1

Please note: The compilations of law provided at this site are

unofficial. They have been prepared by the House Office of the Legislative Counsel for the use and convenience of the House Committee on Financial Services. The official compilation of Federal

law is the United States Code, and rules of evidence regarding the

Code have been established by statute.
" ! COMMITTEE PRINT 108th Congress

1st Session

COMMITTEE

PRINT 108–C

COMPILATION OF BASIC LAWS ON

HOUSING AND COMMUNITY DEVELOPMENT

WITHIN THE JURISDICTION OF THE

COMMITTEE ON FINANCIAL SERVICES

REVISED THROUGH DECEMBER 31, 2002

(end of the 107th Congress)

PREPARED FOR THE USE OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

MARCH 2003

COMPILATION OF BASIC LAWS ON HOUSING AND COMMUNITY DEVELOPMENT

REVISED THROUGH DECEMBER 31, 2002 (end of 107th Congress)

U.S. GOVERNMENT PRINTING OFFICE

84–108 WASHINGTON : 

" ! COMMITTEE PRINT 108th Congress

1st Session

COMMITTEE

PRINT 108–C

2003

COMPILATION OF BASIC LAWS ON

HOUSING AND COMMUNITY DEVELOPMENT

WITHIN THE JURISDICTION OF THE

COMMITTEE ON FINANCIAL SERVICES

REVISED THROUGH DECEMBER 31, 2002

(end of the 107th Congress)

PREPARED FOR THE USE OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

MARCH 2003

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://financialservices.house.gov

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: http://bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250

Mail: Stop SSOP, Washington, DC 20402–0001
HOUSE COMMITTEE ON FINANCIAL SERVICES

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa

DOUG BEREUTER, Nebraska

RICHARD H. BAKER, Louisiana

SPENCER BACHUS, Alabama

MICHAEL N. CASTLE, Delaware

PETER T. KING, New York

EDWARD R. ROYCE, California

FRANK D. LUCAS, Oklahoma

ROBERT W. NEY, Ohio

SUE W. KELLY, New York, Vice Chair

RON PAUL, Texas

PAUL E. GILLMOR, Ohio

JIM RYUN, Kansas

STEVEN C. LATOURETTE, Ohio

DONALD A. MANZULLO, Illinois

WALTER B. JONES, JR., North Carolina

DOUG OSE, California

JUDY BIGGERT, Illinois

MARK GREEN, Wisconsin

PATRICK J. TOOMEY, Pennsylvania

CHRISTOPHER SHAYS, Connecticut

JOHN B. SHADEGG, Arizona

VITO FOSSELLA, New York

GARY G. MILLER, California

MELISSA A. HART, Pennsylvania

SHELLEY MOORE CAPITO, West Virginia

PATRICK J. TIBERI, Ohio

MARK R. KENNEDY, Minnesota

TOM FEENEY, Florida

JEB HENSARLING, Texas

SCOTT GARRETT, New Jersey

TIM MURPHY, Pennsylvania

GINNY BROWN-WAITE, Florida

J. GRESHAM BARRETT, South Carolina

KATHERINE HARRIS, Florida

RICK RENZI, Arizona

BARNEY FRANK, Massachusetts

PAUL E. KANJORSKI, Pennsylvania

MAXINE WATERS, California

CAROLYN B. MALONEY, New York

LUIS V. GUTIERREZ, Illinois

NYDIA M. VELA ́ ZQUEZ, New York

MELVIN L. WATT, North Carolina

GARY L. ACKERMAN, New York

DARLENE HOOLEY, Oregon

JULIA CARSON, Indiana

BRAD SHERMAN, California

GREGORY W. MEEKS, New York

BARBARA LEE, California

JAY INSLEE, Washington

DENNIS MOORE, Kansas

CHARLES A. GONZALEZ, Texas

MICHAEL E. CAPUANO, Massachusetts

HAROLD E. FORD, JR., Tennessee

RUBE ́ N HINOJOSA, Texas

KEN LUCAS, Kentucky

JOSEPH CROWLEY, New York

WM. LACY CLAY, Missouri

STEVE ISRAEL, New York

MIKE ROSS, Arkansas

CAROLYN MCCARTHY, New York

JOE BACA, California

JIM MATHESON, Utah

STEPHEN F. LYNCH, Massachusetts

BRAD MILLER, North Carolina

RAHM EMANUEL, Illinois

DAVID SCOTT, Georgia

ARTUR DAVIS, Alabama

BERNARD SANDERS, Vermont

ROBERT U. FOSTER, III, Staff Director

(II)
(iii)

PREFACE

Contents.—This Committee Print replaces the edition of the

Basic Laws on Housing and Community Development dated December 31, 1998. It contains the texts of the primary housing and

community development laws within the jurisdiction of the Committee on Financial Services of the House of Representatives, as

well as additional laws and materials of particular interest to members of the Committee in considering legislation relating to housing

and community development. The compilation has been updated

through December 31, 2002. It incorporates the laws passed by the

106th and 107th Congresses and includes the major additions and

revisions made by the American Homeownership and Economic Opportunity Act of 2000, enacted December 27, 2000 (Public Law

106–569).

Organization.—This Committee Print has been arranged in

parts, each of which deals with a broad subject area dealt with by

the Committee. The subject areas utilized in organizing the 1998

edition have been retained. Part I contains the basic laws on community development, including the community development block

grant program and the urban development action grant program.

Part II contains the laws regarding public housing and the section

8 rental assistance program, including the United States Housing

Act of 1937. Part III contains the laws relating to supportive housing, including supportive housing for elderly and disabled persons.

Part IV contains laws relating to other Federal assistance for housing, including the HOME program, safety and security in federally

assisted housing, and the low-income housing preservation program. Part V contains the laws on homeownership assistance, including the HOPE homeownership programs. Part VI contains the

McKinney-Vento Homeless Assistance Act and other related laws

on housing for the homeless. Part VII contains the laws regarding

housing for Native Americans and Native Hawaiians. Part VIII

contains the basic laws on FHA mortgage insurance, mortgage relief, and mortgage foreclosure, most notably, the National Housing

Act. Part IX contains laws relating to the secondary market for

mortgage loans, including FNMA, FHLMC, GNMA, and FAMC.

Part X contains the basic laws on rural housing, including the title

V of the Housing Act of 1949. Part XI contains laws establishing

various regulatory programs, such as those relating to interstate

land sales, real estate settlement procedures, manufactured housing construction and safety standards, and termination of private

mortgage insurance. Part XII contains laws for the organization

and operation of the Department of Housing and Urban Development. Part XIII contains additional laws relating to housing and

community development programs. Part XIV contains permanent
iv

appropriation provisions and a list of appropriation Acts relating to

housing and community development. Finally, part XV contains

miscellaneous tables and lists designed to assist in the use of this

compilation.

United States Code.— For the benefit of the reader, the United

States Code citations are shown in boldface brackets at the beginning of each Public Law section in the Committee Print. These citations are not a part of the text of the laws in which they appear.

As its title indicates, this Committee Print contains only the

basic laws relating to housing and community development that

govern programs currently in effect. Additional laws relating to

housing and community development, including laws governing formerly major programs that have since been superseded, various

provisions that have expired or terminated, and laws not within

the jurisdiction of the Committee, may be found in the United

States Code and the notes contained therein.

It is important to recognize that the United States Code, and

the several commercial publications of the Code, contain additional

information that may be extremely useful in understanding the

laws contained in this Committee Print. For example, the relevant

section in the Code will provide the reader with information on specific amendments made to the section since its enactment, effective

dates and transitional provisions, delegations and transfers of functions, and cross references to other sections dealing with similar

subject matters. Commercial publications of the Code also indicate

relevant judicial decisions issued with respect to each section.

For changes after the closing date of this publication (December 31, 2002) to provisions of law in this publication that have citations to the U.S. Code, see the United States Code Classification

Tables published by the Office of the Law Revision Counsel of the

House of Representatives at http://uscode.house.gov/uscct.htm. Bracketed Matter.—Matter appearing in this Committee Print

in boldface black brackets is not a part of the text of the law in

which it appears. As noted above, this matter includes United

States Code citations, which appear at the beginning of each Public

Law provision in this print. The headings and section or subsection

designations of some repealed provisions and some items in tables

of contents also appear in brackets as an aid to the reader.

Comments and Suggestions.—Comments and suggestions for

improvements in future editions of this compilation are encouraged, and may be addressed to the attention of the Editor, Compilation of Basic Laws on Housing and Community Development,

Office of the Legislative Counsel, United States House of Representatives, 136 Cannon House Office Building, Washington, DC

20515.
(V)

CONTENTS

Page

National housing goals ............................................................................................ 1

PART I—COMMUNITY DEVELOPMENT

Housing and Community Development Act of 1974, title I ................................. 9

Community development block grants ........................................................... 9

Community development loan guarantees ..................................................... 45

Urban development action grants ................................................................... 54

CDBG assistance for colonias ................................................................................. 65

Community development needs computer database ............................................. 67

Provisions regarding use of CDBG amounts ......................................................... 69

Rehabilitation demonstration grant program ....................................................... 70

Right of redemption for section 312 mortgagors ................................................... 72

Neighborhood Reinvestment Corporation .............................................................. 74

National urban policy .............................................................................................. 81

John Heinz Neighborhood Development Act ......................................................... 85

Community outreach partnership demonstration ................................................. 90

Community Investment Corporation demonstration ............................................ 94

Enterprise zone development .................................................................................. 101

Capacity building for community development and affordable housing ............. 109

PART II—PUBLIC HOUSING AND SECTION 8 RENTAL ASSISTANCE

Allocation of funds ................................................................................................... 111

United States Housing Act of 1937 ........................................................................ 116

Title I—General program of assisted housing ............................................... 116

Declaration of policy and PHA organization .................................................. 116

Rental payments and definitions .................................................................... 117

Public housing loans ......................................................................................... 129

Public housing contributions ........................................................................... 130

PHA plans ......................................................................................................... 136

Public housing contracts .................................................................................. 143

Designated housing .......................................................................................... 163

Section 8 rental assistance .............................................................................. 165

Fair market rentals .......................................................................................... 166

Vouchers ............................................................................................................ 174

Public housing capital and operating funds ................................................... 196

Labor standards and community service requirement .................................. 208

PHA consortia, joint ventures, affiliates, and subsidiaries ........................... 213

Eligibility for assisted housing ........................................................................ 214

Demolition and disposition of public housing ................................................ 219

Public housing resident management ............................................................. 223

Public housing homeownership opportunities ................................................ 226

Authority to convert public housing to vouchers ........................................... 231

Family self-sufficiency program ...................................................................... 234

Revitalization of severely distressed public housing ..................................... 242

Transfer of public housing management ........................................................ 247

Environmental reviews .................................................................................... 250

Information for law enforcement agencies ..................................................... 251

Exchange of information with law enforcement agencies ............................. 251

Civil money penalties against section 8 owners ............................................ 252

Public housing mortgages and security interests .......................................... 254

Pet ownership in public housing ..................................................................... 255

Resident homeownership programs ................................................................ 255

Required conversion of distressed public housing ......................................... 258
Page

VI

United States Housing Act of 1937—Continued

Services for public housing residents .............................................................. 262

Mixed finance public housing .......................................................................... 263

Title III—HOPE for public housing homeownership ..................................... 266

Title IV—Home rule flexible grant demonstration ........................................ 278

Repeal of section 8 new construction ..................................................................... 287

Repeal of new construction authority ............................................................. 287

Section 8 prior to repeal ................................................................................... 287

Income eligibility .............................................................................................. 289

Repeal of Federal tenant preferences ............................................................. 289

Funding for section 8 tenant-based assistance ..................................................... 291

Moving to work demonstration ............................................................................... 293

Section 8 administrative fees .................................................................................. 297

Section 8 contract renewals .................................................................................... 299

Multifamily housing mortgage & assistance restructuring .................................. 300

Subtitle A—FHA-Insured Multifamily Housing Mortgage and Housing

Assistance Restructuring ............................................................................. 301

Subtitle B—Miscellaneous Provisions ............................................................. 332

Subtitle C—Enforcement Provisions ............................................................... 333

Subtitle D—Office of Multifamily Housing Assistance Restructuring ......... 335

Section 8 rent annual adjustment factors ............................................................. 339

Section 8 excessive rent burden data ..................................................................... 342

Section 8 disaster relief assistance ........................................................................ 343

Section 8 homeownership demonstration .............................................................. 344

Homeownership option ..................................................................................... 344

Funding for pilot programs .............................................................................. 344

Section 8 homeownership assistance pilot program for disabled families .......... 346

Section 8 community investment demonstration .................................................. 349

Use of funds recaptured from refinancing State and local finance projects ....... 351

Access to PHAs’ books ............................................................................................. 352

Miscellaneous provisions ......................................................................................... 353

Rental assistance fraud recoveries .................................................................. 353

Purchase of PHA obligations ........................................................................... 354

Procurement of insurance by PHAs ....................................................................... 355

Transitional ceiling rents for public housing ......................................................... 357

Limitation on public housing assistance ................................................................ 359

Mental health action plans ..................................................................................... 360

Annual report regarding 1998 Act ......................................................................... 361

Consultation in settlement of litigation ................................................................. 362

PART III—SUPPORTIVE HOUSING

Supportive housing for the elderly ......................................................................... 363

Section 202 supportive housing ....................................................................... 363

Civil money penalties against section 202 mortgagors ................................. 371

Transition and repealed elderly/handicapped housing provisions ....................... 378

Transition provisions ........................................................................................ 378

Sec. 202 elderly/handicapped housing—prior to 10–1–91 ............................. 379

Section 8 payments for section 202 projects .......................................................... 389

Prepayment and refinancing of section 202 loans ................................................ 390

Supportive housing for persons with disabilities .................................................. 392

Revised congregate housing services ...................................................................... 402

Funding for service coordinators and congregate services ................................... 417

Pet ownership .......................................................................................................... 418

Housing for persons with AIDS .............................................................................. 420

PART IV—OTHER FEDERAL HOUSING ASSISTANCE

Affordable housing strategies and investment ...................................................... 433

Comprehensive housing affordability strategies ............................................ 436

HOME Investment Partnerships Act .............................................................. 444

Rent supplements .................................................................................................... 485

Section 236 rental assistance .................................................................................. 490

Flexible subsidy program ........................................................................................ 504

Multifamily housing planning and investment strategies ................................... 513

Tenant participation in multifamily housing ........................................................ 519

Anti-Drug Abuse Act of 1988 .................................................................................. 521

Regulatory and enforcement provisions .......................................................... 522
Page

VII

Anti-Drug Abuse Act of 1988—Continued

Public and assisted housing drug elimination ............................................... 523

Drug-free public housing .................................................................................. 529

Youthbuild program ................................................................................................ 531

Standards for residency, occupancy preferences, and service coordinators in

federally assisted housing ................................................................................... 543

Standards and obligations of residency .......................................................... 543

Preferences for elderly residents and units for disabled residents in section 8 housing ................................................................................................ 546

Service coordinators for elderly and disabled residents ................................ 548

General provisions ............................................................................................ 552

Safety and security in public and assisted housing .............................................. 555

Removal of regulatory barriers to affordable housing .......................................... 560

Disposition of HUD-owned projects ........................................................................ 564

Flexible disposition authority .......................................................................... 564

Transfer of unoccupied and substandard housing to local governments

and community development corporations ................................................. 564

Management and disposition of HUD-owned projects ................................... 568

Housing access .................................................................................................. 582

Housing counseling .................................................................................................. 583

State housing finance agencies ............................................................................... 595

Amendments affecting tenant rents ....................................................................... 599

Treatment of housing assistance as income .......................................................... 601

Treatment of payments made to Nazi persecution victims .................................. 602

Financial assistance in impacted areas ................................................................. 604

Restrictions on welfare and public benefits for aliens .......................................... 605

Eligibility for Federal benefits ......................................................................... 606

Eligibility for State and local public benefits ................................................. 616

Use of assisted housing by aliens ........................................................................... 625

Immigration reform ................................................................................................. 632

Solar energy systems in assisted housing ............................................................. 635

Energy conserving improvements for assisted housing ........................................ 636

Energy efficiency plan ............................................................................................. 637

Low-Income Housing Preservation and Resident Homeownership Act of 1990 . 638

Prepayment of mortgages insured under National Housing Act .................. 638

Technical assistance and capacity building .................................................... 669

Transition and other low-income housing preservation provisions ..................... 674

Transition .......................................................................................................... 674

State preservation project assistance ............................................................. 676

Preserving existing housing investment ................................................................ 678

Assistance for self-help housing providers ............................................................. 681

Surplus property disposition for low-income housing use .................................... 686

PART V—HOMEOWNERSHIP ASSISTANCE

National Homeownership Trust Act ...................................................................... 689

HOPE homeownership programs ........................................................................... 696

Homeownership of multifamily units ............................................................. 697

Homeownership of single family homes ......................................................... 709

Section 235 homeownership assistance ................................................................. 719

Enterprise zone homeownership opportunity grants ............................................ 735

Eligibility under first-time homebuyer programs ................................................. 738

PART VI—HOUSING FOR THE HOMELESS

McKinney-Vento Homeless Assistance Act ............................................................ 739

General provisions ............................................................................................ 739

Interagency Council on the Homeless ............................................................. 744

FEMA food and shelter program ..................................................................... 749

Housing affordability strategy ......................................................................... 754

Emergency shelter grants program ................................................................. 754

Supportive housing program ........................................................................... 760

Safe havens for homeless individuals demonstration program .................... 768

Section 8 assistance for single room occupancy dwellings ............................ 775

Shelter plus care program ............................................................................... 778

Rural homelessness grant program ................................................................ 785

Use of FMHA inventory for transitional and turnkey housing .................... 789

Use of unutilized and underutilized public buildings and real property ..... 791
Page

VIII

McKinney-Vento Homeless Assistance Act—Continued

Making surplus personal property available to nonprofit agencies ............. 795

Use for homeless of property at closed defense bases .......................................... 797

FHA single family property disposition for homeless use .................................... 816

PART VII—HOUSING FOR NATIVE AMERICANS AND NATIVE HAWAIIANS

Native American housing assistance ..................................................................... 819

Affordable housing activities ........................................................................... 836

Allocation of grant amounts ............................................................................ 843

Compliance, audits, and reports ...................................................................... 845

Termination of assistance under incorporated programs .............................. 851

Federal guarantees for financing for tribal housing activities ..................... 853

Other housing assistance ................................................................................. 856

Housing assistance for Native Hawaiians ...................................................... 856

Waiver of matching funds requirements for Indian housing programs .............. 880

Loan guarantees for Indian and Native Hawaiian housing ................................. 881

Authority to provide housing assistance to State of Hawaii ................................ 897

Lands Title Report Commission ............................................................................. 898

PART VIII—MORTGAGE INSURANCE, RELIEF, AND FORECLOSURE AND CREDIT

ENHANCEMENT FOR HOUSING

National Housing Act .............................................................................................. 901

Title I—Manufactured home and home improvement loans ........................ 891

Title II—Basic mortgage insurance programs, temporary mortgage assistance payments, and alternative mortgage instruments ............................ 912

Title III—National mortgage associations (note) ........................................... 1061

Title IV—Insurance of savings and loan accounts (note) .............................. 1061

Title V—Miscellaneous ..................................................................................... 1061

Title VI—War housing insurance (note) ......................................................... 1087

Title VII—Insurance for investments in rental housing for families of

moderate income (note) ................................................................................ 1087

Title VIII—Armed services housing mortgage insurance ............................. 1088

Title IX—National defense housing insurance (note) .................................... 1098

Title X—Mortgage insurance for land development (note) ........................... 1098

Title XI—Mortgage insurance for group practice facilities ........................... 1098

Title XII—National insurance development program (note) ......................... 1102

Estimates of use of insuring authority .................................................................. 1103

Right of redemption—resales of FHA financed housing ....................................... 1104

Builders warranty—FHA housing .......................................................................... 1105

Penalties for fraud ................................................................................................... 1107

Insurance for BMIR and § 202 mortgages under § 236 ......................................... 1110

Residential water treatment ................................................................................... 1111

Deregulation of rents ............................................................................................... 1112

Delegated processing ............................................................................................... 1113

Up-front mortgage insurance premium ................................................................. 1114

Emergency mortgage relief ..................................................................................... 1115

Report on delinquencies and foreclosures .............................................................. 1122

Nonjudicial foreclosure of mortgages for single family housing .......................... 1123

Foreclosure of mortgages for multifamily housing ................................................ 1137

Energy efficient mortgages pilot program ............................................................. 1149

Multifamily housing finance improvement pilot programs .................................. 1152

Preventing mortgage defaults on insured multifamily housing projects ............ 1165

PART IX—SECONDARY MARKET FOR MORTGAGE LOANS

Federal National Mortgage Association and Government National Mortgage

Association ............................................................................................................ 1167

GNMA administrative expenses ............................................................................. 1195

FNMA and GNMA—partition ................................................................................. 1196

FNMA mortgage-backed securities program proposal .......................................... 1198

Federal Home Loan Mortgage Corporation ........................................................... 1199

Federal Housing Enterprises Financial Safety and Soundness Act of 1992 ....... 1217

Financial safety and soundness regulator ...................................................... 1221

General authority of Secretary ........................................................................ 1230

Housing goals .................................................................................................... 1234

Enforcement of housing goals .......................................................................... 1244

Required capital levels for enterprises and special enforcement powers ..... 1252
Page

IX

Federal Housing Enterprises Financial Safety and Soundness Act of 1992—

Continued

Enforcement of capital levels ........................................................................... 1267

Federal Agricultural Mortgage Corporation .......................................................... 1277

PART X—RURAL HOUSING

Title V of Housing Act of 1949 ............................................................................... 1309

Section 502 rural housing loans ...................................................................... 1313

Section 504 home repair loans and grants ..................................................... 1325

Section 514 farm labor housing ....................................................................... 1339

Section 515 rural rental housing loans ........................................................... 1341

Section 520 definition of rural area ................................................................ 1362

Section 521 loans and assistance for low- and moderate-income housing ... 1362

Section 523 mutual and self-help housing ...................................................... 1369

Section 524 site loans ....................................................................................... 1371

Section 533 housing preservation grants ....................................................... 1375

Section 538 multifamily rental housing loan guarantees ............................. 1383

Section 542 rural housing voucher program .................................................. 1390

Performance goals for FmHA ................................................................................. 1393

Collateral security for farmer applicants ............................................................... 1394

Interest rate limitation ........................................................................................... 1395

Exemption from dwelling size limitation ............................................................... 1396

Collection of certain data ........................................................................................ 1397

Rural assistance program income limits for isolated rural areas of Alaska ....... 1398

PART XI—REGULATORY PROGRAMS

Interstate Land Sales Full Disclosure Act ............................................................ 1399

Real Estate Settlement Procedures Act of 1974 .................................................... 1418

Simplification of disclosures under RESPA ........................................................... 1435

Settlement costs for FHA and VA .......................................................................... 1436

National Manufactured Housing Construction and Safety Standards Act of

1974 ....................................................................................................................... 1437

Lead-Based Paint Poisoning Prevention Act ......................................................... 1468

Residential Lead-Based Paint Hazard Reduction Act of 1992 ............................. 1477

Home Mortgage Disclosure Act of 1975 ................................................................. 1494

Community Reinvestment Act of 1977 .................................................................. 1505

Adjustable rate mortgage caps ............................................................................... 1512

Recommended policy on radon ................................................................................ 1513

Seismic safety property standards ......................................................................... 1515

Fire safety systems in federally assisted housing ................................................. 1516

Homeowners Protection Act of 1998 ...................................................................... 1521

PART XII—ORGANIZATION AND ADMINISTRATION OF DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Department of Housing and Urban Development Act .......................................... 1535

HUD accountability and applicant disclosures ..................................................... 1552

Subsidy layering review .......................................................................................... 1558

Environmental review requirements for HUD special projects ........................... 1560

Performance goals for HUD .................................................................................... 1562

Research and development programs .................................................................... 1563

Administrative and miscellaneous provisions ....................................................... 1570

Special assistant commissioner for cooperative housing ...................................... 1573

HUD annual report ................................................................................................. 1574

Annual report on characteristics of families in subsidized housing .................... 1575

Semiannual report on contracts ............................................................................. 1576

Elimination of reporting requirements .................................................................. 1577

Termination of reporting requirements .......................................................... 1577

Preservation of certain reporting requirements ............................................. 1578

Improved architectural design ................................................................................ 1580

Paperwork reduction ............................................................................................... 1581

Records and audits required in connection with loans, advances, grants, or

contributions (Byrd amendment) ........................................................................ 1583

Fraud and false statements .................................................................................... 1584

Obstruction of justice .............................................................................................. 1586

International housing and urban development ..................................................... 1587

Economic opportunities for low-income persons .................................................... 1588
Page

X

Notice and comment for demonstration programs ................................................ 1592

Preventing fraud and abuse .................................................................................... 1593

Disclosure of social security number ............................................................... 1593

Consent forms and employment information ................................................. 1593

Use of American materials and products ............................................................... 1599

Revolving fund for liquidating programs ............................................................... 1600

Public notice and comment rulemaking ................................................................. 1602

HUD headquarters building ................................................................................... 1603

PART XIII—OTHER RELATED PROVISIONS OF LAW

Federal Home Loan Banks community investment and affordable housing

programs ............................................................................................................... 1605

FDIC affordable housing program .......................................................................... 1611

National Institute of Building Sciences ................................................................. 1629

National Housing Partnerships .............................................................................. 1637

Condominium and cooperative conversion protection and abuse relief .............. 1643

Wage rate requirements for laborers and mechanics ........................................... 1653

Transfer of surplus real property ........................................................................... 1659

Limitation on withholding or conditioning of assistance ...................................... 1660

Fair housing initiatives program ............................................................................ 1661

Treatment of occupancy standards ......................................................................... 1667

Median area income ................................................................................................ 1668

Solar assistance financing entity ............................................................................ 1669

Guarantees for church arson recovery loans ......................................................... 1671

PART XIV—APPROPRIATIONS

Permanent appropriations ...................................................................................... 1673

List of housing appropriations for fiscal years 1996–2003 ................................... 1675

PART XV—MISCELLANEOUS

List of related laws and United States Code citations ......................................... 1679

List of housing related legislation approved or enacted 1995–2002 .................... 1681

List of nonrecurring reports relating to housing required by laws enacted

1994–2002 ............................................................................................................. 1686

List of acronyms and abbreviated references ........................................................ 1691

List of abbreviated statutory citations ................................................................... 1695

Table of United States Code citations to housing laws ........................................ 1699

Index of United States Code citations .................................................................... 1702

Index of Federal housing and related laws ........................................................... 1707

Table of National Housing Act mortgage insurance funds and programs

covered .................................................................................................................. 1714
To use this index, bend the

publication over and locate the

desired section by following the

black markers.

Part I—Community Development

Part II—Public Housing and Section 8 Assistance

Part III—Supportive Housing

Part IV—Other Federal Housing

Assistance

Part V—Homeownership Assistance

Part VI—Housing for the Homeless

Part VII—Housing for Native

Americans and Native Hawaiians

Part VIII—Mortgage Insurance

Part IX—Secondary Market for

Mortgage Loans

Part X—Rural Housing

Part XI—Regulatory Programs

Part XII—Organization and Administration of the Department

Part XIII—Other Related Provisions of Law

Part XIV—Appropriations

Part XV—Miscellaneous
1

NATIONAL HOUSING GOALS

EXCERPT FROM HOUSING ACT OF 1949

[Public Law 171, 81st Congress; 63 Stat. 413; 42 U.S.C. 1441]

DECLARATION OF NATIONAL HOUSING POLICY

SEC. 2. ø42 U.S.C. 1441¿ The Congress hereby declares that

the general welfare and security of the Nation and the health and

living standards of its people require housing production and related community development sufficient to remedy the serious

housing shortage, the elimination of substandard and other inadequate housing through the clearance of slums and blighted areas,

and the realization as soon as feasible of the goal of a decent home

and a suitable living environment for every American family, thus

contributing to the development and redevelopment of communities

and to the advancement of the growth, wealth, and security of the

Nation. The Congress further declares that such production is necessary to enable the housing industry to make its full contribution

toward an economy of maximum employment, production, and purchasing power. The policy to be followed in attaining the national

housing objective hereby established shall be: (1) private enterprise

shall be encouraged to serve as large a part of the total need as

it can; (2) governmental assistance shall be utilized where feasible

to enable private enterprise to serve more of the total need; (3) appropriate local public bodies shall be encouraged and assisted to

undertake positive programs of encouraging and assisting the development of well-planned, integrated residential neighborhoods,

the development and redevelopment of communities, and the production, at lower costs, of housing of sound standards of design,

construction, livability, and size for adequate family life; (4) governmental assistance to eliminate substandard and other inadequate

housing through the clearance of slums and blighted areas, to facilitate community development and redevelopment, and to provide

adequate housing for urban and rural nonfarm families with incomes so low that they are not being decently housed in new or existing housing shall be extended to those localities which estimate

their own needs and demonstrate that these needs are not being

met through reliance solely upon private enterprise, and without

such aid; and (5) governmental assistance for decent, safe, and sanitary farm dwellings and related facilities shall be extended where

the farmowner demonstrates that he lacks sufficient resources to

provide such housing on his own account and is unable to secure

necessary credit for such housing from other sources on terms and

conditions which he could reasonably be expected to fulfill. The Department of Housing and Urban Development and any other departments or agencies of the Federal Government having powers,

functions, or duties with respect to housing, shall exercise their
Sec. 2 NATIONAL HOUSING GOALS 2

powers, functions or duties under this or any other law, consistently with the national housing policy declared by this Act and in

such manner as will facilitate sustained progress in attaining the

national housing objective hereby established, and in such manner

as will encourage and assist (1) the production of housing of sound

standards of design, construction, livability, and size for adequate

family life; (2) the reduction of the costs of housing without sacrifice of such sound standards; (3) the use of new designs, materials, techniques, and methods in residential construction, the use

of standardized dimensions and methods of assembly of homebuilding materials and equipment, and the increase of efficiency in

residential construction and maintenance; (4) the development of

well-planned, integrated, residential neighborhoods and the development and redevelopment of communities; and (5) the stabilization of the housing industry at a high annual volume of residential

construction.

EXCERPT FROM DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT ACT

[Public Law 89–174; 79 Stat. 667; 42 U.S.C. 3531]

DECLARATION OF PURPOSE

SEC. 2. ø42 U.S.C. 3531¿ The Congress hereby declares that

the general welfare and security of the Nation and the health and

living standards of our people require, as a matter of national purpose, sound development of the Nation’s communities and metropolitan areas in which the vast majority of its people live and work.

To carry out such purpose, and in recognition of the increasing

importance of housing and urban development in our national life,

the Congress finds that establishment of an executive department

is desirable to achieve the best administration of the principal programs of the Federal Government which provide assistance for

housing and for the development of the Nation’s communities, to

assist the President in achieving maximum coordination of the various Federal activities which have a major effect upon urban community, suburban, or metropolitan development; to encourage the

solution of problems of housing, urban development, and mass

transportation through State, county, town, village, or other local

and private action, including promotion of interstate, regional, and

metropolitan cooperation; to encourage the maximum contributions

that may be made by vigorous private homebuilding and mortgage

lending industries to housing, urban development, and the national

economy; and to provide for full and appropriate consideration, at

the national level, of the needs and interests of the Nation’s communities and of the people who live and work in them.

EXCERPTS FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 90–448; 82 Stat. 476, 601; 12 U.S.C. 1701t and 42 U.S.C. 1441a et

seq.]

DECLARATION OF POLICY

SEC. 2. ø12 U.S.C. 1701t¿ The Congress affirms the national

goal, as set forth in section 2 of the Housing Act of 1949, of ‘‘a de-
3 Sec. 1601 NATIONAL HOUSING GOALS

cent home and a suitable living environment for every American

family.’’.

The Congress finds that this goal has not been fully realized

for many of the Nation’s lower income families; that this is a matter of grave national concern; and that there exist in the public and

private sectors of the economy the resources and capabilities necessary to the full realization of this goal.

The Congress declares that in the administration of those

housing programs authorized by this Act which are designed to assist families with incomes so low that they could not otherwise decently house themselves, and of other Government programs designed to assist in the provision of housing for such families, the

highest priority and emphasis should be given to meeting the housing needs of those families for which the national goal has not become a reality; and in the carrying out of such programs there

should be the fullest practicable utilization of the resources and capabilities of private enterprise and of individual self-help techniques.

* * * * * * *

TITLE XVI—HOUSING GOALS AND ANNUAL HOUSING

REPORT

REAFFIRMATION OF GOAL

SEC. 1601. ø42 U.S.C. 1441a¿ (a) The Congress finds that the

supply of the Nation’s housing is not increasing rapidly enough to

meet the national housing goal, established in the Housing Act of

1949, of the ‘‘realization as soon as feasible of the goal of a decent

home and a suitable living environment for every American family’’. The Congress reaffirms this national housing goal and determines that it can be substantially achieved within the next decade

by the construction or rehabilitation of twenty-six million housing

units, six million of these for low and moderate income families.

(b) The Congress further finds that policies designed to contribute to the achievement of the national housing goal have not

directed sufficient attention and resources to the preservation of

existing housing and neighborhoods, that the deterioration and

abandonment of housing for the Nation’s lower income families has

accelerated over the last decade, and that this acceleration has contributed to neighborhood disintegration and has partially negated

the progress toward achieving the national housing goal which has

been made primarily through new housing construction.

(c) The Congress declares that if the national housing goal is

to be achieved, a greater effort must be made to encourage the

preservation of existing housing and neighborhoods through such

measures as housing preservation, moderate rehabilitation, and improvements in housing management and maintenance, in conjunction with the provision of adequate municipal services. Such an effort should concentrate, to a greater extent than it has in the past,

on housing and neighborhoods where deterioration is evident but

has not yet become acute.
Sec. 1602 NATIONAL HOUSING GOALS 4

REPORT OUTLINING PLAN

SEC. 1602. ø42 U.S.C. 1441b¿ Not later than January 15, 1969,

the President shall make a report to the Congress setting forth a

plan, to be carried out over a period of ten years (June 30, 1968,

to June 30, 1978), for the elimination of all substandard housing

and the realization of the goal referred to in section 1601. Such

plan shall—

(1) indicate the number of new or rehabilitated housing

units which it is anticipated, will have to be provided, with or

without Government assistance, during each fiscal year of the

ten-year period, in order to achieve the objectives of the plan,

showing the number of such units which it is anticipated will

have to be provided under each of the various Federal programs designed to assist in the provision of housing;

(2) indicate the reduction in the number of occupied substandard housing units which it is anticipated will have to

occur during each fiscal year of the ten-year period in order to

achieve the objectives of the plan;

(3) provide an estimate of the cost of carrying out the plan

for each of the various Federal programs and for each fiscal

year during the ten-year period to the extent that such costs

will be reflected in the Federal budget;

(4) make recommendations with respect to the legislative

and administrative actions necessary or desirable to achieve

the objectives of the plan; and

(5) provide such other pertinent data, estimates, and recommendations as the President deems advisable.

Such report shall, in addition, contain a projection of the residential mortgage market needs and prospects during the coming year,

including an estimate of the requirements with respect to the availability, need, and flow of mortgage funds (particularly in declining

urban and rural areas) during such year, together with such recommendations as may be deemed appropriate for encouraging the

availability of such funds.

PERIODIC REPORTS

SEC. 1603. ø42 U.S.C. 1441c¿ Not later than March 15 of each

year beginning with calendar year 1981, the President shall transmit to the Congress a report which—

(1) reviews the progress made in achieving housing production objectives during the preceding year, and in the event

that proposed objectives are not achieved, identifies the reasons for the failure;

(2) projects the level, composition, and general location of

production and rehabilitation activity during the current year

and sets general objectives for such activity during the next

year, and reassesses the availability of required resources;

(3) specifies Federal programs and policies to be implemented or recommended in order to achieve the objectives;

(4) updates estimates of the housing needs of lower income

families, analyzing these needs, insofar as possible, by type of

household, housing need, including households with specialized

needs, and general location, and in addition, reassesses the ca-
5 Sec. 2 NATIONAL HOUSING GOALS

pacity of each Federal housing program to serve the needs

identified;

(5) reviews the progress made in achieving goals of conserving and upgrading older housing and neighborhoods, expanding homeownership and equal housing opportunities, and

assuring reasonable shelter costs;

(6) reports on progress made toward developing new methods for measuring and monitoring progress in achieving these

goals; and

(7) identifies legislative and administrative actions which

will or should be adopted or implemented during the current

year and, as feasible, the next year to support achievement of

the goals.

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1819; 42 U.S.C. 5301 note]

SEC. 2. ø42 U.S.C. 5301 note¿ FINDINGS AND PURPOSE.

(a) FINDINGS.—The Congress finds that—

(1) for the past 50 years, the Federal Government has

taken the leading role in enabling the people of the Nation to

be the best housed in the world, and recent reductions in Federal assistance have contributed to a deepening housing crisis

for low- and moderate-income families;

(2) the efforts of the Federal Government have included a

system of specialized lending institutions, favorable tax policies, construction assistance, mortgage insurance, loan guarantees, secondary markets, and interest and rental subsidies,

that have enabled people to rent or buy affordable, decent,

safe, and sanitary housing; and

(3) the tragedy of homelessness in urban and suburban

communities across the Nation, involving a record number of

people, dramatically demonstrates the lack of affordable residential shelter, and people living on the economic margins of

our society (lower income families, the elderly, the working

poor, and the deinstitutionalized) have few available alternatives for shelter.

(b) PURPOSE.—The purpose of this Act, therefore, is—

(1) to reaffirm the principle that decent and affordable

shelter is a basic necessity, and the general welfare of the Nation and the health and living standards of its people require

the addition of new housing units to remedy a serious shortage

of housing units for all Americans, particularly for person of

low and moderate income;

(2) to make the distribution of direct and indirect housing

assistance more equitable by providing Federal assistance for

the less affluent people of the Nation;

(3) to provide needed housing assistance for homeless people and for persons of low and moderate income who lack affordable, decent, safe, and sanitary housing; and

(4) to reform existing programs to ensure that such assistance is delivered in the most efficient manner possible.
Sec. 101 NATIONAL HOUSING GOALS 6

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat 4085; 42 U.S.C. 12701 et seq.]

TITLE I—GENERAL PROVISIONS AND

POLICIES

SEC. 101. ø42 U.S.C. 12701¿ THE NATIONAL HOUSING GOAL.

The Congress affirms the national goal that every American

family be able to afford a decent home in a suitable environment.

SEC. 102. ø42 U.S.C. 12702¿ OBJECTIVE OF NATIONAL HOUSING POLICY.

The objective of national housing policy shall be to reaffirm the

long-established national commitment to decent, safe, and sanitary

housing for every American by strengthening a nationwide partnership of public and private institutions able—

(1) to ensure that every resident of the United States has

access to decent shelter or assistance in avoiding homelessness;

(2) to increase the Nation’s supply of decent housing that

is affordable to low-income and moderate-income families and

accessible to job opportunities;

(3) to improve housing opportunities for all residents of the

United States, particularly members of disadvantaged minorities, on a nondiscriminatory basis;

(4) to help make neighborhoods safe and livable;

(5) to expand opportunities for homeownership;

(6) to provide every American community with a reliable,

readily available supply of mortgage finance at the lowest possible interest rates; and

(7) to encourage tenant empowerment and reduce

generational poverty in federally assisted and public housing

by improving the means by which self-sufficiency may be

achieved.

SEC. 103. ø42 U.S.C. 12703¿ PURPOSES OF THE CRANSTON-GONZALEZ

NATIONAL AFFORDABLE HOUSING ACT.

The purposes of this Act are—

(1) to help families not owning a home to save for a down

payment for the purchase of a home;

(2) to retain wherever feasible as housing affordable to

low-income families those dwelling units produced for such

purpose with Federal assistance;

(3) to extend and strengthen partnerships among all levels

of government and the private sector, including for-profit and

nonprofit organizations, in the production and operation of

housing affordable to low-income and moderate-income families;

(4) to expand and improve Federal rental assistance for

very low-income families; and

(5) to increase the supply of supportive housing, which

combines structural features and services needed to enable

persons with special needs to live with dignity and independence.

* * * * * * *
7 Sec. 103 NATIONAL HOUSING GOALS

1Section 501(a) of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1999, provides that title V of such Act may be

cited as the ‘‘Quality Housing and Work Responsibility Act of 1998’’.

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat 2520; 42 U.S.C. 1437 note]

SEC. 502. FINDINGS AND PURPOSES.

(a) FINDINGS.—Congress finds that—

(1) there exists throughout the Nation a need for decent,

safe, and affordable housing;

(2) the inventory of public housing units owned, assisted,

or operated by public housing agencies, an asset in which the

Federal Government has invested over $90,000,000,000, has

traditionally provided rental housing that is affordable to lowincome persons;

(3) despite serving this critical function, the public housing

system is plagued by a series of problems, including the concentration of very poor people in very poor neighborhoods and

disincentives for economic self-sufficiency;

(4) the Federal method of overseeing every aspect of public

housing by detailed and complex statutes and regulations has

aggravated the problem and has placed excessive administrative burdens on public housing agencies; and

(5) the interests of low-income persons, and the public interest, will best be served by a reformed public housing program that—

(A) consolidates many public housing programs into

programs for the operation and capital needs of public

housing;

(B) streamlines program requirements;

(C) vests in public housing agencies that perform well

the maximum feasible authority, discretion, and control

with appropriate accountability to public housing residents, localities, and the general public; and

(D) rewards employment and economic self-sufficiency

of public housing residents.

(b) PURPOSES.—The purpose of this title 1 is to promote homes

that are affordable to low-income families in safe and healthy environments, and thereby contribute to the supply of affordable housing, by—

(1) deregulating and decontrolling public housing agencies,

thereby enabling them to perform as property and asset managers;

(2) providing for more flexible use of Federal assistance to

public housing agencies, allowing the authorities to leverage

and combine assistance amounts with amounts obtained from

other sources;

(3) facilitating mixed income communities and decreasing

concentrations of poverty in public housing;

(4) increasing accountability and rewarding effective management of public housing agencies;

(5) creating incentives and economic opportunities for residents of dwelling units assisted by public housing agencies to
Sec. 103 NATIONAL HOUSING GOALS 8

work, become self-sufficient, and transition out of public housing and federally assisted dwelling units;

(6) consolidating the voucher and certificate programs for

rental assistance under section 8 of the United States Housing

Act of 1937 into a single market-driven program that will assist in making tenant-based rental assistance under such section more successful at helping low-income families obtain affordable housing and will increase housing choice for low-income families; and

(7) remedying the problems of troubled public housing

agencies and replacing or revitalizing severely distressed public housing projects.
9

PART I—COMMUNITY DEVELOPMENT

COMMUNITY DEVELOPMENT BLOCK GRANTS

EXCERPTS FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1974

[Public Law 93–383; 88 Stat. 633; 42 U.S.C. 5301 et seq.]

TITLE I—COMMUNITY DEVELOPMENT

FINDINGS AND PURPOSE

SEC. 101. ø42 U.S.C. 5301¿ (a) The Congress finds and declares that the Nation’s cities, towns, and smaller urban communities face critical social, economic, and environmental problems

arising in significant measure from—

(1) the growth of population in metropolitan and other

urban areas, and the concentration of persons of lower income

in central cities;

(2) inadequate public and private investment and reinvestment in housing and other physical facilities, and related public and social services, resulting in the growth and persistence

of urban slums and blight and the marked deterioration of the

quality of the urban environment; and

(3) increasing energy costs which have seriously undermined the quality and overall effectiveness of local community

and housing development activities.

(b) The Congress further finds and declares that the future

welfare of the Nation and the well-being of its citizens depend on

the establishment and maintenance of viable urban communities as

social, economic, and political entities, and require—

(1) systematic and sustained action by Federal, State, and

local governments to eliminate blight, to conserve and renew

older urban areas, to improve the living environment of lowand moderate-income families, and to develop new centers of

population growth and economic activity;

(2) substantial expansion of and greater continuity in the

scope and level of Federal assistance, together with increased

private investment in support of community development activities;

(3) continuing effort at all levels of government to streamline programs and improve the functioning of agencies responsible for planning, implementing, and evaluating community

development efforts; and

(4) concerted action by Federal, State, and local governments to address the economic and social hardships borne by

communities as a consequence of scarce fuel supplies.
Sec. 101 COMMUNITY DEVELOPMENT BLOCK GRANTS 10

(c) The primary objective of this title and of the community development program of each grantee under this title is the development of viable urban communities, by providing decent housing

and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income. Consistent with this primary objective, not less than 70 percent of the

aggregate of the Federal assistance provided to States and units of

general local government under section 106 and, if applicable, the

funds received as a result of a guarantee or a grant under section

108, shall be used for the support of activities that benefit persons

of low and moderate income, and the Federal assistance provided

in this title is for the support of community development activities

which are directed toward the following specific objectives—

(1) the elimination of slums and blight and the prevention

of blighting influences and the deterioration of property and

neighborhood and community facilities of importance to the

welfare of the community, principally persons of low and moderate income;

(2) the elimination of conditions which are detrimental to

health, safety, and public welfare, through code enforcement,

demolition, interim rehabilitation assistance, and related activities;

(3) the conservation and expansion of the Nation’s housing

stock in order to provide a decent home and a suitable living

environment for all persons, but principally those of low and

moderate income;

(4) the expansion and improvement of the quantity and

quality of community services, principally for persons of low

and moderate income, which are essential for sound community development and for the development of viable urban communities;

(5) a more rational utilization of land and other natural resources and the better arrangement of residential, commercial,

industrial, recreational, and other needed activity centers;

(6) the reduction of the isolation of income groups within

communities and geographical areas and the promotion of an

increase in the diversity and vitality of neighborhoods through

the spatial deconcentration of housing opportunities for persons of lower income and the revitalization of deteriorating or

deteriorated neighborhoods;

(7) the restoration and preservation of properties of special

value for historic, architectural, or esthetic reasons;

(8) the alleviation of physical and economic distress

through the stimulation of private investment and community

revitalization in areas with population outmigration or a stagnating or declining tax base; and

(9) the conservation of the Nation’s scarce energy resources, improvement of energy efficiency, and the provision of

alternative and renewable energy sources of supply.

It is the intent of Congress that the Federal assistance made available under this title not be utilized to reduce substantially the

amount of local financial support for community development activities below the level of such support prior to the availability of

such assistance.
11 Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS

1Section 101(g) of Public Laws 99–500 and 99–591, 100 Stat. 1783–242, 3341–242, made effective the following provision:

‘‘During 1987 and each succeeding fiscal year, any city within a metropolitan area shall be

considered to be a metropolitan city under section 102(a)(4) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(4)) if such city—

‘‘(1) was entitled to a grant of a hold-harmless amount under section 106(h) of such Act

as such section was in effect prior to the enactment of Public Law 96–399;

‘‘(2) had, according to the 1980 decennial census, a population of 36,957; and

‘‘(3) received a preliminary grant approval on March 8, 1984, for an urban development

action grant under section 119 of the Housing and Community Development Act of 1974.’’.

(d) It is also the purpose of this title to further the development of a national urban growth policy by consolidating a number

of complex and overlaping programs of financial assistance to communities of varying sizes and needs into a consistent system of

Federal aid which—

(1) provides assistance on an annual basis, with maximum

certainty and minimum delay, upon which communities can

rely in their planning;

(2) encourages community development activities which

are consistent with comprehensive local and areawide development planning;

(3) furthers achievement of the national housing goal of a

decent home and a suitable living environment for every American family; and

(4) fosters the undertaking of housing and community development activities in a coordinated and mutually supportive

manner by Federal agencies and programs, as well as by communities.

DEFINITIONS

SEC. 102. ø42 U.S.C. 5302¿ (a) As used in this title—

(1) The term ‘‘unit of general local government’’ means any

city, county, town, township, parish, village, or other general

purpose political subdivision of a State; Guam, the Northern

Mariana Islands, the Virgin Islands, and American Samoa, or

a general purpose political subdivision thereof; a combination

of such political subdivisions that, except as provided in section

106(d)(4), is recognized by the Secretary; the District of Columbia; and the Trust Territory of the Pacific Islands. Such term

also includes a State or a local public body or agency (as defined in section 711 of the Housing and Urban Development

Act of 1970), community association, or other entity, which is

approved by the Secretary for the purpose of providing public

facilities or services to a new community as part of a program

meeting the eligibility standards of section 712 of the Housing

and Urban Development Act of 1970 or title IV of the Housing

and Urban Development Act of 1968.

(2) The term ‘‘State’’ means any State of the United States,

or any instrumentality thereof approved by the Governor; and

the Commonwealth of Puerto Rico.

(3) The term ‘‘metropolitan area’’ means a standard metropolitan statistical area as established by the Office of Management and Budget.

(4) 1 The term ‘‘metropolitan city’’ means (A) a city within

a metropolitan area which is the central city of such area, as
Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS 12

defined and used by the Office of Management and Budget, or

(B) any other city, within a metropolitan area, which has a

population of fifty thousand or more. Any city that was classified as a metropolitan city for at least 2 years pursuant to the

first sentence of this paragraph shall remain classified as a

metropolitan city. Any unit of general local government that

becomes eligible to be classified as a metropolitan city, and was

not classified as a metropolitan city in the immediately preceding fiscal year, may, upon submission of written notification

to the Secretary, defer its classification as a metropolitan city

for all purposes under this title, if it elects to have its population included in an urban county under subsection (d). Notwithstanding the second sentence of this paragraph, a city may

elect not to retain its classification as a metropolitan city. Any

city classified as a metropolitan city pursuant to this paragraph, and that no longer qualifies as a metropolitan city in a

fiscal year beginning after fiscal year 1989, shall retain its

classification as a metropolitan city for such fiscal year and the

succeeding fiscal year, except that in such succeeding fiscal

year (A) the amount of the grant to such city shall be 50 percent of the amount calculated under section 106(b); and (B) the

remaining 50 percent shall be added to the amount allocated

under section 106(d) to the State in which the city is located

and the city shall be eligible in such succeeding fiscal year to

receive a distribution from the State allocation under section

106(d) as increased by this sentence. Any unit of general local

government that was classified as a metropolitan city in any

fiscal year, may, upon submission of written notification to the

Secretary, relinquish such classification for all purposes under

this title if it elects to have its population included with the

population of a county for purposes of qualifying for assistance

(for such following fiscal year) under section 106 as an urban

county under paragraph (6)(D). Any metropolitan city that

elects to relinquish its classification under the preceding sentence and whose port authority shipped at least 35,000,000

tons of cargo in 1988, of which iron ore made up at least half,

shall not receive, in any fiscal year, a total amount of assistance under section 106 from the urban county recipient that is

less than the city would have received if it had not relinquished the classification under the preceding sentence.

(5) The term ‘‘city’’ means (A) any unit of general local government which is classified as a municipality by the United

States Bureau of the Census or (B) any other unit of general

local government which is a town or township and which, in

the determination of the Secretary, (i) possesses powers and

performs functions comparable to those associated with municipalities, (ii) is closely settled, and (iii) contains within its

boundaries no incorporated places as defined by the United

States Bureau of the Census which have not entered into cooperation agreements with such town or township to undertake

or to assist in the undertaking of essential community development and housing assistance activities.

(6)(A) The term ‘‘urban county’’ means any county within

a metropolitan area which—
13 Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS

(i) is authorized under State law to undertake essential community development and housing assistance activities in its unincorporated areas, if any, which are not units

of general local government; and

(ii) either—

(I) has a population of 200,000 or more (excluding

the population of metropolitan cities therein) and has

a combined population of 100,000 or more (excluding

the population of metropolitan cities therein) in such

unincorporated areas and in its included units of general local government (and in the case of counties having a combined population of less than 200,000, the

areas and units of general local government must include the areas and units of general local government

which in the aggregate have the preponderance of the

persons of low and moderate income who reside in the

county) (a) in which it has authority to undertake essential community development and housing assistance activities and which do not elect to have their

population excluded, or (b) with which it has entered

into cooperation agreements to undertake or to assist

in the undertaking of essential community development and housing assistance activities; or

(II) has a population in excess of 100,000, a population density of at least 5,000 persons per square

mile, and contains within its boundaries no incorporated places as defined by the United States Bureau

of the Census.

(B) Any county that was classified as an urban county for

at least 2 years pursuant to subparagraph (A), (C), or (D) shall

remain classified as an urban county, unless it fails to qualify

as an urban county pursuant to subparagraph (A) by reason of

the election of any unit of general local government included

in such county to have its population excluded under clause

(ii)(I)(a) of subparagraph (A) or not to renew a cooperation

agreement under clause (ii)(I)(b) of such subparagraph.

(C) Notwithstanding the combined population amount set

forth in clause (ii) of subparagraph (A), a county shall also

qualify as an urban county for purposes of assistance under

section 106 if such county—

(i) complies with all other requirements set forth in

the first sentence;

(ii) has, according to the most recent available decennial census data, a combined population between 190,000

and 199,999, inclusive (excluding the population of metropolitan cities therein) in all its unincorporated areas that

are not units of general local government and in all units

of general local government located within such county;

(iii) had a population growth rate of not less than 15

percent during the most recent 10-year period measured

by applicable censuses; and

(iv) has submitted data satisfactory to the Secretary

that it has a combined population of not less than 200,000

(excluding the population of metropolitan cities therein) in
Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS 14

all its unincorporated areas that are not units of general

local government and in all units of general local government located within such county.

(D) Such term also includes a county that—

(i) has a combined population in excess of 175,000, has

more than 50 percent of the housing units of the area

unsewered, and has an aquifer that was designated before

March 1, 1987, a sole source aquifer by the Environmental

Protection Agency;

(ii) has taken steps, which include at least one public

referendum, to consolidate substantial public services with

an adjoining metropolitan city, and in the opinion of the

Secretary, has consolidated these services with the city in

an effort that is expected to result in the unification of the

two governments within 6 years of the date of enactment

of the Housing and Community Development Act of 1987;

(iii) had a population between 180,000 and 200,000 on

October 1, 1987, was eligible for assistance under section

119 of the Housing and Community Development Act of

1974 in fiscal year 1986, and does not contain any metropolitan cities;

(iv) has entered into a local cooperation agreement

with a metropolitan city that received assistance under

section 106 because of such classification, and has elected

under paragraph (4) to have its population included with

the population of the county for purposes of qualifying as

an urban county; except that to qualify as an urban county

under this clause (I) the county must have a combined

population of not less than 195,000, (II) more than 15 percent of the residents of the county shall be 60 years of age

or older (according to the most recent decennial census

data), (III) not less than 20 percent of the total personal

income in the county shall be from pensions, social security, disability, and other transfer programs, and (IV) not

less than 40 percent of the land within the county shall be

publicly owned and not subject to property tax levies;

(v)(I) has a population of 175,000 or more (including

the population of metropolitan cities therein), (II) before

January 1, 1975, was designated by the Secretary of Defense pursuant to section 608 of the Military Construction

Authorization Act, 1975 (Public Law 93–552; 88 Stat.

1763), as a Trident Defense Impact Area, and (III) has located therein not less than 1 unit of general local government that was classified as a metropolitan city and (a) for

which county each such unit of general local government

therein has relinquished its classification as a metropolitan city under the 6th sentence of paragraph (4), or (b)

that has entered into cooperative agreements with each

metropolitan city therein to undertake or to assist in the

undertaking of essential community development and

housing assistance activities;

(vi) has entered into a local cooperation agreement

with a metropolitan city that received assistance under

section 106 because of such classification, and has elected
15 Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS

1So in law. Probably should refer to the Defense Base Closure and Realignment Act of 1990.

2So in law.

3Margins so in law.

under paragraph (4) to have its population included with

the population of the county for the purposes of qualifying

as an urban county, except that to qualify as an urban

county under this clause, the county must—

(I) have a combined population of not less than

210,000, excluding any metropolitan city located in the

county that is not relinquishing its metropolitan city

classification, according to the 1990 decennial census

of the Bureau of the Census of the Department of

Commerce;

(II) including any metropolitan cities located in

the county, have had a decrease in population of

10,061 from 1992 to 1994, according to the estimates

of the Bureau of the Census of the Department of

Commerce; and

(III) have had a Federal naval installation that

was more than 100 years old closed by action of the

Base Closure and Realignment Commission appointed

for 1993 under the Base Closure and Realignment Act

of 1990, 1 directly resulting in a loss of employment by

more than 7,000 Federal Government civilian employees and more than 15,000 active duty military personnel, which naval installation was located within

one mile of an enterprise community designated by the

Secretary pursuant to section 1391 of the Internal

Revenue Code of 1986, which enterprise community

has a population of not less than 20,000, according to

the 1990 decennial census of the Bureau of the Census

of the Department of Commerce 2

(vii)(I) 3 has consolidated its government with one or more municipal governments, such that within the county boundaries there

are no unincorporated areas; (II) has a population of not less than

650,000; (III) for more than 10 years, has been classified as a metropolitan city for purposes of allocating and distributing funds

under section 106; and (IV) as of the date of enactment of this

clause, has over 90 percent of the county’s population within the

jurisdiction of the consolidated government; or

(viii) 3 notwithstanding any other provision of this section, any

county that was classified as an urban county pursuant to subparagraph (A) for fiscal year 1999, at the option of the county, may

hereafter remain classified as an urban county for purposes of this

Act.

(E) Any county classified as an urban county pursuant to

subparagraph (A), (B), or (C) of this paragraph, and that no

longer qualifies as an urban county under such subparagraph

in a fiscal year beginning after fiscal year 1989, shall retain its

classification as an urban county for such fiscal year and the

succeeding fiscal year, except that in such succeeding fiscal

year (i) the amount of the grant to such an urban county shall

be 50 percent of the amount calculated under section 106(b);

and (ii) the remaining 50 percent shall be added to the amount
Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS 16

1So in law. The same sentence appears twice.

allocated under section 106(d) to the State in which the urban

county is located and the urban county shall be eligible in such

succeeding fiscal year to receive a distribution from the State

allocation under section 106(d) as increased by this sentence.

(7) The term ‘‘nonentitlement area’’ means an area which

is not a metropolitan city or part of an urban county and does

not include Indian tribes.

(8) The term ‘‘population’’ means total resident population

based on data compiled by the United States Bureau of the

Census and referable to the same point or period in time.

(9) The term ‘‘extent of poverty’’ means the number of persons whose incomes are below the poverty level. Poverty levels

shall be determined by the Secretary pursuant to criteria provided by the Office of Management and Budget, taking into account and making adjustments, if feasible and appropriate and

in the sole discretion of the Secretary, for regional or area variations in income and cost of living, and shall be based on data

referable to the same point or period in time.

(10) The term ‘‘extent of housing overcrowding’’ means the

number of housing units with 1.01 or more persons per room

based on data compiled by the United States Bureau of the

Census and referable to the same point or period in time.

(11) The term ‘‘age of housing’’ means the number of existing housing units constructed in 1939 or earlier based on data

compiled by the United States Bureau of the Census and referable to the same point or period in time.

(12) The term ‘‘extent of growth lag’’ means the number of

persons who would have been residents in a metropolitan city

or urban county, in excess of the current population of such

metropolitan city or urban county, if such metropolitan city or

urban county had had a population growth rate between 1960

and the date of the most recent population count referable to

the same point or period in time equal to the population

growth rate for such period of all metropolitan cities. Where

the boundaries for a metropolitan city or urban county used for

the 1980 census have changed as a result of annexation, the

current population used to compute extent of growth lag shall

be adjusted by multiplying the current population by the ratio

of the population based on the 1980 census within the boundaries used for the 1980 census to the population based on the

1980 census within the current boundaries. Where the boundaries for a metropolitan city or urban county used for the 1980

census have changed as a result of annexation, the current

population used to compute extent of growth lag shall be adjusted by multiplying the current population by the ratio of the

population based on the 1980 census within the boundaries

used for the 1980 census to the population based on the 1980

census within the current boundaries. 1

(13) The term ‘‘housing stock’’ means the number of existing housing units based on data compiled by the United States

Bureau of the Census and referable to the same point or period

in time.
17 Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS

1Section 590 of the Quality Housing and Work Responsibility Act of 1998, title V of Pub. L.

105–276, approved October 21, 1998, provides, in part, as follows:

‘‘SEC. 590. INCOME ELIGIBILITY FOR HOME AND CDBG PROGRAMS.

‘‘(a) IN GENERAL.—The Secretary of Housing and Urban Development shall, for not less than

10 jurisdictions that are metropolitan cities or urban counties for purposes of title I of the Housing and Community Development Act of 1974, grant exceptions not later than 90 days after the

date of the enactment of this Act for such jurisdictions that provide that—

‘‘(1) * * *

‘‘(2) for purposes of the community development block grant program under title I of the

Housing and Community Development Act of 1974, the limitation based on percentage of

median income that is applicable pursuant to section 102(a)(20) for any area within the

State or unit of general local government shall be the numerical percentage that is specified

in subparagraph (A) of such section.

‘‘(b) EFFECTIVE DATE.—This section shall take effect on the date of the enactment of this Act.’’.

(14) The term ‘‘adjustment factor’’ means the ratio between

the age of housing in the metropolitan city or urban county

and the predicted age of housing in such city or county.

(15) The term ‘‘predicted age of housing’’ means the arithmetic product of the housing stock in the metropolitan city or

urban county multiplied times the ratio between the age of

housing in all metropolitan areas and the housing stock in all

metropolitan areas.

(16) The term ‘‘adjusted age of housing’’ means the arithmetic product of the age of housing in the metropolitan city or

urban county multiplied times the adjustment factor.

(17) The term ‘‘Indian tribe’’ means any Indian tribe, band,

group, and nation, including Alaska Indians, Aleuts, and Eskimos, and any Alaskan Native Village, of the United States,

which is considered an eligible recipient under the Indian SelfDetermination and Education Assistance Act (Public Law 93–

638) or was considered an eligible recipient under chapter 67

of title 31, United States Code, prior to the repeal of such

chapter.

(18) The term ‘‘Federal grant-in-aid program’’ means a program of Federal financial assistance other than loans and

other than the assistance provided by this title.

(19) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(20)(A) 1 The terms ‘‘persons of low and moderate income’’

and ‘‘low- and moderate-income persons’’ mean families and individuals whose incomes do not exceed 80 percent of the median income of the area involved, as determined by the Secretary with adjustments for smaller and larger families. The

term ‘‘persons of low income’’ means families and individuals

whose incomes do not exceed 50 percent of the median income

of the area involved, as determined by the Secretary with adjustments for smaller and larger families. The term ‘‘persons of

moderate income’’ means families and individuals whose incomes exceed 50 percent, but do not exceed 80 percent, of the

median income of the area involved, as determined by the Secretary with adjustments for smaller and larger families. For

purposes of such terms, the area involved shall be determined

in the same manner as such area is determined for purposes

of assistance under section 8 of the United States Housing Act

of 1937.
Sec. 102 COMMUNITY DEVELOPMENT BLOCK GRANTS 18

(B) The Secretary may establish percentages of median income for any area that are higher or lower than the percentages set forth in subparagraph (A), if the Secretary finds such

variations to be necessary because of unusually high or low

family incomes in such area.

(21) The term ‘‘buildings for the general conduct of government’’ means city halls, county administrative buildings, State

capitol or office buildings, or other facilities in which the legislative or general administrative affairs of the government are

conducted. Such term does not include such facilities as neighborhood service centers or special purpose buildings located in

low- and moderate-income areas that house various nonlegislative functions or services provided by government at decentralized locations.

(22) The term ‘‘microenterprise’’ means a commercial enterprise that has 5 or fewer employees, 1 or more of whom

owns the enterprise.

(23) The term ‘‘small business’’ means a business that

meets the criteria set forth in section 3(a) of the Small Business Act.

(b) Where appropriate, the definitions in subsection (a) shall be

based, with respect to any fiscal year, on the most recent data compiled by the United States Bureau of the Census and the latest

published reports of the Office of Management and Budget available ninety days prior to the beginning of such fiscal year. The Secretary may by regulation change or otherwise modify the meaning

of the terms defined in subsection (a) in order to reflect any technical change or modification thereof made subsequent to such date

by the United States Bureau of the Census or the Office of Management and Budget.

(c) One or more public agencies, including existing local public

agencies, may be designated by the chief executive officer of a State

or a unit of general local government to undertake activities assisted under this title.

(d) With respect to program years beginning with the program

year for which grants are made available from amounts appropriated for fiscal year 1982 under section 103, the population of

any unit of general local government which is included in that of

an urban county as provided in subparagraph (A)(ii) or (D) of subsection (a)(6) shall be included in the population of such urban

county for three program years beginning with the program year

in which its population was first so included and shall not otherwise be eligible for a grant under section 106 as a separate entity,

unless the urban county does not receive a grant for any year during such three-year period.

(e) Any county seeking qualification as an urban county, including any urban county seeking to continue such qualification,

shall notify, as provided in this subsection, each unit of general

local government, which is included therein and is eligible to elect

to have its population excluded from that of an urban county under

subsection (a)(6)(A)(ii)(I)(a), of its opportunity to make such an election. Such notification shall, at a time and in a manner prescribed

by the Secretary, be provided so as to provide a reasonable period

for response prior to the period for which such qualification is
19 Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS

sought. The population of any unit of general local government

which is provided such notification and which does not inform, at

a time and in a manner prescribed by the Secretary, the county of

its election to exclude its population from that of the county shall,

if the county qualifies as an urban county, be included in the population of such urban county as provided in subsection (d).

AUTHORIZATIONS

SEC. 103. ø42 U.S.C. 5303¿ The Secretary is authorized to

make grants to States, units of general local government, and Indian tribes to carry out activities in accordance with the provisions

of this title. For purposes of assistance under section 106, there are

authorized to be appropriated $4,000,000,000 for fiscal year 1993

and $4,168,000,000 for fiscal year 1994.

STATEMENT OF ACTIVITIES AND REVIEW

SEC. 104. ø42 U.S.C. 5304¿ (a)(1) Prior to the receipt in any

fiscal year of a grant under section 106(b) by any metropolitan city

or urban county, under section 106(d) by any State, or under section 106(d)(2)(B) by any unit of general local government, the

grantee shall have prepared a final statement of community development objectives and projected use of funds and shall have provided the Secretary with the certifications required in subsection

(b) and, where appropriate, subsection (c). In the case of metropolitan cities and urban counties receiving grants pursuant to section

106(b) and in the case of units of general local government receiving grants pursuant to section 106(d)(2)(B), the statement of projected use of funds shall consist of proposed community development activities. In the case of States receiving grants pursuant to

section 106(d), the statement of projected use of funds shall consist

of the method by which the States will distribute funds to units of

general local government.

(2) In order to permit public examination and appraisal of such

statements, to enhance the public accountability of grantees, and

to facilitate coordination of activities with different levels of government, the grantee shall in a timely manner—

(A) furnish citizens or, as appropriate, units of general

local government information concerning the amount of funds

available for proposed community development and housing activities and the range of activities that may be undertaken, including the estimated amount proposed to be used for activities

that will benefit persons of low and moderate income and the

plans of the grantee for minimizing displacement of persons as

a result of activities assisted with such funds and to assist persons actually displaced as a result of such activities;

(B) publish a proposed statement in such manner to afford

affected citizens or, as appropriate, units of general local government an opportunity to examine its content and to submit

comments on the proposed statement and on the community

development performance of the grantee;

(C) hold one or more public hearings to obtain the views

of citizens on community development and housing needs;
Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS 20

(D) provide citizens or, as appropriate, units of general

local government with reasonable access to records regarding

the past use of funds received under section 106 by the grantee; and

(E) provide citizens or, as appropriate, units of general

local government with reasonable notice of, and opportunity to

comment on, any substantial change proposed to be made in

the use of funds received under section 106 from one eligible

activity to another or in the method of distribution of such

funds.

In preparing the final statement, the grantee shall consider any

such comments and views and may, if deemed appropriate by the

grantee, modify the proposed statement. The final statement shall

be made available to the public, and a copy shall be furnished to

the Secretary together with the certifications required under subsection (b) and, where appropriate, subsection (c). Any final statement of activities may be modified or amended from time to time

by the grantee in accordance with the same procedures required in

this paragraph for the preparation and submission of such statement.

(3) A grant under section 106 may be made only if the grantee

certifies that it is following a detailed citizen participation plan

which—

(A) provides for and encourages citizen participation, with

particular emphasis on participation by persons of low and

moderate income who are residents of slum and blight areas

and of areas in which section 106 funds are proposed to be

used, and in the case of a grantee described in section 106(a),

provides for participation of residents in low and moderate income neighborhoods as defined by the local jurisdiction;

(B) provides citizens with reasonable and timely access to

local meetings, information, and records relating to the grantee’s proposed use of funds, as required by regulations of the

Secretary, and relating to the actual use of funds under this

title;

(C) provides for technical assistance to groups representative of persons of low and moderate income that request such

assistance in developing proposals with the level and type of

assistance to be determined by the grantee;

(D) provides for public hearings to obtain citizen views and

to respond to proposals and questions at all stages of the community development program, including at least the development of needs, the review of proposed activities, and review of

program performance, which hearings shall be held after adequate notice, at times and locations convenient to potential or

actual beneficiaries, and with accommodation for the handicapped;

(E) provides for a timely written answer to written complaints and grievances, within 15 working days where practicable; and

(F) identifies how the needs of non-English speaking residents will be met in the case of public hearings where a significant number of non-English speaking residents can be reasonably expected to participate.
21 Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS

This paragraph may not be construed to restrict the responsibility

or authority of the grantee for the development and execution of its

community development program.

(b) Any grant under section 106 shall be made only if the

grantee certifies to the satisfaction of the Secretary that—

(1) the grantee is in full compliance with the requirements

of subsection (a)(2) (A), (B), and (C) and has made the final

statement available to the public;

(2) the grant will be conducted and administered in conformity with the Civil Rights Act of 1964 and the Fair Housing

Act, and the grantee will affirmatively further fair housing;

(3) the projected use of funds has been developed so as to

give maximum feasible priority to activities which will benefit

low- and moderate-income families or aid in the prevention or

elimination of slums or blight, and the projected use of funds

may also include activities which the grantee certifies are designed to meet other community development needs having a

particular urgency because existing conditions pose a serious

and immediate threat to the health or welfare of the community where other financial resources are not available to meet

such needs, except that (A) the aggregate use of funds received

under section 106 and, if applicable, as a result of a guarantee

or a grant under section 108, during a period specified by the

grantee of not more that 3 years, shall principally benefit persons of low and moderate income in a manner that ensures

that not less than 70 percent of such funds are used for activities that benefit such persons during such period; and (B) a

grantee that borders on the Great Lakes and that experiences

significant adverse financial and physical effects due to lakefront erosion or flooding may include in the projected use of

funds activities that are clearly designed to alleviate the threat

posed, and rectify the damage caused, by such erosion or flooding if such activities will principally benefit persons of low and

moderate income and the grantee certifies that such activities

are necessary to meet other needs having a particular urgency;

(4) it has developed a community development plan pursuant to subsection (m), for the period specified by the grantee

under paragraph (3), that identifies community development

needs and specifies both short- and long-term community development objectives that have been developed in accordance

with the primary objective and requirements of this title;

(5) the grantee will not attempt to recover any capital

costs of public improvements assisted in whole or part under

section 106 or with amounts resulting from a guarantee under

section 108 by assessing any amount against properties owned

and occupied by persons of low and moderate income, including

any fee charged or assessment made as a condition of obtaining access to such public improvements, unless (A) funds received under section 106 are used to pay the proportion of such

fee or assessment that relates to the capital costs of such public improvements that are financed from revenue sources other

than under this title; or (B) for purposes of assessing any

amount against properties owned and occupied by persons of

moderate income, the grantee certifies to the Secretary that it
Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS 22

1 November 28, 1990.

2Section 14 of the Department of Housing and Urban Development Act, which is set forth

in part XII of this compilation, limits the making of lump-sum payments in providing relocation

assistance in connection any program administered by the Department of Housing and Urban

Development.

lacks sufficient funds received under section 106 to comply

with the requirements of subparagraph (A); and

(6) the grantee will comply with the other provisions of

this title and with other applicable laws.

(c) A grant may be made under section 106(b) only if the unit

of general local government certifies that it is following—

(1) a current housing affordability strategy which has been

approved by the Secretary in accordance with section 105 of

the Cranston-Gonzalez National Affordable Housing Act, or

(2) a housing assistance plan which was approved by the

Secretary during the 180-day period beginning on the date of

enactment of the Cranston-Gonzalez National Affordable Housing Act, 1 or during such longer period as may be prescribed by

the Secretary in any case for good cause.

(d)(1) A grant under section 106 or 119 may be made only if

the grantee certifies that it is following a residential

antidisplacement and relocation assistance plan. A grantee receiving a grant under section 106(a) or section 119 shall so certify to

the Secretary. A unit of general local government receiving

amounts from a State under section 106(d) shall so certify to the

State, and a unit of general local government receiving amounts

from the Secretary under section 106(d) shall so certify to the Secretary.

(2) The residential antidisplacement and relocation assistance

plan shall in connection with a development project assisted under

section 106 or 119—

(A) in the event of such displacement, provide that—

(i) governmental agencies or private developers shall

provide within the same community comparable replacement dwellings for the same number of occupants as could

have been housed in the occupied and vacant occupiable

low and moderate income dwelling units demolished or

converted to a use other than for housing for low and moderate income persons, and provide that such replacement

housing may include existing housing assisted with project

based assistance provided under section 8 of the United

States Housing Act of 1937;

(ii) such comparable replacement dwellings shall be

designed to remain affordable to persons of low and moderate income for 10 years from the time of initial occupancy;

(iii) relocation benefits shall be provided for all low or

moderate income persons who occupied housing demolished or converted to a use other than for low or moderate

income housing, 2 including reimbursement for actual and

reasonable moving expenses, security deposits, credit

checks, and other moving-related expenses, including any

interim living costs; and in the case of displaced persons

of low and moderate income, provide either—
23 Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS

(I) compensation sufficient to ensure that, for a 5-

year period, the displaced families shall not bear, after

relocation, a ratio of shelter costs to income that exceeds 30 percent; or

(II) if elected by a family, a lump-sum payment

equal to the capitalized value of the benefits available

under subclause (I) to permit the household to secure

participation in a housing cooperative or mutual housing association; and

(iv) persons displaced shall be relocated into comparable replacement housing that is—

(I) decent, safe, and sanitary;

(II) adequate in size to accommodate the occupants;

(III) functionally equivalent; and

(IV) in an area not subject to unreasonably adverse environmental conditions;

(B) provide that persons displaced shall have the right to

elect, as an alternative to the benefits under this subsection,

to receive benefits under the Uniform Relocation Assistance

and Real Property Acquisition Policies Act of 1970 (42 U.S.C.

4601 et seq.) if such persons determine that it is in their best

interest to do so; and

(C) provide that where a claim for assistance under subparagraph (A)(iv) is denied by a grantee, the claimant may appeal to the Secretary in the case of a grant under section 106

or 119 or to the appropriate State official in the case of a grant

under section 106(d), and that the decision of the Secretary or

the State official shall be final unless a court determines the

decision was arbitrary and capricious.

(3) Paragraphs (2)(A)(i) and (2)(A)(ii) shall not apply in any

case in which the Secretary finds, on the basis of objective data,

that there is available in the area an adequate supply of habitable

affordable housing for low and moderate income persons. A determination under this paragraph is final and nonreviewable.

(e) Each grantee shall submit to the Secretary, at a time determined by the Secretary, a performance and evaluation report, concerning the use of funds made available under section 106, together

with an assessment by the grantee of the relationship of such use

to the objectives identified in the grantee’s statement under subsection (a) and to the requirements of subsection (b)(3). Such report

shall also be made available to the citizens in each grantee’s jurisdiction in sufficient time to permit such citizens to comment on

such report prior to its submission, and in such manner and at

such times as the grantee may determine. The grantee’s report

shall indicate its programmatic accomplishments, the nature of and

reasons for changes in the grantee’s program objectives, indications

of how the grantee would change its programs as a result of its experiences, and an evaluation of the extent to which its funds were

used for activities that benefited low- and moderate-income persons. The report shall include a summary of any comments received by the grantee from citizens in its jurisdiction respecting its

program. The Secretary shall encourage and assist national associations of grantees eligible under section 106(d)(2)(B), national as-
Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS 24

1The effective date of the sentence was November 30, 1983.

sociations of States, and national associations of units of general

local government in nonentitlement areas to develop and recommend to the Secretary, within one year after the effective date

of this sentence, 1 uniform recordkeeping, performance reporting

and evaluation reporting, and auditing requirements for such

grantees, States, and units of general local government, respectively. Based on the Secretary’s approval of these recommendations, the Secretary shall establish such requirements for use by

such grantees, States, and units of general local government. The

Secretary shall, at least on an annual basis, make such reviews

and audits as may be necessary or appropriate to determine—

(1) in the case of grants made under section 106(b) or section 106(d)(2)(B), whether the grantee has carried out its activities and, where applicable, its housing assistance plan in a

timely manner, whether the grantee has carried out those activities and its certifications in accordance with the requirements and the primary objectives of this title and with other

applicable laws, and whether the grantee has a continuing capacity to carry out those activities in a timely manner; and

(2) in the case of grants to States made under section

106(d), whether the State has distributed funds to units of general local government in a timely manner and in conformance

to the method of distribution described in its statement, whether the State has carried out its certifications in compliance

with the requirements of this title and other applicable laws,

and whether the State has made such reviews and audits of

the units of general local government as may be necessary or

appropriate to determine whether they have satisfied the applicable performance criteria described in paragraph (1) of this

subsection.

The Secretary may make appropriate adjustments in the amount

of the annual grants in accordance with the Secretary’s findings

under this subsection. With respect to assistance made available to

units of general local government under section 106(d), the Secretary may adjust, reduce, or withdraw such assistance, or take

other action as appropriate in accordance with the Secretary’s reviews and audits under this subsection, except that funds already

expended on eligible activities under this title shall not be recaptured or deducted from future assistance to such units of general

local government.

(f) Insofar as they relate to funds provided under this title, the

financial transactions of recipients of such funds may be audited by

the General Accounting Office under such rules and regulations as

may be prescribed by the Comptroller General of the United States.

The representatives of the General Accounting Office shall have access to all books, accounts, records, reports, files, and other papers,

things, or property belonging to or in use by such recipients pertaining to such financial transactions and necessary to facilitate

the audit.

(g)(1) In order to assure that the policies of the National Environmental Policy Act of 1969 and other provisions of law which further the purposes of such Act (as specified in regulations issued by
25 Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS

the Secretary) are most effectively implemented in connection with

the expenditure of funds under this title, and to assure to the public undiminished protection of the environment, the Secretary, in

lieu of the environmental protection procedures otherwise applicable, may under regulations provide for the release of funds for particular projects to recipients of assistance under this title who assume all of the responsibilities for environmental review, decisionmaking, and action pursuant to such Act, and such other provisions

of law as the regulations of the Secretary specify, that would apply

to the Secretary were he to undertake such projects as Federal

projects. The Secretary shall issue regulations to carry out this

subsection only after consultation with the Council on Environmental Quality.

(2) The Secretary shall approve the release of funds for projects

subject to the procedures authorized by this subsection only if, at

least fifteen days prior to such approval and prior to any commitment of funds to such projects other than for purposes authorized

by section 105(a)(12) or for environmental studies, the recipient of

assistance under this title has submitted to the Secretary a request

for such release accompanied by a certification which meets the requirements of paragraph (3). The Secretary’s approval of any such

certification shall be deemed to satisfy his responsibilities under

the National Environmental Policy Act of 1969 and such other provisions of law as the regulations of the Secretary specify insofar as

those responsibilities relate to the releases of funds for projects to

be carried out pursuant thereto which are covered by such certification.

(3) A certification under the procedures authorized by this subsection shall—

(A) be in a form acceptable to the Secretary,

(B) be executed by the chief executive officer or other officer of the recipient of assistance under this title qualified

under regulations of the Secretary,

(C) specify that the recipient of assistance under this title

has fully carried out its responsibilities as described under

paragraph (1) of this subsection, and

(D) specify that the certifying officer (i) consents to assume

the status of a responsible Federal official under the National

Environmental Policy Act of 1969 and each provision of law

specified in regulations issued by the Secretary insofar as the

provisions of such Act or other such provision of law apply pursuant to paragraph (1) of this subsection, and (ii) is authorized

and consents on behalf of the recipient of assistance under this

title and himself to accept the jurisdiction of the Federal courts

for the purpose of enforcement of his responsibilities as such

an official.

(4) In the case of grants made to States pursuant to section

106(d), the State shall perform those actions of the Secretary described in paragraph (2) and the performance of such actions shall

be deemed to satisfy the Secretary’s responsibilities referred to in

the second sentence of such paragraph.

(h)(1) Units of general local government receiving assistance

under this title may receive funds, in one payment, in an amount

not to exceed the total amount designated in the grant (or, in the
Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS 26

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1992, Pub. L. 102–139, 105 Stat. 752, provides as follows:

‘‘That after September 30, 1991, notwithstanding section 909 of the Cranston-Gonzalez National

Affordable Housing Act (Public Law 101–625), no funds provided or heretofore provided in this

or any other appropriations Act shall be used to establish or supplement a revolving fund under

section 104(h) of the Housing and Community Development Act of 1974, as amended.’’.

Section 909 of the Cranston-Gonzalez National Affordable Housing Act provides as follows:

‘‘SEC. 909. AUTHORITY TO PROVIDE LUMP-SUM PAYMENTS TO REVOLVING LOAN

FUNDS.

‘‘(a) IN GENERAL.—Notwithstanding any other provision of law, units of general local government receiving assistance under title I of the Housing and Community Development Act of

1974 may receive funds in one payment for use in establishing or supplementing revolving loan

funds in the manner provided under section 104(h) of such Act (42 U.S.C. 5304(h)).

‘‘(b) APPLICABILITY.—This section shall apply to funds approved in appropriations Acts for

use under title I of the Housing and Community Development Act of 1974 for fiscal year 1992

and any fiscal year thereafter.’’.

case of a unit of general local government receiving a distribution

from a State pursuant to section 106(d), not to exceed the total

amount of such distribution) for use in establishing a revolving

loan fund which is to be established in a private financial institution and which is to be used to finance rehabilitation activities assisted under this title. 1 Rehabilitation activities authorized under

this section shall begin within 45 days after receipt of such payment and substantial disbursements from such fund must begin

within 180 days after receipt of such payment.

(2) The Secretary shall establish standards for such cash payments which will insure that the deposit result in appropriate benefits in support of the recipient’s rehabilitation program. These

standards shall be designed to assure that the benefits to be derived from the local program include, at a minimum, one or more

of the following elements, or such other criteria as determined by

the Secretary—

(A) leverage of community development block grant funds

so that participating financial institutions commit private

funds for loans in the rehabilitation program in amounts substantially in excess of deposit of community development

funds;

(B) commitment of private funds for rehabilitation loans at

below-market interest rates or with repayment periods lengthened or at higher risk than would normally be taken;

(C) provision of administrative services in support of the

rehabilitation program by the participating lending institutions; and

(D) interest earned on such cash deposits shall be used in

a manner which supports the community rehabilitation program.

(i) In any case in which a metropolitan city is located, in whole

or in part, within an urban county, the Secretary may, upon the

joint request of such city and county, approve the inclusion of the

metropolitan city as part of the urban county for purposes of submitting a statement under section 104(a) and carrying out activities under this title.

(j) Notwithstanding any other provision of law, any unit of general local government may retain any program income that is realized from any grant made by the Secretary, or any amount distributed by a State, under section 106 if (1) such income was realized

after the initial disbursement of the funds received by such unit of
27 Sec. 104 COMMUNITY DEVELOPMENT BLOCK GRANTS

general local government under such section; and (2) such unit of

general local government has agreed that it will utilize the program income for eligible community development activities in accordance with the provisions of this title; except that the Secretary

may, by regulation, exclude from consideration as program income

any amounts determined to be so small that compliance with this

subsection creates an unreasonable administrative burden on the

unit of general local government. A State may require as a condition of any amount distributed by such State under section 106(d)

that a unit of general local government shall pay to such State any

such income to be used by such State to fund additional eligible

community development activities, except that such State shall

waive such condition to the extent such income is applied to continue the activity from which such income was derived.

(k) Each grantee shall provide for reasonable benefits to any

person involuntarily and permanently displaced as a result of the

use of assistance received under this title to acquire or substantially rehabilitate property.

(l) PROTECTION OF INDIVIDUALS ENGAGING IN NON-VIOLENT

CIVIL RIGHTS DEMONSTRATIONS.—No funds authorized to be appropriated under section 103 of this Act may be obligated or expended

to any unit of general local government that—

(1) fails to adopt and enforce a policy prohibiting the use

of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in nonviolent civil

rights demonstrations; or

(2) fails to adopt and enforce a policy of enforcing applicable State and local laws against physically barring entrance to

or exit from a facility or location which is the subject of such

non-violent civil rights demonstration within its jurisdiction.

(m) COMMUNITY DEVELOPMENT PLANS.—

(1) IN GENERAL.—Prior to the receipt in any fiscal year of

a grant from the Secretary under subsection (b), (d)(1), or

(d)(2)(B) of section 106, each recipient shall have prepared and

submitted in accordance with this subsection and in such

standardized form as the Secretary shall, by regulation, prescribe a description of its priority nonhousing community development needs eligible for assistance under this title.

(2) LOCAL GOVERNMENTS.—In the case of a recipient that

is a unit of general local government—

(A) prior to the submission required by paragraph (1),

the recipient shall, to the extent practicable, notify adjacent units of general local government and solicit the

views of citizens on priority nonhousing community development needs; and

(B) the description required under paragraph (1) shall

be submitted to the Secretary, the State, and any other

unit of general local government within which the recipient is located, in such standardized form as the Secretary

shall, by regulation, prescribe.

(3) STATES.—In the case of a recipient that is a State, the

description required by paragraph (1)—

(A) shall include only the needs within the State that

affect more than one unit of general local government and
Sec. 105 COMMUNITY DEVELOPMENT BLOCK GRANTS 28

involve activities typically funded by such States under

this title; and

(B) shall be submitted to the Secretary in such standard form as the Secretary, by regulation, shall prescribe.

(4) EFFECT OF SUBMISSION.—A submission under this subsection shall not be binding with respect to the use or distribution of amounts received under section 106.

ELIGIBLE ACTIVITIES

SEC. 105. ø42 U.S.C. 5305¿ (a) Activities assisted under this

title may include only—

(1) the acquisition of real property (including air rights,

water rights, and other interests therein) which is (A) blighted,

deteriorated, deteriorating, undeveloped, or inappropriately developed from the standpoint of sound community development

and growth; (B) appropriate for rehabilitation or conservation

activities; (C) appropriate for the preservation or restoration of

historic sites, the beautification of urban land, the conservation

of open spaces, natural resources, and scenic areas, the provision of recreational opportunities, or the guidance of urban development; (D) to be used for the provision of public works, facilities, and improvements eligible for assistance under this

title; or (E) to be used for other public purposes;

(2) the acquisition, construction, reconstruction, or installation (including design features and improvements with respect

to such construction, reconstruction, or installation that promote energy efficiency) of public works, facilities (except for

buildings for the general conduct of government), and site or

other improvements;

(3) code enforcement in deteriorated or deteriorating areas

in which such enforcement, together with public or private improvements or services to be provided, may be expected to arrest the decline of the area;

(4) clearance, demolition, removal, reconstruction, and rehabilitation (including rehabilitation which promotes energy efficiency) of buildings and improvements (including interim assistance, and financing public or private acquisition for reconstruction or rehabilitation, and reconstruction or rehabilitation,

of privately owned properties, and including the renovation of

closed school buildings);

(5) special projects directed to the removal of material and

architectural barriers which restrict the mobility and accessibility of elderly and handicapped persons;

(6) payments to housing owners for losses of rental income

incurred in holding for temporary periods housing units to be

utilized for the relocation of individuals and families displaced

by activities under this title;

(7) disposition (through sale, lease, donation, or otherwise)

of any real property acquired pursuant to this title or its retention for public purposes;

(8) provision of public services, including but not limited to

those concerned with employment, crime prevention, child

care, health, drug abuse, education, energy conservation, welfare or recreation needs, if such services have not been pro-
29 Sec. 105 COMMUNITY DEVELOPMENT BLOCK GRANTS

vided by the unit of general local government (through funds

raised by such unit, or received by such unit from the State in

which it is located) during any part of the twelve-month period

immediately preceding the date of submission of the statement

with respect to which funds are to be made available under

this title, and which are to be used for such services, unless

the Secretary finds that the discontinuation of such services

was the result of events not within the control of the unit of

general local government, except that not more that 15 per

centum of the amount of any assistance to a unit of general

local government (or in the case of nonentitled communities

not more than 15 per centum statewide) under this title including program income may be used for activities under this paragraph unless such unit of general local government used more

than 15 percent of the assistance received under this title for

fiscal year 1982 or fiscal year 1983 for such activities (excluding any assistance received pursuant to Public Law 98–8), in

which case such unit of general local government may use not

more than the percentage or amount of such assistance used

for such activities for such fiscal year, whichever method of calculation yields the higher amount, except that of any amount

of assistance under this title (including program income) in

each of fiscal years 1993 through 2003 to the City of Los Angeles and County of Los Angeles, each such unit of general government may use not more than 25 percent in each such fiscal

year for activities under this paragraph, and except that of any

amount of assistance under this title (including program income) in each of fiscal years 1999, 2000, and 2001, to the City

of Miami, such city may use not more than 25 percent in each

fiscal year for activities under this paragraph;

(9) payment of the non-Federal share required in connection with a Federal grant-in-aid program undertaken as part

of activities assisted under this title;

(10) payment of the cost of completing a project funded

under title I of the Housing Act of 1949;

(11) relocation payments and assistance for displaced individuals, families, businesses, organizations, and farm operations, when determined by the grantee to be appropriate;

(12) activities necessary (A) to develop a comprehensive

community development plan, and (B) to develop a policy-planning-management capacity so that the recipient of assistance

under this title may more rationally and effectively (i) determine its needs, (ii) set long-term goals and short-term objectives, (iii) devise programs and activities to meet these goals

and objectives, (iv) evaluate the progress of such programs in

accomplishing these goals and objectives, and (v) carry out

management, coordination, and monitoring of activities necessary for effective planning implementation;

(13) payment of reasonable administrative costs related to

establishing and administering federally approved enterprise

zones and payment of reasonable administrative costs and carrying charges related to (A) administering the HOME program

under title II of the Cranston-Gonzalez National Affordable

Housing Act; and (B) the planning and execution of community
Sec. 105 COMMUNITY DEVELOPMENT BLOCK GRANTS 30

development and housing activities, including the provision of

information and resources to residents of areas in which community development and housing activities are to be concentrated with respect to the planning and execution of such

activities, and including the carrying out of activities as described in section 701(e) of the Housing Act of 1954 on the date

prior to the date of enactment of the Housing and Community

Development Amendments of 1981;

(14) provision of assistance including loans (both interim

and long-term) and grants for activities which are carried out

by public or private nonprofit entities, including (A) acquisition

of real property; (B) acquisition, construction, reconstruction,

rehabilitation, or installation of (i) public facilities (except for

buildings for the general conduct of government), site improvements, and utilities, and (ii) commercial or industrial buildings

or structures and other commercial or industrial real property

improvements; and (C) planning;

(15) assistance to neighborhood-based nonprofit organizations, local development corporations, nonprofit organizations

serving the development needs of the communities in nonentitlement areas, or entities organized under section 301(d) of

the Small Business Investment Act of 1958 to carry out a

neighborhood revitalization or community economic development or energy conservative project in furtherance of the objectives of section 101(c), and assistance to neighborhood-based

nonprofit organizations, or other private or public nonprofit organizations, for the purpose of assisting, as part of neighborhood revitalization or other community development, the development of shared housing opportunities (other than by construction of new facilities) in which elderly families (as defined

in section 3(b)(3) of the United States Housing Act of 1937)

benefit as a result of living in a dwelling in which the facilities

are shared with others in a manner that effectively and efficiently meets the housing needs of the residents and thereby

reduces their cost of housing;

(16) activities necessary to the development of energy use

strategies related to a recipient’s development goals, to assure

that those goals are achieved with maximum energy efficiency,

including items such as—

(A) an analysis of the manner in, and the extent to,

which energy conservation objectives will be integrated

into local government operations, purchasing and service

delivery, capital improvements, budgeting, waste management, district heating and cooling, land use planning and

zoning, and traffic control, parking, and public transportation functions; and

(B) a statement of the actions the recipient will take

to foster energy conservation and the use of renewable energy resources in the private sector, including the enactment and enforcement of local codes and ordinances to encourage or mandate energy conservation or use of renewable energy resources, financial and other assistance to be

provided (principally for the benefit of low- and moderateincome persons) to make energy conserving improvements
31 Sec. 105 COMMUNITY DEVELOPMENT BLOCK GRANTS

to residential structures and any other proposed energy

conservation activities;

(17) provision of assistance to private, for-profit entities,

when the assistance is appropriate to carry out an economic

development project (that shall minimize, to the extent practicable, displacement of existing businesses and jobs in neighborhoods) that—

(A) creates or retains jobs for low- and moderate-income persons;

(B) prevents or eliminates slums and blight;

(C) meets urgent needs;

(D) creates or retains businesses owned by community

residents;

(E) assists businesses that provide goods or services

needed by, and affordable to, low- and moderate-income

residents; or

(F) provides technical assistance to promote any of the

activities under subparagraphs (A) through (E);

(18) the rehabilitation or development of housing assisted

under section 17 of the United States Housing Act of 1937;

(19) provision of technical assistance to public or nonprofit

entities to increase the capacity of such entities to carry out eligible neighborhood revitalization or economic development activities, which assistance shall not be considered a planning

cost as defined in paragraph (12) or administrative cost as defined in paragraph (13);

(20) housing services, such as housing counseling in connection with tenant-based rental assistance and affordable

housing projects assisted under title II of the Cranston-Gonzalez National Affordable Housing Act, energy auditing, preparation of work specifications, loan processing, inspections, tenant selection, management of tenant-based rental assistance,

and other services related to assisting owners, tenants, contractors, and other entities, participating or seeking to participate in housing activities assisted under title II of the Cranston-Gonzalez National Affordable Housing Act;

(21) provision of assistance by recipients under this title to

institutions of higher education having a demonstrated capacity to carry out eligible activities under this subsection for carrying out such activities;

(22) provision of assistance to public and private organizations, agencies, and other entities (including nonprofit and forprofit entities) to enable such entities to facilitate economic development by—

(A) providing credit (including providing direct loans

and loan guarantees, establishing revolving loan funds,

and facilitating peer lending programs) for the establishment, stabilization, and expansion of microenterprises;

(B) providing technical assistance, advice, and business support services (including assistance, advice, and

support relating to developing business plans, securing

funding, conducting marketing, and otherwise engaging in

microenterprise activities) to owners of microenterprises

and persons developing microenterprises; and
Sec. 105 COMMUNITY DEVELOPMENT BLOCK GRANTS 32

1So in law.

2So in law.

3So in law. There is no paragraph (24).

Before October 1, 1995, the paragraph designated (25) of this subsection provided as follows:

‘‘(25) provision of direct assistance to facilitate and expand homeownership among persons

of low and moderate income (except that such assistance shall not be considered a public

service for purposes of paragraph (8)) by using such assistance to—

‘‘(A) subsidize interest rates and mortgage principal amounts for low- and moderateincome homebuyers;

‘‘(B) finance the acquisition by low- and moderate-income homebuyers of housing that

is occupied by the homebuyers;

‘‘(C) acquire guarantees for mortgage financing obtained by low- and moderate-income

homebuyers from private lenders (except that amounts received under this title may not

be used under this subparagraph to directly guarantee such mortgage financing and

grantees under this title may not directly provide such guarantees);

‘‘(D) provide up to 50 percent of any downpayment required from low- or moderateincome homebuyers; or

‘‘(E) pay reasonable closing costs (normally associated with the purchase of a home)

incurred by a low- or moderate-income homebuyers.’’.

Pursuant to section 907(b)(2) of the Cranston-Gonzalez National Affordable Housing Act,

such paragraph was repealed effective October 1, 1995 (and conforming amendments redesignating other paragraphs were made).

The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, Pub. L. 104–204, 110 Stat. 2887, approved September 26, 1996, provides ‘‘[t]hat for fiscal year 1997 and thereafter, section 105(a)(25) of such

Act, shall continue to be effective and the termination and conforming provisions of section

907(b)(2) of the Cranston-Gonzalez National Affordable Housing Act shall not be effective’’.

(C) providing general support (such as peer support

programs and counseling) to owners of microenterprises

and persons developing microenterprises; and 1

(23) activities necessary to make essential repairs and to

pay operating expenses necessary to maintain the habitability

of housing units acquired through tax foreclosure proceedings

in order to prevent abandonment and deterioration of such

housing in primarily low- and moderate-income neighborhoods. 2

(25) 3 lead-based paint hazard evaluation and reduction, as

defined in section 1004 of the Residential Lead-Based Paint

Hazard Reduction Act of 1992.

(b) Upon the request of the recipient of assistance under this

title, the Secretary may agree to perform administrative services

on a reimbursable basis on behalf of such recipient in connection

with loans or grants for the rehabilitation of properties as authorized under subsection (a)(4).

(c)(1) In any case in which an assisted activity described in

paragraph (14) or (17) of subsection (a) is identified as principally

benefiting persons of low and moderate income, such activity

shall—

(A) be carried out in a neighborhood consisting predominately of persons of low and moderate income and provide

services for such persons; or

(B) involve facilities designed for use predominately by

persons of low and moderate income; or

(C) involve employment of persons, a majority of whom are

persons of low and moderate income.

(2)(A) In any case in which an assisted activity described in

subsection (a) is designed to serve an area generally and is clearly

designed to meet identified needs of persons of low and moderate

income in such area, such activity shall be considered to principally

benefit persons of low and moderate income if (i) not less than 51

percent of the residents of such area are persons of low and mod-
33 Sec. 105 COMMUNITY DEVELOPMENT BLOCK GRANTS

erate income; (ii) in any metropolitan city or urban county, the area

served by such activity is within the highest quartile of all areas

within the jurisdiction of such city or county in terms of the degree

of concentration of persons of low and moderate income; or (iii) the

assistance for such activity is limited to paying assessments (including any charge made as a condition of obtaining access) levied

against properties owned and occupied by persons of low and moderate income to recover the capital cost for a public improvement.

(B) The requirements of subparagraph (A) do not prevent the

use of assistance under this title for the development, establishment, and operation for not to exceed 2 years after its establishment of a uniform emergency telephone number system if the Secretary determines that—

(i) such system will contribute substantially to the safety

of the residents of the area served by such system;

(ii) not less than 51 percent of the use of the system will

be by persons of low and moderate income; and

(iii) other Federal funds received by the grantee are not

available for the development, establishment, and operation of

such system due to the insufficiency of the amount of such

funds, the restrictions on the use of such funds, or the prior

commitment of such funds for other purposes by the grantee.

The percentage of the cost of the development, establishment, and

operation of such a system that may be paid from assistance under

this title and that is considered to benefit low and moderate income

persons is the percentage of the population to be served that is

made up of persons of low and moderate income.

(3) Any assisted activity under this title that involves the acquisition or rehabilitation of property to provide housing shall be

considered to benefit persons of low and moderate income only to

the extent such housing will, upon completion, be occupied by such

persons.

(4) For the purposes of subsection (c)(1)(C)—

(A) if an employee resides in, or the assisted activity

through which he or she is employed, is located in a census

tract that meets the Federal enterprise zone eligibility criteria,

the employee shall be presumed to be a person of low- or moderate-income; or

(B) if an employee resides in a census tract where not less

than 70 percent of the residents have incomes at or below 80

percent of the area median, the employee shall be presumed to

be a person of low or moderate income.

(d) TRAINING PROGRAM.—The Secretary shall implement, using

funds recaptured pursuant to section 119(o), an on-going education

and training program for officers and employees of the Department,

especially officers and employees of area and other field offices of

the Department, who are responsible for monitoring and administering activities pursuant to paragraphs (14), (15), and (17) of

subsection (a) for the purpose of ensuring that (A) such personnel

possess a thorough understanding of such activities; and (B) regulations and guidelines are implemented in a consistent fashion.

(e) GUIDELINES FOR EVALUATING AND SELECTING ECONOMIC

DEVELOPMENT PROJECTS.—
Sec. 105 COMMUNITY DEVELOPMENT BLOCK GRANTS 34

(1) ESTABLISHMENT.—The Secretary shall establish, by regulation, guidelines to assist grant recipients under this title to

evaluate and select activities described in section 105(a) (14),

(15), and (17) for assistance with grant amounts. The Secretary

shall not base a determination of eligibility of the use of funds

under this title for such assistance solely on the basis that the

recipient fails to achieve one or more of the guidelines’ objectives as stated in paragraph (2).

(2) PROJECT COSTS AND FINANCIAL REQUIREMENTS.—The

guidelines established under this subsection shall include the

following objectives:

(A) The project costs of such activities are reasonable.

(B) To the extent practicable, reasonable financial support has been committed for such activities from non-Federal sources prior to disbursement of Federal funds.

(C) To the extent practicable, any grant amounts to be

provided for such activities do not substantially reduce the

amount of non-Federal financial support for the activity.

(D) Such activities are financially feasible.

(E) To the extent practicable, such activities provide

not more than a reasonable return on investment to the

owner.

(F) To the extent practicable, grant amounts used for

the costs of such activities are disbursed on a pro rata

basis with amounts from other sources.

(3) PUBLIC BENEFIT.—The guidelines established under

this subsection shall provide that the public benefit provided

by the activity is appropriate relative to the amount of assistance provided with grant amounts under this title.

(f) ASSISTANCE TO FOR-PROFIT ENTITIES.—In any case in which

an activity described in paragraph (17) of subsection (a) is provided

assistance such assistance shall not be limited to activities for

which no other forms of assistance are available or could not be accomplished but for that assistance.

(g) MICROENTERPRISE AND SMALL BUSINESS PROGRAM REQUIREMENTS.—In developing program requirements and providing assistance pursuant to paragraph (17) of subsection (a) to a microenterprise or small business, the Secretary shall—

(1) take into account the special needs and limitations

arising

(2) not consider training, technical assistance, or other

support services costs provided to small businesses or microenterprises or to grantees and subgrantees to develop the capacity to provide such assistance, as a planning cost pursuant

to section 105(a)(12) or an administrative cost pursuant to section 105(a)(13).

(h) PROHIBITION ON USE OF ASSISTANCE FOR EMPLOYMENT RELOCATION ACTIVITIES.—Notwithstanding any other provision of law,

no amount from a grant under section 106 made in fiscal year 1999

or any succeeding fiscal year may be used to assist directly in the

relocation of any industrial or commercial plant, facility, or operation, from 1 area to another area, if the relocation is likely to result in a significant loss of employment in the labor market area

from which the relocation occurs.
35 Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS

ALLOCATION AND DISTRIBUTION OF FUNDS

SEC. 106. ø42 U.S.C. 5306¿ (a)(1) For each fiscal year, of the

amount approved in an appropriation Act under section 103 for

grants in any year (excluding the amounts provided for use in accordance with section 107), the Secretary shall reserve for grants

to Indian tribes 1 percent of the amount appropriated under such

section. The Secretary shall provide for distribution of amounts

under this paragraph to Indian tribes on the basis of a competition

conducted pursuant to specific criteria for the selection of Indian

tribes to receive such amounts. The criteria shall be contained in

a regulation promulgated by the Secretary after notice and public

comment. Notwithstanding any other provision of this Act, such

grants to Indian tribes shall not be subject to the requirements of

section 104, except subsections (f), (g), and (k) of such section.

(2) After reserving such amounts for Indian tribes, the Secretary shall allocate amounts provided for use under section 107.

(3) Of the amount remaining after allocations pursuant to

paragraphs (1) and (2), 70 percent shall be allocated by the Secretary to metropolitan cities and urban counties. Except as otherwise specifically authorized, each metropolitan city and urban

county shall be entitled to an annual grant from such allocation in

an amount not exceeding its basic amount computed pursuant to

paragraph (1) or (2) of subsection (b).

(b)(1) The Secretary shall determine the amount to be allocated

to each metropolitan city which shall be the greater of an amount

that bears the same ratio to the allocation for all metropolitan

areas as either—

(A) the average of the ratios between—

(i) the population of that city and the population of all

metropolitan areas;

(ii) the extent of poverty in that city and the extent of

poverty in all metropolitan areas; and

(iii) the extent of housing overcrowding in that city,

and the extent of housing overcrowding in all metropolitan

areas; or

(B) the average of the ratios between—

(i) the extent of growth lag in that city and the extent

of growth lag in all metropolitan cities;

(ii) the extent of poverty in that city and the extent of

poverty in all metropolitan areas; and

(iii) the age of housing in that city and the age of

housing in all metropolitan areas.

(2) The Secretary shall determine the amount to be allocated

to each urban county, which shall be the greater of an amount that

bears the same ratio to the allocation for all metropolitan areas as

either—

(A) the average of the ratios between—

(i) the population of that urban county and the population of all metropolitan areas;

(ii) the extent of poverty in that urban county and the

extent of poverty in all metropolitan areas; and
Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS 36

(iii) the extent of housing overcrowding in that urban

county and the extent of housing overcrowding in all metropolitan areas; or

(B) the average of the ratios between—

(i) the extent of growth lag in that urban county and

the extent of growth lag in all metropolitan cities and

urban counties;

(ii) the extent of poverty in that urban county and the

extent of poverty in all metropolitan areas; and

(iii) the age of housing in that urban county and the

age of housing in all metropolitan areas.

(3) In determining the average of ratios under paragraphs

(1)(A) and (2)(A), the ratio involving the extent of poverty shall be

counted twice, and each of the other ratios shall be counted once;

and in determining the average of ratios under paragraphs (1)(B)

and (2)(B), the ratio involving the extent of growth lag shall be

counted once, the ratio involving the extent of poverty shall be

counted one and one-half times, and the ratio involving the age of

housing shall be counted two and one-half times.

(4) In computing amounts or exclusions under this section with

respect to any urban county, there shall be excluded units of general local government located in the county the populations of

which are not counted in determining the eligibility of the urban

county to receive a grant under this subsection, except that there

shall be included any independent city (as defined by the Bureau

of the Census) which—

(A) is not part of any county;

(B) is not eligible for a grant pursuant to subsection (b)(1);

(C) is contiguous to the urban county;

(D) has entered into cooperation agreements with the

urban county which provide that the urban county is to undertake or to assist in the undertaking of essential community development and housing assistance activities with respect to

such independent city; and

(E) is not included as a part of any other unit of general

local government for purposes of this section.

Any independent city which is included in any fiscal year for purposes of computing amounts pursuant to the preceding sentence

shall not be eligible to receive assistance under subsection (d) with

respect to such fiscal year.

(5) In computing amounts under this section with respect to

any urban county, there shall be included all of the area of any

unit of local government which is part of, but is not located entirely

within the boundaries of, such urban county if the part of such unit

of local government which is within the boundaries of such urban

county would otherwise be included in computing the amount for

such urban county under this section, and if the part of such unit

of local government which is not within the boundaries of such

urban county is not included as a part of any other unit of local

government for the purpose of this section. Any amount received by

such urban county under this section may be used with respect to

the part of such unit of local government which is outside the

boundaries of such urban county.
37 Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS

(6)(A) Where data are available, the amount determined under

paragraph (1) for a metropolitan city that has been formed by the

consolidation of one or more metropolitan cities with an urban

county shall be equal to the sum of the amounts that would have

been determined under paragraph (1) for the metropolitan city or

cities and the balance of the consolidated government, if such consolidation had not occurred. This paragraph shall apply only to any

consolidation that—

(i) included all metropolitan cities that received grants

under this section for the fiscal year preceding such consolidation and that were located within the urban county;

(ii) included the entire urban county that received a grant

under this section for the fiscal year preceding such consolidation; and

(iii) took place on or after January 1, 1983.

(B) The population growth rate of all metropolitan cities referred to in section 102(a)(12) shall be based on the population of

(i) metropolitan cities other than consolidated governments the

grant for which is determined under this paragraph; and (ii) cities

that were metropolitan cities before their incorporation into consolidated governments. For purposes of calculating the entitlement

share for the balance of the consolidated government under this

paragraph, the entire balance shall be considered to have been an

urban county.

(c)(1) Except as provided in paragraphs (2) and (4), any

amounts allocated to a metropolitan city or an urban county pursuant to the preceding provisions of this section which are not received by the city or county for a fiscal year because of failure to

meet the requirements of subsection (a), (b), (c), or (d) of section

104, or which become available as a result of actions under section

104(e) or 111, shall be reallocated in the succeeding fiscal year to

the other metropolitan cities and urban counties in the same metropolitan area which certify to the satisfaction of the Secretary that

they would be adversely affected by the loss of such amounts from

the metropolitan area. The amount of the share of funds reallocated under this paragraph for any metropolitan city or urban

county shall bear the same ratio to the total of such reallocated

funds in the metropolitan area as the amount of funds awarded to

the city or county for the fiscal year in which the reallocated funds

become available bears to the total amount of funds awarded to all

metropolitan cities and urban counties in the same metropolitan

area for that fiscal year, except that—

(A) in determining the amounts awarded to cities or counties for purposes of calculating shares pursuant to this sentence, there shall be excluded from the award of any city or

county any amounts which become available as a result of actions against such city or county under section 111;

(B) in reallocating amounts resulting from an action under

section 104(e) or section 111, a city or county against whom

any such action was taken in a fiscal year shall be excluded

from a calculation of share for purposes of reallocating, in the

succeeding year, the amounts becoming available as a result of

such action; and
Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS 38

(C) in no event may the share of reallocated funds for any

metropolitan city or urban county exceed 25 per centum of the

amount awarded to the city or county under section 106(b) for

the fiscal year in which the reallocated funds under this paragraph become available.

Any amounts allocated under section 106(b) which become available for reallocation and for which no metropolitan city or urban

county qualifies under this paragraph shall be added to amounts

available for allocation under such section 106(b) in the succeeding

fiscal year.

(2) Notwithstanding any other provision of this title, the Secretary shall make grants from amounts authorized for use under

section 106(b) by the Department of Housing and Urban Development—Independent Agencies Appropriation Act, 1981, in accordance with the provisions of this title which governed grants with

respect to such amounts, as such provisions existed prior to the effective date of the Housing and Community Development Amendments of 1981, except that any such amounts which are not obligated before January 1, 1982, shall be reallocated in accordance

with paragraph (1).

(3) Notwithstanding the provisions of paragraph (1), the Secretary may upon request transfer responsibility to any metropolitan city for the administration of any amounts received, but not obligated, by the urban county in which such city is located if (A)

such city was an included unit of general local government in such

county prior to the qualification of such city as a metropolitan city;

(B) such amounts were designated and received by such county for

use in such city prior to the qualification of such city as a metropolitan city; and (C) such city and county agree to such transfer of

responsibility for the administration of such amounts.

(4)(A) Notwithstanding paragraph (1), in the event of a major

disaster declared by the President under the Robert T. Stafford

Disaster Relief and Emergency Assistance Act, the Secretary shall

make available, to metropolitan cities and urban counties located

or partially located in the areas affected by the disaster, any

amounts that become available as a result of actions under section

104(e) or 111.

(B) In using any amounts that become available as a result of

actions under section 104(e) or 111, the Secretary shall give priority to providing emergency assistance under this paragraph.

(C) The Secretary may provide assistance to any metropolitan

city or urban county under this paragraph only to the extent necessary to meet emergency community development needs, as the

Secretary shall determine (subject to subparagraph (D)), of the city

or county resulting from the disaster that are not met with

amounts otherwise provided under this title, the Robert T. Stafford

Disaster Relief and Emergency Assistance Act, and other

sources of assistance.

(D) Amounts provided to metropolitan cities and urban counties under this paragraph may be used only for eligible activities

under section 105, and in implementing this section, the Secretary

shall evaluate the natural hazards to which any permanent replacement housing is exposed and shall take appropriate action to

mitigate such hazards.
39 Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS

(E) The Secretary shall provide for applications (or amended

applications and statements under section 104) for assistance

under this paragraph.

(F) A metropolitan city or urban county eligible for assistance

under this paragraph may receive such assistance only in each of

the fiscal years ending during the 3-year period beginning on the

date of the declaration of the disaster by the President.

(G) This paragraph may not be construed to require the Secretary to reserve any amounts that become available as a result of

actions under section 104(e) or 111 for assistance under this paragraph if, when such amounts are to be reallocated under paragraph

(1), no metropolitan city or urban county qualifies for assistance

under this paragraph.

(d)(1) Of the amount approved in an appropriations Act under

section 103 that remains after allocations pursuant to paragraphs

(1) and (2) of subsection (a), 30 per centum shall be allocated

among the States for use in nonentitlement areas. The allocation

for each State shall be the greater of an amount that bears the

same ratio to the allocation for such areas of all States available

under this subparagraph as either—

(A) the average of the ratios between—

(i) the population of the nonentitlement areas in that

State and the population of the nonentitlement areas of all

States;

(ii) the extent of poverty in the nonentitlement areas

in that State and the extent of poverty in the nonentitlement areas of all States; and

(iii) the extent of housing overcrowding in the nonentitlement areas in that State and the extent of housing

overcrowding in the nonentitlement areas of all States; or

(B) the average of the ratios between—

(i) the age of housing in the nonentitlement areas in

that State and the age of housing in the nonentitlement

areas of all States;

(ii) the extent of poverty in the nonentitlement areas

in that State and the extent of poverty in the nonentitlement areas of all States; and

(iii) the population of the nonentitlement areas in that

State and the population of the nonentitlement areas of all

States.

In determining the average of the ratios under subparagraph (A)

the ratio involving the extent of poverty shall be counted twice and

each of the other ratios shall be counted once; and in determining

the average of the ratios under subparagraph (B), the ratio involving the age of housing shall be counted two and one-half times, the

ratio involving the extent of poverty shall be counted one and onehalf times, and the ratio involving population shall be counted

once. The Secretary shall, in order to compensate for the discrepancy between the total of the amounts to be allocated under this

paragraph and the total of the amounts available under such paragraph, make a pro rata reduction of each amount allocated to the

nonentitlement areas in each State under such paragraph so that

the nonentitlement areas in each State will receive an amount

which represents the same percentage of the total amount avail-
Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS 40

able under such paragraph as the percentage which the nonentitlement areas of the same State would have received under such

paragraph if the total amount available under such paragraph had

equaled the total amount which was allocated under such paragraph.

(2)(A) Amounts allocated under paragraph (1) shall be distributed to units of general local government located in nonentitlement

areas of the State to carry out activities in accordance with the provisions of this title—

(i) by a State that has elected, in such manner and at such

time as the Secretary shall prescribe, to distribute such

amounts, consistent with the statement submitted under section 104(a); or

(ii) by the Secretary, in any case described in subparagraph (B), for use by units of general local government in accordance with paragraph (3)(B).

Any election to distribute funds made after the close of fiscal year

1984 is permanent and final. Notwithstanding any provision of this

title, the Secretary shall make grants from amounts authorized for

use in nonentitlement areas by the Department of Housing and

Urban Development—Independent Agencies Appropriation Act,

1981, in accordance with the provisions of this title which governed

grants with respect to such amounts, as such provisions existed

prior to the effective date of the Housing and Community Development Amendments of 1981. Any amounts under the preceding sentence (except amounts for which preapplications have been approved by the Secretary prior to October 1, 1981, and which have

been obligated by January 1, 1982) which are or become available

for obligation after fiscal year 1981 shall be available for distribution in the State in which the grants from such amounts were

made, by the State or by the Secretary, whichever is distributing

the State allocation in the fiscal year in which such amounts are

or become available.

(B) The Secretary shall distribute amounts allocated under

paragraph (1) if the State has not elected to distribute such

amounts.

(C) To receive and distribute amounts allocated under paragraph (1), the State must certify that it, with respect to units of

general local government in nonentitlement areas—

(i) engages or will engage in planning for community development activities;

(ii) provides or will provide technical assistance to units of

general local government in connection with community development programs;

(iii) will not refuse to distribute such amounts to any unit

of general local government on the basis of the particular eligible activity selected by such unit of general local government

to meet its community development needs, except that this

clause may not be considered to prevent a State from establishing priorities in distributing such amounts on the basis of

the activities selected; and

(iv) has consulted with local elected officials from among

units of general local government located in nonentitlement
41 Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS

areas of that State in determining the method of distribution

of funds required by subparagraph (A).

(D) To receive and distribute amounts allocated under paragraph (1), the State shall certify that each unit of general local government to be distributed funds will be required to identify its community development and housing needs, including the needs of low

and moderate income persons, and the activities to be undertaken

to meet such needs.

(3)(A) If the State receives and distributes such amounts, it

shall be responsible for the administration of funds so distributed.

The State shall pay from its own resources all administrative expenses incurred by the State in carrying out its responsibilities

under this title, or section 17(e)(1) of the United States Housing

Act of 1937, except that from the amounts received for distribution

in nonentitlement areas, the State may deduct an amount to cover

such expenses and its administrative expenses under section 810 of

this Act not to exceed the sum of $100,000 plus 50 percent of any

such expenses under this title in excess of $100,000. Amounts deducted in excess of $100,000 shall not exceed 2 percent of the

amount so received.

(B) If the Secretary distributes such amounts, the distribution

shall be made in accordance with determinations of the Secretary

pursuant to statements submitted and the other requirements of

section 104 (other than subsection (c)) and in accordance with regulations and procedures prescribed by the Secretary.

(C) Any amounts allocated for use in a State under paragraph

(1) that are not received by the State for any fiscal year because

of failure to meet the requirements of subsection (a), (b), or (d) of

section 104 or to make the certifications required in subparagraphs

(C) and (D) of paragraph (2), or that become available as a result

of actions against the State under section 104(e) or 111, shall be

added to amounts allocated to all States under paragraph (1) for

the succeeding fiscal year.

(D) Any amounts allocated for use in a State under paragraph

(1) that become available as a result of actions under section 104(e)

or 111 against units of general local government in nonentitlement

areas of the State or as a result of the closeout of a grant made

by the Secretary under this section in nonentitlement areas of the

State shall be added to amounts allocated to the State under paragraph (1) for the fiscal year in which the amounts become so available.

(4) Any combination of units of general local governments may

not be required to obtain recognition by the Secretary pursuant to

section 102(a)(1) to be treated as a single unit of general local government for purposes of this subsection.

(5) From the amounts received under paragraph (1) for distribution in nonentitlement areas, the State may deduct an

amount, not to exceed 1 percent of the amount so received, to provide technical assistance to local governments and nonprofit program recipients.
Sec. 106 COMMUNITY DEVELOPMENT BLOCK GRANTS 42

1So in law. Probably should be designated as paragraph (6).

2So in law. Probably should be designated as paragraph (7).

(5) 1 No amount may be distributed by any State or the Secretary under this subsection to any unit of general local government located in a nonentitlement area unless such unit of general

local government certifies that—

(A) it will minimize displacement of persons as a result of

activities assisted with such amounts;

(B) its program will be conducted and administered in conformity with the Civil Rights Act of 1964 and the Fair Housing

Act, and that it will affirmatively further fair housing;

(C) it will provide for opportunities for citizen participation, hearings, and access to information with respect to its

community development program that are comparable to those

required of grantees under section 104(a)(2); and

(D) it will not attempt to recover any capital costs of public

improvements assisted in whole or part under section 106 or

with amounts resulting from a guarantee under section 108 by

assessing any amount against properties owned and occupied

by persons of low and moderate income, including any fee

charged or assessment made as a condition of obtaining access

to such public improvements, unless (i) funds received under

section 106 are used to pay the proportion of such fee or assessment that relates to the capital costs of such public improvements that are financed from revenue sources other than

under this title; or (ii) for purposes of assessing any amount

against properties owned and occupied by persons of moderate

income, the grantee certifies to the Secretary or such State, as

the case may be, that it lacks sufficient funds received under

section 106 to comply with the requirements of clause (i).

(6) 2 Any activities conducted with amounts received by a unit

of general local government under this subsection shall be subject

to the applicable provisions of this title and other Federal law in

the same manner and to the same extent as activities conducted

with amounts received by a unit of general local government under

subsection (a).

(e) The Secretary may fix such qualification or submission

dates as he determines are necessary to permit the computations

and determinations required by this section to be made in a timely

manner, and all such computations and determinations shall be

final and conclusive.

(f) If the total amount available for distribution in any fiscal

year to metropolitan cities and urban counties under this section

is insufficient to provide the amounts to which metropolitan cities

and urban counties would be entitled under subsection (b), and

funds are not otherwise appropriated to meet the deficiency, the

Secretary shall meet the deficiency through a pro rata reduction of

all amounts determined under subsection (b). If the total amount

available for distribution in any fiscal year to metropolitan cities

and urban counties under this section exceeds the amounts to

which metropolitan cities and urban counties would be entitled

under subsection (b), the Secretary shall distribute the excess
43 Sec. 107 COMMUNITY DEVELOPMENT BLOCK GRANTS

1Section 901(c) of the Cranston-Gonzalez National Affordable Housing Act, Pub. L. 101–625,

amended ‘‘[s]ection 107(a)’’ of this Act by redesignating paragraphs (3) and (4) and inserting a

new paragraph (3) as follows:

‘‘(3) to units of general local government that are located in North Dakota for public services with respect to Indian housing;’’.

The amendments could not be executed and were probably intended to be made to section

107(b) of this Act.

through a pro rata increase of all amounts determined under subsection (b).

SPECIAL PURPOSE GRANTS

SEC. 107. ø42 U.S.C. 5307¿ (a) SET-ASIDE.— (1) IN GENERAL.—For each fiscal year (except as otherwise

provided in this paragraph), of the total amount provided in

appropriation Acts under section 103 for the fiscal year,

$60,000,000 shall be set aside for grants under subsection (b)

for such year for the following purposes: (A) $7,000,000 shall be available for grants under subsection (b)(1); (B) $6,500,000 shall be available for grants under subsection (b)(3); (C) $6,000,000 shall be available for grants under subsection (b)(5); (D) $6,000,000 shall be available in fiscal year 1993

for grants under subsection (b)(7); (E) $3,000,000 shall be available for grants under subsection (c);

(F) such sums as may be necessary shall be available

for grants under paragraphs (2), (4), and (6) of subsection

(b); (G) $2,000,000 shall be available in fiscal year 1993

for a grant to the City of Bridgeport, Connecticut, subject

to the approval of sufficient amounts in an appropriation

Act and to binding commitments made by the City of

Bridgeport and the State of Connecticut that the city and

State, respectively, will supplement such amount with

$2,000,000 of additional funds; and (H) $7,500,000 shall be available to carry out the Community Outreach Partnership Act of 1992.

(2) TREATMENT OF GRANTS.—Any grants made under this

section shall be in addition to any other grants that may be

made under this title to the same entities for the same purposes.

(b) From amounts set aside under subsection (a), the Secretary

is authorized to make grants—

(1) in Guam, the Virgin Islands, American Samoa, the

Northern Mariana Islands, and the Trust Territory of the Pacific Islands;

(2) to States and units of general local government for the

purpose of allocating amounts to any such State or unit of general local government that is determined by the Secretary to

have received insufficient amounts under section 106 as a result of a miscalculation of its share of funds under such section; 1

(3) to historically Black colleges;
Sec. 107 COMMUNITY DEVELOPMENT BLOCK GRANTS 44

(4) to States, units of general local government, Indian

tribes, or areawide planning organizations for the purpose of

providing technical assistance in planning, developing, and administering assistance under this title and section 810 of this

Act; to groups designated by such governmental units to assist

them in carrying out assistance under this title; to qualified

groups for the purpose of assisting more than one such governmental unit to carry out assistance under this title; the Secretary may also provide technical assistance, directly or

through contracts, to such governmental units and groups; for

purposes of this paragraph the term ‘‘technical assistance’’

means the facilitating of skills and knowledge in planning, developing, and administering activities under this title in entities that may need but do not possess such skills and knowledge, and includes assessing programs and activities under

this title; except that any recipient of a grant under this paragraph that provides technical assistance pursuant to this paragraph shall provide for the notification of the availability of

such assistance and shall have specific criteria for selection of

recipients of such assistance that are published and publicly

available;

(5) to States and units of general local government and institutions of higher education having a demonstrated capacity

to carry out eligible activities under this title, except that the

Secretary may make a grant under this paragraph only to a

State or unit of general local government that jointly, with an

institution of higher education, has prepared and submitted to

the Secretary an application for such grant, as the Secretary

shall by regulation require;

(6) to units of general local government in nonentitlement

areas for planning community adjustments and economic diversification activities, which may include any eligible activities under section 105, required—

(A) by the proposed or actual establishment, realignment, or closure of a military installation,

(B) by the cancellation or termination of a Department

of Defense contract or the failure to proceed with an approved major weapon system program, or

(C) by a publicly announced planned major reduction

in Department of Defense spending that would directly

and adversely affect a unit of general local government

and will result in the loss of 1,000 or more full-time Department of Defense and contractor employee positions

over a 5-year period in the unit of general local government and the surrounding area, or

if the Secretary (in consultation with the Secretary of Defense)

determines that an action described in subparagraph (A), (B),

or (C) is likely to have a direct and significant adverse consequence on the unit of general local government; and

(7) for the purposes of rebuilding and revitalizing distressed areas of the Los Angeles metropolitan area.
45 Sec. 108 COMMUNITY DEVELOPMENT BLOCK GRANTS

1So in law.

(c) Of the amount set aside for use under subsection (b) in any

fiscal year, the Secretary shall, 1 make grants to institutions of

higher education, either directly or through areawide planning organizations or States, for the purpose of providing assistance to

economically disadvantaged and minority students who participate

in community development work study programs and are enrolled

in full-time graduate or undergraduate programs in community

and economic development, community planning, or community

management.

(d) Amounts set aside for use under subsection (b) in any fiscal

year but not used in that year shall remain available for use in

subsequent fiscal years in accordance with the provisions of that

subsection.

(e)(1) Except as provided in paragraph (2), no grant may be

made under this section, section 106(a)(1), or section 119 and no

assistance may be made available under section 17 of the United

States Housing Act of 1937 unless the grantee provides satisfactory

assurances that its program will be conducted and administered in

conformity with the Civil Rights Act of 1964 and the Fair Housing

Act.

(2) No grant may be made to an Indian tribe under this section, section 106(a)(1), or section 119 unless the applicant provides

satisfactory assurances that its program will be conducted and administered in conformity with title II of Public Law 90–284. The

Secretary may waive, in connection with grants to Indian tribes,

the provisions of section 109 and section 110.

(3) The Secretary may accept a certification from the grantee

or applicant that it has complied with the requirements of paragraph (1) or (2), as appropriate.

(f) Any grant made under this section shall be made pursuant

to criteria for selection of recipients of such grants that the Secretary shall by regulation establish and which the Secretary shall

publish together with any notification of availability of amounts

under this section.

GUARANTEE OF LOANS FOR ACQUISITION OF PROPERTY

SEC. 108. ø42 U.S.C. 5308¿ (a) The Secretary is authorized,

upon such terms and conditions as the Secretary may prescribe, to

guarantee and make commitments to guarantee, only to such extent or in such amounts as provided in appropriation Acts, the

notes or other obligations issued by eligible public entities or by

public agencies designated by such eligible public entities, for the

purposes of financing (1) acquisition of real property or the rehabilitation of real property owned by the eligible public entity (including such related expenses as the Secretary may permit by regulation); (2) housing rehabilitation; (3) economic development activities permitted under paragraphs (14), (15), and (17) of section

105(a); (4) construction of housing by nonprofit organizations for

homeownership under section 17(d) of the United States Housing

Act of 1937 or title VI of the Housing and Community Development

Act of 1987; (5) the acquisition, construction, reconstruction, or installation of public facilities (except for buildings for the general
Sec. 108 COMMUNITY DEVELOPMENT BLOCK GRANTS 46

conduct of government); or (6) in the case of colonias (as such term

is defined in section 916 of the Cranston-Gonzalez National Affordable Housing Act), public works and site or other improvements. A

guarantee under this section may be used to assist a grantee in obtaining financing only if the grantee has made efforts to obtain

such financing without the use of such guarantee and cannot complete such financing consistent with the timely execution of the

program plans without such guarantee. Notes or other obligations

guaranteed pursuant to this section shall be in such form and denominations, have such maturities, and be subject to such conditions as may be prescribed by regulations issued by the Secretary.

The Secretary may not deny a guarantee under this section on the

basis of the proposed repayment period for the note or other obligation, unless the period is more than 20 years or the Secretary determines that the period causes the guarantee to constitute an unacceptable financial risk. Notwithstanding any other provision of

law and subject only to the absence of qualified applicants or proposed activities and to the authority provided in this section, to the

extent approved or provided in appropriation Acts, the Secretary

shall enter into commitments to guarantee notes and obligations

under this section with an aggregate principal amount of

$2,000,000,000 for fiscal year 1993 and $2,000,000,000 for fiscal

year 1994. Of the amount approved in any appropriation Act for

guarantees under this section in any fiscal year, the Secretary shall

allocate 70 percent for guarantees for metropolitan cities, urban

counties, and Indian tribes and 30 percent for guarantees for units

of general local government in nonentitlement areas. The Secretary

may waive the percentage requirements of the preceding sentence

in any fiscal year only to the extent that there is an absence of

qualified applicants or proposed activities from metropolitan cities,

urban counties, and Indian tribes or units of general local government in nonentitlement areas.

(b) No guarantee or commitment to guarantee shall be made

with respect to any note or other obligation if the issuer’s total outstanding notes or obligations guaranteed under this section (excluding any amount defeased under the contract entered into under

subsection (d)(1)(A)) would thereby exceed an amount equal to 5

times the amount of the grant approval for the issuer pursuant to

section 106 or 107.

(c) Notwithstanding any other provision of this title, grants allocated to an issuer pursuant to this title (including program income derived therefrom) are authorized for use in the payment of

principal and interest due (including such servicing, underwriting,

or other costs as may be specified in regulations of the Secretary)

on the notes or other obligations guaranteed pursuant to this section.

(d)(1) To assure the repayment of notes or other obligations

and charges incurred under this section and as a condition for receiving such guarantees, the Secretary shall require the issuer to—

(A) enter into a contract, in a form acceptable to the Secretary, for repayment of notes or other obligations guaranteed

hereunder;

(B) pledge any grant for which the issuer may become eligible under this title; and
47 Sec. 108 COMMUNITY DEVELOPMENT BLOCK GRANTS

(C) furnish, at the discretion of the Secretary, such other

security as may be deemed appropriate by the Secretary in

making such guarantees, including increments in local tax receipts generated by the activities assisted under this title or

dispositions proceeds from the sale of land or rehabilitated

property.

(2) To assist in assuring the repayment of notes or other obligations and charges incurred under this section, a State shall

pledge any grant for which the State may become eligible under

this title as security for notes or other obligations and charges

issued under this section by any unit of general local government

in a nonentitlement area in the State.

(e) The Secretary is authorized, notwithstanding any other provision of this title, to apply grants pledged pursuant to paragraphs

(1)(B) and (2) of subsection (d) to any repayments due the United

States as a result of such guarantees.

(f) The full faith and credit of the United States is pledged to

the payment of all guarantees made under this section. Any such

guarantee made by the Secretary shall be conclusive evidence of

the eligibility of the obligations for such guarantee with respect to

principal and interest, and the validity of any such guarantee so

made shall be incontestable in the hands of a holder of the guaranteed obligations.

(g) The Secretary may issue obligations to the Secretary of the

Treasury in an amount outstanding at any one time sufficient to

enable the Secretary to carry out his obligations under guarantees

authorized by this section. The obligations issued under this subsection shall have such maturities and bear such rate or rates of

interest as shall be determined by the Secretary of the Treasury.

The Secretary of the Treasury is authorized and directed to purchase any obligations of the Secretary issued under this section,

and for such purposes is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under

chapter 31 of title 31, United States Code, and the purposes for

which such securities may be issued under such chapter are extended to include the purchases of the Secretary’s obligations hereunder.

(h) Obligations guaranteed under this section shall be subject

to Federal taxation as provided in subsection (j). The Secretary is

authorized to make, and to contract to make, grants, in such

amounts as may be approved in appropriations Acts, to or on behalf of the issuing eligible public entity or public agency to cover

not to exceed 30 per centum of the net interest cost (including such

servicing, underwriting, or other costs as may be specified in regulations of the Secretary) to the borrowing entity or agency of such

obligations. The Secretary may also, to the extent approved in appropriation Acts, assist the issuer of a note or other obligation

guaranteed under this section in the payment of all or a portion of

the principal and interest amount due under the note or other obligation, if the Secretary determines that the issuer is unable to pay

the amount because of circumstances of extreme hardship beyond

the control of the issuer.

ø(i) [Repealed.]¿
Sec. 108 COMMUNITY DEVELOPMENT BLOCK GRANTS 48

1So in law.

2February 5, 1988.

3So in law. Probably intended to refer to the Cranston-Gonzalez National Affordable Housing

Act, Pub. L. 101–625, approved November 28, 1990.

(j) With respect to any obligation issued by a 1 eligible public

entity or designated agency which is guaranteed pursuant to this

section, the interest paid on such obligation shall be included in

gross income for the purpose of chapter 1 of the Internal Revenue

Code of 1954.

(k)(1) The total amount of outstanding obligations guaranteed

on a cumulative basis by the Secretary pursuant to subsection (a)

shall not at any time exceed $4,500,000,000 or such higher amount

as may be authorized to be appropriated for sections 106 and 107

for any fiscal year.

(2) The Secretary shall monitor the use of guarantees under

this section by eligible public entities. If the Secretary finds that

50 percent of the aggregate guarantee authority has been committed, the Secretary may—

(A) impose limitations on the amount of gurantees any one

entity may receive in any fiscal year of $35,000,000 for units

of general local government receiving grants under section

106(b) and $7,000,000 for units of general local government receiving grants under section 106(d); or

(B) request the enactment of legislation increasing the aggregate limitation on guarantees under this section.

(l) Notes or other obligations guaranteed under this section

may not be purchased by the Federal Financing Bank.

(m) No fee or charge may be imposed by the Secretary or any

other Federal agency on or with respect to a guarantee made by

the Secretary under this section after the date of the enactment of

the Housing and Community Development Act of 1987. 2

(n) Any State that has elected under section 106(d)(2)(A) to distribute funds to units of general local government in nonentitlement areas may assist such units in the submission of applications

for guarantees under this section.

(o) For purposes of this section, the term ‘‘eligible public entity’’

means any unit of general local government, including units of general local government in nonentitlement areas.

(p)(1) The Secretary, in cooperation with eligible public entities, shall carry out training and information activities with respect

to the guarantee program under this section. Such activities shall

commence not later than 1 year after the date of the enactment of

the Housing and Community Development Act of 1990. 3

(2) The Secretary may use amounts set aside under section 107

to carry out this subsection.

(q) ECONOMIC DEVELOPMENT GRANTS.—

(1) AUTHORIZATION.—The Secretary may make grants in

connection with notes or other obligations guaranteed under

this section to eligible public entities for the purpose of enhancing the security of loans guaranteed under this section or improving the viability of projects financed with loans guaranteed

under this section.
49 Sec. 108 COMMUNITY DEVELOPMENT BLOCK GRANTS

(2) ELIGIBLE ACTIVITIES.—Assistance under this subsection

may be used only for the purposes of and in conjunction with

projects and activities assisted under subsection (a).

(3) APPLICATIONS.—Applications for assistance under this

subsection may be submitted only by eligible public entities,

and shall be in the form and in accordance with the procedures

established by the Secretary. Eligible public entities may apply

for grants only in conjunction with requests for guarantees

under subsection (a).

(4) SELECTION CRITERIA.—The Secretary shall establish criteria for awarding assistance under this subsection. Such criteria shall include—

(A) the extent of need for such assistance;

(B) the level of distress in the community to be served

and in the jurisdiction applying for assistance;

(C) the quality of the plan proposed and the capacity

or potential capacity of the applicant to successfully carry

out the plan; and

(D) such other factors as the Secretary determines to

be appropriate.

(r) GUARANTEE OF OBLIGATIONS BACKED BY LOANS.—

(1) AUTHORITY.—The Secretary may, upon such terms and

conditions as the Secretary considers appropriate, guarantee

the timely payment of the principal of and interest on such

trust certificates or other obligations as may—

(A) be offered by the Secretary or by any other offeror

approved for purposes of this subsection by the Secretary;

and

(B) be based on and backed by a trust or pool composed of notes or other obligations guaranteed or eligible

for guarantee by the Secretary under this section.

(2) FULL FAITH AND CREDIT.—To the same extent as provided in subsection (f), the full faith and credit of the United

States is pledged to the payment of all amounts that may be

required to be paid under any guarantee made by the Secretary under this subsection.

(3) SUBROGATION.—If the Secretary pays a claim under a

guarantee made under this section, the Secretary shall be subrogated for all the rights of the holder of the guaranteed certificate or obligation with respect to such certificate or obligation.

(4) EFFECT OF LAWS.—No State or local law, and no Federal law, shall preclude or limit the exercise by the Secretary

of—

(A) the power to contract with respect to public offerings and other sales of notes, trust certificates, and other

obligations guaranteed under this section upon such terms

and conditions as the Secretary deems appropriate;

(B) the right to enforce any such contract by any

means deemed appropriate by the Secretary; and

(C) any ownership rights of the Secretary, as applicable, in notes, certificates, or other obligations guaranteed

under this section, or constituting the trust or pool against
Sec. 109 COMMUNITY DEVELOPMENT BLOCK GRANTS 50

which trust certificates, or other obligations guaranteed

under this section, are offered.

NONDISCRIMINATION

SEC. 109. ø42 U.S.C. 5309¿ (a) No person in the United States

shall on the ground of race, color, national origin, religion, or sex

be excluded from participation in, be denied the benefits of, or be

subjected to discrimination under any program or activity funded

in whole or in part with funds made available under this title. Any

prohibition against discrimination on the basis of age under the

Age Discrimination Act of 1975 or with respect to an otherwise

qualified handicapped individual as provided in section 504 of the

Rehabilitation Act of 1973 shall also apply to any such program or

activity.

(b) Whenever the Secretary determines that a State or unit of

general local government which is a recipient of assistance under

this title has failed to comply with subsection (a) or an applicable

regulation, he shall notify the Governor of such State or the chief

executive officer of such unit of local government of the noncompliance and shall request the Governor or the chief executive officer

to secure compliance. If within a reasonable period of time, not to

exceed sixty days, the Governor or the chief executive officer fails

or refuses to secure compliance, the Secretary is authorized to (1)

refer the matter to the Attorney General with a recommendation

that an appropriate civil action be instituted; (2) exercise the powers and functions provided by title VI of the Civil Rights Act of

1964 (42 U.S.C. 2000d); (3) exercise the powers and functions provided for in section 111(a) of this Act; or (4) take such other action

as may be provided by law.

(c) When a matter is referred to the Attorney General pursuant

to subsection (b), or whenever he has reason to believe that a State

government or unit of general local government is engaged in a

pattern or practice in violation of the provisions of this section, the

Attorney General may bring a civil action in any appropriate

United States district court for such relief as may be appropriate,

including injunctive relief.

(d) The provisions of this section and section 104(b)(2) which

relate to discrimination on the basis of race shall not apply to the

provision of assistance by grantees under this title to the Hawaiian

Home lands.

LABOR STANDARDS

SEC. 110. ø42 U.S.C. 5310¿ (a) All laborers and mechanics employed by contractors or subcontractors in the performance of construction work financed in whole or in part with assistance received under this title shall be paid wages at rates not less than

those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the DavisBacon Act, as amended (40 U.S.C. 276a—276a–5); Provided, That

this section shall apply to the rehabilitation of residential property

only if such property contains not less than 8 units. The Secretary

of Labor shall have, with respect to such labor standards, the authority and functions set forth in Reorganization Plan Numbered
51 Sec. 111 COMMUNITY DEVELOPMENT BLOCK GRANTS

14 of 1950 (15 F.R. 3176; 64 Stat. 1267) and section 2 of the Act

of June 13, 1934, as amended (48 Stat. 948; 40 U.S.C. 276(c)).

(b) Subsection (a) shall not apply to any individual that—

(1) performs services for which the individual volunteered;

(2)(A) does not receive compensation for such services; or

(B) is paid expenses, reasonable benefits, or a nominal fee

for such services; and

(3) is not otherwise employed at any time in the construction work.

REMEDIES FOR NONCOMPLIANCE

SEC. 111. ø42 U.S.C. 5311¿ (a) If the Secretary finds after reasonable notice and opportunity for hearing that a recipient of assistance under this title has failed to comply substantially with any

provision of this title, the Secretary, until he is satisfied that there

is no longer any such failure to comply, shall—

(1) terminate payments to the recipient under this title, or

(2) reduce payments to the recipient under this title by an

amount equal to the amount of such payments which were not

expended in accordance with this title, or

(3) limit the availability of payments under this title to

programs, projects, or activities not affected by such failure to

comply.

(b)(1) In lieu of, or in addition to, any action authorized by subsection (a), the Secretary may, if he has reason to believe that a

recipient has failed to comply substantially with any provision of

this title, refer the matter to the Attorney General of the United

States with a recommendation that an appropriate civil action be

instituted.

(2) Upon such a referral the Attorney General may bring a civil

action in any United States district court having venue thereof for

such relief as may be appropriate, including an action to recover

the amount of the assistance furnished under this title which was

not expended in accordance with it, or for mandatory or injunctive

relief.

(c)(1) Any recipient which receives notice under subsection (a)

of the termination, reduction, or limitation of payments under this

title may, within sixty days after receiving such notice, file with

the United States Court of Appeals for the circuit in which such

State is located, or in the United States Court of Appeals for the

District of Columbia, a petition for review of the Secretary’s action.

The petitioner shall forthwith transmit copies of the petition to the

Secretary and the Attorney General of the United States, who shall

represent the Secretary in the litigation.

(2) The Secretary shall file in the court record of the proceeding on which he based his action, as provided in section 2112

of title 28, United States Code. No objection to the action of the

Secretary shall be considered by the court unless such objection has

been urged before the Secretary.

(3) The court shall have jurisdiction to affirm or modify the action of the Secretary or to set it aside in whole or in part. The findings of fact by the Secretary, if supported by substantial evidence

on the record considered as a whole, shall be conclusive. The court
Sec. 112 COMMUNITY DEVELOPMENT BLOCK GRANTS 52

may order additional evidence to be taken by the Secretary, and to

be made part of the record. The Secretary may modify his findings

of fact, or make new findings, by reason of the new evidence so

taken and filed with the court, and he shall also file such modified

or new findings, which findings with respect to questions of fact

shall be conclusive if supported by substantial evidence on the

record considered as a whole, and shall also file his recommendation, if any, for the modification or setting aside of his original action.

(4) Upon the filing of the record with the court, the jurisdiction

of the court shall be exclusive and its judgment shall be final, except that such judgment shall be subject to review by the Supreme

Court of the United States upon writ of certiorari or certification

as provided in section 1254 of title 28, United State Code.

USE OF GRANTS TO SETTLE OUTSTANDING URBAN RENEWAL LOANS

SEC. 112. ø42 U.S.C. 5312¿ (a) The Secretary is authorized,

notwithstanding any other provision of this title, to apply a portion

of the grants, not to exceed 20 per centum thereof without the request of the recipient, made or to be made under section 103 in any

fiscal year pursuant to an allocation under section 106 to any unit

of general local government toward payment of the principal of,

and accrued interest on, any temporary loan made in connection

with urban renewal projects under title I of the Housing Act of

1949 being carried out within the jurisdication of such unit of general local government if—

(1) the Secretary determines, after consultation with the

local public agency carrying out the project and the chief executive of such unit of general local government, that the project

cannot be completed without additional capital grants, or

(2) the local public agency carrying out the project submits

to the Secretary an appropriate request which is concurred in

by the governing body of such unit of general local government.

In determining the amounts to be applied to the payment of temporary loans, the Secretary shall make an accounting for each

project taking into consideration the costs incurred or to be incurred, the estimated proceeds upon any sale or disposition of property, and the capital grants approved for the project.

(b) Upon application by any local public agency carrying out an

urban renewal project under title I of the Housing Act of 1949,

which application is approved by the governing body of the unit of

general local government in which the project is located, the Secretary may approve a financial settlement of such project if he

finds that a surplus of capital grant funds after full repayment of

temporary loan indebtedness will result and may authorize the

unit of general local government to use such surplus funds, without

deduction or offset, in accordance with the provisions of this title.

REPORTING REQUIREMENTS

SEC. 113. ø42 U.S.C. 5313¿ (a) Not later than 180 days after

the close of each fiscal year in which assistance under this title is

furnished, the Secretary shall submit to the Congress a report

which shall contain—
53 Sec. 117 COMMUNITY DEVELOPMENT BLOCK GRANTS

(1) a description of the progress made in accomplishing the

objectives of this title;

(2) a summary of the use of such funds during the preceding fiscal year;

(3) with respect to the action grants authorized under section 119, a listing of each unit of general local government receiving funds and the amount of such grants, as well as a brief

summary of the projects funded for each such unit, the extent

of financial participation by other public or private entities,

and the impact on employment and economic activity of such

projects during the previous fiscal year; and

(4) a description of the activities carried out under section

108.

(b) The Secretary is authorized to require recipients of assistance under this title to submit to him such reports and other information as may be necessary in order for the Secretary to make the

report required by subsection (a).

CONSULTATION

SEC. 114. ø42 U.S.C. 5314¿ In carrying out the provisions of

this title including the issuance of regulations, the Secretary shall

consult with other Federal departments and agencies administering Federal grant-in-aid programs.

INTERSTATE AGREEMENTS

SEC. 115. ø42 U.S.C. 5315¿ The consent of the Congress is

hereby given to any two or more States to enter into agreements

or compacts, not in conflict with any law of the United States, for

cooperative efforts and mutual assistance in support of community

development planning and programs carried out under this title as

they pertain to interstate areas and to localities within such States,

and to establish such agencies, joint or otherwise, as they may

deem desirable for making such agreements and compacts effective.

TRANSITION PROVISIONS

SEC. 116. ø42 U.S.C. 5316¿ (a) Except with respect to projects

and programs for which funds have been previously committed, no

new grants or loans shall be made after January 1, 1975, under (1)

title I of the Demonstration Cities and Metropolitan Development

Act of 1966, (2) title I of the Housing Act of 1949, (3) section 702

or section 703 of the Housing and Urban Development Act of 1965,

(4) title II of the Housing Amendments of 1955, or (5) title VII of

the Housing Act of 1961.

(b) In the case of funds available for any fiscal year, the Secretary shall not consider any statement under section 104(a), unless such statement is submitted on or prior to such date as the

Secretary shall establish as the final date for submission of statements for that year.

øLIQUIDATION OF SUPERSEDED PROGRAMS¿

SEC. 117. ø(a) [Repealed.]¿
Sec. 119 URBAN DEVELOPMENT ACTION GRANTS 54

(b) ø42 U.S.C. 5317¿ The Secretary is authorized to transfer

the assets and liabilities of any program which is superseded or inactive by reason of this title to the revolving fund for liquidating

programs established pursuant to title II of the Independent Offices Appropriation Act, 1955 (Public Law 83–428; 68 Stat. 272,

295).

* * * * * * *

URBAN DEVELOPMENT ACTION GRANTS

SEC. 119. ø42 U.S.C. 5318¿ (a) The Secretary is authorized to

make urban development action grants to cities and urban counties

which are experiencing severe economic distress to help stimulate

economic development activity needed to aid in economic recovery.

There are authorized to be appropriated to carry out this section

$225,000,000 for fiscal year 1988, and $225,000,000 for fiscal year

1989. Any amount appropriated under this subsection shall remain

available until expended.

(b)(1) Urban development action grants shall be made only to

cities and urban counties which have, in the determination of the

Secretary, demonstrated results in providing housing for low- and

moderate-income persons and in providing equal opportunity in

housing and employment for low- and moderate-income persons

and members of minority groups. The Secretary shall issue regulations establishing criteria in accordance with the preceding sentence and setting forth minimum standards for determining the

level of economic distress of cities and urban counties for eligiblity

for such grants. These standards shall take into account factors

such as the age of housing; the extent of poverty; the extent of population lag; growth of per capita income; and, the extent of unemployment, job lag, or suplus labor. Any city that has a population

of less than 50,000 persons and is not the central city of a metropolitan area, and that was eligible for fiscal year 1983 under this

paragraph for assistance under this section, shall continue to be eligible for such assistance until the Secretary revises the standards

for eligibility for such cities under this paragraph and includes the

extent of unemployment, job lag, or labor surplus as a standard of

distress for such cities. The Secretary shall make such revision as

soon as practicable following the effective date of this sentence.

(2) A city or urban county which fails to meet the minimum

standards established pursuant to paragraph (1) shall be eligible

for assistance under this section if it meets the requirements of the

first sentence of such paragraph and—

(A) in the case of a city with a population of fifty thousand

persons of more or an urban county, contains an area (i) composed of one or more contiguous census tracts, enumeration

districts, neighborhood statistics areas, or block groups, as defined by the United States Bureau of the Census, having at

least a population of ten thousand persons or 10 per centum

of the population of the city or urban county; (ii) in which at

least 70 per centum of the residents have incomes below 80 per

centum of the median income of the city or urban county; and

(iii) in which at least 30 per centum of the residents have incomes below the national poverty level; or
55 Sec. 119 URBAN DEVELOPMENT ACTION GRANTS

(B) in the case of a city with a population of less than fifty

thousand persons, contains an area (i) composed of one or more

contiguous census tracts, enumeration districts, neighborhood

statistics areas, or block groups or other areas defined by the

United States Bureau of the Census or for which data certified

by the United States Bureau of the Census are available having at least a population of two thousand five hundred persons

or 10 per centum of the population of the city, whichever is

greater; (ii) in which at least 70 per centum of the residents

have incomes below 80 per centum of the median income of the

city; and (iii) in which at least 30 per centum of the residents

have incomes below the national poverty level.

The Secretary shall use up to, but not more than, 20 per centum

of the funds appropriated for use in any fiscal year under this section for the purpose of making grants to cities and urban counties

eligible under this paragraph.

(c) Applications for assistance under this section shall—

(1) in the case of an application for a grant under subsection (b)(2), include documentation of grant eligibility in accordance with the standards described in that subsection;

(2) set forth the activities for which assistance is sought,

including (A) an estimate of the costs and general location of

activities; (B) a summary of the public and private resources

which are expected to be made available in connection with the

activities, including how the activities will take advantage of

unique opportunities to attract private investment; and (C) an

analysis of the economic benefits which the activities are expected to produce;

(3) contain a certification satisfactory to the Secretary that

the applicant, prior to submission of its application, (A) has

held public hearings to obtain the views of citizens, particularly residents of the area in which the proposed activities are

to be carried out; (B) has analyzed the impact of these proposed activities on the residents, particularly those of low and

moderate income, of the residential neighborhood, and on the

neighborhood in which they are to be carried out; and (C) has

made available the analysis described in clause (B) to any interested person or organization residing or located in the

neighborhood in which the proposed activities are to be carried

out; and

(4) contain a certification satisfactory to the Secretary that

the applicant, prior to submission of its application, (A) has

identified all properties, if any, which are included on the National Register of Historic Places and which, as determined by

the applicant, will be affected by the project for which the application is made; (B) has identified all other properties, if any,

which will be affected by such project and which, as determined by the applicant, may meet the criteria established by

the Secretary of the Interior for inclusion on such Register, together with documentation relating to the inclusion of such

properties on the Register; (C) has determined the effect, as determined by the applicant, of the project on the properties

identified pursuant to clauses (A) and (B); and (D) will comply

with the requirements of section 121.
Sec. 119 URBAN DEVELOPMENT ACTION GRANTS 56

(d)(1) Except in the case of a city or urban county eligible

under subsection (b)(2), the Secretary shall establish selection criteria for a national competition for grants under this section which

must include—

(A) the comparative degree of economic distress among applicants, as measured (in the case of a metropolitan city or

urban county) by the differences in the extent of growth lag,

the extent of poverty, and the adjusted age of housing in the

metropolitan city or urban county;

(B) other factors determined to be relevant by the Secretary in assessing the comparative degree of economic deterioration in cities and urban counties;

(C) the following other criteria:

(i) the extent to which the grant will stimulate economic recovery by leveraging private investment;

(ii) the number of permanent jobs to be created and

their relation to the amount of grant funds requested;

(iii) the proportion of permanent jobs accessible to

lower income persons and minorities, including persons

who are unemployed;

(iv) the extent to which the project will retain jobs

that will be lost without the provision of a grant under

this section;

(v) the extent to which the project will relieve the most

pressing employment or residential needs of the applicant

by—

(I) reemploying workers in a skill that has recently suffered a sharp increase in unemployment locally;

(II) retraining recently unemployed residents in

new skills;

(III) providing training to increase the local pool of

skilled labor; or

(IV) producing decent housing for low- and moderate-income persons in cases where such housing is

in severe shortage in the area of the applicant, except

that an application shall be considered to produce

housing for low- and moderate-income persons under

this clause only if such application proposes that (a)

not less than 51 percent of all funds available for the

project shall be used for dwelling units and related facilities; and (b) not less than 30 percent of all funds

used for dwelling units and related facilities shall be

used for dwelling units to be occupied by persons of

low and moderate income, or not less than 20 percent

of all dwelling units made available to occupancy

using such funds shall be occupied by persons of low

and moderate income, whichever results in the occupancy of more dwelling units by persons of low and

moderate income;

(vi) the impact of the proposed activities on the fiscal

base of the city or urban county and its relation to the

amount of grant funds requested;
57 Sec. 119 URBAN DEVELOPMENT ACTION GRANTS

(vii) the extent to which State or local Government

funding or special economic incentives have been committed; and

(viii) the extent to which the project will have a substantial impact on physical and economic development of

the city or urban county, the proposed activities are likely

to be accomplished in a timely fashion with the grant

amount available, and the city or urban county has demonstrated performance in housing and community development programs; and

(D) additional consideration for projects with the following

characteristics:

(i) projects to be located within a city or urban county

which did not receive a preliminary grant approval under

this section during the 12-month period preceding the date

on which applications are required to be submitted for the

grant competition involved; and

(ii) twice the amount of the additional consideration

provided under clause (i) for projects to be located in cities

or urban counties which did not receive a preliminary

grant approval during the 24-month period preceding the

date on which applications under this section are required

to be submitted for the grant competition involved.

If a city or urban county has submitted and has pending more

than one application, the additional consideration provided by

subparagraph (D) of the preceding sentence shall be available

only to the project in such city or urban county which received

the highest number of points under subparagraph (C) of such

sentence.

(2) For the purpose of making grants with respect to areas described in subsection (b)(2), the Secretary shall establish selection

criteria, which must include (A) factors determined to be relevant

by the Secretary in assessing the comparative degree of economic

deterioration among eligible areas, and (B) such other criteria as

the Secretary may determine, including at a minimum the criteria

listed in paragraph (1)(C) of this subsection.

(3) The Secretary shall award points to each application as follows:

(A) not more than 35 points on the basis of the criteria referred to in paragraph (1)(A);

(B) not more than 35 points on the basis of the criteria referred to in paragraph (1)(B);

(C) not more than 33 points on the basis of the criteria referred to in paragraph (1)(C); and

(D)(i) 1 additional point on the basis of the criterion referred to in paragraph (1)(D)(i); or

(ii) 2 additional points on the basis of the criterion referred

to in paragraph (1)(D)(ii).

(4) The Secretary shall distribute grant funds under this section so that to the extent practicable during each funding cycle—

(A) 65 percent of the funds is first made available utilizing

all of the criteria set forth in paragraph (1); and
Sec. 119 URBAN DEVELOPMENT ACTION GRANTS 58

(B) 35 percent of the funds is then made available solely

on the basis of the factors referred to in subparagraphs (C) and

(D) of paragraph (1).

(5)(A) Within 30 days of the start of each fiscal year, the Secretary shall announce the number of competitions for grants to be

held in that fiscal year. The number of competitions shall be not

less than two nor more than three.

(B) Each competition for grants described in any clause of subparagraph (A) shall be for an amount equal to the sum of—

(i) approximately the amount of the funds available for

such grants for the fiscal year divided by the number of competitions for those funds;

(ii) any funds available for such grants in any previous

competition that are not awarded; and

(iii) any funds available for such grants in any previous

competition that are recaptured.

(C) Notwithstanding any other provision of this section, in each

competition for grants under this section, no city or urban county

may be awarded a grant or grants in an amount in excess of

$10,000,000 until all cities and urban counties which submitted

fundable applications have been awarded a grant. If funds are

available for additional grants after each city and urban county

submitting a fundable application is awarded one or more grants

under the preceding sentence, then additional grants shall be made

so that each city or urban county that has submitted multiple applications is awarded one additional grant in order of ranking, with

no single city or urban county receiving more than one grant approval in any subsequent series of grant determinations within the

same competition.

(D) All grants under this section, including grants to cities and

urban counties described in subsection (b)(2), shall be awarded in

accordance with subparagraph (C) so that all grants under this section are made in order of ranking.

(e) The Secretary may not approve any grant to a city or urban

county eligible under subsection (b)(2) unless—

(1) the grant will be used in connection with a project located in an area described in subsection (b)(2), except that the

Secretary may waive this requirement where the Secretary determines (A) that there is no suitable site for the project within

that area, (B) the project will be located directly adjacent to

that area, and (C) the project will contribute substantially to

the economic development of that area;

(2) the city or urban county has demonstrated to the to the

satisfaction of the Secretary that basic services supplied by the

city or urban county to the area described in subsection (b)(2)

are at least equivalent, as measured by per capita expenditures, to those supplied to other areas within the city or urban

county which are similar in population size and physical characteristics and which have median incomes above the median

income for the city or urban county;

(3) the grant will be used in connection with a project

which will directly benefit the low- and moderate-income families and individuals residing in the area described in subsection (b)(2); and
59 Sec. 119 URBAN DEVELOPMENT ACTION GRANTS

(4) the city or urban county makes available, from its own

funds or from funds received from the State or under any Federal program which permits the use of financial assistance to

meet the non-Federal share requirements of Federal grant-inaid programs, an amount equal to 20 per centum of the grant

to be available under this section to be used in carrying out the

activities described in the application.

(f) Activities assisted under this section may include such activities, in addition to those authorized under section 105(a), as the

Secretary determines to be consistent with the purposes of this section. In any case in which the project proposes the repayment to

the applicant of the grant funds, such funds shall be made available by the applicant for economic development activities that are

eligible activities under this section or section 105. The applicant

shall annually provide the Secretary with a statement of the projected receipt and use of repaid grant funds during the next year

together with a report acceptable to the Secretary on the use of

such funds during the most recent preceding full fiscal year of the

applicant.

(g) The Secretary shall, at least on an annual basis, make reviews and audits of recipients of grants under this section as necessary to determine the progress made in carrying out activities

substantially in accordance with approved plans and timetables.

The Secretary may adjust, reduce, or withdraw grant funds, or take

other action as appropriate in accordance with the findings of these

reviews and audits, except that funds already expended on eligible

activities under this title shall not be recaptured or deducted from

future grants made to the recipient.

(h)(1) SPECULATIVE PROJECTS.—No assistance may be provided

under this section for projects intended to facilitate the relocation

of industrial or commercial plants or facilities from one area to another, unless the Secretary finds that the relocation does not significantly and adversely affect the unemployment or economic base

of the area from which the industrial or commercial plant or facility is to be relocated. The provisions of this paragraph shall apply

only to projects that do not have identified intended occupants.

(2) PROJECTS WITH IDENTIFIED INTENDED OCCUPANTS.—No assistance may be provided or utilized under this section for any

project with identified intended occupants that is likely to

facilitate—

(A) a relocation of any operation of an industrial or commercial plant or facility or other business establishment—

(i) from any city, urban county, or identifiable community described in subsection (p), that is eligible for assistance under this section; and

(ii) to the city, urban county, or identifiable community described in subsection (p), in which the project is located; or

(B) an expansion of any such operation that results in a

reduction of any such operation in any city, county, or community described in subparagraph (A)(i).

(3) SIGNIFICANT AND ADVERSE EFFECT.—The restrictions established in paragraph (2) shall not apply if the Secretary determines

that the relocation or expansion does not significantly and ad-
Sec. 119 URBAN DEVELOPMENT ACTION GRANTS 60

1February 5, 1988.

2The date of enactment was February 5, 1988.

versely affect the employment or economic base of the city, county,

or community from which the relocation or expansion occurs.

(4) APPEAL OF ADVERSE DETERMINATION.—Following notice of

intent to withhold, deny, or cancel assistance under paragraph (1)

or (2), the Secretary shall provide a period of not less than 90 days

in which the applicant can appeal to the Secretary the withholding,

denial, or cancellation of assistance. Notwithstanding any other

provision of this section, nothing in this section or in any legislative history related to the enactment of this section may be construed to permit an inference or conclusion that the policy of the

Congress in the urban development action grant program is to facilitate the relocation of businesses from one area to another.

(5) ASSISTANCE FOR INDIVIDUALS ADVERSELY AFFECTED BY PROHIBITED RELOCATIONS.—

(A) Any amount withdrawn by, recaptured by, or paid to

the Secretary due to a violation (or a settlement of an alleged

violation) of this subsection (or of any regulation issued or contractual provision entered into to carry out this subsection) by

a project with identified intended occupants shall be made

available by the Secretary as a grant to the city, county, or

community described in subsection (p), from which the operation of an industrial or commercial plant or facility or other

business establishment relocated or in which the operation was

reduced.

(B)(i) Any amount made available under this paragraph

shall be used by the grantee to assist individuals who were employed by the operation involved prior to the relocation or reduction and whose employment or terms of employment were

adversely affected by the relocation or reduction. The assistance shall include job training, job retraining, and job placement.

(ii) If any amount made available to a grantee under this

paragraph is more than is required to provide assistance under

clause (i), the grantee shall use the excess amount to carry out

community development activities eligible under section 105(a).

(C)(i) The provisions of this paragraph shall be applicable

to any amount withdrawn by, recaptured by, or paid to the

Secretary under this section, including any amount withdrawn,

recaptured, or paid before the effective date of this paragraph. 1

(ii) Grants may be made under this paragraph only to the

extent of amounts provided in appropriation Acts.

(6) DEFINITION.—For purposes of this subsection, the term ‘‘operation’’ includes any plant, equipment, facility, position, employment opportunity, production capacity, or product line.

(7) REGULATIONS.—Not later than 60 days after the date of the

enactment of the Housing and Community Development Act of

1987, 2 the Secretary shall issue such regulations as may be necessary to carry out the provisions of this subsection. Such regulations shall include specific criteria to be used by the Secretary in

determining whether there is a significant and adverse effect under

paragraph (3).
61 Sec. 119 URBAN DEVELOPMENT ACTION GRANTS

1So in law.

(i) Not less than 25 per centum of the funds made available for

grants under this section shall be used for cities with populations

of less than fifty thousand persons which are not central cities of

a metropolitan statistical area. The Secretary shall encourage cooperation by geographically proximate cities of less than 50,000

population by permitting consortia of such cities, which may also

include county governments that are not urban counties, to apply

for grants on behalf of a city that is otherwise eligible for assistance under this section. Any grants awarded to such consortia shall

be administered in compliance with eligibility requirements applicable to individual cities.

(j) A grant may be made under this section only where the Secretary determine that there is a strong probability that (1) the nonFederal investment in the project would not be made without the

grant, and (2) the grant would not substitute for non-Federal funds

which are otherwise available to the project.

(k) In making grants under this section, the Secretary shall

take such steps as the Secretary deems appropriate to assure that

the amount of the grant provided is the least necessary to make

the project feasible.

(l) For purpose of this section, the Secretary may reduce or

waive the requirement in section 102(a)(5)(B)(ii) that a town or

township be closely settled.

(m) In the case of any application which identifies any property

in accordance with subsection (c)(4)(B), the Secretary may not commit funds with respect to an approved application unless the applicant has certified to the Secretary that the appropriate State historic preservation officer and the Secretary of the Interior have

been provided an opportunity to take action in accordance with the

provisions of section 121(b).

(n)(1) For the purposes of this section, the term ‘‘city’’ includes

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

Islands, and Indian tribes. Such term also includes the counties of

Kauai, Maui and Hawaii in the State of Hawaii.

(2) The Secretary may not approve a grant to an Indian tribe

under this section unless the tribe (A) is located on a reservation,

or on former Indian reservations in Oklahoma as determined by

the Secretary of the Interior, or in an Alaskan Native Village, and

(B) was an eligible recipient under chapter 67 of title 31, United

States Code, prior to the repeal of such chapter.

(o) If no amounts are set aside under, or amounts are precluded from being appropriated for this section for fiscal years after

fiscal year 1983, any amount which is or becomes available for use

under this section after fiscal year 1983 shall be added to amounts

appropriated under section 103, except that amounts available to

the Secretary for use under this subsection as of October 1, 1993,

and amounts released to the Secretary pursuant to subsection (t)

may be used to provide grants under section 108(q).. 1

(p) An unincorporated portion of an urban county that is approved by the Secretary as an identifiable community for purposes

of this section is eligible for a grant under subsection (b)(2) if such

portion meets the eligibility requirements contained in the first
Sec. 119 URBAN DEVELOPMENT ACTION GRANTS 62

1 April 11, 1994.

sentence of subsection (b)(1) and the requirements of subsection

(b)(2)(B) (applied to the population of the portion of the urban

county) and if it otherwise complies with the provisions of this section.

(q) Of the amounts appropriated for purposes of this section for any fiscal year, not more than $2,500,000 may be used by the Secretary to make technical assistance grants to States or their agencies, municipal technical advisory services operated by universities,

or State associations of counties or municipalities, to enable such

entities to assist units of general local government described in

subsection (i) in developing, applying for assistance for, and implementing programs eligible for assistance under this section.

(r) In utilizing the discretion of the Secretary when providing

assistance and applying selection criteria under this section, the

Secretary may not discriminate against applications on the basis of

(1) the type of activity involved, whether such activity is primarily

housing, industrial, or commercial; or (2) the type of applicant,

whether such applicant is a city or urban county.

(s) For fiscal years 1988 and 1989, the maximum grant amount

for any project under this section is $10,000,000.

(t) UDAG RETENTION PROGRAM.—If a grant or a portion of a

grant under this section remains unexpended upon the issuance of

a notice implementing this subsection, the grantee may enter into

an agreement, as provided under this subsection, with the Secretary to receive a percentage of the grant amount and relinquish

all claims to the balance of the grant within 90 days of the

issuance of notice implementing this subsection (or such later date

as the Secretary may approve). The Secretary shall not recapture

any funds obligated pursuant to this section during a period beginning on the date of enactment of the Multifamily Housing Property

Disposition Reform Act of 1994 1 until 90 days after the issuance

of a notice implementing this subsection. A grantee may receive as

a grant under this subsection—

(1) 33 percent of such unexpended amounts if—

(A) the grantee agrees to expend not less than one-half

of the amount received for activities authorized pursuant

to section 108(q) and to expend such funds in conjunction

with a loan guarantee made under section 108 at least

equal to twice the amount of the funds received; and

(B)(i) the remainder of the amount received is used for

economic development activities eligible under title I of

this Act; and

(ii) except when waived by the Secretary in the case

of a severely distressed jurisdiction, not more than onehalf of the costs of activities under subparagraph (B) are

derived from such unexpended amounts; or

(2) 25 percent of such unexpended amounts if—

(A) the grantee agrees to expend such funds for economic development activities eligible under title I of this

Act; and

(B) except when waived by the Secretary in the case

of a severely distressed jurisdiction, not more than one-
63 Sec. 121 URBAN DEVELOPMENT ACTION GRANTS

half of the costs of such activities are derived from such

unexpended amount.

FAIR PARTICIPATION FOR SMALL COMMUNITIES

SEC. 120. ø42 U.S.C. 5319¿ No community shall be barred from

participating in any program authorized under this title solely on

the basis of population, except as expressly authorized by statute.

HISTORIC PRESERVATION REQUIREMENTS

SEC. 121. ø42 U.S.C. 5320¿ (a) With repect to applications for

assistance under section 119, the Secretary of the Interior, after

consulting with the Secretary, shall prescribe and implement regulations concerning projects funded under section 119 and their relationship with—

(1) ‘‘An Act to establish a program for the preservation of

additional historic properties throughout the Nation, and for

other purposes’’, approved October 14, 1966, as amended; and

(2) ‘‘An Act to provide for the preservation of historical and

archaeological data (including relics and specimens) which

might otherwise be lost as a result of the construction of a

dam’’, approved June 27, 1960, as amended.

(b) In prescribing and implementing such regulations with respect to applications submitted under section 119 which identify

any property pursuant to subsection (c)(4)(B) of such section, the

Secretary of the Interior shall provide at least that—

(1) the appropriate State historic preservation officer (as

determined in accordance with regulations prescribed by the

Secretary of the Interior) shall, not later than 45 days after receiving information from the applicant relating to the identification of properties which will be affected by the project for

which the application is made and which may meet the criteria

established by the Secretary of the Interior for inclusion on the

National Register of Historic Places (together with documentation relating to such inclusion), submit his or her comments,

together with such other information considered necessary by

the officer, to the applicant concerning such properties; and

(2) the Secretary of the Interior shall, not later than 45

days after receiving from the applicant the information described in paragraph (1) and the comments submitted to the

applicant in accordance with paragraph (1), make a determination as to whether any of the properties affected by the project

for which the application is made is eligible for inclusion on

the National Register of Historic Places.

(c) The Advisory Council on Historic Preservation shall prescribe regulations providing for expeditious action by the Council in

making its comments under section 106 of the Act referred to in

subsection (a)(1) in the case of properties which are included on, or

eligible for inclusion on, the National Register of Historic Places

and which are affected by a project for which an application is

made under section 119.
Sec. 122 URBAN DEVELOPMENT ACTION GRANTS 64

SEC. 122. ø42 U.S.C. 5321¿ SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.

For funds designated under this title by a recipient to address

the damage in an area for which the President has declared a disaster under title IV of the Robert T. Stafford Disaster Relief and

Emergency Assistance Act, the Secretary may suspend all requirements for purposes of assistance under section 106 for that area,

except for those related to public notice of funding availability, nondiscrimination, fair housing, labor standards, environmental standards, and requirements that activities benefit persons of low- and

moderate-income.
65

CDBG ASSISTANCE FOR COLONIAS

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4396; 42 U.S.C. 5306 note]

SEC. 916. ø42 U.S.C. 5306 note¿ CDBG ASSISTANCE FOR UNITED

STATES-MEXICO BORDER REGION.

(a) SET-ASIDE FOR COLONIAS.—The States of Arizona, California, New Mexico, and Texas shall each make available, for activities designed to meet the needs of the residents of colonias in

the State relating to water, sewage, and housing, the following percentage of the amount allocated for the State under section 106(d)

of the Housing and Community Development Act of 1974 (42

U.S.C. 5306(d)):

(1) FIRST FISCAL YEAR.—For the first fiscal year to which

this section applies, 10 percent.

(2) SUCCEEDING FISCAL YEARS.—For each of the succeeding

fiscal years to which this section applies, a percentage (not to

exceed 10 percent) that is determined by the Secretary of

Housing and Urban Development to be appropriate after consultation with representatives of the interests of the residents

of colonias.

(b) ELIGIBLE ACTIVITIES.—Assistance distributed pursuant to

this section may be used only to carry out the following activities:

(1) PLANNING.—Payment of the cost of planning community development (including water and sewage facilities) and

housing activities, including the cost of—

(A) the provision of information and technical assistance to residents of the area in which the activities are to

be concentrated and to appropriate nonprofit organizations

and public agencies acting on behalf of the residents; and

(B) preliminary surveys and analyses of market needs,

preliminary site engineering and architectural services,

site options, applications, mortgage commitments, legal

services, and obtaining construction loans.

(2) ASSESSMENTS FOR PUBLIC IMPROVEMENTS.—The payment of assessments (including any charge made as a condition

of obtaining access) levied against properties owned and occupied by persons of low and moderate income to recover the capital cost for a public improvement.

(3) OTHER IMPROVEMENTS.—Other activities eligible under

section 105 of the Housing and Community Development Act

of 1974 designed to meet the needs of residents of colonias.

(c) DISTRIBUTION OF ASSISTANCE.—Assistance shall be made

available pursuant to this section in accordance with a distribution

plan that gives priority to colonias having the greatest need for

such assistance.
Sec. 916 CDBG ASSISTANCE FOR COLONIAS 66

1 Indented so in law.

(d) APPLICABLE LAW.—Except to the extent inconsistent with

this section, assistance provided pursuant to this section shall be

subject to the provisions of title I of the Housing and Community

Development Act of 1974 (42 U.S.C. 5301 et seq.).

(e) DEFINITIONS.—For purposes of this section:

(1) COLONIA.—The term ‘‘colonia’’ means any identifiable

community that—

(A) is in the State of Arizona, California, New Mexico,

or Texas;

(B) is in the United States-Mexico border region;

(C) is determined to be a colonia on the basis of objective criteria, including lack of potable water supply, lack of

adequate sewage systems, and lack of decent, safe, and

sanitary housing; and

(D) 1 was in existence as a colonia before the date

of the enactment of the Cranston-Gonzalez National

Affordable Housing Act.

(2) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ means an organization described in section 501(c) of

the Internal Revenue Code of 1986 and exempt from taxation

under section 501(a) of such Code.

(3) PERSONS OF LOW AND MODERATE INCOME.—The term

‘‘persons of low and moderate income’’ has the meaning given

the term in section 102(a) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)).

(4) UNITED STATES-MEXICO BORDER REGION.—The term

‘‘United States-Mexico border region’’ means the area of the

United States within 150 miles of the border between the

United States and Mexico, except that the term does not include any standard metropolitan statistical area that has a

population exceeding 1,000,000.
67

COMMUNITY DEVELOMENT NEEDS COMPUTER

DATABASE

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3858; 42 U.S.C. 5304 note]

SEC. 852. ø42 U.S.C. 5304 note¿ COMPUTERIZED DATABASE OF COMMUNITY DEVELOPMENT NEEDS.

(a) ESTABLISHMENT OF DEMONSTRATION PROGRAM.—Not later

than the expiration of the 1-year period beginning on the date appropriations for the purposes of this section are made available, the

Secretary of Housing and Urban Development (hereafter in this

section referred to as the ‘‘Secretary’’) shall establish and implement a demonstration program to determine the feasibility of assisting States and units of general local government to develop

methods, utilizing contemporary computer technology, to—

(1) monitor, inventory, and maintain current listings of the

community development needs of the States and units of general local government; and

(2) coordinate strategies within States (especially among

various units of general local government) for meeting such

needs.

(b) INTEGRATED DATABASE SYSTEM AND COMPUTER MAPPING

TOOL.—

(1) DEVELOPMENT AND PURPOSES.—In carrying out the program under this section, the Secretary shall provide for the development of an integrated database system and computer

mapping tool designed to efficiently (A) collect, store, process,

and retrieve information relating to priority nonhousing community development needs within States, and (B) coordinate

strategies for meeting such needs. The integrated database

system and computer mapping tool shall be designed in a manner to coordinate and facilitate the preparation of community

development plans under section 104(m)(1) of the Housing and

Community Development Act of 1974 and to process any information necessary for such plans.

(2) AVAILABILITY TO STATES.—The Secretary shall make

the integrated database system and computer mapping tool developed pursuant to this subsection available to States without

charge.

(3) COORDINATION WITH EXISTING TECHNOLOGY.—The Secretary shall, to the extent practicable, utilize existing technologies and coordinate such activities with existing data systems to prevent duplication.

(c) TECHNICAL ASSISTANCE.—Under the program under this

section, the Secretary shall provide consultation and advice to

States and units of general local government regarding the capa-
Sec. 852 COMMUNITY DEVELOPMENT NEEDS DATABASE 68

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

bilities and advantages of the integrated database system and computer mapping tool developed pursuant to subsection (b) and assistance in installing and using the database system and mapping tool.

(d) GRANTS.—

(1) AUTHORITY AND PURPOSE.—The Secretary shall, to the

extent amounts are made available under appropriation Acts

pursuant to subsection (g), make grants to States for capital

costs relating to installation and use of the integrated database

system and computer mapping tool developed pursuant to subsection (b).

(2) LIMITATIONS.—The Secretary may not make more than

one grant under this subsection to any single State. The Secretary may not make a grant under this subsection to any single State in an amount exceeding $1,000,000.

(3) APPLICATION AND SELECTION.—The Secretary shall provide for the form and manner of applications for grants under

this subsection. The Secretary shall establish criteria for the

selection of States which have submitted applications to receive grants under this section and shall select recipients according to such criteria, which shall give priority to States having, on a long-term basis (as determined by the Secretary), levels of unemployment above the national average level.

(e) STATE COORDINATION OF LOCAL NEEDS.—Each State that

receives a grant under subsection (d) shall annually submit to the

Secretary a report containing a summary of the priority nonhousing community development needs within the State.

(f) REPORTS BY SECRETARY.—The Secretary shall annually submit to the Committees on Banking, Finance and Urban Affairs of

the House of Representatives 1 and Banking, Housing, and Urban

Affairs of the Senate, a report containing a summary of the information submitted for the year by States pursuant to subsection (e),

which shall describe the priority nonhousing community development needs within such States.

(g) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated for each of the fiscal years 1993 and 1994,

$10,000,000 to carry out the program established under this section.
69

ADDITIONAL PROVISIONS REGARDING USE OF CDBG

AMOUNTS

EXCERPTS FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1999

[Public Law 105–276; 112 Stat. 2478, 2484; 42 U.S.C. 5305 note]

COMMUNITY DEVELOPMENT BLOCK GRANTS

* * * * * * *

ø42 U.S.C. 5305 note¿ For any fiscal year, of the amounts

made available as emergency funds under the heading ‘‘Community

Development Block Grants Fund’’ and notwithstanding any other

provision of law, not more than $250,000 may be used for the nonFederal cost-share of any project funded by the Secretary of the

Army through the Corps of Engineers.

* * * * * * *

BROWNFIELDS AS ELIGIBLE CDBG ACTIVITY

SEC. 205. ø42 U.S.C. 5305 note¿ For fiscal years 1998, 1999,

and all fiscal years thereafter, States and entitlement communities

may use funds allocated under the community development block

grants program under title I of the Housing and Community Development Act of 1974 for environmental cleanup and economic development activities related to Brownfields projects in conjunction

with the appropriate environmental regulatory agencies, as if such

activities were eligible under section 105(a) of such Act.
70

REHABILITATION DEMONSTRATION GRANT PROGRAM

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2666; 12 U.S.C. 1701z–1 note]

SEC. 599G. ø12 U.S.C. 1701z–1 note¿ REHABILITATION DEMONSTRATION

GRANT PROGRAM.

(a) IN GENERAL.—The Secretary of Housing and Urban Development shall, to the extent amounts are provided in appropriation

Acts to carry out this section, carry out a program to demonstrate

the effectiveness of making grants for rehabilitation of single family housing located within 10 demonstration areas designated by

the Secretary. Of the areas designated by the Secretary under this

section—

(1) 6 shall be areas that have primarily urban characteristics;

(2) 3 shall be areas that are outside of a metropolitan statistical area; and

(3) 1 shall be an area that has primarily rural characteristics.

In selecting areas, the Secretary shall provide for national geographic and demographic diversity.

(b) GRANTEES.—Grants under the program under this section

may be made only to agencies of State and local governments and

non-profit organizations operating within the demonstration areas.

(c) SELECTION CRITERIA.—In selecting among applications for

designation of demonstration areas and grants under this section,

the Secretary shall consider—

(1) the extent of single family residences located in the

proposed area that have rehabilitation needs;

(2) the ability and expertise of the applicant in carrying

out the purposes of the demonstration program, including the

availability of qualified housing counselors and contractors in

the proposed area willing and able to participate in rehabilitation activities funded with grant amounts;

(3) the extent to which the designation of such area and

the grant award would promote affordable housing opportunities;

(4) the extent to which selection of the proposed area

would have a beneficial effect on the neighborhood or community in the area and on surrounding areas;

(5) the extent to which the applicant has demonstrated

that grant amounts will be used to leverage additional public

or private funds to carry out the purposes of the demonstration

program;

(6) the extent to which lenders (including local lenders and

lenders outside the proposed area) are willing and able to
71 Sec. 599G REHABILITATION DEMONSTRATION GRANT PROGRAM

1October 21, 1998.

make loans for rehabilitation activities assisted with grant

funds; and

(7) the extent to which the application provides for the involvement of local residents in the planning of rehabilitation

activities in the demonstration area.

(d) USE OF GRANT FUNDS.—Funds from grants made under

this section may be used by grantees—

(1) to subsidize interest on loans, over a period of not more

than 5 years from the origination date of the loan, made after

the date of the enactment of this Act for rehabilitation of any

owner-occupied 1- to 4-family residence, including the payment

of interest during any period in which a residence is uninhabitable because of rehabilitation activities;

(2) to facilitate loans for rehabilitation of 1- to 4-family

properties previously subject to a mortgage insured under the

National Housing Act that has been foreclosed or for which insurance benefits have been paid, including to establish revolving loan funds, loan loss reserves, and other financial structures; and

(3) to provide technical assistance in conjunction with the

rehabilitation of owner-occupied 1- to 4-family residences, including counseling, selection contractors, monitoring of work,

approval of contractor payments, and final inspection of work.

(e) DEFINITION OF REHABILITATION.—For purposes of this section, the term ‘‘rehabilitation’’ has the meaning given such term in

section 203(k)(2)(B) of the National Housing Act (12 U.S.C.

1709(k)(2)(B)).

(f) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to

be appropriated to the Secretary to carry out this section such

sums as may be necessary for each of fiscal years 1999 through

2003.

(g) EFFECTIVE DATE.—This section shall take effect on the date

of the enactment of this Act. 1
72

1Section 289(a) of the Cranston-Gonzalez National Affordable Housing Act, Pub. L. 101–625,

provides that no new loans shall be made under section 312 of the Housing Act of 1964 after

October 1, 1991. Section 289(b) of such Act repealed such section 312, effective on October 1,

1991.

RIGHT OF REDEMPTION FOR SECTION 312

MORTGAGORS

EXCERPT FROM DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT REFORM ACT OF 1989

[Public Law 101–235; 103 Stat. 1987; 42 U.S.C. 1452c]

SEC. 701. ø42 U.S.C. 1452c¿ NULLIFICATION OF RIGHT OF REDEMPTION

OF SINGLE FAMILY MORTGAGORS UNDER SECTION 312

REHABILITATION LOAN PROGRAM.

(a) IN GENERAL.—Whenever with respect to a single family

mortgage securing a loan under section 312 of the Housing Act of

1964 1, the Secretary of Housing and Urban Development or its

foreclosure agent forecloses in any Federal or State court or pursuant to a power of sale in a mortgage, the purchaser at the foreclosure sale shall be entitled to receive a conveyance of title to, and

possession of, the property, subject to any interests senior to the interests of the Secretary. With respect to properties that are vacant

and abandoned, notwithstanding any State law to the contrary,

there shall be no right of redemption (including all instances any

right to possession based upon any right of redemption) in the

mortgagor or any other person subsequent to the foreclosure sale

in connection with such single family mortgage. The appropriate

State official or the trustee, as the case may be, shall execute and

deliver a deed or other appropriate instrument conveying title to

the purchaser at the foreclosure sale, consistent with applicable

procedures in the jurisdiction and without regard to any such right

of redemption.

(b) FORECLOSURE BY OTHERS.—Whenever with respect to a single family mortgage on a property that also has a single family

mortgage securing a loan under section 312 of the Housing Act of

1964, a mortgagee forecloses in any Federal or State court or pursuant to a power of sale in a mortgage, the Secretary of Housing

and Urban Development, if the Secretary is purchaser at the foreclosure sale, shall be entitled to receive a conveyance of title to,

and possession of, the property, subject to the interests senior to

the interests of the mortgagee. Notwithstanding any State law to

the contrary, there shall be no right of redemption (including in all

instances any right to possession based upon any right of redemption) if the mortgagor or any other person subsequent to the foreclosure sale to the Secretary in connection with a property that secured a single family mortgage for a loan under section 312 of the

Housing Act of 1964. The appropriate State official or the trustee,

as the case may be, shall execute and deliver a deed or other appropriate instrument conveying title to the Secretary, who is the
73 Sec. 701 RIGHT OF REDEMPTION FOR SECTION 312 MORTGATORS

purchaser at the foreclosure sale, consistent with applicable procedures in the jurisdiction and without regard to any such right of

redemption.

(c) VERIFICATION OF TITLE.—The following actions shall be

taken in order to verify title to the purchaser at the foreclosure

sale:

(1) In the case of a judicial foreclosure in any Federal or

State court, there shall be included in the petition and in the

judgment of foreclosure a statement that the foreclosure is in

accordance with this subsection and that there is no right of

redemption in the mortgagor or any other person.

(2) In the case of a foreclosure pursuant to a power of sale

provision in the mortgage, the statement required in paragraph (1) shall be included in the advertisement of the sale

and either in the recitals of the deed or other appropriate instrument conveying title to the purchaser at the foreclosure

sale or in an affidavit or addendum to the deed.

(d) DEFINITIONS.—For purposes of this section:

(1) The term ‘‘mortgage’’ means a deed of trust, mortgage,

deed to secure debt, security agreement, or any other form of

instrument under which any interest in property, real, personal or mixed, or any interest in property, including leaseholds, life estates, reversionary interests, and any other estates

under applicable State law, is conveyed in trust, mortgaged,

encumbered, pledged, or otherwise rendered subject to a lien,

for the purpose of securing the payment of money or the performance of an obligation.

(2) The term ‘‘single family mortgage’’ means a mortgage

that covers property that includes a 1- to 4-family residence.
74

NEIGHBORHOOD REINVESTMENT CORPORATION

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT

AMENDMENTS OF 1978

[Public Law 95–557; 92 Stat. 2115; 42 U.S.C. 8101 et seq.]

TITLE VI—NEIGHBORHOOD REINVESTMENT CORPORATION

SHORT TITLE

SEC. 601. ø42 U.S.C. 8101 note¿ This title may be cited as the

‘‘Neighborhood Reinvestment Corporation Act’’.

FINDINGS AND PURPOSE

SEC. 602. ø42 U.S.C. 8101¿ (a) The Congress finds that—

(1) the neighborhood housing services demonstration of the

Urban Reinvestment Task Force has proven its worth as a successful program to revitalize older urban neighborhoods by mobilizing public, private, and community resources at the neighborhood level; and

(2) the demand for neighborhood housing services programs in cities throughout the United States warrants the creation of a public corporation to institutionalize and expand the

neighborhood housing services program and other programs of

the present Urban Reinvestment Task Force.

(b) The purpose of this title is to establish a public corporation

which will continue the joint efforts of the Federal financial supervisory agencies and the Department of Housing and Urban Development to promote reinvestment in older neighborhoods by local financial institutions working cooperatively with the community people and local government, and which will continue the nonbureaucratic approach of the Urban Reinvestment Task Force, relying

largely on local initiative for the specific design of local programs.

ESTABLISHMENT OF CORPORATION

SEC. 603. ø42 U.S.C. 8102¿ (a) There is established a Neighborhood Reinvestment Corporation (hereinafter referred to as the

‘‘corporation’’) which shall be a body corporate and shall possess the

powers and shall be subject to the direction and limitations specified herein.

(b) The corporation shall implement and expand the demonstration activities carried out by the Urban Reinvestment Task

Force.

(c) The corporation shall maintain its principal office in the

District of Columbia or at such other place the corporation may

from time to time prescribe.

(d) The corporation, including its franchise, activities, assets,

and income, shall be exempt from all taxation now or hereafter im-
75 Sec. 604 NEIGHBORHOOD REINVESTMENT CORPORATION

posed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the corporation shall

be subject to State, territorial, county, municipal, or local taxation

to the same extent according to its value as other real property is

taxed.

BOARD OF DIRECTORS; ESTABLISHMENT

SEC. 604. ø42 U.S.C. 8103¿ (a) The corporation shall be under

the direction of a board of directors made up of the following members:

(1) the Chairman of the Federal Home Loan Bank Board

or a member of the Federal Home Loan Bank Board to be designated by the Chairman;

(2) the Secretary of Housing and Urban Development;

(3) the Chairman of the Board of Governors of the Federal

Reserve System, or a member of the Board of Governors of the

Federal Reserve System to be designated by the Chairman;

(4) the Chairman of the Federal Deposit Insurance Corporation or the appointive member of the Board of Directors of

the Federal Deposit Insurance Corporation if so designated by

the Chairman;

(5) the Comptroller of the Currency; and

(6) the Chairman of the National Credit Union Administration or a member of the Board of the National Credit Union

Administration to be designated by the Chairman.

(b) The Board shall elect from among its members a chairman

who shall serve for a term of two years, except that the Chairman

of the Federal Home Loan Bank Board shall serve as Chairman of

the Board of Directors for the first such two-year term.

(c) Each director of the corporation shall serve ex officio during

the period he holds the office to which he is appointed by the President.

(d) The directors of the corporation, as full-time officers of the

United States, shall serve without additional compensation but

shall be reimbursed for travel, subsistence, and other necessary expenses incurred in the performance of their duties as directors of

the corporation.

(e) The directors of the corporation shall adopt such bylaws,

policies, and administrative provisions as are necessary to the functioning of the corporation and consistent with the provisions of this

title.

(f) A director who is necessarily absent from a meeting of the

board, or of a committee of the board, may participate in such

meeting through a duly designated representative who is serving,

pursuant to appointment by the President of the United States, by

and with the advice and consent of the Senate, in the same department, agency, corporation, or instrumentality as the absent director, or in the case of the Comptroller of the Currency, through a

duly designated Deputy Comptroller.

(g) The presence of a majority of the board members, or their

representatives as provided in subsection (f), shall constitute a

quorum.
Sec. 605 NEIGHBORHOOD REINVESTMENT CORPORATION 76

(h) The corporation shall be subject to the provisions of section

552 of title 5, United States Code.

(i) All meetings of the board of directors will be conducted in

accordance with the provisions of section 552b of title 5, United

States Code.

OFFICERS AND EMPLOYEES

SEC. 605. (a) The board shall have power to select, employ, and

fix the compensation and benefits of such officers, employees, attorneys, and agents as shall be necessary for the performance of its

duties under this title, without regard to the provisions of title 5,

United States Code, governing appointments in the competitive

service, classification, and General Schedule pay rates, except that

no officer, employee, attorney, or agent of the corporation may be

paid compensation at a rate in excess of the highest rate provided

for GS–18 of the General Schedule under section 5352 of title 5,

United States Code.

(b) The directors of the corporation shall appoint an executive

director who shall serve as chief executive officer of the corporation.

(c) The executive director of the corporation, subject to approval by the board, may appoint and remove such employees of

the corporation as he determines necessary to carry out the purposes of the corporation.

(d) No political test or political qualification shall be used in

selecting, appointing, promoting, or taking any other personnel action with respect to any officer, agent, or employee of the corporation or of any recipient, or in selecting or monitoring any grantee,

contractor, or person or entity receiving financial assistance under

this title.

(e) Officers and employees of the corporation shall not be considered officers or employees of the United States, and the corporation shall not be considered a department, agency, or instrumentality of the Federal Government. The corporation shall be subject

to administrative and cost standards issued by the Office of Management and Budget similar to standards applicable to non-profit

grantees and educational institutions. ø42 U.S.C. 8104¿

POWERS AND DUTIES

SEC. 606. ø42 U.S.C. 8105¿ (a)(1) The corporation shall continue the work of the Urban Reinvestment Task Force in establishing neighborhood housing services programs in neighborhoods

throughout the United States, monitoring their progress, and providing them with grants and technical assistance. For the purpose

of this paragraph, a neighborhood housing services program may

involve a partnership of neighborhood residents and representatives of local governmental and financial institutions, organized as

a State-chartered non-profit corporation, working to bring about reinvestment in one or more neighborhoods through a program of

systematic housing inspections, increased public investment, increased private lending, increased resident investment, and a revolving loan fund to make loans available at flexible rates and

terms to homeowners not meeting private lending criteria.
77 Sec. 606 NEIGHBORHOOD REINVESTMENT CORPORATION

(2) The corporation shall continue the work of the Urban Reinvestment Task Force in identifying, monitoring, evaluating, and

providing grants and technical assistance to selected neighborhood

preservation projects which show promise as mechanisms for reversing neighborhood decline and improving the quality of neighborhood life.

(3) The corporation shall experimentally replicate neighborhood

preservation projects which have demonstrated success, and after

creating reliable development processes, bring the new programs to

neighborhoods throughout the United States which in the judgment

of the corporation can benefit therefrom, by providing assistance in

organizing programs, providing grants in partial support of program costs, and providing technical assistance to ongoing programs.

(4) The corporation shall continue the work of the Urban Reinvestment Task Force in supporting Neighborhood Housing Services

of America, a nonprofit corporation established to provide services

to local neighborhood housing services programs, with support

which may include technical assistance and grants to expand its

national loan purchase pool and may contract with it for services

which it can perform more efficiently or effectively than the corporation.

(5) The corporation shall, in making and providing the foregoing grants and technical and other assistance, determine the reporting and management restrictions or requirements with which

the recipients of such grants or other assistance must comply. In

making such determinations, the corporation shall assure that recipients of grants and other assistance make available to the corporation such information as may be necessary to determine compliance with applicable Federal laws.

(b) To carry out the foregoing purposes and engage in the foregoing activities, the corporation is authorized—

(1) to adopt, alter, and use a corporate seal;

(2) to have succession, until dissolved by Act of Congress;

(3) to make and perform contracts, agreements, and commitments;

(4) to sue and be sued, complain and defend, in any State,

Federal, or other court;

(5) to determine its necessary expenditures and the manner in which the same shall be incurred, allowed, and paid,

and appoint, employ, and fix and provide for the compensation

of consultants, without regard to any other law, except as provided in section 608(d);

(6) to settle, adjust, and compromise, and with or without

compensation or benefit to the corporation to release or waive

in whole or in part, in advance or otherwise, any claim, demand, or right of, by, or against the corporation;

(7) to invest such funds of the corporation in such investment as the board of directors may describe;

(8) to acquire, take, hold, and own, and to deal with and

dispose of any property; and

(9) to exercise all other powers that are necessary and

proper to carry out the purposes of this title.
Sec. 607 NEIGHBORHOOD REINVESTMENT CORPORATION 78

1Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in part XII of this compilation, provides that certain provisions of

law requiring submittal to Congress of an annual, semiannual, or other regular periodic report

shall cease to be effective on May 15, 2000. This subsection is covered by such provision. However, section 1102 of the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569, which is set forth post in part XII of this compilation, provides that such section 3003(a)(1) shall not apply to the report required to be submitted under this subsection.

(c)(1) The corporation may contract with the Office of Neighborhood Reinvestment of the Federal home loan banks for all staff,

services, facilities, and equipment now or in the future furnished

by the Office of Neighborhood Reinvestment to the Urban Reinvestment Task Force, including receiving the services of the Director of

the Office of Neighborhood Reinvestment as the corporation’s executive director.

(2) The corporation shall have the power to award contracts

and grants to—

(A) neighborhood housing services corporations and other

nonprofit corporations engaged in neighborhood preservation

activities; and

(B) local governmental bodies.

(3) The Secretary of Housing and Urban Development, the Federal Home Loan Bank Board and the Federal home loan banks, the

Board of Governors of the Federal Reserve System and the Federal

Reserve banks, the Federal Deposit Insurance Corporation, and the

Comptroller of the Currency, the National Credit Union Administration or any other department, agency, or other instrumentality

of the Federal Government are authorized to provide funds, services and facilities, with or without reimbursement, necessary to

achieve the objectives and to carry out the purposes to this title.

(d)(1) The corporation shall have no power to issue any shares

of stocks, or to declare or pay any dividends.

(2) No part of the income or assets of the corporation shall

inure to the benefit of any director, officer, or employee, except as

reasonable compensation for services or reimbursement for expenses.

(3) The corporation may not contribute to or otherwise support

any political party or candidate for elective public office.

REPORTS AND AUDITS

SEC. 607. ø42 U.S.C. 8106¿ (a) The corporation shall publish

an annual report which shall be transmitted by the corporation to

the President and the Congress. 1

(b) The accounts of the corporation shall be audited annually.

Such audits shall be conducted in accordance with generally accepted auditing standards by independent certified public accountants

who are certified by a regulatory authority of the jurisdiction in

which the audit is undertaken.

(c) In addition to the annual audit, the financial transactions

of the corporation for any fiscal year during which Federal funds

are available to finance any portion of its operations may be audited by the General Accounting Office in accordance with such

rules and regulations as may be prescribed by the Comptroller

General of the United States.
79 Sec. 608 NEIGHBORHOOD REINVESTMENT CORPORATION

(d) For any fiscal year during which Federal funds are available to finance any portion of the corporation’s grants or contracts,

the General Accounting Office, in accordance with such rules and

regulations may be prescribed by the Comptroller General of the

United States, may audit the grantees or contractors of the corporation.

(e) The corporation shall conduct or require each grantee or

contractor to provide for an annual financial audit. The report of

each such audit shall be maintained for a period of at least five

years at the principal office of the corporation.

AUTHORIZATION

SEC. 608. ø42 U.S.C. 8107¿ (a)(1) There are authorized to be

appropriated to the corporation to carry out this title $29,476,000

for fiscal year 1993 and $30,713,992 for fiscal year 1994. Not more

than 15 percent of any amount appropriated under this paragraph

for any fiscal year may be used for administrative expenses.

(2) Of the amount appropriated pursuant to this subsection for

any fiscal year, amounts appropriated in excess of the amount necessary to continue existing services of the Neighborhood Reinvestment Corporation in revitalizing declining neighborhoods shall be

available—

(A) to expand the national neighborhood housing services

network and to assist network capacity development, including

expansion of rental housing resources;

(B) to expand the loan purchase capacity of the national

neighborhood housing services secondary market operated by

Neighborhood Housing Services of America;

(C) to make grants to provide incentives to extend low-income housing use in connection with properties subject to prepayment pursuant to the Low-Income Housing Preservation

and Resident Ownership Act of 1990;

(D) to increase the resources available to the national

neighborhood housing services network programs for the purchase of multifamily and single-family properties owned by the

Secretary of Housing and Urban Development for rehabilitation (if necessary) and sale to low- and moderate-income families; and

(E) to provide matching capital grants, operating subsidies,

and technical services to mutual housing associations for the

development, acquisition, and rehabilitation of multifamily and

single-family properties (including properties owned by the

Secretary of Housing and Urban Development) to ensure affordability by low- and moderate-income families.

(b) Funds appropriated pursuant to this section shall remain

available until expended.

(c) Non-Federal funds received by the corporation, and funds

received by any recipient from a source other than the corporation,

shall be accounted for and reported as receipts and disbursements

separate and distinct from Federal funds.

(d) The corporation shall prepare annually a business-type

budget which shall be submitted to the Office of Management and

Budget, under such rules and regulations as the President may es-
Sec. 608 NEIGHBORHOOD REINVESTMENT CORPORATION 80

tablish as to the date of submission, the form and content, the classifications of data, and the manner in which such budget program

shall be prepared and presented. The budget of the corporation as

modified, amended, or revised by the President shall be transmitted to the Congress as a part of the annual budget required by

chapter 11 of title 31, United States Code. Amendments to the annual budget program may be submitted from time to time.
81

NATIONAL URBAN POLICY

EXCERPT FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1970

[Public Law 91–609; 84 Stat. 1791; 42 U.S.C. 4501 et seq.]

TITLE VII—NATIONAL URBAN POLICY AND NEW

COMMUNITY DEVELOPMENT

SHORT TITLE AND STATEMENT OF PURPOSE

SEC. 701. ø42 U.S.C. 4501 note¿ (a) This title may be cited as

‘‘National Urban Policy and New Community Development Act of

1970’’.

(b) ø42 U.S.C. 4501¿ It is the policy of the Congress and the

purpose of this title to provide for the development of a national

urban policy and to encourage the rational, orderly, efficient, and

economic growth, development, and redevelopment of our States,

metropolitan areas, cities, counties, towns, and communities in predominantly rural areas which demonstrate a special potential for

accelerated growth; to encourage the prudent use and conservation

of energy and our natural resources; and to encourage and support

development which will assure our communities and their residents

of adequate tax bases, community services, job opportunities, and

good housing in well-balanced neighborhoods in socially, economically, and physically attractive living environments.

PART A—DEVELOPMENT OF A NATIONAL URBAN POLICY

FINDINGS AND DECLARATION OF POLICY

SEC. 702. ø42 U.S.C. 4502¿ (a) The Congress finds that rapid

changes in patterns of urban settlement, including change in population distribution and economic bases of urban areas, have created

an imbalance between the Nation’s needs and resources and seriously threaten our physical and social environment, and the financial viability of our cities, and that the economic and social development of the Nation, the proper conservation of our energy and

other natural resources, and the achievement of satisfactory living

standards depend upon the sound, orderly, and more balanced development of all areas of the Nation.

(b) The Congress further finds that Federal programs affect the

location of population, economic growth, and the character of urban

development; that such programs frequently conflict and result in

undesirable and costly patterns of urban development and redevelopment which adversely affect the environment and wastefully use

energy and other natural resources; and that existing and future

programs must be interrelated and coordinated within a system of

orderly development and established priorities consistent with a

national urban policy.
Sec. 703 NATIONAL URBAN POLICY 82

(c) To promote the general welfare and properly apply the resources of the Federal Government in strengthening the economic

and social health of all areas of the Nation and more adequately

protect the physical environment and conserve energy and other

natural resources, the Congress declares that the Federal Government, consistent with the responsibilities of State and local government and the private sector, must assume responsibility for the development of a national urban policy which shall incorporate social,

economic, and other appropriate factors. Such policy shall serve as

a guide in making specific decisions at the national level which affect the pattern of urban development and redevelopment and shall

provide a framework for development of interstate, State, and local

urban policy.

(d) The Congress further declares that the national urban policy should—

(1) favor patterns of urbanization and economic development and stabilization which offer a range of alternative locations and encourage the wise and balanced use of physical and

human resources in metropolitan and urban regions as well as

in smaller urban places which have a potential for accelerated

growth;

(2) foster the continued economic strength of all parts of

the United States, including central cities, suburbs, smaller

communities, local neighborhoods, and rural areas;

(3) encourage patterns of development and redevelopment

which minimize disparities among States, regions, and cities;

(4) treat comprehensively the problems of poverty and employment (including the erosion of tax bases, and the need for

better community services and job opportunities) which are associated with disorderly urbanization and rural decline;

(5) develop means to encourage good housing for all Americans without regard to race or creed;

(6) refine the role of the Federal Government in revitalizing existing communities and encouraging planned, largescale urban and new community development;

(7) strengthen the capacity of general governmental institutions to contribute to balanced urban growth and stabilization; and

(8) increase coordination among Federal programs that

seek to promote job opportunities and skills, decent and affordable housing, public safety, access to health care, educational

opportunities, and fiscal soundness for urban communities and

their residents.

NATIONAL URBAN POLICY REPORT

SEC. 703. ø42 U.S.C. 4503¿ (a) The President shall transmit to

the Congress, not later than June 1, 1993, and not later than the

first day of June of every odd-numbered year thereafter, a Report

on National Urban Policy which shall contribute to the formulation

of such a policy and in addition shall include—

(1) information, statistics, and significant trends relating

to the pattern of urban development for the preceding two

years;
83 Sec. 703 NATIONAL URBAN POLICY

1Section 921(2)(B) of the Housing and Community Development Act of 1992, Pub. L. 102–550,

provides that this paragraph is amended ‘‘by striking ‘such’ and all that follows through the end

of the sentence and inserting ‘legislative or administrative proposals—

‘(A) to promote coordination among Federal programs to assist urban areas;

‘(B) to enhance the fiscal capacity of fiscally distressed urban areas;

‘(C) to promote job opportunities in economically distressed urban areas and to enhance the job skills of residents of such areas;

‘(D) to generate decent and affordable housing;

‘(E) to reduce racial tensions and to combat racial and ethnic violence in urban

areas;

‘(F) to combat urban drug abuse and drug-related crime and violence;

‘(G) to promote the delivery of health care to low-income communities in urban

areas;

‘(H) to expand educational opportunities in urban areas; and

‘(I) to achieve the goals of the national urban policy.’ ’’.

Because the word ‘‘such’’ appears in two places in this paragraph and the amendment does

not specify which occurrence of the work to strike, the amendment could not be executed.

(2) a summary of significant problems facing the United

States as a result of urban trends and developments affecting

the well-being of urban areas;

(3) an examination of the housing and related community

development problems experienced by cities undergoing a

growth rate which equals or exceeds the national average;

(4) an evaluation of the progress and the effectiveness of

Federal efforts designed to meet such problems and to carry

out the national urban policy;

(5) an assessment of the policies and structure of existing

and proposed interstate planning and developments affecting

such policy;

(6) a review of State, local, and private policies, plans, and

programs relevent to such policy;

(7) current and foreseeable needs in the areas served by

policies, plans, and programs designed to carry out such policy,

and the steps being taken to meet such needs; and

(8) 1 recommendations for programs and policies for carrying out such policy, including such legislation and administrative actions as may be deemed necessary and desirable.

(b) The President may transmit from time to time to the Congress supplementary reports on urban growth which shall include

such supplementary and revised recommendations as may be appropriate.

(c) To assist in the preparation of the National Urban Policy

Report and any supplementary reports, the President may establish an advisory board, or seek the advice from time to time of temporary advisory boards, the members of whom shall be drawn from

among private citizens familiar with the problems of urban areas,

and from among Federal officials, Governors of States, mayors,

county officials, members of State and local legislative bodies, and

others qualified to assist in the preparation of such reports.
Sec. 703 NATIONAL URBAN POLICY 84

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(d) REFERRAL.—The National Urban Policy Report shall, when

transmitted to Congress, be referred in the Senate to the Committee on Banking, Housing, and Urban Affairs, and in the House

of Representatives to the Committee on Banking, Finance and

Urban Affairs. 1
85

JOHN HEINZ NEIGHBORHOOD DEVELOPMENT ACT

EXCERPT FROM HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

[Public Law 98–181; 97 Stat. 1172; 42 U.S.C. 5318a]

JOHN HEINZ NEIGHBORHOOD DEVELOPMENT PROGRAM

SEC. 123. ø42 U.S.C. 5318a¿ (a) For the purposes of this section:

(1) The term ‘‘eligible neighborhood development activity’’

means—

(A) creating permanent jobs in the neighborhood;

(B) establishing or expanding businesses within the

neighborhood;

(C) developing, rehabilitating, or managing neighborhood housing stock;

(D) developing delivery mechanisms for essential services that have lasting benefit to the neighborhood; or

(E) planning, promoting, or financing voluntary neighborhood improvement efforts.

(2) The term ‘‘eligible neighborhood development organization’’ means—

(A)(i) an entity organized as a private, voluntary, nonprofit corporation under the laws of the State in which it

operates;

(ii) an organization that is responsible to residents of

its neighborhood through a governing body, not less than

51 per centum of the members of which are residents of

the area served;

(iii) an organization that has conducted business for at

least one year prior to the date of application for participation;

(iv) an organization that operates within an area

that—

(I) meets the requirements for Federal assistance

under section 119 of the Housing and Community Development Act of 1974;

(II) is designated as an enterprise zone under Federal law;

(III) is designated as an enterprise zone under

State law and recognized by the Secretary for purposes of this section as a State enterprise zone; or

(IV) is a qualified distressed community within

the meaning of section 233(b)(1) of the Bank Enterprise Act of 1991; and

(v) an organization that conducts one or more eligible

neighborhood development activities that have as their primary beneficiaries low- and moderate-income persons, as
Sec. 123 NEIGHBORHOOD DEVELOPMENT 86

defined in section 102(a)(2) of the Housing and Community

Development Act of 1974; or

(B) any facility that provides small entrepreneurial

business with affordable shared support services and business development services and meets the requirements of

subparagraph (A).

(3) The term ‘‘neighborhood development funding organization’’ means—

(A) a depository institution the accounts of which are

insured pursuant to the Federal Deposit Insurance Act or

the Federal Credit Union Act, and any subsidiary (as such

term is defined in section 3(w) of the Federal Deposit Insurance Act) thereof;

(B) a depository institution holding company and any

subsidiary thereof (as such term is defined in section 3(w)

of the Federal Deposit Insurance Act); or

(C) a company at least 75 percent of the common stock

of which is owned by one or more insured depository institutions or depository institution holding companies.

(4) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(b)(1) The Secretary shall carry out, in accordance with this

section, a program to support eligible neighborhood development

activities by providing Federal matching funds to eligible neighborhood development organizations on the basis of the monetary support such organizations have received from individuals, businesses,

and nonprofit or other organizations in their neighborhoods, and

from neighborhood development funding organizations, prior to receiving assistance under this section.

(2) The Secretary shall accept applications from eligible neighborhood development organizations for participation in the program. Eligible organizations may participate in more than one year

of the program, but shall be required to submit a new application

and to compete in the selection process for each program year. For

fiscal year 1993 and thereafter, not more than 50 percent of the

grants may be for multiyear awards.

(3) From the pool of eligible neighborhood development organizations submitting applications for participation in a given program year, the Secretary shall select participating organizations in

an appropriate number through a competitive selection process. To

be selected, an applicant shall—

(A) have demonstrated measurable achievements in one or

more of the activities specified in subsection (a)(1);

(B) specify a business plan for accomplishing one or more

of the activities specified in subsection (a)(1);

(C) specify a strategy for achieving greater long term private sector support, especially in cooperation with a neighborhood development funding organization, except that an eligible

neighborhood development organization shall be deemed to

have the full benefit of the cooperation of a neighborhood development funding organization if the eligible neighborhood development organization—
87 Sec. 123 NEIGHBORHOOD DEVELOPMENT

1So in law.

(i) is located in an area described in subsection

(a)(2)(A)(iv) that does not contain a neighborhood development funding organization; or

(ii) demonstrates to the satisfaction of the Secretary

that it has been unable to obtain the cooperation of any

neighborhood development funding organization in such

area despite having made a good faith effort to obtain such

cooperation; and

(D) specify a strategy for increasing the capacity of the organization.

(c) The Secretary shall award grants under this section among

the eligible neighborhood development organizations submitting applications for such grants on the basis of—

(1) the degree of economic distress of the neighborhood involved;

(2) the extent to which the proposed activities will benefit

persons of low and moderate income;

(3) the extent of neighborhood participation in the proposed activities, as indicated by the proportion of the households and businesses in the neighborhood involved that are

members of the eligible neighborhood development organization involved and by the extent of participation in the proposed

activities by a neighborhood development funding organization

that has a branch or office in the neighborhood, except that an

eligible neighborhood development organization shall be

deemed to have the full benefit of the participation of a neighborhood development funding organization if the eligible neighborhood development organization—

(A) is located in an 1 neighborhood that does not contain a branch or office of a neighborhood development

funding organization; or

(B) demonstrates to the satisfaction of the Secretary

that it has been unable to obtain the participation of any

neighborhood development funding organization that has a

branch or office in the neighborhood despite having made

a good faith effort to obtain such participation; and

(4) the extent of voluntary contributions available for the

purpose of subsection (e)(4), except that the Secretary shall

waive the requirement of this subparagraph in the case of an

application submitted by a small eligible neighborhood development organization, an application involving activities in a very

low-income neighborhood, or an application that is especially

meritorious.

(d) The Secretary shall consult with an informal working group

representative of eligible neighborhood organizations with respect

to the implementation and evaluation of the program established

in this section.

(e)(1) The Secretary shall assign each participating organization a defined program year, during which time voluntary contributions from individuals, businesses, and nonprofit or other organizations in the neighborhood, and from neighborhood development

funding organizations, shall be eligible for matching.
Sec. 123 NEIGHBORHOOD DEVELOPMENT 88

(2) Subject to paragraph (3), at the end of each three-month period occurring during the program year, the Secretary shall pay to

each participating neighborhood development organization the

product of—

(A) the aggregate amount of voluntary contributions that

such organization certifies to the satisfaction of the Secretary

it received during such three-month period; and

(B) the matching ratio established for such test neighborhoods under paragraph (4).

(3) The Secretary shall pay not more than $50,000 under this

section to any participating neighborhood development organization

during a single program year, except that, if appropriations for this

section exceed $3,000,000, the Secretary may pay not more than

$75,000 to any participating neighborhood development organization.

(4) For purposes of paragraph (2), the Secretary shall, for each

participating organization, determine an appropriate ratio by which

monetary contributions made to participating neighborhood development organizations will be matched by Federal funds. The highest such ratios shall be established for neighborhoods having the

smallest number of households or the greatest degree of economic

distress.

(5) The Secretary shall insure that—

(A) grants and other forms of assistance may be made

available under this section only if the application contains a

certification by the unit of general local government within

which the neighborhood to be assisted is located that such assistance is not inconsistent with the comprehensive housing affordability strategy of such unit approved under section 105 of

the Cranston-Gonzalez National Affordable Housing Act or the

statement of community development activities and community

development plans of the unit submitted under section 104(m)

of the Housing and Community Development Act of 1974, except that the failure of a unit of general local government to

respond to a request for a certification within thirty days after

the request is made shall be deemed to be a certification; and

(B) eligible neighborhood development activities comply

with all applicable provisions of the Civil Rights Act of 1964.

(6) To carry out this section, the Secretary—

(A) may issue regulations as necessary;

(B) shall utilize, to the fullest extent practicable, relevant

research previously conducted by Federal agencies, State and

local governments, and private organizations and persons;

(C) shall disseminate information about the kinds of activities, forms of organizations, and fund-raising mechanisms associated with successful programs; and

(D) may use not more than 5 per centum of the funds appropriated for administrative or other expenses in connection

with the program.

(f) AUTHORIZATION.—Of the amounts made available for assistance under section 103 of the Housing and Community Development Act of 1974, $1,000,000 for fiscal year 1993 (in addition to

other amounts provided for such fiscal year) and $3,000,000 for fiscal year 1994 shall be available to carry out this section.
89 Sec. 123 NEIGHBORHOOD DEVELOPMENT

(g) ø42 U.S.C. 5318 note¿ SHORT TITLE.—This section may be

cited as the ‘‘John Heinz Neighborhood Development Act’’.
90

1So in law. Probably intended to refer to this section.

COMMUNITY OUTREACH PARTNERSHIP

DEMONSTRATION

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3855; 42 U.S.C. 5307 note]

SEC. 851. ø42 U.S.C. 5307 note¿ COMMUNITY OUTREACH ACT.

(a) SHORT TITLE.—This section may be cited as the ‘‘Community Outreach Partnership Act of 1992’’.

(b) PURPOSE.—The Secretary shall carry out, in accordance

with this section, a 5-year demonstration program to determine the

feasibility of facilitating partnerships between institutions of higher education and communities to solve urban problems through research, outreach, and the exchange of information.

(c) GRANT PROGRAM.—

(1) IN GENERAL.—The Secretary is authorized to make

grants to public and private nonprofit institutions of higher

education to assist in establishing or carrying out research and

outreach activities addressing the problems of urban areas.

(2) USE OF GRANTS.—Grants under this Act 1 shall be used

to establish and operate Community Outreach Partnership

Centers (hereafter in this section referred to as ‘‘Centers’’)

which shall—

(A) conduct competent and qualified research and investigations on theoretical or practical problems in large

and small cities; and

(B) facilitate partnerships and outreach activities between institutions of higher education, local communities,

and local governments to address urban problems.

(3) SPECIFIC PROBLEMS.—Research and outreach activities

assisted under this Act 1 shall focus on problems associated

with housing, economic development, neighborhood revitalization, infrastructure, health care, job training, education, crime

prevention, planning, community organizing, and other areas

deemed appropriate by the Secretary.

(d) APPLICATION.—Any public or private nonprofit institution of

higher education may submit an application for a grant under this

section in such form and containing such information as the Secretary may require by regulation.

(e) SELECTION CRITERIA.—

(1) IN GENERAL.—The Secretary shall select recipients of

grants under this section on the basis of the following criteria:

(A) The demonstrated research and outreach resources

available to the applicant for carrying out the purposes of

this section.
91 Sec. 851 COMMUNITY OUTREACH PARTNERSHIP DEMONSTRATION

(B) The capability of the applicant to provide leadership in solving community problems and in making national contributions to solving long-term and immediate

urban problems.

(C) The demonstrated commitment of the applicant to

supporting urban research and outreach programs by providing matching contributions for any Federal assistance

received.

(D) The demonstrated ability of the applicant to disseminate results of research and successful strategies developed through outreach activities to other Centers and

communities served through the demonstration program.

(E) The projects and activities that the applicant proposes to carry out under the grant.

(F) The effectiveness of the applicant’s strategy to provide outreach activities to communities.

(G) The extent of need in the communities to be served

by the Centers.

(H) Other criteria deemed appropriate by the Secretary.

(2) PREFERENCE.—The Secretary shall give preference to

institutions of higher education that undertake research and

outreach activities by bringing together knowledge and expertise in the various social science and technical disciplines that

relate to urban problems.

(f) FEDERAL SHARES.—The Federal share of a grant under this

section shall not be more than—

(1) 50 percent of the cost of establishing and operating a

Center’s research activities; and

(2) 75 percent of the cost of establishing and operating a

Center’s outreach activities.

(g) NON-FEDERAL SHARES.—The non-Federal share of a grant

may include cash, or the value of non-cash contributions, equipment, or other in-kind contributions deemed appropriate by the

Secretary.

(h) RESPONSIBILITIES.—A Center established under this section

shall—

(1) employ the research and outreach resources of its sponsoring institution of higher education to solve specific urban

problems identified by communities served by the Center;

(2) establish outreach activities in areas identified in the

grant application as the communities to be served;

(3) establish a community advisory committee comprised of

representatives of local institutions and residents of the communities to be served to assist in identifying local needs and

advise on the development and implementation of strategies to

address those issues;

(4) coordinate outreach activities in communities to be

served by the Center;

(5) facilitate public service projects in the communities

served by the Center;

(6) act as a clearinghouse for the dissemination of

information;
Sec. 851 COMMUNITY OUTREACH PARTNERSHIP DEMONSTRATION 92

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

(7) develop instructional programs, convene conferences,

and provide training for local community leaders, when appropriate; and

(8) exchange information with other Centers.

(i) NATIONAL ADVISORY COUNCIL.— (1) ESTABLISHMENT.—The Secretary shall establish a national advisory council (hereafter in this section referred to as

the ‘‘council’’) to—

(A) disseminate the results of research and outreach

activities carried out under this section;

(B) act as a clearinghouse between grant recipients

and other institutions of higher education; and

(C) review and evaluate programs carried out by grant

recipients.

(2) MEMBERS.—The council shall be composed of 12 members to be appointed by the Secretary as follows—

(A) 3 representatives of State and local governments;

(B) 3 representatives of institutions of higher education that receive grants under this section;

(C) 3 individuals or representatives of organizations

that possess significant expertise in urban issues; and

(D) 3 representatives from community advisory committees created pursuant to this section.

(3) VACANCIES.—A vacancy in the membership of the council shall be filled in the manner in which the original appointment was made.

(4) COMPENSATION.—Members of the council shall serve

without pay.

(5) CHAIRMAN.—The council shall elect a member to serve

as chairperson of the council.

(6) MEETINGS.—The council shall meet at least biannually

and at such other times as the chairman may designate.

(j) NATIONAL CLEARINGHOUSE.—The Secretary shall establish a

national clearinghouse to disseminate information resulting from

the research and successful outreach activities developed through

the Centers to grant recipients and other interested institutions of

higher education.

(k) AUTHORIZATIONS.—The sums set aside by section 107 of the

Housing and Community Development Act of 1974 for the purpose

of this section shall be available—

(1) to enable Centers to carry out research and outreach

activities;

(2) to establish and operate the national clearinghouse to

be established under subsection (j).

(l) REPORTING.—

(1) IN GENERAL.—The Secretary of Housing and Urban Development shall submit an annual report to the Committee on

Banking, Housing, and Urban Affairs of the Senate and the

Committee on Banking, Finance and Urban Affairs of the

House of Representatives 1.
93 Sec. 851 COMMUNITY OUTREACH PARTNERSHIP DEMONSTRATION

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(2) CONTENTS.—The report under paragraph (1) shall contain a summary of the activities carried out under this section

during the preceding fiscal year, and findings and conclusions

drawn from such activities.
94

COMMUNITY INVESTMENT CORPORATION

DEMONSTRATION

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3859; 42 U.S.C. 5305 note]

SEC. 853. ø42 U.S.C. 5305 note¿ COMMUNITY INVESTMENT CORPORATION DEMONSTRATION.

(a) SHORT TITLE.—This section may be cited as the ‘‘Community Investment Corporation Demonstration Act’’.

(b) COMMUNITY INVESTMENT CORPORATION DEMONSTRATION.—

(1) FINDINGS.—The Congress finds that—

(A) the Nation’s urban and rural communities face

critical social and economic problems arising from lack of

growth; growing numbers of low-income persons and persons living in poverty; lack of employment and other opportunities to improve the quality of life of these residents;

and lack of capital for business located in, or seeking to locate in these communities;

(B) the future well-being of the United States and its

residents depends on the restoration and maintenance of

viable local economies, and will require increased public

and private investment in low-income housing, business

development, and economic and community development

activities, and technical assistance to local organizations

carrying out revitalization strategies;

(C) lack of expertise and technical capacity can significantly limit the ability of residents and local institutions

to effectively carry out revitalization strategies;

(D) the Federal Government needs to develop new

models for facilitating local revitalization activities;

(E) indigenous community-based financial institutions

play a significant role in identifying and responding to

community needs; and

(F) institutions, such as South Shore Bank (Chicago,

Illinois), Southern Development Bancorporation

(Arkadelphia, Arkansas), Center for Community Self Help

(Durham, North Carolina), and Community Capital Bank

(Brooklyn, New York), with a primary mission of promoting community development have proven their ability

to promote revitalization and are appropriate models for

restoring economic stability and growth in distressed communities and neighborhoods.

(2) PURPOSES.—The demonstration program carried out

under this section shall—
95 Sec. 853 COMMUNITY INVESTMENT CORP. DEMONSTRATION

(A) improve access to capital for initiatives which benefit residents and businesses in targeted geographic areas;

and

(B) test new models for bringing credit and investment

capital to targeted geographic areas and low-income persons in such areas through the provision of assistance for

capital, development services, and technical assistance.

(3) DEFINITIONS.—As used in this section—

(A) the term ‘‘Federal financial supervisory agency’’

means—

(i) the Comptroller of the Currency with respect to

national banks;

(ii) the Board of Governors of the Federal Reserve

System with respect to State-chartered banks which

are members of the Federal Reserve System and bank

holding companies;

(iii) the Federal Deposit Insurance Corporation

with respect to State-chartered banks and savings

banks which are not members of the Federal Reserve

System and the deposits of which are insured by the

Federal Deposit Insurance Corporation;

(iv) the National Credit Union Administration

Board with respect to insured credit union associations; and

(v) the Office of Thrift Supervision with respect to

insured savings associations and savings and loan

holding companies that are not bank holding

companies;

(B) the term ‘‘community investment corporation’’

means an eligible organization selected by the Secretary to

receive assistance pursuant to this section;

(C) the term ‘‘development services’’ means activities

that are consistent with the purposes of this section and

which support and strengthen the lending and investment

activities undertaken by eligible organizations including—

(i) the development of real estate;

(ii) administrative activities associated with the

extension of credit or necessary to make an investment;

(iii) marketing and management assistance;

(iv) business planning and counseling services;

and

(v) other capacity building activities which enable

borrowers, prospective borrowers, or entities in which

eligible organizations have invested, or expect to invest, to improve the likelihood of success of their activities;

(D) the term ‘‘eligible organization’’ means an entity—

(i) that is organized as—

(I) a depository institution holding company

as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); or

(II) a nonprofit organization—

(aa) that is organized under State law;
Sec. 853 COMMUNITY INVESTMENT CORP. DEMONSTRATION 96

(bb) has no part of its net earnings inuring to the benefit of any member, founder,

contributor, or other person;

(cc) complies with standards of financial

accountability acceptable to the Secretary;

and

(dd) is affiliated with a nondepository

lending institution; or is affiliated with a regulated financial institution but is not a subsidiary thereof;

(ii) that has as its primary mission the revitalization of a targeted geographic area;

(iii) that maintains, through significant representation on its governing board and otherwise, accountability to community residents;

(iv) that has principals active in the implementation of its programs who possess significant experience

in lending and the development of affordable housing,

small business development, or community revitalization;

(v) that directly or through a subsidiary or affiliate carries out development services; and

(vi) that will match any assistance received dollarfor-dollar with non-Federal sources of funds;

(E) the term ‘‘equity investment’’ means a capital contribution through the purchase of nonvoting common stock

or through equity grants or contributions to capital reserves or surplus, subject to terms and conditions satisfactory to the Secretary;

(F) the term ‘‘low-income person’’ means a person in a

family whose income does not exceed 80 percent of the median income for the area, as determined by the Secretary

with adjustments for smaller and larger families;

(G) the term ‘‘regulated financial institution’’ means

an insured depository institution (as defined in section 3

of the Federal Deposit Insurance Act (12 U.S.C. 1813), or

an insured credit union as defined in section 101 of the

Federal Credit Union Act (12 U.S.C. 1752));

(H) the term ‘‘Secretary’’ means the Secretary of Housing and Urban Development;

(I) the term ‘‘targeted geographic area’’ means a geographically contiguous area of chronic economic distress,

as measured by unemployment, growth lag, poverty, lag in

growth of per capita income, extent of blight and disinvestment, fiscal distress, or other indicators deemed appropriate by the Secretary, that has been identified by an eligible organization as the area to be served by it; and

(J) an entity is an ‘‘affiliate’’ of another entity if the

first entity controls, is controlled by, or is under common

control with the other entity.

(4) SELECTION CRITERIA.—The Secretary shall select eligible organizations from among applications submitted to participate in the demonstration program, using selection criteria

based on—
97 Sec. 853 COMMUNITY INVESTMENT CORP. DEMONSTRATION

(A) the capacity of the eligible organizations to carry

out the purposes of this section;

(B) the range and comprehensiveness of lending, investment strategies, and development services to be offered by the organizations directly or through subsidiaries

and affiliates thereof;

(C) the types of activities to be pursued, including

lending and development of small business, agriculture, industrial, commercial, or residential projects;

(D) the extent of need in the targeted geographic area

to be served;

(E) the experience and background of the principals at

each eligible organization responsible for carrying out the

purposes of this section;

(F) the extent to which the eligible organizations directly or through subsidiaries and affiliates has successfully implemented other revitalization activities;

(G) an appropriate distribution of eligible organizations among regions of the United States; and

(H) other criteria determined to be appropriate by the

Secretary and consistent with the purposes of this section.

(5) PROGRAM ASSISTANCE.—The Secretary shall—

(A) carry out, in accordance with this section, a program to improve access to capital and demonstrate the feasibility of facilitating the revitalization of targeted geographic areas by providing assistance to eligible organizations;

(B) accept applications from eligible organizations; and

(C) select eligible organizations to receive assistance

pursuant to this section.

(6) ACTIVITIES REQUIRED.—All eligible organizations receiving assistance pursuant to this section are required to engage

in activities that provide access to capital for initiatives which

benefit residents and businesses in targeted geographic areas.

(7) CAPITAL ASSISTANCE.—

(A) IN GENERAL.—

(i) IN GENERAL.—The Secretary shall make grants

and loans to eligible organizations.

(ii) LOANS.—Assistance provided to a depository

institution holding company that is an eligible organization as defined in paragraph (3)(D)(i)(I) shall be in

the form of a loan to be repaid to the Secretary. The

terms and conditions of each loan shall be determined

by the Secretary based on the ability of such entity to

repay, except that interest shall accrue at the current

Treasury rate for obligations of comparable maturity.

(iii) GRANTS OR LOANS.—Assistance provided to an

eligible organization that is a nonprofit organization,

as defined in paragraph (3)(D)(i)(II), may be in the

form of a grant or a loan. If an eligible organization

that is a nonprofit organization uses assistance that it

received under this section to provide assistance to a

for-profit entity, the assistance provided by the nonprofit organization must be in the form of a loan with
Sec. 853 COMMUNITY INVESTMENT CORP. DEMONSTRATION 98

interest to be repaid to the nonprofit organization and

the nonprofit organization must use the proceeds of

the loan for activities consistent with this section.

(B) ELIGIBLE ACTIVITIES.—Capital assistance may only

be used to support the following activities that facilitate

revitalization of targeted geographic areas or that provide

economic opportunities for low-income persons—

(i) increasing the capital available for the purpose

of making loans;

(ii) providing funds for equity investments in

projects;

(iii) providing a portion of loan loss reserves of

regulated financial institutions; and

(iv) providing credit enhancement.

(C) CAPITAL REQUIREMENTS.—Any investment derived

from assistance provided by the Secretary and made by an

eligible organization to a regulated financial institution

shall not be included as an asset in calculating compliance

with applicable capital standards. Such standards shall be

satisfied from sources other than assistance provided

under this section.

(D) AUTHORIZATION.—There are authorized to be appropriated to carry out this paragraph $25,000,000 for fiscal year 1993 and $26,000,000 for fiscal year 1994 to be

used to provide capital assistance to eligible organizations.

Funds appropriated pursuant to this subparagraph shall

remain available until expended.

(8) DEVELOPMENT SERVICES AND TECHNICAL ASSISTANCE

GRANTS.—

(A) IN GENERAL.—The Secretary shall—

(i) provide grants or loans to eligible organizations

for the provision of development services that support

and contribute to the success of the mission of such organizations; and

(ii) provide, or contract to provide, technical assistance to eligible organizations to assist in establishing program activities that are consistent with the

purposes of this section.

(B) AUTHORIZATION.—There are authorized to be appropriated to carry out this paragraph, $15,000,000 for fiscal year 1993 and $15,600,000 for fiscal year 1994. Funds

appropriated pursuant to this subparagraph shall remain

available until expended.

(9) TRAINING PROGRAM.—

(A) IN GENERAL.—The Secretary shall establish, or

contract to establish, an ongoing training program to assist

eligible organizations and their staffs in developing the capacity to carry out the purposes of this section.

(B) AUTHORIZATION.—There are authorized to be appropriated to carry out this paragraph $2,000,000 for fiscal

year 1993 and $2,100,000 for fiscal year 1994. Funds appropriated pursuant to this subparagraph shall remain

available until expended.
99 Sec. 853 COMMUNITY INVESTMENT CORP. DEMONSTRATION

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Continued

(10) REPORTS.—The Secretary shall determine the appropriate reporting requirements with which eligible organizations

receiving assistance under this section must comply.

(11) ADVISORY BOARD.— (A) IN GENERAL.—In establishing requirements to

carry out the provisions of this section, and in considering

applications under this section, the Secretary shall consult

with an advisory board comprised of the following members:

(i) the Administrator of the Small Business Administration;

(ii) two representatives from among the Federal financial supervisory agencies who possess expertise in

matters related to extending credit to persons in lowincome communities;

(iii) two representatives of organizations that possess expertise in development of low-income housing;

(iv) two representatives of organizations that possess expertise in economic development;

(v) two representatives of organizations that possess expertise in small business development;

(vi) two representatives from organizations that

possess expertise in the needs of low-income communities; and

(vii) two representatives from community investment corporations receiving assistance under this

section.

(B) CHAIRPERSON.—The Board shall elect from among

its members a chairperson who shall serve for a term of

2 years.

(C) TERMS.—The members shall serve for terms of 3

years which shall expire on a staggered basis.

(D) REIMBURSEMENT.—The members shall serve without additional compensation but shall be reimbursed for

travel, per diem, and other necessary expenses incurred in

the performance of their duties as members of the advisory

board, in accordance with sections 5702 and 5703 of title

5, United States Code.

(E) DESIGNATED REPRESENTATIVES.—A member who is

necessarily absent from a meeting of the board, or of a

committee of the board, may participate in such meeting

through a duly designated representative who is serving in

the same agency or organization as the absent member.

(F) QUORUM.—The presence of a majority of members,

or their representatives, shall constitute a quorum.

(12) EVALUATION AND REPORT.—The Secretary shall submit

to the Committee on Banking, Housing, and Urban Affairs of

the Senate and the Committee on Banking, Finance and Urban

Affairs of the House of Representatives 1 an annual report con-
Sec. 853 COMMUNITY INVESTMENT CORP. DEMONSTRATION 100

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services. 1The date of enactment was October 28, 1992.

taining a summary of the activities carried out under this section during the fiscal year and any preliminary findings or conclusions drawn from the demonstration program.

(13) NO BENEFIT RULE.—To the extent that assistance is

provided to an eligible organization that is a depository institution holding company, the Secretary shall ensure, to the extent

practicable, that such assistance does not inure to the benefit

of directors, officers, employees and stockholders.

(14) REGULATIONS.—(A) The Secretary shall issue such

regulations as may be necessary to carry out the provisions of

this subsection.

(B) The appropriate Federal financial supervisory agency,

by regulation or order—

(i) may restrict any regulated financial institution’s receipt of an extension of credit from, or investment by, an

eligible organization;

(ii) may restrict the making, by a regulated financial

institution or holding company, of an extension of credit to,

or investment in, an eligible organization; and

(iii) shall prohibit any transaction that poses an undue

risk to the affected deposit insurance fund.

(C) To the extent practicable, the Secretary and the Federal financial supervisory agencies shall coordinate the development of regulations and other program guidelines.

(15) SAFETY AND SOUNDNESS OF INSURED DEPOSITORIES.—

Nothing in this section shall limit the applicability of other law

relating to the safe and sound operation and management of

a regulated financial institution (or a holding company) affiliated with an eligible organization or receiving assistance provided under this section.

(16) EFFECTIVE DATE.—This section shall become effective

6 months from the date of enactment of this Act. 1
101

ENTERPRISE ZONE DEVELOPMENT

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1957; 42 U.S.C. 11501 et seq.]

TITLE VII—ENTERPRISE ZONE

DEVELOPMENT

SEC. 701. ø42 U.S.C. 11501¿ DESIGNATION OF ENTERPRISE ZONES.

(a) DESIGNATION OF ZONES.—

(1) DEFINITION.—For purposes of this section, the term

‘‘enterprise zone’’ means any area that—

(A) is nominated by one or more local governments

and the State or States in which it is located for designation as an enterprise zone (in this section referred to as a

‘‘nominated area’’); and

(B) the Secretary of Housing and Urban Development

designates as an enterprise zone, after consultation with—

(i) the Secretaries of Agriculture, Commerce,

Labor, and the Treasury, the Director of the Office of

Management and Budget, and the Administrator of

the Small Business Administration; and

(ii) in the case of an area on an Indian reservation, the Secretary of the Interior.

(2) NUMBER OF DESIGNATIONS.—

(A) IN GENERAL.—The Secretary of Housing and Urban

Development may designate not more than 100 nominated

areas as enterprise zones.

(B) MINIMUM DESIGNATION IN RURAL AREAS.—Of the

areas designated under subparagraph (A), not less than 1⁄3

shall be areas that—

(i) are within a local government jurisdiction or

jurisdictions with a population of less than 50,000 (as

determined under the most recent census data available);

(ii) are outside of a metropolitan statistical area

(as designated by the Director of the Office of Management and Budget); or

(iii) that are determined by the Secretary, after

consultation with the Secretary of Commerce, to be

rural areas.

(3) AREAS DESIGNATED BASED SOLELY ON DEGREE OF POVERTY.—

(A) IN GENERAL.—Except as provided in subparagraph

(B), the Secretary shall designate (i) the nominated areas
Sec. 701 ENTERPRISE ZONE DEVELOPMENT 102

1The date of enactment was February 5, 1988.

2The date of enactment was October 28, 1992.

with the highest average ranking with respect to the criteria set forth in subparagraphs (C) and (D) of subsection

(c)(3), and the 1 criterion set forth in subparagraph (E)(i)

or (E)(ii) of subsection (c)(3) that gives an area a higher

ranking; and (ii) for areas described in paragraph (2)(B),

the nominated areas with the highest ranking with respect

to the 1 criterion set forth in subparagraph (C), (D), (E)(i),

or (E)(ii) of subsection (c)(3) that gives an area a higher

ranking. For purposes of the preceding sentence, an area

shall be ranked within each such criterion on the basis of

the amount by which the area exceeds such criterion, with

the area that exceeds such criterion by the greatest

amount given the highest ranking.

(B) EXCEPTION WHERE INADEQUATE COURSE OF ACTION,

ETC.—An area shall not be designated under subparagraph

(A) if the Secretary determines that the course of action

with respect to such area is inadequate.

(C) SEPARATE APPLICATION TO RURAL AND OTHER

AREAS.—Subparagraph (A) shall be applied separately with

respect to areas described in paragraph (2)(B) and to other

areas.

(4) LIMITATION ON DESIGNATIONS.—

(A) PUBLICATION OF REGULATIONS.—Before designating

any area as an enterprise zone, the Secretary shall prescribe by regulation not later than 4 months following the

date of the enactment of this Act, 1 after consultation with

the officials described in paragraph (1)(B)—

(i) the procedures for nominating an area under

paragraph (1)(A);

(ii) the parameters relating to the size and population characteristics of an enterprise zone; and

(iii) the manner in which nominated areas will be

evaluated based on the criteria specified in subsection

(d).

(B) TIME LIMITATIONS.—The Secretary shall designate

nominated areas as enterprise zones only during the 24-

month period beginning on the 1st day of the 1st month

following the month in which the date of the enactment of

the Housing and Community Development Act of 1992 occurs. 2

(C) PROCEDURAL RULES.—The Secretary shall not

make any designation under paragraph (1) unless—

(i) the local governments and the State in which

the nominated area is located have the authority—

(I) to nominate such area for designation as

an enterprise zone;

(II) to make the State and local commitments

under subsection (d); and

(III) to provide assurances satisfactory to the

Secretary that such commitments will be fulfilled;
103 Sec. 701 ENTERPRISE ZONE DEVELOPMENT

(ii) a nomination therefor is submitted in such a

manner and in such form, and contains such information, as the Secretary shall by regulation prescribe;

(iii) the Secretary determines that any information furnished is reasonably accurate; and

(iv) the State and local governments certify that

no portion of the area nominated is already included

in an enterprise zone or in an area otherwise nominated to be an enterprise zone.

(5) NOMINATION PROCESS FOR INDIAN RESERVATIONS.—In

the case of a nominated area on an Indian reservation, the reservation governing body (as determined by the Secretary of the

Interior) shall be deemed to be both the State and local governments with respect to such area.

(b) PERIOD FOR WHICH DESIGNATION IS IN EFFECT.— (1) IN GENERAL.—Any designation of an area as an enterprise zone shall remain in effect during the period beginning

on the date of the designation and ending on the earliest of—

(A) December 31 of the 24th calendar year following

the calendar year in which such date occurs;

(B) the termination date designated by the State and

local governments as provided for in their nomination pursuant to subsection (a)(4)(C)(ii); or

(C) the date the Secretary revokes such designation

under paragraph (2).

(2) REVOCATION OF DESIGNATION.—The Secretary, after

consultation with the officials described in subsection (a)(1)(B)

and a hearing on the record involving officials of the State or

local government involved, may revoke the designation of an

area if the Secretary determines that the local government or

the State in which it is located is not complying substantially

with the State and local commitments pursuant to subsection

(d).

(c) AREA AND ELIGIBILITY REQUIREMENTS.—

(1) IN GENERAL.—The Secretary may make a designation

of any nominated area under subsection (a)(1) only if it meets

the requirements of paragraphs (2) and (3).

(2) AREA REQUIREMENTS.—A nominated area meets the requirements of this paragraph if—

(A) the area is within the jurisdiction of the local

government;

(B) the boundary of the area is continuous; and

(C) the area—

(i) has a population, as determined by the most recent census data available, of not less than—

(I) 4,000 if any portion of such area (other

than a rural area described in subsection

(a)(2)(B)(i)) is located within a metropolitan statistical area (as designated by the Director of the Office of Management and Budget) with a population of 50,000 or more; or

(II) 1,000 in any other case; or

(ii) is entirely within an Indian reservation (as determined by the Secretary of the Interior).
Sec. 701 ENTERPRISE ZONE DEVELOPMENT 104

1October 28, 1992.

(3) ELIGIBILITY REQUIREMENTS.—For purposes of paragraph (1), a nominated area meets the requirements of this

paragraph if the State and local governments in which it is located certify and the Secretary, after such review of supporting

data as he deems appropriate, accepts such certification, that—

(A) the area is one of pervasive poverty, unemployment, and general distress;

(B) the area is located wholly within the jurisdiction

of a local government that is eligible for Federal assistance

under section 119 of the Housing and Community Development Act of 1974, as in effect on the date of the enactment

of the Housing and Community Development Act of 1992; 1

(C) the unemployment rate, as determined by the appropriate available data, was not less than 1.5 times the

national unemployment rate for that period;

(D) the poverty rate (as determined by the most recent

census data available) for each populous census tract (or

where not tracted, the equivalent county division as defined by the Bureau of the Census for the purpose of defining poverty areas) within the area was not less than 20

percent for the period to which such data relate; and

(E) the area meets at least one of the following criteria:

(i) Not less than 70 percent of the households living in the area have incomes below 80 percent of the

median income of households of the local government

(determined in the same manner as under section

119(b)(2) of the Housing and Community Development

Act of 1974).

(ii) The population of the area decreased by 20

percent or more between 1970 and 1980 (as determined from the most recent census available).

(4) ELIGIBILITY REQUIREMENTS FOR RURAL AREAS.—For

purposes of paragraph (1), a nominated area that is a rural

area described in subsection (a)(2)(B) meets the requirements

of paragraph (3) if the State and local governments in which

it is located certify and the Secretary, after such review of supporting data as he deems appropriate, accepts such certification, that the area meets—

(A) the criteria set forth in subparagraphs (A) and (B)

of paragraph (3); and

(B) not less than one of the criteria set forth in the

other subparagraphs of paragraph (3).

(d) REQUIRED STATE AND LOCAL COMMITMENTS.— (1) IN GENERAL.—No nominated area shall be designated

as an enterprise zone unless the local government and the

State in which it is located agree in writing that, during any

period during which the area is an enterprise zone, such governments will follow a specified course of action designated to

reduce the various burdens borne by employers or employees

in such area. A course of action shall not be treated as meeting

the requirements of this paragraph unless the course of action
105 Sec. 701 ENTERPRISE ZONE DEVELOPMENT

include provisions described in not less than 4 of the subparagraphs of paragraph (2).

(2) COURSE OF ACTION.—The course of action under paragraph (1) may be implemented by both such governments and

private nongovernmental entities, may be funded from proceeds of any program administered by the Secretary of Housing

and Urban Development or of any program administered by

the Secretary of Agriculture under title V of the Housing Act

of 1949, and may include, but is not limited to—

(A) a reduction of tax rates or fees applying within the

enterprise zone;

(B) an increase in the level of public services, or in the

efficiency of the delivery of public services, within the enterprise zone;

(C) actions to reduce, remove, simplify, or streamline

paperwork requirements within the enterprise zone;

(D) involvement in the program by public authorities

or private entities, organizations, neighborhood associations, and community groups, particularly those within the

nominated area, including a written commitment to provide jobs and job training for, and technical, financial, or

other assistance to, employers, employees, and residents of

the nominated area;

(E) the giving of special preference to contractors

owned and operated by members of any minority; and

(F) the gift (or sale at below fair market value) of surplus land in the enterprise zone to neighborhood organizations agreeing to operate a business on the land.

(3) RECOGNITION OF PAST EFFORTS.—In evaluating courses

of action agreed to by any State or local government, the Secretary shall take into account the past efforts of such State or

local government in reducing the various burdens borne by employers and employees in the area involved.

(4) PROHIBITION OF ASSISTANCE FOR BUSINESS RELOCATIONS.—

(A) IN GENERAL.—The course of action implemented

under paragraph (1) may not include any action to assist—

(i) any establishment relocating from one area to

another area; or

(ii) any subcontractor whose purpose is to divest,

or whose economic success is dependent upon divesting, any other contractor or subcontractor of any contract customarily performed by such other contractor

or subcontractor.

(B) EXCEPTION.—The limitations established in subparagraph (A) shall not be construed to prohibit assistance

for the expansion of an existing business entity through

the establishment of a new branch, affiliate, or subsidiary

if the Secretary—

(i) finds that the establishment of the new branch,

affiliate, or subsidiary will not result in an increase in

unemployment in the area of original location or in

any other area where the existing business entity conducts business operations; and
Sec. 702 ENTERPRISE ZONE DEVELOPMENT 106

(ii) has no reason to believe that the new branch,

affiliate, or subsidiary is being established with the intention of closing down the operations of the existing

business entity in the area of its original location or

in any other area where the existing business entity

conducts business operations.

(e) DEFINITIONS.—For purposes of this section:

(1) GOVERNMENT.—If more than one government seeks to

nominate an area as an enterprise zone, any reference to, or

requirement of, this section shall apply to all such governments.

(2) LOCAL GOVERNMENT.—The term ‘‘local government’’

means—

(A) any county, city, town, township, parish, village, or

other general purpose political subdivision of a State;

(B) any combination of political subdivisions described

in subparagraph (A) recognized by the Secretary; and

(C) the District of Columbia.

(3) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(4) STATE.—The term ‘‘State’’ includes Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, and any other possession of the United States.

SEC. 702. ø42 U.S.C. 11502¿ EVALUATION AND REPORTING REQUIREMENTS.

Not later than the close of the 4th calendar year after the year

in which the Secretary of Housing and Urban Development first

designates areas as enterprise zones pursuant to the amendments

made by section 834 of the Housing and Community Development

Act of 1992, and at the close of each 4th calendar year thereafter,

the Secretary shall prepare and submit to the Congress a report on

the effects of such designation in accomplishing the purposes of

this title. ø42 U.S.C. 11502¿

SEC. 703. ø42 U.S.C. 11503¿ INTERACTION WITH OTHER FEDERAL PROGRAMS.

(a) COORDINATION WITH RELOCATION ASSISTANCE.—The designation of an enterprise zone under section 701 shall not—

(1) constitute approval of a Federal or federally assisted

program or project (within the meaning of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of

1970 (42 U.S.C. 4601 et seq.)); or

(2) entitle any person displaced from real property located

in such zone to any rights or any benefits under such Act.

(b) ENTERPRISE ZONES TREATED AS LABOR SURPLUS AREAS.—

Any area that is designated as an enterprise zone under section

701 shall be treated for all purposes under Federal law as a labor

surplus area.

SEC. 704. ø42 U.S.C. 11504¿ WAIVER OR MODIFICATION OF HOUSING

AND COMMUNITY DEVELOPMENT RULES IN ENTERPRISE

ZONES.

(a) IN GENERAL.—Upon the written request of the governments

that designated and approved an area that has been designated as

an enterprise zone under section 701, the Secretary of Housing and
107 Sec. 704 ENTERPRISE ZONE DEVELOPMENT

Urban Development (or, with respect to any rule issued under title

V of the Housing Act of 1949, the Secretary of Agriculture) may,

in order to further the job creation, community development, or

economic revitalization objectives of the zone, waive or modify all

or part of any rule that the Secretary has authority to promulgate,

as such rule pertains to the carrying out of projects, activities, or

undertakings within the zone.

(b) LIMITATION.—No provision of this section may be construed

to authorize the Secretary to waive or modify any rule adopted to

carry out a statute or Executive order that prohibits, or the purpose of which is to protect persons against, discrimination on the

basis of race, color, religion, sex, marital status, national origin,

age, or handicap.

(c) SUBMISSION OF REQUESTS.—A request under subsection (a)

shall specify the rule or rules to be waived or modified and the

change proposed, and shall briefly describe why the change would

promote the achievement of the job creation, community development, or economic revitalization objectives of the enterprise zone.

If a request is made to the Secretary of Agriculture, the requesting

governments shall send a copy of the request to the Secretary of

Housing and Urban Development at the time the request is made.

(d) CONSIDERATION OF REQUESTS.—In considering a request,

the Secretary shall weigh the extent to which the proposed change

is likely to further job creation, community development, or economic revitalization within the enterprise zone against the effect

the change is likely to have on the underlying purposes of applicable statutes in the geographic area that would be affected by the

change. The Secretary shall approve the request whenever the Secretary finds, in the discretion of the Secretary, that the public interest that the proposed change would serve in furthering such job

creation, community development or economic revitalization outweighs the public interest that continuation of the rule unchanged

would serve in furthering such underlying purposes. The Secretary

shall not approve any request to waive or modify a rule if that

waiver or modification would—

(1) directly violate a statutory requirement; or

(2) be likely to present a significant risk to the public

health, including environmental health or safety.

(e) NOTICE OF DISAPPROVAL.—If a request is disapproved, the

Secretary shall inform the requesting governments in writing of

the reasons therefor and shall, to the maximum extent possible,

work with such governments to develop an alternative, consistent

with the standards contained in subsection (d).

(f) PERIOD FOR DETERMINATION.—The Secretary shall discharge

the responsibilities of the Secretary under this section in an expeditious manner, and shall make a determination on requests not

later than 90 days after their receipt.

(g) APPLICABLE PROCEDURES.—A waiver or modification of a

rule under subsection (a) shall not be considered to be a rule, rulemaking, or regulation under chapter 5 of title 5, United States

Code. To facilitate reaching a decision on any requested waiver or

modification, the Secretary may seek the views of interested parties and, if the views are to be sought, determine how they should

be obtained and to what extent, if any, they should be taken into
Sec. 705 ENTERPRISE ZONE DEVELOPMENT 108

account in considering the request. The Secretary shall publish a

notice in the Federal Register stating any waiver or modification

of a rule under this section.

(h) EFFECT OF SUBSEQUENT AMENDMENT OF RULES.—In the

event that the Secretary proposes to amend a rule for which a

waiver or modification under this section is in effect, the Secretary

shall not change the waiver or modification to impose additional requirements unless the Secretary determines, consistent with standards contained in subsection (d), that such action is necessary.

(i) EXPIRATION OF WAIVERS AND MODIFICATIONS.—No waiver or

modification of a rule under this section shall remain in effect for

a longer period than the period for which the enterprise zone designation remains in effect for the area in which the waiver or modification applies.

(j) DEFINITIONS.—For purposes of this section:

(1) RULE.—The term ‘‘rule’’ means—

(A) any rule as defined in section 551(4) of title 5,

United States Code; or

(B) any rulemaking conducted on the record after opportunity for an agency hearing pursuant to sections 556

and 557 of such title 5.

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development or, with respect to

any rule issued under title V of the Housing Act of 1949, the

Secretary of Agriculture.

SEC. 705. COORDINATION OF HOUSING AND URBAN DEVELOPMENT

PROGRAMS IN ENTERPRISE ZONES.

Section 3 of the Department of Housing and Urban Development Act is amended by adding at the end the following new subsection:

‘‘(d) * * *

SEC. 706. ø42 U.S.C. 11505¿ COORDINATION WITH CDBG AND UDAG PROGRAMS.

It is the policy of the Congress that amounts provided under

the community development block grant and urban development

action grant programs under title I of the Housing and Community

Development Act of 1974 shall not be reduced in any fiscal year in

which the provisions of this title are in effect.
109

CAPACITY BUILDING FOR COMMUNITY DEVELOPMENT

AND AFFORDABLE HOUSING

EXCERPT FROM HUD DEMONSTRATION ACT OF 1993

[Public Law 103–120; 107 Stat. 1148; 42 U.S.C. 9816 note]

SEC. 4. ø42 U.S.C. 9816 note¿ CAPACITY BUILDING FOR COMMUNITY DEVELOPMENT AND AFFORDABLE HOUSING.

(a) IN GENERAL.—The Secretary is authorized to provide assistance through the National Community Development Initiative,

Local Initiatives Support Corporation, The Enterprise Foundation,

Habitat for Humanity, and Youthbuild USA to develop the capacity

and ability of community development corporations and community

housing development organizations to undertake community development and affordable housing projects and programs.

(b) FORM OF ASSISTANCE.—Assistance under this section may

be used for—

(1) training, education, support, and advice to enhance the

technical and administrative capabilities of community development corporations and community housing development organizations;

(2) loans, grants, or predevelopment assistance to community development corporations and community housing development organizations to carry out community development and

affordable housing activities that benefit low-income families;

and

(3) such other activities as may be determined by the National Community Development Initiative, Local Initiatives

Support Corporation, The Enterprise Foundation, Habitat for

Humanity, and Youthbuild USA in consultation with the Secretary.

(c) MATCHING REQUIREMENT.—Assistance provided under this

section shall be matched from private sources in an amount equal

to 3 times the amount made available under this section.

(d) IMPLEMENTATION.—The Secretary shall by notice establish

such requirements as may be necessary to carry out the provisions

of this section. The notice shall take effect upon issuance.

(e) AUTHORIZATION.—There are authorized to be appropriated

$25,000,000 for fiscal year 1994 to carry out this section.

111

1So in law.

PART II—PUBLIC HOUSING AND SECTION 8

RENTAL ASSISTANCE

ALLOCATION OF FUNDS

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1974

[Public Law 93–383; 88 Stat. 674; 42 U.S.C. 1439]

LOCAL HOUSING ASSISTANCE PLANS; ALLOCATION OF HOUSING FUNDS

SEC. 213. ø42 U.S.C. 1439¿ (a)(1) The Secretary of Housing

and Urban Development, upon receiving an application for housing

assistance under the United States Housing Act of 1937, section

101 of the Housing and Urban Development Act of 1965, or 1 if the

unit of general local government in which the proposed assistance

is to be provided has an approved housing assistance plan, shall—

(A) not later than ten days after receipt of the application,

notify the chief executive officer of such unit of general local

government that such application is under consideration; and

(B) afford such unit of general local government, the opportunity, during the thirty-day period beginning on the date of

such notification, to object to the approval of the application on

the grounds that the application is inconsistent with its housing assistance plan.

Upon receiving an application for such housing assistance, the Secretary shall assure that funds made available under this section

shall be utilized to the maximum extent practicable to meet the

needs and goals identified in the unit of local government’s housing

assistance plan.

(2) If the unit of general local government objects to the application on the grounds that it is inconsistent with its housing assistance plan, the Secretary may not approve the application unless he

determines that the application is consistent with such housing assistant plan. If the Secretary determines, that such application is

consistent with the housing assistance plan, he shall notify the

chief executive officer of the unit of general local government of his

determination and the reasons therefor in writing. If the Secretary

concurs with the objection of the unit of local government, he shall

notify the applicant stating the reason therefor in writing.

(3) If the Secretary does not receive an objection by the close

of the period referred to in paragraph (1)(B), he may approve the

application unless he finds it inconsistent with the housing assistance plan. If the Secretary determines that an application is inconsistent with a housing assistance plan, he shall notify the applicant

stating the reasons therefor in writing.
Sec. 213 ALLOCATION OF FUNDS 112

(4) The Secretary shall make the determinations referred to in

paragraphs (2) and (3) within thirty days after he receives an objection pursuant to paragraph (1)(B) or within thirty days after the

close of the period referred to in paragraph (1)(B), whichever is earlier.

(5) As used in this section, the term ‘‘housing assistance plan’’

means a housing assistance plan submitted and approved under

section 104 of this Act or, in the case of a unit of general local government not participating under title I of this Act, a housing plan

approved by the Secretary as meeting the requirements of this section. In developing a housing assistance plan under this paragraph

a unit of general local government shall consult with local public

agencies involved in providing for the welfare of children to determine the housing needs of (A) families identified by the agencies

as having a lack of adequate housing that is a primary factor in

the imminent placement of a child in foster care or in preventing

the discharge of a child from foster care and reunification with his

or her family; and (B) children who, upon discharge of the child

from foster care, cannot return to their family or extended family

and for which adoption is not available. The unit of general local

government shall include in the housing assistance plan needs and

goals with respect to such families and children.

(b) The provisions of subsection (a) shall not apply to—

(1) applications for assistance involving 12 or fewer units

in a single project or development;

(2) applications for assistance with respect to housing in

new community developments approved under title IV of the

Housing and Urban Development Act of 1968 or title VII of the

Housing and Urban Development Act of 1970 which the Secretary determines are necessary to meet the housing requirements under such title; or

(3) applications for assistance with respect to housing financed by loans or loan guarantees from a State or agency

thereof, except that the provisions of subsection (a) shall apply

where the unit of general local government in which the assistance is to be provided objects in its housing assistance plan to

the exemption provided by this paragraph.

ø(c) [Repealed.]¿

(d)(1)(A)(i) Except as provided by subparagraph (B), the Secretary shall allocate assistance referred to in subsection (a)(1) the

first time it is available for reservation on the basis of a formula

that is contained in a regulation prescribed by the Secretary, and

that is based on the relative needs of different States, areas, and

communities, as reflected in data as to population, poverty, housing

overcrowding, housing vacancies, amount of substandard housing,

and other objectively measurable conditions specified in the regulation. The Secretary may allocate assistance under the preceding

sentence in such a manner that each State shall receive not less

than one-half of one percent of the amount of funds available for

each program referred to in subsection (a)(1) in each fiscal year. In

allocating assistance under this paragraph for each program of

housing assistance under subsection (a)(1), the Secretary shall

apply the formula, to the extent practicable, in a manner so that

the assistance under the program is allocated according to the particular relative needs under the preceding sentence that are char-
113 Sec. 213 ALLOCATION OF FUNDS

1Section 522(b)(2) of the Quality Housing and Work Responsibility Act of 1998, title V of Public Law 105–276, approved October 21, 1998, amended section 213(d)(1)(B)(ii) of this Act by

striking ‘‘or section 14’’. Such section probably intended to amend this clause.

acteristic of and related to the particular type of assistance provided under the program. Assistance under section 202 of the

Housing Act of 1959 shall be allocated in a manner that ensures

that awards of the assistance under such section are made for

projects of sufficient size to accommodate facilities for supportive

services appropriate to the needs of frail elderly residents. Amounts

for tenant-based assistance under section 8(o) of the United States

Housing Act of 1937 may not be provided to any public housing

agency that has been disqualified from providing such assistance.

(ii) Assistance under section 8(o) of the United States Housing

Act of 1937 shall be allocated in a manner that enables participating jurisdictions to carry out, to the maximum extent practicable, comprehensive housing affordability strategies approved in

accordance with section 105 of the Cranston-Gonzalez National Affordable Housing Act. Such jurisdictions shall submit recommendations for allocating assistance under such section 8(o) to the Secretary in accordance with procedures that the Secretary determines

to be appropriate to permit allocations of such assistance to be

made on the basis of timely and complete information. This clause

may not be construed to prevent, alter, or otherwise affect the application of the formula established pursuant to clause (i) for purposes of allocating such assistance. For purposes of this clause, the

term ‘‘participating jurisdiction’’ means a State or unit of general

local government designated by the Secretary to be a participating

jurisdiction under title II of the Cranston-Gonzalez National Affordable Housing Act. The preceding sentence shall not apply to

projects acquired from the Resolution Trust Corporation under section 21A(c) of the Federal Home Loan Bank Act.

(B) The formula allocation requirements of subparagraph (A)

shall not apply to—

(i) assistance that is approved in appropriation Acts for

use under sections 9 or 14 1, or the rental rehabilitation grant

program under section 17, of the United States Housing Act of

1937, except that the Secretary shall comply with section 102

of the Department of Housing and Urban Development Reform

Act of 1989 with respect to such assistance; or

(ii) other assistance referred to in subsection (a) that is approved in appropriation Acts for uses that the Secretary determines are incapable of geographic allocation, including amendments of existing contracts, renewal of assistance contracts, assistance to families that would otherwise lose assistance due to

the decision of the project owner to prepay the project mortgage or not to renew the assistance contract, assistance to prevent displacement or to provide replacement housing in connection with the demolition or disposition of public housing,

and assistance in support of the property disposition and loan

management functions of the Secretary.

(C) Any allocation of assistance under subparagraph (A) shall,

as determined by the Secretary, be made to the smallest practicable area, consistent with the delivery of assistance through a

meaningful competitive process designed to serve areas with greater needs.
Sec. 213 ALLOCATION OF FUNDS 114

1So in law. Probably intended to refer to paragraph (3).

(D) Any amounts allocated to a State or areas or communities

within a State that are not likely to be used within a fiscal year

shall not be reallocated for use in another State, unless the Secretary determines that other areas or communities (that are eligible for assistance under the program) within the same State cannot

use the amounts within that same fiscal year.

(2) The Secretary may reserve such housing assistance funds

as he deems appropriate for use by a State or agency thereof.

(3)(A) Notwithstanding any other provision of law, with respect

to fiscal years beginning after September 30, 1990, the Secretary

may retain not more than 5 percent of the financial assistance that

becomes available under programs described in subsection (a)(1)

during any fiscal year. Any such financial assistance that is retained shall be available for subsequent allocation to specific areas

and communities, and may only be used for—

(i) unforeseen housing needs resulting from natural and

other disasters;

(ii) housing needs resulting from emergencies, as certified

by the Secretary, other than such disasters;

(iii) housing needs resulting from the settlement of litigation; and

(iv) housing in support of desegregation efforts.

(B) Any amounts retained in any fiscal year under subparagraph (A) that are unexpended at the end of such fiscal year shall

remain available for the following fiscal year under the program

under subsection (a)(1) from which the amount was retained. Such

amounts shall be allocated on the basis of the formula under subsection (d)(1).

(4)(A) The Secretary shall not reserve or obligate assistance

subject to allocation under paragraph (1)(A) to specific recipients,

unless the assistance is first allocated on the basis of the formula

contained in that paragraph and then is reserved and obligated

pursuant to a competition.

(B) Any competition referred to in subparagraph (A) shall be

conducted pursuant to specific criteria; for the selection of recipients of assistance. The criteria shall be contained in—

(i) a regulation promulgated by the Secretary after notice

and public comment; or

(ii) to the extent authorized by law, a notice published in

the Federal Register.

(C) Subject to the times at which appropriations for assistance

subject to paragraph (1)(A) may become available for reservation in

any fiscal year, the Secretary shall take such steps as the Secretary

deems appropriate to ensure that, to the maximum extent practicable, the process referred to in subparagraph (A) is carried out

with similar frequency and at similar times for each fiscal year.

(D) This paragraph shall not apply to assistance referred to in

paragraph (4) 1. (e) From budget authority made available in appropriation

Acts for fiscal year 1988, the Secretary shall enter into an annual

contributions contract for a term of 180 months to obligate sufficient funds to provide assistance payments pursuant to section

8(b)(1) of the United States Housing Act of 1937 on behalf of 500
115 Sec. 213 ALLOCATION OF FUNDS

1Section 154 of the Housing and Community Development Act of 1992, Public Law 102–550,

106 Stat. 3718, and the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1993, Public Law 102–389, 106 Stat. 1591, both

attempted to amend this subsection by striking the provisions relating to the Park Central New

Community Project and inserting ‘‘Jefferson County, Texas’’. Neither amendment could be executed because the matter cited in both Acts to be struck from this subsection did not conform

to the exact language of this subsection.

lower income families from budget authority made available for fiscal year 1988, so long as such families occupy properties in the

Park Central New Community Project or in adjacent areas that are

recognized by the unit of general local government in which such

Project is located as being included within the Park Central New

Town In Town Project. 1 If a lower income family receiving assistance payments pursuant to this subsection ceases to qualify for assistance payments pursuant to the provisions of section 8 of such

Act or of this subsection during the 180-month term of the annual

contributions contract, assistance payments shall be made on behalf of another lower income family who occupies a unit identified

in the previous sentence.
116

UNITED STATES HOUSING ACT OF 1937

[Public Law 93–383; 88 Stat. 653; 42 U.S.C. 1437 et seq.]

TITLE I—GENERAL PROGRAM OF ASSISTED

HOUSING

SHORT TITLE

SECTION 1. ø42 U.S.C. 1437 note¿ This Act may be cited as the

‘‘United States Housing Act of 1937’’.

SEC. 2. ø42 U.S.C. 1437¿ DECLARATION OF POLICY AND PUBLIC HOUSING AGENCY ORGANIZATION.

(a) DECLARATION OF POLICY.—It is the policy of the United

States—

(1) to promote the general welfare of the Nation by employing the funds and credit of the Nation, as provided in this

Act—

(A) to assist States and political subdivisions of States

to remedy the unsafe housing conditions and the acute

shortage of decent and safe dwellings for low-income

families;

(B) to assist States and political subdivisions of States

to address the shortage of housing affordable to low-income families; and

(C) consistent with the objectives of this title, to vest

in public housing agencies that perform well, the maximum amount of responsibility and flexibility in program

administration, with appropriate accountability to public

housing residents, localities, and the general public;

(2) that the Federal Government cannot through its direct

action alone provide for the housing of every American citizen,

or even a majority of its citizens, but it is the responsibility of

the Government to promote and protect the independent and

collective actions of private citizens to develop housing and

strengthen their own neighborhoods;

(3) that the Federal Government should act where there is

a serious need that private citizens or groups cannot or are not

addressing responsibly; and

(4) that our Nation should promote the goal of providing

decent and affordable housing for all citizens through the efforts and encouragement of Federal, State, and local governments, and by the independent and collective actions of private

citizens, organizations, and the private sector.

(b) PUBLIC HOUSING AGENCY ORGANIZATION.—

(1) REQUIRED MEMBERSHIP.—Except as provided in paragraph (2), the membership of the board of directors or similar
117 Sec. 3 UNITED STATES HOUSING ACT OF 1937

1 Another exception is provided under section 519(d) of the Quality Housing and Work Responsibility Act of 1998, Public Law 105–276, which is set forth, post, this part.

governing body of each public housing agency shall contain not

less than 1 member—

(A) who is directly assisted by the public housing

agency; and

(B) who may, if provided for in the public housing

agency plan, be elected by the residents directly assisted

by the public housing agency.

(2) EXCEPTION.—Paragraph (1) shall not apply to any public housing agency—

(A) that is located in a State that requires the members of the board of directors or similar governing body of

a public housing agency to be salaried and to serve on a

full-time basis; or

(B) with less than 300 public housing units, if—

(i) the agency has provided reasonable notice to

the resident advisory board of the opportunity of not

less than 1 resident described in paragraph (1) to

serve on the board of directors or similar governing

body of the public housing agency pursuant to such

paragraph; and

(ii) within a reasonable time after receipt by the

resident advisory board established by the agency pursuant to section 5A(e) of notice under clause (i), the

public housing agency has not been notified of the intention of any resident to participate on the board of

directors.

(3) NONDISCRIMINATION.—No person shall be prohibited

from serving on the board of directors or similar governing

body of a public housing agency because of the residence of

that person in a public housing project or status as assisted

under section 8.

RENTAL PAYMENTS; DEFINITIONS

SEC. 3. ø42 U.S.C. 1437a¿ (a)(1) Dwelling units assisted under

this Act shall be rented only to families who are low-income families at the time of their initial occupancy of such units. Reviews of

family income shall be made at least annually. Except as provided

in paragraph (2) 1 and subject to the requirement under paragraph

(3), a family shall pay as rent for a dwelling unit assisted under

this Act (other than a family assisted under section 8(o) or (y) or

paying rent under section 8(c)(3)(B)) the highest of the following

amounts, rounded to the nearest dollar:

(A) 30 per centum of the family’s monthly adjusted income;

(B) 10 per centum of the family’s monthly income; or

(C) if the family is receiving payments for welfare assistance from a public agency and a part of such payments, adjusted in accordance with the family’s actual housing costs, is

specifically designated by such agency to meet the family’s

housing costs, the portion of such payments which is so designated.

(2) RENTAL PAYMENTS FOR PUBLIC HOUSING FAMILIES.—
Sec. 3 UNITED STATES HOUSING ACT OF 1937 118

1So in law. Probably should refer to a ‘‘public housing dwelling unit’’.

2Pursuant to section 503 of such Act (42 U.S.C. 1437 note), the effective date was October

1, 1999, except to the extent otherwise specifically provided in such Act or to the extent that

the Secretary, by notice, implemented any provision of such Act before such date.

(A) AUTHORITY FOR FAMILY TO SELECT.—

(i) IN GENERAL.—A family residing in a public housing

dwelling 1 shall pay as monthly rent for the unit the

amount determined under clause (i) or (ii) of subparagraph

(B), subject to the requirement under paragraph (3) (relating to minimum rents). Each public housing agency shall

provide for each family residing in a public housing dwelling unit owned, assisted, or operated by the agency to elect

annually whether the rent paid by such family shall be determined under clause (i) or (ii) of subparagraph (B). A

public housing agency may not at any time fail to provide

both such rent options for any public housing dwelling unit

owned, assisted, or operated by the agency.

(ii) AUTHORITY TO RETAIN FLAT AND CEILING RENTS.—

Notwithstanding clause (i) or any other provision of law,

any public housing agency that is administering flat rents

or ceiling rents pursuant to any authority referred to in

section 519(d) of the Quality Housing and Work Responsibility Act of 1998 before the effective day of such Act 2 may

continue to charge rent in accordance with such rent provisions after such effective date, except that the agency shall

provide for families residing in public housing dwelling

units owned or operated by the agency to elect annually

whether to pay rent under such provisions or in accordance with one of the rent options referred to in subparagraph (A).

(B) ALLOWABLE RENT STRUCTURES.—

(i) FLAT RENTS.—Except as otherwise provided under

this clause, each public housing agency shall establish, for

each dwelling unit in public housing owned or operated by

the agency, a flat rental amount for the dwelling unit,

which shall—

(I) be based on the rental value of the unit, as determined by the public housing agency; and

(II) be designed in accordance with subparagraph

(D) so that the rent structures do not create a disincentive for continued residency in public housing by

families who are attempting to become economically

self-sufficient through employment or who have attained a level of self-sufficiency through their own efforts.

The rental amount for a dwelling unit shall be considered

to comply with the requirements of this clause if such

amount does not exceed the actual monthly costs to the

public housing agency attributable to providing and operating the dwelling unit. The preceding sentence may not

be construed to require establishment of rental amounts

equal to or based on operating costs or to prevent public

housing agencies from developing flat rents required under
119 Sec. 3 UNITED STATES HOUSING ACT OF 1937

1So in law. Probably should be ‘‘or’’.

this clause in any other manner that may comply with this

clause.

(ii) INCOME-BASED RENTS.— (I) IN GENERAL.—The monthly rental amount determined under this clause for a family shall be an

amount, determined by the public housing agency,

that does not exceed the greatest of the amounts

(rounded to the nearest dollar) determined under subparagraphs (A), (B), and (C) of paragraph (1). This

clause may not be construed to require a public housing agency to charge a monthly rent in the maximum

amount permitted under this clause.

(II) DISCRETION.—Subject to the limitation on

monthly rental amount under subclause (I), a public

housing agency may, in its discretion, implement a

rent structure under this clause requiring that a portion of the rent be deposited to an escrow or savings

account, imposing ceiling rents, or adopting income exclusions (such as those set forth in section 3(b)(5)(B)),

or may establish another reasonable rent structure or

amount.

(C) SWITCHING RENT DETERMINATION METHODS BECAUSE OF

HARDSHIP CIRCUMSTANCES.—Notwithstanding subparagraph

(A), in the case of a family that has elected to pay rent in the

amount determined under subparagraph (B)(i), a public housing agency shall immediately provide for the family to pay rent

in the amount determined under subparagraph (B)(ii) during

the period for which such election was made upon a determination that the family is unable to pay the amount determined

under subparagraph (B)(i) because of financial hardship,

including—

(i) situations in which the income of the family has decreased because of changed circumstances, loss of 1 reduction of employment, death in the family, and reduction in

or loss of income or other assistance;

(ii) an increase, because of changed circumstances, in

the family’s expenses for medical costs, child care, transportation, education, or similar items; and

(iii) such other situations as may be determined by the

agency.

(D) ENCOURAGEMENT OF SELF-SUFFICIENCY.—The rental

policy developed by each public housing agency shall encourage

and reward employment and economic self-sufficiency.

(E) INCOME REVIEWS.—Notwithstanding the second sentence of paragraph (1), in the case of families that are paying

rent in the amount determined under subparagraph (B)(i), the

agency shall review the income of such family not less than

once every 3 years.

(3) MINIMUM RENTAL AMOUNT.—

(A) REQUIREMENT.—Notwithstanding paragraph (1) of this

subsection, the method for rent determination elected pursuant

to paragraph (2)(A) of this subsection by a family residing in
Sec. 3 UNITED STATES HOUSING ACT OF 1937 120

public housing, section 8(o)(2) of this Act, or section 206(d) of

the Housing and Urban-Rural Recovery Act of 1983 (including

paragraph (5) of such section), the following entities shall require the following families to pay a minimum monthly rental

amount (which amount shall include any amount allowed for

utilities) of not more than $50 per month, as follows:

(i) Each public housing agency shall require the payment of such minimum monthly rental amount, which

amount shall be determined by the agency, by—

(I) each family residing in a dwelling unit in public housing by the agency;

(II) each family who is assisted under the certificate or moderate rehabilitation program under section

8; and

(III) each family who is assisted under the voucher program under section 8, and the agency shall reduce the monthly assistance payment on behalf of

such family as may be necessary to ensure payment of

such minimum monthly rental amount.

(ii) The Secretary shall require each family who is assisted under any other program for rental assistance under

section 8 to pay such minimum monthly rental amount,

which amount shall be determined by the Secretary.

(B) EXCEPTION FOR HARDSHIP CIRCUMSTANCES.—

(i) IN GENERAL.—Notwithstanding subparagraph (A), a

public housing agency (or the Secretary, in the case of a

family described in subparagraph (A)(ii)) shall immediately

grant an exemption from application of the minimum

monthly rental under such subparagraph to any family unable to pay such amount because of financial hardship,

which shall include situations in which (I) the family has

lost eligibility for or is awaiting an eligibility determination for a Federal, State, or local assistance program, including a family that includes a member who is an alien

lawfully admitted for permanent residence under the Immigration and Nationality Act who would be entitled to

public benefits but for title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996;

(II) the family would be evicted as a result of the imposition of the minimum rent requirement under subparagraph (A); (III) the income of the family has decreased because of changed circumstance, including loss of employment; (IV) a death in the family has occurred; and (V)

other situations as may be determined by the agency (or

the Secretary, in the case of a family described in subparagraph (A)(ii)).

(ii) WAITING PERIOD.—If a resident requests a hardship exemption under this subparagraph and the public

housing agency (or the Secretary, in the case of a family

described in subparagraph (A)(ii)) reasonably determines

the hardship to be of a temporary nature, an exemption

shall not be granted during the 90-day period beginning

upon the making of a request for the exemption. A resident may not be evicted during such 90-day period for non-
121 Sec. 3 UNITED STATES HOUSING ACT OF 1937

payment of rent. In such a case, if the resident thereafter

demonstrates that the financial hardship is of a long-term

basis, the agency (or the Secretary) shall retroactively exempt the resident from the applicability of the minimum

rent requirement for such 90-day period.

(4) OCCUPANCY BY POLICE OFFICERS.— (A) IN GENERAL.—Subject to subparagraph (B) and

notwithstanding any other provision of law, a public housing agency may, in accordance with the public housing

agency plan for the agency, allow a police officer who is

not otherwise eligible for residence in public housing to reside in a public housing dwelling unit. The number and location of units occupied by police officers under this paragraph and the terms and conditions of their tenancies

shall be determined by the public housing agency.

(B) INCREASED SECURITY.—A public housing agency

may take the actions authorized in subparagraph (A) only

for the purpose of increasing security for the residents of

a public housing project.

(C) DEFINITION.—In this paragraph, the term ‘‘police

officer’’ means any person determined by a public housing

agency to be, during the period of residence of that person

in public housing, employed on a full-time basis as a duly

licensed professional police officer by a Federal, State, or

local government or by any agency thereof (including a

public housing agency having an accredited police force).

(5) OCCUPANCY BY OVER-INCOME FAMILIES IN CERTAIN PUBLIC HOUSING.—

(A) AUTHORITY.—Notwithstanding any other provision

of law, a public housing agency that owns or operates less

than 250 units may, on a month-to-month basis, lease a

dwelling unit in a public housing project to an over-income

family in accordance with this paragraph, but only if there

are no eligible families applying for housing assistance

from the public housing agency for that month and the

agency provides not less than 30-day public notice of the

availability of such assistance.

(B) TERMS AND CONDITIONS.—The number and location

of dwelling units of a public housing agency occupied

under this paragraph by over-income families, and the

terms and conditions of those tenancies, shall be determined by the public housing agency, except that—

(i) notwithstanding paragraph (2), rent for a unit

shall be in an amount that is not less than the costs

to operate the unit;

(ii) if an eligible family applies for residence after

an over-income family moves in to the last available

unit, the over-income family shall vacate the unit in

accordance with notice of termination of tenancy provided by the agency, which shall be provided not less

than 30 days before such termination; and

(iii) if a unit is vacant and there is no one on the

waiting list, the public housing agency may allow an

over-income family to gain immediate occupancy in
Sec. 3 UNITED STATES HOUSING ACT OF 1937 122

the unit, while simultaneously providing reasonable

public notice and outreach with regard to availability

of the unit.

(C) DEFINITION.—For purposes of this paragraph, the

term ‘‘over-income family’’ means an individual or family

that is not a low-income family at the time of initial occupancy.

(b) When used in this Act:

(1) The term ‘‘low-income housing’’ means decent, safe, and

sanitary dwellings assisted under this Act. The term ‘‘public housing’’ means low-income housing, and all necessary appurtenances

thereto, assisted under this Act other than under section 8. The

term ‘‘public housing’’ includes dwelling units in a mixed finance

project that are assisted by a public housing agency with capital or

operating assistance. When used in reference to public housing, the

term ‘‘low-income housing project’’ or ‘‘project’’ means (A) housing

developed, acquired, or assisted by a public housing agency under

this Act, and (B) the improvement of any such housing.

(2) The term ‘‘low-income families’’ means those families whose

incomes do not exceed 80 per centum of the median income for the

area, as determined by the Secretary with adjustments for smaller

and larger families, except that the Secretary may establish income

ceilings higher or lower than 80 per centum of the median for the

area on the basis of the Secretary’s findings that such variations

are necessary because of prevailing levels of construction costs or

unusually high or low family incomes. The term ‘‘very low-income

families’’ means low-income families whose incomes do not exceed

50 per centum of the median family income for the area, as determined by the Secretary with adjustments for smaller and larger

families, except that the Secretary may establish income ceilings

higher or lower than 50 per centum of the median for the area on

the basis of the Secretary’s findings that such variations are necessary because of unusually high or low family incomes. Such ceilings shall be established in consultation with the Secretary of Agriculture for any rural area, as defined in section 520 of the Housing

Act of 1949, taking into account the subsidy characteristics and

types of programs to which such ceilings apply. In determining median incomes (of persons, families, or households) for an area or establishing any ceilings or limits based on income under this Act,

the Secretary shall determine or establish area median incomes

and income ceilings and limits for Westchester and Rockland Counties, in the State of New York, as if each such county were an area

not contained within the metropolitan statistical area in which it

is located. In determining such area median incomes or establishing such income ceilings or limits for the portion of such metropolitan statistical area that does not include Westchester or Rockland Counties, the Secretary shall determine or establish area median incomes and income ceilings and limits as if such portion included Westchester and Rockland Counties. In determining areas

that are designated as difficult development areas for purposes of

the low-income housing tax credit, the Secretary shall include

Westchester and Rockland Counties, New York, in the New York

City metropolitan area.

(3) PERSONS AND FAMILIES.—
123 Sec. 3 UNITED STATES HOUSING ACT OF 1937

(A) SINGLE PERSONS.—The term ‘‘families’’ includes families consisting of a single person in the case of (i) an elderly

person, (ii) a disabled person, (iii) a displaced person, (iv) the

remaining member of a tenant family, and (v) any other single

persons. In no event may any single person under clause (v) of

the first sentence be provided a housing unit assisted under

this Act of 2 or more bedrooms.

(B) 1 FAMILIES.—The term ‘‘families’’ includes families with

children and, in the cases of elderly families, near-elderly families, and disabled families, means families whose heads (or

their spouses), or whose sole members, are elderly, near-elderly, or persons with disabilities, respectively. The term includes,

in the cases of elderly families, near-elderly families, and disabled families, 2 or more elderly persons, near-elderly persons,

or persons with disabilities living together, and 1 or more such

persons living with 1 or more persons determined under the

public housing agency plan to be essential to their care or wellbeing.

(C) ABSENCE OF CHILDREN.—The temporary absence of a

child from the home due to placement in foster care shall not

be considered in determining family composition and family

size.

(D) ELDERLY PERSON.—The term ‘‘elderly person’’ means a

person who is at least 62 years of age.

(E) PERSON WITH DISABILITIES.—The term ‘‘person with

disabilities’’ means a person who—

(i) has a disability as defined in section 223 of the Social Security Act,

(ii) is determined, pursuant to regulations issued by

the Secretary, to have a physical, mental, or emotional impairment which (I) is expected to be of long-continued and

indefinite duration, (II) substantially impedes his or her

ability to live independently, and (III) is of such a nature

that such ability could be improved by more suitable housing conditions, or

(iii) has a developmental disability as defined in section 102 of the Developmental Disabilities Assistance and

Bill of Rights Act of 2000.

Such term shall not exclude persons who have the disease of

acquired immunodeficiency syndrome or any conditions arising

from the etiologic agent for acquired immunodeficiency syndrome. Notwithstanding any other provision of law, no individual shall be considered a person with disabilities, for purposes of eligibility for low-income housing under this title, solely on the basis of any drug or alcohol dependence. The Secretary shall consult with other appropriate Federal agencies to

implement the preceding sentence.

(F) DISPLACED PERSON.—The term ‘‘displaced person’’

means a person displaced by governmental action, or a person

whose dwelling has been extensively damaged or destroyed as

a result of a disaster declared or otherwise formally recognized

pursuant to Federal disaster relief laws.
Sec. 3 UNITED STATES HOUSING ACT OF 1937 124

1Section 573(b) of the Cranston-Gonzalez National Affordable Housing Act, Public Law 101–

625, amended this paragraph to exclude from consideration as income amounts not received by

a family. Section 573(e) of such Act provides as follows:

‘‘(e) BUDGET COMPLIANCE.—The amendments made by subsections (b) and (c) shall apply only

to the extent approved in appropriations Acts.’’. 2Section 103(a)(1) of the Housing and Community Development Act of 1992, Public Law 102–

550, amended this paragraph to exclude from consideration as income the amounts eligible for

exclusion under the Social Security Act.

Paragraph (3) of such section 103(a) provides as follows:

‘‘(3) BUDGET COMPLIANCE.—To the extent that the amendments made by paragraphs (1)

and (2) result in additional costs under this title, such amendments shall be effective only

to the extent that amounts to cover such additional costs are provided in advance in appropriation Acts.’’. 3Other Federal laws exclude various amounts from consideration as income for purposes of

housing assistance. See, for example, the exclusion provided by section 509 of the Older Americans Act of 1965 (42 U.S.C. 3056g).

(G) NEAR-ELDERLY PERSON.—The term ‘‘near-elderly person’’ means a person who is at least 50 years of age but below

the age of 62.

(4) The term ‘‘income’’ means income from all sources of each

member of the household, as determined in accordance with criteria prescribed by the Secretary, in consultation with the Secretary of Agriculture, except that any amounts not actually received by the family 1 and any amounts which would be eligible for

exclusion under section 1613(a)(7) of the Social Security Act (42

U.S.C. 1382b(a)(7)) 2 may not be considered as income under this

paragraph. 3

(5) ADJUSTED INCOME.—The term ‘‘adjusted income’’ means,

with respect to a family, the amount (as determined by the public

housing agency) of the income of the members of the family residing in a dwelling unit or the persons on a lease, after any income

exclusions as follows:

(A) MANDATORY EXCLUSIONS.—In determining adjusted income, a public housing agency shall exclude from the annual

income of a family the following amounts:

(i) ELDERLY AND DISABLED FAMILIES.—$400 for any elderly or disabled family.

(ii) MEDICAL EXPENSES.—The amount by which 3 percent of the annual family income is exceeded by the sum

of—

(I) unreimbursed medical expenses of any elderly

family or disabled family;

(II) unreimbursed medical expenses of any family

that is not covered under subclause (I), except that

this subclause shall apply only to the extent approved

in appropriation Acts; and

(III) unreimbursed reasonable attendant care and

auxiliary apparatus expenses for each handicapped

member of the family, to the extent necessary to enable any member of such family (including such handicapped member) to be employed.

(iii) CHILD CARE EXPENSES.—Any reasonable child care

expenses necessary to enable a member of the family to be

employed or to further his or her education.

(iv) MINORS, STUDENTS, AND PERSONS WITH DISABIL- ITIES.—$480 for each member of the family residing in the

household (other than the head of the household or his or

her spouse) who is less than 18 years of age or is attending
125 Sec. 3 UNITED STATES HOUSING ACT OF 1937

1So in law. Should probably be a semicolon.

school or vocational training on a full-time basis, or who

is 18 years of age or older and is a person with disabilities.

(v) CHILD SUPPORT PAYMENTS.—Any payment made by

a member of the family for the support and maintenance

of any child who does not reside in the household, except

that the amount excluded under this clause may not exceed $480 for each child for whom such payment is made;

except that this clause shall apply only to the extent approved in appropriations Acts.

(vi) SPOUSAL SUPPORT EXPENSES.—Any payment made

by a member of the family for the support and maintenance of any spouse or former spouse who does not reside

in the household, except that the amount excluded under

this clause shall not exceed the lesser of (I) the amount

that such family member has a legal obligation to pay, or

(II) $550 for each individual for whom such payment is

made; except that this clause shall apply only to the extent

approved in appropriations Acts.

(vii) EARNED INCOME OF MINORS.—The amount of any

earned income of a member of the family who is not—

(I) 18 years of age or older; and

(II) the head of the household (or the spouse of the

head of the household).

(B) PERMISSIVE EXCLUSIONS FOR PUBLIC HOUSING.—In determining adjusted income, a public housing agency may, in

the discretion of the agency, establish exclusions from the annual income of a family residing in a public housing dwelling

unit. Such exclusions may include the following amounts:

(i) EXCESSIVE TRAVEL EXPENSES.—Excessive travel expenses in an amount not to exceed $25 per family per

week, for employment- or education-related travel. 1

(ii) EARNED INCOME.—An amount of any earned income of the family, established at the discretion of the

public housing agency, which may be based on—

(I) all earned income of the family,

(II) the amount earned by particular members of

the family;

(III) the amount earned by families having certain

characteristics; or

(IV) the amount earned by families or members

during certain periods or from certain sources.

(iii) OTHERS.—Such other amounts for other purposes,

as the public housing agency may establish.

(6) PUBLIC HOUSING AGENCY.— (A) IN GENERAL.—Except as provided in subparagraph (B),

the term ‘‘public housing agency’’ means any State, county,

municipality, or other governmental entity or public body (or

agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of public

housing.

(B) SECTION 8 PROGRAM.—For purposes of the program for

tenant-based assistance under section 8, such term includes—
Sec. 3 UNITED STATES HOUSING ACT OF 1937 126

1So in law.

(i) a consortia of public housing agencies that the Secretary determines has the capacity and capability to administer a program for assistance under such section in an

efficient manner;

(ii) any other public or private nonprofit entity that,

upon the effective date under section 503(a) of the Quality

Housing and Work Responsibility Act of 1998, was administering any program for tenant-based assistance under

section 8 of this Act (as in effect before the effective date

of such Act), pursuant to a contract with the Secretary or

a public housing agency; and

(iii) with respect to any area in which no public housing agency has been organized or where the Secretary determines that a public housing agency is unwilling or unable to implement a program for tenant-based assistance

section 8 1, or is not performing effectively—

(I) the Secretary or another public or private nonprofit entity that by contract agrees to receive assistance amounts under section 8 and enter into housing

assistance payments contracts with owners and perform the other functions of public housing agency

under section 8; or

(II) notwithstanding any provision of State or local

law, a public housing agency for another area that

contracts with the Secretary to administer a program

for housing assistance under section 8, without regard

to any otherwise applicable limitations on its area of

operation.

(7) The term ‘‘State’’ includes the several States, the District

of Columbia, the Commonwealth of Puerto Rico, the territories and

possessions of the United States, and the Trust Territory of the Pacific Islands.

(8) The term ‘‘Secretary’’ means the Secretary of Housing and

Urban Development.

(9) DRUG-RELATED CRIMINAL ACTIVITY.—The term ‘‘drug-related

criminal activity’’ means the illegal manufacture, sale, distribution,

use, or possession with intent to manufacture, sell, distribute, or

use, of a controlled substance (as such term is defined in section

102 of the Controlled Substances Act).

(10) MIXED-FINANCE PROJECT.—The term ‘‘mixed-finance

project’’ means a public housing project that meets the requirements of section 35.

(11) PUBLIC HOUSING AGENCY PLAN.—The term ‘‘public housing

agency plan’’ means the plan of a public housing agency prepared

in accordance with section 5A.

(12) CAPITAL FUND.—The term ‘‘Capital Fund’’ means the fund

established under section 9(d).

(13) OPERATING FUND.—The term ‘‘Operating Fund’’ mean the

fund established under section 9(e).

(c) When used in reference to public housing:

(1) The term ‘‘development’’ means any or all undertakings

necessary for planning, land acquisition, demolition, construction,
127 Sec. 3 UNITED STATES HOUSING ACT OF 1937

1Section 622(c) of the Housing and Community Development Act of 1992, Public Law 102–

550, amended this subsection by inserting after ‘‘project.’’ the following new paragraphs:

‘‘(4) The term ‘congregate housing’ means low-rent housing with which there is connected

a central dining facility where wholesome and economical meals can be served to occupants.

Expenditures incurred by a public housing agency in the operation of a central dining facility in connection with congregate housing (other than the cost of providing food and service)

shall be considered a cost of operation of the project.

‘‘(5) The terms ‘group home’ and ‘independent living facility’ have the meanings given

such terms in section 811(k) of the Cranston-Gonzalez National Affordable Housing Act.’’.

Because the amendatory instructions did not specify which occurrence of ‘‘project’’ the new

paragraphs were to be placed after, the amendment could not be executed. The new paragraphs

were probably intended to be inserted after this paragraph.

or equipment, in connection with a low-income housing project. The

term ‘‘development cost’’ comprises the costs incurred by a public

housing agency in such undertakings and their necessary financing

(including the payment of carrying charges), and in otherwise carrying out the development of such project, but does not include the

costs associated with the demolition of or remediation of environmental hazards associated with public housing units that will not

be replaced on the project site, or other extraordinary site costs as

determined by the Secretary. Construction activity in connection

with a low-income housing project may be confined to the reconstruction, remodeling, or repair of existing buildings.

(2) The term ‘‘operation’’ means any or all undertakings appropriate for management, operation, services, maintenance, security

(including the cost of security personnel), or financing in connection

with a low-income housing project. The term also means the financing of tenant programs and services for families residing in low-income housing projects, particularly where there is maximum feasible participation of the tenants in the development and operation

of such tenant programs and services. As used in this paragraph,

the term ‘‘tenant programs and services’’ includes the development

and maintenance of tenant organizations which participate in the

management of low-income housing projects; the training of tenants to manage and operate such projects and the utilization of

their services in project management and operation; counseling on

household management, housekeeping, budgeting, money management, child care, and similar matters; advice as to resources for job

training and placement, education, welfare, health, and other community services; services which are directly related to meeting tenant needs and providing a wholesome living environment; and referral to appropriate agencies in the community when necessary for

the provision of such services. To the maximum extent available

and appropriate, existing public and private agencies in the community shall be used for the provision of such services.

(3) The term ‘‘acquisition cost’’ means the amount prudently required to be expended by a public housing agency in acquiring

property for a low-income housing project. 1

(d) DISALLOWANCE OF EARNED INCOME FROM RENT DETER- MINATIONS.—

(1) IN GENERAL.—Notwithstanding any other provision of

law, the rent payable under subsection (a) by a family described in paragraph (3) of this subsection may not be increased as a result of the increased income due to such employment during the 12-month period beginning on the date on

which the employment is commenced.
Sec. 3 UNITED STATES HOUSING ACT OF 1937 128

1So in law. Probably should refer to paragraph (3)(A)(ii).

(2) PHASE-IN OF RENT INCREASES.—Upon the expiration of

the 12-month period referred to in paragraph (1), the rent payable by a family described in paragraph (3) may be increased

due to the continued employment of the family member described in paragraph (3)(B), except that during the 12-month

period beginning upon such expiration the amount of the increase may not be greater than 50 percent of the amount of the

total rent increase that would be applicable but for this paragraph.

(3) ELIGIBLE FAMILIES.—A family described in this paragraph is a family—

(A) that—

(i) occupies a dwelling unit in a public housing

project; or

(ii) receives assistance under section 8; and

(B)(i) whose income increases as a result of employment of a member of the family who was previously unemployed for 1 or more years;

(ii) whose earned income increases during the participation of a family member in any family self-sufficiency or

other job training program; or

(iii) who is or was, within 6 months, assisted under

any State program for temporary assistance for needy families funded under part A of title IV of the Social Security

Act and whose earned income increases.

(4) APPLICABILITY.—This subsection and subsection (e)

shall apply beginning upon October 1, 1999, except that this

subsection and subsection (e) shall apply with respect to any

family described in paragraph 3(A)(ii) 1 only to the extent provided in advance in appropriations Acts.

(e) INDIVIDUAL SAVINGS ACCOUNTS.—

(1) IN GENERAL.—In lieu of a disallowance of earned income under subsection (d), upon the request of a family that

qualifies under subsection (d), a public housing agency may establish an individual savings account in accordance with this

subsection for that family.

(2) DEPOSITS TO ACCOUNT.—The public housing agency

shall deposit in any savings account established under this

subsection an amount equal to the total amount that otherwise

would be applied to the family’s rent payment under subsection (a) as a result of employment.

(3) WITHDRAWAL FROM ACCOUNT.—Amounts deposited in a

savings account established under this subsection may only be

withdrawn by the family for the purpose of—

(A) purchasing a home;

(B) paying education costs of family members;

(C) moving out of public or assisted housing; or

(D) paying any other expense authorized by the public

housing agency for the purpose of promoting the economic

self-sufficiency of residents of public and assisted housing.

(f) AVAILABILITY OF INCOME MATCHING INFORMATION.—
129 Sec. 4 UNITED STATES HOUSING ACT OF 1937

1Punctuation so in law. Probably should be a semicolon.

(1) DISCLOSURE TO PHA.—A public housing agency, or the

owner responsible for determining the participant’s eligibility

or level of benefits, shall require any family described in paragraph (2) who receives information regarding income, earnings,

wages, or unemployment compensation from the Department of

Housing and Urban Development pursuant to income verification procedures of the Department to disclose such information,

upon receipt of the information, to the public housing agency

that owns or operates the public housing dwelling unit in

which such family resides or that provides the housing assistance under this Act on behalf of such family, as applicable, or

to the owner responsible for determining the participant’s eligibility or level of benefits.

(2) FAMILIES COVERED.—A family described in this paragraph is a family that resides in a dwelling unit—

(A) that is a public housing dwelling unit;

(B) for which tenant-based assistance is provided

under section 8, 1 or

(C) for which project-based assistance is provided under

section 8, section 202, or section 811.

LOANS FOR LOWER INCOME HOUSING PROJECTS

SEC. 4. ø42 U.S.C. 1437b¿ (a) The Secretary may make loans

or commitments to make loans to public housing agencies to help

finance or refinance the development, acquisition, or operation of

low-income housing projects by such agencies. Any contract for

such loans and any amendment to a contract for such loans shall

provide that such loans shall bear interest at a rate specified by

the Secretary which shall not be less than a rate determined by the

Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the

United States with remaining periods to maturity comparable to

the average maturities of such loans, plus one-eighth of 1 per centum. Such loans shall be secured in such manner and shall be repaid within such period not exceeding forty years, or not exceeding

forty years from the date of the bonds evidencing the loan, as the

Secretary may determine. The Secretary may require loans or commitments to make loans under this section to be pledged as security for obligations issued by a public housing agency in connection

with a low-income housing project.

(b) The Secretary may issue and have outstanding at any one

time notes and other obligations for purchase by the Secretary of

the Treasury in an amount which will not, unless authorized by the

President, exceed $1,500,000,000. For the purpose of determining

obligations incurred to make loans pursuant to this Act against any

limitation otherwise applicable with respect to such loans, the Secretary shall estimate the maximum amount to be loaned at any one

time pursuant to loan agreements then outstanding with public

housing agencies. Such notes or other obligations shall be in such

forms and denominations and shall be subject to such terms and

conditions as may be prescribed by the Secretary with the approval

of the Secretary of the Treasury. The notes or other obligations
Sec. 5 UNITED STATES HOUSING ACT OF 1937 130

1 April 7, 1986.

issued under this subsection shall have such maturities and bear

such rate or rates of interest as shall be determined by the Secretary of the Treasury. The Secretary of the Treasury is authorized

and directed to purchase any notes or other obligations of the Secretary issued hereunder and for such purpose is authorized to use

as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, United States Code, and

the purposes for which securities may be issued under such chapter

are extended to include any purchases of such obligations. The Secretary of the Treasury may at any time sell any of the notes or

other obligations acquired by him under this section. All redemptions, purchases, and sales by the Secretary of the Treasury of such

notes or other obligations shall be treated as public debt transactions of the United States.

(c)(1) At such times as the Secretary may determine, and in accordance with such accounting and other procedures as the Secretary may prescribe, each loan made by the Secretary under subsection (a) that has any principal amount outstanding or any interest amount outstanding or accrued shall be forgiven; and the terms

and conditions of any contract, or any amendment to a contract, for

such loan with respect to any promise to repay such principal and

interest shall be canceled. Such cancellation shall not affect any

other terms and conditions of such contract, which shall remain in

effect as if the cancellation had not occurred. This paragraph shall

not apply to any loan the repayment of which was not to be made

using annual contributions, or to any loan all or part of the proceeds of which are due a public housing agency from contractors or

others.

(2)(A) On the date of the enactment of the Housing and Community Development Reconciliation Amendments of 1985,1 each

note or other obligation issued by the Secretary to the Secretary of

the Treasury pursuant to subsection (b), together with any promise

to repay the principal and unpaid interest that has accrued on each

note or obligation, shall be forgiven; and any other term or condition specified by each such obligation shall be canceled.

(B) On September 30, 1986, and on any subsequent September

30, each such note or other obligation issued by the Secretary to

the Secretary of the Treasury pursuant to subsection (b) during the

fiscal year ending on such date, together with any promise to repay

the principal and unpaid interest that has accrued on each note or

obligation, shall be forgiven; and any other term or condition specified by each such obligation shall be canceled.

(3) Any amount of budget authority (and contract authority)

that becomes available during any fiscal year as a result of the forgiveness of any loan, note, or obligation under this subsection shall

be rescinded.

CONTRIBUTIONS FOR LOWER INCOME HOUSING PROJECTS

SEC. 5. ø42 U.S.C. 1437c¿ (a)(1) The Secretary may make annual contributions to public housing agencies to assist in achieving

and maintaining the lower income character of their projects. The

Secretary shall embody the provisions for such annual contribu-
131 Sec. 5 UNITED STATES HOUSING ACT OF 1937

tions in a contract guaranteeing their payment. The contribution

payable annually under this section shall in no case exceed a sum

equal to the annual amount of principal and interest payable on obligations issued by the public housing agency to finance the development or acquisition cost of the lower income project involved. Annual contributions payable under this section shall be pledged, if

the Secretary so requires, as security for obligations issued by a

public housing agency to assist the development or acquisition of

the project to which annual contributions relate and shall be paid

over a period not to exceed 40 years.

(2) The Secretary may make contributions (in the form of

grants) to public housing agencies to cover the development cost of

public housing projects. The contract under which such contributions shall be made shall specify the amount of capital contributions required for each project to which the contract pertains, and

that the terms and conditions of such contract shall remain in effect for a 40-year period.

(3) The amount of contributions that would be established for

a newly constructed project by a public housing agency designed to

accommodate a number of families of a given size and kind may

be established under this section for a project by such public housing agency that would provide housing for the comparable number,

sizes, and kinds of families through the acquisition and rehabilitation, or use under lease, of structures that are suitable for low-income housing use and obtained in the local market.

(b) The Secretary may prescribe regulations fixing the maximum contributions available under different circumstances, giving

consideration to cost, location, size, rent-paying ability of prospective tenants, or other factors bearing upon the amounts and periods

of assistance needed to achieve and maintain low rentals. Such regulations may provide for rates of contribution based upon development, acquisition, or operation costs, number of dwelling units,

number of persons housed, interest charges, or other appropriate

factors.

(c)(1) The Secretary may enter into contracts for annual contributions aggregating not more than $7,875,049,000 per annum,

which amount shall be increased by $1,494,400,000 on October 1,

1980, and by $906,985,000 on October 1, 1981. The additional authority to enter into such contracts provided on or after October 1,

1980, shall be effective only in such amounts as may be approved

in appropriation Acts. In addition, the aggregate amount which

may be obligated over the duration of the contracts may not exceed

$31,200,000 with respect to the additional authority provided on

October 1, 1980, and $18,087,370,000 with respect to the additional

authority provided on October 1, 1981.

(2) The Secretary shall enter into only such new contracts for

preliminary loans as are consistent with the number of dwelling

units for which contracts for annual contributions may be entered

into.

(3) The full faith and credit of the United States is solemnly

pledged to the payment of all annual contributions contracted for

pursuant to this section, and there are hereby authorized to be appropriated in each fiscal year, out of any money in the Treasury
Sec. 5 UNITED STATES HOUSING ACT OF 1937 132

not otherwise appropriated, the amounts necessary to provide for

such payments.

(4) All payments of annual contributions pursuant to this section shall be made out of any funds available for purposes of this

Act when such payments are due, except that funds obtained

through the issuance of obligations pursuant to section 4(b) (including repayments or other realizations of the principal of loans made

out of such funds) shall not be available for the payment of such

annual contributions.

(5) During such period as the Secretary may prescribe for

starting construction, the Secretary may approve the conversion of

public housing development authority for use under section 9 or for

use for the acquisition and rehabilitation of property to be used in

public housing, if the public housing agency, after consultation with

the unit of local government, certifies that such assistance would

be more effectively used for such purpose, and if the total number

of units assisted will not be less than 90 per centum of the units

covered by the original reservation.

(6) The aggregate amount of budget authority which may be

obligated for contracts for annual contributions and for grants

under section 17 is increased by $9,912,928,000 on October 1, 1983,

and by such sums as may be approved in appropriation Acts on October 1, 1984. The aggregate amount of budget authority that may

be obligated for contracts for annual contributions for assistance

under section 8, for contracts referred to in paragraphs (7)(A)(iv)

and (7)(B)(iv), for grants for public housing, for comprehensive improvement assistance, and for amendments to existing contracts, is

increased (to the extent approved in appropriation Acts) by

$7,167,000,000 on October 1, 1987, and by $7,300,945,000 on October 1, 1988. The aggregate amount of budget authority that may

be obligated for assistance referred to in paragraph (7) is increased

(to the extent approved in appropriation Acts) by $16,194,000,000

on October 1, 1990, and by $14,709,400,000 on October 1, 1991.

The aggregate amount of budget authority that may be obligated

for assistance referred to in paragraph (7) is increased (to the extent approved in appropriation Acts) by $14,710,990,520 on October

1, 1992, and by $15,328,852,122 on October 1993.

(7)(A) Using the additional budget authority provided under

paragraph (6) and the balances of budget authority that become

available during fiscal year 1993, the Secretary shall, to the extent

approved in appropriation Acts, reserve authority to enter into obligations aggregating—

(i) for public housing grants under subsection (a)(2), not more than $830,900,800, of which amount not more than

$257,320,000 shall be available for Indian housing;

(ii) for assistance under section 8, not more than

$1,977,662,720, of which $20,000,000 shall be available for 15-

year contracts for project-based assistance to be used for a

multicultural tenant empowerment and homeownership project

located in the District of Columbia, except that assistance provided for such project shall not be considered for purposes of

the percentage limitations under section 8(i)(2); except that not

more than 49 percent of any amounts appropriated under this

clause may be used for vouchers under section 8(o);
133 Sec. 5 UNITED STATES HOUSING ACT OF 1937

(iii) for comprehensive improvement assistance grants under section 14(k), not more than $3,100,000,000;

(iv) for assistance under section 8 for property disposition, not more than $93,032,000;

(v) for assistance under section 8 for loan management, not more than $202,000,000;

(vi) for extensions of contracts expiring under section 8, not more than $6,746,135,000, which shall be for 5-year contracts for assistance under section 8 and for loan management

assistance under such section;

(vii) for amendments to contracts under section 8, not

more than $1,350,000,000;

(viii) for public housing lease adjustments and amend- ments, not more than $83,055,000;

(ix) for conversions from leased housing contracts under

section 23 of this Act (as in effect immediately before the enactment of the Housing and Community Development Act of

1974) to assistance under section 8, not more than

$12,767,000; and

(x) for grants under section 24 for revitalization of severely distressed public housing, not more than $300,000,000.

(B) Using the additional budget authority provided under paragraph (6) and the balances of budget authority that become available during fiscal year 1994, the Secretary shall, to the extent approved in appropriation Acts, reserve authority to enter into obligations aggregating—

(i) for public housing grants under subsection (a)(2), not

more than $865,798,634, of which amount not more than

$268,127,440 shall be available for Indian housing;

(ii) for assistance under section 8, not more than

$2,060,724,554, of which $20,000,000 shall be available for 15-

year contracts for project-based assistance to be used for a

multicultural tenant empowerment and homeownership project

located in the District of Columbia, except that assistance provided for such project shall not be considered for purposes of

the percentage limitations under section 8(i)(2); except that not

more than 49 percent of any amounts appropriated under this

clause may be used for vouchers under section 8(o);

(iii) for comprehensive improvement assistance grants under section 14(k), not more than $3,230,200,000;

(iv) for assistance under section 8 for property disposition, not more than $96,939,344;

(v) for assistance under section 8 for loan management, not more than $210,484,000;

(vi) for extensions of contracts expiring under section 8, not more than $7,029,472,670, which shall be for 5-year contracts for assistance under section 8 and for loan management

assistance under such section;

(vii) for amendments to contracts under section 8, not

more than $1,406,700,000;

(viii) for public housing lease adjustments and amendments, not more than $86,543,310;

(ix) for conversions from leased housing contracts under

section 23 of this Act (as in effect immediately before the en-
Sec. 5 UNITED STATES HOUSING ACT OF 1937 134

actment of the Housing and Community Development Act of

1974) to assistance under section 8, not more than

$13,303,214; and

(x) for grants under section 24 for revitalization of severely distressed public housing, not more than $312,600,000.

(C)(i) Any amount available for the conversion of a project to

assistance under section 8(b)(1), if not required for such purpose,

shall be used for assistance under section 8(b)(1).

(ii) Any amount available for assistance under section 8 for

property disposition, if not required for such purpose, shall be used

for assistance under section 8(b)(1).

(8) Any amount available for Indian housing under subsection

(a) that is recaptured shall be used only for such housing.

(d) Any contract for loans or annual contributions, or both, entered into by the Secretary with a public housing agency, may

cover one or more than one low-income housing project owned by

such public housing agency; in the event the contract covers two or

more projects, such projects may, for any of the purposes of this Act

and of such contract (including, but not limited to, the determination of the amount of the loan, annual contributions, or payments

in lieu of taxes, specified in such contract), be treated collectively

as one project.

(e) In recognition that there should be local determination of

the need for low-income housing to meet needs not being adequately met by private enterprise—

(1) the Secretary shall not make any contract with a public

housing agency for preliminary loans (all of which shall be repaid out of any moneys which become available to such agency

for the development of the projects involved) for surveys and

planning in respect to any low-income housing projects (i) unless the governing body of the locality involved has by resolution approved the application of the public housing agency for

such preliminary loan; and (ii) unless the public housing agency has demonstrated to the satisfaction of the Secretary that

there is need for such low-income housing which is not being

met by private enterprise; and

(2) the Secretary shall not make any contract for loans

(other than preliminary loans) or for contributions pursuant to

this Act unless the governing body of the locality involved has

entered into an agreement with the public housing agency providing for the local cooperation required by the Secretary pursuant to this Act; the Secretary shall require that each such

agreement shall provide that, notwithstanding any order, judgment, or decree of any court (including any settlement order),

before making any amounts that are provided pursuant to any

contract for contributions under this title available for use for

the development of any housing or other property not previously used as public housing, the public housing agency shall

(A) notify the chief executive officer (or other appropriate official) of the unit of general local government in which the public

housing for which such amounts are to be so used is located

(or to be located) of such use, and (B) pursuant to the request

of such unit of general local government, provide such information as may reasonably be requested by such unit of general
135 Sec. 5 UNITED STATES HOUSING ACT OF 1937

1So in law.

local government regarding the public housing to be so assisted

(except to the extent otherwise prohibited by law).

(f) Subject to the specific limitations or standards in this Act

governing the terms of sales, rentals, leases, loans, contracts for

annual contributions, or other agreements, the Secretary may,

whenever he deems it necessary or desirable in the fulfillment of

the purposes of this Act, consent to the modification, with respect

to rate of interest, time of payment of any installment of principal

or interest, security, amount of annual contribution, or any other

term, of any contract or agreement of any kind to which the Secretary is a party. When the Secretary finds that it would promote

economy or be in the financial interest of the Federal Government

or is necessary to assure or maintain the lower income character

of the project or projects involved, any contract heretofore or hereafter made for annual contributions, loans, or both, may be amended or superseded by a contract entered into by mutual agreement

between the public housing agency and the Secretary. Contracts

may not be amended or superseded in a manner which would impair the rights of the holders of any outstanding obligations of the

public housing agency involved for which annual contributions

have been pledged. Any rule of law contrary to this provision shall

be deemed inapplicable.

(g) In addition to the authority of the Secretary under subsection (a) to pledge annual contributions as security for obligations

issued by a public housing agency, the Secretary is authorized to

pledge annual contributions as a guarantee of payment by a public

housing agency of all principal and interest on obligations issued

by it to assist the development or acquisition of the project to

which the annual contributions relate, except that no obligation

shall be guaranteed under this subsection if the income thereon is

exempt from Federal taxation.

(h) AUDITS.—

(1) BY SECRETARY AND COMPTROLLER GENERAL.—Each contract for contributions for any assistance under this Act to a

public housing agency shall provide that the Secretary, the Inspector General of the Department of Housing and Urban Development, and the Comptroller General of the United States,

or any of their duly authorized representatives, shall, for the

purpose of audit and examination, have access to any books,

documents, papers, and records of the public housing agency

that are pertinent to this Act and to its operations with respect

to financial assistance under the 1 this Act.

(2) WITHHOLDING OF AMOUNTS FOR AUDITS UNDER SINGLE

AUDIT ACT.—The Secretary may, in the sole discretion of the

Secretary, arrange for and pay the costs of an audit required

under chapter 75 of title 31, United States Code. In such circumstances, the Secretary may withhold, from assistance otherwise payable to the agency under this Act, amounts sufficient to pay for the reasonable costs of conducting an acceptable audit, including, when appropriate, the reasonable costs of

accounting services necessary to place the agency’s books and

records in auditable condition. As agreed to by the Secretary
Sec. 5A UNITED STATES HOUSING ACT OF 1937 136

and the Inspector General, the Inspector General may arrange

for an audit under this paragraph.

(i) PROHIBITION ON USE OF FUNDS.—None of the funds made

available to the Department of Housing and Urban Development to

carry out this Act, which are obligated to State or local governments, public housing agencies, housing finance agencies, or other

public or quasi-public housing agencies, shall be used to indemnify

contractors or subcontractors of the government or agency against

costs associated with judgments of infringement of intellectual

property rights.

SEC. 5A. ø42 U.S.C. 1437c–1¿ PUBLIC HOUSING AGENCY PLANS.

(a) 5-YEAR PLAN.—

(1) IN GENERAL.—Subject to paragraph (2), not less than

once every 5 fiscal years, each public housing agency shall submit to the Secretary a plan that includes, with respect to the

5 fiscal years immediately following the date on which the plan

is submitted—

(A) a statement of the mission of the public housing

agency for serving the needs of low-income and very lowincome families in the jurisdiction of the public housing

agency during such fiscal years; and

(B) a statement of the goals and objectives of the public housing agency that will enable the public housing

agency to serve the needs identified pursuant to subparagraph (A) during those fiscal years.

(2) INITIAL PLAN.—The initial 5-year plan submitted by a

public housing agency under this subsection shall be submitted

for the 5-year period beginning on October 1, 1999, or the first

fiscal year thereafter for which the public housing agency initially receives assistance under this Act.

(b) ANNUAL PLAN.—

(1) IN GENERAL.—Effective beginning upon October 1,

1999, each public housing agency shall submit to the Secretary

an annual public housing agency plan under this subsection for

each fiscal year for which the public housing agency receives

assistance under section 8(o) or 9.

(2) UPDATES.—For each fiscal year after the initial submission of an annual plan under this subsection by a public housing agency, the public housing agency may comply with requirements for submission of a plan under this subsection by

submitting an update of the plan for the fiscal year.

(c) PROCEDURES.—

(1) IN GENERAL.—The Secretary shall establish requirements and procedures for submission and review of plans, including requirements for timing and form of submission, and

for the contents of such plans.

(2) CONTENTS.—The procedures established under paragraph (1) shall provide that a public housing agency shall—

(A) in developing the plan consult with the resident

advisory board established under subsection (e); and

(B) ensure that the plan under this section is consistent with the applicable comprehensive housing affordability strategy (or any consolidated plan incorporating
137 Sec. 5A UNITED STATES HOUSING ACT OF 1937

such strategy) for the jurisdiction in which the public

housing agency is located, in accordance with title I of the

Cranston-Gonzalez National Affordable Housing Act, and

contains a certification by the appropriate State or local official that the plan meets the requirements of this paragraph and a description of the manner in which the applicable contents of the public housing agency plan are consistent with the comprehensive housing affordability strategy.

(d) CONTENTS.—An annual public housing agency plan under

subsection (b) for a public housing agency shall contain the following information relating to the upcoming fiscal year for which

the assistance under this Act is to be made available:

(1) NEEDS.—A statement of the housing needs of low-income and very low-income families residing in the jurisdiction

served by the public housing agency, and of other low-income

and very low-income families on the waiting list of the agency

(including housing needs of elderly families and disabled families), and the means by which the public housing agency intends, to the maximum extent practicable, to address those

needs.

(2) FINANCIAL RESOURCES.—A statement of financial resources available to the agency and the planned uses of those

resources.

(3) ELIGIBILITY, SELECTION, AND ADMISSIONS POLICIES.—A

statement of the policies governing eligibility, selection, admissions (including any preferences), assignment, and occupancy

of families with respect to public housing dwelling units and

housing assistance under section 8(o), including—

(A) the procedures for maintaining waiting lists for admissions to public housing projects of the agency, which

may include a system of site-based waiting lists under section 6(r); and

(B) the admissions policy under section 16(a)(3)(B) for

deconcentration of lower-income families.

(4) RENT DETERMINATION.—A statement of the policies of

the public housing agency governing rents charged for public

housing dwelling units and rental contributions of families assisted under section 8(o).

(5) OPERATION AND MANAGEMENT.—A statement of the

rules, standards, and policies of the public housing agency governing maintenance and management of housing owned, assisted, or operated by the public housing agency (which shall

include measures necessary for the prevention or eradication of

pest infestation, including by cockroaches), and management of

the public housing agency and programs of the public housing

agency.

(6) GRIEVANCE PROCEDURE.—A statement of the grievance

procedures of the public housing agency.

(7) CAPITAL IMPROVEMENTS.—With respect to public housing projects owned, assisted, or operated by the public housing

agency, a plan describing the capital improvements necessary

to ensure long-term physical and social viability of the projects.
Sec. 5A UNITED STATES HOUSING ACT OF 1937 138

1So in law.

(8) DEMOLITION AND DISPOSITION.—With respect to public

housing projects owned by the public housing agency—

(A) a description of any housing for which the PHA

will apply for demolition or disposition under section 18;

and

(B) a timetable for the demolition or disposition.

(9) DESIGNATION OF HOUSING FOR ELDERLY AND DISABLED

FAMILIES.—With respect to public housing projects owned, assisted, or operated by the public housing agency, a description

of any projects (or portions thereof) that the public housing

agency has designated or will apply for designation for occupancy by elderly and disabled families in accordance with section 7.

(10) CONVERSION OF PUBLIC HOUSING.—With respect to

public housing owned by a public housing agency—

(A) a description of any building or buildings that the

public housing agency is required to convert to tenantbased assistance under section 33 or that the public housing agency plans to voluntarily convert under section 22;

(B) an analysis of the projects or buildings required to

be converted under section 33; and

(C) a statement of the amount of assistance received

under this Act to be used for rental assistance or other

housing assistance in connection with such conversion.

(11) HOMEOWNERSHIP.—A description of any homeownership programs of the agency under section 8(y) or for which the

public housing agency has applied or will apply for approval

under section 32.

(12) COMMUNITY SERVICE AND SELF-SUFFICIENCY.—A description of—

(A) any programs relating to services and amenities

provided or offered to assisted families;

(B) any policies or programs of the public housing

agency for the enhancement of the economic and social

self-sufficiency of assisted families; 1

(C) how the public housing agency will comply with

the requirements of subsections (c) and (d) of section 12

(relating to community service and treatment of income

changes resulting from welfare program requirements).

(13) SAFETY AND CRIME PREVENTION.—A plan established

by the public housing agency, which shall be subject to the following requirements:

(A) SAFETY MEASURES.—The plan shall provide, on a

project-by-project or jurisdiction-wide basis, for measures

to ensure the safety of public housing residents.

(B) ESTABLISHMENT.—The plan shall be established in

consultation with the police officer or officers in command

for the appropriate precinct or police department.

(C) CONTENT.—The plan shall describe the need for

measures to ensure the safety of public housing residents

and for crime prevention measures, describe any such activities conducted or to be conducted by the agency, and
139 Sec. 5A UNITED STATES HOUSING ACT OF 1937

provide for coordination between the agency and the appropriate police precincts for carrying out such measures

and activities.

(D) SECRETARIAL ACTION.—If the Secretary determines, at any time, that the security needs of a project are

not being adequately addressed by the plan, or that the

local police precinct is not complying with the plan, the

Secretary may mediate between the public housing agency

and the local precinct to resolve any issues of conflict.

(14) PETS.—The requirements of the agency, pursuant to

section 31, relating to pet ownership in public housing.

(15) CIVIL RIGHTS CERTIFICATION.—A certification by the

public housing agency that the public housing agency will

carry out the public housing agency plan in conformity with

title VI of the Civil Rights Act of 1964, the Fair Housing Act,

section 504 of the Rehabilitation Act of 1973, and title II of the

Americans with Disabilities Act of 1990, and will affirmatively

further fair housing.

(16) ANNUAL AUDIT.—The results of the most recent fiscal

year audit of the public housing agency under section 5(h)(2).

(17) ASSET MANAGEMENT.—A statement of how the agency

will carry out its asset management functions with respect to

the public housing inventory of the agency, including how the

agency will plan for the long-term operating, capital investment, rehabilitation, modernization, disposition, and other

needs for such inventory.

(18) OTHER.—Any other information required by law to be

included in a public housing agency plan.

(e) RESIDENT ADVISORY BOARD.—

(1) IN GENERAL.—Except as provided in paragraph (3),

each public housing agency shall establish 1 or more resident

advisory boards in accordance with this subsection, the membership of which shall adequately reflect and represent the

residents assisted by the public housing agency.

(2) FUNCTIONS.—Each resident advisory board established

under this subsection by a public housing agency shall assist

and make recommendations regarding the development of the

public housing agency plan for the agency. The agency shall

consider the recommendations of the resident advisory boards

in preparing the final public housing agency plan, and shall include, in the public housing agency plan submitted to the Secretary under this section, a copy of the recommendations and

a description of the manner in which the recommendations

were addressed.

(3) WAIVER.—The Secretary may waive the requirements

of this subsection with respect to the establishment of resident

advisory boards for a public housing agency if the agency demonstrates to the satisfaction of the Secretary that there exist

resident councils or other resident organizations of the public

housing agency that—

(A) adequately represent the interests of the residents

of the public housing agency; and

(B) have the ability to perform the functions described

in paragraph (2).
Sec. 5A UNITED STATES HOUSING ACT OF 1937 140

1So in law. Probably should be designated as subsection (f).

2So in law.

(1) 1 IN GENERAL.—In developing a public housing agency

plan under this section, the board of directors or similar governing body of a public housing agency shall conduct a public

hearing to discuss the public housing agency plan and to invite

public comment regarding that plan. The hearing shall be conducted at a location that is convenient to residents.

(2) AVAILABILITY OF INFORMATION AND NOTICE.—Not later

than 45 days before the date of a hearing conducted under

paragraph (1), the public housing agency shall—

(A) make the proposed public housing agency plan and

all information relevant to the hearing and proposed plan

available for inspection by the public at the principal office

of the public housing agency during normal business

hours; and

(B) publish a notice informing the public that—

(i) that 2 the information is available as required

under subparagraph (A); and

(ii) that 2 a public hearing under paragraph (1)

will be conducted.

(3) ADOPTION OF PLAN.—A public housing agency may

adopt a public housing agency plan and submit the plan to the

Secretary in accordance with this section only after—

(A) conducting a public hearing under paragraph (1);

(B) considering all public comments received; and

(C) making any appropriate changes in the public

housing agency plan, in consultation with the resident advisory board.

(4) ADVISORY BOARD CONSULTATION ENFORCEMENT.—Pursuant to a written request made by the resident advisory board

for a public housing agency that documents a failure on the

part of the agency to provide adequate notice and opportunity

for comment under this subsection and a finding by the Secretary of good cause within the time period provided for in subsection (i)(4), the Secretary may require the public housing

agency to adequately remedy such failure before final approval

of the public housing agency plan under this section.

(g) AMENDMENTS AND MODIFICATIONS TO PLANS.—

(1) IN GENERAL.—Except as provided in paragraph (2),

nothing in this section shall preclude a public housing agency,

after submitting a plan to the Secretary in accordance with

this section, from amending or modifying any policy, rule, regulation, or plan of the public housing agency, except that a significant amendment or modification may not—

(A) be adopted, other than at a duly called meeting of

board of directors (or similar governing body) of the public

housing agency that is open to the public; and

(B) be implemented, until notification of the amendment or modification is provided to the Secretary and approved in accordance with subsection (i).
141 Sec. 5A UNITED STATES HOUSING ACT OF 1937

1So in law.

(2) CONSISTENCY AND NOTICE.—Each significant amendment or modification to a public housing agency plan submitted to the Secretary under this section shall—

(A) meet the requirements under subsection (c)(2) (relating to consultation with resident advisory board and

consistency with comprehensive housing affordability

strategies); and

(B) be subject to the notice and public hearing requirements of subsection (f ).

(h) SUBMISSION OF PLANS.—

(1) INITIAL SUBMISSION.—Each public housing agency shall

submit the initial plan required by this section, and any

amendment or modification to the initial plan, to the Secretary

at such time and in such form as the Secretary shall require.

(2) ANNUAL SUBMISSION.—Not later than 75 days before

the start of the fiscal year of the public housing agency, after

submission of the initial plan required by this section in accordance with subparagraph (A), each public housing agency

shall annually submit to the Secretary a plan update, including any amendments or modifications to the public housing

agency plan.

(i) REVIEW AND DETERMINATION OF COMPLIANCE.—

(1) REVIEW.—Subject to paragraph (2), after submission of

the public housing agency plan or any amendment or modification to the plan to the Secretary, to the extent that the Secretary considers such action to be necessary to make determinations under this paragraph, the Secretary shall review the

public housing agency plan (including any amendments or

modifications thereto) and determine whether the contents of

the plan—

(A) set forth the information required by this section

and this Act to be contained in a public housing agency

plan;

(B) are consistent with information and data available

to the Secretary, including the approved comprehensive

housing affordability strategy under title I of the Cranston-Gonzalez National Affordable Housing Act for the jurisdiction in which the public housing agency is located;

and

(C) are not prohibited by or inconsistent with any provision of this title or other applicable law.

(2) ELEMENTS EXEMPTED FROM REVIEW.—The Secretary

may, by regulation, provide that one or more elements of a

public housing agency plan shall be reviewed only if the element is challenged, except that the Secretary shall review the

information submitted in each plan pursuant to paragraphs

(3)(B), (8), and (15) of subsection (d).

(3) DISAPPROVAL.—The Secretary may disapprove a public

housing agency plan (or any amendment or modification thereto) only if Secretary 1 determines that the contents of the plan

(or amendment or modification) do not comply with the re-
Sec. 5A UNITED STATES HOUSING ACT OF 1937 142

1So in law.

2 Indented so in law. Subparagraphs (A) through (C) probably should be designated as paragraphs (1) through (3).

quirements under subparagraph 1 (A) through (C) of paragraph

(1).

(4) DETERMINATION OF COMPLIANCE.—

(A) IN GENERAL.—Except as provided in subsection

( j)(2), not later than 75 days after the date on which a

public housing agency plan is submitted in accordance

with this section, the Secretary shall make the determination under paragraph (1) and provide written notice to the

public housing agency if the plan has been disapproved. If

the Secretary disapproves the plan, the notice shall state

with specificity the reasons for the disapproval.

(B) FAILURE TO PROVIDE NOTICE OF DISAPPROVAL.—In

the case of a plan disapproved, if the Secretary does not

provide notice of disapproval under subparagraph (A) before the expiration of the period described in subparagraph

(A), the Secretary shall be considered, for purposes of this

Act, to have made a determination that the plan complies

with the requirements under this section and the agency

shall be considered to have been notified of compliance

upon the expiration of such period. The preceding sentence

shall not preclude judicial review regarding such compliance pursuant to chapter 7 of title 5, United States Code,

or an action regarding such compliance under section 1979

of the Revised Statutes of the United States (42 U.S.C.

1983).

(5) PUBLIC AVAILABILITY.—A public housing agency shall

make the approved plan of the agency available to the general

public.

( j) TROUBLED AND AT-RISK PHAS.—

(1) IN GENERAL.—The Secretary may require, for each public housing agency that is at risk of being designated as troubled under section 6( j)(2) or is designated as troubled under

section 6( j)(2), that the public housing agency plan for such

agency include such additional information as the Secretary

determines to be appropriate, in accordance with such standards as the Secretary may establish or in accordance with such

determinations as the Secretary may make on an agency-byagency basis.

(2) TROUBLED AGENCIES.—The Secretary shall provide explicit written approval or disapproval, in a timely manner, for

a public housing agency plan submitted by any public housing

agency designated by the Secretary as a troubled public housing agency under section 6( j)(2).

(k) STREAMLINED PLAN.—In carrying out this section, the Secretary may establish a streamlined public housing agency plan

for—

(A) 2 public housing agencies that are determined by

the Secretary to be high performing public housing agencies;
143 Sec. 6 UNITED STATES HOUSING ACT OF 1937

1See footnote 2 on preceding page.

(B) 1 public housing agencies with less than 250 public

housing units that have not been designated as troubled

under section 6( j)(2); and

(C) 1 public housing agencies that only administer tenant-based assistance and that do not own or operate public

housing.

(l) COMPLIANCE WITH PLAN.— (1) IN GENERAL.—In providing assistance under this title,

a public housing agency shall comply with the rules, standards,

and policies established in the public housing agency plan of

the public housing agency approved under this section.

(2) INVESTIGATION AND ENFORCEMENT.—In carrying out

this title, the Secretary shall—

(A) provide an appropriate response to any complaint

concerning noncompliance by a public housing agency with

the applicable public housing agency plan; and

(B) if the Secretary determines, based on a finding of

the Secretary or other information available to the Secretary, that a public housing agency is not complying with

the applicable public housing agency plan, take such actions as the Secretary determines to be appropriate to ensure such compliance.

CONTRACT PROVISIONS AND REQUIREMENTS

SEC. 6. ø42 U.S.C. 1437d¿ (a) The Secretary may include in

any contract for loans, contributions, sale, lease, mortgage, or any

other agreement or instrument made pursuant to this Act, such

covenants, conditions, or provisions as he may deem necessary in

order to insure the lower income character of the project involved,

in a manner consistent with the public housing agency plan. Any

such contract shall require that, except in the case of housing predominantly for elderly or disabled families, high-rise elevator

projects shall not be provided for families with children unless the

Secretary makes a determination that there is no practical alternative.

(b)(1) Each contract for loans (other than preliminary loans) or

contributions for the development, acquisition, or operation of public housing shall provide that the total development cost of the

project on which the computation of any annual contributions

under this Act may be based may not exceed the amount determined under paragraph (2) (for the appropriate structure type) unless the Secretary provides otherwise, and in any case may not exceed 110 per centum of such amount unless the Secretary for good

cause determines otherwise.

(2) For purposes of paragraph (1), the Secretary shall determine the total development cost by multiplying the construction

cost guideline for the project (which shall be determined by averaging the current construction costs, as listed by not less than 2

nationally recognized residential construction cost indices, for publicly bid construction of a good and sound quality) by—

(A) in the case of elevator type structures, 1.6; and

(B) in the case of nonelevator type structures, 1.75.
Sec. 6 UNITED STATES HOUSING ACT OF 1937 144

1So in law.

(3) In calculating the total development cost of a project under

paragraph (2), the Secretary shall consider only capital assistance

provided by the Secretary to a public housing agency that are 1 authorized for use in connection with the development of public housing, and shall exclude all other amounts, including amounts provided under—

(A) the HOME investment partnerships program authorized under title II of the Cranston-Gonzalez National Affordable Housing Act; or

(B) the community development block grants program

under title I of the Housing and Community Development Act

of 1974.

(4) The Secretary may restrict the amount of capital funds that

a public housing agency may use to pay for housing construction

costs. For purposes of this paragraph, housing construction costs

include the actual hard costs for the construction of units, builders’

overhead and profit, utilities from the street, and finish landscaping.

(c) Every contract for contributions shall provide that—

(1) the Secretary may require the public housing agency to

review and revise its maximum income limits if the Secretary

determines that changed conditions in the locality make such

revision necessary in achieving the purposes of this Act;

(2) the public housing agency shall determine, and so certify to the Secretary, that each family in the project was admitted in accordance with duly adopted regulations and approved

income limits; and the public housing agency shall review the

incomes of families living in the project no less frequently than

annually;

(3) the public housing agency shall promptly notify (i) any

applicant determined to be ineligible for admission to the

project of the basis for such determination and provide the applicant upon request, within a reasonable time after the determination is made, with an opportunity for an informal hearing

on such determination, and (ii) any applicant determined to be

eligible for admission to the project of the approximate date of

occupancy insofar as such date can be reasonably determined;

(4) the public housing agency shall comply with such procedures and requirements as the Secretary may prescribe to

assure that sound management practices will be followed in

the operation of the project, including requirements pertaining

to—

(A) making dwelling units in public housing available

for occupancy, which shall provide that the public housing

agency may establish a system for making dwelling units

available that provides preference for such occupancy to

families having certain characteristics; each system of

preferences established pursuant to this subparagraph

shall be based upon local housing needs and priorities, as

determined by the public housing agency using generally

accepted data sources, including any information obtained

pursuant to an opportunity for public comment as provided
145 Sec. 6 UNITED STATES HOUSING ACT OF 1937

under section 5A(f ) and under the requirements applicable

to the comprehensive housing affordability strategy for the

relevant jurisdiction;

(B) the establishment of satisfactory procedures designed to assure the prompt payment and collection of

rents and the prompt processing of evictions in the case of

nonpayment of rent;

(C) the establishment of effective tenant-management

relationships designated to assure the satisfactory standards of tenant security and project maintenance are formulated and that the public housing agency (together with

tenant councils where they exist) enforces those standards

fully and effectively;

(D) the development by local housing authority managements of viable homeownership opportunity programs

for low-income families capable of assuming the responsibilities of homeownership;

(E) for each agency that receives assistance under this

title, the establishment and maintenance of a system of accounting for rental collections and costs (including administrative, utility, maintenance, repair and other operating

costs) for each project or operating cost center (as determined by the Secretary), which collections and costs shall

be made available to the general public and submitted to

the appropriate local public official (as determined by the

Secretary); except that the Secretary may permit agencies

owning or operating less than 500 units to comply with the

requirements of this subparagraph by accounting on an

agency-wide basis; and

(F) requiring the public housing agency to ensure and

maintain compliance with subtitle C of title VI of the

Housing and Community Development Act of 1992 and

any regulations issued under such subtitle.

(d) Every contract for contributions with respect to a low-income housing project shall provide that no contributions by the

Secretary shall be made available for such project unless such

project (exclusive of any portion thereof which is not assisted by

contributions under this Act) is exempt from all real and personal

property taxes levied or imposed by the State, city, county, or other

political subdivision; and such contract shall require the public

housing agency to make payments in lieu of taxes equal to 10 per

centum of the sum of the shelter rents charged in such project, or

such lesser amount as (i) is prescribed by State law, or (ii) is

agreed to by the local governing body in its agreement for local cooperation with the public housing agency required under section

5(e)(2) of this Act, or (iii) is due to failure of a local public body or

bodies other than the public housing agency to perform any obligation under such agreement. If any such project is not exempt from

all real and personal property taxes levied or imposed by the State,

city, county, or other political subdivision, such contract shall provide, in lieu of the requirement for tax exemption and payments in

lieu of taxes, that no contributions by the Secretary shall be made

available for such project unless and until the State, city, county,

or other political subdivision in which such project is situated shall
Sec. 6 UNITED STATES HOUSING ACT OF 1937 146

contribute, in the form of cash or tax remission, the amount by

which the taxes paid with respect to the project exceed 10 per centum of the shelter rents charged in such project.

ø(e) [Repealed.]¿

(f ) HOUSING QUALITY REQUIREMENTS.— (1) IN GENERAL.—Each contract for contributions for a public housing agency shall require that the agency maintain its

public housing in a condition that complies with standards

which meet or exceed the housing quality standards established under paragraph (2).

(2) FEDERAL STANDARDS.—The Secretary shall establish

housing quality standards under this paragraph that ensure

that public housing dwelling units are safe and habitable. Such

standards shall include requirements relating to habitability,

including maintenance, health and sanitation factors, condition, and construction of dwellings, and shall, to the greatest

extent practicable, be consistent with the standards established under section 8(o)(8)(B)(i). The Secretary may determine

whether the laws, regulations, standards, or codes of any State

or local jurisdiction meet or exceed these standards, for purposes of this subsection.

(3) ANNUAL INSPECTIONS.—Each public housing agency

that owns or operates public housing shall make an annual inspection of each public housing project to determine whether

units in the project are maintained in accordance with the requirements under paragraph (1). The agency shall retain the

results of such inspections and, upon the request of the Secretary, the Inspector General for the Department of Housing

and Urban Development, or any auditor conducting an audit

under section 5(h), shall make such results available.

(g) Every contract for contributions (including contracts which

amend or supersede contracts previously made) may provide that—

(1) upon the occurrence of a substantial default in respect

to the covenants or conditions to which the public housing

agency is subject (as such substantial default shall be defined

in such contract), the public housing agency shall be obligated

at the option of the Secretary either to convey title in any case

where, in the determination of the Secretary (which determination shall be final and conclusive), such conveyance of title is

necessary to achieve the purposes of this Act, or to deliver to

the Secretary possession of the project, as then constituted, to

which such contract relates; and

(2) the Secretary shall be obligated to reconvey or redeliver

possession of the project, as constituted at the time of reconveyance or redelivery, to such public housing agency or to

its successor (if such public housing agency or a successor exists) upon such terms as shall be prescribed in such contract,

and as soon as practicable (i) after the Secretary is satisfied

that all defaults with respect to the project have been cured,

and that the project will, in order to fulfill the purposes of this

Act, thereafter be operated in accordance with the terms of

such contract; or (ii) after the termination of the obligation to

make annual contributions available unless there are any obligations or covenants of the public housing agency to the Sec-
147 Sec. 6 UNITED STATES HOUSING ACT OF 1937

1So in law. Probably intended to refer to paragraph (1).

2Section 113(e)(1)(C) of the Housing and Community Development Act of 1992 (Public Law

102–550; 106 Stat. 3691) amended this sentence by striking ‘‘indicators.’’ and inserting ‘‘indicators for public housing agencies, to the extent practicable:’’. Because the matter to be struck by

the amendment does not appear in this sentence, the amendment could not be executed.

retary which are then in default. Any prior conveyances and

reconveyances or deliveries and redeliveries of possession shall

not exhaust the right to require a conveyance or delivery of

possession of the project to the Secretary pursuant to subparagraph (1) 1 upon the subsequent occurrence of a substantial default.

Whenever such a contract for annual contributions includes provisions which the Secretary in such contract determines are in accordance with this subsection, and the portion of the annual contribution payable for debt service requirements pursuant to such

contract has been pledged by the public housing agency as security

for the payment of the principal and interest on any of its obligations, the Secretary (notwithstanding any other provisions of this

Act) shall continue to make such annual contributions available for

the project so long as any of such obligations remain outstanding,

and may covenant in such contract that in any event such annual

contributions shall in each year be at least equal to an amount

which, together with such income or other funds as are actually

available from the project for the purpose at the time such annual

contribution is made, will suffice for the payment of all installments, falling due within the next succeeding twelve months, of

principal and interest on the obligations for which the annual contributions provided for in the contract shall have been pledged as

security. In no case shall such annual contributions be in excess of

the maximum sum specified in the contract involved, nor for longer

than the remainder of the maximum period fixed by the contract.

(h) On or after October 1, 1983, the Secretary may enter into

a contract involving new construction only if the public housing

agency demonstrates to the satisfaction of the Secretary that the

cost of new construction in the neighborhood where the public

housing agency determines the housing is needed is less than the

cost of acquisition or acquisition and rehabilitation in such neighborhood, including any reserve fund under subsection (i), would be.

(i) The Secretary may, upon application by a public housing

agency in connection with the acquisition of housing for use as public housing, establish and set aside a reserve fund in an amount

not to exceed 30 per centum of the acquisition cost which shall be

available for use for major repairs to such housing.

(j)(1) The Secretary shall develop and publish in the Federal

Register indicators to assess the management performance of public housing agencies and resident management corporations. The

indicators shall be established by rule under section 553 of title 5,

United States Code. Such indicators shall enable the Secretary to

evaluate the performance of public housing agencies and resident

management corporations in all major areas of management operations. The Secretary shall, in particular, use the following indicators: 2
Sec. 6 UNITED STATES HOUSING ACT OF 1937 148

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1992, Public Law 102-139, 105 Stat. 757, provides as follows:

‘‘Section 6(j)(1) of the Housing Act of 1937, 42 U.S.C. 1437d(j)(1), section 502(a) of the National Affordable Housing Act, is amended as follows:

‘‘(1) by adding at the end of subparagraph (H) the following language: ‘which shall not

exceed the seven factors in the statute, plus an additional five’; and

‘‘(2) by adding as subparagraph (I) the following:

‘(I) The Secretary shall:

‘(1) administer the system of evaluating public housing agencies flexibly to ensure that such agencies are not penalized as result of circumstances beyond their

control;

‘(2) reflect in the weights assigned to the various indicators the differences in

the difficulty of managing individual projects that result from their physical condition and their neighborhood environment; and

‘(3) determine a public housing agency’s status as ‘troubled with respect to the

program under section 14’ based upon factors solely related to its ability to carry

out that program.’.’’.

The amendments were probably intended to be made to section 6(j)(1) of the United States

Housing Act of 1937, as amended by section 502(a) of the Cranston-Gonzalez National Affordable Housing Act. Subparagraph (H), referred to in paragraph (1) of this provision from the appropriations Act, has since been redesignated as subparagraph (K).

(A) The number and percentage of vacancies within an

agency’s inventory, including the progress that an agency has

made within the previous 3 years to reduce such vacancies.

(B) The amount and percentage of funds provided to the

public housing agency from the Capital Fund under section

9(d) which remain unobligated by the public housing agency

after 3 years.

(C) The percentage of rents uncollected.

(D) The utility consumption (with appropriate adjustments

to reflect different regions and unit sizes).

(E) The average period of time that an agency requires to

repair and turn-around vacant units.

(F) The proportion of maintenance work orders outstanding, including any progress that an agency has made during the preceding 3 years to reduce the period of time required

to complete maintenance work orders.

(G) The percentage of units that an agency fails to inspect

to ascertain maintenance or modernization needs within such

period of time as the Secretary deems appropriate (with appropriate adjustments, if any, for large and small agencies).

(H) The extent to which the public housing agency—

(i) coordinates, promotes, or provides effective programs and activities to promote the economic self-sufficiency of public housing residents; and

(ii) provides public housing residents with opportunities for involvement in the administration of the public

housing.

(I) The extent to which the public housing agency—

(i) implements effective screening and eviction policies

and other anticrime strategies; and

(ii) coordinates with local government officials and

residents in the project and implementation of such strategies.

(J) The extent to which the public housing agency is providing acceptable basic housing conditions.

(K) Any other factors as the Secretary deems appropriate. 1
149 Sec. 6 UNITED STATES HOUSING ACT OF 1937

(2)(A)(i) The Secretary shall, under the rulemaking procedures

under section 553 of title 5, United States Code, establish procedures for designating troubled public housing agencies, which procedures shall include identification of serious and substantial failure to perform as measured by the performance indicators specified

under paragraph (1) and such other factors as the Secretary may

deem to be appropriate. Such procedures shall provide that an

agency that fails on a widespread basis to provide acceptable basic

housing conditions for its residents shall be designated as a troubled public housing agency. The Secretary may use a simplified set

of indicators for public housing agencies with less than 250 public

housing units. The Secretary shall also designate, by rule under

section 553 of title 5, United States Code, agencies that are troubled with respect to the program for assistance from the Capital

Fund under section 9(d).

(ii) The Secretary may also, in consultation with national organizations representing public housing agencies and public officials

(as the Secretary determines appropriate), identify and commend

public housing agencies that meet the performance standards established under paragraph (1) in an exemplary manner.

(iii) The Secretary shall establish procedures for public housing

agencies to appeal designation as a troubled agency (including designation as a troubled agency for purposes of the program for assistance from the Capital Fund under section 9(d)), to petition for

removal of such designation, and to appeal any refusal to remove

such designation.

(B)(i) Upon designating a public housing agency with more

than 250 units as troubled pursuant to subparagraph (A) and determining that an assessment under this subparagraph will not duplicate any comparable and recent review, the Secretary shall provide for an on-site, independent assessment of the management of

the agency.

(ii) To the extent the Secretary deems appropriate (taking into

account an agency’s performance under the indicators specified

under paragraph (1)), the assessment team shall also consider

issues relating to the agency’s resident population and physical inventory, including the extent to which (I) the agency’s comprehensive plan prepared pursuant to section 14 adequately and appropriately addresses the rehabilitation needs of the agency’s inventory, (II) residents of the agency are involved in and informed of

significant management decisions, and (III) any projects in the

agency’s inventory are severely distressed and eligible for assistance pursuant to section 24.

(iii) An independent assessment under this subparagraph shall

be carried out by a team of knowledgeable individuals selected by

the Secretary (referred to in this section as the ‘‘assessment team’’)

with expertise in public housing and real estate management. In

conducting an assessment, the assessment team shall consult with

the residents and with public and private entities in the jurisdiction in which the public housing is located. The assessment team

shall provide to the Secretary and the public housing agency a

written report, which shall contain, at a minimum, recommendations for such management improvements as are necessary to

eliminate or substantially remedy existing deficiencies.
Sec. 6 UNITED STATES HOUSING ACT OF 1937 150

1So in law. This new flush sentence probably should have been inserted after clause (iii) of

this subparagraph. See section 113(a)(3)(B) of the Housing and Community Development Act of

1992, Public Law 102–550. 2 Indented so in law.

(C) The Secretary shall seek to enter into an agreement with

each troubled public housing agency, after reviewing the report

submitted pursuant to subparagraph (B) (if applicable) and consulting with the agency’s assessment team.

To the extent the Secretary deems appropriate (taking into account

an agency’s performance under the indicators specified under paragraph (1)), such agreement shall also set forth a plan for enhancing

resident involvement in the management of the public housing

agency. 1 Such agreement shall set forth—

(i) targets for improving performance as measured by the

performance indicators specified under paragraph (1) and other

requirements within a specified period of time;

(ii) strategies for meeting such targets, including a description of the technical assistance that the Secretary will make

available to the agency; and

(iii) incentives or sanctions for effective implementation of

such strategies, which may include any constraints on the use

of funds that the Secretary determines are appropriate.

The Secretary and the public housing agency shall, to the maximum extent practicable, seek the assistance of local public and private entities in carrying out the agreement.

(D) 2 The Secretary shall apply the provisions of this

paragraph to resident management corporations as well as

public housing agencies.

(3)(A) Notwithstanding any other provision of law or of any

contract for contributions, upon the occurrence of events or conditions that constitute a substantial default by a public housing

agency with respect to the covenants or conditions to which the

public housing agency is subject or an agreement entered into

under paragraph (2), the Secretary may—

(i) solicit competitive proposals from other public housing

agencies and private housing management agents which (I) in

the discretion of the Secretary, may be selected by existing

public housing residents through administrative procedures established by the Secretary, and (II) if appropriate, shall provide for such agents to manage all, or part, of the housing administered by the public housing agency or all or part of the

other programs of the agency;

(ii) petition for the appointment of a receiver (which may

be another public housing agency or a private management

corporation) of the public housing agency to any district court

of the United States or to any court of the State in which the

real property of the public housing agency is situated, that is

authorized to appoint a receiver for the purposes and having

the powers prescribed in this subsection;

(iii) solicit competitive proposals from other public housing

agencies and private entities with experience in construction

management in the eventuality that such agencies or firms

may be needed to oversee implementation of assistance made
151 Sec. 6 UNITED STATES HOUSING ACT OF 1937

1October 21, 1998.

available from the Capital Fund under section 9(d) for the

housing; and

(iv) take possession of all or part of the public housing

agency, including all or part of any project or program of the

agency, including any project or program under any other provision of this title; and

(v) require the agency to make other arrangements acceptable to the Secretary and in the best interests of the public

housing residents and families assisted under section 8 for

managing all, or part, of the public housing administered by

the agency or of the programs of the agency.

Residents of a public housing agency designated as troubled pursuant to paragraph (2)(A) may petition the Secretary in writing to

take 1 or more of the actions referred to in this subparagraph. The

Secretary shall respond to such petitions in a timely manner with

a written description of the actions, if any, the Secretary plans to

take and, where applicable, the reasons why such actions differ

from the course proposed by the residents.

(B)(i) If a public housing agency is identified as troubled under

this subsection, the Secretary shall notify the agency of the troubled status of the agency.

(ii)(I) Upon the expiration of the 1-year period beginning on the

later of the date on which the agency receives initial notice from

the Secretary of the troubled status of the agency under clause (i)

and the date of the enactment of the Quality Housing and Work

Responsibility Act of 1998 1, the agency shall improve its performance, as measured by the performance indicators established pursuant to paragraph (1), by at least 50 percent of the difference between the most recent performance measurement and the measurement necessary to remove that agency’s designation as troubled.

(II) Upon the expiration of the 2-year period beginning on the

later of the date on which the agency receives initial notice from

the Secretary of the troubled status of the agency under clause (i)

and the date of the enactment of the Quality Housing and Work

Responsibility Act of 1998 1, the agency shall improve its performance, as measured by the performance indicators established pursuant to paragraph (1), such that the agency is no longer designated as troubled.

(III) In the event that a public housing agency designated as

troubled under this subsection fails to comply with the requirements set forth in subclause (I) or (II), the Secretary shall—

(aa) in the case of a troubled public housing agency with

1,250 or more units, petition for the appointment of a receiver

pursuant to subparagraph (A)(ii); or

(bb) in the case of a troubled public housing agency with

fewer than 1,250 units, either petition for the appointment of

a receiver pursuant to subparagraph (A)(ii), or take possession

of the public housing agency (including all or part of any

project or program of the agency) pursuant to subparagraph

(A)(iv) and appoint, on a competitive or noncompetitive basis,

an individual or entity as an administrative receiver to assume

the responsibilities of the Secretary for the administration of
Sec. 6 UNITED STATES HOUSING ACT OF 1937 152

all or part of the public housing agency (including all or part

of any project or program of the agency).

This subparagraph shall not be construed to limit the courses of action available to the Secretary under subparagraph (A).

(IV) During the period between the date on which a petition

is filed under subclause (III)(aa) and the date on which a receiver

assumes responsibility for the management of the public housing

agency under such subclause, the Secretary may take possession of

the public housing agency (including all or part of any project or

program of the agency) pursuant to subparagraph (A)(iv) and may

appoint, on a competitive or noncompetitive basis, an individual or

entity as an administrative receiver to assume the responsibilities

of the Secretary for the administration of all or part of the public

housing agency (including all or part of any project or program of

the agency).

(C) If a receiver is appointed pursuant to subparagraph (A)(ii),

in addition to the powers accorded by the court appointing the receiver, the receiver—

(i) may abrogate any contract to which the United States

or an agency of the United States is not a party that, in the

receiver’s written determination (which shall include the basis

for such determination), substantially impedes correction of the

substantial default, but only after the receiver determines that

reasonable efforts to renegotiate such contract have failed;

(ii) may demolish and dispose of all or part of the assets

of the public housing agency (including all or part of any

project of the agency) in accordance with section 18, including

disposition by transfer of properties to resident-supported nonprofit entities;

(iii) if determined to be appropriate by the Secretary, may

seek the establishment, as permitted by applicable State and

local law, of 1 or more new public housing agencies;

(iv) if determined to be appropriate by the Secretary, may

seek consolidation of all or part of the agency (including all or

part of any project or program of the agency), as permitted by

applicable State and local laws, into other well-managed public

housing agencies with the consent of such well-managed agencies; and

(v) shall not be required to comply with any State or local

law relating to civil service requirements, employee rights (except civil rights), procurement, or financial or administrative

controls that, in the receiver’s written determination (which

shall include the basis for such determination), substantially

impedes correction of the substantial default.

(D)(i) If, pursuant to subparagraph (A)(iv), the Secretary takes

possession of all or part of the public housing agency, including all

or part of any project or program of the agency, the Secretary—

(I) may abrogate any contract to which the United States

or an agency of the United States is not a party that, in the

written determination of the Secretary (which shall include the

basis for such determination), substantially impedes correction

of the substantial default, but only after the Secretary determines that reasonable efforts to renegotiate such contract have

failed;
153 Sec. 6 UNITED STATES HOUSING ACT OF 1937

(II) may demolish and dispose of all or part of the assets

of the public housing agency (including all or part of any

project of the agency) in accordance with section 18, including

disposition by transfer of properties to resident-supported nonprofit entities;

(III) may seek the establishment, as permitted by applicable State and local law, of 1 or more new public housing agencies;

(IV) may seek consolidation of all or part of the agency (including all or part of any project or program of the agency), as

permitted by applicable State and local laws, into other wellmanaged public housing agencies with the consent of such

well-managed agencies;

(V) shall not be required to comply with any State or local

law relating to civil service requirements, employee rights (except civil rights), procurement, or financial or administrative

controls that, in the Secretary’s written determination (which

shall include the basis for such determination), substantially

impedes correction of the substantial default; and

(VI) shall, without any action by a district court of the

United States, have such additional authority as a district

court of the United States would have the authority to confer

upon a receiver to achieve the purposes of the receivership.

(ii) If, pursuant to subparagraph (B)(ii)(III)(bb), the Secretary

appoints an administrative receiver to assume the responsibilities

of the Secretary for the administration of all or part of the public

housing agency (including all or part of any project or program of

the agency), the Secretary may delegate to the administrative receiver any or all of the powers given the Secretary by this subparagraph, as the Secretary determines to be appropriate and subject

to clause (iii).

(iii) An administrative receiver may not take an action described in subclause (III) or (IV) of clause (i) unless the Secretary

first approves an application by the administrative receiver to authorize such action.

(E) The Secretary may make available to receivers and other

entities selected or appointed pursuant to this paragraph such assistance as the Secretary determines in the discretion of the Secretary is necessary and available to remedy the substantial deterioration of living conditions in individual public housing projects or

other related emergencies that endanger the health, safety, and

welfare of public housing residents or families assisted under section 8. A decision made by the Secretary under this paragraph

shall not be subject to review in any court of the United States, or

in any court of any State, territory, or possession of the United

States.

(F) In any proceeding under subparagraph (A)(ii), upon a determination that a substantial default has occurred and without regard to the availability of alternative remedies, the court shall appoint a receiver to conduct the affairs of all or part of the public

housing agency in a manner consistent with this Act and in accordance with such further terms and conditions as the court may provide. The receiver appointed may be another public housing agency,

a private management corporation, or any other person or appro-
Sec. 6 UNITED STATES HOUSING ACT OF 1937 154

1So in law.

priate entity. The court shall have power to grant appropriate temporary or preliminary relief pending final disposition of the petition

by the Secretary.

(G) The appointment of a receiver pursuant to this paragraph

may be terminated, upon the petition of any party, when the court

determines that all defaults have been cured or the public housing

agency is capable again of discharging its duties.

(H) If the Secretary (or an administrative receiver appointed

by the Secretary) takes possession of a public housing agency (including all or part of any project or program of the agency), or if

a receiver is appointed by a court, the Secretary or receiver shall

be deemed to be acting not in the official capacity of that person

or entity, but rather in the capacity of the public housing agency,

and any liability incurred, regardless of whether the incident giving rise to that liability occurred while the Secretary or receiver

was in possession of all or part of the public housing agency (including all or part of any project or program of the agency), shall

be the liability of the public housing agency.

(4) SANCTIONS FOR IMPROPER USE OF AMOUNTS.—

(A) IN GENERAL.—In addition to any other actions authorized under this Act, if the Secretary finds that a public housing

agency receiving assistance amounts under section 9 for public

housing has failed to comply substantially with any provision

of this Act relating to the public housing program, the Secretary may—

(i) terminate assistance payments under this section

9 1 to the agency;

(ii) withhold from the agency amounts from the total

allocations for the agency pursuant to section 9;

(iii) reduce the amount of future assistance payments

under section 9 to the agency by an amount equal to the

amount of such payments that were not expended in accordance with this Act;

(iv) limit the availability of assistance amounts provided to the agency under section 9 to programs, projects,

or activities not affected by such failure to comply;

(v) withhold from the agency amounts allocated for the

agency under section 8; or

(vi) order other corrective action with respect to the

agency.

(B) TERMINATION OF COMPLIANCE ACTION.—If the Secretary

takes action under subparagraph (A) with respect to a public

housing agency, the Secretary shall—

(i) in the case of action under subparagraph (A)(i), resume payments of assistance amounts under section 9 to

the agency in the full amount of the total allocations under

section 9 for the agency at the time that the Secretary first

determines that the agency will comply with the provisions

of this Act relating to the public housing program;

(ii) in the case of action under clause (ii) or (v) of subparagraph (A), make withheld amounts available as the

Secretary considers appropriate to ensure that the agency
155 Sec. 6 UNITED STATES HOUSING ACT OF 1937

1Section 113(d) of the Housing and Community Development Act of 1992, Public Law 102–

550, provides as follows:

‘‘(d) ANNUAL REPORTS.—Section 6(j)(5)(E) of the United States Housing Act of 1937 (42 U.S.C.

1437d(j)(4)(E)), as so redesignated by subsection (d)(1), is amended by inserting before the semicolon the following: ‘, including an accounting of the authorized funds that have been expended

to support such actions’.’’.

The amendment could not be executed because this paragraph was designated as paragraph

(4) at the time of enactment. The subsection heading and the United States Code citation indicate that the amendment probably was intended to be made to this subparagraph.

complies with the provisions of this Act relating to such

program;

(iii) in the case of action under subparagraph (A)(iv),

release such restrictions at the time that the Secretary

first determines that the agency will comply with the provisions of this Act relating to such program; or

(iv) in the case of action under subparagraph (vi),

cease such action at the time that the Secretary first determines that the agency will comply with the provisions

of this Act relating to such program.

(5) The Secretary shall submit to the Congress annually, as a

part of the report of the Secretary under section 8 of the Department of Housing and Urban Development Act, a report that—

(A) identifies the public housing agencies that have been

designated as troubled under paragraph (2);

(B) describes the grounds on which such public housing

agencies were designated as troubled and continue to be so

designated;

(C) describes the agreements that have been entered into

with such agencies under such paragraph;

(D) describes the status of progress under such agreements;

(E) describes any action that has been taken in accordance

with paragraph (3) 1; and

(F) describes the status of any public housing agency designated as troubled with respect to the program for assistance

from the Capital Fund under section 9(d) and specifies the

amount of assistance the agency received under such program.

(6)(A) To the extent that the Secretary determines such action

to be necessary in order to ensure the accuracy of any certification

made under this section, the Secretary shall require an independent auditor to review documentation or other information

maintained by a public housing agency pursuant to this section to

substantiate each certification submitted by the agency or corporation relating to the performance of that agency or corporation.

(B) The Secretary may withhold, from assistance otherwise

payable to the agency or corporation under section 9, amounts sufficient to pay for the reasonable costs of any review under this

paragraph.

(7) The Secretary shall apply the provisions of this subsection

to resident management corporations in the same manner as applied to public housing agencies.

(k) The Secretary shall by regulation require each public housing agency receiving assistance under this Act to establish and implement an administrative grievance procedure under which tenants will—
Sec. 6 UNITED STATES HOUSING ACT OF 1937 156

(1) be advised of the specific grounds of any proposed adverse public housing agency action;

(2) have an opportunity for a hearing before an impartial

party upon timely request within any period applicable under

subsection (l);

(3) have an opportunity to examine any documents or

records or regulations related to the proposed action;

(4) be entitled to be represented by another person of their

choice at any hearing;

(5) be entitled to ask questions of witnesses and have others make statements on their behalf; and

(6) be entitled to receive a written decision by the public

housing agency on the proposed action.

For any grievance concerning an eviction or termination of tenancy

that involves any activity that threatens the health, safety, or right

to peaceful enjoyment of the premises of other tenants or employees of the public housing agency or any violent or drug-related

criminal activity on or off such premises, or any activity resulting

in a felony conviction, the agency may (A) establish an expedited

grievance procedure as the Secretary shall provide by rule under

section 553 of title 5, United States Code, or (B) exclude from its

grievance procedure any such grievance, in any jurisdiction which

requires that prior to eviction, a tenant be given a hearing in court

which the Secretary determines provides the basic elements of due

process (which the Secretary shall establish by rule under section

553 of title 5, United States Code). Such elements of due process

shall not include a requirement that the tenant be provided an opportunity to examine relevant documents within the possession of

the public housing agency. The agency shall provide to the tenant

a reasonable opportunity, prior to hearing or trial, to examine any

relevant documents, records, or regulations directly related to the

eviction or termination.

(l) Each public housing agency shall utilize leases which—

(1) have a term of 12 months and shall be automatically

renewed for all purposes except for noncompliance with the requirements under section 12(c) (relating to community service

requirements); except that nothing in this title shall prevent a

resident from seeking timely redress in court for failure to

renew based on such noncompliance;

(2) do not contain unreasonable terms and conditions;

(3) obligate the public housing agency to maintain the

project in a decent, safe, and sanitary condition;

(4) require the public housing agency to give adequate

written notice of termination of the lease which shall not be

less than—

(A) a reasonable period of time, but not to exceed 30

days—

(i) if the health or safety of other tenants, public

housing agency employees, or persons residing in the

immediate vicinity of the premises is threatened; or

(ii) in the event of any drug-related or violent

criminal activity or any felony conviction;

(B) 14 days in the case of nonpayment of rent; and
157 Sec. 6 UNITED STATES HOUSING ACT OF 1937

1So in law. Probably should be designated as paragraph (8).

2So in law.

3 Indented and designated so in law. Probably should be designated as subparagraph (B).

(C) 30 days in any other case, except that if a State

or local law provides for a shorter period of time, such

shorter period shall apply;

(5) require that the public housing agency may not terminate the tenancy except for serious or repeated violation of the

terms or conditions of the lease or for other good cause;

(6) provide that any criminal activity that threatens the

health, safety, or right to peaceful enjoyment of the premises

by other tenants or any drug-related criminal activity on or off

such premises, engaged in by a public housing tenant, any

member of the tenant’s household, or any guest or other person

under the tenant’s control, shall be cause for termination of

tenancy;

(7) specify that with respect to any notice of eviction or termination, notwithstanding any State law, a public housing tenant shall be informed of the opportunity, prior to any hearing

or trial, to examine any relevant documents, records or regulations directly related to the eviction or termination;

(7) 1 provide that any occupancy in violation of section

576(b) of the Quality Housing and Work Responsibility Act of

1998 (relating to ineligibility of illegal drug users and alcohol

abusers) or the furnishing of any false or misleading information pursuant to section 577 of such Act (relating to termination of tenancy and assistance for illegal drug users and alcohol abusers) shall be cause for termination of tenancy; 2

(9) provide that it shall be cause for immediate termination of the tenancy of a public housing tenant if such

tenant—

(A) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from

which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place

from which the individual flees, or which, in the case of

the State of New Jersey, is a high misdemeanor under the

laws of such State; or

(2) 3 is violating a condition of probation or parole imposed

under Federal or State law.

For purposes of paragraph (5), the term ‘‘drug-related criminal activity’’ means the illegal manufacture, sale, distribution, use, or

possession with intent to manufacture, sell, distribute, or use, of a

controlled substance (as defined in section 102 of the Controlled

Substances Act (21 U.S.C. 802)).

(m) The Secretary shall not impose any unnecessarily duplicative or burdensome reporting requirements on tenants or public

housing agencies assisted under this Act.

(n) When a public housing agency evicts an individual or family from a dwelling unit for engaging in criminal activity, including

drug-related criminal activity, the public housing agency shall notify the local post office serving that dwelling unit that such individual or family is no longer residing in the dwelling unit.
Sec. 6 UNITED STATES HOUSING ACT OF 1937 158

1Section 575(c)(1)(A)(ii) of the Quality Housing and Work Responsibility Act of 1998, title V

of Public Law 105–276, approved October 21, 1998, amended this subparagraph by striking

‘‘public housing’’ and inserting ‘‘covered housing’’. Because the term ‘‘public housing’’ appears

twice in this subparagraph, the amendment could not be executed. The amendment was probably intended to strike the second occurrence of the term.

(o) In providing housing in low-income housing projects, each

public housing agency may coordinate with any local public agencies involved in providing for the welfare of children to make available dwelling units to—

(1) families identified by the agencies as having a lack of

adequate housing that is a primary factor—

(A) in the imminent placement of a child in foster

care; or

(B) in preventing the discharge of a child from foster

care and reunification with his or her family; and

(2) youth, upon discharge from foster care, in cases in

which return to the family or extended family or adoption is

not available.

ø(p) [Repealed.]¿

(q) AVAILABILITY OF RECORDS.—

(1) IN GENERAL.—

(A) PROVISION OF INFORMATION.—Notwithstanding any

other provision of law, except as provided in subparagraph

(C), the National Crime Information Center, police departments, and other law enforcement agencies shall, upon request, provide information to public housing 1 agencies regarding the criminal conviction records of adult applicants

for, or tenants of, public housing for purposes of applicant

screening, lease enforcement, and eviction.

(B) REQUESTS BY OWNERS OF PROJECT-BASED SECTION

8 HOUSING.—A public housing agency may make a request

under subparagraph (A) for information regarding applicants for, or tenants of, housing that is provided projectbased assistance under section 8 only if the housing is located within the jurisdiction of the agency and the owner

of such housing has requested that the agency obtain such

information on behalf of the owner. Upon such a request

by the owner, the agency shall make a request under subparagraph (A) for the information. The agency may not

make such information available to the owner but shall

perform determinations for the owner regarding screening,

lease enforcement, and eviction based on criteria supplied

by the owner.

(C) EXCEPTION.—A law enforcement agency described

in subparagraph (A) shall provide information under this

paragraph relating to any criminal conviction of a juvenile

only to the extent that the release of such information is

authorized under the law of the applicable State, tribe, or

locality.

(2) OPPORTUNITY TO DISPUTE.—Before an adverse action is

taken with regard to assistance under this title on the basis of

a criminal record, the public housing agency shall provide the

tenant or applicant with a copy of the criminal record and an
159 Sec. 6 UNITED STATES HOUSING ACT OF 1937

opportunity to dispute the accuracy and relevance of that

record.

(3) FEES.—A public housing agency may be charged a reasonable fee for information provided under paragraph (1). In

the case of a public housing agency obtaining information pursuant to paragraph (1)(B) for another owner of housing, the

agency may pass such fee on to the owner initiating the request and may charge additional reasonable fees for making

the request on behalf of the owner and taking other actions for

owners under this subsection.

(4) RECORDS MANAGEMENT.—Each public housing agency

shall establish and implement a system of records management that ensures that any criminal record received by the

public housing agency is—

(A) maintained confidentially;

(B) not misused or improperly disseminated; and

(C) destroyed, once the purpose for which the record

was requested has been accomplished.

(5) CONFIDENTIALITY.—A public housing agency receiving

information under this subsection may use such information

only for the purposes provided in this subsection and such information may not be disclosed to any person who is not an officer, employee, or authorized representative of the agency and

who has a job-related need to have access to the information

in connection with admission of applicants, eviction of tenants,

or termination of assistance. For judicial eviction proceedings,

disclosures may be made to the extent necessary. The Secretary shall, by regulation, establish procedures necessary to

ensure that information provided under this subsection to a

public housing agency is used, and confidentiality of such information is maintained, as required under this subsection. The

Secretary shall establish standards for confidentiality of information obtained under this subsection by public housing agencies on behalf of owners.

(6) PENALTY.—Any person who knowingly and willfully requests or obtains any information concerning an applicant for,

or tenant of, covered housing assistance pursuant to the authority under this subsection under false pretenses, or any person who knowingly and willfully discloses any such information in any manner to any individual not entitled under any

law to receive it, shall be guilty of a misdemeanor and fined

not more than $5,000. The term ‘‘person’’ as used in this paragraph include an officer, employee, or authorized representative of any public housing agency.

(7) CIVIL ACTION.—Any applicant for, or tenant of, covered

housing assistance affected by (A) a negligent or knowing disclosure of information referred to in this subsection about such

person by an officer, employee, or authorized representative of

any public housing agency, which disclosure is not authorized

by this subsection, or (B) any other negligent or knowing action

that is inconsistent with this subsection, may bring a civil action for damages and such other relief as may be appropriate

against any public housing agency responsible for such unauthorized action. The district court of the United States in the
Sec. 6 UNITED STATES HOUSING ACT OF 1937 160

district in which the affected applicant or tenant resides, in

which such unauthorized action occurred, or in which the officer, employee, or representative alleged to be responsible for

any such unauthorized action resides, shall have jurisdiction in

such matters. Appropriate relief that may be ordered by such

district courts shall include reasonable attorney’s fees and

other litigation costs.

(8) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

(A) ADULT.—The term ‘‘adult’’ means a person who is

18 years of age or older, or who has been convicted of a

crime as an adult under any Federal, State, or tribal law.

(B) COVERED HOUSING ASSISTANCE.—The term ‘‘covered housing assistance’’ means—

(i) a dwelling unit in public housing;

(ii) a dwelling unit in housing that is provided

project-based assistance under section 8, including

new construction and substantial rehabilitation

projects; and

(iii) tenant-based assistance under section 8.

(C) OWNER.—The term ‘‘owner’’ means, with respect to

covered housing assistance described in subparagraph

(B)(ii), the entity or private person (including a cooperative

or public housing agency) that has the legal right to lease

or sublease dwelling units in the housing assisted.

(r) SITE-BASED WAITING LISTS.—

(1) AUTHORITY.—A public housing agency may establish

procedures for maintaining waiting lists for admissions to public housing projects of the agency, which may include (notwithstanding any other law, regulation, handbook, or notice to the

contrary) a system of site-based waiting lists under which applicants may apply directly at or otherwise designate the

project or projects in which they seek to reside. All such procedures shall comply with all provisions of title VI of the Civil

Rights Act of 1964, the Fair Housing Act, and other applicable

civil rights laws.

(2) NOTICE.—Any system described in paragraph (1) shall

provide for the full disclosure by the public housing agency to

each applicant of any option available to the applicant in the

selection of the project in which to reside.

(s) AUTHORITY TO REQUIRE ACCESS TO CRIMINAL RECORDS.—A

public housing agency may require, as a condition of providing admission to the public housing program or assisted housing program

under the jurisdiction of the public housing agency, that each adult

member of the household provide a signed, written authorization

for the public housing agency to obtain records described in subsection (q)(1) regarding such member of the household from the National Crime Information Center, police departments, and other

law enforcement agencies.

(t) OBTAINING INFORMATION FROM DRUG ABUSE TREATMENT

FACILITIES.—

(1) AUTHORITY.—Notwithstanding any other provision of

law other than the Public Health Service Act (42 U.S.C. 201

et seq.), a public housing agency may require each person who
161 Sec. 6 UNITED STATES HOUSING ACT OF 1937

applies for admission to public housing to sign one or more

forms of written consent authorizing the agency to receive information from a drug abuse treatment facility that is solely

related to whether the applicant is currently engaging in the

illegal use of a controlled substance.

(2) CONFIDENTIALITY OF APPLICANT’S RECORDS.—

(A) LIMITATION ON INFORMATION REQUESTED.—In a

form of written consent, a public housing agency may request only whether the drug abuse treatment facility has

reasonable cause to believe that the applicant is currently

engaging in the illegal use of a controlled substance.

(B) RECORDS MANAGEMENT.—Each public housing

agency that receives information under this subsection

from a drug abuse treatment facility shall establish and

implement a system of records management that ensures

that any information received by the public housing agency under this subsection—

(i) is maintained confidentially in accordance with

section 543 of the Public Health Service Act (12 U.S.C.

290dd–2);

(ii) is not misused or improperly disseminated;

and

(iii) is destroyed, as applicable—

(I) not later than 5 business days after the

date on which the public housing agency gives

final approval for an application for admission; or

(II) if the public housing agency denies the

application for admission, in a timely manner

after the date on which the statute of limitations

for the commencement of a civil action from the

applicant based upon that denial of admission has

expired.

(C) EXPIRATION OF WRITTEN CONSENT.—In addition to

the requirements of subparagraph (B), an applicant’s

signed written consent shall expire automatically after the

public housing agency has made a final decision to either

approve or deny the applicant’s application for admittance

to public housing.

(3) PROHIBITION OF DISCRIMINATORY TREATMENT OF APPLICANTS.—

(A) FORMS SIGNED.—A public housing agency may only

require an applicant for admission to public housing to

sign one or more forms of written consent under this subsection if the public housing agency requires all such applicants to sign the same form or forms of written consent.

(B) CIRCUMSTANCES OF INQUIRY.—A public housing

agency may only make an inquiry to a drug abuse treatment facility under this subsection if—

(i) the public housing agency makes the same inquiry with respect to all applicants; or

(ii) the public housing agency only makes the

same inquiry with respect to each and every applicant

with respect to whom—
Sec. 6 UNITED STATES HOUSING ACT OF 1937 162

(I) the public housing agency receives information from the criminal record of the applicant

that indicates evidence of a prior arrest or conviction; or

(II) the public housing agency receives information from the records of prior tenancy of the

applicant that demonstrates that the applicant—

(aa) engaged in the destruction of property;

(bb) engaged in violent activity against

another person; or

(cc) interfered with the right of peaceful

enjoyment of the premises of another tenant.

(4) FEE PERMITTED.—A drug abuse treatment facility may

charge a public housing agency a reasonable fee for information provided under this subsection.

(5) DISCLOSURE PERMITTED BY TREATMENT FACILITIES.—A

drug abuse treatment facility shall not be liable for damages

based on any information required to be disclosed pursuant to

this subsection if such disclosure is consistent with section 543

of the Public Health Service Act (42 U.S.C. 290dd–2).

(6) OPTION TO NOT REQUEST INFORMATION.—A public housing agency shall not be liable for damages based on its decision

not to require each person who applies for admission to public

housing to sign one or more forms of written consent authorizing the public housing agency to receive information from a

drug abuse treatment facility under this subsection.

(7) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

(A) DRUG ABUSE TREATMENT FACILITY.—The term

‘‘drug abuse treatment facility’’ means an entity that—

(i) is—

(I) an identified unit within a general medical

care facility; or

(II) an entity other than a general medical

care facility; and

(ii) holds itself out as providing, and provides, diagnosis, treatment, or referral for treatment with respect to the illegal use of a controlled substance.

(B) CONTROLLED SUBSTANCE.—The term ‘‘controlled

substance’’ has the meaning given the term in section 102

of the Controlled Substances Act (21 U.S.C. 802).

(C) CURRENTLY ENGAGING IN THE ILLEGAL USE OF A

CONTROLLED SUBSTANCE.—The term ‘‘currently engaging in

the illegal use of a controlled substance’’ means the illegal

use of a controlled substance that occurred recently enough

to justify a reasonable belief that an applicant’s illegal use

of a controlled substance is current or that continuing illegal use of a controlled substance by the applicant is a real

and ongoing problem.

(8) EFFECTIVE DATE.—This subsection shall take effect

upon enactment and without the necessity of guidance from, or

any regulation issued by, the Secretary.
163 Sec. 7 UNITED STATES HOUSING ACT OF 1937

DESIGNATED HOUSING FOR ELDERLY AND DISABLED FAMILIES

SEC. 7. ø42 U.S.C. 1437e¿ (a) AUTHORITY TO PROVIDE DESIGNATED HOUSING.—

(1) IN GENERAL.—Subject only to provisions of this section

and notwithstanding any other provision of law, a public housing agency for which a plan under subsection (d) is in effect

may provide public housing projects (or portions of projects)

designated for occupancy by (A) only elderly families, (B) only

disabled families, or (C) elderly and disabled families.

(2) PRIORITY FOR OCCUPANCY.—In determining priority for

admission to public housing projects (or portions of projects)

that are designated for occupancy as provided in paragraph (1),

the public housing agency may make units in such projects (or

portions) available only to the types of families for whom the

project is designated.

(3) ELIGIBILITY OF NEAR-ELDERLY FAMILIES.—If a public

housing agency determines that there are insufficient numbers

of elderly families to fill all the units in a project (or portion

of a project) designated under paragraph (1) for occupancy by

only elderly families, the agency may provide that near-elderly

families may occupy dwelling units in the project (or portion).

(b) STANDARDS REGARDING EVICTIONS.—Except as provided in

section 16(e)(1)(B), any tenant who is lawfully residing in a dwelling unit in a public housing project may not be evicted or otherwise

required to vacate such unit because of the designation of the

project (or portion of a project) pursuant to this section or because

of any action taken by the Secretary or any public housing agency

pursuant to this section.

(c) RELOCATION ASSISTANCE.—A public housing agency that

designates any existing project or building, or portion thereof, for

occupancy as provided under subsection (a)(1) shall provide, to each

person and family who agrees to be relocated in connection with

such designation—

(1) notice of the designation and an explanation of available relocation benefits, as soon as is practicable for the agency

and the person or family;

(2) access to comparable housing (including appropriate

services and design features), which may include tenant-based

rental assistance under section 8, at a rental rate paid by the

tenant that is comparable to that applicable to the unit from

which the person or family has vacated; and

(3) payment of actual, reasonable moving expenses.

(d) REQUIRED PLAN.—A plan under this subsection for designating a project (or portion of a project) for occupancy under subsection (a)(1) is a plan, prepared by the public housing agency for

the project and submitted to the Secretary, that—

(1) establishes that the designation of the project is

necessary—

(A) to achieve the housing goals for the jurisdiction

under the comprehensive housing affordability strategy

under section 105 of the Cranston-Gonzalez National Affordable Housing Act; and
Sec. 7 UNITED STATES HOUSING ACT OF 1937 164

1Probably intended to refer to section 202(d)(8) as in effect before October 1, 1991.

(B) to meet the housing needs of the low-income population of the jurisdiction; and

(2) includes a description of—

(A) the project (or portion of a project) to be designated;

(B) the types of tenants for which the project is to be

designated;

(C) any supportive services to be provided to tenants

of the designated project (or portion);

(D) how the design and related facilities (as such term

is defined in section 202(d)(8) 1 of the Housing Act of 1959)

of the project accommodate the special environmental

needs of the intended occupants; and

(E) any plans to secure additional resources or housing

assistance to provide assistance to families that may have

been housed if occupancy in the project were not restricted

pursuant to this section.

For purposes of this subsection, the term ‘‘supportive services’’

means services designed to meet the special needs of residents.

(e) REVIEW OF PLANS.—

(1) REVIEW AND NOTIFICATION.—The Secretary shall conduct a limited review of each plan under subsection (d) that is

submitted to the Secretary to ensure that the plan is complete

and complies with the requirements of subsection (d). The Secretary shall notify each public housing agency submitting a

plan whether the plan complies with such requirements not

later than 60 days after receiving the plan. If the Secretary

does not notify the public housing agency, as required under

this paragraph or paragraph (2), the plan shall be considered,

for purposes of this section, to comply with the requirements

under subsection (d) and the Secretary shall be considered to

have notified the agency of such compliance upon the expiration of such 60-day period.

(2) NOTICE OF REASONS FOR DETERMINATION OF NONCOMPLIANCE.—If the Secretary determines that a plan, as submitted, does not comply with the requirements under subsection (d), the Secretary shall specify in the notice under paragraph (1) the reasons for the noncompliance and any modifications necessary for the plan to meet such requirements.

(3) STANDARDS FOR DETERMINATION OF NONCOMPLIANCE.— The Secretary may determine that a plan does not comply with

the requirements under subsection (d) only if—

(A) the plan is incomplete in significant matters required under such subsection; or

(B) there is evidence available to the Secretary that

challenges, in a substantial manner, any information provided in the plan.

(4) TREATMENT OF EXISTING PLANS.—Notwithstanding any

other provision of this section, a public housing agency shall be

considered to have submitted a plan under this subsection if

the agency has submitted to the Secretary an application and

allocation plan under this section (as in effect before the date
165 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1March 28, 1996.

2So in law. Probably should be ‘‘Acquisition’’.

of the enactment of the Housing Opportunity Program Extension Act of 1996 1) that have not been approved or disapproved

before such date of enactment.

(f) EFFECTIVENESS.— (1) 5-YEAR EFFECTIVENESS OF ORIGINAL PLAN.—A plan

under subsection (d) shall be in effect for purposes of this section during the 5-year period that begins upon notification

under subsection (e)(1) of the public housing agency that the

plan complies with the requirements under subsection (d).

(2) RENEWAL OF PLAN.—Upon the expiration of the 5-year

period under paragraph (1) or any 2-year period under this

paragraph, an agency may extend the effectiveness of the designation and plan for an additional 2-year period (that begins

upon such expiration) by submitting to the Secretary any information needed to update the plan. The Secretary may not limit

the number of times a public housing agency extends the effectiveness of a designation and plan under this paragraph.

(3) TRANSITION PROVISION.—Any application and allocation

plan approved under this section (as in effect before the date

of the enactment of the Housing Opportunity Program Extension Act of 1996 1) before such date of enactment shall be considered to be a plan under subsection (d) that is in effect for

purposes of this section for the 5-year period beginning upon

such approval.

(g) INAPPLICABILITY OF UNIFORM RELOCATION ASSISTANCE AND

REAL PROPERTY ACQUISITIONS POLICY ACT OF 1970.—No tenant of

a public housing project shall be considered to be displaced for purposes of the Uniform Relocation Assistance and Real Property Acquisitions 2 Policy Act of 1970 because of the designation of any existing project or building, or portion thereof, for occupancy as provided under subsection (a) of this section.

LOWER INCOME HOUSING ASSISTANCE

SEC. 8. ø42 U.S.C. 1437f¿ (a) For the purpose of aiding lowerincome families in obtaining a decent place to live and of promoting

economically mixed housing, assistance payments may be made

with respect to existing housing in accordance with the provisions

of this section.

(b) OTHER EXISTING HOUSING PROGRAMS.—(1) IN GENERAL.—

The Secretary is authorized to enter into annual contributions contracts with public housing agenices pursuant to which such agencies may enter into contracts to make assistance payments to owners of existing dwelling units in accordance with this section. In

areas where no public housing agency has been organized or where

the Secretary determines that a public housing agency is unable to

implement the provisions of this section, the Secretary is authorized to enter into such contracts and to perform the other functions

assigned to a public housing agency by this section.

(2) The Secretary is authorized to enter into annual contributions contracts with public housing agencies for the purpose of replacing public housing transferred in accordance with title III of
Sec. 8 UNITED STATES HOUSING ACT OF 1937 166

this Act. Each contract entered into under this subsection shall be

for a term of not more than 60 months.

(c)(1) An assistance contract entered into pursuant to this section shall establish the maximum monthly rent (including utilities

and all maintenance and management charges) which the owner is

entitled to receive for each dwelling unit with respect to which such

assistance payments are to be made. The maximum monthly rent

shall not exceed by more than 10 per centum the fair market rental

established by the Secretary periodically but not less than annually

for existing or newly constructed rental dwelling units of various

sizes and types in the market area suitable for occupancy by persons assisted under this section, except that the maximum monthly

rent may exceed the fair market rental (A) by more than 10 but

not more than 20 per centum where the Secretary determines that

special circumstances warrant such higher maximum rent or that

such higher rent is necessary to the implementation of a housing

strategy as defined in section 105 of the Cranston-Gonzalez National Affordable Housing Act, or (B) by such higher amount as

may be requested by a tenant and approved by the public housing

agency in accordance with paragraph (3)(B). In the case of newly

constructed and substantially rehabilitated units, the exception in

the preceding sentence shall not apply to more than 20 per centum

of the total amount of authority to enter into annual contributions

contracts for such units which is allocated to an area and obligated

with respect to any fiscal year beginning on or after October 1,

1980. Proposed fair market rentals for an area shall be published

in the Federal Register with reasonable time for public comment,

and shall become effective upon the date of publication in final

form in the Federal Register. Each fair market rental in effect

under this subsection shall be adjusted to be effective on October

1 of each year to reflect changes, based on the most recent available data trended so the rentals will be current for the year to

which they apply, of rents for existing or newly constructed rental

dwelling units, as the case may be, of various sizes and types in

the market area suitable for occupancy by persons assisted under

this section. Notwithstanding any other provision of this section,

after the date of enactment of the Housing and Community Development Act of 1977, the Secretary shall prohibit high-rise elevator

projects for families with children unless there is no practical alternative. The Secretary shall establish separate fair market rentals

under this paragraph for Westchester County in the State of New

York. The Secretary shall also establish separate fair market rentals under this paragraph for Monroe County in the Commonwealth

of Pennsylvania. In establishing fair market rentals for the remaining portion of the market area in which Monroe County is located,

the Secretary shall establish the fair market rentals as if such portion included Monroe County. If units assisted under this section

are exempt from local rent control while they are so assisted or

otherwise, the maximum monthly rent for such units shall be reasonable in comparison with other units in the market area that are

exempt from local rent control.

(2)(A) The assistance contract shall provide for adjustment annually or more frequently in the maximum monthly rents for units

covered by the contract to reflect changes in the fair market rentals
167 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1995, Public Law 103–327, 108 Stat. 2315, approved September 28, 1994, amended this subsection by inserting this sentence and the sentence that follows. Such Act provides that ‘‘[such] amendment shall apply to all contracts for new construction, substantial rehabilitation, and moderate rehabilitation projects under which rents are adjusted under section 8(c)(2)(A) of [the United States Housing Act of 1937] by applying an annual

adjustment factor.’’. 2The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1995, Public Law 103–327, 108 Stat. 2315, approved September 28, 1994, amended this subsection by inserting this sentence and second sentence following this sentence. Such Act provides that ‘‘[such] amendment shall apply to all contracts that

are subject to section 8(c)(2)(A) of [the United States Housing Act of 1937] an that provide for

rent adjustments using an annual adjustment factor.’’.

established in the housing area for similar types and sizes of dwelling units or, if the Secretary determines, on the basis of a reasonable formula. However, where the maximum monthly rent, for a

unit in a new construction, substantial rehabilitation, or moderate

rehabilitation project, to be adjusted using an annual adjustment

factor exceeds the fair market rental for an existing dwelling unit

in the market area, the Secretary shall adjust the rent only to the

extent that the owner demonstrates that the adjusted rent would

not exceed the rent for an unassisted unit of similar quality, type,

and age in the same market area, as determined by the Secretary. 1

The immediately foregoing sentence shall be effective only during

fiscal year 1995, fiscal year 1996 prior to April 26, 1996, and fiscal

years 1997 and 1998, and during fiscal year 1999 and thereafter.

Except for assistance under the certificate program, for any unit occupied by the same family at the time of the last annual rental adjustment, where the assistance contract provides for the adjustment of the maximum monthly rent by applying an annual adjustment factor and where the rent for a unit is otherwise eligible for

an adjustment based on the full amount of the factor, 0.01 shall be

subtracted from the amount of the factor, except that the factor

shall not be reduced to less than 1.0. 2 In the case of assistance

under the certificate program, 0.01 shall be subtracted from the

amount of the annual adjustment factor (except that the factor

shall not be reduced to less than 1.0), and the adjusted rent shall

not exceed the rent for a comparable unassisted unit of similar

quality, type, and age in the market area. The immediately foregoing two sentences shall be effective only during fiscal year 1995,

fiscal year 1996 prior to April 26, 1996, and fiscal years 1997 and

1998, and during fiscal year 1999 and thereafter. In establishing

annual adjustment factors for units in new construction and substantial rehabilitation projects, the Secretary shall take into account the fact that debt service is a fixed expense. The immediately

foregoing sentence shall be effective only during fiscal year 1998.

(B) The contract shall further provide for the Secretary to

make additional adjustments in the maximum monthly rent for

units under contract to the extent he determines such adjustments

are necessary to reflect increases in the actual and necessary expenses of owning and maintaining the units which have resulted

from substantial general increases in real property taxes, utility

rates, or similar costs which are not adequately compensated for by

the adjustment in the maximum monthly rent authorized by subparagraph (A). The Secretary shall make additional adjustments in

the maximum monthly rent for units under contract (subject to the

availability of appropriations for contract amendments) to the ex-
Sec. 8 UNITED STATES HOUSING ACT OF 1937 168

tent the Secretary determines such adjustments are necessary to

reflect increases in the actual and necessary expenses of owning

and maintaining the units that have resulted from the expiration

of a real property tax exemption. Where the Secretary determines

that a project assisted under this section is located in a community

where drug-related criminal activity is generally prevalent and the

project’s operating, maintenance, and capital repair expenses have

been substantially increased primarily as a result of the prevalence

of such drug-related activity, the Secretary may (at the discretion

of the Secretary and subject to the availability of appropriations for

contract amendments for this purpose), on a project by project

basis, provide adjustments to the maximum monthly rents, to a

level no greater than 120 percent of the project rents, to cover the

costs of maintenance, security, capital repairs, and reserves required for the owner to carry out a strategy acceptable to the Secretary for addressing the problem of drug-related criminal activity.

Any rent comparability standard required under this paragraph

may be waived by the Secretary to so implement the preceding sentence. The Secretary may (at the discretion of the Secretary and

subject to the availability of appropriations for contract amendments), on a project by project basis for projects receiving projectbased assistance, provide adjustments to the maximum monthly

rents to cover the costs of evaluating and reducing lead-based paint

hazards, as defined in section 1004 of the Residential Lead-Based

Paint Hazard Reduction Act of 1992.

(C) Adjustments in the maximum rents under subparagraphs

(A) and (B) shall not result in material differences between the

rents charged for assisted units and unassisted units of similar

quality, type, and age in the same market area, as determined by

the Secretary. In implementing the limitation established under

the preceding sentence, the Secretary shall establish regulations

for conducting comparability studies for projects where the Secretary has reason to believe that the application of the formula adjustments under subparagraph (A) would result in such material

differences. The Secretary shall conduct such studies upon the request of any owner of any project, or as the Secretary determines

to be appropriate by establishing, to the extent practicable, a modified annual adjustment factor for such market area, as the Secretary shall designate, that is geographically smaller than the applicable housing area used for the establishment of the annual adjustment factor under subparagraph (A). The Secretary shall establish such modified annual adjustment factor on the basis of the results of a study conducted by the Secretary of the rents charged,

and any change in such rents over the previous year, for assisted

units and unassisted units of similar quality, type, and age in the

smaller market area. Where the Secretary determines that such

modified annual adjustment factor cannot be established or that

such factor when applied to a particular project would result in material differences between the rents charged for assisted units and

unassisted units of similar quality, type, and age in the same market area, the Secretary may apply an alternative methodology for

conducting comparability studies in order to establish rents that

are not materially different from rents charged for comparable unassisted units. If the Secretary or appropriate State agency does
169 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1Section 1004(a) of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988,

Public Law 100–628, added this sentence and the preceding sentence. Section 1004(b) of such

Act provides as follows:

‘‘(b) BUDGET COMPLIANCE.—During fiscal year 1989, the amendment made by subsection (a)(2)

shall be effective only to such extent or in such amounts as are provided in appropriation Acts.

For purposes of section 202 of the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (Public Law 100–119), to the extent that this section has the effect of transferring an outlay of the United States from one fiscal year to an adjacent fiscal year, the transfer

is a necessary (but secondary) result of a significant policy change.’’.

not complete and submit to the project owner a comparability study

not later than 60 days before the anniversary date of the assistance

contract under this section, the automatic annual adjustment factor

shall be applied. The Secretary may not reduce the contract rents

in effect on or after April 15, 1987, for newly constructed, substantially rehabilitated, or moderately rehabilitated projects assisted

under this section (including projects assisted under this section as

in effect prior to November 30, 1983), unless the project has been

refinanced in a manner that reduces the periodic payments of the

owner. Any maximum monthly rent that has been reduced by the

Secretary after April 14, 1987, and prior to the enactment of this

sentence shall be restored to the maximum monthly rent in effect

on April 15, 1987. For any project which has had its maximum

monthly rents reduced after April 14, 1987, the Secretary shall

make assistance payments (from amounts reserved for the original

contract) to the owner of such project in an amount equal to the

difference between the maximum monthly rents in effect on April

15, 1987, and the reduced maximum monthly rents, multiplied by

the number of months that the reduced maximum monthly rents

were in effect.1

(3) The amount of the monthly assistance payment with respect to any dwelling unit shall be the difference between the maximum monthly rent which the contract provides that the owner is

to receive for the unit and the rent the family is required to pay

under section 3(a) of this Act. Reviews of family income shall be

made no less frequently than annually.

(4) The assistance contract shall provide that assistance payments may be made only with respect to a dwelling unit under

lease for occupancy by a family determined to be a lower income

family at the time it initially occupied such dwelling unit, except

that such payments may be made with respect to unoccupied units

for a period not exceeding sixty days (A) in the event that a family

vacates a dwelling unit before the expiration date of the lease for

occupancy or (B) where a good faith effort is being made to fill an

unoccupied unit, and, subject to the provisions of the following sentence, such payments may be made, in the case of a newly constructed or substantially rehabilitated project, after such sixty-day

period in an amount equal to the debt service attributable to such

an unoccupied dwelling unit for a period not to exceed one year, if

a good faith effort is being made to fill the unit and the unit provides decent, safe, and sanitary housing. No such payment may be

made after such sixty-day period if the Secretary determines that

the dwelling unit is in a project which provides the owner with revenues exceeding the costs incurred by such owner with respect to

such project.
Sec. 8 UNITED STATES HOUSING ACT OF 1937 170

(5) The Secretary shall take such steps as may be necessary,

including the making of contracts for assistance payments in

amounts in excess of the amounts required at the time of the initial

renting of dwelling units, the reservation of annual contributions

authority for the purpose of amending housing assistance contracts,

or the allocation of a portion of new authorizations for the purpose

of amending housing assistance contracts, to assure that assistance

payments are increased on a timely basis to cover increases in

maximum monthly rents or decreases in family incomes.

ø(6) [Repealed.]¿

ø(7) [Repealed.]¿

(8)(A) Not less than one year before termination of any contract under which assistance payments are received under this section, other than a contract for tenant-based assistance under this

section, an owner shall provide written notice to the Secretary and

the tenants involved of the proposed termination. The notice shall

also include a statement that, if the Congress makes funds available, the owner and the Secretary may agree to a renewal of the

contract, thus avoiding termination, and that in the event of termination the Department of Housing and Urban Development will

provide tenant-based rental assistance to all eligible residents, enabling them to choose the place they wish to rent, which is likely

to include the dwelling unit in which they currently reside. Any

contract covered by this paragraph that is renewed may be renewed for a period of up to 1 year or any number or years, with

payments subject to the availability of appropriations for any year.

(B) In the event the owner does not provide the notice required, the owner may not evict the tenants or increase the tenants’ rent payment until such time as the owner has provided the

notice and 1 year has elapsed. The Secretary may allow the owner

to renew the terminating contract for a period of time sufficient to

give tenants 1 year of advance notice under such terms and conditions as the Secretary may require.

(C) Any notice under this paragraph shall also comply with

any additional requirements established by the Secretary.

(D) For purposes of this paragraph, the term ‘‘termination’’

means the expiration of the assistance contract or an owner’s refusal to renew the assistance contract, and such term shall include

termination of the contract for business reasons.

(d)(1) Contracts to make assistance payments entered into by

a public housing agency with an owner of existing housing units

shall provide (with respect to any unit) that—

(A) the selection of tenants shall be the function of the

owner, subject to the annual contributions contract between

the Secretary and the agency, except that with respect to the

certificate and moderate rehabilitation programs only, for the

purpose of selecting families to be assisted, the public housing

agency may establish local preferences, consistent with the

public housing agency plan submitted under section 5A by the

public housing agency;

(B)(i) the lease between the tenant and the owner shall be

for at least one year or the term of such contract, whichever

is shorter, and shall contain other terms and conditions specified by the Secretary;
171 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1 Indented so in law.

(ii) during the term of the lease, the owner shall not terminate the tenancy except for serious or repeated violation of the

terms and conditions of the lease, for violation of applicable

Federal, State, or local law, or for other good cause;

(iii) during the term of the lease, any criminal activity that

threatens the health, safety, or right to peaceful enjoyment of

the premises by other tenants, any criminal activity that

threatens the health, safety, or right to peaceful enjoyment of

their residences by persons residing in the immediate vicinity

of the premises, or any drug-related criminal activity on or

near such premises, engaged in by a tenant of any unit, any

member of the tenant’s household, or any guest or other person

under the tenant’s control, shall be cause for termination of

tenancy;

(iv) any termination of tenancy shall be preceded by the

owner’s provision of written notice to the tenant specifying the

grounds for such action; and

(v) 1 it shall be cause for termination of the tenancy of a tenant if such tenant—

(I) is fleeing to avoid prosecution, or custody

or confinement after conviction, under the laws of

the place from which the individual flees, for a

crime, or attempt to commit a crime, which is a

felony under the laws of the place from which the

individual flees, or which, in the case of the State

of New Jersey, is a high misdemeanor under the

laws of such State; or

(II) is violating a condition of probation or parole imposed under Federal or State law;

(C) maintenance and replacement (including redecoration)

shall be in accordance with the standard practice for the building concerned as established by the owner and agreed to by the

agency; and

(D) the agency and the owner shall carry out such other

appropriate terms and conditions as may be mutually agreed

to by them.

(2)(A) Each contract for an existing structure entered into

under this section shall be for a term of not less than one month

nor more than one hundred and eighty months. The Secretary shall

permit public housing agencies to enter into contracts for assistance payments of less than 12 months duration in order to avoid

disruption in assistance to eligible families if the annual contributions contract is within 1 year of its expiration date.

(B)(i) In determining the amount of assistance provided under

an assistance contract for project-based assistance under this paragraph or a contract for assistance for housing constructed or substantially rehabilitated pursuant to assistance provided under section 8(b)(2) of this Act (as such section existed immediately before

October 1, 1983), the Secretary may consider and annually adjust,

with respect to such project, for the cost of employing or otherwise

retaining the services of one or more service coordinators under
Sec. 8 UNITED STATES HOUSING ACT OF 1937 172

1So in law. Probably intended to refer to section 671 of such Act.

2 Indented so in law.

3 Indented so in law.

4 Indented so in law.

section 661 1 of the Housing and Community Development Act of

1992 to coordinate the provision of any services within the project

for residents of the project who are elderly or disabled families.

(ii) The budget authority available under section 5(c) for assistance under this section is authorized to be increased by

$15,000,000 on or after October 1, 1992, and by $15,000,000 on or

after October 1, 1993. Amounts made available under this subparagraph shall be used to provide additional amounts under annual

contributions contracts for assistance under this section which

shall be made available through assistance contracts only for the

purpose of providing service coordinators under clause (i) for

projects receiving project-based assistance under this paragraph

and to provide additional amounts under contracts for assistance

for projects constructed or substantially rehabilitated pursuant to

assistance provided under section 8(b)(2) of this Act (as such section existed immediately before October 1, 1983) only for such purpose.

(C) 2 An assistance contract for project-based assistance

under this paragraph shall provide that the owner shall ensure

and maintain compliance with subtitle C of title VI of the

Housing and Community Development Act of 1992 and any

regulations issued under such subtitle.

(D) 3 An owner of a covered section 8 housing project (as

such term is defined in section 659 of the Housing and Community Development Act of 1992) may give preference for occupancy of dwelling units in the project, and reserve units for occupancy, in accordance with subtitle D of title VI of the Housing and Community Development Act of 1992.

(3) Notwithstanding any other provision of law, with the approval of the Secretary the public housing agency administering a

contract under this section with respect to existing housing units

may exercise all management and maintenance responsibilities

with respect to those units pursuant to a contract between such

agency and the owner of such units.

(4) A public housing agency that serves more than one unit of

general local government may, at the discretion of the agency, in

allocating assistance under this section, give priority to disabled

families that are not elderly families.

(5) 4 CALCULATION OF LIMIT.—Any contract entered into

under section 514 of the Multifamily Assisted Housing Reform

and Affordability Act of 1997 shall be excluded in computing

the limit on project-based assistance under this subsection.

(6) TREATMENT OF COMMON AREAS.—The Secretary may not

provide any assistance amounts pursuant to an existing contract

for project-based assistance under this section for a housing project

and may not enter into a new or renewal contract for such assistance for a project unless the owner of the project provides consent,

to such local law enforcement agencies as the Secretary determines

appropriate, for law enforcement officers of such agencies to enter

common areas of the project at any time and without advance no-
173 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1Section 289(a) of the Cranston-Gonzalez National Affordable Housing Act, Public Law 101–

625, provides that no new grants shall be made under this paragraph after October 1, 1991,

except for funds allocated for single room occupancy dwellings as authorized by title IV of the

Stewart B. McKinney Homeless Assistance Act. Section 289(b) of such Act repealed this paragraph, effective on October 1, 1991, except with respect to single-room occupancy dwellings

under title IV of the Stewart B. McKinney Homeless Assistance Act. Before its repeal, the provisions of this section contained the authority for the moderate rehabilitation program.

The provisions of this paragraph, as in effect on the date of such repeal, are set forth in the

footnote to section 441 of the Stewart B. McKinney Homeless Assistance Act, found in part VI,

post, of this compilation.

tice upon a determination of probable cause by such officers that

criminal activity is taking place in such areas.

(e)(1) Nothing in this Act shall be deemed to prohibit an owner

from pledging, or offering as security for any loan or obligation, a

contract for assistance payments entered into pursuant to this section: Provided, That such security is in connection with a project

constructed or rehabilitated pursuant to authority granted in this

section, and the terms of the financing or any refinancing have

been approved by the Secretary.

ø(2) [Repealed.]¿ 1

(f) As used in this section—

(1) the term ‘‘owner’’ means any private person or entity,

including a cooperative, an agency of the Federal Government,

or a public housing agency, having the legal right to lease or

sublease dwelling units;

(2) the terms ‘‘rent’’ or ‘‘rental’’ mean, with respect to members of a cooperative, the charges under the occupancy agreements between such members and the cooperative;

(3) the term ‘‘debt service’’ means the required payments

for principal and interest made with respect to a mortgage secured by housing assisted under this Act;

(4) the term ‘‘participating jurisdiction’’ means a State or

unit of general local government designated by the Secretary

to be a participating jurisdiction under title II of the CranstonGonzalez National Affordable Housing Act;

(5) the term ‘‘drug-related criminal activity’’ means the illegal manufacture, sale, distribution, use, or possession with

intent to manufacture, sell, distribute, or use, of a controlled

substance (as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802));

(6) the term ‘‘project-based assistance’’ means rental assistance under subsection (b) that is attached to the structure pursuant to subsection (d)(2) or (o)(13); and

(7) the term ‘‘tenant-based assistance’’ means rental assistance under subsection (o) that is not project-based assistance

and that provides for the eligible family to select suitable housing and to move to other suitable housing.

(g) Notwithstanding any other provision of this Act, assistance

payments under this section may be provided, in accordance with

regulations prescribed by the Secretary, with respect to some or all

of the units in any project approved pursuant to section 202 of the

Housing Act of 1959.
Sec. 8 UNITED STATES HOUSING ACT OF 1937 174

1 Section 565(c) of the Quality Housing and Work Responsibility Act of 1998, title V of Public

Law 105–276, approved October 21, 1998, amended this subsection by inserting ‘‘(except as provided in section 6(j)(3))’’ after ‘‘section 6’’. The amendment could not be executed.

(h) Sections 5(e) and 6 1 and any other provisions of this Act

which are inconsistent with the provisions of this section shall not

apply to contracts for assistance entered into under this section.

(i) The Secretary may not consider the receipt by a public

housing agency of assistance under section 811(b)(1) of the Cranston-Gonzalez National Affordable Housing Act, or the amount received, in approving assistance for the agency under this section or

determining the amount of such assistance to be provided.

ø(j) [Repealed.]¿

(k) The Secretary shall establish procedures which are appropriate and necessary to assure that income data provided to public

housing agencies and owners by families applying for or receiving

assistance under this section is complete and accurate. In establishing such procedures, the Secretary shall randomly, regularly,

and periodically select a sample of families to authorize the Secretary to obtain information on these families for the purpose of income verification, or to allow those families to provide such information themselves. Such information may include, but is not limited to, data concerning unemployment compensation and Federal

income taxation and data relating to benefits made available under

the Social Security Act, the Food Stamp Act of 1977, or title 38,

United States Code. Any such information received pursuant to

this subsection shall remain confidential and shall be used only for

the purpose of verifying incomes in order to determine eligibility of

families for benefits (and the amount of such benefits, if any) under

this section.

ø(l) [Repealed.]¿

ø(m) [Repealed.]¿

ø(n) [Repealed.]¿

(o) VOUCHER PROGRAM.— (1) AUTHORITY.— (A) IN GENERAL.—The Secretary may provide assistance to public housing agencies for tenant-based assistance

using a payment standard established in accordance with

subparagraph (B). The payment standard shall be used to

determine the monthly assistance that may be paid for any

family, as provided in paragraph (2).

(B) ESTABLISHMENT OF PAYMENT STANDARD.—Except

as provided under subparagraph (D), the payment standard for each size of dwelling unit in a market area shall

not exceed 110 percent of the fair market rental established under subsection (c) for the same size of dwelling

unit in the same market area and shall be not less than

90 percent of that fair market rental.

(C) SET-ASIDE.—The Secretary may set aside not more

than 5 percent of the budget authority made available for

assistance under this subsection as an adjustment pool.

The Secretary shall use amounts in the adjustment pool to

make adjusted payments to public housing agencies under

subparagraph (A), to ensure continued affordability, if the

Secretary determines that additional assistance for such
175 Sec. 8 UNITED STATES HOUSING ACT OF 1937

purpose is necessary, based on documentation submitted

by a public housing agency.

(D) APPROVAL.—The Secretary may require a public

housing agency to submit the payment standard of the

public housing agency to the Secretary for approval, if the

payment standard is less than 90 percent of the fair market rental or exceeds 110 percent of the fair market rental.

(E) REVIEW.—The Secretary—

(i) shall monitor rent burdens and review any payment standard that results in a significant percentage

of the families occupying units of any size paying more

than 30 percent of adjusted income for rent; and

(ii) may require a public housing agency to modify

the payment standard of the public housing agency

based on the results of that review.

(2) AMOUNT OF MONTHLY ASSISTANCE PAYMENT.—Subject to

the requirement under section 3(a)(3) (relating to minimum

rental amount), the monthly assistance payment for a family

receiving assistance under this subsection shall be determined

as follows:

(A) TENANT-BASED ASSISTANCE; RENT NOT EXCEEDING

PAYMENT STANDARD.—For a family receiving tenant-based

assistance, if the rent for the family (including the amount

allowed for tenant-paid utilities) does not exceed the applicable payment standard established under paragraph (1),

the monthly assistance payment for the family shall be

equal to the amount by which the rent (including the

amount allowed for tenant-paid utilities) exceeds the

greatest of the following amounts, rounded to the nearest

dollar:

(i) 30 percent of the monthly adjusted income of

the family.

(ii) 10 percent of the monthly income of the

family.

(iii) If the family is receiving payments for welfare

assistance from a public agency and a part of those

payments, adjusted in accordance with the actual

housing costs of the family, is specifically designated

by that agency to meet the housing costs of the family,

the portion of those payments that is so designated.

(B) TENANT-BASED ASSISTANCE; RENT EXCEEDING PAYMENT STANDARD.—For a family receiving tenant-based assistance, if the rent for the family (including the amount

allowed for tenant-paid utilities) exceeds the applicable

payment standard established under paragraph (1), the

monthly assistance payment for the family shall be equal

to the amount by which the applicable payment standard

exceeds the greatest of amounts under clauses (i), (ii), and

(iii) of subparagraph (A).

(C) FAMILIES RECEIVING PROJECT-BASED ASSISTANCE.—

For a family receiving project-based assistance, the rent

that the family is required to pay shall be determined in

accordance with section 3(a)(1), and the amount of the
Sec. 8 UNITED STATES HOUSING ACT OF 1937 176

housing assistance payment shall be determined in accordance with subsection (c)(3) of this section.

(3) 40 PERCENT LIMIT.—At the time a family initially receives tenant-based assistance under this section with respect

to any dwelling unit, the total amount that a family may be

required to pay for rent may not exceed 40 percent of the

monthly adjusted income of the family.

(4) ELIGIBLE FAMILIES.—To be eligible to receive assistance

under this subsection, a family shall, at the time a family initially receives assistance under this subsection, be a low-income family that is—

(A) a very low-income family;

(B) a family previously assisted under this title;

(C) a low-income family that meets eligibility criteria

specified by the public housing agency;

(D) a family that qualifies to receive a voucher in connection with a homeownership program approved under

title IV of the Cranston-Gonzalez National Affordable

Housing Act; or

(E) a family that qualifies to receive a voucher under

section 223 or 226 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990.

(5) ANNUAL REVIEW OF FAMILY INCOME.— (A) IN GENERAL.—Reviews of family incomes for purposes of this section shall be subject to the provisions of

section 904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988 and shall be conducted

upon the initial provision of housing assistance for the

family and thereafter not less than annually.

(B) PROCEDURES.—Each public housing agency administering assistance under this subsection shall establish

procedures that are appropriate and necessary to ensure

that income data provided to the agency and owners by

families applying for or receiving assistance from the agency is complete and accurate. Each public housing agency

shall, not less frequently than annually, conduct a review

of the family income of each family receiving assistance

under this subsection.

(6) SELECTION OF FAMILIES AND DISAPPROVAL OF

OWNERS.—

(A) PREFERENCES.—

(i) AUTHORITY TO ESTABLISH.—Each public housing agency may establish a system for making tenantbased assistance under this subsection available on behalf of eligible families that provides preference for

such assistance to eligible families having certain

characteristics, which may include a preference for

families residing in public housing who are victims of

a crime of violence (as such term is defined in section

16 of title 18, United States Code) that has been reported to an appropriate law enforcement agency.

(ii) CONTENT.—Each system of preferences established pursuant to this subparagraph shall be based

upon local housing needs and priorities, as determined
177 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1So in law. There is no open parenthesis.

by the public housing agency using generally accepted

data sources, including any information obtained pursuant to an opportunity for public comment as provided under section 5A(f ) and under the requirements

applicable to the comprehensive housing affordability

strategy for the relevant jurisdiction.

(B) SELECTION OF TENANTS.—Each housing assistance

payment contract entered into by the public housing agency and the owner of a dwelling unit) 1 shall provide that

the screening and selection of families for those units shall

be the function of the owner. In addition, the public housing agency may elect to screen applicants for the program

in accordance with such requirements as the Secretary

may establish.

(C) PHA DISAPPROVAL OF OWNERS.—In addition to

other grounds authorized by the Secretary, a public housing agency may elect not to enter into a housing assistance

payments contract under this subsection with an owner

who refuses, or has a history of refusing, to take action to

terminate tenancy for activity engaged in by the tenant,

any member of the tenant’s household, any guest, or any

other person under the control of any member of the

household that—

(i) threatens the health or safety of, or right to

peaceful enjoyment of the premises by, other tenants

or employees of the public housing agency, owner, or

other manager of the housing;

(ii) threatens the health or safety of, or right to

peaceful enjoyment of the residences by, persons residing in the immediate vicinity of the premises; or

(iii) is drug-related or violent criminal activity.

(7) LEASES AND TENANCY.—Each housing assistance payment contract entered into by the public housing agency and

the owner of a dwelling unit—

(A) shall provide that the lease between the tenant

and the owner shall be for a term of not less than 1 year,

except that the public housing agency may approve a

shorter term for an initial lease between the tenant and

the dwelling unit owner if the public housing agency determines that such shorter term would improve housing opportunities for the tenant and if such shorter term is considered to be a prevailing local market practice;

(B) shall provide that the dwelling unit owner shall

offer leases to tenants assisted under this subsection

that—

(i) are in a standard form used in the locality by

the dwelling unit owner; and

(ii) contain terms and conditions that—

(I) are consistent with State and local law;

and

(II) apply generally to tenants in the property

who are not assisted under this section;
Sec. 8 UNITED STATES HOUSING ACT OF 1937 178

1So in law. Should probably end with a period.

(C) shall provide that during the term of the lease, the

owner shall not terminate the tenancy except for serious

or repeated violation of the terms and conditions of the

lease, for violation of applicable Federal, State, or local

law, or for other good cause;

(D) shall provide that during the term of the lease,

any criminal activity that threatens the health, safety, or

right to peaceful enjoyment of the premises by other tenants, any criminal activity that threatens the health, safety, or right to peaceful enjoyment of their residences by

persons residing in the immediate vicinity of the premises,

or any violent or drug-related criminal activity on or near

such premises, engaged in by a tenant of any unit, any

member of the tenant’s household, or any guest or other

person under the tenant’s control, shall be cause for termination of tenancy;

(E) shall provide that any termination of tenancy

under this subsection shall be preceded by the provision of

written notice by the owner to the tenant specifying the

grounds for that action, and any relief shall be consistent

with applicable State and local law; and

(F) may include any addenda required by the Secretary to set forth the provisions of this subsection.

(8) INSPECTION OF UNITS BY PHA’S.—

(A) IN GENERAL.—Except as provided in paragraph

(11), for each dwelling unit for which a housing assistance

payment contract is established under this subsection, the

public housing agency shall inspect the unit before any assistance payment is made to determine whether the dwelling unit meets the housing quality standards under subparagraph (B).

(B) HOUSING QUALITY STANDARDS.—The housing quality standards under this subparagraph are standards for

safe and habitable housing established—

(i) by the Secretary for purposes of this subsection;

or

(ii) by local housing codes or by codes adopted by

public housing agencies that—

(I) meet or exceed housing quality standards,

except that the Secretary may waive the requirement under this subclause to significantly increase access to affordable housing and to expand

housing opportunities for families assisted under

this subsection, except where such waiver could

adversely affect the health or safety of families assisted under this subsection; and

(II) do not severely restrict housing choice 1

(C) INSPECTION.—The determination required under

subparagraph (A) shall be made by the public housing

agency (or other entity, as provided in paragraph (11)) pursuant to an inspection of the dwelling unit conducted before any assistance payment is made for the unit. Inspec-
179 Sec. 8 UNITED STATES HOUSING ACT OF 1937

tions of dwelling units under this subparagraph shall be

made before the expiration of the 15-day period beginning

upon a request by the resident or landlord to the public

housing agency or, in the case of any public housing agency that provides assistance under this subsection on behalf

of more than 1250 families, before the expiration of a reasonable period beginning upon such request. The performance of the agency in meeting the 15-day inspection deadline shall be taken into consideration in assessing the performance of the agency.

(D) ANNUAL INSPECTIONS.—Each public housing agency providing assistance under this subsection (or other entity, as provided in paragraph (11)) shall make an annual

inspection of each assisted dwelling unit during the term

of the housing assistance payments contract for the unit to

determine whether the unit is maintained in accordance

with the requirements under subparagraph (A). The agency (or other entity) shall retain the records of the inspection for a reasonable time and shall make the records

available upon request to the Secretary, the Inspector General for the Department of Housing and Urban Development, and any auditor conducting an audit under section

5(h).

(E) INSPECTION GUIDELINES.—The Secretary shall establish procedural guidelines and performance standards

to facilitate inspections of dwelling units and conform such

inspections with practices utilized in the private housing

market. Such guidelines and standards shall take into consideration variations in local laws and practices of public

housing agencies and shall provide flexibility to authorities

appropriate to facilitate efficient provision of assistance

under this subsection.

(9) VACATED UNITS.—If an assisted family vacates a dwelling unit for which rental assistance is provided under a housing assistance payment contract before the expiration of the

term of the lease for the unit, rental assistance pursuant to

such contract may not be provided for the unit after the month

during which the unit was vacated.

(10) RENT.—

(A) REASONABLENESS.—The rent for dwelling units for

which a housing assistance payment contract is established under this subsection shall be reasonable in comparison with rents charged for comparable dwelling units

in the private, unassisted local market.

(B) NEGOTIATIONS.—A public housing agency (or other

entity, as provided in paragraph (11)) shall, at the request

of a family receiving tenant-based assistance under this

subsection, assist that family in negotiating a reasonable

rent with a dwelling unit owner. A public housing agency

(or such other entity) shall review the rent for a unit

under consideration by the family (and all rent increases

for units under lease by the family) to determine whether

the rent (or rent increase) requested by the owner is reasonable. If a public housing agency (or other such entity)
Sec. 8 UNITED STATES HOUSING ACT OF 1937 180

determines that the rent (or rent increase) for a dwelling

unit is not reasonable, the public housing agency (or other

such entity) shall not make housing assistance payments

to the owner under this subsection with respect to that

unit.

(C) UNITS EXEMPT FROM LOCAL RENT CONTROL.—If a

dwelling unit for which a housing assistance payment contract is established under this subsection is exempt from

local rent control provisions during the term of that contract, the rent for that unit shall be reasonable in comparison with other units in the market area that are exempt

from local rent control provisions.

(D) TIMELY PAYMENTS.—Each public housing agency

shall make timely payment of any amounts due to a dwelling unit owner under this subsection. The housing assistance payment contract between the owner and the public

housing agency may provide for penalties for the late payment of amounts due under the contract, which shall be

imposed on the public housing agency in accordance with

generally accepted practices in the local housing market.

(E) PENALTIES.—Unless otherwise authorized by the

Secretary, each public housing agency shall pay any penalties from administrative fees collected by the public

housing agency, except that no penalty shall be imposed if

the late payment is due to factors that the Secretary determines are beyond the control of the public housing agency.

(11) LEASING OF UNITS OWNED BY PHA.—If an eligible family assisted under this subsection leases a dwelling unit (other

than a public housing dwelling unit) that is owned by a public

housing agency administering assistance under this subsection,

the Secretary shall require the unit of general local government or another entity approved by the Secretary, to make inspections required under paragraph (8) and rent determinations required under paragraph (10). The agency shall be responsible for any expenses of such inspections and determinations.

(12) ASSISTANCE FOR RENTAL OF MANUFACTURED

HOUSING.—

(A) IN GENERAL.—A public housing agency may make

assistance payments in accordance with this subsection on

behalf of a family that utilizes a manufactured home as a

principal place of residence. Such payments may be made

only for the rental of the real property on which the manufactured home owned by any such family is located.

(B) RENT CALCULATION.—

(i) CHARGES INCLUDED.—For assistance pursuant

to this paragraph, the rent for the space on which a

manufactured home is located and with respect to

which assistance payments are to be made shall include maintenance and management charges and tenant-paid utilities.

(ii) PAYMENT STANDARD.—The public housing

agency shall establish a payment standard for the purpose of determining the monthly assistance that may
181 Sec. 8 UNITED STATES HOUSING ACT OF 1937

be paid for any family under this paragraph. The payment standard may not exceed an amount approved or

established by the Secretary.

(iii) MONTHLY ASSISTANCE PAYMENT.—The monthly assistance payment for a family assisted under this

paragraph shall be determined in accordance with

paragraph (2).

(13) PHA PROJECT-BASED ASSISTANCE.— (A) IN GENERAL.—A public housing agency may use

amounts provided under an annual contributions contract

under this subsection to enter into a housing assistance

payment contract with respect to an existing, newly constructed, or rehabilitated structure, that is attached to the

structure, subject to the limitations and requirements of

this paragraph.

(B) PERCENTAGE LIMITATION.—Not more than 20 percent of the funding available for tenant-based assistance

under this section that is administered by the agency may

be attached to structures pursuant to this paragraph.

(C) CONSISTENCY WITH PHA PLAN AND OTHER GOALS.— A public housing agency may approve a housing assistance

payment contract pursuant to this paragraph only if the

contract is consistent with—

(i) the public housing agency plan for the agency

approved under section 5A; and

(ii) the goal of deconcentrating poverty and expanding housing and economic opportunities.

(D) INCOME MIXING REQUIREMENT.—

(i) IN GENERAL.—Not more than 25 percent of the

dwelling units in any building may be assisted under

a housing assistance payment contract for projectbased assistance pursuant to this paragraph.

(ii) EXCEPTIONS.—The limitation under clause (i)

shall not apply in the case of assistance under a contract for housing consisting of single family properties

or for dwelling units that are specifically made available for households comprised of elderly families, disabled families, and families receiving supportive services.

(E) RESIDENT CHOICE REQUIREMENT.—A housing assistance payment contract pursuant to this paragraph

shall provide as follows:

(i) MOBILITY.—Each low-income family occupying

a dwelling unit assisted under the contract may move

from the housing at any time after the family has occupied the dwelling unit for 12 months.

(ii) CONTINUED ASSISTANCE.—Upon such a move,

the public housing agency shall provide the low-income family with tenant-based rental assistance under

this section or such other tenant-based rental assistance that is subject to comparable income, assistance,

rent contribution, affordability, and other requirements, as the Secretary shall provide by regulation. If

such rental assistance is not immediately available to
Sec. 8 UNITED STATES HOUSING ACT OF 1937 182

fulfill the requirement under the preceding sentence

with respect to a low-income family, such requirement

may be met by providing the family priority to receive

the next voucher or other tenant-based rental assistance amounts that become available under the program used to fulfill such requirement.

(F) CONTRACT TERM.—A housing assistance payment

contract pursuant to this paragraph between a public

housing agency and the owner of a structure may have a

term of up to 10 years, subject to the availability of sufficient appropriated funds for the purpose of renewing expiring contracts for assistance payments, as provided in appropriations Acts and in the agency’s annual contributions

contract with the Secretary, and to annual compliance

with the inspection requirements under paragraph (8), except that the agency shall not be required to make annual

inspections of each assisted unit in the development. The

contract may specify additional conditions for its continuation. If the units covered by the contract are owned by

the agency, the term of the contract shall be agreed upon

by the agency and the unit of general local government or

other entity approved by the Secretary in the manner provided under paragraph (11).

(G) EXTENSION OF CONTRACT TERM.—A public housing

agency may enter into a contract with the owner of a

structure assisted under a housing assistance payment

contract pursuant to this paragraph to extend the term of

the underlying housing assistance payment contract for

such period as the agency determines to be appropriate to

achieve long-term affordability of the housing or to expand

housing opportunities. Such a contract shall provide that

the extension of such term shall be contingent upon the future availability of appropriated funds for the purpose of

renewing expiring contracts for assistance payments, as

provided in appropriations Acts, and may obligate the

owner to have such extensions of the underlying housing

assistance payment contract accepted by the owner and

the successors in interest of the owner.

(H) RENT CALCULATION.—A housing assistance payment contract pursuant to this paragraph shall establish

rents for each unit assisted in an amount that does not exceed 110 percent of the applicable fair market rental (or

any exception payment standard approved by the Secretary pursuant to paragraph (1)(D)), except that if a contract covers a dwelling unit that has been allocated low-income housing tax credits pursuant to section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42) and is not located in a qualified census tract (as such term is defined

in subsection (d) of such section 42), the rent for such unit

may be established at any level that does not exceed the

rent charged for comparable units in the building that also

receive the low-income housing tax credit but do not have

additional rental assistance. The rents established by

housing assistance payment contracts pursuant to this
183 Sec. 8 UNITED STATES HOUSING ACT OF 1937

paragraph may vary from the payment standards established by the public housing agency pursuant to paragraph

(1)(B), but shall be subject to paragraph (10)(A).

(I) RENT ADJUSTMENTS.—A housing assistance payments contract pursuant to this paragraph shall provide

for rent adjustments, except that—

(i) the adjusted rent for any unit assisted shall be

reasonable in comparison with rents charged for comparable dwelling units in the private, unassisted, local

market and may not exceed the maximum rent permitted under subparagraph (H); and

(ii) the provisions of subsection (c)(2)(C) shall not

apply.

(J) TENANT SELECTION.—A public housing agency shall

select families to receive project-based assistance pursuant

to this paragraph from its waiting list for assistance under

this subsection. Eligibility for such project-based assistance shall be subject to the provisions of section 16(b) that

apply to tenant-based assistance. The agency may establish preferences or criteria for selection for a unit assisted

under this paragraph that are consistent with the public

housing agency plan for the agency approved under section

5A. Any family that rejects an offer of project-based assistance under this paragraph or that is rejected for admission

to a structure by the owner or manager of a structure assisted under this paragraph shall retain its place on the

waiting list as if the offer had not been made. The owner

or manager of a structure assisted under this paragraph

shall not admit any family to a dwelling unit assisted

under a contract pursuant to this paragraph other than a

family referred by the public housing agency from its waiting list. Subject to its waiting list policies and selection

preferences, a public housing agency may place on its waiting list a family referred by the owner or manager of a

structure and may maintain a separate waiting list for assistance under this paragraph, but only if all families on

the agency’s waiting list for assistance under this subsection are permitted to place their names on the separate

list.

(K) VACATED UNITS.—Notwithstanding paragraph (9),

a housing assistance payment contract pursuant to this

paragraph may provide as follows:

(i) PAYMENT FOR VACANT UNITS.—That the public

housing agency may, in its discretion, continue to provide assistance under the contract, for a reasonable

period not exceeding 60 days, for a dwelling unit that

becomes vacant, but only: (I) if the vacancy was not

the fault of the owner of the dwelling unit; and (II) the

agency and the owner take every reasonable action to

minimize the likelihood and extent of any such vacancy. Rental assistance may not be provided for a vacant unit after the expiration of such period.

(ii) REDUCTION OF CONTRACT.—That, if despite

reasonable efforts of the agency and the owner to fill
Sec. 8 UNITED STATES HOUSING ACT OF 1937 184

a vacant unit, no eligible family has agreed to rent the

unit within 120 days after the owner has notified the

agency of the vacancy, the agency may reduce its

housing assistance payments contract with the owner

by the amount equivalent to the remaining months of

subsidy attributable to the vacant unit. Amounts

deobligated pursuant to such a contract provision shall

be available to the agency to provide assistance under

this subsection.

Eligible applicants for assistance under this subsection

may enforce provisions authorized by this subparagraph.

(14) INAPPLICABILITY TO TENANT-BASED ASSISTANCE.—Subsection (c) shall not apply to tenant-based assistance under

this subsection.

(15) HOMEOWNERSHIP OPTION.— (A) IN GENERAL.—A public housing agency providing

assistance under this subsection may, at the option of the

agency, provide assistance for homeownership under subsection (y).

(B) ALTERNATIVE ADMINISTRATION.—A public housing

agency may contract with a nonprofit organization to administer a homeownership program under subsection (y).

(16) RENTAL VOUCHERS FOR RELOCATION OF WITNESSES AND

VICTIMS OF CRIME.—

(A) WITNESSES.—Of amounts made available for assistance under this subsection in each fiscal year, the Secretary, in consultation with the Inspector General, shall

make available such sums as may be necessary for the relocation of witnesses in connection with efforts to combat

crime in public and assisted housing pursuant to requests

from law enforcement or prosecution agencies.

(B) VICTIMS OF CRIME.—

(i) IN GENERAL.—Of amounts made available for

assistance under this section in each fiscal year, the

Secretary shall make available such sums as may be

necessary for the relocation of families residing in public housing who are victims of a crime of violence (as

that term is defined in section 16 of title 18, United

States Code) that has been reported to an appropriate

law enforcement agency.

(ii) NOTICE.—A public housing agency that receives amounts under this subparagraph shall establish procedures for providing notice of the availability

of that assistance to families that may be eligible for

that assistance.

(17) DEED RESTRICTIONS.—Assistance under this subsection may not be used in any manner that abrogates any

local deed restriction that applies to any housing consisting of

1 to 4 dwelling units. This paragraph may not be construed to

affect the provisions or applicability of the Fair Housing Act.

(18) RENTAL ASSISTANCE FOR ASSISTED LIVING FACILITIES.—

(A) IN GENERAL.—A public housing agency may make

assistance payments on behalf of a family that uses an assisted living facility as a principal place of residence and
185 Sec. 8 UNITED STATES HOUSING ACT OF 1937

that uses such supportive services made available in the

facility as the agency may require. Such payments may be

made only for covering costs of rental of the dwelling unit

in the assisted living facility and not for covering any portion of the cost of residing in such facility that is attributable to service relating to assisted living.

(B) RENT CALCULATION.—

(i) CHARGES INCLUDED.—For assistance pursuant

to this paragraph, the rent of the dwelling unit that

is an assisted living facility with respect to which assistance payments are made shall include maintenance and management charges related to the dwelling unit and tenant-paid utilities. Such rent shall not

include any charges attributable to services relating to

assisted living.

(ii) PAYMENT STANDARD.—In determining the

monthly assistance that may be paid under this paragraph on behalf of any family residing in an assisted

living facility, the public housing agency shall utilize

the payment standard established under paragraph

(1), for the market area in which the assisted living facility is located, for the applicable size dwelling unit.

(iii) MONTHLY ASSISTANCE PAYMENT.—The monthly assistance payment for a family assisted under this

paragraph shall be determined in accordance with

paragraph (2) (using the rent and payment standard

for the dwelling unit as determined in accordance with

this subsection).

(C) DEFINITION.—For the purposes of this paragraph,

the term ‘‘assisted living facility’’ has the meaning given

that term in section 232(b) of the National Housing Act (12

U.S.C. 1715w(b)), except that such a facility may be contained within a portion of a larger multifamily housing

project.

(19) RENTAL VOUCHERS FOR VETERANS AFFAIRS SUPPORTED

HOUSING PROGRAM.—

(A) SET ASIDE.—Subject to subparagraph (C), the Secretary shall set aside, from amounts made available for

rental assistance under this subsection, the amounts specified in subparagraph (B) for use only for providing such assistance through a supported housing program administered in conjunction with the Department of Veterans Affairs. Such program shall provide rental assistance on behalf of homeless veterans who have chronic mental illnesses or chronic substance use disorders, shall require

agreement of the veteran to continued treatment for such

mental illness or substance use disorder as a condition of

receipt of such rental assistance, and shall ensure such

treatment and appropriate case management for each veteran receiving such rental assistance.

(B) AMOUNT.—The amount specified in this subparagraph is—
Sec. 8 UNITED STATES HOUSING ACT OF 1937 186

(i) for fiscal year 2003, the amount necessary to

provide 500 vouchers for rental assistance under this

subsection;

(ii) for fiscal year 2004, the amount necessary to

provide 1,000 vouchers for rental assistance under this

subsection;

(iii) for fiscal year 2005, the amount necessary to

provide 1,500 vouchers for rental assistance under this

subsection; and

(iv) for fiscal year 2006, the amount necessary to

provide 2,000 vouchers for rental assistance under this

subsection.

(C) FUNDING THROUGH INCREMENTAL ASSISTANCE.—In

any fiscal year, to the extent that this paragraph requires

the Secretary to set aside rental assistance amounts for

use under this paragraph in an amount that exceeds the

amount set aside in the preceding fiscal year, such requirement shall be effective only to such extent or in such

amounts as are or have been provided in appropriation

Acts for such fiscal year for incremental rental assistance

under this subsection.

(p) In order to assist elderly families (as defined in section

3(b)(3)) who elect to live in a shared housing arrangement in which

they benefit as a result of sharing the facilities of a dwelling with

others in a manner that effectively and efficiently meets their housing needs and thereby reduces their costs of housing, the Secretary

shall permit assistance provided under the existing housing and

moderate rehabilitation programs to be used by such families in

such arrangements. In carrying out this subsection, the Secretary

shall issue minimum habitability standards for the purpose of assuring decent, safe, and sanitary housing for such families while

taking into account the special circumstances of shared housing.

(q) ADMINISTRATIVE FEES.—

(1) FEE FOR ONGOING COSTS OF ADMINISTRATION.—

(A) IN GENERAL.—The Secretary shall establish fees

for the costs of administering the tenant-based assistance,

certificate, voucher, and moderate rehabilitation programs

under this section.

(B) FISCAL YEAR 1999.—

(i) CALCULATION.—For fiscal year 1999, the fee for

each month for which a dwelling unit is covered by an

assistance contract shall be—

(I) in the case of a public housing agency that,

on an annual basis, is administering a program

for not more than 600 dwelling units, 7.65 percent

of the base amount; and

(II) in the case of an agency that, on an annual basis, is administering a program for more

than 600 dwelling units (aa) for the first 600

units, 7.65 percent of the base amount, and (bb)

for any additional dwelling units under the program, 7.0 percent of the base amount.

(ii) BASE AMOUNT.—For purposes of this subparagraph, the base amount shall be the higher of—
187 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date. 1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

(I) the fair market rental established under

section 8(c) of this Act (as in effect immediately

before the effective date under section 503(a) of

the Quality Housing and Work Responsibility Act

of 1998 1) for fiscal year 1993 for a 2-bedroom existing rental dwelling unit in the market area of

the agency, and

(II) the amount that is the lesser of (aa) such

fair market rental for fiscal year 1994, or (bb)

103.5 percent of the amount determined under

clause (i),

adjusted based on changes in wage data or other objectively measurable data that reflect the costs of administering the program, as determined by the Secretary.

The Secretary may require that the base amount be

not less than a minimum amount and not more than

a maximum amount.

(C) SUBSEQUENT FISCAL YEARS.—For subsequent fiscal

years, the Secretary shall publish a notice in the Federal

Register, for each geographic area, establishing the

amount of the fee that would apply for public housing

agencies administering the program, based on changes in

wage data or other objectively measurable data that reflect

the costs of administering the program, as determined by

the Secretary.

(D) INCREASE.—The Secretary may increase the fee if

necessary to reflect the higher costs of administering small

programs and programs operating over large geographic

areas.

(E) DECREASE.—The Secretary may decrease the fee

for units owned by a public housing agency to reflect reasonable costs of administration.

(2) FEE FOR PRELIMINARY EXPENSES.—The Secretary shall

also establish reasonable fees (as determined by the Secretary)

for—

(A) the costs of preliminary expenses, in the amount

of $500, for a public housing agency, except that such fee

shall apply to an agency only in the first year that the

agency administers a tenant-based assistance program

under this section, and only if, immediately before the effective date under section 503(a) of the Quality Housing

and Work Responsibility Act of 1998 1, the agency was not

administering a tenant-based assistance program under

the United States Housing Act of 1937 (as in effect immediately before such effective date), in connection with its

initial increment of assistance received;
Sec. 8 UNITED STATES HOUSING ACT OF 1937 188

(B) the costs incurred in assisting families who experience difficulty (as determined by the Secretary) in obtaining appropriate housing under the programs; and

(C) extraordinary costs approved by the Secretary.

(3) TRANSFER OF FEES IN CASES OF CONCURRENT GEO- GRAPHICAL JURISDICTION.—In each fiscal year, if any public

housing agency provides tenant-based assistance under this

section on behalf of a family who uses such assistance for a

dwelling unit that is located within the jurisdiction of such

agency but is also within the jurisdiction of another public

housing agency, the Secretary shall take such steps as may be

necessary to ensure that the public housing agency that provides the services for a family receives all or part of the administrative fee under this section (as appropriate).

(4) APPLICABILITY.—This subsection shall apply to fiscal

year 1999 and fiscal years thereafter.

(r) PORTABILITY.—(1) IN GENERAL.—(A) Any family receiving

tenant-based assistance under subsection (o) may receive such assistance to rent an eligible dwelling unit if the dwelling unit to

which the family moves is within any area in which a program is

being administered under this section.

(B)(i) Notwithstanding subparagraph (A) and subject to any exceptions established under clause (ii) of this subparagraph, a public

housing agency may require that any family not living within the

jurisdiction of the public housing agency at the time the family applies for assistance from the agency shall, during the 12-month period beginning on the date of initial receipt of housing assistance

made available on behalf of the family from such agency, lease and

occupy an eligible dwelling unit located within the jurisdiction

served by the agency.

(ii) The Secretary may establish such exceptions to the authority of public housing agencies established under clause (i).

(2) The public housing agency having authority with respect to

the dwelling unit to which a family moves under this subsection

shall have the responsibility of carrying out the provisions of this

subsection with respect to the family.

(3) In providing assistance under subsection (o) for any fiscal

year, the Secretary shall give consideration to any reduction in the

number of resident families incurred by a public housing agency in

the preceding fiscal year as a result of the provisions of this subsection. The Secretary shall establish procedures for the compensation of public housing agencies that issue vouchers to families that

move into or out of the jurisdiction of the public housing agency

under portability procedures. The Secretary may reserve amounts

available for assistance under subsection (o) to compensate those

public housing agencies.

(4) The provisions of this subsection may not be construed to

restrict any authority of the Secretary under any other provision

of law to provide for the portability of assistance under this section.

(5) LEASE VIOLATIONS.—A family may not receive a voucher

from a public housing agency and move to another jurisdiction

under the tenant-based assistance program if the family has moved

out of the assisted dwelling unit of the family in violation of a

lease.
189 Sec. 8 UNITED STATES HOUSING ACT OF 1937

(s) In selecting families for the provision of assistance under

this section (including subsection (o)), a public housing agency may

not exclude or penalize a family solely because the family resides

in a public housing project.

(t) ENHANCED VOUCHERS.— (1) IN GENERAL.—Enhanced voucher assistance under this

subsection for a family shall be voucher assistance under subsection (o), except that under such enhanced voucher

assistance—

(A) subject only to subparagraph (D), the assisted family shall pay as rent no less than the amount the family

was paying on the date of the eligibility event for the

project in which the family was residing on such date;

(B) the assisted family may elect to remain in the

same project in which the family was residing on the date

of the eligibility event for the project, and if, during any

period the family makes such an election and continues to

so reside, the rent for the dwelling unit of the family in

such project exceeds the applicable payment standard established pursuant to subsection (o) for the unit, the

amount of rental assistance provided on behalf of the family shall be determined using a payment standard that is

equal to the rent for the dwelling unit (as such rent may

be increased from time-to-time), subject to paragraph

(10)(A) of subsection (o) and any other reasonable limit

prescribed by the Secretary, except that a limit shall not

be considered reasonable for purposes of this subparagraph

if it adversely affects such assisted families;

(C) subparagraph (B) of this paragraph shall not apply

and the payment standard for the dwelling unit occupied

by the family shall be determined in accordance with subsection (o) if—

(i) the assisted family moves, at any time, from

such project; or

(ii) the voucher is made available for use by any

family other than the original family on behalf of

whom the voucher was provided; and

(D) if the income of the assisted family declines to a

significant extent, the percentage of income paid by the

family for rent shall not exceed the greater of 30 percent

or the percentage of income paid at the time of the eligibility event for the project.

(2) ELIGIBILITY EVENT.—For purposes of this subsection,

the term ‘‘eligibility event’’ means, with respect to a multifamily housing project, the prepayment of the mortgage on

such housing project, the voluntary termination of the insurance contract for the mortgage for such housing project (including any such mortgage prepayment during fiscal year 1996 or

a fiscal year thereafter or any insurance contract voluntary termination during fiscal year 1996 or a fiscal year thereafter),

the termination or expiration of the contract for rental assistance under section 8 of the United States Housing Act of 1937

for such housing project (including any such termination or expiration during fiscal years after fiscal year 1994 prior to the
Sec. 8 UNITED STATES HOUSING ACT OF 1937 190

effective date of the Departments of Veterans Affairs and

Housing and Urban Development, and Independent Agencies

Appropriations Act, 2001), or the transaction under which the

project is preserved as affordable housing, that, under paragraphs (3) and (4) of section 515(c), section 524(d) of the Multifamily Assisted Housing Reform and Affordability Act of 1997

(42 U.S.C. 1437f note), section 223(f ) of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12

U.S.C. 4113(f )), or section 201(p) of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1715z–

1a(p)), results in tenants in such housing project being eligible

for enhanced voucher assistance under this subsection.

(3) TREATMENT OF ENHANCED VOUCHERS PROVIDED UNDER

OTHER AUTHORITY.— (A) IN GENERAL.—Notwithstanding any other provision

of law, any enhanced voucher assistance provided under

any authority specified in subparagraph (B) shall (regardless of the date that the amounts for providing such assistance were made available) be treated, and subject to the

same requirements, as enhanced voucher assistance under

this subsection.

(B) IDENTIFICATION OF OTHER AUTHORITY.—The authority specified in this subparagraph is the authority

under—

(i) the 10th, 11th, and 12th provisos under the

‘‘Preserving Existing Housing Investment’’ account in

title II of the Departments of Veterans Affairs and

Housing and Urban Development, and Independent

Agencies Appropriations Act, 1997 (Public Law 104–

204; 110 Stat. 2884), pursuant to such provisos, the

first proviso under the ‘‘Housing Certificate Fund’’ account in title II of the Departments of Veterans Affairs

and Housing and Urban Development, and Independent Agencies Appropriations Act, 1998 (Public

Law 105–65; 111 Stat. 1351), or the first proviso under

the ‘‘Housing Certificate Fund’’ account in title II of

the Departments of Veterans Affairs and Housing and

Urban Development, and Independent Agencies Appropriations Act, 1999 (Public Law 105–276; 112 Stat.

2469); and

(ii) paragraphs (3) and (4) of section 515(c) of the

Multifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note), as in effect

before the enactment of this Act.

(4) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for each of fiscal years 2000, 2001,

2002, 2003, and 2004 such sums as may be necessary for enhanced voucher assistance under this subsection.

(u) In the case of low-income families living in rental projects

rehabilitated under section 17 of this Act or section 533 of the

Housing Act of 1949 before rehabilitation—

(1) vouchers under this section shall be made for families

who are required to move out of their units because of the

physical rehabilitation activities or because of overcrowding;
191 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1So in law. There should probably be a comma.

(2) at the discretion of each public housing agency or other

agency administering the allocation of assistance 1 vouchers

under this section may be made for families who would have

to pay more than 30 percent of their adjusted income for rent

after rehabilitation whether they choose to remain in, or to

move from, the project; and

(3) the Secretary shall allocate assistance for vouchers

under this section to ensure that sufficient resources are available to address the physical or economic displacement, or potential economic displacement, of existing tenants pursuant to

paragraphs (1) and (2).

(v) The Secretary may extend expiring contracts entered into

under this section for project-based loan management assistance to

the extent necessary to prevent displacement of low-income families receiving such assistance as of September 30, 1996.

ø(w) [Repealed.]¿

(x) FAMILY UNIFICATION.—

(1) INCREASE IN BUDGET AUTHORITY.—The budget authority available under section 5(c) for assistance under section

8(b) is authorized to be increased by $100,000,000 on or after

October 1, 1992, and by $104,200,000 on or after October 1,

1993.

(2) USE OF FUNDS.—The amounts made available under

this subsection shall be used only in connection with tenantbased assistance under section 8 on behalf of (A) any family (i)

who is otherwise eligible for such assistance, and (ii) who the

public child welfare agency for the jurisdiction has certified is

a family for whom the lack of adequate housing is a primary

factor in the imminent placement of the family’s child or children in out-of-home care or the delayed discharge of a child or

children to the family from out-of-home care and (B) for a period not to exceed 18 months, otherwise eligible youths who

have attained at least 18 years of age and not more than 21

years of age and who have left foster care at age 16 or older.

(3) ALLOCATION.—The amounts made available under this

subsection shall be allocated by the Secretary through a national competition among applicants based on demonstrated

need for assistance under this subsection. To be considered for

assistance, an applicant shall submit to the Secretary a written proposal containing a report from the public child welfare

agency serving the jurisdiction of the applicant that describes

how a lack of adequate housing in the jurisdiction is resulting

in the initial or prolonged separation of children from their

families, and how the applicant will coordinate with the public

child welfare agency to identify eligible families and provide

the families with assistance under this subsection.

(4) DEFINITIONS.—For purposes of this subsection:

(A) APPLICANT.—The term ‘‘applicant’’ means a public

housing agency or any other agency responsible for administering assistance under section 8.

(B) PUBLIC CHILD WELFARE AGENCY.—The term ‘‘public

child welfare agency’’ means the public agency responsible
Sec. 8 UNITED STATES HOUSING ACT OF 1937 192

under applicable State law for determining that a child is

at imminent risk of placement in out-of-home care or that

a child in out-of-home care under the supervision of the

public agency may be returned to his or her family.

(y) HOMEOWNERSHIP OPTION.— (1) USE OF ASSISTANCE FOR HOMEOWNERSHIP.—A public

housing agency providing tenant-based assistance on behalf of

an eligible family under this section may provide assistance for

an eligible family that purchases a dwelling unit (including a

unit under a lease-purchase agreement) that will be owned by

1 or more members of the family, and will be occupied by the

family, if the family—

(A) is a first-time homeowner, or owns or is acquiring

shares in a cooperative;

(B) demonstrates that the family has income from employment or other sources (other than public assistance,

except that the Secretary may provide for the consideration of public assistance in the case of an elderly family

or a disabled family), as determined in accordance with requirements of the Secretary, that is not less than twice the

payment standard established by the public housing agency (or such other amount as may be established by the

Secretary);

(C) except as provided by the Secretary, demonstrates

at the time the family initially receives tenant-based assistance under this subsection that one or more adult

members of the family have achieved employment for the

period as the Secretary shall require;

(D) participates in a homeownership and housing

counseling program provided by the agency; and

(E) meets any other initial or continuing requirements

established by the public housing agency in accordance

with requirements established by the Secretary.

(2) DETERMINATION OF AMOUNT OF ASSISTANCE.—

(A) MONTHLY EXPENSES NOT EXCEEDING PAYMENT

STANDARD.—If the monthly homeownership expenses, as

determined in accordance with requirements established

by the Secretary, do not exceed the payment standard, the

monthly assistance payment shall be the amount by which

the homeownership expenses exceed the highest of the following amounts, rounded to the nearest dollar:

(i) 30 percent of the monthly adjusted income of

the family.

(ii) 10 percent of the monthly income of the family.

(iii) If the family is receiving payments for welfare

assistance from a public agency, and a portion of those

payments, adjusted in accordance with the actual

housing costs of the family, is specifically designated

by that agency to meet the housing costs of the family,

the portion of those payments that is so designated.

(B) MONTHLY EXPENSES EXCEED PAYMENT STANDARD.—

If the monthly homeownership expenses, as determined in

accordance with requirements established by the Sec-
193 Sec. 8 UNITED STATES HOUSING ACT OF 1937

retary, exceed the payment standard, the monthly assistance payment shall be the amount by which the applicable

payment standard exceeds the highest of the amounts

under clauses (i), (ii), and (iii) of subparagraph (A).

(3) INSPECTIONS AND CONTRACT CONDITIONS.—

(A) IN GENERAL.—Each contract for the purchase of a

unit to be assisted under this section shall—

(i) provide for pre-purchase inspection of the unit

by an independent professional; and

(ii) require that any cost of necessary repairs be

paid by the seller.

(B) ANNUAL INSPECTIONS NOT REQUIRED.—The requirement under subsection (o)(8)(A)(ii) for annual inspections

shall not apply to units assisted under this section.

(4) OTHER AUTHORITY OF THE SECRETARY.—The Secretary

may—

(A) limit the term of assistance for a family assisted

under this subsection; and

(B) modify the requirements of this subsection as the

Secretary determines to be necessary to make appropriate

adaptations for lease-purchase agreements.

(5) INAPPLICABILITY OF CERTAIN PROVISIONS.—Assistance

under this subsection shall not be subject to the requirements

of the following provisions:

(A) Subsection (c)(3)(B) of this section.

(B) Subsection (d)(1)(B)(i) of this section.

(C) Any other provisions of this section governing

maximum amounts payable to owners and amounts payable by assisted families.

(D) Any other provisions of this section concerning

contracts between public housing agencies and owners.

(E) Any other provisions of this Act that are inconsistent with the provisions of this subsection.

(6) REVERSION TO RENTAL STATUS.—

(A) FHA-INSURED MORTGAGES.—If a family receiving

assistance under this subsection for occupancy of a dwelling defaults under a mortgage for the dwelling insured by

the Secretary under the National Housing Act, the family

may not continue to receive rental assistance under this

section unless the family (i) transfers to the Secretary

marketable title to the dwelling, (ii) moves from the dwelling within the period established or approved by the Secretary, and (iii) agrees that any amounts the family is required to pay to reimburse the escrow account under section 23(d)(3) may be deducted by the public housing agency

from the assistance payment otherwise payable on behalf

of the family.

(B) OTHER MORTGAGES.—If a family receiving assistance under this subsection defaults under a mortgage not

insured under the National Housing Act, the family may

not continue to receive rental assistance under this section

unless it complies with requirements established by the

Secretary.
Sec. 8 UNITED STATES HOUSING ACT OF 1937 194

(C) ALL MORTGAGES.—A family receiving assistance

under this subsection that defaults under a mortgage may

not receive assistance under this subsection for occupancy

of another dwelling owned by one or more members of the

family.

(7) DOWNPAYMENT ASSISTANCE.—

(A) AUTHORITY.—A public housing agency may, in lieu

of providing monthly assistance payments under this subsection on behalf of a family eligible for such assistance

and at the discretion of the public housing agency, provide

assistance for the family in the form of a single grant to

be used only as a contribution toward the downpayment

required in connection with the purchase of a dwelling for

fiscal year 2000 and each fiscal year thereafter to the extent provided in advance in appropriations Acts.

(B) AMOUNT.—The amount of a downpayment grant on

behalf of an assisted family may not exceed the amount

that is equal to the sum of the assistance payments that

would be made during the first year of assistance on behalf

of the family, based upon the income of the family at the

time the grant is to be made.

(8) DEFINITION OF FIRST-TIME HOMEOWNER.—For purposes

of this subsection, the term ‘‘first-time homeowner’’ means—

(A) a family, no member of which has had a present

ownership interest in a principal residence during the 3

years preceding the date on which the family initially receives assistance for homeownership under this subsection;

and

(B) any other family, as the Secretary may prescribe.

(z) TERMINATION OF SECTION 8 CONTRACTS AND REUSE OF RECAPTURED BUDGET AUTHORITY.—

(1) GENERAL AUTHORITY.—The Secretary may reuse any

budget authority, in whole or part, that is recaptured on account of expiration or termination of a housing assistance payments contract only for one or more of the following:

(A) TENANT-BASED ASSISTANCE.—Pursuant to a contract with a public housing agency, to provide tenantbased assistance under this section to families occupying

units formerly assisted under the terminated contract.

(B) PROJECT-BASED ASSISTANCE.—Pursuant to a contract with an owner, to attach assistance to one or more

structures under this section, for relocation of families occupying units formerly assisted under the terminated contract.

(2) FAMILIES OCCUPYING UNITS FORMERLY ASSISTED UNDER

TERMINATED CONTRACT.—Pursuant to paragraph (1), the Secretary shall first make available tenant- or project-based assistance to families occupying units formerly assisted under

the terminated contract. The Secretary shall provide projectbased assistance in instances only where the use of tenantbased assistance is determined to be infeasible by the Secretary.
195 Sec. 8 UNITED STATES HOUSING ACT OF 1937

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1995, Public Law 103–327, 108 Stat. 2316, approved September 28, 1994, amended this section by adding this subsection. Such Act also provides that

such amendment ‘‘shall be effective only during fiscal year 1995.’’.

(aa) 1 REFINANCING INCENTIVE.—

(1) IN GENERAL.—The Secretary may pay all or a part of

the up front costs of refinancing for each project that—

(A) is constructed, substantially rehabilitated, or moderately rehabilitated under this section;

(B) is subject to an assistance contract under this section; and

(C) was subject to a mortgage that has been refinanced under section 223(a)(7) or section 223(f) of the National Housing Act to lower the periodic debt service payments of the owner.

(2) SHARE FROM REDUCED ASSISTANCE PAYMENTS.—The

Secretary may pay the up front cost of refinancing only—

(A) to the extent that funds accrue to the Secretary

from the reduced assistance payments that results from

the refinancing; and

(B) after the application of amounts in accordance

with section 1012 of the Stewart B. McKinney Homeless

Assistance Amendments Act of 1988.

(bb) TRANSFER, REUSE, AND RESCISSION OF BUDGET AUTHORITY.—

(1) TRANSFER OF BUDGET AUTHORITY.—If an assistance

contract under this section, other than a contract for tenantbased assistance, is terminated or is not renewed, or if the contract expires, the Secretary shall, in order to provide continued

assistance to eligible families, including eligible families receiving the benefit of the project-based assistance at the time of

the termination, transfer any budget authority remaining in

the contract to another contract. The transfer shall be under

such terms as the Secretary may prescribe.

(2) REUSE AND RESCISSION OF CERTAIN RECAPTURED BUDGET AUTHORITY.—Notwithstanding paragraph (1), if a projectbased assistance contract for an eligible multifamily housing

project subject to actions authorized under title I is terminated

or amended as part of restructuring under section 517 of the

Multifamily Assisted Housing Reform and Affordability Act of

1997, the Secretary shall recapture the budget authority not

required for the terminated or amended contract and use such

amounts as are necessary to provide housing assistance for the

same number of families covered by such contract for the remaining term of such contract, under a contract providing for

project-based or tenant-based assistance. The amount of budget

authority saved as a result of the shift to project-based or tenant-based assistance shall be rescinded.

(cc) LAW ENFORCEMENT AND SECURITY PERSONNEL.—

(1) IN GENERAL.—Notwithstanding any other provision of

this Act, in the case of assistance attached to a structure, for

the purpose of increasing security for the residents of a project,

an owner may admit, and assistance under this section may be
Sec. 9 UNITED STATES HOUSING ACT OF 1937 196

1This section was amended to read as shown by section 519(a) of the Quality Housing and

Work Responsibility Act of 1998, title V of Public Law 105–276, approved October 21, 1998. Subsections (e), (f), and (g) of such section 519 provide as follows:

‘‘(e) TRANSITIONAL PROVISION OF ASSISTANCE.— ‘‘(1) IN GENERAL.—Subject to paragraph (2), before the implementation of formulas pursuant to sections 9(d)(2) and 9(e)(2) of the United States Housing Act of 1937 (as amended

by subsection (a) of this section), the Secretary shall provide that each public housing agency shall receive funding under sections 9 and 14 of the United States Housing Act of 1937,

as those sections existed immediately before the enactment of this Act (except that such sections shall be subject to any amendments to such sections that may be contained in title

II of this Act).

‘‘(2) QUALIFICATIONS.—Before the implementation of formulas pursuant to sections 9(d)(2)

and 9(e)(2) of the United States Housing Act of 1937 (as amended by subsection (a) of this

section)—

‘‘(A) if a public housing agency establishes a rental amount that is based on a ceiling

rent established pursuant to subsection (d)(1) of this section, the Secretary shall take

into account any reduction of the per unit dwelling rental income of the public housing

agency resulting from the use of that rental amount in calculating the contributions for

the public housing agency for the operation of the public housing under section 9 of the

United States Housing Act of 1937;

‘‘(B) if a public housing agency establishes a rental amount that is based on an adjustment to income under section 3(b)(5)(G) of the United States Housing Act of 1937

(as in effect immediately before the enactment of this Act), the Secretary shall not take

into account any reduction of or any increase in the per unit dwelling rental income

of the public housing agency resulting from the use of that rental amount in calculating

the contributions for the public housing agency for the operation of the public housing

under section 9 of the United States Housing Act of 1937; and

‘‘(C) if a public housing agency establishes a rental amount other than as provided

under subparagraph (A) or (B) that is less than the greatest of the amounts determined

under subparagraphs (A), (B), and (C) of section 3(a)(1) of the United States Housing

Act of 1937, the Secretary shall not take into account any reduction of the per unit

dwelling rental income of the public housing agency resulting from the use of that rental amount in calculating the contributions for the public housing agency for the operation of the public housing under section 9 of the United States Housing Act of 1937.

provided to, police officers and other security personnel who

are not otherwise eligible for assistance under the Act.

(2) RENT REQUIREMENTS.—With respect to any assistance

provided by an owner under this subsection, the Secretary

may—

(A) permit the owner to establish such rent requirements and other terms and conditions of occupancy that

the Secretary considers to be appropriate; and

(B) require the owner to submit an application for

those rent requirements, which application shall include

such information as the Secretary, in the discretion of the

Secretary, determines to be necessary.

(3) APPLICABILITY.—This subsection shall apply to fiscal

year 1999 and fiscal years thereafter.

(dd) TENANT-BASED CONTRACT RENEWALS.—Subject to amounts

provided in appropriation Acts, starting in fiscal year 1999, the

Secretary shall renew all expiring tenant-based annual contribution contracts under this section by applying an inflation factor

based on local or regional factors to an allocation baseline. The allocation baseline shall be calculated by including, at a minimum,

amounts sufficient to ensure continued assistance for the actual

number of families assisted as of October 1, 1997, with appropriate

upward adjustments for incremental assistance and additional families authorized subsequent to that date.

SEC. 9. 1 ø42 U.S.C. 1437g¿ PUBLIC HOUSING CAPITAL AND OPERATING

FUNDS.

(a) MERGER INTO CAPITAL FUND.—Except as otherwise provided in the Quality Housing and Work Responsibility Act of 1998,
197 Sec. 9 UNITED STATES HOUSING ACT OF 1937

‘‘(f) EFFECTIVE DATE OF OPERATING FORMULA.—Notwithstanding the effective date under section 503(a), the Secretary may extend the effective date of the formula under section 9(e)(2) of

the United States Housing Act of 1937 (as amended by subsection (a) of this section) for up to

6 months if such additional time is necessary to implement such formula.

‘‘(g) EFFECTIVE DATE.—Subsections (d), (e), and (f) shall take effect upon the date of the enactment of this Act.’’.

The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

Section 210 of title II of Public Law 105–276 contained amendments to section 9 of the United

States Housing Act of 1937.

any assistance made available for public housing under section 14

of this Act before October 1, 1999, shall be merged into the Capital

Fund established under subsection (d).

(b) MERGER INTO OPERATING FUND.—Except as otherwise provided in the Quality Housing and Work Responsibility Act of 1998,

any assistance made available for public housing under section 9

of this Act before October 1, 1999, shall be merged into the Operating Fund established under subsection (e).

(c) ALLOCATION AMOUNT.—

(1) IN GENERAL.—For fiscal year 2000 and each fiscal year

thereafter, the Secretary shall allocate amounts in the Capital

Fund and Operating Funds for assistance for public housing

agencies eligible for such assistance. The Secretary shall determine the amount of the allocation for each eligible agency,

which shall be, for any fiscal year beginning after the effective

date of the formulas described in subsections (d)(2) and (e)(2)—

(A) for assistance from the Capital Fund, the amount

determined for the agency under the formula under subsection (d)(2); and

(B) for assistance from the Operating Fund, the

amount determined for the agency under the formula

under subsection (e)(2).

(2) FUNDING.—There are authorized to be appropriated for

assistance for public housing agencies under this section the

following amounts:

(A) CAPITAL FUND.—For allocations of assistance from

the Capital Fund, $3,000,000,000 for fiscal year 1999, and

such sums as may be necessary for fiscal years 2000, 2001,

2002, and 2003.

(B) OPERATING FUND.—For allocations of assistance

from the Operating Fund, $2,900,000,000 for fiscal year

1999, and such sums as may be necessary for each of fiscal

years 2000, 2001, 2002, and 2003.

(d) CAPITAL FUND.—

(1) IN GENERAL.—The Secretary shall establish a Capital

Fund for the purpose of making assistance available to public

housing agencies to carry out capital and management activities, including—

(A) the development, financing, and modernization of

public housing projects, including the redesign, reconstruction, and reconfiguration of public housing sites and buildings (including accessibility improvements) and the development of mixed-finance projects;

(B) vacancy reduction;
Sec. 9 UNITED STATES HOUSING ACT OF 1937 198

(C) addressing deferred maintenance needs and the replacement of obsolete utility systems and dwelling equipment;

(D) planned code compliance;

(E) management improvements, including the establishment and initial operation of computer centers in and

around public housing through a Neighborhood Networks

initiative, for the purpose of enhancing the self-sufficiency,

employability, and economic self-reliance of public housing

residents by providing them with onsite computer access

and training resources;

(F) demolition and replacement;

(G) resident relocation;

(H) capital expenditures to facilitate programs to improve the empowerment and economic self-sufficiency of

public housing residents and to improve resident participation;

(I) capital expenditures to improve the security and

safety of residents; and

(J) homeownership activities, including programs

under section 32.

(2) FORMULA.—The Secretary shall develop a formula for

determining the amount of assistance provided to public housing agencies from the Capital Fund for a fiscal year, which

shall include a mechanism to reward performance. The formula

may take into account such factors as—

(A) the number of public housing dwelling units

owned, assisted, or operated by the public housing agency,

the characteristics and locations of the projects, and the

characteristics of the families served and to be served (including the incomes of the families);

(B) the need of the public housing agency to carry out

rehabilitation and modernization activities, replacement

housing, and reconstruction, construction, and demolition

activities related to public housing dwelling units owned,

assisted, or operated by the public housing agency, including backlog and projected future needs of the agency;

(C) the cost of constructing and rehabilitating property

in the area;

(D) the need of the public housing agency to carry out

activities that provide a safe and secure environment in

public housing units owned, assisted, or operated by the

public housing agency;

(E) any record by the public housing agency of exemplary performance in the operation of public housing, as

indicated by the system of performance indicators established pursuant to section 6( j); and

(F) any other factors that the Secretary determines to

be appropriate.

(3) CONDITIONS ON USE FOR DEVELOPMENT AND MODERNIZATION.—

(A) DEVELOPMENT.—Except as otherwise provided in

this Act, any public housing developed using amounts provided under this subsection, or under section 14 as in ef-
199 Sec. 9 UNITED STATES HOUSING ACT OF 1937

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

fect before the effective date under section 503(a) of the

Quality Housing and Work Responsibility Act of 1998 1,

shall be operated under the terms and conditions applicable to public housing during the 40-year period that begins

on the date on which the project (or stage of the project)

becomes available for occupancy.

(B) MODERNIZATION.—Except as otherwise provided in

this Act, any public housing or portion thereof that is modernized using amounts provided under this subsection or

under section 14 (as in effect before the effective date

under section 503(a) of the Quality Housing and Work Responsibility Act of 1998 1) shall be maintained and operated under the terms and conditions applicable to public

housing during the 20-year period that begins on the latest

date on which modernization is completed.

(C) APPLICABILITY OF LATEST EXPIRATION DATE.—Public housing subject to this paragraph or to any other provision of law mandating the operation of the housing as public housing or under the terms and conditions applicable to

public housing for a specified length of time, shall be maintained and operated as required until the latest such expiration date.

(e) OPERATING FUND.—

(1) IN GENERAL.—The Secretary shall establish an Operating Fund for the purpose of making assistance available to

public housing agencies for the operation and management of

public housing, including—

(A) procedures and systems to maintain and ensure

the efficient management and operation of public housing

units (including amounts sufficient to pay for the reasonable costs of review by an independent auditor of the documentation or other information maintained pursuant to

section 6( j)(6) by a public housing agency or resident management corporation to substantiate the performance of

that agency or corporation);

(B) activities to ensure a program of routine preventative maintenance;

(C) anticrime and antidrug activities, including the

costs of providing adequate security for public housing

residents, including above-baseline police service agreements;

(D) activities related to the provision of services, including service coordinators for elderly persons or persons

with disabilities;

(E) activities to provide for management and participation in the management and policy making of public

housing by public housing residents;

(F) the costs of insurance;

(G) the energy costs associated with public housing

units, with an emphasis on energy conservation;
Sec. 9 UNITED STATES HOUSING ACT OF 1937 200

(H) the costs of administering a public housing work

program under section 12, including the costs of any related insurance needs;

(I) the costs of repaying, together with rent contributions, debt incurred to finance the rehabilitation and development of public housing units, which shall be subject to

such reasonable requirements as the Secretary may establish;

(J) the costs associated with the operation and management of mixed finance projects, to the extent appropriate; and

(K) the costs of operating computer centers in public

housing through a Neighborhood Networks initiative described in subsection (d)(1)(E), and of activities related to

that initiative.

(2) FORMULA.— (A) IN GENERAL.—The Secretary shall establish a formula for determining the amount of assistance provided to

public housing agencies from the Operating Fund for a fiscal year. The formula may take into account—

(i) standards for the costs of operating and reasonable projections of income, taking into account the

characteristics and locations of the public housing

projects and characteristics of the families served and

to be served (including the incomes of the families), or

the costs of providing comparable services as determined in accordance with criteria or a formula representing the operations of a prototype well-managed

public housing project;

(ii) the number of public housing dwelling units

owned, assisted, or operated by the public housing

agency;

(iii) the number of public housing dwelling units

owned, assisted, or operated by the public housing

agency that are chronically vacant and the amount of

assistance appropriate for those units;

(iv) to the extent quantifiable, the extent to which

the public housing agency provides programs and activities designed to promote the economic self-sufficiency and management skills of public housing residents;

(v) the need of the public housing agency to carry

out anti-crime and anti-drug activities, including providing adequate security for public housing residents;

(vi) the amount of public housing rental income

foregone by the public housing agency as a result of

escrow savings accounts under section 23(d)(2) for

families participating in a family self-sufficiency program of the agency under such section 23; and

(vii) any other factors that the Secretary determines to

be appropriate.

(B) INCENTIVE TO INCREASE CERTAIN RENTAL IN- COME.—The formula shall provide an incentive to encourage public housing agencies to facilitate increases in
201 Sec. 9 UNITED STATES HOUSING ACT OF 1937

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date. 2October 21, 1998.

earned income by families in occupancy. Any such incentive shall provide that the agency shall benefit from increases in such rental income and that such amounts accruing to the agency pursuant to such benefit may be used

only for low-income housing or to benefit the residents of

the public housing agency.

(C) TREATMENT OF SAVINGS.—The treatment of utility

and waste management costs under the formula shall provide that a public housing agency shall receive the full financial benefit from any reduction in the cost of utilities

or waste management resulting from any contract with a

third party to undertake energy conservation improvements in one or more of its public housing projects.

(3) CONDITION ON USE.—No portion of any public housing

project operated using amounts provided under this subsection,

or under this section as in effect before the effective date under

section 503(a) of the Quality Housing and Work Responsibility

Act of 1998 1, may be disposed of before the expiration of the

10-year period beginning upon the conclusion of the fiscal year

for which such amounts were provided, except as otherwise

provided in this Act.

(f ) NEGOTIATED RULEMAKING PROCEDURE.—The formulas

under subsections (d)(2) and (e)(2) shall be developed according to

procedures for issuance of regulations under the negotiated rulemaking procedure under subchapter III of chapter 5 of title 5,

United States Code.

(g) LIMITATIONS ON USE OF FUNDS.—

(1) FLEXIBILITY FOR CAPITAL FUND AMOUNTS.—Of any

amounts appropriated for fiscal year 2000 or any fiscal year

thereafter that are allocated for fiscal year 2000 or any fiscal

year thereafter from the Capital Fund for any public housing

agency, the agency may use not more than 20 percent for activities that are eligible under subsection (e) for assistance

with amounts from the Operating Fund, but only if the public

housing agency plan for the agency provides for such use.

(2) FULL FLEXIBILITY FOR SMALL PHA’S.—Of any amounts

allocated for any fiscal year for any public housing agency that

owns or operates less than 250 public housing dwelling units,

is not designated pursuant to section 6( j)(2) as a troubled public housing agency, and (in the determination of the Secretary)

is operating and maintaining its public housing in a safe,

clean, and healthy condition, the agency may use any such

amounts for any eligible activities under subsections (d)(1) and

(e)(1), regardless of the fund from which the amounts were allocated and provided. This subsection shall take effect on the

date of the enactment of the Quality Housing and Work Responsibility Act of 1998 2.

(3) LIMITATION ON NEW CONSTRUCTION.— (A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), a public housing agency may not use
Sec. 9 UNITED STATES HOUSING ACT OF 1937 202

any of the amounts allocated for the agency from the Capital Fund or Operating Fund for the purpose of constructing any public housing unit, if such construction

would result in a net increase from the number of public

housing units owned, assisted, or operated by the public

housing agency on October 1, 1999, including any public

housing units demolished as part of any revitalization effort.

(B) EXCEPTION REGARDING USE OF ASSISTANCE.—A

public housing agency may use amounts allocated for the

agency from the Capital Fund or Operating Fund for the

construction and operation of housing units that are available and affordable to low-income families in excess of the

limitations on new construction set forth in subparagraph

(A), but the formulas established under subsections (d)(2)

and (e)(2) shall not provide additional funding for the specific purpose of allowing construction and operation of

housing in excess of those limitations (except to the extent

provided in subparagraph (C)).

(C) EXCEPTION REGARDING FORMULAS.—Subject to reasonable limitations set by the Secretary, the formulas established under subsections (d)(2) and (e)(2) may provide

additional funding for the operation and modernization

costs (but not the initial development costs) of housing in

excess of amounts otherwise permitted under this paragraph, and such amounts may be so used, if—

(i) such units are part of a mixed-finance project

or otherwise leverage significant additional private or

public investment; and

(ii) the estimated cost of the useful life of the

project is less than the estimated cost of providing tenant-based assistance under section 8(o) for the same

period of time.

(h) TECHNICAL ASSISTANCE.—To the extent amounts are provided in advance in appropriations Acts, the Secretary may make

grants or enter into contracts or cooperative agreements in accordance with this subsection for purposes of providing, either directly

or indirectly—

(1) technical assistance to public housing agencies, resident councils, resident organizations, and resident management corporations, including assistance relating to monitoring

and inspections;

(2) training for public housing agency employees and residents;

(3) data collection and analysis;

(4) training, technical assistance, and education to public

housing agencies that are—

(A) at risk of being designated as troubled under section 6( j), to assist such agencies from being so designated;

and

(B) designated as troubled under section 6( j), to assist

such agencies in achieving the removal of that designation;

(5) contract expertise;
203 Sec. 9 UNITED STATES HOUSING ACT OF 1937

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2002, Pub. L. 107–703, 115 Stat. 660, provides ‘‘[t]hat,

hereafter, notwithstanding any other provision of law or any failure of the Secretary of Housing

and Urban Development to issue regulations to carry out section 9(j) of the United States Housing Act of 1937 (42 U.S.C. 1437g(j)), such section is deemed to have taken effect on October 1,

1998, and, except as otherwise provided in this heading, shall apply to all assistance made available under this same heading on or after such date’’.

(6) training and technical assistance to assist in the oversight and management of public housing or tenant-based assistance;

(7) clearinghouse services in furtherance of the goals and

activities of this subsection; and

(8) assistance in connection with the establishment and operation of computer centers in public housing through a Neighborhood Networks initiative described in subsection (d)(1)(E).

As used in this subsection, the terms ‘‘training’’ and ‘‘technical assistance’’ shall include training or technical assistance and the cost

of necessary travel for participants in such training or technical assistance, by or to officials and employees of the Department and of

public housing agencies, and to residents and to other eligible

grantees.

(i) ELIGIBILITY OF UNITS ACQUIRED FROM PROCEEDS OF SALES

UNDER DEMOLITION OR DISPOSITION PLAN.—If a public housing

agency uses proceeds from the sale of units under a homeownership program in accordance with section 32 to acquire additional

units to be sold to low-income families, the additional units shall

be counted as public housing for purposes of determining the

amount of the allocation to the agency under this section until sale

by the agency, but in no case longer than 5 years.

( j) PENALTY FOR SLOW EXPENDITURE OF CAPITAL FUNDS.— 1

(1) OBLIGATION OF AMOUNTS.—Except as provided in paragraph (4) and subject to paragraph (2), a public housing agency

shall obligate any assistance received under this section not

later than 24 months after, as applicable—

(A) the date on which the funds become available to

the agency for obligation in the case of modernization; or

(B) the date on which the agency accumulates adequate funds to undertake modernization, substantial rehabilitation, or new construction of units.

(2) EXTENSION OF TIME PERIOD FOR OBLIGATION.—The

Secretary—

(A) may, extend the time period under paragraph (1)

for a public housing agency, for such period as the Secretary determines to be necessary, if the Secretary determines that the failure of the agency to obligate assistance

in a timely manner is attributable to—

(i) litigation;

(ii) obtaining approvals of the Federal Government or a State or local government;

(iii) complying with environmental assessment

and abatement requirements;

(iv) relocating residents;

(v) an event beyond the control of the public housing agency; or
Sec. 9 UNITED STATES HOUSING ACT OF 1937 204

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

(vi) any other reason established by the Secretary

by notice published in the Federal Register;

(B) shall disregard the requirements of paragraph (1)

with respect to any unobligated amounts made available to

a public housing agency, to the extent that the total of

such amounts does not exceed 10 percent of the original

amount made available to the public housing agency; and

(C) may, with the prior approval of the Secretary, extend the time period under paragraph (1), for an additional

period not to exceed 12 months, based on—

(i) the size of the public housing agency;

(ii) the complexity of capital program of the public

housing agency;

(iii) any limitation on the ability of the public

housing agency to obligate the amounts allocated for

the agency from the Capital Fund in a timely manner

as a result of State or local law; or

(iv) such other factors as the Secretary determines

to be relevant.

(3) EFFECT OF FAILURE TO COMPLY.— (A) PROHIBITION OF NEW ASSISTANCE.—A public housing agency shall not be awarded assistance under this section for any month during any fiscal year in which the

public housing agency has funds unobligated in violation of

paragraph (1) or (2).

(B) WITHHOLDING OF ASSISTANCE.—During any fiscal

year described in subparagraph (A), the Secretary shall

withhold all assistance that would otherwise be provided

to the public housing agency. If the public housing agency

cures its failure to comply during the year, it shall be provided with the share attributable to the months remaining

in the year.

(C) REDISTRIBUTION.—The total amount of any funds

not provided public housing agencies by operation of this

paragraph shall be allocated for agencies determined

under section 6( j) to be high-performing.

(4) EXCEPTION TO OBLIGATION REQUIREMENTS.— (A) IN GENERAL.—Subject to subparagraph (B), if the

Secretary has consented, before the effective date under

section 503(a) of the Quality Housing and Work Responsibility Act of 1998 1, to an obligation period for any agency

longer than provided under paragraph (1), a public housing agency that obligates its funds before the expiration of

that period shall not be considered to be in violation of

paragraph (1).

(B) PRIOR FISCAL YEARS.—Notwithstanding subparagraph (A), any funds appropriated to a public housing

agency for fiscal year 1997 or prior fiscal years shall be

fully obligated by the public housing agency not later than

September 30, 1999.

(5) EXPENDITURE OF AMOUNTS.—
205 Sec. 9 UNITED STATES HOUSING ACT OF 1937

1So in law. Probably should be designated as subparagraph (B).

(A) IN GENERAL.—A public housing agency shall spend

any assistance received under this section not later than

4 years (plus the period of any extension approved by the

Secretary under paragraph (2)) after the date on which

funds become available to the agency for obligation.

(B) ENFORCEMENT.—The Secretary shall enforce the

requirement of subparagraph (A) through default remedies

up to and including withdrawal of the funding.

(6) RIGHT OF RECAPTURE.—Any obligation entered into by

a public housing agency shall be subject to the right of the Secretary to recapture the obligated amounts for violation by the

public housing agency of the requirements of this subsection.

(k) EMERGENCY RESERVE AND USE OF AMOUNTS.— (1) SET-ASIDES.—In each fiscal year after fiscal year 1999,

the Secretary shall set aside, for use in accordance with this

subsection, not more than 2 percent of the total amount made

available to carry out this section for such fiscal year. In addition to amounts set aside under the preceding sentence, in

each fiscal year the Secretary may set from the total amount

made available to carry out this section for such fiscal year not

more than $20,000,000 for the Operation Safe Home program

administered by the Office of the Inspector General of the Department of Housing and Urban Development, for law enforcement efforts to combat violent crime on or near the premises

of public and federally assisted housing.

(2) USE OF FUNDS.—Amounts set aside under paragraph

(1) shall be available to the Secretary for use for assistance, as

provided in paragraph (3), in connection with—

(A) emergencies and other disasters; and

(C) 1 housing needs resulting from any settlement of

litigation; and

(3) ELIGIBLE USES.—In carrying out this subsection, the

Secretary may use amounts set aside under this subsection to

provide—

(A) assistance for any eligible use under the Operating

Fund or the Capital Fund established by this section; or

(B) tenant-based assistance in accordance with

section 8.

(4) LIMITATION.—With respect to any fiscal year, the Sec- retary may carry over not more than a total of $25,000,000 in

unobligated amounts set aside under this subsection for use in

connection with the activities described in paragraph (2) during the succeeding fiscal year.

(5) PUBLICATION.—The Secretary shall publish the use of

any amounts allocated under this subsection relating to emergencies (other than disasters and housing needs resulting from

any settlement of litigation) in the Federal Register.

(l) TREATMENT OF NONRENTAL INCOME.—A public housing

agency that receives income from nonrental sources (as determined

by the Secretary) may retain and use such amounts without any

decrease in the amounts received under this section from the Capital or Operating Fund. Any such nonrental amounts retained shall
Sec. 9 UNITED STATES HOUSING ACT OF 1937 206

1 But see section 226 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999, Public Law 105–276, set forth, post,

in this part of this compilation. 2Probably should refer to the date of the enactment of the Quality Housing and Work Responsibility Act of 1998 (which was October 21, 1998) rather than ‘‘the date of the enactment of this

Act’’.

be used only for low-income housing or to benefit the residents assisted by the public housing agency.

(m) PROVISION OF ONLY CAPITAL OR OPERATING ASSISTANCE.—

(1) AUTHORITY.—In appropriate circumstances, as determined by the Secretary, a public housing agency may commit

capital assistance only, or operating assistance only, for public

housing units, which assistance shall be subject to all of the requirements applicable to public housing except as otherwise

provided in this subsection.

(2) EXEMPTIONS.—In the case of any public housing unit

assisted pursuant to the authority under paragraph (1), the

Secretary may, by regulation, reduce the period under subsection (d)(3) or (e)(3), as applicable, during which such units

must be operated under requirements applicable to public

housing. In cases in which there is commitment of operating

assistance but no commitment of capital assistance, the Secretary may make section 8 requirements applicable, as appropriate, by regulation.

(n) TREATMENT OF PUBLIC HOUSING.—

(1) CERTAIN STATE AND CITY FUNDED HOUSING.— 1

(A) IN GENERAL.—Notwithstanding any other provision

of this section—

(i) for purposes of determining the allocations

from the Operating and Capital Funds pursuant to the

formulas under subsections (d)(2) and (e)(2) and determining assistance pursuant to section 519(e) of the

Quality Housing and Work Responsibility Act of 1998

and under section 9 or 14 of the United States Housing Act of 1937 (as in effect before the date of the enactment of this Act 2), for any period before the implementation of such formulas, the Secretary shall deem

any covered locally developed public housing units as

public housing units developed under this title and

such units shall be eligible for such assistance; and

(ii) assistance provided under this section, under

such section 518(d)(3), or under such section 9 or 14

to any public housing agency may be used with respect

to any covered locally developed public housing units.

(B) COVERED UNITS.—For purposes of this paragraph,

the term ‘covered locally developed public housing units’

means—

(i) not more than 7,000 public housing units developed pursuant to laws of the State of New York and

that received debt service and operating subsidies pursuant to such laws; and

(ii) not more than 5,000 dwelling units developed

pursuant to section 34 of chapter 121B of the General

Laws of the State of Massachusetts.
207 Sec. 11 UNITED STATES HOUSING ACT OF 1937

(2) REDUCTION OF ASTHMA INCIDENCE.—Notwithstanding

any other provision of this section, the New York City Housing

Authority may, in its sole discretion, from amounts provided

from the Operating and Capital Funds, or from amounts provided for public housing before amounts are made available

from such Funds, use not more than exceeding $500,000 per

year for the purpose of initiating, expanding or continuing a

program for the reduction of the incidence of asthma among

residents. The Secretary shall consult with the Administrator

of the Environmental Protection Agency and the Secretary of

Health and Human Services to identify and consider sources of

funding for the reduction of the incidence of asthma among recipients of assistance under this title.

(3) SERVICES FOR ELDERLY RESIDENTS.—Notwithstanding

any other provision of this section, the New York City Housing

Authority may, in its sole discretion, from amounts provided

from the Operating and Capital Funds, or from amounts provided for public housing before the amounts are made available

from such Funds, use not more than $600,000 per year for the

purpose of developing a comprehensive plan to address the

need for services for elderly residents. Such plan may be developed by a partnership created by such Housing Authority and

may include the creation of a model project for assisted living

at one or more developments. The model project may provide

for contracting with private parties for the delivery of services.

(4) EFFECTIVE DATE.—This subsection shall apply to fiscal

year 1999 and each fiscal year thereafter.

GENERAL PROVISIONS

SEC. 10. ø42 U.S.C. 1437h¿ (a) In the performance of, and with

respect to, the functions, powers, and duties vested in him by this

Act, the Secretary, notwithstanding the provisions of any other law,

shall—

(1) prepare annually and submit a budget program as provided for wholly owned Government corporations by chapter 91

of title 31, United States Code; and

(2) maintain an integral set of accounts which may be audited by the General Accounting Office as provided by chapter

91 of title 31, United States Code.

(b) All receipts and assets of the Secretary under this Act shall

be available for the purposes of this Act until expended.

(c) The Federal Reserve banks are authorized and directed to

act as depositories, custodians, and fiscal agents for the Secretary

in the general exercise of his powers under this Act, and the Secretary may reimburse any such bank for its services in such manner as may be agreed upon.

FINANCING LOWER INCOME HOUSING PROJECTS

SEC. 11. ø42 U.S.C. 1437i¿ (a) Obligations issued by a public

housing agency in connection with low-income housing projects

which (1) are secured (A) by a pledge of a loan under any agreement between such public housing agency and the Secretary, or (B)

by a pledge of annual contributions under an annual contributions
Sec. 12 UNITED STATES HOUSING ACT OF 1937 208

contract between such public housing agency and the Secretary, or

(C) by a pledge of both annual contributions under an annual contributions contract and a loan under an agreement between such

public housing agency and the Secretary, and (2) bear, or are accompanied by, a certificate of the Secretary that such obligations

are so secured, shall be incontestable in the hands of a bearer and

the full faith and credit of the United States is pledged to the payment of all amounts agreed to be paid by the Secretary as security

for such obligations.

(b) Except as provided in section 5(g), obligations, including interest thereon, issued by public housing agencies in connection

with low-income housing projects shall be exempt from all taxation

now or hereafter imposed by the United States whether paid by

such agencies or by the Secretary. The income derived by such

agencies from such projects shall be exempt from all taxation now

or hereafter imposed by the United States.

LABOR STANDARDS AND COMMUNITY SERVICE REQUIREMENT

SEC. 12. ø42 U.S.C. 1437j¿ (a) Any contract for loans, contributions, sale, or lease pursuant to this Act shall contain a provision

requiring that not less than the wages prevailing in the locality, as

determined or adopted (subsequent to a determination under applicable State or local law) by the Secretary, shall be paid to all architects, technical engineers, draftsmen, and technicians employed in

the development, and all maintenance laborers and mechanics employed in the operation, of the low-income housing project involved;

and shall also contain a provision that not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor

pursuant to the Davis-Bacon Act (49 Stat. 1011), shall be paid to

all laborers and mechanics employed in the development of the

project involved (including a project with nine or more units assisted under section 8 of this Act, where the public housing agency

or the Secretary and the builder or sponsor enter into an agreement for such use before construction or rehabilitation is commenced), and the Secretary shall require certification as to compliance with the provisions of this section prior to making any payment under such contract.

(b) Subsection (a) and the provisions relating to wages (pursuant to subsection (a)) in any contract for loans, annual contributions, sale, or lease pursuant to this Act, shall not apply to any individual that—

(1) performs services for which the individual volunteered;

(2)(A) does not receive compensation for such services; or

(B) is paid expenses, reasonable benefits, or a nominal fee

for such services; and

(3) is not otherwise employed at any time in the construction work.

(c) COMMUNITY SERVICE REQUIREMENT.—

(1) IN GENERAL.—Except as provided in paragraph (2) and

notwithstanding any other provision of law, each adult resident of a public housing project shall—
209 Sec. 12 UNITED STATES HOUSING ACT OF 1937

1Parentheses so in law.

(A) contribute 8 hours per month of community service

(not including political activities) within the community in

which that adult resides; or

(B) participate in an economic self-sufficiency program

(as that term is defined in subsection (g)) for 8 hours per

month.

(2) EXEMPTIONS.—The Secretary shall provide an exemption from the applicability of paragraph (1) for any individual

who—

(A) is 62 years of age or older;

(B) is a blind or disabled individual, as defined under

section 216(i)(1) or 1614 of the Social Security Act (42

U.S.C. 416(i)(1); 1382c), and who is unable to comply with

this section, or is a primary caretaker of such individual;

(C) is engaged in a work activity (as such term is defined in section 407(d) of the Social Security Act (42 U.S.C.

607(d)), as in effect on and after July 1, 1997)) 1;

(D) meets the requirements for being exempted from

having to engage in a work activity under the State program funded under part A of title IV of the Social Security

Act (42 U.S.C. 601 et seq.) or under any other welfare program of the State in which the public housing agency is located, including a State-administered welfare-to-work program; or

(E) is in a family receiving assistance under a State

program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) or under any other welfare

program of the State in which the public housing agency

is located, including a State-administered welfare-to-work

program, and has not been found by the State or other administering entity to be in noncompliance with such program.

(3) ANNUAL DETERMINATIONS.—

(A) REQUIREMENT.—For each public housing resident

subject to the requirement under paragraph (1), the public

housing agency shall, 30 days before the expiration of each

lease term of the resident under section 6(l)(1), review and

determine the compliance of the resident with the requirement under paragraph (1) of this subsection.

(B) DUE PROCESS.—Such determinations shall be made

in accordance with the principles of due process and on a

nondiscriminatory basis.

(C) NONCOMPLIANCE.— If an agency determines that a

resident subject to the requirement under paragraph (1)

has not complied with the requirement, the agency—

(i) shall notify the resident—

(I) of such noncompliance;

(II) that the determination of noncompliance

is subject to the administrative grievance procedure under subsection (k); and
Sec. 12 UNITED STATES HOUSING ACT OF 1937 210

(III) that, unless the resident enters into an

agreement under clause (ii) of this subparagraph,

the resident’s lease will not be renewed; and

(ii) may not renew or extend the resident’s lease

upon expiration of the lease term and shall take such

action as is necessary to terminate the tenancy of the

household, unless the agency enters into an agreement, before the expiration of the lease term, with the

resident providing for the resident to cure any noncompliance with the requirement under paragraph (1),

by participating in an economic self-sufficiency program for or contributing to community service as

many additional hours as the resident needs to comply

in the aggregate with such requirement over the 12-

month term of the lease.

(4) INELIGIBILITY FOR OCCUPANCY FOR NONCOMPLIANCE.—A

public housing agency may not renew or extend any lease, or

provide any new lease, for a dwelling unit in public housing for

any household that includes an adult member who was subject

to the requirement under paragraph (1) and failed to comply

with the requirement.

(5) INCLUSION IN PLAN.—Each public housing agency shall

include in its public housing agency plan a detailed description

of the manner in which the agency intends to implement and

administer this subsection.

(6) GEOGRAPHIC LOCATION.—The requirement under paragraph (1) may include community service or participation in an

economic self-sufficiency program performed at a location not

owned by the public housing agency.

(7) PROHIBITION AGAINST REPLACEMENT OF EMPLOYEES.—In

carrying out this subsection, a public housing agency may

not—

(A) substitute community service or participation in an

economic self-sufficiency program, as described in paragraph (1), for work performed by a public housing

employee; or

(B) supplant a job at any location at which community

work requirements are fulfilled.

(8) THIRD-PARTY COORDINATING.—A public housing agency

may administer the community service requirement under this

subsection directly, through a resident organization, or through

a contractor having experience in administering volunteerbased community service programs within the service area of

the public housing agency. The Secretary may establish qualifications for such organizations and contractors.

(d) TREATMENT OF INCOME CHANGES RESULTING FROM WEL- FARE PROGRAM REQUIREMENTS.—

(1) COVERED FAMILY.—For purposes of this subsection, the

term ‘‘covered family’’ means a family that (A) receives benefits

for welfare or public assistance from a State or other public

agency under a program for which the Federal, State, or local

law relating to the program requires, as a condition of eligibility for assistance under the program, participation of a

member of the family in an economic self-sufficiency program,
211 Sec. 12 UNITED STATES HOUSING ACT OF 1937

1October 21, 1998.

and (B) resides in a public housing dwelling unit or is provided

tenant-based assistance under section 8.

(2) DECREASES IN INCOME FOR FAILURE TO COMPLY.—

(A) IN GENERAL.—Notwithstanding the provisions of

section 3(a) (relating to family rental contributions) or

paragraph (4) or (5) of section 3(b) (relating to definition

of income and adjusted income), if the welfare or public assistance benefits of a covered family are reduced under a

Federal, State, or local law regarding such an assistance

program because of any failure of any member of the family to comply with the conditions under the assistance program requiring participation in an economic self-sufficiency program or imposing a work activities requirement,

the amount required to be paid by the family as a monthly

contribution toward rent may not be decreased, during the

period of the reduction, as a result of any decrease in the

income of the family (to the extent that the decrease in income is a result of the benefits reduction).

(B) NO REDUCTION BASED ON TIME LIMIT FOR ASSISTANCE.—For purposes of this paragraph, a reduction in benefits as a result of the expiration of a lifetime time limit

for a family receiving welfare or public assistance benefits

shall not be considered to be a failure to comply with the

conditions under the assistance program requiring participation in an economic self-sufficiency program or imposing

a work activities requirement. This paragraph shall apply

beginning upon the date of the enactment of the Quality

Housing and Work Responsibility Act of 1998 1.

(3) EFFECT OF FRAUD.—Notwithstanding the provisions of

section 3(a) (relating to family rental contributions) or paragraph (4) or (5) of section 3(b) (relating to definition of income

and adjusted income), if the welfare or public assistance benefits of a covered family are reduced because of an act of fraud

by a member of the family under the law or program, the

amount required to be paid by the covered family as a monthly

contribution toward rent may not be decreased, during the period of the reduction, as a result of any decrease in the income

of the family (to the extent that the decrease in income is a result of the benefits reduction). This paragraph shall apply beginning upon the date of the enactment of the Quality Housing

and Work Responsibility Act of 1998 1.

(4) NOTICE.—Paragraphs (2) and (3) shall not apply to any

covered family before the public housing agency providing assistance under this Act on behalf of the family obtains written

notification from the relevant welfare or public assistance

agency specifying that the family’s benefits have been reduced

because of noncompliance with economic self-sufficiency program or work activities requirements or fraud, and the level of

such reduction.

(5) OCCUPANCY RIGHTS.—This subsection may not be construed to authorize any public housing agency to establish any
Sec. 12 UNITED STATES HOUSING ACT OF 1937 212

time limit on tenancy in a public housing dwelling unit or on

receipt of tenant-based assistance under section 8.

(6) REVIEW.—Any covered family residing in public housing that is affected by the operation of this subsection shall

have the right to review the determination under this subsection through the administrative grievance procedure established pursuant to section 6(k) for the public housing agency.

(7) COOPERATION AGREEMENTS FOR ECONOMIC SELF-SUFFI- CIENCY ACTIVITIES.— (A) REQUIREMENT.—A public housing agency providing

public housing dwelling units or tenant-based assistance

under section 8 for covered families shall make its best efforts to enter into such cooperation agreements, with

State, local, and other agencies providing assistance to covered families under welfare or public assistance programs,

as may be necessary, to provide for such agencies to transfer information to facilitate administration of subsection (c)

and paragraphs (2), (3), and (4) of this subsection and

other information regarding rents, income, and assistance

that may assist a public housing agency or welfare or public assistance agency in carrying out its functions.

(B) CONTENTS.—A public housing agency shall seek to

include in a cooperation agreement under this paragraph

requirements and provisions designed to target assistance

under welfare and public assistance programs to families

residing in public housing projects and families receiving

tenant-based assistance under section 8, which may include providing for economic self-sufficiency services within such housing, providing for services designed to meet

the unique employment-related needs of residents of such

housing and recipients of such assistance, providing for

placement of workfare positions on-site in such housing,

and such other elements as may be appropriate.

(C) CONFIDENTIALITY.—This paragraph may not be

construed to authorize any release of information prohibited by, or in contravention of, any other provision of Federal, State, or local law.

(e) LEASE PROVISIONS.—A public housing agency shall incorporate into leases under section 6(l) and into agreements for the

provision of tenant-based assistance under section 8, provisions incorporating the conditions under subsection (d).

(f) TREATMENT OF INCOME.—Notwithstanding any other provision of this section, in determining the income of a family who resides in public housing or receives tenant-based assistance under

section 8, a public housing agency shall consider any decrease in

the income of a family that results from the reduction of any welfare or public assistance benefits received by the family under any

Federal, State, or local law regarding a program for such assistance

if the family (or a member thereof, as applicable) has complied with

the conditions for receiving such assistance and is unable to obtain

employment notwithstanding such compliance.

(g) DEFINITION.—For purposes of this section, the term ‘‘economic self-sufficiency program’’ means any program designed to encourage, assist, train, or facilitate the economic independence of
213 Sec. 13 UNITED STATES HOUSING ACT OF 1937

participants and their families or to provide work for participants,

including programs for job training, employment counseling, work

placement, basic skills training, education, workfare, financial or

household management, apprenticeship, or other activities as the

Secretary may provide.

SEC. 13. ø42 U.S.C. 1437k¿ CONSORTIA, JOINT VENTURES, AFFILIATES,

AND SUBSIDIARIES OF PUBLIC HOUSING AGENCIES.

(a) CONSORTIA.—

(1) IN GENERAL.—Any 2 or more public housing agencies

may participate in a consortium for the purpose of administering any or all of the housing programs of those public

housing agencies in accordance with this section.

(2) EFFECT.—With respect to any consortium described in

paragraph (1)—

(A) any assistance made available under this title to

each of the public housing agencies participating in the

consortium shall be paid to the consortium; and

(B) all planning and reporting requirements imposed

upon each public housing agency participating in the consortium with respect to the programs operated by the consortium shall be consolidated.

(3) RESTRICTIONS.—

(A) AGREEMENT.—Each consortium described in paragraph (1) shall be formed and operated in accordance with

a consortium agreement, and shall be subject to the requirements of a joint public housing agency plan, which

shall be submitted by the consortium in accordance with

section 5A.

(B) MINIMUM REQUIREMENTS.—The Secretary shall

specify minimum requirements relating to the formation

and operation of consortia and the minimum contents of

consortium agreements under this paragraph.

(b) JOINT VENTURES.—

(1) IN GENERAL.—Notwithstanding any other provision of

law, a public housing agency, in accordance with the public

housing agency plan, may—

(A) form and operate wholly owned or controlled subsidiaries (which may be nonprofit corporations) and other

affiliates, any of which may be directed, managed, or controlled by the same persons who constitute the board of directors or similar governing body of the public housing

agency, or who serve as employees or staff of the public

housing agency; or

(B) enter into joint ventures, partnerships, or other

business arrangements with, or contract with, any person,

organization, entity, or governmental unit—

(i) with respect to the administration of the programs of the public housing agency, including any program that is subject to this title; or

(ii) for the purpose of providing or arranging for

the provision of supportive or social services.
Sec. 15 UNITED STATES HOUSING ACT OF 1937 214

1So in law.

2So in law. There is no subparagraph (B).

(2) USE OF AND TREATMENT INCOME 1.—Any income generated under paragraph (1)—

(A) shall be used for low-income housing or to benefit

the residents assisted by the public housing agency; and

(B) shall not result in any decrease in any amount

provided to the public housing agency under this title, except as otherwise provided under the formulas established

under section 9(d)(2) and 9(e)(2).

(3) AUDITS.—The Comptroller General of the United

States, the Secretary, or the Inspector General of the Department of Housing and Urban Development may conduct an

audit of any activity undertaken under paragraph (1) at any

time.

øPUBLIC HOUSING MODERNIZATION¿

øSEC. 14 [Repealed.]¿.

PAYMENT OF NONFEDERAL SHARE

SEC. 15. ø42 U.S.C. 1437m¿ Any of the following may be used

as the non-Federal share required in connection with activities undertaken under Federal grant-in-aid programs which provide social, educational, employment, and other services to the tenants in

a project assisted under this Act, other than under section 8:

(1) annual contributions under this Act for operation of the

project; or

(2) rental or use-value of buildings or facilities paid for, in

whole or in part, from development, modernization, or operation cost financed under this Act.

ELIGIBILITY FOR ASSISTED HOUSING

SEC. 16. ø42 U.S.C. 1437n¿ (a) INCOME ELIGIBILITY FOR PUBLIC

HOUSING.—

(1) INCOME MIX WITHIN PROJECTS.—A public housing agency may establish and utilize income-mix criteria for the selection of residents for dwelling units in public housing projects,

subject to the requirements of this section.

(2) PHA INCOME MIX.—

(A) 2 TARGETING.—Except as provided in paragraph

(4), of the public housing dwelling units of a public housing

agency made available for occupancy in any fiscal year by

eligible families, not less than 40 percent shall be occupied

by families whose incomes at the time of commencement

of occupancy do not exceed 30 percent of the area median

income, as determined by the Secretary with adjustments

for smaller and larger families; except that the Secretary

may establish income ceilings higher or lower than 30 percent of the area median income on the basis of the Secretary’s findings that such variations are necessary because of unusually high or low family incomes.
215 Sec. 16 UNITED STATES HOUSING ACT OF 1937

1So in law. There is no subclause (II) in clause (i).

2So in law. Probably should refer to section (6)(s).

(3) PROHIBITION OF CONCENTRATION OF LOW-INCOME FAMILIES.—

(A) PROHIBITION.—A public housing agency may not,

in complying with the requirements under paragraph (2),

concentrate very low-income families (or other families

with relatively low incomes) in public housing dwelling

units in certain public housing projects or certain buildings

within projects. The Secretary shall review the income and

occupancy characteristics of the public housing projects

and the buildings of such projects of such agencies to ensure compliance with the provisions of this paragraph and

paragraph (2).

(B) DECONCENTRATION.—

(i) IN GENERAL.—A public housing agency shall

submit with its annual public housing agency plan

under section 5A an admissions policy designed to provide for deconcentration of poverty and income-mixing

by bringing higher income tenants into lower income

projects and lower income tenants into higher income

projects. This clause may not be construed to impose

or require any specific income or racial quotas for any

project or projects.

(ii) INCENTIVES.—In implementing the policy

under clause (i), a public housing agency may offer incentives for eligible families having higher incomes to

occupy dwelling unit in projects predominantly occupied by eligible families having lower incomes, and

provide for occupancy of eligible families having lower

incomes in projects predominantly occupied by eligible

families having higher incomes.

(iii) FAMILY CHOICE.—Incentives referred to in

clause (ii) may be made available by a public housing

agency only in a manner that allows for the eligible

family to have the sole discretion in determining

whether to accept the incentive and an agency may

not take any adverse action toward any eligible family

for choosing not to accept an incentive and occupancy

of a project described in clause (i)(II) 1, Provided, That

the skipping of a family on a waiting list to reach another family to implement the policy under clause (i)

shall not be considered an adverse action. An agency

implementing an admissions policy under this subparagraph shall implement the policy in a manner

that does not prevent or interfere with the use of sitebased waiting lists authorized under section 6(s) 2. (4) FUNGIBILITY WITH TENANT-BASED ASSISTANCE.—

(A) AUTHORITY.—Except as provided under subparagraph (D), the number of public housing dwelling units

that a public housing agency shall otherwise make available in accordance with paragraph (2)(A) to comply with

the percentage requirement under such paragraph for a
Sec. 16 UNITED STATES HOUSING ACT OF 1937 216

fiscal year shall be reduced by the credit number for the

agency under subparagraph (B).

(B) CREDIT FOR EXCEEDING TENANT-BASED ASSISTANCE

TARGETING REQUIREMENT.—Subject to subparagraph (C),

the credit number under this subparagraph for a public

housing agency for a fiscal year shall be the number by

which—

(i) the aggregate number of qualified families who,

in such fiscal year, are initially provided tenant-based

assistance under section 8 by the agency; exceeds

(ii) the number of qualified families that is required for the agency to comply with the percentage

requirement under subsection (b)(1) for such fiscal

year.

(C) LIMITATIONS ON CREDIT NUMBER.—The credit number under subparagraph (B) for a public housing agency

for a fiscal year may not in any case exceed the lesser of—

(i) the number of dwelling units that is equivalent

to 10 percent of the aggregate number of families initially provided tenant-based assistance under section 8

by the agency in such fiscal year; or

(ii) the number of public housing dwelling units of

the agency that—

(I) are in projects that are located in census

tracts having a poverty rate of 30 percent or more;

and

(II) are made available for occupancy during

such fiscal year and are actually filled only by

families whose incomes at the time of commencement of such occupancy exceed 30 percent of the

area median income, as determined by the Secretary with adjustments for smaller and larger

families.

(D) FUNGIBILITY FLOOR.—Notwithstanding any authority under subparagraph (A), of the public housing dwelling

units of a public housing agency made available for occupancy in any fiscal year by eligible families, not less than

30 percent shall be occupied by families whose incomes at

the time of commencement of occupancy do not exceed 30

percent of the area median income, as determined by the

Secretary with adjustments for smaller and larger families.

(E) QUALIFIED FAMILY.—For purposes of this paragraph, the term ‘‘qualified family’’ means a family having

an income described in subsection (b)(1).

(b) INCOME ELIGIBILITY FOR TENANT-BASED SECTION 8 ASSIST- ANCE.—

(1) IN GENERAL.—Of the families initially provided tenantbased assistance under section 8 by a public housing agency in

any fiscal year, not less than 75 percent shall be families

whose incomes do not exceed 30 percent of the area median income, as determined by the Secretary with adjustments for

smaller and larger families; except that the Secretary may establish income ceilings higher or lower than 30 percent of the
217 Sec. 16 UNITED STATES HOUSING ACT OF 1937

1October 1, 1981.

area median income on the basis of the Secretary’s findings

that such variations are necessary because of unusually high

or low family incomes.

(2) JURISDICTIONS SERVED BY MULTIPLE PHA’S.—In the case

of any 2 or more public housing agencies that administer tenant-based assistance under section 8 with respect solely to

identical geographical areas, such agencies shall be treated as

a single public housing agency for purposes of paragraph (1).

(c) INCOME ELIGIBILITY FOR PROJECT-BASED SECTION 8 ASSISTANCE.—

(1) PRE-1981 ACT PROJECTS.—Not more than 25 percent of

the dwelling units that were available for occupancy under section 8 housing assistance payments contracts under this Act

before the effective date of the Housing and Community Development Amendments of 1981 1, and which will be leased on or

after such effective date shall be available for leasing by lowincome families other than very low-income families.

(2) POST-1981 ACT PROJECTS.—Not more than 15 percent of

the dwelling units which become available for occupancy under

section 8 housing assistance payments contracts under this Act

on or after the effective date of the Housing and Community

Development Amendments of 1981 1 shall be available for leasing by low-income families other than very low-income families.

(3) TARGETING.—For each project assisted under a contract

for project-based assistance, of the dwelling units that become

available for occupancy in any fiscal year that are assisted

under the contract, not less than 40 percent shall be available

for leasing only by families whose incomes at the time of commencement of occupancy do not exceed 30 percent of the area

median income, as determined by the Secretary with adjustments for smaller and larger families; except that the Secretary may establish income ceilings higher or lower than 30

percent of the area median income on the basis of the Secretary’s findings that such variations are necessary because of

unusually high or low family incomes.

(4) PROHIBITION OF SKIPPING.—In developing admission

procedures implementing paragraphs (1), (2), and (3), the Secretary shall prohibit project owners from selecting families for

residence in an order different from the order on the waiting

list for the purpose of selecting relatively higher income families for residence. Nothing in this paragraph or this subsection

may be construed to prevent an owner of housing assisted

under a contract for project-based assistance from establishing

a preference for occupancy in such housing for families containing a member who is employed.

(5) EXCEPTION.—The limitations established in paragraphs

(1), (2), and (3) shall not apply to dwelling units made available under project-based contracts under section 8 for the purpose of preventing displacement, or ameliorating the effects of

displacement.
Sec. 16 UNITED STATES HOUSING ACT OF 1937 218

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

(6) DEFINITION.—For purposes of this subsection, the term

‘‘project-based assistance’’ means assistance under any of the

following programs:

(A) The new construction or substantial rehabilitation

program under section 8(b)(2) (as in effect before October

1, 1983).

(B) The property disposition program under section

8(b) (as in effect before the effective date under section

503(a) of the Quality Housing and Work Responsibility Act

of 1998) 1.

(C) The loan management set-aside program under

subsections (b) and (v) of section 8.

(D) The project-based certificate program under section 8(d)(2).

(E) The moderate rehabilitation program under section

8(e)(2) (as in effect before October 1, 1991).

(F) The low-income housing preservation program

under Low-Income Housing Preservation and Resident

Homeownership Act of 1990 or the provisions of the Emergency Low Income Housing Preservation Act of 1987 (as in

effect before November 28, 1990).

(G) Section 8 (as in effect before the effective date

under section 503(a) of the Quality Housing and Work Responsibility Act of 1998) 1, following conversion from assistance under section 101 of the Housing and Urban Development Act of 1965 or section 236(f )(2) of the National Housing Act.

(d) ESTABLISHMENT OF DIFFERENT STANDARDS.—Notwithstanding subsection (a)(2) or (b)(1), if approved by the Secretary, a

public housing agency may for good cause establish and implement,

in accordance with the public housing agency plan, an admission

standard other than the standard under such subsection.

ø(e) [Repealed.]¿

(f) INELIGIBILITY OF INDIVIDUALS CONVICTED OF MANUFACTURING OR PRODUCING METHAMPHETAMINE ON THE PREMISES.—

Notwithstanding any other provision of law, a public housing agency shall establish standards for occupancy in public housing dwelling units and assistance under section 8 that—

(1) permanently prohibit occupancy in any public housing

dwelling unit by, and assistance under section 8 for, any person who has been convicted of manufacturing or otherwise producing methamphetamine on the premises in violation of any

Federal or State law; and

(2) immediately and permanently terminate the tenancy in

any public housing unit of, and the assistance under section 8

for, any person who is convicted of manufacturing or otherwise

producing methamphetamine on the premises in violation of

any Federal or State law.
219 Sec. 18 UNITED STATES HOUSING ACT OF 1937

1Section 289(a) of the Cranston-Gonzalez National Affordable Housing Act, Public Law 101–

625, provides that no new grants or loans may be made under this section after October 1, 1991.

Subsection (b) of such section repealed this section effective on October 1, 1991.

However, section 152 of the Housing and Community Development Act of 1987, Public Law

100–242, provides as follows:

‘‘SEC. 152. TERMINATION OF RENTAL DEVELOPMENT GRANT PROGRAM.

‘‘(a) IN GENERAL.—Effective on October 1, 1989, the rental development grant program under

section 17(d) of the United States Housing Act of 1937 shall terminate.

‘‘(b) SAVINGS PROVISION.—The provisions of subsection (a) shall not apply with respect to any

housing development grant under section 17(d) of the United States Housing Act of 1937 made

pursuant to a reservation of funds made by the Secretary of Housing and Urban Development

before October 1, 1989.’’.

øRENTAL REHABILITATION AND DEVELOPMENT GRANTS¿

øSEC. 17. 1 [Repealed.]¿

SEC. 18. ø42 U.S.C. 1437p¿ DEMOLITION AND DISPOSITION OF PUBLIC

HOUSING.

(a) APPLICATIONS FOR DEMOLITION AND DISPOSITION.—Except

as provided in subsection (b), upon receiving an application by a

public housing agency for authorization, with or without financial

assistance under this title, to demolish or dispose of a public housing project or a portion of a public housing project (including any

transfer to a resident-supported nonprofit entity), the Secretary

shall approve the application, if the public housing agency

certifies—

(1) in the case of—

(A) an application proposing demolition of a public

housing project or a portion of a public housing project,

that—

(i) the project or portion of the public housing

project is obsolete as to physical condition, location, or

other factors, making it unsuitable for housing purposes; and

(ii) no reasonable program of modifications is costeffective to return the public housing project or portion

of the project to useful life; and

(B) an application proposing the demolition of only a

portion of a public housing project, that the demolition will

help to ensure the viability of the remaining portion of the

project;

(2) in the case of an application proposing disposition by

sale or other transfer of a public housing project or other real

property subject to this title—

(A) the retention of the property is not in the best interests of the residents or the public housing agency

because—

(i) conditions in the area surrounding the public

housing project adversely affect the health or safety of

the residents or the feasible operation of the project by

the public housing agency; or

(ii) disposition allows the acquisition, development, or rehabilitation of other properties that will be

more efficiently or effectively operated as low-income

housing;
Sec. 18 UNITED STATES HOUSING ACT OF 1937 220

1So in law.

(B) the public housing agency has otherwise determined the disposition to be appropriate for reasons that

are—

(i) in the best interests of the residents and the

public housing agency;

(ii) consistent with the goals of the public housing

agency and the public housing agency plan; and

(iii) otherwise consistent with this title; or

(C) for property other than dwelling units, the property is excess to the needs of a public housing project or

the disposition is incidental to, or does not interfere with,

continued operation of a public housing project;

(3) that the public housing agency has specifically authorized the demolition or disposition in the public housing agency

plan, and has certified that the actions contemplated in the

public housing agency plan comply with this section;

(4) that the public housing agency—

(A) will notify each family residing in a project subject

to demolition or disposition 90 days prior to the displacement date, except in cases of imminent threat to health or

safety, consistent with any guidelines issued by the Secretary governing such notifications, that—

(i) the public housing project will be demolished or

disposed of;

(ii) the demolition of the building in which the

family resides will not commence until each resident

of the building is relocated; and

(iii) each family displaced by such action will be

offered comparable housing—

(I) that meets housing quality standards;

(II) that is located in an area that is generally

not less desirable than the location of the displaced person’s housing; and

(III) which may include—

(aa) tenant-based assistance, except that

the requirement under this clause regarding

offering of comparable housing shall be fulfilled by use of tenant-based assistance only

upon the relocation of such family into such

housing;

(bb) project-based assistance; or

(cc) occupancy in a unit operated or assisted by the public housing agency at a rental rate paid by the family that is comparable

to the rental rate applicable to the unit from

which the family is vacated;

(B) will provide for the payment of the actual and reasonable relocation expenses of each resident to be displaced;

(C) will ensure that each displaced resident is offered

comparable housing in accordance with the notice under

subparagraph (A); and 1
221 Sec. 18 UNITED STATES HOUSING ACT OF 1937

(D) will provide any necessary counseling for residents

who are displaced; and

(E) will not commence demolition or complete disposition until all residents residing in the building are relocated;

(5) that the net proceeds of any disposition will be used—

(A) unless waived by the Secretary, for the retirement

of outstanding obligations issued to finance the original

public housing project or modernization of the project; and

(B) to the extent that any proceeds remain after the

application of proceeds in accordance with subparagraph

(A), for—

(i) the provision of low-income housing or to benefit the residents of the public housing agency; or

(ii) leveraging amounts for securing commercial

enterprises, on-site in public housing projects of the

public housing agency, appropriate to serve the needs

of the residents; and

(6) that the public housing agency has complied with subsection (c).

(b) DISAPPROVAL OF APPLICATIONS.—The Secretary shall disapprove an application submitted under subsection (a) if the Secretary determines that—

(1) any certification made by the public housing agency

under that subsection is clearly inconsistent with information

and data available to the Secretary or information or data requested by the Secretary; or

(2) the application was not developed in consultation

with—

(A) residents who will be affected by the proposed

demolition or disposition;

(B) each resident advisory board and resident council,

if any, of the project (or portion thereof) that will be affected by the proposed demolition or disposition; and

(C) appropriate government officials.

(c) RESIDENT OPPORTUNITY TO PURCHASE IN CASE OF PROPOSED DISPOSITION.—

(1) IN GENERAL.—In the case of a proposed disposition of

a public housing project or portion of a project, the public housing agency shall, in appropriate circumstances, as determined

by the Secretary, initially offer the property to any eligible

resident organization, eligible resident management corporation, or nonprofit organization acting on behalf of the residents,

if that entity has expressed an interest, in writing, to the public housing agency in a timely manner, in purchasing the property for continued use as low-income housing.

(2) TIMING.—

(A) EXPRESSION OF INTEREST.—A resident organization, resident management corporation, or other residentsupported nonprofit entity referred to in paragraph (1)

may express interest in purchasing property that is the

subject of a disposition, as described in paragraph (1), during the 30-day period beginning on the date of notification

of a proposed sale of the property.
Sec. 19 UNITED STATES HOUSING ACT OF 1937 222

(B) OPPORTUNITY TO ARRANGE PURCHASE.—If an entity

expresses written interest in purchasing a property, as

provided in subparagraph (A), no disposition of the property shall occur during the 60-day period beginning on the

date of receipt of that written notice (other than to the entity providing the notice), during which time that entity

shall be given the opportunity to obtain a firm commitment for financing the purchase of the property.

(d) REPLACEMENT UNITS.—Notwithstanding any other provision of law, replacement public housing units for public housing

units demolished in accordance with this section may be built on

the original public housing location or in the same neighborhood as

the original public housing location if the number of the replacement public housing units is significantly fewer than the number

of units demolished.

(e) CONSOLIDATION OF OCCUPANCY WITHIN OR AMONG BUILD- INGS.—Nothing in this section may be construed to prevent a public

housing agency from consolidating occupancy within or among

buildings of a public housing project, or among projects, or with

other housing for the purpose of improving living conditions of, or

providing more efficient services to, residents.

(f ) DE MINIMIS EXCEPTION TO DEMOLITION REQUIREMENTS.— Notwithstanding any other provision of this section, in any 5-year

period a public housing agency may demolish not more than the

lesser of 5 dwelling units or 5 percent of the total dwelling units

owned by the public housing agency, but only if the space occupied

by the demolished unit is used for meeting the service or other

needs of public housing residents or the demolished unit was beyond repair.

(g) UNIFORM RELOCATION AND REAL PROPERTY ACQUISITION

ACT.—The Uniform Relocation and Real Property Acquisition Policies Act of 1970 shall not apply to activities under this section.

(h) RELOCATION AND REPLACEMENT.—Of the amounts appropriated for tenant-based assistance under section 8 in any fiscal

year, the Secretary may use such sums as are necessary for relocation and replacement housing for dwelling units that are demolished and disposed of from the public housing inventory (in addition to other amounts that may be available for such purposes).

FINANCING LIMITATIONS

SEC. 19. ø42 U.S.C. 1437q¿ On and after October 1, 1983, the

Secretary—

(1) may only enter into contracts for annual contributions

regarding obligations financing public housing projects authorized by section 5(c) if such obligations are exempt from taxation under section 11(b), or if such obligations are issued

under section 4 and such obligations are exempt from taxation;

and

(2) may not enter into contracts for periodic payments to

the Federal Financing Bank to offset the costs to the Bank of

purchasing obligations (as described in the first sentence of

section 16(b) of the Federal Financing Bank Act of 1973) issued

by local public housing agencies for purposes of financing public housing projects authorized by section 5(c) of this Act.
223 Sec. 20 UNITED STATES HOUSING ACT OF 1937

PUBLIC HOUSING RESIDENT MANAGEMENT

SEC. 20. ø42 U.S.C. 1437r¿ (a) PURPOSE.—The purpose of this

section is to encourage increased resident management of public

housing projects, as a means of improving existing living conditions

in public housing projects, by providing increased flexibility for

public housing projects that are managed by residents by—

(1) permitting the retention, and use for certain purposes,

of any revenues exceeding operating and project costs; and

(2) providing funding, from amounts otherwise available,

for technical assistance to promote formation and development

of resident management entities.

For purposes of this section, the term ‘‘public housing project’’ includes one or more contiguous buildings or an area of contiguous

row houses the elected resident councils of which approve the establishment of a resident management corporation and otherwise

meet the requirements of this section.

(b) PROGRAM REQUIREMENTS.—

(1) RESIDENT COUNCIL.—As a condition of entering into a

resident management program, the elected resident council of

a public housing project shall approve the establishment of a

resident management corporation. When such approval is

made by the elected resident council of a building or row house

area, the resident management program shall not interfere

with the rights of other families residing in the project or harm

the efficient operation of the project. The resident management

corporation and the resident council may be the same organization, if the organization complies with the requirements applicable to both the corporation and council. The corporation shall

be a nonprofit corporation organized under the laws of the

State in which the project is located, and the tenants of the

project shall be the sole voting members of the corporation. If

there is no elected resident council, a majority of the households of the public housing project shall approve the establishment of a resident council to determine the feasibility of establishing a resident management corporation to manage the

project.

(2) PUBLIC HOUSING MANAGEMENT SPECIALIST.—The resident council of a public housing project, in cooperation with the

public housing agency, shall select a qualified public housing

management specialist to assist in determining the feasibility

of, and to help establish, a resident management corporation

and to provide training and other duties agreed to in the daily

operations of the project.

(3) BONDING AND INSURANCE.—Before assuming any management responsibility for a public housing project, the resident management corporation shall provide fidelity bonding

and insurance, or equivalent protection, in accordance with

regulations and requirements of the Secretary and the public

housing agency. Such bonding and insurance, or its equivalent,

shall be adequate to protect the Secretary and the public housing agency against loss, theft, embezzlement, or fraudulent

acts on the part of the resident management corporation or its

employees.
Sec. 20 UNITED STATES HOUSING ACT OF 1937 224

(4) MANAGEMENT RESPONSIBILITIES.—A resident management corporation that qualifies under this section, and that

supplies insurance and bonding or equivalent protection sufficient to the Secretary and the public housing agency, shall

enter into a contract with the public housing agency establishing the respective management rights and responsibilities

of the corporation and the public housing agency. Such contract shall be consistent with the requirements of this Act applicable to public housing projects and may include specific

terms governing management personnel and compensation, access to public housing project records, submission of and adherence to budgets, rent collection procedures, tenant income verification, tenant eligibility determinations, tenant eviction, the

acquisition of supplies and materials, rent determination, community service requirements, and such other matters as may

be appropriate. The contract shall be treated as a contracting

out of services and shall be subject to any provision of a collective bargaining agreement regarding contracting out to which

the public housing agency is subject.

(5) ANNUAL AUDIT.—The books and records of a resident

management corporation operating a public housing project

shall be audited annually by a certified public accountant. A

written report of each audit shall be forwarded to the public

housing agency and the Secretary.

(c) ASSISTANCE AMOUNTS.—A contract under this section for

management of a public housing project by a resident management

corporation shall provide for—

(1) the public housing agency to provide a portion of the

assistance to agency from the Capital and Operating Funds to

the resident management corporation in accordance with subsection (e) for purposes of operating the public housing project

covered by the contract and performing such other eligible activities with respect to the project as may be provided under

the contract;

(2) the amount of income expected to be derived from the

project itself (from sources such as rents and charges);

(3) the amount of income to be provided to the project from

the other sources of income of the public housing agency (such

as interest income, administrative fees, and rents); and

(4) any income generated by a resident management corporation of a public housing project that exceeds the income estimated under the contract shall be used for eligible activities

under subsections (d)(1) and (e)(1) of section 9.

(d) WAIVER OF FEDERAL REQUIREMENTS.—

(1) WAIVER OF REGULATORY REQUIREMENTS.—Upon the request of any resident management corporation and public

housing agency, and after notice and an opportunity to comment is afforded to the affected tenants, the Secretary may

waive (for both the resident management corporation and the

public housing agency) any requirement established by the

Secretary (and not specified in any statute) that the Secretary

determines to unnecessarily increase the costs or restrict the

income of a public housing project.
225 Sec. 20 UNITED STATES HOUSING ACT OF 1937

(2) WAIVER TO PERMIT EMPLOYMENT.—Upon the request of

any resident management corporation, the Secretary may, subject to applicable collective bargaining agreements, permit residents of such project to volunteer a portion of their labor.

(3) EXCEPTIONS.—The Secretary may not waive under this

subsection any requirement with respect to income eligibility

for purposes of section 16, rental payments under section 3(a),

tenant or applicant protections, employee organizing rights, or

rights of employees under collective bargaining agreements.

(e) DIRECT PROVISION OF OPERATING AND CAPITAL ASSIST- ANCE.— (1) IN GENERAL.—The Secretary shall directly provide assistance from the Operating and Capital Funds to a resident

management corporation managing a public housing development pursuant to a contract under this section, but only if—

(A) the resident management corporation petitions the

Secretary for the release of the funds;

(B) the contract provides for the resident management

corporation to assume the primary management responsibilities of the public housing agency; and

(C) the Secretary determines that the corporation has

the capability to effectively discharge such responsibilities.

(2) USE OF ASSISTANCE.—Any assistance from the Operating and Capital Funds provided to a resident management

corporation pursuant to this subsection shall be used for purposes of operating the public housing developments of the

agency and performing such other eligible activities with respect to public housing as may be provided under the contract.

(3) RESPONSIBILITY OF PUBLIC HOUSING AGENCY.—If the

Secretary provides direct funding to a resident management

corporation under this subsection, the public housing agency

shall not be responsible for the actions of the resident management corporation.

(4) CALCULATION OF OPERATING FUND ALLOCATION.—Notwithstanding any provision of section 9 or any regulation

under such section, and subject to the exception provided in

paragraph (3), the portion of the amount received by a public

housing agency under section 9 that is due to an allocation

from the Operating Fund and that is allocated to a public

housing project managed by a resident management corporation shall not be less than the public housing agency per unit

monthly amount provided in the previous year as determined

on an individual project basis.

(5) CALCULATION OF TOTAL INCOME.—

(A) Subject to subparagraph (B), the amount of funds

provided by a public housing agency to a public housing

project managed by a resident management corporation

may not be reduced during the 3-year period beginning on

the date of the enactment of the Housing and Community

Development Act of 1987 or on any later date on which a

resident management corporation is first established for

the project.

(B) If the total income of a public housing agency (including any amounts from the Capital or Operating Funds
Sec. 21 UNITED STATES HOUSING ACT OF 1937 226

1 November 7, 1988.

provided to the public housing agency under section 9) is

reduced or increased, the income provided by the public

housing agency to a public housing project managed by a

resident management corporation shall be reduced or increased in proportion to the reduction or increase in the

total income of the public housing agency, except that any

reduction in amounts from the Operating Fund that occurs

as a result of fraud, waste, or mismanagement by the public housing agency shall not affect the funds provided to

the resident management corporation.

(6) RETENTION OF EXCESS REVENUES.— (A) Any income generated by a resident management

corporation of a public housing project that exceeds the income estimated for purposes of this subsection shall be excluded in subsequent years in calculating (i) the allocations from the Operating Fund for the public housing

agency under section 9; and (ii) the funds provided by the

public housing agency to the resident management corporation.

(B) Any revenues retained by a resident management

corporation under subparagraph (A) shall be used for purposes of improving the maintenance and operation of the

public housing project, for establishing business enterprises that employ residents of public housing, or for acquiring additional dwelling units for low-income families.

ø(f) [Repealed.]¿

ø(g) [Repealed.]¿

(h) APPLICABILITY.—Any management contract between a public housing agency and a resident management corporation that is

entered into after the date of the enactment of the Stewart B.

McKinney Homeless Assistance Amendments Act of 1988 1 shall be

subject to this section and the regulations issued to carry out this

section.

PUBLIC HOUSING HOMEOWNERSHIP AND MANAGEMENT

OPPORTUNITIES

SEC. 21. ø42 U.S.C. 1437s¿ (a) HOMEOWNERSHIP OPPORTUNITIES IN GENERAL.—Lower income families residing in a public

housing project shall be provided with the opportunity to purchase

the dwelling units in the project through a qualifying resident

management corporation as follows:

(1) FORMATION OF RESIDENT MANAGEMENT CORPORATION.— As a condition for public housing homeownership—

(A) the adult residents of a public housing project

shall have formed a resident management corporation in

accordance with regulations and requirements of the Secretary prescribed under this section and section 20;

(B) the resident management corporation shall have

entered into a contract with the public housing agency establishing the respective management rights and responsibilities of the resident management corporation and the

public housing agency; and
227 Sec. 21 UNITED STATES HOUSING ACT OF 1937

1 November 28, 1990.

(C) the resident management corporation shall have

demonstrated its ability to manage public housing effectively and efficiently for a period of not less than 3 years.

(2) HOMEOWNERSHIP ASSISTANCE.— (A) The Secretary may provide assistance from the

Capital Fund to a public housing project in which homeownership activities under this section are conducted.

(B) The Secretary may provide financial assistance to

public housing agencies, resident management corporations, or resident councils that obtain, by contract or otherwise, training, technical assistance, and educational assistance as the Secretary determines to be necessary to promote homeownership opportunities under this section.

(C) This paragraph shall not have effect after February 4, 1991. The Secretary may not provide financial assistance under subparagraph (B), after such date, unless

the Secretary determines that such assistance is necessary

for the development of a homeownership program that was

initiated, as determined by the Secretary, before the date

of the enactment of the Cranston-Gonzalez National Affordable Housing Act. 1

(3) CONDITIONS OF PURCHASE BY A RESIDENT MANAGEMENT

CORPORATION.—

(A) A resident management corporation may purchase

from a public housing agency one or more multifamily

buildings in a public housing project following a determination by the Secretary that—

(i) the resident management corporation has met

the conditions of paragraph (1);

(ii) the resident management corporation has applied for and is prepared to undertake the ownership,

management, and maintenance of the building or

buildings with continued assistance from the Secretary;

(iii) the public housing agency has held one or

more public hearings to obtain the views of citizens regarding the proposed purchase and, in consultation

with the Secretary, has certified that the purchase will

not interfere with the rights of other families residing

in public housing, will not harm the efficient operation

of other public housing, and is in the interest of the

community;

(iv) the public housing agency has certified that it

has and will implement a plan to replace public housing units sold under this section within 30 months of

the sale, which plan shall provide for replacement of

100 percent of the units sold under this section by—

(I) production, acquisition, or rehabilitation of

vacant public housing units by the public housing

agency; and

(II) acquisition by the resident management

corporation of nonpublicly owned, decent, and af-
Sec. 21 UNITED STATES HOUSING ACT OF 1937 228

1 November 28, 1990.

fordable housing units, which the resident management corporation shall operate as rental housing subject to tenant income and rent limitations

comparable to the limitations applicable to public

housing; and

(v) the building or buildings meet the housing

quality standards applicable under section 6(f ), and

the physical condition, management, and operation of

the building or buildings are sufficient to permit affordable homeownership by the families residing in

the project.

(B) The price of a building purchased under the preceding sentence shall be approved by the Secretary, in consultation with the public housing agency and resident

management corporation, taking into account the fair market value of the property, the ability of resident families

to afford and maintain the property, and such other factors

as the Secretary determines to be consistent with increasing the supply of dwelling units affordable to very low income families.

(C) This paragraph shall not have effect after February 4, 1991. The authority for a resident management

corporation to purchase 1 or more multifamily buildings in

a public housing project from a public housing agency shall

terminate after such date, unless the Secretary determines

that such purchase is necessary for the development of a

homeownership program that was initiated, as determined

by the Secretary, before the date of the enactment of the

Cranston-Gonzalez National Affordable Housing Act.1

(4) CONDITIONS OF RESALE.—

(A)(i) A resident management corporation may sell a

dwelling unit or ownership rights in a dwelling unit only

to a lower income family residing in, or eligible to reside

in, public housing and only if the Secretary determines

that the purchase will not interfere with the rights of

other families residing in the housing project or harm the

efficient operation of the project, and the family will be

able to purchase and maintain the property.

(ii) The sale of dwelling units or ownership rights in

dwelling units under clause (i) shall be made to families in

the following order of priority:

(I) a lower income family residing in the public

housing project in which the dwelling unit is located;

(II) a lower income family residing in any public

housing project within the jurisdiction of the public

housing agency having jurisdiction with respect to the

project in which the dwelling unit is located;

(III) a lower income family receiving Federal housing assistance and residing in the jurisdiction of such

public housing agency; and

(IV) a lower income family on the waiting list of

such public housing agency for public housing or as-
229 Sec. 21 UNITED STATES HOUSING ACT OF 1937

sistance under section 8, with priority given in the

order in which the family appears on the waiting list.

(iii) Each resident management corporation shall provide each family described in clause (ii) with a notice of

the eligibility of the family to purchase a dwelling unit

under this paragraph.

(B) A purchase under subparagraph (A) may be made

under any of the following arrangements:

(i) Limited dividend cooperative ownership.

(ii) Condominium ownership.

(iii) Fee simple ownership.

(iv) Shared appreciation with a public housing

agency providing financing under paragraph (6).

(v) Any other arrangement determined by the Secretary to be appropriate.

(C) Property purchased under this section shall be resold only to the resident management corporation, a lower

income family residing in or eligible to reside in public

housing or housing assisted under section 8, or to the public housing agency.

(D) In no case may the owner receive consideration for

his or her interest in the property that exceeds the total

of—

(i) the contribution to equity paid by the owner;

(ii) the value, as determined by such means as the

Secretary shall determine through regulation, of any

improvements installed at the expense of the owner

during the owner’s tenure as owner; and

(iii) the appreciated value determined by an inflation allowance at a rate which may be based on a cost

of living index, an income index, or market index as

determined by the Secretary through regulation and

agreed to by the purchaser and the resident management corporation or the public housing agency, whichever is appropriate, at the time of initial sale, and applied against the contribution to equity; the resident

management corporation or the public housing agency

may, at the time of initial sale, enter into an agreement with the owner to set a maximum amount which

this appreciation may not exceed.

(E) Upon sale, the resident management corporation

or the public housing agency, whichever is appropriate,

shall ensure that subsequent owners are bound by the

same limitations on resale and further restrictions on equity appreciation.

(5) USE OF PROCEEDS.—Notwithstanding any other provision of this Act or other law to the contrary, proceeds from the

sale of a building or buildings under paragraph (3) and

amounts recaptured under paragraph (4) shall be paid to the

public housing agency and shall be retained and used by the

public housing agency only to increase the number of public

housing units available for occupancy. The resident management corporation shall keep and make available to the public

housing agency and the Secretary all records necessary to cal-
Sec. 21 UNITED STATES HOUSING ACT OF 1937 230

culate accurately payments due the local housing agency under

this section. The Secretary shall not reduce or delay payments

under other provisions of law as a result of amounts made

available to the local housing agency under this section.

(6) FINANCING.—When financing for the purchase of the

property is not otherwise available for purposes of assisting

any purchase by a family or resident management corporation

under this section, the public housing agency involved may

make a loan on the security of the property involved to the

family or resident management corporation at a rate of interest

that shall not be lower than 70 percent of the market interest

rate for conventional mortgages on the date on which the loan

is made.

(7) CAPITAL AND OPERATING ASSISTANCE.—Notwithstanding

the purchase of a building in a public housing project under

this section, the Secretary shall continue to provide assistance

under section 9 with respect to the project. Such assistance

may not exceed the allocation for the project under section 9.

(8) OPERATING FUND ALLOCATION.—Amounts from the Operating Fund shall not be available with respect to a building

after the date of its sale by the public housing agency.

(b) PROTECTION OF NONPURCHASING FAMILIES.— (1) EVICTION PROHIBITION.—No family residing in a dwelling unit in a public housing project may be evicted by reason

of the sale of the project to a resident management corporation

under this section.

(2) TENANTS RIGHTS.—Families renting a dwelling unit

purchased by a resident management corporation shall have

all rights provided to tenants of public housing under this Act.

(3) RENTAL ASSISTANCE.—If any family resides in a dwelling unit in a building purchased by a resident management

corporation, and the family decides not to purchase the dwelling unit, the Secretary shall offer to provide to the family (at

the option of the family) tenant-based assistance under section

8(o) for as long as the family continues to reside in the building. The Secretary may adjust the payment standard for such

assistance to take into account conditions under which the

building was purchased.

(4) RENTAL AND RELOCATION ASSISTANCE.—If any family

resides in a dwelling unit in a public housing project in which

other dwelling units are purchased under this section, and the

family decides not to purchase the dwelling unit, the Secretary

shall offer (to be selected by the family, at its option)—

(A) to assist the family in relocating to a comparable

appropriate sized dwelling unit in another public housing

project, and to reimburse the family for their cost of relocation; and

(B) to provide to the family the financial assistance

necessary to permit the family to stay in the dwelling unit

or to move to another comparable dwelling unit and to pay

no more for rent than required under subparagraph (A),

(B), or (C) of section 3(a)(1).

(c) FINANCIAL ASSISTANCE FOR PUBLIC HOUSING AGENCIES.—

The Secretary shall provide to public housing agencies such finan-
231 Sec. 22 UNITED STATES HOUSING ACT OF 1937

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date. 2February 5, 1988.

cial assistance as is necessary to permit such agencies to carry out

the provisions of this section.

(d) ADDITIONAL HOMEOWNERSHIP AND MANAGEMENT OPPORTUNITIES.—This section shall not apply to the turnkey III, the mutual

help, or any other homeownership program established under section 6(c)(4)(D), as in effect before the effective date under section

503(a) of the Quality Housing and Work Responsibility Act of

1998 1, and in existence before the date of the enactment of the

Housing and Community Development Act of 1987 2.

(e) REGULATIONS.—The Secretary shall issue such regulations

as may be necessary to carry out the provisions of this section.

Such regulations may establish any additional terms and conditions for homeownership or resident management under this section that are determined by the Secretary to be appropriate.

ø(f) [Repealed.]¿

(g) LIMITATION.—Any authority of the Secretary under this section to provide financial assistance, or to enter into contracts to

provide financial assistance, shall be effective only to such extent

or in such amounts as are or have been provided in advance in an

appropriation Act. ø42 U.S.C. 1437s¿

SEC. 22. ø42 U.S.C. 1437t¿ AUTHORITY TO CONVERT PUBLIC HOUSING

TO VOUCHERS.

(a) AUTHORITY.—A public housing agency may convert any

public housing project (or portion thereof) owned by the public

housing agency to tenant-based assistance, but only in accordance

with the requirements of this section.

(b) CONVERSION ASSESSMENT.—

(1) IN GENERAL.—To convert public housing under this section, a public housing agency shall conduct an assessment of

the public housing that includes—

(A) a cost analysis that demonstrates whether or not

the cost (both on a net present value basis and in terms

of new budget authority requirements) of providing tenantbased assistance under section 8 for the same families in

substantially similar dwellings over the same period of

time is less expensive than continuing public housing assistance in the public housing project for the remaining

useful life of the project;

(B) an analysis of the market value of the public housing project both before and after rehabilitation, and before

and after conversion;

(C) an analysis of the rental market conditions with

respect to the likely success of the use of tenant-based assistance under section 8 in that market for the specific

residents of the public housing project, including an assessment of the availability of decent and safe dwellings

renting at or below the payment standard established for

tenant-based assistance under section 8 by the agency;
Sec. 22 UNITED STATES HOUSING ACT OF 1937 232

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

(D) the impact of the conversion to tenant-based assistance under this section on the neighborhood in which

the public housing project is located; and

(E) a plan that identifies actions, if any, that the public housing agency would take with regard to converting

any public housing project or projects (or portions thereof)

of the public housing agency to tenant-based assistance.

(2) TIMING.—Not later than 2 years after the effective date

under section 503(a) of the Quality Housing and Work Responsibility Act of 1998 1, each public housing agency shall conduct

an assessment under paragraph (1) or (3) of the status of each

public housing project owned by such agency and shall submit

to the Secretary such assessment. A public housing agency

may otherwise undertake an assessment under this subsection

at any time and for any public housing project (or portion

thereof) owned by the agency. A public housing agency may update a previously conducted assessment for a project (or portion thereof) for purposes of compliance with the one-year limitation under subsection (c).

(3) STREAMLINED ASSESSMENT.—At the discretion of the

Secretary or at the request of a public housing agency, the Secretary may waive any or all of the requirements of paragraph

(1) or (3) or otherwise require a streamlined assessment with

respect to any public housing project or class of public housing

projects.

(c) CRITERIA FOR IMPLEMENTATION OF CONVERSION PLAN.—A

public housing agency may convert a public housing project (or portion thereof) owned by the agency to tenant-based assistance only

pursuant to a conversion assessment under subsection (b) that one

year and that demonstrates that the conversion—

(1) will not be more expensive than continuing to operate

the public housing project (or portion thereof) as public housing;

(2) will principally benefit the residents of the public housing project (or portion thereof) to be converted, the public housing agency, and the community; and

(3) will not adversely affect the availability of affordable

housing in such community.

(d) CONVERSION PLAN REQUIREMENT.—A public housing project

may be converted under this section to tenant-based assistance

only as provided in a conversion plan under this subsection, which

has not been disapproved by the Secretary pursuant to subsection

(e). Each conversion plan shall—

(1) be developed by the public housing agency, in consultation with the appropriate public officials, with significant participation by the residents of the project (or portion thereof) to

be converted;

(2) be consistent with and part of the public housing agency plan;
233 Sec. 22 UNITED STATES HOUSING ACT OF 1937

(3) describe the conversion and future use or disposition of

the project (or portion thereof) and include an impact analysis

on the affected community;

(4) provide that the public housing agency shall—

(A) notify each family residing in a public housing

project (or portion) to be converted under the plan 90 days

prior to the displacement date except in cases of imminent

threat to health or safety, consistent with any guidelines

issued by the Secretary governing such notifications,

that—

(i) the public housing project (or portion) will be

removed from the inventory of the public housing

agency; and

(ii) each family displaced by such action will be offered comparable housing—

(I) that meets housing quality standards;

(II) that is located in an area that is generally

not less desirable than the location of the displaced person’s housing; and

(III) which may include—

(aa) tenant-based assistance, except that

the requirement under this clause regarding

offering of comparable housing shall be fulfilled by use of tenant-based assistance only

upon the relocation of such family into such

housing;

(bb) project-based assistance; or

(cc) occupancy in a unit operated or assisted by the public housing agency at a rental rate paid by the family that is comparable

to the rental rate applicable to the unit from

which the family is vacated;

(B) provide any necessary counseling for families displaced by such action;

(C) ensure that, if the project (or portion) converted is

used as housing after such conversion, each resident may

choose to remain in their dwelling unit in the project and

use the tenant-based assistance toward rent for that unit;

and

(D) provide any actual and reasonable relocation expenses for families displaced by the conversion; and

(5) provide that any proceeds to the agency from the conversion will be used subject to the limitations that are applicable under section 18(a)(5) to proceeds resulting from the disposition or demolition of public housing.

(e) REVIEW AND APPROVAL OF CONVERSION PLANS.—The Secretary shall disapprove a conversion plan only if—

(1) the plan is plainly inconsistent with the conversion assessment for the agency developed under subsection (b);

(2) there is reliable information and data available to the

Secretary that contradicts that conversion assessment; or

(3) the plan otherwise fails to meet the requirements of

this section.
Sec. 23 UNITED STATES HOUSING ACT OF 1937 234

1October 21, 1998.

(f ) TENANT-BASED ASSISTANCE.—To the extent approved by the

Secretary, the funds used by the public housing agency to provide

tenant-based assistance under section 8 shall be added to the annual contribution contract administered by the public housing

agency.

SEC. 23. ø42 U.S.C. 1437u¿ FAMILY SELF-SUFFICIENCY PROGRAM.

(a) PURPOSE.—The purpose of the Family Self-Sufficiency program established under this section is to promote the development

of local strategies to coordinate use of public housing and assistance under the certificate and voucher programs under section 8

with public and private resources, to enable eligible families to

achieve economic independence and self-sufficiency.

(b) ESTABLISHMENT OF PROGRAM.—

(1) REQUIRED PROGRAMS.—Except as provided in paragraph (2), the Secretary shall carry out a program under which

each public housing agency that administers assistance under

subsection (b) or (o) of section 8 or makes available new public

housing dwelling units—

(A) may, during fiscal years 1991 and 1992, carry out

a local Family Self-Sufficiency program under this section;

(B) effective on October 1, 1992, the Secretary shall require each such agency to carry out a local Family SelfSufficiency program under this section, subject to the limitations in paragraph (4); and

(C) effective on the date of the enactment of the Quality Housing and Work Responsibility Act of 1998 1, to the

extent an agency is not required to carry out a program

pursuant to subparagraph (B) of this paragraph and paragraph (4), may carry out a local Family Self-Sufficiency

program under this section.

Subject to paragraph (4), each local program shall, subject to

availability of supportive services, include an action plan under

subsection (g) and shall provide comprehensive supportive

services for families electing to participate in the program. In

carrying out the self-sufficiency program under this section,

the Secretary shall consult with the heads of other appropriate

Federal agencies and provide for cooperative actions and funding agreements with such agencies. Each public housing agency administering an approved local program may employ a

service coordinator to administer the local program.

(2) EXCEPTION.—The Secretary shall not require a public

housing agency to carry out a local program under subsection

(a) if the public housing agency provides certification (as such

term is defined under title I of the Cranston-Gonzalez National

Affordable Housing Act) to the Secretary, that the establishment and operation of the program is not feasible because of

local circumstances, which may include—

(A) lack of supportive services accessible to eligible

families, which shall include insufficient availability of resources for programs under title I of the Workforce Investment Act of 1998 or the Job Opportunities and Basic Skills
235 Sec. 23 UNITED STATES HOUSING ACT OF 1937

1October 21, 1998.

Training Program under part F of title IV of the Social Security Act;

(B) lack of funding for reasonable administrative costs;

(C) lack of cooperation by other units of State or local

government; or

(D) any other circumstances that the Secretary may

consider appropriate.

In allocating assistance available for reservation under this

Act, the Secretary may not refuse to provide assistance or decrease the amount of assistance that would otherwise be provided to any public housing agency because the agency has

provided a certification under this paragraph or because, pursuant to a certification, the agency has failed to carry out a

self-sufficiency program.

(3) SCOPE.—Subject to paragraph (4), each public housing

agency required to carry out a local program under this section

shall make the following housing assistance available under

the program in each fiscal year:

(A) Certificate and voucher assistance under section

8(b) and (o), in an amount equivalent to the increase for

such year in the number of families so assisted by the

agency (as compared to the preceding year).

(B) Public housing dwelling units, in the number equal

to the increase for such year in units made available by

the agency (as compared to the preceding year).

Each such public housing agency shall continue to operate

a local program for the number of families determined under

this paragraph subject only to the availability under appropriations Acts of sufficient amounts for assistance.

(4) TERMINATION OF REQUIREMENT TO EXPAND PROGRAM.—

(A) IN GENERAL.—Notwithstanding any other provision

of law, a public housing agency that receives incremental

assistance under subsection (b) or (o) of section 8 or that

makes available new public housing dwelling units shall

not be required, after the enactment of the Quality Housing and Work Responsibility Act of 1998 1, to provide assistance under a local Family Self-Sufficiency program

under this section to any families not required to be assisted under subparagraph (B) of this paragraph.

(B) CONTINUATION OF EXISTING OBLIGATIONS.— (i) IN GENERAL.—Each public housing agency that,

before the enactment of the Quality Housing and

Work Responsibility Act of 1998 1, was required under

this section to carry out a local Family Self-Sufficiency

program shall continue to operate such local program

for the number of families determined under paragraph (3), subject only to the availability under appropriations Acts of sufficient amounts for housing assistance.

(ii) REDUCTION.—The number of families for which

an agency is required under clause (i) to operate such

local program shall be decreased by one for each fam-
Sec. 23 UNITED STATES HOUSING ACT OF 1937 236

ily that, after enactment of the Quality Housing and

Work Responsibility Act of 1998 1, fulfills its obligations under the contract of participation.

(5) NONPARTICIPATION.—Assistance under the certificate or

voucher programs under section 8 for a family that elects not

to participate in a local program shall not be delayed by reason

of such election.

(c) CONTRACT OF PARTICIPATION.—

(1) IN GENERAL.—Each public housing agency carrying out

a local program under this section shall enter into a contract

with each leaseholder receiving assistance under the certificate

and voucher programs of the public housing agency under section 8 or residing in public housing administered by the agency, that elects to participate in the self-sufficiency program

under this section. The contract shall set forth the provisions

of the local program, shall establish specific interim and final

goals by which compliance with and performance of the contract may be measured, and shall specify the resources and

supportive services to be made available to the participating

family pursuant to paragraph (2) and the responsibilities of the

participating family. The contract shall provide that the public

housing agency may terminate or withhold assistance under

section 8 and services under paragraph (2) of this subsection

if the public housing agency determines, through an administrative grievance procedure in accordance with the requirements of section 6(k), that the family has failed to comply with

the requirements of the contract without good cause (which

may include a loss or reduction in access to supportive services, or a change in circumstances that makes the family or individual unsuitable for participation).

(2) SUPPORTIVE SERVICES.—A local program under this section shall provide appropriate supportive services under this

paragraph to each participating family entering into a contract

of participation under paragraph (1). The supportive services

shall be provided during the period the family is receiving assistance under section 8 or residing in public housing, and may

include—

(A) child care;

(B) transportation necessary to receive services;

(C) remedial education;

(D) education for completion of high school;

(E) job training and preparation;

(F) substance abuse treatment and counseling;

(G) training in homemaking and parenting skills;

(H) training in money management;

(I) training in household management; and

(J) any other services and resources appropriate to assist eligible families to achieve economic independence and

self-sufficiency.

(3) TERM AND EXTENSION.—Each family participating in a

local program shall be required to fulfill its obligations under

the contract of participation not later than 5 years after entering into the contract. The public housing agency shall extend
237 Sec. 23 UNITED STATES HOUSING ACT OF 1937

the term of the contract for any family that requests an extension, upon a finding of the agency of good cause.

(4) EMPLOYMENT AND COUNSELING.—The contract of participation shall require the head of the participating family to

seek suitable employment during the term of the contract. The

public housing agency may, during such period, provide counseling for the family with respect to affordable rental and

homeownership opportunities in the private housing market

and money management counseling.

(d) INCENTIVES FOR PARTICIPATION.— (1) MAXIMUM RENTS.—During the term of the contract of

participation, the amount of rent paid by any participating

family whose monthly adjusted income does not exceed 50 percent of the area median income for occupancy in the public

housing unit or dwelling unit assisted under section 8 may not

be increased on the basis of any increase in the earned income

of the family, unless the increase results in an income exceeding 50 percent of the area median income. The Secretary shall

provide for increased rents for participating families whose incomes are between 50 and 80 percent of the area median income, so that any family whose income increases to 80 percent

or more of the area median income pays 30 percent of the family’s monthly adjusted income for rent. Upon completion of the

contract of participation, if the participating family continues

to qualify for and reside in a dwelling unit in public housing

or housing assisted under section 8, the rent charged the participating family shall be increased (if applicable) to 30 percent

of the monthly adjusted income of the family.

(2) ESCROW SAVINGS ACCOUNTS.—For each participating

family whose monthly adjusted income is less than 50 percent

of the area median income, the difference between 30 percent

of the adjusted income of the participating family and the

amount of rent paid by a participating family shall be placed

in an interest-bearing escrow account established by the public

housing agency on behalf of the participating family. For families with incomes between 50 and 80 percent of the area median income, the Secretary shall provide for escrow of the difference between 30 percent of the family income and the

amount paid by the family for rent as determined by the Secretary under paragraph (1). The Secretary shall not escrow any

amounts for any family whose adjusted income exceeds 80 percent of the area median income. Amounts in the escrow account may be withdrawn by the participating family after the

family ceases to receive income assistance under Federal or

State welfare programs, upon successful performance of the obligations of the family under the contract of participation entered into by the family under subsection (c), as determined according to the specific goals and terms included in the contract,

and under other circumstances in which the Secretary determines an exception for good cause is warranted. A public housing agency establishing such escrow accounts may make certain amounts in the accounts available to the participating

families before full performance of the contract obligations

based on compliance with, and completion of, specific interim
Sec. 23 UNITED STATES HOUSING ACT OF 1937 238

goals included in the contract; except that any such amounts

shall be used by the participating families for purposes consistent with the contracts of participation, as determined by

the public housing agency.

(3) PLAN.—Each public housing agency carrying out a local

program under this section shall establish a plan to offer incentives to families to encourage families to participate in the

program. The plan shall require the establishment of escrow

savings accounts under paragraph (2) and may include any

other incentives designed by the public housing agency.

(e) EFFECT OF INCREASES IN FAMILY INCOME.—Any increase in

the earned income of a family during the participation of the family

in a local program established under this section may not be considered as income or a resource for purposes of eligibility of the

family for other benefits, or amount of benefits payable to the family, under any program administered by the Secretary, unless the

income of the family equals or exceeds 80 percent of the median income of the area (as determined by the Secretary with adjustments

for smaller and larger families).

(f) PROGRAM COORDINATING COMMITTEE.— (1) FUNCTIONS.—Each public housing agency carrying out

a local program under this section shall, in consultation with

the chief executive officer of the unit of general local government, develop an action plan under subsection (g), carry out

activities under the local program, and secure commitments of

public and private resources through a program coordinating

committee established by the public housing agency under this

subsection.

(2) MEMBERSHIP.—The program coordinating committee

may consist of representatives of the public housing agency,

the unit of general local government, the local agencies (if any)

responsible for carrying out programs under title I of the

Workforce Investment Act of 1998 or the Job Opportunities

and Basic Skills Training Program under part F of title IV of

the Social Security Act, and other organizations, such as other

State and local welfare and employment agencies, public and

private education or training institutions, nonprofit service

providers, and private businesses. The public housing agency

may, in consultation with the chief executive officer of the unit

of general local government, utilize an existing entity as the

program coordinating committee if it meets the requirements

of this subsection.

(g) ACTION PLAN.—

(1) REQUIRED SUBMISSION.—The Secretary shall require

each public housing agency participating in the self-sufficiency

program under this section to submit to the Secretary, for approval by the Secretary, an action plan under this subsection

in such form and in accordance with such procedures as the

Secretary shall require.

(2) DEVELOPMENT OF PLAN.—In developing the plan, the

public housing agency shall consult with the chief executive officer of the applicable unit of general local government, the

program coordinating committee established under subsection

(f), representatives of residents of the public housing, any local
239 Sec. 23 UNITED STATES HOUSING ACT OF 1937

agencies responsible for programs under title I of the Workforce Investment Act of 1998 or the Job Opportunities and

Basic Skills Training Program under part F of title IV of the

Social Security Act, other appropriate organizations (such as

other State and local welfare and employment or training institutions, child care providers, nonprofit service providers, and

private businesses), and any other public and private service

providers affected by the operation of the local program.

(3) CONTENTS OF PLAN.—The Secretary shall require that

the action plan contain at a minimum—

(A) a description of the size, characteristics, and needs

of the population of the families expected to participate in

the local self-sufficiency program;

(B) a description of the number of eligible participating families who can reasonably be expected to receive

supportive services under the program, based on available

and anticipated Federal, State, local, and private resources;

(C) a description of the services and activities under

subsection (c)(2) to be provided to families receiving assistance under this section through the section 8 and public

housing programs, which shall be provided by both public

and private resources;

(D) a description of the incentives pursuant to subsection (d) offered by the public housing agency to families

to encourage participation in the program;

(E) a description of how the local program will deliver

services and activities according to the needs of the families participating in the program;

(F) a description of both the public and private resources that are expected to be made available to provide

the activities and services under the local program;

(G) a timetable for implementation of the local program;

(H) assurances satisfactory to the Secretary that development of the services and activities under the local

program has been coordinated with the Job Opportunities

and Basic Skills Training Program under part F of title IV

of the Social Security Act and programs under title I of the

workforce Investment Act of 1998 and any other relevant

employment, child care, transportation, training, and education programs in the applicable area, and that implementation will continue to be coordinated, in order to

avoid duplication of services and activities; and

(I) assurances satisfactory to the Secretary that nonparticipating families will retain their rights to public

housing or section 8 assistance notwithstanding the provisions of this section.

(h) ALLOWABLE PUBLIC HOUSING AGENCY ADMINISTRATIVE

FEES AND COSTS.—

(1) SECTION 8 FEES.—The Secretary shall establish a fee

under section 8(q) for the costs incurred in administering the

provision of certificate and voucher assistance under section 8

through the self-sufficiency program under this section. The fee
Sec. 23 UNITED STATES HOUSING ACT OF 1937 240

1So in law.

shall be the fee in effect under such section on June 1, 1990,

except that for purposes of the fee under this paragraph the

applicable dollar amount for preliminary expenses under section 8(q)(2)(A)(i) shall, subject to approval in appropriations

Acts, be $300. Upon the submission by the Comptroller General of the United States of the report required under section

554(b) of the Cranston-Gonzalez National Affordable Housing

Act, the Secretary shall revise the fee under this paragraph,

taking into consideration the report of the Comptroller General.

(2) PERFORMANCE FUNDING SYSTEM.—Notwithstanding any

provision of section 9, the Secretary shall provide for inclusion

under the performance funding system under section 9 of reasonable and eligible administrative costs (including the costs of

employing a full-time service coordinator) incurred by public

housing agencies carrying out local programs under this section. The Secretary shall include an estimate of the administrative costs likely to be incurred by participating public housing agencies in the annual budget request for the Department

of Housing and Urban Development for public housing operating assistance under section 9 and shall include a request for

such amounts in the budget request. Of any amounts appropriated under section 9(c) for fiscal year 1993, $25,000,000 is

authorized to be used for costs under this paragraph, and of

any amounts appropriated under such section for fiscal year

1994, $25,900,000 is authorized to be used for costs under this

paragraph.

(i) PUBLIC HOUSING AGENCY INCENTIVE AWARD ALLOCATION.—

(1) IN GENERAL.—The Secretary shall carry out a competition for budget authority for certificate and voucher assistance

under section 8 and public housing development assistance

under section 5(a)(2) reserved under paragraph (4) and shall

allocate such budget authority to public housing agencies pursuant to the competition.

(2) CRITERIA.—The competition shall be based on successful and outstanding implementation by public housing agencies

of a local self-sufficiency program under this section. The Secretary shall establish perfomance 1 criteria for public housing

agencies carrying out such local programs and the Secretary

shall cause such criteria to be published in the Federal Register.

(3) USE.—Each public housing agency that receives an allocation of budget authority under this subsection shall use

such authority to provide assistance under the local self-sufficiency program established by the public housing agency under

this section.

(4) RESERVATION OF BUDGET AUTHORITY.—Notwithstanding

section 213(d) of the Housing and Community Development

Act of 1974, the Secretary shall reserve for allocation under

this subsection not less than 10 percent of the portion of budget authority appropriated in each of fiscal years 1991 and 1992

for section 8 that is available for purposes of providing assist-
241 Sec. 23 UNITED STATES HOUSING ACT OF 1937

ance under the existing housing certificate and housing voucher programs for families not currently receiving assistance, and

not less than 10 percent of the public housing development assistance available in such fiscal years for the purpose under

section 5(a)(2) (excluding amounts for major reconstruction of

obsolete projects).

(j) ON-SITE FACILITIES.—Each public housing agency carrying

out a local program may, subject to the approval of the Secretary,

make available and utilize common areas or unoccupied public

housing units in public housing projects administered by the agency for the provision of supportive services under the local program.

The use of the facilities of a public housing agency under this subsection shall not affect the amount of assistance provided to the

agency under section 9.

(k) FLEXIBILITY.—In establishing and carrying out the self-sufficiency program under this section, the Secretary shall allow public housing agencies, units of general local government, and other

organizations discretion and flexibility, to the extent practicable, in

developing and carrying out local programs.

(l) REPORTS.—

(1) TO SECRETARY.—Each public housing agency that carries out a local self-sufficiency program approved by the Secretary under this section shall submit to the Secretary, not less

than annually a report regarding the program. The report shall

include—

(A) a description of the activities carried out under the

program;

(B) a description of the effectiveness of the program in

assisting families to achieve economic independence and

self-sufficiency;

(C) a description of the effectiveness of the program in

coordinating resources of communities to assist families to

achieve economic independence and self-sufficiency; and

(D) any recommendations of the public housing agency

or the appropriate local program coordinating committee

for legislative or administrative action that would improve

the self-sufficiency program carried out by the Secretary

and ensure the effectiveness of the program.

(2) HUD ANNUAL REPORT.—The Secretary shall submit to

the Congress annually, as a part of the report of the Secretary

under section 8 of the Department of Housing and Urban Development Act, a report summarizing the information submitted by public housing agencies under paragraph (1). The report under this paragraph shall also include any recommendations of the Secretary for improving the effectiveness of the

self-sufficiency program under this section.

(m) GAO REPORT.—The Comptroller General of the United

States may submit to the Congress reports under this subsection

evaluating and describing the Family Self-Sufficiency program carried out by the Secretary under this section.

(n) DEFINITIONS.—As used in this section:

(1) The term ‘‘contract of participation’’ means a contract

under subsection (c) entered into by a public housing agency
Sec. 24 UNITED STATES HOUSING ACT OF 1937 242

1The date of enactment was November 28, 1990.

carrying out a local program under this section and a participating family.

(2) The term ‘‘earned income’’ means income from wages,

tips, salaries, and other employee compensation, and any earnings from self-employment. The term does not include any pension or annuity, transfer payments, or any cash or in-kind benefits.

(3) The term ‘‘eligible family’’ means a family whose head

of household is not elderly, disabled, pregnant, a primary caregiver for children under the age of 3, or for whom the family

self-sufficiency program would otherwise be unsuitable. Notwithstanding the preceding sentence, a public housing agency

may enroll such families if they choose to participate in the

program.

(4) The term ‘‘local program’’ means a program for providing supportive services to participating families carried out

by a public housing agency within the jurisdiction of the public

housing agency.

(5) The term ‘‘participating family’’ means a family that resides in public housing or housing assisted under section 8 and

elects to participate in a local self-sufficiency program under

this section.

(6) The term ‘‘vacant unit’’ means a dwelling unit that has

been vacant for not less than 9 consecutive months.

(o) EFFECTIVE DATE AND REGULATIONS.—

(1) REGULATIONS.—Not later than the expiration of the

180-day period beginning on the date of the enactment of the

Cranston-Gonzalez National Affordable Housing Act, 1 the Secretary shall by notice establish any requirements necessary to

carry out this section. Such requirements shall be subject to

section 553 of title 5, United States Code. The Secretary shall

issue final regulations based on the notice not later than the

expiration of the 8-month period beginning on the date of the

notice. Such regulations shall become effective upon the expiration of the 1-year period beginning on the date of the publication of the final regulations.

ø(2) [Repealed.]¿

SEC. 24. ø42 U.S.C. 1437v¿ DEMOLITION, SITE REVITALIZATION, REPLACEMENT HOUSING, AND TENANT-BASED ASSISTANCE

GRANTS FOR PROJECTS.

(a) PURPOSES.—The purpose of this section is to provide assistance to public housing agencies for the purposes of—

(1) improving the living environment for public housing

residents of severely distressed public housing projects through

the demolition, rehabilitation, reconfiguration, or replacement

of obsolete public housing projects (or portions thereof);

(2) revitalizing sites (including remaining public housing

dwelling units) on which such public housing projects are located and contributing to the improvement of the surrounding

neighborhood;

(3) providing housing that will avoid or decrease the concentration of very low-income families; and
243 Sec. 24 UNITED STATES HOUSING ACT OF 1937

(4) building sustainable communities.

(b) GRANT AUTHORITY.—The Secretary may make grants as

provided in this section to applicants whose applications for such

grants are approved by the Secretary under this section.

(c) CONTRIBUTION REQUIREMENT.— (1) IN GENERAL.—The Secretary may not make any grant

under this section to any applicant unless the applicant certifies to the Secretary that the applicant will—

(A) supplement the aggregate amount of assistance

provided under this section with an amount of funds from

sources other than this section equal to not less than 5

percent of the amount provided under this section; and

(B) in addition to supplemental amounts provided in

accordance with subparagraph (A), if the applicant uses

more than 5 percent of the amount of assistance provided

under this section for services under subsection (d)(1)(L),

provide supplemental funds from sources other than this

section in an amount equal to the amount so used in excess of 5 percent.

(2) SUPPLEMENTAL FUNDS.—In calculating the amount of

supplemental funds provided by a grantee for purposes of paragraph (1), the grantee may include amounts from other Federal

sources, any State or local government sources, any private

contributions, the value of any donated material or building,

the value of any lease on a building, the value of the time and

services contributed by volunteers, and the value of any other

in-kind services or administrative costs provided.

(3) EXEMPTION.—If assistance provided under this title will

be used only for providing tenant-based assistance under section 8 or demolition of public housing (without replacement),

the Secretary may exempt the applicant from the requirements

under paragraph (1)(A).

(d) ELIGIBLE ACTIVITIES.—

(1) IN GENERAL.—Grants under this section may be used

for activities to carry out revitalization programs for severely

distressed public housing, including—

(A) architectural and engineering work;

(B) redesign, rehabilitation, or reconfiguration of a severely distressed public housing project, including the site

on which the project is located;

(C) the demolition, sale, or lease of the site, in whole

or in part;

(D) covering the administrative costs of the applicant,

which may not exceed such portion of the assistance provided under this section as the Secretary may prescribe;

(E) payment of reasonable legal fees;

(F) providing reasonable moving expenses for residents

displaced as a result of the revitalization of the project;

(G) economic development activities that promote the

economic self-sufficiency of residents under the revitalization program, including a Neighborhood Networks initiative for the establishment and operation of computer centers in public housing for the purpose of enhancing the

self-sufficiency, employability, an economic self-reliance of
Sec. 24 UNITED STATES HOUSING ACT OF 1937 244

public housing residents by providing them with onsite

computer access and training resources;

(H) necessary management improvements;

(I) leveraging other resources, including additional

housing resources, retail supportive services, jobs, and

other economic development uses on or near the project

that will benefit future residents of the site;

(J) replacement housing (including appropriate homeownership downpayment assistance for displaced residents

or other appropriate replacement homeownership activities) and rental assistance under section 8;

(K) transitional security activities; and

(L) necessary supportive services, except that not more

than 15 percent of the amount of any grant may be used

for activities under this paragraph.

(2) ENDOWMENT TRUST FOR SUPPORTIVE SERVICES.—In

using grant amounts under this section made available in fiscal year 2000 or thereafter for supportive services under paragraph (1)(L), a public housing agency may deposit such

amounts in an endowment trust to provide supportive services

over such period of time as the agency determines. Such

amounts shall be provided to the agency by the Secretary in

a lump sum when requested by the agency, shall be invested

in a wise and prudent manner, and shall be used (together

with any interest thereon earned) only for eligible uses pursuant to paragraph (1)(L). A public housing agency may use

amounts in an endowment trust under this paragraph in conjunction with other amounts donated or otherwise made available to the trust for similar purposes.

(e) APPLICATION AND SELECTION.—

(1) APPLICATION.—An application for a grant under this

section shall demonstrate the appropriateness of the proposal

in the context of the local housing market relative to other alternatives, and shall include such other information and be

submitted at such time and in accordance with such procedures, as the Secretary shall prescribe.

(2) SELECTION CRITERIA.—The Secretary shall establish selection criteria for the award of grants under this section and

shall include such factors as—

(A) the relationship of the grant to the public housing

agency plan for the applicant and how the grant will result

in a revitalized site that will enhance the neighborhood in

which the project is located and enhance economic opportunities for residents;

(B) the capability and record of the applicant public

housing agency, or any alternative management entity for

the agency, for managing large-scale redevelopment or

modernization projects, meeting construction timetables,

and obligating amounts in a timely manner;

(C) the extent to which the applicant could undertake

such activities without a grant under this section;

(D) the extent of involvement of residents, State and

local governments, private service providers, financing en-
245 Sec. 24 UNITED STATES HOUSING ACT OF 1937

tities, and developers, in the development of a revitalization program for the project;

(E) the need for affordable housing in the community;

(F) the supply of other housing available and affordable to families receiving tenant-based assistance under

section 8;

(G) the amount of funds and other resources to be leveraged by the grant;

(H) the extent of the need for, and the potential impact of, the revitalization program; and

(I) such other factors as the Secretary considers appropriate.

(3) APPLICABILITY OF SELECTION CRITERIA.—The Secretary

may determine not to apply certain of the selection criteria established pursuant to paragraph (2) when awarding grants for

demolition only, tenant-based assistance only, or other specific

categories of revitalization activities. This section may not be

construed to require any application for a grant under this section to include demolition of public housing or to preclude use

of grant amounts for rehabilitation or rebuilding of any housing on an existing site.

(f ) COST LIMITS.—Subject to the provisions of this section, the

Secretary—

(1) shall establish cost limits on eligible activities under

this section sufficient to provide for effective revitalization programs; and

(2) may establish other cost limits on eligible activities

under this section.

(g) DISPOSITION AND REPLACEMENT.—Any severely distressed

public housing disposed of pursuant to a revitalization plan and

any public housing developed in lieu of such severely distressed

housing, shall be subject to the provisions of section 18. Severely

distressed public housing demolished pursuant to a revitalization

plan shall not be subject to the provisions of section 18.

(h) ADMINISTRATION BY OTHER ENTITIES.—The Secretary may

require a grantee under this section to make arrangements satisfactory to the Secretary for use of an entity other than the public

housing agency to carry out activities assisted under the revitalization plan, if the Secretary determines that such action will help to

effectuate the purposes of this section.

(i) WITHDRAWAL OF FUNDING.—If a grantee under this section

does not proceed within a reasonable timeframe, in the determination of the Secretary, the Secretary shall withdraw any grant

amounts under this section that have not been obligated by the

public housing agency. The Secretary shall redistribute any withdrawn amounts to one or more other applicants eligible for assistance under this section or to one or more other entities capable of

proceeding expeditiously in the same locality in carrying out the revitalization plan of the original grantee.

( j) DEFINITIONS.—For purposes of this section, the following

definitions shall apply:

(1) APPLICANT.—The term ‘‘applicant’’ means—

(A) any public housing agency that is not designated

as troubled pursuant to section 6( j)(2);
Sec. 24 UNITED STATES HOUSING ACT OF 1937 246

1So in law.

2So in law.

3The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

(B) any public housing agency for which a private

housing management agent has been selected, or a receiver has been appointed, pursuant to section 6( j)(3); and

(C) any public housing agency that is designated as

troubled pursuant to section 6( j)(2) and that—

(i) is so designated principally for reasons that

will not affect the capacity of the agency to carry out

a revitalization program;

(ii) is making substantial progress toward eliminating the deficiencies of the agency; or

(iii) is otherwise determined by the Secretary to

be capable of carrying out a revitalization program.

(2) SEVERELY DISTRESSED PUBLIC HOUSING.—The term ‘‘severely distressed public housing’’ means a public housing

project (or building in a project)—

(A) that—

(i) requires major redesign, reconstruction or redevelopment, or partial or total demolition, to correct serious deficiencies in the original design (including inappropriately high population density), deferred maintenance, physical deterioration or obsolescence of

major systems and other deficiencies in the physical

plant of the project;

(ii) is a significant contributing factor to the physical decline of and disinvestment by public and private

entities in the surrounding neighborhood;

(iii)(I) is occupied predominantly by families who

are very low-income families with children, are unemployed, and dependent on various forms of public assistance; or

(II) has high rates of vandalism and criminal activity (including drug-related criminal activity) in comparison to other housing in the area;

(iv) cannot be revitalized through assistance under

other programs, such as the program for capital and

operating assistance for public housing under this Act,

or the programs under sections 9 and 14 of the United

States Housing Act of 1937 (as in effect before the effective date under under 1 section 503(a) 2 the Quality

Housing and Work Responsibility Act of 1998 3), because of cost constraints and inadequacy of available

amounts; and

(v) in the case of individual buildings, is, in the

Secretary’s determination, sufficiently separable from

the remainder of the project of which the building is

part to make use of the building feasible for purposes

of this section; or

(B) that was a project described in subparagraph (A)

that has been legally vacated or demolished, but for which
247 Sec. 25 UNITED STATES HOUSING ACT OF 1937

the Secretary has not yet provided replacement housing

assistance (other than tenant-based assistance).

(3) SUPPORTIVE SERVICES.—The term ‘‘supportive services’’

includes all activities that will promote upward mobility, selfsufficiency, and improved quality of life for the residents of the

public housing project involved, including literacy training, job

training, day care, transportation, and economic development

activities.

(k) GRANTEE REPORTING.—The Secretary shall require grantees of assistance under this section to report the sources and uses

of all amounts expended for revitalization plans.

(l) ANNUAL REPORT.—The Secretary shall submit to the Congress an annual report setting forth—

(1) the number, type, and cost of public housing units revitalized pursuant to this section;

(2) the status of projects identified as severely distressed

public housing;

(3) the amount and type of financial assistance provided

under and in conjunction with this section; and

(4) the recommendations of the Secretary for statutory and

regulatory improvements to the program established by this

section.

(m) FUNDING.— (1) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for grants under this section

$600,000,000 for fiscal year 1999 and such sums as may be

necessary for each of fiscal years 2000, 2001, and 2002.

(2) TECHNICAL ASSISTANCE AND PROGRAM OVERSIGHT.—Of

the amount appropriated pursuant to paragraph (1) for any fiscal year, the Secretary may use up to 2 percent for technical

assistance or contract expertise, including assistance in connection with the establishment and operation of computer centers

in public housing through the Neighborhoods Networks initiative described in subsection (d)(1)(G). Such assistance or contract expertise may be provided directly or indirectly by grants,

contracts, or cooperative agreements, and shall include training, and the cost of necessary travel for participants in such

training, by or to officials of the Department of Housing and

Urban Development, of public housing agencies, and of residents.

(n) SUNSET.—No assistance may be provided under this section

after September 30, 2002.

SEC. 25. ø42 U.S.C. 1437w¿ TRANSFER OF MANAGEMENT OF CERTAIN

HOUSING TO INDEPENDENT MANAGER AT REQUEST OF

RESIDENTS.

(a) AUTHORITY.—The Secretary may transfer the responsibility

and authority for management of specified housing (as such term

is defined in subsection (h)) from a public housing agency to an eligible management entity, in accordance with the requirements of

this section, if—

(1) a request for transfer of management of such housing

is made and approved in accordance with subsection (b); and

(2) the Secretary or the public housing agency, as appropriate pursuant to subsection (b), determines that—
Sec. 25 UNITED STATES HOUSING ACT OF 1937 248

(A) due to the mismanagement of the agency, such

housing has deferred maintenance, physical deterioration,

or obsolescence of major systems and other deficiencies in

the physical plant of the project;

(B) such housing is located in an area such that the

housing is subject to recurrent vandalism and criminal activity (including drug-related criminal activity); and

(C) the residents can demonstrate that the elements of

distress for such housing specified in subparagraphs (A)

and (B) can be remedied by an entity or entities, identified

by the residents, that has or have a demonstrated capacity

to manage, with reasonable expenses for modernization.

(b) REQUEST FOR TRANSFER.—The responsibility and authority

for managing specified housing may be transferred only pursuant

to a request made by a majority vote of the residents for the specified housing that—

(1) in the case of specified housing that is owned by a public housing agency that is designated as a troubled agency

under section 6( j)(2)—

(A) is made to the public housing agency or the Secretary; and

(B) is approved by the agency or the Secretary; or

(2) in the case of specified housing that is owned by a public housing agency that is not designated as a troubled agency

under section 6( j)(2)—

(A) is made to and approved by the public housing

agency; or

(B) if a request is made to the agency pursuant to subparagraph (A) and is not approved, is subsequently made

to and approved by the Secretary.

(c) CAPITAL AND OPERATING ASSISTANCE.—Pursuant to a contract under subsection (d), the Secretary shall require the public

housing agency for specified housing to provide to the manager for

the housing, from any assistance from the Capital and Operating

Funds under section 9 for the agency, fair and reasonable amounts

for the housing for eligible capital and operating activities under

subsection (d)(1) and (e)(1) of section 9. The amount made available

under this subsection to a manager shall be determined by the Secretary based on the share for the specified housing of the aggregate

amount of assistance from such Funds for the public housing agency transferring the housing, taking into consideration the operating

and capital improvement needs of the specified housing, the operating and capital improvement needs of the remaining public housing units managed by the public housing agency, and the public

housing agency plan of such agency.

(d) CONTRACT BETWEEN SECRETARY AND MANAGER.—

(1) REQUIREMENTS.—Pursuant to the approval of a request

under this section for transfer of the management of specified

housing, the Secretary shall enter into a contract with the eligible management entity.

(2) TERMS.—A contract under this subsection shall contain

provisions establishing the rights and responsibilities of the

manager with respect to the specified housing and the Sec-
249 Sec. 25 UNITED STATES HOUSING ACT OF 1937

retary and shall be consistent with the requirements of this

Act applicable to public housing projects.

(e) COMPLIANCE WITH PUBLIC HOUSING AGENCY PLAN.—A

manager of specified housing under this section shall comply with

the approved public housing agency plan applicable to the housing

and shall submit such information to the public housing agency

from which management was transferred as may be necessary for

such agency to prepare and update its public housing agency plan.

(f ) DEMOLITION AND DISPOSITION BY MANAGER.—A manager

under this section may demolish or dispose of specified housing

only if, and in the manner, provided for in the public housing agency plan for the agency transferring management of the housing.

(g) LIMITATION ON PHA LIABILITY.—A public housing agency

that is not a manager for specified housing shall not be liable for

any act or failure to act by a manager or resident council for the

specified housing.

(h) DEFINITIONS.—For purposes of this section, the following

definitions shall apply:

(1) ELIGIBLE MANAGEMENT ENTITY.—The term ‘‘eligible

management entity’’ means, with respect to any public housing

project, any of the following entities:

(A) NONPROFIT ORGANIZATION.—A public or private

nonprofit organization, which may—

(i) include a resident management corporation;

and

(ii) not include the public housing agency that

owns or operates the project.

(B) FOR-PROFIT ENTITY.—A for-profit entity that has

demonstrated experience in providing low-income housing.

(C) STATE OR LOCAL GOVERNMENT.—A State or local

government, including an agency or instrumentality thereof.

(D) PUBLIC HOUSING AGENCY.—A public housing

agency (other than the public housing agency that owns or

operates the project).

The term does not include a resident council.

(2) MANAGER.—The term ‘‘manager’’ means any eligible

management entity that has entered into a contract under this

section with the Secretary for the management of specified

housing.

(3) NONPROFIT.—The term ‘‘nonprofit’’ means, with respect

to an organization, association, corporation, or other entity,

that no part of the net earnings of the entity inures to the benefit of any member, founder, contributor, or individual.

(4) PRIVATE NONPROFIT ORGANIZATION.—The term ‘‘private

nonprofit organization’’ means any private organization (including a State or locally chartered organization) that—

(A) is incorporated under State or local law;

(B) is nonprofit in character;

(C) complies with standards of financial accountability

acceptable to the Secretary; and

(D) has among its purposes significant activities related to the provision of decent housing that is affordable

to low-income families.
Sec. 26 UNITED STATES HOUSING ACT OF 1937 250

(5) PUBLIC NONPROFIT ORGANIZATION.—The term ‘‘public

nonprofit organization’’ means any public entity that is nonprofit in character.

(6) SPECIFIED HOUSING.—The term ‘‘specified housing’’

means a public housing project or projects, or a portion of a

project or projects, for which the transfer of management is requested under this section. The term includes one or more contiguous buildings and an area of contiguous row houses, but in

the case of a single building, the building shall be sufficiently

separable from the remainder of the project of which it is part

to make transfer of the management of the building feasible

for purposes of this section.

SEC. 26. ø42 U.S.C. 1437x¿ ENVIRONMENTAL REVIEWS.

(a) IN GENERAL.—

(1) RELEASE OF FUNDS.—In order to assure that the policies of the National Environmental Policy Act of 1969 and

other provisions of law which further the purposes of such Act

(as specified in regulations issued by the Secretary) are most

effectively implemented in connection with the expenditure of

funds under this title, and to assure to the public

undiminished protection of the environment, the Secretary

may, under such regulations, in lieu of the environmental protection procedures otherwise applicable, provide for the release

of funds for projects or activities under this title, as specified

by the Secretary upon the request of a public housing agency

under this section, if the State or unit of general local government, as designated by the Secretary in accordance with regulations, assumes all of the responsibilities for environmental

review, decisionmaking, and action pursuant to such Act, and

such other provisions of law as the regulations of the Secretary

may specify, which would otherwise apply to the Secretary

with respect to the release of funds.

(2) IMPLEMENTATION.—The Secretary, after consultation

with the Council on Environmental Quality, shall issue such

regulations as may be necessary to carry out this section. Such

regulations shall specify the programs to be covered.

(b) PROCEDURE.—The Secretary shall approve the release of

funds subject to the procedures authorized by this section only if,

not less than 15 days prior to such approval and prior to any commitment of funds to such projects or activities, the public housing

agency has submitted to the Secretary a request for such release

accompanied by a certification of the State or unit of general local

government which meets the requirements of subsection (c). The

Secretary’s approval of any such certification shall be deemed to

satisfy the Secretary’s responsibilities under the National Environmental Policy Act of 1969 and such other provisions of law as the

regulations of the Secretary specify insofar as those responsibilities

relate to the release of funds which are covered by such certification.

(c) CERTIFICATION.—A certification under the procedures authorized by this section shall—

(1) be in a form acceptable to the Secretary;
251 Sec. 28 UNITED STATES HOUSING ACT OF 1937

(2) be executed by the chief executive officer or other officer of the State or unit of general local government who qualifies under regulations of the Secretary;

(3) specify that the State or unit of general local government under this section has fully carried out its responsibilities as described under subsection (a); and

(4) specify that the certifying officer—

(A) consents to assume the status of a responsible Federal official under the National Environmental Policy Act

of 1969 and each provision of law specified in regulations

issued by the Secretary insofar as the provisions of such

Act or other such provision of law apply pursuant to subsection (a); and

(B) is authorized and consents on behalf of the State

or unit of general local government and himself or herself

to accept the jurisdiction of the Federal courts for the purpose of enforcement of his or her responsibilities as such

an official.

(d) APPROVAL BY STATES.—In cases in which a unit of general

local government carries out the responsibilities described in subsection (c), the Secretary may permit the State to perform those actions of the Secretary described in subsection (b) and the performance of such actions by the State, where permitted by the Secretary, shall be deemed to satisfy the Secretary’s responsibilities

referred to in the second sentence of subsection (b).

SEC. 27. ø42 U.S.C. 1437y¿ PROVISION OF INFORMATION TO LAW ENFORCEMENT AND OTHER AGENCIES.

Notwithstanding any other provision of law, the Secretary

shall, at least 4 times annually and upon request of the Immigration and Naturalization Service (hereafter in this section referred

to as the ‘‘Service’’), furnish the Service with the name and address

of, and other identifying information on, any individual who the

Secretary knows is not lawfully present in the United States, and

shall ensure that each contract for assistance entered into under

section 6 or 8 of this Act with a public housing agency provides

that the public housing agency shall furnish such information at

such times with respect to any individual who the public housing

agency knows is not lawfully present in the United States.

SEC. 28. ø42 U.S.C. 1437z¿ EXCHANGE OF INFORMATION WITH LAW ENFORCEMENT AGENCIES.

Notwithstanding any other provision of law, each public housing agency that enters into a contract for assistance under section

6 or 8 of this Act with the Secretary shall furnish any Federal,

State, or local law enforcement officer, upon the request of the officer, with the current address, Social Security number, and photograph (if applicable) of any recipient of assistance under this Act,

if the officer—

(1) furnishes the public housing agency with the name of

the recipient; and

(2) notifies the agency that—

(A) such recipient—

(i) is fleeing to avoid prosecution, or custody or

confinement after conviction, under the laws of the
Sec. 29 UNITED STATES HOUSING ACT OF 1937 252

place from which the individual flees, for a crime, or

attempt to commit a crime, which is a felony under

the laws of the place from which the individual flees,

or which, in the case of the State of New Jersey, is a

high misdemeanor under the laws of such State; or

(ii) is violating a condition of probation or parole

imposed under Federal or State law; or

(iii) has information that is necessary for the officer to conduct the officer’s official duties;

(B) the location or apprehension of the recipient is

within such officer’s official duties; and

(C) the request is made in the proper exercise of the

officer’s official duties.

SEC. 29. ø42 U.S.C. 1437z–1¿ CIVIL MONEY PENALTIES AGAINST SECTION 8 OWNERS.

(a) IN GENERAL.— (1) EFFECT ON OTHER REMEDIES.—The penalties set forth

in this section shall be in addition to any other available civil

remedy or any available criminal penalty, and may be imposed

regardless of whether the Secretary imposes other administrative sanctions.

(2) FAILURE OF SECRETARY.—The Secretary may not impose penalties under this section for a violation, if a material

cause of the violation is the failure of the Secretary, an agent

of the Secretary, or a public housing agency to comply with an

existing agreement.

(b) VIOLATIONS OF HOUSING ASSISTANCE PAYMENT CONTRACTS

FOR WHICH PENALTY MAY BE IMPOSED.— (1) LIABLE PARTIES.—The Secretary may impose a civil

money penalty under this section on—

(A) any owner of a property receiving project-based assistance under section 8;

(B) any general partner of a partnership owner of that

property; and

(C) any agent employed to manage the property that

has an identity of interest with the owner or the general

partner of a partnership owner of the property.

(2) VIOLATIONS.—A penalty may be imposed under this

section for a knowing and material breach of a housing assistance payments contract, including the following—

(A) failure to provide decent, safe, and sanitary housing pursuant to section 8; or

(B) knowing or willful submission of false, fictitious, or

fraudulent statements or requests for housing assistance

payments to the Secretary or to any department or agency

of the United States.

(3) AMOUNT OF PENALTY.—The amount of a penalty imposed for a violation under this subsection, as determined by

the Secretary, may not exceed $25,000 per violation.

(c) AGENCY PROCEDURES.—

(1) ESTABLISHMENT.—The Secretary shall issue regulations

establishing standards and procedures governing the imposition of civil money penalties under subsection (b). These standards and procedures—
253 Sec. 29 UNITED STATES HOUSING ACT OF 1937

(A) shall provide for the Secretary or other department

official to make the determination to impose the penalty;

(B) shall provide for the imposition of a penalty only

after the liable party has received notice and the opportunity for a hearing on the record; and

(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from

a hearing and judicial review, as provided under subsection (d).

(2) FINAL ORDERS.—

(A) IN GENERAL.—If a hearing is not requested before

the expiration of the 15-day period beginning on the date

on which the notice of opportunity for hearing is received,

the imposition of a penalty under subsection (b) shall constitute a final and unappealable determination.

(B) EFFECT OF REVIEW.—If the Secretary reviews the

determination or order, the Secretary may affirm, modify,

or reverse that determination or order.

(C) FAILURE TO REVIEW.—If the Secretary does not review that determination or order before the expiration of

the 90-day period beginning on the date on which the determination or order is issued, the determination or order

shall be final.

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (b), the

Secretary shall take into consideration—

(A) the gravity of the offense;

(B) any history of prior offenses by the violator (including offenses occurring before the enactment of this section);

(C) the ability of the violator to pay the penalty;

(D) any injury to tenants;

(E) any injury to the public;

(F) any benefits received by the violator as a result of

the violation;

(G) deterrence of future violations; and

(H) such other factors as the Secretary may establish

by regulation.

(4) PAYMENT OF PENALTY.—No payment of a civil money

penalty levied under this section shall be payable out of project

income.

(d) JUDICIAL REVIEW OF AGENCY DETERMINATION.—Judicial review of determinations made under this section shall be carried out

in accordance with section 537(e) of the National Housing Act.

(e) REMEDIES FOR NONCOMPLIANCE.—

(1) JUDICIAL INTERVENTION.—

(A) IN GENERAL.—If a person or entity fails to comply

with the determination or order of the Secretary imposing

a civil money penalty under subsection (b), after the determination or order is no longer subject to review as provided by subsections (c) and (d), the Secretary may request

the Attorney General of the United States to bring an action in an appropriate United States district court to ob-
Sec. 30 UNITED STATES HOUSING ACT OF 1937 254

tain a monetary judgment against that person or entity

and such other relief as may be available.

(B) FEES AND EXPENSES.—Any monetary judgment

awarded in an action brought under this paragraph may,

in the discretion of the court, include the attorney’s fees

and other expenses incurred by the United States in connection with the action.

(2) NONREVIEWABILITY OF DETERMINATION OR ORDER.—In

an action under this subsection, the validity and appropriateness of the determination or order of the Secretary imposing

the penalty shall not be subject to review.

(f) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(g) DEPOSIT OF PENALTIES.— (1) IN GENERAL.—Notwithstanding any other provision of

law, if the mortgage covering the property receiving assistance

under section 8 is insured or was formerly insured by the Secretary, the Secretary shall apply all civil money penalties collected under this section to the appropriate insurance fund or

funds established under this Act, as determined by the Secretary.

(2) EXCEPTION.—Notwithstanding any other provision of

law, if the mortgage covering the property receiving assistance

under section 8 is neither insured nor formerly insured by the

Secretary, the Secretary shall make all civil money penalties

collected under this section available for use by the appropriate

office within the Department for administrative costs related to

enforcement of the requirements of the various programs administered by the Secretary.

(h) DEFINITIONS.—In this section—

(1) the term ‘‘agent employed to manage the property that

has an identity of interest’’ means an entity—

(A) that has management responsibility for a project;

(B) in which the ownership entity, including its general partner or partners (if applicable), has an ownership

interest; and

(C) over which such ownership entity exerts effective

control; and

(2) the term ‘‘knowing’’ means having actual knowledge of

or acting with deliberate ignorance of or reckless disregard for

the prohibitions under this section.

SEC. 30. ø42 U.S.C. 1437z–2¿ PUBLIC HOUSING MORTGAGES AND SECURITY INTERESTS.

(a) GENERAL AUTHORIZATION.—The Secretary may, upon such

terms and conditions as the Secretary may prescribe, authorize a

public housing agency to mortgage or otherwise grant a security interest in any public housing project or other property of the public

housing agency.

(b) TERMS AND CONDITIONS.—In making any authorization

under subsection (a), the Secretary may consider—

(1) the ability of the public housing agency to use the proceeds of the mortgage or security interest for low-income housing uses;
255 Sec. 32 UNITED STATES HOUSING ACT OF 1937

(2) the ability of the public housing agency to make payments on the mortgage or security interest; and

(3) such other criteria as the Secretary may specify.

(c) NO FEDERAL LIABILITY.—No action taken under this section

shall result in any liability to the Federal Government.

SEC. 31. ø42 U.S.C. 1437z–3¿ PET OWNERSHIP IN PUBLIC HOUSING.

(a) OWNERSHIP CONDITIONS.—A resident of a dwelling unit in

public housing (as such term is defined in subsection (c)) may own

1 or more common household pets or have 1 or more common

household pets present in the dwelling unit of such resident, subject to the reasonable requirements of the public housing agency,

if the resident maintains each pet responsibly and in accordance

with applicable State and local public health, animal control, and

animal anti-cruelty laws and regulations and with the policies established in the public housing agency plan for the agency.

(b) REASONABLE REQUIREMENTS.—The reasonable requirements referred to in subsection (a) may include—

(1) requiring payment of a nominal fee, a pet deposit, or

both, by residents owning or having pets present, to cover the

reasonable operating costs to the project relating to the presence of pets and to establish an escrow account for additional

costs not otherwise covered, respectively;

(2) limitations on the number of animals in a unit, based

on unit size;

(3) prohibitions on—

(A) types of animals that are classified as dangerous;

and

(B) individual animals, based on certain factors, including the size and weight of the animal; and

(4) restrictions or prohibitions based on size and type of

building or project, or other relevant conditions.

(c) PET OWNERSHIP IN PUBLIC HOUSING DESIGNATED FOR OCCUPANCY BY ELDERLY OR HANDICAPPED FAMILIES.—For purposes of

this section, the term ‘public housing’ has the meaning given the

term in section 3(b), except that such term does not include any

public housing that is federally assisted rental housing for the elderly or handicapped, as such term is defined in section 227(d) of

the Housing and Urban-Rural Recovery Act of 1983 (12 U.S.C.

1701r–1(d)).

(d) REGULATIONS.—This section shall take effect upon the date

of the effectiveness of regulations issued by the Secretary to carry

out this section. Such regulations shall be issued after notice and

opportunity for public comment in accordance with the procedure

under section 553 of title 5, United States Code, applicable to substantive rules (notwithstanding subsections (a)(2), (b)(B), and (d)(3)

of such section).

SEC. 32. ø42 U.S.C. 1437z–4¿ RESIDENT HOMEOWNERSHIP PROGRAMS.

(a) IN GENERAL.—A public housing agency may carry out a

homeownership program in accordance with this section and the

public housing agency plan of the agency to make public housing

dwelling units, public housing projects, and other housing projects

available for purchase by low-income families for use only as principal residences for such families. An agency may transfer a unit
Sec. 32 UNITED STATES HOUSING ACT OF 1937 256

pursuant to a homeownership program only if the program is authorized under this section and approved by the Secretary.

(b) PARTICIPATING UNITS.—A program under this section may

cover any existing public housing dwelling units or projects, and

may include other dwelling units and housing owned, assisted, or

operated, or otherwise acquired for use under such program, by the

public housing agency.

(c) ELIGIBLE PURCHASERS.— (1) LOW-INCOME REQUIREMENT.—Only low-income families

assisted by a public housing agency, other low-income families,

and entities formed to facilitate such sales by purchasing units

for resale to low-income families shall be eligible to purchase

housing under a homeownership program under this section.

(2) OTHER REQUIREMENTS.—A public housing agency may

establish other requirements or limitations for families to purchase housing under a homeownership program under this section, including requirements or limitations regarding employment or participation in employment counseling or training activities, criminal activity, participation in homeownership

counseling programs, evidence of regular income, and other requirements. In the case of purchase by an entity for resale to

low-income families, the entity shall sell the units to low-income families within 5 years from the date of its acquisition of

the units. The entity shall use any net proceeds from the resale

and from managing the units, as determined in accordance

with guidelines of the Secretary, for housing purposes, such as

funding resident organizations and reserves for capital replacements.

(d) RIGHT OF FIRST REFUSAL.—In making any sale under this

section, the public housing agency shall initially offer the public

housing unit at issue to the resident or residents occupying that

unit, if any, or to an organization serving as a conduit for sales to

any such resident.

(e) PROTECTION OF NONPURCHASING RESIDENTS.—If a public

housing resident does not exercise the right of first refusal under

subsection (d) with respect to the public housing unit in which the

resident resides, the public housing agency—

(1) shall notify the resident residing in the unit 90 days

prior to the displacement date except in cases of imminent

threat to health or safety, consistent with any guidelines

issued by the Secretary governing such notifications, that—

(A) the public housing unit will be sold;

(B) the transfer of possession of the unit will occur

until the resident is relocated; and

(C) each resident displaced by such action will be offered comparable housing—

(i) that meets housing quality standards;

(ii) that is located in an area that is generally not

less desirable than the location of the displaced resident’s housing; and

(iii) which may include—

(I) tenant-based assistance, except that the requirement under this subclause regarding offering

of comparable housing shall be fulfilled by use of
257 Sec. 32 UNITED STATES HOUSING ACT OF 1937

tenant-based assistance only upon the relocation

of such resident into such housing;

(II) project-based assistance; or

(III) occupancy in a unit owned, operated, or

assisted by the public housing agency at a rental

rate paid by the resident that is comparable to the

rental rate applicable to the unit from which the

resident is vacated;

(2) shall provide for the payment of the actual and reasonable relocation expenses of the resident to be displaced;

(3) shall ensure that the displaced resident is offered comparable housing in accordance with the notice under paragraph

(1);

(4) shall provide any necessary counseling for the displaced

resident; and

(5) shall not transfer possession of the unit until the resident is relocated.

(f ) FINANCING AND ASSISTANCE.—A homeownership program

under this section may provide financing for acquisition of housing

by families purchasing under the program, or for acquisition of

housing by the public housing agency for sale under the program,

in any manner considered appropriate by the agency (including

sale to a resident management corporation).

(g) DOWNPAYMENT REQUIREMENT.—

(1) IN GENERAL.—Each family purchasing housing under a

homeownership program under this section shall be required to

provide from its own resources a downpayment in connection

with any loan for acquisition of the housing, in an amount determined by the public housing agency. Except as provided in

paragraph (2), the agency shall permit the family to use grant

amounts, gifts from relatives, contributions from private

sources, and similar amounts as downpayment amounts in

such purchase.

(2) DIRECT FAMILY CONTRIBUTION.—In purchasing housing

pursuant to this section, each family shall contribute an

amount of the downpayment, from resources of the family

other than grants, gifts, contributions, or other similar

amounts referred to in paragraph (1), that is not less than 1

percent of the purchase price.

(h) OWNERSHIP INTERESTS.—A homeownership program under

this section may provide for sale to the purchasing family of any

ownership interest that the public housing agency considers appropriate under the program, including ownership in fee simple, a condominium interest, an interest in a limited dividend cooperative, a

shared appreciation interest with a public housing agency providing financing.

(i) RESALE.—

(1) AUTHORITY AND LIMITATION.—A homeownership program under this section shall permit the resale of a dwelling

unit purchased under the program by an eligible family, but

shall provide such limitations on resale as the agency considers

appropriate (whether the family purchases directly from the

agency or from another entity) for the agency to recapture—
Sec. 33 UNITED STATES HOUSING ACT OF 1937 258

1Section 537(a) of the Quality Housing and Work Responsibility Act of 1998, title V of Public

Law 105–276, approved October 21, 1998, amended this section to read as shown.

Subsection (b) of section 537 of such Act repealed section 202 of the Departments of Veterans

Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act,

1996 (Public Law 104–134; 110 Stat. 1321–279), which required public housing agencies to carry

out a program for conversion of certain public housing to vouchers.

Subsection (c)(2) of section 537 of such Act provides as follows:

‘‘(2) SAVINGS PROVISION.—Notwithstanding the amendments made by this section, section

202 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996 (42 U.S.C. 14371 note) and any regulations implementing such section, as in effect immediately before the enactment of this Act, shall

continue to apply to public housing developments identified by the Secretary or a public

housing agency for conversion pursuant to that section or for assessment of whether such

conversion is required prior to enactment of this Act.’’.

(A) some or all of the economic gain derived from any

such resale occurring during the 5-year period beginning

upon purchase of the dwelling unit by the eligible family;

and

(B) after the expiration of such 5-year period, only

such amounts as are equivalent to the assistance provided

under this section by the agency to the purchaser.

(2) CONSIDERATIONS.—The limitations referred to in paragraph (1)(A) may provide for consideration of the aggregate

amount of assistance provided under the program to the family, the contribution to equity provided by the purchasing eligible family, the period of time elapsed between purchase under

the homeownership program and resale, the reason for resale,

any improvements to the property made by the eligible family,

any appreciation in the value of the property, and any other

factors that the agency considers appropriate.

( j) NET PROCEEDS.—The net proceeds of any sales under a

homeownership program under this section remaining after payment of all costs of the sale shall be used for purposes relating to

low-income housing and in accordance with the public housing

agency plan of the agency carrying out the program.

(k) HOMEOWNERSHIP ASSISTANCE.—From amounts distributed

to a public housing agency under the Capital Fund under section

9(d), or from other income earned by the public housing agency, the

public housing agency may provide assistance to public housing

residents to facilitate the ability of those residents to purchase a

principal residence, including a residence other than a residence located in a public housing project.

(l) INAPPLICABILITY OF DISPOSITION REQUIREMENTS.—The provisions of section 18 shall not apply to disposition of public housing

dwelling units under a homeownership program under this section.

SEC. 33. 1 ø42 U.S.C. 1437z–5¿ REQUIRED CONVERSION OF DISTRESSED

PUBLIC HOUSING TO TENANT-BASED ASSISTANCE.

(a) IDENTIFICATION OF UNITS.—Each public housing agency

shall identify all public housing projects of the public housing agency that meet all of the following requirements:

(1) The project is on the same or contiguous sites.

(2) The project is determined by the public housing agency

to be distressed, which determination shall be made in accordance with guidelines established by the Secretary, which guidelines shall take into account the criteria established in the

Final Report of the National Commission on Severely Distressed Public Housing (August 1992).
259 Sec. 33 UNITED STATES HOUSING ACT OF 1937

(3) The project—

(A) is identified as distressed housing under paragraph (2) for which the public housing agency cannot assure the long-term viability as public housing through reasonable modernization expenses, density reduction,

achievement of a broader range of family income, or other

measures; or

(B) has an estimated cost, during the remaining useful

life of the project, of continued operation and modernization as public housing that exceeds the estimated cost,

during the remaining useful life of the project, of providing

tenant-based assistance under section 8 for all families in

occupancy, based on appropriate indicators of cost (such as

the percentage of total development costs required for

modernization).

(b) CONSULTATION.—Each public housing agency shall consult

with the appropriate public housing residents and the appropriate

unit of general local government in identifying any public housing

projects under subsection (a).

(c) PLAN FOR REMOVAL OF UNITS FROM INVENTORIES OF

PHA’S.—

(1) DEVELOPMENT.—Each public housing agency shall develop and carry out a 5-year plan in conjunction with the Secretary for the removal of public housing units identified under

subsection (a) from the inventory of the public housing agency

and the annual contributions contract.

(2) APPROVAL.—Each plan required under paragraph (1)

shall—

(A) be included as part of the public housing agency

plan;

(B) be certified by the relevant local official to be in accordance with the comprehensive housing affordability

strategy under title I of the Housing and Community Development Act of 1992; and

(C) include a description of any disposition and demolition plan for the public housing units.

(3) EXTENSIONS.—The Secretary may extend the 5-year

deadline described in paragraph (1) by not more than an additional 5 years if the Secretary makes a determination that the

deadline is impracticable.

(4) REVIEW BY SECRETARY.—

(A) FAILURE TO IDENTIFY PROJECTS.—If the Secretary

determines, based on a plan submitted under this subsection, that a public housing agency has failed to identify

1 or more public housing projects that the Secretary determines should have been identified under subsection (a),

the Secretary may designate the public housing projects to

be removed from the inventory of the public housing agency pursuant to this section.

(B) ERRONEOUS IDENTIFICATION OF PROJECTS.—If the

Secretary determines, based on a plan submitted under

this subsection, that a public housing agency has identified

1 or more public housing projects that should not have
Sec. 33 UNITED STATES HOUSING ACT OF 1937 260

been identified pursuant to subsection (a), the Secretary

shall—

(i) require the public housing agency to revise the

plan of the public housing agency under this subsection; and

(ii) prohibit the removal of any such public housing project from the inventory of the public housing

agency under this section.

(d) CONVERSION TO TENANT-BASED ASSISTANCE.—

(1) IN GENERAL.—To the extent approved in advance in appropriations Acts, the Secretary shall make budget authority

available to a public housing agency to provide assistance

under this Act to families residing in any public housing

project that, pursuant to this section, is removed from the inventory of the agency and the annual contributions contract of

the agency.

(2) CONVERSION REQUIREMENTS.—Each agency carrying

out a plan under subsection (c) for removal of public housing

dwelling units from the inventory of the agency shall—

(A) notify each family residing in a public housing

project to be converted under the plan 90 days prior to the

displacement date, except in cases of imminent threat to

health or safety, consistent with any guidelines issued by

the Secretary governing such notifications, that—

(i) the public housing project will be removed from

the inventory of the public housing agency; and

(ii) each family displaced by such action will be offered comparable housing—

(I) that meets housing quality standards; and

(II) which may include—

(aa) tenant-based assistance, except that

the requirement under this clause regarding

offering of comparable housing shall be fulfilled by use of tenant-based assistance only

upon the relocation of such family into such

housing;

(bb) project-based assistance; or

(cc) occupancy in a unit operated or assisted by the public housing agency at a rental rate paid by the family that is comparable

to the rental rate applicable to the unit from

which the family is vacated.

(B) provide any necessary counseling for families displaced by such action;

(C) ensure that, if the project (or portion) converted is

used as housing after such conversion, each resident may

choose to remain in their dwelling unit in the project and

use the tenant-based assistance toward rent for that unit;

(D) ensure that each displaced resident is offered comparable housing in accordance with the notice under subparagraph (A); and

(E) provide any actual and reasonable relocation expenses for families displaced by such action.
261 Sec. 33 UNITED STATES HOUSING ACT OF 1937

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

(e) CESSATION OF UNNECESSARY SPENDING.—Notwithstanding

any other provision of law, if, in the determination of the Secretary,

a project or projects of a public housing agency meet or are likely

to meet the criteria set forth in subsection (a), the Secretary may

direct the agency to cease additional spending in connection with

such project or projects until the Secretary determines or approves

an appropriate course of action with respect to such project or

projects under this section, except to the extent that failure to expend such amounts would endanger the health or safety of residents in the project or projects.

(f ) USE OF BUDGET AUTHORITY.—Notwithstanding any other

provision of law, if a project or projects are identified pursuant to

subsection (a), the Secretary may authorize or direct the transfer,

to the tenant-based assistance program of such agency or to appropriate site revitalization or other capital improvements approved

by the Secretary, of—

(1) in the case of an agency receiving assistance under the

comprehensive improvement assistance program, any amounts

obligated by the Secretary for the modernization of such

project or projects pursuant to section 14 of the United States

Housing Act of 1937 (as in effect immediately before the effective date under section 503(a) of the Quality Housing and

Work Responsibility Act of 1998 1);

(2) in the case of an agency receiving public housing modernization assistance by formula pursuant to such section 14,

any amounts provided to the agency which are attributable

pursuant to the formula for allocating such assistance to such

project or projects;

(3) in the case of an agency receiving assistance for the

major reconstruction of obsolete projects, any amounts obligated by the Secretary for the major reconstruction of such

project or projects pursuant to section 5( j)(2) of the United

States Housing Act of 1937, as in effect immediately before the

effective date under section 503(a) of the Quality Housing and

Work Responsibility Act of 1998 1; and

(4) in the case of an agency receiving assistance pursuant

to the formulas under section 9, any amounts provided to the

agency which are attributable pursuant to the formulas for allocating such assistance to such project or projects.

(g) REMOVAL BY SECRETARY.—The Secretary shall take appropriate actions to ensure removal of any public housing project identified under subsection (a) from the inventory of a public housing

agency, if the public housing agency fails to adequately develop a

plan under subsection (c) with respect to that project, or fails to

adequately implement such plan in accordance with the terms of

the plan.

(h) ADMINISTRATION.— (1) IN GENERAL.—The Secretary may require a public housing agency to provide to the Secretary or to public housing residents such information as the Secretary considers to be necessary for the administration of this section.
Sec. 34 UNITED STATES HOUSING ACT OF 1937 262

1Section 538(a) of the Quality Housing and Work Responsibility Act of 1998, title V of Public

Law 105–276, approved October 21, 1998, added this section.

Section 538(b) of such Act provides as follows:

‘‘(b) ASSESSMENT AND REPORT BY SECRETARY.—Not later than 3 years after the date of the

enactment of the Quality Housing and Work Responsibility Act of 1998, the Secretary of Housing and Urban Development shall—

‘‘(1) conduct an evaluation and assessment of grants carried out by resident organizations,

and particularly of the effect of the grants on living conditions in public housing and housing assisted under the Native American Housing Assistance and Self-Determination Act of

1996; and

‘‘(2) submit to the Congress a report setting forth the findings of the Secretary as a result

of the evaluation and assessment and including any recommendations the Secretary determines to be appropriate.

This subsection shall take effect on the date of the enactment of this Act.’’.

(2) APPLICABILITY OF SECTION 18.—Section 18 shall not

apply to the demolition of public housing projects removed

from the inventory of the public housing agency under this section.

SEC. 34. 1 ø42 U.S.C. 1437z–6¿ SERVICES FOR PUBLIC AND INDIAN HOUSING RESIDENTS.

(a) IN GENERAL.—To the extent that amounts are provided in

advance in appropriations Acts, the Secretary may make grants to

public housing agencies on behalf of public housing residents, recipients under the Native American Housing Assistance and SelfDetermination Act of 1996 (notwithstanding section 502 of such

Act) on behalf of residents of housing assisted under such Act, or

directly to resident management corporations, resident councils, or

resident organizations (including nonprofit entities supported by

residents), for the purposes of providing a program of supportive

services and resident empowerment activities to provide supportive

services to public housing residents and residents of housing assisted under such Act or assist such residents in becoming economically self-sufficient.

(b) ELIGIBLE ACTIVITIES.—Grantees under this section may use

such amounts only for activities on or near the property of the public housing agency or public housing project or the property of a recipient under such Act or housing assisted under such Act that are

designed to promote the self-sufficiency of public housing residents

or residents of housing assisted under such Act or provide supportive services for such residents, including activities relating to—

(1) physical improvements to a public housing project or

residents of housing assisted under such Act in order to provide space for supportive services for residents;

(2) the provision of service coordinators or a congregate

housing services program for elderly individuals, elderly disabled individuals, nonelderly disabled individuals, or temporarily disabled individuals;

(3) the provision of services related to work readiness, including education, job training and counseling, job search

skills, business development training and planning, tutoring,

mentoring, adult literacy, computer access, personal and family

counseling, health screening, work readiness health services,

transportation, and child care;

(4) economic and job development, including employer linkages and job placement, and the start-up of resident microenterprises, community credit unions, and revolving loan
263 Sec. 35 UNITED STATES HOUSING ACT OF 1937

funds, including the licensing, bonding, and insurance needed

to operate such enterprises;

(5) resident management activities and resident participation activities; and

(6) other activities designed to improve the economic selfsufficiency of residents.

(c) FUNDING DISTRIBUTION.—

(1) IN GENERAL.—Except for amounts provided under subsection (d), the Secretary may distribute amounts made available under this section on the basis of a competition or a formula, as appropriate.

(2) FACTORS FOR DISTRIBUTION.—Factors for distribution

under paragraph (1) shall include—

(A) the demonstrated capacity of the applicant to carry

out a program of supportive services or resident empowerment activities;

(B) the ability of the applicant to leverage additional

resources for the provision of services; and

(C) the extent to which the grant will result in a high

quality program of supportive services or resident empowerment activities.

(d) MATCHING REQUIREMENT.—The Secretary may not make

any grant under this section to any applicant unless the applicant

supplements amounts made available under this section with funds

from sources other than this section in an amount equal to not less

than 25 percent of the grant amount. Such supplemental amounts

may include—

(1) funds from other Federal sources;

(2) funds from any State, local, or tribal government

sources;

(3) funds from private contributions; and

(4) the value of any in-kind services or administrative

costs provided to the applicant.

(e) FUNDING FOR RESIDENT ORGANIZATIONS.—To the extent

that there are a sufficient number of qualified applications for assistance under this section, not less than 25 percent of any

amounts appropriated to carry out this section shall be provided directly to resident councils, resident organizations, and resident

management corporations. In any case in which a resident council,

resident organization, or resident management corporation lacks

adequate expertise, the Secretary may require the council, organization, or corporation to utilize other qualified organizations as

contract administrators with respect to financial assistance provided under this section.

SEC. 35. ø42 U.S.C. 1437z–7¿ MIXED FINANCE PUBLIC HOUSING.

(a) AUTHORITY.—A public housing agency may own, operate,

assist, or otherwise participate in 1 or more mixed-finance projects

in accordance with this section.

(b) ASSISTANCE.— (1) FORMS.—A public housing agency may provide to a

mixed-finance project assistance from the Operating Fund

under section 9, assistance from the Capital Fund under such

section, or both forms of assistance. A public housing agency
Sec. 35 UNITED STATES HOUSING ACT OF 1937 264

may, in accordance with regulations established by the Secretary, provide capital assistance to a mixed-finance project in

the form of a grant, loan, guarantee, or other form of investment in the project, which may involve drawdown of funds on

a schedule commensurate with construction draws for deposit

into an interest-bearing escrow account to serve as collateral or

credit enhancement for bonds issued by a public agency, or for

other forms of public or private borrowings, for the construction or rehabilitation of the development.

(2) USE.—To the extent deemed appropriate by the Secretary, assistance used in connection with the costs associated

with the operation and management of mixed-finance projects

may be used for funding of an operating reserve to ensure affordability for low-income and very low-income families in lieu

of the availability of operating funds for public housing units

in a mixed-finance project.

(c) COMPLIANCE WITH PUBLIC HOUSING REQUIREMENTS.—The

units assisted with capital or operating assistance in a mixed-finance project shall be developed, operated, and maintained in accordance with the requirements of this Act relating to public housing during the period required by under this Act, unless otherwise

specified in this section. For purposes of this Act, any reference to

public housing owned or operated by a public housing agency shall

include dwelling units in a mixed finance project that are assisted

by the agency with capital or operating assistance.

(d) MIXED-FINANCE PROJECTS.—

(1) IN GENERAL.—For purposes of this section, the term

‘mixed-finance project’ means a project that meets the requirements of paragraph (2) and is financially assisted by private

resources, which may include low-income housing tax credits,

in addition to amounts provided under this Act.

(2) TYPES OF PROJECTS.—The term includes a project that

is developed—

(A) by a public housing agency or by an entity affiliated with a public housing agency;

(B) by a partnership, a limited liability company, or

other entity in which the public housing agency (or an entity affiliated with a public housing agency) is a general

partner, managing member, or otherwise participates in

the activities of that entity;

(C) by any entity that grants to the public housing

agency the right of first refusal and first option to purchase, after the close of the compliance period, of the qualified low-income building in which the public housing units

exist in accordance with section 42(i)(7) of the Internal

Revenue Code of 1986; or

(D) in accordance with such other terms and conditions as the Secretary may prescribe by regulation.

(e) STRUCTURE OF PROJECTS.—Each mixed-finance project shall

be developed—

(1) in a manner that ensures that public housing units are

made available in the project, by regulatory and operating

agreement, master contract, individual lease, condominium or

cooperative agreement, or equity interest;
265 Sec. 35 UNITED STATES HOUSING ACT OF 1937

(2) in a manner that ensures that the number of public

housing units bears approximately the same proportion to the

total number of units in the mixed-finance project as the value

of the total financial commitment provided by the public housing agency bears to the value of the total financial commitment

in the project, or shall not be less than the number of units

that could have been developed under the conventional public

housing program with the assistance, or as may otherwise be

approved by the Secretary; and

(3) in accordance with such other requirements as the Secretary may prescribe by regulation.

(f ) TAXATION.— (1) IN GENERAL.—A public housing agency may elect to exempt all public housing units in a mixed-finance project—

(A) from the provisions of section 6(d), and instead

subject such units to local real estate taxes; and

(B) from the finding of need and cooperative agreement provisions under section 5(e)(1)(ii) and 5(e)(2), but

only if the development of the units is not inconsistent

with the jurisdiction’s comprehensive housing affordability

strategy.

(2) LOW-INCOME HOUSING TAX CREDIT.—With respect to

any unit in a mixed-finance project that is assisted pursuant

to the low-income housing tax credit under section 42 of the Internal Revenue Code of 1986, the rents charged to the residents may be set at levels not to exceed the amounts allowable

under that section, provided that such levels for public housing

residents do not exceed the amounts allowable under section 3.

(g) USE OF SAVINGS.—Notwithstanding any other provision of

this Act, to the extent deemed appropriate by the Secretary, to facilitate the establishment of socioeconomically mixed communities,

a public housing agency that uses assistance from the Capital Fund

for a mixed-finance project, to the extent that income from such a

project reduces the amount of assistance used for operating or

other costs relating to public housing, may use such resulting savings to rent privately developed dwelling units in the neighborhood

of the mixed-finance project. Such units shall be made available for

occupancy only by low-income families eligible for residency in public housing.

(h) EFFECT OF CERTAIN CONTRACT TERMS.—If an entity that

owns or operates a mixed-finance project, that includes a significant number of units other than public housing units enters into

a contract with a public housing agency, the terms of which obligate the entity to operate and maintain a specified number of units

in the project as public housing units in accordance with the requirements of this Act for the period required by law, such contractual terms may provide that, if, as a result of a reduction in appropriations under section 9 or any other change in applicable law, the

public housing agency is unable to fulfill its contractual obligations

with respect to those public housing units, that entity may deviate,

under procedures and requirements developed through regulations

by the Secretary, from otherwise applicable restrictions under this

Act regarding rents, income eligibility, and other areas of public

housing management with respect to a portion or all of those public
Sec. 301 UNITED STATES HOUSING ACT OF 1937 266

housing units, to the extent necessary to preserve the viability of

those units while maintaining the low-income character of the

units to the maximum extent practicable.

øTITLE II—ASSISTED HOUSING FOR INDIANS

AND ALASKA NATIVES¿

øNOTE.—Title II of the United States Housing Act of 1937 established low-income housing programs for Indians and Alaska Natives. Title II was repealed by section 501(a) of the Native American Housing Assistance and Self-Determination Act of 1996 (Public Law 104–330). For provisions regarding termination of assistance under such programs see sections 502, 503, and 507 of such

Act, set forth in Part VII of this compilation.¿

TITLE III—HOPE FOR PUBLIC HOUSING

HOMEOWNERSHIP

SEC. 301. ø42 U.S.C. 1437aaa¿ PROGRAM AUTHORITY.

(a) IN GENERAL.—The Secretary is authorized to make—

(1) planning grants to help applicants to develop homeownership programs in accordance with this title; and

(2) implementation grants to carry out homeownership

programs in accordance with this title.

(b) AUTHORITY TO RESERVE HOUSING ASSISTANCE.—In connection with a grant under this title, the Secretary may reserve authority to provide assistance under section 8 of this Act to the extent necessary to provide replacement housing and rental assistance for a nonpurchasing tenant who resides in the project on the

date the Secretary approves the application for an implementation

grant, for use by the tenant in another project.

SEC. 302. ø42 U.S.C. 1437aaa–1¿ PLANNING GRANTS.

(a) GRANTS.—The Secretary is authorized to make planning

grants to applicants for the purpose of developing homeownership

programs under this title. The amount of a planning grant under

this section may not exceed $200,000, except that the Secretary

may for good cause approve a grant in a higher amount.

(b) ELIGIBLE ACTIVITIES.—Planning grants may be used for activities to develop homeownership programs (which may include

programs for cooperative ownership), including—

(1) development of resident management corporations and

resident councils;

(2) training and technical assistance for applicants related

to development of a specific homeownership program;

(3) studies of the feasibility of a homeownership program;

(4) inspection for lead-based paint hazards, as required by

section 302(a) of the Lead-Based Paint Poisoning Prevention

Act;

(5) preliminary architectural and engineering work;

(6) tenant and homebuyer counseling and training;

(7) planning for economic development, job training, and

self-sufficiency activities that promote economic self-sufficiency
267 Sec. 302 UNITED STATES HOUSING ACT OF 1937

1The date of enactment was November 28, 1990.

of homebuyers and homeowners under the homeownership program;

(8) development of security plans; and

(9) preparation of an application for an implementation

grant under this title.

(c) APPLICATION.—

(1) FORM AND PROCEDURES.—An application for a planning

grant shall be submitted by an applicant in such form and in

accordance with such procedures as the Secretary shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for a planning grant, specifying the activities proposed to be carried out, the schedule for completing the activities, the personnel necessary to complete

the activities, and the amount of the grant requested;

(B) a description of the applicant and a statement of

its qualifications;

(C) identification and description of the public housing

project or projects involved, and a description of the composition of the tenants, including family size and income;

(D) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State

or unit of general local government within which the

project is located (or, during the first 12 months after enactment of the Cranston-Gonzalez National Affordable

Housing Act,1 that the application is consistent with such

other existing State or local housing plan or strategy that

the Secretary shall determine to be appropriate); and

(E) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(d) SELECTION CRITERIA.—The Secretary shall, by regulation,

establish selection criteria for a national competition for assistance

under this section, which shall include—

(1) the qualifications or potential capabilities of the applicant;

(2) the extent of tenant interest in the development of a

homeownership program for the project;

(3) the potential of the applicant for developing a successful and affordable homeownership program and the suitability

of the project for homeownership;

(4) national geographic diversity among projects for which

applicants are selected to receive assistance; and

(5) such other factors that the Secretary shall require that

(in the determination of the Secretary) are appropriate for pur-
Sec. 303 UNITED STATES HOUSING ACT OF 1937 268

1Section 181(g)(1)(B) of the Housing and Community Development Act of 1992, Public Law

102–550, provides as follows:

‘‘(B) OPERATING SUBSIDIES.—Section 303(b)(9) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 1437aaa–2(b)(9)) is amended by inserting before the

period at the end the following: ‘, and except that implementation grants may not be

used under this paragraph to fund operating expenses for scattered site public housing

acquired under a homeownership program’.’’.

The amendment could not be executed and was probably intended to be made to this paragraph of the United States Housing Act of 1937.

poses of carrying out the program established by this title in

an effective and efficient manner.

SEC. 303. ø42 U.S.C. 1437aaa–2¿ IMPLEMENTATION GRANTS.

(a) GRANTS.—The Secretary is authorized to make implementation grants to applicants for the purpose of carrying out homeownership programs approved under this title.

(b) ELIGIBLE ACTIVITIES.—Implementation grants may be used

for activities to carry out homeownership programs (including programs for cooperative ownership) that meet the requirements

under this subtitle, including the following activities:

(1) Architectural and engineering work.

(2) Implementation of the homeownership program, including acquisition of the public housing project from a public

housing agency for the purpose of transferring ownership to eligible families in accordance with a homeownership program

that meets the requirements under this title.

(3) Rehabilitation of any public housing project covered by

the homeownership program, in accordance with standards established by the Secretary.

(4) Abatement of lead-based paint hazards, as required by

section 302(a) of the Lead-Based Paint Poisoning Prevention

Act.

(5) Administrative costs of the applicant, which may not

exceed 15 percent of the amount of assistance provided under

this section.

(6) Development of resident management corporations and

resident management councils, but only if the applicant has

not received assistance under section 302 for such activities.

(7) Counseling and training of homebuyers and homeowners under the homeownership program.

(8) Relocation of tenants who elect to move.

(9) Any necessary temporary relocation of tenants during

rehabilitation.

(10) Funding of operating expenses and replacement reserves of the project covered by the homeownership program,

except that the amount of assistance for operating expenses

shall not exceed the amount the project would have received if

it had continued to receive such assistance from the Operating

Fund, with adjustments comparable to those that would have

been made under section 9. 1

(11) Implementation of a replacement housing plan.

(12) Legal fees.

(13) Defraying costs for the ongoing training needs of the

recipient that are related to developing and carrying out the

homeownership program.
269 Sec. 303 UNITED STATES HOUSING ACT OF 1937

(14) Economic development activities that promote economic self-sufficiency of homebuyers, residents, and homeowners under the homeownership program.

(c) MATCHING FUNDING.—

(1) IN GENERAL.—Each recipient shall assure that contributions equal to not less than 25 percent of the grant

amount made available under this section, excluding any

amounts provided for post-sale operating expenses and replacement housing, shall be provided from non-Federal sources to

carry out the homeownership program.

(2) FORM.—Such contributions may be in the form of—

(A) cash contributions from non-Federal resources,

which may not include Federal tax expenditures or funds

from a grant made under section 106(b) or section 106(d)

of the Housing and Community Development Act of 1974;

(B) payment of administrative expenses, as defined by

the Secretary, from non-Federal resources, including funds

from a grant made under section 106(b) or section 106(d)

of the Housing and Community Development Act of 1974;

(C) the value of taxes, fees, or other charges that are

normally and customarily imposed but are waived, foregone, or deferred in a manner that facilitates the implementation of a homeownership program assisted under

this subtitle;

(D) the value of land or other real property as appraised according to procedures acceptable to the Secretary;

(E) the value of investment in on-site and off-site infrastructure required for a homeownership program assisted under this subtitle; or

(F) such other in-kind contributions as the Secretary

may approve.

Contributions for administrative expenses shall be recognized

only up to an amount equal to 7 percent of the total amount

of grants made available under this section.

(3) REDUCTION OF REQUIREMENT.—The Secretary shall reduce the matching requirement for homeownership programs

carried out under this section in accordance with the formula

established under section 220(d) of the Cranston-Gonzalez National Affordable Housing Act.

(d) APPLICATION.—

(1) FORM AND PROCEDURE.—An application for an implementation grant shall be submitted by an applicant in such

form and in accordance with such procedures as the Secretary

shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for an implementation grant, specifying

the amount of the grant requested and its proposed uses;

(B) if applicable, an application for assistance under

section 8 of this Act, which shall specify the proposed uses

of such assistance and the period during which the assistance will be needed;
Sec. 303 UNITED STATES HOUSING ACT OF 1937 270

1The date of enactment was November 28, 1990.

(C) a description of the qualifications and experience

of the applicant in providing housing for low-income families;

(D) a description of the proposed homeownership program, consistent with section 304 and the other requirements of this title, which shall specify the activities proposed to be carried out and their estimated costs, identifying reasonable schedules for carrying it out, and demonstrating that the program will comply with the affordability requirements under section 304(b);

(E) identification and description of the public housing

project or projects involved, and a description of the composition of the tenants, including family size and income;

(F) a description of and commitment for the resources

that are expected to be made available to provide the

matching funding required under subsection (c) and of

other resources that are expected to be made available in

support of the homeownership program;

(G) identification and description of the financing proposed for any (i) rehabilitation and (ii) acquisition (I) of the

property, where applicable, by a resident council or other

entity for transfer to eligible families, and (II) by eligible

families of ownership interests in, or shares representing,

units in the project;

(H) if the applicant is not a public housing agency, the

proposed sales price, if any, the basis for such price determination, and terms to the applicant;

(I) the estimated sales prices, if any, and terms to eligible families;

(J) any proposed restrictions on the resale of units

under a homeownership program;

(K) identification and description of the entity that

will operate and manage the property;

(L) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State

or unit of general local government within which the

project is located (or, during the first 12 months after enactment of the Cranston-Gonzalez National Affordable

Housing Act,1 that the application is consistent with such

other existing State or local housing plan or strategy that

the Secretary shall determine to be appropriate); and

(M) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(e) SELECTION CRITERIA.—The Secretary shall establish selection criteria for a national competition for assistance under this

section, which shall include—
271 Sec. 304 UNITED STATES HOUSING ACT OF 1937

(1) the ability of the applicant to develop and carry out the

proposed homeownership program, taking into account the

quality of any related ongoing program of the applicant, and

the extent of tenant interest in the development of a homeownership program and community support;

(2) the feasibility of the homeownership program;

(3) the extent to which current tenants and other eligible

families will be able to afford the purchase;

(4) the quality and viability of the proposed homeownership program, including the viability of the economic self-sufficiency plan;

(5) the extent to which funds for activities that do not

qualify as eligible activities will be provided in support of the

homeownership program;

(6) whether the approved comprehensive housing affordability strategy for the jurisdiction within which the public

housing project is located includes the proposed homeownership program as one of the general priorities identified pursuant to section 105(b)(7) of the Cranston-Gonzalez National Affordable Housing Act;

(7) national geographic diversity among housing for which

applicants are selected to receive assistance; and

(8) the extent to which a sufficient supply of affordable

rental housing exists in the locality, so that the implementation of the homeownership program will not reduce the number

of such rental units available to residents currently residing in

such units or eligible for residency in such units.

(f) LOCATION WITHIN PARTICIPATING JURISDICTIONS.—The Secretary may approve applications for grants under this title only

for public housing projects located within the boundaries of

jurisdictions—

(1) which are participating jurisdictions under title III of

the Cranston-Gonzalez National Affordable Housing Act; or

(2) on behalf of which the agency responsible for affordable

housing has submitted a housing strategy or plan.

(g) APPROVAL.—The Secretary shall notify each applicant, not

later than 6 months after the date of the submission of the application, whether the application is approved or not approved. The Secretary may approve the application for an implementation grant

with a statement that the application for the section 8 assistance

for replacement housing and for residents of the project not purchasing units is conditionally approved, subject to the availability

of appropriations in subsequent fiscal years.

SEC. 304. ø42 U.S.C. 1437aaa–3¿ HOMEOWNERSHIP PROGRAM REQUIREMENTS.

(a) IN GENERAL.—A homeownership program under this title

shall provide for acquisition by eligible families of ownership interests in, or shares representing, at least one-half of the units in a

public housing project under any arrangement determined by the

Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership) and fee simple ownership

(including condominium ownership), for occupancy by the eligible

families.
Sec. 304 UNITED STATES HOUSING ACT OF 1937 272

(b) AFFORDABILITY.—A homeownership program under this

title shall provide for the establishment of sales prices (including

principal, insurance, taxes, and interest and closing costs) for initial acquisition of the property from the public housing agency if

the applicant is not a public housing agency, and for sales to eligible families, such that an eligible family shall not be required to

expend more than 30 percent of the adjusted income of the family

per month to complete a sale under the homeownership program.

(c) PLAN.—A homeownership program under this title shall

provide, and include a plan, for—

(1) identifying and selecting eligible families to participate

in the homeownership program;

(2) providing relocation assistance to families who elect to

move;

(3) ensuring continued affordability by tenants, homebuyers, and homeowners in the project;

(4) providing ongoing training and counseling for homebuyers and homeowners; and

(5) replacing units in eligible projects covered by a homeownership program.

(d) ACQUISITION AND REHABILITATION LIMITATIONS.—Acquisition or rehabilitation of public housing projects under a homeownership program under this title may not consist of acquisition

or rehabilitation of less than the whole public housing project in a

project consisting of more than 1 building. The provisions of this

subsection may be waived upon a finding by the Secretary that the

sale of less than all the buildings in a project is feasible and will

not result in a hardship to any tenants of the project who are not

included in the homeownership program.

(e) FINANCING.—

(1) IN GENERAL.—The application shall identify and describe the proposed financing for (A) any rehabilitation, and (B)

acquisition (i) of the project, where applicable, by an entity

other than the public housing agency for transfer to eligible

families, and (ii) by eligible families of ownership interests in,

or shares representing, units in the project. Financing may include use of the implementation grant, sale for cash, or other

sources of financing (subject to applicable requirements), including conventional mortgage loans and mortgage loans insured under title II of the National Housing Act.

(2) PROHIBITION AGAINST PLEDGES.—Property transferred

under this title shall not be pledged as collateral for debt or

otherwise encumbered except when the Secretary determines

that—

(A) such encumbrance will not threaten the long-term

availability of the property for occupancy by low-income

families;

(B) neither the Federal Government nor the public

housing agency will be exposed to undue risks related to

action that may have to be taken pursuant to paragraph

(3);

(C) any debt obligation can be serviced from project income, including operating assistance; and
273 Sec. 305 UNITED STATES HOUSING ACT OF 1937

(D) the proceeds of such encumbrance will be used

only to meet housing standards in accordance with subsection (f) or to make such additional capital improvements as the Secretary determines to be consistent with

the purposes of this title.

(3) OPPORTUNITY TO CURE.—Any lender that provides financing in connection with a homeownership program under

this subtitle shall give the public housing agency, resident

management corporation, individual owner, or other appropriate entity a reasonable opportunity to cure a financial default before foreclosing on the property, or taking other action

as a result of the default.

(f) HOUSING QUALITY STANDARDS.—The application shall include a plan ensuring that the unit—

(1) will be free from any defects that pose a danger to

health or safety before transfer of an ownership interest in, or

shares representing, a unit to an eligible family; and

(2) will, not later than 2 years after the transfer to an eligible family, meet minimum housing standards established by

the Secretary for the purposes of this title.

ø(g) [Repealed.]¿

(h) PROTECTION OF NON-PURCHASING FAMILIES.—

(1) IN GENERAL.—No tenant residing in a dwelling unit in

a public housing project on the date the Secretary approves an

application for an implementation grant may be evicted by reason of a homeownership program approved under this title.

(2) REPLACEMENT ASSISTANCE.—If the tenant decides not

to purchase a unit, or is not qualified to do so, the recipient

shall, during the term of any operating assistance under the

implementation grant, permit each otherwise qualified tenant

to continue to reside in the project at rents that do not exceed

levels consistent with section 3(a) of this Act or, if an otherwise

qualified tenant chooses to move (at any time during the term

of such operating assistance contract), the public housing agency shall, to the extent approved in appropriations Acts, offer

such tenant (A) a unit in another public housing project, or (B)

section 8 assistance for use in other housing.

(3) RELOCATION ASSISTANCE.—The recipient shall also inform each such tenant that if the tenant chooses to move, the

recipient will pay relocation assistance in accordance with the

approved homeownership program.

(4) OTHER RIGHTS.—Tenants renting a unit in a project

transferred under this title shall have all rights provided to

tenants of public housing under this Act.

SEC. 305. ø42 U.S.C. 1437aaa–4¿ OTHER PROGRAM REQUIREMENTS.

(a) SALE BY PUBLIC HOUSING AGENCY TO APPLICANT OR OTHER

ENTITY REQUIRED.—Where the Secretary approves an application

providing for the transfer of the eligible project from the public

housing agency to another applicant, the public housing agency

shall transfer the project to such other applicant, in accordance

with the approved homeownership program.

(b) PREFERENCES.—In selecting eligible families for homeownership, the recipient shall give a first preference to otherwise
Sec. 305 UNITED STATES HOUSING ACT OF 1937 274

qualified current tenants and a second preference to otherwise

qualified eligible families who have completed participation in an

economic self-sufficiency program specified by the Secretary.

(c) COST LIMITATIONS.—The Secretary may establish cost limitations on eligible activities under this title, subject to the provisions of this title.

(d) ANNUAL CONTRIBUTIONS.—Notwithstanding the purchase of

a public housing project under this section, or the purchase of a

unit in a public housing project by an eligible family, the Secretary

shall continue to pay annual contributions with respect to the

project. Such contributions may not exceed the maximum contributions authorized in section 5(a).

(e) OPERATING SUBSIDIES.—Amounts from an allocation from

the Operating Fund under section 9 of this Act shall not be available with respect to a public housing project after the date of its

sale by the public housing agency.

(f) USE OF PROCEEDS FROM SALES TO ELIGIBLE FAMILIES.—The

entity that transfers ownership interests in, or shares representing,

units to eligible families, or another entity specified in the approved application, shall use the proceeds, if any, from the initial

sale for costs of the homeownership program, including operating

expenses, improvements to the project, business opportunities for

low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other

activities approved by the Secretary.

(g) RESTRICTIONS ON RESALE BY HOMEOWNERS.—

(1) IN GENERAL.—

(A) TRANSFER PERMITTED.—A homeowner under a

homeownership program may transfer the homeowner’s

ownership interest in, or shares representing, the unit, except that a homeownership program may establish restrictions on the resale of units under the program.

(B) RIGHT TO PURCHASE.—Where a resident management corporation, resident council, or cooperative has jurisdiction over the unit, the corporation, council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the homeowner for the amount specified in a firm contract between

the homeowner and a prospective buyer. If such an entity

does not have jurisdiction over the unit or elects not to

purchase and if the prospective buyer is not a low-income

family, the public housing agency or the implementation

grant recipient shall have the right to purchase the ownership interest in, or shares representing, the unit for the

same amount.

(C) PROMISSORY NOTE REQUIRED.—The homeowner

shall execute a promissory note equal to the difference between the market value and the purchase price, payable to

the public housing agency or other entity designated in the

homeownership plan, together with a mortgage securing

the obligation of the note.

(2) 6 YEARS OR LESS.—In the case of a transfer within 6

years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to as-
275 Sec. 305 UNITED STATES HOUSING ACT OF 1937

sure that an eligible family may not receive any undue profit.

The plan shall provide for limiting the family’s consideration

for its interest in the property to the total of—

(A) the contribution to equity paid by the family;

(B) the value, as determined by such means as the

Secretary shall determine through regulation, of any improvements installed at the expense of the family during

the family’s tenure as owner; and

(C) the appreciated value determined by an inflation

allowance at a rate which may be based on a cost-of-living

index, an income index, or market index as determined by

the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests

in, or shares representing, units to eligible families (or another entity specified in the approved application), at the

time of initial sale, and applied against the contribution to

equity.

Such an entity may, at the time of initial sale, enter into an

agreement with the family to set a maximum amount which

this appreciation may not exceed.

(3) 6–20 YEARS.—In the case of a transfer during the period beginning 6 years after the acquisition and ending 20

years after the acquisition, the homeownership program shall

provide for the recapture by the Secretary or the program of

an amount equal to the amount of the declining balance on the

note described in paragraph (1)(C).

(4) USE OF RECAPTURED FUNDS.—Fifty percent of any portion of the net sales proceeds that may not be retained by the

homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership

interests in, or shares representing, units to eligible families,

or another entity specified in the approved application, for use

for improvements to the project, business opportunities for lowincome families, supportive services related to the homeownership program, additional homeownership opportunities, and

other activities approved by the Secretary. The remaining 50

percent shall be returned to the Secretary for use under this

subtitle, subject to limitations contained in appropriations

Acts. Such entity shall keep and make available to the Secretary all records necessary to calculate accurately payments

due the Secretary under this subsection.

(h) THIRD PARTY RIGHTS.—The requirements under this title

regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against the

grant recipient with respect to actions involving rehabilitation, and

against purchasers of property under this subsection or their successors in interest with respect to other actions by affected low-income families, resident management corporations, resident councils, public housing agencies, and any agency, corporation, or authority of the United States Government. The parties specified in

the preceding sentence shall be entitled to reasonable attorney fees

upon prevailing in any such judicial action.

(i) DOLLAR LIMITATION ON ECONOMIC DEVELOPMENT ACTIVITIES.—Not more than an aggregate of $250,000 from amounts
Sec. 306 UNITED STATES HOUSING ACT OF 1937 276

1So in law. Probably intended to refer to section 302(b)(7).

made available under sections 302 and 303 may be used for economic development activities under sections 302(b)(6) 1 and

303.(b)(9) for any project.

(j) TIMELY HOMEOWNERSHIP.—Recipients shall transfer ownership of the property to tenants within a specified period of time

that the Secretary determines to be reasonable. During the interim

period when the property continues to be operated and managed as

rental housing, the recipient shall utilize written tenant selection

policies and criteria that are consistent with the public housing

program and that are approved by the Secretary as consistent with

the purpose of improving housing opportunities for low-income families. The recipient shall promptly notify in writing any rejected applicant of the grounds for any rejection.

(k) CAPABILITY OF RESIDENT MANAGEMENT CORPORATIONS AND

RESIDENT COUNCILS.—To be eligible to receive a grant under section 303, a resident management corporation or resident council

shall demonstrate to the Secretary its ability to manage public

housing by having done so effectively and efficiently for a period of

not less than 3 years or by arranging for management by a qualified management entity.

(l) RECORDS AND AUDIT OF RECIPIENTS OF ASSISTANCE.— (1) IN GENERAL.—Each recipient shall keep such records as

may be reasonably necessary to fully disclose the amount and

the disposition by such recipient of the proceeds of assistance

received under this title (and any proceeds from financing obtained in accordance with subsection (b) or sales under subsections (f) and (g)(4)), the total cost of the homeownership program in connection with which such assistance is given or

used, and the amount and nature of that portion of the program supplied by other sources, and such other sources as will

facilitate an effective audit.

(2) ACCESS BY THE SECRETARY.—The Secretary shall have

access for the purpose of audit and examination to any books,

documents, papers, and records of the recipient that are pertinent to assistance received under this title.

(3) ACCESS BY THE COMPTROLLER GENERAL.—The Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also

have access for the purpose of audit and examination to any

books, documents, papers, and records of the recipient that are

pertinent to assistance received under this title.

SEC. 306. ø42 U.S.C. 1437aaa–5¿ DEFINITIONS.

For purposes of this title:

(1) The term ‘‘applicant’’ means the following entities that

may represent the tenants of the project:

(A) A public housing agency.

(B) A resident management corporation, established in

accordance with requirements of the Secretary under section 20.

(C) A resident council.

(D) A cooperative association.

(E) A public or private nonprofit organization.
277 Sec. 309 UNITED STATES HOUSING ACT OF 1937

1Section 518(a) of the Quality Housing and Work Responsibility Act of 1998, title V of Public

Law 105–276, approved Ocotber 21, 1998, struck section 5(h) of the United States Housing Act

of 1937. Subsection (a)(2)(C) of such section 518 amended this section by striking ‘‘section 5(h)

and’’. The amendment could not be executed as written.

(F) A public body, including an agency or instrumentality thereof.

(2) The term ‘‘eligible family’’ means—

(A) a family or individual who is a tenant in the public

housing project on the date the Secretary approves an implementation grant;

(B) a low-income family; or

(C) a family or individual who is assisted under a

housing program administered by the Secretary or the Secretary of Agriculture (not including any non-low income

families assisted under any mortgage insurance program

administered by either Secretary).

(3) The term ‘‘homeownership program’’ means a program

for homeownership meeting the requirements under this title.

(4) The term ‘‘recipient’’ means an applicant approved to

receive a grant under this title or such other entity specified

in the approved application that will assume the obligations of

the recipient under this title.

(5) The term ‘‘resident council’’ means any incorporated

nonprofit organization or association that—

(A) is representative of the tenants of the housing;

(B) adopts written procedures providing for the election of officers on a regular basis; and

(C) has a democratically elected governing board,

elected by the tenants of the housing.

SEC. 307. ø42 U.S.C. 1437aaa–6¿ RELATIONSHIP TO OTHER HOMEOWNERSHIP OPPORTUNITIES.

The program authorized under this title shall be in addition to

any other public housing homeownership and management opportunities, including opportunities under section 5(h) 1 of this Act.

SEC. 308. ø42 U.S.C. 1437aaa–7¿ LIMITATION ON SELECTION CRITERIA.

In establishing criteria for selecting applicants to receive assistance under this title, the Secretary may not establish any selection criterion or criteria that grant or deny such assistance to an

applicant (or have the effect of granting or denying assistance)

based on the implementation, continuation, or discontinuation of

any public policy, regulation, or law of any jurisdiction in which the

applicant or project is located.

SEC. 309. ø42 U.S.C. 1437aaa–8¿ ANNUAL REPORT.

The Secretary shall annually submit to the Congress a report

setting forth—

(1) the number, type, and cost of public housing units sold

pursuant to this title;

(2) the income, race, gender, children, and other characteristics of families participating (or not participating) in homeownership programs funded under this title;

(3) the amount and type of financial assistance provided

under and in conjunction with this title;
Sec. 401 UNITED STATES HOUSING ACT OF 1937 278

1So in law.

(4) the amount of financial assistance provided under this

title that was needed to ensure continued affordability and

meet future maintenance and repair costs; and

(5) the recommendations of the Secretary for statutory and

regulatory improvements to the program.

TITLE IV—HOME RULE FLEXIBLE

GRANT DEMONSTRATION

SEC. 401. ø42 U.S.C. 1437bbb¿ PURPOSE.

The purpose of this title is to demonstrate the effectiveness of

authorizing local governments and municipalities, in coordination

with the public housing agencies for such jurisdictions—

(1) to receive and combine program allocations of covered

housing assistance; and

(2) to design creative approaches for providing and administering Federal housing assistance based on the particular

needs of the jurisdictions that—

(A) provide incentives to low-income families with children whose head of the household is employed, seeking

employment, or preparing for employment by participating

in a job training or educational program, or any program

that otherwise assists individuals in obtaining employment

and attaining economic self-sufficiency;

(B) reduce costs of Federal housing assistance and

achieve greater cost-effectiveness in Federal housing assistance expenditures;

(C) increase the stock of affordable housing and housing choices for low-income families;

(D) increase homeownership among low-income families;

(E) reduce geographic concentration of assisted families;

(F) reduce homelessness through providing permanent

housing solutions;

(G) improve program management; and

(H) achieve such other purposes with respect to lowincome families, as determined by the participating local

governments and municipalities in coordination with the

public housing agencies; 1

SEC. 402. ø42 U.S.C. 1437bbb–1¿ FLEXIBLE GRANT PROGRAM.

(a) AUTHORITY AND USE.—The Secretary shall carry out a demonstration program in accordance with the purposes under section

401 and the provisions of this title. A jurisdiction approved by the

Secretary for participation in the program may receive and combine and enter into performance-based contracts for the use of

amounts of covered housing assistance, in the manner determined

appropriate by the participating jurisdiction, during the period of

the jurisdiction’s participation—
279 Sec. 402 UNITED STATES HOUSING ACT OF 1937

1 Indented so in law.

(1) to provide housing assistance and services for low-income families in a manner that facilitates the transition of

such families to work;

(2) to reduce homelessness through providing permanent

housing solutions;

(3) to increase homeownership among low-income families;

or

(4) for other housing purposes for low-income families determined by the participating jurisdiction.

(b) PERIOD OF PARTICIPATION.—A jurisdiction may participate

in the demonstration program under this title for a period consisting of not less than 1 nor more than 5 fiscal years.

(c) PARTICIPATING JURISDICTIONS.—

(1) 1 IN GENERAL.—Subject to paragraph (2), during

the 4-year period consisting of fiscal years 1999 through

2002, the Secretary may approve for participation in the

program under this title not more than an aggregate of

100 jurisdictions over the entire term of the demonstration

program. A jurisdiction that was approved for participation

in the demonstration program under this title in a fiscal

year and that is continuing such participation in any subsequent fiscal year shall count as a single jurisdiction for

purposes of the numerical limitation under this paragraph.

(2) EXCLUSION OF HIGH PERFORMING AGENCIES.—Notwithstanding any other provision of this title other than paragraph

(4) of this subsection, the Secretary may approve for participation in the demonstration program under this title only jurisdictions served by public housing agencies that—

(A) are not designated as high-performing agencies,

pursuant to their most recent scores under the public

housing management assessment program under section

6( j)(2) (or any successor assessment program for public

housing agencies), as of the time of approval; and

(B) have a most recent score under the public housing

management assessment program under section 6( j)(2) (or

any successor assessment program for public housing

agencies), as of the time of approval, that is among the

lowest 40 percent of the scores of all agencies.

(3) LIMITATION ON TROUBLED AND NON-TROUBLED PHAS.—

Of the jurisdictions approved by the Secretary for participation

in the demonstration program under this title—

(A) not more than 55 may be jurisdictions served by

a public housing agency that, at the time of approval, is

designated as a troubled agency under the public housing

management assessment program under section 6( j)(2) (or

any successor assessment program for public housing

agencies); and

(B) not more than 45 may be jurisdictions served by

a public housing agency that, at the time of approval, is

not designated as a troubled agency under the public housing management assessment program under section 6( j)(2)
Sec. 403 UNITED STATES HOUSING ACT OF 1937 280

1The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

(or any successor assessment program for public housing

agencies).

(4) EXCEPTION.—If the City of Indianapolis, Indiana submits an application for participation in the program under this

title and, upon review of the application under section 406(b),

the Secretary determines that such application is approvable

under this title, the Secretary shall approve such application,

notwithstanding the second sentence of section 406(b)(2). Such

City shall count for purposes of the numerical limitations on

jurisdictions under paragraphs (1) and (3) of section 402(c), but

the provisions of section 402(c)(2) (relating to exclusion of highperforming agencies) shall not apply to such City.

SEC. 403. ø42 U.S.C. 1437bbb–2¿ PROGRAM ALLOCATION AND COVERED

HOUSING ASSISTANCE.

(a) PROGRAM ALLOCATION.—In each fiscal year, the amount

made available to each participating jurisdiction under the demonstration program under this title shall be equal to the sum of the

amounts of covered housing assistance that would otherwise be

made available under the provisions of this Act to the public housing agency for the jurisdiction.

(b) COVERED HOUSING ASSISTANCE.—For purposes of this title,

the term ‘‘covered housing assistance’’ means—

(1) operating assistance under section 9 (as in effect before

the effective date under section 503(a) of the Quality Housing

and Work Responsibility Act of 1998 1);

(2) modernization assistance under section 14 (as in effect

before the effective date under section 503(a) of the Quality

Housing and Work Responsibility Act of 1998 1);

(3) assistance for the certificate and voucher programs

under section 8 (as in effect before the effective date under section 503(a) of the Quality Housing and Work Responsibility Act

of 404.1998 1);

(4) assistance from the Operating Fund under section 9(e);

(5) assistance from the Capital Fund under section 9(d);

and

(6) tenant-based assistance under section 8 (as amended

by the Quality Housing and Work Responsibility Act of 1998).

SEC. 404. ø42 U.S.C. 1437bbb–3¿ APPLICABILITY OF REQUIREMENTS

UNDER PROGRAMS FOR COVERED HOUSING ASSISTANCE.

(a) IN GENERAL.—In each fiscal year of the demonstration program under this title, amounts made available to a participating

jurisdiction under the demonstration program shall be subject to

the same terms and conditions as such amounts would be subject

to if made available under the provisions of this Act pursuant to

which covered housing assistance is otherwise made available

under this Act to the public housing agency for the jurisdiction, except that—

(1) the Secretary may waive any such term or condition

identified by the jurisdiction to the extent that the Secretary
281 Sec. 406 UNITED STATES HOUSING ACT OF 1937

1October 21, 1998.

determines such action to be appropriate to carry out the purposes of the demonstration program under this title; and

(2) the participating jurisdiction may combine the amounts

made available and use the amounts for any activity eligible

under the programs under sections 8 and 9.

(b) NUMBER OF FAMILIES ASSISTED.—In carrying out the demonstration program under this title, each participating jurisdiction

shall assist substantially the same total number of eligible low-income families as would have otherwise been served by the public

housing agency for the jurisdiction had the jurisdiction not participated in the demonstration program under this title.

(c) PROTECTION OF RECIPIENTS.—This title may not be construed to authorize the termination of assistance to any recipient

receiving assistance under this Act before the date of the enactment of this title 1 as a result of the implementation of the demonstration program under this title.

(d) EFFECT ON ABILITY TO COMPETE FOR OTHER PROGRAMS.—

This title may not be construed to affect the ability of any applying

or participating jurisdiction (or a public housing agency for any

such jurisdiction) to compete or otherwise apply for or receive assistance under any other housing assistance program administered

by the Secretary.

SEC. 405. ø42 U.S.C. 1437bbb–4¿ PROGRAM REQUIREMENTS.

(a) APPLICABILITY OF CERTAIN PROVISIONS.—Notwithstanding

section 404(a)(1), the Secretary may not waive, with respect to any

participating jurisdiction, any of the following provisions:

(1) The first sentence of paragraph (1) of section 3(a) (relating to eligibility of low-income families).

(2) Section 16 (relating to income eligibility and targeting

of assistance).

(3) Paragraph (2) of section 3(a) (relating to rental payments for public housing families).

(4) Paragraphs (2) and (3) of section 8(o) (to the extent

such paragraphs limit the amount of rent paid by families assisted with tenant-based assistance).

(5) Section 18 (relating to demolition or disposition of public housing).

(b) COMPLIANCE WITH ASSISTANCE PLAN.—A participating jurisdiction shall provide assistance using amounts received pursuant

to this title in the manner set forth in the plan of the jurisdiction

approved by the Secretary under section 406(a)(2).

SEC. 406. ø42 U.S.C. 1437bbb–5¿ APPLICATION.

(a) IN GENERAL.—The Secretary shall provide for jurisdictions

to submit applications for approval to participate in the demonstration program under this title. An application—

(1) shall be submitted only after the jurisdiction provides

for citizen participation through a public hearing and, if appropriate, other means;

(2) shall include a plan for the provision of housing assistance with amounts received pursuant to this title that—

(A) is developed by the jurisdiction;
Sec. 406 UNITED STATES HOUSING ACT OF 1937 282

1So in law.

2Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

(B) takes into consideration comments from the public

hearing, any other public comments on the proposed program, and comments from current and prospective residents who would be affected; and

(C) identifies each term or condition for which the jurisdiction is requesting waiver under section 404 (a)(1);

(3) shall describe how the plan for use of amounts will assist in meeting the purposes of, and be used in accordance

with, sections 401 and 402(a), respectively;

(4) shall propose standards for measuring performance in

using assistance provided pursuant to this title based on the

performance standards under subsection (b)(4);

(5) shall propose the length of the period for participation

of the jurisdiction is 1 in the demonstration program under this

title;

(6) shall—

(A) in the case of the application of any jurisdiction

within whose boundaries are areas subject to any other

unit of general local government, include the signed consent of the appropriate executive official of such unit to the

application; and

(B) in the case of the application of a consortia of units

of general local government (as provided under section

409(1)(B)), include the signed consent of the appropriate

executive officials of each unit included in the consortia;

(7) shall include information sufficient, in the determination of the Secretary—

(A) to demonstrate that the jurisdiction has or will

have management and administrative capacity sufficient

to carry out the plan under paragraph (2), including a

demonstration that the applicant has a history of effectively administering amounts provided under other programs of the Department of Housing and Urban Development, such as the community development block grant

program, the HOME investment partnerships program,

and the programs for assistance for the homeless under

the Stewart B. McKinney Homeless Assistance Act 2;

(B) to demonstrate that carrying out the plan will not

result in excessive duplication of administrative efforts

and costs, particularly with respect to activities performed

by public housing agencies operating within the boundaries of the jurisdiction;

(C) to describe the function and activities to be carried

out by such public housing agencies affected by the plan;

and

(D) to demonstrate that the amounts received by the

jurisdiction will be maintained separate from other funds
283 Sec. 406 UNITED STATES HOUSING ACT OF 1937

available to the jurisdiction and will be used only to carry

out the plan;

(8) shall include information describing how the jurisdiction will make decisions regarding asset management of housing for low-income families under programs for covered housing assistance or assisted with grant amounts under this title;

(9) shall—

(A) clearly identify any State or local laws that will affect implementation of the plan under paragraph (2) and

any contractual rights and property interests that may be

affected by the plan;

(B) describe how the plan will be carried out with respect to such laws, rights, and interests; and

(C) contain a legal memorandum sufficient to describe

how the plan will comply with such laws and how the plan

will be carried out without violating or impairing such

rights and interests; and

(10) shall identify procedures for how the jurisdiction shall

return to providing covered assistance for the jurisdiction

under the provisions of title I, in the case of determination

under subsection (b)(4)(B).

A plan required under paragraph (2) to be included in the application may be contained in a memorandum of agreement or other

document executed by a jurisdiction and public housing agency, if

such document is submitted together with the application.

(b) REVIEW, APPROVAL, AND PERFORMANCE STANDARDS.—

(1) REVIEW.—The Secretary shall review each application

for participation in the demonstration program under this title

and shall determine and notify the jurisdiction submitting the

application, not later than 90 days after its submission, of

whether the application is approvable under this title. If the

Secretary determines that the application of a jurisdiction is

approvable under this title, the Secretary shall provide affected

public housing agencies an opportunity to review and to provide written comments on the application for a period of not

less than 30 days after notification under the preceding sentence. If the Secretary determines that an application is not

approvable under this title, the Secretary shall notify the jurisdiction submitting the application of the reasons for such determination. Upon making a determination of whether an application is approvable or nonapprovable under this title, the

Secretary shall make such determination publicly available in

writing together with a written statement of the reasons for

such determination.

(2) APPROVAL.—The Secretary may approve jurisdictions

for participation in the demonstration program under this title,

but only from among applications that the Secretary has determined under paragraph are approvable under this title and

only in accordance with section 402(c). The Secretary shall

base the selection of jurisdictions to approve on the potential

success, as evidenced by the application, in—

(A) achieving the goals set forth in the performance

standards under paragraph (4)(A); and

(B) increasing housing choices for low-income families.
Sec. 406 UNITED STATES HOUSING ACT OF 1937 284

(3) AGREEMENT.—The Secretary shall offer to enter into an

agreement with each jurisdiction approved for participation in

the program under this title providing for assistance pursuant

to this title for a period in accordance with section 402(b) and

incorporating a requirement that the jurisdiction achieve a

particular level of performance in each of the areas for which

performance standards are established under paragraph (4)(A)

of this subsection. If the Secretary and the jurisdiction enter

into an agreement, the Secretary shall provide any covered

housing assistance for the jurisdiction in the manner authorized under this title. The Secretary may not provide covered

housing assistance for a jurisdiction in the manner authorized

under this title unless the Secretary and jurisdiction enter into

an agreement under this paragraph.

(4) PERFORMANCE STANDARDS.— (A) ESTABLISHMENT.—The Secretary and each participating jurisdiction may collectively establish standards for

evaluating the performance of the participating jurisdiction in meeting the purposes under section 401 of this

title, which may include standards for—

(i) moving dependent low-income families to economic self-sufficiency;

(ii) reducing the per-family cost of providing housing assistance;

(iii) expanding the stock of affordable housing and

housing choices for low-income families;

(iv) improving program management;

(v) increasing the number of homeownership opportunities for low-income families;

(vi) reducing homelessness through providing permanent housing resources;

(vii) reducing geographic concentration of assisted

families; and

(viii) any other performance goals that the Secretary and the participating jurisdiction may establish.

(B) FAILURE TO COMPLY.—If, at any time during the

participation of a jurisdiction in the program under this

title, the Secretary determines that the jurisdiction is not

sufficiently meeting, or making progress toward meeting,

the levels of performance incorporated into the agreement

of the jurisdiction pursuant to subparagraph (A), the Secretary shall terminate the participation of the jurisdiction

in the program under this title and require the implementation of the procedures included in the application of the

jurisdiction pursuant to subsection (a)(10).

(5) TROUBLED AGENCIES.—The Secretary may establish requirements for the approval of applications under this section

submitted by public housing agencies designated under section

6( j)(2) as troubled, which may include additional or different

criteria determined by the Secretary to be more appropriate for

such agencies.

(c) STATUS OF PHAS.—This title may not be construed to require any change in the legal status of any public housing agency
285 Sec. 408 UNITED STATES HOUSING ACT OF 1937

or in any legal relationship between a jurisdiction and a public

housing agency as a condition of participation in the program

under this title.

(d) PHA PLANS.—In carrying out this title, the Secretary may

provide for a streamlined public housing agency plan and planning

process under section 5A for participating jurisdictions.

SEC. 407. ø42 U.S.C. 1437bbb–6¿ TRAINING.

The Secretary, in consultation with representatives of public

and assisted housing interests, may provide training and technical

assistance relating to providing assistance under this title and may

conduct detailed evaluations of up to 30 jurisdictions for the purpose of identifying replicable program models that are successful at

carrying out the purposes of this title.

SEC. 408. ø42 U.S.C. 1437bbb–7¿ ACCOUNTABILITY.

(a) MAINTENANCE OF RECORDS.—Each participating jurisdiction

shall maintain such records as the Secretary may require to—

(1) document the amounts received by the jurisdiction

under this Act and the disposition of such amounts under the

demonstration program under this title;

(2) ensure compliance by the jurisdiction with this title;

and

(3) evaluate the performance of the jurisdiction under the

demonstration program under this title.

(b) REPORTS.—Each participating jurisdiction shall annually

submit to the Secretary a report in a form and at a time specified

by the Secretary, which shall include—

(1) documentation of the use of amounts made available to

the jurisdiction under this title;

(2) any information as the Secretary may request to assist

the Secretary in evaluating the demonstration program under

this title; and

(3) a description and analysis of the effect of assisted activities in addressing the objectives of the demonstration program under this title.

(c) ACCESS TO DOCUMENTS BY SECRETARY AND COMPTROLLER

GENERAL.—The Secretary and the Comptroller General of the

United States, or any duly authorized representative of the Secretary or the Comptroller General, shall have access for the purpose of audit and examination to any books, documents, papers,

and records maintained by a participating jurisdiction that relate

to the demonstration program under this title.

(d) PERFORMANCE REVIEW AND EVALUATION.—

(1) PERFORMANCE REVIEW.—Based on the performance

standards established under section 406(b)(4), the Secretary

shall monitor the performance of participating jurisdictions in

providing assistance under this title.

(2) STATUS REPORT.—Not later than 60 days after the conclusion of the second year of the demonstration program under

this title, the Secretary shall submit to Congress an interim report on the status of the demonstration program and the

progress each participating jurisdiction in achieving the purposes of the demonstration program under section 401.
Sec. 409 UNITED STATES HOUSING ACT OF 1937 286

1So in law. Should probably insert the word ‘‘of’’ after evaluation.

2October 21, 1998.

SEC. 409. ø42 U.S.C. 1437bbb–8¿ DEFINITIONS.

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

(1) JURISDICTION.—The term ‘‘jurisdiction’’ means—

(A) a unit of general local government (as such term

is defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act) that has boundaries, for

purposes of carrying out this title, that—

(i) wholly contain the area within which a public

housing agency is authorized to operate; and

(ii) do not contain any areas contained within the

boundaries of any other participating jurisdiction; and

(B) a consortia of such units of general local government, organized for purposes of this title.

(2) PARTICIPATING JURISDICTION.—The term ‘‘participating

jurisdiction’’ means, with respect to a period for which such an

agreement is made, a jurisdiction that has entered into an

agreement under section 406(b)(3) to receive assistance pursuant to this title for such fiscal year.

SEC. 410. ø42 U.S.C. 1437bbb–9¿ TERMINATION AND EVALUATION.

(a) TERMINATION.—The demonstration program under this title

shall terminate not less than 2 and not more than 5 years after the

date on which the demonstration program is commenced.

(b) EVALUATION.—Not later than 6 months after the termination of the demonstration program under this title, the Secretary

shall submit to the Congress a final report, which shall include—

(1) an evaluation 1 the effectiveness of the activities carried

out under the demonstration program; and

(2) any findings and recommendations of the Secretary for

any appropriate legislative action.

SEC. 411. ø42 U.S.C. 1437bbb note¿ APPLICABILITY.

This title shall take effect on the date of the enactment of the

Quality Housing and Work Responsibility Act of 1998. 2
287

REPEAL OF SECTION 8 NEW CONSTRUCTION

EXCERPT FROM HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

[Public Law 98–181; 97 Stat. 1183; 42 U.S.C. 1437f note]

REPEAL OF NEW CONSTRUCTION AUTHORITY

SEC. 209. (a) The United States Housing Act of 1937 is amended as follows:

(1) Section 8(a) is amended by striking out ‘‘, newly constructed, and substantially rehabilitated’’.

(2) Section 8(b)(2) is repealed.

(3) Section 8(e) of such Act is amended by striking out

paragraphs (1), (2), and (3) and by redesignating paragraphs

(4) and (5) as paragraphs (1) and (2), respectively.

(4) Section 8(i) of such Act is repealed.

(5) Section 8 of such Act is amended by striking out subsections (l) and (m).

(6) Section 8(n) of such Act is amended by striking out

‘‘(e)(5) and subsection (i)’’ and inserting in lieu thereof ‘‘(e)(2)’’.

(b) The amendments made by subsection (a) shall take effect

on October 1, 1983, except that the provisions repealed shall remain in effect—

(1) with respect to any funds obligated for a viable project

under section 8 of the United States Housing Act of 1937 prior

to January 1, 1984; and

(2) with respect to any project financed under section 202

of the Housing Act of 1959.

EXCERPTS FROM UNITED STATES HOUSING ACT OF 1937—PRIOR TO

NOVEMBER 30, 1983

LOWER INCOME HOUSING ASSISTANCE

SEC. 8. (a) * * *

(b)(1) * * *

(2) To the extent of annual contributions authorizations under

section 5(c) of this Act, the Secretary is authorized to make assistance payments pursuant to contracts with owners or prospective

owners who agree to construct or substantially rehabilitate housing

in which some or all of the units shall be available for occupancy

by lower-income families in accordance with the provisions of this

section. To increase housing opportunities for very low-income families, the Secretary shall assure that newly constructed housing to be

assisted under this section is modest in design. The Secretary may

also enter into annual contributions contracts with public housing

agencies pursuant to which such agencies may enter into contracts

to make assistance payments to such owners or prospective owners.

Each contract to make assistance payments for newly constructed or
Sec. 8 REPEAL OF SECTION 8 NEW CONSTRUCTION 288

substantially rehabilitated housing assisted under this section entered into after the date of enactment of the Housing and Community Development Amendments of 1981 shall provide that during

the term of the contract the owner shall make available for occupancy by families which are eligible for assistance under this section, at the time of their initial occupancy, the number of units for

which assistance is committed under the contract.

* * * * * * *

(e)(1) The Secretary shall not contract to make assistance payments with respect to a newly constructed or substantially rehabilitated dwelling unit for a term of less than two hundred and forty

months or more than three hundred and sixty months, except that

such term may not exceed two hundred and forty months in the case

of a project financed with assistance of a loan made by, or insured,

guaranteed or intended for purchase by, the Federal Government,

other than pursuant to section 244 of the National Housing Act.

Notwithstanding the preceding sentence, in the case of a project

owned by, or financed by a loan or loan guarantee from, a State or

local agency or the Farmers’ Home Administration, the term may

not exceed four hundred and eighty months.

(2) The contract between the Secretary and the owner with respect to newly constructed or substantially rehabilitated dwelling

units shall provide that all ownership, management, and maintenance responsibilities, including the selection of tenants and the termination of tenancy, shall be assumed by the owner (or any entity,

including a public housing agency, approved by the Secretary, with

which the owner may contract for the performance of such responsibilities), except that the tenant selection criteria shall give preference to families which occupy substandard housing or are involuntarily displaced at the time they are seeking housing assistance

under this section. In approving any public housing agency to assume all the management and maintenance responsibilities of any

dwelling unit under the preceding sentence, the Secretary may do so

without regard to whether such agency administers the housing assistance payment contract for that unit.

(3) The construction or substantial rehabilitation of dwelling

units to be assisted under this section shall be eligible for financing

with mortgages insured under the National Housing Act. Assistance

with respect to such dwelling units shall not be withheld or made

subject to preferences by reason of the availability of mortgage insurance pursuant to section 244 of such Act or by reason of the taxexempt status of the bonds or other obligations to be used to finance

such construction or rehabilitation.

* * * * * * *

(i) In entering into contracts under this section with respect to

substantially rehabilitated dwelling units, the Secretary shall provide that—

(1) the maximum monthly rent permitted for the assisted

units be not greater than the amount permitted under subsection (c) or a lesser amount which the Secretary determines

is appropriate taking into consideration the investment of the

owner in the assisted units and such other factors as the Secretary determines to be relevant;
289 Sec. 555 REPEAL OF SECTION 8 NEW CONSTRUCTION

(2) the assisted units be rehabilitated to a level which meets

but does not exceed applicable codes and standards for decent,

safe, and sanitary housing which are prescribed by the Secretary;

(3) all the dwelling units in the housing structure in which

the assisted units are located meet applicable codes and standards prescribed by the Secretary for decent, safe, and sanitary

housing;

(4) the term of any such contract does not exceed the maximum term permitted under subsection (e)(1) or a shorter term

which the Secretary determines is appropriate taking into consideration the amount of investment of the owner in the assisted

units and such other factors as the Secretary determines to be

relevant; and

(5) the assisted units meet cost-effective energy efficiency

standards prescribed by the Secretary.

* * * * * * *

(l) After selection of a proposal involving newly constructed or

substantially rehabilitated units for assistance under this section,

the Secretary shall limit cost and rent increases, except for adjustment in rent pursuant to section 8(c)(2), to those approved by the

Secretary. The Secretary may approve those increases only for unforeseen factors beyond the owner’s control, design changes required

by the Secretary or the local government, or changes in financing

approved by the Secretary.

(m) For the purpose of achieving the lowest cost in providing

units in newly constructed projects assisted under this section, the

Secretary shall give a preference in entering into contracts under

this section for projects which are to be located on specific tracts of

land provided by States or units of local government if the Secretary

determines that the tract of land is suitable for such housing, and

that affording such preference will be cost effective.

EXCERPTS FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4220, 4233; 42 U.S.C. 1437f note]

SEC. 555. ø42 U.S.C. 1437f note¿ INCOME ELIGIBILITY FOR TENANCY IN

NEW CONSTRUCTION UNITS.

Any dwelling units in any housing constructed or substantially

rehabilitated pursuant to assistance provided under section 8(b)(2)

of the United States Housing Act of 1937, as such section existed

before October 1, 1983, and with a contract for assistance under

such section, shall be reserved for occupancy by low-income families and very low-income families.

EXCERPT FROM THE BALANCED BUDGET DOWNPAYMENT ACT, I

[Public Law 104–99; 110 Stat. 42]

PUBLIC AND ASSISTED HOUSING RENTS, INCOME ADJUSTMENTS, AND

PREFERENCES

SEC. 402. ø(a) [Repealed.]¿

* * * * * * *
Sec. 555 REPEAL OF SECTION 8 NEW CONSTRUCTION 290

1Section 514(c)(2) of the Quality Housing and Work Responsibility Act of 1998, title V of Public Law 105–276, approved October 21, 1998, provides as follows:

‘‘(2) PROHIBITION.—Notwithstanding any other provision of law (including subsection (f)

of this section), section 402(d)(4)(B) of The Balanced Budget Downpayment Act, I (42 U.S.C.

1437a note) shall apply to fiscal year 1999 and thereafter.’’.

(d) REPEAL OF FEDERAL PREFERENCES.—

* * * * * * *

(4) SECTION 8 NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION.—

(A) REPEAL.— * * *

(B) 1 PROHIBITION.—Notwithstanding any other provision of law, no Federal tenant selection preferences under

the United States Housing Act of 1937 shall apply with respect to—

(i) housing constructed or substantially rehabilitated pursuant to assistance provided under section

8(b)(2) of the United States Housing Act of 1937 (as

such section existed on the day before October 1,

1983); or

(ii) projects financed under section 202 of the

Housing Act of 1959 (as such section existed on the

day before the date of enactment of the Cranston-Gonzalez National Affordable Housing Act).

* * * * * * *
291

FUNDING FOR SECTION 8 TENANT-BASED ASSISTANCE

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2614]

SEC. 558. AUTHORIZATIONS OF APPROPRIATIONS.

(a) IN GENERAL.—There is authorized to be appropriated for

providing public housing agencies with tenant-based housing assistance under section 8 of the United States Housing Act of

1937—

(1) to provide amounts for incremental assistance under

such section 8—

(A) for each of fiscal years 2000 and 2001, the amount

necessary to assist 100,000 incremental dwelling units in

each such fiscal year; and

(B) for each of fiscal years 1999, 2002, and 2003, such

sums as may be necessary; and

(2) such sums as may be necessary for each of fiscal years

1999, 2000, 2001, 2002, and 2003, for—

(A) relocation and replacement housing for units that

are demolished and disposed of from the public housing inventory (in addition to other amounts that may be available for such purposes);

(B) relocation of residents of properties that are owned

by the Secretary and being disposed of or that are discontinuing section 8 project-based assistance;

(C) the conversion of section 23 projects to assistance

under section 8;

(D) carrying out the family unification program;

(E) relocation of witnesses in connection with efforts to

combat crime in public and assisted housing pursuant to

a request from a law enforcement or prosecution agency;

(F) nonelderly disabled families affected by the designation of a public housing development under section 7

of the United States Housing Act of 1937, the establishment of preferences in accordance with section 651 of the

Housing and Community Development Act of 1992, or the

restriction of occupancy to elderly families in accordance

with section 658 of such Act, and to the extent the Secretary determines that such amount is not needed to fund

applications for such affected families, to other nonelderly

disabled families;

(G) housing vouchers for homeless individuals; and

(H) housing vouchers to compensate public housing

agencies which issue vouchers to families that move into

or out of the jurisdiction of the agency under portability

procedures.
Sec. 558 FUNDING FOR SECTION 8 TENANT-BASED ASSISTANCE 292

1October 21, 1998.

(b) ASSISTANCE FOR DISABLED FAMILIES.—

(1) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated, for tenant-based assistance under section 8 of the United States Housing Act of 1937, to be used in

accordance with paragraph (2), $50,000,000 for fiscal year

2000, and such sums as may be necessary for each subsequent

fiscal year.

(2) USE.—The Secretary shall provide amounts made available under paragraph (1) to public housing agencies only for

use to provide tenant-based assistance under section 8 of the

United States Housing Act of 1937 for nonelderly disabled families (including such families relocating pursuant to designation of a public housing development under 7 of such Act or to

the establishment of occupancy restrictions in accordance with

section 658 of the Housing and Community Development Act

of 1992, and other nonelderly disabled families who have applied to the agency for assistance under such section 8).

(3) ALLOCATION OF AMOUNTS.—The Secretary shall allocate

and provide amounts made available under paragraph (1) to

public housing agencies as the Secretary determines appropriate based on the relative levels of need among the authorities for assistance for families described in paragraph (1).

(c) EFFECTIVE DATE.—This section shall take effect on the date

of the enactment of this Act. 1
293

MOVING TO WORK DEMONSTRATION

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1996 (AS CONTAINED IN SECTION 101(e) OF OMNIBUS CONSOLIDATED RESCISSIONS AND APPROPRIATIONS ACT OF

1996)

[Public Law 104–134; 110 Stat. 1321–281; 42 U.S.C. 1437f note]

PUBLIC HOUSING/SECTION 8 MOVING TO WORK DEMONSTRATION

SEC. 204. ø42 U.S.C. 1437f note¿ (a) PURPOSE.—The purpose

of this demonstration is to give public housing agencies and the

Secretary of Housing and Urban Development the flexibility to design and test various approaches for providing and administering

housing assistance that: reduce cost and achieve greater cost effectiveness in Federal expenditures; give incentives to families with

children where the head of household is working, seeking work, or

is preparing for work by participating in job training, educational

programs, or programs that assist people to obtain employment

and become economically self-sufficient; and increase housing

choices for low-income families.

(b) PROGRAM AUTHORITY.—The Secretary of Housing and

Urban Development shall conduct a demonstration program under

this section beginning in fiscal year 1996 under which up to 30

public housing agencies (including Indian housing authorities) administering the public or Indian housing program and the section

8 housing assistance payments program may be selected by the

Secretary to participate. The Secretary shall provide training and

technical assistance during the demonstration and conduct detailed

evaluations of up to 15 such agencies in an effort to identify

replicable program models promoting the purpose of the demonstration. Under the demonstration, notwithstanding any provision of the United States Housing Act of 1937 except as provided

in subsection (e), an agency may combine operating assistance provided under section 9 of the United States Housing Act of 1937,

modernization assistance provided under section 14 of such Act,

and assistance provided under section 8 of such Act for the certificate and voucher programs, to provide housing assistance for lowincome families, as defined in section 3(b)(2) of the United States

Housing Act of 1937, and services to facilitate the transition to

work on such terms and conditions as the agency may propose and

the Secretary may approve.

(c) APPLICATION.—An application to participate in the

demonstration—

(1) shall request authority to combine assistance under

sections 8, 9, and 14 of the United States Housing Act of 1937;
Sec. 204 MOVING TO WORK DEMONSTRATION 294

(2) shall be submitted only after the public housing agency

provides for citizen participation through a public hearing and,

if appropriate, other means;

(3) shall include a plan developed by the agency that takes

into account comments from the public hearing and any other

public comments on the proposed program, and comments from

current and prospective residents who would be affected, and

that includes criteria for—

(A) families to be assisted, which shall require that at

least 75 percent of the families assisted by participating

demonstration public housing authorities shall be very

low-income families, as defined in section 3(b)(2) of the

United States Housing Act of 1937;

(B) establishing a reasonable rent policy, which shall

be designed to encourage employment and self-sufficiency

by participating families, consistent with the purpose of

this demonstration, such as by excluding some or all of a

family’s earned income for purposes of determining rent;

(C) continuing to assist substantially the same total

number of eligible low-income families as would have been

served had the amounts not been combined;

(D) maintaining a comparable mix of families (by family size) as would have been provided had the amounts not

been used under the demonstration; and

(E) assuring that housing assisted under the demonstration program meets housing quality standards established or approved by the Secretary; and

(4) may request assistance for training and technical assistance to assist with design of the demonstration and to participate in a detailed evaluation.

(d) SELECTION.—In selecting among applications, the Secretary

shall take into account the potential of each agency to plan and

carry out a program under the demonstration, the relative performance by an agency under the public housing management assessment program under section 6(j) of the United States Housing Act

of 1937, and other appropriate factors as determined by the Secretary.

(e) APPLICABILITY OF 1937 ACT PROVISIONS.—

(1) Section 18 of the United States Housing Act of 1937

shall continue to apply to public housing notwithstanding any

use of the housing under this demonstration.

(2) Section 12 of such Act shall apply to housing assisted

under the demonstration, other than housing assisted solely

due to occupancy by families receiving tenant-based assistance.

(f) EFFECT ON SECTION 8, OPERATING SUBSIDIES, AND COMPREHENSIVE GRANT PROGRAM ALLOCATIONS.—The amount of assistance received under section 8, section 9, or pursuant to section 14

by a public housing agency participating in the demonstration

under this part shall not be diminished by its participation.

(g) RECORDS, REPORTS, AND AUDITS.—

(1) KEEPING OF RECORDS.—Each agency shall keep such

records as the Secretary may prescribe as reasonably necessary

to disclose the amounts and the disposition of amounts under
295 Sec. 204 MOVING TO WORK DEMONSTRATION

this demonstration, to ensure compliance with the requirements of this section, and to measure performance.

(2) REPORTS.—Each agency shall submit to the Secretary

a report, or series of reports, in a form and at a time specified

by the Secretary. Each report shall—

(A) document the use of funds made available under

this section;

(B) provide such data as the Secretary may request to

assist the Secretary in assessing the demonstration; and

(C) describe and analyze the effect of assisted activities in addressing the objectives of this part.

(3) ACCESS TO DOCUMENTS BY THE SECRETARY.—The Secretary shall have access for the purpose of audit and examination to any books, documents, papers, and records that are pertinent to assistance in connection with, and the requirements

of, this section.

(4) ACCESS TO DOCUMENTS BY THE COMPTROLLER GEN- ERAL.—The Comptroller General of the United States, or any

of the duly authorized representatives of the Comptroller General, shall have access for the purpose of audit and examination to any books, documents, papers, and records that are pertinent to assistance in connection with, and the requirements

of, this section.

(h) EVALUATION AND REPORT.—

(1) CONSULTATION WITH PHA AND FAMILY REPRESENTATIVES.—In making assessments throughout the demonstration,

the Secretary shall consult with representatives of public housing agencies and residents.

(2) REPORT TO CONGRESS.—Not later than 180 days after

the end of the third year of the demonstration, the Secretary

shall submit to the Congress a report evaluating the programs

carried out under the demonstration. The report shall also include findings and recommendations for any appropriate legislative action.

(i) FUNDING FOR TECHNICAL ASSISTANCE AND EVALUATION.—

From amounts appropriated for assistance under section 14 of the

United States Housing Act of 1937 for fiscal years 1996, 1997, and

1998, the Secretary may use up to a total of $5,000,000—

(1) to provide, directly or by contract, training and technical assistance—

(A) to public housing agencies that express an interest

to apply for training and technical assistance pursuant to

subsection (c)(4), to assist them in designing programs to

be proposed for the demonstration; and

(B) to up to 10 agencies selected to receive training

and technical assistance pursuant to subsection (c)(4), to

assist them in implementing the approved program; and

(2) to conduct detailed evaluations of the activities of the

public housing agencies under paragraph (1)(B), directly or by

contract.

( j) CAPITAL AND OPERATING FUND ASSISTANCE.—With respect

to any public housing agency participating in the demonstration

under this section that receives assistance from the Capital or Operating Fund under section 9 of the United States Housing Act of
Sec. 204 MOVING TO WORK DEMONSTRATION 296

1937 (as amended by the Quality Housing and Work Responsibility

Act of 1998), for purposes of this section—

(1) any reference to assistance under section 9 of the

United States Housing Act of 1937 shall be considered to refer

also to assistance provided from the Operating Fund under section 9(e) of such Act (as so amended); and

(2) any reference to assistance under section 14 of the

United States Housing Act of 1937 shall be considered to refer

also to assistance provided from the Capital Fund under section 9(d) of such Act (as so amended).
297

SECTION 8 ADMINISTRATIVE FEES

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1997

[Public Law 104–204; 110 Stat. 2893; 42 U.S.C. 1437f note]

SEC. 202. ø42 U.S.C. 1437f note¿ ADMINISTRATIVE FEES.—Notwithstanding section 8(q) of the United States Housing Act of 1937,

as amended—

(a) The Secretary shall establish fees for the cost of administering the certificate, voucher and moderate rehabilitation programs.

(1)(A) For fiscal year 1997, the fee for each month for

which a dwelling unit is covered by an assistance contract

shall be 7.5 percent of the base amount, adjusted as provided

herein, in the case of an agency that, on an annual basis, is

administering a program of no more than 600 units, and 7 percent of the base amount, adjusted as provided herein, for each

additional unit above 600.

(B) The base amount shall be the higher of—

(i) the fair market rental for fiscal year 1993 for a 2-

bedroom existing rental dwelling unit in the market area

of the agency; and

(ii) such fair market rental for fiscal year 1994, but

not more than 103.5 percent of the amount determined

under clause (i).

(C) The base amount shall be adjusted to reflect changes

in the wage data or other objectively measurable data that reflect the costs of administering the program during fiscal year

1996; except that the Secretary may require that the base

amount be not less than a minimum amount and not more

than a maximum amount.

(2) For subsequent fiscal years, the Secretary shall publish

a notice in the Federal Register, for each geographic area, establishing the amount of the fee that would apply for the agencies administering the program, based on changes in wage data

or other objectively measurable data that reflect the cost of administering the program, as determined by the Secretary.

(3) The Secretary may increase the fee if necessary to reflect higher costs of administering small programs and programs operating over large geographic areas.

(4) The Secretary may decrease the fee for PHA-owned

units.

(b) Beginning in fiscal year 1997 and thereafter, the Secretary

shall also establish reasonable fees (as determined by the Secretary) for—
Sec. 202 SECTION 8 ADMINISTRATIVE FEES 298

(1) the costs of preliminary expenses, in the amount of

$500, for a public housing agency, but only in the first year it

administers a tenant-based assistance program under the

United States Housing Act of 1937 and only if, immediately before the effective date of this Act, it was not administering a

tenant-based assistance program under the 1937 Act

(as in effect immediately before the effective date of this Act),

in connection with its initial increment of assistance received;

(2) the costs incurred in assisting families who experience

difficulty (as determined by the Secretary) in obtaining appropriate housing under the program; and

(3) extraordinary costs approved by the Secretary.
299

SECTION 8 CONTRACT RENEWALS

EXCERPT FROM THE BALANCED BUDGET DOWNPAYMENT ACT, I

[Public Law 104–99; 110 Stat. 44; 42 U.S.C. 1437f note]

SECTION 8 CONTRACT RENEWALS

SEC. 405. ø42 U.S.C. 1437f note¿ (a) Notwithstanding part 24

of title 24 of the Code of Federal Regulations, for fiscal year 1996

and henceforth, the Secretary of Housing and Urban Development

may use amounts available for the renewal of assistance under section 8 of the United States Housing Act of 1937, upon termination

or expiration of a contract for assistance under section 8 of such

Act of 1937 (other than a contract for tenant-based assistance and

notwithstanding section 8(v) of such Act for loan management assistance), to provide assistance under section 8 of such Act, subject

to the Section 8 Existing Fair Market Rents, for the eligible families assisted under the contracts at expiration or termination,

which assistance shall be in accordance with terms and conditions

prescribed by the Secretary.

* * * * * * *
300

1Section 613 of the Mark-to-Market Extension Act of 2001 (P.L. 107–116; 115 Stat. 2224) inserted a new section 525 at the end of subtitle A without including a conforming amendment

to the table of contents.

MULTIFAMILY HOUSING MORTGAGE & ASSISTANCE

RESTRUCTURING

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1998

[Public Law 105–65; 111 Stat. 1384; 42 U.S.C. 1437f note]

TITLE V—HUD MULTIFAMILY HOUSING REFORM

SEC. 501. TABLE OF CONTENTS.

The table of contents for this title is as follows:

TITLE V—HUD MULTIFAMILY HOUSING REFORM

Sec. 510. Short title.

SUBTITLE A—FHA-INSURED MULTIFAMILY HOUSING MORTGAGE AND HOUSING

ASSISTANCE RESTRUCTURING

Sec. 511. Findings and purposes.

Sec. 512. Definitions.

Sec. 513. Authority of participating administrative entities.

Sec. 514. Mortgage restructuring and rental assistance sufficiency plan.

Sec. 515. Section 8 renewals and long-term affordability commitment by owner of

project.

Sec. 516. Prohibition on restructuring.

Sec. 517. Restructuring tools.

Sec. 518. Management standards.

Sec. 519. Monitoring of compliance.

Sec. 520. Reports to Congress.

Sec. 521. GAO audit and review.

Sec. 522. Regulations.

Sec. 523. Technical and conforming amendments.

Sec. 524. Section 8 contract renewals. 1

SUBTITLE B—MISCELLANEOUS PROVISIONS

Sec. 531. Rehabilitation grants for certain insured projects.

Sec. 532. GAO report on section 8 rental assistance for multifamily housing

projects.

SUBTITLE C—ENFORCEMENT PROVISIONS

Sec. 541. Implementation.

Sec. 542. Income verification.

PART 1—FHA SINGLE FAMILY AND MULTIFAMILY HOUSING

Sec. 551. Authorization to immediately suspend mortgagees.

Sec. 552. Extension of equity skimming to other single family and multifamily

housing programs.

Sec. 553. Civil money penalties against mortgagees, lenders, and other participants

in FHA programs.
301 Sec. 511 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

1Section 624(a) of the Mark-to-Market Extension Act of 2001 (P.L. 107–116; 115 Stat. 2224)

replaced section 578 in its entirety without including a conforming amendment to the table of

contents. 2Section 621(1) of the Mark-to-Market Extension Act of 2001 (Public Law 107–116; 115 Stat.

2226; enacted January 10, 2002) amended section 579(a) of the Multifamily Assisted Housing

Reform and Affordability Act of 1997 in its entirety. Before the enactment of Public Law 107–

116, section 579(a) read as follows:

‘‘(a) REPEAL.—Subtitle A (except for section 524) and subtitle D (except for this section) are

repealed effective October 1, 2001.’’.

This title is shown as if the provisions of subtitles A and D were not repealed by such section

579(a) (see the date of enactment of Public Law 107–116 above) and the amendments made to

this title by Public Law 107–116 were executed to those provisions.

Paragraphs (1) and (2) of section 579(a), as amended (set forth, post, this part) provide for

repeal of subtitle A (except for section 524) effective October 1, 2006 and subtitle D (except for

section 579) effective October 1, 2004. 3October 27, 1997.

PART 2—FHA MULTIFAMILY PROVISIONS

Sec. 561. Civil money penalties against general partners, officers, directors, and

certain managing agents of multifamily projects.

Sec. 562. Civil money penalties for noncompliance with section 8 HAP contracts.

Sec. 563. Extension of double damages remedy.

Sec. 564. Obstruction of Federal audits.

SUBTITLE D—OFFICE OF MULTIFAMILY HOUSING ASSISTANCE RESTRUCTURING

Sec. 571. Establishment of Office of Multifamily Housing Assistance Restructuring.

Sec. 572. Director.

Sec. 573. Duty and authority of Director.

Sec. 574. Personnel.

Sec. 575. Budget and financial reports.

Sec. 576. Limitation on subsequent employment.

Sec. 577. Audits by GAO.

Sec. 578. Suspension of program because of failure to appoint Director. 1

Sec. 579. Termination.

SEC. 510. ø12 U.S.C. 1701 note¿ SHORT TITLE.

This title may be cited as the ‘‘Multifamily Assisted Housing

Reform and Affordability Act of 1997’’.

Subtitle A—FHA-Insured Multifamily Housing

Mortgage and Housing Assistance Restructuring 2

SEC. 511. ø42 U.S.C. 1437f note¿ FINDINGS AND PURPOSES.

(a) FINDINGS.—Congress finds that—

(1) there exists throughout the Nation a need for decent,

safe, and affordable housing;

(2) as of the date of enactment of this Act, 3 it is estimated

that—

(A) the insured multifamily housing portfolio of the

Federal Housing Administration consists of 14,000 rental

properties, with an aggregate unpaid principal mortgage

balance of $38,000,000,000; and

(B) approximately 10,000 of these properties contain

housing units that are assisted with project-based rental

assistance under section 8 of the United States Housing

Act of 1937;

(3) FHA-insured multifamily rental properties are a major

Federal investment, providing affordable rental housing to an

estimated 2,000,000 low- and very low-income families;
Sec. 511 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 302

1October 27, 1997.

(4) approximately 1,600,000 of these families live in dwelling units that are assisted with project-based rental assistance

under section 8 of the United States Housing Act of 1937;

(5) a substantial number of housing units receiving

project-based assistance have rents that are higher than the

rents of comparable, unassisted rental units in the same housing rental market;

(6) many of the contracts for project-based assistance will

expire during the several years following the date of enactment

of this Act; 1

(7) it is estimated that—

(A) if no changes in the terms and conditions of the

contracts for project-based assistance are made before fiscal year 2000, the cost of renewing all expiring rental assistance contracts under section 8 of the United States

Housing Act of 1937 for both project-based and tenantbased rental assistance will increase from approximately

$3,600,000,000 in fiscal year 1997 to over $14,300,000,000

by fiscal year 2000 and some $22,400,000,000 in fiscal year

2006;

(B) of those renewal amounts, the cost of renewing

project-based assistance will increase from $1,200,000,000

in fiscal year 1997 to almost $7,400,000,000 by fiscal year

2006; and

(C) without changes in the manner in which projectbased rental assistance is provided, renewals of expiring

contracts for project-based rental assistance will require an

increasingly larger portion of the discretionary budget authority of the Department of Housing and Urban Development in each subsequent fiscal year for the foreseeable future;

(8) absent new budget authority for the renewal of expiring rental contracts for project-based assistance, many of the

FHA-insured multifamily housing projects that are assisted

with project-based assistance are likely to default on their

FHA-insured mortgage payments, resulting in substantial

claims to the FHA General Insurance Fund and Special Risk

Insurance Fund;

(9) more than 15 percent of federally assisted multifamily

housing projects are physically or financially distressed, including a number which suffer from mismanagement;

(10) due to Federal budget constraints, the downsizing of

the Department of Housing and Urban Development, and diminished administrative capacity, the Department lacks the

ability to ensure the continued economic and physical wellbeing of the stock of federally insured and assisted multifamily

housing projects;

(11) the economic, physical, and management problems

facing the stock of federally insured and assisted multifamily

housing projects will be best served by reforms that—

(A) reduce the cost of Federal rental assistance, including project-based assistance, to these projects by re-
303 Sec. 511 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

ducing the debt service and operating costs of these

projects while retaining the low-income affordability and

availability of this housing;

(B) address physical and economic distress of this

housing and the failure of some project managers and owners of projects to comply with management and ownership

rules and requirements; and

(C) transfer and share many of the loan and contract

administration functions and responsibilities of the Secretary to and with capable State, local, and other entities;

and

(12) the authority and duties of the Secretary, not including the control by the Secretary of applicable accounts in the

Treasury of the United States, may be delegated to State, local

or other entities at the discretion of the Secretary, to the extent the Secretary determines, and for the purpose of carrying

out this title, so that the Secretary has the discretion to be relieved of processing and approving any document or action required by these reforms.

(b) PURPOSES.—Consistent with the purposes and requirements

of the Government Performance and Results Act of 1993, the purposes of this subtitle are—

(1) to preserve low-income rental housing affordability and

availability while reducing the long-term costs of project-based

assistance;

(2) to reform the design and operation of Federal rental

housing assistance programs, administered by the Secretary, to

promote greater multifamily housing project operating and cost

efficiencies;

(3) to encourage owners of eligible multifamily housing

projects to restructure their FHA-insured mortgages and

project-based assistance contracts in a manner that is consistent with this subtitle before the year in which the contract

expires;

(4) to reduce the cost of insurance claims under the National Housing Act related to mortgages insured by the Secretary and used to finance eligible multifamily housing

projects;

(5) to streamline and improve federally insured and assisted multifamily housing project oversight and administration;

(6) to resolve the problems affecting financially and

physically troubled federally insured and assisted multifamily

housing projects through cooperation with residents, owners,

State and local governments, and other interested entities and

individuals;

(7) to protect the interest of project owners and managers,

because they are partners of the Federal Government in meeting the affordable housing needs of the Nation through the section 8 rental housing assistance program;

(8) to protect the interest of tenants residing in the multifamily housing projects at the time of the restructuring for the

housing; and
Sec. 512 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 304

(9) to grant additional enforcement tools to use against

those who violate agreements and program requirements, in

order to ensure that the public interest is safeguarded and that

Federal multifamily housing programs serve their intended

purposes.

SEC. 512. ø42 U.S.C. 1437f note¿ DEFINITIONS.

In this subtitle:

(1) COMPARABLE PROPERTIES.—The term ‘‘comparable properties’’ means properties in the same market areas, where

practicable, that—

(A) are similar to the eligible multifamily housing

project as to neighborhood (including risk of crime), type of

location, access, street appeal, age, property size, apartment mix, physical configuration, property and unit amenities, utilities, and other relevant characteristics; and

(B) are not receiving project-based assistance.

(2) ELIGIBLE MULTIFAMILY HOUSING PROJECT.—The term

‘‘eligible multifamily housing project’’ means a property consisting of more than 4 dwelling units—

(A) with rents that, on an average per unit or per

room basis, exceed the rent of comparable properties in the

same market area, determined in accordance with guidelines established by the Secretary;

(B) that is covered in whole or in part by a contract

for project-based assistance under—

(i) the new construction or substantial rehabilitation program under section 8(b)(2) of the United

States Housing Act of 1937 (as in effect before October

1, 1983);

(ii) the property disposition program under section

8(b) of the United States Housing Act of 1937;

(iii) the moderate rehabilitation program under

section 8(e)(2) of the United States Housing Act of

1937;

(iv) the loan management assistance program

under section 8 of the United States Housing Act of

1937;

(v) section 23 of the United States Housing Act of

1937 (as in effect before January 1, 1975);

(vi) the rent supplement program under section

101 of the Housing and Urban Development Act of

1965; or

(vii) section 8 of the United States Housing Act of

1937, following conversion from assistance under section 101 of the Housing and Urban Development Act

of 1965; and

(C) financed by a mortgage insured or held by the Secretary under the National Housing Act.

Such term does not include any project with an expiring contract described in paragraph (1) or (2) of section 524(e), but

does include a project described in section 524(e)(3). Notwithstanding any other provision of this title, the Secretary may

treat a project as an eligible multifamily housing project for
305 Sec. 512 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

purposes of this title if (I) the project is assisted pursuant to

a contract for project-based assistance under section 8 of the

United States Housing Act of 1937 renewed under section 524

of this Act, (II) the owner consents to such treatment, and (III)

the project met the requirements of the first sentence of this

paragraph for eligibility as an eligible multifamily housing

project before the initial renewal of the contract under section

524.

(3) EXPIRING CONTRACT.—The term ‘‘expiring contract’’

means a project-based assistance contract attached to an eligible multifamily housing project which, under the terms of the

contract, will expire.

(4) EXPIRATION DATE.—The term ‘‘expiration date’’ means

the date on which an expiring contract expires.

(5) FAIR MARKET RENT.—The term ‘‘fair market rent’’

means the fair market rental established under section 8(c) of

the United States Housing Act of 1937.

(6) LOW-INCOME FAMILIES.—The term ‘‘low-income families’’ has the same meaning as provided under section 3(b)(2)

of the United States Housing Act of 1937.

(7) MORTGAGE RESTRUCTURING AND RENTAL ASSISTANCE

SUFFICIENCY PLAN.—The term ‘‘mortgage restructuring and

rental assistance sufficiency plan’’ means the plan as provided

under section 514.

(8) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ means any private nonprofit organization that—

(A) is organized under State or local laws;

(B) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; and

(C) has a long-term record of service in providing or financing quality affordable housing for low-income families

through relationships with public entities.

(9) PORTFOLIO RESTRUCTURING AGREEMENT.—The term

‘‘portfolio restructuring agreement’’ means the agreement entered into between the Secretary and a participating administrative entity, as provided under section 513.

(10) PARTICIPATING ADMINISTRATIVE ENTITY.—The term

‘‘participating administrative entity’’ means a public agency

(including a State housing finance agency or a local housing

agency), a nonprofit organization, or any other entity (including a law firm or an accounting firm) or a combination of such

entities, that meets the requirements under section 513(b).

(11) PROJECT-BASED ASSISTANCE.—The term ‘‘project-based

assistance’’ means rental assistance described in paragraph

(2)(B) of this section that is attached to a multifamily housing

project.

(12) RENEWAL.—The term ‘‘renewal’’ means the replacement of an expiring Federal rental contract with a new contract under section 8 of the United States Housing Act of 1937,

consistent with the requirements of this subtitle.

(13) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.
Sec. 513 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 306

(14) STATE.—The term ‘‘State’’ has the same meaning as in

section 104 of the Cranston-Gonzalez National Affordable

Housing Act.

(15) TENANT-BASED ASSISTANCE.—The term ‘‘tenant-based

assistance’’ has the same meaning as in section 8(f) of the

United States Housing Act of 1937.

(16) UNIT OF GENERAL LOCAL GOVERNMENT.—The term

‘‘unit of general local government’’ has the same meaning as in

section 104 of the Cranston-Gonzalez National Affordable

Housing Act.

(17) VERY LOW-INCOME FAMILY.—The term ‘‘very low-income family’’ has the same meaning as in section 3(b) of the

United States Housing Act of 1937.

(18) QUALIFIED MORTGAGEE.—The term ‘‘qualified mortgagee’’ means an entity approved by the Secretary that is capable of servicing, as well as originating, FHA-insured mortgages, and that—

(A) is not suspended or debarred by the Secretary;

(B) is not suspended or on probation imposed by the

Mortgagee Review Board; and

(C) is not in default under any Government National

Mortgage Association obligation.

(19) OFFICE.—The term ‘‘Office’’ means the Office of Multifamily Housing Assistance Restructuring established under

section 571.

SEC. 513. ø42 U.S.C. 1437f note¿ AUTHORITY OF PARTICIPATING ADMINISTRATIVE ENTITIES.

(a) PARTICIPATING ADMINISTRATIVE ENTITIES.— (1) IN GENERAL.—Subject to subsection (b)(3), the Secretary shall enter into portfolio restructuring agreements with

participating administrative entities for the implementation of

mortgage restructuring and rental assistance sufficiency plans

to restructure multifamily housing mortgages insured or held

by the Secretary under the National Housing Act, in order to—

(A) reduce the costs of expiring contracts for assistance

under section 8 of the United States Housing Act of 1937;

(B) address financially and physically troubled

projects; and

(C) correct management and ownership deficiencies.

(2) PORTFOLIO RESTRUCTURING AGREEMENTS.—Each portfolio restructuring agreement entered into under this subsection shall—

(A) be a cooperative agreement to establish the obligations and requirements between the Secretary and the

participating administrative entity;

(B) identify the eligible multifamily housing projects or

groups of projects for which the participating administrative entity is responsible for assisting in developing and

implementing approved mortgage restructuring and rental

assistance sufficiency plans under section 514;

(C) require the participating administrative entity to

review and certify to the accuracy and completeness of the

evaluation of rehabilitation needs required under section

514(e)(3) for each eligible multifamily housing project in-
307 Sec. 513 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

cluded in the portfolio restructuring agreement, in accordance with regulations promulgated by the Secretary;

(D) identify the responsibilities of both the participating administrative entity and the Secretary in implementing a mortgage restructuring and rental assistance

sufficiency plan, including any actions proposed to be

taken under section 516 or 517;

(E) require each mortgage restructuring and rental assistance sufficiency plan to be prepared in accordance with

the requirements of section 514 for each eligible multifamily housing project;

(F) include other requirements established by the Secretary, including a right of the Secretary to terminate the

contract immediately for failure of the participating administrative entity to comply with any applicable requirement;

(G) if the participating administrative entity is a State

housing finance agency or a local housing agency,

indemnify the participating administrative entity against

lawsuits and penalties for actions taken pursuant to the

agreement, excluding actions involving willful misconduct

or negligence;

(H) include compensation for all reasonable expenses

incurred by the participating administrative entity necessary to perform its duties under this subtitle; and

(I) include, where appropriate, incentive agreements

with the participating administrative entity to reward superior performance in meeting the purposes of this title.

(b) SELECTION OF PARTICIPATING ADMINISTRATIVE ENTITY.—

(1) SELECTION CRITERIA.—The Secretary shall select a participating administrative entity based on whether, in the determination of the Secretary, the participating administrative

entity—

(A) has demonstrated experience in working directly

with residents of low-income housing projects and with

tenants and other community-based organizations;

(B) has demonstrated experience with and capacity for

multifamily restructuring and multifamily financing

(which may include risk-sharing arrangements and restructuring eligible multifamily housing properties under

the fiscal year 1997 Federal Housing Administration multifamily housing demonstration program);

(C) has a history of stable, financially sound, and responsible administrative performance (which may include

the management of affordable low-income rental housing);

(D) has demonstrated financial strength in terms of

asset quality, capital adequacy, and liquidity;

(E) has demonstrated that it will carry out the specific

transactions and other responsibilities under this subtitle

in a timely, efficient, and cost-effective manner; and

(F) meets other criteria, as determined by the Secretary.

(2) SELECTION.—If more than 1 interested entity meets the

qualifications and selection criteria for a participating adminis-
Sec. 513 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 308

trative entity, the Secretary may select the entity that demonstrates, as determined by the Secretary, that it will—

(A) provide the most timely, efficient, and costeffective—

(i) restructuring of the mortgages covered by the

portfolio restructuring agreement; and

(ii) administration of the section 8 project-based

assistance contract, if applicable; and

(B) protect the public interest (including the long-term

provision of decent low-income affordable rental housing

and protection of residents, communities, and the American taxpayer).

(3) PARTNERSHIPS.—For the purposes of any participating

administrative entity applying under this subsection, participating administrative entities are encouraged to develop partnerships with each other and with nonprofit organizations, if

such partnerships will further the participating administrative

entity’s ability to meet the purposes of this title.

(4) ALTERNATIVE ADMINISTRATORS.—With respect to any eligible multifamily housing project for which a participating administrative entity is unavailable, or should not be selected to

carry out the requirements of this subtitle with respect to that

multifamily housing project for reasons relating to the selection

criteria under paragraph (1), the Secretary shall—

(A) carry out the requirements of this subtitle with respect to that eligible multifamily housing project; or

(B) contract with other qualified entities that meet the

requirements of paragraph (1) to provide the authority to

carry out all or a portion of the requirements of this subtitle with respect to that eligible multifamily housing

project.

(5) PRIORITY FOR PUBLIC AGENCIES AS PARTICIPATING ADMINISTRATIVE ENTITIES.—The Secretary shall provide a reasonable period during which the Secretary will consider proposals

only from State housing finance agencies or local housing agencies, and the Secretary shall select such an agency without

considering other applicants if the Secretary determines that

the agency is qualified. The period shall be of sufficient duration for the Secretary to determine whether any State housing

finance agencies or local housing agencies are interested and

qualified. Not later than the end of the period, the Secretary

shall notify the State housing finance agency or the local housing agency regarding the status of the proposal and, if the proposal is rejected, the reasons for the rejection and an opportunity for the applicant to respond.

(6) STATE AND LOCAL PORTFOLIO REQUIREMENTS.—

(A) IN GENERAL.—If the housing finance agency of a

State is selected as the participating administrative entity,

that agency shall be responsible for such eligible multifamily housing projects in that State as may be agreed

upon by the participating administrative entity and the

Secretary. If a local housing agency is selected as the

participating administrative entity, that agency shall be

responsible for such eligible multifamily housing projects
309 Sec. 514 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

in the jurisdiction of the agency as may be agreed upon by

the participating administrative entity and the Secretary.

(B) NONDELEGATION.—Except with the prior approval

of the Secretary, a participating administrative entity may

not delegate or transfer responsibilities and functions

under this subtitle to 1 or more entities.

(7) PRIVATE ENTITY REQUIREMENTS.— (A) IN GENERAL.—If a for-profit entity is selected as

the participating administrative entity, that entity shall be

required to enter into a partnership with a public purpose

entity (including the Department).

(B) PROHIBITION.—No private entity shall share, participate in, or otherwise benefit from any equity created,

received, or restructured as a result of the portfolio restructuring agreement.

SEC. 514. ø42 U.S.C. 1437f note¿ MORTGAGE RESTRUCTURING AND

RENTAL ASSISTANCE SUFFICIENCY PLAN.

(a) IN GENERAL.— (1) DEVELOPMENT OF PROCEDURES AND REQUIREMENTS.— The Secretary shall develop procedures and requirements for

the submission of a mortgage restructuring and rental assistance sufficiency plan for each eligible multifamily housing

project with an expiring contract.

(2) TERMS AND CONDITIONS.—Each mortgage restructuring

and rental assistance sufficiency plan submitted under this

subsection shall be developed by the participating administrative entity, in cooperation with an owner of an eligible multifamily housing project and any servicer for the mortgage that

is a qualified mortgagee, under such terms and conditions as

the Secretary shall require.

(3) CONSOLIDATION.—Mortgage restructuring and rental

assistance sufficiency plans submitted under this subsection

may be consolidated as part of an overall strategy for more

than 1 property.

(b) NOTICE REQUIREMENTS.—The Secretary shall establish notice procedures and hearing requirements for tenants and owners

concerning the dates for the expiration of project-based assistance

contracts for any eligible multifamily housing project.

(c) EXTENSION OF CONTRACT TERM.—Subject to agreement by

a project owner, the Secretary may extend the term of any expiring

contract or provide a section 8 contract with rent levels set in accordance with subsection (g) for a period sufficient to facilitate the

implementation of a mortgage restructuring and rental assistance

sufficiency plan, as determined by the Secretary.

(d) TENANT RENT PROTECTION.—If the owner of a project with

an expiring Federal rental assistance contract does not agree to extend the contract, not less than 12 months prior to terminating the

contract, the project owner shall provide written notice to the Secretary and the tenants and the Secretary shall make tenant-based

assistance available to tenants residing in units assisted under the

expiring contract at the time of expiration. In addition, if after giving the notice required in the first sentence, an owner determines

to terminate a contract, an owner shall provide an additional written notice with respect to the termination, in a form prescribed by
Sec. 514 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 310

the Secretary, not less than 120 days prior to the termination. In

the event the owner does not provide the 120-day notice required

in the preceding sentence, the owner may not evict the tenants or

increase the tenants’ rent payment until such time as the owner

has provided the 120-day notice and such period has elapsed. The

Secretary may allow the owner to renew the terminating contract

for a period of time sufficient to give tenants 120 days of advance

notice in accordance with section 524 of this Act.

(e) MORTGAGE RESTRUCTURING AND RENTAL ASSISTANCE

SUFFICIENCY PLAN.—Each mortgage restructuring and rental assistance sufficiency plan shall—

(1) except as otherwise provided, restructure the projectbased assistance rents for the eligible multifamily housing

project in a manner consistent with subsection (g), or provide

for tenant-based assistance in accordance with section 515;

(2) allow for rent adjustments by applying an operating

cost adjustment factor established under guidelines established

by the Secretary;

(3) require the owner or purchaser of an eligible multifamily housing project to evaluate the rehabilitation needs of

the project, in accordance with regulations of the Secretary,

and notify the participating administrative entity of the rehabilitation needs;

(4) require the owner or purchaser of the project to provide

or contract for competent management of the project;

(5) require the owner or purchaser of the project to take

such actions as may be necessary to rehabilitate, maintain adequate reserves, and to maintain the project in decent and safe

condition, based on housing quality standards established by—

(A) the Secretary; or

(B) local housing codes or codes adopted by public

housing agencies that—

(i) meet or exceed housing quality standards established by the Secretary; and

(ii) do not severely restrict housing choice;

(6) require the owner or purchaser of the project to

maintain affordability and use restrictions in accordance with

regulations promulgated by the Secretary, for a term of not

less than 30 years which restrictions shall be—

(A) contained in a legally enforceable document recorded in the appropriate records; and

(B) consistent with the long-term physical and financial viability and character of the project as affordable

housing;

(7) include a certification by the participating administrative entity that the restructuring meets subsidy layering requirements established by the Secretary by regulation for purposes of this subtitle;

(8) require the owner or purchaser of the project to meet

such other requirements as the Secretary determines to be appropriate; and

(9) prohibit the owner from refusing to lease a reasonable

number of units to holders of certificates and vouchers under

section 8 of the United States Housing Act of 1937 because of
311 Sec. 514 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

the status of the prospective tenants as certificate and voucher

holders.

(f) TENANT AND OTHER PARTICIPATION AND CAPACITY

BUILDING.—

(1) PROCEDURES.— (A) IN GENERAL.—The Secretary shall establish procedures to provide an opportunity for tenants of the project,

residents of the neighborhood, the local government, and

other affected parties to participate effectively and on a

timely basis in the restructuring process established by

this subtitle.

(B) COVERAGE.—These procedures shall take into account the need to provide tenants of the project, residents

of the neighborhood, the local government, and other affected parties timely notice of proposed restructuring actions and appropriate access to relevant information about

restructuring activities. To the extent practicable and consistent with the need to accomplish project restructuring

in an efficient manner, the procedures shall give all such

parties an opportunity to provide comments to the participating administrative entity in writing, in meetings, or in

another appropriate manner (which comments shall be

taken into consideration by the participating administrative entity).

(2) REQUIRED CONSULTATION.—The procedures developed

pursuant to paragraph (1) shall require consultation with tenants of the project, residents of the neighborhood, the local government, and other affected parties, in connection with at least

the following:

(A) the mortgage restructuring and rental assistance

sufficiency plan;

(B) any proposed transfer of the project; and

(C) the rental assistance assessment plan pursuant to

section 515(c).

(3) FUNDING.—

(A) IN GENERAL.—The Secretary shall make available

not more than $10,000,000 annually in funding, which

amount shall be in addition to any amounts made available under this subparagraph and carried over from previous years, from which the Secretary may make obligations to tenant groups, nonprofit organizations, and public

entities for building the capacity of tenant organizations,

for technical assistance in furthering any of the purposes

of this subtitle (including transfer of developments to new

owners), for technical assistance for preservation of low-income housing for which project-based rental assistance is

provided at below market rent levels and may not be renewed (including transfer of developments to tenant

groups, nonprofit organizations, and public entities), for

tenant services, and for tenant groups, nonprofit organizations, and public entities described in section 517(a)(5),

from those amounts made available under appropriations

Acts for implementing this subtitle or previously made

available for technical assistance in connection with the
Sec. 514 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 312

preservation of affordable rental housing for low-income

persons.

(B) MANNER OF PROVIDING.—Notwithstanding any

other provision of law restricting the use of preservation

technical assistance funds, the Secretary may provide any

funds made available under subparagraph (A) through existing technical assistance programs pursuant to any other

Federal law, including the Low-Income Housing Preservation and Resident Homeownership Act of 1990 and the

Multifamily Housing Property Disposition Reform Act of

1994, or through any other means that the Secretary considers consistent with the purposes of this subtitle, without regard to any set-aside requirement otherwise applicable to those funds.

(C) PROHIBITION.—None of the funds made available

under subparagraph (A) may be used directly or indirectly

to pay for any personal service, advertisement, telegram,

telephone, letter, printed or written matter, or other device, intended or designed to influence in any manner a

Member of Congress, to favor or oppose, by vote or otherwise, any legislation or appropriation by Congress, whether before or after the introduction of any bill or resolution

proposing such legislation or appropriation.

(g) RENT LEVELS.—

(1) IN GENERAL.—Except as provided in paragraph (2),

each mortgage restructuring and rental assistance sufficiency

plan pursuant to the terms, conditions, and requirements of

this subtitle shall establish for units assisted with projectbased assistance in eligible multifamily housing projects adjusted rent levels that—

(A) are equivalent to rents derived from comparable

properties, if—

(i) the participating administrative entity makes

the rent determination within a reasonable period of

time; and

(ii) the market rent determination is based on not

less than 2 comparable properties; or

(B) if those rents cannot be determined, are equal to

90 percent of the fair market rents for the relevant market

area.

(2) EXCEPTIONS.—

(A) IN GENERAL.—A contract under this section may

include rent levels that exceed the rent level described in

paragraph (1) at rent levels that do not exceed 120 percent

of the fair market rent for the market area (except that

the Secretary may waive this limit for not more than five

percent of all units subject to portfolio restructuring agreements, based on a finding of special need), if the participating administrative entity—

(i) determines that the housing needs of the tenants and the community cannot be adequately addressed through implementation of the rent limitation

required to be established through a mortgage restruc-
313 Sec. 514 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

turing and rental assistance sufficiency plan under

paragraph (1); and

(ii) follows the procedures under paragraph (3).

(B) EXCEPTION RENTS.—In any fiscal year, a participating administrative entity may approve exception rents

on not more than 20 percent of all units covered by the

portfolio restructuring agreement with expiring contracts

in that fiscal year, except that the Secretary may waive

this ceiling upon a finding of special need.

(3) RENT LEVELS FOR EXCEPTION PROJECTS.—For purposes

of this section, a project eligible for an exception rent shall receive a rent calculated on the actual and projected costs of operating the project, at a level that provides income sufficient

to support a budget-based rent that consists of—

(A) the debt service of the project;

(B) the operating expenses of the project, as determined by the participating administrative entity,

including—

(i) contributions to adequate reserves;

(ii) the costs of maintenance and necessary rehabilitation; and

(iii) other eligible costs permitted under section 8

of the United States Housing Act of 1937;

(C) an adequate allowance for potential operating

losses due to vacancies and failure to collect rents, as determined by the participating administrative entity;

(D) an allowance for a reasonable rate of return to the

owner or purchaser of the project, as determined by the

participating administrative entity, which may be established to provide incentives for owners or purchasers to

meet benchmarks of quality for management and housing

quality; and

(E) other expenses determined by the participating administrative entity to be necessary for the operation of the

project.

(h) EXEMPTIONS FROM RESTRUCTURING.—The following

categories of projects shall not be covered by a mortgage restructuring and rental assistance sufficiency plan if—

(1) the primary financing or mortgage insurance for the

multifamily housing project that is covered by that expiring

contract was provided by a unit of State government or a unit

of general local government (or an agency or instrumentality of

a unit of a State government or unit of general local government) and the financing involves mortgage insurance under

the National Housing Act, such that the implementation of a

mortgage restructuring and rental assistance sufficiency plan

under this subtitle is in conflict with applicable law or agreements governing such financing;

(2) the project is a project financed under section 202 of

the Housing Act of 1959 or section 515 of the Housing Act of

1949, or refinanced pursuant to section 811 of the American

Homeownership and Economic Opportunity Act of 2000 (12

U.S.C. 1701q note); or
Sec. 515 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 314

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

(3) the project has an expiring contract under section 8 of

the United States Housing Act of 1937 entered into pursuant

to section 441 of the Stewart B. McKinney Homeless Assistance Act 1.

SEC. 515. ø42 U.S.C. 1437f note¿ SECTION 8 RENEWALS AND LONG-TERM

AFFORDABILITY COMMITMENT BY OWNER OF PROJECT.

(a) SECTION 8 RENEWALS OF RESTRUCTURED PROJECTS.— (1) PROJECT-BASED ASSISTANCE.—Subject to the availability

of amounts provided in advance in appropriations Acts, and to

the control of the Secretary of applicable accounts in the Treasury of the United States, with respect to an expiring section 8

contract on an eligible multifamily housing project to be renewed with project-based assistance (based on a determination

under subsection (c)), the Secretary shall enter into contracts

with participating administrative entities pursuant to which

the participating administrative entity shall offer to renew or

extend the contract, or the Secretary shall offer to renew such

contract, and the owner of the project shall accept the offer, if

the initial renewal is in accordance with the terms and conditions specified in the mortgage restructuring and rental assistance sufficiency plan and the rental assistance assessment

plan.

(2) TENANT-BASED ASSISTANCE.—Subject to the availability

of amounts provided in advance in appropriations Acts and to

the control of the Secretary of applicable accounts in the Treasury of the United States, with respect to an expiring section 8

contract on an eligible multifamily housing project to be renewed with tenant-based assistance (based on a determination

under subsection (c)), the Secretary shall enter into contracts

with participating administrative entities pursuant to which

the participating administrative entity shall provide for the renewal of section 8 assistance on an eligible multifamily housing project with tenant-based assistance, or the Secretary shall

provide for such renewal, in accordance with the terms and

conditions specified in the mortgage restructuring and rental

assistance sufficiency plan and the rental assistance assessment plan.

(b) REQUIRED COMMITMENT.—After the initial renewal of a section 8 contract pursuant to this section, the owner shall accept

each offer made pursuant to subsection (a) to renew the contract,

for the term of the affordability and use restrictions required by

section 514(e)(6), if the offer to renew is on terms and conditions

specified in the mortgage restructuring and rental assistance sufficiency plan.

(c) DETERMINATION OF WHETHER TO RENEW WITH PROJECTBASED OR TENANT-BASED ASSISTANCE.—

(1) MANDATORY RENEWAL OF PROJECT-BASED ASSISTANCE.—

Section 8 assistance shall be renewed with project-based

assistance, if—
315 Sec. 515 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

(A) the project is located in an area in which the participating administrative entity determines, based on housing market indicators, such as low vacancy rates or high

absorption rates, that there is not adequate available and

affordable housing or that the tenants of the project would

not be able to locate suitable units or use the tenant-based

assistance successfully;

(B) a predominant number of the units in the project

are occupied by elderly families, disabled families, or elderly and disabled families; or

(C) the project is held by a nonprofit cooperative ownership housing corporation or nonprofit cooperative housing trust.

(2) RENTAL ASSISTANCE ASSESSMENT PLAN.—

(A) IN GENERAL.—With respect to any project that is

not described in paragraph (1), the participating administrative entity shall, after consultation with the owner of

the project, develop a rental assistance assessment plan to

determine whether to renew assistance for the project with

tenant-based assistance or project-based assistance.

(B) RENTAL ASSISTANCE ASSESSMENT PLAN REQUIREMENTS.—Each rental assistance assessment plan developed

under this paragraph shall include an assessment of the

impact of converting to tenant-based assistance and the

impact of extending project-based assistance on—

(i) the ability of the tenants to find adequate,

available, decent, comparable, and affordable housing

in the local market;

(ii) the types of tenants residing in the project

(such as elderly families, disabled families, large families, and cooperative homeowners);

(iii) the local housing needs identified in the comprehensive housing affordability strategy, and local

market vacancy trends;

(iv) the cost of providing assistance, comparing the

applicable payment standard to the project’s adjusted

rent levels determined under section 514(g);

(v) the long-term financial stability of the project;

(vi) the ability of residents to make reasonable

choices about their individual living situations;

(vii) the quality of the neighborhood in which the

tenants would reside; and

(viii) the project’s ability to compete in the marketplace.

(C) REPORTS TO DIRECTOR.—Each participating administrative entity shall report regularly to the Director as defined in subtitle D, as the Director shall require,

identifying—

(i) each eligible multifamily housing project for

which the entity has developed a rental assistance assessment plan under this paragraph that determined

that the tenants of the project generally supported renewal of assistance with tenant-based assistance, but
Sec. 516 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 316

under which assistance for the project was renewed

with project-based assistance; and

(ii) each project for which the entity has developed

such a plan under which the assistance is renewed

using tenant-based assistance.

(3) ELIGIBILITY FOR TENANT-BASED ASSISTANCE.—Subject to

paragraph (4), with respect to any project that is not described

in paragraph (1), if a participating administrative entity approves the use of tenant-based assistance based on a rental assistance assessment plan developed under paragraph (2), tenant-based assistance shall be provided to each assisted family

(other than a family already receiving tenant-based assistance)

residing in the project at the time the assistance described in

section 512(2)(B) terminates.

(4) ASSISTANCE THROUGH ENHANCED VOUCHERS.—In the

case of any family described in paragraph (3) that resides in

a project described in section 512(2)(B), the tenant-based assistance provided shall be enhanced voucher assistance under

section 8(t) of the United States Housing Act of 1937 (42

U.S.C. 1437f(t)).

(5) INAPPLICABILITY OF CERTAIN PROVISION.—If a participating administrative entity approves renewal with projectbased assistance under this subsection, section 8(d)(2) of the

United States Housing Act of 1937 shall not apply.

SEC. 516. ø42 U.S.C. 1437f note¿ PROHIBITION ON RESTRUCTURING.

(a) PROHIBITION ON RESTRUCTURING.—The Secretary may elect

not to consider any mortgage restructuring and rental assistance

sufficiency plan or request for contract renewal if the Secretary or

the participating administrative entity determines that—

(1)(A) the owner or purchaser of the project has engaged

in material adverse financial or managerial actions or omissions with regard to such project; or

(B) the owner or purchaser of the project has engaged in

material adverse financial or managerial actions or omissions

with regard to other projects of such owner or purchaser that

are federally assisted or financed with a loan from, or mortgage insured or guaranteed by, an agency of the Federal Government;

(2) material adverse financial or managerial actions or

omissions include—

(A) materially violating any Federal, State, or local

law or regulation with regard to this project or any other

federally assisted project, after receipt of notice and an opportunity to cure;

(B) materially breaching a contract for assistance

under section 8 of the United States Housing Act of 1937,

after receipt of notice and an opportunity to cure;

(C) materially violating any applicable regulatory or

other agreement with the Secretary or a participating administrative entity, after receipt of notice and an opportunity to cure;
317 Sec. 516 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

(D) repeatedly and materially violating any Federal,

State, or local law or regulation with regard to the project

or any other federally assisted project;

(E) repeatedly and materially breaching a contract for

assistance under section 8 of the United States Housing

Act of 1937;

(F) repeatedly and materially violating any applicable

regulatory or other agreement with the Secretary or a participating administrative entity;

(G) repeatedly failing to make mortgage payments at

times when project income was sufficient to maintain and

operate the property;

(H) materially failing to maintain the property according to housing quality standards after receipt of notice and

a reasonable opportunity to cure; or

(I) committing any actions or omissions that would

warrant suspension or debarment by the Secretary;

(3) the owner or purchaser of the property materially

failed to follow the procedures and requirements of this subtitle, after receipt of notice and an opportunity to cure; or

(4) the poor condition of the project cannot be remedied in

a cost effective manner, as determined by the participating administrative entity.

The term ‘‘owner’’ as used in this subsection, in addition to it having the same meaning as in section 8(f) of the United States Housing Act of 1937, also means an affiliate of the owner. The term

‘‘purchaser’’ as used in this subsection means any private person or

entity, including a cooperative, an agency of the Federal Government, or a public housing agency, that, upon purchase of the

project, would have the legal right to lease or sublease dwelling

units in the project, and also means an affiliate of the purchaser.

The terms ‘‘affiliate of the owner’’ and ‘‘affiliate of the purchaser’’

means any person or entity (including, but not limited to, a general

partner or managing member, or an officer of either) that controls

an owner or purchaser, is controlled by an owner or purchaser, or

is under common control with the owner or purchaser. The term

‘‘control’’ means the direct or indirect power (under contract, equity

ownership, the right to vote or determine a vote, or otherwise) to

direct the financial, legal, beneficial or other interests of the owner

or purchaser.

(b) OPPORTUNITY TO DISPUTE FINDINGS.—

(1) IN GENERAL.—During the 30-day period beginning on

the date on which the owner or purchaser of an eligible

multifamily housing project receives notice of a rejection under

subsection (a) or of a mortgage restructuring and rental assistance sufficiency plan under section 514, the Secretary or participating administrative entity shall provide that owner or

purchaser with an opportunity to dispute the basis for the rejection and an opportunity to cure.

(2) AFFIRMATION, MODIFICATION, OR REVERSAL.—

(A) IN GENERAL.—After providing an opportunity to

dispute under paragraph (1), the Secretary or the participating administrative entity may affirm, modify, or reverse

any rejection under subsection (a) or rejection of a mort-
Sec. 517 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 318

gage restructuring and rental assistance sufficiency plan

under section 514.

(B) REASONS FOR DECISION.—The Secretary or the participating administrative entity, as applicable, shall identify the reasons for any final decision under this paragraph.

(C) REVIEW PROCESS.—The Secretary shall establish

an administrative review process to appeal any final decision under this paragraph.

(c) FINAL DETERMINATION.—Any final determination under this

section shall not be subject to judicial review.

(d) DISPLACED TENANTS.—

(1) NOTICE TO CERTAIN RESIDENTS.—The Office shall notify

any tenant that is residing in a project or receiving assistance

under section 8 of the United States Housing Act of 1937 (42

U.S.C. 1437f) at the time of rejection under this section, of

such rejection, except that the Office may delegate the responsibility to provide notice under this paragraph to the participating administrative entity.

(2) ASSISTANCE AND MOVING EXPENSES.—Subject to the

availability of amounts provided in advance in appropriations

Acts, for any low-income tenant that is residing in a project or

receiving assistance under section 8 of the United States Housing Act of 1937 at the time of rejection under this section, that

tenant shall be provided with tenant-based assistance and reasonable moving expenses, as determined by the Secretary.

(e) TRANSFER OF PROPERTY.—For properties disqualified from

the consideration of a mortgage restructuring and rental assistance

sufficiency plan under this section in accordance with paragraph

(1) or (2) of subsection (a) because of actions by an owner or purchaser, the Secretary shall establish procedures to facilitate the

voluntary sale or transfer of a property as part of a mortgage restructuring and rental assistance sufficiency plan, with a

preference for tenant organizations and tenant-endorsed community-based nonprofit and public agency purchasers meeting such

reasonable qualifications as may be established by the Secretary.

SEC. 517. ø42 U.S.C. 1437f note¿ RESTRUCTURING TOOLS.

(a) MORTGAGE RESTRUCTURING.—

(1) In this subtitle, an approved mortgage restructuring

and rental assistance sufficiency plan shall include restructuring mortgages in accordance with this subsection to

provide—

(A) a restructured or new first mortgage that is sustainable at rents at levels that are established in section

514(g); and

(B) a second mortgage that is in an amount equal to

not more than the greater of—

(i) the full or partial payment of claim made under

this subtitle; or

(ii) the difference between the restructured or new

first mortgage and the indebtedness under the existing insured mortgage immediately before it is restructured or refinanced, provided that the amount of the
319 Sec. 517 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

second mortgage shall be in an amount that the Secretary or participating administrative entity determines can reasonably be expected to be repaid.

(2) The second mortgage shall bear interest at a rate not

to exceed the applicable Federal rate as defined in section

1274(d) of the Internal Revenue Code of 1986. The term of the

second mortgage shall be equal to the term of the restructured

or new first mortgage.

(3) Payments on the second mortgage shall be deferred

when the first mortgage remains outstanding, except to the extent there is excess project income remaining after payment of

all reasonable and necessary operating expenses (including deposits in a reserve for replacement), debt service on the first

mortgage, and any other expenditures approved by the Secretary. At least 75 percent of any excess project income shall

be applied to payments on the second mortgage, and the Secretary or the participating administrative entity may permit

up to 25 percent to be paid to the project owner if the Secretary or participating administrative entity determines that

the project owner meets benchmarks for management and

housing quality.

(4) The full amount of the second mortgage shall be immediately due and payable if—

(A) the first mortgage is terminated or paid in full, except as otherwise provided by the holder of the second

mortgage;

(B) the project is purchased and the second mortgage

is assumed by any subsequent purchaser in violation of

guidelines established by the Secretary; or

(C) the Secretary provides notice to the project owner

that such owner has failed to materially comply with any

requirements of this section or the United States Housing

Act of 1937 as those requirements apply to the project,

with a reasonable opportunity for such owner to cure such

failure.

(5) The Secretary may modify the terms of the second

mortgage, assign the second mortgage to the acquiring organization or agency, or forgive all or part of the second mortgage

if the Secretary holds the second mortgage and if the project

is acquired by a tenant organization or tenant-endorsed community-based nonprofit or public agency, pursuant to guidelines established by the Secretary.

(6) The second mortgage under this section may be a first

mortgage if no restructured or new first mortgage will meet

the requirement of paragraph (1)(A).

(b) RESTRUCTURING TOOLS.—In addition to the requirements of

subsection (a) and to the extent these actions are consistent with

this section and with the control of the Secretary of applicable accounts in the Treasury of the United States, an approved mortgage

restructuring and rental assistance sufficiency plan under this subtitle may include one or more of the following actions:

(1) FULL OR PARTIAL PAYMENT OF CLAIM.—Making a full

payment of claim or partial payment of claim under section

541(b) of the National Housing Act, as amended by section
Sec. 517 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 320

523(b) of this Act. Any payment under this paragraph shall not

require the approval of a mortgagee.

(2) REFINANCING OF DEBT.—Refinancing of all or part of

the debt on a project. If the refinancing involves a mortgage

that will continue to be insured under the National Housing

Act, the refinancing shall be documented through amendment

of the existing insurance contract and not through a new insurance contract.

(3) MORTGAGE INSURANCE.—Providing FHA multifamily

mortgage insurance, reinsurance or other credit enhancement

alternatives, including multifamily risk-sharing mortgage programs, as provided under section 542 of the Housing and Community Development Act of 1992. The Secretary shall use riskshared financing under section 542(c) of the Housing and Community Development Act of 1992 for any mortgage restructuring, rehabilitation financing, or debt refinancing included as

part of a mortgage restructuring and rental assistance sufficiency plan if the terms and conditions are considered to be the

best available financing in terms of financial savings to the

FHA insurance funds and will result in reduced risk of loss to

the Federal Government. Any limitations on the number of

units available for mortgage insurance under section 542 shall

not apply to eligible multifamily housing projects. Any credit

subsidy costs of providing mortgage insurance shall be paid

from the Liquidating Accounts of the General Insurance Fund

or the Special Risk Insurance Fund and shall not be subject to

any limitation on appropriations.

(4) CREDIT ENHANCEMENT.—Providing any additional State

or local mortgage credit enhancements and risk-sharing arrangements that may be established with State or local housing finance agencies, the Federal Housing Finance Board, the

Federal National Mortgage Association, and the Federal Home

Loan Mortgage Corporation, to a modified or refinanced first

mortgage.

(5) COMPENSATION OF THIRD PARTIES.—Consistent with the

portfolio restructuring agreement, entering into agreements,

incurring costs, or making payments, including incentive

agreements designed to reward superior performance in meeting the purposes of this Act, as may be reasonably necessary,

to compensate the participation of participating administrative

entities and other parties in undertaking actions authorized by

this subtitle. Upon request to the Secretary, participating administrative entities that are qualified under the United States

Housing Act of 1937 to serve as contract administrators shall

be the contract administrators under section 8 of the United

States Housing Act of 1937 for purposes of any contracts entered into as part of an approved mortgage restructuring and

rental assistance sufficiency plan. Subject to the availability of

amounts provided in advance in appropriations Acts for administrative fees under section 8 of the United States Housing Act

of 1937, such amounts may be used to compensate participating administrative entities for compliance monitoring costs

incurred under section 519.
321 Sec. 517 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

(6) USE OF PROJECT ACCOUNTS.—Applying any residual receipts, replacement reserves, and any other project accounts

not required for project operations, to maintain the long-term

affordability and physical condition of the property or of other

eligible multifamily housing projects. The participating administrative entity may expedite the acquisition of residual receipts, replacement reserves, or other such accounts, by entering into agreements with owners of housing covered by an expiring contract to provide an owner with a share of the receipts, not to exceed 10 percent, in accordance with guidelines

established by the Secretary.

(c) REHABILITATION NEEDS AND ADDITION OF SIGNIFICANT FEA- TURES.—(1) REHABILITATION NEEDS.— (A) IN GENERAL.—Rehabilitation may be paid from the

residual receipts, replacement reserves, or any other

project accounts not required for project operations, or, as

provided in appropriations Acts and subject to the control

of the Secretary of applicable accounts in the Treasury of

the United States, from budget authority provided for increases in the budget authority for assistance contracts

under section 8 of the United States Housing Act of 1937,

the rehabilitation grant program established under section

236 of the National Housing Act, as amended by section

531 of subtitle B of this Act, or through the debt restructuring transaction. Rehabilitation under this paragraph

shall only be for the purpose of restoring the project to a

non-luxury standard adequate for the rental market intended at the original approval of the project-based assistance.

(B) CONTRIBUTION.—Each owner or purchaser of a

project to be rehabilitated under an approved mortgage restructuring and rental assistance sufficiency plan shall

contribute, from non-project resources, not less than 25

percent of the amount of rehabilitation assistance received,

except that the participating administrative entity may

provide an exception from the requirement of this subparagraph for housing cooperatives.

(2) ADDITION OF SIGNIFICANT FEATURES.—

(A) AUTHORITY.—An approved mortgage restructuring

and rental assistance sufficiency plan may require the improvement of the project by the addition of significant features that are not necessary for rehabilitation to the standard provided under paragraph (1), such as air conditioning,

an elevator, and additional community space. The Secretary shall establish guidelines regarding the inclusion of

requirements regarding such additional significant features under such plans.

(B) FUNDING.—Significant features added pursuant to

an approved mortgage restructuring and rental assistance

sufficiency plan may be paid from the funding sources

specified in the first sentence of paragraph (1)(A).

(C) LIMITATION ON OWNER CONTRIBUTION.—An owner

of a project may not be required to contribute from non-
Sec. 518 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 322

1 January 10, 2002.

project resources, toward the cost of any additional significant features required pursuant to this paragraph, more

than 25 percent of the amount of any assistance received

for the inclusion of such features.

(D) APPLICABILITY.—This paragraph shall apply to all

eligible multifamily housing projects, except projects for

which the Secretary and the project owner executed a

mortgage restructuring and rental assistance sufficiency

plan on or before the date of the enactment of the Markto-Market Extension Act of 2001. 1

(d) PROHIBITION ON EQUITY SHARING BY THE SECRETARY.—The

Secretary is prohibited from participating in any equity agreement

or profit-sharing agreement in conjunction with any eligible multifamily housing project.

(e) CONFLICT OF INTEREST GUIDELINES.—The Secretary may

establish guidelines to prevent conflicts of interest by a participating administrative entity that provides, directly or through risksharing arrangements, any form of credit enhancement or financing pursuant to subsections (b)(3) or (b)(4) or to prevent conflicts

of interest by any other person or entity under this subtitle.

SEC. 518. ø42 U.S.C. 1437f note¿ MANAGEMENT STANDARDS.

Each participating administrative entity shall establish management standards, including requirements governing conflicts of

interest between owners, managers, contractors with an identity of

interest, pursuant to guidelines established by the Secretary and

consistent with industry standards.

SEC. 519. ø42 U.S.C. 1437f note¿ MONITORING OF COMPLIANCE.

(a) COMPLIANCE AGREEMENTS.—(1) Pursuant to regulations

issued by the Secretary under section 522(a), each participating administrative entity, through binding contractual agreements with

owners and otherwise, shall ensure long-term compliance with the

provisions of this subtitle. Each agreement shall, at a minimum,

provide for—

(A) enforcement of the provisions of this subtitle; and

(B) remedies for the breach of those provisions.

(2) If the participating administrative entity is not qualified

under the United States Housing Act of 1937 to be a section 8 contract administrator or fails to perform its duties under the portfolio

restructuring agreement, the Secretary shall have the right to enforce the agreement.

(b) PERIODIC MONITORING.—

(1) IN GENERAL.—Not less than annually, each participating administrative entity that is qualified to be the section

8 contract administrator shall review the status of all multifamily housing projects for which a mortgage restructuring and

rental assistance sufficiency plan has been implemented.

(2) INSPECTIONS.—Each review under this subsection shall

include onsite inspection to determine compliance with housing

codes and other requirements as provided in this subtitle and

the portfolio restructuring agreements.
323 Sec. 522 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

(3) ADMINISTRATION.—If the participating administrative

entity is not qualified under the United States Housing Act of

1937 to be a section 8 contract administrator, either the Secretary or a qualified State or local housing agency shall be responsible for the review required by this subsection.

(c) AUDIT BY THE SECRETARY.—The Comptroller General of the

United States, the Secretary, and the Inspector General of the Department of Housing and Urban Development may conduct an

audit at any time of any multifamily housing project for which a

mortgage restructuring and rental assistance sufficiency plan has

been implemented.

SEC. 520. ø42 U.S.C. 1437f note¿ REPORTS TO CONGRESS.

(a) ANNUAL REVIEW.—In order to ensure compliance with this

subtitle, the Secretary shall conduct an annual review and report

to the Congress on actions taken under this subtitle and the status

of eligible multifamily housing projects.

(b) SEMIANNUAL REVIEW.—Not less than semiannually during

the 2-year period beginning on the date of the enactment of this

Act and not less than annually thereafter, the Secretary shall submit reports to the Committee on Financial Services of the House

of Representatives and the Committee on Banking, Housing, and

Urban Affairs of the Senate stating, for such periods, the total

number of projects identified by participating administrative entities under each of clauses (i) and (ii) of section 515(c)(2)(C).

SEC. 521. ø42 U.S.C. 1437f note¿ GAO AUDIT AND REVIEW.

(a) INITIAL AUDIT.—Not later than 18 months after the effective date of final regulations promulgated under this subtitle, the

Comptroller General of the United States shall conduct an audit to

evaluate eligible multifamily housing projects and the implementation of mortgage restructuring and rental assistance sufficiency

plans.

(b) REPORT.— (1) IN GENERAL.—Not later than 18 months after the audit

conducted under subsection (a), the Comptroller General of the

United States shall submit to Congress a report on the status

of eligible multifamily housing projects and the implementation of mortgage restructuring and rental assistance sufficiency

plans.

(2) CONTENTS.—The report submitted under paragraph (1)

shall include—

(A) a description of the initial audit conducted under

subsection (a); and

(B) recommendations for any legislative action to increase the financial savings to the Federal Government of

the restructuring of eligible multifamily housing projects

balanced with the continued availability of the maximum

number of affordable low-income housing units.

SEC. 522. ø42 U.S.C. 1437f note¿ REGULATIONS.

(a) RULEMAKING AND IMPLEMENTATION.—

(1) INTERIM REGULATIONS.—The Director shall issue such

interim regulations as may be necessary to implement this

subtitle and the amendments made by this subtitle with respect to eligible multifamily housing projects covered by con-
Sec. 523 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 324

tracts described in section 512(2)(B) that expire in fiscal year

1999 or thereafter. If, before the expiration of such period, the

Director has not been appointed, the Secretary shall issue such

interim regulations.

(2) FINAL REGULATIONS.—The Director shall issue final

regulations necessary to implement this subtitle and the

amendments made by this subtitle with respect to eligible multifamily housing projects covered by contracts described in section 512(2)(B) that expire in fiscal year 1999 or thereafter before the later of: (A) the expiration of the 12-month period beginning upon the date of the enactment of this Act; and (B) the

3-month period beginning upon the appointment of the Director under subtitle D.

(3) FACTORS FOR CONSIDERATION.—Before the publication

of the final regulations under paragraph (2), in addition to

public comments invited in connection with publication of the

interim rule, the Secretary shall—

(A) seek recommendations on the implementation of

sections 513(b) and 515(c)(1) from organizations representing—

(i) State housing finance agencies and local

housing agencies;

(ii) other potential participating administering entities;

(iii) tenants;

(iv) owners and managers of eligible multifamily

housing projects;

(v) States and units of general local government;

and

(vi) qualified mortgagees; and

(B) convene not less than 3 public forums at which the

organizations making recommendations under subparagraph (A) may express views concerning the proposed

disposition of the recommendations.

(b) TRANSITION PROVISION FOR CONTRACTS EXPIRING IN FISCAL

YEAR 1998.—Notwithstanding any other provision of law, the Secretary shall apply all the terms of section 211 and section 212 of

the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997

(except for section 212(h)(1)(G) and the limitation in section 212(k))

contracts for project-based assistance that expire during fiscal year

1998 (in the same manner that such provisions apply to expiring

contracts defined in section 212(a)(3) of such Act), except that section 517(a) of the Act shall apply to mortgages on projects subject

to such contracts.

SEC. 523. ø42 U.S.C. 1437f note¿ TECHNICAL AND CONFORMING AMENDMENTS.

(a) CALCULATION OF LIMIT ON PROJECT-BASED ASSISTANCE.—

Section 8(d) of the United States Housing Act of 1937 (42 U.S.C.

1437f(d)) is amended by adding at the end the following:

* * * * * * *
325 Sec. 524 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

(b) PARTIAL PAYMENT OF CLAIMS ON MULTIFAMILY HOUSING

PROJECTS.—Section 541 of the National Housing Act (12 U.S.C.

1735f–19) is amended—

* * * * * * *

(c) REUSE AND RESCISSION OF CERTAIN RECAPTURED BUDGET

AUTHORITY.—Section 8(bb) of the United States Housing Act of

1937 (42 U.S.C. 1437f(bb)) is amended—

* * * * * * *

(d) SECTION 8 CONTRACT RENEWALS.—Section 405(a) of the

Balanced Budget Downpayment Act, I (42 U.S.C. 1437f note) is

amended by***

(e) RENEWAL UPON REQUEST OF OWNER.—Section 211(b)(3) of

the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997

(Public Law 104–204; 110 Stat. 2896) is amended—

* * * * * * *

(f) EXTENSION OF DEMONSTRATION CONTRACT PERIOD.—Section

212(g) of the Departments of Veterans Affairs and Housing and

Urban Development, and Independent Agencies Appropriations

Act, 1997 (Public Law 104–204) is amended—

* * * * * * *

SEC. 524. ø42 U.S.C. 1437f note¿ RENEWAL OF EXPIRING PROJECTBASED SECTION 8 CONTRACTS.

(a) IN GENERAL.— (1) RENEWAL.—Subject to paragraph (2), upon termination

or expiration of a contract for project-based assistance under

section 8 for a multifamily housing project (and notwithstanding section 8(v) of the United States Housing Act of 1937

for loan management assistance), the Secretary shall, at the

request of the owner of the project and to the extent sufficient

amounts are made available in appropriation Acts, use

amounts available for the renewal of assistance under section

8 of such Act to provide such assistance for the project. The assistance shall be provided under a contract having such terms

and conditions as the Secretary considers appropriate, subject

to the requirements of this section. This section shall not require contract renewal for a project that is eligible under this

subtitle for a mortgage restructuring and rental assistance sufficiency plan, if there is no approved plan for the project and

the Secretary determines that such an approved plan is necessary.

(2) PROHIBITION ON RENEWAL.—Notwithstanding part 24 of

title 24 of the Code of Federal Regulations, the Secretary may

elect not to renew assistance for a project otherwise required

to be renewed under paragraph (1) or provide comparable benefits under paragraph (1) or (2) of subsection (e) for a project

described in either such paragraph, if the Secretary determines

that a violation under paragraphs (1) through (4) of section

516(a) has occurred with respect to the project. For purposes

of such a determination, the provisions of section 516 shall

apply to a project under this section in the same manner and
Sec. 524 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 326

to the same extent that the provisions of such section apply to

eligible multifamily housing projects, except that the Secretary

shall make the determination under section 516(a)(4).

(3) CONTRACT TERM FOR MARK-UP-TO-MARKET CONTRACTS.—

In the case of an expiring or terminating contract that has rent

levels less than comparable market rents for the market area,

if the rent levels under the renewal contract under this section

are equal to comparable market rents for the market area, the

contract shall have a term of not less than 5 years, subject to

the availability of sufficient amounts in appropriation Acts.

(4) RENEWAL RENTS.—Except as provided in subsection (b),

the contract for assistance shall provide assistance at the following rent levels:

(A) MARKET RENTS.—At the request of the owner of

the project, at rent levels equal to the lesser of comparable

market rents for the market area or 150 percent of the fair

market rents, in the case only of a project that—

(i) has rent levels under the expiring or terminating contract that do not exceed such comparable

market rents;

(ii) does not have a low- and moderate-income use

restriction that can not be eliminated by unilateral action by the owner;

(iii) is decent, safe, and sanitary housing, as determined by the Secretary;

(iv) is not—

(I) owned by a nonprofit entity;

(II) subject to a contract for moderate rehabilitation assistance under section 8(e)(2) of the

United States Housing Act of 1937, as in effect before October 1, 1991; or

(III) a project for which the public housing

agency provided voucher assistance to one or more

of the tenants after the owner has provided notice

of termination of the contract covering the tenant’s unit; and

(v) has units assisted under the contract for which

the comparable market rent exceeds 110 percent of the

fair market rent.

The Secretary may adjust the percentages of fair market

rent (as specified in the matter preceding clause (i) and in

clause (v)), but only upon a determination and written notification to the Congress within 10 days of making such

determination, that such adjustment is necessary to ensure that this subparagraph covers projects with a high

risk of nonrenewal of expiring contracts for project-based

assistance.

(B) REDUCTION TO MARKET RENTS.—In the case of a

project that has rent levels under the expiring or terminating contract that exceed comparable market rents for

the market area, at rent levels equal to such comparable

market rents.
327 Sec. 524 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

(C) RENTS NOT EXCEEDING MARKET RENTS.—In the

case of a project that is not subject to subparagraph (A) or

(B), at rent levels that—

(i) are not less than the existing rents under the

terminated or expiring contract, as adjusted by an operating cost adjustment factor established by the Secretary (which shall not result in a negative adjustment), if such adjusted rents do not exceed comparable

market rents for the market area; and

(ii) do not exceed comparable market rents for the

market area.

In determining the rent level for a contract under this subparagraph, the Secretary shall approve rents sufficient to

cover budget-based cost increases and shall give greater

consideration to providing rent at a level up to comparable

market rents for the market area based on the number of

the criteria under clauses (i) through (iii) of subparagraph

(D) that the project meets. Notwithstanding any other provision of law, the Secretary shall include in such budgetbased cost increases costs relating to the project as a whole

(including costs incurred with respect to units not covered

by the contract for assistance), but only (I) if inclusion of

such costs is requested by the owner or purchaser of the

project, (II) if inclusion of such costs will permit capital repairs to the project or acquisition of the project by a nonprofit organization, and (III) to the extent that inclusion of

such costs (or a portion thereof) complies with the requirement under clause (ii).

(D) WAIVER OF 150 PERCENT LIMITATION.—Notwithstanding subparagraph (A), at rent levels up to comparable

market rents for the market area, in the case of a project

that meets the requirements under clauses (i) through (v)

of subparagraph (A) and—

(i) has residents who are a particularly vulnerable

population, as demonstrated by a high percentage of

units being rented to elderly families, disabled families, or large families;

(ii) is located in an area in which tenant-based assistance would be difficult to use, as demonstrated by

a low vacancy rate for affordable housing, a high

turnback rate for vouchers, or a lack of comparable

rental housing; or

(iii) is a high priority for the local community, as

demonstrated by a contribution of State or local funds

to the property.

In determining the rent level for a contract under this subparagraph, the Secretary shall approve rents sufficient to

cover budget-based cost increases and shall give greater

consideration to providing rent at a level up to comparable

market rents for the market area based on the number of

the criteria under clauses (i) through (iv) that the project

meets.

(5) COMPARABLE MARKET RENTS AND COMPARISON WITH

FAIR MARKET RENTS.—The Secretary shall prescribe the method
Sec. 524 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 328

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

for determining comparable market rent by comparison with

rents charged for comparable properties (as such term is defined in section 512), which may include appropriate adjustments for utility allowances and adjustments to reflect the

value of any subsidy (other than section 8 assistance) provided

by the Department of Housing and Urban Development.

(b) EXCEPTION RENTS.—

(1) RENEWAL.—In the case of a multifamily housing project

described in paragraph (2), pursuant to the request of the

owner of the project, the contract for assistance for the project

pursuant to subsection (a) shall provide assistance at the lesser

of the following rent levels:

(A) ADJUSTED EXISTING RENTS.—The existing rents

under the expiring contract, as adjusted by an operating

cost adjustment factor established by the Secretary (which

shall not result in a negative adjustment).

(B) BUDGET-BASED RENTS.—Subject to a determination

by the Secretary that a rent level under this subparagraph

is appropriate for a project, a rent level that provides income sufficient to support a budget-based rent (including

a budget-based rent adjustment if justified by reasonable

and expected operating expenses).

(2) PROJECTS COVERED.—A multifamily housing project described in this paragraph is a multifamily housing project

that—

(A) is not an eligible multifamily housing project

under section 512(2); or

(B) is exempt from mortgage restructuring under this

subtitle pursuant to section 514(h).

(3) MODERATE REHABILITATION PROJECTS.—In the case of a

project with a contract under the moderate rehabilitation program, other than a moderate rehabilitation contract under section 441 of the Stewart B. McKinney Homeless Assistance

Act 1, pursuant to the request of the owner of the project, the

contract for assistance for the project pursuant to subsection

(a) shall provide assistance at the lesser of the following rent

levels:

(A) ADJUSTED EXISTING RENTS.—The existing rents

under the expiring contract, as adjusted by an operating

cost adjustment factor established by the Secretary (which

shall not result in a negative adjustment).

(B) FAIR MARKET RENTS.—Fair market rents (less any

amounts allowed for tenant-purchased utilities).

(C) MARKET RENTS.—Comparable market rents for the

market area.

(c) RENT ADJUSTMENTS AFTER RENEWAL OF CONTRACT.—

(1) REQUIRED.—After the initial renewal of a contract for

assistance under section 8 of the United States Housing Act of

1937 pursuant to subsection (a), (b)(1), or (e)(2), the Secretary
329 Sec. 524 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

shall annually adjust the rents using an operating cost adjustment factor established by the Secretary (which shall not result in a negative adjustment) or, upon the request of the

owner and subject to approval of the Secretary, on a budget

basis. In the case of projects with contracts renewed pursuant

to subsection (a) or pursuant to subsection (e)(2) at rent levels

equal to comparable market rents for the market area, at the

expiration of each 5-year period, the Secretary shall compare

existing rents with comparable market rents for the market

area and may make any adjustments in the rent necessary to

maintain the contract rents at a level not greater than comparable market rents or to increase rents to comparable market rents.

(2) DISCRETIONARY.—In addition to review and adjustment

required under paragraph (1), in the case of projects with contracts renewed pursuant to subsection (a) or pursuant to subsection (e)(2) at rent levels equal to comparable market rents

for the market area, the Secretary may, at the discretion of the

Secretary but only once within each 5-year period referred to

in paragraph (1), conduct a comparison of rents for a project

and adjust the rents accordingly to maintain the contract rents

at a level not greater than comparable market rents or to increase rents to comparable market rents.

(d) ENHANCED VOUCHERS UPON CONTRACT EXPIRATION.—

(1) IN GENERAL.—In the case of a contract for project-based

assistance under section 8 for a covered project that is not renewed under subsection (a) or (b) of this section (or any other

authority), to the extent that amounts for assistance under this

subsection are provided in advance in appropriation Acts, upon

the date of the expiration of such contract the Secretary shall

make enhanced voucher assistance under section 8(t) of the

United States Housing Act of 1937 (42 U.S.C. 1437f(t)) available on behalf of each low-income family who, upon the date

of such expiration, is residing in an assisted dwelling unit in

the covered project.

(2) DEFINITIONS.—For purposes of this subsection, the

following definitions shall apply:

(A) ASSISTED DWELLING UNIT.—The term ‘‘assisted

dwelling unit’’ means a dwelling unit that—

(i) is in a covered project; and

(ii) is covered by rental assistance provided under

the contract for project-based assistance for the covered project.

(B) COVERED PROJECT.—The term ‘‘covered project’’

means any housing that—

(i) consists of more than four dwelling units;

(ii) is covered in whole or in part by a contract for

project-based assistance under—

(I) the new construction or substantial rehabilitation program under section 8(b)(2) of the

United States Housing Act of 1937 (as in effect before October 1, 1983);
Sec. 524 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 330

(II) the property disposition program under

section 8(b) of the United States Housing Act of

1937;

(III) the moderate rehabilitation program

under section 8(e)(2) of the United States Housing

Act of 1937 (as in effect before October 1, 1991);

(IV) the loan management assistance program

under section 8 of the United States Housing Act

of 1937;

(V) section 23 of the United States Housing

Act of 1937 (as in effect before January 1, 1975);

(VI) the rent supplement program under section 101 of the Housing and Urban Development

Act of 1965; or

(VII) section 8 of the United States Housing

Act of 1937, following conversion from assistance

under section 101 of the Housing and Urban Development Act of 1965,

which contract will (under its own terms) expire during the period consisting of fiscal years 2000 through

2004; and

(iii) is not housing for which residents are eligible

for enhanced voucher assistance as provided, pursuant

to the ‘‘Preserving Existing Housing Investment’’ account in the Departments of Veterans Affairs and

Housing and Urban Development, and Independent

Agencies Appropriations Act, 1997 (Public Law 104–

204; 110 Stat. 2884) or any other subsequently enacted provision of law, in lieu of any benefits under

section 223 of the Low-Income Housing Preservation

and Resident Homeownership Act of 1990 (12 U.S.C.

4113).

(4) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for each of fiscal years 2000, 2001,

2002, 2003, and 2004 such sums as may be necessary for enhanced voucher assistance under this subsection.

(e) CONTRACTUAL COMMITMENTS UNDER PRESERVATION

LAWS.—Except as provided in subsection (a)(2) and notwithstanding any other provision of this subtitle, the following shall

apply:

(1) PRESERVATION PROJECTS.—Upon expiration of a contract for assistance under section 8 for a project that is subject

to an approved plan of action under the Emergency Low Income Housing Preservation Act of 1987 (12 U.S.C. 1715l note)

or the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4101 et seq.), to the extent

amounts are specifically made available in appropriation Acts,

the Secretary shall provide to the owner benefits comparable

to those provided under such plan of action, including distributions, rent increase procedures, and duration of low-income affordability restrictions. This paragraph shall apply to projects

with contracts expiring before, on, or after the date of the enactment of this section.

(2) DEMONSTRATION PROJECTS.—
331 Sec. 524 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

(A) IN GENERAL.—Upon expiration of a contract for assistance under section 8 for a project entered into pursuant

to any authority specified in subparagraph (B) for which

the Secretary determines that debt restructuring is inappropriate, the Secretary shall, at the request of the owner

of the project and to the extent sufficient amounts are

made available in appropriation Acts, provide benefits to

the owner comparable to those provided under such contract, including annual distributions, rent increase procedures, and duration of low-income affordability restrictions. This paragraph shall apply to projects with contracts

expiring before, on, or after the date of the enactment of

this section.

(B) DEMONSTRATION PROGRAMS.—The authority

specified in this subparagraph is the authority under—

(i) section 210 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996 (Public

Law 104–134; 110 Stat. 1321–285; 42 U.S.C. 1437f

note);

(ii) section 212 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (Public

Law 104–204; 110 Stat. 2897; 42 U.S.C. 1437f note);

and

(iii) either of such sections, pursuant to any provision of this title.

(3) MORTGAGE RESTRUCTURING AND RENTAL ASSISTANCE

SUFFICIENCY PLANS.—Notwithstanding paragraph (1), the

owner of the project may request, and the Secretary may consider, mortgage restructuring and rental assistance sufficiency

plans to facilitate sales or transfers of properties under this

subtitle, subject to an approved plan of action under the Emergency Low Income Housing Preservation Act of 1987 (12 U.S.C.

1715l note) or the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4101 et seq.),

which plans shall result in a sale or transfer of those properties.

(f ) PREEMPTION OF CONFLICTING STATE LAWS LIMITING

DISTRIBUTIONS.—

(1) IN GENERAL.—Except as provided in paragraph (2), no

State or political subdivision of a State may establish, continue

in effect, or enforce any law or regulation that limits or restricts, to an amount that is less than the amount provided for

under the regulations of the Secretary establishing allowable

project distributions to provide a return on investment, the

amount of surplus funds accruing after the date of the enactment of this section that may be distributed from any multifamily housing project assisted under a contract for rental assistance renewed under any provision of this section (except

subsection (b)) to the owner of the project.

(2) EXCEPTION AND WAIVER.—Paragraph (1) shall not apply

to any law or regulation to the extent such law or regulation

applies to—
Sec. 525 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 332

(A) a State-financed multifamily housing project; or

(B) a multifamily housing project for which the owner

has elected to waive the applicability of paragraph (1).

(3) TREATMENT OF LOW-INCOME USE RESTRICTIONS.—This

subsection may not be construed to provide for, allow, or result

in the release or termination, for any project, of any low- or

moderate-income use restrictions that can not be eliminated by

unilateral action of the owner of the project.

(g) APPLICABILITY.—Except to the extent otherwise specifically

provided in this section, this section shall apply with respect to any

multifamily housing project having a contract for project-based assistance under section 8 that terminates or expires during fiscal

year 2000 or thereafter.

SEC. 525. ø42 U.S.C. 1437f note¿ CONSISTENCY OF RENT LEVELS UNDER

ENHANCED VOUCHER ASSISTANCE AND RENT

RESTRUCTURINGS.

(a) IN GENERAL.—The Secretary shall examine the standards

and procedures for determining and establishing the rent standards described under subsection (b). Pursuant to such examination,

the Secretary shall establish procedures and guidelines that are designed to ensure that the amounts determined by the various rent

standards for the same dwelling units are reasonably consistent

and reflect rents for comparable unassisted units in the same area

as such dwelling units.

(b) RENT STANDARDS.—The rent standards described in this

subsection are as follows:

(1) ENHANCED VOUCHERS.—The payment standard for enhanced voucher assistance under section 8(t) of the United

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

(2) MARK-TO-MARKET.—The rents derived from comparable

properties, for purposes of section 514(g) of this Act.

(3) CONTRACT RENEWAL.—The comparable market rents for

the market area, for purposes of section 524(a)(4) of this Act.

Subtitle B—Miscellaneous Provisions

SEC. 531. REHABILITATION GRANTS FOR CERTAIN INSURED

PROJECTS.

Section 236 of the National Housing Act (12 U.S.C. 1715z–1)

is amended by adding at the end the following:

* * * * * * *

SEC. 532. ø42 U.S.C. 1437f note¿ GAO REPORT ON SECTION 8 RENTAL ASSISTANCE FOR MULTIFAMILY HOUSING PROJECTS.

Not later than the expiration of the 18-month period beginning

on the date of the enactment of this Act, the Comptroller General

of the United States shall submit a report to the Congress

analyzing—

(1) the housing projects for which project-based assistance

is provided under section 8 of the United States Housing Act

of 1937, but which are not subject to a mortgage insured or

held by the Secretary under the National Housing Act;

(2) how State and local housing finance agencies have benefited financially from the rental assistance program under
333 Sec. 552 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

1October 27, 1997.

section 8 of the United States Housing Act of 1937, including

any benefits from fees, bond financings, and mortgage

refinancings; and

(3) the extent and effectiveness of State and local housing

finance agencies oversight of the physical and financial management and condition of multifamily housing projects for

which project-based assistance is provided under section 8 of

the United States Housing Act of 1937.

Subtitle C—Enforcement Provisions

SEC. 541. ø42 U.S.C. 1437f note¿ IMPLEMENTATION.

(a) ISSUANCE OF NECESSARY REGULATIONS.—Notwithstanding

section 7(o) of the Department of Housing and Urban Development

Act or part 10 of title 24, Code of Federal Regulations (as in existence on the date of enactment of this Act 1), the Secretary shall

issue such regulations as the Secretary determines to be necessary

to implement this subtitle and the amendments made by this subtitle in accordance with section 552 or 553 of title 5, United States

Code, as determined by the Secretary.

(b) USE OF EXISTING REGULATIONS.—In implementing any provision of this subtitle, the Secretary may, in the discretion of the

Secretary, provide for the use of existing regulations to the extent

appropriate, without rulemaking.

SEC. 542. INCOME VERIFICATION.

(a) REINSTITUTION OF REQUIREMENTS REGARDING HUD ACCESS

TO CERTAIN INFORMATION OF STATE AGENCIES.—

(1) IN GENERAL.—Section 303(i) of the Social Security Act

is amended by striking paragraph (5).

(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to any request for information made after

the date of the enactment of this Act.

(b) REPEAL OF TERMINATION REGARDING HOUSING ASSISTANCE

PROGRAMS.—Section 6103(l)(7)(D) of the Internal Revenue Code of

1986 is amended by striking the last sentence.

Part 1—FHA Single Family and Multifamily

Housing

SEC. 551. AUTHORIZATION TO IMMEDIATELY SUSPEND MORTGAGEES.

Section 202(c)(3)(C) of the National Housing Act (12 U.S.C.

1708(c)(3)(C)) is amended***

SEC. 552. EXTENSION OF EQUITY SKIMMING TO OTHER SINGLE FAMILY AND MULTIFAMILY HOUSING PROGRAMS.

Section 254 of the National Housing Act (12 U.S.C. 1715z–19)

is amended to read as follows:

* * * * * * *
Sec. 553 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 334

1The date of enactment was October 27, 1997.

SEC. 553. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS,

AND OTHER PARTICIPANTS IN FHA PROGRAMS.

(a) CHANGE TO SECTION TITLE.—Section 536 of the National

Housing Act (12 U.S.C. 1735f–14) is amended by striking the section heading and the section designation and inserting the following:

* * * * * * *

(b) EXPANSION OF PERSONS ELIGIBLE FOR PENALTY.—Section

536(a) of the National Housing Act (12 U.S.C. 1735f–14(a)) is

amended—

* * * * * * *

(c) ADDITIONAL VIOLATIONS FOR MORTGAGEES, LENDERS, AND

OTHER PARTICIPANTS IN FHA PROGRAMS.—Section 536(b) of the

National Housing Act (12 U.S.C. 1735f–14(b)) is amended—

* * * * * * *

(d) CONFORMING AND TECHNICAL AMENDMENTS.—Section 536

of the National Housing Act (12 U.S.C. 1735f–14) is amended—

* * * * * * *

Part 2—FHA Multifamily Provisions

SEC. 561. CIVIL MONEY PENALTIES AGAINST GENERAL PARTNERS, OFFICERS, DIRECTORS, AND CERTAIN MANAGING AGENTS

OF MULTIFAMILY PROJECTS.

(a) CIVIL MONEY PENALTIES AGAINST MULTIFAMILY MORTGAGORS.—Section 537 of the National Housing Act (12 U.S.C. 1735f–

15) is amended—

* * * * * * *

(b) ø42 U.S.C. 1437f–15 note¿ IMPLEMENTATION.— (1) PUBLIC COMMENT.—The Secretary shall implement the

amendments made by this section by regulation issued after

notice and opportunity for public comment. The notice shall

seek comments primarily as to the definitions of the terms

‘‘ownership interest in’’ and ‘‘effective control’’, as those terms

are used in the definition of the terms ‘‘agent employed to

manage the property that has an identity of interest’’ and

‘‘identity of interest agent’’.

(2) TIMING.—A proposed rule implementing the amendments made by this section shall be published not later than

1 year after the date of enactment of this Act. 1

(c) ø42 U.S.C. 1437f–15 note¿ APPLICABILITY OF AMENDMENTS.—The amendments made by subsection (a) shall apply only

with respect to—

(1) violations that occur on or after the effective date of the

final regulations implementing the amendments made by this

section; and

(2) in the case of a continuing violation (as determined by

the Secretary of Housing and Urban Development), any portion

of a violation that occurs on or after that date.
335 Sec. 571 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

1The date of enactment was October 27, 1997.

2For the repeal of this subtitle, see footnote #2 at the beginning of subtitle A.

SEC. 562. CIVIL MONEY PENALTIES FOR NONCOMPLIANCE WITH

SECTION 8 HAP CONTRACTS.

(a) BASIC AUTHORITY.—Title I of the United States Housing

Act of 1937 (42 U.S.C. 1437 et seq.) is amended—

* * * * * * *

(b) ø42 U.S.C. 1437z–1 note¿ APPLICABILITY.—The amendments made by subsection (a) shall apply only with respect to—

(1) violations that occur on or after the effective date of

final regulations implementing the amendments made by this

section; and

(2) in the case of a continuing violation (as determined by

the Secretary of Housing and Urban Development), any portion

of a violation that occurs on or after such date.

(c) ø42 U.S.C. 1437z–1 note¿ IMPLEMENTATION.—

(1) REGULATIONS.—

(A) IN GENERAL.—The Secretary shall implement the

amendments made by this section by regulation issued

after notice and opportunity for public comment.

(B) COMMENTS SOUGHT.—The notice under subparagraph (A) shall seek comments as to the definitions of the

terms ‘‘ownership interest in’’ and ‘‘effective control’’, as

such terms are used in the definition of the term ‘‘agent

employed to manage such property that has an identity of

interest’’.

(2) TIMING.—A proposed rule implementing the amendments made by this section shall be published not later than

1 year after the date of enactment of this Act. 1

SEC. 563. EXTENSION OF DOUBLE DAMAGES REMEDY.

Section 421 of the Housing and Community Development Act

of 1987 (12 U.S.C. 1715z–4a) is amended—

* * * * * * *

SEC. 564. OBSTRUCTION OF FEDERAL AUDITS.

Section 1516(a) of title 18, United States Code, is amended by

inserting after ‘‘under a contract or subcontract,’’ the following: ‘‘or

relating to any property that is security for a mortgage note that

is insured, guaranteed, acquired, or held by the Secretary of Housing and Urban Development pursuant to any Act administered by

the Secretary,’’.

Subtitle D—Office of Multifamily Housing

Assistance Restructuring 2

SEC. 571. ø42 U.S.C. 1437f note¿ ESTABLISHMENT OF OFFICE OF MULTIFAMILY HOUSING ASSISTANCE RESTRUCTURING.

There is hereby established an office within the Department of

Housing and Urban Development, which shall be known as the Office of Multifamily Housing Assistance Restructuring.
Sec. 572 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 336

SEC. 572. ø42 U.S.C. 1437f note¿ DIRECTOR.

(a) APPOINTMENT.—The Office shall be under the management

of a Director, who shall be appointed by the President from among

individuals who are citizens of the United States and have a demonstrated understanding of financing and mortgage restructuring

for affordable multifamily housing.

(b) VACANCY.—A vacancy in the position of Director shall be

filled by appointment in the manner provided under subsection (a).

The President shall make such an appointment not later than 60

days after such position first becomes vacant.

(c) DEPUTY DIRECTOR.— (1) IN GENERAL.—The Office shall have a Deputy Director

who shall be appointed by the Director from among individuals

who are citizens of the United States and have a demonstrated

understanding of financing and mortgage restructuring for affordable multifamily housing.

(2) FUNCTIONS.—The Deputy Director shall have such

functions, powers, and duties as the Director shall prescribe. In

the event of the death, resignation, sickness, or absence of the

Director, the Deputy Director shall serve as acting Director

until the return of the Director or the appointment of a successor pursuant to subsection (b).

SEC. 573. ø42 U.S.C. 1437f note¿ DUTY AND AUTHORITY OF DIRECTOR.

(a) DUTY.—The Secretary shall, acting through the Director,

administer the program of mortgage and rental assistance restructuring for eligible multifamily housing projects under subtitle A.

During the period before the Director is appointed, the Secretary

may carry out such program.

(b) AUTHORITY.—The Director is authorized to make such determinations, take such actions, issue such regulations, and perform such functions assigned to the Director under law as the Director determines necessary to carry out such functions, subject to

the review and approval of the Secretary. The Director shall semiannually submit a report to the Assistant Secretary of the Department of Housing and Urban Development who is the Federal Housing Commissioner regarding the activities, determinations, and actions of the Director.

(c) DELEGATION OF AUTHORITY.—The Director may delegate to

officers and employees of the Office (but not to contractors, subcontractors, or consultants) any of the functions, powers, and duties

of the Director, as the Director considers appropriate.

(d) INDEPENDENCE IN PROVIDING INFORMATION TO CONGRESS.— (1) IN GENERAL.—Notwithstanding subsection (a) or (b),

the Director shall not be required to obtain the prior approval,

comment, or review of any officer or agency of the United

States before submitting to the Congress, or any committee or

subcommittee thereof, any reports, recommendations, testimony, or comments if such submissions include a statement indicating that the views expressed therein are those of the Director and do not necessarily represent the views of the Secretary or the President.

(2) REQUIREMENT.—If the Director determines at any time

that the Secretary is taking or has taken any action that interferes with the ability of the Director to carry out the duties of
337 Sec. 576 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING

the Director under this Act or that affects the administration

of the program under subtitle A of this Act in a manner that

is inconsistent with the purposes of this Act, including any proposed action by the Director, in the discretion of the Director,

that is overruled by the Secretary, the Director shall immediately report directly to the Committee on Financial Services

of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate regarding such

action. Notwithstanding subsection (a) or (b), any determination or report under this paragraph by the Director shall not

be subject to prior review or approval of the Secretary.

SEC. 574. ø42 U.S.C. 1437f note¿ PERSONNEL.

(a) OFFICE PERSONNEL.—The Director may appoint and fix the

compensation of such officers and employees of the Office as the Director considers necessary to carry out the functions of the Director

and the Office. Officers and employees may be paid without regard

to the provisions of chapter 51 and subchapter III of chapter 53 of

title 5, United States Code, relating to classification and General

Schedule pay rates.

(b) COMPARABILITY OF COMPENSATION WITH FEDERAL BANKING

AGENCIES.—In fixing and directing compensation under subsection

(a), the Director shall consult with, and maintain comparability

with compensation of officers and employees of the Federal Deposit

Insurance Corporation.

(c) PERSONNEL OF OTHER FEDERAL AGENCIES.—In carrying out

the duties of the Office, the Director may use information, services,

staff, and facilities of any executive agency, independent agency, or

department on a reimbursable basis, with the consent of such agency or department.

(d) OUTSIDE EXPERTS AND CONSULTANTS.—The Director may

procure temporary and intermittent services under section 3109(b)

of title 5, United States Code.

SEC. 575. ø42 U.S.C. 1437f note¿ BUDGET AND FINANCIAL REPORTS.

(a) FINANCIAL OPERATING PLANS AND FORECASTS.—Before the

beginning of each fiscal year, the Secretary shall submit a copy of

the financial operating plans and forecasts for the Office to the Director of the Office of Management and Budget.

(b) REPORTS OF OPERATIONS.—As soon as practicable after the

end of each fiscal year and each quarter thereof, the Secretary

shall submit a copy of the report of the results of the operations

of the Office during such period to the Director of the Office of

Management and Budget.

(c) INCLUSION IN PRESIDENT’S BUDGET.—The annual plans,

forecasts, and reports required under this section shall be included:

(1) in the Budget of the United States in the appropriate form; and

(2) in the congressional justifications of the Department of Housing

and Urban Development for each fiscal year in a form determined

by the Secretary.

SEC. 576. ø42 U.S.C. 1437f note¿ LIMITATION ON SUBSEQUENT EMPLOYMENT.

Neither the Director nor any former officer or employee of the

Office who, while employed by the Office, was compensated at a

rate in excess of the lowest rate for a position classified higher
Sec. 577 PROJECT-BASED SECTION 8 ASSISTANCE RESTRUCTURING 338

than GS–15 of the General Schedule under section 5107 of title 5,

United States Code, may, during the 1-year period beginning on

the date of separation from employment by the Office, accept compensation from any party (other than a Federal agency) having any

financial interest in any mortgage restructuring and rental assistance sufficiency plan under subtitle A or comparable matter in

which the Director or such officer or employee had direct participation or supervision.

SEC. 577. ø42 U.S.C. 1437f note¿ AUDITS BY GAO.

The Comptroller General shall audit the operations of the Office in accordance with generally accepted Government auditing

standards. All books, records, accounts, reports, files, and property

belonging to, or used by, the Office shall be made available to the

Comptroller General. Audits under this section shall be conducted

annually for the first 2 fiscal years following the date of the enactment of this Act and as appropriate thereafter.

SEC. 578. ø42 U.S.C. 1437f note¿ OVERSIGHT BY FEDERAL HOUSING

COMMISSIONER.

All authority and responsibilities assigned under this subtitle

to the Secretary shall be carried out through the Assistant Secretary of the Department of Housing and Urban Development who

is the Federal Housing Commissioner.

SEC. 579. ø42 U.S.C. 1437f note¿ TERMINATION.

(a) REPEALS.—

(1) MARK-TO-MARKET PROGRAM.—Subtitle A (except for section 524) is repealed effective October 1, 2006.

(2) OMHAR.—Subtitle D (except for this section) is repealed effective October 1, 2004.

(b) EXCEPTION.—Notwithstanding the repeal under subsection

(a), the provisions of subtitle A (as in effect immediately before

such repeal) shall apply with respect to projects and programs for

which binding commitments have been entered into under this Act

before October 1, 2006.

(c) TERMINATION OF DIRECTOR AND OFFICE.—The Office of Multifamily Housing Assistance Restructuring and the position of Director of such Office shall terminate at the end of September 30,

2004.

(d) TRANSFER OF AUTHORITY.—Effective upon the repeal of subtitle D under subsection (a)(2) of this section, all authority and responsibilities to administer the program under subtitle A are transferred to the Secretary.
339

SECTION 8 RENT ANNUAL ADJUSTMENT FACTORS

EXCERPT FROM DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT REFORM ACT OF 1989

[Public Law 101–235; 103 Stat. 1987; 42 U.S.C. 1437f note]

TITLE VIII—SECTION 8 RENT ADJUSTMENTS

SEC. 801. ø42 U.S.C. 1437f note¿ ANNUAL ADJUSTMENT FACTORS FOR

SECTION 8 RENTS.

(a) EFFECT OF PRIOR COMPARABILITY STUDIES.—

(1) IN GENERAL.—In any case in which, in implementing

section 8(c)(2) of the United States Housing Act of 1937—

(A) the use of comparability studies by the Secretary

of Housing and Urban Development or the appropriate

State agency as an independent limitation on the amount

of rental adjustments resulting from the application of an

annual adjustment factor under such section has resulted

in the reduction of the maximum monthly rent for units

covered by the contract or the failure to increase such contract rent to the full amount otherwise permitted under

the annual adjustment factor, or

(B) an assistance contract requires a project owner to

make a request before becoming eligible for a rent adjustment under the annual adjustment factor and the project

owner certifies that such a request was not made because

of anticipated negative adjustment to the project rents,

for fiscal year 1980, and annually thereafter until regulations

implementing this section take effect, rental adjustments shall

be calculated as an amount equal to the annual adjustment

factor multiplied by a figure equal to the contract rent minus

the amount of contract rent attributable to debt service. Upon

the request of the project owner, the Secretary shall pay to the

project owner the amount, if any, by which the total rental adjustment calculated under the preceding sentence exceeds the

total adjustments the Secretary or appropriate State agency

actually approved, except that solely for purposes of calculating

retroactive payments under this subsection, in no event shall

any project owner be paid an amount less than 30 percent of

a figure equal to the aggregate of the annual adjustment factor

multiplied by the full contract rent for each year on or after

fiscal year 1980, minus the sum of the rental payments the

Secretary or appropriate State agency actually approved for

those years. The method provided by this subsection shall be

the exclusive method by which retroactive payments, whether

or not requested, may be made for projects subject to this subsection for the period from fiscal year 1980 until the regula-
Sec. 801 SECTION 8 RENT ANNUAL ADJUSTMENT FACTORS 340

1The date of enactment was December 15, 1989.

tions issued under subsection (e) take effect. For purposes of

this paragraph, ‘‘debt service’’ shall include interest, principal,

and mortgage insurance premium if any.

(2) APPLICABILITY.— (A) IN GENERAL.—Subsection (a) shall apply with respect to any use of comparability studies referred to in

such subsection occurring before the effective date of the

regulations issued under subsection (e).

(B) FINAL LITIGATION.—Subsection (a) shall not apply

to any project with respect to which litigation regarding

the authority of the Secretary to use comparability studies

to limit rental adjustments under section 8(c)(2) of the

United State Housing Act of 1937 has resulted in a judgment before the effective date of this Act 1 that is final and

not appealable (including any settlement agreement).

(b) 3-YEAR PAYMENTS.—The Secretary shall provide the

amounts under subsection (a) over the 3-year period beginning on

the effective date of the regulations issued under subsection (e).

The Secretary shall provide the payments authorized under subsection (a) only to the extent approved in subsequent appropriations Acts. There are authorized to be appropriated such sums as

may be necessary for this purpose.

(c) COMPARABILITY STUDIES.—Section 8(c)(2)(C) of the United

States Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(C) is amended by

inserting after the period at the end of the first sentence the following: * * *

(d) DETERMINATION OF CONTRACT RENT.—(1) The Secretary

shall upon the request of the project owner, make a one-time determination of the contract rent for each project owner referred to in

subsection (a). The contract rent shall be the greater of the contract

rent—

(A) currently approved by the Secretary under section

8(c)(2) of the United States Housing Act of 1937, or

(B) calculated in accordance with the first sentence of subsection (a)(1).

(2) All adjustments in contract rents under section 8(c)(2) of

the United States Housing Act of 1937, including adjustments involving projects referred to in subsection (a), that occur beginning

with the first anniversary date of the contract after the regulations

issued under subsection (e) take effect shall be made in accordance

with the annual adjustment and comparability provisions of sections (8)(c)(2)(A) and 8(c)(2)(C) of such Act, respectively, using the

one-time contract rent determination under paragraph (1).

(e) REGULATIONS.—The Secretary shall issue regulations to

carry out this section and the amendments made by this section,

including the amendments made by subsection (c) with regard to

annual adjustment factors and comparability studies. The Secretary shall issue such regulations not later than the expiration of

the 180-day period beginning on the date of the enactment of this

Act. 1

(f) REPORT.—Not later than March 1, 1990, the Secretary shall

report to the Congress on the feasibility and desirability, and the
341 Sec. 801 SECTION 8 RENT ANNUAL ADJUSTMENT FACTORS

budgetary, legal, and administrative aspects, of adjusting contract

rents under section 8(c)(2)(C) of the United States Housing Act of

1937 on the basis of any alternative methodologies that are simpler

in application than individual project comparability studies.

(g) TECHNICAL AMENDMENT.—The first sentence of section

8(c)(2)(C) of the United States Housing Act of 1937 is amended by

inserting * * *
342

SECTION 8 EXCESSIVE RENT BURDEN DATA

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4222; 42 U.S.C. 1437f note]

SEC. 550. REVISIONS TO VOUCHER PROGRAM

* * * * * * *

(b) ø42 U.S.C. 1437f note¿ DOCUMENTATION OF EXCESSIVE

RENT BURDENS.—

(1) DATA.—The Secretary of Housing and Urban Development shall collect and maintain, in an automated system, data

describing the characteristics of families assisted under the

certificate and voucher programs established under section 8 of

the United States Housing Act of 1937, which data shall include the share of family income paid toward rent.

(2) REPORT.—Not less than annually, the Secretary shall

submit a report to the Congress setting forth, for each of the

certificate program and the voucher program, the percentage of

families participating in the program who are paying for rent

more than the amount determined under section 3(a)(1) of such

Act. The report shall set forth data in appropriate categories,

such as various areas of the country, types and sizes of public

housing agencies, types of families, and types of markets. The

data shall identify the jurisdictions in which more than 10 percent of the families assisted under section 8 of such Act pay

for rent more than the amount determined under section

3(a)(1) of such Act and the report shall include an examination

of whether the fair market rent for such areas is appropriate.

The report shall also include any recommendations of the Secretary for legislative and administrative actions appropriate as

a result of analysis of the data.

(3) AVAILABILITY OF DATA.—The Secretary shall make

available to each public housing agency administering assistance under the certificate or voucher program any data maintained under this subsection that relates to the public housing

agency.
343

SECTION 8 DISASTER RELIEF ASSISTANCE

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4403; 42 U.S.C. 1437c note]

SEC. 931. ø42 U.S.C. 1437c note¿ SECTION 8 CERTIFICATES AND VOUCHERS.

The budget authority available under section 5(c) of the United

States Housing Act of 1937 (42 U.S.C. 1437c(c)) for tenant-based

assistance under section 8 of the United States Housing Act of

1937 is authorized to be increased in any fiscal year in which a

major disaster is declared by the President under the Robert T.

Stafford Disaster Relief and Emergency Asssistance Act in such

amounts as may be necessary to provide assistance under such programs for individuals and families whose housing has been damaged or destroyed as a result of such disaster, except that in implementing this section, the Secretary shall evaluate the natural hazards to which any permanent replacement housing is exposed and

shall take appropriate action to mitigate such hazards.

SEC. 932. ø42 U.S.C. 1437c note¿ MODERATE REHABILITATION.

The budget authority available under section 5(c) of the United

States Housing Act of 1937 (42 U.S.C. 1437c(c)) for assistance

under the moderate rehabilitation program under section 8(e)(2) of

such Act is authorized to be increased in any fiscal year in which

a major disaster is declared by the President under the Robert T.

Stafford Disaster Relief and Emergency Assistance Act in such

amount as may be necessary to provide assistance under such program for individuals and families whose housing has been damaged

or destroyed as a result of such disaster, except that in implementing this section, the Secretary shall evaluate the natural hazards to which any permanent replacement housing is exposed and

shall take appropriate action to mitigate such hazards.
344

1October 21, 1998.

SECTION 8 HOMEOWNERSHIP DEMONSTRATION

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2613; 42 U.S.C. 1437f note]

SEC. 555. HOMEOWNERSHIP OPTION.

* * * * * * *

(b) ø42 U.S.C. 1437f note¿ DEMONSTRATION PROGRAM.—

(1) IN GENERAL.—With the consent of the affected public

housing agencies, the Secretary may carry out (or contract

with 1 or more entities to carry out) a demonstration program

under section 8(y) of the United States Housing Act of 1937 (42

U.S.C. 1437f(y)) to expand homeownership opportunities for

low-income families.

(2) REPORT.—The Secretary shall report annually to Congress on activities conducted under this subsection.

(c) ø42 U.S.C. 1437f note¿ APPLICABILITY.—This section shall

take effect on, and the amendments made by this section are made

on, and shall apply beginning upon, the date of the enactment of

this Act. 1

EXCERPT FROM AMERICAN HOMEOWNERSHIP AND ECONOMIC

OPPORTUNITY ACT OF 2000

[Public Law 106–569; 114 Stat. 2955]

SEC. 303. FUNDING FOR PILOT PROGRAMS.

(a) AUTHORIZATION OF APPROPRIATIONS.—There is authorized

to be appropriated such sums as may be necessary for fiscal year

2001 for assistance in connection with the existing homeownership

pilot programs carried out under the demonstration program authorized under section 555(b) of the Quality Housing and Work Responsibility Act of 1998 (Public Law 105–276; 112 Stat. 2613).

(b) USE.—Subject to subsection (c), amounts made available

pursuant to this section shall be used only through such homeownership pilot programs to provide, on behalf of families participating in such programs, amounts for downpayments in connection

with dwellings purchased by such families using assistance made

available under section 8(y) of the United States Housing Act of

1937 (42 U.S.C. 1437f(y)). No such downpayment grant may exceed

20 percent of the appraised value of the dwelling purchased with

assistance under such section 8(y).

(c) MATCHING REQUIREMENT.—The amount of assistance made

available under this section for any existing homeownership pilot

program may not exceed twice the amount donated from sources

other than this section for use under the program for assistance de-
345 Sec. 303 SECTION 8 HOMEOWNERSHIP DEMONSTRATION

scribed in subsection (b). Amounts donated from other sources may

include amounts from State housing finance agencies and Neighborhood Housing Services of America.
346

SECTION 8 HOMEOWNERSHIP ASSISTANCE PILOT

PROGRAM FOR DISABLED FAMILIES

EXCERPT FROM AMERICAN HOMEOWNERSHIP AND ECONOMIC

OPPORTUNITY ACT OF 2000

[Public Law 106–569; 114 Stat. 2953; 42 U.S.C. 1437f note]

SEC. 302. ø42 U.S.C. 1437f note] PILOT PROGRAM FOR HOMEOWNERSHIP

ASSISTANCE FOR DISABLED FAMILIES.

(a) IN GENERAL.—A public housing agency providing tenantbased assistance on behalf of an eligible family under section 8 of

the United States Housing Act of 1937 (42 U.S.C. 1437f ) may provide assistance for a disabled family that purchases a dwelling unit

(including a dwelling unit under a lease-purchase agreement) that

will be owned by one or more members of the disabled family and

will be occupied by the disabled family, if the disabled family—

(1) purchases the dwelling unit before the expiration of the

3-year period beginning on the date that the Secretary first implements the pilot program under this section;

(2) demonstrates that the disabled family has income from

employment or other sources (including public assistance), as

determined in accordance with requirements of the Secretary,

that is not less than twice the payment standard established

by the public housing agency (or such other amount as may be

established by the Secretary);

(3) except as provided by the Secretary, demonstrates at

the time the disabled family initially receives tenant-based assistance under this section that one or more adult members of

the disabled family have achieved employment for the period

as the Secretary shall require;

(4) participates in a homeownership and housing counseling program provided by the agency; and

(5) meets any other initial or continuing requirements established by the public housing agency in accordance with requirements established by the Secretary.

(b) DETERMINATION OF AMOUNT OF ASSISTANCE.—

(1) IN GENERAL.—

(A) MONTHLY EXPENSES NOT EXCEEDING PAYMENT

STANDARD.—If the monthly homeownership expenses, as

determined in accordance with requirements established

by the Secretary, do not exceed the payment standard, the

monthly assistance payment shall be the amount by which

the homeownership expenses exceed the highest of the following amounts, rounded to the nearest dollar:

(i) Thirty percent of the monthly adjusted income

of the disabled family.

(ii) Ten percent of the monthly income of the disabled family.
347 Sec. 302 SECTION 8 DISABLED FAMILIES HOMEOWNERSHIP PILOT PROGRAM

(iii) If the disabled family is receiving payments

for welfare assistance from a public agency, and a portion of those payments, adjusted in accordance with

the actual housing costs of the disabled family, is specifically designated by that agency to meet the housing

costs of the disabled family, the portion of those payments that is so designated.

(B) MONTHLY EXPENSES EXCEED PAYMENT STANDARD.—

If the monthly homeownership expenses, as determined in

accordance with requirements established by the Secretary, exceed the payment standard, the monthly assistance payment shall be the amount by which the applicable

payment standard exceeds the highest of the amounts

under clauses (i), (ii), and (iii) of subparagraph (A).

(2) CALCULATION OF AMOUNT.—

(A) LOW-INCOME FAMILIES.—A disabled family that is

a low-income family shall be eligible to receive 100 percent

of the amount calculated under paragraph (1).

(B) INCOME BETWEEN 81 AND 89 PERCENT OF MEDIAN.—

A disabled family whose income is between 81 and 89 percent of the median for the area shall be eligible to receive

66 percent of the amount calculated under paragraph (1).

(C) INCOME BETWEEN 90 AND 99 PERCENT OF MEDIAN.—

A disabled family whose income is between 90 and 99 percent of the median for the area shall be eligible to receive

33 percent of the amount calculated under paragraph (1).

(D) INCOME MORE THAN 99 PERCENT OF MEDIAN.—A

disabled family whose income is more than 99 percent of

the median for the area shall not be eligible to receive assistance under this section.

(c) INSPECTIONS AND CONTRACT CONDITIONS.—

(1) IN GENERAL.—Each contract for the purchase of a

dwelling unit to be assisted under this section shall—

(A) provide for pre-purchase inspection of the dwelling

unit by an independent professional; and

(B) require that any cost of necessary repairs be paid

by the seller.

(2) ANNUAL INSPECTIONS NOT REQUIRED.—The requirement

under subsection (o)(8)(A)(ii) of section 8 of the United States

Housing Act of 1937 for annual inspections shall not apply to

dwelling units assisted under this section.

(d) OTHER AUTHORITY OF THE SECRETARY.—The Secretary

may—

(1) limit the term of assistance for a disabled family assisted under this section;

(2) provide assistance for a disabled family for the entire

term of a mortgage for a dwelling unit if the disabled family

remains eligible for such assistance for such term; and

(3) modify the requirements of this section as the Secretary determines to be necessary to make appropriate adaptations for lease-purchase agreements.

(e) ASSISTANCE PAYMENTS SENT TO LENDER.—The Secretary

shall remit assistance payments under this section directly to the
Sec. 302SECTION 8 DISABLED FAMILIES HOMEOWNERSHIP PILOT PROGRAM 348

1The date of enactment was December 27, 2000.

mortgagee of the dwelling unit purchased by the disabled family receiving such assistance payments.

(f ) INAPPLICABILITY OF CERTAIN PROVISIONS.—Assistance

under this section shall not be subject to the requirements of the

following provisions:

(1) Subsection (c)(3)(B) of section 8 of the United States

Housing Act of 1937.

(2) Subsection (d)(1)(B)(i) of section 8 of the United States

Housing Act of 1937.

(3) Any other provisions of section 8 of the United States

Housing Act of 1937 governing maximum amounts payable to

owners and amounts payable by assisted families.

(4) Any other provisions of section 8 of the United States

Housing Act of 1937 concerning contracts between public housing agencies and owners.

(5) Any other provisions of the United States Housing Act

of 1937 that are inconsistent with the provisions of this section.

(g) REVERSION TO RENTAL STATUS.—

(1) NON-FHA MORTGAGES.—If a disabled family receiving

assistance under this section defaults under a mortgage not insured under the National Housing Act, the disabled family

may not continue to receive rental assistance under section 8

of the United States Housing Act of 1937 unless it complies

with requirements established by the Secretary.

(2) ALL MORTGAGES.—A disabled family receiving assistance under this section that defaults under a mortgage may

not receive assistance under this section for occupancy of another dwelling unit owned by one or more members of the disabled family.

(3) EXCEPTION.—This subsection shall not apply if the Secretary determines that the disabled family receiving assistance

under this section defaulted under a mortgage due to catastrophic medical reasons or due to the impact of a federally declared major disaster or emergency.

(h) REGULATIONS.—Not later than 90 days after the date of the

enactment of this Act, 1 the Secretary shall issue regulations to implement this section. Such regulations may not prohibit any public

housing agency providing tenant-based assistance on behalf of an

eligible family under section 8 of the United States Housing Act of

1937 from participating in the pilot program under this section.

(i) DEFINITION OF DISABLED FAMILY.—For the purposes of this

section, the term ‘‘disabled family’’ has the meaning given the term

‘‘person with disabilities’’ in section 811(k)(2) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013(k)(2)).
349

SECTION 8 COMMUNITY INVESTMENT DEMONSTRATION

EXCERPT FROM HUD DEMONSTRATION ACT OF 1993

[Public Law 103–120; 107 Stat. 1148; 42 U.S.C. 1437f note]

SEC. 6. ø42 U.S.C. 1437f note¿ SECTION 8 COMMUNITY INVESTMENT

DEMONSTRATION PROGRAM.

(a) DEMONSTRATION PROGRAM.—The Secretary shall carry out

a demonstration program to attract pension fund investment in affordable housing through the use of project-based rental assistance

under section 8 of the United States Housing Act of 1937.

(b) FUNDING REQUIREMENTS.—In carrying out this section, the

Secretary shall ensure that not less than 50 percent of the funds

appropriated for the demonstration program each year are used in

conjunction with the disposition of either—

(1) multifamily properties owned by the Department; or

(2) multifamily properties securing mortgages held by the

Department.

(c) CONTRACT TERMS.—

(1) IN GENERAL.—Project-based assistance under this section shall be provided pursuant to a contract entered into by

the Secretary and the owner of the eligible housing that—

(A) provides assistance for a term of not less than 60

months and not greater than 180 months; and

(B) provides for contract rents, to be determined by

the Secretary, which shall not exceed contract rents permitted under section 8 of the United States Housing Act

of 1937, taking into consideration any costs for the construction, rehabilitation, or acquisition of the housing.

(2) AMENDMENT TO SECTION 203.—Section 203 of the Housing and Community Development Amendments of 1978 (12

U.S.C. 1701z–11) is amended by adding at the end the following new subsection:

‘‘(l) Project-based assistance in connection with the disposition

of a multifamily housing project may be provided for a contract

term of less than 15 years if such assistance is provided—

‘‘(1) under a contract authorized under section 6 of the

HUD Demonstration Act of 1993; and

‘‘(2) pursuant to a disposition plan under this section for

a project that is determined by the Secretary to be otherwise

in compliance with this section.’’.

(d) LIMITATION.—(1) The Secretary may not provide (or make

a commitment to provide) more than 50 percent of the funding for

housing financed by any single pension fund, except that this limitation shall not apply if the Secretary, after the end of the 6-month

period beginning on the date notice is issued under subsection (e)—

(A) determines that—
Sec. 6 SECTION 8 COMMUNITY INVESTMENT DEMONSTRATION 350

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(i) there are no expressions of interest that are likely

to result in approvable applications in the reasonably foreseeable future; or

(ii) any such expressions of interest are not likely to

use all funding under this section; and

(B) so informs the Committee on Banking, Finance and

Urban Affairs of the House of Representatives 1 and the Committee on Banking, Housing, and Urban Affairs of the Senate.

(2) If the Secretary determines that there are expressions of interest referred to in paragraph (1)(A)(ii), the Secretary may reserve

funding sufficient in the Secretary’s determination to fund such applications and may use any remaining funding for other pension

funds in accordance with this section.

(e) IMPLEMENTATION.—The Secretary shall by notice establish

such requirements as may be necessary to carry out the provisions

of this section. The notice shall take effect upon issuance.

(f) APPLICABILITY OF ERISA.—Notwithstanding section 514(d)

of the Employee Retirement Income Security Act of 1974, nothing

in this section shall be construed to authorize any action or failure

to act that would constitute a violation of such Act.

(g) REPORT.—Not later than 3 months after the last day of

each fiscal year, the Secretary shall submit to the Committee on

Banking, Finance and Urban Affairs of the House of Representatives 1 and the Committee on Banking, Housing, and Urban Affairs

of the Senate a report summarizing the activities carried out under

this section during that fiscal year.

(h) ESTABLISHMENT OF STANDARDS.—Mortgages secured by

housing assisted under this demonstration shall meet such standards regarding financing and securitization as the Secretary may

establish.

(i) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated $100,000,000 for fiscal year 1994 to carry out

this section.

ø(j) [Repealed.]¿

(k) TERMINATION DATE.—The Secretary shall not enter into

any new commitment to provide assistance under this section after

September 30, 1998.
351

USE OF FUNDS RECAPTURED FROM REFINANCING

STATE AND LOCAL FINANCE PROJECTS

EXCERPT FROM STEWART B. McKINNEY HOMELESS ASSISTANCE

AMENDMENTS ACT OF 1988

[Public Law 102–550; 106 Stat. 3722; 42 U.S.C. 1437f note]

SEC. 1012. ø42 U.S.C. 1437f note¿ USE OF FUNDS RECAPTURED FROM

REFINANCING STATE AND LOCAL FINANCE PROJECTS.

(a) DEFINITION OF QUALIFIED PROJECT.—For purposes of this

section, the term ‘‘qualified project’’ means any State financed

project or local government or local housing agency financed

project, that—

(1) was—

(A) provided a financial adjustment factor under section 8 of the United States Housing Act of 1937; or

(B) constructed or substantially rehabilitated pursuant

to assistance provided under a contract under section

8(b)(2) of the United States Housing Act of 1937 (as in effect on September 30, 1983) entered into during any of calendar years 1979 through 1984; and

(2) is being refinanced.

(b) AVAILABILITY OF FUNDS.—The Secretary shall make available to the State housing finance agency in the State in which a

qualified project is located, or the local government or local housing

agency initiating the refinancing of the qualified project, as applicable, an amount equal to 50 percent of the amounts recaptured from

the project (as determined by the Secretary on a project-by-project

basis). Notwithstanding any other provision of law, such amounts

shall be used only for providing decent, safe, and sanitary housing

affordable for very low-income families and persons.

(c) APPLICABILITY AND BUDGET COMPLIANCE.—

(1) RETROACTIVITY.—This section shall apply to

refinancings of projects for which settlement occurred or occurs

before, on, or after the date of the enactment of the Housing

and Community Development Act of 1992, subject to the provisions of paragraph (2).

(2) BUDGET COMPLIANCE.—This section shall apply only to

the extent or in such amounts as are provided in appropriation

Acts.
352

ACCESS TO PUBLIC HOUSING AGENCIES’ BOOKS

EXCERPT FROM HOUSING ACT OF 1954

[Public Law 560, 83d Congress; 68 Stat. 647; 42 U.S.C. 1435]

AUDITS UNDER PUBLIC HOUSING ACT OF 1937; COMPTROLLER

GENERAL

SEC. 816. ø42 U.S.C. 1435¿ Every contract for loans or annual

contributions under the United States Housing Act of 1937, as

amended, shall provide that the Secretary of Housing and Urban

Development and the Comptroller General of the United States, or

any of their duly authorized representatives, shall, for the purpose

of audit and examination, have access to any books, documents, papers, and records of the public housing agency entering into such

contract that are pertinent to its operations with respect to financial assistance under the United States Housing Act of 1937, as

amended.
353

MISCELLANEOUS PROVISIONS

EXCERPTS FROM TITLE III OF OMNIBUS BUDGET RECONCILIATION

ACT OF 1981 (HOUSING AND COMMUNITY DEVELOPMENT AMENDMENTS OF 1981)

[Public Law 97–35; 95 Stat. 406; 42 U.S.C. 1437f note; 12 U.S.C. 2294a]

MISCELLANEOUS HOUSING ASSISTANCE PROVISIONS

SEC. 326. * * *

* * * * * * *

(d) ø42 U.S.C. 1437f note¿ RENTAL ASSISTANCE FRAUD RECOVERIES.—

(1) AUTHORITY TO RETAIN RECOVERED AMOUNTS.—The Secretary of Housing and Urban Development shall permit public

housing agencies administering the housing assistance payments program under section 8 of the United States Housing

Act of 1937 to retain, out of amounts obtained by the agencies

from tenants that are due as a result of fraud and abuse, an

amount (determined in accordance with regulations issued by

the Secretary) equal to the greater of—

(A) 50 percent of the amount actually collected, or

(B) the actual, reasonable, and necessary expenses related to the collection, including costs of investigation,

legal fees, and collection agency fees.

(2) USE.—Amounts retained by an agency shall be made

available for use in support of the affected program or project,

in accordance with regulations issued by the Secretary. Where

the Secretary is the principal party initiating or sustaining an

action to recover amounts from families or owners, the provisions of this section shall not apply.

(3) RECOVERY.—Amounts may be recovered under this

paragraph—

(A) by an agency through a lawsuit (including settlement of the lawsuit) brought by the agency or through

court-ordered restitution pursuant to a criminal proceeding

resulting from an agency’s investigation where the agency

seeks prosecution of a family or where an agency seeks

prosecution of an owner; or

(B) through administrative repayment agreements

with a family or owner entered into as a result of an administrative grievance procedure conducted by an impartial decisionmaker in accordance with section 6(k) of the

United States Housing Act of 1937.

* * * * * * *
Sec. 329E MISCELLANEOUS PROVISIONS 354

PURCHASE OF PHA OBLIGATIONS

SEC. 329E. ø12 U.S.C. 2294a¿ In addition to any authority provided before October 1, 1981, the Secretary of Housing and Urban

Development may, on and after October 1, 1981, enter into contracts for periodic payments to the Federal Financing Bank to offset the costs to the Bank of purchasing obligations (as described in

the first sentence of section 16(b) of the Federal Financing Bank

Act of 1973) issued by local public housing agencies for purposes

of financing public housing projects authorized by section 5(c) of

the United States Housing Act of 1937. Notwithstanding any other

provision of law, such contracts may be entered into only to the extent approved in appropriation Acts, and the aggregate amount

which may be obligated over the duration of such contracts may

not exceed $400,000,000. There are hereby authorized to be appropriated any amounts necessary to provide for such payments. The

authority to enter into contracts under this subsection shall be in

lieu of any authority (except for authority provided specifically to

the Secretary before October 1, 1981) of the Secretary to enter into

contracts for such purposes under section 16(b) of the Federal Financing Bank Act of 1973.
355

1The date of enactment was October 28, 1991.

PROCUREMENT OF INSURANCE BY PUBLIC HOUSING

AGENCIES

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1992

[Public Law 102–139; 105 Stat. 758; 42 U.S.C. 1436c]

* * * * * * *

Hereafter, notwithstanding any other provision of State or Federal law, regulation or other requirement, any public housing agency or Indian housing authority that purchases any line of insurance

from a nonprofit insurance entity, owned and controlled by public

housing agencies or Indian housing authorities, and approved by

the Secretary, may purchase such insurance without regard to competitive procurement.

Hereafter, the Secretary shall establish standards as set forth

herein, by regulation, adopted after notice and comment rulemaking pursuant to the Administrative Procedures Act, which will

become effective not later than one year from the effective date of

this Act. 1

Hereafter, in establishing standards for approval of such nonprofit insurance entities, the Secretary shall be assured that such

entities have sufficient surplus capital to meet reasonably expected

losses, reliable accounting systems, sound actuarial projections, and

employees experienced in the insurance industry. The Secretary

shall not place restrictions on the investment of funds of any such

entity that is regulated by the insurance department of any State

that describes the types of investments insurance companies licensed in such State may make. With regard to such entities that

are not so regulated, the Secretary shall establish investment

guidelines that are comparable to State law regulating the investments of insurance companies.

Hereafter, the Secretary shall not approve additional nonprofit

insurance entities until such standards have become final, nor

shall the Secretary revoke the approval of any nonprofit insurance

entity previously approved by the Department unless for cause and

after a due process hearing.

Hereafter, until the Department of Housing and Urban Development has adopted regulations specifying the nature and quality of

insurance covering the potential personal injury liability exposure

of public housing authorities and Indian housing authorities (and

their contractors, including architectural and engineering services)

as a result of testing and abatement of lead-based paint in federally subsidized public and Indian housing units, said authorities

shall be permitted to purchase insurance for such risk, as an allow-
PROCUREMENT OF INSURANCE BY PHA’S 356

able expense against amounts available for capital improvements

(modernization): Provided, That such insurance is competitively selected and that coverage provided under such policies, as certified

by the authority, provides reasonable coverage for the risk of liability exposure, taking into consideration the potential liability concerns inherent in the testing and abatement of lead-based paint,

and the managerial and quality assurance responsibilities associated with the conduct of such activities.
357

1October 21, 1998.

TRANSITIONAL CEILING RENTS FOR PUBLIC HOUSING

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2561; 42 U.S.C. 1437a note]

SEC. 519. PUBLIC HOUSING CAPITAL AND OPERATING FUNDS.

* * * * * * *

(d) ø42 U.S.C. 1437a note¿ TRANSITIONAL CEILING RENTS.—

Notwithstanding section 3(a)(1) of the United States Housing Act

of 1937 (42 U.S.C. 1437a(1)), during the period ending upon the

later of the implementation of the formulas established pursuant to

subsections (d)(2) and (e)(2) of such Act (as amended by this section) and October 1, 1999, a public housing agency may take any

of the following actions with respect to public housing:

(1) NEW PROVISIONS.—An agency may—

(A) adopt and apply ceiling rents that reflect the reasonable market value of the housing, but that are not less

than—

(i) for housing other than housing predominantly

for elderly or disabled families (or both), 75 percent of

the monthly cost to operate the housing of the agency;

(ii) for housing predominantly for elderly or disabled families (or both), 100 percent of the monthly

cost to operate the housing of the agency; and

(iii) the monthly cost to make a deposit to a replacement reserve (in the sole discretion of the public

housing agency); and

(B) allow families to pay ceiling rents referred to in

subparagraph (A), unless, with respect to any family, the

ceiling rent established under this paragraph would exceed

the amount payable as rent by that family under paragraph (1).

(2) CEILING RENTS FROM BALANCED BUDGET ACT, I.—An

agency may utilize the authority under section 3(a)(2) of the

United States Housing Act of 1937 (42 U.S.C. 1437a(a)(2)), as

in effect immediately before the enactment of this Act 1, notwithstanding any amendment to such section made by this Act.

(3) TRANSITIONAL CEILING RENTS FOR BALANCED BUDGET

ACT, I.—An agency may utilize the authority with respect to

ceiling rents under section 402(b)(2) of The Balanced Budget

Downpayment Act, I (42 U.S.C. 1437a note), notwithstanding

any other provision of law (including the expiration of the applicability of such section or the repeal of such section).

* * * * * * *
Sec. 519 TRANSITIONAL CEILING RENTS FOR PUBLIC HOUSING 358

(g) EFFECTIVE DATE.—Subsections (d), (e), and (f ) shall take effect upon the date of the enactment of this Act.
359

LIMITATION ON PUBLIC HOUSING ASSISTANCE

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1999

[Public Law 105–276; 112 Stat. 2490; 42 U.S.C. 1437 note]

SEC. 226. ø42 U.S.C. 1437 note¿ FUNDING OF CERTAIN PUBLIC

HOUSING.—Notwithstanding any other provision of law, no funds in

this Act or any other Act may hereafter be used by the Secretary

of Housing and Urban Development to determine allocations or

provide assistance for operating subsidies or modernization for certain State and city funded and locally developed public housing

units, as defined for purposes of a statutory paragraph, notwithstanding the deeming by statute of such units to be public housing

units developed under the United States Housing Act of 1937, unless such unit was so assisted before October 1, 1998.
360

2So in law.

MENTAL HEALTH ACTION PLANS

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2550; 42 U.S.C. 1437 note]

SEC. 517. ø42 U.S.C. 1437 note¿ MENTAL HEALTH ACTION PLAN.

The Secretary of Housing and Urban Development, in consultation with the Secretary of Health and Human Services, the

Secretary of Labor, and appropriate State and local officials and

representatives, shall—

(1) develop an action plan and list of recommendations for

the improvement of means of providing severe mental illness

treatment to families and individuals receiving housing assistance under the United States Housing Act of 1937, including

public housing residents, residents of multifamily housing assisted with project-based assistance under section 8 of such

Act, and recipients of tenant-based assistance under such section; and

(2) develop and disseminate a list of current practices

among public housing agencies and owners of assisted housing

that serve to benefit persons in need of mental health care.’’. 2
361

1October 21, 1998.

ANNUAL REPORT REGARDING 1998 ACT

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2643; 42 U.S.C. 1437 note]

SEC. 581. ø42 U.S.C. 1437 note¿ ANNUAL REPORT.

(a) IN GENERAL.—Not later than 1 year after the date of the

enactment of this Act, and annually thereafter, the Secretary shall

submit a report to the Congress on—

(1) the impact of the amendments made by this Act on—

(A) the demographics of public housing residents and

families receiving tenant-based assistance under the

United States Housing Act of 1937; and

(B) the economic viability of public housing agencies;

and

(2) the effectiveness of the rent policies established by this

Act and the amendments made by this Act on the employment

status and earned income of public housing residents.

(b) EFFECTIVE DATE.—This section shall take effect on the date

of the enactment of this Act. 1
362

1October 21, 1998.

CONSULTATION WITH AFFECTED AREAS IN

SETTLEMENT OF LITIGATION

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2668; 42 U.S.C. 1436d]

SEC. 599H. ASSISTANCE FOR CERTAIN LOCALITIES.

* * * * * * *

(b) ø42 U.S.C. 1436d¿ CONSULTATION WITH AFFECTED AREAS

IN SETTLEMENT OF LITIGATION.—In negotiating any settlement of,

or consent decree for, significant litigation regarding public housing

or section 8 tenant-based assistance that involves the Secretary

and any public housing agency or any unit of general local government, the Secretary shall seek the views of any units of general

local government and public housing agencies having jurisdictions

that are adjacent to the jurisdiction of the public housing agency

involved, if the resolution of such litigation would involve the acquisition or development of public housing dwelling units or the

use of vouchers under section 8 of the United States Housing Act

of 1937 in jurisdictions that are adjacent to the jurisdiction of the

public housing agency involved in the litigation.

* * * * * * *

(m) EFFECTIVE DATE.—This section shall take effect on, and

the amendments made by this section are made on, and shall apply

beginning upon, the date of the enactment of this Act. 1
363

PART III—SUPPORTIVE HOUSING

SUPPORTIVE HOUSING FOR THE ELDERLY

EXCERPT FROM HOUSING ACT OF 1959

[Public Law 101–625; 104 Stat. 4297; 12 U.S.C. 1701q, 1701q–1]

TITLE II—HOUSING FOR THE ELDERLY OR

HANDICAPPED

* * * * * * *

SEC. 202. ø12 U.S.C. 1701q¿ SUPPORTIVE HOUSING FOR THE ELDERLY.

(a) PURPOSE.—The purpose of this section is to enable elderly

persons to live with dignity and independence by expanding the

supply of supportive housing that—

(1) is designed to accommodate the special needs of elderly

persons; and

(2) provides a range of services that are tailored to the

needs of elderly persons occupying such housing.

(b) GENERAL AUTHORITY.—The Secretary is authorized to provide assistance to private nonprofit organizations and consumer cooperatives to expand the supply of supportive housing for the elderly. Such assistance shall be provided as (1) capital advances in accordance with subsection (c)(1), and (2) contracts for project rental

assistance in accordance with subsection (c)(2). Such assistance

may be used to finance the construction, reconstruction, or moderate or substantial rehabilitation of a structure or a portion of a

structure, or the acquisition of a structure, to be used as supportive

housing for the elderly in accordance with this section. Assistance

may also cover the cost of real property acquisition, site improvement, conversion, demolition, relocation, and other expenses that

the Secretary determines are necessary to expand the supply of

supportive housing for the elderly.

(c) FORMS OF ASSISTANCE.— (1) CAPITAL ADVANCES.—A capital advance provided under

this section shall bear no interest and its repayment shall not

be required so long as the housing remains available for very

low-income elderly persons in accordance with this section.

Such advance shall be in an amount calculated in accordance

with the development cost limitation established in subsection

(h).

(2) PROJECT RENTAL ASSISTANCE.—Contracts for project

rental assistance shall obligate the Secretary to make monthly

payments to cover any part of the costs attributed to units occupied (or, as approved by the Secretary, held for occupancy)

by very low-income elderly persons that is not met from project

income. The annual contract amount for any project shall not
Sec. 202 SUPPORTIVE HOUSING FOR THE ELDERLY 364

exceed the sum of the initial annual project rentals for all

units so occupied and any initial utility allowances for such

units, as approved by the Secretary. Any contract amounts not

used by a project in any year shall remain available to the

project until the expiration of the contract. The Secretary may

adjust the annual contract amount if the sum of the project income and the amount of assistance payments available under

this paragraph are inadequate to provide for reasonable project

costs.

(3) TENANT RENT CONTRIBUTION.—A very low-income person shall pay as rent for a dwelling unit assisted under this

section the highest of the following amounts, rounded to the

nearest dollar: (A) 30 percent of the person’s adjusted monthly

income, (B) 10 percent of the person’s monthly income, or (C)

if the person is receiving payments for welfare assistance from

a public agency and a part of such payments, adjusted in accordance with the person’s actual housing costs, is specifically

designated by such agency to meet the person’s housing costs,

the portion of such payments which is so designated.

(d) TERM OF COMMITMENT.— (1) USE LIMITATIONS.—All units in housing assisted under

this section shall be made available for occupancy by very lowincome elderly persons for not less than 40 years.

(2) CONTRACT TERMS.—The initial term of a contract entered into under subsection (c)(2) shall be 240 months. The

Secretary shall, to the extent approved in appropriation Acts,

extend any expiring contract for a term of not less than 60

months. In order to facilitate the orderly extension of expiring

contracts, the Secretary is authorized to make commitments to

extend expiring contracts during the year prior to the date of

expiration.

(e) APPLICATIONS.—Funds made available under this section

shall be allocated by the Secretary among approvable applications

submitted by private nonprofit organizations. Applications for assistance under this section shall be submitted by an applicant in

such form and in accordance with such procedures as the Secretary

shall establish. Such applications shall contain—

(1) a description of the proposed housing;

(2) a description of the assistance the applicant seeks

under this section;

(3) a description of the resources that are expected to be

made available in compliance with subsection (h);

(4) a description of (A) the category or categories of elderly

persons the housing is intended to serve; (B) the supportive

services, if any, to be provided to the persons occupying such

housing; (C) the manner in which such services will be provided to such persons, including, in the case of frail elderly

persons, evidence of such residential supervision as the Secretary determines is necessary to facilitate the adequate provision of such services; and (D) the public or private sources of

assistance that can reasonably be expected to fund or provide

such services;

(5) a certification from the public official responsible for

submitting a housing strategy for the jurisdiction to be served

in accordance with section 105 of the Cranston-Gonzalez Na-
365 Sec. 202 SUPPORTIVE HOUSING FOR THE ELDERLY

1So in law. Section 602(c) of the Housing and Community Development Act of 1992, Pub. L.

102–550, amended this paragraph by ‘‘adding at the end’’ the matter that follows the semicolon.

The matter was probably intended to be inserted before the semicolon at the end. 2So in law.

3Section 851(c)(1) of the American Homeownership and Economic Opportunity Act of 2000

(P.L. 106–569; 114 Stat. 3024), provides as follows:

(1) SUPPORTIVE HOUSING FOR THE ELDERLY.—The first sentence of section 202(g)(1) of the

Housing Act of 1959 (12 U.S.C. 1701q(g)(1)) is amended by striking ‘‘and (F)’’ and inserting

the following: ‘‘(F) providing education and outreach regarding telemarketing fraud, in accordance with the standards issued under section 671(f ) of the Housing and Community Development Act of 1992 (42 U.S.C. 13631(f )); and (G)’’.

The amendment could not be executed and probably should have been made to the second

sentence.

tional Affordable Housing Act that the proposed project is consistent with the approved housing strategy; and

(6) such other information or certifications that the Secretary determines to be necessary or appropriate to achieve the

purposes of this section.

The Secretary shall not reject an application on technical grounds

without giving notice of that rejection and the basis therefor to the

applicant and affording the applicant an opportunity to respond.

(f) SELECTION CRITERIA.—The Secretary shall establish selection criteria for assistance under this section, which shall include—

(1) the ability of the applicant to develop and operate the

proposed housing;

(2) the need for supportive housing for the elderly in the

area to be served; 1, taking into consideration the availability

of public housing for the elderly and vacancy rates in such facilities

(3) the extent to which the proposed size and unit mix of

the housing will enable the applicant to manage and operate

the housing efficiently and ensure that the provision of supportive services will be accomplished in an economical fashion;

(4) the extent to which the proposed design of the housing

will meet the special physical needs of elderly persons;

(5) the extent to which the applicant has demonstrated

that the supportive services identified in subsection (e)(4) will

be provided on a consistent, long-term basis;

(6) the extent to which the proposed design of the housing

will accommodate the provision of supportive services that are

expected to be needed, either initially or over the useful life of

the housing, by the category or categories of elderly persons

the housing is intended to serve; and

(7) such other factors as the Secretary determines to be appropriate to ensure that funds made available under this section are used effectively.

(g) PROVISIONS 2 OF SERVICES.—

(1) IN GENERAL.—In carrying out the provisions of this section, the Secretary shall ensure that housing assisted under

this section provides a range of services tailored to the needs

of the category or categories of elderly persons (including frail

elderly persons) occupying such housing. Such services may include (A) meal service adequate to meet nutritional need; (B)

housekeeping aid; (C) personal assistance; (D) transportation

services; (E) health-related services; and (F) 3 such other services as the Secretary deems essential for maintaining independent living. The Secretary may permit the provision of
Sec. 202 SUPPORTIVE HOUSING FOR THE ELDERLY 366

services to elderly persons who are not residents if the participation of such persons will not adversely affect the cost-effectiveness or operation of the program or add significantly to the

need for assistance under this Act.

(2) LOCAL COORDINATION OF SERVICES.—The Secretary

shall ensure that owners have the managerial capacity to—

(A) assess on an ongoing basis the service needs of

residents;

(B) coordinate the provision of supportive services and

tailor such services to the individual needs of residents;

and

(C) seek on a continuous basis new sources of assistance to ensure the long-term provision of supportive services.

Any cost associated with this subsection shall be an eligible

cost under subsection (c)(2).

(3) SERVICE COORDINATORS.—Any cost associated with employing or otherwise retaining a service coordinator in housing

assisted under this section shall be considered an eligible cost

under subsection (c)(2). If a project is receiving congregate

housing services assistance under section 802 of the CranstonGonzalez National Affordable Housing Act, the amount of costs

provided under subsection (c)(2) for the project service coordinator may not exceed the additional amount necessary to cover

the costs of providing for the coordination of services for residents of the project who are not eligible residents under such

section 802. To the extent that amounts are available pursuant

to subsection (c)(2) for the costs of carrying out this paragraph

within a project, an owner of housing assisted under this section shall provide a service coordinator for the housing to coordinate the provision of services under this subsection within

the housing.

(h) DEVELOPMENT COST LIMITATIONS.—

(1) IN GENERAL.—The Secretary shall periodically establish

development cost limitations by market area for various types

and sizes of supportive housing for the elderly by publishing a

notice of the cost limitations in the Federal Register. The cost

limitations shall reflect—

(A) the cost of construction, reconstruction, or rehabilitation of supportive housing for the elderly that meets applicable State and local housing and building codes;

(B) the cost of movables necessary to the basic operation of the housing, as determined by the Secretary;

(C) the cost of special design features necessary to

make the housing accessible to elderly persons;

(D) the cost of special design features necessary to

make individual dwelling units meet the physical needs of

elderly project residents;

(E) the cost of congregate space necessary to accommodate the provision of supportive services to elderly project

residents;

(F) if the housing is newly constructed, the cost of

meeting the energy efficiency standards promulgated by

the Secretary in accordance with section 109 of the Cranston-Gonzalez National Affordable Housing Act; and
367 Sec. 202 SUPPORTIVE HOUSING FOR THE ELDERLY

(G) the cost of land, including necessary site improvement.

In establishing development cost limitations for a given market

area under this subsection, the Secretary shall use data that

reflect currently prevailing costs of construction, reconstruction, or rehabilitation, and land acquisition in the area. For

purposes of this paragraph, the term ‘‘congregate space’’ shall

include space for cafeterias or dining halls, community rooms

or buildings, workshops, adult day health facilities, or other

outpatient health facilities, or other essential service facilities.

Neither this section nor any other provision of law may be construed as prohibiting or preventing the location and operation,

in a project assisted under this section, of commercial facilities

for the benefit of residents of the project and the community

in which the project is located, except that assistance made

available under this section may not be used to subsidize any

such commercial facility.

(2) ACQUISITION.—In the case of existing housing and related facilities to be acquired, the cost limitations shall

include—

(A) the cost of acquiring such housing,

(B) the cost of rehabilitation, alteration, conversion, or

improvement, including the moderate rehabilitation thereof, and

(C) the cost of the land on which the housing and related facilities are located.

(3) ANNUAL ADJUSTMENTS.—The Secretary shall adjust the

cost limitation not less than once annually to reflect changes

in the general level of construction, reconstruction, or rehabilitation costs.

(4) INCENTIVES FOR SAVINGS.— (A) SPECIAL HOUSING ACCOUNT.—The Secretary shall

use the development cost limitations established under

paragraph (1) or (2) to calculate the amount of financing

to be made available to individual owners. Owners which

incur actual development costs that are less than the

amount of financing shall be entitled to retain 50 percent

of the savings in a special housing account. Such percentage shall be increased to 75 percent for owners which add

energy efficiency features which—

(i) exceed the energy efficiency standards promulgated by the Secretary in accordance with section 109

of the Cranston-Gonzalez National Affordable Housing

Act;

(ii) substantially reduce the life-cycle cost of the

housing;

(iii) reduce gross rent requirements; and

(iv) enhance tenant comfort and convenience.

(B) USES.—The special housing account established

under subparagraph (A) may be used (i) to supplement

services provided to residents of the housing or funds set

aside for replacement reserves, or (ii) for such other purposes as determined by the Secretary.

(5) DESIGN FLEXIBILITY.—The Secretary shall, to the extent

practicable, give owners the flexibility to design housing appro-
Sec. 202 SUPPORTIVE HOUSING FOR THE ELDERLY 368

priate to their location and proposed resident population within broadly defined parameters.

(6) USE OF FUNDS FROM OTHER SOURCES.—An owner shall

be permitted voluntarily to provide funds from sources other

than this section for amenities and other features of appropriate design and construction suitable for supportive housing

for the elderly if the cost of such amenities is (A) not financed

with the advance, and (B) is not taken into account in determining the amount of Federal assistance or of the rent contribution of tenants. Notwithstanding any other provision of

law, assistance amounts provided under this section may be

treated as amounts not derived from a Federal grant.

(i) TENANT SELECTION.—

(1) IN GENERAL.—An owner shall adopt written tenant selection procedures that are satisfactory to the Secretary as (A)

consistent with the purpose of improving housing opportunities

for very low-income elderly persons; and (B) reasonably related

to program eligibility and an applicant’s ability to perform the

obligations of the lease. Such tenant selection procedures shall

comply with subtitle C of title VI of the Housing and Community Development Act of 1992 and any regulations issued

under such subtitle. Owners shall promptly notify in writing

any rejected applicant of the grounds for any rejection.

(2) INFORMATION REGARDING HOUSING UNDER THIS SECTION.—The Secretary shall provide to an appropriate agency in

each area (which may be the applicable Area Agency on the

Aging) information regarding the availability of housing assisted under this section.

(j) MISCELLANEOUS PROVISIONS.—

(1) TECHNICAL ASSISTANCE.—The Secretary shall make

available appropriate technical assistance to assure that applicants having limited resources, particularly minority applicants, are able to participate more fully in the program carried

out under this section.

(2) CIVIL RIGHTS COMPLIANCE.—Each owner shall certify,

to the satisfaction of the Secretary, that assistance made available under this section will be conducted and administered in

conformity with title VI of the Civil Rights Act of 1964, the

Fair Housing Act, and other Federal, State, and local laws prohibiting discrimination and promoting equal opportunity.

(3) OWNER DEPOSIT.—

(A) IN GENERAL.—The Secretary shall require an

owner to deposit an amount not to exceed $25,000 in a special escrow account to assure the owner’s commitment to

the housing.

(B) REDUCTION OF REQUIREMENT.—The Secretary may

reduce or waive the owner deposit specified under paragraph (1) for individual applicants if the Secretary finds

that such waiver or reduction is necessary to achieve the

purposes of this section and the applicant demonstrates to

the satisfaction of the Secretary that it has the capacity to

manage and maintain the housing in accordance with this

section. The Secretary shall reduce or waive the requirement of the owner deposit under paragraph (1) in the case
369 Sec. 202 SUPPORTIVE HOUSING FOR THE ELDERLY

of a nonprofit applicant that is not affiliated with a national sponsor, as determined by the Secretary.

(4) NOTICE OF APPEAL.—The Secretary shall notify an

owner not less than 30 days prior to canceling any reservation

of assistance provided under this section. During the 30-day

period following the receipt of a notice under the preceding

sentence, an owner may appeal the proposed cancellation of

loan authority. Such appeal, including review by the Secretary,

shall be completed not later than 45 days after the appeal is

filed.

(5) LABOR.— (A) IN GENERAL.—The Secretary shall take such action as

may be necessary to ensure that all laborers and mechanics

employed by contractors and subcontractors in the construction

of housing with 12 or more units assisted under this section

shall be paid wages at rates not less than the rates prevailing

in the locality involved for the corresponding classes of laborers

and mechanics employed on construction of a similar character,

as determined by the Secretary of Labor in accordance with the

Act of March 3, 1931 (commonly known as the Davis-Bacon

Act).

(B) EXEMPTION.—Subparagraph (A) shall not apply to any

individual who—

(i) performs services for which the individual volunteered;

(ii)(I) does not receive compensation for such services;

or

(II) is paid expenses, reasonable benefits, or a nominal

fee for such services; and

(iii) is not otherwise employed at any time in the construction work.

(6) ACCESS TO RESIDUAL RECEIPTS.—The Secretary shall

authorize the owner of a project assisted under this section to

use any residual receipts held for the project in excess of $500

per unit (or in excess of such other amount prescribed by the

Secretary based on the needs of the project) for activities to

retrofit and renovate the project described under section

802(d)(3) of the Cranston-Gonzalez National Affordable Housing Act, to provide a service coordinator for the project as described in section 802(d)(4) of such Act, or to provide supportive services (as such term is defined in section 802(k) of

such Act) to residents of the project. Any owner that uses residual receipts under this paragraph shall submit to the Secretary a report, not less than annually, describing the uses of

the residual receipts. In determining the amount of project

rental assistance to be provided to a project under subsection

(c)(2) of this section, the Secretary may take into consideration

the residual receipts held for the project only if, and to the extent that, excess residual receipts are not used under this

paragraph.

(7) COMPLIANCE WITH HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992.—Each owner shall operate housing assisted

under this section in compliance with subtitle C of title VI of

the Housing and Community Development Act of 1992 and any

regulations issued under such subtitle.
Sec. 202 SUPPORTIVE HOUSING FOR THE ELDERLY 370

(8) USE OF PROJECT RESERVES.—Amounts for project reserves for a project assisted under this section may be used for

costs, subject to reasonable limitations as the Secretary determines appropriate, for reducing the number of dwelling units

in the project. Such use shall be subject to the approval of the

Secretary to ensure that the use is designed to retrofit units

that are currently obsolete or unmarketable.

(k) DEFINITIONS.— (1) The term ‘‘elderly person’’ means a household composed

of one or more persons at least one of whom is 62 years of age

or more at the time of initial occupancy.

(2) The term ‘‘frail elderly’’ means an elderly person who

is unable to perform at least 3 activities of daily living adopted

by the Secretary for purposes of this program. Owners may establish additional eligibility requirements (acceptable to the

Secretary) based on the standards in local supportive services

programs.

(3) The term ‘‘owner’’ means a private nonprofit organization that receives assistance under this section to develop and

operate supportive housing for the elderly.

(4) The term ‘‘private nonprofit organization’’ means any

incorporated private institution or foundation—

(A) no part of the net earnings of which inures to the

benefit of any member, founder, contributor, or individual;

(B) which has a governing board (i) the membership of

which is selected in a manner to assure that there is significant representation of the views of the community in

which such housing is located, and (ii) which is responsible

for the operation of the housing assisted under this section; and

(C) which is approved by the Secretary as to financial

responsibility.

Such term includes a for-profit limited partnership the sole

general partner of which is an organization meeting the requirements under subparagraphs (A), (B), and (C), or a corporation wholly owned and controlled by an organization meeting the requirements under subparagraphs (A), (B), and (C).

(5) The term ‘‘State’’ includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the

possessions of the United States.

(6) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(7) The term ‘‘supportive housing for the elderly’’ means

housing that is designed (A) to meet the special physical needs

of elderly persons and (B) to accommodate the provision of supportive services that are expected to be needed, either initially

or over the useful life of the housing, by the category or categories of elderly persons that the housing is intended to serve.

(8) The term ‘‘very low-income’’ has the same meaning as

given the term ‘‘very low-income families’’ under section 3(b)(2)

of the United States Housing Act of 1937.

(l) ALLOCATION OF FUNDS.—

(1) CAPITAL ADVANCES.—Of any amounts made available

for assistance under this section, such sums as may be necessary shall be available for funding capital advances in ac-
371 Sec. 202a SUPPORTIVE HOUSING FOR THE ELDERLY

1The date of enactment was November 28, 1990.

2Section 602(g) of the Housing and Community Development Act of 1992, Pub. L. 102–550,

amended ‘‘[s]ection 202(l)(4) of the Housing Act of 1959 (12 U.S.C. 1701q(l)(3))...by striking ‘20

percent’ and inserting ‘15 percent’ ’’. The amendment was probably intended to be made to section 202(l)(3). 3The second subsection (m) was added by section 821 of the American Homeownership and

Economic Opportunity Act of 2000 (P.L. 106–569; 114 Stat. 3020). The amendment probably

should have been to amend such subsection ‘‘to read as follows:’’.

cordance with subsection (c)(1). Such amounts, the repayments

from such advances, and the proceeds from notes or obligations

issued under this section prior to the enactment of the Cranston-Gonzalez National Affordable Housing Act 1 shall constitute a revolving fund to be used by the Secretary in carrying

out this section.

(2) PROJECT RENTAL ASSISTANCE.—Of any amounts made

available for assistance under this section, such sums as may

be necessary shall be available for funding project rental assistance in accordance with subsection (c)(2).

(3) NONMETROPOLITAN ALLOCATION.—Not less than 20 percent 2 of the funds made available for assistance under this section shall be allocated by the Secretary on a national basis for

nonmetropolitan areas.

(m) AUTHORIZATION OF APPROPRIATIONS.—There is authorized

to be appropriated for providing assistance under this section

$710,000,000 for fiscal year 2000.

(m) 3 AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for providing assistance under this section

such sums as may be necessary for each of fiscal years 2001, 2002,

and 2003.

CIVIL MONEY PENALTIES AGAINST SECTION 202 MORTGAGORS

SEC. 202a. ø12 U.S.C. 1701q–1¿ (a) IN GENERAL.—The penalties set forth in this section shall be in addition to any other

available civil remedy or criminal penalty, and may be imposed

whether or not the Secretary imposes other administrative sanctions. The Secretary may not impose penalties under this section

for violations a material cause of which are the failure of the Department, an agent of the Department, or a public housing agency

to comply with existing agreements.

(b) PENALTY FOR VIOLATION OF AGREEMENT AS CONDITION OF

TRANSFER OF PHYSICAL ASSETS, FLEXIBLE SUBSIDY LOAN, CAPITAL

IMPROVEMENT LOAN, MODIFICATION OF MORTGAGE TERMS, OR

WORKOUT AGREEMENT.—

(1) IN GENERAL.—Whenever a mortgagor of property that

includes 5 or more living units and that has a mortgage held

pursuant to section 202, who has agreed in writing, as a condition of a transfer of physical assets, a flexible subsidy loan, a

capital improvement loan, a modification of the mortgage

terms, or a workout agreement, to use nonproject income to

make cash contributions for payments due under the note and

mortgage, for payments to the reserve for replacements, to restore the project to good physical condition, or to pay other

project liabilities, knowingly and materially fails to comply

with any of these commitments, the Secretary may impose a

civil money penalty on the mortgagor in accordance with the

provisions of this section.
Sec. 202a SUPPORTIVE HOUSING FOR THE ELDERLY 372

(2) AMOUNT.—The amount of the penalty, as determined

by the Secretary, for a violation of this subsection may not exceed the amount of the loss the Secretary would incur at a

foreclosure sale, or sale after foreclosure, with respect to the

property involved.

(c) VIOLATIONS OF REGULATORY AGREEMENT.—

(1) IN GENERAL.—The Secretary may also impose a civil

money penalty on a mortgagor or property that includes 5 or

more living units and that has a mortgage held pursuant to

section 202 for any knowing and material violation of the regulatory agreement executed by the mortgagor, as follows:

(A) Conveyance, transfer, or encumbrance of any of

the mortgaged property, or permitting the conveyance,

transfer, or encumbrance of such property, without the

prior written approval of the Secretary.

(B) Assignment, transfer, disposition, or encumbrance

of any personal property of the project, including rents, or

paying out any funds, except for reasonable operating expenses and necessary repairs, without the prior written

approval of the Secretary.

(C) Conveyance, assignment, or transfer of any beneficial interest in any trust holding title to the property, or

the interest of any general partner in a partnership owning the property, or any right to manage or receive the

rents and profits from the mortgaged property, without the

prior written approval of the Secretary.

(D) Remodeling, adding to, reconstructing, or demolishing any part of the mortgaged property or subtracting

from any real or personal property of the project, without

the prior written approval of the Secretary.

(E) Requiring, as a condition of the occupancy or leasing of any unit in the project, any consideration or deposit

other than the prepayment of the first month’s rent, plus

a security deposit in an amount not in excess of 1 month’s

rent, to guarantee the performance of the covenants of the

lease.

(F) Not holding any funds collected as security deposits separate and apart from all other funds of the project

in a trust account, the amount of which at all times equals

or exceeds the aggregate of all outstanding obligations

under the account.

(G) Payment for services, supplies, or materials which

exceeds $500 and substantially exceeds the amount ordinarily paid for such services, supplies, or materials in the

area where the services are rendered or the supplies or

materials furnished.

(H) Failure to maintain at any time the mortgaged

property, equipment, buildings, plans, offices, apparatus,

devices, books, contracts, records, documents, and other related papers (including failure to keep copies of all written

contracts or other instruments which affect the mortgaged

property) in reasonable condition for proper audit and for

examination and inspection at any reasonable time by the

Secretary or any duly authorized agents of the Secretary.
373 Sec. 202a SUPPORTIVE HOUSING FOR THE ELDERLY

(I) Failure to maintain the books and accounts of the

operations of the mortgaged property and of the project in

accordance with requirements prescribed by the Secretary.

(J) Failure to furnish the Secretary, by the expiration

of the 60-day period beginning on the 1st day after the

completion of each fiscal year, with a complete annual financial report based upon an examination of the books and

records of the mortgagor prepared in accordance with requirements prescribed by the Secretary, and prepared and

certified to by an independent public accountant or a certified public accountant and certified to by an officer of the

mortgagor, unless the Secretary has approved an extension

of the 60-day period in writing. The Secretary shall approve an extension where the mortgagor demonstrates

that failure to comply with this subparagraph is due to

events beyond the control of the mortgagor.

(K) At the request of the Secretary, the agents of the

Secretary, the employees of the Secretary, or the attorneys

of the Secretary, failure to furnish monthly occupancy reports or failure to provide specific answers to questions

upon which information is sought relative to income, assets, liabilities, contracts, the operation and condition of

the property, or the status of the mortgage.

(L) Failure to make promptly all payments due under

the note and mortgage, including tax and insurance escrow

payments, and payments to the reserve for replacements

when there is adequate project income available to make

such payments.

(M) Amending the articles of incorporation or bylaws,

other than as permitted under the terms of the articles of

incorporation as approved by the Secretary, without the

prior written approval of the Secretary.

(2) AMOUNT OF PENALTY.—A penalty imposed for a violation under this subsection, as determined by the Secretary,

may not exceed $25,000 for a violation of any of the subparagraphs of paragraph (1).

(d) AGENCY PROCEDURES.—

(1) ESTABLISHMENT.—The Secretary shall establish standards and procedures governing the imposition of civil money

penalties under subsections (b) and (c). These standards and

procedures—

(A) shall provide for the Secretary or other department

official (such as the Assistant Secretary for Housing) to

make the determination to impose a penalty;

(B) shall provide for the imposition of a penalty only

after the mortgagor has been given an opportunity for a

hearing on the record; and

(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from

a hearing.

(2) FINAL ORDERS.—If no hearing is requested within 15

days of receipt of the notice of opportunity for hearing, the imposition of the penalty shall constitute a final and

unappealable determination. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or re-
Sec. 202a SUPPORTIVE HOUSING FOR THE ELDERLY 374

verse that determination or order. If the Secretary does not review the determination or order within 90 days of the issuance

of the determination or order, the determination or order shall

be final.

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (b) or (c),

consideration shall be given to such factors as the gravity of

the offense, any history of prior offenses (including offenses occurring before enactment of this section), ability to pay the

penalty, injury to the tenants, injury to the public, benefits received, deterrence of future violations, and such other factors

as the Secretary may determine in regulations to be appropriate.

(4) REVIEWABILITY OF IMPOSITION OF PENALTY.—The Secretary’s determination or order imposing a penalty under subsection (b) or (c) shall not be subject to review, except as provided in subsection (e).

(e) JUDICIAL REVIEW OF AGENCY DETERMINATION.— (1) IN GENERAL.—After exhausting all administrative remedies established by the Secretary under subsection (d)(1), a

mortgagor against whom the Secretary has imposed a civil

money penalty under subsection (b) or (c) may obtain a review

of the penalty and such ancillary issues as may be addressed

in the notice of determination to impose a penalty under subsection (d)(1)(A) in the appropriate court of appeals of the

United States, by filing in such court, within 20 days after the

entry of such order or determination, a written petition praying that the Secretary’s order or determination be modified or

be set aside in whole or in part.

(2) OBJECTIONS NOT RAISED IN HEARING.—The court shall

not consider any objection that was not raised in the hearing

conducted pursuant to subsection (d)(1) unless a demonstration

is made of extraordinary circumstances causing the failure to

raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence not presented at such

hearing is material and that there were reasonable grounds for

the failure to present such evidence at the hearing, the court

shall remand the matter to the Secretary for consideration of

such additional evidence.

(3) SCOPE OF REVIEW.—The decisions, findings, and determinations of the Secretary shall be reviewed pursuant to section 706 of title 5, United States Code.

(4) ORDER TO PAY PENALTY.—Notwithstanding any other

provision of law, in any such review, the court shall have the

power to order payment of the penalty imposed by the Secretary.

(f) ACTION TO COLLECT PENALTY.—If a mortgagor fails to comply with the Secretary’s determination or order imposing a civil

money penalty under subsection (b) or (c), after the determination

or order is no longer subject to review as provided by subsections

(d)(1) and (e), the Secretary may request the Attorney General of

the United States to bring an action in an appropriate United

States district court to obtain a monetary judgment against the

mortgagor and such other relief as may be available. The monetary

judgment may, in the court’s discretion, include the attorneys fees
375 Sec. 202b SUPPORTIVE HOUSING FOR THE ELDERLY

and other expenses incurred by the United States in connection

with the action. In an action under this subsection, the validity and

appropriateness of the Secretary’s determination or order imposing

the penalty shall not be subject to review.

(g) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(h) DEFINITION OF KNOWINGLY.—The term ‘‘knowingly’’ means

having actual knowledge of or acting with deliberate ignorance of

or reckless disregard for the prohibitions under this section.

(i) REGULATIONS.—The Secretary shall issue such regulations

as the Secretary deems appropriate to implement this section.

(j) DEPOSIT OF PENALTIES IN INSURANCE FUNDS.—Notwithstanding any other provision of law, all civil money penalties collected under this section shall be deposited in the fund established

under section 201(j) of the Housing and Community Development

Amendments of 1978.

SEC. 202b. ø12 U.S.C. 1701q–2¿ GRANTS FOR CONVERSION OF ELDERLY

HOUSING TO ASSISTED LIVING FACILITIES.

(a) GRANT AUTHORITY.—The Secretary of Housing and Urban

Development may make grants in accordance with this section to

owners of eligible projects described in subsection (b) for one or

both of the following activities:

(1) REPAIRS.—Substantial capital repairs to projects that

are needed to rehabilitate, modernize, or retrofit aging structures, common areas, or individual dwelling units.

(2) CONVERSION.—Activities designed to convert dwelling

units in the eligible project to assisted living facilities for elderly persons.

(b) ELIGIBLE PROJECTS.—An eligible project described in this

subsection is a multifamily housing project that is—

(1)(A) described in subparagraph (B), (C), (D), (E), (F), or

(G) of section 683(2) of the Housing and Community Development Act of 1992 (42 U.S.C. 13641(2)), or (B) only to the extent

amounts of the Department of Agriculture are made available

to the Secretary of Housing and Urban Development for such

grants under this section for such projects, subject to a loan

made or insured under section 515 of the Housing Act of 1949

(42 U.S.C. 1485);

(2) owned by a private nonprofit organization (as such

term is defined in section 202); and

(3) designated primarily for occupancy by elderly persons.

Notwithstanding any other provision of this subsection or this section, an unused or underutilized commercial property may be considered an eligible project under this subsection, except that the

Secretary may not provide grants under this section for more than

three such properties. For any such projects, any reference under

this section to dwelling units shall be considered to refer to the

premises of such properties.

(c) APPLICATIONS.—Applications for grants under this section

shall be submitted to the Secretary in accordance with such procedures as the Secretary shall establish. Such applications shall

contain—
Sec. 202b SUPPORTIVE HOUSING FOR THE ELDERLY 376

(1) a description of the substantial capital repairs or the

proposed conversion activities for which a grant under this section is requested;

(2) the amount of the grant requested to complete the substantial capital repairs or conversion activities;

(3) a description of the resources that are expected to be

made available, if any, in conjunction with the grant under

this section; and

(4) such other information or certifications that the

Secretary determines to be necessary or appropriate.

(d) FUNDING FOR SERVICES.—The Secretary may not make a

grant under this section for conversion activities unless the application contains sufficient evidence, in the determination of the Secretary, of firm commitments for the funding of services to be provided in the assisted living facility, which may be provided by third

parties.

(e) SELECTION CRITERIA.—The Secretary shall select applications for grants under this section based upon selection criteria,

which shall be established by the Secretary and shall include—

(1) in the case of a grant for substantial capital repairs,

the extent to which the project to be repaired is in need of such

repair, including such factors as the age of improvements to be

repaired, and the impact on the health and safety of residents

of failure to make such repairs;

(2) in the case of a grant for conversion activities, the extent to which the conversion is likely to provide assisted living

facilities that are needed or are expected to be needed by the

categories of elderly persons that the assisted living facility is

intended to serve, with a special emphasis on very low-income

elderly persons who need assistance with activities of daily living;

(3) the inability of the applicant to fund the repairs or conversion activities from existing financial resources, as evidenced by the applicant’s financial records, including assets in

the applicant’s residual receipts account and reserves for replacement account;

(4) the extent to which the applicant has evidenced community support for the repairs or conversion, by such indicators as letters of support from the local community for the repairs or conversion and financial contributions from public and

private sources;

(5) in the case of a grant for conversion activities, the extent to which the applicant demonstrates a strong commitment

to promoting the autonomy and independence of the elderly

persons that the assisted living facility is intended to serve;

(6) in the case of a grant for conversion activities, the quality, completeness, and managerial capability of providing the

services which the assisted living facility intends to provide to

elderly residents, especially in such areas as meals, 24-hour

staffing, and on-site health care; and

(7) such other criteria as the Secretary determines to be

appropriate to ensure that funds made available under this

section are used effectively.

(f ) SECTION 8 PROJECT-BASED ASSISTANCE.—
377 Sec. 202b SUPPORTIVE HOUSING FOR THE ELDERLY

(1) ELIGIBILITY.—Notwithstanding any other provision of

law, a multifamily project which includes one or more dwelling

units that have been converted to assisted living facilities

using grants made under this section shall be eligible for

project-based assistance under section 8 of the United States

Housing Act of 1937, in the same manner in which the project

would be eligible for such assistance but for the assisted living

facilities in the project.

(2) CALCULATION OF RENT.—For assistance pursuant to

this subsection, the maximum monthly rent of a dwelling unit

that is an assisted living facility with respect to which assistance payments are made shall not include charges attributable

to services relating to assisted living.

(g ) DEFINITIONS.—For the purposes of this section—

(1) the term ‘‘assisted living facility’’ has the meaning

given such term in section 232(b) of the National Housing Act

(12 U.S.C. 1715w(b)); and

(2) the definitions in section 202(k) shall apply.

(h) AUTHORIZATION OF APPROPRIATIONS.—There is authorized

to be appropriated for providing grants under this section such

sums as may be necessary for fiscal year 2000.
378

TRANSITION AND REPEALED ELDERLY/HANDICAPPED

HOUSING PROVISIONS

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4297; 12 U.S.C. 1701q note]

SEC. 801. SUPPORTIVE HOUSING FOR THE ELDERLY.

(a) IN GENERAL.—Section 202 of the Housing Act of 1959 (12

U.S.C. 1701q) is amended to read as follows:

‘‘SEC. 202. SUPPORTIVE HOUSING FOR THE ELDERLY.

* * * * * * *

(b) CONFORMING AMENDMENT.—Section 213(a) of the Housing

and Community Development Act of 1974 is amended by striking

‘‘section 202 of the Housing Act of 1959’’.

(c) ø12 U.S.C. 1701q note¿ EFFECTIVE DATE AND APPLICABILITY.—The amendments made by this section shall take effect on

October 1, 1991, with respect to projects approved on or after such

date. The Secretary shall issue regulations for such purpose after

notice and an opportunity for public comment in accordance with

section 553 of title 5, United States Code. Regulations shall be

issued for comment not later than 180 days after the date of enactment of this Act.

(d) ø12 U.S.C. 1701q note¿ EXPEDITED FINANCING AND CONSTRUCTION.—

(1) IN GENERAL.—The Secretary may, subject to the availability of appropriations for contract amendments for the purposes of this subsection—

(A) provide such adjustments and waivers to the cost

limitations specified under 24 CFR 885.410(a)(1); and

(B) make such adjustments to the relevant fair market

rent limitations established under section 8(c)(1) of the

United States Housing Act of 1937 in providing assistance

under such Act,

as are necessary to ensure the expedited financing and construction of qualified supportive housing for the elderly provided that the Secretary finds that any applicable cost containment rules and regulations have been satisfied.

(2) DEFINITION.—For purposes of this subsection, the term

‘‘supportive housing for the elderly’’ means housing—

(A) located in a high-cost jurisdiction; and

(B) for which a loan reservation was made under section 202 of the Housing Act of 1959, 3 years before the

date of enactment of this Act but for which no loan has

been executed and recorded.
379 Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS

1Section 801(a) of the Cranston-Gonzalez National Affordable Housing Act, Pub. L. 101–625,

amended this section in its entirety, which is set forth in this part. See the preceding page.

(e) AUTHORIZATION FOR EXISTING PROGRAM.—Section

202(a)(4)(C) of the Housing Act of 1959 (12 U.S.C. 1701q(a)(4)(C))

is amended—

* * * * * * *

EXCERPT FROM HOUSING ACT OF 1959—PRIOR TO OCTOBER 1, 1991

[Public Law 86–372; 73 Stat. 667]

LOAN PROGRAM

SEC. 202. 1 (a)(1) The purpose of this section is to assist private

nonprofit corporations, limited profit sponsors, consumer cooperatives or public bodies or agencies to provide housing and related facilities for elderly or handicapped families.

(2) In order to carry out the purpose of this section, the Secretary may make loans to any corporation (as defined in subsection

(d)(2)), to any limited profit sponsor approved by the Secretary, to

any consumer cooperatives, or to any public body or agency for the

provisions of rental or cooperative housing related facilities for elderly or handicapped families, except that (A) no such loan shall be

made unless the applicant shows that it is unable to secure the necessary funds from other sources upon terms and conditions equally

as favorable as the terms and conditions applicable to loans under

this section (B) no such loan shall be made unless the Secretary

finds that the construction will be undertaken in an economical

manner and that it will not be of elaborate or extravagant design

or materials, and (C) no such loan shall be made to a public body

or agency unless it certifies that it is not receiving financial assistance from the United States exclusively pursuant to the United

States Housing Act of 1937.

(3)(A) A loan under this section may be in an amount not exceeding that total development cost (as defined in subsection (d)(3)),

as determined by the Secretary, except that in the case of other than

a corporation, consumer cooperative, or public body or agency the

amount of the loan shall not exceed 90 per centum of the development cost; shall be secured in such manner and be repaid within

such period, not exceeding fifty years, as may be determined by him;

and shall bear an interest rate which is not more than a rate determined by the Secretary taking into consideration the average yield,

during the 3-month period immediately preceding the fiscal year in

which the loan is made, on the most recently issued 30-year marketable obligations of the United States, adjusted to the nearest oneeighth of 1 per centum, plus an allowance adequate in the judgment

of the Secretary to cover administrative costs and probable losses

under the program, except that such interest rate plus such allowance shall not exceed 9.25 per centum per annum.

(B) At the option of the borrower, a loan under this section may

be made and may be processed for a conditional or firm commitment either (i) at an interest rate not to exceed a rate and allowance

determined by the Secretary in accordance with subparagraph (A)

using the 1-month period immediately prior to the month in which
Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS 380

1So in law.

the request for a commitment is submitted; or (ii) at an interest rate

not to exceed a rate and allowance determined by the Secretary in

accordance with subparagraph (A) using the 3-month period immediately preceding the fiscal year in which the request for a commitment is submitted.

(4)(A) There is authorized to be appropriated for the purposes

of this section not to exceed $500,000,000, which amount shall be

increased by $150,000,000 on July 1, 1969. Amounts so appropriated, and the proceeds from notes or other obligations issued

under subparagraph (B), shall constitute a revolving fund to be

used by the Secretary in carrying out this section.

(B)(i) To carry out the purposes of this section, the Secretary is

authorized to issue to the Secretary of the Treasury notes or other

obligations in an aggregate amount not to exceed $1,475,000,000,

which amount shall be increased to $2,387,500,000 on October 1,

1977, to $3,300,000,000 on October 1, 1978, to $3,827,500,000 on

October 1, 1979, to $4,777,500,000 on October 1, 1980, to

$5,752,500,000 on October 1, 1981, to $6,400,000,000 on October 1,

1983, to such sum as may be approved in an appropriation Act on

October 1, 1984, and to such sums as may 1 approved in appropriation Acts for fiscal years 1988 and 1989, in such forms and denominations, bearing such maturities, and subject to such terms and

conditions as may be prescribed by the Secretary of the Treasury.

Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury taking into consideration the

average yield, during the 3-month period immediately preceding the

fiscal year in which the loan is made, on the most recently issued

30-year marketable obligations of the United States. The Secretary

of the Treasury is authorized and directed to purchase any notes

and other obligations issued hereunder and for that purpose he is

authorized to use as a public debt transaction the proceeds from the

sale of any securities issued under chapter 31 of title 31, United

States Code; and the purposes for which securities may be issued

under such chapter are extended to include any purchase of such

notes and obligations. The Secretary of the Treasury may at any

time sell any of the notes or other obligations acquired by him under

this section. All redemptions, purchases, and sales by the Secretary

of the Treasury of such notes or other obligations shall be treated

as public debt transactions of the United States. The Secretary may

not issue notes or other obligations to the Secretary of the Treasury

pursuant to this section in an aggregate amount exceeding

$800,000,000 except as approved in appropriation Acts.

(ii) The receipt and disbursements of the fund shall not be included in the total of the Budget of the United States Government

and shall be exempt from any limitation on annual expenditure or

net lending.

(C) Amounts in the fund shall be available to the Secretary for

the purpose of making loans under this section and for paying interest on obligations issued under subparagraph (B). The aggregate

loans made under this section shall not exceed the limits on such

lending authority established in appropriation Acts. For fiscal year
381 Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS

1991, not more than $714,200,000 may be approved in appropriation Acts for such loans.

(5) To the maximum extent practicable, the Secretary shall use

the services and facilities of the private mortgage industry in servicing mortgage loans made under this section.

(6) In reviewing applications for loans under this section, the

Secretary may consider the extent to which such loans—

(A) will assist in stabilizing, conserving, and revitalizing

neighborhoods and communities;

(B) will assist in providing housing for elderly and handicapped families in neighborhoods and communities in which

they are experiencing significant displacement due to public or

private investment; or

(C) will assist in the substantial rehabilitation, in an economical manner, of structures having architectural, historical

or cultural significance.

(7) The Secretary may make available appropriate technical

and training assistance to assure that applicants having limited resources, particularly minority applicants, are able to participate

more fully in the program carried out under this section.

(8) In reviewing applications for loans under this section, the

Secretary shall give a priority to any project that will provide housing designed to replace a structure that is owned by a public housing agency, contains not less than 100 dwelling units, is used for

housing only elderly families, and is to be demolished. The requirements of this paragraph shall not apply after September 30, 1988.

(9) The Secretary may reserve loan authority under this section

and budget authority under section 8 of the United States Housing

Act of 1937 for a project before acquisition of the project (or before

an offer or option to purchase is made on the project) from the Resolution Trust Corporation under section 21A(c) of the Federal Home

Loan Bank Act, if the Secretary determines there is a reasonable

likelihood that the project will be acquired from the Resolution

Trust Corporation under section 21A(c).

(b) In the performance of, and with respect to, the functions,

powers, and duties vested in him by this section the Secretary shall

(in addition to any authority otherwise vested in him) have the functions, powers, and the duties set forth in section 402 (except subsection (c)(2)) of the Housing Act of 1950.

(c)(1) Housing constructed with a loan made under this section

shall not be used for transient or hotel purposes while such loan is

outstanding

(2) As used in paragraph (1), the term ‘‘transient or hotel purposes’’ shall have such meaning as may be prescribed by the Secretary, but rental for any period less than thirty days shall in any

event constitute use for such purposes. The provisions of subsection

(f) through (j) of section 513 of the National Housing Act (as added

by section 132 of the Housing Act of 1954) shall apply in the case

of violations of paragraph (1) as though the housing described in

such subsection were multifamily housing (as defined in section

513(e)(2) of the National Housing Act) with respect to which a mortgage is insured under such Act.

(3)(A) The Secretary shall take such action as may be necessary

to insure that all laborers and mechanics employed by contractors
Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS 382

and subcontractors in the construction of housing assisted under

this section and designed for dwelling use by 12 or more elderly or

handicapped families shall be paid wages at rates not less than

those prevailing in the locality involved for the corresponding classes of laborers and mechanics employed on construction of a similar

character, as determined by the Secretary of Labor in accordance

with the Act of March 3, 1931, as amended (the Davis-Bacon Act).

(B) Subparagraph (A) shall not apply to any individual that—

(i) performs services for which the individual volunteered;

(ii)(I) does not receive compensation for such services; or

(II) is paid expenses, reasonable benefits, or a nominal fee

for such services; and

(iii) is not otherwise employed at any time in the construction work.

(d) As used in this section—

(1) The term ‘‘housing’’ means structures suitable for dwelling

use by elderly or handicapped families which are (A) new structures, or (B) provided by rehabilitation, alteration, conversion, or

improvement of existing structures which are otherwise inadequate

for proposed dwelling use by such families.

(2) The term ‘‘corporation’’ means any incorporated private institution or foundation—

(A) no part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual;

(B) which has a governing board (i) the membership of

which is selected in a manner to assure that there is significant

representation of the views of the community in which such

project is located, and (ii) which is responsible for the operation

of the housing project assisted under this section; and

(C) which is approved by the Secretary as to financial responsibility.

(3) The term ‘‘development cost’’ means cost of construction of

housing and of other related facilities, the cost of movables necessary to the basic operation of the project, as determined by the

Secretary, and of the land on which it is located, including necessary site improvement, which cost shall be determined without regard to mortgage limits applicable to housing projects subject to

mortgages insured under section 231 of the National Housing Act.

In the case of housing to meet the needs of handicapped (primarily

nonelderly) persons, such term also means the cost of acquiring existing housing and related facilities, the cost of rehabilitation, alteration, conversion, or improvement, including the moderate rehabilitation thereof, and the cost of the land on which the housing and

related facilities are located. The term also means the cost of acquiring existing housing and related facilities from the Resolution Trust

Corporation under section 21A(c) of the Federal Home Loan Bank

Act, the cost of rehabilitation, alteration, conversion, or improvements, including the moderate rehabilitation thereof, and the cost of

the land on which the housing and related facilities are located.

(4) The term ‘‘elderly or handicapped families’’ means families

which consist of two or more persons and the head of which (or his

spouse) is sixty-two years of age or over or is handicapped, and such

term also means a single person who is sixty-two years of age or

over or is handicapped. A person shall be considered handicapped
383 Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS

if such person is determined, pursuant to regulations issued by the

Secretary, to have an impairment which (A) is expected to be of

long-continued and indefinite duration, (B) substantially impedes

his ability to live independently, and (C) is of such a nature that

such ability could be improved by more suitable housing conditions.

A person shall also be considered handicapped if such person has

a developmental disability as defined in section 102(7) of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C.

6001(7)). The Secretary shall prescribe such regulations as may be

necessary to prevent abuses in determining, under the definitions

contained in this paragraph, the eligibility of families and persons

for admission to and occupancy of housing constructed with assistance under this section. Notwithstanding the preceding provisions of

this paragraph, the term ‘‘elderly or handicapped families’’ includes

two or more elderly or handicapped persons living together, one or

more such persons living with another person who is determined

(under regulations prescribed by the Secretary) to be essential to

their care or well-being, and the surviving member or members of

any family described in the first sentence of this paragraph who

were living, in a unit assisted under this section, with the deceased

member of the family at the time of his or her death.

(5) The term ‘‘State’’ includes the several States, the District of

Columbia, the Commonwealth of Puerto Rico, and the possessions

of the United States.

(6) The term ‘‘Secretary’’ means the Secretary of Housing and

Urban Development.

(7) The term ‘‘construction’’ means erection of new structures or

rehabilitation, alteration, conversion, or improvement of existing

structures.

(8) The term ‘‘related facilities’’ means (A) new structures suitable for use by elderly or handicapped families residing in the

project or in the area as cafeterias or dining halls, community

rooms or buildings, workshops, adult day health facilities, or other

outpatient health facilities, or other essential service facilities, and

(B) structures suitable for the above uses provided by rehabilitation,

alteration, conversion, or improvement of existing structures which

are otherwise inadequate for such uses.

(9) The term ‘‘housing for handicapped families’’ means housing

and related facilities to be occupied by handicapped families who

are primarily nonelderly handicapped families.

(10) The term ‘‘nonelderly handicapped families’’ means elderly

or handicapped families, the head of which (and spouse, if any) is

less than 62 years of age at the time of initial occupancy of a project

assisted under this section.

(e) Nothing in this section or in regulations promulgated under

this section shall prevent a corporation or consumer cooperative

from obtaining a loan under this section for the provision of housing

and related facilities for elderly or handicapped families, notwithstanding the fact that such corporation or cooperative has theretofore obtained a commitment from the Federal Housing Administration for mortgage insurance under section 231 of the National Housing Act with respect to the housing involved, if (1) such corporation

or cooperative is otherwise eligible for such loan under this section,

(2) such commitment was obtained prior to the date of enactment
Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS 384

of the Housing Act of 1961 and (3) the Secretary determines that the

financing of such housing through a loan under this section rather

than through mortgage insurance under such section 231 is necessary or desirable in order to avoid hardship for the elderly or

handicapped families who are the prospective tenants of such housing.

(f)(1) In carrying out the provisions of this section, the Secretary

shall seek to assure, pursuant to applicable regulations, that housing and related facilities assisted under this section will be in appropriate support of, and supported by, applicable State and local

plans which respond to Federal program requirements by providing

an assured range of necessary services for individuals occupying

such housing (which services may include, among others, health (including adult day health services), continuing education, welfare informational, recreational, homemaker, counseling, and referral services, transportation where necessary to facilitate access to social

services, and services designed to encourage and assist recipients to

use the services and facilities available to them), including plans

approved by the Secretary of Health and Human Services pursuant

to section 133 of the Mental Retardation Facilities and Community

Mental Health Center Construction Act of 1963 or pursuant to title

III of the Older Americans Act of 1965.

(2) Each applicant for a loan under this section for housing and

related facilities shall submit with the application a supportive

services plan describing—

(A) the category or categories of families such housing and

facilities are intended to serve;

(B) the range of necessary services to be provided to the

families occupying such housing;

(C) the manner in which such services will be provided to

such families; and

(D) the extent of State and local funds available to assist

in the provision of such services.

(g)(1) In carrying out the provisions of this section and section

8 of the United States Housing Act of 1937, the Secretary shall issue

and implement regulations, as soon as practicable after the date of

enactment of Housing and Community Development Act of 1977,

which shall provide that the processing of any application for a loan

for a project under this section and the processing of any application for assistance under such section 8 with respect to housing

units in the same such project shall be coordinated in an economical

and efficient manner. At the time of settlement on permanent financing with respect to a project under this section, the Secretary

shall make an appropriate adjustment in the amount of any assistance to be provided under a contract for annual contributions pursuant to section 8 of the United States Housing Act of 1937 in order

to reflect fully any difference between the interest rate which will actually be charged in connection with such permanent financing and

the interest rate which was in effect at the time of the reservation

of assistance in connection with the project. In the case of existing

housing and related facilites acquired from the Resolution Trust

Corporation under section 21A(c) of the Federal Home Loan Bank

Act, the term of the contract pursuant to such section 8 shall be 240

months.
385 Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS

1So in law. Probably intended to refer to this paragraph.

2So in law.

(2) In determining the amount of assistance to be provided for

a project pursuant to such section 8, subject to the availability of appropriations for contract amendments for the purpose of this paragraph the Secretary may also consider (and annually adjust for) the

costs of—

(A) the expenses of a management staff member of the

project to coordinate the provision of any services within the

project provided through any agency of the Federal Government

or any other public or private department, agency, or organization to elderly, especially those who are frail, or handicapped

residents of the project to enable such residents to live independently and prevent placement in nursing homes or institutions, including services under subsection (f) and subparagraph

(B) of this subsection 1; and

(B) expenses for the provision of services for elderly, especially those who are frail, and handicapped residents of the

project that enable residents to live independently and prevent

placement in nursing homes or institutions, which may include

meal services, housekeeping and chore assistance, personal care,

laundry assistance, transportation services, and health-related

services,

except that not more than 15 percent of the cost of the provision of

such services may be considered under this subsection for purposes

of determining the amount of assistance provided. This paragraph

shall not apply in the case of a project assisted under the congregate

housing services program.

(h)(1) Of the amounts made available in appropriation Acts for

loans under subsection (a)(4)(C) for any fiscal year commencing

after September 30, 1987, not less than 15 percent shall be available

for loans for the development costs of housing for handicapped families. If the amount required for any such fiscal year for approvable

applications for loan 2 under this subsection is less than the amount

available under this paragraph, the balance shall be made available for loans under other provisions of this section.

(2) The Secretary shall take such actions as may be necessary

to ensure that—

(A) funds made available under this subsection will be used

to support a variety of methods of meeting the needs primarily

of nonelderly handicapped families by providing a variety of

housing options, ranging from small group homes to independent living complexes; and

(B) housing for handicapped families assisted under this

subsection will provide families occupying units in such housing with an assured range of services specified in subsection (f),

will provide such families with opportunities for optimal independent living and participation in normal daily activities, and

will facilitate access by such families to the community at large

and to suitable employment opportunities within such community.

(3)(A) In allocating funds under this subsection, and in processing applications for loans under this section and assistance pay-
Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS 386

1The date of enactment was February 5, 1988.

2See section 162(d) of the Housing and Community Development Act of 1987, Pub. L. 100–242,

which is set forth, post, this part and provides for the termination of rental assistance payments

under section 8 of the United States Housing Act of 1937 for projects for the handicapped.

ments under paragraph (4), the Secretary shall adopt such distinct

standards and procedures as the Secretary determines appropriate

due to differences between housing for handicapped families and

other housing assisted under this section. In adopting such standards, the Secretary shall ensure adequate participation by representatives of the disability community through the provisions available

under the Federal Advisory Committee Act.

(B) The Secretary may, on a demonstration basis, determine the

feasibility and desirability of reducing processing time and costs for

housing for handicapped families by limiting project design to a

small number of prototype designs. Any such demonstration shall be

limited to the 3-year period following the date of the enactment of

the Housing and Community Development Act of 1987,1 may only

involve projects whose sponsors consent to participation in such

demonstration, and shall be described in a report submitted by the

Secretary to the Congress following completion of such demonstration.

(4)(A) 2 The Secretary shall, to the extent approved in appropriation Acts, enter into contracts with owners of housing for handicapped families receiving loans under, or meeting the requirements

of, this section to make monthly payments to cover any part of the

costs attributed to units occupied (or, as approved by the Secretary,

held for occupancy) by lower income families that is not met from

project income. The annual contract amount for any project shall

not exceed the sum of the initial annual project rentals for all units

and any initial utility allowances for such units, as approved by the

Secretary. Any contract amounts not used by a project in any year

shall remain available to the project until the expiration of the contract. The term of a contract entered into under this subparagraph

shall be 240 months. The annual contract amount may be adjusted

by the Secretary if the sum of the project income and the amount

of assistance payments available under this subparagraph are inadequate to provide for reasonable project costs. In the case of an intermediate care facility in which there reside families assisted under

title XIX of the Social Security Act, project income under this subparagraph shall include the same amount as if such families were

being assisted under title XVI of the Social Security Act.

(B) The Secretary shall approve initial project rentals for any

project assisted under this subsection based on the determination of

the Secretary of the total actual necessary and reasonable costs of

developing and operating the project, excluding the costs of the assured range of services under subsection (f), taking into consideration the need to contain costs to the extent practicable and consistent with the purposes of the project and this section.

(C) The Secretary shall require that, during the term of each

contract entered into under subparagraph (A), all units in a project

assisted under this subsection shall be made available for occupancy by lower income families, as such term is defined in section

3(b)(2) of the United States Housing Act of 1937. The rent payment

required of a lower income family shall be determined in accordance
387 Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS

with section 3(a) of such Act, except that the gross income of a family occupying an intermediate care facility assisted under title XIX

of the Social Security Act shall be the same amount as if the family

were being assisted under title XVI of the Social Security Act.

(D) The Secretary shall coordinate the processing of an application for a loan for housing for handicapped families under this section and the processing of an application for assistance payments

under this paragraph for such housing.

(i)(1) Unless otherwise requested by the sponsor, a maximum of

25 per centum of the units in a project financed under this section

may be efficiency units, subject to a determination by the Secretary

that such units are appropriate for the elderly or handicapped population residing in the vicinity of such project or to be served by such

project.

(2) The Secretary may require a sponsor of a housing project financed with a loan under this section to deposit an amount not to

exceed $10,000 in a special escrow account to assure the commitment and long-term management capabilities of such sponsor.

(3) In establishing per unit cost limitations for purposes of this

section, the Secretary shall take into account design features necessary to meet the needs of elderly and handicapped residents, and

such limitations shall reflect the cost of providing such features. The

Secretary shall adjust the per unit cost limitations in effect on January 1, 1983, not less than once annually to reflect changes in the

general level of construction costs.

(j)(1) The Secretary may not approve the prepayment of any

loan made under this section, or transfer such loan, unless such

prepayment or transfer is made as part of a transaction that will

ensure that the project involved will continue to operate until the

original maturity date of such loan in a manner that will provide

rental housing for the elderly and handicapped on terms at least as

advantageous to existing and future tenants as the terms required

by the original loan agreement entered into under this section and

any other loan agreements entered into under other provisions of

law.

(2) The Secretary may not sell any mortgage held by the Secretary as security for a loan made under this section.

(k)(1) In the process of selecting projects for loans under this

section, the Secretary shall assure the inclusion of special design

features and congregate space if necessary to meet the special needs

of elderly and handicapped residents.

(2) The Secretary shall encourage the provision of small and

scattered site group homes and independent living facilities for nonelderly handicapped persons and families.

(3) In considering applications for assistance under section 202,

the Secretary shall not reject an application on technical grounds

without giving notice of that rejection and the basis therefor to the

applicant and affording the applicant on opportunity to respond.

(l) The basis for selection of a contractor to be employed in the

development or construction of a project assisted under this section

shall be determined by the project sponsor or borrower if the development cost of the project is less than $2,000,000, if the project rentals will be less than 110 per centum of the fair market rent applicable to projects financed under this section, or if the sponsor of the
Sec. 202 REPEALED ELDERLY/HANDICAPPED HOUSING PROVISIONS 388

1So in law. There is no subsection (o).

project is a labor organization. The Secretary shall not impose different requirements or standards with respect to construction

change orders, increases in loan amount to cover change orders, errors in plans and specifications, and use of contingency funds, because of the method of contractor selection used by the sponsor or

borrower.

(m) Nothing in this section authorizes the Secretary to prohibit

any sponsor from voluntarily providing funds from other sources for

amenities and other features of appropriate design and construction

suitable for inclusion in such project if the cost of such amenities

is (1) not financed with the loan, and (2) not taken into account in

determining the amount of Federal subsidy or of the rent contribution of tenants.

(n) The Secretary shall notify the project sponsor not less than

30 days prior to canceling any loan authority provided under this

section. During the 30-day period following the receipt of a notice

under paragraph (1), a sponsor may appeal the proposed cancellation of loan authority. Such appeal, including review by the Secretary, shall be completed not later than 45 days after the appeal

is filed.

(p) 1 The Secretary shall provide to an appropriate agency in

each area (which may be the applicable Area Agency on the Aging)

information regarding the availability of housing assisted under

this section.
389

SECTION 8 PAYMENTS FOR SECTION 202 PROJECTS

EXCERPT FROM SECTION 210 OF HOUSING AND COMMUNITY

DEVELOPMENT ACT OF 1974

[Public Law 93–383; 88 Stat. 671; 12 U.S.C. 1701q note]

* * * * * * *

(g)(1) ø12 U.S.C. 1701q note¿ In determining the feasibility

and marketability of a project under section 202 of the Housing Act

of 1959, the Secretary shall consider the availability of monthly assistance payments pursuant to section 8 of the United States Housing Act of 1937 with respect to such a project.

(2) The Secretary shall insure that with the original approval

of a project authorized pursuant to section 202 of the Housing Act

of 1959, and thereafter at each annual revision of the assistance

contract under section 8 of the United States Housing Act of 1937

with respect to such units in such project, the project will serve

both low- and moderate-income families in a mix which he determines to be appropriate for the area and for viable operation of the

project; except that the Secretary shall not permit maintenance or

vacancies to await tenants of one income level where tenants of another income level are available.

EXCERPT FROM SECTION 162 OF HOUSING AND COMMUNITY

DEVELOPMENT ACT OF 1987

[Public Law 100–242; 101 Stat. 1859; 12 U.S.C. 1701q note]

* * * * * * *

(d) ø12 U.S.C. 1701q note¿ TERMINATION OF SECTION 8 ASSISTANCE.—On and after the first date that amounts approved in an

appropriation Act for any fiscal year become available for contracts

under section 202(h)(4)(A) of the Housing Act of 1959, as amended

by subsection (b) of this section, no project for handicapped (primarily nonelderly) families approved for such fiscal year pursuant

to section 202 of such Act shall be provided assistance payments

under section 8 of the United States Housing Act of 1937, except

pursuant to a reservation for a contract to make such assistance

payments that was made before the first date that amounts for

contracts under such section 202(h)(4)(A) became available.
390

1 November 28, 1990.

PREPAYMENT AND REFINANCING OF SECTION 202

LOANS FOR SUPPORTIVE HOUSING FOR ELDERLY

PERSONS

EXCERPT FROM AMERICAN HOMEOWNERSHIP AND ECONOMIC

OPPORTUNITY ACT OF 2000

[Public Law 106–569; 114 Stat. 3019; 12 U.S.C. 1701q note]

Subtitle A—Refinancing for Section 202

Supportive Housing for the Elderly

SEC. 811. ø12 U.S.C. 1701q note¿ PREPAYMENT AND REFINANCING.

(a) APPROVAL OF PREPAYMENT OF DEBT.—Upon request of the

project sponsor of a project assisted with a loan under section 202

of the Housing Act of 1959 (as in effect before the enactment of the

Cranston-Gonzalez National Affordable Housing Act 1), the Secretary shall approve the prepayment of any indebtedness to the

Secretary relating to any remaining principal and interest under

the loan as part of a prepayment plan under which—

(1) the project sponsor agrees to operate the project until

the maturity date of the original loan under terms at least as

advantageous to existing and future tenants as the terms required by the original loan agreement or any rental assistance

payments contract under section 8 of the United States Housing Act of 1937 (or any other rental housing assistance programs of the Department of Housing and Urban Development,

including the rent supplement program under section 101 of

the Housing and Urban Development Act of 1965 (12 U.S.C.

1701s)) relating to the project; and

(2) the prepayment may involve refinancing of the loan if

such refinancing results in a lower interest rate on the principal of the loan for the project and in reductions in debt service related to such loan.

(b) SOURCES OF REFINANCING.—In the case of prepayment

under this section involving refinancing, the project sponsor may

refinance the project through any third party source, including financing by State and local housing finance agencies, use of tax-exempt bonds, multi-family mortgage insurance under the National

Housing Act, reinsurance, or other credit enhancements, including

risk sharing as provided under section 542 of the Housing and

Community Development Act of 1992 (12 U.S.C. 1707 note). For

purposes of underwriting a loan insured under the National Housing Act, the Secretary may assume that any section 8 rental assistance contract relating to a project will be renewed for the term of

such loan.
391 Sec. 811 REFINANCING OF SECTION 202 LOANS

(c) USE OF UNEXPENDED AMOUNTS.—Upon execution of the refinancing for a project pursuant to this section, the Secretary shall

make available at least 50 percent of the annual savings resulting

from reduced section 8 or other rental housing assistance contracts

in a manner that is advantageous to the tenants, including—

(1) not more than 15 percent of the cost of increasing the

availability or provision of supportive services, which may include the financing of service coordinators and congregate services;

(2) rehabilitation, modernization, or retrofitting of structures, common areas, or individual dwelling units;

(3) construction of an addition or other facility in the

project, including assisted living facilities (or, upon the approval of the Secretary, facilities located in the community

where the project sponsor refinances a project under this section, or pools shared resources from more than one such

project); or

(4) rent reduction of unassisted tenants residing in the

project according to a pro rata allocation of shared savings resulting from the refinancing.

(d) USE OF CERTAIN PROJECT FUNDS.—The Secretary shall

allow a project sponsor that is prepaying and refinancing a project

under this section—

(1) to use any residual receipts held for that project in ex- cess of $500 per individual dwelling unit for not more than 15

percent of the cost of activities designed to increase the availability or provision of supportive services; and (2) to use any reserves for replacement in excess of $1,000

per individual dwelling unit for activities described in paragraphs (2) and (3) of subsection (c).
392

1So in law.

SUPPORTIVE HOUSING FOR PERSONS WITH

DISABILITIES

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4324; 42 U.S.C. 8013]

TITLE VIII—HOUSING FOR PERSONS WITH

SPECIAL NEEDS

* * * * * * *

Subtitle B—Supportive Housing for Persons With

Disabilities

SEC. 811. ø42 U.S.C. 8013¿ SUPPORTIVE HOUSING FOR PERSONS WITH

DISABILITIES.

(a) PURPOSE.—The purpose of this section is to enable persons

with disabilities to live with dignity and independence within their

communities by expanding the supply of supportive housing that—

(1) is designed to accommodate the special needs of such

persons; and

(2) provides supportive services that address the individual

health, mental health, and other needs of such persons.

(b) (b) 1 AUTHORITY TO PROVIDE ASSISTANCE.—The Secretary is

authorized—

(1) to provide tenant-based rental assistance to eligible

persons with disabilities, in accordance with subsection (d)(4);

and

(2) to provide assistance to private, nonprofit organizations

to expand the supply of supportive housing for persons with

disabilities, which shall be provided as—

(A) capital advances in accordance with subsection

(d)(1), and

(B) contracts for project rental assistance in accordance with subsection (d)(2);

assistance under this paragraph may be used to finance the acquisition, acquisition and moderate rehabilitation, construction, reconstruction, or moderate or substantial rehabilitation

of housing, including the acquisition from the Resolution Trust

Corporation, to be used as supportive housing for persons with

disabilities and may include real property acquisition, site improvement, conversion, demolition, relocation, and other expenses that the Secretary determines are necessary to expand

the supply of supportive housing for persons with disabilities.
393 Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES

1So in law.

2Section 623(a)(3)(A) of the Housing and Community Development Act of 1992, Pub. L. 102–

550, amended this paragraph ‘‘by striking ‘this section’ and inserting ‘subsection (b)(2)’ ’’. Because the amendment did not specify which occurrence of ‘‘this section’’ to strike, the amendment could not be executed. The amendment was probably intended to apply to the first place

such phrase appears.

(c) GENERAL REQUIREMENTS.—The Secretary shall take such

actions as may be necessary to ensure that—

(1) assistance made available under this section will be

used to meet the special needs of persons with disabilities by

providing a variety of housing options, ranging from group

homes and independent living facilities to dwelling units in

multifamily housing developments, condominium housing, and

cooperative housing; and

(2) supportive housing for persons with disabilities assisted under this section shall—

(A) provide persons with disabilities occupying such

housing with supportive services that address their individual needs;

(B) provide such persons with opportunities for optimal independent living and participation in normal daily

activities, 1 and

(C) facilitate access by such persons to the community

at large and to suitable employment opportunities within

such community.

(d) FORMS OF ASSISTANCE.—

(1) CAPITAL ADVANCES.—A capital advance provided under

this section 2 shall bear no interest and its repayment shall not

be required so long as the housing remains available for verylow-income persons with disabilities in accordance with this

section. Such advance shall be in an amount calculated in accordance with the development cost limitation established in

subsection (h).

(2) PROJECT RENTAL ASSISTANCE.—Contracts for project

rental assistance shall obligate the Secretary to make monthly

payments to cover any part of the costs attributed to units occupied (or, as approved by the Secretary, held for occupancy)

by very low-income persons with disabilities that is not met

from project income. The annual contract amount for any

project shall not exceed the sum of the initial annual project

rentals for all units and any initial utility allowances for such

units, as approved by the Secretary. Any contract amounts not

used by a project in any year shall remain available to the

project until the expiration of the contract. The Secretary may

adjust the annual contract amount if the sum of the project income and the amount of assistance payments available under

this paragraph are inadequate to provide for reasonable project

costs. In the case of an intermediate care facility which is the

residence of persons assisted under title XIX of the Social Security Act, project income under this paragraph shall include

the same amount as if such person were being assisted under

title XVI of the Social Security Act.

(3) RENT CONTRIBUTION.—A very low-income person shall

pay as rent for a dwelling unit assisted under subsection (b)(2)
Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES 394

the higher of the following amounts, rounded to the nearest

dollar: (A) 30 percent of the person’s adjusted monthly income,

(B) 10 percent of the person’s monthly income, or (C) if the person is receiving payments for welfare assistance from a public

agency and a part of such payments, adjusted in accordance

with the person’s actual housing costs, is specifically designated by such agency to meet the person’s housing costs, the

portion of such payments which is so designated; except that

the gross income of a person occupying an intermediate care

facility assisted under title XIX of the Social Security Act shall

be the same amount as if the person were being assisted under

title XVI of the Social Security Act.

(4) TENANT-BASED RENTAL ASSISTANCE.— (A) ADMINISTERING ENTITIES.—Tenant-based rental assistance provided under subsection (b)(1) may be provided

only through a public housing agency that has submitted

and had approved a plan under section 7(d) of the United

States Housing Act of 1937 (42 U.S.C. 1437e(d)) that provides for such assistance, or through a private nonprofit

organization. A public housing agency shall be eligible to

apply under this section only for the purposes of providing

such tenant-based rental assistance.

(B) PROGRAM RULES.—Tenant-based rental assistance

under subsection (b)(1) shall be made available to eligible

persons with disabilities and administered under the same

rules that govern tenant-based rental assistance made

available under section 8 of the United States Housing Act

of 1937, except that the Secretary may waive or modify

such rules, but only to the extent necessary to provide for

administering such assistance under subsection (b)(1)

through private nonprofit organizations rather than

through public housing agencies.

(C) ALLOCATION OF ASSISTANCE.—In determining the

amount of assistance provided under subsection (b)(1) for

a private nonprofit organization or public housing agency,

the Secretary shall consider the needs and capabilities of

the organization or agency, in the case of a public housing

agency, as described in the plan for the agency under section 7 of the United States Housing Act of 1937.

(e) TERM OF COMMITMENT.—

(1) USE LIMITATIONS.—All units in housing assisted under

subsection (b)(2) shall be made available for occupancy by very

low-income persons with disabilities for not less than 40 years.

(2) CONTRACT TERMS.—The initial term of a contract entered into under subsection (d)(2) shall be 240 months. The

Secretary shall, to the extent approved in appropriation Acts,

extend any expiring contract for a term of not less than 60

months. In order to facilitate the orderly extension of expiring

contracts, the Secretary is authorized to make commitments to

extend expiring contracts during the year prior to the date of

expiration.

(f) APPLICATIONS.—Funds made available under subsection

(b)(2) shall be allocated by the Secretary among approvable applications submitted by private nonprofit organizations. Applications for
395 Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES

1Section 623(a)(6) of the Housing and Community Development Act of 1992, Pub. L. 102–550,

amended this subsection by ‘‘striking ‘this section’ and inserting ‘subsection (b)(2)’ ’’. Because

the amendment did not specify which occurrence of ‘‘this section’’ to strike, the amendment could

not be executed. The amendment was probably intended to apply to the first place such phrase

appears.

assistance under subsection (b)(2) shall be submitted in such form

and in accordance with such procedures as the Secretary shall establish. Such applications shall contain—

(1) a description of the proposed housing;

(2) a description of the assistance the applicant seeks

under this section;

(3) a supportive service plan that contains—

(A) a description of the needs of persons with disabilities that the housing is expected to serve;

(B) assurances that persons with disabilities occupying

such housing will receive supportive services based on

their individual needs;

(C) evidence of the applicant’s (or a designated service

provider’s) experience in providing such supportive services;

(D) a description of the manner in which such services

will be provided to such persons, including evidence of

such residential supervision as the Secretary determines is

necessary to facilitate the adequate provision of such services; and

(E) identification of the extent of State and local funds

available to assist in the provision of such services;

(4) a certification from the appropriate State or local agency (as determined by the Secretary) that the provision of the

services identified in paragraph (3) are well designed to serve

the special needs of persons with disabilities;

(5) reasonable assurances that the applicant will own or

have control of an acceptable site for the proposed housing not

later than 6 months after notification of an award for assistance;

(6) a certification from the public official responsible for

submitting a housing strategy for the jurisdiction to be served

in accordance with section 105 of the Cranston-Gonzalez National Affordable Housing Act that the proposed housing is consistent with the approved housing strategy; and

(7) such other information or certifications that the Secretary determines to be necessary or appropriate to achieve the

purposes of this section.

(g) SELECTION CRITERIA.—The Secretary shall establish selection criteria for assistance under this section 1, which shall

include—

(1) the ability of the applicant to develop and operate the

proposed housing;

(2) the need for housing for persons with disabilities in the

area to be served;

(3) the extent to which the proposed design of the housing

will meet the special needs of persons with disabilities;
Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES 396

(4) the extent to which the applicant has demonstrated

that the necessary supportive services will be provided on a

consistent, long-term basis;

(5) the extent to which the proposed design of the housing

will accommodate the provision of such services;

(6) the extent to which the applicant has control of the site

of the proposed housing; and

(7) such other factors as the Secretary determines to be appropriate to ensure that funds made available under this section are used effectively.

(h) DEVELOPMENT COST LIMITATIONS.— (1) IN GENERAL.—The Secretary shall periodically establish

development cost limitations by market area for various types

and sizes of supportive housing for persons with disabilities by

publishing a notice of the cost limitations in the Federal Register. The cost limitations shall reflect—

(A) the cost of acquisition, construction, reconstruction,

or rehabilitation of supportive housing for persons with

disabilities that (i) meets applicable State and local housing and building codes; and (ii) conforms with the design

characteristics of the neighborhood in which it is to be located;

(B) the cost of movables necessary to the basic operation of the housing, as determined by the Secretary;

(C) the cost of special design features necessary to

make the housing accessible to persons with disabilities;

(D) the cost of special design features necessary to

make individual dwelling units meet the special needs of

persons with disabilities;

(E) the cost of congregate space necessary to accommodate the provision of supportive services to persons with

disabilities;

(F) if the housing is newly constructed, the cost of

meeting the energy efficiency standards promulgated by

the Secretary in accordance with section 109 of the Cranston-Gonzalez National Affordable Housing Act; and

(G) the cost of land, including necessary site improvement.

In establishing development cost limitations for a given market

area, the Secretary shall use data that reflect currently prevailing costs of acquisition, construction, reconstruction, or rehabilitation, and land acquisition in the area. Neither this section nor any other provision of law may be construed as prohibiting or preventing the location and operation, in a project

assisted under this section, of commercial facilities for the benefit of residents of the project and the community in which the

project is located, except that assistance made available under

this section may not be used to subsidize any such commercial

facility.

(2) RTC PROPERTIES.—In the case of existing housing and

related facilities from the Resolution Trust Corporation under

section 21A(c) of the Federal Home Loan Bank Act, the cost

limitations shall include—

(A) the cost of acquiring such housing,
397 Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES

(B) the cost of rehabilitation, alteration, conversion, or

improvement, including the moderate rehabilitation thereof, and

(C) the cost of the land on which the housing and related facilities are located.

(3) ANNUAL ADJUSTMENTS.—The Secretary shall adjust the

cost limitation not less than once annually to reflect changes

in the general level of acquisition, construction, reconstruction,

or rehabilitation costs.

(4) INCENTIVES FOR SAVINGS.— (A) SPECIAL PROJECT ACCOUNT.—The Secretary shall

use the development cost limitations established under

paragraph (1) to calculate the amount of financing to be

made available to individual owners. Owners which incur

actual development costs that are less than the amount of

financing shall be entitled to retain 50 percent of the savings in a special project account. Such percentage shall be

increased to 75 percent for owners which add energy efficiency features which (i) exceed the energy efficiency

standards promulgated by the Secretary in accordance

with section 109 of the Cranston-Gonzalez National Affordable Housing Act; (ii) substantially reduce the life-cycle

cost of the housing; (iii) reduce gross rent requirements;

and (iv) enhance tenant comfort and convenience.

(B) USES.—The special project account established

under subparagraph (A) may be used (i) to supplement

services provided to residents of the housing or funds setaside for replacement reserves, or (ii) for such other purposes as determined by the Secretary.

(5) FUNDS FROM OTHER SOURCES.—An owner shall be permitted voluntarily to provide funds from sources other than

this section for amenities and other features of appropriate design and construction suitable for supportive housing for persons with disabilities if the cost of such amenities is (A) not financed with the advance, and (B) is not taken into account in

determining the amount of Federal assistance or of the rent

contribution of tenants. Notwithstanding any other provision of

law, assistance amounts provided under this section may be

treated as amounts not derived from a Federal grant.

(i) TENANT SELECTION.—(1) An owner shall adopt written tenant selection procedures that are satisfactory to the Secretary as

(A) consistent with the purpose of improving housing opportunities

for very low-income persons with disabilities; and (B) reasonably

related to program eligibility and an applicant’s ability to perform

the obligations of the lease. Owners shall promptly notify in writing any rejected applicant of the grounds for any rejection.

(2) Notwithstanding any other provision of law, an owner may,

with the approval of the Secretary, limit occupancy within housing

developed under this section to persons with disabilities who have

similar disabilities and require a similar set of supportive services

in a supportive housing environment.

(j) MISCELLANEOUS PROVISIONS.—

(1) TECHNICAL ASSISTANCE.—The Secretary shall make

available appropriate technical assistance to assure that appli-
Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES 398

1So in law.

cants having limited resources, particularly minority applicants, are able to participate more fully in the program carried

out under this section.

(2) CIVIL RIGHTS COMPLIANCE.—Each owner shall certify,

to the satisfaction of the Secretary, that assistance made available under this section will be conducted and administered in

conformity with title VI of the Civil Rights Act of 1964, the

Fair Housing Act and other Federal, State, and local laws prohibiting discrimination and promoting equal opportunity; and 1

(3) SITE CONTROL.—An applicant may obtain ownership or

control of a suitable site different from the site specified in the

initial application. If an applicant fails to obtain ownership or

control of the site within 1 year after notification of an award

for assistance, the assistance shall be recaptured and reallocated.

(4) OWNER DEPOSIT.—The Secretary may require an owner

to deposit an amount not to exceed $10,000 in a special escrow

account to assure the owner’s commitment to the housing.

(5) NOTICE OF APPEAL.—The Secretary shall notify an

owner not less than 30 days prior to canceling any reservation

of assistance provided under this section. During the 30-day

period following the receipt of a notice under the preceding

sentence, an owner may appeal the proposed cancellation. Such

appeal, including review by the Secretary, shall be completed

not later than 45 days after the appeal is filed.

(6) LABOR STANDARDS.—

(A) IN GENERAL.—The Secretary shall take such action

as may be necessary to insure that all laborers and mechanics employed by contractors and subcontractors in the

construction of housing with 12 or more units assisted

under this section shall be paid wages at rates not less

than those prevailing in the locality involved for the corresponding classes of laborers and mechanics employed on

construction of a similar character, as determined by the

Secretary of Labor in accordance with the Act of March 3,

1931 (commonly known as the Davis-Bacon Act).

(B) EXEMPTION.—Subparagraph (A) shall not apply to

any individual who—

(i) performs services for which the individual volunteered;

(ii)(I) does not receive compensation for such services; or

(II) is paid expenses, reasonable benefits, or a

nominal fee for such services; and

(iii) is not otherwise employed at any time in the

construction work.

(7) USE OF PROJECT RESERVES.—Amounts for project reserves for a project assisted under this section may be used for

costs, subject to reasonable limitations as the Secretary determines appropriate, for reducing the number of dwelling units

in the project. Such use shall be subject to the approval of the
399 Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES

1So in law. Probably intended to refer to subsection (l)(4).

Secretary to ensure that the use is designed to retrofit units

that are currently obsolete or unmarketable.

(k) DEFINITIONS.—As used in this section—

(1) The term ‘‘group home’’ means a single family residential structure designed or adapted for occupancy by not more

than 8 persons with disabilities. The Secretary may waive the

project size limitation contained in the previous sentence if the

applicant demonstrates that local market conditions dictate the

development of a larger project. Not more than 1 home may be

located on any one site and no such home may be located on

a site contiguous to another site containing such a home.

(2) The term ‘‘person with disabilities’’ means a household

composed of one or more persons at least one of whom is an

adult who has a disability. A person shall be considered to

have a disability if such person is determined, pursuant to regulations issued by the Secretary to have a physical, mental, or

emotional impairment which (A) is expected to be of long-continued and indefinite duration, (B) substantially impedes his or

her ability to live independently, and (C) is of such a nature

that such ability could be improved by more suitable housing

conditions. A person shall also be considered to have a disability if such person has a developmental disability as defined

in section 102 of the Developmental Disabilities Assistance and

Bill of Rights Act of 2000. The Secretary shall prescribe such

regulations as may be necessary to prevent abuses in determining, under the definitions contained in this paragraph, the

eligibility of families and persons for admission to and occupancy of housing assisted under this section. Notwithstanding

the preceding provisions of this paragraph, the term ‘‘person

with disabilities’’ includes two or more persons with disabilities

living together, one or more such persons living with another

person who is determined (under regulations prescribed by the

Secretary) to be important to their care or well-being, and the

surviving member or members of any household described in

the first sentence of this paragraph who were living, in a unit

assisted under this section, with the deceased member of the

household at the time of his or her death.

(3) The term ‘‘supportive housing for persons with disabilities’’ means housing that—

(A) is designed to meet the special needs of persons

with disabilities, and

(B) provides supportive services that address the individual health, mental health or other special needs of such

persons.

(4) The term ‘‘independent living facility’’ means a project

designed for occupancy by not more than 24 persons with disabilities (or such higher number of persons as permitted under

criteria that the Secretary shall prescribe, subject to the limitation under subsection (h)(6) 1) in separate dwelling units where

each dwelling unit includes a kitchen and a bath.

(5) The term ‘‘owner’’ means a private nonprofit organization that receives assistance under this section to develop and
Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES 400

1Section 841 of the American Homeownership and Economic Opportunity Act of 2000 (P.L.

106–569; 114 Stat. 3022) provides as follows:

‘‘SEC. 841. ELIGIBILITY OF FOR-PROFIT LIMITED PARTNERSHIPS.

‘‘Section 811(k)(6) of the Housing Act of 1959 (42 U.S.C. 8013(k)(6)) is amended by inserting

after subparagraph (D) the following:

‘‘ ‘Such term includes a for-profit limited partnership the sole general partner of which is

an organization meeting the requirements under subparagraphs (A), (B), (C), and (D) or a

corporation wholly owned and controlled by an organization meeting the requirements

under subparagraphs (A), (B), (C), and (D).’ ’’.

The amendment probably should have been made to such section of the Cranston-Gonzalez

National Affordable Housing Act. 2So in law. Probably intended to refer to subsection (d)(1).

3So in law. Probably intended to refer to subsection (d)(2).

operate a project for supportive housing for persons with disabilities.

(6) The term ‘‘private nonprofit organization’’ means any

institution or foundation—

(A) that has received, or has temporary clearance to

receive, tax-exempt status under section 501(c)(3) of the

Internal Revenue Code of 1986;

(B) no part of the net earnings of which inures to the

benefit of any member, founder, contributor, or individual;

(C) which has a governing board (i) the membership of

which is selected in a manner to assure that there is significant representation of the views of persons with disabilities, and (ii) which is responsible for the operation of

the housing assisted under this section; and

(D) 1 which is approved by the Secretary as to financial responsibility.

(7) The term ‘‘State’’ includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the

possessions of the United States.

(8) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(9) The term ‘‘very low-income’’ has the same meaning as

given the term ‘‘very low-income families’’ under section 3(b)(2)

of the United States Housing Act of 1937.

(l) ALLOCATION OF FUNDS.—

(1) ALLOCATION.—Of any amount made available for assistance under this section in any fiscal year, an amount shall

be used for assistance under subsection (b)(2) that is not less

than the amount made available in appropriation Acts for such

assistance in the preceding year.

(2) CAPITAL ADVANCES.—Of any amounts made available

for assistance under subsection (b), such sums as may be necessary shall be available for funding capital advances in accordance with subsection (c)(1) 2. Such amounts, the repayments from such advances, and the proceeds from notes or obligations issued under this section prior to the enactment of this

Act shall constitute a revolving fund to be used by the Secretary in carrying out this section.

(3) PROJECT RENTAL ASSISTANCE.—Of any amounts made

available for assistance under subsection (b), such sums as

may be necessary shall be available for funding project rental

assistance in accordance with subsection (c)(2). 3
401 Sec. 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES

(4) SIZE LIMITATION.—Of any amounts made available for

any fiscal year and used for capital advances or project rental

assistance under paragraphs (1) and (2) of subsection (d), not

more than 25 percent may be used for supportive housing

which contains more than 24 separate dwelling units.

(m) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated for providing assistance under this section such

sums as may be necessary for each of fiscal years 2001, 2002, and

2003.
402

REVISED CONGREGATE HOUSING SERVICES

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4304; 42 U.S.C. 8011]

SEC. 802. ø42 U.S.C. 8011¿ REVISED CONGREGATE HOUSING SERVICES

PROGRAM.

(a) FINDINGS AND PURPOSES.—

(1) FINDINGS.—The Congress finds that—

(A) the effective provision of congregate services may

require the redesign of units and buildings to meet the

special physical needs of the frail elderly persons and the

creation of congregate space to accommodate services that

enhance independent living;

(B) congregate housing, coordinated with the delivery

of supportive services, offers an innovative, proven, and

cost-effective means of enabling frail older persons and

persons with disabilities to maintain their dignity and

independence;

(C) independent living with assistance is a preferable

housing alternative to institutionalization for many frail

older persons and persons with disabilities;

(D) 365,000 persons in federally assisted housing experience some form of frailty, and the number is expected to

increase as the general population ages;

(E) an estimated 20 to 30 percent of older adults living

in federally assisted housing experience some form of frailty;

(F) a large and growing number of frail elderly residents face premature or unnecessary institutionalization

because of the absence of or deficiencies in the availability,

adequacy, coordination, or delivery of supportive services;

(G) the support service needs of frail residents of assisted housing are beyond the resources and experience

that housing managers have for meeting such needs;

(H) supportive services would promote the invaluable

option of independent living for nonelderly persons with

disabilities in federally assisted housing;

(I) approximately 25 percent of congregate housing

services program sites provide congregate services to

young individuals with disabilities;

(J) to the extent that institutionalized older adults do

not need the full costly support provided by such care, public moneys could be more effectively spent providing the

necessary services in a noninstitutional setting; and

(K) the Congregate Housing Services Program, established by Congress in 1978, and similar programs pro-
403 Sec. 802 REVISED CONGREGATE HOUSING SERVICES

viding in-home services have been effective in preventing

unnecessary institutionalization and encouraging deinstitutionalization.

(2) PURPOSES.—The purposes of this section are—

(A) to provide assistance to retrofit individual dwelling

units and renovate public and common areas in eligible

housing to meet the special physical needs of eligible residents;

(B) to create and rehabilitate congregate space in or

adjacent to such housing to accommodate supportive services that enhance independent living;

(C) to improve the capacity of management to assess

the service needs of eligible residents, coordinate the provision of supportive services that meet the needs of eligible

residents and ensure the long-term provision of such services;

(D) to provide services in federally assisted housing to

prevent premature and inappropriate institutionalization

in a manner that respects the dignity of the elderly and

persons with disabilities;

(E) to provide readily available and efficient supportive services that provide a choice in supported living

arrangements by utilizing the services of an on-site coordinator, with emphasis on maintaining a continuum of care

for the vulnerable elderly;

(F) to improve the quality of life of older Americans

living in federally assisted housing;

(G) to preserve the viability of existing affordable

housing projects for lower-income older residents who are

aging in place by assisting managers of such housing with

the difficulties and challenges created by serving older

residents;

(H) to develop partnerships between the Federal Government and State governments in providing services to

the frail elderly and persons with disabilities; and

(I) to utilize Federal and State funds in a more costeffective and humane way in serving the needs of older

adults.

(b) CONTRACTS FOR CONGREGATE SERVICES PROGRAMS.—

(1) IN GENERAL.—The Secretary of Housing and Urban Development and the Secretary of Agriculture (through Administrator of the Farmers Home Administration) shall enter into

contracts with States, Indian tribes, units of general local government and local nonprofit housing sponsors, utilizing any

amounts appropriated under subsection (n)—

(A) to provide congregate services programs for eligible

project residents to promote and encourage maximum

independence within a home environment for such residents capable of self-care with appropriate supportive services; or

(B) to adapt housing to better accommodate the physical requirements and service needs of eligible residents.

(2) TERM OF CONTRACTS.—Each contract between the Secretary concerned and a State, Indian tribe, or unit of general
Sec. 802 REVISED CONGREGATE HOUSING SERVICES 404

local government, or local nonprofit housing sponsor, shall be

for a term of 5 years and shall be renewable at the expiration

of the term, except as otherwise provided in this section.

(c) RESERVATION OF AMOUNTS.—For each State, Indian tribe,

unit of general local government, and nonprofit housing sponsor,

receiving a contract under this subsection, the Secretary concerned

shall reserve a sum equal to the total approved contract amount

from the amount authorized and appropriated for the fiscal year in

which the notification date of funding approval occurs.

(d) ELIGIBLE ACTIVITIES.— (1) IN GENERAL.—A congregate services program under

this section shall provide meal and other services for eligible

project residents (and other residents and nonresidents, as provided in subsection (e)), as provided in this section, that are coordinated on site.

(2) MEAL SERVICES.—Congregate services programs assisted under this section shall include meal service adequate to

meet at least one-third of the daily nutritional needs of eligible

project residents, as follows:

(A) FOOD STAMPS AND AGRICULTURAL COMMODITIES.— In providing meal services under this paragraph, each congregate services program—

(i) shall—

(I) apply for approval as a retail food store

under section 9 of the Food Stamp Act of 1977 (42

U.S.C. 2018); and

(II) if approved under such section, accept

coupons (as defined in section 3(e) of such Act) as

payment from individuals to whom such meal

services are provided; and

(ii) shall request, and use to provide such meal

services, agricultural commodities made available

without charge by the Secretary of Agriculture.

(B) PREFERENCE FOR NUTRITION PROVIDERS.—In contracting for or otherwise providing for meal services under

this paragraph, each congregate services program shall

give preference to any provider of meal services who—

(i) receives assistance under title III of the Older

Americans Act of 1965; or

(ii) has experience, according to standards as the

Secretary shall require, in providing meal services in

a housing project under the Congregate Housing Services Act of 1978 or any other program for congregate

services.

(3) RETROFIT AND RENOVATION.—Assistance under this section may be provided with respect to eligible housing for the

elderly for—

(A) retrofitting of individual dwelling units to meet the

special physical needs of current or future residents who

are or are expected to be eligible residents, which retrofitting may include—

(i) widening of doors to allow passage by persons

with disabilities in wheelchairs into and within units

in the project;
405 Sec. 802 REVISED CONGREGATE HOUSING SERVICES

1So in law. Probably intended to refer to subsection (e).

(ii) placement of light switches, electrical outlets,

thermostats and other environmental controls in accessible locations;

(iii) installation of grab bars in bathrooms or the

placement of reinforcements in bathroom walls to

allow later installation of grab bars;

(iv) redesign of usable kitchens and bathrooms to

permit a person in a wheelchair to maneuver about

the space; and

(v) such other features of adaptive design that the

Secretary finds are appropriate to meet the special

needs of such residents;

(B) such renovation as is necessary to ensure that public and common areas are readily accessible to and usable

by eligible residents;

(C) renovation, conversion, or combination of vacant

dwelling units to create congregate space to accommodate

the provision of supportive services to eligible residents;

(D) renovation of existing congregate space to accommodate the provision of supportive services to eligible residents; and

(E) construction or renovation of facilities to create

conveniently located congregate space to accommodate the

provision of supportive services to eligible residents.

For purposes of this paragraph, the term ‘‘congregate space’’

shall include space for cafeterias or dining halls, community

rooms or buildings, workshops, adult day health facilities, or

other outpatient health facilities, or other essential service facilities.

(4) SERVICE COORDINATOR.—Assistance under this section

may be provided with respect to the employment of one or

more individuals (hereinafter referred to as ‘‘service coordinator’’) who may be responsible for—

(A) working with the professional assessment committee established under subsection (f) 1 on an ongoing

basis to assess the service needs of eligible residents;

(B) working with service providers and the professional assessment committee to tailor the provision of services to the needs and characteristics of eligible residents;

(C) mobilizing public and private resources to ensure

that the qualifying supportive services identified pursuant

to subsection (d) 1 can be funded over the time period identified under such subsection;

(D) monitoring and evaluating the impact and effectiveness of any supportive service program receiving capital or operating assistance under this section; and

(E) performing such other duties and functions that

the Secretary deems appropriate to enable frail elderly

persons residing in federally assisted housing to live with

dignity and independence.

Such qualifications and standards shall include requiring each

service coordinator to be trained in the aging process, elder
Sec. 802 REVISED CONGREGATE HOUSING SERVICES 406

services, disability services, eligibility for and procedures of

Federal and applicable State entitlement programs, legal liability issues relating to providing service coordination, drug and

alcohol use and abuse by the elderly, and mental health issues.

The Secretary shall establish such minimum qualifications and

standards for the position of service coordinator that the Secretary deems necessary to ensure sound management. The Secretary may fund the employment of service coordinators by

using amounts appropriated under this section and by permitting owners to use existing sources of funds, including excess

project reserves.

(5) OTHER SERVICES.—Congregate services programs assisted under this section may include services for transportation, personal care, dressing, bathing, toileting, housekeeping, chore assistance, nonmedical counseling, assessment

of the safety of housing units, group and socialization activities, assistance with medications (in accordance with any applicable State law), case management, personal emergency response, and other services to prevent premature and unnecessary institutionalization of eligible project residents.

(6) DETERMINATION OF NEEDS.—In determining the services to be provided to eligible project residents under a congregate services program assisted under this section, the program shall provide for consideration of the needs and wants of

eligible project residents.

(7) FEES.—

(A) ELIGIBLE PROJECT RESIDENTS.—The owner of each

eligible housing project shall establish fees for meals and

other services provided under a congregate services program to eligible project residents, which shall be sufficient

to provide 10 percent of the costs of the services provided.

The Secretary concerned shall provide for the waiver of

fees under this paragraph for individuals whose incomes

are insufficient to provide for any payment. The fees for

meals shall be in the following amounts:

(i) FULL MEAL SERVICES.—The fees for residents

receiving more than 1 meal per day, 7 days per week,

shall be reasonable and shall equal between 10 and 20

percent of the adjusted income of the project resident

(as such income is determined under section 3(b) of

the United States Housing Act of 1937), or the cost of

providing the services, whichever is less.

(ii) LESS THAN FULL MEAL SERVICES.—The fees for

residents receiving meal services less frequently than

as described in the preceding sentence shall be in an

amount equal to 10 percent of such adjusted income of

the project resident or the cost of providing the services, whichever is less.

(B) OTHER RESIDENTS AND NONRESIDENTS.—Fees shall

be established under this paragraph for residents of eligible housing projects (other than eligible project residents)

and for nonresidents that receive services from a congregate services program pursuant to subsection (e). Such
407 Sec. 802 REVISED CONGREGATE HOUSING SERVICES

fees shall be in an amount equal to the cost of providing

the services.

(8) DIRECT AND INDIRECT PROVISION OF SERVICES.—Any

State, Indian tribe, unit of general local government, or nonprofit housing sponsor that receives assistance under this section may provide congregate services directly to eligible project

residents or may, by contract or lease, provide such services

through other appropriate agencies or providers.

(e) ELIGIBILITY FOR SERVICES.— (1) ELIGIBLE PROJECT RESIDENTS.—Any eligible resident

who is a resident of an eligible housing project (or who with

deinstitutionalization and appropriate supportive services

under this section could become a resident of eligible federally

assisted housing) shall be eligible for services under a congregate services program assisted under this section.

(2) ECONOMIC NEED.—In providing services under a congregate services program, the program shall give consideration

to serving eligible project residents with the greatest economic

need.

(3) IDENTIFICATION.— (A) IN GENERAL.—A professional assessment committee under subparagraph (B) shall identify eligible

project residents under paragraph (1) and shall designate

services appropriate to the functional abilities and needs of

each eligible project resident. The committee shall utilize

procedures that ensure that the process of determining eligibility of individuals for congregate services shall accord

such individuals fair treatment and due process and a

right of appeal of the determination of eligibility, and shall

also ensure the confidentiality of personal and medical

records.

(B) PROFESSIONAL ASSESSMENT COMMITTEE.—A professional assessment committee under this section shall consist of not less than 3 individuals, who shall be appointed

to the committee by the officials of the eligible housing

project responsible for the congregate services program,

and shall include qualified medical and other health and

social services professionals competent to appraise the

functional abilities of the frail elderly and persons with

disabilities in relation to the performance of tasks of daily

living.

(4) ELIGIBILITY OF OTHER RESIDENTS.—The elderly and persons with disabilities who reside in an eligible housing project

other than eligible project residents under paragraph (1) may

receive services from a congregate services program under this

section if the housing managers, congregate service coordinators, and the professional assessment committee jointly determine that the participation of such individuals will not negatively affect the provision of services to eligible project residents. Residents eligible for services under this paragraph

shall pay fees as provided under subsection (d).

(5) ELIGIBILITY OF NONRESIDENTS.—The Secretary may

permit the provision of services to elderly persons and persons

with disabilities who are not residents if the participation of
Sec. 802 REVISED CONGREGATE HOUSING SERVICES 408

1So in law.

such persons will not adversely affect the cost-effectiveness or

operation of the program or add significantly to the need for

assistance under this section.

(f) ELIGIBLE CONTRACT RECIPIENTS AND DISTRIBUTION OF ASSISTANCE.—The Secretary concerned may provide assistance under

this section and enter into contracts under subsection (b) with—

(1) owners of eligible housing;

(2) States that submit applications in behalf of owners of

eligible housing; and

(3) Indian tribes and units of general local government

that submit applications on behalf of owners of eligible housing.

(g) APPLICATIONS.—The funds made available under this section shall be allocated by the Secretary among approvable applications submitted by or on behalf of owners. Applications for assistance under this section shall be submitted in such form and in accordance with such procedures as the Secretary shall establish. Applications for assistance shall contain—

(1) a description of the type of assistance the applicant is

applying for;

(2) in the case of an application involving rehabilitation or

retrofit, a description of the activities to be carried out, the

number of elderly persons to be served, the costs of such activities, and evidence of a commitment for the services to be associated with the project;

(3) a description of qualifying supportive services that can

reasonably be expected to be made available to eligible residents over a 5-year period;

(4) a firm commitment from one or more sources of assistance ensuring that some or all of the qualifying supportive

services identified under paragraph (3) will be provided for not

less than 1 year following the completion of activities assisted

under subsection (d);

(5) a description of public or private sources of assistance

that are likely to fund or provide qualifying supportive services, including evidence of any intention to provide assistance

expressed by State and local governments, private foundations,

and other organizations (including for-profit and nonprofit organizations);

(6) a certifications 1 from the appropriate State or local

agency (as determined by the Secretary) that—

(A) the provision of the qualifying supportive services

identified under paragraph (3) will enable eligible residents to live independently and avoid unnecessary institutionalization,

(B) there is a reasonable likelihood that such services

will be funded or provided for the entire period specified

under paragraph (3), and

(C) the agency and the applicant will, during the term

of the contract, actively seek assistance for such services

from other sources;
409 Sec. 802 REVISED CONGREGATE HOUSING SERVICES

1So in law. Probably intended to refer to subsection (m).

(7) a description of any fees that would be established pursuant to subsection (d); and

(8) such other information or certifications that the Secretary determines to be necessary or appropriate to achieve the

purposes of this section.

The Secretary shall act on each application within 60 days of

its submission.

(h) SELECTION AND EVALUATION OF APPLICATIONS AND PROGRAMS.—

(1) IN GENERAL.—Each Secretary concerned shall establish

criteria for selecting States, Indian tribes, units of general local

government, and local nonprofit housing sponsors to receive assistance under this section, and shall select such entities to receive assistance. The criteria for selection shall include consideration of—

(A) the extent to which the activities described in subsection (d)(3) will foster independent living and the provision of such services;

(B) the types and priorities of the basic services proposed to be provided, the appropriateness of the targeting

of services, the methods of providing for deinstitutionalized

older individuals and individuals with disabilities, and the

relationship of the proposal to the needs and characteristics of the eligible residents of the projects where the services are to be provided;

(C) the schedule for establishment of services following

approval of the application;

(D) the degree to which local social services are adequate for the purpose of assisting eligible project residents

to maintain independent living and avoid unnecessary institutionalization;

(E) the professional qualifications of the members of

the professional assessment committee;

(F) the reasonableness and application of fees schedules established for congregate services;

(G) the adequacy and accuracy of the proposed budgets; and

(H) the extent to which the owner will provide funds

from other services in excess of that required by this section.

(2) EVALUATION OF PROVISION OF CONGREGATE SERVICES

PROGRAMS.—The Secretary of Housing and Urban Development

and the Secretary of Agriculture shall, by regulation under

subsection (n), 1 establish procedures for States, Indian tribes,

and units of general local government receiving assistance

under this section—

(A) to review and evaluate the performance of the congregate services programs of eligible housing projects receiving assistance under this section in such State; and

(B) to submit annually, to the Secretary concerned, a

report evaluating the impact and effectiveness of con-
Sec. 802 REVISED CONGREGATE HOUSING SERVICES 410

1 November 28, 1990.

gregate services programs in the entity assisted under this

section.

(i) CONGREGATE SERVICES PROGRAM FUNDING.—

(1) COST DISTRIBUTION.—

(A) CONTRIBUTION REQUIREMENT.—In providing contracts under subsection (b), each Secretary concerned shall

provide for the cost of providing the congregate services

program assisted under this section to be distributed as

follows:

(i) Each State, Indian tribe, unit of general government, or nonprofit housing sponsor that receives

amounts under a contract under subsection (b) shall

supplement any such amount with amounts sufficient

to provide 50 percent of the cost of providing the congregate services program. Any monetary or in-kind

contributions received by a congregate services program under the Congregate Housing Services Act of

1978 may be considered for purposes of fulfilling the

requirement under this clause. The Secretary concerned shall encourage owners to use excess residual

receipts to the extent available to supplement funds

for retrofit and supportive services under this section.

(ii) The Secretary concerned shall provide 40 percent of the cost, with amounts under contracts under

subsection (b).

(iii) Fees under subsection (d)(7) shall provide 10

percent of the cost.

(B) EXCEPTIONS.—

(i) For any congregate services program that was

receiving assistance under a contract under the Congregate Housing Services Act of 1978 on the date of

the enactment of this Act,1 the unit of general local

government or nonprofit housing sponsor, in coordination with a local government with respect to such program shall not be subject to the requirement to provide supplemental contributions under subparagraph

(A)(i) (for such program) for the 6-year period beginning on the expiration of the contract for such assistance. The Secretary concerned shall require each such

program to maintain, for such 6-year period, the same

dollar amount of annual contributions in support of

the services eligible for assistance under this section

as were contributed to such program during the year

preceding the date of the enactment of this Act.1

(ii) To the extent that the limitations under subsection (d)(7) regarding the percentage of income eligible residents may pay for services will result in collected fees for any congregate services program of less

than 10 percent of the cost of providing the program,

50 percent of such remaining costs shall be provided

by the recipient of amounts under the contract and 50
411 Sec. 802 REVISED CONGREGATE HOUSING SERVICES

percent of such remaining costs shall be provided by

the Secretary concerned under such contract.

(C) ELIGIBLE SUPPLEMENTAL CONTRIBUTIONS.—If provided by the State, Indian tribe, unit of general local government, or local nonprofit housing sponsor, any salary

paid to staff from governmental sources to carry out the

program of the recipient and salary paid to residents employed by the program (other than from amounts under a

contract under subsection (b)), and any other in-kind contributions from governmental sources shall be considered

as supplemental contributions for purposes of meeting the

supplemental contribution requirement under subparagraph (A)(i), except that the amount of in-kind contributions considered for purposes of fulfilling such contribution

requirement may not exceed 10 percent of the total

amount to be provided by the State, Indian tribe, local government, or local nonprofit housing sponsor.

(D) PROHIBITION OF SUBSTITUTION OF FUNDS.—The

Secretary concerned shall require each State, Indian tribe,

unit of general local government, and local nonprofit housing sponsor, that receives assistance under this section to

maintain the same dollar amount of annual contribution

that such State, Indian tribe, local government, or sponsor

was making, if any, in support of services eligible for assistance under this section before the date of the submission of the application for such assistance.

(E) LIMITATION.—For purposes of complying with the

requirement under subparagraph (A)(i), the appropriate

Secretary concerned may not consider any amounts contributed or provided by any local government to any State

receiving assistance under this section that exceed 10 percent of the amount required of the State under subparagraph (A)(i).

(2) CONSULTATION.—The Secretary shall consult with the

Secretary of Health and Human Services regarding the availability of assistance from other Federal programs to support

services under this section and shall make information available to applicants for assistance under this section.

(j) MISCELLANEOUS PROVISIONS.—

(1) USE OF RESIDENTS IN PROVIDING SERVICES.—Each housing project that receives assistance under this section shall, to

the maximum extent practicable, utilize the elderly and persons with disabilities who are residents of the housing project,

but who are not eligible project residents, to participate in providing the services provided under congregate services programs under this section. Such individuals shall be paid wages

that shall not be lower than the higher of—

(A) the minimum wage that would be applicable to the

employee under the Fair Labor Standards Act of 1938, if

section 6(a)(1) of such Act applied to the resident and if

the resident were not exempt under section 13 of such Act;
Sec. 802 REVISED CONGREGATE HOUSING SERVICES 412

1So in law.

2 November 28, 1990.

(B) the State of 1 local minimum wage for the most

nearly comparable covered employment; or

(C) the prevailing rates of pay for persons employed in

similar public occupations by the same employer.

(2) EFFECT OF SERVICES.—Except for wages paid under

paragraph (1) of this subsection, services provided to a resident

of an eligible housing project under a congregate services program under this section may not be considered as income for

the purpose of determining eligibility for or the amount of assistance or aid furnished under any Federal, federally assisted,

or State program based on need.

(3) ELIGIBILITY AND PRIORITY FOR 1978 ACT RECIPIENTS.—

Notwithstanding any other provision of this section, any public

housing agency, housing assisted under section 202 of the

Housing Act of 1959, or nonprofit corporation that was receiving assistance under a contract under the Congregate Housing

Services Act of 1978 on the date of the enactment of this section 2 shall (subject to approval and allocation of sufficient

amounts under the Congregate Housing Services Act of 1978

and appropriations Acts under such Act) receive assistance

under the Congregate Housing Services Act of 1978 for the remainder of the term of the contract for assistance for such

agency or corporation under such Act, and shall receive priority for assistance under this section after the expiration of

such period.

(4) ADMINISTRATIVE COST LIMITATION.—A recipient of assistance under this section may not use more than 10 percent

of the sum of such assistance and the contribution amounts required under subsection (i)(1)(A)(i) for administrative costs and

shall ensure that any entity to which the recipient distributes

amounts from such sum may not expend more than a reasonable amount from such distributed amounts for administrative

costs. Administrative costs may not include any capital expenses.

(k) DEFINITIONS.—For purposes of this section:

(1) The term ‘‘activity of daily living’’ means an activity

regularly necessary for personal care and includes bathing,

dressing, eating, getting in and out of bed and chairs, walking,

going outdoors, and using the toilet.

(2) The term ‘‘case management’’ means assessment of the

needs of a resident, ensuring access to and coordination of

services for the resident, monitoring delivery of services to the

resident, and periodic reassessment to ensure that services

provided are appropriate to the needs and wants of the resident.

(3) The term ‘‘congregate housing’’ means low-rent housing

that is connected to a central dining facility where wholesome

and economical meals can be served to the residents.

(4) The term ‘‘congregate services’’ means services described in subsection (d) of this section.
413 Sec. 802 REVISED CONGREGATE HOUSING SERVICES

1Section 501(a) of the Native American Housing Assistance and Self-Determination Act of

1996 (P.L. 104–330; 110 Stat. 4041) repealed title II of the United States Housing Act of 1937. 2So in law. Probably intended to refer to the United States Housing Act of 1937.

(5) The term ‘‘congregate services program’’ means a program assisted under this section undertaken by an eligible

housing project to provide congregate services to eligible residents.

(6) The term ‘‘eligible housing project’’ means—

(A) public housing (as such term is defined in section

3(b) of the United States Housing Act of 1937) and lower

income housing developed or operated pursuant to a contract between the Secretary of Housing and Urban Development and an Indian housing authority under title II of

the United States Housing Act of 1937 1;

(B) housing assisted under section 8 of the United

States Housing Act of 1937 with a contract that is attached to the structure under subsection (d)(2) of such section or with a contract entered into in connection with the

new construction or moderate rehabilitation of the structure under section 8(b)(2) of the United States Housing

Act, 2 as such section existed before October 1, 1983;

(C) housing assisted under section 202 of the Housing

Act of 1959;

(D) housing assisted under section 221(d) or 236 of the

National Housing Act, with respect to which the owner has

made a binding commitment to the Secretary of Housing

and Urban Development not to prepay the mortgage or

terminate the insurance contract under section 229 of such

Act (unless the binding commitments have been made to

extend the low-income use restrictions relating to such

housing for the remaining useful life of the housing);

(E) housing assisted under section 514 or 515 of the

Housing Act of 1949, with respect to which the owner has

made a binding commitment to the Secretary of Agriculture not to prepay or refinance the mortgage (unless the

binding commitments have been made to extend the lowincome use restrictions relating to such housing for not

less than the 20-year period under section 502(c)(4) of the

Housing Act of 1949); and

(F) housing assisted under section 516 of the Housing

Act of 1949.

(7) The term ‘‘eligible resident’’ means a person residing in

eligible housing for the elderly who qualifies under the definition of frail elderly, person with disabilities (regardless of

whether the person is elderly), or temporarily disabled.

(8) The term ‘‘frail elderly’’ means an elderly person who

is unable to perform at least 3 activities of daily living adopted

by the Secretary for purposes of this program. Owners may establish additional eligibility requirements (acceptable to the

Secretary) based on the standards in local supportive services

programs.

(9) The term ‘‘Indian tribe’’ means any Indian tribe, band,

nation, or other organized group or community, including any

Alaska Native village or regional corporation as defined in or
Sec. 802 REVISED CONGREGATE HOUSING SERVICES 414

1So in law.

established pursuant to the Alaska Native Claims Settlement

Act, that is recognized as eligible for the special programs and

services provided by the United States to Indians because of

their status as Indians.

(10) The term ‘‘instrumental activity of daily living’’ means

a regularly necessary home management activity and includes

preparing meals, shopping for personal items, managing

money, using the telephone, and performing light or heavy

housework.

(11) The term ‘‘local nonprofit housing sponsor’’ includes

public housing agencies (as such term is defined in section

3(b)(6)) 1 of the United States Housing Act of 1937.

(12) The term ‘‘nonprofit’’, as applied to an organization,

means no part of the net earnings of the organization inures,

or may lawfully inure, to the benefit of any private shareholder

or individual.

(13) The term ‘‘elderly person’’ means a person who is at

least 62 years of age.

(14) The term ‘‘person with disabilities’’ has the meaning

given the term by section 811 of this Act.

(15) The term ‘‘professional assessment committee’’ means

a committee established under subsection (e)(3)(B).

(16) The term ‘‘qualifying supportive services’’ means new

or significantly expanded services that the Secretary deems essential to enable eligible residents to live independently and

avoid unnecessary institutionalization. Such services may include but not be limited to (A) meal service adequate to meet

nutritional need; (B) housekeeping aid; (C) personal assistance

(which may include, but is not limited to, aid given to eligible

residents in grooming, dressing, and other activities which

maintain personal appearance and hygiene); (D) transportation

services; (E) health-related services; and (F) personal emergency response systems; the owner may provide the qualifying

services directly to eligible residents or may, by contract or

lease, provide such services through other appropriate agencies

or providers.

(17) The term ‘‘Secretary concerned’’ means—

(A) the Secretary of Housing and Urban Development,

with respect to eligible federally assisted housing administered by such Secretary; and

(B) the Secretary of Agriculture, with respect to eligible federally assisted housing administered by the Administrator of the Farmers Home Administration.

(18) The term ‘‘State’’ means the States 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, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States.

(19) The term ‘‘temporarily disabled’’ means having an impairment that—
415 Sec. 802 REVISED CONGREGATE HOUSING SERVICES

1So in law. Probably intended to be ‘‘report’’.

2The date of enactment was November 28, 1990.

(A) is expected to be of no more than 6 months duration; and

(B) impedes the ability of the individual to live independently unless the individual receives congregate services.

(20) The term ‘‘unit of general local government’’—

(A) means any city, town, township, county, parish,

village, or other general purpose political subdivision of a

State; and

(B) includes a unit of general government acting as an

applicant for assistance under this section in cooperation

with a nonprofit housing sponsor and a nonprofit housing

sponsor acting as an applicant for assistance under this

section in cooperation with a unit of general local government, as provided under subsection (g)(1)(B).

(l) REPORTS TO CONGRESS.—

(1) IN GENERAL.—Each Secretary concerned shall submit to

the Congress, for each fiscal year for which assistance is provided for congregate services programs under this section, an

annual report—

(A) describing the activities being carried out with assistance under this section and the population being

served by such activities;

(B) evaluating the effectiveness of the program of providing assistance for congregate services under this section, and a comparison of the effectiveness of the program

under this section with the HOPE for Elderly Independence Program under section 803 of this Act; and

(C) containing any other information that the Secretary concerned considers helpful to the Congress in evaluating the effectiveness of this section.

(2) SUBMISSION OF DATA TO SECRETARY CONCERNED.—The

Secretary of Housing and Urban Development and the Secretary of Agriculture shall provide, by regulation under subsection (m), for the submission of data by recipients of assistance under this section to be used in the repeat 1 required by

paragraph (1).

(m) REGULATIONS.—The Secretary of Housing and Urban Development and the Secretary of Agriculture shall, not later than

the expiration of the 180-day period beginning on the date of the

enactment of this Act,2 jointly issue any regulations necessary to

carry out this section.

(n) AUTHORIZATION OF APPROPRIATIONS.—

(1) AUTHORIZATION AND USE.—There are authorized to be

appropriated to carry out this section $21,000,000 for fiscal

year 1993, and $21,882,000 for fiscal year 1994, of which not

more than—

(A) the amount of such sums appropriated that, with

respect to the total amount appropriated, represents the

ratio of the total number of units of eligible federally assisted housing for elderly individuals assisted by programs
Sec. 802 REVISED CONGREGATE HOUSING SERVICES 416

administered by the Secretary of Housing and Urban Development to the total number of units assisted by programs administered by such Secretary and the Secretary

of Agriculture, shall be used for assistance for congregate

services programs in eligible federally assisted housing administered by the Secretary of Housing and Urban Development: and

(B) the amount of such sums appropriated that, with

respect to the total amount appropriated, represents the

ratio of the total number of units of eligible federally assisted housing for elderly individuals assisted by programs

administered by the Secretary of Agriculture to the total

number of units assisted by programs administered by

such Secretary and the Secretary of Housing and Urban

Development, shall be used for assistance for congregate

services programs in eligible federally assisted housing administered by the Secretary of Agriculture (through the

Administrator of the Farmers Home Administration).

(2) AVAILABILITY.—Any amounts appropriated under this

subsection shall remain available until expended.

(o) RESERVE FUND.—The Secretary may reserve not more than

5 percent of the amounts made available in each fiscal year to supplement grants awarded to owners under this section when, in the

determination of the Secretary, such supplemental adjustments are

required to maintain adequate levels of services to eligible residents.

(p) CONFORMING AMENDMENT.—Section 9(a)(3)(B) of the United

States Housing Act of 1937 is amended—

* * * * * * *
417

FUNDING FOR SERVICE COORDINATORS AND

CONGREGATE SERVICES

EXCERPT FROM AMERICAN HOMEOWNERSHIP AND ECONOMIC

OPPORTUNITY ACT OF 2000

[Public Law 106–569; 114 Stat. 2953]

SEC. 823. SERVICE COORDINATORS AND CONGREGATE SERVICES FOR

ELDERLY AND DISABLED HOUSING.

There are authorized to be appropriated to the Secretary such

sums as may be necessary for each of fiscal years 2001, 2002, and

2003, for the following purposes:

(1) GRANTS FOR SERVICE COORDINATORS FOR CERTAIN FEDERALLY ASSISTED MULTIFAMILY HOUSING.—For grants under

section 676 of the Housing and Community Development Act

of 1992 (42 U.S.C. 13632) for providing service coordinators.

(2) CONGREGATE SERVICES FOR FEDERALLY ASSISTED HOUSING.—For contracts under section 802 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8011) to provide congregate services programs for eligible residents of eligible housing projects under subparagraphs (B) through (D) of

subsection (k)(6) of such section.
418

1The date of enactment was November 30, 1983.

PET OWNERSHIP

EXCERPT FROM HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

[Public Law 98–181; 97 Stat. 1195; 12 U.S.C. 1701r–1]

PET OWNERSHIP IN ASSISTED RENTAL HOUSING FOR THE ELDERLY OR

HANDICAPPED

SEC. 227. ø12 U.S.C. 1701r–1¿ (a) No owner or manager of any

federally assisted rental housing for the elderly or handicapped

may—

(1) as a condition of tenancy or otherwise, prohibit or prevent any tenant in such housing from owning common household pets or having common household pets living in the dwelling accommodations of such tenant in such housing; or

(2) restrict or discriminate against any person in connection with admission to, or continued occupancy of, such housing by reason of the ownership of such pets by, or the presence

of such pets in the dwelling accommodations of, such person.

(b)(1) Not later than the expiration of the twelve-month period

following the date of the enactment of this Act,1 the Secretary of

Housing and Urban Development and the Secretary of Agriculture

shall each issue such regulations as may be necessary to ensure (A)

compliance with the provisions of subsection (a) with respect to any

program of assistance referred to in subsection (d) that is administered by such Secretary; and (B) attaining the goal of providing decent, safe, and sanitary housing for the elderly or handicapped.

(2) Such regulations shall establish guidelines under which the

owner or manager of any federally assisted rental housing for the

elderly or handicapped (A) may prescribe reasonable rules for the

keeping of pets by tenants in such housing; and (B) shall consult

with the tenants of such housing in prescribing such rules. Such

rules may consider factors such as density of tenants, pet size,

types or pets, potential financial obligations of tenants, and standards of pet care.

(c) Nothing in this section may be construed to prohibit any

owner or manager of federally assisted rental housing for the elderly or handicapped, or any local housing authority or other appropriate authority of the community where such housing is located,

from requiring the removal from any such housing of any pet

whose conduct or condition is duly determined to constitute a nuisance or a threat to the health or safety of the other occupants of

such housing or of other persons in the community where such

housing is located.
419 Sec. 227 PET OWNERSHIP

1For exemption of Indian housing, see section 201(c) of the United States Housing Act of

1937, which is set forth in part II of this compilation.

(d) For purposes of this section, the term ‘‘federally assisted

rental housing for the elderly or handicapped’’ means any rental

housing project that—

(1) is assisted under section 202 of the Housing Act of

1959; or

(2) is assisted under the United States Housing Act of

1937, the National Housing Act, or title V of the Housing Act

of 1949, and is designated for occupancy by elderly or handicapped families, as such term is defined in section 202(d)(4) of

the Housing Act of 1959.1
420

1So in law. Probably intended to refer to this subtitle.

HOUSING FOR PERSONS WITH AIDS

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4375; 42 U.S.C. 12901 et seq.]

TITLE VIII—HOUSING FOR PERSONS WITH

SPECIAL NEEDS

* * * * * * *

Subtitle D—Housing Opportunities for Persons

With AIDS

SEC. 851. ø42 U.S.C. 12901 note¿ SHORT TITLE.

This subtitle may be cited as the ‘‘AIDS Housing Opportunity

Act’’.

SEC. 852. ø42 U.S.C. 12901¿ PURPOSE.

The purpose of this title 1 is to provide States and localities

with the resources and incentives to devise long-term comprehensive strategies for meeting the housing needs of persons with acquired immunodeficiency syndrome and families of such persons.

SEC. 853. ø42 U.S.C. 12902¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘acquired immunodeficiency syndrome and

related diseases’’ means the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent for acquired immunodeficiency syndrome.

(2) The term ‘‘applicant’’ means a State, a unit of general

local government, or a nonprofit organization eligible to receive

assistance under this subtitle.

(3) The term ‘‘low-income individual’’ means any individual

or family whose incomes do not exceed 80 percent of the median income for the area, as determined by the Secretary of

Housing and Urban Development, with adjustments for smaller and larger families, except that the Secretary may establish

income ceilings higher or lower than 80 percent of the median

income for the area if the Secretary finds that such variations

are necessary because of prevailing levels of construction costs

or unusually high or low family incomes.

(4) The term ‘‘grantee’’ means a State or unit of general

local government receiving grants from the Secretary under

this subtitle.
421 Sec. 854 HOUSING FOR PERSONS WITH AIDS

1So in law. Probably intended to refer to this subtitle.

(5) The term ‘‘metropolitan statistical area’’ means a metropolitan statistical area as established by the Office of Management and Budget. Such term includes the District of Columbia.

(6) The term ‘‘locality’’ means the geographical area within

the jurisdiction of a local government.

(7) The term ‘‘recipient’’ means a grantee or other applicant receiving funds under this title. 1

(8) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(9) The term ‘‘State’’ means a State of the United States,

the District of Columbia, and the Commonwealth of Puerto

Rico, or any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive to act on behalf of the jurisdiction with regard to provisions of this subtitle.

(10) The term ‘‘unit of general local government’’ has the

same meaning as in 104 of this Act.

(11) The term ‘‘city’’ has the meaning given the term in

section 102(a) of the Housing and Community Development

Act of 1974.

(12) The term ‘‘eligible person’’ means a person with acquired immunodeficiency syndrome or a related disease and

the family of such person.

(13) The term ‘‘nonprofit organization’’ means any nonprofit organization (including a State or locally chartered, nonprofit organization) that—

(A) is organized under State or local laws;

(B) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual;

(C) complies with standards of financial accountability

acceptable to the Secretary; and

(D) has among its purposes significant activities related to providing services or housing to persons with acquired immunodeficiency syndrome or related diseases.

(14) The term ‘‘project sponsor’’ means a nonprofit organization or a housing agency of a State or unit of general local

government that contracts with a grantee to receive assistance

under this subtitle.

SEC. 854. ø42 U.S.C. 12903¿ GENERAL AUTHORITY.

(a) GRANTS AUTHORIZED.—The Secretary shall, to the extent of

amounts approved in appropriations Acts under section 863, make

grants to States, units of general local government, and nonprofit

organizations.

(b) IMPLEMENTATION OF ELIGIBLE ACTIVITIES.—A grantee shall

carry out eligible activities under section 855 through project sponsors. Any grantee that is a State that enters into a contract with

a nonprofit organization to carry out eligible activities in a locality

shall obtain the approval of the unit of general local government

for the locality before entering into the contract.

(c) ALLOCATION OF RESOURCES.—
Sec. 854 HOUSING FOR PERSONS WITH AIDS 422

(1) FORMULA ALLOCATION.—The Secretary shall allocate 90

percent of the amounts approved in appropriation Acts under

section 863 among States and cities whose most recent comprehensive housing affordability strategy (or abbreviated strategy) has been approved by the Secretary under section 105 of

this Act. Such amounts shall be allocated as follows:

(A) 75 percent among—

(i) cities that are the most populous unit of general local government in a metropolitan statistical

area having a population greater than 500,000 and

more than 1,500 cases of acquired immunodeficiency

syndrome; and

(ii) States with more than 1,500 cases of acquired

immunodeficiency syndrome outside of metropolitan

statistical areas described in clause (i); and

(B) 25 percent among cities that (i) are the most populous unit of general local government in a metropolitan

statistical area having a population greater than 500,000

and more than 1,500 cases of acquired immunodeficiency

syndrome, and (ii) have a higher than average per capita

incidence of acquired immunodeficiency syndrome.

A single city may receive assistance allocated under subparagraph (A) and subparagraph (B). For purposes of allocating

amounts under this paragraph for any fiscal year, the number

of cases of acquired immunodeficiency syndrome shall be the

number of such cases reported to and confirmed by the Director of the Centers for Disease Control of the Public Health

Service as of March 31 of the fiscal year immediately preceding

the fiscal year for which the amounts are appropriated and to

be allocated.

(2) MINIMUM GRANT.—Subject only to the availability of

amounts pursuant to appropriations Acts under section 863,

for each fiscal year each eligible grantee under paragraph (1)

shall receive funding according to its proportionate share of the

total, except that each entity shall receive a minimum allocation of $200,000 from subparagraphs (A) and (B) of paragraph

(1) combined, and any increase this entails from the formula

amount will be deducted from all other allocations exceeding

$200,000 on a pro rata basis. If allocation under subparagraph

(A) of paragraph (1) would allocate less than $200,000 for any

State, the allocation for such State shall be $200,000 and the

amount of the increase under this sentence shall be deducted

on a pro rata basis from the allocations of the other States, except that a reduction under this subparagraph may not reduce

the amount allocated to any eligible entity to less than

$200,000.

(3) NONFORMULA ALLOCATION.—

(A) IN GENERAL.—The Secretary shall allocate 10 percent of the amounts appropriated under section 863

among—

(i) States and units of general local government

that do not qualify for allocation of amounts under

paragraph (1); and
423 Sec. 854 HOUSING FOR PERSONS WITH AIDS

(ii) States, units of general local government, and

nonprofit organizations, to fund special projects of national significance.

(B) SELECTION.—In selecting projects under this paragraph, the Secretary shall consider (i) relative numbers of

acquired immunodeficiency syndrome cases and per capita

acquired immunodeficiency syndrome incidence; (ii) housing needs of eligible persons in the community; (iii) extent

of local planning and coordination of housing programs for

eligible persons; and (iv) the likelihood of the continuation

of State and local efforts.

(C) NATIONAL SIGNIFICANCE PROJECTS.—For the purpose of subparagraph (A)(ii), in selecting projects of national significance the Secretary shall consider (i) the need

to assess the effectiveness of a particular model for providing supportive housing for eligible persons; (ii) the innovative nature of the proposed activity; and (iii) the potential replicability of the proposed activity in other similar

localities or nationally.

(d) APPLICATIONS.—Funds made available under this section

shall be allocated among applications submitted by applicants and

approved by the Secretary. Applications for assistance under this

section shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish.

Such applications shall contain—

(1) a description of the proposed activities;

(2) a description of the size and characteristics of the population that would be served by the proposed activities;

(3) a description of the public and private resources that

are expected to be made available in connection with the proposed activities;

(4) assurances satisfactory to the Secretary that any property purchased, leased, rehabilitated, renovated, or converted

with assistance under this section shall be operated for not less

than 10 years for the purpose specified in the application, except as otherwise specified in this subtitle;

(5) evidence in a form acceptable to the Secretary that the

proposed activities will meet urgent needs that are not being

met by available public and private sources; and

(6) such other information or certifications that the Secretary determines to be necessary to achieve the purposes of

this section.

(e) ADDITIONAL REQUIREMENT FOR METROPOLITAN AREAS.—In

addition to the other requirements of this section, to be eligible for

a grant to a metropolitan area under this section, the major city,

urban county, and any city with a population of 50,000 or more in

that metropolitan area shall establish or designate a governmental

agency or organization for receipt and use of amounts received

from a grant under this section and shall submit to the Secretary,

together with the application under subsection (d) a proposal for

the operation of such agency or organization.

(f) ADDITIONAL REQUIREMENT FOR CITY FORMULA GRANTEES.—

In addition to the other requirements of this section, to be eligible

for a grant pursuant to subsection (c)(1), a city shall provide such
Sec. 855 HOUSING FOR PERSONS WITH AIDS 424

assurances as the Secretary may require that any grant amounts

received will be allocated among eligible activities in a manner that

addresses the needs within the metropolitan statistical area in

which the city is located, including areas not within the jurisdiction

of the city. Any such city shall coordinate with other units of general local government located within the metropolitan statistical

area to provide such assurances and comply with the assurances.

SEC. 855. ø42 U.S.C. 12904¿ ELIGIBLE ACTIVITIES.

Grants allocated under this subtitle shall be available only for

approved activities to carry out strategies designed to prevent

homelessness among eligible persons. Approved activities shall include activities that—

(1) enable public and nonprofit organizations or agencies to

provide housing information to such persons and coordinate efforts to expand housing assistance resources for such persons

under section 857;

(2) facilitate the development and operation of shelter and

services for such persons under section 858;

(3) provide rental assistance to such persons under section

859;

(4) facilitate (through project-based rental assistance or

other means) the moderate rehabilitation of single room occupancy dwellings (SROs) that would be made available only to

such persons under section 860;

(5) facilitate the development of community residences for

eligible persons under section 861;

(6) carry out other activities that the Secretary develops in

cooperation with eligible States and localities, except that activities developed under this paragraph may be assisted only

with amounts provided under section 854(c)(3).

The Secretary shall establish standards and guidelines for approved activities. The Secretary shall permit grantees to refine and

adapt such standards and guidelines for individual projects,

where such refinements and adaptations are made necessary by

local circumstances.

SEC. 856. ø42 U.S.C. 12905¿ RESPONSIBILITIES OF GRANTEES.

(a) PROHIBITION OF SUBSTITUTION OF FUNDS.—Amounts received from grants under this subtitle may not be used to replace

other amounts made available or designated by State or local governments for use for the purposes under this subtitle.

(b) CAPABILITY.—The recipient shall have, in the determination

of the grantee or the Secretary, the capacity and capability to effectively administer a grant under this subtitle.

(c) COOPERATION.—The recipient shall agree to cooperate and

coordinate in providing assistance under this subtitle with the

agencies of the relevant State and local governments responsible

for services in the area served by the applicant for eligible persons

and other public and private organizations and agencies providing

services for such eligible persons.

(d) PROHIBITION OF FEES.—The recipient shall agree that no

fee will be charged to any eligible person for any housing or services provided with amounts from a grant under this subtitle.
425 Sec. 858 HOUSING FOR PERSONS WITH AIDS

1So in law. Probably intended to refer to this subtitle.

(e) CONFIDENTIALITY.—The recipient shall agree to ensure the

confidentiality of the name of any individual assisted with amounts

from a grant under this subtitle and any other information regarding individuals receiving such assistance.

(f) FINANCIAL RECORDS.—The recipient shall agree to maintain

and provide the grantee or the Secretary with financial records sufficient, in the determination of the Secretary, to ensure proper accounting and disbursing of amounts received from a grant under

this subtitle.

(g) ADMINISTRATIVE EXPENSES.— (1) GRANTEES.—Notwithstanding any other provision of

this subtitle, each grantee may use not more than 3 percent of

the grant amount for administrative costs relating to administering grant amounts and allocating such amounts to project

sponsors.

(2) PROJECT SPONSORS.—Notwithstanding any other provision of this subtitle, each project sponsor receiving amounts

from grants made under this title 1 may use not more than 7

percent of the amounts received for administrative costs relating to carrying out eligible activities under section 855, including the costs of staff necessary to carry out eligible activities.

(h) ENVIRONMENTAL REVIEW.—For purposes of environmental

review, a grant under this subtitle shall be treated as assistance

for a special project that is subject to section 305(c) of the Multifamily Housing Property Disposition Reform Act of 1994, and shall

be subject to the regulations issued by the Secretary to implement

such section.

SEC. 857. ø42 U.S.C. 12906¿ GRANTS FOR AIDS HOUSING INFORMATION

AND COORDINATION SERVICES.

Grants under this section may only be used for the following

activities:

(1) HOUSING INFORMATION SERVICES.—To provide (or contract to provide) counseling, information, and referral services

to assist eligible persons to locate, acquire, finance, and maintain housing and meet their housing needs.

(2) RESOURCE IDENTIFICATION.—To identify, coordinate,

and develop housing assistance resources (including conducting

preliminary research and making expenditures necessary to

determine the feasibility of specific housing-related initiatives)

for eligible persons.

SEC. 858. ø42 U.S.C. 12907¿ AIDS SHORT-TERM SUPPORTED HOUSING

AND SERVICES.

(a) USE OF GRANTS.—Any amounts received from grants under

this section may only be used to carry out a program to provide (or

contract to provide) assistance to eligible persons who are homeless

or in need of housing assistance to prevent homelessness, which

may include the following activities:

(1) SHORT-TERM SUPPORTED HOUSING.—Purchasing, leasing, renovating, repairing, and converting facilities to provide

short-term shelter and services.

(2) SHORT-TERM HOUSING PAYMENTS ASSISTANCE.—Providing rent assistance payments for short-term supported
Sec. 858 HOUSING FOR PERSONS WITH AIDS 426

housing and rent, mortgage, and utilities payments to prevent

homelessness of the tenant or mortgagor of a dwelling.

(3) SUPPORTIVE SERVICES.—Providing supportive services,

to eligible persons assisted under paragraphs (1) and (2), including health, mental health, assessment, permanent housing

placement, drug and alcohol abuse treatment and counseling,

day care, and nutritional services (except that health services

under this paragraph may only be provided to eligible persons

with acquired immunodeficiency syndrome or related diseases),

and providing technical assistance to eligible persons to provide assistance in gaining access to benefits and services for

homeless individuals provided by the Federal Government and

State and local governments.

(4) OPERATION.—Providing for the operation of short-term

supported housing provided under this section, including the

costs of security, operation insurance, utilities, furnishings,

equipment, supplies, and other incidental costs.

(5) ADMINISTRATION.—Providing staff to carry out the program under this section (subject to the provisions of section

856(g)).

(b) PROGRAM REQUIREMENTS.—

(1) MINIMUM USE PERIOD FOR STRUCTURES.—

(A) IN GENERAL.—Any building or structure assisted

with amounts from a grant under this section shall be

maintained as a facility to provide short-term supported

housing or assistance for eligible persons—

(i) in the case of assistance involving substantial

rehabilitation or acquisition of the building, for a period of not less than 10 years; and

(ii) in the case of assistance under paragraph (1),

(3), or (4) of subsection (a), for a period of not less than

3 years.

(B) WAIVER.—The Secretary may waive the requirement under subparagraph (A) with respect to any building

or structure if the organization or agency that received the

grant under which the building was assisted demonstrates,

to the satisfaction of the Secretary, that—

(i) the structure is no longer needed to provide

short-term supported housing or assistance or the continued operation of the structure for such purposes is

no longer feasible; and

(ii) the structure will be used to benefit individuals or families whose incomes do not exceed 80 percent of the median income for the area, as determined

by the Secretary, with adjustments for smaller and

larger families, except that the Secretary may establish income ceilings higher or lower than 80 percent of

the median income for the area if the Secretary finds

that such variations are necessary because of prevailing levels of construction costs or unusually high

or low family incomes.

(2) RESIDENCY AND LOCATION LIMITATIONS ON SHORT-TERM

SUPPORTED HOUSING.—
427 Sec. 859 HOUSING FOR PERSONS WITH AIDS

(A) RESIDENCY.—A short-term supported housing facility assisted with amounts from a grant under this section

may not provide shelter or housing at any single time for

more than 50 families or individuals.

(B) WAIVER.—The Secretary may, as the Secretary determines appropriate, waive the limitation under subparagraph (A) for any program or short-term supported housing facility.

(3) TERM OF ASSISTANCE.—

(A) SUPPORTED HOUSING ASSISTANCE.—A program assisted under this section may not provide residence in a

short-term housing facility assisted under this section to

any individual for a sum of more than 60 days during

any 6-month period.

(B) HOUSING PAYMENTS ASSISTANCE.—A program assisted under this section may not provide assistance for

rent, mortgage, or utilities payments to any individual for

rent, mortgage, or utilities costs accruing over a period of

more than 21 weeks of any 52-week period.

(C) WAIVER.—Notwithstanding subparagraphs (A) and

(B), the Secretary may waive the applicability of the requirements under such subparagraphs with respect to any

individual for which the project sponsor has made a good

faith effort to acquire permanent housing (in accordance

with paragraph (4)) and has been unable to do so.

(4) PLACEMENT.—A program assisted under this section

shall provide for any individual who has remained in shortterm supported housing assisted under the demonstration program, to the maximum extent practicable, the opportunity for

placement in permanent housing or an environment appropriate to the health and social needs of the individual.

(5) PRESUMPTION FOR INDEPENDENT LIVING.—In providing

assistance under this section in any case in which the residence of an individual is appropriate to the needs of the individual, a program assisted under this section shall, when reasonable, provide for assistance in a manner appropriate to

maintain the individual in such residence.

(6) CASE MANAGEMENT SERVICES.—A program assisted

under this section shall provide each individual assisted under

the program with an opportunity, if eligible, to receive case

management services available from the appropriate social

service agencies.

SEC. 859. ø42 U.S.C. 12908¿ RENTAL ASSISTANCE.

(a) USE OF FUNDS.—

(1) IN GENERAL.—Grants under this section may be used

only for assistance to provide rental assistance for low-income

eligible persons. Such assistance may be project based or tenant based and shall be provided to the extent practicable in the

manner provided for under section 8 of the United States

Housing Act of 1937. Grantees shall ensure that the housing

provided is decent, safe, and sanitary.

(2) SHARED HOUSING ARRANGEMENTS.—Grants under this

section may be used to assist individuals who elect to reside in
Sec. 860 HOUSING FOR PERSONS WITH AIDS 428

1So in law. Probably intended to refer to section 856(g)(2).

shared housing arrangements in the manner provided under

section 8(p) of the United States Housing Act of 1937 (42

U.S.C. 1437f(p)), except that, notwithstanding such section, assistance under this section may be made available to nonelderly individuals. The Secretary shall issue any standards for

shared housing under this paragraph that vary from standards

issued under section 8(p) of the United States Housing Act of

1937 only to the extent necessary to provide for circumstances

of shared housing arrangements under this paragraph that differ from circumstances of shared housing arrangements for elderly families under section 8(p) of the United States Housing

Act of 1937.

(b) LIMITATIONS.—A recipient under this section shall comply

with the following requirements:

(1) SERVICES.—The recipient shall provide for qualified

service providers in the area to provide appropriate services to

the eligible persons assisted under this section.

(2) INTENSIVE ASSISTANCE.—For any individual with acquired immunodeficiency syndrome or related diseases who requires more care than can be provided in housing assisted

under this section, the recipient shall provide for the locating

of a care provider who can appropriately care for the individual

and referral of the individual to the care provider.

(c) ADMINISTRATIVE COSTS.—A project sponsor providing rental

assistance under this section may use amounts from any grant received under this section for administrative expenses involved in

providing such assistance, subject to the provisions of 856(g)(2). 1

SEC. 860. ø42 U.S.C. 12909¿ SINGLE ROOM OCCUPANCY DWELLINGS.

(a) USE OF GRANTS.—Grants under this section may be used to

provide project-based rental assistance or grants to facilitate the

development of single room occupancy dwellings. To the extent

practicable, a program under this section shall be carried out in the

manner provided for under section 8(n) of the United States Housing Act of 1937.

(b) LIMITATION.—Recipients under this section shall require

the provision to individuals assisted under this section of the following assistance:

(1) SERVICES.—Appropriate services provided by qualified

service providers in the area.

(2) INTENSIVE ASSISTANCE.—For any individual with acquired immunodeficiency syndrome or related diseases who requires more care than can be provided in housing assisted

under this section, locating a care provider who can appropriately care for the individual and referral of the individual

to the care provider. ¿

SEC. 861. ø42 U.S.C. 12910¿ GRANTS FOR COMMUNITY RESIDENCES AND

SERVICES.

(a) GRANT AUTHORITY.—The Secretary of Housing and Urban

Development may make grants to States and metropolitan areas to

develop and operate community residences and provide services for

eligible persons.
429 Sec. 861 HOUSING FOR PERSONS WITH AIDS

(b) COMMUNITY RESIDENCES AND SERVICES.—

(1) COMMUNITY RESIDENCES.—

(A) IN GENERAL.—A community residence under this

section shall be a multiunit residence designed for eligible

persons for the following purposes:

(i) To provide a lower cost residential alternative

to institutional care and to prevent or delay the need

for institutional care.

(ii) To provide a permanent or transitional residential setting with appropriate services that enhances the quality of life for individuals who are unable to live independently.

(iii) To prevent homelessness among eligible persons by increasing available suitable housing resources.

(iv) To integrate eligible persons into local communities and provide services to maintain the abilities of

such eligible persons to participate as fully as possible

in community life.

(B) RENT.—Except to the extent that the costs of providing residence are reimbursed or provided by any other

assistance from Federal or non-Federal public sources,

each resident in a community residence shall pay as rent

for a dwelling unit an amount equal to the following:

(i) For low-income individuals, the amount of rent

paid under section 3(a) of the United States Housing

Act of 1937 (42 U.S.C. 1437a(a)) by a low-income family (as the term is defined in section 3(b)(2) of such Act

(42 U.S.C. 1437a(b)(2))) for a dwelling unit assisted

under such Act.

(ii) For any resident that is not a low-income resident, an amount based on a formula, which shall be

determined by the Secretary, under which rent is determined by the income and resources of the resident.

(C) FEES.—Fees may be charged for any services provided under subsection (c)(2) to residents of a community

residence, except that any fees charged shall be based on

the income and resources of the resident and the provision

of services to any resident of a community residence may

not be withheld because of an inability of the resident to

pay such fee.

(D) SECTION 8 ASSISTANCE.—Assistance made available

under section 8 of the United States Housing Act of 1937

(42 U.S.C. 1437f) may be used in conjunction with a community residence under this subsection for tenant-based

assistance.

(2) SERVICES.—Services provided with a grant under this

section shall consist of services appropriate in assisting individuals with acquired immunodeficiency syndrome and related

diseases to enhance their quality of life, enable such individuals to more fully participate in community life, and delay or

prevent the placement of such individuals in hospitals or other

institutions.
Sec. 861 HOUSING FOR PERSONS WITH AIDS 430

1Section 606(j)(11)(E)(ii) of the Housing and Community Development Act of 1992, Pub. L.

102–550, amended this subsection by striking ‘‘individuals with acquired immunodeficiency syndrome or related diseases’’ each place it appears and inserting ‘‘eligible persons’’. Because the

matter to be struck does not appear in this subsection, the amendment could not be executed.

(c) USE OF GRANTS.—Any amounts received from a grant under

this section may be used only as follows:

(1) COMMUNITY RESIDENCES.—For providing assistance in

connection with community residences under subsection (b)(1)

for the following activities:

(A) PHYSICAL IMPROVEMENTS.—Construction, acquisition, rehabilitation, conversion, retrofitting, and other

physical improvements necessary to make a structure suitable for use as a community residence.

(B) OPERATING COSTS.—Operating costs for a community residence.

(C) TECHNICAL ASSISTANCE.—Technical assistance in

establishing and operating a community residence, which

may include planning and other predevelopment or

preconstruction expenses, and expenses relating to community outreach and educational activities regarding acquired

immunodeficiency syndrome and related diseases provided

for individuals residing in proximity of eligible persons assisted under this subtitle.

(D) IN-HOUSE SERVICES.—Services appropriate for individuals residing in a community residence, which may include staff training and recruitment.

(2) SERVICES.—For providing services under subsection

(b)(2) to any individuals assisted under this subtitle.

(3) ADMINISTRATIVE EXPENSES.—For administrative expenses related to the planning and carrying out activities

under this section (subject to the provisions of section 856(g)).

(d) LIMITATIONS ON USE OF GRANTS.—

(1) COMMUNITY RESIDENCES.—Any jurisdiction that receives a grant under this section may not use any amounts received under the grant for the purposes under subsection (c)(1),

except for planning and other expenses preliminary to construction or other physical improvement under subsection

(c)(1)(A), unless the jurisdiction certifies to the Secretary, as

the Secretary shall require, the following:

(A) SERVICE AGREEMENT.—That the jurisdiction has

entered into a written agreement with service providers

qualified to deliver any services included in the proposal

under subsection (c) to provide such services to eligible

persons assisted by the community residence.

(B) FUNDING AND CAPABILITY.—That the jurisdiction

will have sufficient funding for such services and the service providers are qualified to assist individuals with acquired immunodeficiency syndrome and related diseases 1.

(C) ZONING AND BUILDING CODES.—That any construction or physical improvements carried out with amounts

received from the grant will comply with any applicable

State and local housing codes and licensing requirements

in the jurisdiction in which the building or structure is located.
431 Sec. 863 HOUSING FOR PERSONS WITH AIDS

1See footnote 1 on the preceding page.

(D) INTENSIVE ASSISTANCE.—That, for any individual

with acquired immunodeficiency syndrome or related diseases who resides in a community residence assisted under

the grant and who requires more intensive care than can

be provided by the community residence, the jurisdiction

will locate for and refer the individual to a service provider

who can appropriately care for the individual.

(2) SERVICES.—Any jurisdiction that receives a grant under

this section may use any amounts received under the grant for

the purposes under subsection (c)(2) only for the provision of

services by service providers qualified to provide such services

to individuals with acquired immunodeficiency syndrome and

related diseases 1.

SEC. 862. ø42 U.S.C. 12911¿ REPORT.

Any organization or agency that receives a grant under this

subtitle shall submit to the Secretary, for any fiscal year in which

the organization or agency receives a grant under this subtitle, a

report describing the use of the amounts received, which shall include the number of individuals assisted, the types of assistance

provided, and any other information that the Secretary determines

to be appropriate.

SEC. 863. ø42 U.S.C. 12912¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this sub- title $150,000,000 for fiscal year 1993 and $156,300,000 for fiscal

year 1994.

433

PART IV—OTHER FEDERAL HOUSING

ASSISTANCE

AFFORDABLE HOUSING STRATEGIES AND INVESTMENT

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4085; 42 U.S.C. 12704 et seq.]

TITLE I—GENERAL PROVISIONS AND POLICIES

* * * * * * *

SEC. 104. ø42 U.S.C. 12704¿ DEFINITIONS.

As used in this title and in title II:

(1) The term ‘‘unit of general local government’’ means a

city, town, township, county, parish, village, or other general

purpose political subdivision of a State; the Federated States

of Micronesia and Palau, the Marshall Islands, or a general

purpose political subdivision thereof; a consortium of such political subdivisions recognized by the Secretary in accordance

with section 216(2) of this Act; and any agency or instrumentality thereof that is established pursuant to legislation and

designated by the chief executive to act on behalf of the jurisdiction with regard to provisions of this Act.

(2) The term ‘‘State’’ means any State of the United States,

the District of Columbia, the Commonwealth of Puerto Rico, or

any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act on behalf of the State with regard to the provisions

of this Act.

(3) The term ‘‘jurisdiction’’ means a State or unit of general local government.

(4) The term ‘‘participating jurisdiction’’ means any State

or unit of general local government that has been so designated in accordance with section 216 of this Act.

(5) The term ‘‘nonprofit organization’’ means any private,

nonprofit organization (including a State or locally chartered,

nonprofit organization) that—

(A) is organized under State or local laws,

(B) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual,

(C) complies with standards of financial accountability

acceptable to the Secretary, and

(D) has among its purposes significant activities related to the provision of decent housing that is affordable

to low-income and moderate-income persons.
Sec. 104 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES 434

1Section 590 of the Quality Housing and Work Responsibility Act of 1998, title V of Public

Law 105–276, approved October 21, 1998, provides, in part, as follows:

‘‘SEC. 590. INCOME ELIGIBILITY FOR HOME AND CDBG PROGRAMS.

‘‘(a) IN GENERAL.—The Secretary of Housing and Urban Development shall, for not less than

10 jurisdictions that are metropolitan cities or urban counties for purposes of title I of the Housing and Community Development Act of 1974, grant exceptions not later than 90 days after the

date of the enactment of this Act for such jurisdictions that provide that—

‘‘(1) for purposes of the HOME investment partnerships program under title II of the

Cranston-Gonzalez National Affordable Housing Act, the limitation based on percentage of

median income that is applicable under section 104(10), 214(1)(A), or 215(a)(1)(A) for any

area of the jurisdiction shall be the numerical percentage that is specified in such section;

and

‘‘(2) * * *

‘‘(b) EFFECTIVE DATE.—This section shall take effect on the date of the enactment of this Act.’’.

(6) The term ‘‘community housing development organization’’ means a nonprofit organization as defined in paragraph

(5), that—

(A) has among its purposes the provision of decent

housing that is affordable to low-income and moderate-income persons;

(B) maintains, through significant representation on

the organization’s governing board and otherwise, accountability to low-income community residents and, to the extent practicable, low-income beneficiaries with regard to

decisions on the design, siting, development, and management of affordable housing;

(C) has a demonstrated capacity for carrying out activities assisted under this Act; and

(D) has a history of serving the local community or

communities within which housing to be assisted under

this Act is to be located.

In the case of an organization serving more than one county,

the Secretary may not require that such organization, to be

considered a community housing development organization for

purposes of this Act, include as members on the organization’s

governing board low-income persons residing in each county

served.

(7) The term ‘‘government-sponsored mortgage finance corporations’’ means the Federal National Mortgage Association,

the Federal Home Loan Mortgage Corporation, and the Federal

Agricultural Mortgage Corporation.

(8) The term ‘‘housing’’ includes manufactured housing and

manufactured housing lots and elder cottage housing opportunity units that are small, free-standing, barrier-free, energyefficient, removable, and designed to be installed adjacent to

existing 1- to 4-family dwellings.

(9) The term ‘‘very low-income families’’ means low-income

families whose incomes do not exceed 50 percent of the median

family income for the area, as determined by the Secretary

with adjustments for smaller and larger families, except that

the Secretary may establish income ceilings higher or lower

than 50 percent of the median for the area on the basis of the

Secretary’s findings that such variations are necessary because

of prevailing levels of construction costs or fair market rents,

or unusually high or low family incomes.

(10) 1 The term ‘‘low-income families’’ means families

whose incomes do not exceed 80 percent of the median income
435 Sec. 104 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES

for the area, as determined by the Secretary with adjustments

for smaller and larger families, except that the Secretary may

establish income ceilings higher or lower than 80 percent of the

median for the area on the basis of the Secretary’s findings

that such variations are necessary because of prevailing levels

of construction costs or fair market rents, or unusually high or

low family incomes.

(11) The term ‘‘families’’ has the same meaning given that

term by section 3 of the United States Housing Act of 1937.

(12) The term ‘‘security’’ has the same meaning as in section 2 of the Securities Act of 1933.

(13) The term ‘‘displaced homemaker’’ means an individual

who—

(A) is an adult;

(B) has not worked full-time full-year in the labor

force for a number of years but has, during such years,

worked primarily without remuneration to care for the

home and family; and

(C) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment.

(14) The term ‘‘first-time homebuyer’’ means an individual

and his or her spouse who have not owned a home during the

3-year period prior to purchase of a home with assistance

under title II, except that—

(A) any individual who is a displaced homemaker may

not be excluded from consideration as a first-time homebuyer under this paragraph on the basis that the individual, while a homemaker, owned a home with his or her

spouse or resided in a home owned by the spouse;

(B) any individual who is a single parent may not be

excluded from consideration as a first-time homebuyer

under this paragraph on the basis that the individual,

while married, owned a home with his or her spouse or resided in a home owned by the spouse; and

(C) an individual shall not be excluded from consideration as a first-time homebuyer under this paragraph on

the basis that the individual owns or owned, as a principal

residence during such 3-year period, a dwelling unit whose

structure is—

(i) not permanently affixed to a permanent foundation in accordance with local or other applicable regulations, or

(ii) not in compliance with State, local, or model

building codes, or other applicable codes, and cannot

be brought into compliance with such codes for less

than the cost of constructing a permanent structure.

(15) The term ‘‘single parent’’ means an individual who—

(A) is unmarried or legally separated from a spouse;

and

(B)(i) has 1 or more minor children for whom the individual has custody or joint custody; or

(ii) is pregnant.

(16) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development, unless otherwise specified in this Act.
Sec. 105 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES 436

1So in law.

(17) The term ‘‘substantial rehabilitation’’ means the rehabilitation of residential property at an average cost in excess

of $25,000 per dwelling unit.

(18) The term ‘‘public housing agency’’ has the meaning

given the term in section 3(b) of the United States Housing Act

of 1937 (42 U.S.C. 1437a(b)).

(19) The term ‘‘metropolitan city’’ has the meaning given

the term in section 102(a)(4) of the Housing and Community

Development Act of 1974 (42 U.S.C. 5302(a)(4)).

(20) The term ‘‘urban county’’ has the meaning given the

term in section 102(a)(6) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(6)).

(21) The term ‘‘certification’’ means a written assertion,

based on supporting evidence, which shall be kept available for

inspection by the Secretary, the Inspector General and the

public, which assertion shall be deemed to be accurate for purposes of this Act, unless the Secretary determines otherwise

after inspecting the evidence and providing due notice and opportunity for comment.

(23) 1 The term ‘‘to demonstrate to the Secretary’’ means to

submit to the Secretary a written assertion together with supporting evidence that, in the determination of the Secretary,

supports the accuracy of the assertion.

(24) 1 The term ‘‘insular area’’ means any of the following:

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

American Samoa.

(24) The term ‘‘energy efficient mortgage’’ means a mortgage that provides financing incentives for the purchase of energy efficient homes, or that provides financing incentives to

make energy efficiency improvements in existing homes by incorporating the cost of such improvements in the mortgage.

(25) The term ‘‘energy efficient mortgage’’ means a mortgage that provides financing incentives for the purchase of energy efficient homes, or that provides financing incentives to

make energy efficiency improvements in existing homes by incorporating the cost of such improvements in the mortgage.

SEC. 105. ø42 U.S.C. 12705¿ STATE AND LOCAL HOUSING STRATEGIES.

(a) IN GENERAL.—The Secretary shall provide assistance directly to a jurisdiction only if—

(1) the jurisdiction submits to the Secretary a comprehensive housing affordability strategy (hereafter in this section referred to as the ‘‘housing strategy’’);

(2) the jurisdiction submits annual updates of the housing

strategy; and

(3) the housing strategy, and any annual update of such

strategy, is approved by the Secretary.

The Secretary shall establish such dates and manner for the submission and approval of housing strategies under this section that

the Secretary determines will facilitate orderly program management by jurisdictions and provide for timely investment or other

use of funds made available under title II of this Act and other programs requiring submission of a housing strategy. If the Secretary

finds there is good cause, the Secretary may provide reasonable ex-
437 Sec. 105 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES

tensions of any deadlines for submission of a jurisdiction’s housing

strategy.

(b) CONTENTS.—A housing strategy submitted under this section shall be in a form that the Secretary determines to be appropriate for the assistance the jurisdiction may be provided and

shall—

(1) describe the jurisdiction’s estimated housing needs projected for the ensuing 5-year period, and the jurisdiction’s need

for assistance for very low-income, low-income, and moderateincome families, specifying such needs for different types of

tenure and for different categories of residents, such as very

low-income, low-income, and moderate-income families, the elderly, persons with disabilities, single persons, large families,

residents of nonmetropolitan areas, families who are participating in an organized program to achieve economic independence and self-sufficiency, persons with acquired immunodeficiency syndrome, and other categories of persons residing

in or expected to reside in the jurisdiction that the Secretary

determines to be appropriate;

(2) describe the nature and extent of homelessness, including rural homelessness, within the jurisdiction, providing an

estimate of the special needs of various categories of persons

who are homeless or threatened with homelessness, including

tabular representation of such information, and a description

of the jurisdiction’s strategy for (A) helping low-income families

avoid becoming homeless; (B) addressing the emergency shelter

and transitional housing needs of homeless persons (including

a brief inventory of facilities and services that meet such needs

within that jurisdiction); and (C) helping homeless persons

make the transition to permanent housing and independent

living;

(3) describe the significant characteristics of the jurisdiction’s housing market, indicating how those characteristics will

influence the use of funds made available for rental assistance,

production of new units, rehabilitation of old units, or acquisition of existing units;

(4) explain whether the cost of housing or the incentives

to develop, maintain, or improve affordable housing in the jurisdiction are affected by public policies, particularly by policies

of the jurisdiction, including tax policies affecting land and

other property, land use controls, zoning ordinances, building

codes, fees and charges, growth limits, and policies that affect

the return on residential investment, and describe the jurisdiction’s strategy to remove or ameliorate negative effects, if any,

of such policies, except that, if a State requires a unit of general local government to submit a regulatory barrier assessment that is substantially equivalent to the information required under this paragraph, as determined by the Secretary,

the unit of general local government may submit its assessment submitted to the State to the Secretary and shall be considered to have complied with this paragraph;

(5) explain the institutional structure, including private industry, nonprofit organizations, and public institutions,

through which the jurisdiction will carry out its housing strategy, assessing the strengths and gaps in that delivery system
Sec. 105 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES 438

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’. 2So in law. Probably intended to refer to paragraphs (1) and (2).

and describing what the jurisdiction will do to overcome those

gaps;

(6) indicate resources from private and non-Federal public

sources that are reasonably expected to be made available to

carry out the purposes of this Act, explaining how funds made

available will leverage those additional resources and identifying, where the jurisdiction deems it appropriate, publicly

owned land or property located within the jurisdiction that

may be utilized to carry out the purposes of this Act;

(7) set forth the jurisdiction’s plan for investment or other

use of housing funds made available under title II of this Act,

the United States Housing Act of 1937, the Housing and Community Development Act of 1974, and the Stewart B. McKinney Homeless Assistance Act 1, during the ensuing year or such

longer period as the Secretary determines to be appropriate,

indicating the general priorities for allocating investment geographically within the jurisdiction and among different activities and housing needs;

(8) describe how the jurisdiction’s plan will address the

housing needs identified pursuant to subparagraphs (1) and

(2), 2 describe the reasons for allocation priorities, and identify

any obstacles to addressing underserved needs;

(9) describe the means of cooperation and coordination

among the State and any units of general local government in

the development, submission, and implementation of their

housing strategies;

(10) in the case of a unit of local government, describe the

number of public housing units in the jurisdiction, the physical

condition of such units, the restoration and revitalization needs

of public housing projects within the jurisdiction, the public

housing agency’s strategy for improving the management and

operation of such public housing, and the public housing agency’s strategy for improving the living environment of low- and

very-low-income families residing in public housing;

(11) describe the manner in which the plan of the jurisdiction will help address the needs of public housing;

(12) in the case of a State, describe the strategy to coordinate the Low-Income Tax Credit with development of housing,

including public housing, that is affordable to very low-income

and low-income families;

(13) describe the jurisdiction’s activities to encourage public housing residents to become more involved in management

and participate in homeownership;

(14) describe the standards and procedures according to

which the jurisdiction will monitor activities authorized under

this Act and ensure long-term compliance with the provisions

of this Act;

(15) include a certification that the jurisdiction will affirmatively further fair housing;
439 Sec. 105 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES

(16) include a certification that the jurisdiction has in effect and is following a residential antidisplacement and relocation assistance plan that, in any case of any such displacement

in connection with any activity assisted with amounts provided

under title II, requires the same actions and provides the same

rights as required and provided under a residential

antidisplacement and relocation assistance plan under section

104(d) of the Housing and Community Development Act of

1974 in the event of displacement in connection with a development project assisted under section 106 or 119 of such Act;

(17) estimate the number of housing units within the jurisdiction that are occupied by low-income families or very lowincome families and that contain lead-based paint hazards, as

defined in section 1004 of the Residential Lead-Based Paint

Hazard Reduction Act of 1992, outline the actions proposed or

being taken to evaluate and reduce lead-based paint hazards,

and describe how lead-based paint hazard reduction will be integrated into housing policies and programs;

(18) include the number of families to whom the jurisdiction will provide affordable housing as defined in section 215

using funds made available;

(19) for any housing strategy submitted for fiscal year

1994 or any fiscal year thereafter and taking into consideration

factors over which the jurisdiction has control, describe the jurisdiction’s goals, programs, and policies for reducing the number of households with incomes below the poverty line (as defined by the Office of Management and Budget and revised annually), and, in consultation with other appropriate public and

private agencies, state how the jurisdiction’s goals, programs,

and policies for producing and preserving affordable housing

set forth in the housing strategy will be coordinated with other

programs and services for which the jurisdiction is responsible

and the extent to which they will reduce (or assist in reducing)

the number of households with incomes below the poverty line;

and

(20) describe the jurisdictions activities to enhance coordination between public and assisted housing providers and private and governmental health, mental health, and service

agencies.

The Secretary may provide for the submission of abbreviated housing strategies by jurisdictions that are not otherwise expected to be

participating jurisdictions under title II of this Act. Such an abbreviated housing strategy shall be appropriate to the types and

amounts of assistance the jurisdiction is to receive as determined

by the Secretary.

(c) APPROVAL.—

(1) IN GENERAL.—The Secretary shall review the housing

strategy upon receipt. Not later than 60 days after receipt by

the Secretary, the housing strategy shall be approved unless

the Secretary determines before that date that (A) the housing

strategy is inconsistent with the purposes of this Act, or (B)

the information described in subsection (b) has not been provided in a substantially complete manner. For the purpose of

the preceding sentence, the adoption or continuation of a public

policy identified pursuant to subsection (b)(4) shall not be a
Sec. 105 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES 440

basis for the Secretary’s disapproval of a housing strategy.

During the 18-month period following enactment of this Act,

the Secretary may extend the review period to not longer than

90 days.

(2) ACTIONS IN CASE OF DISAPPROVAL.—If the Secretary

disapproves the housing strategy, the Secretary shall immediately notify the jurisdiction of such disapproval. Not later

than 15 days after the Secretary’s disapproval, the Secretary

shall inform the jurisdiction in writing of (A) the reasons for

disapproval, and (B) actions that the jurisdiction could take to

meet the criteria for approval. If the Secretary fails to inform

the jurisdiction of the reasons for disapproval within such 15-

day period, the housing strategy shall be deemed to have been

approved.

(3) AMENDMENTS AND RESUBMISSION.—The Secretary shall,

for a period of not less than 45 days following the date of first

disapproval, permit amendments to, or the resubmission of,

any housing strategy that is disapproved. The Secretary shall

approve or disapprove a housing strategy not less than 30 days

after receipt of such amendments or resubmission.

(d) COORDINATION OF STATE AND LOCAL HOUSING STRATEGIES.—The Secretary may establish such requirements as the Secretary deems appropriate to encourage coordination between and

among the housing strategies of a State and any participating jurisdictions within the State, except that a unit of general local government shall not be required to have elements of its housing

strategy approved by the State.

(e) CONSULTATION WITH SOCIAL SERVICE AGENCIES.—

(1) IN GENERAL.—When preparing a housing strategy for

submission under this section, a jurisdiction shall make reasonable efforts to confer with appropriate social service agencies regarding the housing needs of children, elderly persons,

persons with disabilities, homeless persons, and other persons

served by such agencies.

(2) LEAD-BASED PAINT HAZARDS.—When preparing that

portion of a housing strategy required by subsection (b)(16), a

jurisdiction shall consult with State or local health and child

welfare agencies and examine existing data related to leadbased paint hazards and poisonings, including health department data on the addresses of housing units in which children

have been identified as lead poisoned.

(f) BARRIER REMOVAL.—Not later than 4 months after completion of the final report of the Secretary’s Advisory Commission on

Regulatory Barriers to Affordable Housing, the Secretary shall submit to the Congress a written report outlining the Secretary’s recommendations for legislative and administrative actions to facilitate the removal or modification of excessive, duplicative, or unnecessary regulations or other requirements of Federal, State, or local

governments that (1) inflate the costs of or otherwise inhibit the

construction, rehabilitation, or management of housing, particularly housing that otherwise could be affordable to low-income and

moderate-income families, or (2) contribute to economic or racial

discrimination.

(g) TREATMENT OF TROUBLED PUBLIC HOUSING AGENCIES.—
441 Sec. 107 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

(1) EFFECT OF TROUBLED STATUS ON CHAS.—The comprehensive housing affordability strategy (or any consolidated

plan incorporating such strategy) for the State or unit of general local government in which any troubled public housing

agency is located shall not be considered to comply with the requirements under this section unless such plan includes a description of the manner in which the State or unit will provide

financial or other assistance to such troubled agency in improving its operations to remove such designation.

(2) DEFINITION.—For purposes of this subsection, the term

‘‘troubled public housing agency’’ means a public housing agency that, upon the effective date of the Quality Housing and

Work Responsibility Act of 1998, is designated under section

6( j)(2) of the United States Housing Act of 1937 as a troubled

public housing agency.

SEC. 106. ø42 U.S.C. 12706¿ CERTIFICATION.

The Secretary shall, by regulation or otherwise, as deemed by

the Secretary to be appropriate, require any application for housing

assistance under title II of this Act, assistance under the Housing

and Community Development Act of 1974, or assistance under the

Stewart B. McKinney Homeless Assistance Act 1, to contain or be

accompanied by a certification by an appropriate State or local public official that the proposed housing activities are consistent with

the housing strategy of the jurisdiction to be served.

SEC. 107. ø42 U.S.C. 12707¿ CITIZEN PARTICIPATION.

(a) IN GENERAL.—Before submitting a housing strategy under

this section, a jurisdiction shall—

(1) make available to its citizens, public agencies, and

other interested parties information concerning the amount of

assistance the jurisdiction expects to receive and the range of

investment or other uses of such assistance that the jurisdiction may undertake;

(2) publish a proposed housing strategy in a manner that,

in the determination of the Secretary, affords affected citizens,

public agencies, and other interested parties a reasonable opportunity to examine its content and to submit comments on

the proposed housing strategy;

(3) hold one or more public hearings to obtain the views

of citizens, public agencies, and other interested parties on the

housing needs of the jurisdiction; and

(4) provide citizens, public agencies, and other interested

parties with reasonable access to records regarding any uses of

any assistance the jurisdiction may have received during the

preceding 5 years.

(b) NOTICE AND COMMENT.—Before submitting any performance report or substantial amendment to a housing strategy under

this section, a participating jurisdiction shall provide citizens with

reasonable notice of, and opportunity to comment on, such performance report or substantial amendment prior to its submission.
Sec. 108 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES 442

1Probably should refer to paragraph (18) of section 105(b) (relating to the number of families

who are provided affordable housing).

(c) CONSIDERATION OF COMMENTS.—A participating jurisdiction

shall consider any comments or views of citizens in preparing a

final housing strategy, amendment to a housing strategy or performance report for submission. A summary of such comments or

views shall be attached when a housing strategy, amendment to a

housing strategy or performance report is submitted. The submitted housing strategy, amendment, or report shall be made

available to the public.

(d) REGULATIONS.—The Secretary shall by regulation establish

procedures appropriate and practicable for providing a fair hearing

and timely resolution of citizen complaints related to housing strategies or performance reports.

SEC. 108. ø42 U.S.C. 12708¿ COMPLIANCE.

(a) PERFORMANCE REPORTS.—

(1) IN GENERAL.—Each participating jurisdiction shall annually review and report, in a form acceptable to the Secretary,

on the progress it has made in carrying out its housing strategy, which report shall include an evaluation of the jurisdiction’s progress in meeting its goal established in section

105(b)(15) of this Act, 1 and information on the number and

types of households served, including the number of very lowincome, low-income, and moderate-income persons served and

the racial and ethnic status of persons served that will be assisted with funds made available.

(2) SUBMISSION.—The Secretary shall (A) establish dates

for submission of reports under this subsection, and (B) review

such reports and make such recommendations as the Secretary

deems appropriate to carry out the purposes of this Act.

(3) FAILURE TO REPORT.—If a jurisdiction fails to submit a

report satisfactory to the Secretary in a timely manner, assistance to the jurisdiction under title II of this Act or the other

programs referred to in section 106 may be—

(A) suspended until a report satisfactory to the Secretary is submitted; or

(B) withdrawn and reallocated if the Secretary finds,

after notice and opportunity for a hearing, that the jurisdiction will not submit a satisfactory report.

(b) PERFORMANCE REVIEW BY SECRETARY.—

(1) IN GENERAL.—The Secretary shall ensure that activities

of each jurisdiction required to submit a housing strategy

under section 105 are reviewed not less frequently than annually. Such review shall include, insofar as practicable, on-site

visits by employees of the Department of Housing and Urban

Development and shall include an assessment of the

jurisdiction’s—

(A) management of funds made available under programs administered by the Secretary;

(B) compliance with its housing strategy;

(C) accuracy in the preparation of performance reports

under subsection (a); and
443 Sec. 109 COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES

(D) efforts to ensure that housing assisted under programs administered by the Secretary are in compliance

with contractual agreements and the requirements of law.

(2) REPORT BY THE SECRETARY.—The Secretary shall report

on the performance review in writing. The Secretary shall give

the jurisdiction not less than 30 days to review and comment

on the report. After taking into consideration the comments of

the jurisdiction, the Secretary may revise the report and shall

make the jurisdiction’s comments and the report, with any revisions, readily available to the public within 30 days after receipt of the jurisdiction’s comments.

(c) REVIEW BY COURTS.—The adequacy of information submitted under section 105(b)(4) shall not be reviewable by any Federal, State, or other court. Review of a housing strategy by any

Federal, State, or other court shall be limited to determining

whether the process of development and the content of the strategy

are in substantial compliance with the requirements of this Act.

During the pendency of any action challenging the adequacy of a

housing strategy or the action of the Secretary in approving a

strategy, the court shall not have the authority to enjoin activities

taken by the jurisdiction to implement an approved housing strategy. Any housing assisted during the pendency of such action shall

not be subject to any order of the court resulting from such action.

SEC. 109. ø42 U.S.C. 12709¿ ENERGY EFFICIENCY STANDARDS.

(a) ESTABLISHMENT.—

(1) IN GENERAL.—The Secretary of Housing and Urban Development and the Secretary of Agriculture shall, not later

than 1 year after the date of the enactment of the Energy Policy Act of 1992, jointly establish, by rule, energy efficiency

standards for—

(A) new construction of public and assisted housing

and single family and multifamily residential housing

(other than manufactured homes) subject to mortgages insured under the National Housing Act; and

(B) new construction of single family housing (other

than manufactured homes) subject to mortgages insured,

guaranteed, or made by the Secretary of Agriculture under

title V of the Housing Act of 1949.

(2) CONTENTS.—Such standards shall meet or exceed the

requirements of the Council of American Building Officials

Model Energy Code, 1992 (hereafter in this section referred to

as ‘‘CABO Model Energy Code, 1992’’), or, in the case of multifamily high rises, the requirements of the American Society of

Heating, Refrigerating, and Air-Conditioning Engineers Standard 90.1–1989 (hereafter in this section referred to as

‘‘ASHRAE Standard 90.1–1989’’), and shall be cost-effective

with respect to construction and operating costs on a life-cycle

cost basis. In developing such standards, the Secretaries shall

consult with an advisory task force composed of homebuilders,

national, State, and local housing agencies (including public

housing agencies), energy agencies, building code organizations

and agencies, energy efficiency organizations, utility organizations, low-income housing organizations, and other parties designated by the Secretaries.
Sec. 110 HOME INVESTMENT PARTNERSHIPS ACT 444

1The date of enactment was November 28, 1990.

(b) MODEL ENERGY CODE.—If the Secretaries have not, within

1 year after the date of the enactment of the Energy Policy Act of

1992, established energy efficiency standards under subsection (a),

all new construction of housing specified in such subsection shall

meet the requirements of CABO Model Energy Code, 1992, or, in

the case of multifamily high rises, the requirements of ASHRAE

Standard 90.1–1989.

(c) REVISIONS OF MODEL ENERGY CODE.—If the requirements

of CABO Model Energy Code, 1992, or, in the case of multifamily

high rises, ASHRAE Standard 90.1–1989, are revised at any time,

the Secretaries shall, not later than 1 year after such revision,

amend the standards established under subsection (a) to meet or

exceed the requirements of such revised code or standard unless

the Secretaries determine that compliance with such revised code

or standard would not result in a significant increase in energy efficiency or would not be technologically feasible or economically justified.

SEC. 110. ø42 U.S.C. 12710¿ CAPACITY STUDY.

(a) IN GENERAL.—The Secretary shall ensure that the Department of Housing and Urban Development has adequate capacity

and resources, including staff and training programs, to carry out

its mission and responsibilities to implement the provisions of this

Act, including the ability of the Department to carry out the multifamily mortgage insurance program, and the ability to respond to

areas identified as ‘‘material weaknesses’’ by the Office of the Inspector General in financial audits or other reports.

(b) REPORT.—Not later than 60 days after the date of enactment of this Act,1 and annually thereafter, the Secretary shall prepare and submit to the Committee on Banking, Housing, and

Urban Affairs of the Senate and the Committee on Banking, Finance and Urban Affairs of the House of Representatives a study

detailing the Department’s plan to maintain such capacity, together with any recommendations for legislative and administrative action as the Secretary determines to be appropriate.

SEC. 111. ø42 U.S.C. 12711¿ PROTECTION OF STATE AND LOCAL AUTHORITY.

Notwithstanding any other provision of this title or title II, the

Secretary shall not establish any criteria for allocating or denying

funds made available under programs administered by the Secretary based on the adoption, continuation, or discontinuation by a

jurisdiction of any public policy, regulation, or law that is (1) adopted, continued, or discontinued in accordance with the jurisdiction’s

duly established authority, and (2) not in violation of any Federal

law.

TITLE II—INVESTMENT IN AFFORDABLE

HOUSING

SEC. 201. ø42 U.S.C. 12701 note¿ SHORT TITLE.

This title may be cited as the ‘‘HOME Investment Partnerships

Act’’.
445 Sec. 202 HOME INVESTMENT PARTNERSHIPS ACT

SEC. 202. ø42 U.S.C. 12721¿ FINDINGS.

The Congress finds that—

(1) the Nation has not made adequate progress toward the

goal of national housing policy, as set out in the Housing Act

of 1949 and reaffirmed in the Housing and Urban Development

Act of 1968, which would provide decent, safe, sanitary, and affordable living environments for all Americans;

(2) the supply of affordable rental housing is diminishing;

(3) the Tax Reform Act of 1986 removed major tax incentives for the production of affordable rental housing;

(4) the living environments of an increasing number of

Americans have deteriorated over the past several years as a

result of reductions in Federal assistance to low-income and

moderate-income families;

(5) many Americans face the possibility of homelessness

unless Federal, State, and local governments work together

with the private sector to develop and rehabilitate the housing

stock of the Nation to provide decent, safe, sanitary, and affordable housing for very low-income and low-income families;

(6) reliable Federal leadership is needed to achieve an adequate supply of affordable housing for all Americans;

(7) to achieve the goal of national housing policy, there is

a need to strengthen nationwide a cost-effective communitybased housing partnership designed to—

(A) expand the supply of rental housing that is affordable to very low-income and low-income families,

(B) improve homeownership opportunities for low-income families,

(C) carry out comprehensive housing strategies tailored to local housing market conditions, and

(D) protect the Federal, State, and local investment in

low-income housing to ensure affordability of the housing

for the remaining useful life of the property;

(8) direct assistance to expand the supply of affordable

rental housing should be provided in a way that is more costeffective and targeted than tax incentives;

(9) much of the Nation’s housing system works very well

and provides a strong base on which national housing policy

should build;

(10) an increasing number of States and local governments

have been successful in producing cost-effective low-income and

moderate-income housing by working in partnership with the

private sector, including nonprofit community development corporations, community action agencies, neighborhood housing

services corporations, trade unions, groups sponsored by religious organizations, limited equity cooperatives, and other tenant organizations;

(11) during the 1980’s, nonprofit community housing development organizations, despite severe obstacles caused by inadequate funding, have played an increasingly important role in

the production and rehabilitation of affordable housing in communities across the Nation;

(12) additional financial resources and technical skills

must be made available in local communities if the Nation is

to mobilize the capacity of the private sector, including non-
Sec. 203 HOME INVESTMENT PARTNERSHIPS ACT 446

profit community housing development organizations, to provide a more adequate supply of decent, safe, and sanitary

housing that is affordable to very low-income, low-income, and

moderate-income families and meets the need for large family

units and other additional units that are available to very lowincome families receiving rental assistance payments from Federal, State, and local governments; and

(13) the long-term success of efforts to provide more affordable housing depends upon tenants and homeowners being fiscally responsible and able managers.

SEC. 203. ø42 U.S.C. 12722¿ PURPOSES.

The purposes of this title are—

(1) to expand the supply of decent, safe, sanitary, and affordable housing, with primary attention to rental housing, for

very low-income and low-income Americans;

(2) to mobilize and strengthen the abilities of States and

units of general local government throughout the United

States to design and implement strategies for achieving an

adequate supply of decent, safe, sanitary, and affordable housing;

(3) to provide participating jurisdictions, on a coordinated

basis, with the various forms of Federal housing assistance, including capital investment, mortgage insurance, rental assistance, and other Federal assistance, needed—

(A) to expand the supply of decent, safe, sanitary, and

affordable housing;

(B) to make new construction, rehabilitation, substantial rehabilitation, and acquisition of such housing feasible;

and

(C) to promote the development of partnerships among

the Federal Government, States and units of general local

government, private industry, and nonprofit organizations

able to utilize effectively all available resources to provide

more of such housing;

(4) to make housing more affordable for very low-income

and low-income families through the use of tenant-based rental

assistance;

(5) to develop and refine, on an ongoing basis, a selection

of model programs incorporating the most effective methods for

providing decent, safe, sanitary, and affordable housing, and

accelerate the application of such methods where appropriate

throughout the United States to achieve the prudent and efficient use of funds made available under this title;

(6) to expand the capacity of nonprofit community housing

development organizations to develop and manage decent, safe,

sanitary, and affordable housing;

(7) to ensure that Federal investment produces housing

stock that is available and affordable to low-income families for

the property’s remaining useful life, is appropriate to the

neighborhood surroundings, and, wherever appropriate, is

mixed income housing;

(8) to increase the investment of private capital and the

use of private sector resources in the provision of decent, safe,

sanitary, and affordable housing;
447 Sec. 211 HOME INVESTMENT PARTNERSHIPS ACT

1The date of enactment was November 28, 1990.

(9) to allocate Federal funds for investment in affordable

housing among participating jurisdictions by formula allocation;

(10) to leverage those funds insofar as practicable with

State and local matching contributions and private investment;

(11) to establish for each participating jurisdiction a

HOME Investment Trust Fund with a line of credit for investment in affordable housing, with repayments back to its

HOME Investment Trust Fund being made available for reinvestment by the jurisdiction;

(12) to provide credit enhancement for affordable housing

by utilizing the capacities of existing agencies and mortgage finance institutions when most efficient and supplementing their

activities when appropriate; and

(13) to assist very low-income and low-income families to

obtain the skills and knowledge necessary to become responsible homeowners and tenants.

SEC. 204. ø42 U.S.C. 12723¿ COORDINATED FEDERAL SUPPORT FOR

HOUSING STRATEGIES.

The Secretary shall make assistance under this title available

to participating jurisdictions, through the Office of the Assistant

Secretary for Housing-FHA Commissioner of the Department of

Housing and Urban Development, to the maximum extent practicable, in coordination with mortgage insurance, rental assistance,

and other housing assistance appropriate to the efficient and timely

completion of activities under this title.

SEC. 205. ø42 U.S.C. 12724¿. AUTHORIZATION.

There are authorized to be appropriated to carry out this title $2,086,000,000 for fiscal year 1993, and $2,173,612,000 for fiscal

year 1994, of which— (1) not more than $14,000,000 for fiscal year 1993, and $25,000,000 for fiscal year 1994, shall be for community housing partnership activities authorized under section 233; and (2) not more than $11,000,000 for fiscal year 1993, and $22,000,000 for fiscal year 1994, shall be for activities in support of State and local housing strategies authorized under

subtitle C.

SEC. 206. ø42 U.S.C. 12725¿ NOTICE.

The Secretary shall issue regulations to implement the provisions of this title after notice and an opportunity for comment pursuant to section 553 of title 5, United States Code. Such regulations shall become effective not later than 180 days after the date

of enactment of this Act.1

Subtitle A—HOME Investment Partnerships

SEC. 211. ø42 U.S.C. 12741¿ AUTHORITY.

The Secretary is authorized to make funds available to participating jurisdictions for investment to increase the number of families served with decent, safe, sanitary, and affordable housing and

expand the long-term supply of affordable housing in accordance

with provisions of this subtitle.
Sec. 212 HOME INVESTMENT PARTNERSHIPS ACT 448

1So in law. Probably intended to refer to the United States Housing Act of 1937.

SEC. 212. ø42 U.S.C. 12742¿ ELIGIBLE USES OF INVESTMENT.

(a) HOUSING USES.—

(1) IN GENERAL.—Funds made available under this subtitle

may be used by participating jurisdictions to provide incentives

to develop and support affordable rental housing and homeownership affordability through the acquisition, new construction, reconstruction, or moderate or substantial rehabilitation

of affordable housing, including real property acquisition, site

improvement, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced

persons, families, businesses, or organizations, to provide for

the payment of reasonable administrative and planning costs,

to provide for the payment of operating expenses of community

housing development organizations, and to provide tenantbased rental assistance. For the purpose of this subtitle, the

term ‘‘affordable housing’’ includes permanent housing for disabled homeless persons, transitional housing, and single room

occupancy housing.

(2) PREFERENCE TO REHABILITATION.—A participating jurisdiction shall give preference to rehabilitation of substandard

housing unless the jurisdiction determines that—

(A) such rehabilitation is not the most cost effective

way to meet the jurisdiction’s need to expand the supply

of affordable housing; and

(B) the jurisdiction’s housing needs cannot be met

through rehabilitation of the available stock.

The Secretary shall not restrict a participating jurisdiction’s

choice of rehabilitation, substantial rehabilitation, new construction, reconstruction, acquisition, or other eligible housing

use unless such restriction is explicitly authorized under section 223(2).

(3) TENANT-BASED RENTAL ASSISTANCE.—

(A) IN GENERAL.—A participating jurisdiction may use

funds provided under this subtitle for tenant-based rental

assistance only if—

(i) the jurisdiction certifies that the use of funds

under this subtitle for tenant-based rental assistance

is an essential element of the jurisdiction’s annual

housing strategy for expanding the supply, affordability, and availability of decent, safe, sanitary, and

affordable housing, and specifies the local market conditions that lead to the choice of this option; and

(ii) the tenant-based rental assistance is provided

in accordance with written tenant selection policies

and criteria that are consistent with the purposes of

providing housing to very low- and low-income families and are reasonably related to preference rules established under section 6(c)(4)(A) of the Housing Act of

1937. 1

(B) FAIR SHARE NOT AFFECTED.—A jurisdiction’s section 8 fair share allocation shall be unaffected by the use

of assistance under this title.
449 Sec. 212 HOME INVESTMENT PARTNERSHIPS ACT

1So in law.

(C) 24-MONTH CONTRACTS.—Rental assistance contracts made available with assistance under this title shall

be for not more than 24 months, except that assistance to

a family may be renewed.

(D) USE OF SECTION 8 ASSISTANCE.—In any case where

assistance under section 8 of the United States Housing

Act of 1937 becomes available to a participating jurisdiction, recipients of rental assistance under this title shall

qualify for tenant selection preferences to the same extent

as when they received the rental assistance under this

title. A rental assistance program under this title shall

meet minimum criteria prescribed by the Secretary, such

as housing quality standards and standards regarding the

reasonableness of the rent.

(E) SECURITY DEPOSIT ASSISTANCE.—A jurisdiction

using funds provided under this subtitle for tenant-based

rental assistance may use such funds to provide loans or

grants to very low- and low-income families for security deposits for rental of dwelling units. Assistance under this

subparagraph does not preclude assistance under any

other provision of this paragraph.

(5) 1 LEAD-BASED PAINT HAZARDS.—A participating jurisdiction may use funds provided under this subtitle for the evaluation and reduction of lead-based paint hazards, as defined in

section 1004 of the Residential Lead-Based Paint Hazard Reduction Act of 1992.

(b) INVESTMENTS.—Participating jurisdictions shall have discretion to invest funds made available under this subtitle as equity

investments, interest-bearing loans or advances, noninterest-bearing loans or advances, interest subsidies or other forms of assistance that the Secretary has determined to be consistent with the

purposes of this title. Each participating jurisdiction shall have the

right to establish the terms of assistance.

(c) ADMINISTRATIVE COSTS.—In each fiscal year, each participating jurisdiction may use not more than 10 percent of the funds

made available under this subtitle to the jurisdiction for such year

for any administrative and planning costs of the jurisdiction in carrying out this subtitle, including the costs of the salaries of persons

engaged in administering and managing activities assisted with

funds made available under this subtitle.

(d) PROHIBITED USES.—Funds made available under this subtitle may not be used to—

(1) defray any administrative cost of a participating jurisdiction that exceed the amount specified under subsection (c),

(2) provide tenant-based rental assistance for the special

purposes of the existing section 8 program, including replacing

public housing that is demolished or disposed of, preserving

federally assisted housing, assisting in the disposition of housing owned or held by the Secretary, preventing displacement

from rental rehabilitation projects, or extending or renewing

tenant-based assistance under section 8 of the United States

Housing Act of 1937,
Sec. 212 HOME INVESTMENT PARTNERSHIPS ACT 450

1So in law. Probably intended to refer to the United States Housing Act of 1937.

(3) provide non-Federal matching contributions required

under any other Federal program,

(4) provide assistance authorized under section 9 of the

United States Housing Act of 1937,

(5) carry out activities authorized under section 9(d)(1) of

the Housing Act of 1937 1, or

(6) provide assistance to eligible low-income housing under

the Emergency Low Income Housing Preservation Act of 1987

or the Low-Income Housing Preservation and Resident Homeownership Act of 1990.

(e) COST LIMITS.— (1) IN GENERAL.—The Secretary shall establish limits on

the amount of funds under this subtitle that may be invested

on a per unit basis. For multifamily housing, such limits shall

not be less than the per unit dollar amount limitations set

forth in section 221(d)(3)(ii) of the National Housing Act, as

such limitations may be adjusted in accordance therewith, except that for purposes of this subsection the Secretary shall, by

regulation, increase the per unit dollar amount limitations in

any geographical area by an amount, not to exceed 140 percent, that equals the amount by which the costs of multifamily

housing construction in the area exceed the national average

of such costs. The limits shall be established on a market-bymarket basis, with adjustments made for number of bedrooms,

and shall reflect the actual cost of new construction, reconstruction, or rehabilitation of housing that meets applicable

State and local housing and building codes and the cost of

land, including necessary site improvements. Adjustments

shall be made annually to reflect inflation. Separate limits may

be set for different eligible activities.

(2) CRITERIA.—In calculating per unit limits, the Secretary

shall take into account that assistance under this title is intended to—

(A) provide nonluxury housing with suitable amenities;

(B) operate effectively in all jurisdictions;

(C) facilitate mixed-income housing; and

(D) reflect the costs associated with meeting the special needs of tenants or homeowners that the housing is

designed to serve.

(3) CONSULTATION.—In calculating cost limits, the Secretary shall consult with organizations that have expertise in

the development of affordable housing, including national nonprofit organizations and national organizations representing

private development firms and State and local governments.

(f) CERTIFICATION OF COMPLIANCE.—The requirements of section 102(d) of the Department of Housing and Urban Development

Reform Act of 1989 shall be satisfied by a certification by a participating jurisdiction to the Secretary that the combination of Federal

assistance provided to any housing project shall not be any more

than is necessary to provide affordable housing.

(g) LIMITATION ON OPERATING ASSISTANCE.—A participating jurisdiction may not use more than 5 percent of its allocation under
451 Sec. 214 HOME INVESTMENT PARTNERSHIPS ACT

this subtitle for the payment of operating expenses for community

housing development organizations.

SEC. 213. ø42 U.S.C. 12743¿ DEVELOPMENT OF MODEL PROGRAMS.

(a) IN GENERAL.—The Secretary shall—

(1) in cooperation with participating jurisdictions, government-sponsored mortgage finance corporations, nonprofit organizations, the private sector, and other appropriate parties, develop, test, evaluate, refine, and, as necessary, replace a selection of model programs designed to carry out the purposes of

this title;

(2) make available to participating jurisdictions alternative

model programs, which shall include suggested guidelines, procedures, forms, legal documents and such other elements as

the Secretary determines to be appropriate;

(3) assure, insofar as is feasible, the availability of an appropriate variety of model programs designed for local market

conditions, housing problems, project characteristics, and managerial capacities as they differ among participating jurisdictions;

(4) negotiate and enter into agreements with agencies of

the Federal Government, participating jurisdictions, private financial institutions, government-sponsored mortgage finance

corporations, nonprofit organizations, and other entities to provide such services, products, or financing as may be required

for the implementation of a model program;

(5) provide detailed information on model programs as requested by participating jurisdictions, private financial institutions, developers, nonprofit organizations, and other interested

parties; and

(6) encourage the use of such model programs to achieve

efficiency, economies of scale, and effectiveness in the investment of funds made available under this subtitle through

third-party training, printed materials, and such other means

of support as the Secretary determines will achieve the purpose of this title.

(b) ADOPTION OF PROGRAMS.—Except as provided in section

223(2), each participating jurisdiction shall have the discretion to

adopt one or more model programs, adapt one or more model programs to its own requirements, design additional forms of assistance by itself or in cooperation with other participating jurisdictions, and suggest additional model programs for adoption by the

Secretary as the participating jurisdiction may deem appropriate,

and the Secretary may assist a participating jurisdiction in adopting, adapting, or designing one or more model programs.

(c) SUBTITLE D PROGRAMS.—The selection of model programs to

be made available for adoption or adaptation shall include programs meeting the criteria set forth in subtitle D.

SEC. 214. ø42 U.S.C. 12744¿ INCOME TARGETING.

Each participating jurisdiction shall invest funds made available under this subtitle within each fiscal year so that—

(1) with respect to rental assistance and rental units—

(A) not less than 90 percent of (i) the families receiving such rental assistance are families whose incomes do

not exceed 60 percent of the median family income for the
Sec. 215 HOME INVESTMENT PARTNERSHIPS ACT 452

area, as determined by the Secretary with adjustments for

smaller and larger families, (except that the Secretary may

establish income ceilings higher or lower than 60 percent

of the median for the area on the basis of the Secretary’s

findings that such variations are necessary because of prevailing levels of construction cost or fair market rent, or

unusually high or low family income) at the time of occupancy or at the time funds are invested, whichever is later,

or (ii) the dwelling units assisted with such funds are occupied by families having such incomes; and

(B) the remainder of (i) the families receiving such

rental assistance are households that qualify as low-income families (other than families described in subparagraph (A)) at the time of occupancy or at the time funds

are invested, whichever is later, or (ii) the dwelling units

assisted with such funds are occupied by such households;

(2) with respect to homeownership assistance, 100 percent

of such funds are invested with respect to dwelling units that

are occupied by households that qualify as low-income families;

and

(3) all such funds are invested with respect to housing that

qualifies as affordable housing under section 215.

SEC. 215. ø42 U.S.C. 12745¿ QUALIFICATION AS AFFORDABLE HOUSING.

(a) RENTAL HOUSING.—

(1) QUALIFICATION.—Housing that is for rental shall qualify as affordable housing under this title only if the housing—

(A) bears rents not greater than the lesser of (i) the

existing fair market rent for comparable units in the area

as established by the Secretary under section 8 of the

United States Housing Act of 1937, or (ii) a rent that does

not exceed 30 percent of the adjusted income of a family

whose income equals 65 percent of the median income for

the area, as determined by the Secretary, with adjustment

for number of bedrooms in the unit, except that the Secretary may establish income ceilings higher or lower than

65 percent of the median for the area on the basis of the

Secretary’s findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes;

(B) has not less than 20 percent of the units (i) occupied by very low-income families who pay as a contribution

toward rent (excluding any Federal or State rental subsidy

provided on behalf of the family) not more than 30 percent

of the family’s monthly adjusted income as determined by

the Secretary, or (ii) occupied by very low-income families

and bearing rents not greater than the gross rent for rentrestricted residential units as determined under section

42(g)(2) of the Internal Revenue Code of 1986;

(C) is occupied only by households that qualify as lowincome families;

(D) is not refused for leasing to a holder of a voucher

or certificate of eligibility under section 8 of the United

States Housing Act of 1937 because of the status of the
453 Sec. 215 HOME INVESTMENT PARTNERSHIPS ACT

prospective tenant as a holder of such voucher or certificate of eligibility;

(E) will remain affordable, according to binding commitments satisfactory to the Secretary, for the remaining

useful life of the property, as determined by the Secretary,

without regard to the term of the mortgage or to transfer

of ownership, or for such other period that the Secretary

determines is the longest feasible period of time consistent

with sound economics and the purposes of this Act, except

upon a foreclosure by a lender (or upon other transfer in

lieu of foreclosure) if such action (i) recognizes any contractual or legal rights of public agencies, nonprofit sponsors,

or others to take actions that would avoid termination of

low-income affordability in the case of foreclosure or transfer in lieu of foreclosure, and (ii) is not for the purpose of

avoiding low income affordability restrictions, as determined by the Secretary; and

(F) if newly constructed, meets the energy efficiency

standards promulgated by the Secretary in accordance

with section 109 of this Act.

(2) ADJUSTMENT OF QUALIFYING RENT.—The Secretary may

adjust the qualifying rent established for a project under subparagraph (A) of paragraph (1), only if the Secretary finds that

such adjustment is necessary to support the continued financial viability of the project and only by such amount as the

Secretary determines is necessary to maintain continued financial viability of the project.

(3) INCREASES IN TENANT INCOME.—Housing shall qualify

as affordable housing despite a temporary noncompliance with

subparagraph (B) or (C) of paragraph (1) if such noncompliance

is caused by increases in the incomes of existing tenants and

if actions satisfactory to the Secretary are being taken to ensure that all vacancies are filled in accordance with paragraph

(1) until such noncompliance is corrected. Tenants who no

longer qualify as low-income families shall pay as rent the lesser of the amount payable by the tenant under State or local

law or 30 percent of the family’s adjusted monthly income, as

recertified annually. The preceding sentence shall not apply

with respect to funds made available under this Act for units

that have been allocated a low-income housing tax credit by a

housing credit agency pursuant to section 42 of the Internal

Revenue Code 1986.

(4) MIXED-INCOME PROJECT.—Housing that accounts for

less than 100 percent of the dwelling units in a project shall

qualify as affordable housing if such housing meets the criteria

of this section.

(5) MIXED-USE PROJECT.—Housing in a project that is designed in part for uses other than residential use shall qualify

as affordable housing if such housing meets the criteria of this

section.

(6) WAIVER OF QUALIFYING RENT.—

(A) IN GENERAL.—For the purpose of providing affordable housing appropriate for families described in subparagraph (B), the Secretary may, upon the application of the
Sec. 215 HOME INVESTMENT PARTNERSHIPS ACT 454

project owner, waive the applicability of subparagraph (A)

of paragraph (1) with respect to a dwelling unit if—

(i) the unit is occupied by such a family, on whose

behalf tenant-based assistance is provided under section 8 of the United States Housing Act of 1937 (42

U.S.C. 1437f );

(ii) the rent for the unit is not greater than the existing fair market rent for comparable units in the

area, as established by the Secretary under section 8

of the United States Housing Act of 1937; and

(iii) the Secretary determines that the waiver, together with waivers under this paragraph for other

dwelling units in the project, will result in the use of

amounts described in clause (iii) in an effective manner that will improve the provision of affordable housing for such families.

(B) ELIGIBLE FAMILIES.—A family described in this

subparagraph is a family that consists of at least one elderly person (who is the head of household) and one or

more of such person’s grand children, great grandchildren,

great nieces, great nephews, or great great grandchildren

(as defined by the Secretary), but does not include any parent of such grandchildren, great grandchildren, great

nieces, great nephews, or great great grandchildren. Such

term includes any such grandchildren, great grandchildren, great nieces, great nephews, or great great

grandchildren who have been legally adopted by such elderly person.

(b) HOMEOWNERSHIP.—Housing that is for homeownership

shall qualify as affordable housing under this title only if the

housing—

(1) has an initial purchase price that does not exceed 95

percent of the median purchase price for the area, as determined by the Secretary with such adjustments for differences

in structure, including whether the housing is single-family or

multifamily, and for new and old housing as the Secretary determines to be appropriate;

(2) is the principal residence of an owner whose family

qualifies as a low-income family—

(A) in the case of a contract to purchase existing housing, at the time of purchase;

(B) in the case of a lease-purchase agreement for existing housing or for housing to be constructed, at the time

the agreement is signed; or

(C) in the case of a contract to purchase housing to be

constructed, at the time the contract is signed;

(3) is subject to resale restrictions that are established by

the participating jurisdiction and determined by the Secretary

to be appropriate to—

(A) allow for subsequent purchase of the property only

by persons who meet the qualifications specified under

paragraph (2), at a price which will—
455 Sec. 216 HOME INVESTMENT PARTNERSHIPS ACT

1So in law.

2The date of enactment was November 28, 1990.

(i) provide the owner with a fair return on investment, including any improvements, 1 and

(ii) ensure that the housing will remain affordable

to a reasonable range of low-income homebuyers; or

(B) recapture the investment provided under this title

in order to assist other persons in accordance with the requirements of this title, except where there are no net proceeds or where the net proceeds are insufficient to repay

the full amount of the assistance; and

(4) if newly constructed, meets the energy efficiency standards promulgated by the Secretary in accordance with section

109 of this Act.

SEC. 216. ø42 U.S.C. 12746¿ PARTICIPATION BY STATES AND LOCAL

GOVERNMENTS.

The Secretary shall designate a State or unit of general local

government to be a participating jurisdiction when it complies with

procedures that the Secretary shall establish by regulation, which

procedures shall only provide for the following:

(1) ALLOCATION.—Not later than 20 days after funds to

carry out this subtitle become available (or, during the first

year after enactment of this Act, 2 not later than 20 days after

(A) funds to carry out this subtitle are provided in an appropriations Act, or (B) regulations to implement this subtitle are

promulgated, whichever is later), the Secretary shall allocate

funds in accordance with section 217 and promptly notify each

jurisdiction receiving a formula allocation of its allocation

amount. If a jurisdiction is not already a participating jurisdiction, the Secretary shall inform the jurisdiction in writing how

the jurisdiction may become a participating jurisdiction.

(2) CONSORTIA.—A consortium of geographically contiguous

units of general local government shall be deemed to be a unit

of general local government for purposes of this title if the Secretary determines that the consortium—

(A) has sufficient authority and administrative capability to carry out the purposes of this title on behalf of its

member jurisdictions, and

(B) will, according to a written certification by the

State (or States, if the consortium includes jurisdictions in

more than one State), direct its activities to alleviation of

housing problems within the State or States.

(3) ELIGIBILITY.—(A) Except as provided in paragraph (10),

a jurisdiction receiving a formula allocation under section 217

shall be eligible to become a participating jurisdiction if its formula allocation is $750,000 or greater, or if the Secretary finds

that—

(i) the jurisdiction has a local housing authority and

has demonstrated a capacity to carry out provisions of this

subtitle, and

(ii) the State has authorized the Secretary to transfer

to the jurisdiction a portion of the State’s allocation that

is equal to or greater than the difference between the jurisdiction’s formula allocation and $750,000, or the State
Sec. 216 HOME INVESTMENT PARTNERSHIPS ACT 456

or jurisdiction has made available from the State’s or jurisdiction’s own sources an equal amount for use by the jurisdiction in conformance with the provisions of this subtitle.

(B) If a jurisdiction has met the requirements of subparagraph (A), the jurisdiction’s formula allocation for a fiscal year

shall subsequently be deemed to equal the sum of the jurisdiction’s allocation under section 217(a)(1) and the amount made

available to the jurisdiction under subparagraph (A)(ii).

(4) NOTIFICATION.—If an eligible jurisdiction notifies the

Secretary in writing, not later than 30 days after receiving notification under paragraph (1), of its intention to become a participating jurisdiction, the Secretary shall reserve an amount

equal to the jurisdiction’s allocation (plus any reallocations for

which the jurisdiction is eligible under section 217(d)(1)) pending the jurisdiction’s designation as a participating jurisdiction.

The Secretary shall reallocate, in accordance with paragraph

(6) of this section, any funds reserved under the previous sentence if the Secretary determines that the jurisdiction will not

meet the requirements for designation as a participating jurisdiction within a reasonable period of time.

(5) SUBMISSION OF STRATEGY.—Not later than 90 days

after providing notification under paragraph (4), an eligible jurisdiction shall submit to the Secretary a comprehensive housing affordability strategy in accordance with section 105.

(6) REALLOCATION.—If the Secretary determines that a jurisdiction has failed to meet the requirements of the previous

3 paragraphs or if the Secretary, after providing for amendments and resubmissions in accordance with section 105(c)(3),

disapproves the jurisdiction’s comprehensive housing affordability strategy, the Secretary shall reallocate any funds reserved for the jurisdiction as follows:

(A) STATE.—If a State has failed to meet the requirements, the Secretary shall—

(i) make any funds reserved for the State available by direct reallocation among applications submitted by units of general local government within the

State or consortia that include units of general local

government within the State, insofar as approvable

applications meeting the selection criteria under section 217(c) are received within 12 months after the

funds become available for the direct reallocation, and

(ii) reallocate the remainder by formula in accordance with section 217(b).

(B) LOCAL.—If a unit of general local government has

failed to meet the requirements and is located in a State

that is a participating jurisdiction, the Secretary shall reallocate to the State any funds reserved for the locality,

with preference going to the provision of affordable housing within the locality.

(C) DIRECT REALLOCATION.—If a unit of general local

government has failed to meet the requirements and is located in a State that is not a participating jurisdiction, the

Secretary shall—

(i) make any funds reserved for the locality available for use within the State by direct reallocation
457 Sec. 216 HOME INVESTMENT PARTNERSHIPS ACT

1Section 202(a) of the Housing and Community Development Act of 1992, Pub. L. 102–550,

approved October 28, 1992, amended this section by adding this paragraph and the references

to this paragraph. Subsection (c) of such section 202 provides as follows:

‘‘(c) APPLICABILITY.—Notwithstanding any other provision of law, the grant thresholds provided for in section 216, as amended by this section, and the grant thresholds provided for in

section 217(b) of the Cranston-Gonzalez National Affordable Housing Act, as amended by this

section, shall apply.’’.

among units of general local government and community housing development organizations, insofar as approvable applications meeting the selection criteria

under section 217(c) are received within 12 months

after the funds become available for the direct reallocation with priority going to applications for affordable housing within the locality, and

(ii) reallocate the remainder in accordance with

section 217(b).

(D) CERTAIN JURISDICTIONS DEEMED TO BE PARTICIPATING JURISDICTIONS.—If a State or unit of general local

government is meeting the requirements of paragraphs (3),

(4), and (5), it shall be deemed to be a participating jurisdiction for purposes of reallocation under this paragraph.

(7) DESIGNATION.—The Secretary shall designate an eligible jurisdiction to be a participating jurisdiction as soon as its

comprehensive housing affordability strategy is approved in accordance with section 105.

(8) CONTINUOUS DESIGNATION.—Once a State or unit of

general local government is designated a participating jurisdiction, it shall remain a participating jurisdiction for subsequent

fiscal years, except as provided in paragraph (9). The provisions of paragraphs (3) through (6) shall not apply to participating jurisdictions.

(9) REVOCATION.—The Secretary may revoke a jurisdiction’s designation as a participating jurisdiction if—

(A) the Secretary finds, after reasonable notice and opportunity for hearing, that the jurisdiction is unwilling or

unable to carry out the provisions of this title, or

(B) the jurisdiction’s allocation falls below $750,000 for

3 consecutive years, below $625,000 for 2 consecutive

years, or the jurisdiction does not receive a formula allocation of $500,000 or more in any 1 year, except as provided

in paragraph (10).

If a jurisdiction’s designation as a participating jurisdiction is

revoked, any remaining line of credit in the jurisdiction’s

HOME Investment Trust Fund established under section 218

shall be reallocated in accordance with paragraph (6) of this

section.

(10) THRESHOLD REDUCTION.— 1If the amount appropriated

pursuant to section 205 for any fiscal year is less than

$1,500,000,000, then this section shall be applied during that

year—

(A) by substituting ‘‘$500,000’’ for ‘′′$750,000’’ both

places it appears in paragraph (3); and

(B) by substituting ‘‘$500,000’’, ‘‘$410,000’’, and

‘‘$335,000’’ for ‘‘$750,000’’, ‘‘$625,000’’, and ‘‘$500,000’’,

respectively, where they appear in paragraph (9).
Sec. 217 HOME INVESTMENT PARTNERSHIPS ACT 458

1So in law. The Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1993, Pub. L. 102–389, 106 Stat. 1582, added this

paragraph.

Subsequently, section 211(a)(2) of the Housing and Community Development Act of 1992, Pub.

L. 102–550, approved October 28, 1992, amended this subsection by ‘‘adding after paragraph (2)’’

the preceding paragraph (also designated as paragraph (3)).

SEC. 217. ø42 U.S.C. 12747¿ ALLOCATION OF RESOURCES.

(a) IN GENERAL.— (1) STATES AND UNITS OF GENERAL LOCAL GOVERNMENT.— After reserving amounts under paragraph (3) for the insular

areas, the Secretary shall allocate funds approved in an appropriation Act to carry out this title by formula as provided in

subsection (b). Of the funds made available under the preceding sentence, the Secretary shall initially allocate 60 percent among units of general local government and 40 percent

among States.

ø(2) [Repealed.]¿

(3) INSULAR AREAS.—For each fiscal year, of any amounts

approved in appropriation Acts to carry out this title, the Secretary shall reserve for grants to the insular areas the greater

of (A) $750,000, or (B) 0.2 percent of the amounts appropriated

under such Acts. The Secretary shall provide for the distribution of amounts reserved under this paragraph among the insular areas pursuant to specific criteria for such distribution,

which shall be contained in a regulation issued by the Secretary.

(3) 1 INSULAR AREAS.—For each fiscal year, of any amounts

approved in appropriations Acts to carry out this title, the Secretary shall reserve for grants to the insular areas the greater

of (A) $750,000, or (B) 0.2 percent of the amounts appropriated

under such Acts. The Secretary shall provide for the distribution of amounts reserved under this paragraph among the insular areas pursuant to specific criteria for such distribution.

The criteria shall be contained in a regulation promulgated by

the Secretary after notice and public comment.

(b) FORMULA ALLOCATION.— (1) IN GENERAL.— (A) BASIC FORMULA.—The Secretary shall establish in

regulation an allocation formula that reflects each jurisdiction’s share of total need among eligible jurisdiction for an

increased supply of affordable housing for very low-income

and low-income families of different size, as identified by

objective measures of inadequate housing supply, substandard housing, the number of low-income families in

housing likely to be in need of rehabilitation, the costs of

producing housing, poverty, and the relative fiscal incapacity of the jurisdiction to carry out housing activities eligible under section 212 without Federal assistance. Allocation among units of general local government shall take

into account the housing needs of metropolitan cities,

urban counties, and approved consortia of units of general

local government.

(B) SOURCE OF DATA.—The data to be used for formula

allocation of funds within a fiscal year shall be data obtained from a standard source that are available to the

Secretary 90 days prior to the beginning of that fiscal year.
459 Sec. 217 HOME INVESTMENT PARTNERSHIPS ACT

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. At the beginning of the 104th Congress, the Subcommittee on Housing and Community Development was

renamed the Subcommittee on Housing and Community Opportunity. However, H. Res. 5, 107th

Congress, agreed to on January 3, 2001, abolished the Committee on Banking and Financial

Services and established the Committee on Financial Services, which has jurisdiction over many

of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(C) USE OF BASIC FORMULA.—The basic formula established under subparagraph (A) shall be used for all formula allocations and reallocations provided for in this subtitle.

(D) WEIGHTS.—When allocation is made among States,

the Secretary shall apply the formula in subparagraph (A)

giving 20 percent weight to measures of need for the whole

State and 80 percent weight to measures of need among

units of general local government that are not receiving an

allocation under section 216(1).

(E) ADJUSTMENTS.—In developing the basic formula in

subparagraph (A), the Secretary shall (i) avoid the allocation of an excessively large share of amounts made available under this subtitle to any one State or unit of general

local government, and (ii) take into account the need for a

geographic distribution of amounts made available under

this subtitle that appropriately reflects the housing need

in each region of the Nation.

(F) CONSULTATION.—The Secretary shall develop the

formula in subparagraph (A) in ongoing consultation with

(i) the Subcommittee on Housing and Urban Affairs of the

Committee on Banking, Housing, and Urban Affairs of the

Senate, (ii) the Subcommittee on Housing and Community

Development of the Committee on Banking, Finance and

Urban Affairs of the House of Representatives 1, and (iii)

organizations representing States and units of general

local government. Not less than 60 days prior to publishing a formula for comment, the Secretary shall submit

to the Committee on Banking, Housing, and Urban Affairs

of the Senate and the Committee on Banking, Finance and

Urban Affairs of the House of Representatives a copy of

the formula the Secretary intends to propose.

(2) MINIMUM STATE ALLOCATION.— (A) IN GENERAL.—If the formula, when applied to

funds approved under this section in appropriations Acts

for a fiscal year, would allocate less than $3,000,000 to any

State, the allocation for such State shall be $3,000,000,

and the increase shall be deducted pro rata from the allocations of other States.

(B) INCREASED MINIMUM ALLOCATION.—If no unit of

general local government within a State receives an allocation under paragraph (3), the State’s allocation shall be increased by $500,000. Priority for use of such increased allocation shall go to the provision of affordable housing

within the boundaries of metropolitan cities, urban counties, and approved consortia within the State, based on the

need for such funds. The increased allocation to a State
Sec. 217 HOME INVESTMENT PARTNERSHIPS ACT 460

1Section 202(b) of the Housing and Community Development Act of 1992, Pub. L. 102–550,

approved October 28, 1992, amended this subsection by adding this paragraph and the references to this paragraph. Subsection (c) of such section 202 provides as follows:

‘‘(c) APPLICABILITY.—Notwithstanding any other provision of law, the grant thresholds provided for in section 216, as amended by this section, and the grant thresholds provided for in

section 217(b) of the Cranston-Gonzalez National Affordable Housing Act, as amended by this

section, shall apply.’’.

under the preceding sentence shall be derived by a pro

rata deduction from the allocations to units of general local

government in all States, except that such pro rata deduction shall not reduce the allocation of any unit of general

local government below $500,000.

(3) MINIMUM LOCAL ALLOCATION.—The Secretary shall allocate funds available for formula allocation to units of general

local government that, as of the end of the previous fiscal year,

qualified as metropolitan cities, urban counties, and consortia

approved by the Secretary in accordance with section 216(2) so

that, when all such funds are initially allocated by formula, jurisdictions that are allocated an amount of $500,000 or more,

and participating jurisdictions (other than consortia that fail to

renew the membership of all of their member jurisdictions)

that are allocated an amount less than $500,000, shall receive

an allocation. Prior to announcing initial allocations, the Secretary shall successively recalculate the allocations to jurisdictions under this subsection so that the maximum number of

such jurisdictions can receive initial allocations, except as provided in paragraph (4).

(4) THRESHOLD REDUCTION.— 1If the amount appropriated

pursuant to section 205 for any fiscal year is less than

$1,500,000,000, then this section shall be applied during that

year by substituting ‘‘$335,000’’ for ‘‘$500,000’’ where it appears in paragraph (3).

(c) CRITERIA FOR DIRECT REALLOCATION.—The Secretary shall

establish objective criteria for making direct reallocations to any

participating jurisdiction and other eligible entities. A jurisdiction

shall be eligible for a direct reallocation under this subsection only

if the jurisdiction, in a form acceptable to the Secretary, submits

an application that demonstrates to the satisfaction of the Secretary that the jurisdiction is engaged, or has made good faith efforts to engage, in cooperative efforts between the State and appropriate participating jurisdictions within the State to develop, coordinate, and implement housing strategies under this title. The

Secretary shall by regulation establish objective selection criteria

for such direct reallocations, which criteria shall take into

account—

(1) the applicant’s demonstrated commitment to expand

the supply of affordable rental housing, including units developed by public housing agencies, as indicated by the additional

number of units of affordable housing made available through

production or rehabilitation within the previous 2 years, making adjustment for regional variations in construction and rehabilitation costs and giving special consideration to the number of additional units made available under this title through

production or rehabilitation, including units developed by public housing agencies, in relation to the amounts made available

under this program;
461 Sec. 217 HOME INVESTMENT PARTNERSHIPS ACT

(2) the applicant’s actions that—

(A) direct funds made available under this subtitle to

benefit very low-income families, with a range of incomes,

in amounts that exceed the income targeting requirements

of section 214, with extra consideration given for activities

that expand the supply of affordable housing for very lowincome families whose incomes do not exceed 30 percent of

the median family income for the area, as determined by

the Secretary;

(B) apply the tenant selection preference categories

applicable under section 8 of the United States Housing

Act of 1937 to the selection of tenants for housing assisted

under this subtitle;

(C) provide matching resources in excess of funds required under section 220; and

(D) stimulate a high degree of investment and participation in development by the private sector, including nonprofit organizations; and

(3) the degree to which the applicant is pursuing policies

that—

(A) make existing housing more affordable;

(B) remove or ameliorate any negative effects that

public policies identified by the applicant pursuant to section 105(b)(4) may have on the cost of housing or the incentives to develop, maintain, or improve affordable housing in the jurisdiction;

(C) preserve the affordability of privately-owned housing that is vulnerable to conversion, demolition, disinvestment, or abandonment;

(D) increase the supply of housing that is affordable to

very low-income and low-income persons, particularly in

areas that are accessible to expanding job opportunities;

and

(E) remedy the effects of discrimination and improve

housing opportunities for disadvantaged minorities.

(d) REALLOCATIONS.—

(1) IN GENERAL.—The Secretary shall make any reallocations periodically throughout each fiscal year so as to ensure

that all funds to be reallocated are made available to eligible

jurisdictions as soon as possible, consistent with orderly program administration. Jurisdictions eligible for such reallocations shall include participating jurisdictions and jurisdictions

meeting the requirements of paragraphs (3), (4), and (5) of section 216.

(2) COMMITMENTS.—The Secretary shall establish procedures according to which participating jurisdictions may make

commitments to invest funds made available under this section. Such procedures shall provide for appropriate stages of

commitment of funds to a project from initial reservation

through binding commitment. Notwithstanding any other provision of this title, funds that the Secretary determines are

needed to fulfill binding commitments shall not be available for

reallocation.

(3) LIMITATION.—Unless otherwise specified in this subtitle, any reallocation of funds from a State shall be made only
Sec. 218 HOME INVESTMENT PARTNERSHIPS ACT 462

1So in law. Probably intended to refer to section 223.

among all participating States, and any reallocation of funds

from units of general local government shall be made only

among all participating units of general local government.

SEC. 218. ø42 U.S.C. 12748¿ HOME INVESTMENT TRUST FUNDS.

(a) ESTABLISHMENT.—The Secretary shall establish for each

participating jurisdiction a HOME Investment Trust Fund, which

shall be an account (or accounts as provided in section 219(c)) for

use solely to invest in affordable housing within the participating

jurisdiction’s boundaries or within the boundaries of contiguous jurisdictions in joint projects which serve residents from both jurisdictions in accordance with the provisions of this subtitle.

(b) LINE OF CREDIT.—The Secretary shall establish a line of

credit in the HOME Investment Trust Fund of each participating

jurisdiction, which line of credit shall include—

(1) funds allocated or reallocated to the participating jurisdiction under section 217, and

(2) any payment or repayment made pursuant to section

219.

(c) REDUCTIONS.—A participating jurisdiction’s line of credit

shall be reduced by—

(1) funds drawn from the HOME Investment Trust Fund

by the participating jurisdiction,

(2) funds expiring under subsection (g), and

(3) any penalties assessed by the Secretary under section

224. 1

(d) CERTIFICATION.—A participating jurisdiction may draw

funds from its HOME Investment Trust Fund, but not to exceed

the remaining line of credit, only after providing certification that

the funds shall be used pursuant to the participating jurisdiction’s

approved housing strategy and in compliance with all requirements

of this title. When such certification is received, the Secretary shall

immediately disburse such funds in accordance with the form of

the assistance determined by the participating jurisdiction.

(e) INVESTMENT WITHIN 15 DAYS.—The participating jurisdiction shall, not later than 15 days after funds are drawn from the

jurisdiction’s HOME Investment Trust Fund, invest such funds, together with any interest earned thereon, in the affordable housing

for which the funds were withdrawn.

(f) NO INTEREST OR FEES.—The Secretary shall not charge any

interest or levy any other fee with regard to funds in a HOME Investment Trust Fund.

(g) EXPIRATION OF RIGHT TO DRAW FUNDS.—If any funds becoming available to a participating jurisdiction under this title are

not placed under binding commitment to affordable housing within

24 months after the last day of the month in which such funds are

deposited in the jurisdiction’s HOME Investment Trust Fund, the

jurisdiction’s right to draw such funds from the HOME Investment

Trust Fund shall expire. The Secretary shall reduce the line of

credit in the participating jurisdiction’s HOME Investment Trust

Fund by the expiring amount and shall reallocate the funds by formula in accordance with section 217(d).

(h) ADMINISTRATIVE PROVISION.—The Secretary shall keep each

participating jurisdiction informed of the status of its HOME In-
463 Sec. 220 HOME INVESTMENT PARTNERSHIPS ACT

vestment Trust Fund, including the status of amounts under various stages of commitment.

SEC. 219. ø42 U.S.C. 12749¿ REPAYMENT OF INVESTMENT.

(a) IN GENERAL.—Any repayment of funds drawn from a jurisdiction’s HOME Investment Trust Fund, and any payment of interest or other return on the investment of such funds, shall be deposited in such jurisdiction’s HOME Investment Trust Fund, except

that, if the jurisdiction is not a participating jurisdiction when such

payment or repayment is made, the amount of such payment or repayment shall be reallocated in accordance with section 217(d).

(b) ASSURANCE OF REPAYMENT.—Each participating jurisdiction

shall enter into an agreement with the Secretary ensuring that

funds invested in affordable housing under this subtitle are repayable when the housing no longer qualifies as affordable housing.

Any repayment under the previous sentence shall be for deposit in

the HOME Investment Trust Fund of the jurisdiction making the

investment; except that if such jurisdiction is not a participating

jurisdiction when such repayment is made, the amount of such repayment shall be reallocated in accordance with section 217(d).

(c) AVAILABILITY.—The Secretary shall take such actions as are

necessary to ensure that any repayments deposited in a HOME Investment Trust Fund in accordance with this section shall be immediately available to the participating jurisdiction for investment

subject to the provisions of this subtitle that apply to funds that

are allocated under section 217. Actions authorized under the preceding sentence may include authorizing the establishment for a

participating jurisdiction of a HOME Investment Trust Fund account outside of the Federal Government that, under arrangements

satisfactory to the Secretary, shall be used solely to invest in affordable housing within the participating jurisdiction’s boundaries

in accordance with the provisions of this title. Such accounts shall

be established in such a manner that repayments are not receipts

or collections of the Federal Government.

SEC. 220. ø42 U.S.C. 12750¿ MATCHING REQUIREMENTS.

(a) CONTRIBUTION.—Each participating jurisdiction shall make

contributions to housing that qualifies as affordable housing under

this title that total, throughout a fiscal year, not less than 25 percent of the funds drawn from the jurisdiction’s HOME Investment

Trust Fund in such fiscal year. Such contributions shall be in addition to any amounts made available under section 216(3)(A)(ii).

(b) RECOGNITION.— (1) IN GENERAL.—A contribution shall be recognized for

purposes of subsection (a) only if it—

(A) is made with respect to housing that qualifies as

affordable housing under section 215; or

(B) is made with respect to any portion of a project not

less than 50 percent of the units of which qualify as affordable housing under section 215.

(2) ADMINISTRATIVE EXPENSES.—Contributions for administrative expenses may not be recognized for purposes of subsection (a).

(c) FORM.—Such contributions may be in the form of—

(1) cash contributions from non-Federal resources, which

may not include funds from a grant made under section 106(b)
Sec. 220 HOME INVESTMENT PARTNERSHIPS ACT 464

1So in law.

2So in law. There is no paragraph (5).

or section 106(d) of the Housing and Community Development

Act of 1974;

(2) the value of taxes, fees, or other charges that are normally and customarily imposed but are waived, foregone, or deferred in a manner that achieves affordability of housing assisted under this title;

(3) the value of land or other real property as appraised

according to procedures acceptable to the Secretary; and 1

(4) the value of investment in on-site and off-site infrastructure directly required for affordable housing assisted

under this title. 1

(6) 2 up to—

(A) 50 percent of proceeds from bond financing validly

issued by a State or local government, agency or instrumentality thereof, or political subdivision thereof, and repayable with revenues derived from a multifamily affordable housing project financed, and

(B) 25 percent of proceeds from bond financing validly

issued by a State or local government, agency or instrumentality thereof, or political subdivision thereof, and repayable with revenues derived from a single-family project

financed,

but not more than 25 percent of the contribution required

under subsection (a) may be derived from these sources;

(7) the reasonable value of any site-preparation and construction materials and any donated or voluntary labor in connection with the site-preparation for, or construction or rehabilitation of, affordable housing; and

(8) such other contributions to affordable housing as the

Secretary considers appropriate.

(d) REDUCTION OF REQUIREMENT.— (1) IN GENERAL.—The Secretary shall reduce the matching

requirement under subsection (a) with respect to any funds

drawn from a jurisdiction’s HOME Investment Trust Fund Account during a fiscal year by—

(A) 50 percent for a jurisdiction that certifies that it

is in fiscal distress; and

(B) 100 percent for a jurisdiction that certifies that it

is in severe fiscal distress.

(2) DEFINITIONS.—For purposes of this section—

(A) ‘‘fiscal distress’’ means a jurisdiction other than a

State that satisfies 1 of the distress criteria set forth in

paragraph (3); and

(B) ‘‘severe fiscal distress’’ means a jurisdiction other

than a State that satisfies both of the distress criteria set

forth in paragraph (3).

(3) DISTRESS CRITERIA.—For purposes of a jurisdiction

other than a State certifying that it is distressed, the following

criteria shall apply:

(A) POVERTY RATE.—The average poverty rate in the

jurisdiction for the calendar year immediately preceding

the year in which its fiscal year begins was equal to or
465 Sec. 223 HOME INVESTMENT PARTNERSHIPS ACT

greater than 125 percent of the average national poverty

rate during such calendar year (as determined according to

information of the Bureau of the Census).

(B) PER CAPITA INCOME.—The average per capita income in the jurisdiction for the calendar year immediately

preceding the year in which its fiscal year begins was less

than 75 percent of the average national per capita income

during such calendar year (as determined according to information of the Bureau of the Census).

(4) STATES.—In determining the degree to which a jurisdiction that is a State is distressed, the Secretary shall take into

consideration the State’s fiscal capacity and expenditure needs

as determined by a national organization which compiles the

relevant data.

(5) WAIVER IN DISASTER AREAS.—If a participating jurisdiction is located in an area in which a declaration of a disaster

pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act is in effect for any part of a fiscal year,

the Secretary may reduce the matching requirement for that

fiscal year under subsection (a) with respect to any funds

drawn from a jurisdiction’s HOME Investment Trust Fund Account during that fiscal year by up to 100 percent.

SEC. 221. ø42 U.S.C. 12751¿ PRIVATE-PUBLIC PARTNERSHIP.

Each participating jurisdiction shall make all reasonable efforts, consistent with the purposes of this title, to maximize participation by the private sector, including nonprofit organizations and

for-profit entities, in the implementation of the jurisdiction’s housing strategy, including participation in the financing, development,

rehabilitation and management of affordable housing. Nothing in

the previous sentence shall preclude public housing authorities

from fully participating in the implementation of a jurisdiction’s

housing strategy.

SEC. 222. ø42 U.S.C. 12752¿ DISTRIBUTION OF ASSISTANCE.

(a) LOCAL.—Each participating jurisdiction shall, insofar as

is feasible, distribute assistance under this subtitle geographically

within its boundaries and among different categories of housing

need, according to the priorities of housing need identified in the

jurisdiction’s approved housing strategy.

(b) STATE.—Participating States shall be responsible for distributing assistance throughout the State according to the State’s

assessment of the geographical distribution of the housing need

within the State, as identified in the State’s approved housing

strategy. Participating States shall distribute assistance to rural

areas in amounts that take into account the nonmetropolitan share

of the State’s total population and objective measures of rural housing need, such as poverty and substandard housing, as set forth in

the State’s housing strategy approved under section 105 of this Act.

To the extent the need is within the boundaries of a participating

unit of general local government, the State and the unit of general

local government shall coordinate activities to address that need.

SEC. 223. ø42 U.S.C. 12753¿ PENALTIES FOR MISUSE OF FUNDS.

If the Secretary finds after reasonable notice and opportunity

for hearing that a participating jurisdiction has failed to comply

substantially with any provision of this subtitle and until the Sec-
Sec. 224 HOME INVESTMENT PARTNERSHIPS ACT 466

retary is satisfied that there is no longer any such failure to comply, the Secretary shall reduce the line of credit in the participating

jurisdiction’s HOME Investment Trust Fund by the amount of any

expenditures that were not in accordance with the requirements of

this title, and the Secretary may—

(1) prevent withdrawals from the participating jurisdiction’s HOME Investment Trust Fund for activities affected by

such failure to comply;

(2) restrict the participating jurisdiction’s activities under

this title to activities that conform to one or more model programs made available under section 213; or

(3) remove the participating jurisdiction from participation

in allocations or reallocations of funds made available under

this subtitle.

SEC. 224. ø42 U.S.C. 12754¿ LIMITATION ON JURISDICTIONS UNDER

COURT ORDER.

(a) IN GENERAL.—Notwithstanding any other provision of this

Act, the Secretary shall ensure that funds provided under this subtitle are not employed to carry out housing remedies or to pay

fines, penalties, or costs associated with an action in which—

(1) a participating jurisdiction has been adjudicated, by a

Federal, State, or local court, to be in violation of title VI of

the Civil Rights Act of 1964, the Fair Housing Act, or any

other Federal, State, or local law promoting fair housing or

prohibiting discrimination, or

(2) a settlement has been entered into in any case where

claims of such violations have been asserted against a participating jurisdiction, except to the extent permitted by subsection (b).

(b) REMEDIAL USE OF FUNDS PERMITTED.—In the case of settlement described in subsection (a)(2), a jurisdiction may use funds

provided under this Act to carry out housing remedies with eligible

activities.

SEC. 225. ø42 U.S.C. 12755¿ TENANT AND PARTICIPANT PROTECTIONS.

(a) LEASE.—The lease between a tenant and an owner of affordable housing assisted under this title for rental shall be for not

less than one year, unless by mutual agreement between the tenant and the owner, and shall contain such terms and conditions as

the Secretary shall determine to be appropriate.

(b) TERMINATION OF TENANCY.—An owner shall not terminate

the tenancy or refuse to renew the lease of a tenant of rental housing assisted under this title except for serious or repeated violation

of the terms and conditions of the lease, for violation of applicable

Federal, State, or local law, or for other good cause. Any termination or refusal to renew must be preceded by not less than 30

days by the owner’s service upon the tenant of a written notice

specifying the grounds for the action.

(c) MAINTENANCE AND REPLACEMENT.—The owner of rental

housing assisted under this title shall maintain the premises in

compliance with all applicable housing quality standards and local

code requirements.

(d) TENANT SELECTION.—The owner of rental housing assisted

under this title shall adopt written tenant selection policies and criteria that—
467 Sec. 231 HOME INVESTMENT PARTNERSHIPS ACT

(1) are consistent with the purpose of providing housing for

very low-income and low-income families,

(2) are reasonably related to program eligibility and the

applicant’s ability to perform the obligations of the lease,

(3) give reasonable consideration to the housing needs of

families that would have a preference under section 6(c)(4)(A)

of the United States Housing Act of 1937 (42 U.S.C.

1437d(c)(4)(A)), and

(4) provide for (A) the selection of tenants from a written

waiting list in the chronological order of their application, insofar as is practicable, and (B) for the prompt notification in

writing of any rejected applicant of the grounds for any rejection.

SEC. 226. ø42 U.S.C. 12756¿ MONITORING OF COMPLIANCE.

(a) ENFORCEABLE AGREEMENTS.—Each participating jurisdiction, through binding contractual agreements with owners and otherwise, shall ensure long-term compliance with the provisions of

this title. Such measures shall provide for (1) enforcement of the

provisions of this title by the jurisdiction or by the intended beneficiaries, and (2) remedies for the breach of such provisions.

(b) PERIODIC MONITORING.—Each participating jurisdiction, not

less frequently than annually, shall review the activities of owners

of affordable housing assisted under this title for rental to assess

compliance with the requirements of this title. Such review shall

include on-site inspection to determine compliance with housing

codes and other applicable regulations. The results of each review

shall be included in the jurisdiction’s performance report submitted

to the Secretary under section 108(a) and made available to the

public.

(c) SPECIAL PROCEDURES FOR CERTAIN PROJECTS.—In the case

of small-scale or scattered site housing, the Secretary may provide

for such streamlined procedures for achieving the purposes of this

section as the Secretary determines to be appropriate.

Subtitle B—Community Housing Partnership

SEC. 231. ø42 U.S.C. 12771¿ SET-ASIDE FOR COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS.

(a) IN GENERAL.—For a period of 24 months after funds under

subtitle A are made available to a jurisdiction, the jurisdiction

shall reserve not less than 15 percent of such funds for investment

only in housing to be developed, sponsored, or owned by community

housing development organizations. Each participating jurisdiction

shall make reasonable efforts to identify community housing development organizations that are capable or can reasonably be expected to become capable of carrying out elements of the jurisdiction’s housing strategy and to encourage such community housing

development organizations to do so. If during the first 24 months

of its participation under this title, a participating jurisdiction is

unable to identify a sufficient number of capable community housing development organizations, then up to 20 percent of the funds

allocated to that jurisdiction under this section, but not to exceed

$150,000, may be made available to carry out activities that develop the capacity of community housing development organiza-
Sec. 232 HOME INVESTMENT PARTNERSHIPS ACT 468

tions in that jurisdiction. A participating jurisdiction is authorized

to enter into contracts with community housing development organizations to carry out this section.

(b) RECAPTURE AND REUSE.—If any funds reserved under subsection (a) remain uninvested for a period of 24 months, then the

Secretary shall deduct such funds from the line of credit in the participating jurisdiction’s HOME Investment Trust Fund and make

such funds available by direct reallocation (1) to other participating

jurisdictions for affordable housing developed, sponsored or owned

by community housing development organizations, or (2) to nonprofit intermediary organizations to carry out activities that develop the capacity of community housing development organizations consistent with section 233, with preference to community

housing development organizations serving the jurisdiction from

which the funds were recaptured.

(c) DIRECT REALLOCATION CRITERIA.—Insofar as practicable, direct reallocations under this section shall be made according to the

selection criteria established under section 217(c).

SEC. 232. ø42 U.S.C. 12772¿ PROJECT-SPECIFIC ASSISTANCE TO COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS.

(a) IN GENERAL.—Amounts reserved under section 231 may be

used for activities eligible under section 212 and, in amounts not

to exceed 10 percent of the amounts so reserved, for other activities

specified under this section.

(b) PROJECT-SPECIFIC TECHNICAL ASSISTANCE AND SITE CON- TROL LOANS.— (1) IN GENERAL.—Amounts reserved under the previous

section may be used to provide technical assistance and site

control loans to community housing development organizations

in the early stages of site development for an eligible project.

Such loans shall not exceed amounts that the jurisdiction determines to be customary and reasonable project preparation

costs allowable under paragraph (2).

(2) ALLOWABLE EXPENSES.—A loan under this subsection

may be provided to cover project expenses necessary to determine project feasibility (including costs of an initial feasibility

study), consulting fees, costs of preliminary financial applications, legal fees, architectural fees, engineering fees, engagement of a development team, site control and title clearance.

(3) REPAYMENT.—A community housing development organization that receives a loan under this subsection shall repay

the loan to the participating jurisdiction’s HOME Investment

Trust Fund from construction loan proceeds or other project income. The participating jurisdiction may waive repayment of

the loan, in part or in whole, if there are impediments to

project development that the participating jurisdiction determines are reasonably beyond the control of the borrower.

(c) PROJECT-SPECIFIC SEED MONEY LOANS.—

(1) IN GENERAL.—Amounts reserved under the previous

section may be used to provide loans to community housing development organizations to cover preconstruction project costs

that the jurisdiction determines to be customary and reasonable, including, but not limited to the costs of obtaining firm

construction loan commitments, architectural plans and specifications, zoning approvals, engineering studies, and legal fees.
469 Sec. 233 HOME INVESTMENT PARTNERSHIPS ACT

(2) ELIGIBLE SPONSORS.—A loan under this subsection may

be provided only to a community housing development organization that has, with respect to the project concerned, site control, a preliminary financial commitment, and a capable development team.

(3) REPAYMENT.—A community housing development organization that receives a loan under this subsection shall repay

the loan to the jurisdiction’s HOME Investment Trust Fund

from construction loan proceeds or other project income. The

participating jurisdiction may waive repayment of the loan, in

whole or in part, if there are impediments to project development that the participating jurisdiction determines are reasonably beyond the control of the borrower.

SEC. 233. ø42 U.S.C. 12773¿ HOUSING EDUCATION AND ORGANIZATIONAL SUPPORT.

(a) IN GENERAL.—The Secretary is authorized to provide education and organizational support assistance, in conjunction with

other assistance made available under this subtitle—

(1) to facilitate the education of low-income homeowners

and tenants;

(2) to promote the ability of community housing development organizations, including community land trusts, to maintain, rehabilitate and construct housing for low-income and

moderate-income families in conformance with the requirements of this title; and

(3) to achieve the purposes under paragraphs (1) and (2)

by helping women who reside in low- and moderate-income

neighborhoods rehabilitate and construct housing in the neighborhoods.

(b) ELIGIBLE ACTIVITIES.—Assistance under this section may be

used only for the following eligible activities:

(1) ORGANIZATIONAL SUPPORT.—Organizational support assistance may be made available to community housing development organizations to cover operational expenses and to cover

expenses for training and technical, legal, engineering and

other assistance to the board of directors, staff, and members

of the community housing development organization.

(2) HOUSING EDUCATION.—Housing education assistance

may be made available to community housing development organizations to cover expenses for providing or administering

programs for educating, counseling, or organizing homeowners

and tenants who are eligible to receive assistance under other

provisions of this title.

(3) PROGRAM-WIDE SUPPORT OF NONPROFIT DEVELOPMENT

AND MANAGEMENT.—Technical assistance, training, and continuing support may be made available to eligible community

housing development organizations for managing and conserving properties developed under this title.

(4) BENEVOLENT LOAN FUNDS.—Technical assistance may

be made available to increase the investment of private capital

in housing for very low-income families, particularly by encouraging the establishment of benevolent loan funds through

which private financial institutions will accept deposits at

below-market interest rates and make those funds available at
Sec. 233 HOME INVESTMENT PARTNERSHIPS ACT 470

favorable rates to developers of low-income housing and to

low-income homebuyers.

(5) COMMUNITY DEVELOPMENT BANKS AND CREDIT

UNIONS.—Technical assistance may be made available to establish privately owned, local community development banks and

credit unions to finance affordable housing.

(6) COMMUNITY LAND TRUSTS.—Organizational support,

technical assistance, education, training, and continuing support under this subsection may be made available to community land trusts (as such term is defined in subsection (f)) and

to community groups for the establishment of community land

trusts.

(7) FACILITATING WOMEN IN HOMEBUILDING PROFESSIONS.— Technical assistance may be made available to businesses,

unions, and organizations involved in construction and rehabilitation of housing in low- and moderate-income areas to assist women residing in the area to obtain jobs involving such

activities, which may include facilitating access by such women

to, and providing, apprenticeship and other training programs

regarding nontraditional skills, recruiting women to participate

in such programs, providing continuing support for women at

job sites, counseling and educating businesses regarding suitable work environments for women, providing information to

such women regarding opportunities for establishing small

housing construction and rehabilitation businesses, and providing materials and tools for training such women (in an

amount not exceeding 10 percent of any assistance provided

under this paragraph). The Secretary shall give priority under

this paragraph to providing technical assistance for organizations rehabilitating single family or multifamily housing owned

or controlled by the Secretary pursuant to title II of the National Housing Act and which have women members in occupations in which women constitute 25 percent or less of the total

number of workers in the occupation (in this section referred

to as ‘‘nontraditional occupations’’).

(c) DELIVERY OF ASSISTANCE.—The Secretary shall provide this

assistance only through contract—

(1) with a nonprofit intermediary organization that, in the

determination of the Secretary—

(A) customarily provides, in more than one community, services related to the provision of decent housing

that is affordable to low-income and moderate-income persons or the revitalization of deteriorating neighborhoods;

(B) has demonstrated experience in providing a range

of assistance (such as financing, technical assistance, construction and property management assistance, capacity

building and training) to community housing development

organizations or similar organizations that engage in community revitalization;

(C) has demonstrated the ability to provide technical

assistance and training for community-based developers of

affordable housing;

(D) has described the uses to which such assistance

will be put and the intended beneficiaries of the assistance; and
471 Sec. 233 HOME INVESTMENT PARTNERSHIPS ACT

(E) in the case of activities under subsection (b)(7), is

a community-based organization (as such term is defined

in section 4 of the Job Training Partnership Act) or public

housing agency, which has demonstrated experience in

preparing women for apprenticeship training in construction or administering programs for training women for

construction or other nontraditional occupations (and such

organizations may use assistance for activities under such

subsection to employ women in housing construction and

rehabilitation activities to the extent that the organization

has the capacity to conduct such activities); or

(2) with another organization, if a participating jurisdiction demonstrates that the organization is qualified to carry

out eligible activities and that the jurisdiction would not be

served in a timely manner by intermediaries specified under

paragraph (1).

Contracts under paragraph (2) shall be for activities specified in an

application from the participating jurisdiction, which application

shall include a certification that the activities are necessary to the

effective implementation of the participating jurisdiction’s housing

strategy.

(d) LIMITATIONS.—Contracts under this section with any one

contractor for a fiscal year may not—

(1) exceed 20 percent of the amount appropriated for this

section for such fiscal year; or

(2) provide more than 20 percent of the operating budget

(which shall not include funds that are passed through to community housing development organizations) of the contracting

organization for any one year.

(e) SINGLE-STATE CONTRACTORS.—Not less than 40 percent of

the funds made available for this section in an appropriations Act

in any fiscal year shall be made available for eligible contractors

that have worked primarily in one State. The Secretary shall provide assistance under this section, to the extent applications are

submitted and approved, to contractors in each of the geographic

regions having a regional office of the Department of Housing and

Urban Development.

(f) DEFINITION OF COMMUNITY LAND TRUST.—For purposes of

this section, the term ‘‘community land trust’’ means a community

housing development organization (except that the requirements

under subparagraphs (C) and (D) of section 104(6) shall not apply

for purposes of this subsection)—

(1) that is not sponsored by a for-profit organization;

(2) that is established to carry out the activities under

paragraph (3);

(3) that—

(A) acquires parcels of land, held in perpetuity, primarily for conveyance under long-term ground leases;

(B) transfers ownership of any structural improvements located on such leased parcels to the lessees; and

(C) retains a preemptive option to purchase any such

structural improvement at a price determined by formula

that is designed to ensure that the improvement remains

affordable to low- and moderate-income families in perpetuity;
Sec. 234 HOME INVESTMENT PARTNERSHIPS ACT 472

(4) whose corporate membership that is open to any adult

resident of a particular geographic area specified in the bylaws

of the organization; and

(5) whose board of directors—

(A) includes a majority of members who are elected by

the corporate membership; and

(B) is composed of equal numbers of (i) lessees pursuant to paragraph (3)(B), (ii) corporate members who are

not lessees, and (iii) any other category of persons described in the bylaws of the organization.

SEC. 234. ø42 U.S.C. 12774¿ OTHER REQUIREMENTS.

(a) TENANT PARTICIPATION PLAN.—A community housing development organization that receives assistance under this subtitle

shall provide a plan for and follow a program of tenant participation in management decisions and shall adhere to a fair lease and

grievance procedure approved by the participating jurisdiction.

(b) LIMITATION ON ASSISTANCE.—A community housing development organization may not receive assistance under this title for

any fiscal year in an amount that provides more than 50 percent

of the organization’s total operating budget in the fiscal year or

$50,000 annually, whichever is greater.

(c) ADJUSTMENTS OF OTHER ASSISTANCE.—The Secretary shall

take account of assistance provided to a project under this subtitle

when adjusting other assistance to be provided to the project as required by section 102(d) of the Department of Housing and Urban

Development Reform Act of 1989.

Subtitle C—Other Support for State and Local

Housing Strategies

SEC. 241. ø42 U.S.C. 12781¿ AUTHORITY.

The Secretary shall, insofar as is feasible through contract

with eligible organizations, develop the capacity of participating jurisdictions, State and local housing finance agencies, nonprofit organizations and for-profit corporations, working in partnership, to

identify and meet needs for an increased supply of decent, affordable housing.

SEC. 242. ø42 U.S.C. 12782¿ PRIORITIES FOR CAPACITY DEVELOPMENT.

To carry out section 241, the Secretary shall provide assistance

under this subtitle to—

(1) facilitate the exchange of information that would help

participating jurisdictions carry out the purposes of this title,

including information on program design, housing finance, land

use controls, and building construction techniques;

(2) improve the ability of States and units of general local

government to design and implement comprehensive housing

affordability strategies, particularly those States and units of

general local government that are relatively inexperienced in

the development of affordable housing;

(3) encourage private lenders and for-profit developers of

low-income housing to participate in public-private partnerships to achieve the purposes of this title;

(4) improve the ability of States and units of general local

government, community housing development organizations,
473 Sec. 245 HOME INVESTMENT PARTNERSHIPS ACT

private lenders, and for-profit developers of low-income housing

to incorporate energy efficiency into the planning, design, financing, construction, and operation of affordable housing;

(5) facilitate the establishment and efficient operation of

employer-assisted housing programs through research, technical assistance and demonstration projects; and

(6) facilitate the establishment and efficient operation of

land bank programs, under which title to vacant and abandoned parcels of real estate located in or causing blighted

neighborhoods is cleared for use consistent with the purposes

of this title.

SEC. 243. ø42 U.S.C. 12783¿ CONDITIONS OF CONTRACTS.

(a) ELIGIBLE ORGANIZATIONS.—The Secretary shall carry out

this subtitle insofar as is practicable through contract with—

(1) a participating jurisdiction or agency thereof;

(2) a public purpose organization established pursuant to

State or local legislation and responsible to the chief elected official of a participating jurisdiction;

(3) an agency or authority established by two or more participating jurisdictions to carry out activities consistent with

the purposes of this title;

(4) a national or regional nonprofit organization that has

a membership comprised predominantly of entities or officials

of entities that qualify under paragraph (1), (2), or (3); or

(5) a professional and technical services company or firm

that has demonstrated capacity to provide services under this

subtitle.

(b) CONTRACT TERMS.—Contracts under this subtitle shall be

for not more than 3 years and shall provide not more than 20 percent of the operating budget of the contracting organization in any

one year. Within any fiscal year, contracts with any one organization may not be entered into for a total of more than 20 percent

of the funds appropriated under this subtitle in that fiscal year.

SEC. 244. ø42 U.S.C. 12784¿ RESEARCH IN HOUSING AFFORDABILITY.

The Secretary is authorized to support, through contracts with

eligible organizations and otherwise, such research and to publish

such reports as will assist in the achievement of the purposes of

this title. Activities authorized by the previous sentence may include an ongoing analysis of the impact of public policies at the

Federal, State, and local levels, both individually and in the aggregate, on the incentives to expand and maintain the supply of energy-efficient affordable housing in the United States, particularly

in areas with severe problems of housing affordability, through the

use of cost-saving innovative building technology and construction

techniques. For purposes of this section, agencies of the United

States, government-sponsored mortgage finance corporations, and

qualified research organizations shall be included as eligible organizations in addition to eligible organizations specified under section 243.

SEC. 245. ø42 U.S.C. 12785¿ REACH: ASSET RECYCLING INFORMATION

DISSEMINATION.

(a) IN GENERAL.—The Secretary shall make available upon request by any participating jurisdiction a list of eligible properties

that are located within the jurisdiction and that are owned or con-
Sec. 251 HOME INVESTMENT PARTNERSHIPS ACT 474

trolled by the Department of Housing and Urban Development to

facilitate the purchase, development, or rehabilitation of such properties with assistance made available under this title.

(b) ELIGIBLE PROPERTIES.—An eligible property under this section shall—

(1) be an unoccupied single-family or multifamily dwelling,

such that acquisition and rehabilitation of the dwelling would

not result in the displacement of any residents of the dwelling;

and

(2) have an appraised value that does not exceed (A) in the

case of a 1- to 4-family dwelling, 95 percent of the median purchase price for the area for such dwellings, as determined by

the Secretary, or (B) in the case of a dwelling with more than

4 units, the applicable maximum dollar amount limitation

under section 221(d)(3)(ii) of the National Housing Act (12

U.S.C. 1715l(d)(3)(ii)) for elevator-type structures.

Subtitle D—Specified Model Programs

SEC. 251. ø42 U.S.C. 12801¿ GENERAL AUTHORITY.

Among the alternative model programs that the Secretary

shall make available for use by participating jurisdictions under

the provisions of section 213 shall be model programs specified in

this subtitle. The Secretary shall keep these specified model programs under review and submit to Congress such recommendations

for change as the Secretary determines to be appropriate.

SEC. 252. ø42 U.S.C. 12802¿ RENTAL HOUSING PRODUCTION.

(a) REPAYABLE ADVANCES.—

(1) IN GENERAL.—The Secretary shall make available a

model program under which repayable advances may be made

to public and private project sponsors in constructing, acquiring, or substantially rehabilitating projects to be used as affordable rental housing, including limited equity cooperatives

and mutual housing.

(2) MAXIMUM AMOUNT OF ADVANCE.—An advance under

this model program shall not exceed 50 percent of the total

costs associated with the construction, acquisition, or substantial rehabilitation of the project, as determined by the participating jurisdiction.

(3) TERMS OF REPAYMENT.—

(A) INTEREST PAYMENTS.—

(i) IN GENERAL.—Under the model program, advances shall be repaid with interest calculated at a

rate of not more than 3 percent per year, as determined by the participating jurisdiction to be appropriate. Interest shall begin to accrue 1 year after

the completion of the construction, acquisition, or substantial rehabilitation of the project and shall be payable in annual installments.

(ii) EXCEPTION.—Interest and any accrued interest

shall be payable only from the surplus cash flow of the

project, after a minimum return on equity determined

by the participating jurisdiction to be appropriate. As

used in the previous sentence, the term ‘‘surplus cash
475 Sec. 252 HOME INVESTMENT PARTNERSHIPS ACT

flow’’ means the cash flow of the project after the payment of all amounts due under the first mortgage, operating expenses, and required replacement reserves,

as determined by the participating jurisdiction.

(B) ADDITIONAL INTEREST PAYMENTS.—Under the

model program, for any year in which the sum of the surplus cash flow of a project and the return on equity exceeds all interest payments due under subparagraph (A),

50 percent of the excess surplus cash flow shall be paid to

the participating jurisdiction’s HOME Investment Trust

Fund as additional interest.

(C) PRINCIPAL AND UNPAID INTEREST.—The principal

amount of an advance under the model program, and any

interest remaining unpaid pursuant to subparagraph

(A)(ii) shall be repayable when the housing no longer

qualifies as affordable housing in accordance with section

219(b).

(b) SELECTION GUIDELINES.—

(1) IN GENERAL.—The Secretary shall establish guidelines

for the selection of projects by participating jurisdictions for assistance under the model program. Such guidelines shall be designed to select projects in areas and for markets demonstrating the greatest need for the production of affordable

rental housing.

(2) SPECIFIC REQUIREMENTS.—The selection guidelines may

include—

(A) the extent of the shortage of rental housing in the

area that is available to low-income families;

(B) the extent large families with children will be

served by the project;

(C) the extent to which the project provides congregate

facilities and has available supportive services that will

permit elderly or handicapped residents who become frail

and are in need of assistance in living to continue to reside

in the project;

(D) the extent of very low-income and low-income occupancy in excess of the income targeting requirements in

section 214;

(E) the extent of the project sponsor’s commitment of

equity to the project (except that this criterion shall not

apply to or affect the selection of applications submitted by

public housing agencies and nonprofit entities);

(F) the extent of the project sponsor’s commitment of

equity to the project in comparison to the value of all public assistance for the project, including assistance under

this title, other Federal assistance and financing, and

State and local government contributions (except that this

criterion shall not apply to or affect the selection of applications submitted by public housing agencies and nonprofit

entities);

(G) the extent of non-Federal public or private assistance to the project;

(H) the extent to which the project provides supportive

services for persons with disabilities; and
Sec. 253 HOME INVESTMENT PARTNERSHIPS ACT 476

1The date of enactment was November 28, 1990.

(I) any other factor determined by the Secretary to be

appropriate.

(c) GUIDELINES.—The Secretary shall publish guidelines for the

model program under this section not later than 180 days after enactment of this Act.1

SEC. 253. ø42 U.S.C. 12803¿ RENTAL REHABILITATION.

(a) IN GENERAL.—The Secretary shall make available a model

program to support the rehabilitation of privately owned rental

housing located in neighborhoods where the median income does

not exceed 80 percent of the area median as determined by the Secretary and where rents can reasonably be expected not to change

materially over an extended period of time.

(b) AMOUNT OF SUBSIDY.—The amount of the rehabilitation

subsidy shall be moderate and shall generally not exceed 50 percent of the total costs associated with the rehabilitation of the

housing.

(c) ADDITIONAL RESTRICTIONS.—The guidelines of the model

program shall generally comport with the additional protections

and restrictions specified under section 17(c) of the United States

Housing Act of 1937.

SEC. 254. ø42 U.S.C. 12804¿ REHABILITATION LOANS.

(a) IN GENERAL.—The Secretary shall make available a model

program to provide direct loans to finance the rehabilitation of low

and moderate income single family and multifamily residential

properties.

(b) CONDITION OF LOANS.—The Secretary shall establish terms

and conditions to ensure that such loans are acceptable risks, taking into consideration the need for rehabilitation, the security for

the loan and the ability of the borrower to repay the loan. The Secretary may establish the interest rate for loans under the model

program, which shall include special interest rates for loans to borrowers with incomes below 80 percent of the area median income.

(c) ADDITIONAL RESTRICTIONS.—Guidelines for the model program may require that the property—

(1) be located in an area that contains a substantial number

of dwellings in need of rehabilitation;

(2) the property is residential and owner-occupied; and

(3) the property is in need of rehabilitation or concentrated

code enforcement within a reasonable time, and the rehabilitation of such property is consistent with a local plan for rehabilitation or code enforcement.

Additional guidelines for the model program shall generally comport with the additional protections and restrictions specified under

section 312 of the Housing Act of 1964.

SEC. 255. ø42 U.S.C. 12805¿ SWEAT EQUITY MODEL PROGRAM.

(a) IN GENERAL.—The Secretary shall make available a model

program to provide grants to public and private nonprofit organizations and community housing development organizations to provide

technical and supervisory assistance to low-income and very low-income families, including the homeless, in acquiring, rehabilitating,

and constructing housing by the self-help housing method.
477 Sec. 257 HOME INVESTMENT PARTNERSHIPS ACT

(b) REHABILITATION OF PROPERTIES.—The program shall target

for rehabilitation properties which have been acquired by the Federal, State, or local governments.

(c) HOMEOWNERSHIP OPPORTUNITIES THROUGH SWEAT EQUITY.—

(1) The program shall utilize the skilled or unskilled labor

of eligible families in exchange for acquisition of the property.

(2) Training shall be provided to eligible families in building and home maintenance skills.

(d) RENTAL OPPORTUNITIES THROUGH SWEAT EQUITY.—(1) The

program shall include rental opportunities for eligible families

which will help expand the stock of affordable housing which is

most appropriate for the target group.

(2) The use of the tenant’s skilled or unskilled labor shall be

encouraged in lieu of or as a supplement to rent payments by the

tenant.

(e) DEFINITION.—The term ‘‘self-help housing’’ means the same

as in section 523 of the Housing Act of 1949.

(f) ADDITIONAL RESTRICTIONS.—The guidelines for the model

program shall generally comport with the additional protections

and restrictions specified under section 523 of the Housing Act of

1949.

SEC. 256. ø42 U.S.C. 12806¿ HOME REPAIR SERVICES GRANTS FOR

OLDER AND DISABLED HOMEOWNERS.

(a) IN GENERAL.—The Secretary shall make available a model

program to provide home repair services for older homeowners and

disabled homeowners, including such services as the examination

of homes, repair services, and follow-up to ensure the continued effectiveness of the repairs provided.

(b) ELIGIBLE RECIPIENTS.—Home repair services shall be provided to homeowners who—

(1) own and reside in the dwellings for which services are

provided;

(2) are older or disabled; and

(3) are members of low-income families.

(c) PERMITTED RESTRICTIONS.—Guidelines for the model program shall require that—

(1) assisted dwelling units be the primary residence of the

homeowner for whom services are provided;

(2) preferences be provided for (A) very low-income families, and (B) individuals with intense need characterized by

noneconomic factors such as physical and mental disabilities,

language barriers, and cultural, social, or geographical isolation caused by racial or ethnic status that restricts the ability

of an individual to perform normal daily tasks or that threatens the capacity of the individual to live independently;

(3) any fees charged be based on the income of the individual receiving the home repair services.

SEC. 257. ø42 U.S.C. 12807¿ LOW-INCOME HOUSING CONSERVATION

AND EFFICIENCY GRANT PROGRAMS.

(a) IN GENERAL.—The Secretary shall make available a model

program to provide safe, energy-efficient affordable housing for lowincome persons.

(b) ACTIVITIES.—The model program shall provide for—
Sec. 258 HOME INVESTMENT PARTNERSHIPS ACT 478

(1) identification of housing that is—

(A) owned and occupied by low-income families who

have received, are currently receiving, or are scheduled to

receive assistance under the weatherization assistance for

low-income persons program under part A of title IV of the

Energy Conservation and Production Act (or a comparable

Federal or State program);

(B) in danger of becoming uninhabitable within a 5-

year period because of structural weaknesses or problems;

and

(C) not sufficiently sound to permit energy conservation improvements without other repair or rehabilitation

measures to protect such energy investments;

(2) repairs that will significantly prolong the habitability of

units identified under paragraph (1), including roofing, electrical, plumbing, furnace, and foundation repairs or replacement that will prolong the use of the unit as a safe and energyefficient residence for low-income persons; and

(3) reasonable steps to ensure that any units so repaired

will remain occupied by persons or families eligible for assistance under this title.

SEC. 258. ø42 U.S.C. 12808¿ SECOND MORTGAGE ASSISTANCE FOR

FIRST-TIME HOMEBUYERS.

(a) IN GENERAL.—The Secretary shall make available a model

program under which units of general local government provide

loans (secured by second mortgages) with deferred payment of interest and principal to first-time homebuyers.

(b) HOMEOWNERSHIP COUNSELING.—The program under this

section shall provide for homeownership counseling to first-time

homebuyers assisted, which shall include—

(1) counseling before and after purchase of the property;

(2) assisting first-time homebuyers in identifying the most

suitable and affordable properties;

(3) providing homebuyers with financial management assistance;

(4) assisting homebuyers in understanding mortgage transactions and home sales contracts; and

(5) assisting homebuyers with eliminating any credit problems that may prevent the homebuyers from purchasing the

property.

(c) ELIGIBILITY REQUIREMENTS.—Deferred payment loans secured by second mortgages may be provided under the model program under this section if—

(1) the homebuyer assisted is a first-time homebuyer;

(2) the property secured by the second mortgage is a single-family residence and is the principal residence of the homebuyer; and

(3) the principal obligation of the deferred payment loan

secured by a second mortgage does not exceed 30 percent of the

acquisition price of the residence to the homebuyer.

(d) PAYMENT TERMS.—

(1) PERIOD OF DEFERRAL.—The payment of any principal

and interest on a loan under this section shall be deferred for

not less than the 5-year period beginning on the date of the acquisition of the residence by the homebuyer.
479 Sec. 271 HOME INVESTMENT PARTNERSHIPS ACT

1The date of enactment was October 28, 1992.

(2) INTEREST RATE.—The interest rate on the unpaid balance of a loan under this section shall be at least 4 percent.

(3) REPAYMENT PERIOD.—A deferred payment loan secured

by a second mortgage shall be repayable over the 15-year period beginning at the end of the deferral period.

(e) SECURITY.—A deferred payment loan assisted with amount

provided under a grant under this section shall be secured by a lien

on the property involved, which lien shall be subordinate to the

first mortgage on the property.

SEC. 259. ø42 U.S.C. 12809¿ REHABILITATION OF STATE AND LOCAL

GOVERNMENT IN REM PROPERTIES.

(a) IN GENERAL.—The Secretary shall make available a model

program under which States and units of general local government

may convert in rem properties to provide affordable permanent

housing for the homeless by leasing such properties to nonprofit organizations and permitting such organizations to rehabilitate the

properties.

(b) TARGET.—The program shall target vacant properties for

rehabilitation by nonprofit organizations.

SEC. 260. ø42 U.S.C. 12810¿ COST-SAVING BUILDING TECHNOLOGIES

AND CONSTRUCTION TECHNIQUES.

(a) IN GENERAL.—The Secretary shall make available a model

program to utilize cost-saving building technologies and construction techniques for purposes of providing homeownership and rental opportunities under this title.

(b) SELECTION CRITERIA.—The Secretary shall establish criteria

for participating jurisdictions to select projects for assistance under

the model program which may include—

(1) the extent to which innovative, cost-saving building

and construction technologies are utilized;

(2) the extent to which innovative, cost-saving construction

techniques are utilized;

(3) the extent to which units will be made available to lowincome families and individuals;

(4) the extent to which non-Federal public or private assistance is utilized; and

(5) any other factor, determined by the Secretary to be appropriate.

(c) GUIDELINES.—The Secretary shall publish guidelines for the

model program under this section not later than 180 days after the

date of the enactment of the Housing and Community Development

Act of 1992. 1

(d) REPORT.—The Secretary shall submit a biennial report to

the Congress on the utilization of the model program under this

section.

Subtitle E—Mortgage Credit Enhancement

SEC. 271. ø42 U.S.C. 12821¿ REPORT ON CREDIT ENHANCEMENT.

(a) IN GENERAL.—The Comptroller General of the United

States shall carry out a study of ways in which financing for affordable housing may be made available to assist in the most efficient
Sec. 281 HOME INVESTMENT PARTNERSHIPS ACT 480

1The date of enactment was November 28, 1990.

implementation of comprehensive housing affordability strategies

of participating jurisdictions. In conducting the study, the Comptroller General shall draw upon the expertise of such representatives of State and local government, State and local housing finance agencies, agencies of the United States, government-sponsored mortgage finance corporations, for-profit and nonprofit housing developers, private financial institutions, and sources of

long-term mortgage investment, as the Comptroller General determines to be appropriate.

(b) REPORT.—Not later than one year after the enactment of

this Act,1 the Comptroller General shall submit to the Congress

and the Secretary a report containing any recommendations for legislative or administrative actions needed to improve the availability

of mortgage finance for affordable housing. The report shall include, but need not be limited to, an assessment of—

(1) the need for the Department of Housing and Urban Development or other agencies of the United States to provide

partial credit enhancement to make financing for affordable

housing available efficiently and at the lowest possible cost;

and

(2) alternative ways in which—

(A) the Department could provide any needed credit

enhancement on a one-stop basis for participating jurisdictions, in coordination with other forms of assistance under

this subtitle;

(B) the Department or other agencies of the Federal

Government could assist government-sponsored mortgage

finance corporations in the financing of mortgages on affordable housing through the development of mortgagebacked securities that are more standardized and readily

traded in the capital markets;

(C) the capacities of existing agencies of the United

States could be used to provide mortgage finance more efficiently for affordable housing through government-sponsored mortgage finance corporations; and

(D) the interests of the Federal Government could be

protected and any risks of loss could be minimized through

requirements for fees, mortgage insurance, risk-sharing,

secure collateral, and guarantees by other parties, and

through standards relating to minimum capital and prior

experience with underwriting, origination and servicing.

Subtitle F—General Provisions

SEC. 281. ø42 U.S.C. 12831¿ EQUAL OPPORTUNITY.

(a) SOLICITATION OF CONTRACTS.—Each participating jurisdiction shall prescribe procedures acceptable to the Secretary to establish and oversee a minority outreach program within each such jurisdiction to ensure the inclusion, to the maximum extent possible,

of minorities and women, and entities owned by minorities and

women, including, without limitation, real estate firms, construction firms, appraisal firms, management firms, financial institutions, investment banking firms, underwriters, accountants, and
481 Sec. 283 HOME INVESTMENT PARTNERSHIPS ACT

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

providers of legal services, in all contracts, entered into by the participating jurisdiction with such persons or entities, public and private, in order to facilitate the activities of the participating jurisdiction to provide affordable housing authorized under this Act or

any other Federal housing law applicable to such jurisdiction.

(b) REPORT TO CONGRESS.—Before the end of the 180-day period beginning on the date the first allocation of funds is made

under section 217, the Secretary shall submit to the Congress a report containing a description of the actions taken by each participating jurisdiction pursuant to subsection (a) and such recommendations for administrative and legislative action as the Secretary may determine to be appropriate to carry out the purposes

of such subsection.

SEC. 282. ø42 U.S.C. 12832¿ NONDISCRIMINATION.

No person in the United States shall on the grounds of race,

color, national origin, religion, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination

under any program or activity funded in whole or in part with

funds made available under this title. Any prohibition against discrimination on the basis of age under the Age Discrimination Act

of 1975 or with respect to an otherwise qualified handicapped individual as provided in section 504 of the Rehabilitation Act of 1973

shall also apply to any such program or activity. The Secretary

may waive this section in connection with the use of funds made

available under this title on lands set aside under the Hawaiian

Homes Commission Act, 1920 (42 Stat. 108).

SEC. 283. ø42 U.S.C. 12883¿ AUDITS BY COMPTROLLER GENERAL.

(a) AUDITS OF THE HOME INVESTMENT PARTNERSHIPS PROGRAM.—The Comptroller General, when the Comptroller General

deems it to be appropriate or when requested by the Committee on

Banking, Housing, and Urban Affairs of the Senate or the Committee on Banking, Finance and Urban Affairs of the House of Representatives 1, shall conduct a full financial audit of the records of

the HOME Investment Partnerships program for any fiscal year.

The report of the Comptroller General shall be submitted promptly

to the Secretary and the Congress and shall be published.

(b) AUDITS OF RECIPIENTS.—The financial transactions of participating jurisdictions and of other recipients of funds provided

under this title may, insofar as they relate to funds provided under

this title, be audited by the General Accounting Office under such

rules and regulations as may be prescribed by the Comptroller

General of the United States. The representatives of the General

Accounting Office shall have access to all books, accounts, records,

reports, files, and other papers, things, or property belonging to or

in use by such recipients pertaining to such financial transactions

and necessary to facilitate the audit.
Sec. 284 HOME INVESTMENT PARTNERSHIPS ACT 482

SEC. 284. ø42 U.S.C. 12834¿ UNIFORM RECORDKEEPING AND REPORTS

TO THE CONGRESS.

(a) UNIFORM REQUIREMENTS.—The Secretary shall develop and

establish uniform recordkeeping, performance reporting, and auditing requirements for use by participating jurisdictions.

(b) REPORT TO THE CONGRESS.—Not later than 120 days after

the end of each fiscal year, the Secretary shall make an annual report to the Congress that summarizes and assesses the results of

reports provided under this section. Such report shall include a description of actions taken by each participating jurisdiction pursuant to section 281(a) and such recommendations for administrative

and legislative action as may be appropriate to carry out the purposes of such section.

SEC. 285. ø42 U.S.C. 12835¿ CITIZEN PARTICIPATION.

The Secretary shall ensure that each participating jurisdiction,

and each jurisdiction seeking to become a participating jurisdiction,

complies with the requirements of section 107 of this Act.

SEC. 286. ø42 U.S.C. 12836¿ LABOR.

(a) IN GENERAL.—Any contract for the construction of affordable housing with 12 or more units assisted with funds made available under this subtitle shall contain a provision requiring that not

less than the wages prevailing in the locality, as predetermined by

the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C.

276a—276a–5), shall be paid to all laborers and mechanics employed in the development of affordable housing involved, and participating jurisdictions shall require certification as to compliance

with the provisions of this section prior to making any payment

under such contract.

(b) WAIVER.—Subsection (a) shall not apply if the individual receives no compensation or is paid expenses, reasonable benefits, or

a nominal fee to perform the services for which the individual volunteered and such persons are not otherwise employed at any time

in the construction work.

SEC. 287. ø42 U.S.C. 12837¿ INTERSTATE AGREEMENTS.

The consent of the Congress is hereby given to any two or more

States to enter into agreements or compacts, not in conflict with

any law of the United States, for cooperative efforts and mutual assistance in support of activities authorized under this title as they

pertain to interstate areas and to localities within such States, and

to establish such agencies, joint or otherwise, as they may deem desirable for making such agreements and compacts effective.

SEC. 288. ø42 U.S.C. 12838¿ ENVIRONMENTAL REVIEW.

(a) IN GENERAL.—In order to assure that the policies of the National Environmental Policy Act of 1969 and other provisions of law

which further the purposes of such Act (as specified in regulations

issued by the Secretary) are most effectively implemented in connection with the expenditure of funds under this title, and to assure to the public undiminished protection of the environment, the

Secretary, in lieu of the environmental protection procedures otherwise applicable, may under regulations provide for the release of

funds for particular projects to jurisdictions or insular areas under

this title who assume all of the responsibilities for environmental

review, decisionmaking, and action pursuant to such Act, and such

other provisions of law as the regulations of the Secretary specify,
483 Sec. 289 HOME INVESTMENT PARTNERSHIPS ACT

that would apply to the Secretary were he to undertake such

projects as Federal projects. The Secretary shall issue regulations

to carry out this section only after consultation with the Council on

Environmental Quality. The regulations shall provide—

(1) for the monitoring of the environmental reviews performed under this section;

(2) in the discretion of the Secretary, to facilitate training

for the performance of such reviews; and

(3) for the suspension or termination of the assumption

under this section.

The Secretary’s duty under the preceding sentence shall not be construed to limit or reduce any responsibility assumed by a State or

unit of general local government with respect to any particular release of funds.

(b) PROCEDURE.—The Secretary shall approve the release of

funds subject to the procedures authorized by this section only if,

at least 15 days prior to such approval and prior to any commitment of funds to such projects the jurisdiction or insular area has

submitted to the Secretary a request for such release accompanied

by a certification which meets the requirements of subsection (c).

The Secretary’s approval of any such certification shall be deemed

to satisfy his responsibilities under the National Environmental

Policy Act of 1969 and such other provisions of law as the regulations of the Secretary specify insofar as those responsibilities relate

to the releases of funds for projects to be carried out pursuant

thereto which are covered by such certification.

(c) CERTIFICATION.—A certification under the procedures authorized by this section shall—

(1) be in a form acceptable to the Secretary,

(2) be executed by the chief executive officer or other officer of the recipient of assistance under this title qualified

under regulations of the Secretary,

(3) specify that the recipient of assistance under this title

has fully carried out its responsibilities as described under subsection (a), and

(4) specify that the certifying officer (A) consents to assume the status of a responsible Federal official under the National Environmental Policy Act of 1969 and each provision of

law specified in regulations issued by the Secretary insofar as

the provisions of such Act or other such provision of law apply

pursuant to subsection (a), and (B) is authorized and consents

on behalf of the jurisdiction or insular area and himself to accept the jurisdiction of the Federal courts for the purpose of enforcement of his responsibilities as such an official.

(d) ASSISTANCE TO UNITS OF GENERAL LOCAL GOVERNMENT

FROM A STATE.—In the case of assistance to units of general local

government from a State, the State shall perform those actions of

the Secretary described in subsection (b) and the performance of

such actions shall be deemed to satisfy the Secretary’s responsibilities referred to in the second sentence of such subsection.

SEC. 289. ø42 U.S.C. 12839¿ TERMINATION OF EXISTING HOUSING PROGRAMS.

(a) IN GENERAL.—Except with respect to projects and programs

for which binding commitments have been entered into prior to Oc-
Sec. 290 HOME INVESTMENT PARTNERSHIPS ACT 484

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

tober 1, 1991, no new grants or loans shall be made after October 1, 1991, under—

(1) section 17 of the United States Housing Act of 1937;

(2) section 312 of the Housing Act of 1964;

(3) title VI of the Housing and Community Development

Act of 1987;

(4) section 8(e)(2) of the United States Housing Act of

1937, except for funds allocated under such section for single

room occupancy dwellings as authorized by title IV of the

Stewart B. McKinney Homeless Assistance Act 1; and

(5) section 810 of the Housing and Community Development Act of 1974.

(b) REPEALS.—

(1) IN GENERAL.—Except as provided in paragraph (2), effective on October 1, 1991, the provisions of law referred to in

subsection (a) are repealed.

(2) NO EFFECT ON SRO PROGRAM.—The provision of law referred to in subsection (a)(4) shall remain in effect with respect

to single room occupancy dwellings as authorized by title IV of

the Stewart B. McKinney Homeless Assistance Act 1.

(c) DISPOSITION OF REPAYMENTS.—Any amounts received on or

after October 1, 1991, as repayments or recaptures in connection

with the programs referred to in subsection (a) and any other

amounts for such programs that remain or become unobligated on

or after such date, shall be paid into the general fund of the

Treasury.

SEC. 290. ø42 U.S.C. 12840¿ SUSPENSION OF REQUIREMENTS FOR DISASTER AREAS.

For funds designated under this title by a recipient to address

the damage in an area for which the President has declared a disaster under title IV of the Robert T. Stafford Disaster Relief and

Emergency Assistance Act, the Secretary may suspend all statutory

requirements for purposes of assistance under this title for that

area, except for those related to public notice of funding availability, nondiscrimination, fair housing, labor standards, environmental standards, and low-income housing affordability.
485

RENT SUPPLEMENTS

EXCERPT FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1965

[Public Law 89–117; 79 Stat. 451; 12 U.S.C. 1701s]

FINANCIAL ASSISTANCE TO ENABLE CERTAIN PRIVATE HOUSING TO BE

AVAILABLE FOR LOWER INCOME FAMILIES WHO ARE ELDERLY,

HANDICAPPED, DISPLACED, VICTIMS OF A NATURAL DISASTER, OR

OCCUPANTS OF SUBSTANDARD HOUSING

SEC. 101. ø12 U.S.C. 1701s¿ (a) The Secretary of Housing and

Urban Development (hereinafter referred to as the ‘‘Secretary’’) is

authorized to make, and contract to make, annual payments to a

‘‘housing owner’’ on behalf of ‘‘qualified tenants’’, as those terms are

defined herein, in such amounts and under such circumstances as

are prescribed in or pursuant to this section. In no case shall a contract provide for such payments with respect to any housing for a

period exceeding forty years. The aggregate amount of the contracts to make such payments shall not exceed amounts approved

in appropriation Acts and payments pursuant to such contracts

shall not exceed $150,000,000 per annum prior to July 1, 1969,

which maximum dollar amount shall be increased by $40,000,000,

on July 1, 1969, by $100,000,000 on July 1, 1970, and by

$40,000,000 on July 1, 1971.

(b) As used in this section, the term ‘‘housing owner’’ means a

private nonprofit corporation or other private nonprofit legal entity,

a limited dividend corporation or other limited dividend legal entity, or a cooperative housing corporation, which is a mortgagor

under section 221(d)(3) of the National Housing Act and which,

after the enactment of this section, has been approved for mortgage

insurance thereunder and has been approved for receiving the benefits of this section: Provided, That, except as provided in subsection (j), no payments under this section may be made with respect to any property financed with a mortgage receiving the benefits of the interest rate provided for in the proviso in section

221(d)(5) of that Act. Such term also includes a private nonprofit

corporation or other private nonprofit legal entity, a limited dividend corporation or other limited dividend legal entity, or a cooperative housing corporation, which is the owner of a rental or cooperative housing project financed under a State or local program providing assistance through loans, loan insurance, or tax abatement

and which may involve either new or existing construction and

which is approved for receiving the benefits of this section. Subject

to the limitations provided in subsection (j), the term ‘‘housing

owner’’ also has the meaning prescribed in such subsection.

Nothing in this section shall be construed as preventing payments to a housing owner with respect to projects in which all or

part of the dwelling units do not contain kitchen facilities; but of
Sec. 101 RENT SUPPLEMENTS 486

the total amount of contracts to make annual payments approved

in appropriation Acts pursuant to subsection (a) after the date of

the enactment of Housing and Urban Development Act of 1970, not

more than 10 per centum in the aggregate shall be made with respect to such projects.

(c) As used in this section, the term—

(1) ‘‘qualified tenant’’ means any individual or family having an income which would qualify such individual or family

for assistance under section 8 of the United States Housing Act

of 1937, except that such term shall also include any individual

or family who was receiving assistance under this section on

the day preceding the date of the enactment of the Housing

and Community Development Amendments of 1979, so long as

such individual or family continues to meet the conditions for

such assistance which were in effect on such day; and

(2) ‘‘income’’ means income from all sources of each member of the household, as determined in accordance with criteria

prescribed by the Secretary. In determining amounts to be excluded from income, the Secretary may, in the Secretary’s discretion, take into account the number of minor children in the

household and such other factors as the Secretary may determine are appropriate.

The terms ‘‘qualified tenant’’ and ‘‘tenant’’ including a member of

a cooperative who satisfies the foregoing requirements and who,

upon resale of his membership to the cooperative, will not be reimbursed for any equity increment accumulated through payments

under this section. With respect to members of a cooperative, the

term ‘‘rental’’ and ‘‘rental charges’’ mean the charges under the occupancy agreements between such members and the cooperative.

(d) The amount of the annual payment with respect to any

dwelling unit shall be the lesser of (1) 70 per centum of the fair

market rent, or (2) the amount by which the fair market rental for

such unit exceeds 30 per centum of the tenant’s adjusted income.

(e)(1) For purposes of carrying out the provisions of this section, the Secretary shall establish criteria and procedures for determining the eligibility of occupants and rental charges, including

criteria and procedures with respect to periodic review of tenant incomes and periodic adjustment of rental charges.

(2) Procedures adopted by the Secretary hereunder shall provide for recertifications of the incomes of occupants no less frequently than annually for the purpose of adjusting rental charges

and annual payments on the basis of occupants’ incomes, but in no

event shall rental charges adjusted under this section for any

dwelling exceed the fair market rental of the dwelling.

(3) The Secretary may enter into agreements, or authorize

housing owners to enter into agreements, with public or private

agencies for services required in the selection of qualified tenants,

including those who may be approved, on the basis of the probability of future increases in their incomes, as lessees under an option to purchase (which will give such approved qualified tenants

an exclusive right to purchase at a price established or determined

as provided in the option) dwellings, and in the establishment of

rentals. The Secretary is authorized (without limiting his authority

under any other provision of law) to delegate to any such public or
487 Sec. 101 RENT SUPPLEMENTS

1The date of enactment was November 30, 1983.

private agency his authority to issue certificates pursuant to this

subsection.

(4) No payments under this section may be made with respect

to any property for which the costs of operation (including wages

and salaries) are determined by the Secretary to be greater than

similar costs of operation of similar housing in the community

where the property is situated.

(f) * * *

(g) The Secretary is authorized to make such rules and regulations, to enter into such agreements, and to adopt such procedures

as be may deem necessary or desirable to carry out the provisions

of this section. Nothing contained in this section shall affect the authority of the Secretary of Housing and Urban Development with

respect to any housing assisted under this section, section

221(d)(3), section 231(c)(3), or section 236 of the National Housing

Act, or section 202 of the Housing Act of 1959, including the authority to prescribe occupancy requirements under other provisions

of law or to determine the portion of any such housing which may

be occupied by qualified tenants. To ensure that qualified tenants

occupying that number of units with respect to which assistance

was being provided under this section immediately prior to the

date of enactment of this sentence 1 receive the benefit of assistance contracted for under this section, the Secretary shall offer annually to amend contracts entered into with owners of projects assisted under this section but not subject to mortgages insured

under title II of the National Housing Act to provide sufficient payments to cover 100 percent of the necessary rent increases and

changes in the incomes of qualified tenants, subject to the availability of authority for such purpose under section 5(c) of the

United States Housing Act of 1937. The Secretary shall take such

actions as may be necessary to ensure that payments, including

payments that reflect necessary rent increases and changes in the

incomes of tenants, are made on a timely basis for all units covered

by contracts entered into under this section.

(h) There are authorized to be appropriated such sums as may

be necessary to carry out the provisions of this section, including,

but not limited to, such sums as may be necessary to make annual

payments as prescribed in this section, pay for services provided

under (or pursuant to agreements entered into under) subsection

(e), and provide administrative expenses.

(i) * * *

(j)(1) For the purpose of assisting housing under this section on

an experimental basis, subject to the limitations of this subsection,

the term ‘‘housing owner’’ (in addition to the meaning prescribed in

subsection (b)) includes—

(A) a private nonprofit corporation on other private nonprofit legal entity, a limited dividend corporation or other limited dividend legal entity, or a cooperative housing corporation,

which is a mortgagor under a mortgage which receives the benefits of the interest rate provided for in the proviso in section

221(d)(5) of the National Housing Act and which, after the date

of the enactment of this Act, has been approved for mortgage
Sec. 101 RENT SUPPLEMENTS 488

1Section 514(d) of the Quality Housing and Work Responsibility Act of 1998 (Public Law 105–

276; 112 Stat. 2548) provided that ‘[s]ubsection (k) of section 1010 of the Housing and Urban

Development Act of 1965 (12 U.S.C. 1701s(k)) is hereby repealed.’’. Such section 514(d) probably

intended to repeal this subsection.

insurance under section 221(d)(3) of the National Housing Act

and has been approved for receiving the benefits of this section;

(B) a private nonprofit corporation or other private nonprofit legal entity which is a mortgagor under a mortgage insured under section 231(c)(3) of the National Housing Act and

which, after the date of the enactment of this Act, has obtained

final endorsement of such mortgage for mortgage insurance

and has been approved for receiving the benefits of this section;

(C) a private nonprofit corporation, a public body or agency, or a cooperative housing corporation, which is a borrower

under section 202 of the Housing Act of 1959 and has been approved for receiving the benefits of this section: Provided, That

with respect to properties financed with loans under such section made on or before the date of the enactment of this Act,

payments shall not be made with respect to more than 20 per

centum of the dwelling units in any property so financed; and

(D) a private nonprofit corporation or other private nonprofit legal entity, a limited dividend corporation or other limited dividend legal entity, or a cooperative housing corporation,

which is assisted under section 236 of the National Housing

Act and which has been approved for receiving the benefits of

this section: Provided, That payments shall not be made with

respect to more than 20 per centum of the dwelling units in

any property so financed, except that the foregoing limitation

may be increased to 40 per centum of the dwelling units in any

such property if the Secretary determines that such increase is

necessary and desirable in order to provide additional housing

for individuals and families meeting the requirements of subsection (c).

(2) Of the amounts approved in appropriation Acts pursuant to

subsection (a) for payments under this section in any year, not

more than 5 per centum in the aggregate shall be paid with respect

to properties of housing owners as defined in paragraph (1)(A) of

this subsection, and not more than 5 per centum in the aggregate

shall be paid with respect to properties of housing owners as defined in paragraphs (1)(B) and (1)(C) of this subsection.

(k) 1 In selecting individuals or families to be assisted under

this section in accordance with the eligibility criteria and procedures established under subsection (e)(1), the project owner shall

give preference to individuals and families who are occupying substandard housing, are paying more than 50 percent of family income for rent, or are involuntarily displaced at the time they are

seeking housing or assistance under this section.

(l) Notwithstanding the provisions of subsection (a) and any

other provision of law, the Secretary may utilize additional authority under section 5(c) of the United States Housing Act of 1937

made available by appropriation Acts on or after October 1, 1979,

to supplement assistance authority available under this section.
489 Sec. 101 RENT SUPPLEMENTS

The Secretary shall utilize, to the extent necessary after September

30, 1984, any authority under this section that is recaptured either

as the result of the conversion of housing projects covered by assistance under this section to contracts for assistance under section 8

of the United States Housing Act of 1937 or otherwise (1) for the

purpose of making assistance payments, including amendments as

provided in subsection (g), with respect to housing projects assisted

under this section, but not subject to mortgages insured under the

National Housing Act, that remain covered by assistance under

this section; and (2) if not required to provide assistance under this

section, and notwithstanding any other provision of law, for the

purpose of contracting for assistance payments under section

236(f)(2) of the National Housing Act.

(m) The Secretary shall, not later than 45 days after receipt of

an application by the mortgagee, provide interest reduction and

rental assistance payments for the benefit of projects assisted

under this section whose mortgages were made by State or local

housing finance agencies or State or local government agencies for

a term equal to the remaining mortgage term to maturity on

projects assisted under this section to the extent of—

(1) unexpended balances of amounts of authority as set

forth in certain letter agreements between the Department of

Housing and Urban Development and such State or local housing finance agencies or State or local government agencies, and

(2) existing allocation under section 236 contracts on

projects whose mortgages were made by State or local housing

finance agencies or State or local government agencies which

are not being funded, to the extent of such excess allocation,

for any purposes permitted under the provisions of this section.

An application shall be eligible for assistance under the previous

sentence only if the mortgagee submits the application within 548

days after the effective date of this subsection, along with a certification of the mortgagee that amounts hereunder are to be utilized

hereunder for the purpose of either (A) reducing rents or rent increases to tenants, or (B) making repairs or otherwise increasing

the economic viability of a related project. Unexpended balances referred to in the first sentence of this subsection which remain after

disposition of all such applications is favorably concluded shall be

rescinded. The authority conferred by this subsection to provide interest reduction and rental assistance payments shall be available

only to the extent approved in appropriation Acts.
490

SECTION 236 RENTAL ASSISTANCE

EXCERPT FROM NATIONAL HOUSING ACT

[Public Law 90–448; 82 Stat. 498; 12 U.S.C. 1715z–1]

RENTAL AND COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES

SEC. 236. ø12 U.S.C. 1715z–1¿ (a) For the purpose of reducing

rentals for lower income families, the Secretary is authorized to

make, and to contract to make, periodic interest reduction payments on behalf of the owner of a rental housing project designed

for occupancy by lower income families, which shall be accomplished through payments to mortgagees holding mortgages meeting the special requirements specified in this section.

(b) Interest reduction payments with respect to a project shall

only be made during such time as the project is operated as a rental housing project and is subject to a mortgage which meets the requirements of, and is insured under, subsection (j) of this section:

Provided, That the Secretary is authorized to continue making such

interest reduction payments where the mortgage has been assigned

to the Secretary: Provided further, That interest reduction payments may be made with respect to a mortgage or part thereof on

a rental or cooperative housing project owned by a private nonprofit corporation or other private nonprofit entity, a limited dividend corporation or other limited dividend entity, public entity, or

a cooperative housing corporation, which is financed under a State

or local program providing assistance through loans, loan insurance, or tax abatements, and which may involve either new or existing construction and which is approved for receiving the benefits

of this section. The term ‘‘mortgage insurance premiums,’’ when

used in this section in relation to a project financed by a loan

under a State or local program, means such fees and charges, approved by the Secretary, as are payable by the mortgagor to the

State or local agency mortgagee to meet reserve requirements and

administrative expenses of such agency.

(c) The interest reduction payments to a mortgagee by the Secretary on behalf of a project owner shall be in an amount not exceeding the difference between the monthly payments for principal,

interest, and mortgage insurance premium which the project owner

as a mortgagor is obliged to pay under the mortgage and the

monthly payment for principal and interest such project owner

would be obligated to pay if the mortgage were to bear interest at

the rate of 1 per centum per annum.

(d) The Secretary may include in the payment to the mortgagee such amount, in addition to the amount computed under subsection (c), as he deems appropriate to reimburse the mortgagee for

its expenses in handling the mortgage.
491 Sec. 236 SECTION 236 RENTAL ASSISTANCE

(e)(1) As a condition for receiving the benefits of interest reduction payments, the project owner shall operate the project in accordance with such requirements with respect to tenant eligibility

and rents as the Secretary may prescribe. Procedures shall be

adopted by the Secretary for review of tenant incomes at intervals

of one year (or at shorter intervals where the Secretary deems it

desirable).

(2) A project for which interest reduction payments are made

under this section and for which the mortgage on the project has

been refinanced shall continue to receive the interest reduction

payments under this section under the terms of the contract for

such payments, but only if the project owner enters into such binding commitments as the Secretary may require (which shall be applicable to any subsequent owner) to ensure that the owner will

continue to operate the project in accordance with all low-income

affordability restrictions for the project in connection with the Federal assistance for the project for a period having a duration that

is not less than the term for which such interest reduction payments are made plus an additional 5 years.

(f )(1)(A)(i) For each dwelling unit there shall be established,

with the approval of the Secretary, a basic rental charge and fair

market rental charge.

(ii) The basic rental charge shall be—

(I) the amount needed to operate the project with payments of principal and interest due under a mortgage bearing

interest at the rate of 1 percent per annum; or

(II) an amount greater than that determined under clause

(ii)(I), but not greater than the market rent for a comparable

unassisted unit, reduced by the value of the interest reduction

payments subsidy.

(iii) The fair market rental charge shall be—

(I) the amount needed to operate the project with payments of principal, interest, and mortgage insurance premium

which the mortgagor is obligated to pay under the mortgage

covering the project; or

(II) an amount greater than that determined under clause

(iii)(I), but not greater than the market rent for a comparable

unassisted unit.

(iv) The Secretary may approve a basic rental charge and fair

market rental charge for a unit that exceeds the minimum

amounts permitted by this subparagraph for such charges only if—

(I) the approved basic rental charge and fair market rental

charges each exceed the applicable minimum charge by the

same amount; and

(II) the project owner agrees to restrictions on project use

or mortgage prepayment that are acceptable to the Secretary.

(v) The Secretary may approve a basic rental charge and fair

market rental charge under this paragraph for a unit with assistance under section 8 of the United States Housing Act of 1937 (42

U.S.C. 1437f) that differs from the basic rental charge and fair

market rental charge for a unit in the same project that is similar

in size and amenities but without such assistance, as needed to ensure equitable treatment of tenants in units without such assistance.
Sec. 236 SECTION 236 RENTAL ASSISTANCE 492

(B)(i) The rental charge for each dwelling unit shall be at the

basic rental charge or such greater amount, not exceeding the fair

market rental charge determined pursuant to subparagraph (A), as

represents 30 percent of the tenant’s adjusted income, except as

otherwise provided in this subparagraph.

(ii) In the case of a project which contains more than 5000

units, is subject to an interest reduction payments contract, and is

financed under a State or local project, the Secretary may reduce

the rental charge ceiling, but in no case shall the rental charge be

below the basic rental charge set forth in subparagraph (A)(ii)(I).

(iii) For plans of action approved for capital grants under the

Low-Income Housing Preservation and Resident Homeownership

Act of 1990 or the Emergency Low Income Housing Preservation

Act of 1987, the rental charge for each dwelling unit shall be at the

minimum basic rental charge set forth in subparagraph (A)(ii)(I) or

such greater amount, not exceeding the lower of: (I) the fair market

rental charge set forth in subparagraph (A)(iii)(I); or (II) the actual

rent paid for a comparable unit in comparable unassisted housing

in the market area in which the housing assisted under this section

is located, as represents 30 percent of the tenant’s adjusted income.

(C) With respect to those projects which the Secretary determines have separate utility metering paid by the tenants for some

or all dwelling units, the Secretary may—

(i) permit the basic rental charge and the fair market rental charge to be determined on the basis of operating the project

without the payment of the cost of utility services used by such

dwelling units; and

(ii) permit the charging of a rental for such dwelling units

at such an amount less than 30 percent of a tenant’s adjusted

income as the Secretary determines represents a proportionate

decrease for the utility charges to be paid by such tenant, but

in no case shall rental be lower than 25 percent of a tenant’s

adjusted income.

(2) With respect to 20 per centum of the dwelling units in any

project made subject to a contract under this section after the date

of enactment of the Housing and Community Development Act of

1974, the Secretary shall make, and contract to make, additional

assistance payments to the project owner on behalf of tenants

whose incomes are too low for them to afford the basic rentals (including the amount allowed for utilities in the case of a project

with separate utility metering) with 30 per centum of this adjusted

income. The additional assistance payments authorized by this

paragraph with respect to any dwelling unit shall be the amount

required to reduce the rental payment (including the amount allowed for utilities in the case of a project with separate utility metering) by the tenant to the highest of the following amounts,

rounded to the nearest dollar:

(A) 30 per centum of the tenant’s monthly adjusted income;

(B) 10 per centum of the tenant’s monthly income; or

(C) if the family is receiving payments for welfare assistance from a public agency and a part of such payments, adjusted in accordance with the family’s actual housing costs, is

specifically designated by such agency to meet the family’s
493 Sec. 236 SECTION 236 RENTAL ASSISTANCE

1 November 30, 1983.

housing costs, the portion of such payments which is so designated.

Notwithstanding the foregoing provisions of this paragraph, the

Secretary may—

(A) reduce such 20 per centum requirements in the case of

any project if be determines that such action is necessary to assure the economic viability of the project; or

(B) increase such 20 per centum requirement in the case

of any project if he determines that such action is necessary

and feasible in order to assure, insofar as is practicable, that

there is in the project a reasonable range in the income levels

of tenants, or that such action is to be taken to meet the housing needs of elderly or handicapped families.

(3) The Secretary shall utilize amounts credited to the fund described in subsection (g) for the sole purpose of carrying out the

purposes of section 201 of the Housing and Community Development Amendments of 1978. No payments may be made from such

fund unless approved in an appropriation Act. No amount may be

so approved for any fiscal year beginning after September 30, 1994.

(4) To ensure that eligible tenants occupying that number of

units with respect to which assistance was being provided under

this subsection immediately prior to the date of enactment of this

sentence 1 receive the benefit of assistance contracted for under

paragraph (2), the Secretary shall offer annually to amend contracts, entered into under this subsection with owners of projects

assisted but not subject to mortgages insured under this section to

provide sufficient payments to cover 100 percent of the necessary

rent increases and changes in the incomes of eligible tenants, subject to the availability of authority for such purpose under section

5(c) of the United States Housing Act of 1937. The Secretary shall

take such actions as may be necessary to ensure that payments, including payments that reflect necessary rent increases and changes

in the incomes of tenants, are made on a timely basis for all units

covered by contracts entered into under paragraph (2).

(5)(A) In order to induce advances by owners for capital improvements (excluding any owner contributions that may be required by the Secretary as a condition for assistance under section

201 of the Housing and Community Development Amendments of

1978) to benefit projects assisted under this section, in establishing

basic rental charges and fair market rental charges under paragraph (1) the Secretary may include an amount that would permit

a return of such advances with interest to the owner out of project

income, on such terms and conditions as the Secretary may determine. Any resulting increase in rent contributions shall be—

(i) to a level not exceeding the lower of 30 percent of the

adjusted income of the tenant or the published existing fair

market rent for comparable housing established under section

8(c) of the United States Housing Act of 1937;

(ii) phased in equally over a period of not less than 3

years, if such increase is 30 percent or more; and

(iii) limited to not more than 10 percent per year if such

increase is more than 10 percent but less than 30 percent.
Sec. 236 SECTION 236 RENTAL ASSISTANCE 494

1So in law. There is no paragraph (6).

2Section 861(b) of the American Homeownership and Economic Opportunity Act of 20000,

Pub. L. 106-569, approved December 27, 2000, provides as follows:

‘‘(b) TREATMENT OF EXCESS CHARGES PREVIOUSLY COLLECTED.—Any excess charges that a

project owner may retain pursuant to the amendments made by subsections (b) and (c) of section

532 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2000 (Public Law 106–74; 113 Stat. 1116) that have been

collected by such owner since the date of the enactment of such appropriations Act and that

such owner has not remitted to the Secretary of Housing and Urban Development may be retained by such owner unless such Secretary otherwise provides. To the extent that a project

owner has remitted such excess charges to the Secretary since such date of the enactment, the

Secretary may return to the relevant project owner any such excess charges remitted. Notwithstanding any other provision of law, amounts in the Rental Housing Assistance Fund, or heretofore or subsequently transferred from the Rental Housing Assistance Fund to the Flexible

Subsidy Fund, shall be available to make such return of excess charges previously remitted to

the Secretary, including the return of excess charges referred to in section 532(e) of such appropriations Act.’’.

Paragraphs (2) and (3) of this subsection were added by subsections (b) and (c) of section 532

of such Appropriations Act.

(B) Assistance under section 8 of the United States Housing

Act of 1937 shall be provided, to the extent available under appropriations Acts, if necessary to mitigate any adverse effects on income-eligible tenants.

(7) 1 The Secretary shall determine whether and under

what conditions the provisions of this subsection shall apply to

mortgages sold by the Secretary on a negotiated basis.

(g)(1) The project owner shall, as required by the Secretary, accumulate, safeguard, and periodically pay the Secretary or such

other entity as determined by the Secretary and upon such terms

and conditions as the Secretary deems appropriate, all rental

charges collected on a unit-by-unit basis in excess of the basic rental charges. Unless otherwise directed by the Secretary, such excess

charges shall be credited to a reserve used by the Secretary to

make additional assistance payments as provided in paragraph (3)

of subsection (f ).

(2) Notwithstanding any other requirements of this subsection,

a project owner may retain some or all of such excess charges for

project use if authorized by the Secretary. 2 Such excess charges

shall be used for the project and upon terms and conditions established by the Secretary, unless the Secretary permits the owner to

retain funds for non-project use after a determination that the

project is well-maintained housing in good condition and that the

owner has not engaged in material adverse financial or managerial

actions or omissions as described in section 516 of the Multifamily

Assisted Housing Reform and Affordability Act of 1997. In connection with the retention of funds for non-project use, the Secretary

may require the project owner to enter into a binding commitment

(which shall be applicable to any subsequent owner) to ensure that

the owner will continue to operate the project in accordance with

all low-income affordability restrictions for the project in connection

with the Federal assistance for the project for a period having a duration of not less than the term of the existing affordability restrictions plus an additional 5 years.

(3) The Secretary shall not withhold approval of the retention

by the owner of such excess charges because of the existence of unpaid excess charges if such unpaid amount is being remitted to the

Secretary over a period of time in accordance with a workout agree-
495 Sec. 236 SECTION 236 RENTAL ASSISTANCE

ment with the Secretary, unless the Secretary determines that the

owner is in violation of the workout agreement.

(h) In addition to establishing the requirements specified in

subsection (e), the Secretary is authorized to make such rules and

regulations, to enter into such agreements, and to adopt such procedures as he may deem necessary or desirable to carry out the

provisions of this section.

(i)(1) There are authorized to be appropriated such sums as

may be necessary to carry out the provisons of this section, including such sums as may be necessary to make interest reduction payments under contracts entered into by the Secretary under this section. The aggregate amount of outstanding contracts to make such

payments shall not exceed amounts approved in appropriation

Acts, and payments pursuant to such contracts shall not exceed

$75,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall be increased by $125,000,000 on July 1, 1969,

$150,000,000 on July 1, 1970, by $200,000,000 on July 1, 1971, and

by $75,000,000 on July 1, 1974. The Secretary shall utilize, to the

extent necessary after September 30, 1984, any authority under

this section that is recaptured either as the result of the conversion

of housing projects covered by assistance under subsection (f)(2) to

contracts for assistance under section 8 of the United States Housing Act of 1937 or otherwise for the purpose of making assistance

payments, including amendments as provided in subsection (f)(4),

with respect to housing projects assisted, but not subject to mortgages insured, under the section that remain covered by assistance

under subsection (f)(2).

(2) Contracts for assistance payments under this section may

be entered into only with respect to tenants whose incomes do not

exceed 80 per centum of the median family income for the area, as

determined by the Secretary with adjustments for smaller and

larger families, except that the Secretary may establish income

ceilings higher or lower than 80 per centum of the median for the

area on the basis of his findings that such variations are necessary

because of prevailing levels of construction costs, unusually high or

low family incomes, or other factors.

(3) Not less than 10 per centum of the total amount of contracts for assistance payments authorized by appropriation Acts to

be made after June 30, 1974, shall be available for use only with

respect to dwellings, or dwelling units in projects, which are approved by the Secretary prior to rehabilitation.

(4) At least 20 per centum of the total amount of contracts for

assistance payments authorized in appropriation Acts to be made

after June 30, 1974, shall be available for use only with respect to

projects which are planned in whole or in part for occupancy by elderly or handicapped families. As used in this paragraph the term

‘‘elderly families’’ means families which consist of two or more persons the head of which (or his spouse) is sixty-two years of age or

over or is handicapped. Such term also means a single person who

is sixty-two years of age or over or is handicapped. A person shall

be considered handicapped if such person is determined pursuant

to regulations issued by the Secretary to have an impairment

which (A) is expected to be of long-continued and indefinite duration, (B) substantially impedes his ability to live independently,
Sec. 236 SECTION 236 RENTAL ASSISTANCE 496

1Subsections (c) and (d) of section 201 of the Housing and Urban Development Act of 1968,

Pub. L. 90–448, approved August 1, 1968, provide as follows:

‘‘(c) The Secretary of Housing and Urban Development is authorized, upon such terms and

conditions as he may prescribe, to transfer to section 236(j) of the National Housing Act the

insurance of a mortgage which has not be [sic] finally endorsed for insurance under section

221(d)(3) of such Act and which has been approved for the below-market interest rate prescribed

in the proviso of section 221(d)(5) of such Act.

‘‘(d) The Secretary of Housing and Urban Development is authorized, upon such terms and

conditions as he may prescribe, to insure under section 236(j) of the National Housing Act a

mortgage meeting the requirements of such section which is given to refinance a mortgage loan

made under section 202 of the Housing Act of 1959: Provided, That the application for such insurance is filed with the Secretary on or before the date of project completion, or within such

reasonable time thereafter as the Secretary may permit.’’.

Section 201(e)(3) of the Housing and Urban Development Act of 1968 also amended section

101 of the Housing and Urban Development Act of 1965 to permit up to 20 percent of the units

in any one project to be occupied by tenants receiving rent supplement benefits under section

101 of the 1965 Act.

and (C) is of such a nature that such ability could be improved by

more suitable housing conditions.

(j)(1) The Secretary is authorized, upon application by the

mortgagee, to insure a mortgage (including advances on such mortgage during construction) which meets the requirements of this

subsection.1 Commitments for the insurance of such mortgages

may be issued by the Secretary prior to the date of their execution

or disbursement thereon, upon such terms and conditions as he

may prescribe.

(2) As used in this subsection—

(A) the terms ‘‘family’’ and ‘‘families’’ shall have the same

meaning as in section 221;

(B) the term ‘‘elderly or handicapped families’’ shall have

the same meaning as in section 202 of the Housing Act of

1959; and

(C) the terms ‘‘mortgage’’, ‘‘mortgagee’’, and ‘‘mortgagor’’

shall have the same meaning as in section 201.

(3) To be eligible for insurance under this subsection, a mortgage shall meet the requirements specified in subsections (d)(1)

and (d)(3) of section 221, except as such requirements are modified

by this subsection. In the case of a project financed with a mortgage insured under this subsection which involves a mortgagor

other than a cooperative or a private nonprofit corporation or association and which is sold to a cooperative or a nonprofit corporation

or association, the Secretary is further authorized to insure under

this subsection a mortgage given by such purchaser in an amount

not exceeding the appraised value of the property at the time of

purchase, which value shall be based upon a mortgage amount on

which the debt service can be met from the income of the property

when operated on a nonprofit basis, after payment of all operating

expenses, taxes and required reserves.

(4) A mortgage to be insured under this subsection shall—

(A) be executed by a mortgagor eligible under subsection

(d)(3) or (e) of section 221;

(B) bear interest at a rate not to exceed such percent per

annum on the amount of the principal obligation outstanding

at any time as the Secretary determines is necessary to meet

the mortgage market, taking into consideration the yields on

mortgages in the primary and secondary markets; and

(C) provide for complete amortization by periodic payments

within such term as the Secretary may prescribe.
497 Sec. 236 SECTION 236 RENTAL ASSISTANCE

(5) The property or project shall—

(A) comply with such standards and conditions as the Secretary may prescribe to establish the acceptability of the property for mortgage insurance and may include such nondwelling

facilities as the Secretary deems adequate and appropriate to

serve the occupants and the surrounding neighborhood: Provided, That the project shall be predominantly residential and

any nondwelling facility included in the mortgage shall be

found by the Secretary to contribute to the economic feasibility

of the project, and the Secretary shall give due consideration

to the possible effect of the project on other business enterprises in the community: Provided further, That in the case of

a project designed primarily for occupancy by elderly or handicapped families, the project may include related facilities for

use by elderly or handicapped families, including cafeterias or

dining halls, community rooms, workshops, infirmaries, or

other inpatient or outpatient health facilities, and other essential service facilities;

(B) include five or more dwelling units, but such units, in

the case of a project designed primarily for occupancy by displaced, elderly, or handicapped families, need not, with the approval of the Secretary, contain kitchen facilities; and

(C) be designed primarily for use as a rental project to be

occupied by lower income families or by elderly or handicapped

families: Provided, That lower income persons who are less

than sixty-two years of age shall be eligible for occupancy in

such a project.

In any case in which it is determined in accordance with regulations of the Secretary that facilities in existence or under construction on the date of enactment of the Housing and Urban Development Act of 1970 which could appropriately be used for classroom

purposes are available in any such property or project and that

public schools in the community are overcrowed due in part to the

attendance at such schools of residents of the property or project,

such facilities may be used for such purposes to the extent permitted in such regulations (without being subject to any of the requirements of the first proviso in subparagraph (A) except the requirement that the project be predominantly residential).

(6) With the approval of the Secretary, the mortgagor may sell

the individual dwelling units to lower income or elderly or handicapped purchasers. The Secretary may consent to the release of the

mortgagor from his liability under the mortgage and the credit instrument secured thereby, or consent to the release of parts of the

mortgaged property from the lien of the mortgage, upon such terms

and conditions as he may prescribe, and the mortgage may provide

for such release.

(k) As used in this section the term ‘‘tenant’’ includes a member of a cooperative; the term ‘‘rental housing project’’ includes a

cooperative housing project; and the terms ‘‘rental’’ and ‘‘rental

charge’’ mean, with respect to members of a cooperative, the

charges under the occupancy agreements between such members

and the cooperative.

(l) The Secretary shall from time to time allocate and transfer

to the Secretary of Agriculture, for use (in accordance with the
Sec. 236 SECTION 236 RENTAL ASSISTANCE 498

terms and conditions of this section) in rural areas and small

towns, a reasonable portion of the total authority to contract to

make periodic interest reduction payments as approved in appropriation Acts under subsection (i).

(m) For the purpose of this section the term ‘‘income’’ means

income from all sources of each member of the household, as determined in accordance with criteria prescribed by the Secretary, except that any amounts not actually received by the family may not

be considered as income under this subsection. In determining

amounts to be excluded from income, the Secretary may, in the

Secretary’s discretion, take into account the number of minor children in the household and such other factors as the Secretary may

determine are appropriate.

(n) No mortgage shall be insured under this section after November 30, 1983, except pursuant to a commitment to insure before

that date. A mortgage may be insured under this section after the

date in the preceding sentence in order to refinance a mortgage insured under this section or to finance pursuant to subsection (j)(3)

the purchase, by a cooperative or nonprofit corporation or association, of a project assisted under this section.

(o) The Secretary is authorized to enter into agreements with

any State or agency thereof under which such State or agency

thereof contracts to make interest reduction payments, subject to

all the terms and conditions specified in this section and in rules,

regulations and procedures adopted by the Secretary under this

section, with respect to all or a part of a project covered by a mortgage insured under this section. Any funds provided by a State or

agency thereof for the purpose of making interest reduction payments shall be administered, disbursed and accounted for by the

Secretary in accordance with the agreements entered into by the

Secretary with the State or agency thereof and for such fees as

shall be specified therein. Before entering into any agreements pursuant to this subsection the Secretary shall require assurances satisfactory to him that the State or agency thereof is able to provide

sufficient funds for the making of interest reduction payments for

the full period specified in the interest reduction contract.

(p) The Secretary is authorized to enter into contracts with

State or local agencies approved by him to provide for the monitoring and supervision by such agencies of the management by private sponsors of projects assisted under this section. Such contracts

shall require that such agencies promptly report to the Secretary

any deficiencies in the management of such projects in order to enable the Secretary to take corrective action at the earliest practicable time.

(q) The Secretary may provide assistance under section 8 of the

United States Housing Act of 1937 with respect to residents of

units in a project assisted under this section. In entering into contracts under section 5(c) of such Act with respect to the additional

authority provided on October 1, 1980, the Secretary shall not utilize more than $20,000,000 of such additional authority to provide

assistance for elderly or handicapped families which, at the time of

applying for assistance under such section 8, are residents of a

project assisted under this section and are expending more than 50

percent of their income on rental payments.
499 Sec. 236 SECTION 236 RENTAL ASSISTANCE

(r) The Secretary shall, not later than 45 days after receipt of

an application by the mortgagee, provide interest reduction and

rental assistance payments for the benefit of projects assisted

under this section whose mortgages were made by State or local

housing finance agencies or State or local government agencies for

a term equal to the remaining mortgage term to maturity on

projects assisted under this section to the extent of—

(1) unexpended balances of amounts of authority as set

forth in certain letter agreements between the Department of

Housing and Urban Development and such State or local housing finance agencies or State or local government agencies, and

(2) existing allocation under section 236 contracts on

projects whose mortgages were made by State or local housing

finance agencies or State or local government agencies which

are not being funded, to the extent of such excess allocation,

for any purposes permitted under the provisions of this section,

including without limitation rent supplement and rental assistance payment unit increases and mortgage increases for any

eligible purpose under this section, including without limitation operating deficit loans.

An application shall be eligible for assistance under the previous

sentence only if the mortgagee submits the application within 548

days after the effective date of this subsection, along with a certification of the mortgagee that amounts hereunder are to be utilized

only for the purpose of either (A) reducing rents or rent increases

to tenants, or (B) making repairs or otherwise increasing the economic viability of a related project. Unexpended balances referred

to in the first sentence of this subsection which remain after disposition of all such applications is favorably concluded shall be rescinded. The calculation of the amount of assistance to be provided

under an interest reduction contract pursuant to this subsection

shall be made on the basis of an assumed mortgage term equal to

the lesser of a 40-year amortization period or the term of that part

of the mortgage which relates to the additional assistance provided

under this subsection, even though the additional assistance may

be provided for a shorter period. The authority conferred by this

subsection to provide interest reduction and rental assistance payments shall be available only to the extent approved in appropriation Acts.

(s) GRANTS AND LOANS FOR REHABILITATION OF MULTIFAMILY

PROJECTS.—

(1) IN GENERAL.—The Secretary may make grants and

loans for the capital costs of rehabilitation to owners of projects

that meet the eligibility and other criteria set forth in, and in

accordance with, this subsection.

(2) PROJECT ELIGIBILITY.—A project may be eligible for

capital assistance under this subsection under a grant or loan

only—

(A) if—

(i) the project is or was insured under any provision of title II of the National Housing Act;

(ii) the project was assisted under section 8 of the

United States Housing Act of 1937 on the date of en-
Sec. 236 SECTION 236 RENTAL ASSISTANCE 500

1So in law.

actment of the Multifamily Assisted Housing Reform

and Affordability Act of 1997; and

(iii) the project mortgage was not held by a State

agency as of the date of enactment of the Multifamily

Assisted Housing Reform and Affordability Act of

1997;

(B) if 1 the project owner agrees to maintain the housing quality standards as required by the Secretary;

(C) the project owner enters into such binding commitments as the Secretary may require (which shall be applicable to any subsequent owner) to ensure that the owner

will continue to operate the project in accordance with all

low-income affordability restrictions for the project in connection with the Federal assistance for the project for a period having a duration that is not less than the period referred to in paragraph (5)(C);

(D)(i) if 1 the Secretary determines that the owner or

purchaser of the project has not engaged in material adverse financial or managerial actions or omissions with regard to such project; or

(ii) if 1 the Secretary elects to make such determination, that the owner or purchaser of the project has not engaged in material adverse financial or managerial actions

or

omissions with regard to other projects of such owner or

purchaser that are federally assisted or financed with a

loan from, or mortgage insured or guaranteed by, an agency of the Federal Government;

(iii) material adverse financial or managerial actions

or omissions, as the terms are used in this subparagraph,

include—

(I) materially violating any Federal, State, or local

law or regulation with regard to this project or any

other federally assisted project, after receipt of notice

and an opportunity to cure;

(II) materially breaching a contract for assistance

under section 8 of the United States Housing Act of

1937, after receipt of notice and an opportunity to

cure;

(III) materially violating any applicable regulatory

or other agreement with the Secretary or a participating administrative entity, after receipt of notice

and an opportunity to cure;

(IV) repeatedly failing to make mortgage payments at times when project income was sufficient to

maintain and operate the property;

(V) materially failing to maintain the property according to housing quality standards after receipt of

notice and a reasonable opportunity to cure; or

(VI) committing any act or omission that would

warrant suspension or debarment by the Secretary;

and
501 Sec. 236 SECTION 236 RENTAL ASSISTANCE

1So in law.

(iv) the term ‘‘owner’’ as used in this subparagraph, in

addition to it having the same meaning as in section 8(f)

of the United States Housing Act of 1937, also means an

affiliate of the owner; the term ‘‘purchaser’’ as used in this

subsection means any private person or entity, including a

cooperative, an agency of the Federal Government, or a

public housing agency, that, upon purchase of the project,

would have the legal right to lease or sublease dwelling

units in the project, and also means an affiliate of the purchaser; the terms ‘‘affiliate of the owner’’ and ‘‘affiliate of

the purchaser’’ means any person or entity (including, but

not limited to, a general partner or managing member, or

an officer of either) that controls an owner or purchaser,

is controlled by an owner or purchaser, or is under common control with the owner or purchaser; the term ‘‘control’’ means the direct or indirect power (under contract,

equity ownership, the right to vote or determine a vote, or

otherwise) to direct the financial, legal, beneficial or other

interests of the owner or purchaser; and

(E) if 1 the project owner demonstrates to the satisfaction of the Secretary—

(i) using information in a comprehensive needs assessment, that capital assistance under this subsection

from a grant or loan (as appropriate) is needed for rehabilitation of the project; and

(ii) that project income is not sufficient to support

such rehabilitation.

(3) ELIGIBLE USES.—Amounts from a grant or loan under

this subsection may be used only for projects eligible under

paragraph (2) for the purposes of—

(A) payment into project replacement reserves;

(B) debt service payments on non-Federal rehabilitation loans; and

(C) payment of nonrecurring maintenance and capital

improvements, under such terms and conditions as are determined by the Secretary.

(4) GRANT AND LOAN AGREEMENTS.—

(A) IN GENERAL.—The Secretary shall provide in any

grant or loan agreement under this subsection that the

grant or loan shall be terminated if the project fails to

meet housing quality standards, as applicable on the date

of enactment of the Multifamily Assisted Housing Reform

and Affordability Act of 1997, or any successor standards

for the physical conditions of projects, as are determined

by the Secretary.

(B) AFFORDABILITY AND USE CLAUSES.—The Secretary

shall include in a grant or loan agreement under this subsection a requirement for the project owners to maintain

such affordability and use restrictions as the Secretary determines to be appropriate and consistent with paragraph

(2)(C).
Sec. 236 SECTION 236 RENTAL ASSISTANCE 502

1Section 535(a)(5) of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Approriations Act, 2000, Pub. L. 106–74, 113 Stat. 1119, provides that this paragraph is amended by inserting ‘‘or loan’’ after ‘‘grant’’ each place it appears.

Because the term ‘grant‘ does not appear in this paragraph, the amendment could not be executed.

(C) OTHER TERMS.—The Secretary may include in a

grant or loan agreement under this subsection such other

terms and conditions as the Secretary determines to be

necessary.

(5) LOAN TERMS.—A loan under this subsection—

(A) shall provide amounts for the eligible uses under

paragraph (3) in a single loan disbursement of loan principal;

(B) shall be repaid, as to principal and interest, on behalf of the borrower using amounts recaptured from contracts for interest reduction payments pursuant to clause

(i) or (ii) of paragraph (7)(A);

(C) shall have a term to maturity of a duration not

shorter than the remaining period for which the interest

reduction payments for the insured mortgage or mortgages

that fund repayment of the loan would have continued

after extinguishment or writedown of the mortgage (in accordance with the terms of such mortgage in effect immediately before such extinguishment or writedown);

(D) shall bear interest at a rate, as determined by the

Secretary of the Treasury, that is based upon the current

market yields on outstanding marketable obligations of the

United States having comparable maturities; and

(E) shall involve a principal obligation of an amount

not exceeding the amount that can be repaid using

amounts described in subparagraph (B) over the term determined in accordance with subparagraph (C), with interest at the rate determined under subparagraph (D).

(6) DELEGATION.—

(A) IN GENERAL.—In addition to the authorities set

forth in subsection (p), the Secretary may delegate to State

and local governments the responsibility for the administration of grants 1 under this subsection. Any such government may carry out such delegated responsibilities directly

or under contracts.

(B) ADMINISTRATION COSTS.—In addition to other eligible purposes, amounts of grants 1 under this subsection

may be made available for costs of administration under

subparagraph (A).

(7) FUNDING.—

(A) IN GENERAL.—For purposes of carrying out this

subsection, the Secretary may make available amounts

that are unobligated amounts for contracts for interest reduction payments—

(i) that were previously obligated for contracts for

interest reduction payments under this section until

the insured mortgage under this section was extinguished;
503 Sec. 236 SECTION 236 RENTAL ASSISTANCE

(ii) that become available as a result of the outstanding principal balance of a mortgage having been

written down;

(iii) that are uncommitted balances within the

limitation on maximum payments that may have been,

before the date of enactment of the Multifamily Assisted Housing Reform and Affordability Act of 1997,

permitted in any fiscal year; or

(iv) that become available from any other source.

(B) LIQUIDATION AUTHORITY.—The Secretary may liquidate obligations entered into under this subsection under

section 1305(10) of title 31, United States Code.

(C) CAPITAL GRANTS.—In making capital grants under

the terms of this subsection, using the amounts that the

Secretary has recaptured from contracts for interest reduction payments, the Secretary shall ensure that the rates

and amounts of outlays do not at any time exceed the

rates and amounts of outlays that would have been experienced if the insured mortgage had not been extinguished

or the principal amount had not been written down, and

the interest reduction payments that the Secretary has recaptured had continued in accordance with the terms in effect immediately prior to such extinguishment or writedown.

(D) LOANS.—In making loans under this subsection

using the amounts that the Secretary has recaptured from

contracts for interest reduction payments pursuant to

clause (i) or (ii) of paragraph (7)(A)—

(i) the Secretary may use such recaptured

amounts for costs (as such term is defined in section

502 of the Congressional Budget Act of 1974) of such

loans; and

(ii) the Secretary may make loans in any fiscal

year only to the extent or in such amounts that

amounts are used under clause (i) to cover costs of

such loans.
504

FLEXIBLE SUBSIDY PROGRAM

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT

AMENDMENTS OF 1978

[Public Law 95–557; 92 Stat. 2084; 12 U.S.C. 1715z–1a]

ASSISTANCE FOR TROUBLED MULTIFAMILY HOUSING PROJECTS

SEC. 201. ø12 U.S.C. 1715z–1a¿ (a) The purposes of this section are to provide assistance to restore or maintain the financial

soundness, to assist in the improvement of the management, to

permit capital improvements to be made to maintain certain

projects as decent, safe, and sanitary housing, and to maintain the

low- to moderate-income character of certain projects assisted or

approved for assistance under the National Housing Act, the

United States Housing Act of 1937, the Housing Act of 1959, or the

Housing and Urban Development Act of 1965, without regard to

whether such projects are insured under the National Housing Act.

(b) The Secretary of Housing and Urban Development (hereinafter referred to in this section as the ‘‘Secretary’’) may make available, and contract to make available, to such extent and in such

amounts as may be approved in appropriation Acts, financial assistance to owners of rental or cooperative housing projects meeting

the requirements of this section. Such assistance shall be made on

an annual basis and in accordance with the provisions of this section, without regard to whether such projects are insured under the

National Housing Act.

(c) A rental or cooperative housing project is eligible for assistance under this section only if such project—

(1)(A) is assisted under section 236 or the proviso of section 221(d)(5) of the National Housing Act, or under section

101 of the Housing and Urban Development Act of 1965, or received a loan under section 202 of the Housing Act of 1959

more than 15 years before the date on which assistance is

made available under this section;

(B) is assisted under section 23 of the United States Housing Act of 1937, as in effect immediately before January 1,

1975, section 8 of the United States Housing Act of 1937 following conversion to such assistance from assistance under

section 236 of the National Housing Act or section 101 of the

Housing and Urban Development Act of 1965; or

(C) met the criteria specified in subparagraph (A) of this

paragraph before the acquisition of such project by the Secretary and has been sold by the Secretary, subject to a mortgage insured or held by the Secretary and subject to an agreement (in effect during the period of assistance under this section) which provides that the low- and moderate-income character of the project will be maintained; except that, with re-
505 Sec. 201 FLEXIBLE SUBSIDY PROGRAM

1Section 405(a)(1) of the Housing and Community Development Act of 1992, Pub. L. 102–550,

amended this paragraph ‘‘by striking ‘and’ ’’. Because such section did not specify which occurrence of the word to strike, the amendment could not be executed. The amendment was probably

intended to be made to the last occurrence of such word. 2Section 406 of the Housing and Community Development Act of 1992, Pub. L. 102–550, provides as follows:

Continued

spect to projects sold after October 1, 1978, assistance shall be

available for a period not to exceed three years; and

(2) meets such other requirements consistent with the purposes of this section as the Secretary may prescribe.

(d) No assistance may be made available under this section unless the Secretary has determined that—

(1) such assistance, when considered with other resources

available to the project, is necessary and, in the determination

of the Secretary, will restore or maintain the financial or physical soundness of the project and maintain the low- and moderate-income character of the project, and the owner has

agreed to maintain the low- and moderate-income character of

such project for a period at least equal to the remaining term

of the project mortgage;

(2) the assistance which could reasonably be expected to be

provided over the useful life of the project will be less costly

to the Federal Government than other reasonable alternatives

by which the Secretary could maintain the low- and moderateincome character of the project;

(3) the owner of the project, together with the mortgagee

in the case of a project not insured under the National Housing

Act, has provided or has agreed to provide assistance to the

project in such manner as the Secretary may determine;

(4) the project is or can reasonably be made structurally

sound, as determined on the basis of information obtained as

a result of an onsite inspection of the project;

(5) the management of the project is being conducted by

persons who meet minimum levels of competency and experience prescribed by the Secretary; and 1

(6) the project is being operated and managed in accordance with a management-improvement-and-operating plan

which is designed to reduce the operating costs of the project,

which has been approved by the Secretary, and which includes

the following: (A) a detailed maintenance schedule; (B) a schedule for correcting past deficiencies in maintenance, repairs, and

replacements; (C) a plan to upgrade the project to meet costeffetive energy efficiency standards prescribed by the Secretary; (D) a plan to improve financial and management control systems; (E) a detailed annual operating budget taking

into account such standards for operating costs in the area as

may be determined by the Secretary; and (F) such other requirements as the Secretary may determine; except that the

Secretary may excuse an owner from compliance with the plan

requirement set forth in this paragraph in any case in which

such owner seeks only assistance for capital improvements

under this section 2;
Sec. 201 FLEXIBLE SUBSIDY PROGRAM 506

‘‘SEC. 406. FLEXIBLE SUBSIDY PROGRAM.

‘‘Section 201(d)(6) of the Housing and Community Development Amendments of 1978 (12

U.S.C. 1715z–1a(d)(6)) is amended by inserting before the period at the end the following: ‘‘; and

except that the Secretary shall review and approve or disapprove each plan not later than the

expiration of the 30-day period beginning upon the date of submission of the plan to the Secretary by the owner, but if the Secretary fails to inform the owner of approval or disapproval

of the plan within such period the plan shall be considered to have been approved’’.

Because no period appears at the end of this paragraph, the amendment could not be executed. The material to be inserted by the amendment was probably intended to be inserted before the semicolon at the end of this paragraph.

(7) all reasonable attempts have been made to take all appropriate actions and provide suitable housing for project residents;

(8) the project has a feasible plan to involve the residents

in project decisions;

(9) the affirmative fair housing marketing plan meets applicable requirements; and

(10) the owner certifies that it will comply with various

equal opportunity statutes.

(e) Prior to making assistance available to a project, the Secretary shall consult with the appropriate officials of the unit of

local government in which such project is located and seek assurances that—

(1) the community in which the project is located is or will

provide essential services to the project in keeping with the

community’s general level of such services;

(2) the real estate taxes on the project are or will be no

greater than would be the case if the property were assessed

in a manner consistent with normal property assessment procedures for the community; and

(3) assistance to the project under this section would not

be inconsistent with local plans and priorities.

(f)(1) The Secretary may, with respect to any year, provide assistance under this section, and make commitments to provide such

assistance, with respect to any project (except a project assisted

only for capital improvements) in any amount which the Secretary

determines is consistent with the project’s management-improvement-and-operating plan described in subsection (d)(6) and which

does not exceed the sum of—

(A) an amount determined by the Secretary to be necessary to correct deficiencies in the project which exist at the

beginning of the first year with respect to which assistance is

made available for the project under this section, which were

caused by the deferral of regularly scheduled maintenance and

repairs or the failure to make necessary and timely replacements of equipment and other components of the project, and

for which payment has not previously been made;

(B) an amount determined by the Secretary to be necessary to maintain the low- and moderate-income character of

the project by reducing deficiencies, which exist at the beginning of the first year with respect to which assistance is made

available for the project under this section and for which payment has not previously been made, in the reserve funds established by the project owner for the purpose of replacing capital

items;
507 Sec. 201 FLEXIBLE SUBSIDY PROGRAM

(C) an amount not greater than the amount by which the

estimated operating expenses (as described in paragraph (2) of

this subsection) for the year with respect to which such assistance is made available exceeds the estimated revenues to be

received (as described in paragraph (2) of this subsection) by

the project during such year; and

(D) an amount determined by the Secretary to be necessary to carry out a plan to upgrade the project to meet costeffective energy efficiency standards prescibed by the Secretary.

(2) The estimated revenues for any project under paragraph (1)

(C) of this subsection with respect to any year shall be equal to the

sum of—

(A) the estimated amount of rent which is to be expended

by the tenants of such project during such year, as determined

by the Secretary without regard to section 236(f)(1) of the National Housing Act;

(B) the estimated amount of rental assistance payments to

be made on behalf of such tenants during such year, other

than assistance made under this section;

(C) the estimated amount of assistance payments to be

made on behalf of the owner of such project under section

212(d)(5) or section 236 of the National Housing Act during

such year; and

(D) other income attributable to the project as determined

by the Secretary;

except that—

(E) in computing the estimated amount of rent to be expended by tenants, the Secretary shall provide that (i) at least

25 percent (or such lesser percentage as is provided for under

any other Federal housing assistance program in which such

tenant is participating) of the income of each such tenant is included, or (ii) in the case of a tenant paying his or her own

utilities, a percentage of income which is less than 25 percent

and which takes into account the reasonable costs of such

utilties; except that no amount shall be provided for any tenant

under clause (i) or (ii) which exceeds the fair market rental

charge as determined pursuant to section 236(f)(1) of the National Housing Act for such tenant; and

(F) in computing the estimated amount of rent to be expended by tenants and the estimated amount of rental assistance payments to be made on behalf of such tenants, the Secretary may permit a delinquency-and-vacancy allowance of not

more than 6 per centum of the estimated amount of such rent

and payments computed without regard to such allowance; except that, with respect to the first three years in which assistance is provided to a project under this section, the Secretary

may permit such allowance for such project to exceed such 6

percent by an amount which the Secretary determines is appropriate to carry out the purposes of this section.

For purposes of computing estimated operating expenses of any

such project with respect to any year, the Secretary shall include

all estimated operating costs which the Secretary determines to be

necessary and consistent with the management-improvement-and-
Sec. 201 FLEXIBLE SUBSIDY PROGRAM 508

operating plan for the project for such year, including, but not limited to taxes, utilities, maintenance and repairs (except for maintenance and repairs which should have been performed in previous

years), management, insurance, debt service, and payments made

by the owner for the purpose of establishing or maintaining a reserve fund for replacement costs. The Secretary may not include in

such estimated operating expenses any return on the equity investment of the owner in such project.

(3) In order to carry out the purposes of this section, the Secretary may, notwithstanding the provisions of section 236(f)(1) of

the National Housing Act, provide that, for purposes of establishing

a rental charge under such section, there may be excluded from the

computation of the cost of operating a project an amount equivalent

to the amount of assistance payments made for the project under

this section.

(4) Any assistance payments made pursuant to this section

with respect to any project shall be made on an annual basis, payable at such intervals, but at least quarterly, as the Secretary may

determine, and may be in any amount (which the Secretary determines to be consistent with the purpose of this section), except that

the sum of such assistance payments for any year for a project

(other than a project receiving assistance only for capital improvements) may not exceed the amount computed pursuant to paragraph (1) of this subsection. The Secretary shall review the operations of the project at the time of such payments to determine

that such operations are consistent with the management-improvement-and-operating plan.

(g) The project owner shall, as required by the Secretary, accumulate, safeguard, and periodically pay the Secretary or such other

entity as determined by the Secretary and upon such terms and

conditions as the Secretary deems appropriate, all rental charges

collected on a unit-by-unit basis in excess of the basic rental

charges. Unless otherwise directed by the Secretary, such excess

charges shall be credited to a reserve used by the Secretary to

make additional assistance payments as provided in paragraph (3)

of subsection (f ). Notwithstanding any other requirements of this

subsection, an owner of a project with a mortgage insured under

this section, or a project previously assisted under subsection (b)

but without a mortgage insured under this section if the project

mortgage was insured under section 207 of this Act before July 30,

1998 pursuant to section 223(f ) of this Act and assisted under subsection (b), may retain some or all of such excess charges for

project use if authorized by the Secretary and upon such terms and

conditions as established by the Secretary.

(h) The Secretary may not use any of the assistance available

under this section during any fiscal year beginning on or after October 1, 1981, to supplement any contract to make rental assistance payments which was made pursuant to section 101 of the

Housing and Urban Development Act of 1965.

ø(i) [Repealed.]¿

(j)(1) For purposes of carrying out the provisions of this section,

there is hereby established in the Treasury of the United States a

revolving fund, to be known as the Flexible Subsidy Fund. The

Fund shall, to the extent approved in appropriation Acts, be avail-
509 Sec. 201 FLEXIBLE SUBSIDY PROGRAM

1So in law. Probably intended to refer to the Department of Housing and Urban Development—Independent Agencies Appropriations Act, 1989, Pub. L. 101–404, approved August 19,

1988.

able to the Secretary to provide assistance under this section (including assistance for capital improvements) and shall not (except

as provided in Public Law 100–4–4 1 (102 Stat. 1018), as in effect

on October 1, 1988) be available for any other purpose.

(2) The Fund shall consist of (A) any amount appropriated to

carry out the purposes of this section; (B) any amount repaid on

any assistance provided under this section; (C) any amounts credited to the reserve fund described in section 236(g) of the National

Housing Act; (D) any other amount received by the Secretary under

this section (including any amount realized under paragraph (3)),

and (E) any amount received by the Secretary pursuant to section

537 of the National Housing Act and section 202a of the Housing

Act of 1959.

(3) Any amounts in the Fund determined by the Secretary to

be in excess of the amounts currently required to carry out the provisions of this section shall be invested by the Secretary in obligations of, or obligations guaranteed as to both principal and interest

by, the United States or any agency of the United States.

(4) The Secretary shall, to the extent of approvable applica- tions and subject to paragraph (1), use not less than $30,000,000

or 40 percent (whichever is less) of the amounts available from the

Fund in any fiscal year for purposes of providing assistance for capital improvements in accordance with this section. Any amount reserved under this paragraph for assistance for capital improvements that is not used before the last 60 days of a fiscal year shall

become available for other assistance under this section.

(5) There is authorized to be appropriated for assistance under the flexible subsidy fund not to exceed $52,200,000 for fiscal year

1993 and $54,392,400 for fiscal year 1994.

(k)(1) Assistance for capital improvements under this section

shall include assistance for any major repair or replacement of a

capital item in a multifamily housing project, including any such

repair or replacement required as a result of deferred or inadequate maintenance. Capital improvements do not include maintenance of any such item. Assistance for capital improvements under

this section shall be in the form of a loan.

(2) The owner of a project receiving assistance for capital improvements shall agree to contribute assistance to such project in

such amounts, from such sources, and in such manner as the Secretary determines to be appropriate.

(3) The Secretary may provide assistance for capital improvements under this section if the Secretary finds that the reserve

funds established by the owner of a project for the purpose of making capital improvements are insufficient to finance both the capital improvements for which such assistance is to be used and other

capital improvements that are reasonably expected to be required

in the near future, and such insufficiency is not the result of the

failure of such owner to comply with any standard established by

the Secretary for management of such reserve funds.

(l)(1) The principal amount of any assistance for capital improvements under this section that is provided to the owner of a
Sec. 201 FLEXIBLE SUBSIDY PROGRAM 510

project shall not exceed the difference between the contribution

made by the owner in accordance with subsection (k)(2) and the

sum of—

(A) the amount determined by the Secretary to be necessary for such owner to make capital improvements with respect to capital items that have failed, or are likely to deteriorate seriously or fail in the near future, in such projects;

(B) the amount determined by the Secretary to be necessary to carry out a plan to upgrade the capital items being

improved, and any other capital items determined by the Secretary to be associated with such capital items being improved

and to require upgrading, to meet cost-effective energy efficiency standards prescribed by the Secretary; and

(C) the amount determined by the Secretary to be necessary to comply with the requirements of section 504 of the

Rehabilitation Act of 1973 (29 U.S.C. 794).

(2)(A) The term of any assistance for capital improvements in

the form of a loan under this section shall not exceed the remaining term of the mortgage of the project with respect to which such

loan is provided.

(B) Each loan for capital improvements provided under this

section shall bear interest at a rate determined by the Secretary

to be appropriate, except that—

(i) such rate shall not be more than 3 percentage points

below a rate determined by the Secretary of the Treasury taking into consideration the average interest rate on all interest

bearing obligations of the United States then forming a part of

the public debt, computed at the end of the fiscal year next

preceding date on which the loan is made, adjusted to the

nearest 1⁄8 of 1 percent, plus an allowance adequate in the

judgment of the Secretary of Housing and Urban Development

to cover administrative costs and probable losses under the

program; and

(ii) such interest rate plus such allowance shall not exceed

6 percent per annum nor be less than 3 percent per annum.

(C) Each loan for capital improvements provided under this

section shall be considered to be a liability of the project involved,

and shall not be dischargeable in any bankruptcy proceeding under

section 727, 1141, or 1328(b) of title 11, United States Code.

(D) The Secretary may establish such additional conditions on

loans provided under this section as the Secretary determines to be

appropriate. The Secretary may require owners receiving assistance for capital improvements under this section to retain the

housing as housing affordable for very low-income families or persons, low-income families or persons and moderate-income families

or persons for the remaining useful life of the housing. For purposes of this section, the term ‘‘remaining useful life’’ means, with

respect to housing assisted under this section, the period during

which the physical characteristics of the housing remain in a condition suitable for occupancy, assuming normal maintenance and repairs are made and major systems and capital components are replaced as becomes necessary.

(E) The Secretary may provide more than one loan or assistance in any other form to any project under this section, if each
511 Sec. 201 FLEXIBLE SUBSIDY PROGRAM

1 November 28, 1990.

loan or other assistance complies with the provisions of this section.

(m)(1) Increases in rental payments that may occur as a result

of the debt service and other expenses of a loan for capital improvements provided under this section for a project subject to a plan of

action approved under subtitle B of the Emergency Low Income

Housing Preservation Act of 1987 shall be governed by the rent

agreements entered into under such subtitle.

(2) In order to minimize any increases in rental payments that

may occur as a result of the debt service and other expenses of a

loan for capital improvements provided under this section for a

project and that would be incurred by lower income residents of the

project involved whose rental payments are, or would as a result

of such expenses be, in excess of the amount allowable if section

3(a) of the United States Housing Act of 1937 were applicable to

such residents, or where appropriate to implement a plan of action

under subtitle B of the Emergency Low Income Housing Preservation Act of 1987, the Secretary may take any or all of the following

actions:

(A) Provide assistance with respect to such project under

section 8 of the United States Housing Act of 1937, to the extent amounts are available for such assistance and without regard to section 16 of such Act.

(B) Notwithstanding subsection (l)(2)(B), reduce the rate of

interest charged on such loan to a rate of not less than 1 percent.

(C) Increase the term of such loan to a term that does not

exceed the remaining term of the mortgage on such project.

(D) Increase the amount of assistance to be provided by

the owner of such project under subsection (k)(2), if applicable,

to an amount not to exceed 30 percent of the total estimated

cost of the capital improvements involved.

(E) Permit repayment of the debt service to be deferred as

long as the low and moderate income character of the project

is maintained in accordance with subsection (d).

(n) ALLOCATION OF ASSISTANCE.— (1) SET-ASIDE.—In providing, and contracting to provide,

assistance for capital improvements under this section, in each

fiscal year the Secretary shall set aside an amount, as determined by the Secretary, for projects that are eligible for incentives under section 224(b) of the Emergency Low Income Housing Preservation Act of 1987, as such section existed before the

date of enactment of the Cranston-Gonzalez National Affordable Housing Act. 1 The Secretary may make such assistance

available on a noncompetitive basis.

(2) GENERAL RULES FOR ALLOCATION.—Except as provided

in paragraph (3), with respect to assistance under this section

not set aside for projects under paragraph (1), the Secretary—

(A) may award assistance on a noncompetitive basis;

and

(B) shall award assistance to eligible projects on the

basis of—
Sec. 201 FLEXIBLE SUBSIDY PROGRAM 512

(i) the extent to which the project is physically or

financially troubled, as evidenced by the comprehensive needs assessment submitted in accordance with

title IV of the Housing and Community Development

Act of 1992; and

(ii) the extent to which such assistance is necessary and reasonable to prevent the default of federally insured mortgages.

(3) EXCEPTIONS.—The Secretary may make exceptions to

selection criteria set forth in paragraph (2)(B) to permit the

provision of assistance to eligible projects based upon—

(A) the extent to which such assistance is necessary to

prevent the imminent foreclosure or default of a project

whose owner has not submitted a comprehensive needs assessment pursuant to title IV of the Housing and Community Development Act of 1992;

(B) the extent to which the project presents an imminent threat to the life, health, and safety of project residents; or

(C) such other criteria as the Secretary may specify by

regulation or by notice printed in the Federal Register.

(4) CONSIDERATIONS.—In providing assistance under this

section, the Secretary shall take into consideration—

(A) the extent to which there is evidence that there

will be significant opportunities for residents (including a

resident council or resident management corporation, as

appropriate) to be involved in the management of the

project (except that this paragraph shall have no application to projects that are owned as cooperatives); and

(B) the extent to which there is evidence that the

project owner has provided competent management and

complied with all regulatory and administrative requirements.

(o) The Secretary shall coordinate the allocation of assistance

under this section with assistance made available under section

8(v) of the United States Housing Act of 1937 and section 203 of

this Act to enhance the cost effectiveness of the Federal response

to troubled multifamily housing.

(p) ENHANCED VOUCHER ELIGIBILITY.—Notwithstanding any

other provision of law, any project that receives or has received assistance under this section and which is the subject of a transaction under which the project is preserved as affordable housing,

as determined by the Secretary, shall be considered eligible low-income housing under section 229 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4119)

for purposes of eligibility of residents of such project for enhanced

voucher assistance provided under section 8(t) of the United States

Housing Act of 1937 (42 U.S.C. 1437f(t)) (pursuant to section

223(f ) of the Low-Income Housing Preservation and Resident

Homeownership Act of 1990 (12 U.S.C. 4113(f ))).
513

1 November 28, 1990

MULTIFAMILY HOUSING PLANNING AND INVESTMENT

STRATEGIES

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3773; 12 U.S.C. 1715z–1a note]

TITLE IV—MULTIFAMILY HOUSING

PLANNING AND INVESTMENT STRATEGIES

SEC. 401. ø12 U.S.C. 1715z–1a note¿ DEFINITIONS.

For purposes of this title:

(1) COVERED MULTIFAMILY HOUSING PROPERTY.—The term

‘‘covered multifamily housing property’’ means any housing—

(A) that is—

(i) reserved for occupancy by very low-income elderly persons pursuant to section 202(d)(1) of the

Housing Act of 1959;

(ii) assisted under the provisions of section 202 of

the Housing Act of 1959 (as such section existed before

the effectiveness of the amendment made by section

801(a) of the Cranston-Gonzalez National Affordable

Housing Act);

(iii) financed by a loan or mortgage insured, assisted, or held by the Secretary or a State or State

agency under section 236 of the National Housing Act;

or

(iv) financed by a loan or mortgage insured or

held by the Secretary pursuant to section 221(d)(3) of

the National Housing Act; and

(B) that is not eligible for assistance under—

(i) the Low-Income Housing Preservation and

Resident Homeownership Act of 1990;

(ii) the provisions of the Emergency Low Income

Housing Preservation Act of 1987 (as in effect immediately before the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act 1); or

(iii) the HOME Investment Partnerships Act.

(2) COVERED MULTIFAMILY HOUSING PROPERTY FOR THE ELDERLY.—The term ‘‘covered multifamily housing property for

the elderly’’ means any multifamily housing project that was

designed or designated to serve, or is serving, elderly persons
Sec. 402 MULTIFAMILY HOUSING PLANNING AND INVESTMENT 514

or families and is assisted under a program administered by

the Secretary.

(3) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

SEC. 402. ø12 U.S.C. 1715z–1a note¿ REQUIRED SUBMISSION.

(a) IN GENERAL.—The owner of each covered multifamily housing property, and the owner of each covered multifamily housing

property for the elderly, shall submit to the Secretary of Housing

and Urban Development a comprehensive needs assessment of the

property under this title. The assessment shall be prepared by an

entity that does not have an identity of interest with the owner.

(b) TIMING.—To ensure that assessments for all covered multifamily housing properties will be submitted on or before the conclusion of fiscal year 1997, the Secretary shall require the owners of

such properties, including covered multifamily housing properties

for the elderly, to submit the assessments for the properties in accordance with the following schedule:

(1) For fiscal year 1994, 10 percent of the aggregate number of such properties.

(2) For each of fiscal years 1995, 1996, and 1997, an additional 30 percent of the aggregate number of such properties.

SEC. 403. ø12 U.S.C. 1715z–1a note¿ CONTENTS.

(a) IN GENERAL.—Each comprehensive needs assessment submitted under this title for a covered multifamily housing property

or a covered multifamily housing property for the elderly shall contain the following information with respect to the property:

(1) A description of any financial or other assistance currently needed for the property to ensure that the property is

maintained in a livable condition and to ensure the financial

viability of the project.

(2) A description of any financial or other assistance for

the property that, at the time of the assessment, is reasonably

foreseeable as necessary to ensure that the property is maintained in a livable condition and to ensure the financial viability of the project, during the remaining useful life of the property.

(3) A description of any resources available for meeting the

current and future needs of the property described under paragraphs (1) and (2) and the likelihood of obtaining such resources.

(4) A description of any assistance needed for the property

under programs administered by the Secretary.

(b) PROJECTS FOR THE ELDERLY.—Each comprehensive needs

assessment for a covered multifamily housing property for the elderly shall include, in addition to the information required under

subsection (a), the following information with respect to the

property:

(1) A description of the supportive service needs of such

residents and any supportive services provided to elderly residents of the property.

(2) A description of any modernization needs and activities

for the property.

(3) A description of any personnel needs for the property.
515 Sec. 404 MULTIFAMILY HOUSING PLANNING AND INVESTMENT

SEC. 404. ø12 U.S.C. 1715z–1a note¿ SUBMISSION AND REVIEW.

(a) FORM.—The Secretary shall establish the form and manner

of submission of the comprehensive needs assessments under this

title.

(b) RESIDENT REVIEW.—The Secretary shall require each owner

of a covered multifamily housing property and each owner of a covered multifamily housing property for the elderly to make available

to the residents of the property the comprehensive needs assessment that is to be submitted to the Secretary. The Secretary shall

require each owner to provide for such residents to submit comments and opinions regarding the assessment to the owner before

the submission of the assessment.

(c) STATE HOUSING FINANCE AGENCY REVIEW.—To the extent

that a covered multifamily housing property or a covered multifamily housing property for the elderly is financed or assisted by

a State housing finance agency (as such term is defined in section

802 of the Housing and Community Development Act of 1974), the

Secretary shall require the owner of the property to submit the

comprehensive needs assessment for the property to the State

housing finance agency upon submitting the assessment to the Secretary.

(d) REVIEW.—

(1) IN GENERAL.—The Secretary shall review each comprehensive needs assessment for completeness and adequacy

before the expiration of the 90-day period beginning on the receipt of the assessment and shall notify the owner of the property for which the assessment was submitted of the findings of

such review.

(2) INCOMPLETE OR INADEQUATE ASSESSMENTS.—If the Secretary determines that the assessment is substantially incomplete or inadequate, the Secretary shall—

(A) notify the owner of the portion or portions of the

assessment requiring completion or other revision; and

(B) require the owner to submit an amended assessment to the Secretary not later than 30 days after such notification.

(e) COST OF PREPARATION OF STRATEGY.—The Secretary shall

consider any costs relating to preparing a comprehensive needs assessment under this title for a covered multifamily housing property that do not exceed $5,000 for the property as an eligible

project expense for the property. The Secretary shall provide that

an owner may not increase the rental charge for any unit in a covered multifamily housing property to provide for the cost of preparing a comprehensive needs assessment.

(f) PUBLICATION OF METHOD FOR RECEIVING CAPITAL NEEDS

ASSESSMENT.—The Secretary shall cause to be published in the

Federal Register the method by which the Secretary determines

which capital needs assessments will be received each year in accordance with section 402(b) and subsection (d) of this section.

(g) ANNUAL REVIEW AND REPORT OF FUNDING AND TARGETING

FOR COVERED MULTIFAMILY PROPERTIES FOR THE ELDERLY.—

(1) REVIEW.—The Secretary shall annually conduct a comprehensive review of—
Sec. 405 MULTIFAMILY HOUSING PLANNING AND INVESTMENT 516

(A) the funding levels required to fully address the

needs of covered multifamily housing properties for the elderly identified in the comprehensive needs assessments

under section 403(b), specifically identifying any expenses

necessary to make substantial repairs and add features

(such as congregate dining facilities and commercial kitchens) resulting from development of a property in compliance with cost-containment requirements established by

the Secretary;

(B) the adequacy of the geographic targeting of resources provided under programs of the Department with

respect to covered multifamily housing properties for the

elderly, based on information acquired pursuant to section

403(b); and

(C) local housing markets throughout the United

States, with respect to the need, availability, and cost of

housing for elderly persons and families, which shall include review of any information and plans relating to

housing for elderly persons and families included in comprehensive housing affordability strategies submitted by

jurisdictions pursuant to section 105 of the Cranston-Gonzalez National Affordable Housing Act.

(2) REPORT.—The Secretary of Housing and Urban Development shall submit a report to the Congress annually describing the results of the annual comprehensive needs assessments

under section 402 for covered multifamily housing properties

for the elderly and the annual review conducted under paragraph (1) of this subsection, which shall contain a description

of the methods used by project owners and by the Secretary to

acquire the information described in section 402(b) and any

findings and recommendations of the Secretary pursuant to the

review.

SEC. 405. TROUBLED MULTIFAMILY HOUSING.

(a) MANDATORY ELEMENTS.—Section 201(d) of the Housing and

Community Development Amendments of 1978 (12 U.S.C. 1715z–

1a(d)) is amended—

* * * * * * *

(b) SELECTION CRITERIA.— (1) REPEAL OF SECTION 201(k)(4).—Section 201(k)(4) of the

Housing and Community Development Amendments of 1978

(12 U.S.C. 1715z–1a(k)(4)) is repealed.

(2) NEW CRITERIA.—Section 201 of the Housing and Community Development Amendments of 1978 is amended by adding at the end the following new subsection:

* * * * * * *

(c) LOW-INCOME AFFORDABILITY RESTRICTIONS.—Section

201(l)(2)(D) of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1715z–1a(l)(2)(D)) is amended by adding

at the end the following: ‘‘The Secretary may require owners receiving assistance for capital improvements under this section to retain

the housing as housing affordable for very low-income families or

persons, low-income families or persons and moderate-income fami-
517 Sec. 409 MULTIFAMILY HOUSING PLANNING AND INVESTMENT

lies or persons for the remaining useful life of the housing. For purposes of this section, the term ‘remaining useful life’ means, with

respect to housing assisted under this section, the period during

which the physical characteristics of the housing remain in a condition suitable for occupancy, assuming normal maintenance and repairs are made and major systems and capital components are replaced as becomes necessary.’’.

(d) EXCLUSIVITY OF ASSISTANCE.—Section 201 of the Housing

and Community Development Amendments of 1978, as amended by

this section, is further amended by adding at the end the following

new subsection:

* * * * * * *

(e) OWNER CONTRIBUTIONS.—Section 201(k)(2) of the Housing

and Community Development Amendments of 1978 is amended—

* * * * * * *

(f) COORDINATION OF ASSISTANCE.—Section 201 of the Housing

and Community Development Amendments of 1978, as amended by

this section, is further amended by adding at the end the following

new subsection:

* * * * * * *

SEC. 406. FLEXIBLE SUBSIDY PROGRAM.

Section 201(d)(6) of the Housing and Community Development

Amendments of 1978 (12 U.S.C. 1715z–1a(d)(6)) is amended by inserting before the period at the end the following: ‘‘; and except

that the Secretary shall review and approve or disapprove each

plan not later than the expiration of the 30-day period beginning

upon the date of submission of the plan to the Secretary by the

owner, but if the Secretary fails to inform the owner of approval

or disapproval of the plan within such period the plan shall be considered to have been approved’’.

SEC. 407. CAPACITY STUDY.

Section 110(a) of the Cranston-Gonzalez National Affordable

Housing Act (42 U.S.C. 12710(a)) is amended—

* * * * * * *

SEC. 408. FLEXIBLE SUBSIDY PROGRAM.

(a) AUTHORIZATION OF APPROPRIATIONS.—Section 201(j)(5) of

the Housing and Community Development Amendments of 1978

(12 U.S.C. 1715z–1a(j)(5)) is amended to read as follows:

* * * * * * *

(b) USE OF SECTION 236 RENTAL ASSISTANCE FUND AMOUNTS

FOR FLEXIBLE SUBSIDY PAYMENTS.—Section 236(f)(3) of the National Housing Act (12 U.S.C. 1715z–1a(f)(3)) is amended by striking ‘‘September 30, 1992’’ and inserting ‘‘September 30, 1994’’.

SEC. 409. ø12 U.S.C. 1715z–1a note¿ FUNDING.

(a) ALLOCATION OF ASSISTANCE.—Based upon needs identified

in comprehensive needs assessments, and subject to otherwise applicable program requirements, including selection criteria, the Secretary may allocate the following assistance to owners of covered

multifamily housing projects and may provide such assistance on

a noncompetitive basis:
Sec. 409 MULTIFAMILY HOUSING PLANNING AND INVESTMENT 518

(1) Operating assistance and capital improvement assistance for troubled multifamily housing projects pursuant to section 201 of the Housing and Community Development Amendments of 1978, except for assistance set aside under section

201(n)(1).

(2) Loan management assistance available pursuant to section 8 of the United States Housing Act of 1937.

(b) OPERATING ASSISTANCE AND CAPITAL IMPROVEMENT ASSISTANCE.—In providing assistance under subsection (a) the Secretary

shall use the selection criteria set forth in section 201(n) of the

Housing and Community Development Amendments of 1978.

(c) AMOUNT OF ASSISTANCE.—The Secretary may fund all or

only a portion of the needs identified in the capital needs assessment of an owner selected to receive assistance under this section.
519

TENANT PARTICIPATION IN MULTIFAMILY HOUSING

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT

AMENDMENTS OF 1978

[Public Law 95–557; 92 Stat. 2088; 12 U.S.C. 1715z–1b]

TENANT PARTICIPATION IN MULTIFAMILY HOUSING PROJECTS

SEC. 202. ø12 U.S.C. 1715z–1b¿ (a) The purpose of this section

is to recognize the importance and benefits of cooperation and participation of tenants in creating a suitable living environment in

multifamily housing projects and in contributing to the successful

operation of such projects, including their good physical condition,

proper maintenance, security, energy efficiency, and control of operating costs. For the purpose of this section, the term ‘‘multifamily

housing project’’ means a project which is eligible for assistance as

described in section 201(c) of this Act or section 202 of the Housing

Act of 1959, or a project which receives project-based assistance

under section 8 of the United States Housing Act of 1937 (42

U.S.C. 1437f) or enhanced vouchers under the Low-Income Housing

Preservation and Resident Homeownership Act of 1990, the provisions of the Emergency Low Income Housing Preservation Act of

1987, or the Multifamily Assisted Housing Reform and Affordability Act of 1997.

(b) The Secretary shall assure that—

(1) where the Secretary’s written approval is required with

respect to an owner’s request for rent increase, conversion of

residential rental units to any other use (including commercial

use or use as a unit in any condominium or cooperative

project), partial release of security, or major physical alterations, or where the Secretary proposes to sell a mortgage secured by a multifamily housing project, tenants have adequate

notice of, reasonable access to relevant information about, and

an opportunity to comment on such actions (and in the case of

a project owned by the Secretary, any proposed disposition of

the project) and that such comments are taken into consideration by the Secretary;

(2) project owners not interfere with the efforts of tenants

to obtain rent subsidies or other public assistance;

(3) leases approved by the Secretary provide that tenants

may not be evicted without good cause or without adequate notice of the reasons therefor and do not contain unreasonable

terms and conditions; and

(4) project owners do not impede the reasonable efforts of

resident tenant organizations to represent their members or

the reasonable efforts of tenants to organize.
Sec. 202 TENANT PARTICIPATION 520

(c) The Secretary shall promulgate regulations to carry out the

provisions of this section not later than 90 days after the date of

enactment of this Act.
521

ANTI-DRUG ABUSE ACT OF 1988

EXCERPTS FROM ANTI-DRUG ABUSE ACT OF 1988

[Public Law 100–690; 102 Stat. 4295; 42 U.S.C. 11901 et seq.]

TITLE V—USER ACCOUNTABILITY

SEC. 5001. TABLE OF CONTENTS.

The table of contents for this title is as follows:

TITLE V—USER ACCOUNTABILITY

Sec. 5001. Table of contents.

Subtitle A—Opposition to Legalization and Public Awareness

Sec. 5011. Sense of the Congress opposing legalization of drugs.

Sec. 5012. Public awareness campaign.

Subtitle B—National Commission on Drug-Free Schools

Sec. 5051. National commission on drug-free schools.

Subtitle C—Preventing Drug Abuse in Public Housing

CHAPTER 1—REGULATORY AND ENFORCEMENT PROVISIONS

Sec. 5101. Termination of tenancy in public housing.

Sec. 5102. Study of public housing security activities.

Sec. 5103. Report on impact of public housing lease and grievance regulation on

ability of public housing agencies to take action against tenants engaging in drug crimes.

Sec. 5104. Eligible activities under Bureau of Justice Assistance block grant program.

Sec. 5105. Inclusion of leasehold interests in property subject to forfeiture under

Controlled Substances Act.

CHAPTER 2—PUBLIC AND ASSISTED HOUSING DRUG ELIMINATION

Sec. 5121. Short title.

Sec. 5122. Congressional findings.

Sec. 5123. Authority to make grants.

Sec. 5124. Eligible activities.

Sec. 5125. Applications.

Sec. 5126. Definitions.

Sec. 5127. Implementation.

Sec. 5128. Reports.

Sec. 5129. Monitoring.

Sec. 5130. Authorization of appropriations.

CHAPTER 3—DRUG-FREE PUBLIC HOUSING

Sec. 5141. Short title.

Sec. 5142. Statement of purpose.

Sec. 5143. Clearinghouse on drug abuse in public housing.

Sec. 5144. Regional training program on drug abuse in public housing.

Sec. 5145. Definitions.

Sec. 5146. Regulations.

Subtitle D—Drug-Free Workplace Act of 1988

Sec. 5151. Short title.
Sec. 5101 ANTI-DRUG ABUSE ACT OF 1988 522

Sec. 5152. Drug-free workplace requirements for Federal contractors.

Sec. 5153. Drug-free workplace requirements for Federal grant recipients.

Sec. 5154. Employee sanctions and remedies.

Sec. 5155. Waiver.

Sec. 5156. Regulations.

Sec. 5157. Definitions.

Sec. 5158. Construction of subtitle.

Sec. 5159. Repeal of limitation on use of funds.

Sec. 5160. Effective date.

Subtitle E—President’s Media Commission on Alcohol and Drug Abuse Prevention

Sec. 5201. Authorization of appropriations for President’s Media Commission on Alcohol and Drug Abuse Prevention.

Subtitle F—Drug-Free America Policy

Sec. 5251. United States policy for a drug-free America by 1995.

Subtitle G—Denial of Federal Benefits to Drug Traffickers and Possessors

Sec. 5301. Denial of Federal benefits to drug traffickers and possessors.

* * * * * * *

Subtitle C—Preventing Drug Abuse in

Public Housing

CHAPTER 1—REGULATORY AND ENFORCEMENT

PROVISIONS

SEC. 5101. TERMINATION OF TENANCY IN PUBLIC HOUSING.

Section 6(l) of the United States Housing Act of 1937 (42

U.S.C. 1437d(l)) is amended—

(1) by striking ‘‘and’’ at the end of paragraph (3);

(2) by striking the period at the end of paragraph (4) and

inserting ‘‘; and’’; and

(3) by adding at the end the following:

‘‘(5) provide that a public housing tenant, any member of

the tenant’s household, or a guest or other person under the

tenant’s control shall not engage in criminal activity, including

drug-related criminal activity, on or near public housing premises, while the tenant is a tenant in public housing, and such

criminal activity shall be cause for termination of tenancy.

For purposes of paragraph (5), the term ‘drug-related criminal activity’ means the illegal manufacture, sale, distribution, use, or possession with intent to manufacture, sell, distribute, or use, of a controlled substance (as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802)).’’.

SEC. 5102. STUDY OF PUBLIC HOUSING SECURITY ACTIVITIES.

(a) IN GENERAL.—The Secretary of Housing and Urban Development shall conduct a study of the extent to which security activities in public housing projects are funded under the performance

funding system established under section 9 of the United States

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

(b) SPECIFIC REQUIREMENTS.—The study shall include an analysis of—

(1) the extent to which the performance funding system

currently takes into account, and should take into account,

costs associated with maintaining security, including the hiring
523 Sec. 5121 ANTI-DRUG ABUSE ACT OF 1988

1The date of enactment was November 18, 1988.

of security personnel, investigators, and security liaisons with

local law enforcement agencies;

(2) the extent to which public housing agencies have been

compelled to shift funds from tenant services, building maintenance, or other eligible activities to security activities; and

(3) an estimate of the per unit additional cost necessary to

enable all public housing agencies to provide adequate security.

(c) REPORT.—Not later than 6 months after the date of the enactment of this Act, 1 the Secretary of Housing and Urban Development shall submit to the Congress a report setting forth the findings and recommendations of the Secretary as a result of the study

conducted under this section.

SEC. 5103. ø42 U.S.C. 1437d note¿ REPORT ON IMPACT OF PUBLIC

HOUSING LEASE AND GRIEVANCE REGULATION ON ABILITY OF PUBLIC HOUSING AGENCIES TO TAKE ACTION

AGAINST TENANTS ENGAGING IN DRUG CRIMES.

The Secretary of Housing and Urban Development shall submit to the Congress a report on the impact of the implementation

of the public housing tenancy and administrative grievance procedure regulations issued under section 6(k) of the United States

Housing Act of 1937 (42 U.S.C. 1437d(k)) on the ability of public

housing agencies to evict or take other appropriate action against

tenants engaging in criminal activity, especially with respect to the

manufacture, sale, distribution, use, or possession of controlled substances (as defined in section 102 of the Controlled Substances Act

(21 U.S.C. 802)). The report shall be submitted not later than 12

months after the date of the enactment of this Act. 1

SEC. 5104. ELIGIBLE ACTIVITIES UNDER BUREAU OF JUSTICE ASSISTANCE BLOCK GRANT PROGRAM.

Section 501(b) of the Omnibus Crime Control and Safe Streets

Act of 1968 (as added by title VI of this Act) is amended—

(1) by inserting after paragraph (16) the following new

paragraph:

‘‘(17) addressing the problems of drug trafficking and the

illegal manufacture of controlled substances in public housing;’’; and

(2) by redesignating the succeeding paragraphs accordingly.

SEC. 5105. INCLUSION OF LEASEHOLD INTERESTS IN PROPERTY SUBJECT TO FORFEITURE UNDER CONTROLLED SUBSTANCES

ACT.

Section 511(a)(7) of the Controlled Substances Act (21 U.S.C.

881(a)(7)) is amended by inserting ‘‘(including any leasehold interest)’’ after ‘‘right, title, and interest’’.

CHAPTER 2—PUBLIC AND ASSISTED HOUSING DRUG

ELIMINATION

SEC. 5121. ø42 U.S.C. 11901 note¿ SHORT TITLE.

This chapter may be cited as the ‘‘Public and Assisted Housing

Drug Elimination Act of 1990’’.
Sec. 5122 ANTI-DRUG ABUSE ACT OF 1988 524

SEC. 5122. ø42 U.S.C. 11901¿ CONGRESSIONAL FINDINGS.

The Congress finds that—

(1) the Federal Government has a duty to provide public

and other federally assisted low-income housing that is decent,

safe, and free from illegal drugs;

(2) public and other federally assisted low-income housing

in many areas suffers from rampant drug-related or violent

crime;

(3) drug dealers are increasingly imposing a reign of terror

on public and other federally assisted low-income housing tenants;

(4) the increase in drug-related and violent crime not only

leads to murders, muggings, and other forms of violence

against tenants, but also to a deterioration of the physical environment that requires substantial government expenditures;

(5) local law enforcement authorities often lack the resources to deal with the drug problem in public and other federally assisted low-income housing, particularly in light of the

recent reductions in Federal aid to cities;

(6) the Federal Government should provide support for effective safety and security measures to combat drug-related

and violent crime, primarily in and around public housing

projects with severe crime problems;

(7) closer cooperation should be encouraged between public

and assisted housing managers, local law enforcement agencies, and residents in developing and implementing anti-crime

programs; and

(8) anti-crime strategies should be improved through the

expansion of community-oriented policing initiatives.

SEC. 5123. ø42 U.S.C. 11902¿ AUTHORITY TO MAKE GRANTS.

(a) IN GENERAL.—The Secretary of Housing and Urban Development, in accordance with the provisions of this chapter, may

make grants to public housing agencies, public housing resident

management corporations that are principally managing, as determined by the Secretary, public housing projects owned by public

housing agencies, recipients of assistance under the Native American Housing Assistance and Self-Determination Act of 1996, Indian tribes and private, for-profit and nonprofit owners of federally

assisted low-income housing for use in eliminating drug-related

and violent crime.

(b) CONSORTIA.—Subject to terms and conditions established by

the Secretary, public housing agencies may form consortia for purposes of applying for grants under this chapter.

SEC. 5124. ø42 U.S.C. 11903¿ ELIGIBLE ACTIVITIES.

(a) PUBLIC AND ASSISTED HOUSING.—Grants under this chapter

may be used in public housing or other federally assisted low-income housing projects for—

(1) the employment of security personnel;

(2) reimbursement of local law enforcement agencies for

additional security and protective services;

(3) physical improvements which are specifically designed

to enhance security;

(4) the employment of one or more individuals—
525 Sec. 5125 ANTI-DRUG ABUSE ACT OF 1988

1So in law. There is no comma.

2So in law.

(A) to investigate drug-related or violent crime in and

around the real property comprising any public or other

federally assisted low-income housing project; and

(B) to provide evidence relating to such crime in any

administrative or judicial proceeding;

(5) the provision of training, communications equipment,

and other related equipment for use by voluntary tenant patrols acting in cooperation with local law enforcement officials;

(6) programs designed to reduce use of drugs in and

around public or other federally assisted low-income housing

projects, including drug-abuse prevention, intervention, referral, and treatment programs;

(7) where a public housing agency, an Indian tribe, or recipient of assistance under the Native American Housing Assistance and Self-Determination Act of 1996 receives a grant,

providing funding to nonprofit resident management corporations and resident councils to develop security and drug abuse

prevention programs involving site residents; and

(8) sports programs and sports activities that serve primarily youths from public or other federally assisted low-income housing projects and are operated in conjunction with, or

in furtherance of, an organized program or plan designed to reduce or eliminate drugs and drug-related problems in and

around such projects.

(b) OTHER PHA-OWNED HOUSING.—Notwithstanding any other

provision of this chapter, grants under this chapter may be used

to eliminate drug-related crime in and around housing owned by

public housing agencies that is not public housing assisted under

the United States Housing Act of 1937 and is not otherwise federally assisted, for the activities described in paragraphs (1) through

(7) of subsection (a), but only if—

(1) the housing is located in a high intensity drug trafficking area designated pursuant to section 1005 of this Act;

and

(2) the public housing agency owning the housing demonstrates, to the satisfaction of the Secretary, that drug-related

or violent activity in or around the housing has a detrimental

effect on or about the real property comprising any public or

other federally assisted low-income housing.

SEC. 5125. ø42 U.S.C. 11904¿ APPLICATIONS.

(a) IN GENERAL.—To receive a grant under this chapter, a public housing agency, a public housing resident management corporation, an Indian tribe 1 a recipient of assistance under the Native

American Housing Assistance and Self-Determination Act of 1996,

or an owner of federally assisted low-income housing shall submit

an application to the Secretary, at such time, in such manner, and

accompanied by such additional information as the Secretary may

reasonably require. Such application shall include a plan for addressing the problem of drug-related or violent crime in and around

of 2 the housing administered or owned by the applicant for which

the application is being submitted, which plan shall be coordinated
Sec. 5125 ANTI-DRUG ABUSE ACT OF 1988 526

1Typeface so in law.

2The effective date under section 503 of such Act (112 Stat. 2521; 42 U.S.C. 1437 note) was

October 1, 1999, except to the extent otherwise specifically provided in such Act or to the extent

that the Secretary, by notice, implemented any provision of such Act before such date.

with and may be included in the public housing agency plan submitted to the Secretary pursuant to section 5A of the United States

Housing Act of 1937.

(b) One-Year Renewable Grants.— 1

(1) IN GENERAL.—An eligible applicant that is a public

housing agency may apply for a 1-year grant under this chapter that, subject to the availability of appropriated amounts,

shall be renewed annually for a period of not more than 4 additional years, except that such renewal shall be contingent upon

the Secretary finding, upon an annual or more frequent review,

that the grantee agency is performing under the terms of the

grant and applicable laws in a satisfactory manner and meets

such other requirements as the Secretary may prescribe. The

Secretary may adjust the amount of any grant received or renewed under this paragraph to take into account increases or

decreases in amounts appropriated for these purposes or such

other factors as the Secretary determines to be appropriate.

(2) ELIGIBILITY AND PREFERENCE.—The Secretary may not

provide assistance under this chapter to an applicant that is a

public housing agency unless—

(A) the agency will use the grants to continue or expand activities eligible for assistance under this chapter,

as in effect immediately before the effective date under

section 503(a) of the Quality Housing and Work Responsibility Act of 1998 2, in which case the Secretary shall provide preference to such applicant; except that preference

under this subparagraph shall not preclude selection by

the Secretary of other meritorious applications that address urgent or serious crime problems nor be construed to

require continuation of activities determined by the Secretary to be unworthy of continuation; or

(B) the agency is in the class established under paragraph (3).

(3) PHA’S HAVING URGENT OR SERIOUS CRIME PROBLEMS.—

The Secretary shall, by regulations issued after notice and opportunity for public comment, set forth criteria for establishing

a class of public housing agencies that have urgent or serious

crime problems. The Secretary may reserve a portion of the

amount appropriated to carry out this chapter in each fiscal

year only for grants for public housing agencies in such class,

except that any amounts from such portion reserved that are

not obligated to agencies in the class shall be made available

only for agencies that are subject to a preference under paragraph (2)(A).

(4) INAPPLICABILITY TO FEDERALLY ASSISTED LOW-INCOME

HOUSING.—The provisions of this subsection shall not apply to

federally assisted low-income housing.

(c) CRITERIA.—The Secretary shall approve applications under

subsection (b) that are not subject to a preference under subsection

(b)(2)(A) on the basis of thresholds or criteria such as—
527 Sec. 5126 ANTI-DRUG ABUSE ACT OF 1988

(1) the extent of the drug-related or violent crime problem

in and around the public or federally assisted low-income housing project or projects proposed for assistance;

(2) the quality of the plan to address the crime problem in

the public or federally assisted low-income housing project or

projects proposed for assistance, including the extent to which

the plan includes initiatives that can be sustained over a period of several years;

(3) the capability of the applicant to carry out the plan;

and

(4) the extent to which tenants, the local government and

the local community support and participate in the design and

implementation of the activities proposed to be funded under

the application.

(d) FEDERALLY ASSISTED LOW-INCOME HOUSING.—In addition

to the selection criteria specified in subsection (c), the Secretary

may establish other criteria for the evaluation of applications submitted by owners of federally assisted low-income housing, except

that such additional criteria shall be designed only to reflect—

(1) relevant differences between the financial resources

and other characteristics of public housing authorities and

owners of federally assisted low-income housing, or

(2) relevant differences between the problem of drug-related or violent crime in public housing and the problem of

drug-related or violent crime in federally assisted low-income

housing.

(e) HIGH INTENSITY DRUG TRAFFICKING AREAS.—In evaluating

the extent of the drug-related crime problem pursuant to subsection (c), the Secretary may consider whether housing projects

proposed for assistance are located in a high intensity drug trafficking area designated pursuant to section 1005 of the Anti-Drug

Abuse Act of 1988.

SEC. 5126. ø42 U.S.C. 11905¿ DEFINITIONS.

For the purposes of this chapter:

(1) CONTROLLED SUBSTANCE.—The term controlled substance’’ has the meaning given such term in section 102 of the

Controlled Substance Act (21 U.S.C. 802).

(2) DRUG-RELATED CRIME.—The term ‘‘drug-related crime’’

means the illegal manufacture, sale, distribution, use, or possession with intent to manufacture, sell, distribute, or use a

controlled substance.

(3) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(4) FEDERALLY ASSISTED LOW-INCOME HOUSING.—The term

‘‘federally assisted low-income housing’’ means housing assisted under—

(A) section 221(d)(3), section 221(d)(4), or 236 of the

National Housing Act;

(B) section 101 of the Housing and Urban Development Act of 1965; or
Sec. 5127 ANTI-DRUG ABUSE ACT OF 1988 528

1So in law. Section 227(a)(2) of the Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 2000 (Public Law 106–74), as

added by section 175(d) of Public Law 106–113, 113 Stat. 1534, provides that this subparagraph

is amended ‘‘by striking ‘1937: or’ and inserting ‘1937.’ ’’. Because the matter to be struck does

not appear, the amendment could not be executed. 2The date of enactment was October 21, 1998.

(C) section 8 of the United States Housing Act of 1937;

or 1

(5) RECIPIENT.—The term ‘‘recipient’’, when used in reference to the Native American Housing Assistance and SelfDetermination Act of 1996, has the meaning given such term

in section 4 of such Act.

(6) INDIAN TRIBE.—The term ‘‘Indian tribe’’ has the meaning given the term in section 4(12) of the Native American

Housing Assistance and Self Determination Act of 1996, 25

U.S.C. 4103(12).

SEC. 5127. ø42 U.S.C. 11906¿ REPORTS.

(a) GRANTEE REPORTS.—The Secretary shall require grantees

under this chapter to provide periodic reports that include the obligation and expenditure of grant funds, the progress made by the

grantee in implementing the plan described in section 5125(a), and

any change in the incidence of drug-related crime in projects assisted under this chapter.

(b) HUD REPORTS.—The Secretary shall submit a report to the

Congress not later than 18 months after the date of the enactment

of the Quality Housing and Work Responsibility Act of 1998 2 describing the system used to distribute funding to grantees under

this section, which shall include descriptions of—

(1) the methodology used to distribute amounts made

available under this chapter among public housing agencies,

including provisions used to provide for renewals of ongoing

programs funded under this chapter; and

(2) actions taken by the Secretary to ensure that amounts

made available under this chapter are not used to fund baseline local government services, as described in section 5128(b).

(c) NOTICE OF FUNDING AWARDS.—The Secretary shall cause to

be published in the Federal Register notice of all grant awards

made pursuant to this chapter, which shall identify the grantees

and the amount of the grants. Such notice shall be published not

less frequently than annually.

SEC. 5128. ø42 U.S.C. 11907¿ MONITORING.

(a) IN GENERAL.—The Secretary shall audit and monitor the

programs funded under this chapter to ensure that assistance provided under this chapter is administered in accordance with the

provisions of this chapter.

(b) PROHIBITION OF FUNDING BASELINE SERVICES.—

(1) IN GENERAL.—Amounts provided under this chapter

may not be used to reimburse or support any local law enforcement agency or unit of general local government for the provision of services that are included in the baseline of services required to be provided by any such entity pursuant to a local

cooperation agreement under section 5(e)(2) of the United

States Housing Act of 1937 or any provision of an annual con-
529 Sec. 5142 ANTI-DRUG ABUSE ACT OF 1988

tributions contract for payments in lieu of taxation pursuant to

section 6(d) of such Act.

(2) DESCRIPTION.—Each public housing agency that receives grant amounts under this chapter shall describe, in the

report under section 5127(a), such baseline of services for the

unit of general local government in which the jurisdiction of

the agency is located.

(c) ENFORCEMENT.—The Secretary shall provide for the effective enforcement of this section, which may include the use of onsite monitoring, independent public audit requirements, certification by local law enforcement or local government officials regarding the performance of baseline services referred to in subsection (b), and entering into agreements with the Attorney General to achieve compliance, and verification of compliance, with the

provisions of this chapter.

SEC. 5129. ø42 U.S.C. 11908¿ AUTHORIZATION OF APPROPRIATIONS.

(a) IN GENERAL.—There are authorized to be appropriated to

carry out this chapter $310,000,000 for fiscal year 1999, and such

sums as may be necessary for fiscal years 2000, 2001, 2002, and

2003.

(b) SET-ASIDE FOR FEDERALLY ASSISTED LOW-INCOME HOUSING.—Of any amounts made available in any fiscal year to carry

out this chapter not more than 6.25 percent shall be available for

grants for federally assisted low-income housing.

(c) SET-ASIDE FOR TECHNICAL ASSISTANCE AND PROGRAM OVERSIGHT.—Of any amounts appropriated in any fiscal year to carry

out this chapter, amounts shall be available to the extent provided

in appropriations Acts to provide training, technical assistance,

contract expertise, program oversight, program assessment, execution, and other assistance for or on behalf of public housing agencies, recipients of assistance under the Native American Housing

Assistance and Self-Determination Act of 1996, resident organizations, and officials and employees of the Department (including

training and the cost of necessary travel for participants in such

training, by or to officials and employees of the Department and of

public housing agencies, and to residents and to other eligible

grantees). Assistance and other activities carried out using

amounts made available under this subsection may be provided directly or indirectly by grants, contracts, or cooperative agreements.

CHAPTER 3—DRUG-FREE PUBLIC HOUSING

SEC. 5141. ø42 U.S.C. 11901 note¿ SHORT TITLE.

This chapter may be cited as the ‘‘Drug-Free Public Housing

Act of 1988’’.

SEC. 5142. ø42 U.S.C. 11921¿ STATEMENT OF PURPOSE.

The purpose of this chapter is to reaffirm the principle that decent affordable shelter is a basic necessity, and the general welfare

of the Nation and the health and living standards of its people require better coordination and training in drug prevention programs

among the public officials and agencies responsible for administering the public housing programs of the Nation.
Sec. 5143 ANTI-DRUG ABUSE ACT OF 1988 530

1The date of enactment was November 18, 1988.

SEC. 5143. ø42 U.S.C. 11922¿ CLEARINGHOUSE ON DRUG ABUSE IN PUBLIC HOUSING.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development shall establish, in the Office of Public Housing in the

Department of Housing and Urban Development, a clearinghouse

to receive, collect, process, and assemble information regarding the

abuse of controlled substances in public housing projects.

(b) FUNCTIONS.—The clearinghouse established under subsection (a) shall—

(1) respond to inquiries by members of the public requesting assistance in investigating, studying, and working on the

problem of the abuse of controlled substances; and

(2) receive, collect, process, assemble, and provide information on programs, authorities, institutions, and agencies, that

may further assist members of the public requesting information from the clearinghouse.

SEC. 5144. ø42 U.S.C. 11923¿ REGIONAL TRAINING PROGRAM ON DRUG

ABUSE IN PUBLIC HOUSING.

(a) ESTABLISHMENT.—The Secretary shall establish a regional

training program for the training of public housing officials, to better prepare and educate the officials to confront the widespread

abuse of controlled substances in the communities in which the officials work.

(b) OPERATION.—The regional training program established

under subsection (a) shall be conducted within 12 months after the

date of the enactment of this Act 1 by a national training unit established by the Secretary.

SEC. 5145. ø42 U.S.C. 11924¿ DEFINITIONS.

For purposes of this chapter:

(1) CONTROLLED SUBSTANCE.—The term ‘‘controlled substance’’ has the meaning given such term in section 102 of the

Controlled Substances Act (21 U.S.C. 802).

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

SEC. 5146. ø42 U.S.C. 11925¿ REGULATIONS.

Not later than 6 months after the date of the enactment of this

Act, 1 the Secretary shall issue any regulations necessary to carry

out this chapter.

* * * * * * *
531

YOUTHBUILD PROGRAM

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 102–550; 106 Stat. 3723; 42 U.S.C. 12899 et seq.]

TITLE IV—HOMEOWNERSHIP AND OPPORTUNITY FOR PEOPLE EVERYWHERE PROGRAMS

* * * * * * *

Subtitle D—HOPE for Youth: Youthbuild

SEC. 451. ø42 U.S.C. 12899¿ STATEMENT OF PURPOSE.

It is the purpose of this subtitle—

(1) to expand the supply of permanent affordable housing

for homeless individuals and members of low- and very low-income families by utilizing the energies and talents of economically disadvantaged young adults;

(2) to provide economically disadvantaged young adults

with opportunities for meaningful work and service to their

communities in helping to meet the housing needs of homeless

individuals and members of low- and very low-income families;

(3) to enable economically disadvantaged young adults to

obtain the education and employment skills necessary to

achieve economic self-sufficiency; and

(4) to foster the development of leadership skills and commitment to community development among young adults in

low-income communities.

SEC. 452. ø42 U.S.C. 12899a¿ PROGRAM AUTHORITY.

The Secretary may make—

(1) planning grants to enable applicants to develop

Youthbuild programs; and

(2) implementation grants to enable applicants to carry out

Youthbuild programs.

SEC. 453. ø42 U.S.C. 12899b¿ PLANNING GRANTS.

(a) GRANTS.—The Secretary is authorized to make planning

grants to applicants for the purpose of developing Youthbuild programs under this subtitle. The amount of a planning grant under

this section may not exceed $150,000, except that the Secretary

may for good cause approve a grant in a higher amount.

(b) ELIGIBLE ACTIVITIES.—Planning grants may be used for activities to develop Youthbuild programs including—

(1) studies of the feasibility of a Youthbuild program;
Sec. 453 YOUTHBUILD PROGRAM 532

(2) establishment of consortia between youth training and

education programs and housing owners or developers, including any organizations specified in section 457(2), which will

participate in the Youthbuild program;

(3) identification and selection of a site for the Youthbuild

program;

(4) preliminary architectural and engineering work for the

Youthbuild program;

(5) identification and training of staff for the Youthbuild

program;

(6) planning for education, job training, and other services

that will be provided as part of the Youthbuild program;

(7) other planning, training, or technical assistance necessary in advance of commencing the Youthbuild program; and

(8) preparation of an application for an implementation

grant under this subtitle.

(c) APPLICATION.—

(1) FORM AND PROCEDURES.—An application for a planning

grant shall be submitted by an applicant in such form and in

accordance with such procedures as the Secretary shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for a planning grant, specifying the activities proposed to be carried out, the schedule for completing the activities, the personnel necessary to complete

the activities, and the amount of the grant requested;

(B) a description of the applicant and a statement of

its qualifications, including a description of the applicant’s

past experience with housing rehabilitation or construction

and with youth and youth education and employment

training programs, and its relationship with local unions

and apprenticeship programs, and other community

groups;

(C) identification and description of potential sites for

the program and the construction or rehabilitation activities that would be undertaken at such sites; potential

methods for identifying and recruiting youth participants;

potential educational and job training activities, work opportunities and other services for participants; and potential coordination with other Federal, State, and local housing and youth education and employment training activities including activities conducted by Indian tribes;

(D) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State

or unit of general local government within which the

project is located; and

(E) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation
533 Sec. 454 YOUTHBUILD PROGRAM

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(d) SELECTION CRITERIA.—The Secretary shall, by regulation,

establish selection criteria for a national competition for assistance

under this section, which shall include—

(1) the qualifications or potential capabilities of the applicant;

(2) the potential of the applicant for developing a successful and affordable Youthbuild program;

(3) the need for the prospective program, as determined by

the degree of economic distress—

(A) of the community from which participants would

be recruited (such as poverty, youth unemployment, and

number of individuals who have dropped out of high

school); and

(B) of the community in which the housing proposed

to be constructed or rehabilitated would be located (such

as incidence of homelessness, shortage of affordable housing, and poverty); and

(4) such other factors that the Secretary shall require that

(in the determination of the Secretary) are appropriate for purposes of carrying out the program established by this subtitle

in an effective and efficient manner.

SEC. 454. ø42 U.S.C. 12899c¿ IMPLEMENTATION GRANTS.

(a) GRANTS.—The Secretary is authorized to make implementation grants to applicants for the purpose of carrying out Youthbuild

programs approved under this subtitle.

(b) ELIGIBLE ACTIVITIES.—Implementation grants may be used

to carry out Youthbuild programs, including the following activities:

(1) Architectural and engineering work.

(2) Acquisition, rehabilitation, acquisition and rehabilitation, or construction of housing and related facilities to be used

for the purposes of providing homeownership under subtitle B

and subtitle C of this title, residential housing for homeless individuals, and low- and very low-income families, or transitional housing for persons who are homeless, have disabilities,

are ill, are deinstitutionalized, or have other special needs.

(3) Administrative costs of the applicant, which may not

exceed 15 percent of the amount of assistance provided under

this section, or such higher percentage as the Secretary determines is necessary to support capacity development by a private nonprofit organization.

(4) Education and job training services and activities

including—

(A) work experience and skills training, coordinated, to

the maximum extent feasible, with preapprenticeship and

apprenticeship programs, in the construction and rehabilitation activities described in subsection (b)(2);

(B) services and activities designed to meet the educational needs of participants, including—

(i) basic skills instruction and remedial education;
Sec. 454 YOUTHBUILD PROGRAM 534

(ii) bilingual education for individuals with limited-English proficiency;

(iii) secondary education services and activities designed to lead to the attainment of a high school diploma or its equivalent; and

(iv) counseling and assistance in attaining postsecondary education and required financial aid;

(C) counseling services and related activities;

(D) activities designed to develop employment and

leadership skills, including support for youth councils; and

(E) support services and need-based stipends necessary to enable individuals to participate in the program

and, for a period not to exceed 12 months after completion

of training, to assist participants through support services

in retaining employment.

(5) Wage stipends and benefits provided to participants.

(6) Funding of operating expenses and replacement reserves of the property covered by the Youthbuild program.

(7) Legal fees.

(8) Defraying costs for the ongoing training and technical

assistance needs of the recipient that are related to developing

and carrying out the Youthbuild program.

(c) APPLICATION.— (1) FORM AND PROCEDURE.—An application for an implementation grant shall be submitted by an applicant in such

form and in accordance with such procedures as the Secretary

shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for an implementation grant, specifying

the amount of the grant requested and its proposed uses;

(B) a description of the applicant and a statement of

its qualifications, including a description of the applicant’s

past experience with housing rehabilitation or construction

and with youth and youth education and employment

training programs, and its relationship with local unions

and apprenticeship programs, and other community

groups;

(C) a description of the proposed site for the program;

(D) a description of the educational and job training

activities, work opportunities, and other services that will

be provided to participants;

(E) a description of the proposed construction or rehabilitation activities to be undertaken and the anticipated

schedule for carrying out such activities;

(F) a description of the manner in which eligible

youths will be recruited and selected, including a description of arrangements which will be made with communitybased organizations, State and local educational agencies,

including agencies of Indian tribes, public assistance agencies, the courts of jurisdiction for status and youth offenders, shelters for homeless individuals and other agencies

that serve homeless youth, foster care agencies, and other

appropriate public and private agencies;
535 Sec. 454 YOUTHBUILD PROGRAM

(G) a description of the special outreach efforts that

will be undertaken to recruit eligible young women (including young women with dependent children);

(H) a description of how the proposed program will be

coordinated with other Federal, State, and local activities

and activities conducted by Indian tribes, including vocational, adult and bilingual education programs, job training provided with funds available under title I of the

Workforce Investment Act of 1998 and the Family Support

Act of 1988, and housing and community development programs, including programs that receive assistance under

section 106 of the Housing and Community Development

Act of 1974;

(I) assurances that there will be a sufficient number of

adequately trained supervisory personnel in the program

who have attained the level of journeyman or its equivalent;

(J) a description of the applicant’s relationship with

local building trade unions regarding their involvement in

training, and the relationship of the Youthbuild program

with established apprenticeship programs;

(K) a description of activities that will be undertaken

to develop the leadership skills of participants;

(L) a detailed budget and a description of the system

of fiscal controls and auditing and accountability procedures that will be used to ensure fiscal soundness;

(M) a description of the commitments for any additional resources to be made available to the program from

the applicant, from recipients of other Federal, State or

local housing and community development assistance who

will sponsor any part of the construction, rehabilitation,

operation and maintenance, or other housing and community development activities undertaken as part of the program, or from other Federal, State or local activities and

activities conducted by Indian tribes, including, but not

limited to, vocational, adult and bilingual education programs, and job training provided with funds available

under title I of the Workforce Investment Act of 1998 and

the Family Support Act of 1988;

(N) identification and description of the financing proposed for any—

(i) rehabilitation;

(ii) acquisition of the property; or

(iii) construction;

(O) identification and description of the entity that

will operate and manage the property;

(P) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State

or unit of general local government within which the

project is located; and
Sec. 454 YOUTHBUILD PROGRAM 536

(Q) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(d) SELECTION CRITERIA.—The Secretary shall establish selection criteria for assistance under this section, which shall include—

(1) the qualifications or potential capabilities of the applicant;

(2) the feasibility of the Youthbuild program;

(3) the potential for developing a successful Youthbuild

program;

(4) the need for the prospective project, as determined by

the degree of economic distress of the community from which

participants would be recruited (such as poverty, youth unemployment, number of individuals who have dropped out of high

school) and of the community in which the housing proposed

to be constructed or rehabilitated would be located (such as incidence of homelessness, shortage of affordable housing, poverty);

(5) the apparent commitment of the applicant to leadership

development, education, and training of participants;

(6) the inclusion of previously homeless tenants in the

housing provided;

(7) the commitment of other resources to the program by

the applicant and by recipients of other Federal, State or local

housing and community development assistance who will sponsor any part of the construction, rehabilitation, operation and

maintenance, or other housing and community development activities undertaken as part of the program, or by other Federal,

State or local activities and activities conducted by Indian

tribes, including, but not limited to, vocational, adult and bilingual education programs, and job training provided with funds

available under title I of the Workforce Investment Act of 1998

and the Family Support Act of 1988; and

(8) such other factors as the Secretary determines to be appropriate for purposes of carrying out the program established

by this subtitle in an effective and efficient manner.

(e) PRIORITY FOR APPLICANTS WHO OBTAIN HOUSING MONEY

FROM OTHER SOURCES.—The Secretary shall give priority in the

award of grants under this section to applicants to the extent that

they propose to finance activities described in paragraphs (1), (2),

and (6) of subsection (b) from funds provided from Federal, State,

local, or private sources other than assistance under this subtitle.

(f) APPROVAL.—The Secretary shall notify each applicant, not

later than 4 months after the date of the submission of the application, whether the application is approved or not approved.

(g) COMBINED PLANNING AND IMPLEMENTATION GRANT APPLICATION PROCEDURE.—The Secretary shall develop a procedure

under which an applicant may apply at the same time and in a single application for a planning grant and an implementation grant,

with receipt of the implementation grant conditioned on successful

completion of the activities funded by the planning grant.
537 Sec. 455 YOUTHBUILD PROGRAM

1So in law. Probably intended to refer to this subtitle.

SEC. 455. ø42 U.S.C. 12899d¿ YOUTHBUILD PROGRAM REQUIREMENTS.

(a) RESIDENTIAL RENTAL HOUSING.—Each residential rental

housing project receiving assistance under this subtitle shall meet

the following requirements:

(1) OCCUPANCY BY LOW- AND VERY LOW-INCOME FAMILIES.—

In the project—

(A) at least 90 percent of the units shall be occupied,

or available for occupancy, by individuals and families

with incomes less than 60 percent of the area median income, adjusted for family size; and

(B) the remaining units shall be occupied, or available

for occupancy, by low-income families.

(2) TENANT PROTECTIONS.—

(A) LEASE.—The lease between a tenant and an owner

of residential rental housing assisted under this subtitle

shall be for not less than 1 year, unless otherwise mutually agreed to by the tenant and the owner, and shall contain such terms and conditions as the Secretary shall determine to be appropriate.

(B) TERMINATION OF TENANCY.—An owner shall not

terminate the tenancy or refuse to renew the lease of a

tenant of residential rental housing assisted under this

title 1 except for serious or repeated violation of the terms

and conditions of the lease, for violation of applicable Federal, State, or local law, or for other good cause. Any termination or refusal to renew must be preceded by not less

than 30 days by the owner’s service upon the tenant of a

written notice specifying the grounds for the action.

(C) MAINTENANCE AND REPLACEMENT.—The owner of

residential rental housing assisted under this subtitle shall

maintain the premises in compliance with all applicable

housing quality standards and local code requirements.

(D) TENANT SELECTION.—The owner of residential

rental housing assisted under this subtitle shall adopt

written tenant selection policies and criteria that—

(i) are consistent with the purpose of providing

housing for very low-income and low-income families

and individuals;

(ii) are reasonably related to program eligibility

and the applicant’s ability to perform the obligations

of the lease;

(iii) give reasonable consideration to the housing

needs of families that would qualify for a preference

under any system of preferences established under

section 6(c)(1) of the United States Housing Act of

1937; and

(iv) provide for (I) the selection of tenants from a

written waiting list in the chronological order of their

application, to the extent practicable, and (II) for the

prompt notification in writing of any rejected applicant

of the grounds for any rejection.
Sec. 455 YOUTHBUILD PROGRAM 538

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

(3) LIMITATION ON RENTAL PAYMENTS.—Tenants in each

project shall not be required to pay rent in excess of the

amount provided under section 3(a) of the United States Housing Act of 1937.

(4) TENANT PARTICIPATION PLAN.—For each project owned

by a nonprofit organization, the organization shall provide a

plan for and follow a program of tenant participation in management decisions.

(5) PROHIBITION AGAINST DISCRIMINATION.—A unit in a

project assisted under this subtitle may not be refused for leasing to a family holding tenant-based assistance under section

8 of the United States Housing Act of 1937 because of the status of the prospective tenant as a holder of such assistance.

(b) TRANSITIONAL HOUSING.—Each transitional housing project

receiving assistance under this subtitle shall adhere to the requirements regarding service delivery, housing standards, and rent limitations applicable to comparable housing receiving assistance

under title IV of the Stewart B. McKinney Homeless Assistance

Act 1.

(c) LIMITATIONS ON PROFITS FOR RENTAL AND TRANSITIONAL

HOUSING.—

(1) MONTHLY RENTAL LIMITATION.—The aggregate monthly

rental for each eligible project may not exceed the operating

costs of the project (including debt service, management, adequate reserves, and other operating costs) plus a 6 percent return on any equity investment of the project owner.

(2) PROFIT LIMITATIONS ON PARTNERS.—A nonprofit organization that receives assistance under this subtitle for a project

shall agree to use any profit received from the operation, sale,

or other disposition of the project for the purpose of providing

housing for low- and moderate-income families. Profit-motivated partners in a nonprofit partnership may receive—

(A) not more than a 6 percent return on their equity

investment from project operations; and

(B) upon disposition of the project, not more than an

amount equal to their initial equity investment plus a return on that investment equal to the increase in the Consumer Price Index for the geographic location of the project

since the time of the initial investment of such partner in

the project.

(d) HOMEOWNERSHIP.—Each homeownership project that receives assistance under this subtitle shall comply with the requirements of subtitle B or subtitle C of this title.

(e) RESTRICTIONS ON CONVEYANCE.—The ownership interest in

a project that receives assistance under this subtitle may not be

conveyed unless the instrument of conveyance requires a subsequent owner to comply with the same restrictions imposed upon

the original owner.
539 Sec. 456 YOUTHBUILD PROGRAM

1So in law.

2So in law. There is no subparagraph (F) of such section 454(b)(4). Probably intended to refer

to subparagraphs (B) through (E) of such section.

(f) CONVERSION OF TRANSITIONAL HOUSING.—The Secretary

may waive the requirements of subsection (b) to permit the conversion of a transitional housing project to a permanent housing

project only if such housing would meet the requirements for residential rental housing specified in this section.

(g) PERIOD OF RESTRICTIONS.—A project that receives assistance under this subtitle shall comply with the requirements of this

section for the remaining useful life of the property.

SEC. 456. ø42 U.S.C. 12899e¿ ADDITIONAL PROGRAM REQUIREMENTS.

(a) ELIGIBLE PARTICIPANTS.—

(1) IN GENERAL.—Except as provided in paragraph (2), an

individual may participate in a Youthbuild program receiving

assistance under this subtitle only if such individual is—

(A) 16 to 24 years of age, inclusive;

(B) a very low-income individual or a member of a

very low-income family; and

(C) an individual who has dropped out of high school.

(2) EXCEPTION FOR INDIVIDUALS NOT MEETING INCOME OR

EDUCATIONAL NEED REQUIREMENTS.—Not more than 25 percent

of the participants in such program may be individuals who do

not meet the requirements of either paragraphs 1 (1)(B) or (C),

but who have educational needs despite attainment of a high

school diploma or its equivalent.

(3) PARTICIPATION LIMITATION.—Any eligible individual selected for full-time participation in a Youthbuild program may

be offered full-time participation for a period of not less than

6 months and not more than 24 months.

(b) MINIMUM TIME DEVOTED TO EDUCATIONAL SERVICES AND

ACTIVITIES.—A Youthbuild program receiving assistance under this

subtitle shall be structured so that 50 percent of the time spent by

participants in the program is devoted to educational services and

activities, such as those specified in subparagraphs (B) through (F)

of section 454(b)(4). 2

(c) AUTHORITY RESTRICTION.—No provision of this subtitle may

be construed to authorize any agency, officer, or employee of the

United States to exercise any direction, supervision, or control over

the curriculum, program of instruction, administration, or personnel of any educational institution, school, or school system, or

over the selection of library resources, textbooks, or other printed

or published instructional materials by any educational institution

or school system.

(d) STATE AND LOCAL STANDARDS.—All educational programs

and activities supported with funds provided under this subtitle

shall be consistent with applicable State and local educational

standards. Standards and procedures with respect to the awarding

of academic credit and certifying educational attainment in such

programs shall be consistent with applicable State and local educational standards.

(e) WAGES, LABOR STANDARDS, AND NONDISCRIMINATION.—To

the extent consistent with the provisions of this subtitle, sections
Sec. 457 YOUTHBUILD PROGRAM 540

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

142, 143 and 167 of the Job Training Partnership Act (as in effect

on the day before the date of enactment of the Workforce Investment Act of 1998), relating to wages and benefits, labor standards,

and nondiscrimination, shall apply to the programs conducted

under this subtitle as if such programs were conducted under the

Job Training Partnership Act (as in effect on the day before the

date of enactment of the Workforce Investment Act of 1998). This

section may not be construed to prevent a recipient of a grant

under this subtitle from using funds from non-Federal sources to

increase wages and benefits under such programs, if appropriate.

SEC. 457. ø42 U.S.C. 12899f¿ DEFINITIONS.

For purposes of this subtitle:

(1) ADJUSTED INCOME.—The term ‘‘adjusted income’’ has

the meaning given the term in section 3(b) of the United States

Housing Act of 1937.

(2) APPLICANT.—The term ‘‘applicant’’ means a public or

private nonprofit agency, including—

(A) a community-based organization;

(B) an administrative entity designated under section

103(b)(1)(B) of the Job Training Partnership Act;

(C) a community action agency;

(D) a State and local housing development agency;

(E) a community development corporation;

(F) a State and local youth service and conservation

corps; and

(G) any other entity eligible to provide education and

employment training under other Federal employment

training programs.

(3) COMMUNITY-BASED ORGANIZATION.—The term ‘‘community-based organization’’ means a private nonprofit organization that—

(A) maintains, through significant representation on

the organization’s governing board or otherwise, accountability to low-income community residents and, to the extent practicable, low-income beneficiaries of programs receiving assistance under this subtitle; and

(B) has a history of serving the local community or

communities where a program receiving assistance under

this subtitle is located.

(4) HOMELESS INDIVIDUAL.—The term ‘‘homeless individual’’ has the meaning given the term in section 103 of the

Stewart B. McKinney Homeless Assistance Act 1.

(5) HOUSING DEVELOPMENT AGENCY.—The term ‘‘housing

development agency’’ means any agency of a State or local government, or any private nonprofit organization that is engaged

in providing housing for homeless or low-income families.

(6) INCOME.—The term ‘‘income’’ has the meaning given

the term in section 3(b) of the United States Housing Act of

1937.
541 Sec. 457 YOUTHBUILD PROGRAM

(7) INDIAN TRIBE.—The term ‘‘Indian tribe’’ has the same

meaning given such term in section 102(a)(17) of the Housing

and Community Development Act of 1974 (42 U.S.C.

5302(a)(17)).

(8) INDIVIDUAL WHO HAS DROPPED OUT OF HIGH SCHOOL.— The term ‘‘individual who has dropped out of high school’’

means an individual who is neither attending any school nor

subject to a compulsory attendance law and who has not received a secondary school diploma or a certificate of equivalency for such diploma.

(9) INSTITUTION OF HIGHER EDUCATION.—The term ‘‘institution of higher education’’ has the meaning given the term in

section 101 of the Higher Education Act of 1965.

(10) LIMITED-ENGLISH PROFICIENCY.—The term ‘‘limitedEnglish proficiency’’ has the meaning given the term in section

7004(a) of the Elementary and Secondary Education Act of

1965.

(11) LOW-INCOME FAMILY.—The term ‘‘low-income family’’

has the meaning given the term in section 3(b) of the United

States Housing Act of 1937.

(12) OFFENDER.—The term ‘‘offender’’ means any adult or

juvenile with a record of arrest or conviction for a criminal offense.

(13) QUALIFIED NONPROFIT AGENCY.—The term ‘‘qualified

public or private nonprofit agency’’ means any nonprofit agency

that has significant prior experience in the operation of

projects similar to the Youthbuild program authorized under

this subtitle and that has the capacity to provide effective technical assistance.

(14) RELATED FACILITIES.—The term ‘‘related facilities’’ includes cafeterias or dining halls, community rooms or buildings, appropriate recreation facilities, and other essential service facilities.

(15) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(16) STATE.—The term ‘‘State’’ means any of the several

States, the District of Columbia, the Commonwealth of Puerto

Rico, the Commonwealth of the Northern Mariana Islands, the

Virgin Islands, Guam, American Samoa, the Trust Territories

of the Pacific Islands, or any other territory or possession of

the United States.

(17) TRANSITIONAL HOUSING.—The term ‘‘transitional housing’’ means a project that has as its purpose facilitating the

movement of homeless individuals and families to independent

living within a reasonable amount of time. Transitional housing includes housing primarily designed to serve deinstitutionalized homeless individuals and other homeless individuals

with mental or physical disabilities and homeless families with

children.

(18) VERY LOW-INCOME FAMILY.—The term ‘‘very low-income family’’ has the meaning given the term in section 3(b)

of the United States Housing Act of 1937.

(19) YOUTHBUILD PROGRAM.—The term ‘‘Youthbuild program’’ means any program that receives assistance under this
Sec. 458 YOUTHBUILD PROGRAM 542

subtitle and provides disadvantaged youth with opportunities

for employment, education, leadership development, and training in the construction or rehabilitation of housing for homeless individuals and members of low- and very low-income families.

SEC. 458. ø42 U.S.C. 12899g¿ MANAGEMENT AND TECHNICAL ASSISTANCE.

(a) SECRETARY ASSISTANCE.—The Secretary may enter into

contracts with a qualified public or private nonprofit agency to provide assistance to the Secretary in the management, supervision,

and coordination of Youthbuild programs receiving assistance

under this subtitle.

(b) SPONSOR ASSISTANCE.—The Secretary shall enter into contracts with a qualified public or private nonprofit agency to provide

appropriate training, information, and technical assistance to sponsors of programs assisted under this subtitle.

(c) APPLICATION PREPARATION.—Technical assistance may also

be provided in the development of program proposals and the preparation of applications for assistance under this subtitle to eligible

entities which intend or desire to submit such applications. Community-based organizations shall be given first priority in the provision of such assistance.

(d) RESERVATION OF FUNDS.—In each fiscal year, the Secretary

shall reserve 5 percent of the amounts available for activities under

this subtitle pursuant to section 402 to carry out subsections (b)

and (c) of this section.

SEC. 459. ø42 U.S.C. 12899h¿ CONTRACTS.

Each Youthbuild program shall carry out the services and activities under this subtitle directly or through arrangements or

under contracts with administrative entities designated under section 103(b)(1)(B) of the Job Training Partnership Act, with State

and local educational agencies, institutions of higher education,

State and local housing development agencies, or with other public

agencies, including agencies of Indian tribes, and private organizations.

SEC. 460. ø42 U.S.C. 12899h–1¿ INELIGIBILITY OF INDIAN TRIBES.

Indian tribes, Indian housing authorities, and other agencies

primarily serving Indians or Indian areas shall not be eligible applicants for amounts made available for assistance under this subtitle for fiscal year 1998 and fiscal years thereafter.

SEC. 461. ø42 U.S.C. 12899i¿ REGULATIONS.

The Secretary shall issue any regulations necessary to carry

out this subtitle.
543

STANDARDS FOR RESIDENCY, OCCUPANCY PREFERENCES, AND SERVICE COORDINATORS IN FEDERALLY ASSISTED HOUSING

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3820; 42 U.S.C. 13601 et seq.]

TITLE VI—HOUSING FOR ELDERLY PERSONS AND PERSONS WITH DISABILITIES

* * * * * * *

Subtitle C—Standards and Obligations of

Residency in Federally Assisted Housing

SEC. 641. ø42 U.S.C. 13601¿ COMPLIANCE BY OWNERS AS CONDITION

OF FEDERAL ASSISTANCE.

The Secretary of Housing and Urban Development shall require owners of federally assisted housing (as such term is defined

in section 683(2)), as a condition of receiving housing assistance for

such housing, to comply with the procedures and requirements established under this subtitle.

SEC. 642. ø42 U.S.C. 13602¿ COMPLIANCE WITH CRITERIA FOR OCCUPANCY AS REQUIREMENT FOR TENANCY.

In selecting tenants for occupancy of units in federally assisted

housing, an owner of such housing shall utilize the criteria for occupancy in federally assisted housing established by the Secretary,

by regulation, under section 643. If an owner determines that an

applicant for occupancy in the housing does not meet such criteria,

the owner may deny such applicant occupancy.

SEC. 643. ø42 U.S.C. 13603¿ ESTABLISHMENT OF CRITERIA FOR OCCUPANCY.

(a) TASK FORCE.—

(1) ESTABLISHMENT.—To assist the Secretary in establishing reasonable criteria for occupancy in federally assisted

housing, the Secretary shall establish a task force to review all

rules, policy statements, handbooks, technical assistance

memoranda, and other relevant documents issued by the Department of Housing and Urban Development on the standards

and obligations governing residency in federally assisted housing and make recommendations to the Secretary for the establishment of such criteria for occupancy.
Sec. 643 FED. ASSISTED HOUSING OCCUPANCY STANDARDS 544

(2) MEMBERS.—The Secretary shall appoint members to

the task force, which shall include individuals representing the

interests of owners, managers, and tenants of federally assisted housing, public housing agencies, owner and tenant advocacy organizations, persons with disabilities and disabled

families, organizations assisting homeless individuals, and social service, mental health, and other nonprofit servicer providers who serve federally assisted housing.

(3) COMPENSATION.—Members of the task force shall not

receive compensation for serving on the task force.

(4) DUTIES.—The task force shall—

(A) review all existing standards, regulations, and

guidelines governing occupancy and tenant selection policies in federally assisted housing;

(B) review all existing standards, regulations, and

guidelines governing lease provisions and other rules of occupancy for federally assisted housing;

(C) determine whether the standards, regulations, and

guidelines reviewed under subparagraphs (A) and (B) provide sufficient guidance to owners and managers of federally assisted housing to—

(i) develop procedures for preselection inquiries

sufficient to determine the capacity of applicants to

comply with reasonable lease terms and conditions of

occupancy;

(ii) utilize leases that prohibit behavior which endangers the health or safety of other tenants or violates the rights of other tenants to peaceful enjoyment

of the premises;

(iii) assess the need to provide, and appropriate

measures for providing, reasonable accommodations

required under the Fair Housing Act and section 504

of the Rehabilitation Act of 1973 for persons with various types of disabilities; and

(iv) comply with civil rights laws and regulations;

(D) propose criteria for occupancy in federally assisted

housing, standards for the reasonable performance and behavior of tenants of federally assisted housing, compliance

standards consistent with the reasonable accommodation

of the requirements of the Fair Housing Act and section

504 of the Rehabilitation Act of 1973, standards for compliance with other civil rights laws, and procedures for the

eviction of tenants not complying with such standards consistent with sections 6 and 8 of the United States Housing

Act of 1937; and

(E) report to the Congress and the Secretary of Housing and Urban Development pursuant to paragraph (7).

(5) PROCEDURE.—In carrying out its duties, the task force

shall hold public hearings and receive written comments for a

period of not less than 60 days.

(6) SUPPORT.—The Secretary of Housing and Urban Development shall cooperate fully with the task force and shall provide support staff and office space to assist the task force in

carrying out its duties.
545 Sec. 644 FED. ASSISTED HOUSING OCCUPANCY STANDARDS

1The date of enactment was October 28, 1992.

(7) REPORTS.—Not later than 3 months after the date of

enactment of this Act 1, the task force shall submit to the Secretary and the Congress a preliminary report describing its initial actions. Not later than 6 months after the date of enactment of this Act 1, the task force shall submit a report to the

Secretary and the Congress, which shall include—

(A) a description of its findings; and

(B) recommendations to revise such standards, regulations, and guidelines to provide accurate and complete

guidance to owners and managers of federally assisted

housing as determined necessary under paragraph (4).

(b) RULEMAKING.— (1) AUTHORITY.—The Secretary shall, by regulation, establish criteria for selection of tenants for occupancy in federally

assisted housing and lease provisions for such housing.

(2) STANDARDS.—The criteria shall provide sufficient guidance to owners and managers of federally assisted housing to

enable them to (A) select tenants capable of complying with

reasonable lease terms, (B) utilize leases prohibiting behavior

which endangers the health or safety of others or violates the

right of other tenants to peaceful enjoyment of the premises,

(C) comply with legal requirements to make reasonable accommodations for persons with disabilities, and (D) comply with

civil rights laws. The criteria shall be consistent with the requirements under subsections (k) and (l) of section 6 and section 8(d)(1) of the United States Housing Act of 1937 and any

similar contract and lease requirements for federally assisted

housing. In establishing the criteria, the Secretary shall take

into consideration the report of the task force under subsection

(a)(7).

(3) PROCEDURE.—Not later than 90 days after the submission of the final report under subsection (a)(7), the Secretary

shall issue a notice of proposed rulemaking of the regulations

under this subsection providing for notice and opportunity for

public comment regarding the regulations, pursuant to the provisions of section 553 of title 5, United States Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such section).

The duration of the period for public comment under such section 553 shall not be less than 60 days. The Secretary shall

issue final regulations under this subsection not later than the

expiration of the 60-day period beginning upon the conclusion

of the comment period, which shall take effect upon issuance.

SEC. 644. ø42 U.S.C. 13604¿ ASSISTED APPLICATIONS.

(a) AUTHORITY.—The Secretary shall provide that any individual or family applying for occupancy in federally assisted housing may include in the application for the housing the name, address, phone number, and other relevant information of a family

member, friend, or social, health, advocacy, or other organization,

and that the owner shall treat such information as confidential.

(b) MAINTENANCE OF INFORMATION.—The Secretary shall require the owner of any federally assisted housing receiving an application including such information to maintain such information
Sec. 651 ELDERLY/DISABLED OCCUPANCY IN SEC. 8 HOUSING 546

for any applicants who become tenants of the housing, for the purposes of facilitating contact by the owner with such person or organization to assist in providing any services or special care for the

tenant and assist in resolving any relevant tenancy issues arising

during the tenancy of such tenant.

(c) LIMITATIONS.—An owner of federally assisted housing may

not require any individual or family applying for occupancy in the

housing to provide the information described in subsection (a).

Subtitle D—Authority To Provide Preferences for Elderly Residents and Units

for Disabled Residents in Certain Section 8 Assisted Housing

SEC. 651. ø42 U.S.C. 13611¿ AUTHORITY.

Notwithstanding any other provision of law, an owner of a covered section 8 housing project (as such term is defined in section

659) designed primarily for occupancy by elderly families may, in

selecting tenants for units in the project that become available for

occupancy, give preference to elderly families who have applied for

occupancy in the housing, subject to the requirements of this subtitle.

SEC. 652. ø42 U.S.C. 13612¿ RESERVATION OF UNITS FOR DISABLED

FAMILIES.

(a) REQUIREMENT.—Notwithstanding any other provision of

law, for any project for which an owner gives preference in occupancy to elderly families pursuant to section 651, such owner shall

(subject to sections 653, 654, and 655) reserve units in the project

for occupancy only by disabled families who are not elderly or nearelderly families (and who have applied for occupancy in the housing) in the number determined under subsection (b).

(b) NUMBER OF UNITS.—Each owner required to reserve units

in a project for occupancy under subsection (a) shall reserve a number of units in the project that is not less than the lesser of—

(1) the number of units equivalent to the higher of—

(A) the percentage of units in the project that were occupied by such disabled families upon the date of the enactment of this Act; or

(B) the percentage of units in the project that were occupied by such families upon January 1, 1992; or

(2) 10 percent of the number of units in the project.

SEC. 653. ø42 U.S.C. 13613¿ SECONDARY PREFERENCES.

(a) INSUFFICIENT ELDERLY FAMILIES.—If an owner of a covered

section 8 housing project in which elderly families are given a preference for occupancy pursuant to section 651 determines (in accordance with regulations established by the Secretary) that there are

insufficient numbers of elderly families who have applied for occupancy in the housing to fill all the units in the project not reserved

under section 652, the owner may give preference for occupancy of

such units to disabled families who are near-elderly families and

have applied for occupancy in the housing.
547 Sec. 657 ELDERLY/DISABLED OCCUPANCY IN SEC. 8 HOUSING

(b) INSUFFICIENT NON-ELDERLY DISABLED FAMILIES.—If an

owner of a covered section 8 housing project in which elderly families are given a preference for occupancy pursuant to section 651

determines (in accordance with regulations established by the Secretary) that there are insufficient numbers of disabled families who

are not elderly or near-elderly families and have applied for occupancy in the housing to fill all the units in the project reserved

under section 652, the owner may give preference for occupancy of

units so reserved to disabled families who are near-elderly families

and have applied for occupancy in the housing.

SEC. 654. ø42 U.S.C. 13614¿ GENERAL AVAILABILITY OF UNITS.

If an owner of a covered section 8 housing project in which disabled families who are near-elderly families are given a preference

for occupancy pursuant to subsection (a) or (b) of section 653 determines (in accordance with regulations established by the Secretary)

that there are an insufficient number of such families to fill all the

units in the project for which the preference is applicable, the

owner shall make such units generally available for occupancy by

families who have applied, and are eligible, for occupancy in the

housing, without regard to the preferences established pursuant to

this subtitle.

SEC. 655. ø42 U.S.C. 13615¿ PREFERENCE WITHIN GROUPS.

Among disabled families qualifying for occupancy in units reserved under section 652, and among elderly families and near-elderly families qualifying for preference for occupancy pursuant to

section 651 or 653, preference for occupancy in units that are assisted under section 8 of the United States Housing Act of 1937

shall be given to disabled families according to any preferences established under any system established under section 8(d)(1)(A) by

the public housing agency.

SEC. 656. ø42 U.S.C. 13616¿ PROHIBITION OF EVICTIONS.

Any tenant who, except for reservation of a percentage of the

units of a project pursuant to section 652 or any preference for occupancy established pursuant to this subtitle, is lawfully residing

in a dwelling unit in a covered section 8 housing project, may not

be evicted or otherwise required to vacate such unit because of the

reservation or preferences or because of any action taken by the

Secretary of Housing and Urban Development or the owner of the

project pursuant to this subtitle.

SEC. 657. ø42 U.S.C. 13617¿ TREATMENT OF COVERED SECTION 8

HOUSING NOT SUBJECT TO ELDERLY PREFERENCE.

If an owner of any covered section 8 housing project designed

primarily for occupancy by elderly families does not give preference

in occupancy to elderly families as authorized in this subtitle, then

elderly families (as such term was defined in section 3 of the

United States Housing Act of 1937 before the date of the enactment of this Act) shall be eligible for occupancy in such housing to

the same extent that such families were eligible before the date of

the enactment of this Act.
Sec. 658 FED. ASSISTED HOUSING SERVICE COORDINATORS 548

1The date of enactment was October 28, 1992.

SEC. 658. ø42 U.S.C. 13618¿ TREATMENT OF OTHER FEDERALLY ASSISTED HOUSING.

(a) RESTRICTED OCCUPANCY.—An owner of any federally assisted project (or portion of a project) as described in subparagraphs (D), (E), and (F) of section 683(2) that was designed for occupancy by elderly families may continue to restrict occupancy in

such project (or portion) to elderly families in accordance with the

rules, standards, and agreements governing occupancy in such

housing in effect at the time of the development of the housing.

(b) PROHIBITION OF EVICTIONS.—Any tenant who is lawfully residing in a dwelling unit in a housing project described in subsection (a) may not be evicted or otherwise required to vacate such

unit because of any reservation or preferences under this subtitle

or because of any action taken by the Secretary of Housing and

Urban Development or the owner of the project pursuant to this

subtitle.

SEC. 659. ø42 U.S.C. 13619¿ COVERED SECTION 8 HOUSING.

For purposes of this subtitle, the term ‘‘covered section 8 housing’’ means housing described in section 683(2)(G) that was originally designed for occupancy by elderly families.

SEC. 660. SECTION 8 PREFERENCE.

Section 8(d) of the United States Housing Act of 1937 (42

U.S.C. 1437f(d)) is amended by adding at the end the following new

paragraph:

‘‘(4) A public housing agency that serves more than one unit

of general local government may, at the discretion of the agency,

in allocating assistance under this section, give priority to disabled

families that are not elderly families.’’.

SEC. 661. ø42 U.S.C. 13620¿ STUDY.

The Secretary of Housing and Urban Development shall conduct a study to determine the extent to which Federal housing programs serve elderly families, disabled families, and families with

children, in relation to the need of such families who are eligible

for assistance under such programs. The Secretary shall submit a

report to the Congress describing the study and the findings of the

study not later than the expiration of the 1-year period beginning

on the date of the enactment of this Act. 1

Subtitle E—Service Coordinators for Elderly and Disabled Residents of Federally Assisted Housing

SEC. 671. ø42 U.S.C. 13631¿ REQUIREMENT TO PROVIDE SERVICE COORDINATORS.

(a) IN GENERAL.—To the extent that amounts are made available for providing service coordinators under this section, the Secretary shall require owners of covered federally assisted housing

projects (as such term is defined in subsection (d)) receiving such

amounts to provide for employing or otherwise retaining the services of one or more individuals to coordinate the provision of sup-
549 Sec. 671 FED. ASSISTED HOUSING SERVICE COORDINATORS

portive services for elderly and disabled families residing in the

projects (in this section referred to as a ‘‘service coordinator’’). No

such elderly or disabled family may be required to accept services.

(b) RESPONSIBILITIES.—Each service coordinator of a covered

federally assisted housing project provided pursuant to this subtitle

or the amendments made by this subtitle—

(1) shall consult with the owner of the housing, tenants,

any tenant organizations, any resident management organizations, service providers, and any other appropriate persons, to

identify the particular needs and characteristics of elderly and

disabled families who reside in the project and any supportive

services related to such needs and characteristics;

(2) shall manage and coordinate the provision of such services for residents of the project;

(3) may provide training to tenants of the project in the obligations of tenancy or coordinate such training;

(4) shall meet the minimum qualifications and standards

required under section 802(d)(4) of the Cranston-Gonzalez National Affordable Housing Act; and

(5) may carry out other appropriate activities for residents

of the project.

(c) INCLUDED SERVICES.—Supportive services referred to under

subsection (b)(1) may include health-related services, mental health

services, services for nonmedical counseling, meals, transportation,

personal care, bathing, toileting, housekeeping, chore assistance,

safety, group and socialization activities, assistance with medications (in accordance with any applicable State laws), case management, personal emergency response, education and outreach regarding telemarketing fraud in accordance with the standards

issued under subsection (f ), and other appropriate services. The

services may be provided through any agency of the Federal Government or any other public or private department, agency, or organization.

(d) COVERED FEDERALLY ASSISTED HOUSING.—For purposes of

this subtitle, the term ‘‘covered federally assisted housing’’ means

housing that is federally assisted housing (as such term is defined

in section 683(2)), except that such term does not include housing

described in subparagraphs (C) and (D) of such section.

(e) SERVICES FOR LOW-INCOME ELDERLY OR DISABLED FAMILIES

RESIDING IN VICINITY OF CERTAIN PROJECTS.—To the extent only

that this section applies to service coordinators for covered federally assisted housing described in subparagraphs (B), (C), (D), (E),

(F), and (G) of section 683(2), any reference in this section to elderly or disabled residents of a project shall be construed to include

low-income elderly or disabled families living in the vicinity of such

project.

(f ) PROTECTION AGAINST TELEMARKETING FRAUD.—

(1) IN GENERAL.—The Secretary, in coordination with the

Secretary of Health and Human Services, shall establish

standards for service coordinators in federally assisted housing

who are providing education and outreach to elderly persons

residing in such housing regarding telemarketing fraud. The

standards shall be designed to ensure that such education and

outreach informs such elderly persons of the dangers of tele-
Sec. 672 FED. ASSISTED HOUSING SERVICE COORDINATORS 550

marketing fraud and facilitates the investigation and prosecution of telemarketers engaging in fraud against such residents.

(2) CONTENTS.—The standards established under this subsection shall require that any such education and outreach be

provided in a manner that—

(A) informs such residents of—

(i) the prevalence of telemarketing fraud targeted

against elderly persons;

(ii) how telemarketing fraud works;

(iii) how to identify telemarketing fraud;

(iv) how to protect themselves against telemarketing fraud, including an explanation of the dangers of providing bank account, credit card, or other financial or personal information over the telephone to

unsolicited callers;

(v) how to report suspected attempts at telemarketing fraud; and

(vi) their consumer protection rights under Federal law;

(B) provides such other information as the Secretary

considers necessary to protect such residents against

fraudulent telemarketing; and

(C) disseminates the information provided by appropriate means, and in determining such appropriate means,

the Secretary shall consider on-site presentations at federally assisted housing, public service announcements, a

printed manual or pamphlet, an Internet website, and telephone outreach to residents whose names appear on

‘‘mooch lists’’ confiscated from fraudulent telemarketers.

SEC. 672. REQUIRED TRAINING OF SERVICE COORDINATORS.

Section 802(d)(4) of the Cranston-Gonzalez National Affordable

Housing Act (42 U.S.C. 8011(d)(4)) is amended by inserting after

the period at the end of the first sentence beginning after subparagraph (E) the following new sentence: ‘‘Such qualifications and

standards shall include requiring each service coordinator to be

trained in the aging process, elder services, disability services, eligibility for and procedures of Federal and applicable State entitlement programs, legal liability issues relating to providing service

coordination, drug and alcohol use and abuse by the elderly, and

mental health issues.’’.

SEC. 673. COSTS OF PROVIDING SERVICE COORDINATORS IN PUBLIC

HOUSING.

Section 9(a)(1)(B) of the United States Housing Act of 1937 (42

U.S.C. 1437g(a)(1)(B)) is amended—

* * * * * * *

SEC. 674. COSTS OF PROVIDING SERVICE COORDINATORS IN

PROJECT-BASED SECTION 8 HOUSING.

Section 8(d)(2) of the United States Housing Act of 1937 (42

U.S.C. 1437f(d)(2)) is amended by adding at the end the following

new subparagraph:

* * * * * * *
551 Sec. 677 FED. ASSISTED HOUSING SERVICE COORDINATORS

SEC. 675. COSTS OF PROVIDING SERVICE COORDINATORS FOR FAMILIES RECEIVING FEDERAL TENANT-BASED ASSISTANCE.

Section 8(q) of the United States Housing Act of 1937 (42

U.S.C. 1437f(q)) is amended—

* * * * * * *

SEC. 676. ø42 U.S.C. 13632¿ GRANTS FOR COSTS OF PROVIDING SERVICE COORDINATORS IN CERTAIN FEDERALLY ASSISTED

HOUSING.

(a) AUTHORITY.—The Secretary may make grants under this

section to owners of federally assisted housing projects described in

subparagraphs (B), (C), (D), (E), (F), and (G) of section 683(2). Any

grant amounts shall be used for the costs of employing or otherwise

retaining the services of one or more service coordinators under

section 671 to coordinate the provision of any services within the

project for residents of the project who are elderly families and disabled families (as such terms are defined in section 683 of this

Act). A service coordinator funded with a grant under this section

for a project may provide services to low-income elderly or disabled

families living in the vicinity of such project.

(b) APPLICATION AND SELECTION.—The Secretary shall provide

for the form and manner of applications for grants under this section and for selection of applicants to receive such grants.

(c) ELIGIBLE PROJECT EXPENSE.—For any federally assisted

housing project described in subparagraph (B), (C), (D), (E), (F), or

(G) of section 683(2) that does not receive a grant under this section, the cost of employing or otherwise retaining the services of

one or more service coordinators under section 671 and not more

than 15 percent of the cost of providing services to the residents

of the project shall be considered an eligible project expense, but

only to the extent that amounts are available from project rent and

other income for such costs.

SEC. 677. EXPANDED RESPONSIBILITIES OF SERVICE COORDINATORS

IN SECTION 202 HOUSING.

(a) SUPPORTIVE HOUSING FOR THE ELDERLY.—Section 202(g) of

the Housing Act of 1959 (12 U.S.C. 1701q(g)), as amended by section 801 of the Cranston-Gonzalez National Affordable Housing

Act, is amended—

* * * * * * *

(b) ø12 U.S.C. 1701q note¿ OLD SECTION 202 PROJECTS.—

(1) AVAILABILITY OF SECTION 8 ASSISTANCE.—Subject to the

availability of appropriations for contract amendments for the

purpose of this paragraph, in determining the amount of assistance under section 8 of the United States Housing Act of

1937 to be provided for a project assisted under section 202 of

the Housing Act of 1959, as in effect before the effectiveness

of the amendments made by section 801 of the Cranston-Gonzalez National Affordable Housing Act, the Secretary shall consider (and annually adjust for) the costs of—

(A) employing or otherwise retaining the services of

one or more service coordinators under section 661 of this

Act to coordinate the provision of any services within the

project for residents of the project who are elderly families

and disabled families; and
Sec. 681 FED. ASSISTED HOUSING SERVICE COORDINATORS 552

(B) expenses for the provision of such services.

Not more than 15 percent of the cost of the provision of services under subparagraph (B) may be considered under this

paragraph for purposes of determining the amount of assistance provided.

(2) INAPPLICABILITY OF HUD REFORM ACT PROVISIONS.—Notwithstanding section 102 of the Department of Housing and

Urban Development Reform Act of 1989, the provisions of

paragraphs (1), (2), and (3) of subsection (a) of such section

shall not apply to amendments to contracts under section 8 of

the United States Housing Act of 1937 made to carry out the

purposes of paragraph (1) of this subsection.

(3) LIMITATION.—If a project is receiving congregate housing services assistance under the Congregate Housing Services

Act of 1978 or section 802 of the Cranston-Gonzalez National

Affordable Housing Act, the amount of costs provided pursuant

to paragraph (1) for the project may not exceed the additional

amount necessary to cover the costs of providing for the coordination of services for residents of the project who are not eligible residents under such section 802 or eligible project residents under the Congregate Housing Services Act of 1978, as

applicable.

Subtitle F—General Provisions

SEC. 681. COMPREHENSIVE HOUSING AFFORDABILITY STRATEGIES.

Section 105(b) of the Cranston-Gonzalez National Affordable

Housing Act (42 U.S.C. 12705(b)) is amended—

* * * * * * *

SEC. 682. CONFORMING AMENDMENTS.

(a) PUBLIC HOUSING.—Section 6(c)(4) of the United States

Housing Act of 1937 (42 U.S.C. 1437d(c)(4)) is amended—

* * * * * * *

(b) PROJECT-BASED SECTION 8 HOUSING.—Section 8(d)(2) of the

United States Housing Act of 1937 (42 U.S.C. 1437f(d)(2)), as

amended by section 664 of this Act, is further amended by adding

at the end the following new subparagraphs:

* * * * * * *

(c) SUPPORTIVE HOUSING FOR THE ELDERLY.—Section 202 of

the Housing Act of 1959 (12 U.S.C. 1701q), as amended by section

801 of the Cranston-Gonzalez National Affordable Housing Act, is

amended—

* * * * * * *

SEC. 683. ø42 U.S.C. 13641¿ DEFINITIONS.

For purposes of this title:

(1) ELDERLY, DISABLED, AND NEAR-ELDERLY FAMILIES.—The

terms ‘‘elderly family’’, ‘‘disabled family’’, and ‘‘near-elderly

family’’ have the meanings given the terms under section

3(b)(3) of the United States Housing Act of 1937.
553 Sec. 685 FED. ASSISTED HOUSING SERVICE COORDINATORS

1The date of enactment was October 28, 1992.

(2) FEDERALLY ASSISTED HOUSING.—The terms ‘‘federally

assisted housing’’ and ‘‘project’’ mean—

(A) a public housing project (as such term is defined

in section 3(b) of the United States Housing Act of 1937);

(B) housing for which project-based assistance is provided under section 8 of the United States Housing Act of

1937;

(C) housing that is assisted under section 202 of the

Housing Act of 1959 (as amended by section 801 of the

Cranston-Gonzalez National Affordable Housing Act);

(D) housing that is assisted under section 202 of the

Housing Act of 1959, as such section existed before the enactment of the Cranston-Gonzalez National Affordable

Housing Act;

(E) housing financed by a loan or mortgage insured

under section 221(d)(3) of the National Housing Act that

bears interest at a rate determined under the proviso of

section 221(d)(5) of such Act;

(F) housing insured, assisted, or held by the Secretary

or a State or State agency under section 236 of the National Housing Act; and

(G) housing constructed or substantially rehabilitated

pursuant to assistance provided under section 8(b)(2) of

the United States Housing Act of 1937, as in effect before

October 1, 1983, that is assisted under a contract for assistance under such section.

(3) HOUSING ASSISTANCE.—The term ‘‘housing assistance’’

means, with respect to federally assisted housing, the grant,

contribution, capital advance, loan, mortgage insurance, or

other assistance provided for the housing under the provisions

of law referred to in paragraph (2). The term also includes

any related assistance provided for the housing by the Secretary, including any rental assistance for low-income occupants.

(4) OWNER.—The term ‘‘owner’’ means, with respect to federally assisted housing, the entity or private person, including

a cooperative or public housing agency, that has the legal right

to lease or sublease dwelling units in such housing.

(5) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

SEC. 684.ø42 U.S.C. 13642¿ APPLICABILITY.

Except as otherwise provided in subtitles B through F of this

title and the amendments made by such subtitles, such subtitles

and the amendments made by such subtitles shall apply upon the

expiration of the 6-month period beginning on the date of the enactment of this Act. 1

SEC. 685. ø42 U.S.C. 13643¿ REGULATIONS.

The Secretary shall issue regulations necessary to carry out

subtitles B through F of this title and the amendments made by

such subtitles not later than the expiration of the 6-month period

beginning on the date of the enactment of this Act. 1 The regula-
Sec. 685 FED. ASSISTED HOUSING SERVICE COORDINATORS 554

tions shall be issued after notice and opportunity for public comment pursuant to the provisions of section 553 of title 5, United

States Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3)

of such section).
555

SAFETY AND SECURITY IN PUBLIC AND ASSISTED

HOUSING

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2634; 42 U.S.C. 13661 et seq.]

TITLE V—PUBLIC HOUSING AND

TENANT-BASED ASSISTANCE REFORM

* * * * * * *

Subtitle F—Safety and Security in Public

and Assisted Housing

SEC. 575. PROVISIONS APPLICABLE ONLY TO PUBLIC HOUSING AND

SECTION 8 ASSISTANCE.

(a) DRUG-RELATED AND CRIMINAL ACTIVITY UNDER PUBLIC

HOUSING GRIEVANCE PROCEDURE.—Section 6(k) of the United

States Housing Act of 1937 (42 U.S.C. 1437d(k)) is amended, in the

matter following paragraph (6)—

* * * * * * *

(b) TERMINATION OF TENANCY IN PUBLIC HOUSING.—Section

6(l) of the United States Housing Act of 1937 (42 U.S.C. 1437d(l))

is amended—

* * * * * * *

(c) AVAILABILITY OF CRIMINAL RECORDS FOR TENANT SCREEN- ING AND EVICTION.—Section 6(q) of the United States Housing Act

of 1937 (42 U.S.C. 1437d(q)(1)) is amended—

* * * * * * *

(d) AUTHORITY TO REQUIRE ACCESS TO CRIMINAL RECORDS.— Section 6 of the United States Housing Act of 1937 (42 U.S.C.

1437d), as amended by the preceding provisions of this Act, is further amended by adding at the end the following new subsection:

* * * * * * *

(e) OBTAINING INFORMATION FROM DRUG ABUSE TREATMENT

FACILITIES.—Section 6 of the United States Housing Act of 1937

(42 U.S.C. 1437d), as amended by the preceding provisions of this

Act, is further amended by adding at the end the following new

subsection:

* * * * * * *
Sec. 576 SAFETY AND SECURITY IN PUBLIC AND ASSISTED HOUSING 556

SEC. 576. ø42 U.S.C. 13661¿ SCREENING OF APPLICANTS FOR FEDERALLY ASSISTED HOUSING.

(a) INELIGIBILITY BECAUSE OF EVICTION FOR DRUG CRIMES.—

Any tenant evicted from federally assisted housing by reason of

drug-related criminal activity (as such term is defined in section

3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b))

shall not be eligible for federally assisted housing during the 3-year

period beginning on the date of such eviction, unless the evicted

tenant successfully completes a rehabilitation program approved by

the public housing agency (which shall include a waiver of this subsection if the circumstances leading to eviction no longer exist).

(b) INELIGIBILITY OF ILLEGAL DRUG USERS AND ALCOHOL ABUS- ERS.— (1) IN GENERAL.—Notwithstanding any other provision of

law, a public housing agency or an owner of federally assisted

housing, as determined by the Secretary, shall establish standards that prohibit admission to the program or admission to

federally assisted housing for any household with a member—

(A) who the public housing agency or owner determines is illegally using a controlled substance; or

(B) with respect to whom the public housing agency or

owner determines that it has reasonable cause to believe

that such household member’s illegal use (or pattern of illegal use) of a controlled substance, or abuse (or pattern of

abuse) of alcohol, may interfere with the health, safety, or

right to peaceful enjoyment of the premises by other residents.

(2) CONSIDERATION OF REHABILITATION.—In determining

whether, pursuant to paragraph (1)(B), to deny admission to

the program or federally assisted housing to any household

based on a pattern of illegal use of a controlled substance or

a pattern of abuse of alcohol by a household member, a public

housing agency or an owner may consider whether such household member—

(A) has successfully completed a supervised drug or alcohol rehabilitation program (as applicable) and is no

longer engaging in the illegal use of a controlled substance

or abuse of alcohol (as applicable);

(B) has otherwise been rehabilitated successfully and

is no longer engaging in the illegal use of a controlled substance or abuse of alcohol (as applicable); or

(C) is participating in a supervised drug or alcohol rehabilitation program (as applicable) and is no longer engaging in the illegal use of a controlled substance or abuse

of alcohol (as applicable).

(c) AUTHORITY TO DENY ADMISSION TO CRIMINAL OFFEND- ERS..—Except as provided in subsections (a) and (b) of this section

and in addition to any other authority to screen applicants, in selecting among applicants for admission to the program or to federally assisted housing, if the public housing agency or owner of such

housing (as applicable) determines that an applicant or any member of the applicant’s household is or was, during a reasonable time

preceding the date when the applicant household would otherwise

be selected for admission, engaged in any drug-related or violent
557 Sec. 577 SAFETY AND SECURITY IN PUBLIC AND ASSISTED HOUSING

criminal activity or other criminal activity which would adversely

affect the health, safety, or right to peaceful enjoyment of the

premises by other residents, the owner, or public housing agency

employees, the public housing agency or owner may—

(1) deny such applicant admission to the program or to federally assisted housing; and

(2) after the expiration of the reasonable period beginning

upon such activity, require the applicant, as a condition of admission to the program or to federally assisted housing, to submit to the public housing agency or owner evidence sufficient

(as the Secretary shall by regulation provide) to ensure that

the individual or individuals in the applicant’s household who

engaged in criminal activity for which denial was made under

paragraph (1) have not engaged in any criminal activity during

such reasonable period.

(d) CONFORMING AMENDMENTS.—The United States Housing

Act of 1937 is amended—

(1) in section 6—

(A) by striking subsection (r); and

(B) by redesignating subsections (s), (t), and (u) (as

added by the preceding provisions of this Act) as subsections (r), (s), and (t), respectively; and

(2) in section 16 (42 U.S.C. 1437n), by striking subsection

(e).

SEC. 577. ø42 U.S.C. 13662¿ TERMINATION OF TENANCY AND ASSISTANCE FOR ILLEGAL DRUG USERS AND ALCOHOL ABUSERS IN FEDERALLY ASSISTED HOUSING.

(a) IN GENERAL.—Notwithstanding any other provision of law,

a public housing agency or an owner of federally assisted housing

(as applicable), shall establish standards or lease provisions for

continued assistance or occupancy in federally assisted housing

that allow the agency or owner (as applicable) to terminate the tenancy or assistance for any household with a member—

(1) who the public housing agency or owner determines is

illegally using a controlled substance; or

(2) whose illegal use (or pattern of illegal use) of a controlled substance, or whose abuse (or pattern of abuse) of alcohol, is determined by the public housing agency or owner to

interfere with the health, safety, or right to peaceful enjoyment

of the premises by other residents.

(b) CONSIDERATION OF REHABILITATION.—In determining

whether, pursuant to subsection (a)(2), to terminate tenancy or assistance to any household based on a pattern of illegal use of a controlled substance or a pattern of abuse of alcohol by a household

member, a public housing agency or an owner may consider whether such household member—

(1) has successfully completed a supervised drug or alcohol

rehabilitation program (as applicable) and is no longer engaging in the illegal use of a controlled substance or abuse of alcohol (as applicable);

(2) has otherwise been rehabilitated successfully and is no

longer engaging in the illegal use of a controlled substance or

abuse of alcohol (as applicable); or
Sec. 578 SAFETY AND SECURITY IN PUBLIC AND ASSISTED HOUSING 558

(3) is participating in a supervised drug or alcohol rehabilitation program (as applicable) and is no longer engaging in the

illegal use of a controlled substance or abuse of alcohol (as applicable).

SEC. 578. ø42 U.S.C. 13663¿ INELIGIBILITY OF DANGEROUS SEX OFFENDERS FOR ADMISSION TO PUBLIC HOUSING.

(a) IN GENERAL.—Notwithstanding any other provision of law,

an owner of federally assisted housing shall prohibit admission to

such housing for any household that includes any individual who

is subject to a lifetime registration requirement under a State sex

offender registration program.

(b) OBTAINING INFORMATION.—As provided in regulations

issued by the Secretary to carry out this section—

(1) a public housing agency shall carry out criminal history

background checks on applicants for federally assisted housing

and make further inquiry with State and local agencies as necessary to determine whether an applicant for federally assisted

housing is subject to a lifetime registration requirement under

a State sex offender registration program; and

(2) State and local agencies responsible for the collection or

maintenance of criminal history record information or information on persons required to register as sex offenders shall comply with requests of public housing agencies for information

pursuant to this section.

(c) REQUESTS BY OWNERS FOR PHA’S TO OBTAIN INFORMA- TION.—A public housing agency may take any action under subsection (b) regarding applicants for, or tenants of, federally assisted

housing other than federally assisted housing described in subparagraph (A) or (B) of section 579(a)(2), but only if the housing is located within the jurisdiction of the agency and the owner of such

housing has requested that the agency take such action on behalf

of the owner. Upon such a request by the owner, the agency shall

take the action requested under subsection (b). The agency may not

make any information obtained pursuant to the action under subsection (b) available to the owner but shall perform determinations

for the owner regarding screening, lease enforcement, and eviction

based on criteria supplied by the owner.

(d) OPPORTUNITY TO DISPUTE.—Before an adverse action is

taken with respect to an applicant for federally assisted housing on

the basis that an individual is subject to a lifetime registration requirement under a State sex offender registration program, the

public housing agency obtaining the record shall provide the tenant

or applicant with a copy of the registration information and an opportunity to dispute the accuracy and relevance of that information.

(e) FEE.—A public housing agency may be charged a reasonable fee for taking actions under subsection (b). In the case of a

public housing agency taking actions on behalf of another owner of

federally assisted housing pursuant to subsection (c), the agency

may pass such fee on to the owner making the request and may

charge an additional reasonable fee for making the request on behalf of the owner.

(f ) RECORDS MANAGEMENT.—Each public housing agency shall

establish and implement a system of records management that en-
559 Sec. 579 SAFETY AND SECURITY IN PUBLIC AND ASSISTED HOUSING

sures that any criminal record or information regarding a lifetime

registration requirement under a State sex offender registration

program that is obtained under this section by the public housing

agency is—

(1) maintained confidentially;

(2) not misused or improperly disseminated; and

(3) destroyed, once the purpose for which the record was

requested has been accomplished.

SEC. 579. ø42 U.S.C. 13664¿ DEFINITIONS.

(a) DEFINITIONS.—For purposes of this subtitle, the following

definitions shall apply:

(1) DRUG-RELATED CRIMINAL ACTIVITY.—The term ‘‘drug-related criminal activity’’ has the meaning given the term in section 3(b) of the United States Housing Act of 1937 (42 U.S.C.

1437a(b)).

(2) FEDERALLY ASSISTED HOUSING.—The term ‘‘federally assisted housing’’ means a dwelling unit—

(A) in public housing (as such term is defined in section 3(b) of the United States Housing Act of 1937 (42

U.S.C. 1437a));

(B) assisted with tenant-based assistance under section 8 of the United States Housing Act of 1937;

(C) in housing that is provided project-based assistance under section 8 of the United States Housing Act of

1937, including new construction and substantial rehabilitation projects;

(D) in housing that is assisted under section 202 of the

Housing Act of 1959 (as amended by section 801 of the

Cranston-Gonzalez National Affordable Housing Act);

(E) in housing that is assisted under section 202 of the

Housing Act of 1959, as such section existed before the enactment of the Cranston-Gonzalez National Affordable

Housing Act;

(F) in housing that is assisted under section 811 of the

Cranston-Gonzalez National Affordable Housing Act;

(G) in housing financed by a loan or mortgage insured

under section 221(d)(3) of the National Housing Act that

bears interest at a rate determined under the proviso of

section 221(d)(5) of such Act;

(H) in housing insured, assisted, or held by the Secretary or a State or State agency under section 236 of the

National Housing Act; or

(I) in housing assisted under section 514 or 515 of the

Housing Act of 1949.

(3) OWNER.—The term ‘‘owner’’ means, with respect to federally assisted housing, the entity or private person (including

a cooperative or public housing agency) that has the legal right

to lease or sublease dwelling units in such housing.
560

REMOVAL OF REGULATORY BARRIERS TO AFFORDABLE

HOUSING

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3938; 42 U.S.C. 12705a et seq.]

TITLE XII—REMOVAL OF REGULATORY

BARRIERS TO AFFORDABLE HOUSING

SEC. 1201. ø42 U.S.C. 12705a note¿ SHORT TITLE.

This title may be cited as the ‘‘Removal of Regulatory Barriers

to Affordable Housing Act of 1992’’.

SEC. 1202. ø42 U.S.C. 12705a¿ PURPOSES.

The purposes of this title are—

(1) to encourage State and local governments to further

identify and remove regulatory barriers to affordable housing

(including barriers that are excessive, unnecessary, duplicative,

or exclusionary) that significantly increase housing costs and

limit the supply of affordable housing; and

(2) to strengthen the connection between Federal housing

assistance and State and local efforts to identify and eliminate

regulatory barriers.

SEC. 1203. ø42 U.S.C. 12705b¿ DEFINITION OF REGULATORY BARRIERS

TO AFFORDABLE HOUSING.

For purposes of this title, the terms ‘‘regulatory barriers to affordable housing’’ and ‘‘regulatory barriers’’ mean any public policies (including policies embodied in statutes, ordinances, regulations, or administrative procedures or processes) required to be

identified by a jurisdiction in connection with its comprehensive

housing affordability strategy under section 105(b)(4) of the Cranston-Gonzalez National Affordable Housing Act. Such terms do not

include policies relating to rents imposed on a structure by a jurisdiction or policies that have served to create or preserve, or can be

shown to create or preserve, housing for low- and very low-income

families, including displacement protections, demolition controls,

replacement housing requirements, relocation benefits, housing

trust funds, dedicated funding sources, waiver of local property

taxes and builder fees, inclusionary zoning, rental zoning overlays,

long-term use restrictions, and rights of first refusal.

SEC. 1204. ø42 U.S.C. 12705c¿ GRANTS FOR REGULATORY BARRIER REMOVAL STRATEGIES AND IMPLEMENTATION.

(a) FUNDING.—There is authorized to be appropriated for

grants under subsections (b) and (c) such sums as may be necessary for each of fiscal years 2001, 2002, 2003, 2004, and 2005.
561 Sec. 1204 AFF. HOUSING REGULATORY BARRIERS REMOVAL

(b) GRANT AUTHORITY.—The Secretary may make grants to

States and units of general local government (including consortia

of such governments) for the costs of developing and implementing

strategies to remove regulatory barriers to affordable housing, including the costs of—

(1) identifying, assessing, and monitoring State and local

regulatory barriers;

(2) identifying State and local policies (including laws and

regulations) that permit or encourage regulatory barriers;

(3) developing legislation to provide State, local, or regional programs to reduce regulatory barriers and developing

a strategy for adoption of such legislation;

(4) developing model State or local standards and ordinances to reduce regulatory barriers and assisting in the adoption and use of the standards and ordinances;

(5) carrying out the simplification and consolidation of administrative procedures and processes constituting regulatory

barriers to affordable housing, including the issuance of permits; and

(6) providing technical assistance and information to units

of general local government for implementation of legislative

and administrative reform programs to remove regulatory barriers to affordable housing.

ø(c) [Repealed.]¿

(d) DEFINITION.—For purposes of this section, the terms ‘‘regulatory barriers to affordable housing’’ and ‘‘regulatory barriers’’

have the meaning given such terms in section 1203.

(e) APPLICATION AND SELECTION.—The Secretary shall provide

for the form and manner of applications for grants under this section, which shall describe how grant amounts will assist the State

or unit of general local government in developing and implementing strategies to remove regulatory barriers to affordable

housing. The Secretary shall establish criteria for approval of applications under this subsection and such criteria shall require that

grant amounts be used in a manner consistent with the strategy

contained in the comprehensive housing affordability strategy for

the jurisdiction pursuant to section 105(b)(4) of the Cranston-Gonzalez National Affordable Housing Act.

(f ) SELECTION OF GRANTEES.—To the extent amounts are made

available to carry out this section, the Secretary shall provide

grants on a competitive basis to eligible grantees based on the proposed uses of such amounts, as provided in applications under subsection (e).

(g) COORDINATION WITH CLEARINGHOUSE.—Each State and

unit of general local government receiving a grant under this section, shall consult, coordinate, and exchange information with the

clearinghouse established under section 1205.

(h) REPORTS TO SECRETARY.—Each State and unit of general

local government receiving a grant under this section shall submit

a report to the Secretary, not less than 12 months after receiving

the grant, describing any activities carried out with the grant

amounts. The report shall contain an assessment of the impact of

any regulatory barriers identified by the grantee on the housing

patterns of minorities.
Sec. 1205 AFF. HOUSING REGULATORY BARRIERS REMOVAL 562

(i) CONFORMING AMENDMENTS.—The first sentence of section

106(d)(1) of the Housing and Community Development Act of 1974

(42 U.S.C. 5306(d)(1)) is amended by striking ‘‘for grants’’ and all

that follows through ‘‘(2))’’ and inserting ‘‘that remains after allocations pursuant to paragraphs (1) and (2) of subsection (a)’’.

SEC. 1205. ø42 U.S.C. 12705d¿ REGULATORY BARRIERS CLEARINGHOUSE.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development shall establish a clearinghouse to serve as a national repository to receive, collect, process, assemble, and disseminate information regarding—

(1) State and local laws, regulations, and policies affecting

the development, maintenance, improvement, availability, or

cost of affordable housing (including tax policies affecting land

and other property, land use controls, zoning ordinances, building codes, fees and charges, growth limits, and policies that affect the return on investment in residential property), and the

prevalence and effects on affordable housing of such laws, regulations, and policies;

(2) State and local activities, strategies, and plans to remove or ameliorate the negative effects, if any, of such laws,

regulations, and policies, including particularly innovative or

successful activities, strategies, and plans; and

(3) State and local strategies, activities and plans that promote affordable housing and housing desegregation, including

particularly innovative or successful strategies, activities, and

plans.

(b) FUNCTIONS.—The clearinghouse established under subsection (a) shall—

(1) respond to inquiries from State and local governments,

other organizations, and individuals requesting information regarding State and local laws, regulations, policies, activities,

strategies, and plans described in subsection (a);

(2) provide assistance in identifying, examining, and understanding such laws, regulations, policies, activities, strategies, and plans; and

(3) by making available through a World Wide Web site of

the Department, by electronic mail, or otherwise, provide to

each housing agency of a unit of general local government that

serves an area having a population greater than 100,000, an

index of all State and local strategies and plans submitted

under subsection (a) to the clearinghouse, which—

(A) shall describe the types of barriers to affordable

housing that the strategy or plan was designed to ameliorate or remove; and

(B) shall, not later than 30 days after submission to

the clearinghouse of any new strategy or plan, be updated

to include the new strategy or plan submitted.

(c) ORGANIZATION.—The clearinghouse under this section shall

be established within the Office of Policy Development of the Department of Housing and Urban Development and shall be under

the direction of the Assistant Secretary for Policy Development and

Research.
563 Sec. 1206 AFF. HOUSING REGULATORY BARRIERS REMOVAL

1The date of enactment was December 27, 2000.

(d) TIMING.—The clearinghouse under this section (as amended

by section 103 of the Housing Affordability Barrier Removal Act of

2000) shall be established and commence carrying out the functions

of the clearinghouse under this section not later than 1 year after

the date of the enactment of such Act. 1 The Secretary of Housing

and Urban Development may comply with the requirements under

this section by reestablishing the clearinghouse that was originally

established to comply with this section and updating and improving such clearinghouse to the extent necessary to comply with the

requirements of this section as in effect pursuant to the enactment

of such Act.

SEC. 1206. SUBSTANTIALLY EQUIVALENT FEDERAL AND STATE BARRIER ASSESSMENT REMOVAL REQUIREMENTS.

Section 105(b)(4) of the Cranston-Gonzalez National Affordable

Housing Act (42 U.S.C. 12705(b)(4)) is amended * * *.
564

DISPOSITION OF HUD-OWNED PROJECTS

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1997

[Public Law 104–204; 110 Stat. 2894; 12 U.S.C. 1715z–11a]

SEC. 204. ø12 U.S.C. 1715z–11a¿ DISPOSITION OF HUD-OWNED

PROPERTIES. (a) FLEXIBLE AUTHORITY FOR MULTIFAMILY

PROJECTS.—During fiscal year 1997 and fiscal years thereafter, the

Secretary may manage and dispose of multifamily properties

owned by the Secretary, including, for fiscal years 1997, 1998,

1999, 2000, and thereafter, the provision of grants and loans from

the General Insurace Fund (12 U.S.C. 1735(c)) for the necessary

costs of rehabilitation, demolition, or construction on the properties

(which shall be eligible whether vacant or occupied) and multifamily mortgages held by the Secretary on such terms and conditions as the Secretary may determine, notwithstanding any other

provision of law.

(b) TRANSFER OF UNOCCUPIED AND SUBSTANDARD HOUSING TO

LOCAL GOVERNMENTS AND COMMUNITY DEVELOPMENT CORPORATIONS.—

(1) TRANSFER AUTHORITY.—Notwithstanding the authority

under subsection (a) and the last sentence of section 204(g) of

the National Housing Act (12 U.S.C. 1710(g)), the Secretary of

Housing and Urban Development shall transfer ownership of

any qualified HUD property, subject to the requirements of

this section, to a unit of general local government having jurisdiction for the area in which the property is located or to a

community development corporation which operates within

such a unit of general local government in accordance with this

subsection, but only to the extent that units of general local

government and community development corporations consent

to transfer and the Secretary determines that such transfer is

practicable.

(2) QUALIFIED HUD PROPERTIES.—For purposes of this subsection, the term ‘‘qualified HUD property’’ means any property for which, as of the date that notification of the property

is first made under paragraph (3)(B), not less than 6 months

have elapsed since the later of the date that the property was

acquired by the Secretary or the date that the property was determined to be unoccupied or substandard, that is owned by

the Secretary and is—

(A) an unoccupied multifamily housing project;

(B) a substandard multifamily housing project; or

(C) an unoccupied single family property that—
565 Sec. 204 DISPOSITION OF HUD-OWNED PROJECTS

(i) has been determined by the Secretary not to be

an eligible asset under section 204(h) of the National

Housing Act (12 U.S.C. 1710(h)); or

(ii) is an eligible asset under such section 204(h),

but—

(I) is not subject to a specific sale agreement

under such section; and

(II) has been determined by the Secretary to

be inappropriate for continued inclusion in the

program under such section 204(h) pursuant to

paragraph (10) of such section.

(3) TIMING.—The Secretary shall establish procedures that

provide for—

(A) time deadlines for transfers under this subsection;

(B) notification to units of general local government

and community development corporations of qualified

HUD properties in their jurisdictions;

(C) such units and corporations to express interest in

the transfer under this subsection of such properties;

(D) a right of first refusal for transfer of qualified

HUD properties to units of general local government and

community development corporations, under which—

(i) the Secretary shall establish a period during

which the Secretary may not transfer such properties

except to such units and corporations;

(ii) the Secretary shall offer qualified HUD properties that are single family properties for purchase by

units of general local government at a cost of $1 for

each property, but only to the extent that the costs to

the Federal Government of disposal at such price do

not exceed the costs to the Federal Government of disposing of property subject to the procedures for single

family property established by the Secretary pursuant

to the authority under the last sentence of section

204(g) of the National Housing Act (12 U.S.C.

1710(g));

(iii) the Secretary may accept an offer to purchase

a property made by a community development corporation only if the offer provides for purchase on a

cost recovery basis; and

(iv) the Secretary shall accept an offer to purchase

such a property that is made during such period by

such a unit or corporation and that complies with the

requirements of this paragraph; and

(E) a written explanation, to any unit of general local

government or community development corporation making an offer to purchase a qualified HUD property under

this subsection that is not accepted, of the reason that

such offer was not acceptable.

(4) OTHER DISPOSITION.—With respect to any qualified

HUD property, if the Secretary does not receive an acceptable

offer to purchase the property pursuant to the procedure established under paragraph (3), the Secretary shall dispose of the

property to the unit of general local government in which prop-
Sec. 204 DISPOSITION OF HUD-OWNED PROJECTS 566

erty is located or to community development corporations located in such unit of general local government on a negotiated,

competitive bid, or other basis, on such terms as the Secretary

deems appropriate.

(5) SATISFACTION OF INDEBTEDNESS.—Before transferring

ownership of any qualified HUD property pursuant to this subsection, the Secretary shall satisfy any indebtedness incurred

in connection with the property to be transferred, by canceling

the indebtedness.

(6) DETERMINATION OF STATUS OF PROPERTIES.—To ensure

compliance with the requirements of this subsection, the Secretary shall take the following actions:

(A) UPON ENACTMENT.—Upon the enactment of this

subsection, the Secretary shall promptly assess each residential property owned by the Secretary to determine

whether such property is a qualified HUD property.

(B) UPON ACQUISITION.—Upon acquiring any residential property, the Secretary shall promptly determine

whether the property is a qualified HUD property.

(C) UPDATES.—The Secretary shall periodically reassess the residential properties owned by the Secretary to

determine whether any such properties have become qualified HUD properties.

(7) TENANT LEASES.—This subsection shall not affect the

terms or the enforceability of any contract or lease entered into

with respect to any residential property before the date that

such property becomes a qualified HUD property.

(8) USE OF PROPERTY.—Property transferred under this

subsection shall be used only for appropriate neighborhood revitalization efforts, including homeownership, rental units,

commercial space, and parks, consistent with local zoning regulations, local building codes, and subdivision regulations and

restrictions of record.

(9) INAPPLICABILITY TO PROPERTIES MADE AVAILABLE FOR

HOMELESS.—Notwithstanding any other provision of this subsection, this subsection shall not apply to any properties that

the Secretary determines are to be made available for use by

the homeless pursuant to subpart E of part 291 of title 24,

Code of Federal Regulations, during the period that the properties are so available.

(10) PROTECTION OF EXISTING CONTRACTS.—This subsection

may not be construed to alter, affect, or annul any legally binding obligations entered into with respect to a qualified HUD

property before the property becomes a qualified HUD property.

(11) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

(A) COMMUNITY DEVELOPMENT CORPORATION.—The

term ‘‘community development corporation’’ means a nonprofit organization whose primary purpose is to promote

community development by providing housing opportunities for low-income families.

(B) COST RECOVERY BASIS.—The term ‘‘cost recovery

basis’’ means, with respect to any sale of a residential
567 Sec. 204 DISPOSITION OF HUD-OWNED PROJECTS

property by the Secretary, that the purchase price paid by

the purchaser is equal to or greater than the sum of: (i)

the appraised value of the property, as determined in accordance with such requirements as the Secretary shall establish; and (ii) the costs incurred by the Secretary in connection with such property during the period beginning on

the date on which the Secretary acquires title to the property and ending on the date on which the sale is consummated.

(C) MULTIFAMILY HOUSING PROJECT.—The term ‘‘multifamily housing project’’ has the meaning given the term in

section 203 of the Housing and Community Development

Amendments of 1978.

(D) RESIDENTIAL PROPERTY.—The term ‘‘residential

property’’ means a property that is a multifamily housing

project or a single family property.

(E) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(F) SEVERE PHYSICAL PROBLEMS.—The term ‘‘severe

physical problems’’ means, with respect to a dwelling unit,

that the unit—

(i) lacks hot or cold piped water, a flush toilet, or

both a bathtub and a shower in the unit, for the exclusive use of that unit;

(ii) on not less than three separate occasions during the preceding winter months, was uncomfortably

cold for a period of more than 6 consecutive hours due

to a malfunction of the heating system for the unit;

(iii) has no functioning electrical service, exposed

wiring, any room in which there is not a functioning

electrical outlet, or has experienced three or more

blown fuses or tripped circuit breakers during the preceding 90-day period;

(iv) is accessible through a public hallway in

which there are no working light fixtures, loose or

missing steps or railings, and no elevator; or

(v) has severe maintenance problems, including

water leaks involving the roof, windows, doors, basement, or pipes or plumbing fixtures, holes or open

cracks in walls or ceilings, severe paint peeling or broken plaster, and signs of rodent infestation.

(G) SINGLE FAMILY PROPERTY.—The term ‘‘single family property’’ means a 1- to 4-family residence.

(H) SUBSTANDARD.—The term ‘‘substandard’’ means,

with respect to a multifamily housing project, that 25 percent or more of the dwelling units in the project have severe physical problems.

(I) UNIT OF GENERAL LOCAL GOVERNMENT.—The term

‘‘unit of general local government’’ has the meaning given

such term in section 102(a) of the Housing and Community

Development Act of 1974.

(J) UNOCCUPIED.—The term ‘‘unoccupied’’ means, with

respect to a residential property, that the unit of general

local government having jurisdiction over the area in
Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS 568

1The date of enactment was December 21, 2000.

which the project is located has certified in writing that

the property is not inhabited.

(12) REGULATIONS.—

(A) INTERIM.—Not later than 30 days after the date of

the enactment of this subsection 1, the Secretary shall

issue such interim regulations as are necessary to carry

out this subsection.

‘‘(B) FINAL.—Not later than 60 days after the date of

the enactment of this subsection 1, the Secretary shall

issue such final regulations as are necessary to carry out

this subsection.

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT

AMENDMENTS OF 1978

[Public Law 103–233; 108 Stat. 343; 12 U.S.C. 1701z–11 and 1701z–12]

SEC. 203. ø12 U.S.C. 1701z–11¿ MANAGEMENT AND DISPOSITION OF

MULTIFAMILY HOUSING PROJECTS.

(a) GOALS.—The Secretary of Housing and Urban Development

shall manage or dispose of multifamily housing projects that are

owned by the Secretary or that are subject to a mortgage held by

the Secretary in a manner that—

(1) is consistent with the National Housing Act and this

section;

(2) will protect the financial interests of the Federal Government; and

(3) will, in the least costly fashion among reasonable available alternatives, address the goals of—

(A) preserving certain housing so that it can remain

available to and affordable by low-income persons;

(B) preserving and revitalizing residential neighborhoods;

(C) maintaining existing housing stock in a decent,

safe, and sanitary condition;

(D) minimizing the involuntary displacement of tenants;

(E) maintaining housing for the purpose of providing

rental housing, cooperative housing, and homeownership

opportunities for low-income persons;

(F) minimizing the need to demolish multifamily housing projects;

(G) supporting fair housing strategies; and

(H) disposing of such projects in a manner consistent

with local housing market conditions.

In determining the manner in which a project is to be managed or

disposed of, the Secretary may balance competing goals relating to

individual projects in a manner that will further the purposes of

this section.

(b) DEFINITIONS.—For purposes of this section:

(1) MULTIFAMILY HOUSING PROJECT.—The term ‘‘multifamily housing project’’ means any multifamily rental housing

project which is, or prior to acquisition by the Secretary was,
569 Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS

assisted or insured under the National Housing Act, or was

subject to a loan under section 202 of the Housing Act of 1959.

(2) SUBSIDIZED PROJECT.—The term ‘‘subsidized project’’

means a multifamily housing project that, immediately prior to

the assignment of the mortgage on such project to, or the acquisition of such mortgage by, the Secretary, was receiving any

of the following types of assistance:

(A) Below market interest rate mortgage insurance

under the proviso of section 221(d)(5) of the National

Housing Act.

(B) Interest reduction payments made in connection

with mortgages insured under section 236 of the National

Housing Act.

(C) Direct loans made under section 202 of the Housing Act of 1959.

(D) Assistance in the form of—

(i) rent supplement payments under section 101 of

the Housing and Urban Development Act of 1965,

(ii) additional assistance payments under section

236(f)(2) of the National Housing Act,

(iii) housing assistance payments made under section 23 of the United States Housing Act of 1937 (as

in effect before January 1, 1975), or

(iv) housing assistance payments made under section 8 of the United States Housing Act of 1937 (excluding payments made for tenant-based assistance

under section 8),

if (except for purposes of section 183(c) of the Housing and

Community Development Act of 1987) such assistance payments are made to more than 50 percent of the units in

the project.

(3) FORMERLY SUBSIDIZED PROJECT.—The term ‘‘formerly

subsidized project’’ means a multifamily housing project owned

by the Secretary that was a subsidized project immediately

prior to its acquisition by the Secretary.

(4) UNSUBSIDIZED PROJECT.—The term ‘‘unsubsidized

project’’ means a multifamily housing project owned by the

Secretary that is not a subsidized project or a formerly subsidized project.

(5) AFFORDABLE.—A unit shall be considered affordable

if—

(A) for units occupied—

(i) by very low-income families, the rent does not

exceed 30 percent of 50 percent of the area median income, as determined by the Secretary, with adjustments for smaller and larger families; and

(ii) by low-income families other than very low-income families, the rent does not exceed 30 percent of

80 percent of the area median income, as determined

by the Secretary, with adjustments for smaller and

larger families; or

(B) the unit, or the family residing in the unit, is receiving assistance under section 8 of the United States

Housing Act of 1937.
Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS 570

1 Indented so in law.

(6) LOW-INCOME FAMILIES AND VERY LOW-INCOME FAMI- LIES.—The terms ‘‘low-income families’’ and ‘‘very low-income

families’’ shall have the meanings given the terms in section

3(b) of the United States Housing Act of 1937.

(7) PREEXISTING TENANT.—The term ‘‘preexisting tenant’’

means, with respect to a multifamily housing project acquired

pursuant to this section by a purchaser other than the Secretary at foreclosure or after sale by the Secretary, a family

that resides in a unit in the project immediately before the acquisition of the project by the purchaser.

(8) MARKET AREA.—The term ‘‘market area’’ means a market area determined by the Secretary.

(9) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(c) DISPOSITION OF PROPERTY.— (1) DISPOSITION TO PURCHASERS.—In carrying out this section, the Secretary may dispose of a multifamily housing

project owned by the Secretary on a negotiated, competitive

bid, or other basis, on such terms as the Secretary deems appropriate considering the low-income character of the project

and consistent with the goals in subsection (a), only to a purchaser determined by the Secretary to be capable of—

(A) satisfying the conditions of the disposition plan developed under paragraph (2) for the project;

(B) implementing a sound financial and physical management program that is designed to enable the project to

meet anticipated operating and repair expenses to ensure

that the project will remain in decent, safe, and sanitary

condition and in compliance with any standards under applicable State or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and

any such standards established by the Secretary;

(C) responding to the needs of the tenants and working cooperatively with tenant organizations;

(D) providing adequate organizational, staff, and financial resources to the project; and

(E) meeting such other requirements as the Secretary

may determine.

(2) DISPOSITION PLAN.— 1

(A) IN GENERAL.—Prior to the sale of a multifamily

housing project that is owned by the Secretary, the Secretary shall develop an initial disposition plan for the

project that specifies the minimum terms and conditions of

the Secretary for disposition of the project, the initial sales

price that is acceptable to the Secretary, and the assistance that the Secretary plans to make available to a prospective purchaser in accordance with this section.

(B) MARKET-WIDE PLANS.—In developing the initial

disposition plan under this subsection for a multifamily

housing project located in a market area in which at least

1 other multifamily housing project owned by the Secretary is located, the Secretary may coordinate the disposi-
571 Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS

tion of all such multifamily housing projects located within

the same market area to the extent and in such manner

as the Secretary determines appropriate to carry out the

goals under subsection (a).

(C) SALES PRICE.—The initial sales price shall be reasonably related to the intended use of the project after

sale, any rehabilitation requirements for the project, the

rents for units in the project that can be supported by the

market, the amount of rental assistance available for the

project under section 8 of the United States Housing Act

of 1937, the occupancy profile of the project (including family size and income levels for tenant families), and any

other factors that the Secretary considers appropriate.

(D) COMMUNITY AND TENANT INPUT.—In carrying out

this section, the Secretary shall develop procedures—

(i) to obtain appropriate and timely input into disposition plans from officials of the unit of general local

government affected, the community in which the

project is situated, and the tenants of the project; and

(ii) to facilitate, where feasible and appropriate,

the sale of multifamily housing projects to existing

tenant organizations with demonstrated capacity, to

public or nonprofit entities that represent or are affiliated with existing tenant organizations, or to other

public or nonprofit entities.

(E) TECHNICAL ASSISTANCE.—To carry out the procedures developed under subparagraph (D), the Secretary

may provide technical assistance, directly or indirectly,

and may use amounts available for technical assistance

under the Emergency Low Income Housing Preservation

Act of 1987, subtitle C of the Low-Income Housing Preservation and Resident Homeownership Act of 1990, subtitle

B of title IV of the Cranston-Gonzalez National Affordable

Housing Act, or this section, for the provision of technical

assistance under this paragraph. Recipients of technical

assistance funding under the provisions referred to in this

subparagraph shall be permitted to provide technical assistance to the extent of such funding under any of such

provisions or under this subparagraph, notwithstanding

the source of the funding.

(3) FORECLOSURE SALE.—In carrying out this section, the

Secretary shall—

(A) prior to foreclosing on any mortgage held by the

Secretary on any multifamily housing project, notify both

the unit of general local government in which the property

is located and the tenants of the property of the proposed

foreclosure sale; and

(B) dispose of a multifamily housing project through a

foreclosure sale only to a purchaser that the Secretary determines is capable of implementing a sound financial and

physical management program that is designed to enable

the project to meet anticipated operating and repair expenses to ensure that the project will remain in decent,

safe, and sanitary condition and in compliance with any
Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS 572

standards under applicable State or local laws, rules, ordinances, or regulations relating to the physical condition of

the housing and any such standards established by the

Secretary.

(d) MANAGEMENT AND MAINTENANCE OF PROPERTIES.—

(1) CONTRACTING FOR MANAGEMENT SERVICES.—In carrying

out this section, the Secretary may—

(A) contract for management services for a multifamily

housing project that is owned by the Secretary (or for

which the Secretary is mortgagee in possession) with forprofit and nonprofit entities and public agencies (including

public housing authorities) on a negotiated, competitive

bid, or other basis at a price determined by the Secretary

to be reasonable, with a manager the Secretary has determined is capable of—

(i) implementing a sound financial and physical

management program that is designed to enable the

project to meet anticipated operating and maintenance

expenses to ensure that the project will remain in decent, safe, and sanitary condition and in compliance

with any standards under applicable State or local

laws, rules, ordinances, or regulations relating to the

physical condition of the project and any such standards established by the Secretary;

(ii) responding to the needs of the tenants and

working cooperatively with tenant organizations;

(iii) providing adequate organizational, staff, and

financial resources to the project; and

(iv) meeting such other requirements as the Secretary may determine; and

(B) require the owner of a multifamily housing project

that is subject to a mortgage held by the Secretary to contract for management services for the project in the manner described in subparagraph (A).

(2) MAINTENANCE OF PROJECTS OWNED BY SECRETARY.—In

the case of multifamily housing projects that are owned by the

Secretary (or for which the Secretary is mortgagee in possession), the Secretary shall—

(A) to the greatest extent possible, maintain all such

occupied projects in a decent, safe, and sanitary condition

and in compliance with any standards under applicable

State or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such

standards established by the Secretary;

(B) to the greatest extent possible, maintain full occupancy in all such projects; and

(C) maintain all such projects for purposes of providing rental or cooperative housing.

(3) PROJECTS SUBJECT TO A MORTGAGE HELD BY SECRETARY.—In the case of any multifamily housing project that

is subject to a mortgage held by the Secretary, the Secretary

shall require the owner of the project to carry out the requirements of paragraph (2).
573 Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS

(e) REQUIRED ASSISTANCE.—In disposing of multifamily housing property under this section, consistent with the goal of section

203(a)(3)(A), the Secretary shall take, separately or in combination

with other actions under this subsection or subsection (f), one or

more of the following actions:

(1) CONTRACT WITH OWNER FOR PROJECT-BASED ASSIST- ANCE.—In the case of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure

or after sale by the Secretary, the Secretary may enter into

contracts under section 8 of the United States Housing Act of

1937 (to the extent budget authority is available) with owners

of the projects, subject to the following requirements:

(A) SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS RE- CEIVING MORTGAGE-RELATED ASSISTANCE.—In the case of a

subsidized or formerly subsidized project referred to in

subparagraphs (A) through (C) of subsection (b)(2)—

(i) the contract shall be sufficient to assist at least

all units covered by an assistance contract under any

of the authorities referred to in subsection (b)(2)(D) before acquisition or foreclosure, unless the Secretary

acts pursuant to the provisions of subparagraph (C);

(ii) the contract shall provide that, when a vacancy occurs in any unit in the project requiring

project-based rental assistance pursuant to this subparagraph that is occupied by a family who is not eligible for assistance under such section 8, the owner

shall lease the available unit to a family eligible for

assistance under such section 8; and

(iii) the Secretary shall take actions to ensure that

any unit in any such project that does not otherwise

receive project-based assistance under this subparagraph remains available and affordable for the remaining useful life of the project, as defined by the

Secretary; to carry out this clause, the Secretary may

require purchasers to establish use or rent restrictions

maintaining the affordability of such units.

(B) SUBSIDIZED OR FORMERLY SUBSIDIZED PROJECTS RECEIVING RENTAL ASSISTANCE.—In the case of a subsidized

or formerly subsidized project referred to in subsection

(b)(2)(D) that is not subject to subparagraph (A)—

(i) the contract shall be sufficient to assist at least

all units in the project that are covered, or were covered immediately before foreclosure on or acquisition

of the project by the Secretary, by an assistance contract under any of the provisions referred to in such

subsection, unless the Secretary acts pursuant to provisions of subparagraph (C); and

(ii) the contract shall provide that, when a vacancy occurs in any unit in the project requiring

project-based rental assistance pursuant to this subparagraph that is occupied by a family who is not eligible for assistance under such section 8, the owner

shall lease the available unit to a family eligible for

assistance under such section 8.
Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS 574

(C) EXCEPTIONS.—

(i) AUTHORITY.—In lieu of providing project-based

assistance under section 8 of the United States Housing Act of 1937 in accordance with subparagraph (A)(i)

or (B)(i) for a project, the Secretary may, for certain

units in unsubsidized projects located within the same

market area as the project otherwise required to be assisted with such project-based assistance—

(I) require use and rent restrictions providing

that such units shall be available to and affordable by very low-income families for the remaining

useful life of the project (as defined by the Secretary), or

(II) provide project-based assistance under

section 8 for such units to be occupied by only

very low-income persons,

but only if the requirements under clause (ii) are met.

(ii) REQUIREMENTS.—The requirements under this

clause are that—

(I) upon the disposition of the project otherwise required to be assisted with project-based assistance under subparagraph (A)(i) or (B)(i), the

Secretary shall make available tenant-based assistance under section 8 to low-income families residing in units otherwise required to be assisted

with such project-based assistance; and

(II) the number of units subject to use restrictions or provided assistance under clause (i) shall

be at least equivalent to the number of units otherwise required to be assisted with project-based

assistance under section 8 in accordance with subparagraph (A)(i) or (B)(i).

(D) UNSUBSIDIZED PROJECTS.—Notwithstanding actions taken pursuant to subparagraph (C), in the case of

unsubsidized projects, the contract shall be sufficient to

provide—

(i) project-based rental assistance for all units that

are covered, or were covered immediately before foreclosure or acquisition, by an assistance contract

under—

(I) the new construction and substantial rehabilitation program under section 8(b)(2) of the

United States Housing Act of 1937 (as in effect before October 1, 1983);

(II) the property disposition program under

section 8(b) of such Act;

(III) the project-based certificate program

under section 8 of such Act;

(IV) the moderate rehabilitation program

under section 8(e)(2) of such Act;

(V) section 23 of such Act (as in effect before

January 1, 1975);
575 Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS

1So in law.

(VI) the rent supplement program under section 101 of the Housing and Urban Development

Act of 1965; or

(VII) section 8 of the United States Housing

Act of 1937, following conversion from assistance

under section 101 of the Housing and Urban Development Act of 1965; and

(ii) tenant-based assistance under section 8 of the

United States Housing Act of 1937 for families that

are preexisting tenants of the project in units that, immediately before foreclosure or acquisition of the

project by the Secretary, were covered by an assistance contract under the loan management set-aside

program under section 8(b) of the United States Housing Act of 1937.

(2) ANNUAL CONTRIBUTION CONTRACTS FOR TENANT-BASED

ASSISTANCE.—In the case of multifamily housing projects that

are acquired by a purchaser other than the Secretary at foreclosure or after sale by the Secretary, the Secretary may enter

into annual contribution contracts with public housing agencies

to provide tenant-based assistance under section 8 of the

United States Housing Act of 1937 on behalf of all low-income

families who are otherwise eligible for assistance in accordance

with subparagraph (A), (B), or (D) of paragraph (1) on the date

that the project is acquired by the purchaser, subject to the following requirements:

(A) REQUIREMENT OF SUFFICIENT AFFORDABLE HOUSING

IN AREA.—The Secretary may not take action under this

paragraph unless the Secretary determines that there is

available in the area an adequate supply of habitable, affordable housing for very low-income families and other

low-income families using tenant-based assistance.

(B) LIMITATION FOR SUBSIDIZED AND FORMERLY SUBSIDIZED PROJECTS.—The Secretary may not take actions

under this paragraph in connection with units in subsidized or formerly subsidized projects for more than 10

percent of the aggregate number of units in such projects

disposed of by the Secretary in any fiscal year.

(3) OTHER ASSISTANCE.— (A) IN GENERAL.—In accordance with the authority

provided under the National Housing Act, the Secretary

may provide other assistance pursuant to subsection (f) to

the owners of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure, or after sale by the Secretary, on terms that ensure that—

(i) at least the units in the project otherwise required to receive project-based assistance pursuant to

subparagraphs 1 (A), (B), or (D) of paragraph (1) are

available to and affordable by low-income persons; and

(ii) for the remaining useful life of the project, as

defined by the Secretary, there shall be in force such
Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS 576

use or rent restrictions as the Secretary may prescribe.

(B) VERY LOW-INCOME TENANTS.—If, as a result of actions taken pursuant to this paragraph, the rents charged

to any very low-income families residing in the project who

are otherwise required (pursuant to subparagraph (A), (B),

or (D) of paragraph (1)) to receive project-based assistance

under section 8 of the United States Housing Act of 1937

exceed the amount payable as rent under section 3(a) of

the United States Housing Act of 1937, the Secretary shall

provide tenant-based assistance under section 8 of such

Act to such families.

(f) DISCRETIONARY ASSISTANCE.—In addition to the actions required under subsection (e) for a subsidized, formerly subsidized, or

unsubsidized multifamily housing project, the Secretary may, pursuant to the disposition plan and the goals in subsection (a), take

one or more of the following actions:

(1) DISCOUNTED SALES PRICE.—In accordance with the authority provided under the National Housing Act, the Secretary

may reduce the selling price of the project. Such reduced sales

price shall be reasonably related to the intended use of the

property after sale, any rehabilitation requirements for the

project, the rents for units in the project that can be supported

by the market, the amount of rental assistance available for

the project under section 8 of the United States Housing Act

of 1937, the occupancy profile of the project (including family

size and income levels for tenant families), and any other factors that the Secretary considers appropriate.

(2) USE AND RENT RESTRICTIONS.—The Secretary may require certain units in a project to be subject to use or rent restrictions providing that such units will be available to and affordable by low- and very low-income persons for the remaining useful life of the property, as defined by the Secretary.

(3) SHORT-TERM LOANS.—The Secretary may provide shortterm loans to facilitate the sale of a multifamily housing

project if—

(A) authority for such loans is provided in advance in

an appropriation Act;

(B) such loan has a term of not more than 5 years;

(C) the Secretary determines, based upon documentation provided to the Secretary, that the borrower has obtained a commitment of permanent financing to replace

the short-term loan from a lender who meets standards established by the Secretary; and

(D) the terms of such loan are consistent with prevailing practices in the marketplace or the provision of

such loan results in no cost to the Government, as defined

in section 502 of the Congressional Budget Act of 1974.

(4) UP-FRONT GRANTS.—If the Secretary determines that

action under this paragraph is more cost-effective than establishing rents pursuant to subsection (h)(2), the Secretary may

utilize the budget authority provided for contracts issued under

this section for project-based assistance under section 8 of the

United States Housing Act of 1937 to (in addition to providing
577 Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS

project-based section 8 rental assistance) provide up-front

grants for the necessary cost of rehabilitation and other related

development costs.

(5) TENANT-BASED ASSISTANCE.—The Secretary may make

available tenant-based assistance under section 8 of the United

States Housing Act of 1937 to families residing in a multifamily housing project that do not otherwise qualify for projectbased assistance.

(6) ALTERNATIVE USES.—

(A) IN GENERAL.—Notwithstanding any other provision

of law, after providing notice to and an opportunity for

comment by preexisting tenants, the Secretary may allow

not more than—

(i) 10 percent of the total number of units in multifamily housing projects that are disposed of by the

Secretary during any fiscal year to be made available

for uses other than rental or cooperative uses, including low-income homeownership opportunities, or in

any particular project, community space, office space

for tenant or housing-related service providers or security programs, or small business uses, if such uses

benefit the tenants of the project; and

(ii) 5 percent of the total number of units in multifamily housing projects that are disposed of by the

Secretary during any fiscal year to be used in any

manner, if the Secretary and the unit of general local

government or area-wide governing body determine

that such use will further fair housing, community development, or neighborhood revitalization goals.

(B) DISPLACEMENT PROTECTION.—The Secretary may

take actions under subparagraph (A) only if—

(i) tenant-based rental assistance under section 8

of the United States Housing Act of 1937 is made

available to each eligible family residing in the project

that is displaced as a result of such actions; and

(ii) the Secretary determines that sufficient habitable, affordable rental housing is available in the market area in which the project is located to ensure use

of such assistance.

(7) TRANSFER FOR USE UNDER OTHER PROGRAMS OF SECRETARY.—

(A) IN GENERAL.—Notwithstanding the provisions of

subsection (e), the Secretary may, pursuant to an agreement under subparagraph (B), transfer a multifamily

housing project—

(i) to a public housing agency for use of the project

as public housing; or

(ii) to an entity eligible to own or operate housing

assisted under section 202 of the Housing Act of 1959

or under section 811 of the Cranston-Gonzalez National Affordable Housing Act for use as supportive

housing under either of such sections.
Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS 578

(B) REQUIREMENTS FOR AGREEMENT.—An agreement

providing for the transfer of a project described in subparagraph (A) shall—

(i) contain such terms, conditions, and limitations

as the Secretary determines appropriate, including requirements to ensure use of the project as public housing, supportive housing under section 202 of the Housing Act of 1959, or supportive housing under section

811 of the Cranston-Gonzalez National Affordable

Housing Act, as applicable; and

(ii) ensure that no tenant of the project will be displaced as a result of actions taken under this paragraph.

(8) REBUILDING.—Notwithstanding any provision of section

8 of the United States Housing Act of 1937, the Secretary may

provide project-based assistance in accordance with subsection

(e) of this section to support the rebuilding of a multifamily

housing project rebuilt or to be rebuilt (in whole or in part and

on-site, off-site, or in a combination of both) in connection with

disposition under this section, if the Secretary determines

that—

(A) the project is not being maintained in a decent,

safe, and sanitary condition;

(B) rebuilding the project would be less expensive than

substantial rehabilitation;

(C) the unit of general local government in which the

project is located approves the rebuilding and makes a financial contribution or other commitment to the project;

and

(D) the rebuilding is a part of a local neighborhood revitalization plan approved by the unit of general local government.

The provisions of subsection (j)(2) shall apply to any tenants of

the project who are displaced.

(9) EMERGENCY ASSISTANCE FUNDS.—The Secretary may

make arrangements with State agencies and units of general

local government of States receiving emergency assistance

under part A of title IV of the Social Security Act for the provision of assistance under such Act on behalf of eligible families

who would reside in any multifamily housing projects.

(g) PROTECTION FOR UNASSISTED VERY LOW-INCOME TENANTS.—For each multifamily housing project disposed of under this

section, the Secretary shall require that, for any very low-income

family who is a preexisting tenant of the project who (upon disposition) would be required to pay rent in an amount in excess of 30

percent of the adjusted income (as such term is defined in section

3(b) of the United States Housing Act of 1937) of the family—

(1) for a period of 2 years beginning upon the date of the

acquisition of the project by the purchaser under such disposition, the rent for the unit occupied by the family may not be

increased above the rent charged immediately before acquisition;

(2) such family shall be considered displaced for purposes

of any system of preferences established pursuant to section
579 Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS

6(c)(4)(A), 8(d)(1)(A), or 8(o)(6)(A) of the United States Housing

Act of 1937; and

(3) notice shall be provided to such family, not later than

the date of the acquisition of the project by the purchaser—

(A) of the requirements under paragraphs (1) and (2);

and

(B) that, after the expiration of the period under paragraph (1), the rent for the unit occupied by the family may

be increased.

(h) CONTRACT REQUIREMENTS.—Contracts for project-based

rental assistance under section 8 of the United States Housing Act

of 1937 provided pursuant to this section shall be subject to the following requirements:

(1) CONTRACT TERM.—The contract shall have a term of 15

years, except that the term may be less than 15 years—

(A) to the extent that the Secretary finds that, based

on the rental charges and financing for the multifamily

housing project to which the contract relates, the financial

viability of the project can be maintained under a contract

having such a term; except that the Secretary shall require

that the amount of rent payable by tenants of the project

for units assisted under such contract shall not exceed the

amount payable for rent under section 3(a) of the United

States Housing Act of 1937 for a period of at least 15

years; or

(B) if such assistance is provided—

(i) under a contract authorized under section 6 of

the HUD Demonstration Act of 1993; and

(ii) pursuant to a disposition plan under this section for a project that is determined by the Secretary

to be otherwise in compliance with this section.

(2) CONTRACT RENT.—The Secretary shall establish the

contract rents under such contracts at levels that, together

with other resources available to the purchasers, provide sufficient amounts for the necessary costs of rehabilitating and operating the multifamily housing project and do not exceed the

percentage of the existing housing fair market rentals for the

market area in which the project assisted under the contract

is located as determined by the Secretary under section 8(c) of

the United States Housing Act of 1937.

(i) RIGHT OF FIRST REFUSAL FOR LOCAL AND STATE GOVERNMENT AGENCIES.—

(1) NOTIFICATION.—Not later than 30 days after the Secretary acquires title to a multifamily housing project, the Secretary shall notify the appropriate unit of general local government (including public housing agencies) and State agency or

agencies designated by the chief executive officer of the State

in which the project is located of such acquisition of title and

that, for a period beginning upon such notification that does

not exceed 90 days, such unit of general local government and

agency or agencies shall have the exclusive right under this

subsection to make bona fide offers to purchase the project.

(2) RIGHT OF FIRST REFUSAL.—During the 90-day period,

the Secretary may not sell or offer to sell the multifamily hous-
Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS 580

ing project other than to a party notified under paragraph (1),

unless the unit of general local government and the designated

State agency or agencies notify the Secretary that they will not

make an offer to purchase the project. The Secretary shall accept a bona fide offer to purchase the project made during such

period if it complies with the terms and conditions of the disposition plan for the project or is otherwise acceptable to the

Secretary.

(3) PROCEDURE.—The Secretary shall establish any procedures necessary to carry out this subsection.

(j) DISPLACEMENT OF TENANTS AND RELOCATION ASSISTANCE.— (1) IN GENERAL.—Whenever tenants will be displaced as a

result of the demolition of, repairs to, or conversion in the use

of, a multifamily housing project that is owned by the Secretary (or for which the Secretary is mortgagee in possession),

the Secretary shall identify tenants who will be displaced, and

shall notify all such tenants of their pending displacement and

of any relocation assistance that may be available. In the case

of a multifamily housing project that is subject to a mortgage

held by the Secretary, the Secretary shall require the owner of

the project to carry out the requirements of this paragraph, if

the Secretary has authorized the demolition of, repairs to, or

conversion in the use of such multifamily housing project.

(2) RIGHTS OF DISPLACED TENANTS.—The Secretary shall

ensure for any such tenant (who continues to meet applicable

qualification standards) the right—

(A) to return, whenever possible, to a repaired or rebuilt unit;

(B) to occupy a unit in another multifamily housing

project owned by the Secretary;

(C) to obtain housing assistance under the United

States Housing Act of 1937; or

(D) to receive any other available similar relocation assistance as the Secretary determines to be appropriate.

(k) MORTGAGE AND PROJECT SALES.—

(1) IN GENERAL.—The Secretary may not approve the sale

of any loan or mortgage held by the Secretary (including any

loan or mortgage owned by the Government National Mortgage

Association) on any subsidized project or formerly subsidized

project, unless such sale is made as part of a transaction that

will ensure that such project will continue to operate at least

until the maturity date of such loan or mortgage, in a manner

that will provide rental housing on terms at least as advantageous to existing and future tenants as the terms required

by the program under which the loan or mortgage was made

or insured prior to the assignment of the loan or mortgage on

such project to the Secretary.

(2) SALE OF CERTAIN PROJECTS.—The Secretary may not

approve the sale of any subsidized project—

(A) that is subject to a mortgage held by the Secretary,

or

(B) if the sale transaction involves the provision of any

additional subsidy funds by the Secretary or a recasting of

the mortgage,
581 Sec. 203 DISPOSITION OF HUD-OWNED PROJECTS

unless such sale is made as part of a transaction that will ensure that the project will continue to operate, at least until the

maturity date of the loan or mortgage, in a manner that will

provide rental housing on terms at least as advantageous to

existing and future tenants as the terms required by the program under which the loan or mortgage was made or insured

prior to the proposed sale of the project.

(3) MORTGAGE SALES TO STATE AND LOCAL GOVERN- MENTS.—Notwithstanding any provision of law that requires

competitive sales or bidding, the Secretary may carry out negotiated sales of mortgages held by the Secretary, without the

competitive selection of purchasers or intermediaries, to units

of general local government or State agencies, or groups of investors that include at least one such unit of general local government or State agency, if the negotiations are conducted

with such agencies, except that—

(A) the terms of any such sale shall include the agreement of the purchasing agency or unit of local government

or State agency to act as mortgagee or owner of a beneficial interest in such mortgages, in a manner consistent

with maintaining the projects that are subject to such

mortgages for occupancy by the general tenant group intended to be served by the applicable mortgage insurance

program, including, to the extent the Secretary determines

appropriate, authorizing such unit of local government or

State agency to enforce the provisions of any regulatory

agreement or other program requirements applicable to

the related projects; and

(B) the sales prices for such mortgages shall be, in the

determination of the Secretary, the best prices that may be

obtained for such mortgages from a unit of general local

government or State agency, consistent with the expectation and intention that the projects financed will be retained for use under the applicable mortgage insurance

program for the life of the initial mortgage insurance contract.

(4) SALE OF MORTGAGES COVERING UNSUBSIDIZED

PROJECTS.—Notwithstanding any other provision of law, the

Secretary may sell mortgages held on projects that are not subsidized or formerly subsidized projects on such terms and conditions as the Secretary may prescribe.

(5) MORTGAGE SALE DEMONSTRATION.—The Secretary may

carry out a demonstration to test the feasibility of restructuring and disposing of troubled multifamily mortgages held by

the Secretary through the establishment of partnerships with

public, private, and nonprofit entities.

(6) PROJECT SALE DEMONSTRATION.—The Secretary may

carry out a demonstration to test the feasibility of disposing of

troubled multifamily housing projects that are owned by the

Secretary through the establishment of partnerships with public, private, and nonprofit entities.

(l) REPORT TO CONGRESS.—Not later than June 1 of each year,

the Secretary shall submit to the Congress a report describing the

status of multifamily housing projects owned by or subject to mort-
Sec. 204 DISPOSITION OF HUD-OWNED PROJECTS 582

gages held by the Secretary, on an aggregate basis, which highlights the differences, if any, between the subsidized and the unsubsidized inventory. The report shall include—

(1) the average and median size of the projects;

(2) the geographic locations of the projects, by State and

region;

(3) the years during which projects were assigned to the

Department, and the average and median length of time that

projects remain in the HUD-held inventory;

(4) the status of HUD-held mortgages;

(5) the physical condition of the HUD-held and HUDowned inventory;

(6) the occupancy profile of the projects, including the income, family size, race, and ethnic origin of current tenants,

and the rents paid by such tenants;

(7) the proportion of units that are vacant;

(8) the number of projects for which the Secretary is mortgagee in possession;

(9) the number of projects sold in foreclosure sales;

(10) the number of HUD-owned projects sold;

(11) a description of actions undertaken pursuant to this

section, including a description of the effectiveness of such actions and any impediments to the disposition or management

of multifamily housing projects;

(12) a description of the extent to which the provisions of

this section and actions taken under this section have displaced tenants of multifamily housing projects;

(13) a description of any of the functions performed in connection with this section that are contracted out to public or

private entities or to States; and

(14) a description of the activities carried out under subsection (i) during the preceding year.

HOUSING ACCESS

SEC. 204. ø12 U.S.C. 1701z–12¿ The Secretary shall require

any purchaser of a multifamily housing project owned by the Secretary which is sold on or after October 1, 1978, to agree not to

refuse unreasonably to lease a vacant dwelling unit in the project

which rents for an amount not greater than the fair market rent

for a comparable unit in the area as determined by the Secretary

under section 8 of the United States Housing Act of 1937 to a holder of a certificate of eligibility under that section solely because of

such prospective tenant’s status as a certificate holder.
583

HOUSING COUNSELING

EXCERPTS FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 90–448; 82 Stat. 484, 490; 12 U.S.C. 1701w, 1701x]

HOMEOWNERSHIP FOR LOWER INCOME FAMILIES

SEC. 101. ø12 U.S.C. 1701w¿ (a) * * *

* * * * * * *

(e) The Secretary of Housing and Urban Development is authorized to provide, or contract with public or private organizations

to provide, such budget, debt management, and related counseling

services to mortgagors whose mortgages are insured under section

235(i) or 235(j)(4) of the National Housing Act as he determines to

be necessary to assist such mortgagors in meeting the responsibilities of homeownership. There are authorized to be appropriated

such sums as may be necessary to carry out the provisions of this

subsection.

* * * * * * *

TECHNICAL ASSISTANCE, COUNSELING TO TENANTS AND HOMEOWNERS, AND LOANS TO SPONSORS OF LOW- AND MODERATE-INCOME HOUSING

SEC. 106. ø12 U.S.C. 1701x¿ (a)(1) The Secretary is authorized

to provide, or contract with public or private organizations to provide, information, advice, and technical assistance, including but

not limited to—

(i) the assembly, correlation, publication, and dissemination of information with respect to the construction, rehabilitation, and operation of low- and moderate-income housing;

(ii) the provision of advice and technical assistance to public bodies or to nonprofit or cooperative organizations with respect to the construction, rehabilitation, and operation of lowand moderate-income housing, including assistance with respect to self-help and mutual self-help programs;

(iii) counseling and advice to tenants and homeowners

with respect to property maintenance, financial management,

and such other matters as may be appropriate to assist them

in improving their housing conditions and in meeting the

responsibilities of tenancy or homeownership; and

(iv) the provision of technical assistance to communities,

particularly smaller communities, to assist such communities

in planning, developing, and administering Community Development Programs pursuant to title I of the Housing and Community Development Act of 1974.
Sec. 106 HOUSING COUNSELING 584

(2) The Secretary (A) shall provide the services described in

clause (iii) of paragraph (1) for homeowners assisted under section

235 of the National Housing Act; (B) shall, in consultation with the

Secretary of Agriculture, provide such services for borrowers who

are first-time homebuyers with guaranteed loans under section

502(h) of the Housing Act of 1949; and (C) may provide such services for other owners of single family dwelling units insured under

title II of the National Housing Act or guaranteed or insured under

chapter 37 of title 38, United States Code. For purposes of this

paragraph and clause (iii) of paragraph (1), the Secretary may provide the services described in such clause directly or may enter into

contracts with, make grants to, and provide other types of assistance to private or public organizations with special competence and

knowledge in counseling low- and moderate-income families to provide such services.

(3) There is authorized to be appropriated for the purposes of

this subsection, without fiscal year limitation, such sums as may

be necessary, except that for such purposes there are authorized to

be appropriated $6,025,000 for fiscal year 1993 and $6,278,050 for

fiscal year 1994. Of the amounts appropriated for each of fiscal

years 1993 and 1994, up to $500,000 shall be available for use for

counseling and other activities in connection with the demonstration program under section 152 of the Housing and Community Development Act of 1992. Any amounts so appropriated shall remain

available until expended.

(b)(1) The Secretary is authorized to make loans to nonprofit

organizations or public housing agencies for the necessary expenses, prior to construction, in planning, and obtaining financing

for, the rehabilitation or construction of housing for low- or moderate-income families under section 235 of the National Housing

Act or any other federally assisted program. Such loans shall be

made without interest and shall not exceed 80 per centum of the

reasonable costs expected to be incurred in planning, and in obtaining financing for, such housing prior to the availability of financing,

including, but not limited to, preliminary surveys and analyses of

market needs, preliminary site engineering and architectural fees,

site acquisition, application, and mortgage commitment fees, and

construction loan fees and discounts. The Secretary shall require

repayment of loans made under this subsection, under such terms

and conditions as he may require, upon completion of the project

or sooner, and may cancel any part or all of a loan if he determines

that it cannot be recovered from the proceeds of any permanent

loan made to finance the rehabilitation or construction of the housing.

(2) The Secretary shall determine prior to the making of any

loan that the nonprofit organization or public housing agency

meets such requirements with respect to financial responsibility

and stability as he may prescribe.

(3) There are authorized to be appropriated for the purposes of

this subsection not to exceed $7,500,000, for the fiscal year ending

June 30, 1969, and not to exceed $10,000,000 for the fiscal year

ending June 30, 1970. Any amounts so appropriated shall remain

available until expended, and any amounts authorized for any fis-
585 Sec. 106 HOUSING COUNSELING

cal year under this paragraph but not appropriated may be appropriated for any succeeding fiscal year.

(4) All funds appropriated for the purposes of this subsection

shall be deposited in a fund which shall be known as the Low and

Moderate Income Sponsor Fund, and which shall be available without fiscal year limitation and be administered by the Secretary as

a revolving fund for carrying out the purposes of this subsection.

Sums received in repayment of loans made under this subsection

shall be deposited in such fund.

(c) GRANTS FOR HOMEOWNERSHIP COUNSELING ORGANIZA- TIONS.—(1) IN GENERAL.—The Secretary of Housing and Urban Development may make grants—

(A) to nonprofit organizations experienced in the provision of homeownership counseling to enable the organizations to provide homeownership counseling to eligible

homeowners; and

(B) to assist in the establishment of nonprofit homeownership counseling organizations.

(2) PROGRAM REQUIREMENTS.— (A) Applications for grants under this subsection shall

be submitted in the form, and in accordance with the procedures, that the Secretary requires.

(B) The homeownership counseling organizations receiving assistance under this subsection shall use the

assistance only to provide homeownership counseling to

eligible homeowners.

(C) The homeownership counseling provided by homeownership counseling organizations receiving assistance

under this subsection shall include counseling with respect

to—

(i) financial management;

(ii) available community resources, including public assistance programs, mortgage assistance programs, home repair assistance programs, utility assistance programs, food programs, and social services; and

(iii) employment training and placement.

(3) AVAILABILITY OF HOMEOWNERSHIP COUNSELING.—The

Secretary shall take any action that is necessary—

(A) to ensure the availability throughout the United

States of homeownership counseling from homeownership

counseling organizations receiving assistance under this

subsection, with priority to areas that—

(i) are experiencing high rates of home foreclosure

and any other indicators of homeowner distress determined by the Secretary to be appropriate;

(ii) are not already adequately served by homeownership counseling organizations; and

(iii) have a high incidence of mortgages involving

principal obligations (including such initial service

charges, appraisal, inspection, and other fees as the

Secretary shall approve) in excess of 97 percent of the

appraised value of the properties that are insured pursuant to section 203 of the National Housing Act; and
Sec. 106 HOUSING COUNSELING 586

(B) to inform the public of the availability of the homeownership counseling.

(4) ELIGIBILITY FOR COUNSELING.—A homeowner shall be

eligible for homeownership counseling under this subsection

if—

(A) the home loan is secured by property that is the

principal residence (as defined by the Secretary) of the

homeowner;

(B) the home loan is not assisted under title V of the

Housing Act of 1949; and

(C) the homeowner is, or is expected to be, unable to

make payments, correct a home loan delinquency within a

reasonable time, or resume full home loan payments due

to a reduction in the income of the homeowner because

of—

(i) an involuntary loss of, or reduction in, the employment of the homeowner, the self-employment of

the homeowner, or income from the pursuit of the occupation of the homeowner; or

(ii) any similar loss or reduction experienced by

any person who contributes to the income of the

homeowner.

An applicant for a mortgage shall be eligible for homeownership counseling under this subsection if the applicant is a firsttime homebuyer who meets the requirements of section

303(b)(1) of the Cranston-Gonzalez National Affordable Housing Act and the mortgage involves a principal obligation (including such initial service charges, appraisal, inspection, and

other fees as the Secretary shall approve) in excess of 97 percent of the appraised value of the property and is to be insured

pursuant to section 203 of the National Housing Act.

(5) NOTIFICATION OF AVAILABILITY OF HOMEOWNERSHIP

COUNSELING.—

(A) NOTIFICATION OF AVAILABILITY OF HOMEOWNERSHIP

COUNSELING.—

(i) REQUIREMENT.—Except as provided in subparagraph (C), the creditor of a loan (or proposed creditor)

shall provide notice under clause (ii) to (I) any eligible

homeowner who fails to pay any amount by the date

the amount is due under a home loan, and (II) any applicant for a mortgage described in paragraph (4).

(ii) CONTENT.—Notification under this subparagraph shall—

(I) notify the homeowner or mortgage applicant of the availability of any homeownership

counseling offered by the creditor (or proposed

creditor);

(II) if provided to an eligible mortgage applicant, state that completion of a counseling program is required for insurance pursuant to section

203 of the National Housing Act; and

(III) notify the homeowner or mortgage applicant of the availability of homeownership counseling provided by nonprofit organizations ap-
587 Sec. 106 HOUSING COUNSELING

proved by the Secretary and experienced in the

provision of homeownership counseling, or provide

the toll-free telephone number described in subparagraph (D)(i).

(B) DEADLINE FOR NOTIFICATION.—The notification required in subparagraph (A) shall be made—

(i) in a manner approved by the Secretary; and

(ii) before the expiration of the 45-day period beginning on the date on which the failure referred to in

such subparagraph occurs.

(C) NOTIFICATION.—Notification under subparagraph

(A) shall not be required with respect to any loan for which

the eligible homeowner pays the amount overdue before

the expiration of the 45-day period under subparagraph

(B)(ii).

(D) ADMINISTRATION AND COMPLIANCE.—The Secretary

shall, to the extent of amounts approved in appropriation

Acts, enter into an agreement with an appropriate private

entity under which the entity will—

(i) operate a toll-free telephone number through

which any eligible homeowner can obtain a list of nonprofit organizations, which shall be updated annually,

that—

(I) are approved by the Secretary and experienced in the provision of homeownership counseling; and

(II) serve the area in which the residential

property of the homeowner is located;

(ii) monitor the compliance of creditors with the

requirements of subparagraphs (A) and (B); and

(iii) report to the Secretary not less than annually

regarding the extent of compliance of creditors with

the requirements of subparagraphs (A) and (B).

(E) REPORT.—The Secretary shall submit a report to

the Congress not less than annually regarding the extent

of compliance of creditors with the requirements of subparagraphs (A) and (B) and the effectiveness of the entity

monitoring such compliance. The Secretary shall also include in the report any recommendations for legislative action to increase the authority of the Secretary to penalize

creditors who do not comply with such requirements.

(6) DEFINITIONS.—For purposes of this subsection:

(A) The term ‘‘creditor’’ means a person or entity that

is servicing a home loan on behalf of itself or another person or entity.

(B) The term ‘‘eligible homeowner’’ means a homeowner eligible for counseling under paragraph (4).

(C) The term ‘‘home loan’’ means a loan secured by a

mortgage or lien on residential property.

(D) The term ‘‘homeowner’’ means a person who is obligated under a home loan.

(E) The term ‘‘residential property’’ means a 1-family

residence, including a 1-family unit in a condominium

project, a membership interest and occupancy agreement
Sec. 106 HOUSING COUNSELING 588

in a cooperative housing project, and a manufactured home

and the lot on which the home is situated.

(7) REGULATIONS.—The Secretary shall issue any regulations that are necessary to carry out this subsection.

(8) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to carry out this section $7,000,000 for

fiscal year 1993 and $7,294,000 for fiscal year 1994, of which

amounts $1,000,000 shall be available in each such fiscal year

to carry out paragraph (5)(D). Any amount appropriated under

this subsection shall remain available until expended.

(d) PREPURCHASE AND FORECLOSURE-PREVENTION COUNSELING

DEMONSTRATION.— (1) PURPOSES.—The purpose of this subsection is—

(A) to reduce defaults and foreclosures on mortgage

loans insured under the Federal Housing Administration

single family mortgage insurance program;

(B) to encourage responsible and prudent use of such

federally insured home mortgages;

(C) to assist homeowners with such federally insured

mortgages to retain the homes they have purchased pursuant to such mortgages; and

(D) to encourage the availability and expansion of

housing opportunities in connection with such federally insured home mortgages.

(2) AUTHORITY.—The Secretary of Housing and Urban Development shall carry out a program to demonstrate the effectiveness of providing coordinated prepurchase counseling and

foreclosure-prevention counseling to first-time homebuyers and

homeowners in avoiding defaults and foreclosures on mortgages insured under the Federal Housing Administration single family home mortgage insurance program.

(3) GRANTS.—Under the demonstration program under this

subsection, the Secretary shall make grants to qualified nonprofit organizations under paragraph (4) to enable the organizations to provide prepurchase counseling services to eligible

homebuyers and foreclosure-prevention counseling services to

eligible homeowners, in counseling target areas.

(4) QUALIFIED NONPROFIT ORGANIZATIONS.—The Secretary

shall select nonprofit organizations to receive assistance under

the demonstration program under this subsection based on the

experience and ability of the organizations in providing homeownership counseling and their ability to provide communitybased prepurchase and foreclosure-prevention counseling under

paragraphs (5) and (6) in a counseling target area. To be eligible for selection under this paragraph, a nonprofit organization

shall submit an application containing a proposal for providing

counseling services in the form and manner required by the

Secretary.

(5) PREPURCHASE COUNSELING.—

(A) MANDATORY PARTICIPATION.—Under the demonstration program, the Secretary shall require any eligible homebuyer who intends to purchase a home located in

a counseling target area and who has applied for (as determined by the Secretary) a qualified mortgage (as such
589 Sec. 106 HOUSING COUNSELING

term is defined in paragraph (9)) on such home that involves a downpayment of less than 10 percent of the principal obligation of the mortgage, to receive counseling prior

to signing of a contract to purchase the home. The counseling shall include counseling with respect to—

(i) financial management and the responsibilities

involved in homeownership;

(ii) fair housing laws and requirements;

(iii) the maximum mortgage amount that the

homebuyer can afford; and

(iv) options, programs, and actions available to the

homebuyer in the event of actual or potential delinquency or default.

(B) ELIGIBILITY FOR COUNSELING.—A homebuyer shall

be eligible for prepurchase counseling under this paragraph if—

(i) the homebuyer has applied for a qualified mortgage;

(ii) the homebuyer is a first-time homebuyer; and

(iii) the home to be purchased under the qualified

mortgage is located in a counseling target area.

(6) FORECLOSURE-PREVENTION COUNSELING.— (A) AVAILABILITY.—Under the demonstration program,

the Secretary shall make counseling available for eligible

homeowners who are 60 or more days delinquent with respect to a payment under a qualified mortgage on a home

located within a counseling target area. The counseling

shall include counseling with respect to options, programs,

and actions available to the homeowner for resolving the

delinquency or default.

(B) NOTIFICATION OF DELINQUENCY.—Under the demonstration program, the Secretary shall require the creditor of any eligible homeowner who is delinquent (as described in subparagraph (A)) to send written notice by registered or certified mail within 5 days (excluding Saturdays, Sundays, and legal public holidays) after the occurrence of such delinquency—

(i) notifying the homeowner of the delinquency

and the name, address, and phone number of the

counseling organization for the counseling target area;

and

(ii) notifying any counseling organization for the

counseling target area of the delinquency and the

name, address, and phone number of the delinquent

homeowner.

(C) COORDINATION WITH EMERGENCY HOMEOWNERSHIP

COUNSELING PROGRAM.—The Secretary may coordinate the

provision of assistance under subsection (c) with the demonstration program under this subsection.

(D) ELIGIBILITY FOR COUNSELING.—A homeowner shall

be eligible for foreclosure-prevention counseling under this

paragraph if—

(i) the home owned by the homeowner is subject

to a qualified mortgage; and
Sec. 106 HOUSING COUNSELING 590

(ii) such home is located in a counseling target

area.

(7) SCOPE OF DEMONSTRATION PROGRAM.— (A) DESIGNATION OF COUNSELING TARGET AREAS.—The

Secretary shall designate 3 counseling target areas (as provided in subparagraph (B)), which shall be located in not

less than 2 separate metropolitan areas. The Secretary

shall provide for counseling under the demonstration program under this subsection with respect to only such counseling target areas.

(B) COUNSELING TARGET AREAS.—Each counseling target area shall consist of a group of contiguous census

tracts—

(i) the population of which is greater than 50,000;

(ii) which together constitute an identifiable

neighborhood, area, borough, district, or region within

a metropolitan area (except that this clause may not

be construed to exclude a group of census tracts containing areas not wholly contained within a single

town, city, or other political subdivision of a State);

(iii) in which the average age of existing housing

is greater than 20 years; and

(iv) for which (I) the percentage of qualified mortgages on homes within the area that are foreclosed exceeds 5 percent for the calendar year preceding the

year in which the area is selected as a counseling target area, or (II) the number of qualified mortgages

originated on homes in such area in the calendar year

preceding the calendar year in which the area is selected as a counseling target area exceeds 20 percent

of the total number of mortgages originated on residences in the area during such year.

(C) MORTGAGE CHARACTERISTICS.—In designating

counseling target areas under subparagraph (A), the Secretary shall designate at least 1 such area that meets the

requirements of subparagraph (B)(iv)(I) and at least 1 such

area that meets the requirements of subparagraph

(B)(iv)(II).

(D) EXPANSION OF TARGET AREAS.—The Secretary may

expand any counseling target area during the term of the

demonstration program, if the Secretary determines that

counseling can be adequately provided within such expanded area and the purposes of this subsection will be

furthered by such expansion. Any such expansion shall include only groups of census tracts that are contiguous to

the counseling target area expanded and such census tract

groups shall not be subject to the provisions of subparagraph (B).

(E) DESIGNATION OF CONTROL AREAS.—For purposes of

determining the effectiveness of counseling under the demonstration program, the Secretary shall designate 3 control

areas, each of which shall correspond to 1 of the counseling

target areas designated under subparagraph (A). Each control area shall be located in the metropolitan area in which
591 Sec. 106 HOUSING COUNSELING

the corresponding counseling target area is located, shall

meet the requirements of subparagraph (B), and shall be

similar to such area with respect to size, age of housing

stock, median income, and racial makeup of the population. Each control area shall also comply with the requirements of subclause (I) or (II) of subparagraph (B)(iv),

according to the subclause with which the corresponding

counseling target area complies.

(8) EVALUATION.—Each organization providing counseling

under the demonstration program under this subsection shall

maintain records with respect to each eligible homebuyer and

eligible homeowner counseled and shall provide information

with respect to such counseling as the Secretary or the Comptroller General may require.

(9) DEFINITIONS.—For purposes of this subsection:

(A) The term ‘‘control area’’ means an area designated

by the Secretary under paragraph (7)(E).

(B) The term ‘‘counseling target area’’ means an area

designated by the Secretary under paragraph (7)(A).

(C) The term ‘‘creditor’’ means a person or entity that

is servicing a loan secured by a qualified mortgage on behalf of itself or another person or entity.

(D) The term ‘‘displaced homemaker’’ means an individual who—

(i) is an adult;

(ii) has not worked full-time, full-year in the labor

force for a number of years, but has during such years,

worked primarily without remuneration to care for the

home and family; and

(iii) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment.

(E) The term ‘‘downpayment’’ means the amount of

purchase price of home required to be paid at or before the

time of purchase.

(F) The term ‘‘eligible homebuyer’’ means a homebuyer

that meets the requirements under paragraph (5)(B).

(G) The term ‘‘eligible homeowner’’ means a homeowner that meets the requirements under paragraph

(6)(D).

(H) The term ‘‘first-time homebuyer’’ means an individual who—

(i) (and whose spouse) has had no ownership in a

principal residence during the 3-year period ending on

the date of purchase of the home pursuant to which

counseling is provided under this subsection;

(ii) is a displaced homemaker who, except for owning a residence with his or her spouse or residing in

a residence owned by the spouse, meets the requirements of clause (i); or

(iii) is a single parent who, except for owning a

residence with his or her spouse or residing in a residence owned by the spouse while married, meets the

requirements of clause (i).
Sec. 106 HOUSING COUNSELING 592

(I) The term ‘‘home’’ includes any dwelling or dwelling

unit eligible for a qualified mortgage, and includes a unit

in a condominium project, a membership interest and occupancy agreement in a cooperative housing project, and a

manufactured home and the lot on which the home is situated.

(J) The term ‘‘metropolitan area’’ means a standard

metropolitan statistical area as designated by the Director

of the Office of Management and Budget.

(K) The term ‘‘qualified mortgage’’ means a mortgage

on a 1- to 4-family home that is insured under title II of

the National Housing Act.

(L) The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(M) The term ‘‘single parent’’ means an individual

who—

(i) is unmarried or legally separated from a

spouse; and

(ii)(I) has 1 or more minor children for whom the

individual has custody or joint custody; or

(II) is pregnant.

(10) REGULATIONS.—The Secretary may issue any regulations necessary to carry out this subsection.

(11) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to carry out this subsection

$365,000 for fiscal year 1993 and $380,330 for fiscal year 1994.

(12) TERMINATION.—The demonstration program under

this subsection shall terminate at the end of fiscal year 1994.

(e) CERTIFICATION.—

(1) REQUIREMENT FOR ASSISTANCE.—An organization may

not receive assistance for counseling activities under subsection (a)(1)(iii), (a)(2), (c), or (d), unless the organization provides such counseling, to the extent practicable, by individuals

who have been certified by the Secretary under this subsection

as competent to provide such counseling.

(2) STANDARDS AND EXAMINATION.—The Secretary shall, by

regulation, establish standards and procedures for testing and

certifying counselors. Such standards and procedures shall require for certification that the individual shall demonstrate, by

written examination (as provided under subsection (f)(4)), competence to provide counseling in each of the following areas:

(A) Financial management.

(B) Property maintenance.

(C) Responsibilities of homeownership and tenancy.

(D) Fair housing laws and requirements.

(E) Housing affordability.

(F) Avoidance of, and responses to, rental and mortgage delinquency and avoidance of eviction and mortgage

default.

(3) ENCOURAGEMENT.—The Secretary shall encourage organizations engaged in providing homeownership and rental

counseling that do not receive assistance under this section to

employ individuals to provide such counseling who are certified
593 Sec. 106 HOUSING COUNSELING

under this subsection or meet the certification standards established under this subsection.

(f) HOMEOWNERSHIP AND RENTAL COUNSELOR TRAINING AND

CERTIFICATION PROGRAMS.— (1) ESTABLISHMENT.—To the extent amounts are provided

in appropriations Acts under paragraph (7), the Secretary shall

contract with an appropriate entity (which may be a nonprofit

organization) to carry out a program under this subsection to

train individuals to provide homeownership and rental counseling and to administer the examination under subsection

(e)(2) and certify individuals under such subsection.

(2) ELIGIBILITY AND SELECTION.— (A) ELIGIBILITY.—To be eligible to provide the training

and certification program under this subsection, an entity

shall have demonstrated experience in training homeownership and rental counselors.

(B) SELECTION.—The Secretary shall provide for entities meeting the requirements of subparagraph (A) to submit applications to provide the training and certification

program under this subsection. The Secretary shall select

an application based on the ability of the entity to—

(i) establish the program as soon as possible on a

national basis, but not later than the date under paragraph (6);

(ii) minimize the costs involved in establishing the

program; and

(iii) effectively and efficiently carry out the program.

(3) TRAINING.—The Secretary shall require that training of

counselors under the program under this subsection be designed and coordinated to prepare individuals for successful

completion of the examination for certification under subsection (e)(2). The Secretary, in consultation with the entity selected under paragraph (2)(B), shall establish the curriculum

and standards for training counselors under the program.

(4) CERTIFICATION.—The entity selected under paragraph

(2)(B) shall administer the examination under subsection (e)(2)

and, on behalf of the Secretary, certify individuals successfully

completing the examination. The Secretary, in consultation

with such entity, shall establish the content and format of the

examination.

(5) FEES.—Subject to the approval of the Secretary, the entity selected under paragraph (2)(B) may establish and impose

reasonable fees for participation in the training provided under

the program and for examination and certification under subsection (e)(2), in an amount sufficient to cover any costs of such

activities not covered with amounts provided under paragraph

(7).

(6) TIMING.—The entity selected under paragraph (2)(B) to

carry out the training and certification program shall establish

the program as soon as possible after such selection, and shall

make training and certification available under the program on

a national basis not later than the expiration of the 1-year period beginning upon such selection.
Sec. 106 HOUSING COUNSELING 594

(7) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to carry out this subsection $2,000,000

for fiscal year 1993 and $2,084,000 for 1994.
595

STATE HOUSING FINANCE AGENCIES

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1974

[Public Law 93–383; 88 Stat. 722; 42 U.S.C. 1440]

STATE HOUSING FINANCE AND DEVELOPMENT AGENCIES

SEC. 802. ø42 U.S.C. 1440¿ (a) It is the purpose of this section

to encourage the formation and effective operation of State housing

finance agencies and State development agencies which have authority to finance, to assist in carrying out, or to carry out activities

designed to (1) provide housing and related facilities through land

acquisition, construction, or rehabilitation, for persons and families

of low, moderate, and middle income, (2) promote the sound growth

and development of neighborhoods through the revitalization of

slum and blighted areas, (3) increase and improve employment opportunities for the unemployed and underemployed through the development and redevelopment of industrial, manufacturing, and

commercial facilities, or (4) implement the development aspects of

State land use and preservation policies, including the advance acquisition of land where it is consistent with such policies. The Secretary of Housing and Urban Development shall encourage maximum participation by private and nonprofit developers in activities assisted under this section.

(b)(1) A State housing finance or State development agency is

eligible for assistance under this section only if the Secretary determines that it is fully empowered and has adequate authority to at

least carry out or assist in carrying out the purposes specified in

clause (1) of subsection (a).

(2) for the purpose of this section—

(A) the term ‘‘State housing finance or State development

agency’’ means any public body or agency, publicly sponsored

corporation, or instrumentality of one or more States which is

designated by the Governor (or Governors in the case of an

interstate development agency) for purposes of this section;

(B) the term ‘‘State’’ means any State of the United States,

the District of Columbia, the Commonwealth of Puerto Rico, or

any territory or possession of the United States; and

(C) the term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(c)(1) The Secretary is authorized to guarantee, and enter into

commitments to guarantee, the bonds, debentures, notes, and other

obligations issued by State housing finance or State development

agencies to finance development activities as determined by him to

be in furtherance of the purpose of clause (1) or (2) of subsection

(a), except that obligations issued to finance activities solely in furtherance of the purpose of clause (1) of subsection (a) may be guar-
Sec. 802 STATE HOUSING FINANCE AGENCIES 596

anteed only if the activities are in connection with the revitalization of slum or blighted areas under title I of this Act or under any

other program determined to be acceptable by the Secretary for

this purpose.

(2) The Secretary is authorized to make, and to contract to

make, grants to or on behalf of a State housing finance or State

development agency to cover not to exceed 331⁄3 per centum of the

interest payable on bonds, debentures, notes, and other obligations

issued by such agency to finance development activities in furtherance of the purposes of this section.

(3) No obligation shall be guaranteed or otherwise assisted

under this section unless the interest income thereon is subject to

Federal taxation as provided in subsection (h)(2), except that use

of guarantees provided for in this subsection shall not be made a

condition to nor preclude receipt of any other Federal assistance.

(4) The full faith and credit of the United States is pledged to

the payment of all guarantees made under this section with respect

to principal, interest, and any redemption premiums. Any such

guarantee made by the Secretary shall be conclusive evidence of

the eligibility of the obligation involved for such guarantee, and the

validity of any guarantee so made shall be incontestable in the

hands of a holder of the guaranteed obligation.

(5) The Secretary is authorized to establish and collect such

fees and charges for and in connection with guarantees made under

this section as he considers reasonable.

(6) There are authorized to be appropriated such sums as may

be necessary to make payments as provided for in contracts entered into by the Secretary under paragraph (2) of this subsection,

and payments pursuant to such contracts shall not exceed

$50,000,000 per annum prior to July 1, 1975, which maximum dollar amount shall be increased by $60,000,000 on July 1, 1975. The

aggregate principal amount of the obligations which may be guaranteed under this section and outstanding at any one time shall

not exceed $500,000,000.

(d) The Secretary shall take such steps as he considers reasonable to assure that bonds, debentures, notes, and other obligations

which are guaranteed under subsection (c) will—

(1) be issued only to investors approved by, or meeting requirements prescribed by, the Secretary, or, if an offering to

the public is contemplated, be underwritten upon terms and

conditions approved by the Secretary;

(2) bear interest at a rate satisfactory to the Secretary;

(3) contain or be subject to repayment, maturity, and other

provisions satisfactory to the Secretary; and

(4) contain or be subject to provisions with respect to the

protection of the security interests of the United States, including any provisions deemed appropriate by the Secretary relating to subrogation, liens, and releases of liens, payment of

taxes, cost certification procedures, escrow or trusteeship requirements, or other matters.

(e)(1) The Secretary is authorized to establish a revolving fund

to provide for the timely payment of any liabilities incurred as a

result of guarantees under subsection (c) and for the payment of

obligations issued to the Secretary of the Treasury under para-
597 Sec. 802 STATE HOUSING FINANCE AGENCIES

graph (2) of this subsection. Such revolving fund shall be comprised

of (A) receipts from fees and charges; (B) recoveries under security,

subrogation, and other rights; (C) repayments, interest income, and

any other receipts obtained in connection with guarantees made

under subsection (c); (D) proceeds of the obligations issued to the

Secretary of the Treasury pursuant to paragraph (2) of this subsection; and (E) such sums, which are hereby authorized to be appropriated, as may be required for such purposes. Money in the revolving fund not currently needed for the purpose of this section

shall be kept on hand or on deposit, or invested in obligations of

the United States or guaranteed thereby, or in obligations, participations, or other instruments which are lawful investments for fiduciary, trust, or public funds.

(2) The Secretary may issue obligations to the Secretary of the

Treasury in an amount sufficient to enable the Secretary to carry

out his functions with respect to the guarantees authorized by subsection (c). The obligations issued under this paragraph shall have

such maturities and bear such rate or rates of interest as shall be

determined by the Secretary of the Treasury. The Secretary of the

Treasury is authorized and directed to purchase any obligations so

issued, and for that purpose he is authorized to use as a public

debt transaction the proceeds from the sale of any securities issued

under chapter 31 of title 31, United States Code, and the purposes

for which securities may be issued under such chapter are extended to include purchases of the obligations hereunder.

(3) Notwithstanding any other provision of law relating to the

acquisition, handling, improvement, or disposal of real and other

property by the United States, the Secretary shall have power, for

the protection of the interests of the fund authorized under this

subsection, to pay out of such fund all expenses or charges in connection with the acquisition, handling, improvement, or disposal of

any property, real or personal, acquired by him as a result of recoveries under security, subrogation, or other rights.

(f) The Secretary is authorized to provide, either directly or by

contract or other arrangements, technical assistance to State housing finance or State development agencies to assist them in connection with planning and carrying out development activities in furtherance of the purpose of this section.

(g) All laborers and mechanics employed by contractors or subcontractors in housing or development activities assisted under this

section shall be paid wages at rates not less than those prevailing

on similar work in the locality as determined by the Secretary of

Labor in accordance with the Davis-Bacon Act, as amended (40

U.S.C. 276a—276a–5): Provided, That this section shall apply to

the construction of residential property only if such property is designed for residential use for eight or more families. No assistance

shall be extended under this section with respect to any development activities without first obtaining adequate assurance that

these labor standards will be maintained upon the work involved

in such activities. The Secretary of Labor shall have, with respect

to the labor standards specified in this subsection, the authority

and functions set forth in Reorganization Plan Numbered 14 of

1950 (64 Stat. 1267), and section 2 of the Act of June 13, 1934 (40

U.S.C. 276c).
Sec. 802 STATE HOUSING FINANCE AGENCIES 598

(h)(1) In the performance of, and with respect to, the functions,

powers, and duties vested in him by this section, the Secretary, in

addition to any authority otherwise vested to him, shall—

(A) have the power, notwithstanding any other provision of

law, in connection with any guarantee under this section,

whether before or after default, to provide by contract for the

extinguishment upon default of any redemption, equitable,

legal, or other right, title, or interest of a State housing finance

or State development agency in any mortgage, deed, trust, or

other instrument held by or on behalf of the Secretary for the

protection of the security interests of the United States; and

(B) have the power to foreclose on any property or commence any action to protect or enforce any right conferred

upon him by law, contract, or other agreement, and bid for and

purchase at any foreclosure or other sale any property in connection with which he has provided a guarantee pursuant to

this section. In the event of any such acquisition, the Secretary

may, notwithstanding any other provision of law relating to

the acquisition, handling, or disposal or real property by the

United States, complete, administer, remodel and convert, dispose of, lease, and otherwise deal with, such property. Notwithstanding any other provision of law, the Secretary shall also

have power to pursue to final collection by way of compromise

or otherwise all claims acquired by him in connection with any

security, subrogation, or other rights obtained by him in administering this section.

(2) With respect to any obligation issued by a State housing finance or State development agency for which the issuer has elected

to receive the benefits of the assistance provided under this section,

the interest paid on such obligation and received by the purchaser

thereof (or his successor in interest) shall be included in gross income for the purposes of chapter 1 of the Internal Revenue Code

of 1954.

(i)(1) Section 24(a)(2) of the Federal Reserve Act (as amended

by section 711 of this Act) is amended by inserting the following

before the period at the end thereof: ‘‘, or to obligations guaranteed

under section 802 of the Housing and Community Development Act

of 1974’’.

(2) The twelfth paragraph of section 5(c) of the Homeowners’

Loan Act of 1933 is amended by adding in the last sentence immediately after the words ‘‘or under part B of the Urban Growth and

New Community Development Act of 1970’’ the following: ‘‘or under

section 802 of the Housing and Community Development Act of

1974’’.
599

AMENDMENTS AFFECTING TENANT RENTS

EXCERPT FROM HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

[Public Law 98–181; 97 Stat. 1180; 42 U.S.C. 1437a note]

AMENDMENTS AFFECTING TENANT RENTS OR CONTRIBUTIONS

SEC. 206. * * *

* * * * * * *

(d)(1) ø42 U.S.C. 1437a note¿ The following provisions of this

paragraph apply to determinations of the rent to be paid by or the

contribution required of a tenant occupying housing assisted under

the authorities amended by this section or subsections (a) through

(h) of section 322 of the Housing and Community Development

Amendments of 1981 (hereinafter referred to as ‘‘assisted housing’’)

on or before the effective date of regulations implementing this section:

(A) Notwithstanding any other provision of this section or

subsections (a) through (h) of section 322 of the Housing and

Community Development Amendments of 1981, the Secretary

of Housing and Urban Development (hereinafter referred to as

the ‘‘Secretary’’) may provide for delayed applicability, or for

staged implementation, of the procedures for determining rents

or contributions, as appropriate, required by such provisions if

the Secretary determines that immediate application of such

procedures would be impracticable, would violate the terms of

existing leases, or would result in extraordinary hardship for

any class of tenants.

(B) The Secretary shall provide that the rent or contribution, as appropriate, required to be paid by a tenant shall not

increase as a result of the amendments made by this section

and subsections (a) through (h) of section 322 of the Housing

and Community Development Amendments of 1981, and as a

result of any other provision of Federal law or regulation, by

more than 10 per centum during any twelve-month period, unless the increase above 10 per centum is attributable to increases in income which are unrelated to such amendments,

law, or regulation.

(2) Tenants of assisted housing other than those referred to in

paragraph (1) shall be subject to immediate rent payment or contribution determinations in accordance with applicable law and

without regard to the provisions of paragraph (1), but the Secretary

shall provide that the rent or contribution payable by any such tenant who is occupying assisted housing on the effective date of any

provision of Federal law or regulation shall not increase, as a result of any such provision of Federal law or regulation, by more

than 10 per centum during any twelve-month period, unless the in-
Sec. 206 AMENDMENTS AFFECTING TENANT RENTS 600

crease above 10 per centum is attributable to increases in income

which are unrelated to such law or regulation.

(3) In the case of tenants receiving rental assistance under section 521(a)(1) of the Housing Act of 1949 on the effective date of

this section whose assistance is converted to assistance under section 8 of the United States Housing Act of 1937 on or after such

date, the Secretary shall provide that the rent or contribution payable by any such tenant shall not increase, as a result of such conversion, by more than 10 per centum during any twelve-month period, unless the increase above 10 per centum is attributable to increases in income which are unrelated to such conversion or to any

provision of Federal law or regulation.

(4)(A) Notwithstanding any other provision of law, in the case

of the conversion of any assistance under section 101 of the Housing and Urban Development Act of 1965, section 236(f)(2) of the

National Housing Act, or section 23 of the United States Housing

Act of 1937 (as in effect before the date of the enactment of the

Housing and Community Development Act of 1974) to assistance

under section 8 of the United States Housing Act of 1937, any increase in rent payments or contributions resulting from such conversion, and from the amendments made by this section of any tenant benefiting from such assistance who is sixty-two years of age

or older may not exceed 10 per centum per annum.

(B) In the case of any such conversion of assistance occurring

on or after October 1, 1981, and before the date of the enactment

of this section, the rental payments due after such date of enactment by any tenant benefiting from such assistance who was sixtytwo years of age or older on the date of such conversion shall be

computed as if the tenant’s rental payment or contribution had, on

the date of conversion, been the lesser of the actual rental payment

or contribution required, or 25 per centum of the tenant’s income.

(5) The limitations on increases in rent contained in paragraphs (1)(B), (2), (3), and (4) shall remain in effect and may not

be changed or superseded except by another provision of law which

amends this subsection.

(6) As used in this subsection, the term ‘‘contribution’’ means

an amount representing 30 per centum of a tenant’s monthly adjusted income, 10 per centum of the tenant’s monthly income, or

the designated amount of welfare assistance, whichever amount is

used to determine the monthly assistance payment for the tenant

under section 3(a) of the United States Housing Act of 1937.

(7) The provisions of subsections (a) through (h) of section 322

of the Housing and Community Development Amendments of 1981

shall be implemented and fully applicable to all affected tenants no

later than five years following the date of enactment of such

amendments, except that the Secretary may extend the time for

implementation if the Secretary determines that full implementation would result in extraordinary hardship for any class of

tenants.
601

TREATMENT OF HOUSING ASSISTANCE AS INCOME

EXCERPT FROM HOUSING AUTHORIZATION ACT OF 1976

[Public Law 94–375; 90 Stat. 1068; 42 U.S.C. 1382 note]

SEC. 2. * * *

(h) ø42 U.S.C. 1382 note¿ Notwithstanding any other provision

of law, the value of any assistance paid with respect to a dwelling

unit under the United States Housing Act of 1937, the National

Housing Act, section 101 of the Housing and Urban Development

Act of 1965, or title V of the Housing Act of 1949 may not be considered as income or a resource for the purpose of determining the

eligibility of, or the amount of the benefits payable to, any person

living in such unit for assistance under title XVI of the Social Security Act. This subsection shall become effective on October 1, 1976.
602

1 August 1, 1994.

TREATMENT OF PAYMENTS MADE TO NAZI

PERSECUTION VICTIMS

PUBLIC LAW 103–286

[108 Stat. 1450; 42 U.S.C. 1437a note]

SECTION 1. CERTAIN PAYMENTS MADE TO VICTIMS OF NAZI PERSECUTION DISREGARDED IN DETERMINING ELIGIBILITY

FOR AND THE AMOUNT OF NEED-BASED BENEFITS AND

SERVICES.

(a) IN GENERAL.—Payments made to individuals because of

their status as victims of Nazi persecution shall be disregarded in

determining eligibility for and the amount of benefits or services to

be provided under any Federal or federally assisted program which

provides benefits or services based, in whole or in part, on need.

(b) APPLICABILITY.—Subsection (a) shall apply to determinations made on or after the date of the enactment of this Act 1 with

respect to payments referred to in subsection (a) made before, on,

or after such date.

(c) PROHIBITION AGAINST RECOVERY OF VALUE OF EXCESSIVE

BENEFITS OR SERVICES PROVIDED DUE TO FAILURE TO TAKE AC- COUNT OF CERTAIN PAYMENTS MADE TO VICTIMS OF NAZI PERSECU- TION.—No officer, agency, or instrumentality of any government

may attempt to recover the value of excessive benefits or services

provided before the date of the enactment of this Act under any

program referred to in subsection (a) by reason of any failure to

take account of payments referred to in subsection (a).

(d) NOTICE TO INDIVIDUALS WHO MAY HAVE BEEN DENIED ELI- GIBILITY FOR BENEFITS OR SERVICES DUE TO THE FAILURE TO DIS- REGARD CERTAIN PAYMENTS MADE TO VICTIMS OF NAZI PERSECU- TION.—Any agency of government that has not disregarded payments referred to in subsection (a) in determining eligibility for a

program referred to in subsection (a) shall make a good faith effort

to notify any individual who may have been denied eligibility for

benefits or services under the program of the potential eligibility of

the individual for such benefits or services.

(e) REPAYMENT OF ADDITIONAL RENT PAID UNDER HUD HOUS- ING PROGRAMS BECAUSE OF FAILURE TO DISREGARD REPARATION

PAYMENTS.—

(1) AUTHORITY.—To the extent that amounts are provided

in appropriation Acts for payments under this subsection, the

Secretary of Housing and Urban Development shall make payments to qualified individuals in the amount determined under

paragraph (3).

(2) QUALIFIED INDIVIDUALS.—For purposes of this subsection, the term ‘‘qualified individual’’ means an individual

who—
603 Sec. 1 TREATMENT OF PAYMENTS TO NAZI PERSECUTION VICTIMS

1The date of enactment was August 1, 1994.

(A) has received any payment because of the individual’s status as a victim of Nazi persecution;

(B) at any time during the period beginning on February 1, 1993 and ending on April 30, 1993, resided in a

dwelling unit in housing assisted under any program for

housing assistance of the Department of Housing and

Urban Development under which rent payments for the

unit were determined based on or taking into consideration the income of the occupant of the unit;

(C) paid rent for such dwelling unit for any portion of

the period referred to in subparagraph (B) in an amount

determined in a manner that did not disregard the payment referred to in subparagraph (A); and

(D) has submitted a claim for payment under this subsection as required under paragraph (4).

The term does not include the successors, heirs, or estate of an

individual meeting the requirements of the preceding sentence.

(3) AMOUNT OF PAYMENT.—The amount of a payment

under this subsection for a qualified individual shall be equal

to the difference between—

(A) the sum of the amount of rent paid by the individual for rental of the dwelling unit of the individual assisted under a program for housing assistance of the Department of Housing and Urban Development, for the period referred to in paragraph (2)(B), and

(B) the sum of the amount of rent that would have

been payable by the individual for rental of such dwelling

unit for such period if the payments referred to in paragraph (2)(A) were disregarded in determining the amount

of rent payable by the individual for such period.

(4) SUBMISSION OF CLAIMS.—A payment under this subsection for an individual may be made only pursuant to a written claim for such payment by such individual submitted to the

Secretary of Housing and Urban Development in the form and

manner required by the Secretary before—

(A) in the case of any individual notified by the Department of Housing and Urban Development orally or in

writing that such specific individual is eligible for a payment under this subsection, the expiration of the 6-month

period beginning on the date of receipt of such notice; and

(B) in the case of any other individual, the expiration

of the 12-month period beginning on the date of the enactment of this Act 1.
604

FINANCIAL ASSISTANCE IN IMPACTED AREAS

EXCERPT FROM THE HOUSING AND COMMUNITY DEVELOPMENT ACT

OF 1980

[Public Law 96–399; 94 Stat. 1638; 42 U.S.C. 1436b]

FINANCIAL ASSISTANCE IN IMPACTED AREAS

SEC. 216. ø42 U.S.C. 1436b¿ The Secretary of Housing and

Urban Development shall not exclude from consideration for financial assistance under federally assisted housing programs proposals

for housing projects solely because the site proposed is located

within an impacted area. For the purposes of this section, the term

‘‘federally assisted housing programs’’ means any program authorized by the United States Housing Act of 1937, sections 235 and

236 of the National Housing Act, section 101 of the Housing and

Urban Development Act of 1965, or section 202 of the Housing Act

of 1959.
605

RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

EXCERPTS FROM PERSONAL RESPONSIBILITY AND WORK

OPPORTUNITY RECONCILIATION ACT OF 1996

[Public Law 104–193; 110 Stat. 2260; 8 U.S.C. 1601 et seq.]

TITLE IV—RESTRICTING WELFARE AND

PUBLIC BENEFITS FOR ALIENS

SEC. 400. ø8 U.S.C. 1601¿ STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND IMMIGRATION.

The Congress makes the following statements concerning national policy with respect to welfare and immigration:

(1) Self-sufficiency has been a basic principle of United

States immigration law since this country’s earliest immigration statutes.

(2) It continues to be the immigration policy of the United

States that—

(A) aliens within the Nation’s borders not depend on

public resources to meet their needs, but rather rely

on their own capabilities and the resources of their families, their sponsors, and private organizations, and

(B) the availability of public benefits not constitute an

incentive for immigration to the United States.

(3) Despite the principle of self-sufficiency, aliens have

been applying for and receiving public benefits from Federal,

State, and local governments at increasing rates.

(4) Current eligibility rules for public assistance and unenforceable financial support agreements have proved wholly incapable of assuring that individual aliens not burden the public benefits system.

(5) It is a compelling government interest to enact new

rules for eligibility and sponsorship agreements in order to assure that aliens be self-reliant in accordance with national immigration policy.

(6) It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of

public benefits.

(7) With respect to the State authority to make determinations concerning the eligibility of qualified aliens for public

benefits in this title, a State that chooses to follow the Federal

classification in determining the eligibility of such aliens for

public assistance shall be considered to have chosen the least

restrictive means available for achieving the compelling governmental interest of assuring that aliens be self-reliant in

accordance with national immigration policy.
Sec. 401 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 606

Subtitle A—Eligibility for Federal Benefits

SEC. 401. ø8 U.S.C. 1611¿ ALIENS WHO ARE NOT QUALIFIED ALIENS

INELIGIBLE FOR FEDERAL PUBLIC BENEFITS.

(a) IN GENERAL.—Notwithstanding any other provision of law

and except as provided in subsection (b), an alien who is not a

qualified alien (as defined in section 431) is not eligible for any

Federal public benefit (as defined in subsection (c)).

(b) EXCEPTIONS.—

(1) Subsection (a) shall not apply with respect to the following Federal public benefits:

(A) Medical assistance under title XIX of the Social Security Act (or any successor program to such title) for care

and services that are necessary for the treatment of an

emergency medical condition (as defined in section

1903(v)(3) of such Act) of the alien involved and are not related to an organ transplant procedure, if the alien involved otherwise meets the eligibility requirements for

medical assistance under the State plan approved under

such title (other than the requirement of the receipt of aid

or assistance under title IV of such Act, supplemental security income benefits under title XVI of such Act, or a

State supplementary payment).

(B) Short-term, non-cash, in-kind emergency disaster

relief.

(C) Public health assistance (not including any assistance under title XIX of the Social Security Act) for immunizations with respect to immunizable diseases and for

testing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease.

(D) Programs, services, or assistance (such as soup

kitchens, crisis counseling and intervention, and shortterm shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after

consultation with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community

level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the

amount of assistance provided, or the cost of assistance

provided on the individual recipient’s income or resources;

and (iii) are necessary for the protection of life or safety.

(E) Programs for housing or community development

assistance or financial assistance administered by the Secretary of Housing and Urban Development, any program

under title V of the Housing Act of 1949, or any assistance

under section 306C of the Consolidated Farm and Rural

Development Act, to the extent that the alien is receiving

such a benefit on the date of the enactment of this Act.

(2) Subsection (a) shall not apply to any benefit payable

under title II of the Social Security Act to an alien who is lawfully present in the United States as determined by the Attorney General, to any benefit if nonpayment of such benefit
607 Sec. 401 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

would contravene an international agreement described in section 233 of the Social Security Act, to any benefit if nonpayment would be contrary to section 202(t) of the Social Security Act, or to any benefit payable under title II of the Social

Security Act to which entitlement is based on an application

filed in or before the month in which this Act becomes law.

(3) Subsection (a) shall not apply to any benefit payable

under title XVIII of the Social Security Act (relating to the

medicare program) to an alien who is lawfully present in the

United States as determined by the Attorney General and,

with respect to benefits payable under part A of such title, who

was authorized to be employed with respect to any wages attributable to employment which are counted for purposes of eligibility for such benefits.

(4) Subsection (a) shall not apply to any benefit payable

under the Railroad Retirement Act of 1974 or the Railroad Unemployment Insurance Act to an alien who is lawfully present

in the United States as determined by the Attorney General or

to an alien residing outside the United States.

(5) Subsection (a) shall not apply to eligibility for benefits

for the program defined in section 402(a)(3)(A) (relating to the

supplemental security income program), or to eligibility for

benefits under any other program that is based on eligibility

for benefits under the program so defined, for an alien who

was receiving such benefits on August 22, 1996.

(c) FEDERAL PUBLIC BENEFIT DEFINED.—

(1) Except as provided in paragraph (2), for purposes of

this title the term ‘‘Federal public benefit’’ means—

(A) any grant, contract, loan, professional license, or

commercial license provided by an agency of the United

States or by appropriated funds of the United States; and

(B) any retirement, welfare, health, disability, public

or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit

for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of

the United States or by appropriated funds of the United

States.

(2) Such term shall not apply—

(A) to any contract, professional license, or commercial

license for a nonimmigrant whose visa for entry is related

to such employment in the United States, or to a citizen

of a freely associated state, if section 141 of the applicable

compact of free association approved in Public Law 99–239

or 99–658 (or a successor provision) is in effect;

(B) with respect to benefits for an alien who as a work

authorized nonimmigrant or as an alien lawfully admitted

for permanent residence under the Immigration and Nationality Act qualified for such benefits and for whom the

United States under reciprocal treaty agreements is required to pay benefits, as determined by the Attorney General, after consultation with the Secretary of State; or
Sec. 402 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 608

(C) to the issuance of a professional license to, or the

renewal of a professional license by, a foreign national not

physically present in the United States.

SEC. 402. ø8 U.S.C. 1612¿ LIMITED ELIGIBILITY OF QUALIFIED ALIENS

FOR CERTAIN FEDERAL PROGRAMS.

(a) LIMITED ELIGIBILITY FOR SPECIFIED FEDERAL PROGRAMS.— (1) IN GENERAL.—Notwithstanding any other provision of

law and except as provided in paragraph (2), an alien who is

a qualified alien (as defined in section 431) is not eligible for

any specified Federal program (as defined in paragraph (3)).

(2) EXCEPTIONS.— (A) TIME-LIMITED EXCEPTION FOR REFUGEES AND

ASYLEES.—With respect to the specified Federal programs

described in paragraph (3), paragraph (1) shall not apply

to an alien until 7 years after the date—

(i) an alien is admitted to the United States as a

refugee under section 207 of the Immigration and Nationality Act;

(ii) an alien is granted asylum under section 208

of such Act;

(iii) an alien’s deportation is withheld under section 243(h) of such Act (as in effect immediately before

the effective date of section 307 of division C of Public

Law 104–208) or section 241(b)(3) of such Act (as

amended by section 305(a) of division C of Public Law

104–208);

(iv) an alien is granted status as a Cuban and

Haitian entrant (as defined in section 501(e) of the

Refugee Education Assistance Act of 1980); or

(v) an alien is admitted to the United States as an

Amerasian immigrant pursuant to section 584 of the

Foreign Operations, Export Financing, and Related

Programs Appropriations Act, 1988 (as contained in

section 101(e) of Public Law 100–202 and amended by

the 9th proviso under MIGRATION AND REFUGEE ASSIST- ANCE in title II of the Foreign Operations, Export Financing, and Related Programs Appropriations Act,

1989, Public Law 100–461, as amended).

(B) CERTAIN PERMANENT RESIDENT ALIENS.—Paragraph (1) shall not apply to an alien who—

(i) is lawfully admitted to the United States for

permanent residence under the Immigration and

Nationality Act; and

(ii)(I) has worked 40 qualifying quarters of coverage as defined under title II of the Social Security

Act or can be credited with such qualifying quarters as

provided under section 435, and (II) in the case of any

such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive any

Federal means-tested public benefit (as provided

under section 403) during any such period.

(C) VETERAN AND ACTIVE DUTY EXCEPTION.—Paragraph (1) shall not apply to an alien who is lawfully residing in any State and is—
609 Sec. 402 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

(i) a veteran (as defined in section 101, 1101, or

1301, or as described in section 107 of title 38, United

States Code) with a discharge characterized as an honorable discharge and not on account of alienage and

who fulfills the minimum active-duty service requirements of section 5303A(d) of title 38, United States

Code,

(ii) on active duty (other than active duty for

training) in the Armed Forces of the United States, or

(iii) the spouse or unmarried dependent child of

an individual described in clause (i) or (ii) or the

unremarried surviving spouse of an individual described in clause (i) or (ii) who is deceased if the marriage fulfills the requirements of section 1304 of title

38, United States Code.

(D) TRANSITION FOR ALIENS CURRENTLY RECEIVING

BENEFITS.—

(i) SSI.—

(I) IN GENERAL.—With respect to the specified

Federal program described in paragraph (3)(A),

during the period beginning on the date of the enactment of this Act and ending on September 30,

1998, the Commissioner of Social Security shall

redetermine the eligibility of any individual who

is receiving benefits under such program as of the

date of the enactment of this Act and whose eligibility for such benefits may terminate by reason of

the provisions of this subsection.

(II) REDETERMINATION CRITERIA.— With respect to any redetermination under subclause (I),

the Commissioner of Social Security shall apply

the eligibility criteria for new applicants for benefits under such program.

(III) GRANDFATHER PROVISION.—The provisions of this subsection and the redetermination

under subclause (I), shall only apply with respect

to the benefits of an individual described in subclause (I) for months beginning on or after September 30, 1998.

(IV) NOTICE.—Not later than March 31, 1997,

the Commissioner of Social Security shall notify

an individual described in subclause (I) of the provisions of this clause.

(ii) FOOD STAMPS.—

(I) IN GENERAL.—With respect to the specified

Federal program described in paragraph (3)(B), ineligibility under paragraph (1) shall not apply

until April 1, 1997, to an alien who received benefits under such program on the date of enactment

of this Act, unless such alien is determined to be

ineligible to receive such benefits under the Food

Stamp Act of 1977. The State agency shall recertify the eligibility of all such aliens during the pe-
Sec. 402 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 610

riod beginning April 1, 1997, and ending August

22, 1997.

(II) RECERTIFICATION CRITERIA.—With respect

to any recertification under subclause (I), the

State agency shall apply the eligibility criteria for

applicants for benefits under such program.

(III) GRANDFATHER PROVISION.—The provisions of this subsection and the recertification

under subclause (I) shall only apply with respect

to the eligibility of an alien for a program for

months beginning on or after the date of recertification, if on the date of enactment of this Act the

alien is lawfully residing in any State and is receiving benefits under such program on such date

of enactment.

(E) ALIENS RECEIVING SSI ON AUGUST 22, 1996.—With

respect to eligibility for benefits for the program defined in

paragraph (3)(A) (relating to the supplemental security income program), paragraph (1) shall not apply to an alien

who is lawfully residing in the United States and who was

receiving such benefits on August 22, 1996.

(F) DISABLED ALIENS LAWFULLY RESIDING IN THE

UNITED STATES ON AUGUST 22, 1996.—With respect to eligibility for benefits for the specified Federal programs described in paragraph (3), paragraph (1) shall not apply to

an alien who—

(i) in the case of the specified Federal program described in paragraph (3)(A)—

(I) was lawfully residing in the United States

on August 22, 1996; and

(II) is blind or disabled (as defined in paragraph (2) or (3) of section 1614(a) of the Social Security Act (42 U.S.C. 1382c(a))); and

(ii) in the case of the specified Federal program

described in paragraph (3)(B), is receiving benefits or

assistance for blindness or disability (within the meaning of section 3(r) of the Food Stamp Act of 1977 (7

U.S.C. 2012(r))).

(G) EXCEPTION FOR CERTAIN INDIANS.—With respect to

eligibility for benefits for the specified Federal programs

described in paragraph (3), section 401(a) and paragraph

(1) shall not apply to any individual—

(i) who is an American Indian born in Canada to

whom the provisions of section 289 of the Immigration

and Nationality Act (8 U.S.C. 1359) apply; or

(ii) who is a member of an Indian tribe (as defined

in section 4(e) of the Indian Self-Determination and

Education Assistance Act (25 U.S.C. 450b(e))).

(H) SSI EXCEPTION FOR CERTAIN RECIPIENTS ON THE

BASIS OF VERY OLD APPLICATIONS.—With respect to eligibility for benefits for the program defined in paragraph

(3)(A) (relating to the supplemental security income program), paragraph (1) shall not apply to any individual—
611 Sec. 402 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

(i) who is receiving benefits under such program

for months after July 1996 on the basis of an application filed before January 1, 1979; and

(ii) with respect to whom the Commissioner of Social Security lacks clear and convincing evidence that

such individual is an alien ineligible for such benefits

as a result of the application of this section.

(I) FOOD STAMP EXCEPTION FOR CERTAIN ELDERLY INDIVIDUALS.—With respect to eligibility for benefits for the

specified Federal program described in paragraph (3)(B),

paragraph (1) shall not apply to any individual who on August 22, 1996—

(i) was lawfully residing in the United States; and

(ii) was 65 years of age or older.

(J) FOOD STAMP EXCEPTION FOR CERTAIN CHILDREN.—

With respect to eligibility for benefits for the specified Federal program described in paragraph (3)(B), paragraph (1)

shall not apply to any individual who is under 18 years of

age.

(K) FOOD STAMP EXCEPTION FOR CERTAIN HMONG AND

HIGHLAND LAOTIANS.—With respect to eligibility for benefits for the specified Federal program described in paragraph (3)(B), paragraph (1) shall not apply to—

(i) any individual who—

(I) is lawfully residing in the United States;

and

(II) was a member of a Hmong or Highland

Laotian tribe at the time that the tribe rendered

assistance to United States personnel by taking

part in a military or rescue operation during the

Vietnam era (as defined in section 101 of title 38,

United States Code);

(ii) the spouse, or an unmarried dependent child,

of such an individual; or

(iii) the unremarried surviving spouse of such an

individual who is deceased.

(L) FOOD STAMP EXCEPTION FOR CERTAIN QUALIFIED

ALIENS.—With respect to eligibility for benefits for the

specified Federal program described in paragraph (3)(B),

paragraph (1) shall not apply to any qualified alien who

has resided in the United States with a status within the

meaning of the term ‘‘qualified alien’’ for a period of 5

years or more beginning on the date of the alien’s entry

into the United States.

(3) SPECIFIED FEDERAL PROGRAM DEFINED.—For purposes

of this title, the term ‘‘specified Federal program’’ means any

of the following:

(A) SSI.—The supplemental security income program

under title XVI of the Social Security Act, including supplementary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act and payments pursuant to an agreement entered into under section 212(b) of Public Law 93–66.
Sec. 402 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 612

1Margin so in law.

2So in law.

(B) FOOD STAMPS.—The food stamp program as defined in section 3(h) of the Food Stamp Act of 1977.

(b) LIMITED ELIGIBILITY FOR DESIGNATED FEDERAL

PROGRAMS.—

(1) IN GENERAL.—Notwithstanding any other provision of

law and except as provided in section 403 and paragraph (2),

a State is authorized to determine the eligibility of an alien

who is a qualified alien (as defined in section 431) for any designated Federal program (as defined in paragraph (3)).

(2) EXCEPTIONS.—Qualified aliens under this paragraph

shall be eligible for any designated Federal program.

(A) TIME-LIMITED EXCEPTION FOR REFUGEES AND

ASYLEES.—

(i) MEDICAID.—With respect to the designated

Federal program described in paragraph (3)(C), paragraph (1) shall not apply to an alien until 7 years after

the date—

(I) an alien is admitted to the United States

as a refugee under section 207 of the Immigration

and Nationality Act;

(II) an alien is granted asylum under section

208 of such Act;

(III) an alien’s deportation is withheld under

section 243(h) of such Act (as in effect immediately before the effective date of section 307 of

division C of Public Law 104–208) or section

241(b)(3) of such Act (as amended by section

305(a) of division C of Public Law 104–208);

(IV) an alien is granted status as a Cuban

and Haitian entrant (as defined in section 501(e)

of the Refugee Education Assistance Act of 1980);

or

(V) 1 an alien 2 admitted to the United States as

an Amerasian immigrant as described in subsection

(a)(2)(A)(i)(V) until 5 years after the date of such

alien’s entry into the United States.

(ii) OTHER DESIGNATED FEDERAL PROGRAMS.—With

respect to the designated Federal programs under

paragraph (3) (other than subparagraph (C)), paragraph (1) shall not apply to an alien until 5 years after

the date—

(I) an alien is admitted to the United States

as a refugee under section 207 of the Immigration

and Nationality Act;

(II) an alien is granted asylum under section

208 of such Act;

(III) an alien’s deportation is withheld under

section 243(h) of such Act;

(IV) an alien is granted status as a Cuban

and Haitian entrant (as defined in section 501(e)
613 Sec. 402 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

of the Refugee Education Assistance Act of 1980);

or

(V) 1 an alien 2 admitted to the United States as

an Amerasian immigrant as described in subsection

(a)(2)(A)(i)(V) until 5 years after the date of such

alien’s entry into the United States.

(B) CERTAIN PERMANENT RESIDENT ALIENS.—An

alien who—

(i) is lawfully admitted to the United States for

permanent residence under the Immigration and Nationality Act; and

(ii)(I) has worked 40 qualifying quarters of coverage as defined under title II of the Social Security

Act or can be credited with such qualifying quarters as

provided under section 435, and (II) in the case of any

such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive any

Federal means-tested public benefit (as provided

under section 403) during any such period.

(C) VETERAN AND ACTIVE DUTY EXCEPTION.—An alien

who is lawfully residing in any State and is—

(i) a veteran (as defined in section 101, 1101, or

1301, or as described in section 107 of title 38, United

States Code) with a discharge characterized as an honorable discharge and not on account of alienage and

who fulfills the minimum active-duty service requirements of section 5303A(d) of title 38, United States

Code,

(ii) on active duty (other than active duty for

training) in the Armed Forces of the United States, or

(iii) the spouse or unmarried dependent child of

an individual described in clause (i) or (ii) or the

unremarried surviving spouse of an individual described in clause (i) or (ii) who is deceased if the marriage fulfills the requirements of section 1304 of title

38, United States Code.

(D) TRANSITION FOR THOSE CURRENTLY RECEIVING BENEFITS.—An alien who on the date of the enactment of this

Act is lawfully residing in any State and is receiving benefits under such program on the date of the enactment of

this Act shall continue to be eligible to receive such benefits until January 1, 1997.

(E) MEDICAID EXCEPTION FOR CERTAIN INDIANS.—With

respect to eligibility for benefits for the program defined in

paragraph (3)(C) (relating to the medicaid program), section 401(a) and paragraph (1) shall not apply to any individual described in subsection (a)(2)(G).

(F) MEDICAID EXCEPTION FOR ALIENS RECEIVING SSI.—

An alien who is receiving benefits under the program defined in subsection (a)(3)(A) (relating to the supplemental

security income program) shall be eligible for medical assistance under a State plan under title XIX of the Social

Security Act (42 U.S.C. 1396 et seq.) under the same terms
Sec. 403 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 614

and conditions that apply to other recipients of benefits

under the program defined in such subsection.

(3) DESIGNATED FEDERAL PROGRAM DEFINED.—For purposes of this title, the term ‘‘designated Federal program’’

means any of the following:

(A) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES.—The

program of block grants to States for temporary assistance

for needy families under part A of title IV of the Social

Security Act.

(B) SOCIAL SERVICES BLOCK GRANT.—The program of

block grants to States for social services under title XX of

the Social Security Act.

(C) MEDICAID.—A State plan approved under title XIX

of the Social Security Act, other than medical assistance

described in section 401(b)(1)(A).

SEC. 403. ø8 U.S.C. 1613¿ FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR FEDERAL MEANS-TESTED PUBLIC

BENEFIT.

(a) IN GENERAL.—Notwithstanding any other provision of law

and except as provided in subsections (b), (c), and (d), an alien who

is a qualified alien (as defined in section 431) and who enters the

United States on or after the date of the enactment of this Act is

not eligible for any Federal means-tested public benefit for a period

of 5 years beginning on the date of the alien’s entry into the United

States with a status within the meaning of the term ‘‘qualified

alien’’.

(b) EXCEPTIONS.—The limitation under subsection (a) shall not

apply to the following aliens:

(1) EXCEPTION FOR REFUGEES AND ASYLEES.—

(A) An alien who is admitted to the United States as

a refugee under section 207 of the Immigration and Nationality Act.

(B) An alien who is granted asylum under section 208

of such Act.

(C) An alien whose deportation is being withheld

under section 243(h) of such Act (as in effect immediately

before the effective date of section 307 of division C of Public Law 104–208) or section 241(b)(3) of such Act (as

amended by section 305(a) of division C of Public Law

104–208).

(D) An alien who is a Cuban and Haitian entrant as

defined in section 501(e) of the Refugee Education Assistance Act of 1980.

(E) An alien admitted to the United States as an

Amerasian immigrant as described in section

402(a)(2)(A)(i)(V).

(2) VETERAN AND ACTIVE DUTY EXCEPTION.—An alien who

is lawfully residing in any State and is—

(A) a veteran (as defined in section 101, 1101, or 1301,

or as described in section 107 of title 38, United States

Code) with a discharge characterized as an honorable discharge and not on account of alienage and who fulfills the

minimum active-duty service requirements of section

5303A(d) of title 38, United States Code,
615 Sec. 403 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

1So in law. Probably intended to refer to subparagraph (A) or (B).

(B) on active duty (other than active duty for training)

in the Armed Forces of the United States, or

(C) the spouse or unmarried dependent child of an individual described in subparagraph (A) or (B) or the

unremarried surviving spouse of an individual described in

clause (i) or (ii) 1 who is deceased if the marriage fulfills

the requirements of section 1304 of title 38, United States

Code.

(c) APPLICATION OF TERM FEDERAL MEANS-TESTED PUBLIC BEN- EFIT.— (1) The limitation under subsection (a) shall not apply to

assistance or benefits under paragraph (2).

(2) Assistance and benefits under this paragraph are as

follows:

(A) Medical assistance described in section

401(b)(1)(A).

(B) Short-term, non-cash, in-kind emergency disaster

relief.

(C) Assistance or benefits under the Richard B. Russell National School Lunch Act.

(D) Assistance or benefits under the Child Nutrition

Act of 1966.

(E) Public health assistance (not including any assistance under title XIX of the Social Security Act) for immunizations with respect to immunizable diseases and for

testing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease.

(F) Payments for foster care and adoption assistance

under parts B and E of title IV of the Social Security Act

for a parent or a child who would, in the absence of subsection (a), be eligible to have such payments made on the

child’s behalf under such part, but only if the foster or

adoptive parent (or parents) of such child is a qualified

alien (as defined in section 431).

(G) Programs, services, or assistance (such as soup

kitchens, crisis counseling and intervention, and shortterm shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after

consultation with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community

level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the

amount of assistance provided, or the cost of assistance

provided on the individual recipient’s income or resources;

and (iii) are necessary for the protection of life or safety.

(H) Programs of student assistance under titles IV, V,

IX, and X of the Higher Education Act of 1965, and titles

III, VII, and VIII of the Public Health Service Act.

(I) Means-tested programs under the Elementary and

Secondary Education Act of 1965.

(J) Benefits under the Head Start Act.
Sec. 404 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 616

1So in law.

(K) Benefits under the 1 title I of the Workforce Investment Act of 1998.

(L) Assistance or benefits provided to individuals

under the age of 18 under the Food Stamp Act of 1977 (7

U.S.C. 2011 et seq.).

(d) BENEFITS FOR CERTAIN GROUPS.—Notwithstanding any

other provision of law, the limitations under section 401(a) and

subsection (a) shall not apply to—

(1) an individual described in section 402(a)(2)(G), but only

with respect to the programs specified in subsections (a)(3) and

(b)(3)(C) of section 402; or

(2) an individual, spouse, or dependent described in section

402(a)(2)(K), but only with respect to the specified Federal program described in section 402(a)(3)(B).

SEC. 404. ø8 U.S.C. 1614¿ NOTIFICATION AND INFORMATION

REPORTING.

(a) NOTIFICATION.—Each Federal agency that administers a

program to which section 401, 402, or 403 applies shall, directly or

through the States, post information and provide general notification to the public and to program recipients of the changes regarding eligibility for any such program pursuant to this subtitle.

* * * * * * *

(d) INFORMATION REPORTING FOR HOUSING PROGRAMS.—Title I

of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.)

is amended by adding at the end the following new section:

* * * * * * *

Subtitle B—Eligibility for State and Local

Public Benefits Programs

SEC. 411. ø8 U.S.C. 1621¿ ALIENS WHO ARE NOT QUALIFIED ALIENS OR

NONIMMIGRANTS INELIGIBLE FOR STATE AND LOCAL

PUBLIC BENEFITS.

(a) IN GENERAL.—Notwithstanding any other provision of law

and except as provided in subsections (b) and (d), an alien who is

not—

(1) a qualified alien (as defined in section 431),

(2) a nonimmigrant under the Immigration and Nationality Act, or

(3) an alien who is paroled into the United States under

section 212(d)(5) of such Act for less than one year,

is not eligible for any State or local public benefit (as defined in

subsection (c)).

(b) EXCEPTIONS.—Subsection (a) shall not apply with respect to

the following State or local public benefits:

(1) Assistance for health care items and services that are

necessary for the treatment of an emergency medical condition

(as defined in section 1903(v)(3) of the Social Security Act) of

the alien involved and are not related to an organ transplant

procedure.
617 Sec. 411 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

(2) Short-term, non-cash, in-kind emergency disaster relief.

(3) Public health assistance for immunizations with respect to immunizable diseases and for testing and treatment of

symptoms of communicable diseases whether or not such

symptoms are caused by a communicable disease.

(4) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter)

specified by the Attorney General, in the Attorney General’s

sole and unreviewable discretion after consultation with appropriate Federal agencies and departments, which (A) deliver inkind services at the community level, including through public

or private nonprofit agencies; (B) do not condition the provision

of assistance, the amount of assistance provided, or the cost of

assistance provided on the individual recipient’s income or resources; and (C) are necessary for the protection of life or

safety.

(c) STATE OR LOCAL PUBLIC BENEFIT DEFINED.— (1) Except as provided in paragraphs (2) and (3), for purposes of this subtitle the term ‘‘State or local public benefit’’

means—

(A) any grant, contract, loan, professional license, or

commercial license provided by an agency of a

State or local government or by appropriated funds of a

State or local government; and

(B) any retirement, welfare, health, disability, public

or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit

for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of

a State or local government or by appropriated funds of a

State or local government.

(2) Such term shall not apply—

(A) to any contract, professional license, or commercial

license for a nonimmigrant whose visa for entry is related

to such employment in the United States, or to a citizen

of a freely associated state, if section 141 of the applicable

compact of free association approved in Public Law 99–239

or 99–658 (or a successor provision) is in effect;

(B) with respect to benefits for an alien who as a work

authorized nonimmigrant or as an alien lawfully admitted

for permanent residence under the Immigration and Nationality Act qualified for such benefits and for whom the

United States under reciprocal treaty agreements is required to pay benefits, as determined by the Secretary of

State, after consultation with the Attorney General; or

(C) to the issuance of a professional license to, or the

renewal of a professional license by, a foreign national not

physically present in the United States.

(3) Such term does not include any Federal public benefit

under section 401(c).

(d) STATE AUTHORITY TO PROVIDE FOR ELIGIBILITY OF ILLEGAL

ALIENS FOR STATE AND LOCAL PUBLIC BENEFITS.—A State may provide that an alien who is not lawfully present in the United States

is eligible for any State or local public benefit for which such alien
Sec. 412 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 618

would otherwise be ineligible under subsection (a) only through the

enactment of a State law after the date of the enactment of this

Act which affirmatively provides for such eligibility.

SEC. 412. ø8 U.S.C. 1622¿ STATE AUTHORITY TO LIMIT ELIGIBILITY OF

QUALIFIED ALIENS FOR STATE PUBLIC BENEFITS.

(a) IN GENERAL.—Notwithstanding any other provision of law

and except as provided in subsection (b), a State is authorized to

determine the eligibility for any State public benefits of an alien

who is a qualified alien (as defined in section 431), a nonimmigrant

under the Immigration and Nationality Act, or an alien who is paroled into the United States under section 212(d)(5) of such Act for

less than one year.

(b) EXCEPTIONS.—Qualified aliens under this subsection shall

be eligible for any State public benefits.

(1) TIME-LIMITED EXCEPTION FOR REFUGEES AND

ASYLEES.—

(A) An alien who is admitted to the United States as

a refugee under section 207 of the Immigration and Nationality Act until 5 years after the date of an alien’s entry

into the United States.

(B) An alien who is granted asylum under section 208

of such Act until 5 years after the date of such grant of

asylum.

(C) An alien whose deportation is being withheld

under section 243(h) of such Act (as in effect immediately

before the effective date of section 307 of division C of Public Law 104–208) or section 241(b)(3) of such Act (as

amended by section 305(a) of division C of Public Law

104–208) until 5 years after such withholding.

(D) An alien who is a Cuban and Haitian entrant as

defined in section 501(e) of the Refugee Education Assistance Act of 1980 until 5 years after the alien is granted

such status.

(E) An alien admitted to the United States as an

Amerasian immigrant as described in section

402(a)(2)(A)(i)(V).

(2) CERTAIN PERMANENT RESIDENT ALIENS.—An alien

who—

(A) is lawfully admitted to the United States for permanent residence under the Immigration and Nationality

Act; and

(B)(i) has worked 40 qualifying quarters of coverage as

defined under title II of the Social Security Act or can be

credited with such qualifying quarters as provided under

section 435, and (ii) in the case of any such qualifying

quarter creditable for any period beginning after December

31, 1996, did not receive any Federal means-tested public

benefit (as provided under section 403) during any such

period.

(3) VETERAN AND ACTIVE DUTY EXCEPTION.—An alien who

is lawfully residing in any State and is—

(A) a veteran (as defined in section 101, 1101, or 1301,

or as described in section 107 of title 38, United States

Code) with a discharge characterized as an honorable dis-
619 Sec. 431 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

1So in law. Probably intended to refer to subparagraph (A) or (B).

charge and not on account of alienage and who fulfills the

minimum active-duty service requirements of section

5303A(d) of title 38, United States Code,

(B) on active duty (other than active duty for training)

in the Armed Forces of the United States, or

(C) the spouse or unmarried dependent child of an individual described in subparagraph (A) or (B) or the

unremarried surviving spouse of an individual described in

clause (i) or (ii) 1 who is deceased if the marriage fulfills

the requirements of section 1304 of title 38, United States

Code.

(4) TRANSITION FOR THOSE CURRENTLY RECEIVING BENEFITS.—An alien who on the date of the enactment of this Act

is lawfully residing in any State and is receiving benefits on

the date of the enactment of this Act shall continue to be eligible to receive such benefits until January 1, 1997.

SEC. 413. ø8 U.S.C. 1625¿ AUTHORIZATION FOR VERIFICATION OF ELIGIBILITY FOR STATE AND LOCAL PUBLIC BENEFITS.

A State or political subdivision of a State is authorized to require an applicant for State and local public benefits (as defined in

section 411(c)) to provide proof of eligibility.

Subtitle C—Attribution of Income and

Affidavits of Support

* * * * * * *

Subtitle D—General Provisions

SEC. 431. ø8 U.S.C. 1641¿ DEFINITIONS.

(a) IN GENERAL.—Except as otherwise provided in this title,

the terms used in this title have the same meaning given such

terms in section 101(a) of the Immigration and Nationality Act.

(b) QUALIFIED ALIEN.—For purposes of this title, the term

‘‘qualified alien’’ means an alien who, at the time the alien applies

for, receives, or attempts to receive a Federal public benefit, is—

(1) an alien who is lawfully admitted for permanent residence under the Immigration and Nationality Act,

(2) an alien who is granted asylum under section 208 of

such Act,

(3) a refugee who is admitted to the United States under

section 207 of such Act,

(4) an alien who is paroled into the United States under

section 212(d)(5) of such Act for a period of at least 1 year,

(5) an alien whose deportation is being withheld under section 243(h) of such Act (as in effect immediately before the effective date of section 307 of division C of Public Law 104–208)

or section 241(b)(3) of such Act (as amended by section 305(a)

of division C of Public Law 104–208),
Sec. 431 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 620

1So in law.

2So in law.

(6) an alien who is granted conditional entry pursuant to

section 203(a)(7) of such Act as in effect prior to April 1, 1980; 1

or

(7) an alien who is a Cuban and Haitian entrant (as defined in section 501(e) of the Refugee Education Assistance Act

of 1980).

(c) TREATMENT OF CERTAIN BATTERED ALIENS AS QUALIFIED

ALIENS.—For purposes of this title, the term ‘‘qualified alien’’

includes—

(1) an alien who—

(A) has been battered or subjected to extreme cruelty

in the United States by a spouse or a parent, or by a member of the spouse or parent’s family residing in the same

household as the alien and the spouse or parent consented

to, or acquiesced in, such battery or cruelty, but only if (in

the opinion of the agency providing such benefits) there is

a substantial connection between such battery or cruelty

and the need for the benefits to be provided; and

(B) has been approved or has a petition pending which

sets forth a prima facie case for—

(i) status as a spouse or a child of a United States

citizen pursuant to clause (ii), (iii), or (iv) of section

204(a)(1)(A) of the Immigration and Nationality Act,

(ii) classification pursuant to clause (ii) or (iii) of

section 204(a)(1)(B) of the Act (as in effect prior to

April 1, 1997),

(iii) suspension of deportation under section

244(a)(3) of the Immigration and Nationality Act (as

in effect before the title III–A effective date in section

309 of the Illegal Immigration Reform and Immigrant

Responsibility Act of 1996). 2

(iv) status as a spouse or child of a United States

citizen pursuant to clause (i) of section 204(a)(1)(A) of

such Act, or classification pursuant to clause (i) of section 204(a)(1)(B) of such Act;

(v) cancellation of removal pursuant to section

240A(b)(2) of such Act;

(2) an alien—

(A) whose child has been battered or subjected to extreme cruelty in the United States by a spouse or a parent

of the alien (without the active participation of the alien

in the battery or cruelty), or by a member of the spouse

or parent’s family residing in the same household as the

alien and the spouse or parent consented or acquiesced to

such battery or cruelty, and the alien did not actively participate in such battery or cruelty, but only if (in the opinion of the agency providing such benefits) there is a substantial connection between such battery or cruelty and

the need for the benefits to be provided; and

(B) who meets the requirement of subparagraph (B) of

paragraph (1); or
621 Sec. 432 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

(3) an alien child who—

(A) resides in the same household as a parent who has

been battered or subjected to extreme cruelty in the

United States by that parent’s spouse or by a member of

the spouse’s family residing in the same household as the

parent and the spouse consented or acquiesced to such battery or cruelty, but only if (in the opinion of the agency

providing such benefits) there is a substantial connection

between such battery or cruelty and the need for the benefits to be provided; and

(B) who meets the requirement of subparagraph (B) of

paragraph (1).

This subsection shall not apply to an alien during any period in

which the individual responsible for such battery or cruelty resides

in the same household or family eligibility unit as the individual

subjected to such battery or cruelty.

After consultation with the Secretaries of Health and Human

Services, Agriculture, and Housing and Urban Development, the

Commissioner of Social Security, and with the heads of such Federal agencies administering benefits as the Attorney General considers appropriate, the Attorney General shall issue guidance (in

the Attorney General’s sole and unreviewable discretion) for purposes of this subsection and section 421(f), concerning the meaning

of the terms ‘‘battery’’ and ‘‘extreme cruelty’’, and the standards

and methods to be used for determining whether a substantial connection exists between battery or cruelty suffered and an individual’s need for benefits under a specific Federal, State, or local

program.

SEC. 432. ø8 U.S.C. 1642¿ VERIFICATION OF ELIGIBILITY FOR FEDERAL

PUBLIC BENEFITS.

(a) IN GENERAL.—(1) Not later than 18 months after the date

of the enactment of this Act, the Attorney General of the United

States, after consultation with the Secretary of Health and Human

Services, shall promulgate regulations requiring verification that a

person applying for a Federal public benefit (as defined in section

401(c)), to which the limitation under section 401 applies, is a

qualified alien and is eligible to receive such benefit. Such regulations shall, to the extent feasible, require that information requested and exchanged be similar in form and manner to information requested and exchanged under section 1137 of the Social

Security Act. Not later than 90 days after the date of the enactment of the Balanced Budget Act of 1997, the Attorney General of

the United States, after consultation with the Secretary of Health

and Human Services, shall issue interim verification guidance.

(2) Not later than 18 months after the date of the enactment

of this Act, the Attorney General, in consultation with the Secretary of Health and Human Services, shall also establish procedures for a person applying for a Federal public benefit (as defined

in section 401(c)) to provide proof of citizenship in a fair and nondiscriminatory manner.

(3) Not later than 90 days after the date of the enactment of

the Balanced Budget Act of 1997, the Attorney General shall promulgate regulations which set forth the procedures by which a

State or local government can verify whether an alien applying for
Sec. 433 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 622

a State or local public benefit is a qualified alien, a nonimmigrant

under the Immigration and Nationality Act, or an alien paroled

into the United States under section 212(d)(5) of the Immigration

and Nationality Act for less than 1 year, for purposes of determining whether the alien is ineligible for benefits under section

411 of this Act.

(b) STATE COMPLIANCE.—Not later than 24 months after the

date the regulations described in subsection (a) are adopted, a

State that administers a program that provides a Federal public

benefit shall have in effect a verification system that complies with

the regulations.

(c) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated such sums as may be necessary to carry out the

purpose of this section.

(d) NO VERIFICATION REQUIREMENT FOR NONPROFIT CHARITABLE ORGANIZATIONS.—Subject to subsection (a), a nonprofit charitable organization, in providing any Federal public benefit (as defined in section 401(c)) or any State or local public benefit (as defined in section 411(c)), is not required under this title to determine, verify, or otherwise require proof of eligibility of any

applicant for such benefits.

SEC. 433. ø8 U.S.C. 1643¿ STATUTORY CONSTRUCTION.

(a) LIMITATION.—

(1) Nothing in this title may be construed as an entitlement or a determination of an individual’s eligibility or fulfillment of the requisite requirements for any Federal, State, or

local governmental program, assistance, or benefits. For purposes of this title, eligibility relates only to the general issue

of eligibility or ineligibility on the basis of alienage.

(2) Nothing in this title may be construed as addressing

alien eligibility for a basic public education as determined by

the Supreme Court of the United States under Plyler v. Doe

(457 U.S. 202)(1982).

(b) BENEFIT ELIGIBILITY LIMITATIONS APPLICABLE ONLY WITH

RESPECT TO ALIENS PRESENT IN THE UNITED STATES.—Notwithstanding any other provision of this title, the limitations on eligibility for benefits under this title shall not apply to eligibility for

benefits of aliens who are not residing, or present, in the United

States with respect to—

(1) wages, pensions, annuities, and other earned payments

to which an alien is entitled resulting from employment by, or

on behalf of, a Federal, State, or local government agency

which was not prohibited during the period of such employment or service under section 274A or other applicable provision of the Immigration and Nationality Act; or

(2) benefits under laws administered by the Secretary of

Veterans Affairs.

(c) NOT APPLICABLE TO FOREIGN ASSISTANCE.—This title does

not apply to any Federal, State, or local governmental program, assistance, or benefits provided to an alien under any program of foreign assistance as determined by the Secretary of State in consultation with the Attorney General.
623 Sec. 441 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS

(d) SEVERABILITY.—If any provision of this title or the application of such provision to any person or circumstance is held to be

unconstitutional, the remainder of this title and the application of

the provisions of such to any person or circumstance shall not be

affected thereby.

SEC. 434. ø8 U.S.C. 1644¿ COMMUNICATION BETWEEN STATE AND

LOCAL GOVERNMENT AGENCIES AND THE IMMIGRATION

AND NATURALIZATION SERVICE.

Notwithstanding any other provision of Federal, State, or local

law, no State or local government entity may be prohibited, or in

any way restricted, from sending to or receiving from the Immigration and Naturalization Service information regarding the immigration status, lawful or unlawful, of an alien in the United States.

SEC. 435. ø8 U.S.C. 1645¿ QUALIFYING QUARTERS.

For purposes of this title, in determining the number of qualifying quarters of coverage under title II of the Social Security Act

an alien shall be credited with—

(1) all of the qualifying quarters of coverage as defined

under title II of the Social Security Act worked by a parent of

such alien before the date on which the alien attains age 18,

and

(2) all of the qualifying quarters worked by a spouse of

such alien during their marriage and the alien remains married to such spouse or such spouse is deceased.

No such qualifying quarter of coverage that is creditable under title

II of the Social Security Act for any period beginning after December 31, 1996, may be credited to an alien under paragraph (1) or

(2) if the parent or spouse (as the case may be) of such alien received any Federal means-tested public benefit (as provided under

section 403) during the period for which such qualifying quarter of

coverage is so credited. Notwithstanding section 6103 of the Internal Revenue Code of 1986, the Commissioner of Social Security is

authorized to disclose quarters of coverage information concerning

an alien and an alien’s spouse or parents to a government agency

for the purposes of this title.

SEC. 436. ø8 U.S.C. 1646¿ DERIVATIVE ELIGIBILITY FOR BENEFITS.

Notwithstanding any other provision of law, an alien who

under the provisions of this title is ineligible for benefits under the

food stamp program (as defined in section 402(a)(3)(B)) shall not be

eligible for such benefits because the alien receives benefits under

the supplemental security income program (as defined in section

402(a)(3)(A)).

Subtitle E—Conforming Amendments

Relating to Assisted Housing

SEC. 441. CONFORMING AMENDMENTS RELATING TO ASSISTED

HOUSING.

(a) LIMITATIONS ON ASSISTANCE.—Section 214 of the Housing

and Community Development Act of 1980 (42 U.S.C. 1436a) is

amended—
Sec. 441 RESTRICTIONS ON PUBLIC BENEFITS FOR ALIENS 624

(1) by striking ‘‘Secretary of Housing and Urban Development’’ each place it appears and inserting ‘‘applicable

Secretary’’;

(2) in subsection (b), by inserting after ‘‘National Housing

Act,’’ the following: ‘‘the direct loan program under section 502

of the Housing Act of 1949 or section 502(c)(5)(D), 504,

521(a)(2)(A), or 542 of such Act, subtitle A of title III of the

Cranston-Gonzalez National Affordable Housing Act,’’;

(3) in paragraphs (2) through (6) of subsection (d), by striking ‘‘Secretary’’ each place it appears and inserting ‘‘applicable

Secretary’’;

(4) in subsection (d), in the matter following paragraph (6),

by striking ‘‘the term ‘Secretary’’’ and inserting ‘‘the term ‘applicable Secretary’’’; and

(5) by adding at the end the following new subsection:

‘‘(h) For purposes of this section, the term ‘applicable Secretary’

means—

‘‘(1) the Secretary of Housing and Urban Development,

with respect to financial assistance administered by such Secretary and financial assistance under subtitle A of title III of

the Cranston-Gonzalez National Affordable Housing Act; and

‘‘(2) the Secretary of Agriculture, with respect to financial

assistance administered by such Secretary.’’.

(b) CONFORMING AMENDMENTS.—Section 501(h) of the Housing

Act of 1949 (42 U.S.C. 1471(h)) is amended—

(1) by striking ‘‘(1)’’;

(2) by striking ‘‘by the Secretary of Housing and Urban Development’’; and

(3) by striking paragraph (2).

Subtitle F—Earned Income Credit Denied

to Unauthorized Employees

* * * * * * *
625

1Section 3(b) of P.L. 106–504 (114 Stat. 2312) provides as follows:

‘‘(b) Section 214(a) of the Housing Community Development Act of 1980 (42 U.S.C. 1436a(a))

is amended—

Continued

USE OF ASSISTED HOUSING BY ALIENS

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1980

[Public Law 96–399; 94 Stat. 1614, 1637; 42 U.S.C. 1436a]

RESTRICTION ON USE OF ASSISTED HOUSING

SEC. 214. ø42 U.S.C. 1436a¿ (a) Notwithstanding any other

provision of law, the applicable Secretary may not make financial

assistance available for the benefit of any alien unless that alien

is a resident of the United States and is—

(1) an alien lawfully admitted for permanent residence as

an immigrant as defined by sections 101(a)(15) and 101(a)(20)

of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)

and 8 U.S.C. 1101(a)(20)), excluding, among others, alien visitors, tourists, diplomats, and students who enter the United

States temporarily with no intention of abandoning their residence in a foreign country;

(2) an alien who entered the United States prior to June

30, 1948, or such subsequent date as is enacted by law, continuously maintained his or her residence in the United States

since then, and is not ineligible for citizenship, but who is

deemed to be lawfully admitted for permanent residence as a

result of an exercise of discretion by the Attorney General pursuant to section 249 of the Immigration and Nationality Act (8

U.S.C. 1259);

(3) an alien who is lawfully present in the United States

pursuant to an admission under section 207 of the Immigration

and Nationality Act (8 U.S.C. 1157) or pursuant to the granting of asylum (which has not been terminated) under section

208 of such Act (8 U.S.C. 1158);

(4) an alien who is lawfully present in the United States

as a result of an exercise of discretion by the Attorney General

for emergent reasons or reasons deemed strictly in the public

interest pursuant to section 212(d)(5) of the Immigration and

Nationality Act (8 U.S.C. 1182(d)(5));

(5) an alien who is lawfully present in the United States

as a result of the Attorney General’s withholding deportation

pursuant to section 241(b)(3) of the Immigration and Nationality Act (8 U.S.C. 1253(h)); or

(6) 1 an alien lawfully admitted for temporary or permanent residence under section 245A of the Immigration and Nationality Act.
Sec. 214 USE OF ASSISTED HOUSING BY ALIENS 626

‘‘(1) by striking ‘or’ at the end of paragraph (5);

‘‘(2) by striking the period at the end of paragraph (6) and inserting ‘; or’; and

‘‘(3) by adding at the end the following new paragraph:

‘(7) an alien who is lawfully resident in the United States and its territories and possessions under section 141 of the Compacts of Free Association between the Government of the

United States and the Governments of the Marshall Islands, the Federated States of Micronesia (48 U.S.C. 1901 note) and Palau (48 U.S.C. 1931 note) while the applicable section

is in effect: Provided, That, within Guam any such alien shall not be entitled to a preference

in receiving assistance under this Act over any United States citizen or national resident

therein who is otherwise eligible for such assistance.’.’’.

The United States Code citation suggests that the amendments were probably intended to be

made to section 214(a) of this Act.

(b)(1) For purposes of this section the term ‘‘financial assistance’’ means financial assistance made available pursuant to the

United States Housing Act of 1937, Section 235, or 236 of the National Housing Act, the direct loan program under section 502 of

the Housing Act of 1949 or section 502(c)(5)(D), 504, 521(a)(2)(A),

or 542 of such Act, subtitle A of title III of the Cranston-Gonzalez

National Affordable Housing Act, or section 101 of the Housing and

Urban Development Act of 1965.

(2) If the eligibility for financial assistance of at least one

member of a family has been affirmatively established under the

program of financial assistance and under this section, and the ineligibility of one or more family members has not been affirmatively established under this section, any financial assistance made

available to that family by the applicable Secretary shall be prorated, based on the number of individuals in the family for whom

eligibility has been affirmatively established under the program of

financial assistance and under this section, as compared with the

total number of individuals who are members of the family.

(c)(1) If, following completion of the applicable hearing process,

financial assistance for any individual receiving such assistance on

the date of the enactment of the Housing and Community Development Act of 1987 is to be terminated, the public housing agency or

other local governmental entity involved (in the case of public housing or assistance under section 8 of the United States Housing Act

of 1937) or the applicable Secretary (in the case of any other financial assistance) shall take one of the following actions:

(A) Permit the continued provision of financial assistance,

if necessary to avoid the division of a family in which the head

of household or spouse is a citizen of the United States, a national of the United States, or an alien resident of the United

States described in any of paragraphs (1) through (6) of subsection (a). For purposes of this paragraph, the term ‘‘family’’

means a head of household, any spouse, any parents of the

head of household, any parents of the spouse, and any children

of the head of household or spouse. Financial assistance continued under this subparagraph for a family may be provided only

on a prorated basis, under which the amount of financial assistance is based on the percentage of the total number of

members of the family that are eligible for that assistance

under the program of financial assistance and under this section.

(B)(i) Defer the termination of financial assistance, if necessary to permit the orderly transition of the individual and

any family members involved to other affordable housing.
627 Sec. 214 USE OF ASSISTED HOUSING BY ALIENS

(ii) Except as provided in clause (iii), any deferral under

this subparagraph shall be for a 6-month period and may be

renewed by the public housing agency or other entity involved

for an aggregate period of 18 months. At the beginning of each

deferral period, the public housing agency or other entity involved shall inform the individual and family members of their

ineligibility for financial assistance and offer them other assistance in finding other affordable housing.

(iii) The time period described in clause (ii) shall not apply

in the case of a refugee under section 207 of the Immigration

and Nationality Act or an individual seeking asylum under section 208 of that Act.

(2) Notwithstanding any other provision of law, the applicable

Secretary may not make financial assistance available for the benefit of—

(A) any alien who—

(i) has a residence in a foreign country that such alien

has no intention of abandoning;

(ii) is a bona fide student qualified to pursue a full

course of study; and

(iii) is admitted to the United States temporarily and

solely for purposes of pursuing such a course of study at

an established institution of learning or other recognized

place of study in the United States, particularly designated

by such alien and approved by the Attorney General after

consultation with the Department of Education of the

United States, which institution or place of study shall

have agreed to report to the Attorney General the termination of attendance of each nonimmigrant student (and if

any such institution of learning or place of study fails to

make such reports promptly the approval shall be withdrawn); and

(B) the alien spouse and minor children of any alien

described in subparagraph (A), if accompanying such alien or

following to join such alien.

(d) The following conditions apply with respect to financial assistance being or to be provided for the benefit of an individual:

(1)(A) There must be a declaration in writing by the individual (or, in the case of an individual who is a child, by another on the individual’s behalf), under penalty of perjury, stating whether or not the individual is a citizen or national of the

United States, and, if that individual is not a citizen or national of the United States, that the individual is in a satisfactory immigration status. If the declaration states that the individual is not a citizen or national of the United States and that

the individual is younger than 62 years of age, the declaration

shall be verified by the Immigration and Naturalization Service. If the declaration states that the individual is a citizen or

national of the United States, the applicable Secretary, or the

agency administering assistance covered by this section, may

request verification of the declaration by requiring presentation of documentation that the applicable Secretary considers

appropriate, including a United States passport, resident alien
Sec. 214 USE OF ASSISTED HOUSING BY ALIENS 628

1September 30, 1996.

card, alien registration card, social security card, or other documentation.

(B) In this subsection, the term ‘‘satisfactory immigration

status’’ means an immigration status which does not make the

individual ineligible for financial assistance.

(2) If such an individual is not a citizen or national of the

United States, is not 62 years of age or older, and is receiving

financial assistance on the date of enactment of the Use of Assisted Housing by Aliens Act of 1996 1 or applying for financial

assistance on or after that date, there must be presented

either—

(A) alien registration documentation or other proof of

immigration registration from the Immigration and Naturalization Service that contains the individual’s alien admission number or alien file number (or numbers if the individual has more than one number), or

(B) such other documents as the applicable Secretary

determines constitutes reasonable evidence indicating a

satisfactory immigration status.

In the case of an individual applying for financial assistance on

or after the date of enactment of the Use of Assisted Housing

by Aliens Act of 1996 1, the applicable Secretary may not provide any such assistance for the benefit of that individual before documentation is presented and verified under paragraph

(3) or (4).

(3) If the documentation described in paragraph (2)(A) is

presented, the applicable Secretary shall utilize the individual’s alien file or alien admission number to verify with the

Immigration and Naturalization Service the individual’s immigration status through an automated or other system (designated by the Service for use with States) that—

(A) utilizes the individual’s name, file number, admission number, or other means permitting efficient verification, and

(B) protects the individual’s privacy to the maximum

degree possible.

(4) In the case of such an individual who is not a citizen

or national of the United States, is not 62 years of age or older,

and is receiving financial assistance on the date of enactment

of the Use of Assisted Housing by Aliens Act of 1996 1 or applying for financial assistance on or after that date, if, at the time

of application or recertification for financial assistance, the

statement described in paragraph (1) is submitted but the documentation required under paragraph (2) is not presented or

if the documentation required under paragraph (2)(A) is presented but such documentation is not verified under paragraph

(3)—

(A) the applicable Secretary—

(i) shall provide a reasonable opportunity, not to

exceed 30 days, to submit to the applicable Secretary

evidence indicating a satisfactory immigration status,

or to appeal to the Immigration and Naturalization
629 Sec. 214 USE OF ASSISTED HOUSING BY ALIENS

1September 30, 1996.

Service the verification determination of the Immigration and Naturalization Service under paragraph (3),

(ii) in the case of any individual receiving assistance on the date of enactment of the Use of Assisted

Housing by Aliens Act of 1996, may not delay, deny,

reduce, or terminate the eligibility of that individual

for financial assistance on the basis of the immigration

status of that individual until the expiration of that

30-day period; and

(iii) in the case of any individual applying for financial assistance on or after the date of enactment of

the Use of Assisted Housing by Aliens Act of 1996,

may not deny the application for such assistance on

the basis of the immigration status of that individual

until the expiration of that 30-day period; and

(B) if any documents or additional information are

submitted as evidence under subparagraph (A), or if appeal is made to the Immigration and Naturalization Service with respect to the verification determination of the

Service under paragraph (3)—

(i) the applicable Secretary shall transmit to the

Immigration and Naturalization Service photostatic or

other similar copies of such documents or additional

information for official verification,

(ii) pending such verification or appeal, the applicable Secretary may not—

(I) in the case of any individual receiving assistance on the date of enactment of the Use of

Assisted Housing by Aliens Act of 1996 1, delay,

deny, reduce, or terminate the eligibility of that

individual for financial assistance on the basis of

the immigration status of that individual; and

(II) in the case of any individual applying for

financial assistance on or after the date of enactment of the Use of Assisted Housing by Aliens Act

of 1996 1, deny the application for such assistance

on the basis of the immigration status of that individual; and

(iii) the applicable Secretary shall not be liable for

the consequences of any action, delay, or failure of the

Service to conduct such verification.

(5) If the applicable Secretary determines, after complying

with the requirements of paragraph (4), that such an individual is not in a satisfactory immigration status, the applicable Secretary shall—

(A) deny the application of that individual for financial

assistance or terminate the eligibility of that individual for

financial assistance, as applicable;

(B) provide that the individual may request a fair

hearing during the 30-day period beginning upon receipt of

the notice under subparagraph (C); and
Sec. 214 USE OF ASSISTED HOUSING BY ALIENS 630

(C) provide to the individual written notice of the determination under this paragraph, the right to a fair hearing process, and the time limitation for requesting a hearing under subparagraph (C).

(6) The applicable Secretary shall terminate the eligibility

for financial assistance of an individual and the members of

the household of the individual, for a period of not less than

24 months, upon determining that such individual has knowingly permitted another individual who is not eligible for such

assistance to reside in the public or assisted housing unit of

the individual. This provision shall not apply to a family if the

ineligibility of the ineligible individual at issue was considered

in calculating any proration of assistance provided for the family.

For purposes of this subsection, the term ‘‘applicable Secretary’’

means the applicable Secretary, a public housing agency, or another entity that determines the eligibility of an individual for financial assistance.

(e) The applicable Secretary shall not take any compliance, disallowance, penalty, or other regulatory action against an entity

with respect to any error in the entity’s determination to make an

individual eligible for financial assistance based on citizenship or

immigration status—

(1) if the entity has provided such eligibility based on a

verification of satisfactory immigration status by the Immigration and Naturalization Service,

(2) because the entity, under subsection (d)(4)(A)(ii) (or

under any alternative system for verifying immigration status

with the Immigration and Naturalization Service authorized in

the Immigration Reform and Control Act of 1986 (Public Law

99–603)), was required to provide a reasonable opportunity to

submit documentation, or

(3) because the entity, under subsection (d)(4)(B)(ii) (or

under any alternative system for verifying immigration status

with the Immigration and Naturalization Service authorized in

the Immigration Reform and Control Act of 1986 (Public Law

99–603)), was required to wait for the response to the Immigration and Naturalization Service to the entity’s request for

official verification of the immigration status of the individual,

or the response from the Immigration and Naturalization Service to the appeal of that individual.

(f)(1) Notwithstanding any other provision of law, no agency or

official of a State or local government shall have any liability for

the design or implementation of the Federal verification system described in subsection (d) if the implementation by the State or local

agency or official is in accordance with Federal rules and regulations.

(2) The verification system of the Department of Housing and

Urban Development shall not supersede or affect any consent

agreement entered into or court decree or court order entered prior

to the date of the enactment of the Housing and Community Development Act of 1987.

(g) The applicable Secretary is authorized to pay to each public

housing agency or other entity an amount equal to 100 percent of
631 Sec. 214 USE OF ASSISTED HOUSING BY ALIENS

1So in law.

the costs incurred by the public housing agency or other entity in

implementing and operating an immigration status verification system under subsection (d) (or under any alternative system for verifying immigration status with the Immigration and Naturalization

Service authorized in the Immigration Reform and Control Act of

1986 (Public Law 99–603)).

(h) For purposes of this section, the term ‘‘applicable Secretary’’

means—

(1) the Secretary of Housing and Urban Development, with

respect to financial assistance administered by such Secretary

and financial assistance under subtitle A of title III of the

Cranston-Gonzalez National Affordable Housing Act; and

(2) the Secretary of Agriculture, with respect to financial

assistance administered by such Secretary.

(i) VERIFICATION OF ELIGIBILITY.—

(1) IN GENERAL.—No individual or family applying for financial assistance may receive such financial assistance prior

to the affirmative establishment and verification of eligibility

of at least the individual or one family member under subsection (d) by the applicable Secretary or other appropriate entity.

(2) RULES APPLICABLE TO PUBLIC HOUSING AGENCIES.—A

public housing agency (as that term is defined in section 3 of

the United States Housing Act of 1937)—

(A) may, notwithstanding paragraph (1) of this subsection, elect not to affirmatively establish and verify eligibility before providing financial assistance 1

(B) in carrying out subsection (d)—

(i) may initiate procedures to affirmatively establish or verify the eligibility of an individual or family

under this section at any time at which the public

housing agency determines that such eligibility is in

question, regardless of whether or not that individual

or family is at or near the top of the waiting list of the

public housing agency;

(ii) may affirmatively establish or verify the eligibility of an individual or family under this section in

accordance with the procedures set forth in section

274A(b)(1) of the Immigration and Nationality Act;

and

(iii) shall have access to any relevant information

contained in the SAVE system (or any successor thereto) that relates to any individual or family applying for

financial assistance.

(3) ELIGIBILITY OF FAMILIES.—For purposes of this subsection, with respect to a family, the term ‘‘eligibility’’ means

the eligibility of each family member.
632

1Subsections (d) through (g) of section 301 of the Immigration Act of 1990, Pub. L. 101–649

(relating to temporary stays of deportation and work authorization to promote family unity),

provide as follows:

‘‘(d) TEMPORARY DISQUALIFICATION FROM CERTAIN PUBLIC WELFARE ASSISTANCE.—Aliens provided the benefits of this section by virtue of their relation to a legalized alien described in subsection (b)(2)(A) or (b)(2)(B) shall be ineligible for public welfare assistance in the same manner

and for the same period as the legalized alien is ineligible for such assistance under section

245A(h) or 210(f), respectively, of the Immigration and Nationality Act.

‘‘(e) EXCEPTION FOR CERTAIN ALIENS.—An alien is not eligible for the benefits of this section

if the Attorney General finds that—

‘‘(1) the alien has been convicted of a felony or 3 or more misdemeanors in the United

States,

‘‘(2) the alien is described in section 208(b)(2)(A) of the Immigration and Nationality Act, or‘‘(3) has committed an act of juvenile delinquency which if committed by an adult would

be classified as—

‘‘(A) a felony crime of violence that has an element the use or attempted use of physical force against another individual, or

‘‘(B) a felony offense that by its nature involves a substantial risk that physical force

against another individual may be used in the course of committing the offense.

‘‘(f) CONSTRUCTION.—Nothing in this section shall be construed as authorizing an alien to

apply for admission to, or to be admitted to, the United States in order to obtain benefits under

this section.

‘‘(g) EFFECTIVE DATE.—The section shall take effect on October 1, 1991; except that the delay

in effectiveness of this section shall not be construed as reflecting a Congressional belief that

the existing family fairness program should be modified in any way before such date.’’.

IMMIGRATION REFORM

EXCERPTS FROM IMMIGRATION AND NATIONALITY ACT

[Public Law 99–603; 100 Stat. 3422; 8 U.S.C. 1255a]

ADJUSTMENT OF STATUS OF CERTAIN ENTRANTS BEFORE JANUARY 1,

1982, TO THAT OF PERSON ADMITTED FOR LAWFUL RESIDENCE

SEC. 245A. ø8 U.S.C. 1255a¿ (a) TEMPORARY RESIDENT STATUS.—The Attorney General shall adjust the status of an alien to

that of an alien lawfully admitted for temporary residence if the

alien meets the following requirements:

* * * * * * *

(h) 1 TEMPORARY DISQUALIFICATION OF NEWLY LEGALIZED

ALIENS FROM RECEIVING CERTAIN PUBLIC WELFARE ASSISTANCE.—

(1) IN GENERAL.—During the five-year period beginning on

the date an alien was granted lawful temporary resident status

under subsection (a), and notwithstanding any other provision

of law—

(A) except as provided in paragraphs (2) and (3), the

alien is not eligible for—

(i) any program of financial assistance furnished

under Federal law (whether through grant, loan, guarantee, or otherwise) on the basis of financial need, as

such programs are identified by the Attorney General

in consultation with other appropriate heads of the

various departments and agencies of Government (but
633 Sec. 245A IMMIGRATION REFORM

in any event including the State program of assistance

under part A of title IV of the Social Security Act),

(ii) medical assistance under a State plan approved under title XIX of the Social Security Act, and

(iii) assistance under the Food Stamp Act of 1977;

and

(B) a State or political subdivision therein may, to the

extent consistent with subparagraph (A) and paragraphs

(2) and (3), provide that the alien is not eligible for the

programs of financial assistance or for medical assistance

described in subparagraph (A)(ii) furnished under the law

of that State or political subdivision.

Unless otherwise specifically provided by this section or other

law, an alien in temporary lawful residence status granted

under subsection (a) shall not be considered (for purposes of

any law of a State or political subdivision providing for a program of financial assistance) to be permanently residing in the

United States under color of law.

(2) EXCEPTIONS.—Paragraph (1) shall not apply—

(A) to a Cuban and Haitian entrant (as defined in

paragraph (1) or (2)(A) of section 501(e) of Public Law 96–

422, as in effect on April 1, 1983), or

(B) in the case of assistance (other than assistance

under a State program funded under part A of title IV of

the Social Security Act) which is furnished to an alien who

is an aged, blind, or disabled individual (as defined in section 1614(a)(1) of the Social Security Act).

(3) RESTRICTED MEDICAID BENEFITS.—

(A) CLARIFICATION OF ENTITLEMENT.—Subject to the

restrictions under subparagraph (B), for the purpose of

providing aliens with eligibility to receive medical

assistance—

(i) paragraph (1) shall not apply,

(ii) aliens who would be eligible for medical assistance but for the provisions of paragraph (1) shall be

deemed, for purposes of title XIX of the Social Security

Act, to be so eligible, and

(iii) aliens lawfully admitted for temporary residence under this section, such status not having

changed, shall be considered to be permanently residing in the United States under color of law.

(B) RESTRICTION OF BENEFITS.—

(i) LIMITATION TO EMERGENCY SERVICES AND SERVICES FOR PREGNANT WOMEN.—Notwithstanding any

provision of title XIX of the Social Security Act (including subparagraphs (B) and (C) of section

1902(a)(10) of such Act), aliens who, but for subparagraph (A), would be ineligible for medical assistance

under paragraph (1), are only eligible for such assistance with respect to—

(I) emergency services (as defined for purposes of section 1916(a)(2)(D) of the Social Security Act), and
Sec. 245A IMMIGRATION REFORM 634

(II) services described in section 1916(a)(2)(B)

of such Act (relating to service for pregnant

women).

(ii) NO RESTRICTION FOR EXEMPT ALIENS AND CHILDREN.—The restrictions of clause (i) shall not apply to

aliens who are described in paragraph (2) or who are

under 18 years of age.

(C) DEFINITION OF MEDICAL ASSISTANCE.—In this paragraph, the term ‘‘medical assistance’’ refers to medical assistance under a State plan approved under title XIX of

the Social Security Act.

(4) TREATMENT OF CERTAIN PROGRAMS.—Assistance furnished under any of the following provisions of law shall not

be construed to be financial assistance described in paragraph

(1)(A)(i):

(A) The Richard B. Russell National School Lunch Act.

(B) The Child Nutrition Act of 1966.

(C) The Carl D. Perkins Vocational and Technical

Education Act of 1998.

(D) Title I of the Elementary and Secondary Education

Act of 1965.

(E) The Headstart-Follow Through Act.

(F) Title I of the Workforce Investment Act of 1998.

(G) Title IV of the Higher Education Act of 1965.

(H) The Public Health Service Act.

(I) Titles V, XVI, and XX, and parts B, D, and E of

title IV, of the Social Security Act (and titles I, X, XIV, and

XVI of such Act as in effect without regard to the amendment made by section 301 of the Social Security Amendments of 1972).

(5) ADJUSTMENT NOT AFFECTING FASCELL-STONE BENEFITS.—For the purpose of section 501 of the Refugee Education

Assistance Act of 1980 (Public Law 96–122), assistance shall be

continued under such section with respect to an alien without

regard to the alien’s adjustment of status under this section.

(i) DISSEMINATION OF INFORMATION ON LEGALIZATION PROGRAM.—Beginning not later than the date designated by the Attorney General under subsection (a)(1)(A), the Attorney General, in cooperation with qualified designated entities, shall broadly disseminate information respecting the benefits which aliens may receive

under this section and the requirements to obtain such benefits.
635

SOLAR ENERGY SYSTEMS IN ASSISTED HOUSING

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT

AMENDMENTS OF 1978

[Public Law 95–557; 92 Stat. 2095; 12 U.S.C. 1701z–13]

SEC. 209. ø12 U.S.C. 1701z–13¿ (a) It is the purpose of this

section to promote and extend the application of viable solar energy

systems as a desirable source of energy for residental single-family

and multifamily housing units.

(b)(1) The Secretary, in carrying out programs and activities

under section 312 of the Housing Act of 1964, section 202 of the

Housing Act of 1959, and section 8 of the United States Housing

Act of 1937, shall permit the installation of solar energy systems

which are cost-effective and economically feasible.

(2) For the purpose of this Act, the term ‘‘solar energy system’’

means any addition, alteration, or improvement to an existing or

new structure which is designed to utilize wind energy or solar energy either of the active type based on mechanically forced energy

transfer or of the passive type based on convective, conductive, or

radiant energy transfer or some combination of these types to reduce the energy requirements of that structure from other energy

sources, and which is in conformity with such criteria and standards as shall be prescribed by the Secretary in consultation with

the Secretary of Energy.

(c) In carrying out subsection (b), the Secretary shall take such

steps as may be necessary to encourage the installation of cost-effective and economically feasible solar energy systems in housing

assisted under the programs and activities referred to in such subsection taking into account the interests of low-income homeowners

and renters, including the implementation of a plan of action to

publicize the availability and feasibility of solar energy systems to

current or potential recipients of assistance under such programs

and activities.

(d) The Secretary shall, in conjunction with the Secretary of

Energy, transmit to the Congress, within eighteen months after the

date of enactment of this Act, a report setting forth—

(1) the number of solar units which were contracted for or

installed or which are on order under the provisions of subsection (b)(1) of this section during the first twelve full calendar months after the date of enactment of this Act; and

(2) an analysis of any problems and benefits related to encouraging the use of solar energy systems in the programs and

activities referred to in subsection (b).
636

ENERGY CONSERVING IMPROVEMENTS FOR ASSISTED

HOUSING

EXCERPT FROM NATIONAL ENERGY CONSERVATION POLICY ACT

[Public Law 95–619; 92 Stat. 3235; 42 U.S.C. 8231]

SEC. 251. ø42 U.S.C. 8231¿ ENERGY–CONSERVING IMPROVEMENTS FOR

ASSISTED HOUSING.

* * * * * * *

(b) GRANTS.—(1) The Secretary of Housing and Urban Development is authorized to make grants to finance energy conserving improvements (as defined in subparagraph (2) of the last paragraph

of section 2(a) of the National Housing Act) to projects which are

financed with loans under section 202 of the Housing Act of 1959,

or which are subject to mortgages insured under section 221(d)(3)

or section 236 of the National Housing Act. The Secretary shall

make assistance available under this subsection on a priority basis

to those projects which are in financial difficulty as a result of high

energy costs. In carrying out the program authorized by this subsection, the Secretary shall issue regulations requiring that any

grant made under this subsection shall be made only on the condition that the recipient of such grant shall take steps (prescribed by

the Secretary) to assure that the benefits derived from such grants

in terms of lower energy costs shall accrue to tenants in the form

of lower operating subsidy if such a subsidy is being paid to such

recipient.

(2) The Secretary shall establish minimum standards for energy conserving improvements to multifamily dwelling units to be

assisted under this subsection.

(3) There are authorized to be appropriated to carry out the

provisions of this subsection not to exceed $25,000,000.
637

1The date of enactment was Novermber 28, 1990.

ENERGY EFFICIENCY PLAN

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4416; 42 U.S.C. 12712]

SEC. 945. ø42 U.S.C. 12712¿ 5-YEAR ENERGY EFFICIENCY PLAN.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development shall establish a plan for activities to be undertaken and

policies to be adopted by the Secretary within the 5-year period beginning upon the submission of the plan to the Congress under

subsection (d) to provide for, encourage, and improve energy efficiency in newly constructed, rehabilitated, and existing housing. In

developing the plan, the Secretary shall consider, as appropriate,

any energy assessments under section 944.

(b) INITIAL PLAN.—The Secretary of Housing and Urban Development shall establish the first plan under this section not later

than the expiration of the 1-year period beginning on the date of

the enactment of this Act.1

(c) UPDATES.—The Secretary of Housing and Urban Development shall revise and update the plan under this section not less

than once for each 2-year period, the first such 2-year period beginning on the date of the submission of the initial plan under subsection (b) to the Congress (as provided in subsection (d)). Each

such update shall revise the plan for the 5-year period beginning

upon the submission of the updated plan to the Congress.

(d) SUBMISSION TO CONGRESS.—The Secretary of Housing and

Urban Development shall submit the initial plan established under

subsection (b) and any updated plans under subsection (c) to the

Congress not later than the date by which such plans are to be established or updated under such paragraphs.
638

LOW-INCOME HOUSING PRESERVATION AND RESIDENT

HOMEOWNERSHIP ACT OF 1990

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[As added by Public Law 101–625; 104 Stat. 4249; 12 U.S.C. 4101 et seq.]

TITLE II—PRESERVATION OF LOW INCOME

HOUSING

Subtitle A—Short Title

SEC. 201. ø12 U.S.C. 4101 note¿ SHORT TITLE.

This title may be cited as the ‘‘Low-Income Housing Preservation and Resident Homeownership Act of 1990’’.

Subtitle B—Prepayment of Mortgages Insured

Under National Housing Act

SEC. 211. ø12 U.S.C. 4101¿ GENERAL PREPAYMENT LIMITATION.

(a) PREPAYMENT AND TERMINATION.—An owner of eligible lowincome housing may prepay, and a mortgagee may accept prepayment of, a mortgage on such housing only in accordance with a

plan of action approved by the Secretary under this subtitle or in

accordance with section 224. An insurance contract with respect to

eligible low-income housing may be terminated pursuant to section

229 of the National Housing Act only in accordance with a plan of

action approved by the Secretary under this subtitle or in accordance with section 224.

(b) FORECLOSURE.—A mortgagee may foreclose the mortgage

on, or acquire by deed in lieu of foreclosure, any eligible low-income

housing project only if the mortgagee also conveys title to the

project to the Secretary in connection with a claim for insurance

benefits.

(c) EFFECT OF UNAUTHORIZED PREPAYMENT.—Any prepayment

of a mortgage on eligible low-income housing or termination of the

mortgage insurance on such housing not in compliance with the

provisions of this subtitle shall be null and void and any low-income affordability restrictions on the housing shall continue to

apply to the housing.

SEC. 212. ø12 U.S.C. 4102¿ NOTICE OF INTENT.

(a) FILING WITH THE SECRETARY.—An owner of eligible low-income housing that intends to terminate the low-income affordability restrictions through prepayment or voluntary termination in

accordance with section 218, extend the low-income affordability restrictions of the housing in accordance with section 219, or transfer
639 Sec. 213 LIHPRH ACT OF 1990

1 November 28, 1990.

the housing to a qualified purchaser in accordance with section

220, shall file with the Secretary a notice indicating such intent in

the form and manner as the Secretary shall prescribe.

(b) FILING WITH THE STATE OR LOCAL GOVERNMENT, TENANTS, AND MORTGAGEE.—The owner, upon filing a notice of intent under

this section, shall simultaneously file the notice of intent with the

chief executive officer of the appropriate State or local government

for the jurisdiction within which the housing is located and with

the mortgagee, and shall inform the tenants of the housing of the

filing.

(c) INELIGIBILITY FOR FILING.—An owner shall not be eligible

to file a notice of intent under this section if the mortgage covering

the housing—

(1) falls into default on or after the date of the enactment

of the Cranston-Gonzalez National Affordable Housing Act;1 or

(2)(A) fell into default before, but is current as of, such

date; and

(B) the owner does not agree to recompense the appropriate Insurance Fund, in the amount the Secretary determines appropriate, for any losses sustained by the Fund as a

result of any work-out or other arrangement agreed to by the

Secretary and the owner with respect to the defaulted mortgage.

The Secretary shall carry out this subsection in a manner consistent with the provisions of section 203 of the Housing and Community Development Amendments of 1978.

SEC. 213. ø12 U.S.C. 4103¿ APPRAISAL AND PRESERVATION VALUE OF

ELIGIBLE LOW-INCOME HOUSING.

(a) APPRAISAL.—Upon receiving notice of intent regarding an

eligible low-income housing project indicating an intent to extend

the low-income affordability restrictions under section 219 or transfer the housing under section 220, the Secretary shall provide for

determination of the preservation value of the housing, as follows:

(1) APPRAISERS.—The preservation value shall be determined by 2 independent appraisers, one of whom shall be selected by the Secretary and one of whom shall be selected by

the owner. The appraisals shall be conducted not later than 4

months after filing the notice of intent under section 212, and

the owner shall submit to the Secretary the appraisal made by

the owner’s selected appraiser not later than 90 days after receipt of the notice under paragraph (2). If the 2 appraisers fail

to agree on the preservation value, and the Secretary and the

owner also fail to agree on the preservation value, the Secretary and the owner shall jointly select and jointly compensate a third appraiser, whose appraisal shall be binding on

the parties.

(2) NOTICE.—Not later than 30 days after the filing of a

notice of intent to seek incentives under section 219 or transfer

the property under section 220, the Secretary shall provide

written notice to the owner filing the notice of intent of—

(A) the need for the owner to acquire an appraisal of

the property under paragraph (1);
Sec. 213 LIHPRH ACT OF 1990 640

(B) the rules and guidelines for such appraisals;

(C) the filing deadline for submission of the appraisal

under paragraph (1);

(D) the need for an appraiser retained by the Secretary to inspect the housing and project financial records;

and

(E) any delegation to the appropriate State agency by

the Secretary of responsibilities regarding the appraisal.

(3) TIMELINESS.—The Secretary may approve a plan of action to receive incentives under section 219 or 220 only based

upon an appraisal conducted in accordance with this subsection that is not more than 30 months old.

(b) PRESERVATION VALUE.—For purposes of this subtitle, the

preservation value of eligible low-income housing appraised under

this section shall be—

(1) for purposes of extending the low-income affordability

restrictions and receiving incentives under section 219, the fair

market value of the property based on the highest and best use

of the property as residential rental housing; and

(2) for purposes of transferring the property under section

220 or 221, the fair market value of the housing based on the

highest and best use of the property.

(c) GUIDELINES.—The Secretary shall provide written guidelines for appraisals of preservation value, which shall assume repayment of the existing federally assisted mortgage, termination of

the existing low-income affordability restrictions, simultaneous termination of any Federal rental assistance, and costs of compliance

with any State or local laws of general applicability. The guidelines

may permit reliance upon assessments of rehabilitation needs and

other conversion costs determined by an appropriate State agency,

as determined by the Secretary. The guidelines shall instruct the

appraiser to use the greater of actual project operating expenses at

the time of the appraisal (based on the average of the actual

project operating expenses during the preceding 3 years) or projected operating expenses after conversion in determining preservation value. The guidelines established by the Secretary shall not be

inconsistent with customary appraisal standards. The guidelines

shall also meet the following requirements:

(1) RESIDENTIAL RENTAL VALUE.—In the case of preservation value determined under subsection (b)(1), the guidelines

shall assume conversion of the housing to market-rate rental

housing and shall establish methods for (A) determining rehabilitation expenditures that would be necessary to bring the

housing up to quality standards required to attract and sustain

a market rate tenancy upon conversion, and (B) assessing

other costs that the owner could reasonably be expected to

incur if the owner converted the property to market-rate multifamily rental housing.

(2) HIGHEST AND BEST USE VALUE.—In the case of preservation value determined under subsection (b)(2), the guidelines

shall assume conversion of the housing to highest and best use

for the property and shall establish methods for (A) determining any rehabilitation expenditures that would be necessary to convert the housing to such use, and (B) assessing
641 Sec. 215 LIHPRH ACT OF 1990

other costs that the owner could reasonably be expected to

incur if the owner converted the property to its highest and

best use. ø12 U.S.C. 4103¿

SEC. 214. ø12 U.S.C. 4104¿ ANNUAL AUTHORIZED RETURN AND PRESERVATION RENTS.

(a) ANNUAL AUTHORIZED RETURN.—Pursuant to an appraisal

under section 213, the Secretary shall determine the annual authorized return on the appraised housing, which shall be equal to

8 percent of the preservation equity (as such term is defined in section 229(8)).

(b) PRESERVATION RENTS.—The Secretary shall also determine

the aggregate preservation rents under this subsection for each

project appraised under section 213. The aggregate preservation

rents shall be used solely for the purposes of comparison with Federal cost limits under section 215. Actual rents received by an

owner (or a qualified purchaser) shall be determined pursuant to

section 219, 220, or 221. The aggregate preservation rents shall be

established as follows:

(1) EXTENSION OF AFFORDABILITY LIMITS.—The aggregate

preservation rent for purposes of receiving incentives pursuant

to extension of the low-income affordability restrictions under

section 219 shall be the gross potential income for the project,

determined by the Secretary, that would be required to support

the following costs:

(A) The annual authorized return determined under

subsection (a).

(B) Debt service on any rehabilitation loan for the

housing.

(C) Debt service on the federally-assisted mortgage for

the housing.

(D) Project operating expenses.

(E) Adequate reserves.

(2) SALE.—The aggregate preservation rent for purposes of

receiving incentives pursuant to sale under section 220 or 221

shall be the gross income for the project determined by the

Secretary, that would be required to support the following

costs:

(A) Debt service on the loan for acquisition of the

housing.

(B) Debt service on any rehabilitation loan for the

housing.

(C) Debt service on the federally-assisted mortgage for

the housing.

(D) Project operating expenses.

(E) Adequate reserves.

SEC. 215. ø12 U.S.C. 4105¿ FEDERAL COST LIMITS AND LIMITATIONS ON

PLANS OF ACTION.

(a) DETERMINATION OF RELATIONSHIP TO FEDERAL COST LIM- ITS.— (1) INITIAL DETERMINATION.—For each eligible low-income

housing project appraised under section 213(a), the Secretary

shall determine whether the aggregate preservation rents for

the project determined under paragraph (1) or (2) of section
Sec. 215 LIHPRH ACT OF 1990 642

214(b) exceed the amount determined by multiplying 120 percent of the fair market rental (established under section 8(c) of

the United States Housing Act of 1937) for the market area in

which the housing is located by the number of dwelling units

in the project (according to appropriate unit sizes).

(2) RELEVANT LOCAL MARKETS.—If the aggregate preservation rents for a project exceeds the amount determined under

paragraph (1), the Secretary shall determine whether such aggregate rents exceed the amount determined by multiplying

120 percent of the prevailing rents in the relevant local market

area in which the housing is located by the number of units

in the project (according to the appropriate unit sizes). A relevant local market area shall be an area geographically smaller than a market area established by the Secretary under section 8(c)(1) of the United States Housing Act of 1937 that is

identifiable as a distinct rental market area. The Secretary

may rely on the appraisal to determine the relevant local market areas and prevailing rents in such local areas and any

other information the Secretary determines is appropriate.

(3) EFFECT.—For purposes of this subtitle, the aggregate

preservation rents shall be considered to exceed the Federal

cost limits under this subsection only if the aggregate preservation rents exceed the amount determined under paragraph

(1) and the amount determined under paragraph (2).

(b) LIMITATIONS ON ACTION PURSUANT TO FEDERAL COST LIMITS.—

(1) HOUSING WITHIN FEDERAL COST LIMITS.—If the aggregate preservation rents for an eligible low-income housing

project do not exceed the Federal cost limit, the owner may not

prepay the mortgage on the housing or terminate the insurance contract with respect to the housing, except as permitted

under section 224. The owner may—

(A) file a plan of action under section 217 to receive

incentives under section 219; or

(B) file a second notice of intent under section 216(d)

indicating an intention to transfer the housing under section 220 and take actions pursuant to such section.

(2) HOUSING EXCEEDING FEDERAL COST LIMITS.—If the aggregate preservation rents for an eligible low-income housing

project exceed the Federal cost limit, the owner may—

(A) file a plan of action under section 217 to receive

incentives under section 219 if the owner agrees to accept

incentives under such sections in an amount that shall not

exceed the Federal cost limit;

(B) file a second notice of intent under section 216(d)

indicating an intention to transfer the housing under section 220 and take actions pursuant to such section if the

owner agrees to transfer the housing at a price that shall

not exceed the Federal cost limit; or

(C) file a second notice of intent under section 216(d)

indicating an intention to prepay the mortgage or voluntarily terminate the insurance, subject to the mandatory

sale provisions under section 221.
643 Sec. 216 LIHPRH ACT OF 1990

SEC. 216. ø12 U.S.C. 4106¿ INFORMATION FROM SECRETARY.

(a) INFORMATION TO OWNERS TERMINATING AFFORDABILITY RE- STRICTIONS.—The Secretary shall provide each owner who submits

a notice of intent to terminate the low-income affordability restrictions on the housing under section 218 with information under this

section not later than 6 months after receipt of the notice of intent.

The information shall include a description of the criteria for such

termination specified under section 218 and the documentation required to satisfy such criteria.

(b) INFORMATION TO OWNERS EXTENDING LOW-INCOME AFFORD- ABILITY RESTRICTIONS.—The Secretary shall provide each owner

who submits notice of intent to extend the low-income affordability

restrictions on the housing under section 219 or transfer the housing under section 220 to a qualified purchaser with information

under this subsection not later than 9 months after receipt of the

notice of intent. The information shall include any information necessary for the owner to prepare a plan of action under section 217,

including the following:

(1) PRESERVATION VALUES.—A statement of the preservation value of the housing determined under paragraphs (1) and

(2) of section 213(b).

(2) PRESERVATION RENT.—A statement of the preservation

rent for the housing as calculated under section 214(b).

(3) FEDERAL COST LIMITS.—A statement of the applicable

Federal cost limits for the market area (or relevant local market area, if applicable) in which the housing is located, which

shall explain the limitations under sections 219 and 220 of the

amount of assistance that the Secretary may provide based on

such cost limits.

(4) FEDERAL COST LIMIT ANALYSIS.—A statement of whether the aggregate preservation rents exceed the Federal cost

limits and a direction to the owner to file a plan of action

under section 217 or submit a second notice of intent under

section 216(d), whichever is applicable.

(c) AVAILABILITY TO TENANTS.—The Secretary shall make any

information provided to the owner under subsections (a) and (b)

available to the tenants of the housing, together with other information relating to the rights and opportunities of the tenants.

(d) SECOND NOTICE OF INTENT.—

(1) FILING.—Each owner of eligible low-income housing

that elects to transfer housing under section 220 shall submit

to the Secretary, in such form and manner as the Secretary

prescribes, notice of intent to sell the housing under section

220. To be eligible to prepay the mortgage or voluntarily terminate the insurance contract on the mortgage, an owner of housing for which the preservation rents exceed the Federal cost

limits under section 215(b) shall submit to the Secretary notice

of such intent. The provisions of sections 221 and 223 shall

apply to any owner submitting a notice under the preceding

sentence.

(2) TIMING.—A second notice of intent under this subsection shall be submitted not later than 30 days after receipt

of information from the Secretary under this section. If an

owner fails to submit such notice within such period, the notice
Sec. 217 LIHPRH ACT OF 1990 644

of intent submitted by the owner under section 212 shall be

void and ineffective for purposes of this subtitle.

(3) FILING WITH THE STATE OR LOCAL GOVERNMENT, TENANTS, AND MORTGAGEE.—Upon filing a second notice of intent

under this subsection, the owner shall simultaneously file such

notice of the intent with the chief executive officer of the appropriate State or local government for the jurisdiction within

which the housing is located and with the mortgagee, and shall

inform the tenants of the housing of the filing.

SEC. 217. ø12 U.S.C. 4107¿ PLAN OF ACTION.

(a) SUBMISSION TO SECRETARY.—

(1) TIMING.—Not later than 6 months after receipt of the

information from the Secretary under section 216 an owner

seeking to terminate the low-income affordability restrictions

through prepayment of the mortgage or voluntary termination

under section 218, or to extend the low-income affordability restriction on the housing under section 219, shall submit a plan

of action to the Secretary in such form and manner as the Secretary shall prescribe. Any owner or purchaser seeking a transfer of the housing under section 220 or 221 shall submit a plan

of action under this section to the Secretary upon acceptance

of a bona fide offer under section 220 (b) or (c) or upon making

of any bona fide offer under section 221.

(2) COPIES TO TENANTS.—Each owner submitting a plan of

action under this section to the Secretary shall also submit a

copy to the tenants of the housing. The owner shall simultaneously submit the plan of action to the office of the chief executive officer of the appropriate State or local government for

the jurisdiction within which the housing is located. Each

owner and the Secretary shall also, upon request, make available to the tenants of the housing and to the office of the chief

executive officer of the appropriate State or local government

for the jurisdiction within which the housing is located all documentation supporting the plan of action, but not including

any information that the Secretary determines is proprietary

information. An appropriate agency of such State or local government shall review the plan and advise the tenants of the

housing of any programs that are available to assist the tenants in carrying out the purposes of this title.

(3) FAILURE TO SUBMIT.—If the owner does not submit a

plan of action to the Secretary within the 6-month period referred to in paragraph (1) (or the applicable longer period), the

notice of intent shall be ineffective for purposes of this subtitle

and the owner may not submit another notice of intent under

section 212 until 6 months after the expiration of such period.

(b) CONTENTS.—

(1) TERMINATION OF AFFORDABILITY RESTRICTIONS.—If the

plan of action proposes to terminate the low-income affordability restrictions through prepayment or voluntary termination in accordance with section 218, the plan shall include—

(A) a description of any proposed changes in the status

or terms of the mortgage or regulatory agreement;
645 Sec. 218 LIHPRH ACT OF 1990

(B) a description of any proposed changes in the lowincome affordability restrictions;

(C) a description of any change in ownership that is

related to prepayment or voluntary termination;

(D) an assessment of the effect of the proposed

changes on existing tenants;

(E) an analysis of the effect of the proposed changes

on the supply of housing affordable to low- and very lowincome families or persons in the community within which

the housing is located and in the area that the housing

could reasonably be expected to serve; and

(F) any other information that the Secretary determines is necessary to achieve the purposes of this title.

(2) EXTENSION OF AFFORDABILITY RESTRICTIONS.—If the

plan of action proposes to extend the low-income affordability

restrictions of the housing in accordance with section 219 or

transfer the housing to a qualified purchaser in accordance

with section 220, the plan shall include—

(A) a description of any proposed changes in the status

or terms of the mortgage or regulatory agreement;

(B) a description of the Federal incentives requested

(including cash flow projections), and analyses of how the

owner will address any physical or financial deficiencies

and maintain the low-income affordability restrictions of

the housing;

(C) a description of any assistance from State or local

government agencies, including low-income housing tax

credits, that have been offered to the owner or purchaser

or for which the owner or purchaser has applied or intends

to apply;

(D) a description of any transfer of the property, including the identity of the transferee and a copy of any

documents of sale; and

(E) any other information that the Secretary determines is necessary to achieve the purposes of this title.

(c) REVISIONS.—An owner may from time to time revise and

amend the plan of action as may be necessary to obtain approval

of the plan under this subtitle. The owner shall submit any revision to the Secretary and to the tenants of the housing and make

available to the Secretary and tenants all documentation supporting any revision, but not including any information that the

Secretary determines is proprietary information.

SEC. 218. ø12 U.S.C. 4108¿ PREPAYMENT AND VOLUNTARY TERMINATION.

(a) APPROVAL.—The Secretary may approve a plan of action

that provides for termination of the low-income affordability restrictions through prepayment of the mortgage or voluntary termination of the mortgage insurance contract only upon a written finding that—

(1) implementation of the plan of action will not—

(A) materially increase economic hardship for current

tenants, and will not in any event result in (i) a monthly

rental payment by any current tenant that exceeds 30 percent of the monthly adjusted income of the tenant or an in-
Sec. 219 LIHPRH ACT OF 1990 646

crease in the monthly rental payment in any year that exceeds 10 percent (whichever is lower), or (ii) in the case of

a current tenant who already pays more than such percentage, an increase in the monthly rental payment in any

year that exceeds the increase in the Consumer Price

Index or 10 percent (whichever is lower); or

(B) involuntarily displace current tenants (except for

good cause) where comparable and affordable housing is

not readily available determined without regard to the

availability of Federal housing assistance that would address any such hardship or involuntary displacement; and

(2) the supply of vacant, comparable housing is sufficient

to ensure that such prepayment will not materially affect—

(A) the availability of decent, safe, and sanitary housing affordable to low-income and very low-income families

or persons in the area that the housing could reasonably

be expected to serve;

(B) the ability of low-income and very low-income families or persons to find affordable, decent, safe, and sanitary housing near employment opportunities; or

(C) the housing opportunities of minorities in the community within which the housing is located.

(b) STANDARDS AND PROCEDURE FOR WRITTEN FINDINGS.—

(1) STANDARDS.—A written finding under subsection (a)

shall be based on an analysis of the evidence considered by the

Secretary in reaching such finding and shall contain documentation of such evidence.

(2) PROCEDURE AND CRITERIA.—The Secretary shall, by

regulation, develop (A) a procedure for determining whether

the conditions under paragraphs (1) and (2) of subsection (a)

exist, (B) requirements for evidence on which such determinations are based, and (C) criteria on which such determinations

are based.

(c) DISAPPROVAL.—If the Secretary determines a plan of action

to prepay a mortgage or terminate an insurance contract fails to

meet the requirements of subsection (a), the Secretary shall disapprove the plan, the notice of intent filed under section 212 by

such owner shall not be effective for purposes of this subtitle, and

the owner may, in order to receive incentives under this subtitle,

file a new notice of intent under such section.

SEC. 219. ø12 U.S.C. 4109¿ INCENTIVES TO EXTEND LOW-INCOME USE.

(a) AGREEMENTS BY SECRETARY.—After approving a plan of action from an owner of eligible low-income housing that includes the

owner’s plan to extend the low-income affordability restrictions of

the housing, the Secretary shall, subject to the availability of appropriations for such purpose, enter into such agreements as are

necessary to enable the owner to receive (for each year after the

approval of the plan of action) the annual authorized return for the

housing determined under section 214(a), pay debt service on the

federally-assisted mortgage covering the housing, pay debt service

on any loan for rehabilitation of the housing, and meet project operating expenses and establish adequate reserves. The Secretary

shall take into account the Federal cost limits under section 215(a)
647 Sec. 219 LIHPRH ACT OF 1990

1So in law.

for the housing when providing incentives under subsections (b)(2)

and (3) of this section. The Secretary shall take such actions as are

necessary to ensure that owners receive the annual authorized return for the housing determined under section 214(a) during the

period in which rent increases are phased in as provided in section

222(a)(2)(E), including (in order of preference) (1) allowing the

owner access to residual receipt accounts (pursuant to subsection

(b)(1) of this section), (2) deferring remittance of excess rent payments, and (3) providing an increase in rents permitted under an

existing contract under section 8 of the United States Housing Act

of 1937 (pursuant to subsection (b)(2) of this section).

(b) PERMISSIBLE INCENTIVES.—Such agreements may include

one or more of the following incentives:

(1) Increased access to residual receipts accounts.

(2) Subject to the availability of amounts provided in appropriations Acts—

(A) an increase in the rents permitted under an existing contract under section 8 of the United States Housing

Act of 1937, or

(B) additional assistance under section 8 or an extension of any project-based assistance attached to the housing; and 1

(3) An increase in the rents on units occupied by current

tenants as permitted under section 222.

(4) Financing of capital improvements under section 201 of

the Housing and Community Development Amendments of

1978.

(5) Financing of capital improvements through provision of

insurance for a second mortgage under section 241 of the National Housing Act.

(6) In the case of housing defined in section 229(1)(A)(iii),

redirection of the Interest Reduction Payment subsidies to a

second mortgage.

(7) Access by the owner to a portion of the preservation equity in the housing through provision of insurance for a second

mortgage loan insured under section 241(f) of the National

Housing Act or a non-insured mortgage loan approved by the

Secretary and the mortgagee.

(8) Other incentives authorized in law.

With respect to any housing with a mortgage insured or otherwise

assisted pursuant to section 236 of the National Housing Act, the

provisions of subsections (f) and (g) of section 236 of such Act notwithstanding, the fair market rental charge for each unit in such

housing may be increased in accordance with this subsection, but

the owner shall pay to the Secretary all rental charges collected in

excess of the basic rental charges, in an amount not greater than

the fair market rental charges as such charges would have been established under section 236(f) of such Act absent the requirements

of this paragraph.
Sec. 220 LIHPRH ACT OF 1990 648

1So in law. Probably intended to refer to this subsection.

SEC. 220. ø12 U.S.C. 4110¿ INCENTIVES FOR TRANSFER TO QUALIFIED

PURCHASERS.

(a) IN GENERAL.—With respect to any eligible low-income housing for which an owner has submitted a second notice of intent

under section 216(d) to transfer the housing to a qualified purchaser, the owner shall offer the housing for transfer to qualified

purchasers as provided in this section. The Secretary shall issue

regulations describing the means by which potential qualified purchasers shall be notified of the availability of the housing for sale.

The Secretary shall take into account the Federal cost limits under

section 215(a) for the housing when providing incentives under section 219(b)(2) and (b)(3) (pursuant to subsection (d)(3) of this section).

(b) RIGHT OF FIRST OFFER TO PRIORITY PURCHASERS.—

(1) NEGOTIATION PERIOD.—For the 12-month period beginning on the receipt by the Secretary of a second notice of intent

under section 216(d) with respect to such housing, the owner

may offer to sell and negotiate a sale of the housing only with

priority purchasers. The negotiated sale price may not exceed

the preservation value of the housing determined under section

213(b)(2). The owner or the purchaser shall submit a plan of

action under section 217 for any sale under this subsection,

which shall include any request for assistance under this section, upon the acceptance of any bona fide offer meeting the requirements of this paragraph.

(2) EXPRESSION OF INTEREST.—During such period, priority

purchasers may submit written notice to the Secretary stating

their interest in acquiring the housing. Such notice shall be

made in the form and include such information as the Secretary may prescribe.

(3) INFORMATION.—Within 30 days of receipt of an expression of interest by a priority purchaser, the Secretary shall provide such purchaser with information on the assistance available from the Federal Government to facilitate a transfer and

the owner shall provide appropriate information on the housing, as determined by the Secretary.

(c) RIGHT OF REFUSAL FOR OTHER QUALIFIED PURCHASERS.—If

no bona fide offer to purchase any eligible low-income housing subject to this section that meets the requirements of subsection (b) is

made and accepted during the period under such subsection,

during the 3-month period beginning upon the expiration of the 12-

month period under subsection (b)(1), the owner of the housing

may offer to sell and may sell the housing only to qualified purchasers. The negotiated sale price may not exceed the preservation

value of the housing determined under section 213(b)(2). The owner

or purchaser shall submit a plan of action under section 217 for

any sale under this subsection, which shall include any request for

assistance under this section, upon the acceptance of any bona fide

offer meeting the requirements of this paragraph.1

(d) ASSISTANCE.—

(1) APPROVAL.—If the qualified purchaser is a resident

council, the Secretary may not approve a plan of action for as-
649 Sec. 220 LIHPRH ACT OF 1990

sistance under this section unless the council’s proposed resident homeownership program meets the requirements under

section 226. For all other qualified purchasers, the Secretary

may not approve the plan unless the Secretary finds that the

criteria for approval under section 222 have been satisfied.

(2) AMOUNT.—Subject to the availability of amounts approved in appropriations Acts, the Secretary shall, for approvable plans of action, provide assistance sufficient to enable

qualified purchasers (including all priority purchasers other

than resident councils acquiring under the homeownership program authorized by section 226) to—

(A) acquire the eligible low-income housing from the

current owner for a purchase price not greater than the

preservation equity of the housing;

(B) pay the debt service on the federally-assisted mortgage covering the housing;

(C) pay the debt service on any loan for the rehabilitation of the housing;

(D) meet project operating expenses and establish adequate reserves for the housing, and in the case of a priority purchaser, meet project oversight costs;

(E) receive a distribution equal to an 8 percent annual

return on any actual cash investment (from sources other

than assistance provided under this title) made to acquire

or rehabilitate the project;

(F) in the case of a priority purchaser, receive a reimbursement of all reasonable transaction expenses associated with the acquisition, loan closing, and implementation of an approved plan of action; and

(G) in the case of an approved resident homeownership program, cover the costs of training for the resident

council, homeownership counseling and training, the fees

for the nonprofit entity or public agency working with the

resident council and costs related to relocation of tenants

who elect to move.

(3) INCENTIVES.—

(A) IN GENERAL.—For all qualified purchasers of housing under this subsection, the Secretary may provide assistance for an approved plan of action in the form of 1 or

more of the incentives authorized under section 219(b), except that the incentive under such section 219(b)(7) may

include an acquisition loan under section 241(f) of the National Housing Act.

(B) PRIORITY PURCHASERS.—Where the qualified purchaser is a priority purchaser, the Secretary may provide

assistance for an approved plan of action (in the form of

a grant) for each unit in the housing in an amount, as determined by the Secretary, that does not exceed the

present value of the total of the projected published fair

market rentals for existing housing (established by the

Secretary under section 8(c) of the United States Housing

Act of 1937) for the next 10 years (or such longer period

if additional assistance is necessary to cover the costs referred to in paragraph (2)).
Sec. 221 LIHPRH ACT OF 1990 650

SEC. 221. ø12 U.S.C. 4111¿ MANDATORY SALE FOR HOUSING EXCEEDING FEDERAL COST LIMITS.

(a) IN GENERAL.—With respect to any eligible low-income housing for which the aggregate preservation rents determined under

section 214(b) exceed the Federal cost limit, the owner shall offer

the housing for sale to qualified purchasers as provided in this section.

(b) RIGHT OF FIRST REFUSAL TO PRIORITY PURCHASERS.—

(1) DURATION AND REQUIRED SALE.—For the 12-month period beginning upon the receipt by the Secretary of the second

notice of intent under section 216(d) with respect to such housing, the owner of the housing may offer to sell and may sell

the housing only to priority purchasers. If, during such period,

a priority purchaser makes a bona fide offer to purchase the

housing for a sale price not less than the preservation value of

the housing determined under section 213(b)(2), the Secretary

shall require the owner to sell the housing pursuant to such

offer.

(2) EXPRESSION OF INTEREST.—During the period under

paragraph (1), priority purchasers shall have the opportunity

to submit written notice to the owner and the Secretary stating

their interest in acquiring the housing. Such written notice

shall be in such form and include such information as the Secretary may prescribe.

(3) INFORMATION FROM SECRETARY.—Not later than 30

days after receipt of any notice under paragraph (2), the Secretary shall provide such purchaser with information on the

assistance available from the Federal Government to facilitate

a transfer and the owner shall provide such purchaser with appropriate information on the housing, as determined by the

Secretary.

(c) RIGHT OF REFUSAL FOR OTHER QUALIFIED PURCHASERS.—If

no bona fide offer to purchase any eligible low-income housing subject to this section that meets the requirements of subsection (b) is

made during the period under such subsection, during the 3-month

period beginning upon the expiration of the 12-month period under

subsection (b)(1), the owner of the housing may offer to sell and

may sell the housing only to qualified purchasers. If, during such

period, a qualified purchaser makes a bona fide offer to purchase

the housing for a sale price not less than the preservation value of

the housing determined under section 213(b)(2), the Secretary shall

require the owner to sell the housing pursuant to such offer.

(d) ASSISTANCE.—

(1) FEDERAL COST LIMIT.—Subject to the availability of

amounts approved in appropriations Acts, the Secretary shall,

for approvable plans of action, provide to qualified purchasers

assistance under section 8 of the United States Housing Act of

1937 sufficient to produce a gross income potential equal to the

amount determined by multiplying 120 percent of the prevailing rents in the relevant local market area in which the

housing is located by the number of units in the project (according to appropriate unit sizes), and any other incentives authorized under section 219(b) that would have been provided to

a qualified purchaser under section 220.
651 Sec. 222 LIHPRH ACT OF 1990

1So in law.

(2) ADDITIONAL ASSISTANCE.—From amounts made available under section 234(b), the Secretary may make grants to

assist in the completion of sales and transfers under this section to any qualified purchasers. Any grant under this paragraph shall be in an amount not exceeding the difference between the preservation value for the housing (determined

under section 213(b)(2)) and the level of assistance under paragraph (1) of this subsection.

(3) SECURING STATE AND LOCAL FUNDING.—The Secretary

shall assist any qualified purchaser of such housing in securing

funding and other assistance (including tax and assessment reductions) from State and local governments to facilitate a sale

under this section.

SEC. 222. ø12 U.S.C. 4112¿ CRITERIA FOR APPROVAL OF PLAN OF ACTION INVOLVING INCENTIVES.

(a) IN GENERAL.—The Secretary may approve a plan of action

for extension of the low-income affordability restrictions on any eligible low-income housing or transfer the housing to a qualified purchaser (other than a resident council) only upon finding that—

(1) due diligence has been given to ensuring that the package of incentives is, for the Federal Government, the least costly alternative that is consistent with the full achievement of

the purposes of this title;

(2) binding commitments have been made to ensure that—

(A) the housing will be retained as housing affordable

for very low-income families or persons, low income 1 families or persons, and moderate-income families or persons

for the remaining useful life of such housing (as determined under subsection (c));

(B) throughout such period, adequate expenditures

will be made for maintenance and operation of the housing

and that the project meets housing standards established

by the Secretary under subsection (d), as determined by inspections conducted under such subsection by the Secretary;

(C) current tenants will not be involuntarily displaced

(except for good cause);

(D) monthly rent contributions by current and future

tenants, including tenants receiving assistance under section 8 of the United States Housing Act of 1937, shall not

exceed the lesser of—

(i) 30 percent of the adjusted income of the tenant;

or

(ii) 90 percent of the actual rent paid for a comparable unit in comparable unassisted housing in the

market area in which the eligible low-income housing

is located;

except that the rent contributions of tenants (other than

tenants receiving assistance under section 8 of the United

States Housing Act of 1937) occupying the housing at the
Sec. 222 LIHPRH ACT OF 1990 652

1So in law. This subparagraph was amended to read as shown by section 601(a) of the bill

S. 2281, 103d Congress, as reported (S. Rep. 103–307), which was enacted by the Departments

of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1995, Pub. L. 103–327, 108 Stat. 2316, approved September 28, 1994, by incorporating

such section 601 by reference. Subsection (f) of such section 601 provides as follows:

‘‘(f) TRANSITION PROVISIONS.— ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), this section shall take effect on

the date of enactment of this Act.

‘‘(2) EXCEPTION.—If an owner of eligible low-income housing has a plan of action that has

been approved by the Secretary and that is being implemented as of the date of enactment

of this Act, subsections (a), (b), (c), and (d) shall not apply to current tenants of such housing until the first date on which the next annual rent adjustments are made following the

date of enactment of this Act.’’.

Such Act also provides that ‘‘the provisions of such section 601 shall be effective only during

fiscal year 1995.’’. 2So in law. The Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1995, Pub. L. 103–327, 108 Stat. 2316, approved September 28, 1994, enacted section 601 of the bill S. 2281, 103d Congress, as reported (S. Rep.

103–307), by incorporating such section by reference. Subsection (c) of such section 601 provides

as follows:

‘‘(c) SECTION 8 ASSISTANCE.—Section 222(a)(1)(E)(ii) of the Low-Income Housing Preservation

and Resident Homeownership Act of 1990 (12 U.S.C. 4112(a)(1)(E)) is amended—

‘‘(1) by striking ‘; and’ at the end and inserting a period; and

‘‘(2) by adding at the end the following: ‘For any section 8 assistance provided under this

subtitle, whether through the extension of an existing contract or the provision of a new

contract for assistance, the Secretary shall have the discretion to adjust contract rents within the limits established under section 215, irrespective of the comparable rent requirements set forth in section 8(c) of the United States Housing Act of 1937. Notwithstanding

any provision of law to the contrary, any conflict pertaining to the computation of contract

rents arising from differences between this subtitle and section 8 of the United States Housing Act of 1937 shall, subject to the prior approval of the Secretary, be resolved in favor

of this subtitle; and’.’’.

The amendment could not be executed to paragraph (1) of this subsection and was probably

intended to be made to this subparagraph.

Also, See footnote 1 on this page relating to transition provisions and the effective date of

the amendment. 3This clause was added by section 601(b) of the bill S. 2281, 103d Congress, as reported (S.

Rep. 103–307), which was enacted by the Departments of Veterans Affairs and Housing and

Urban Development, and Independent Agencies Appropriations Act, 1995, Pub. L. 103–327, 108

Stat. 2316, approved September 28, 1994, by incorporating such section 601 by reference. See

footnote 1 on this page relating to transition provisions and the effective date of the amendment.

time of any increase may not be reduced under this subparagraph. 1

(E)(i) any resulting increase in rents for current tenants (except for increases made necessary by increased operating costs)—

(I) shall be phased in equally over a period of not

less than 3 years, if such increase is 30 percent or

more; and

(II) shall be limited to not more than 10 percent

per year if such increase is more than 10 percent but

less than 30 percent;

(ii) assistance under section 8 of the United States

Housing Act of 1937 shall be provided, to the extent available under appropriation Acts, if necessary to mitigate any

adverse effect on current income-eligible very low- and

low-income tenants; and 2

(iii) 3(I) to retain the tenant occupancy profile required by subparagraph (F)(i), tenants that are determined by the Secretary to be low-income tenants at

initial income certification upon occupancy, or at the

time of implementation of a plan of action (whichever

occurs last), shall pay for rent an amount that is not

less than the lesser of—
653 Sec. 222 LIHPRH ACT OF 1990

1So in law.

2The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1995, Pub. L. 103–327, 108 Stat. 2316, approved September 28, 1994, enacted section 601 of the bill S. 2281, 103d Congress, as reported (S. Rep.

103–307), by incorporating such section by reference. Subsection (d) of such section 601 provides

as follows:

‘‘(d) APPLICABILITY OF FEDERAL PREFERENCES.—Section 222(a)(1)(F) of the Low-Income

Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4112(a)(1)(F)) is

amended—

‘‘(1) in clause (i)—

‘‘(A) by striking ‘rents for units becoming available to new tenants shall be at levels

approved by the Secretary that will ensure, to the extent practicable, that the units will

be’ and inserting ‘to the extent practicable, the units becoming available to new tenants

shall be’; and

‘‘(B) by striking ‘and’ at the end;

‘‘(2) by redesignating clause (ii) as clause (iii); and

‘‘(3) by inserting after clause (i) the following new clause:

‘(ii) in order to maintain the proportions of very low- and low-income families and persons required by clause (i), owners shall be required to apply any required Federal preference rules only with respect to tenants within each low- or very low-income category,

in accordance with the approved tenant profile; and’.’’.

The amendment could not be executed to paragraph (1)(F) of this subsection and was probably intended to be made to this subparagraph.

Also, see footnote 1 on the preceding page relating to transition provisions and the effective

date of the amendment.

(aa) 30 percent of 45 percent of median income for the area (as determined by the Secretary

and adjusted for family size); or

(bb) 90 percent of the actual rent paid for a

comparable unit in comparable unassisted housing

in the market area in which the eligible low-income housing is located.

Subject to subclause (II), payment of this minimum

rent shall be a condition of continued occupancy and

eligibility for section 8 assistance.

(II) Notwithstanding the rents required under

subclause (I), a tenant who occupies a unit designated

for occupancy by low-income persons and families, and

who becomes a very low-income tenant, shall be provided with the next available unit designated for occupancy by very low-income persons and families, and,

until such unit becomes available, shall pay for rent

not more than the amount chargeable as rent under

section 3(a) of the United States Housing Act of 1937.

Such tenant shall not be evicted for nonpayment of

rent if the rent amounts set forth in this subclause are

paid. The costs resulting from the difference between

rents required under subclause (I) and the rents permitted under this subclause shall be incorporated into

the section 8 contract for units designated for occupancy by low-income persons or families; and 1

(F) 2(i) rents for units becoming available to new tenants shall be at levels approved by the Secretary that will

ensure, to the extent practicable, that the units will be

available and affordable to the same proportions of very

low-income families or persons, low-income families or persons, and moderate-income families or persons (including

families or persons whose incomes are 95 percent or more

of area median income) as resided in the housing as of

January 1, 1987 (based on the area median income limits
Sec. 222 LIHPRH ACT OF 1990 654

1 Indented so in law.

established by the Secretary in February 1987), or the date

the plan of action is approved, whichever date results in

the highest proportion of very low-income families, except

that this limitation shall not prohibit a higher proportion

of very low-income families from occupying the housing;

and

(ii) in approving rents under this paragraph, the Secretary shall take into account any additional incentives

provided under this subtitle;

(G) future rent adjustments shall be—

(i) made by applying an annual factor (to be determined by the Secretary) to the portion of rent attributable to operating expenses for the housing and,

where the owner is a priority purchaser, to the portion

of rent attributable to project oversight costs; and

(ii) subject to a procedure, established by the Secretary, for owners to apply for rent increases not adequately compensated by annual adjustment under

clause (i), under which the Secretary may increase

rents in excess of the amount determined under clause

(i) only if the Secretary determines such increases are

necessary to reflect extraordinary necessary expenses

of owning and maintaining the housing; and

(H) 1 any savings from reductions in operating expenses due to management efficiencies shall be deposited in project reserves for replacement and the owner

shall have periodic access to such reserves, to the extent the Secretary determines that the level of reserves is adequate and that the housing is maintained

in accordance with the standards established under

section 222(d); and

(3) no incentives under section 219 (other than to purchasers under section 220) may be provided until the Secretary

determines the project meets housing standards under subsection (d), except that incentives under such section and other

incentives designed to correct deficiencies in the project may be

provided.

(b) IMPLEMENTATION.—Any agreement to maintain the low-income affordability restrictions for the remaining useful life of the

housing may be made through execution of a new regulatory agreement, modifications to the existing regulatory agreement or mortgage, or, in the case of the prepayment of a mortgage or voluntary

termination of mortgage insurance, a recorded instrument.

(c) DETERMINATION OF REMAINING USEFUL LIFE.—

(1) DEFINITION.—For purposes of this title, the term ‘‘remaining useful life’’ means, with respect to eligible low-income

housing, the period during which the physical characteristics of

the housing remain in a condition suitable for occupancy, assuming normal maintenance and repairs are made and major

systems and capital components are replaced as becomes necessary.
655 Sec. 222 LIHPRH ACT OF 1990

(2) STANDARDS.—The Secretary shall, by rule under section

553 of title 5, United States Code, establish standards for determining when the useful life of an eligible low-income housing project has expired. The determination shall be made on

the record after opportunity for a hearing.

(3) OWNER PETITION.—The Secretary shall establish a procedure under which owners of eligible low-income housing may

petition the Secretary for a determination that the useful life

of such housing has expired. The procedure shall not permit

such a petition before the expiration of the 50-year period beginning upon the approval of a plan of action under this subtitle with respect to such housing. In making a determination

pursuant to a petition under this paragraph, the Secretary

shall presume that the useful life of the housing has not expired, and the owner shall have the burden of proof in establishing such expiration. The Secretary may not determine that

the useful life of any housing has expired if such determination

results primarily from failure to make regular and reasonable

repairs and replacement, as became necessary.

(4) TENANT AND COMMUNITY COMMENT AND APPEAL.—In

making a determination regarding the useful life of any housing pursuant to a petition submitted under paragraph (3), the

Secretary shall provide for comment by tenants of the housing

and interested persons and organizations with respect to the

petition. The Secretary shall also provide the tenants and interested persons and organizations with an opportunity to appeal a determination under this subsection.

(d) HOUSING STANDARDS.—

(1) ESTABLISHMENT AND INSPECTION.—The Secretary shall,

by regulation, establish standards regarding the physical condition in which any eligible low income housing project receiving incentives under this subtitle shall be maintained. The Secretary shall inspect each such project not less than annually to

ensure that the project is in compliance with such standards.

(2) SANCTIONS.—

(A) IN GENERAL.—The Secretary shall take any action

appropriate to require the owner of any housing not in

compliance with such standards to bring such housing into

compliance with the standards, including—

(i) directing the mortgagee, with respect to an equity take-out loan under section 241(f) of the National

Housing Act, to withhold the disbursement to the

owner of any escrowed loan proceeds and requiring

that such proceeds be used for repair of the housing;

and

(ii) reduce the amount of the annual authorized

return, as determined by the Secretary, for the period

ending upon a determination by the Secretary that the

project is in compliance with the standards and requiring that such amounts be used for repair.

(B) CONTINUED COMPLIANCE.—To ensure continued

compliance with the standards for a project subject to any

action under subparagraph (A), the Secretary may also

limit access of the owner to such amounts and use of such
Sec. 223 LIHPRH ACT OF 1990 656

1So in law.

amounts for not more than the 2-year period beginning

upon the determination that the project is in compliance

with the standards.

(C) REMOVAL OF ASSISTANCE.—If, upon inspection, the

Secretary determines that any eligible low income housing

project has failed to comply with the standards established

under this subsection for 2 consecutive years, the Secretary may take 1 or more of the following actions:

(i) Subject to availability of amounts provided in

appropriations Acts, provide assistance under sections

8(b) and 8(o) of the United States Housing Act of 1937

(other than project-based assistance attached to the

housing) for any tenant eligible for such assistance

who desires to terminate occupancy in the housing.

For each unit in the housing vacated pursuant to the

provision of assistance under this clause, the Secretary

may, notwithstanding any other law or contract for assistance, cancel the provision of project-based assistance attached to the housing for 1 dwelling unit, if the

housing is receiving such assistance.

(ii) In the case of housing for which an equity

take-out loan has been made under section 241(f) of

the National Housing Act, declare such loan to be in

default and accelerate the maturity date of the loan.

(iii) Declare any rehabilitation loan insured or

provided by the Secretary (with respect to the housing) to be in default and accelerate the maturity date

of the loan.

(iv) Suspend payments under or terminate any

contract for project-based rental assistance under section 8 of the United States Housing Act of 1937.

(v) Take any other action authorized by law or the

project regulatory agreement to ensure that the housing will be brought into compliance with the standards

established under this subsection.

SEC. 223. ø12 U.S.C. 4113¿ ASSISTANCE FOR DISPLACED TENANTS.

(a) SECTION 8 ASSISTANCE.—Each low-income family that is

displaced as a result of the prepayment of the mortgage or voluntary termination of an insurance contract on eligible low income

housing shall, subject to the availability or 1 amounts provided

under appropriations Acts, receive tenant-based assistance under

section 8 of the United States Housing Act of 1937. To the extent

sufficient amounts are made available under appropriations Acts,

in each fiscal year the Secretary shall reserve from amounts made

available under section 234(a) of this Act or, if necessary, under

section 5(c) of the United States Housing Act of 1937, such

amounts as the Secretary determines are necessary to provide assistance payments for low-income families displaced during the fiscal year.

(b) RELOCATION ASSISTANCE.—The Secretary shall coordinate

with public housing agencies to ensure that any very low- or lowincome family displaced from eligible low-income housing as the re-
657 Sec. 223 LIHPRH ACT OF 1990

sult of the prepayment of the mortgage (or termination of the mortgage insurance contract) on such housing is able to acquire a suitable, affordable dwelling unit in the area of the housing from which

the family is displaced. The Secretary shall require the owner of

such housing to pay 50 percent of the moving expenses of each family relocated, except that such percentage shall be increased to the

extent that State or local law of general applicability requires a

higher payment by the owner.

(c) CONTINUED OCCUPANCY.— (1) IN GENERAL.—Each owner that prepays the mortgage

(or terminates the mortgage insurance contract) on eligible

low-income housing shall, as provided in paragraph (3), allow

the tenants occupying units in such housing on the date of the

submission of notice of intent under section 212 to remain in

the housing for a period of 3 years, at rent levels (except for

increases necessary for increased operating costs) existing at

the time of prepayment.

(2) PROVISION OF ASSISTANCE BY OWNER.—In any case in

which the Secretary requires an owner to allow tenants to occupy units under paragraph (1), an owner may fulfill the requirements of such paragraph by providing such assistance

necessary for the tenant to rent a decent, safe, and sanitary

unit in another project for the same period and at a rental cost

to the tenant not in excess of the rental amount the tenant

would have been required to pay in the housing of the owner,

except that the tenant must freely agree to waive the right to

occupy the unit in the owner’s housing.

(3) APPLICABILITY TO LOW-VACANCY AREAS AND SPECIAL

NEEDS TENANTS.—The provisions of this subsection shall apply

only to—

(A) eligible low income housing located in a low-vacancy area (as such term is defined by the Secretary); and

(B) tenants in any eligible low-income housing in any

area who have special needs restricting their ability to relocate (including elderly tenants and tenants with disabilities), as determined under regulations established by the

Secretary.

(d) REQUIRED ACCEPTANCE OF SECTION 8 ASSISTANCE.—An

owner who prepays the mortgage (or terminates the mortgage insurance contract) on eligible low-income housing and maintains the

housing for residential rental occupancy may not refuse to rent,

refuse to negotiate for the rental of, or otherwise make unavailable

or deny the rent of a dwelling unit in such property to any person,

or discriminate against any person in the terms, conditions, or

privileges of rental of a dwelling (or in the provision of services or

facilities in connection therewith), because the person receives assistance under section 8 of United States Housing Act of 1937.

(e) REGIONAL POOLS.—In providing assistance under this section, the Secretary shall allocate the assistance on a regional basis

through the regional offices of the Department of Housing and

Urban Development. The Secretary shall allocate assistance under

this section in a manner so that the total number of assisted units

in each such region available for occupancy by, and affordable to,

lower income families and persons does not decrease because of the
Sec. 224 LIHPRH ACT OF 1990 658

prepayment or payment of a mortgage on eligible low-income housing or the termination of an insurance contract on such housing.

(f ) ENHANCED VOUCHER ASSISTANCE FOR CERTAIN TENANTS.—

(1) AUTHORITY.—In lieu of benefits under subsections (b),

(c), and (d), and subject to the availability of appropriated

amounts, each family described in paragraph (2) shall be offered enhanced voucher assistance under section 8(t) of the

United States Housing Act of 1937 (42 U.S.C. 1437f(t)).

(2) ELIGIBLE FAMILIES.—A family described in this paragraph is a family that is—

(A)(i) a low-income family; or

(ii) a moderate-income family that is: (I) an elderly

family; (II) a disabled family; or (III) residing in a low-vacancy area; and

(B) residing in eligible low-income housing on the date

of the prepayment of the mortgage or voluntary termination of the insurance contract.

SEC. 224. ø12 U.S.C. 4114¿ PERMISSIBLE PREPAYMENT OR VOLUNTARY

TERMINATION AND MODIFICATION OF COMMITMENTS.

(a) IN GENERAL.—Notwithstanding any limitations on prepayment or voluntary termination under this subtitle, an owner may

terminate the low-income affordability restrictions through prepayment or voluntary termination, subject to compliance with the provisions of section 223, under one of the following circumstances:

(1)(A) The Secretary approves a plan of action under section 219(a), but does not provide the assistance approved in

such plan during the 15-month period beginning on the date of

approval.

(B) After the date that the housing would have been eligible for prepayment pursuant to the terms of the mortgage (notwithstanding this subtitle), the Secretary approves a plan of

action under section 220 or 221, but does not provide the assistance approved in such plan before the earlier of (i) the expiration of the 2-month period beginning on the commencement

of the 1st fiscal year beginning after such approval, or (ii) the

expiration of the 6-month period beginning on the date of approval.

(C) The Secretary approves a plan of action under section

220 or 221 for any eligible low-income housing not covered by

subparagraph (B), but does not provide the assistance approved in such plan before the earlier of (i) the expiration

of the 2-month period beginning on the commencement of the

1st fiscal year beginning after such approval, or (ii) the expiration of the 9-month period beginning on the date of approval.

(2) An owner who intended to transfer the housing to a

qualified purchaser under section 220 or 221, and fully complied with the provisions of such section, did not receive any

bona fide offers from any qualified purchasers within the applicable time periods.

In the event that the purchaser under the plan of action is unable

to consummate the purchase for reasons other than the failure of

the Secretary to provide incentives, an owner may terminate the

low-income affordability restrictions through prepayment or vol-
659 Sec. 225 LIHPRH ACT OF 1990

untary termination subject to the provisions of sections 220 and

221.

(b) SECTION 8 RENTAL ASSISTANCE.—When providing rental assistance under section 8, the Secretary may enter into a contract

with an owner, contingent upon the future availability of appropriations for the purpose of renewing expiring contracts for rental

assistance as provided in appropriations Acts, to extend the term

of such rental assistance for such additional period or periods necessary to carry out an approved plan of action. The contract and

the approved plan of action shall provide that, if the Secretary is

unable to extend the term of such rental assistance or is unable to

develop a revised package of incentives providing benefits to the

owner comparable to those received under the original approved

plan of action, the Secretary, upon the request of the owner, shall

take the following actions (subject to the limitations under the

following paragraphs):

(1) MODIFICATION OF COMMITMENTS.—Modify the binding

commitments made pursuant to section 222(a)(2) that are dependent on such rental assistance.

(2) TERMINATION OF PLAN OF ACTION.—Permit the owner to

prepay the mortgage and terminate the plan of action and any

implementing use agreements or restrictions, but only if the

owner agrees in writing to comply with provisions of section

223.

At least 30 days before making a request under this subsection, an

owner shall notify the Secretary of the owner’s intention to submit

the request. The Secretary shall have a period of 90 days following

receipt of such notice to take action to extend the rental assistance

contract and to continue the binding commitments under section

222(a)(2).

SEC. 225. ø12 U.S.C. 4115¿ TIMETABLE FOR APPROVAL OF PLAN OF ACTION.

(a) NOTIFICATION OF DEFICIENCIES.—Not later than 60 days

after receipt of a plan of action, the Secretary shall notify the

owner in writing of any deficiencies that prevent the plan of action

from being approved. If deficiencies are found, such notice shall describe alternative ways in which the plan may be revised to meet

the criteria for approval.

(b) NOTIFICATION OF APPROVAL.— (1) IN GENERAL.—Not later than 180 days after receipt of

a plan of action, or such longer period as the owner requests,

the Secretary shall notify the owner in writing whether the

plan of action, including any revisions, is approved. If approval

is withheld, the notice shall describe—

(A) the reasons for withholding approval; and

(B) the actions that could be taken to meet the criteria

for approval.

(2) OPPORTUNITY TO REVISE.—The Secretary shall subsequently give the owner a reasonable opportunity to revise the

plan of action and seek approval.

(c) DELAYED APPROVAL.—If the Secretary does not approve a

plan of action within the period under subsection (b), the Secretary

shall provide incentives and assistance under this subtitle in the

amount that the owner would have received if the Secretary had
Sec. 226 LIHPRH ACT OF 1990 660

complied with such time limitations. The preceding sentence shall

not apply if the plan of action was not approved because of deficiencies. An owner may bring an action in the appropriate Federal

district court to enforce this subsection.

SEC. 226. ø12 U.S.C. 4116¿ RESIDENT HOMEOWNERSHIP PROGRAM.

(a) FORMATION OF RESIDENT COUNCIL.—Tenants seeking to

purchase eligible low-income housing in accordance with section

220 shall organize a resident council for the purpose of developing

a resident homeownership program in accordance with standards

established by the Secretary. The resident council shall work with

a public or private nonprofit organization or a public body (including an agency or instrumentality thereof). Such organization or

public body shall have experience to enable it to help the tenants

consider their options and to develop the capacity necessary to own

and manage the housing, where appropriate, and shall be approved

by the Secretary.

(b) OTHER PROGRAM REQUIREMENTS AND LIMITATIONS.—

(1) SALES TO RESIDENTS.—As a condition of approval of a

plan of action involving homeownership program under this

subtitle, the resident council shall prepare a workable plan acceptable to the Secretary for giving all residents an opportunity to become owners, which plan shall identify—

(A) the price at which the resident council intends to

transfer ownership interests in, or shares representing,

units in the housing;

(B) the factors that will influence the establishment of

such price;

(C) how such price compares to the estimated appraised value of the ownership interests or shares;

(D) the underwriting standard the resident council

plans to use (or reasonably expects a public or private

lender to use) for potential tenant purchasers;

(E) the financing arrangements the tenants are expected to pursue or be provided; and

(F) a workable schedule of sale (subject to the limitations of paragraph (8)) based on estimated tenant incomes.

(2) APPROVAL OF METHOD OF CONVERSION AND LIMITATION

ON CONDITIONS OF APPROVAL.—The Secretary shall approve the

method for converting the housing to homeownership, which

may involve acquisition of ownership interests in, or shares

representing, the units in a project under any arrangement determined by the Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership)

and fee simple ownership (including condominium ownership).

The Secretary may not require the prepayment of the mortgage on eligible low-income housing for the approval of a plan

of action involving a homeownership program for the housing.

(3) REQUIRED CONDITIONS.—The Secretary shall require

that the form of homeownership impose appropriate conditions,

including conditions to assure that—

(A) the number of initial owners that are very low-income, lower income, or moderate-income persons at initial
661 Sec. 226 LIHPRH ACT OF 1990

occupancy meet standards required or approved by the

Secretary;

(B) occupancy charges payable by the owners meet requirements established by the Secretary;

(C) the aggregate incomes of initial and subsequent

owners and other sources of funds for the project are sufficient to permit occupancy charges to cover the full operating costs of the housing and any debt service;

(D) each initial owner occupies the unit it acquires;

and

(E) the low-income affordability restrictions shall continue to apply to any rental units in the housing for any

period during which such units remain rental units.

(4) USE OF PROCEEDS FROM SALES TO ELIGIBLE FAMILIES.—

The entity that transfers ownership interests in, or shares representing, units to eligible families, or another entity specified

in the approved application, may use 50 percent of the proceeds, if any, from the initial sale for costs of the homeownership program, including improvements to the project, operating

and replacement reserves for the project, additional homeownership opportunities in the project, and other project-related activities approved by the Secretary. The remaining 50

percent of such proceeds shall be returned to the Secretary for

use under section 220, subject to availability under appropriations Acts. Such entity shall keep, and make available to the

Secretary, all records necessary to calculate accurately payments due the Secretary under this paragraph.

(5) RESTRICTIONS ON RESALE BY HOMEOWNERS.—

(A) IN GENERAL.—

(i) TRANSFER PERMITTED.—A homeowner under a

homeownership program may transfer the homeowner’s ownership interest in, or shares representing,

the unit, except that a homeownership program may

establish restrictions on the resale of units under the

program.

(ii) RIGHT TO PURCHASE.—Where a resident management corporation, resident council, or cooperative

has jurisdiction over the unit, the corporation, council,

or cooperative shall have the right to purchase the

ownership interest in, or shares representing, the unit

from the homeowner for the amount specified in a firm

contract between the homeowner and a prospective

buyer.

(iii) PROMISSORY NOTE REQUIRED.—The homeowner shall execute a promissory note equal to the difference, if any, between the market value and the purchase price, payable to the Secretary, together with a

mortgage securing the obligation of the note.

(B) 6 YEARS OR LESS.—In the case of a transfer within

6 years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any

undue profit. The plan shall provide for limiting the fam-
Sec. 226 LIHPRH ACT OF 1990 662

ily’s consideration for its interest in the property to the

total of—

(i) the contribution to equity paid by the family;

(ii) the value, as determined by such means as the

Secretary shall determine through regulation, of any

improvements installed at the expense of the family

during the family’s tenure as owner; and

(iii) the appreciated value determined by an inflation allowance at a rate which may be based on a costof-living index, an income index, or market index as

determined by the Secretary through regulation and

agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing,

units to eligible families (or another entity specified in

the approved application), at the time of initial sale,

and applied against the contribution to equity.

Such an entity may, at the time of initial sale, enter into

an agreement with the family to set a maximum amount

which this appreciation may not exceed.

(C) 6–20 YEARS.—In the case of a transfer during the

period beginning 6 years after the acquisition and ending

20 years after the acquisition, the homeownership program

shall provide for the recapture by the Secretary or the program of an amount equal to the amount of the declining

balance on the note described in subparagraph (A)(iii).

(D) USE OF RECAPTURED FUNDS.—Any net sales proceeds that may not be retained by the homeowner under

the plan approved pursuant to this paragraph shall be

paid to the HOME Investment Trust Fund for the unit of

general local government in which the housing is located.

If the housing is located in a unit of general local government that is not a participating jurisdiction (as such term

is defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act), any such net sales proceeds shall be paid to the HOME Investment Trust Fund

for the State in which the housing is located. With respect

to any proceeds transferred to a HOME Investment Trust

Fund under this subparagraph, the Secretary shall take

such actions as are necessary to ensure that the proceeds

shall be immediately available for eligible activities to expand the supply of affordable housing under section 212 of

the Cranston-Gonzalez National Affordable Housing Act.

The Secretary shall require the maintenance of any

records necessary to calculate accurately payments due

under this paragraph.

(6) PROTECTION OF NONPURCHASING FAMILIES.—

(A) EVICTION.—No tenant residing in a dwelling unit

in a property on the date the Secretary approves a plan of

action may be evicted by reason of a homeownership program approved under this subtitle.

(B) RENTAL ASSISTANCE.—If a tenant decides not to

purchase a unit, or is not qualified to do so, the Secretary

shall ensure that rental assistance under section 8 is available for use by each otherwise qualified tenant (that meets
663 Sec. 226 LIHPRH ACT OF 1990

the eligibility requirements under such section) in that or

another property. Any system for preferences established

under section 8(d)(1)(A) or 8(o)(6)(A) of the United States

Housing Act of 1937 shall not apply to the provision of assistance to such families.

(C) RELOCATION ASSISTANCE.—The resident council

shall also inform each such tenant that if the tenant chooses to move, the owner will pay relocation assistance in accordance with the approved homeownership program.

(7) QUALIFIED MANAGEMENT.—As a condition of approval of

a homeownership program under this subtitle, the resident

council shall have demonstrated its abilities to manage eligible

properties by having done so effectively and efficiently for a period of not less than 3 years or by entering into a contract with

a qualified management entity that meets such standards as

the Secretary may prescribe to ensure that the property will be

maintained in a decent, safe, and sanitary condition.

(8) TIMELY HOMEOWNERSHIP.—Except in the case of limited

equity cooperatives, resident councils shall transfer ownership

of the property to tenants within a specified period of time that

the Secretary determines to be reasonable. During the interim

period when the property continues to be operated and managed as rental housing, the resident council shall utilize written tenant selection policies and criteria that are approved by

the Secretary as consistent with the purpose of providing housing for very low-income families. The resident council shall

promptly notify in writing any rejected applicant of the

grounds for any rejection.

(9) RECORDS AND AUDIT OF RESIDENT COUNCILS.—

(A) MAINTENANCE.—Each resident council shall keep

such records as may be reasonably necessary to fully disclose the amount and the disposition by such resident

council of the proceeds of assistance received under this

subtitle (including any proceeds from sales under paragraphs (4) and (5)(D)), the total cost of the homeownership

program in connection with which such assistance is given

or used, and the amount and nature of that portion of the

program supplied by other sources, and such other sources

as will facilitate an effective audit.

(B) ACCESS.—The Secretary shall have access for the

purpose of audit and examination to any books, documents, papers, and records of the resident council that are

pertinent to assistance received under this subtitle.

(C) AUDIT.—The Comptroller General of the United

States, or any of the duly authorized representatives of the

Comptroller General, shall also have access for the purpose of audit and examination to any books, documents,

papers, and records of the resident council that are pertinent to assistance received under this subtitle.

(10) ASSUMPTION CONDITIONS.—Any entity that assumes a

mortgage covering low-income housing in connection with the

acquisition of the housing from an owner under this section

must comply with any low-income affordability restrictions for
Sec. 227 LIHPRH ACT OF 1990 664

the remaining useful life of the housing as determined under

section 222(c).

SEC. 227. ø12 U.S.C. 4117¿ DELEGATED RESPONSIBILITY TO STATE

AGENCIES.

(a) IN GENERAL.—In addition to any responsibilities delegated

under section 213(c), the Secretary shall delegate some or all responsibility for implementing this subtitle to a State housing

agency if such agency submits a preservation plan acceptable to

the Secretary.

(b) APPROVAL.—State preservation plans shall be submitted in

such form and in accordance with such procedures as the Secretary

shall establish. The Secretary may approve plans that contain—

(1) an inventory of low-income housing located within the

State that is or will be eligible low-income housing under this

subtitle within 5 years;

(2) a description of the agency’s experience in the area of

multifamily financing and restructuring;

(3) a description of the administrative resources that the

agency will commit to the processing of plans of action in accordance with this subtitle;

(4) a description of the administrative resources that the

agency will commit to the monitoring of approved plans of action in accordance with this subtitle;

(5) an independent analysis of the performance of the multifamily housing inventory financed or otherwise monitored by

the agency;

(6) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under

section 105 of the Cranston-Gonzalez National Affordable

Housing Act that the proposed activities are consistent with

the approved housing strategy of the State within which the eligible low-income housing is located; and

(7) such other certifications or information that the Secretary determines to be necessary or appropriate to achieve the

purposes of this subtitle.

(c) IMPLEMENTATION AGREEMENTS.—The Secretary may enter

into any agreements necessary to implement an approved State

preservation plan, which may include incentives that are authorized under other provisions of this subtitle.

SEC. 228. ø12 U.S.C. 4118¿ CONSULTATIONS WITH OTHER INTERESTED

PARTIES.

The Secretary shall confer with any appropriate State or local

government agency to confirm any State or local assistance that is

available to achieve the purposes of this title and shall give consideration to the views of any such agency when making determinations under this subtitle. The Secretary shall also confer with appropriate interested parties that the Secretary believes could assist

in the development of a plan of action that best achieves the purposes of this subtitle.

SEC. 229. ø12 U.S.C. 4119¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘eligible low-income housing’’ means any

housing financed by a loan or mortgage—
665 Sec. 229 LIHPRH ACT OF 1990

1This paragraph was amended to read as shown by section 601(e) of the bill S. 2281, 103d

Congress, as reported (S. Rep. 103–307), which was enacted by the Departments of Veterans

Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act,

1995, Pub. L. 103–327, 108 Stat. 2316, approved September 28, 1994, by incorporating such section 601 by reference. Such Act provides that ‘‘the provisions of such section 601 shall be effective only during fiscal year 1995.’’.

(A) that is—

(i) insured or held by the Secretary under section

221(d)(3) of the National Housing Act and receiving

loan management assistance under section 8 of the

United States Housing Act of 1937 due to a conversion

from section 101 of the Housing and Urban Development Act of 1965;

(ii) insured or held by the Secretary and bears interest at a rate determined under the proviso of section 221(d)(5) of the National Housing Act;

(iii) insured, assisted, or held by the Secretary or

a State or State agency under section 236 of the National Housing Act; or

(iv) held by the Secretary and formerly insured

under a program referred to in clause (i), (ii), or (iii);

and

(B) that, under regulation or contract in effect before

February 5, 1988, is or will within 24 months become eligible for prepayment without prior approval of the Secretary.

(2) The term ‘‘Federal cost limit’’ means, for any eligible

low-income housing, the amount determined under section

215(a).

(3) The term ‘‘low-income affordability restrictions’’ means

limits imposed by regulation or regulatory agreement on tenant rents, rent contributions, or income eligibility in eligible

low-income housing.

(4) 1(A) The term ‘‘low-income tenants’’ means families or

persons with incomes that exceed 50 percent of the median income for the area (as determined by the Secretary with adjustments for family size) but do not exceed 80 percent of the median income for the area (as determined by the Secretary with

adjustments for family size).

(B) The term ‘‘very low-income tenants’’ means families or

persons with incomes that are less than or equal to 50 percent

of the median income for the area (as determined by the Secretary with adjustments for family size).

(5) The term ‘‘moderate-income families or persons’’ means

families or persons whose incomes are between 80 percent and

95 percent of the median income for the area, as determined

by the Secretary with adjustments for smaller and larger families.

(6) The term ‘‘nonprofit organization’’ means any private,

nonprofit organization that—

(A) is organized or chartered under State or local laws;

(B) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual;
Sec. 230 LIHPRH ACT OF 1990 666

(C) complies with standards of financial accountability

acceptable to the Secretary; and

(D) has among its principal purposes significant activities related to the provision of decent housing that is affordable to very low-, low-, and moderate-income families.

(7) The term ‘‘owner’’ means the current or subsequent

owner or owners of eligible low-income housing.

(8) The term ‘‘preservation equity’’ means, for any eligible

low-income housing—

(A) for purposes of determining the authorized return

under section 214(a) and providing incentives to extend

the low-income affordability restrictions on the housing

under section 219—

(i) the preservation value of the housing determined under section 213(b)(1); less

(ii) any debt secured by the property; and

(B) for purposes of determining incentives under section 220 and 221 and determining the amount of an acquisition loan under the provisions of section 241(f)(3) of the

National Housing Act—

(i) the preservation value of the housing determined under section 213(b)(2); less

(ii) the outstanding balance of the federally-assisted mortgage or mortgages for the housing.

(9) The term ‘‘preservation value’’ means, for any eligible

low-income housing, the applicable value determined under

paragraph (1) or (2) of section 213(b).

(10) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(11) The term ‘‘resident council’’ means any incorporated

nonprofit organization or association that—

(A) is representative of the residents of the housing;

(B) adopts written procedures providing for the election of officers on a regular basis; and

(C) has a democratically elected governing board,

elected by the residents of the housing.

SEC. 230. ø12 U.S.C. 4120¿ NOTICE TO TENANTS.

Where a provision of this subtitle requires that information or

material be given to tenants of the housing, the requirement may

be met by (1) posting a copy of the information or material in readily accessible locations within each affected building, or posting notices in each such location describing the information or material

and specifying a location, as convenient to the tenants as is reasonably practical, where a copy may be examined, and (2) supplying

a copy of the information or material to a representative of the tenants.

SEC. 231. ø12 U.S.C. 4121¿ DEFINITIONS OF QUALIFIED AND PRIORITY

PURCHASER AND RELATED PARTY RULE.

(a) PRIORITY PURCHASER.—The term ‘‘priority purchaser’’

means (A) a resident council organized to acquire the housing in

accordance with a resident homeownership program that meets the
667 Sec. 232 LIHPRH ACT OF 1990

1So in law. Probably intended to refer to section 226.

2So in law. Probably intended to refer to section 222(c).

requirements of section 231 1; and (B) any nonprofit organization or

State or local agency that agrees to maintain low-income affordability restrictions for the remaining useful life of the housing (as

determined under section 222(d)). 2

(b) QUALIFIED PURCHASER.—The term ‘‘qualified purchaser’’

means any entity that agrees to maintain low-income affordability

restrictions for the remaining useful life of the housing (as determined under section 222(c)), and includes for-profit entities and

priority purchasers.

(c) RELATED PARTIES.—Except as provided in subsection (d),

the terms ‘‘qualified purchaser’’ and ‘‘priority purchaser’’ do not include any entity that, either directly or indirectly, is wholly or partially owned or controlled by the owner of the housing being transferred under this subtitle, is under whole or partial common control

with such owner, or has any financial interest in such owner or in

which such owner has any financial interest. The Secretary shall

issue any regulations appropriate to implement the preceding sentence.

(d) MANAGEMENT EXCEPTION.—A qualified purchaser shall not

be precluded from retaining as a property management entity a

company that is owned or controlled by the selling owner or a principal thereof if retention of the management company is neither a

condition of sale nor part of consideration paid for sale and the

property management contract is negotiated by the qualified purchaser on an arm’s length basis.

SEC. 232. ø12 U.S.C. 4122¿ PREEMPTION OF STATE AND LOCAL LAWS.

(a) IN GENERAL.—No State or political subdivision of a State

may establish, continue in effect, or enforce any law or regulation

that—

(1) restricts or inhibits the prepayment of any mortgage

described in section 229(1) (or the voluntary termination of any

insurance contract pursuant to section 229 of the National

Housing Act) on eligible low income housing;

(2) restricts or inhibits an owner of such housing from receiving the authorized annual return provided under section

214;

(3) is inconsistent with any provision of this subtitle, including any law, regulation, or other restriction that limits or

impairs the ability of any owner of eligible low income housing

to receive incentives authorized under this subtitle (including

authorization to increase rental rates, transfer the housing, obtain secondary financing, or use the proceeds of any of such incentives); or

(4) in its applicability to low-income housing is limited only

to eligible low-income housing for which the owner has prepaid

the mortgage or terminated the insurance contract.

Any law, regulation, or restriction described under paragraph (1),

(2), (3), or (4) shall be ineffective and any eligible low-income housing exempt from the law, regulation, or restriction, only to the extent that it violates the provisions of this subsection.
Sec. 233 LIHPRH ACT OF 1990 668

1 November 28, 1990.

2Section 312 of the Housing and Community Development Act of 1992, Pub. L. 102–550, approved October 28, 1992, amended ‘‘[t]itle II of the Housing and Community Development Act

of 1987 . . . by adding at the end’’ this subtitle C.

However, the Housing and Community Development Act of 1987, Pub. L. 100–242, approved

February 5, 1988, included subtitles C and D (relating to rural rental housing displacement prevention and other measures to preserve low-income housing), consisting of sections 241-243 and

261-263.

Therefore, the new subtitle C added by section 312 of Public Law 102–550 is added after

subtitle D (after section 263), the subtitle probably should have been designated as subtitle E,

and the sections of such subtitle probably should have been designated as sections 271 through

277.

Because the provisions of subtitles C and D of the Public Law 100–242 contained only

amendments to other laws, such provisions are not set forth in this compilation. The laws

amended by the provisions of such subtitles are, however, set forth in this compilation.

(b) EFFECT.—This section shall not prevent the establishment,

continuing in effect, or enforcement of any law or regulation of any

State or political subdivision of a State not inconsistent with the

provisions of this subtitle, such as any law or regulation relating

to building standards, zoning limitations, health, safety, or habitability standards for housing, rent control, or conversion of rental

housing to condominium or cooperative ownership, to the extent

such law or regulation is of general applicability to both housing

receiving Federal assistance and nonassisted housing. This section

shall not preempt, annul, or alter any contractual restrictions or

obligations existing before the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act 1 that prevent or

limit an owner of eligible low-income housing from prepaying the

mortgage on the housing (or terminating the insurance contract on

the housing).

SEC. 233. ø12 U.S.C. 4123¿ SEVERABILITY.

If any provision of this subtitle, or the application of such provision with respect to any person or circumstance, is held invalid,

the remainder of this Act, and the application of such provision to

any other person or circumstance, shall not be affected by such

holding.

SEC. 234. ø12 U.S.C. 4124¿ AUTHORIZATION OF APPROPRIATIONS.

(a) IN GENERAL.—There are authorized to be appropriated for

assistance and incentives authorized under this subtitle

$638,252,784 for fiscal year 1993 and $665,059,401 for fiscal year

1994.

(b) GRANTS.—Subject to approval in appropriation Acts, not more than $50,000,000 of the amounts made available under subsection (a) for fiscal year 1993, and not more than $50,000,000 of

the amounts made available under subsection (a) for fiscal year

1994, shall be available for grants under section 221(d)(2).

SEC. 235. ø12 U.S.C. 4101 note¿ APPLICABILITY.

Subject to section 605 of the Cranston-Gonzalez National Affordable Housing Act, the requirements of this subtitle shall apply

to any project that is eligible low-income housing on or after November 1, 1987.

Subtitle C 2—Rural Rental Housing Displacement

Prevention

* * * * * * *
669 Sec. 253 LIHPRH ACT OF 1990

1See footnote 1 on the preceding page.

Subtitle D 1—Other Measures to Preserve Low

Income Housing

* * * * * * *

Subtitle C 1—Technical Assistance and Capacity

Building

SEC. 251. ø12 U.S.C. 4141¿ AUTHORITY.

The Secretary of Housing and Urban Development may provide technical assistance and capacity building to further the preservation program established under this title.

SEC. 252. ø12 U.S.C. 4142¿ PURPOSES.

The purposes of this subtitle are—

(1) to promote the ability of residents of eligible low-income housing to meaningfully participate in the preservation

process established by this title and affect decisions about the

future of their housing;

(2) to promote the ability of community-based nonprofit

housing developers and resident councils to acquire, rehabilitate, and competently own and manage eligible housing as

rental or cooperative housing for low- and moderate-income

people; and

(3) to assist the Secretary in discharging the obligation

under section 220 to notify potential qualified purchasers of

the availability of properties for sale and to otherwise facilitate

the coordination and oversight of the preservation program established under this title.

SEC. 253. ø12 U.S.C. 4143¿ GRANTS FOR BUILDING RESIDENT CAPACITY AND FUNDING PREDEVELOPMENT COSTS.

(a) IN GENERAL.—Assistance made available under this section

shall be used for direct assistance grants to resident organizations

and community-based nonprofit housing developers and resident

councils to assist the acquisition of specific projects (including the

payment of reasonable administrative expenses to participating

intermediaries).

(b) ALLOCATION.—30 percent of the assistance made available

under this section shall be used for resident capacity grants in accordance with subsection (d). The remainder shall be used for

predevelopment grants in connection with specific projects in accordance with subsection (e).

(c) LIMITATION ON GRANT AMOUNTS.—A resident capacity grant

under subsection (d) may not exceed $30,000 per project and a

grant under subsection (e) for predevelopment costs may not exceed

$200,000 per project, exclusive of any fees paid to a participating

intermediary by the Secretary for administering the program.

(d) RESIDENT CAPACITY GRANTS.—

(1) USE.—Resident capacity grants under this subsection

shall be available to eligible applicants to cover expenses for

resident outreach, incorporation of a resident organization or
Sec. 254 LIHPRH ACT OF 1990 670

council, conducting democratic elections, training, leadership

development, legal and other technical assistance to the board

of directors, staff and members of the resident organization or

council.

(2) ELIGIBLE HOUSING.—Grants under this subsection may

be provided with respect to eligible low-income housing for

which the owner has filed a notice of intent under subtitle B

of this title or title II of the Emergency Low Income Housing

Preservation Act of 1987 (pursuant to section 604 of the Cranston-Gonzalez National Affordable Housing Act).

(e) PREDEVELOPMENT GRANTS.—

(1) USE.—Predevelopment grants under this subsection

shall be made available to community-based nonprofit housing

developers and resident councils to cover the cost of organizing

a purchasing entity and pursuing an acquisition, including

third party costs for training, development consulting, legal,

appraisal, accounting, environmental, architectural and engineering, application fees, and sponsor’s staff and overhead

costs.

(2) ELIGIBLE HOUSING.—Such grants may only be made

available with respect to any eligible low-income housing

project for which the owner has filed an initial notice of intent

to transfer the housing to a qualified purchaser in accordance

with section 220 of this title, or has filed a notice of intent and

entered into a binding agreement to sell the housing to a resident organization or nonprofit organization.

(3) PHASE-IN OF GRANT PAYMENTS.—Grant payments under

this subsection shall be made in phases, based on performance

benchmarks established by the Secretary in consultation with

intermediaries selected under section 255(b).

(f) GRANT APPLICATIONS.—Grant applications for assistance

under subsections (d) and (e) shall be received monthly on a rolling

basis and approved or rejected on at least a quarterly basis by

intermediaries selected under section 255(b).

(g) APPEAL.—If an application for assistance under subsections

(d) or (e) is denied, the applicant shall have the right to appeal the

denial to the Secretary and receive a binding determination within

30 days of the appeal.

SEC. 254. ø12 U.S.C. 4144¿ GRANTS FOR OTHER PURPOSES.

The Secretary may provide grants under this subtitle—

(1) to resident-controlled or community-based nonprofit organizations with experience in resident education and organizing for the purpose of conducting community, city or county

wide outreach and training programs to identify and organize

residents of eligible low-income housing; and

(2) to State and local government agencies and nonprofit

intermediaries for the purpose of carrying out such activities

as the Secretary deems appropriate to further the preservation

program established under this title.

SEC. 255. ø12 U.S.C. 4145¿ DELIVERY OF ASSISTANCE THROUGH INTERMEDIARIES.

(a) IN GENERAL.—The Secretary shall approve and disburse assistance under section 253 through eligible intermediaries selected
671 Sec. 255 LIHPRH ACT OF 1990

by the Secretary under subsection (b). If the Secretary does not receive an acceptable proposal from an intermediary offering to administer assistance under this section in a given State, the Secretary shall administer the program in such State directly.

(b) SELECTION OF ELIGIBLE INTERMEDIARIES.— (1) IN GENERAL.—The Secretary shall develop criteria to

select eligible intermediaries, through a competitive process, to

administer assistance under this subtitle. The process shall include provision for a reasonable administrative fee.

(2) PRIORITY.—With respect to all forms of grants available

under section 253, such criteria shall give priority to applications from eligible intermediaries with demonstrated expertise

or experience with the program established under this title or

under the Emergency Low Income Housing Preservation Act of

1987.

(3) CRITERIA.—The criteria developed under this subsection shall—

(A) not assign any preference or priority to applications from eligible intermediaries based on their previous

participation in administering or receiving Federal grants

or loans (but may exclude applicants who have failed to

perform under prior contracts of a similar nature);

(B) require an applicant to prepare a proposal that

demonstrates adequate staffing, qualifications, prior experience, and a plan for participation; and

(C) permit an applicant to serve as the administrator

of assistance made available under section 253(d) or (e),

based on the applicant’s suitability and interest.

(4) GEOGRAPHIC COVERAGE.—The Secretary may select

more than 1 State or regional intermediary for a single State

or region. The number of intermediaries chosen for each State

or region may be based on the number of eligible low-income

housing projects in the State or region, provided there is no duplication of geographic coverage by intermediaries in the administration of the direct assistance grant program.

(5) NATIONAL NONPROFIT INTERMEDIARIES.—National nonprofit intermediaries shall be selected to administer the assistance made available under section 253 only with respect to

States or regions for which no other eligible intermediary, acceptable to the Secretary, has submitted a proposal to participate.

(6) PREFERENCE.—With respect to assistance made available under section 254, preference shall be given to eligible regional, State, and local intermediaries, over national nonprofit

organizations.

(c) CONFLICTS OF INTEREST.—Eligible intermediaries selected

under subsection (b) to disburse assistance under section 253 shall

certify that they will serve only as delegated program administrators, charged with the responsibility for reviewing and approving

grant applications on behalf of the Secretary. Selected intermediaries shall—

(1) establish appropriate procedures for grant administration and fiscal management, pursuant to standards established

by the Secretary; and
Sec. 256 LIHPRH ACT OF 1990 672

(2) receive a reasonable administrative fee, except that

they may not provide other services to grant recipients with respect to projects that are the subject of the grant application

and may not receive payment, directly or indirectly, from the

proceeds of grants they have approved.

(d) DEFINITION OF ELIGIBLE INTERMEDIARIES.—For purposes of

this section, the term ‘‘eligible intermediary’’ means a State, regional, or national organization (including a quasi-public organization) or a State or local housing agency that—

(1) has as a central purpose the preservation of existing affordable housing and the prevention of displacement;

(2) does not receive direct Federal appropriations for operating support;

(3) in the case of a national nonprofit organization, has

been in existence for at least 5 years prior to the date of application and has been classified by the Internal Revenue Service

as an exempt organization under section 501(c)(3) of the Internal Revenue Code of 1986;

(4) in the case of a regional or State nonprofit organization, has been in existence for at least 3 years prior to the date

of application and has been classified by the Internal Revenue

Service as an exempt organization under section 501(c)(3) of

the Internal Revenue Code of 1986 or is otherwise a tax-exempt entity;

(5) has a record of service to low-income individuals or

community-based nonprofit housing developers in multiple

communities and, with respect to intermediaries administering

assistance under section 253, has experience with the allocation or administration of grant or loan funds; and

(6) meets standards of fiscal responsibility established by

the Secretary.

SEC. 256. ø12 U.S.C. 4146¿ DEFINITIONS.

For purposes of this subtitle—

(1) the term ‘‘community-based nonprofit housing developer’’ means a nonprofit community development corporation

that—

(A) has been classified by the Internal Revenue Service as an exempt organization under section 501(c)(3) of

the Internal Revenue Code of 1986;

(B) has been in existence for at least 2 years prior to

the date of the grant application;

(C) has a record of service to low- and moderate-income people in the community in which the project is located;

(D) is organized at the neighborhood, city, county or

multi-county level; and

(E) in the case of a corporation acquiring eligible housing under subtitle B of this title, agrees to form a purchaser entity that conforms to the definition of a community-based nonprofit organization under such subtitle and

agrees to use its best efforts to secure majority tenant consent to the acquisition of the project for which grant assistance is requested; and
673 Sec. 257 LIHPRH ACT OF 1990

(2) the terms ‘‘eligible low-income housing’’, ‘‘nonprofit organization’’, ‘‘owner’’, and ‘‘resident council’’ have the meanings

given such terms in section 229.

SEC. 257. ø12 U.S.C. 4147¿ FUNDING.

The Secretary shall use not more than $25,000,000 of the

amounts made available under section 234(a) for fiscal year 1993,

and not more than $25,000,000 of the amounts made available

under section 234(a) for fiscal year 1994, to carry out this subtitle.

Of any amounts made available to carry out this subtitle in any appropriation Act, 90 percent shall be set aside for use in accordance

with section 253 and 10 percent shall be set aside for use in accordance with subsection 254.
674

1So in law. Probably intended to refer to section 8(v)(2).

TRANSITION AND OTHER LOW-INCOME HOUSING

PRESERVATION PROVISIONS

EXCERPTS FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4249; 12 U.S.C. 4101 note, 4125]

TITLE VI—PRESERVATION OF AFFORDABLE

RENTAL HOUSING

Subtitle A—Prepayment of Mortgages Insured

Under National Housing Act

SEC. 601. PREPAYMENT OF MORTGAGES.

(a) IN GENERAL.—Subtitles A and B of the Emergency Low Income Housing Preservation Act of 1987 (12 U.S.C. 1715l note) are

amended to read as follows:

* * * * * * *

(b) TABLE OF CONTENTS.—The table of contents of such Act is

amended by striking the items relating to subtitles A and B of title

II and inserting the following:

* * * * * * *

SEC. 602. RELATED NATIONAL HOUSING ACT AMENDMENTS.

(a) INSURANCE FOR SECOND MORTGAGE FINANCING.—Section

241(f) of the National Housing Act is amended to read as follows:

* * * * * * *

(b) APPROVAL PRIOR TO FORECLOSURE.—Section 250(b) of such

Act (12 U.S.C. 1715z–15(b)) is amended to read as follows:

* * * * * * *

(c) REPEALER.—Section 250(c) of such Act is hereby repealed,

and section 250(d) is redesignated as section 250(c).

SEC. 603. RELATED UNITED STATES HOUSING ACT OF 1937 AMENDMENTS.

Section 89(v)(2) 1 of the United States Housing Act of 1937 is

amended by striking out ‘‘Emergency Low Income Housing Preservation Act of 1987’’ and inserting ‘‘Low-Income Housing Preservation and Resident Homeownership Act of 1990’’.

SEC. 604. ø12 U.S.C. 4101 note¿ TRANSITION PROVISIONS.

(a) HOUSING ELIGIBLE FOR ELECTION.—Any owner of housing

that becomes eligible low-income housing before January 1, 1991

and who, before such date, filed a notice of intent under section 222

of the Emergency Low Income Housing Preservation Act of 1987
675 Sec. 603 TRANSITION AND OTHER PRESERVATION PROVISIONS

1The date of enactment was November 28, 1990.

(as such section existed before the date of the enactment of this

Act) 1 or under section 212 of such Act (as amended by section

601(a)) may elect to be subject to (1) the provisions of such Act as

in effect before the date of the enactment of this Act, or (2) the provisions of the Low-Income Housing Preservation and Resident

Homeownership Act of 1990, after the date of the enactment of this

Act. 1 The Secretary shall establish procedures for owners to make

the election under the preceding sentence. An owner that elects to

be subject to the provisions of the Emergency Low Income Housing

Preservation Act of 1987 shall comply with section 212(b), section

217(a)(2), and section 217(c) of the Low-Income Housing Preservation and Resident Homeownership Act of 1990.

(b) RIGHT OF CONVERSION TO NEW SYSTEM.—Any owner who

has filed a plan of action on or before October 11, 1990, shall have

the right to convert to the system of incentives and restrictions

under this subtitle, with such adjustments as the Secretary determines to be appropriate to compensate for the value of any incentives the owner received under the Emergency Low Income Housing Preservation Act of 1987. Owners filing plans after such date

shall not have any right under this subsection.

(c) EFFECTIVENESS OF REPEALED PROVISIONS.—Notwithstanding the amendment made by section 601(a), the provisions of

the Emergency Low Income Housing Preservation Act of 1987 (as

in effect immediately before the date of the enactment of this Act) 1

shall apply with respect to any housing for which the election

under subsection (a)(1) is made. With respect to housing for which

such an election is made—

(1) in making incentives under section 224 of such Act

available to such housing, the Secretary—

(A) shall, for approvable plans of action, provide assistance sufficient to enable a nonprofit organization that

has purchased or will purchase an eligible low income

housing project to meet project oversight costs; and

(B) may not refuse to offer incentives referred to in

such section to any owner who filed a notice of intent

under section 222 of such Act before October 15, 1991,

based solely on the date of filing of the plan of action for

the housing; and

(2) provisions of section 233(1)(A)(i) of such Act shall not

apply, and the term ‘‘eligible low income housing’’ shall, for

purposes of such Act, shall include housing financed by a loan

or mortgage that is insured or held by the Secretary or a State

or State agency under section 221(d)(3) of the National Housing Act and receiving loan management assistance under section 8 of the United States Housing Act of 1937 due to a conversion from section 101 of the Housing and Urban Development Act of 1965.

(d) REGULATIONS.—Not later than the expiration of the 90-day

period beginning on the date of the enactment of this Act, 1 the Secretary of Housing and Urban Development shall, subject to the provisions of section 553 of title 5, United States Code, publish proposed rules to implement this subtitle and the amendments made
Sec. 605 TRANSITION AND OTHER PRESERVATION PROVISIONS 676

1The date of enactment was November 28, 1990.

by this subtitle. Not later than 45 days after the expiration of the

period under the preceding sentence the Secretary shall issue interim or final rules to implement such provisions.

SEC. 605. ø12 U.S.C. 4101 note¿ EFFECTIVE DATE.

This subtitle shall take effect on the date of the enactment of

this Act. 1

Subtitle B—Other Preservation Provisions

SEC. 611. SECTION 236 RENTAL ASSISTANCE.

(a) DEFINITION OF INCOME.—Section 236(m) of the National

Housing Act (12 U.S.C. 1715z–1) is amended by inserting before

the period at the end of the first sentence the following: ‘‘, except

that any amounts not actually received by the family may not be

considered as income under this subsection’’.

(b) RENT CHARGES.—

(1) PROJECTS ASSISTED UNDER SECTION 236.—Section 236(f)

of the National Housing Act (12 U.S.C. 1715z–1(f)) is amended

by adding at the end the following new paragraph:

‘‘(5)***

(2) INSURED PROJECTS.—Section 221(f) of the National Housing

Act (12 U.S.C. 1715l(f)) is amended by adding at the end the following new undesignated paragraph:

* * * * * * *

SEC. 612. MANAGEMENT AND PRESERVATION OF FEDERALLY ASSISTED HOUSING.

(a) SECTION 236.—Section 236(f) of the National Housing Act,

as amended by the preceding provisions of this Act, is further

amended by adding at the end the following new paragraph:

* * * * * * *

(b) SECTION 221.—Section 221 of the National Housing Act is

amended by inserting the following new subsection after subsection

(k):

* * * * * * *

SEC. 613. ASSISTANCE TO PREVENT PREPAYMENT UNDER STATE

MORTGAGE PROGRAMS.

(a) SECTION 8 ASSISTANCE.— (1) AUTHORITY.—Section 8(d)(2)(A)) of the United States

Housing Act of 1937 (42 U.S.C. 1437f(d)(2)(A)) is amended by

inserting after the period at the end the following:

* * * * * * *

(2) CONTRACT TERM.—Section 8(d)(2)(C) of the United

States Housing Act of 1937 (42 U.S.C. 1437f(d)(2)(C)) is amended by inserting after the period at the end the following:

* * * * * * *

(b) ø12 U.S.C. 4125¿ STATE PRESERVATION PROJECT ASSISTANCE.—
677 Sec. 613 TRANSITION AND OTHER PRESERVATION PROVISIONS

(1) IN GENERAL.—Upon application by a State or local

housing authority (including public housing agencies), the Secretary of Housing and Urban Development may make available, from sources of assistance appropriated to preserve the

low and moderate income status of projects with expiring Federal use restrictions, assistance to such State or local housing

authorities for use in preventing the loss of housing affordable

for low and moderate income families that is assisted under a

State program under the terms of which the owner may prepay

a State assisted or subsidized mortgage on such housing. The

application of the State or local housing authority shall demonstrate to the Secretary that the total amount of incentives

provided to the owner to induce the owner to preserve the low

and moderate income status of the project shall not exceed the

level of incentives which may be provided to a similarly situated project with expiring Federal use restrictions under subtitle B of title II of the Housing and Community Development

Act of 1987.

(2) SECTION 8.—Any assistance under section 8 of the

United States Housing Act of 1937 made available pursuant to

this subsection may be used (i) to supplement any assistance

available on existing section 8 contracts, or (ii) to provide additional assistance to structures to ensure that all units occupied

by tenants who are lower income families (as such term is defined in section 3(b) of the United States Housing Act of 1937)

pay rents not exceeding 30 percent of their adjusted incomes.

Any project receiving assistance hereunder shall be subject to

standards, inspections and sanctions established by the Secretary under section 222(d) of the Housing and Community Development Act of 1987. Any such section 8 assistance shall be

provided for a term and at the fair market rent levels or such

higher levels used as applicable for eligible low-income housing

that receives incentives under subtitle B of title II of the Housing and Community Development Act of 1987.

(3) RESTRICTION.—Assistance may be provided under this

subsection only to State and local housing authorities that require any housing receiving such assistance to remain affordable for lower and moderate income tenants for the period during which assistance under this subsection is received.
678

1October 1, 1996.

PRESERVING EXISTING HOUSING INVESTMENT

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1997

[Public Law 104–204; 110 Stat. 2883; 12 U.S.C. 4101 note]

PRESERVING EXISTING HOUSING INVESTMENT

* * * ø12 U.S.C. 4101 note¿ Provided further, That of the

total amount provided under this head, $350,000,000 shall be available for use in conjunction with properties that are eligible for assistance under the Low-Income Housing Preservation and Resident

Homeownership Act of 1990 (LIHPRHA) or the Emergency Low Income Housing Preservation Act of 1987 (ELIHPA), of which

$75,000,000 shall be available for obligation until March 1, 1997

for projects (1) that are subject to a repayment or settlement agreement that was executed between the owner and the Secretary prior

to September 1, 1995; (2) whose submissions were delayed as a result of their location in areas that were designated as a Federal

disaster area in a Presidential Disaster Declaration; or (3) whose

processing was, in fact or in practical effect, suspended, deferred,

or interrupted for a period of twelve months or more because of differing interpretations, by the Secretary and an owner or by the

Secretary and a State or local rent regulatory agency, concerning

the timing of filing eligibility or the effect of a presumptively applicable State or local rent control law or regulation on the determination of preservation value under section 213 of LIHPRHA, as

amended, if the owner of such project filed notice of intent to extend the low-income affordability restrictions of the housing, or

transfer to a qualified purchaser who would extend such restrictions, on or before November 1, 1993; and of which, up to

$100,000,000 may be used for rental assistance to prevent displacement of families residing in projects whose owners prepay their

mortgages; and the balance of which shall be available from the effective date of this Act 1 for sales to preferred priority purchasers:

Provided further, That with the exception of projects described in

clauses (1), (2), or (3) of the preceding proviso, the Secretary shall,

notwithstanding any other provision of law, suspend further processing of preservation applications which have not heretofore received approval of a plan of action: Provided further, That

$150,000,000 of amounts recaptured from interest reduction payment contracts for section 236 projects whose owners prepay their

mortgages during fiscal year 1997 shall be rescinded: Provided further, That an owner of eligible low-income housing may prepay the

mortgage or request voluntary termination of a mortgage insurance

contract, so long as said owner agrees not to raise rents for sixty
679 PRESERVING EXISTING HOUSING INVESTMENT

1So in law. Probably should be ‘‘or’’.

days after such prepayment: Provided further, That such developments have been determined to have preservation equity at least

equal to the lesser of $5,000 per unit or $500,000 per project or the

equivalent of eight times the most recently published monthly fair

market rent for the area in which the project is located as the appropriate unit size for all of the units in the eligible project: Provided further, That the Secretary may modify the regulatory agreement to permit owners and priority purchasers to retain rental income in excess of the basic rental charge in projects assisted under

section 236 of the National Housing Act, for the purpose of preserving the low- and moderate-income character of the housing:

Provided further, That eligible low-income housing shall include

properties meeting the requirements of this paragraph with mortgages that are held by a State agency as a result of a sale by the

Secretary without insurance, which immediately before the sale

would have been eligible low-income housing under LIHPRHA: Provided further, That notwithstanding any other provision of law,

subject to the availability of appropriated funds, each low-income

family, and moderate-income family who is elderly or disabled or

is residing in a low-vacancy area, residing in the housing on the

date of prepayment or voluntary termination, and whose rent, as

a result of a rent increase occurring no later than one year after

the date of the prepayment, exceeds 30 percent of adjusted income,

shall be offered tenant-based assistance in accordance with section

8 or any successor program, under which the family shall pay no

less for rent than it paid on such date: Provided further, That any

family receiving tenant-based assistance under the preceding proviso may elect (1) to remain in the unit of the housing and if the

rent exceeds the fair market rent or payment standard, as applicable, the rent shall be deemed to be the applicable standard, so long

as the administering public housing agency finds that the rent is

reasonable in comparison with rents charged for comparable unassisted housing units in the market or (2) to move from the housing

and the rent will be subject to the fair market rent of 1 the payment standard, as applicable, under existing program rules and

procedures: Provided further, That the tenant-based assistance

made available under the preceding two provisos are in lieu of benefits provided in subsections 223(b), (c), and (d) of the Low-Income

Housing Preservation and Resident Homeownership Act of 1990:

Provided further, That any sales shall be funded using the capital

grant available under section 220(d)(3)(A) of LIHPRHA: Provided

further, That any extensions shall be funded using a non-interestbearing capital (direct) loan by the Secretary not in excess of the

amount of the cost of rehabilitation approved in the plan of action

plus 65 percent of the property’s preservation equity and under

such other terms and conditions as the Secretary may prescribe:

Provided further, That any capital grant shall be limited to seven

times, and any capital loan limited to six times, the annual fair

market rent for the project, as determined using the fair market

rent for fiscal year 1997 for the area in which the project is located,

using the appropriate apartment sizes and mix in the eligible

project, except where, upon the request of a priority purchaser, the
PRESERVING EXISTING HOUSING INVESTMENT 680

Secretary determines that a greater amount is necessary and appropriate to preserve low-income housing: Provided further, That

section 241(f) of the National Housing Act is repealed and insurance under such section shall not be offered as an incentive under

LIHPRHA and ELIHPA: Provided further, That up to $10,000,000

of the amount of $350,000,000 made available by a preceding proviso in this paragraph may be used at the discretion of the Secretary to reimburse owners of eligible properties for which plans of

action were submitted prior to the effective date of this Act 1, but

were not executed for lack of available funds, with such reimbursement available only for documented costs directly applicable to the

preparation of the plan of action as determined by the Secretary,

and shall be made available on terms and conditions to be established by the Secretary: Provided further, That, notwithstanding

any other provision of law, a priority purchaser may utilize assistance under the HOME Investment Partnerships Act or the Low Income Housing Tax Credit: Provided further, That projects with approved plans of action which exceed the limitations on eligibility for

funding imposed by this Act may submit revised plans of action

which conform to these limitations by March 1, 1997, and retain

the priority for funding otherwise applicable from the original date

of approval of their plan of action, subject to securing any additional necessary funding commitments by August 1, 1997.
681

ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS

EXCERPT FROM HOUSING OPPORTUNITY PROGRAM EXTENSION ACT

OF 1996

[Public Law 104–120; 110 Stat. 841; 42 U.S.C. 12805 note]

SEC. 11. ø42 U.S.C. 12805 note¿ ASSISTANCE FOR SELF-HELP HOUSING

PROVIDERS.

(a) GRANT AUTHORITY.—The Secretary of Housing and Urban

Development may, to the extent amounts are available to carry out

this section and the requirements of this section are met, make

grants for use in accordance with this section to national and regional organizations and consortia that have experience in providing or facilitating self-help housing homeownership opportunities.

(b) GOALS AND ACCOUNTABILITY.—In making grants under this

section, the Secretary shall take such actions as may be necessary

to ensure that—

(1) assistance provided under this section is used to facilitate and encourage innovative homeownership opportunities

through the provision of self-help housing, under which the

homeowner contributes a significant amount of sweat equity

toward the construction of the new dwelling;

(2) assistance provided under this section for land acquisition and infrastructure development results in the development of not less than 4,000 new dwellings;

(3) the dwellings constructed in connection with assistance

provided under this section are quality dwellings that comply

with local building and safety codes and standards and are

available at prices below the prevailing market prices;

(4) the provision of assistance under this section establishes and fosters a partnership between the Federal Government and organizations and consortia, resulting in efficient development of affordable housing with minimal governmental

intervention, limited governmental regulation, and significant

involvement by private entities;

(5) activities to develop housing assisted pursuant to this

section involve community participation in which volunteers

assist in the construction of dwellings; and

(6) dwellings are developed in connection with assistance

under this section on a geographically diverse basis, which includes areas having high housing costs, rural areas, and areas

underserved by other homeownership opportunities that are

populated by low-income families unable to otherwise afford

housing.

If, at any time, the Secretary determines that the goals under this

subsection cannot be met by providing assistance in accordance

with the terms of this section, the Secretary shall immediately no-
ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS 682

tify the applicable Committees in writing of such determination

and any proposed changes for such goals or this section.

(c) NATIONAL COMPETITION.—The Secretary shall select organizations and consortia referred to in subsection (a) to receive grants

through a national competitive process, which the Secretary shall

establish.

(d) USE.—

(1) PURPOSE.—Amounts from grants made under this section, including any recaptured amounts, shall be used only for

eligible expenses in connection with developing new decent,

safe, and sanitary nonluxury dwellings in the United States for

families and persons who otherwise would be unable to afford

to purchase a dwelling.

(2) ELIGIBLE EXPENSES.—For purposes of paragraph (1),

the term ‘‘eligible expenses’’ means costs only for the following

activities:

(A) LAND ACQUISITION.—Acquiring land (including financing and closing costs), which may include reimbursing

an organization, consortium, or affiliate, upon approval of

any required environmental review, for nongrant amounts

of the organization, consortium, or affiliate advanced before such review to acquire land.

(B) INFRASTRUCTURE IMPROVEMENT.—Installing, extending, constructing, rehabilitating, or otherwise improving utilities and other infrastructure.

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

(e) ESTABLISHMENT OF GRANT FUND.—

(1) IN GENERAL.—Any amounts from any grant made

under this section shall be deposited by the grantee organization or consortium in a fund that is established by such organization or consortium for such amounts, administered by such

organization or consortium, and available for use only for the

purposes under subsection (d). Any interest, fees, or other

earnings of the fund shall be deposited in the fund and shall

be considered grant amounts for purposes of this section.

(2) ASSISTANCE TO AFFILIATES.—Any organization or consortia that receives a grant under this section may use

amounts in the fund established for such organization or consortia pursuant to paragraph (1) for the purposes under subsection (d) by providing assistance from the fund to local affiliates of such organization or consortia.

(f) REQUIREMENTS FOR ASSISTANCE.—The Secretary may make

a grant to an organization or consortium under subsection (a) only

pursuant to—

(1) an expression of interest by such organization or consortia to the Secretary for a grant for such purposes;

(2) a determination by the Secretary that the organization

or consortia has the capability and has obtained financial commitments (or has the capacity to obtain financial commitments)

necessary to—

(A) develop not less than 30 dwellings in connection

with the grant amounts; and
683 ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS

(B) otherwise comply with a grant agreement under

subsection (i); and

(3) a grant agreement entered into under subsection (i).

ø(g) [Repealed.]¿

(h) GEOGRAPHICAL DIVERSITY.—In making grants under subsection (a), the Secretary shall ensure that grants are provided and

grant amounts are used in a manner that results in national geographic diversity among housing developed using grant amounts

under this section.

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

made only pursuant to a grant agreement entered into by the Secretary and the organization or consortia receiving the grant, which

shall—

(1) require such organization or consortia to use grant

amounts only as provided in this section;

(2) provide for the organization or consortia to develop a

specific and reasonable number of dwellings using the grant

amounts, which number shall be established taking into consideration costs and economic conditions in the areas in which

the dwellings will be developed, but in no case shall be less

than 30;

(3) require the organization or consortia to use the grant

amounts in a manner that leverages other sources of funding

(other than grants under this section), including private or

public funds, in developing the dwellings;

(4) require the organization or consortia to comply with the

other provisions of this section;

(5) provide that the Secretary shall recapture any grant

amounts provided to the organization or consortia that are not

used within 24 months after such amounts are first disbursed

to the organization or consortia, except that such period shall

be 36 months in the case of grant amounts from amounts made

available for fiscal year 1996 to carry out this section, and in

the case of a grant amounts provided to a local affiliate of the

organization or consortia that is developing five or more dwellings in connection with such grant amounts; and

(6) contain such other terms as the Secretary may require

to provide for compliance with subsection (b) and the requirements of this section.

(j) FULFILLMENT OF GRANT AGREEMENT.—If the Secretary determines that an organization or consortia awarded a grant under

this section has not, within 24 months after grant amounts are

first made available to the organization or consortia (or, in the case

of grant amounts from amounts made available for fiscal year 1996

to carry out this section and grant amounts provided to a local affiliate of the organization or consortia that is developing five or

more dwellings in connection with such grant amounts, within 36

months), substantially fulfilled the obligations under the grant

agreement, including development of the appropriate number of

dwellings under the agreement, the Secretary shall use any such

undisbursed amounts remaining from such grant for other grants

in accordance with this section.
ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS 684

1 H. Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and Financial Services and established the Committee on Financial Services, which has jurisdiction over many of the areas previously under the jurisdiction of the Committee on Banking

and Financial Services.

(k) RECORDS AND AUDITS.—During the period beginning upon

the making of a grant under this section and ending upon closeout of the grant under subsection (l)—

(1) the organization awarded the grant shall keep such

records and adopt such administrative practices as the Secretary may require to ensure compliance with the provisions of

this section and the grant agreement; and

(2) the Secretary and the Comptroller General of the

United States, and any of their duly authorized representatives, shall have access for the purpose of audit and examination to any books, documents, papers, and records of the grantee organization or consortia and its affiliates that are pertinent

to the grant made under this section.

(l) CLOSE-OUT.—The Secretary shall close out a grant made

under this section upon determining that the aggregate amount of

any assistance provided from the fund established under subsection

(e)(1) by the grantee organization or consortium exceeds the

amount of the grant. For purposes of this paragraph, any interest,

fees, and other earnings of the fund shall be excluded from the

amount of the grant.

(m) ENVIRONMENTAL REVIEW.—A grant under this section shall

be considered to be funds for a special project for purposes of section 305(c) of the Multifamily Housing Property Disposition Reform

Act of 1994.

(n) REPORT TO CONGRESS.—Not later than 90 days after closeout of all grants under this section is completed, the Secretary

shall submit a report to the applicable Committees describing the

grants made under this section, the grantees, the housing developed in connection with the grant amounts, and the purposes for

which the grant amounts were used.

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

definitions shall apply:

(1) APPLICABLE COMMITTEES.—The term ‘‘applicable Committees’’ means the Committee on Banking and Financial Services of the House of Representatives 1 and the Committee on

Banking, Housing, and Urban Affairs of the Senate.

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(3) UNITED STATES.—The term ‘‘United States’’ includes

the States 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 any other territory or possession of the

United States.

(p) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated to carry out this section such sums as may be

necessary for fiscal year 2001.

(q) REGULATIONS.—The Secretary shall issue any final regulations necessary to carry out this section not later than 30 days
685 ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS

1The date of enactment was March 28, 1996.

after the date of the enactment of this Act 1. The regulations shall

take effect upon issuance and may not exceed, in length, 5 full

pages in the Federal Register.
686

SURPLUS PROPERTY DISPOSITION FOR LOW-INCOME

HOUSING USE

EXCERPT FROM TITLE 40, UNITED STATES CODE

[Public Law 107–217; 116 Stat. 1094]

§ 550. Disposal of real property for certain purposes

(a) DEFINITION.—In this section, the term ‘‘State’’ includes the

District of Columbia, Puerto Rico, and the territories and possessions of the United States.

(b) ENFORCEMENT AND REVISION OF INSTRUMENTS TRANSFERRING

PROPERTY UNDER THIS SECTION.—

(1) IN GENERAL.—Subject to disapproval by the Administrator of General Services within 30 days after notice of a proposed action to be taken under this section, except for personal

property transferred pursuant to section 549 of this title, the

official specified in paragraph (2) shall determine and enforce

compliance with the terms, conditions, reservations, and restrictions contained in an instrument by which a transfer

under this section is made. The official shall reform, correct, or

amend the instrument if necessary to correct the instrument or

to conform the transfer to the requirements of law. The official

shall grant a release from any term, condition, reservation or

restriction contained in the instrument, and shall convey, quitclaim, or release to the transferee (or other eligible user) any

right or interest reserved to the Federal Government by the instrument, if the official determines that the property no longer

serves the purpose for which it was transferred or that a release, conveyance, or quitclaim deed will not prevent accomplishment of that purpose. The release, conveyance, or quitclaim deed may be made subject to terms and conditions that

the official considers necessary to protect or advance the interests of the Government.

(2) SPECIFIED OFFICIAL.—The official referred to in paragraph (1) is—

(A) the Secretary of Education, for property transferred

under subsection (c) for school, classroom, or other educational use;

(B) the Secretary of Health and Human Services, for

property transferred under subsection (d) for use in the

protection of public health, including research;

(C) the Secretary of the Interior, for property transferred

under subsection (e) for public park or recreation area use;

(D) the Secretary of Housing and Urban Development,

for property transferred under subsection (f) to provide

housing or housing assistance for low-income individuals

or families; and
687 Sec. 550 USE OF SURPLUS PROPERTY FOR LOW-INCOME HOUSING

(E) the Secretary of the Interior, for property transferred

under subsection (h) for use as a historic monument for

the benefit of the public.

* * * * * * *

(f) PROPERTY FOR LOW INCOME HOUSING ASSISTANCE.—

(1) ASSIGNMENT.—The Administrator, in the Administrator’s

discretion and under regulations that the Administrator may

prescribe, may assign to the Secretary of Housing and Urban

Development for disposal surplus real property, including

buildings, fixtures, and equipment situated on the property,

that the Secretary recommends as needed to provide housing

or housing assistance for low-income individuals or families.

(2) SALE OR LEASE.—Subject to disapproval by the Administrator within 30 days after notice to the Administrator by the

Secretary of Housing and Urban Development of a proposed

transfer, the Secretary, to provide housing or housing assistance for low-income individuals or families, may sell or lease

property assigned to the Secretary under paragraph (1) to a

State, a political subdivision or instrumentality of a State, or

a nonprofit organization that exists for the primary purpose of

providing housing or housing assistance for low-income individuals or families.

(3) SELF-HELP HOUSING.—

(A) IN GENERAL.—The Administrator shall disapprove a

proposed transfer of property under this subsection unless

the Administrator determines that the property will be

used for low-income housing opportunities through the

construction, rehabilitation, or refurbishment of self-help

housing, under terms requiring that—

(i) subject to subparagraph (B), an individual or

family receiving housing or housing assistance

through use of the property shall contribute a significant amount of labor toward the construction, rehabilitation, or refurbishment; and

(ii) dwellings constructed, rehabilitated, or refurbished through use of the property shall be quality

dwellings that comply with local building and safety

codes and standards and shall be available at prices

below prevailing market prices.

(B) GUIDELINES FOR CONSIDERING DISABILITIES.—For

purposes of fulfilling self-help requirements under paragraph (3)(A)(i), the Administrator shall ensure that nonprofit organizations receiving property under paragraph (2)

develop and use guidelines to consider any disability (as

defined in section 3(2) of the Americans with Disabilities

Act of 1990 (42 U.S.C. 12102(2)).

(4) FIXING VALUE.—

(A) IN GENERAL.—In fixing the sale or lease value of

property disposed of under paragraph (2), the Secretary of

Housing and Urban Development shall take into consideration and discount the value for any benefit which has accrued or may accrue to the Government from the use of
Sec. 550 USE OF SURPLUS PROPERTY FOR LOW-INCOME HOUSING 688

the property by the State, political subdivision or instrumentality, or nonprofit organization.

(B) AMOUNT OF DISCOUNT.—The amount of the discount

under subparagraph (A) is 75 percent of the market value

of the property, except that the Secretary of Housing and

Urban Development may discount by a greater percentage

if the Secretary, in consultation with the Administrator,

determines that a higher percentage is justified.
689

PART V—HOMEOWNERSHIP ASSISTANCE

NATIONAL HOMEOWNERSHIP TRUST ACT

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4129; 42 U.S.C. 12851 et seq.]

TITLE III—HOMEOWNERSHIP

Subtitle A—National Homeownership Trust

Demonstration

SEC. 301. ø42 U.S.C. 12851 note¿ SHORT TITLE.

This subtitle may be cited as the ‘‘National Homeownership

Trust Act’’.

SEC. 302. ø42 U.S.C. 12851¿ NATIONAL HOMEOWNERSHIP TRUST.

(a) ESTABLISHMENT.—There is established the National Homeownership Trust, which shall be in the Department of Housing and

Urban Development and shall provide assistance to first-time

homebuyers in accordance with this subtitle.

(b) BOARD OF DIRECTORS.—The Trust shall be governed by a

Board of Directors, which shall be composed of—

(1) the Secretary of Housing and Urban Development, who

shall be the chairperson of the Board;

(2) the Secretary of the Treasury;

(3) the chairperson of the Board of Directors of the Federal

Deposit Insurance Corporation;

(4) the chairperson of the Federal Housing Finance Board;

(5) the chairperson of the Board of Directors of the Federal

National Mortgage Association;

(6) the chairperson of the Board of Directors of the Federal

Home Loan Mortgage Corporation; and

(7) 1 individual representing consumer interests, who shall

be appointed by the President of the United States, by and

with the advice and consent of the Senate.

(c) POWERS OF TRUST.—The Trust shall have the same powers as

the powers given the Government National Mortgage Association

in section 309(a) of the Federal National Mortgage Association

Charter Act (12 U.S.C. 1723a(a)).

(d) TRAVEL AND PER DIEM.—Members of the Board of Directors

shall receive no additional compensation by reason of service on the

Board, but shall be allowed travel expenses, including per diem in

lieu of subsistence, as provided for employees of the Federal Government or in the same manner as persons employed intermit-
Sec. 303 NATIONAL HOMEOWNERSHIP TRUST ACT 690

1So in law.

tently in the Government service are allowed under section 5703 of

title 5, United States Code, as appropriate.

(e) DIRECTOR AND STAFF.—

(1) DIRECTOR.—The Board of Directors may appoint an executive director of the Trust and fix the compensation of the executive director, which shall be paid from amounts in the National Homeownership Trust Fund.

(2) STAFF.—Subject to such rules as the Board of Directors

may prescribe, the Trust may appoint and hire such staff and

provide for offices as may be necessary to carry out its duties.

The Trust may fix the compensation of the staff, which shall

be paid from amounts in the National Homeownership Trust

Fund.

SEC. 303. ø42 U.S.C. 12852¿ ASSISTANCE FOR FIRST-TIME HOMEBUYERS.

(a) IN GENERAL.—The Trust shall provide assistance payments

for first-time homebuyers (including homebuyers buying shares in

limited equity cooperatives) in the following manners:

(1) INTEREST RATE BUYDOWNS.—Assistance payments so that

the rate of interest payable on the mortgages by the homebuyers does not exceed 6 percent.

(2) DOWNPAYMENT ASSISTANCE.—Assistance payments to provide amounts for downpayments (including closing costs and

other costs payable at the time of closing) on mortgages for

such homebuyers.

(3) ASSISTANCE IN CONNECTION WITH MORTGAGE REVENUE

BONDS FINANCING.—Interest rate buydowns and downpayment

assistance in the manner provided in subsection (e).

(4) SECOND MORTGAGE ASSISTANCE.—Assistance payments to

provide loans (secured by second mortgages) with deferred payment of interest and principal; and 1

(5) CAPITALIZATION OF REVOLVING LOAN FUNDS.—Grants to

public organizations or agencies to establish revolving loan

funds to provide homeownership assistance to eligible firsttime homebuyers consistent with the requirements of this subtitle. Such grants shall be matched by an equal amount of local

investment in such revolving loan funds. Any proceeds or repayments from loans made under this paragraph shall be returned to the revolving loan fund established under this paragraph to be used for purposes related to this section.

(b) ELIGIBILITY REQUIREMENTS.—Assistance payments under this

subtitle may be made only to homebuyers and for mortgages meeting the following requirements:

(1) FIRST-TIME HOMEBUYER.—The homebuyer is an individual

who—

(A) (and whose spouse) has had no ownership in a principal residence during the 3-year period ending on the date

of purchase of the property with respect to which assistance payments are made under this subtitle;

(B) is a displaced homemaker who, except for owning a

home with his or her spouse or residing in a home owned

by the spouse, meets the requirements of subparagraph

(A);
691 Sec. 303 NATIONAL HOMEOWNERSHIP TRUST ACT

(C) is a single parent who, except for owning a home

with his or her spouse or residing in a home owned by the

spouse while married, meets the requirements of subparagraph (A); or

(D) meets the requirements of subparagraph (A), (B), or

(C), except for owning, as a principal residence, a dwelling

unit whose structure is—

(i) not permanently affixed to a permanent foundation in accordance with local or other applicable regulations; or

(ii) not in compliance with State, local, or model

building codes, or other applicable codes, and cannot

be brought into compliance with such codes for less

than the cost of constructing a permanent structure.

(2) MAXIMUM INCOME OF HOMEBUYER.—The aggregate annual income of the homebuyer and the members of the family

of the homebuyer residing with the homebuyer, for the 12-

month period preceding the date of the application of the

homebuyer for assistance under this subtitle, does not exceed—

(A) 95 percent of the median income for a family of 4

persons (adjusted by family size) in the applicable metropolitan statistical area (or such other area that the Board

of Directors determines for areas outside of metropolitan

statistical areas); or

(B) 115 percent of such median income (adjusted by family size) in the case of an area that is subject to a high cost

area mortgage limit under title II of the National Housing

Act.

The Board of Directors shall provide for certification of such income for purposes of initial eligibility for assistance payments

under this subtitle and shall provide for recertification of

homebuyers (and families of homebuyers) so assisted not less

than every 2 years thereafter.

(3) CERTIFICATION.—The homebuyer (and spouse, where applicable) shall certify that the homebuyer has made a good

faith effort to obtain a market rate mortgage and has been denied because the annual income of the homebuyer and the

members of the family of the homebuyer residing with the

homebuyer is insufficient.

(4) PRINCIPAL RESIDENCE.—The property securing the mortgage is a single-family residence or unit in a cooperative and

is the principal residence of the homebuyer.

(5) MAXIMUM MORTGAGE AMOUNT.—The principal obligation

of the mortgage does not exceed the principal amount that

could be insured with respect to the property under the National Housing Act.

(6) MAXIMUM INTEREST RATE.—The interest payable on the

mortgage is established at a fixed rate that does not exceed a

maximum rate of interest established by the Trust taking into

consideration prevailing interest rates on similar mortgages.

(7) RESPONSIBLE MORTGAGEE.—The mortgage has been made

to, and is held by, a mortgagee that is federally insured or that

is otherwise approved by the Trust as responsible and able to

service the mortgage properly.
Sec. 303 NATIONAL HOMEOWNERSHIP TRUST ACT 692

(8) MINIMUM DOWNPAYMENT.—For a first-time homebuyer to

receive downpayment assistance under subsection (a)(2), the

homebuyer shall have paid not less than 1 percent of the cost

of acquisition of the property (excluding any mortgage insurance premium paid at the time the mortgage is insured), as

such cost is estimated by the Board of Directors.

(c) TERMS OF ASSISTANCE.—

(1) SECURITY.—Assistance payments under this subtitle shall

be secured by a lien on the property involved. The lien shall

be subordinate to all mortgages existing on the property on the

date on which the first assistance payment is made.

(2) REPAYMENT UPON SALE.—Assistance payments under this

subtitle shall be repayable from the net proceeds of the sale,

without interest, upon the sale of the property for which the

assistance payments are made. If the sale results in no net

proceeds or the net proceeds are insufficient to repay the

amount of the assistance payments in full, the Board of Directors shall release the lien to the extent that the debt secured

by the lien remains unpaid.

(3) REPAYMENT UPON INCREASED INCOME.—If the aggregate

annual income of the homebuyer (and family of the homebuyer)

assisted under this subtitle exceeds the applicable maximum

income allowable under subsection (b)(2) for any 2-year period

after such assistance is provided, the Board of Directors may

provide for the repayment, on a monthly basis, of all or a portion of such assistance payments, based on the amount of assistance provided and the income of the homebuyer (and family

of the homebuyer).

(4) REPAYMENT IF PROPERTY CEASES TO BE PRINCIPAL RESIDENCE.—If the property for which assistance payments are

made ceases to be the principal residence of the first-time

homebuyer (or the family of the homebuyer), the Board of Directors may provide for the repayment of all or a portion of the

assistance payments.

(5) AVAILABLE ASSISTANCE.—The Trust may make assistance

payments under paragraphs (1) and (2) of subsection (a) with

respect to a single mortgage of an eligible homebuyer.

(d) ALLOCATION FORMULA.—Amounts available in any fiscal year

for assistance under this subtitle shall be allocated for homebuyers

in each State on the basis of the need of eligible first-time homebuyers in each State for such assistance in comparison with the

need of eligible first-time homebuyers for such assistance among all

States.

(e) ASSISTANCE IN CONNECTION WITH HOUSING FINANCED WITH

MORTGAGE REVENUE BONDS.—

(1) AUTHORITY.—The Trust shall provide assistance for firsttime homebuyers in the form of interest rate buydowns and

downpayment assistance under this subsection. Such assistance shall be available only with respect to mortgages for the

purchase of residences (A) financed with the proceeds of a

qualified mortgage bond (as such term is defined in section 143

of the Internal Revenue Code of 1986), or (B) for which a credit

is allowable under section 25 of such Code.
693 Sec. 304 NATIONAL HOMEOWNERSHIP TRUST ACT

1So in law. Probably should be designated as paragraph (4).

(2) ELIGIBILITY.—To be eligible for assistance under this subsection, homebuyers and mortgages shall also meet the requirements under subsection (b) of this section, except that—

(A) the certification under subsection (b)(3) shall not be

required for assistance under this subsection;

(B) the provisions of subsection (b)(2) shall not apply to

assistance under this section; and

(C) the aggregate income of the homebuyer and the

members of the family of the homebuyer residing with the

homebuyer, for the 12-month period preceding the date of

the application of the homebuyer for assistance under this

subsection, shall not exceed 80 percent of the median income for a family of 4 persons (as adjusted for family size)

in the applicable metropolitan statistical area.

(3) LIMITATION OF ASSISTANCE.—Notwithstanding subsection

(a), assistance payments for first-time homebuyers under this

subsection shall be provided in the following manners:

(A) INTEREST RATE BUYDOWNS.—Assistance payments to

decrease the rate of interest payable on the mortgages by

the homebuyers, in an amount not exceeding—

(i) in the first year of the mortgage, 2.0 percent of

the total principal obligation of the mortgage;

(ii) in the second year of the mortgage, 1.5 percent

of the total principal obligation of the mortgage;

(iii) in the third year of the mortgage, 1.0 percent of

the total principal obligation of the mortgage; and

(iv) in the fourth year of the mortgage, 0.5 percent

of the total principal obligation of the mortgage.

(B) DOWNPAYMENT ASSISTANCE.—Assistance payments to

provide amounts for downpayments on mortgages by the

homebuyers, in an amount not exceeding 2.5 percent of the

principal obligation of the mortgage.

(3) 1 AVAILABILITY.—The Trust may make assistance payments under subparagraphs (A) and (B) of paragraph (3) with

respect to a single mortgage of a homebuyer.

SEC. 304. ø42 U.S.C. 12853¿ NATIONAL HOMEOWNERSHIP TRUST FUND.

(a) ESTABLISHMENT.—There is established in the Treasury of the

United States a revolving fund, to be known as the National Homeownership Trust Fund.

(b) ASSETS.—The Fund shall consist of—

(1) any amount approved in appropriation Acts under section

308 for purposes of carrying out this subtitle;

(2) any amount received by the Trust as repayment for payments made under this subtitle; and

(3) any amount received by the Trust under subsection (d).

(c) USE OF AMOUNTS.—The Fund shall, to the extent approved in

appropriations Acts, be available to the Trust for purposes of carrying out this subtitle.

(d) INVESTMENT OF EXCESS AMOUNTS.—Any amounts in the Fund

determined by the Trust to be in excess of the amounts currently

required to carry out the provisions of this subtitle shall be invested by the Trust in obligations of, or obligations guaranteed as
Sec. 305 NATIONAL HOMEOWNERSHIP TRUST ACT 694

to both principal and interest by, the United States or any agency

of the United States.

(e) DEMONSTRATION PROGRAMS.—Using not more than

$20,000,000 of any amounts appropriated for the Fund under section 308 in fiscal year 1991, the Secretary shall carry out demonstration programs for combining housing activities and economic

development activities, as follows:

(1) In Milwaukee, Wisconsin, in an amount not to exceed

$4,200,000, for development, rehabilitation, and revitalization

of 2 vacant structures in a blighted minority neighborhood.

(2) In Washington, District of Columbia, in an amount not to

exceed $10,000,000, for nonprofit neighborhood-based groups to

acquire and rehabilitate vacant public and private housing for

resale or rent to low- and moderate-income families and to the

extent of and subject to engage in neighborhood-based economic development activities.

(3) In Philadelphia, Pennsylvania, in an amount not to exceed $1,000,000, for technical assistance and organizational

support for a community development corporation that is a

city-wide public/private partnership engaged in the provision

of technical assistance to neighborhood community development corporations.

(4) In other areas, as the Secretary may determine.

SEC. 305. ø42 U.S.C. 12854¿ DEFINITIONS.

For purposes of this subtitle:

(1) BOARD OF DIRECTORS.—The term ‘‘Board of Directors’’ or

‘‘Board’’ means the Board of Directors of the National Homeownership Trust under section 302(b).

(2) DISPLACED HOMEMAKER.—The term ‘‘displaced homemaker’’ means an individual who—

(A) is an adult;

(B) has not worked full-time full-year in the labor force

for a number of years, but has during such years, worked

primarily without remuneration to care for the home and

family; and

(C) is unemployed or underemployed and is experiencing

difficulty in obtaining or upgrading employment.

(3) FUND.—The term ‘‘Fund’’ means the National Homeownership Trust Fund established in section 304.

(4) SINGLE PARENT.—The term ‘‘single parent’’ means an individual who—

(A) is unmarried or legally separated from a spouse; and

(B)(i) has 1 or more minor children for whom the individual has custody or joint custody; or

(ii) is pregnant.

(5) STATE.—The term ‘‘State’’ means the States 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, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States.

(6) TRUST.—The term ‘‘Trust’’ means the National Homeownership Trust established in section 302.
695 Sec. 310 NATIONAL HOMEOWNERSHIP TRUST ACT

1So in law. Probably intended to refer to section 309.

SEC. 306. ø42 U.S.C. 12855¿ REGULATIONS.

The Board of Directors shall issue any regulations necessary to

carry out this subtitle.

SEC. 307. ø42 U.S.C. 12856¿ REPORT.

The Board of Directors shall submit to the Congress, not later

than the expiration of the 90-day period beginning on the date of

the termination of the Trust under section 310, a report containing

a description of the activities of the Trust and an analysis of the

effectiveness of the Trust in assisting first-time homebuyers.

SEC. 308. ø42 U.S.C. 12857¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated for assistance payments

under this subtitle $520,665,600 for fiscal year 1993 and

$542,533,555 for fiscal year 1994, of which such sums as may be

necessary shall be available in each such fiscal year for use under

section 303(e). Any amount appropriated under this section shall be

deposited in the Fund and shall remain available until expended,

subject to the provisions of section 311. 1

SEC. 309. ø42 U.S.C. 12858¿ TRANSITION.

(a) AUTHORITY OF SECRETARY.—Upon the termination of the

Trust as provided in section 310, the Secretary of Housing and

Urban Development shall exercise any authority of the Board of Directors and the Trust in accordance with the provisions of this subtitle as may be necessary to provide for the conclusion of the outstanding affairs of the Trust.

(b) APPLICABILITY OF TRUST PROVISIONS.—Any assistance under

this subtitle shall, after termination of the Trust, be subject to the

provisions of this subtitle that would have applied to such assistance if the termination had not occurred.

(c) CERTIFICATION OF FUND TO TREASURY.—Upon a determination by the Secretary of Housing and Urban Development that the

National Homeownership Trust Fund is no longer necessary, the

Secretary shall certify any amounts remaining in the Fund to the

Secretary of the Treasury and the Secretary of the Treasury shall

deposit into the general fund of the Treasury as miscellaneous receipts any amounts remaining in the Fund.

SEC. 310. ø42 U.S.C. 12859¿ TERMINATION.

The Trust shall terminate on September 30, 1994.

Subtitle B—FHA and Secondary Mortgage Market

* * * * * * *
696

1Probably should refer to ‘‘such title’’, i.e., title III of the United States Housing Act of 1937.

2Probably should refer to ‘‘such subtitle’’, i.e., subtitle B of title IV of the Cranston-Gonzalez

National Affordable Housing Act. 3Probably should refer to ‘‘such subtitle’’, i.e., subtitle C of title IV of the Cranston-Gonzalez

National Affordable Housing Act.

HOPE HOMEOWNERSHIP PROGRAMS

EXCERPTS FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4148; 42 U.S.C. 12870 et seq.]

TITLE IV—HOMEOWNERSHIP AND OPPORTUNITY FOR PEOPLE EVERYWHERE PROGRAMS

SEC. 401. ø42 U.S.C. 1437aaa note¿ SHORT TITLE.

This title may be cited as the ‘‘Homeownership and Opportunity Through HOPE Act’’.

SEC. 402. ø42 U.S.C. 12870¿ AUTHORIZATION OF APPROPRIATIONS.

(a) FISCAL YEAR 1993.—There are authorized to be appro- priated for grants under this title $855,000,000 for fiscal year 1993,

of which—

(1) $285,000,000 shall be available for activities authorized

under title III of the United States Housing Act of 1937, of

which up to $4,500,000 of any amounts appropriated may be

made available for technical assistance to potential applicants,

applicants and recipients of assistance under this title; 1

(2) $285,000,000 shall be available for activities authorized

under subtitle B, of which up to $3,250,000 of any amounts appropriated may be made available for technical assistance to

potential applicants, applicants and recipients of assistance

under this subtitle; 2 and

(3) $285,000,000 shall be available for activities under subtitle C, of which up to $2,250,000 of any amounts appropriated

may be made available for technical assistance to potential applicants, applicants and recipients of assistance under this subtitle. 3

Of the amounts appropriated pursuant to this subsection, up to

$40,000,000, but not less than 5 percent, shall be available for activities authorized under subtitle D. Any amount appropriated pursuant to this subsection shall remain available until expended.

(b) FISCAL YEAR 1994.—There are authorized to be appro- priated for grants under this title $883,641,000 for fiscal year 1994,

of which—

(1) $294,547,000 shall be available for activities authorized

under title III of the United States Housing Act of 1937, up to

$4,500,000 of which may be made available for technical assist-
697 Sec. 421 HOPE HOMEOWNERSHIP PROGRAMS

1Probably should refer to ‘‘such title’’, i.e., title III of the United States Housing Act of 1937.

2Probably should refer to ‘‘such subtitle’’, i.e., subtitle B of title IV of the Cranston-Gonzalez

National Affordable Housing Act. 3Probably should refer to ‘‘such subtitle’’, i.e., subtitle C of title IV of the Cranston-Gonzalez

National Affordable Housing Act. 4Title III of the United States Housing Act of 1937, 42 U.S.C. 2437aaa et seq., contains the

HOPE for public and Indian housing homeownership provisions and is set forth in part II of

this compilation.

ance to potential applicants, applicants and recipients of assistance under this title; 1

(2) $294,547,000 shall be available for activities authorized

under subtitle B, up to $3,250,000 of which may be made available for technical assistance to potential applicants, applicants

and recipients of assistance under this subtitle; 2 and

(3) $294,547,000 shall be available for activities under subtitle C, up to $2,250,000 of which may be made available for

technical assistance to potential applicants, applicants and recipients of assistance under this subtitle. 3

Of the amounts appropriated pursuant to this subsection, up to

$41,680,000, but not less than 5 percent, shall be available for activities authorized under subtitle D. Any amount appropriated pursuant to this subsection shall remain available until expended.

(c) TECHNICAL ASSISTANCE.—Technical assistance made available under title III of the United States Housing Act of 1937 or

subtitle B or subtitle C of this title may include, but shall not be

limited to, training, clearinghouse services, the collection, processing and dissemination of program information useful for local

and national program management, and provision of seed money.

Such technical assistance may be made available directly, or indirectly under contracts and grants, as appropriate. In any fiscal

year, no single applicant, potential applicant, or recipient under

title III of the United States Housing Act of 1937, or subtitle B or

subtitle C of this title may receive technical assistance in an

amount exceeding 20 percent of the total amount made available

for technical assistance under such title or subtitle for the fiscal

year.

Subtitle A—HOPE for Public and Indian Housing

Homeownership

SEC. 411. HOPE FOR PUBLIC AND INDIAN HOUSING HOMEOWNERSHIP.

The United States Housing Act of 1937 is amended by adding

at the end the following new title:

‘‘TITLE III 4—HOPE FOR PUBLIC AND INDIAN

HOUSING HOMEOWNERSHIP

* * * * * * *

Subtitle B—HOPE for Homeownership of

Multifamily Units

SEC. 421. ø42 U.S.C. 12871¿ PROGRAM AUTHORITY.

(a) IN GENERAL.—The Secretary is authorized to make—
Sec. 422 HOPE HOMEOWNERSHIP PROGRAMS 698

(1) planning grants to enable applicants to develop homeownership programs; and

(2) implementation grants to enable applicants to carry out

homeownership programs.

(b) AUTHORITY TO RESERVE HOUSING ASSISTANCE.—In connection with a grant under this subtitle, the Secretary may reserve authority to provide assistance under section 8 of the United States

Housing Act of 1937 to the extent necessary to provide rental assistance for a nonpurchasing tenant who resides in the project on

the date the Secretary approves the application for an implementation grant, for use by the tenant in another project.

SEC. 422. ø42 U.S.C. 12872¿ PLANNING GRANTS.

(a) GRANTS.—The Secretary is authorized to make planning

grants to applicants for the purpose of developing homeownership

programs under this subtitle. The amount of a planning grant

under this section may not exceed $200,000, except that the Secretary may for good cause approve a grant in a higher amount.

(b) ELIGIBLE ACTIVITIES.—Planning grants may be used for activities to develop homeownership programs (which may include

programs for cooperative ownership), including—

(1) development of resident management corporations and

resident councils;

(2) training and technical assistance of applicants related

to the development of a specific homeownership program;

(3) studies of the feasibility of a homeownership program;

(4) inspection for lead-based paint hazards, as required by

section 302(a) of the Lead-Based Paint Poisoning Prevention

Act;

(5) preliminary architectural and engineering work;

(6) tenant and homebuyer counseling and training;

(7) planning for economic development, job training, and

self-sufficiency activities that promote economic self-sufficiency

for homebuyers and homeowners under the homeownership

program;

(8) development of security plans; and

(9) preparation of an application for an implementation

grant under this subtitle.

(c) APPLICATION.—

(1) FORM AND PROCEDURES.—An application for a planning

grant shall be submitted by an applicant in such form and in

accordance with such procedures as the Secretary shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for a planning grant, specifying the activities proposed to be carried out, the schedule for completing the activities, the personnel necessary to complete

the activities, and the amount of the grant requested;

(B) a description of the applicant and a statement of

its qualifications;

(C) identification and description of the eligible property involved, and a description of the composition of the

tenants, including family size and income;
699 Sec. 423 HOPE HOMEOWNERSHIP PROGRAMS

1The date of enactment was November 28, 1990.

(D) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State

or unit of general local government within which the

project is located (or, during the first 12 months after enactment of this Act,1 that the application is consistent with

such other existing State or local housing plan or strategy

that the Secretary shall determine to be appropriate); and

(E) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(d) SELECTION CRITERIA.—The Secretary shall, by regulation,

establish selection criteria for a national competition for assistance

under this section, which shall include—

(1) the qualifications or potential capabilities of the applicant;

(2) the extent of tenant interest in the development of a

homeownership program for the property;

(3) the potential of the applicant for developing a successful and affordable homeownership program and the suitability

of the property for homeownership;

(4) national geographic diversity among housing for which

applicants are selected to receive assistance; and

(5) such other factors that the Secretary shall require that

(in the determination of the Secretary) are appropriate for purposes of carrying out the program established by this subtitle

in an effective and efficient manner.

SEC. 423. ø42 U.S.C. 12873¿ IMPLEMENTATION GRANTS.

(a) GRANTS.—The Secretary is authorized to make implementation grants to applicants for the purpose of carrying out homeownership programs approved under this subtitle.

(b) ELIGIBLE ACTIVITIES.—Implementation grants may be used

for activities to carry out homeownership programs (including programs for cooperative ownership), including the following activities:

(1) Architectural and engineering work.

(2) Acquisition of the eligible property for the purpose of

transferring ownership to eligible families in accordance with

a homeownership program that meets the requirements under

this subtitle.

(3) Rehabilitation of any property covered by the homeownership program, in accordance with standards established

by the Secretary.

(4) Abatement of lead-based paint hazards, as required by

section 302(a) of the Lead-Based Paint Poisoning Prevention

Act.

(5) Administrative costs of the applicant, which may not

exceed 15 percent of the amount of the assistance provided

under this section.
Sec. 423 HOPE HOMEOWNERSHIP PROGRAMS 700

1Probably intended to refer to section 422.

(6) Development of resident management corporations and

resident management councils, but only if the applicant has

not received assistance under section 322 1 for such activities.

(7) Counseling and training of homebuyers and homeowners under the homeownership program.

(8) Relocation of tenants who elect to move.

(9) Any necessary temporary relocation of tenants during

rehabilitation.

(10) Planning for establishment of for- or not-for-profit

small businesses by or on behalf of residents, job training, and

other activities that promote economic self-sufficiency of homebuyers and homeowners of the property covered by the homeownership program and economic development of the neighborhood.

(11) Funding of operating expenses and replacement reserves of the property covered by the homeownership program.

(12) Legal fees.

(13) Defraying costs for the ongoing training needs of the

recipient that are related to developing and carrying out the

homeownership program.

(14) Economic development activities that promote economic self-sufficiency of homebuyers, residents, and homeowners under the homeownership program.

(c) MATCHING FUNDING.—

(1) IN GENERAL.—Each recipient shall assure that contributions equal to not less than 33 percent of the grant

amounts made available under this section, excluding any

amounts provided for post-sale operating expense, shall be provided from non-Federal sources to carry out the homeownership program.

(2) FORM.—Such contributions may be in the form of—

(A) cash contributions from non-Federal resources,

which may not include funds from a grant made under section 106(b) or section 106(d) of the Housing and Community Development Act of 1974;

(B) payment of administrative expenses, as defined by

the Secretary, from non-Federal resources, including funds

from a grant made under section 106(b) or section 106(d)

of the Housing and Community Development Act of 1974;

(C) the value of taxes, fees, or other charges that are

normally and customarily imposed but are waived, foregone, or deferred in a manner that facilitates the implementation of a homeownership program assisted under

this subtitle;

(D) the value of land or other real property as appraised according to procedures acceptable to the Secretary;

(E) the value of investment in on-site and off-site infrastructure required for a homeownership program assisted under this subtitle; or

(F) such other in-kind contributions as the Secretary

may approve.
701 Sec. 423 HOPE HOMEOWNERSHIP PROGRAMS

1So in law. Probably intended to refer to section 424.

Contributions for administrative expenses shall be recognized

only up to an amount equal to 7 percent of the total amount

of grants made available under this section.

(d) APPLICATION.— (1) FORM AND PROCEDURE.—An application for an implementation grant shall be submitted by an applicant in such

form and in accordance with such procedures as the Secretary

shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for an implementation grant, specifying

the amount of the grant requested and its proposed uses;

(B) if applicable, an application for assistance under

section 8 of the United States Housing Act of 1937, specifying the proposed uses of such assistance and the period

during which the assistance will be needed;

(C) a description of the qualifications and experience

of the applicant in providing low-income housing;

(D) a description of the proposed homeownership program, consistent with section 324 1 and the other requirements of this subtitle, specifying the activities proposed to

be carried out and their estimated costs, identifying reasonable schedules for carrying it out, and demonstrating

the program will comply with the affordability requirements under section 324(b); 1

(E) identification and description of the property involved, and a description of the composition of the tenants,

including family size and income;

(F) a description of and commitment for the resources

that are expected to be made available to provide the

matching funding required under subsection (c) and of

other resources that are expected to be made available in

support of the homeownership program;

(G) identification and description of the financing proposed for any (i) rehabilitation and (ii) acquisition (I) of the

property, by an entity for transfer to eligible families, and

(II) by eligible families of ownership interests in, or shares

representing, units in the project;

(H) the proposed sales price, the basis for such price

determination, and terms to an entity, if any, that will

purchase the property for resale to eligible families;

(I) the proposed sales prices, if any, and terms to eligible families;

(J) any proposed restrictions on the resale of units

under a homeownership program;

(K) identification and description of the entity that

will operate and manage the property;

(L) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State
Sec. 424 HOPE HOMEOWNERSHIP PROGRAMS 702

1The date of enactment was November 28, 1990.

2So in law. Probably should be designated as subsection (e).

3So in law. Probably should be designated as subsection (f).

or unit of general local government within which the

project is located (or, during the first 12 months after enactment of this Act,1 that the application is consistent with

such other existing State or local housing plan or strategy

that the Secretary shall determine to be appropriate); and

(M) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(d) 2 SELECTION CRITERIA.—The Secretary shall establish selection criteria for assistance under this section, which shall include—

(1) the qualifications or potential capabilities of the applicant;

(2) the feasibility of the homeownership program;

(3) the extent of tenant interest in the development of a

homeownership program for the property;

(4) the potential for developing an affordable homeownership program and the suitability of the property for homeownership;

(5) national geographic diversity among housing for which

applicants are selected to receive assistance;

(6) the extent to which a sufficient supply of affordable

rental housing of the type assisted under this title exists in the

locality, so that the implementation of the homeownership program will not appreciably reduce the number of such rental

units available to residents currently residing in such units or

eligible for residency in such units; and

(7) such other factors as the Secretary determines to be appropriate for purposes of carrying out the program established

by the subtitle in an effective and efficient manner.

(e) 3 APPROVAL.—The Secretary shall notify each applicant, not

later than 6 months after the date of the submission of the application, whether the application is approved or not approved. The Secretary may approve the application for an implementation grant

with a statement that the application for the section 8 assistance

for residents of the project not purchasing units is conditionally approved, subject to the availability of appropriations in subsequent

fiscal years.

SEC. 424. ø42 U.S.C. 12874¿ HOMEOWNERSHIP PROGRAM REQUIREMENTS.

(a) IN GENERAL.—A homeownership program under this subtitle shall provide for acquisition by eligible families of ownership

interest in, or shares representing, the units in an eligible property

under any arrangement determined by the Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership) and fee simple ownership (including condominium ownership), for occupancy by the eligible families.

(b) AFFORDABILITY.—A homeownership program under this

subtitle shall provide for the establishment of sales prices (includ-
703 Sec. 424 HOPE HOMEOWNERSHIP PROGRAMS

ing principal, insurance, taxes, and interest and closing costs) for

initial acquisition of the property, and for sales to eligible families,

such that the eligible family shall not be required to expend more

than 30 percent of the adjusted income of the family per month to

complete a sale under the homeownership program.

(c) PLAN.—A homeownership program under this subtitle shall

provide, and include a plan, for—

(1) identifying and selecting eligible families to participate

in the homeownership program;

(2) providing relocation assistance to families who elect to

move;

(3) ensuring continued affordability by tenants, homebuyers, and homeowners in the property; and

(4) providing ongoing training and counseling for homebuyers and homeowners.

(d) ACQUISITION AND REHABILITATION LIMITATION.—Acquisition

or rehabilitation of a property under a homeownership program

under this subtitle may not consist of acquisition or rehabilitation

of less than all of the units in the property. The provisions of this

subsection may be waived upon a finding by the Secretary that the

sale of less than all the buildings in a project is feasible and will

not result in a hardship to any tenants of the project who are not

included in the homeownership program.

(e) FINANCING.—

(1) IN GENERAL.—The application shall identify and describe the proposed financing for (A) any rehabilitation, and (B)

acquisition (i) of the project, where applicable, by an entity for

transfer to eligible families, and (ii) by eligible families of ownership interests in, or shares representing, units in the project.

Financing may include use of the implementation grant, sale

for cash, or other sources of financing (subject to applicable requirements), including conventional mortgage loans and mortgage loans insured under title II of the National Housing Act.

(2) PROHIBITION AGAINST PLEDGES.—Property transferred

under this subtitle shall not be pledged as collateral for debt

or otherwise encumbered except when the Secretary determines that—

(A) such encumbrance will not threaten the long-term

availability of the property for occupancy by low-income

families;

(B) neither the Federal Government nor the public

housing agency will be exposed to undue risks related to

action that may have to be taken pursuant to paragraph

(3);

(C) any debt obligation can be serviced from project income, including operating assistance; and

(D) the proceeds of such encumbrance will be used

only to meet housing standards in accordance with subsection (f) or to make such additional capital improvements as the Secretary determines to be consistent with

the purposes of this subtitle.

(3) OPPORTUNITY TO CURE.—Any lender that provides financing in connection with a homeownership program under

this subtitle shall give the public housing agency, resident
Sec. 425 HOPE HOMEOWNERSHIP PROGRAMS 704

1Probably intended to refer to section 8 of the United States Housing Act of 1937.

management corporation, individual owner, or other appropriate entity a reasonable opportunity to cure a financial default before foreclosing on the property, or taking other action

as a result of the default.

(f) HOUSING QUALITY STANDARDS.—The application shall include a plan ensuring that the unit—

(1) will be free from any defects that pose a danger to

health or safety before transfer of an ownership interest in, or

shares representing, a unit to an eligible family; and

(2) will, not later than 2 years after the transfer to an eligible family, meet minimum housing standards established by

the Secretary for the purpose of this title.

(g) PROTECTION OF NONPURCHASING FAMILIES.—

(1) IN GENERAL.—No tenant residing in a dwelling unit in

a property on the date the Secretary approves an application

for an implementation grant may be evicted by reason of a

homeownership program approved under this subtitle.

(2) RENTAL ASSISTANCE.—If a tenant decides not to purchase a unit, or is not qualified to do so, the Secretary shall,

subject to the availability of appropriations, ensure that rental

assistance under section 8 1 is available for use by each otherwise qualified tenant in that or another property.

(3) RELOCATION ASSISTANCE.—The recipient shall also inform each such tenant that if the tenant chooses to move, the

recipient will pay relocation assistance in accordance with the

approved homeownership program.

SEC. 425. ø42 U.S.C. 12875¿ OTHER PROGRAM REQUIREMENTS.

(a) PREFERENCES.—In selecting eligible families for homeownership, the recipient shall give a first preference to otherwise

qualified current tenants and a second preference to otherwise

qualified eligible families who have completed participation in an

economic self-sufficiency program specified by the Secretary.

(b) COST LIMITATIONS.—The Secretary may establish cost limitations on eligible activities under this subtitle, subject to the provisions of this subtitle.

(c) USE OF PROCEEDS FROM SALES TO ELIGIBLE FAMILIES.—The

entity that transfers ownership interests in, or shares representing,

units to eligible families, or another entity specified in the approved application, shall use the proceeds, if any, from the initial

sale for costs of the homeownership program, including operating

expenses, improvements to the project, business opportunities for

low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other

activities approved by the Secretary.

(d) RESTRICTIONS ON RESALE BY HOMEOWNERS.—

(1) IN GENERAL.—

(A) TRANSFER PERMITTED.—A homeowner under a

homeownership program may transfer the homeowner’s

ownership interest in, or shares representing, the unit, except that a homeownership program may establish restrictions on the resale of units under the program.
705 Sec. 425 HOPE HOMEOWNERSHIP PROGRAMS

(B) RIGHT TO PURCHASE.—Where a resident management corporation, resident council, or cooperative has jurisdiction over the unit, the corporation, council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the homeowner for the amount specified in a firm contract between

the homeowner and a prospective buyer. If such an entity

does not have jurisdiction over the unit or elects not to

purchase and if the prospective buyer is not a low-income

family, the public housing agency or the implementation

grant recipient shall have the right to purchase the ownership interest in, or shares representing, the unit for the

same amount.

(C) PROMISSORY NOTE REQUIRED.—The homeowner

shall execute a promissory note equal to the difference between the market value and the purchase price, payable to

the public housing agency or other entity designated in the

homeownership plan, together with a mortgage securing

the obligation of the note.

(2) 6 YEARS OR LESS.—In the case of a transfer within 6

years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any undue profit.

The plan shall provide for limiting the family’s consideration

for its interest in the property to the total of—

(A) the contribution to equity paid by the family;

(B) the value, as determined by such means as the

Secretary shall determine through regulation, of any improvements installed at the expense of the family during

the family’s tenure as owner; and

(C) the appreciated value determined by an inflation

allowance at a rate which may be based on a cost-of-living

index, an income index, or market index as determined by

the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests

in, or shares representing, units to eligible families (or another entity specified in the approved application), at the

time of initial sale, and applied against the contribution to

equity.

Such an entity may, at the time of initial sale, enter into an

agreement with the family to set a maximum amount which

this appreciation may not exceed.

(3) 6–20 YEARS.—In the case of a transfer during the period beginning 6 years after the acquisition and ending 20

years after the acquisition, the homeownership program shall

provide for the recapture by the Secretary or the program of

an amount equal to the amount of the declining balance on the

note described in paragraph (1)(C).

(4) USE OF RECAPTURED FUNDS.—Fifty percent of any portion of the net sales proceeds that may not be retained by the

homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership

interests in, or shares representing, units to eligible families,

or another entity specified in the approved application, for use
Sec. 425 HOPE HOMEOWNERSHIP PROGRAMS 706

1So in law. Probably intended to refer to sections 422(b)(7) and 423(b)(10).

for improvements to the project, business opportunities for lowincome families, supportive services related to the homeownership program, additional homeownership opportunities, and

other activities approved by the Secretary. The remaining 50

percent shall be returned to the Secretary for use under this

subtitle, subject to limitations contained in appropriations

Acts. Such entity shall keep and make available to the Secretary all records necessary to calculate accurately payments

due the Secretary under this subsection.

(e) THIRD PARTY RIGHTS.—The requirements under this subtitle regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against

the grant recipient with respect to actions involving rehabilitation,

and against purchasers of property under this subsection or their

successors in interest with respect to other actions by affected lowincome families, resident management corporations, resident councils, public housing agencies, and any agency, corporation, or authority of the United States Government. The parties specified in

the preceding sentence shall be entitled to reasonable attorney fees

upon prevailing in any such judicial action.

(f) DOLLAR LIMITATION ON ECONOMIC DEVELOPMENT ACTIVI- TIES.—Not more than an aggregate of $250,000 from amounts

made available under sections 422 and 423 may be used for economic development activities under sections 422(b)(6) and

423(b)(9) 1 for any project.

(g) TIMELY HOMEOWNERSHIP.—Recipients shall transfer ownership of the property to tenants within a specified period of time

that the Secretary determines to be reasonable. During the interim

period when the property continues to be operated and managed as

rental housing, the recipient shall utilize written tenant selection

policies and criteria that are approved by the Secretary as consistent with the purpose of improving housing opportunities for

low-income families. The recipient shall promptly notify in writing

any rejected applicant of the grounds for any rejection.

(h) RECORDS AND AUDIT OF RECIPIENTS OF ASSISTANCE.— (1) IN GENERAL.—Each recipient shall keep such records as

may be reasonably necessary to fully disclose the amount and

the disposition by such recipient of the proceeds of assistance

received under this subtitle (and any proceeds from financing

obtained or sales under subsections (c) and (d)), the total cost

of the homeownership program in connection with which such

assistance is given or used, and the amount and nature of that

portion of the program supplied by other sources, and such

other sources as will facilitate an effective audit.

(2) ACCESS BY THE SECRETARY.—The Secretary shall have

access for the purpose of audit and examination to any books,

documents, papers, and records of the recipient that are pertinent to assistance received under this subtitle.

(3) ACCESS BY THE COMPTROLLER GENERAL.—The Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also

have access for the purpose of audit and examination to any
707 Sec. 426 HOPE HOMEOWNERSHIP PROGRAMS

books, documents, papers, and records of the recipient that are

pertinent to assistance received under this subtitle.

(i) CERTAIN ENTITIES NOT ELIGIBLE.—Any entity that assumes,

as determined by the Secretary, a mortgage covering eligible property in connection with the acquisition of the property from an

owner under this section must comply with any low-income affordability restrictions for the remaining term of the mortgage. This requirement shall only apply to an entity, such as a cooperative association, that, as determined by the Secretary, intends to own the

housing on a permanent basis.

SEC. 426. ø42 U.S.C. 12876¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘applicant’’ means the following entities that

may represent the tenants of the housing:

(A) A resident management corporation established in

accordance with the requirements of the Secretary under

section 20 of the United States Housing Act of 1937.

(B) A resident council.

(C) A cooperative association.

(D) A public or private nonprofit organization.

(E) A public body (including an agency or instrumentality thereof).

(F) A public housing agency (including an Indian housing authority).

(G) A mutual housing association.

(2) The term ‘‘eligible family’’ means a family or

individual—

(A) who is a tenant of the eligible property on the date

the Secretary approves an implementation grant; or

(B) whose income does not exceed 80 percent of the

median income for the area, as determined by the Secretary with adjustments for smaller and larger families.

(3) The term ‘‘eligible property’’ means a multifamily rental property, containing 5 or more units, that is—

(A) owned or held by the Secretary;

(B) financed by a loan or mortgage held by the Secretary or insured by the Secretary;

(C) determined by the Secretary to have serious physical or financial problems under the terms of an insurance

or loan program administered by the Secretary; or

(D) owned or held by the Secretary of Agriculture, the

Resolution Trust Corporation, the Federal Deposit Insurance Corporation, the Secretary of Defense, the Secretary

of Transportation, the General Services Administration,

any other Federal agency, or a State or local government

or an agency or instrumentality thereof.

(4) The term ‘‘homeownership program’’ means a program

for homeownership under this subtitle.
Sec. 427 HOPE HOMEOWNERSHIP PROGRAMS 708

1So in law. Section 501(b)(1)(D) of Public Law 104–330, 110 Stat. 4042, struck section 3(b)(11)

of the United States Housing Act of 1937, which previously consisted of a definition of the term

‘‘Indian housing authority’’.

(5) The term ‘‘Indian housing authority’’ has the meaning

given such term in section 3(b)(11) 1 of the United States Housing Act of 1937.

(6) The term ‘‘low-income family’’ has the meaning given

such term in section 3(b)(2) of the United States Housing Act

of 1937.

(7) The term ‘‘public housing agency’’ has the meaning

given such term in section 3(b)(6) of the United States Housing

Act of 1937.

(8) The term ‘‘recipient’’ means an applicant approved to

receive a grant under this title or such other entity specified

in the approved application that will assume the obligations of

the recipient under this subtitle.

(9) The term ‘‘resident council’’ means any incorporated

nonprofit organization or association that—

(A) is representative of the tenants of the housing;

(B) adopts written procedures providing for the election of officers on a regular basis; and

(C) has a democratically elected governing board,

elected by the tenants of the housing.

(10) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

SEC. 427. ø42 U.S.C. 12877¿ EXEMPTION.

Eligible property covered by a homeownership program approved under this subtitle shall not be subject to—

(1) the Low-Income Housing Preservation and Resident

Homeownership Act of 1990, or

(2) the requirements of section 203 of the Housing and

Community Development Amendments of 1978 applicable to

the sale of projects either at foreclosure or after acquisition by

the Secretary.

SEC. 428. ø42 U.S.C. 12878¿ LIMITATION ON SELECTION CRITERIA.

In establishing criteria for selecting applicants to receive assistance under this subtitle, the Secretary may not establish any

selection criterion or criteria that grant or deny such assistance to

an applicant (or have the effect of granting or denying assistance)

based on the implementation, continuation, or discontinuation of

any public policy, regulation, or law of any jurisdiction in which the

applicant or project is located.

SEC. 429. AMENDMENT TO NATIONAL HOUSING ACT.

Section 203(b)(9) of the National Housing Act (12 U.S.C.

1709(b)(9)) is amended by inserting after ‘‘Housing Act of 1961,’’

the following: * * *

SEC. 430. ø42 U.S.C. 12879¿ IMPLEMENTATION.

Not later than the expiration of the 180-day period beginning

on the date that funds authorized under this subtitle first become

available for obligation, the Secretary shall by notice establish such

requirements as may be necessary to carry out the provisions of

this subtitle. Such requirements shall be subject to section 553 of
709 Sec. 442 HOPE HOMEOWNERSHIP PROGRAMS

title 5, United States Code. The Secretary shall issue regulations

based on the initial notice before the expiration of the 8-month period beginning on the date of the notice.

SEC. 431. ø42 U.S.C. 12880¿ REPORT.

The Secretary shall no later than December 31, 1995, submit

to the Congress a report setting forth—

(1) the number, type and cost of eligible properties transferred pursuant to this subtitle;

(2) the income, race, gender, children and other characteristics of families participating (or not participating) in homeownership programs funded under this subtitle;

(3) the amount and type of financial assistance provided

under and in conjunction with this subtitle;

(4) the amount of financial assistance provided under this

subtitle that was needed to ensure continued affordability and

meet future maintenance and repair costs; and

(5) the recommendations of the Secretary for statutory and

regulatory improvements to the program.

Subtitle C—HOPE for Homeownership of Single

Family Homes

SEC. 441. ø42 U.S.C. 12891¿ PROGRAM AUTHORITY.

The Secretary is authorized to make—

(1) planning grants to help applicants develop homeownership programs in accordance with this subtitle; and

(2) implementation grants to enable applicants to carry out

homeownership programs in accordance with this subtitle.

SEC. 442. ø42 U.S.C. 12892¿ PLANNING GRANTS.

(a) GRANTS.—The Secretary is authorized to make planning

grants to applicants for the purpose of developing homeownership

programs under this subtitle. The amount of a planning grant

under this section may not exceed $200,000, except that the Secretary may for good cause approve a grant in a higher amount.

(b) ELIGIBLE ACTIVITIES.—Planning grants may be used for activities to develop homeownership programs (which may include

programs for cooperative ownership), including—

(1) identifying eligible properties;

(2) training and technical assistance of applicants related

to the development of a specific homeownership program;

(3) studies of the feasibility of specific homeownership

programs;

(4) inspection for lead-based paint hazards, as required by

section 302(a) of the Lead-Based Paint Poisoning Prevention

Act;

(5) preliminary architectural and engineering work;

(6) homebuyer counseling and training;

(7) planning for economic development, job training, and

self-sufficiency activities that promote economic self-sufficiency

for homebuyers and homeowners under the homeownership

program;

(8) development of security plans; and
Sec. 442 HOPE HOMEOWNERSHIP PROGRAMS 710

1The date of enactment was November 28, 1990.

(9) preparation of an application for an implementation

grant under this subtitle.

(c) APPLICATION.— (1) FORM AND PROCEDURES.—An application for a planning

grant shall be submitted by an applicant in such form and in

accordance with such procedures as the Secretary shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for a planning grant, specifying the activities proposed to be carried out, the schedule for completing the activities, the personnel necessary to complete

the activities, and the amount of the grant requested;

(B) a description of the applicant and a statement of

its qualifications;

(C) identification and description of the eligible properties likely to be involved, and a description of the composition of the potential homebuyers and residents of the

areas in which such eligible properties are located, including family size and income;

(D) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State

or unit of general local government within which the

project is located (or, during the first 12 months after enactment of this Act,1 that the application is consistent with

such other existing State or local housing plan or strategy

that the Secretary shall determine to be appropriate); and

(E) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(d) SELECTION CRITERIA.—The Secretary shall, by regulation,

establish selection criteria for a national competition for assistance

under this section, which shall include—

(1) the qualifications or potential capabilities of the applicant;

(2) the extent of interest in the development of a homeownership program;

(3) the potential of the applicant for developing a successful and affordable homeownership program and the availability

and suitability of eligible properties in the applicable geographic area with respect to the application;

(4) national geographic diversity among housing for which

applicants are selected to receive assistance; and

(5) such other factors that the Secretary shall require that

(in the determination of the Secretary) are appropriate for purposes of carrying out the program established by this subtitle

in an effective and efficient manner.
711 Sec. 443 HOPE HOMEOWNERSHIP PROGRAMS

SEC. 443. ø42 U.S.C. 12893¿ IMPLEMENTATION GRANTS.

(a) GRANTS.—The Secretary is authorized to make implementation grants to applicants for the purpose of carrying out homeownership programs approved under this subtitle.

(b) ELIGIBLE ACTIVITIES.—Implementation grants may be used

for activities to carry out homeownership programs (which may include programs for cooperative ownership), including the following activities:

(1) Architectural and engineering work.

(2) Acquisition of the property for the purpose of transferring ownership to eligible families in accordance with a homeownership program meeting the requirements of this subtitle.

(3) Rehabilitation of the property covered by the homeownership program, in accordance with standards established

by the Secretary.

(4) Abatement of lead-based paint hazards, as required by

section 302(a) of the Lead-Based Paint Poisoning Prevention

Act.

(5) Administrative costs of the applicant, which may not

exceed 15 percent of the amount of assistance provided under

this section.

(6) Counseling and training of homebuyers and homeowners under the homeownership program.

(7) Relocation of eligible families who elect to move.

(8) Any necessary temporary relocation of homebuyers during rehabilitation.

(9) Legal fees.

(10) Defraying costs for the ongoing training needs of the

recipient that are related to developing and carrying out the

homeownership program.

(11) Economic development activities that promote economic self-sufficiency of homebuyers and homeowners under

the homeownership program.

(c) MATCHING FUNDING.—

(1) IN GENERAL.—Each recipient shall assure that contributions equal to not less than 25 percent of the grant

amounts under this section are provided from non-Federal

sources to carry out the homeownership program.

(2) FORM.—Such contributions may be in the form of—

(A) cash contributions from non-Federal resources

which may not include funds from a grant made under section 106(b) or section 106(d) of the Housing and Community Development Act of 1974;

(B) payment of administrative expenses, as defined by

the Secretary, from non-Federal resources, including funds

from a grant made under section 106(b) or section 106(d)

of the Housing and Community Development Act of 1974;

(C) the value of taxes, fees, or other charges that are

normally and customarily imposed but are waived, foregone, or deferred in a manner that facilitates the implementation of a homeownership program assisted under

this subtitle;
Sec. 443 HOPE HOMEOWNERSHIP PROGRAMS 712

(D) the value of investment in on-site and off-site infrastructure required for a homeownership program assisted under this subtitle; or

(E) such other in-kind contributions as the Secretary

may approve.

Contributions for administrative expenses shall be recognized only

up to an amount equal to 7 percent of the total amount of grants

made available under this section.

(d) APPLICATION.— (1) FORM AND PROCEDURE.—An application for an implementation grant shall be submitted by an applicant in such

form and in accordance with such procedures as the Secretary

shall establish.

(2) MINIMUM REQUIREMENTS.—The Secretary shall require

that an application contain at a minimum—

(A) a request for an implementation grant, specifying

the amount of the grant requested and its proposed uses;

(B) a description of the qualifications and experience

of the applicant in providing low-income housing;

(C) a description of the proposed homeownership program, consistent with section 444 and the other requirements of this subtitle specifying the activities proposed to

be carried out and their estimated costs, identifying reasonable schedules for carrying it out, and demonstrating

that the program will comply with the affordability requirements under section 444(b);

(D) an identification and description of the properties

to be acquired under the homeownership program and a

description of the composition of potential eligible families,

including family size and income;

(E) a description of and commitment for the resources

that are expected to be made available to provide the

matching funding required under subsection (c) and of

other resources that are expected to be made available in

support of the homeownership program;

(F) identification and description of the financing proposed for any (i) rehabilitation and (ii) acquisition (I) of the

project, where applicable, by an entity for transfer to eligible families, and (II) by eligible families of ownership interests in, or shares representing, units in the project;

(G) the proposed sales prices for the properties, the

basis for such price determinations, and terms to an entity, if any, that will purchase that property for resale to eligible families;

(H) the proposed sales prices, if any, and terms to eligible families;

(I) identification and description of the entity that will

operate and manage the property;

(J) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy under section 105 of the Cranston-Gonzalez National

Affordable Housing Act that the proposed activities are

consistent with the approved housing strategy of the State

or unit of general local government within which the
713 Sec. 444 HOPE HOMEOWNERSHIP PROGRAMS

1The date of enactment was November 28, 1990.

project is located (or, during the first 12 months after enactment of this Act,1 that the application is consistent with

such other existing State or local housing plan or strategy

that the Secretary shall determine to be appropriate); and

(K) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(e) SELECTION CRITERIA.—The Secretary shall establish selection criteria for assistance under this subtitle, which shall

include—

(1) the ability of the applicant to develop and carry out the

proposed homeownership program, taking into account the

qualifications and experience of the applicant and the quality

of any related ongoing program of the applicant;

(2) the feasibility of the homeownership program;

(3) the quality and viability of the proposed homeownership program;

(4) the extent to which suitable eligible property is available for use under the program in the area to be served, and

the extent to which the types of property expected to be covered by the proposed homeownership program are federally

owned;

(5) whether the approved comprehensive housing affordability strategy for the jurisdiction within which the eligible

property is located includes the proposed homeownership program as one of the general priorities identified pursuant to section 105(b)(7) of the Cranston-Gonzalez National Affordable

Housing Act;

(6) national geographic diversity among housing for which

applicants are selected to receive assistance; and

(7) the extent to which a sufficient supply of affordable

rental housing of the type assisted under this subtitle exists in

the locality, so that the implementation of the homeownership

program will not appreciably reduce the number of such rental

units available to residents currently residing in such units or

eligible for residency in such units.

(f) APPROVAL.—The Secretary shall notify each applicant, not

later than 6 months after the date of the submission of the application, whether the application is approved or not approved.

SEC. 444. ø42 U.S.C. 12894¿ HOMEOWNERSHIP PROGRAM REQUIREMENTS.

(a) IN GENERAL.—A homeownership program under this subtitle shall provide for acquisition by eligible families of ownership

interests in, or shares representing, units in an eligible property

under any arrangement determined by the Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership) and fee simple ownership (including condominium ownership), for occupancy by the eligible families.

(b) AFFORDABILITY.—A homeownership program under this

subtitle shall provide for the establishment of sales prices (includ-
Sec. 445 HOPE HOMEOWNERSHIP PROGRAMS 714

ing principal, insurance, taxes, and interest and closing costs) for

initial acquisition of the property, and for sales to eligible families,

such that the eligible family shall not be required to expend more

than 30 percent of the adjusted income of the family per month to

complete a sale under the homeownership program.

(c) ELIGIBLE PROPERTY.—A property may not participate in a

homeownership program under this subtitle unless all tenants or

occupants of the property (at the time of the application for the implementation grant covering the property is filed with the Secretary) participate in the homeownership program.

(d) PLAN.—A homeownership program under this subtitle shall

provide, and include a plan, for—

(1) identifying and selecting eligible families to participate

in the homeownership program;

(2) providing relocation assistance to families who elect to

move; and

(3) ensuring continued affordability of the property to

homebuyers and homeowners.

(e) HOUSING QUALITY STANDARDS.—The application shall include a plan ensuring that the unit—

(1) will be free from any defects that pose a danger to

health or safety before transfer of an ownership interest in, or

shares representing, a unit to an eligible family; and

(2) will, not later than 2 years after the transfer to an eligible family, meet minimum housing standards established by

the Secretary for the purpose of this title.

(f) PREFERENCE FOR ACQUISITION OF VACANT UNITS.—Each

homeownership program under this subtitle shall provide that, in

making vacant units in eligible properties available for acquisition

by eligible families, preference shall be given to eligible families

who reside in public or Indian housing.

SEC. 445. ø42 U.S.C. 12895¿ OTHER PROGRAM REQUIREMENTS.

(a) COST LIMITATIONS.—The Secretary may establish cost limitations on eligible activities under this subtitle, subject to the provisions of this subtitle.

(b) USE OF PROCEEDS FROM SALES TO ELIGIBLE FAMILIES.—

Any entity that transfers ownership interests in, or shares representing, units to eligible families, or another entity specified in

the approved application, may use the proceeds, if any, from the

initial sale for costs of the homeownership program, including operating expenses, improvements to the project, business opportunities

for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and

other activities approved by the Secretary.

(c) RESTRICTIONS ON RESALE BY HOMEOWNERS.—

(1) IN GENERAL.—

(A) TRANSFER PERMITTED.—A homeowner under a

homeownership program may transfer the homeowner’s

ownership interest in, or shares representing, the unit, except that a homeownership program may establish restrictions on the resale of units under the program.

B) RIGHT TO PURCHASE.—Where a resident management corporation, resident council, or cooperative has ju-
715 Sec. 445 HOPE HOMEOWNERSHIP PROGRAMS

risdiction over the unit, the corporation, council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the homeowner for the amount specified in a firm contract between

the homeowner and a prospective buyer. If such an entity

does not have jurisdiction over the unit or elects not to

purchase and if the prospective buyer is not a low-income

family, the public housing agency or the implementation

grant recipient shall have the right to purchase the ownership interest in, or shares representing, the unit for the

same amount.

(C) PROMISSORY NOTE REQUIRED.—The homeowner

shall execute a promissory note equal to the difference between the market value and the purchase price, payable to

the public housing agency or other entity designated in the

homeownership plan, together with a mortgage securing

the obligation of the note.

(2) 6 YEARS OR LESS.—In the case of a transfer within 6

years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any undue profit.

The plan shall provide for limiting the family’s consideration

for its interest in the property to the total of—

(A) the contribution to equity paid by the family;

(B) the value, as determined by such means as the

Secretary shall determine through regulation, of any improvements installed at the expense of the family during

the family’s tenure as owner; and

(C) the appreciated value determined by an inflation

allowance at a rate which may be based on a cost-of-living

index, an income index, or market index as determined by

the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests

in, or shares representing, units to eligible families (or another entity specified in the approved application), at the

time of initial sale, and applied against the contribution to

equity.

Such an entity may, at the time of initial sale, enter into an

agreement with the family to set a maximum amount which

this appreciation may not exceed.

(3) 6–20 YEARS.—In the case of a transfer during the period beginning 6 years after the acquisition and ending 20

years after the acquisition, the homeownership program shall

provide for the recapture by the Secretary or the program of

an amount equal to the amount of the declining balance on the

note described in paragraph (1)(C).

(4) USE OF RECAPTURED FUNDS.—Fifty percent of any portion of the net sales proceeds that may not be retained by the

homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership

interests in, or shares representing, units to eligible families,

or another entity specified in the approved application, for use

for improvements to the project, business opportunities for lowincome families, supportive services related to the homeowner-
Sec. 446 HOPE HOMEOWNERSHIP PROGRAMS 716

1So in law. There are no subsections (f) and (g).

ship program, additional homeownership opportunities, and

other activities approved by the Secretary. The remaining 50

percent shall be returned to the Secretary for use under this

subtitle, subject to limitations contained in appropriations

Acts. Such entity shall keep and make available to the Secretary all records necessary to calculate accurately payments

due the Secretary under this subsection.

(d) THIRD PARTY RIGHTS.—The requirements under this subtitle regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against

the grant recipient with respect to actions involving rehabilitation,

and against purchasers of property under this subsection or their

successors in interest with respect to other actions by affected lowincome families, resident management corporations, resident councils, public housing agencies, and any agency, corporation, or authority of the United States Government. The parties specified in

the preceding sentence shall be entitled to reasonable attorney fees

upon prevailing in any such judicial action.

(e) PROTECTION OF NONPURCHASING FAMILIES.—No tenant residing in a dwelling unit in a property on the date the Secretary

approves an application for an implementation grant may be evicted by reason of a homeownership program approved under this

subtitle.

(h) 1 RECORDS AND AUDIT OF RECIPIENTS OF ASSISTANCE.—

(1) IN GENERAL.—Each recipient shall keep such records as

may be reasonably necessary to fully disclose the amount and

the disposition by such recipient of the proceeds of assistance

received under this subtitle (and any proceeds from financing

obtained or sales under subsections (b) and (c)), the total cost

of the homeownership program in connection with which such

assistance is given or used, and the amount and nature of that

portion of the program supplied by other sources, and such

other sources as will facilitate an effective audit.

(2) ACCESS BY THE SECRETARY.—The Secretary shall have

access for the purpose of audit and examination to any books,

documents, papers, and records of the recipient that are pertinent to assistance received under this subtitle.

(3) ACCESS BY THE COMPTROLLER GENERAL.—The Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also

have access for the purpose of audit and examination to any

books, documents, papers, and records of the recipient that are

pertinent to assistance received under this subtitle.

SEC. 446. ø42 U.S.C. 12896¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘applicant’’ means a private nonprofit organization, cooperative association, or a public agency (including an

agency or instrumentality thereof) in cooperation with a private nonprofit organization.

(2) The term ‘‘displaced homemaker’’ has the same meaning as in section 104.
717 Sec. 447 HOPE HOMEOWNERSHIP PROGRAMS

1So in law. Section 501(b)(1)(D) of Public Law 104–330, 110 Stat. 4042, struck section 3(b)(11)

of the United States Housing Act of 1937, which previously consisted of a definition of the term

‘‘Indian housing authority’’.

(3) The term ‘‘eligible family’’ means a family or individual

who—

(A) has an income that does not exceed 80 percent of

the median income for the area, as determined by the Secretary with adjustments for smaller and larger families;

and

(B) is a first-time homebuyer.

(4) The term ‘‘eligible property’’ means a single family

property, containing no more than four units, that is owned or

held by the Secretary, the Secretary of Veterans Affairs, the

Secretary of Agriculture, the Resolution Trust Corporation, the

Federal Deposit Insurance Corporation, the Secretary of Defense, the Secretary of Transportation, the General Services

Administration, any other Federal agency, a State or local government (including any in rem property), or a public housing

agency or an Indian housing authority (excluding public or Indian housing under the United States Housing Act of 1937 and

including properties held by institutions within the jurisdiction

of the Resolution Trust Corporation).

(5) The term ‘‘first-time homebuyer’’ has the same meaning

as in section 104.

(6) The term ‘‘homeownership program’’ means a program

for homeownership under this subtitle.

(7) The term ‘‘Indian housing authority’’ has the meaning

given such term in section 3(b)(11) 1 of the United States Housing Act of 1937.

(8) The term ‘‘low-income family’’ has the meaning given

such term in section 3(b)(2) of the United States Housing Act

of 1937.

(9) The term ‘‘public housing agency’’ has the meaning

given such term in section 3(b)(6) of the United States Housing

Act of 1937.

(10) The term ‘‘recipient’’ means an applicant approved to

receive a grant under this subtitle or such other entity specified in the approved application that will assume the obligations of the recipient under this subtitle.

(11) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(12) The term ‘‘single parent’’ means an individual who—

(A) is unmarried or legally separated from a spouse;

and

(B)(i) has 1 or more minor children for whom the individual has custody or joint custody; or

(ii) is pregnant.

SEC. 447. ø42 U.S.C. 12897¿ LIMITATION ON SELECTION CRITERIA.

In establishing criteria for selecting applicants to receive assistance under this subtitle, the Secretary may not establish any

selection criterion or criteria that grant or deny such assistance to

an applicant (or have the effect of granting or denying assistance)

based on the implementation, continuation, or discontinuation of
Sec. 448 HOPE HOMEOWNERSHIP PROGRAMS 718

any public policy, regulation, or law of any jurisdiction in which the

applicant or project is located.

SEC. 448. ø42 U.S.C. 12898¿ IMPLEMENTATION.

Not later than the expiration of the 180-day period beginning

on the date funds authorized under this subtitle first become available for obligation, the Secretary shall by notice establish such requirements as may be necessary to carry out the provisions of this

subtitle. Such requirements shall be subject to section 553 of title

5, United States Code. The Secretary shall issue regulations based

on the initial notice before the expiration of the 8-month period beginning on the date of the notice.
719

1Section 401(d) of the Housing and Community Development Act of 1987, Pub. L. 100–242,

provides as follows:

‘‘(d) TERMINATION OF SECTION 235.—

‘‘(1) IN GENERAL.—Effective on October 1, 1989, the program under section 235 of the National Housing Act shall terminate.

‘‘(2) SAVINGS PROVISION.—The provisions of paragraph (1) shall not affect—

‘‘(A) any mortgage insurance commitment issued; or

‘‘(B) any assistance pursuant to a reservation of funds made;

under section 235 of the National Housing Act prior to October 1, 1989.’’.

But, section 125(d) of the Department of Housing and Urban Development Reform Act of

1989, Pub. L. 101–235, provides as follows:

‘‘(d) SAVINGS PROVISION.—Notwithstanding the termination of the program under section 235

pursuant to section 401(d) of the Housing and Community Development Act of 1987, the Secretary of Housing and Urban Development shall have authority to insure mortgages under section 235(r), to make assistance payments with respect to such insured mortgages, and to make

any other payment or to take any other action related to the refinancing of mortgages insured

under section 235.’’.

SECTION 235 HOMEOWNERSHIP ASSISTANCE

EXCERPT FROM NATIONAL HOUSING ACT

[Public Law 90–448; 82 Stat. 477; 12 U.S.C. 1715z]

HOMEOWNERSHIP FOR LOWER INCOME FAMILIES

SEC. 235.1 ø12 U.S.C. 1715z¿ (a)(1) For the purpose of assisting lower-income families in acquiring homeownership or in acquiring membership in a cooperative association operating a housing

project, the Secretary is authorized to make, and to contract to

make, periodic assistance payments on behalf of such homeowners

and cooperative members. The assistance shall be accomplished

through payments to mortgagees holding mortgages meeting the

special requirements specified in this section or which mortgages

are assisted under a State or local program providing assistance

through loans, loan insurance or tax abatement. In making such

assistance available, the Secretary shall give preference to low-income families who, without such assistance, would be likely to be

involuntarily displaced (including those who would be likely to be

displaced from rental units which are to be converted into a condominium project or a cooperative project). Such assistance may include the acquisition of a condominium or a membership in a cooperative association.

(2)(A) Notwithstanding any other provision of this section, the

Secretary is authorized to make periodic assistance payments

under this section on behalf of families whose incomes do not exceed the maximum income limits prescribed pursuant to subsection

(h)(2) of this section for the purpose of assisting such families in

acquiring ownership of a manufactured home consisting of two or

more modules and a lot on which such manufactured home is or

will be situated, except that periodic assistance payments pursuant

to this paragraph shall not be made with respect to more than 20

per centum of the total number of units with respect to which assistance is approved under this section after January 1, 1976. As-
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 720

sistance payments under this section pursuant to this paragraph

shall be accomplished through payments on behalf of an owner of

lower income of a manufactured home as described in the preceding sentence to the financial institution which makes the loan,

advance of credit, or purchase of an obligation representing the

loan or advance of credit to finance the purchase of the manufactured home and the lot on which such manufactured home is or

will be situated, but only if insurance under section 2 of this Act

covering such loan, advance of credit, or obligation has been granted to such institution.

(B) Notwithstanding the provisions of subsection (c) of this section, assistance payments provided pursuant to this paragraph

shall be in an amount not exceeding the lesser of—

(i) the balance of the monthly payment for principal, interest, real and personal property taxes, insurance, and insurance

premium chargeable under section 2 of this Act due under the

loan or advance of credit remaining unpaid after applying 20

per centum of the manufactured homeowner’s income; or

(ii) the difference between the amount of the monthly payment for principal, interest, and insurance premium chargeable under section 2 of this Act which the manufactured homeowner is obligated to pay under the loan or advance of credit

and the monthly payment of principal and interest which the

owner would be obligated to pay if the loan or advance of credit

were to bear interest at a rate derived by subtracting from the

interest rate applicable to such loan or advance of credit the

interest rate differential between the maximum interest rate

plus mortgage insurance premium applicable to mortgages insured under subsection (i) of this section at the time such loan

or advance of credit is made and the interest rate which such

mortgages are presumed under regulations prescribed by the

Secretary, to bear for purposes of subsection (c)(2) of this section.

(b) To qualify for assistance payments, the homeowner or the

cooperative member shall be of lower income and satisfy eligibility

requirements prescribed by the Secretary, and—

(1) the homeowner shall be a mortgagor under a mortgage

which meets the requirements of and is insured under subsection (i) or (j)(4) of this section: Provided, That a mortgage

meeting the requirements of subsection (i)(3)(A) of this section

but insured under section 237 may qualify for assistance payments if such mortgage was executed by a mortgagor who is

determined not to be an acceptable credit risk for mortgage insurance purposes (but otherwise eligible) under subsection

(j)(4) of this section or under section 221(d)(2) or 234(c) and accepted as a reasonably satisfactory credit risk under section

237; or

(2) the cooperative association of which the family is a

member shall operate (A) a housing project the construction or

substantial rehabilitation of which has been financed with a

mortgage insured under section 213 or section 221(d)(3) and

which has been completed within two years prior to the filing

of the application for assistance payments and the dwelling

unit has had no previous occupant other than the family: Pro-
721 Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE

vided, That if any cooperative member who has received assistance payments transfers his membership and occupancy rights

to another person who satisfies the eligibility requirements

prescribed by the Secretary and undertakes the obligation to

pay occupancy charges, the new cooperative member may qualify for assistance payments upon the filing of an application

with respect to the dwelling unit involved to be occupied by

him: Provided further, That assistance payments may be made

with respect to a dwelling unit in an existing cooperative

project which meets such standards as the Secretary may prescribe, if the family qualifies as a displaced family as defined

in section 221(f), or a family which includes five or more minor

persons, or a family occupying low-rent public housing: Provided further, That the amount of the mortgage attributable to

the dwelling unit shall involve a principal obligation not in excess of $40,000 ($47,500 in any geographical area where the

Secretary authorizes an increase on the basis of a finding that

cost levels so require), except that with respect to any family

with five or more persons the foregoing limits shall be $47,500

and $55,000 respectively, or (B) a housing project which is financed under a State or local program providing assistance

through loans, loan insurance, or tax abatements, and which

prior to completion of construction or rehabilitation is approved

for receiving the benefits of this section.

(c)(1) Subject to the second sentence of this paragraph, the assistance payments to a mortgagee by the Secretary on behalf of a

mortgagor shall be made during such time as the mortgagor shall

continue to occupy the property which secures the mortgage: Provided, That assistance payments may be made on behalf of a homeowner who assumes a mortgage insured under subsection (i) or

(j)(4) with respect to which assistance payments have been made

on behalf of the previous owner, if the homeowner is approved by

the Secretary as eligible for receiving such assistance: Provided further, That the Secretary is authorized to continue making such assistance payments where the mortgage has been assigned to the

Secretary. Assistance payments pursuant to any new contract,

other than a contract in connection with a refinancing under subsection (r), entered into after September 30, 1983, that utilizes authority approved in appropriation Acts for any fiscal year beginning

after such date may not be made for more than a 10-year period.

The payments shall be in an amount not exceeding the lesser of—

(A) the balance of the monthly payment for principal, interest, taxes, insurance, and mortgage insurance premium due

under the mortgage remaining unpaid after applying 20 per

centum of the mortgagor’s income; or

(B) the difference between the amount of the monthly payment for principal, interest, and mortgage insurance premium

which the mortgagor is obligated to pay under the mortgage

and the monthly payment for principal and interest which the

mortgagor would be obligated to pay if the mortgage were to

bear interest at the rate of 1 per centum per annum (4 per centum per annum in the case of a mortgage described in subsection (o)).
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 722

1Sec. 206(b)(2) of the Housing and Community Development Act of 1980, Pub. L. 96–399, approved Oct. 8, 1980, provides that paragraph (c)(2) ‘‘does not apply to any assistance contract

under section 235 of the National Housing Act entered into pursuant to a commitment issued

within 6 months following the date of enactment of [the Housing and Community Development

Act of 1980]’’. 2Section 125(c)(2) of the Department of Housing and Urban Development Reform Act of 1989,

Pub. L. 101–235, amended this paragraph by inserting ‘‘(except to the extent provided in subsection (r) for mortgages insured under such subsection)’’ after ‘‘refinanced,’’. The amendment

could not be executed.

(2)(A) 1 Upon disposition by the homeowner of any property assisted pursuant to this section or where the homeowner rents such

a property (or the owner’s unit in the case of a two- to four-family

property) for a period longer than one year, the Secretary shall provide for the recapture of an amount equal to the lesser of (i) the

amount of assistance actually received under this section, other

than any amount provided under subsection (e), or (ii) an amount

equal to at least 50 per centum of the net appreciation of the property, as determined by the Secretary. For the purpose of this paragraph, the term ‘‘net appreciation of the property’’ means any increase in the value of the property over the original purchase price,

less the reasonable costs of sale, the reasonable costs of improvements made to the property, and any increase in the mortgage

amount as of the time of sale over the original mortgage balance

due to the mortgage being insured pursuant to section 245. Notwithstanding any other provision of law, any such assistance shall

constitute a debt secured by the property to the extent that the

Secretary may provide for such recapture.

(B) Subparagraph (A) does not apply to any property with respect to which there is assumption in accordance with paragraph

(1) of this subsection or to any property which is subject to a mortgage, loan, or other advance of credit insured pursuant to subsection (q).

(3)(A) There hereby is established in the Treasury of the

United States a fund, which, to the extent approved in appropriation Acts, may be used by the Secretary for purposes of carrying

out subparagraph (B). There shall be deposited into such fund (i)

any amount recaptured under paragraph (2); (ii) any authority to

make assistance payments under subsection (a) that is committed

for use in a contract but is unused because the mortgage, loan, or

advance of credit involved is refinanced 2 or because such assistance payments are terminated or suspended for other reasons before the original termination date of such contract; and (iii) any

amount received under subparagraph (C).

(B) In the case of any homeowner whose assistance payments

are terminated by reason of the 10-year limitation referred to in

paragraph (1), and who is determined by the Secretary to be unable to assume the full payments due under the mortgage, loan, or

advance of credit involved, the Secretary shall, to the extent of the

availability of amounts in the fund established in subparagraph

(A), contract to make, and make, continued assistance payments on

behalf of such homeowner. Such continued assistance payments

shall be made in an amount determined in accordance with the applicable provisions of paragraph (1) or subsection (a)(2)(B) and for

such period as the Secretary determines to be appropriate.
723 Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE

(C) Any amounts in such fund determined by the Secretary to

be in excess of the amounts currently required to carry out the provisions of subparagraph (B) shall be invested by the Secretary in

obligations of, or obligations guaranteed as to both principal and

interest by, the United States or any agency of the United States.

Notwithstanding the preceding sentence, any amounts of budget

authority or contract authority recaptured from assistance payments contracts relating to mortgages that are being refinanced

that are not required for assistance payments contracts relating to

mortgages insured under this subsection, shall be rescinded.

(d) Assistance payments to a mortgagee by the Secretary on

behalf of a family holding membership in a cooperative association

operating a housing project shall be made only during such time

as the family is an occupant of such project and shall be in

amounts computed on the basis of the formula set forth in subsection (c) applying the cooperative member’s proportionate share

of the obligations under the project mortgage to the items specified

in the formula.

(e) The Secretary may include in the payment to the mortgagee

such amount, in addition to the amount computed under subsection

(a)(2)(B), (c), (d), (j)(7), or (r), as he deems appropriate to reimburse

the mortgagee for its expenses in handling the mortgage.

(f) Procedures shall be adopted by the Secretary for recertifications of the mortgagor’s (or cooperative member’s) income at intervals of two years (or at shorter intervals where the Secretary

deems it desirable) for the purpose of adjusting the amount of such

assistance payments within the limits of the formula described in

subsection (c).

(g) The Secretary shall prescribe such regulations as he deems

necessary to assure that the sales price of, or other consideration

paid in connection with, the purchase by a homeowner of the property with respect to which assistance payments are to be made is

not increased above the appraised value on which the maximum

mortgage which the Secretary will insure is computed.

(h)(1) There are authorized to be appropriated such sums as

may be necessary to carry out the provisions of this section, including such sums as may be necessary to make the assistance payments under contracts entered into under this section. The aggregate amount of outstanding contracts to make such payments shall

not exceed amounts approved in appropriation Acts, and payments

pursuant to such contracts shall not exceed $75,000,000 per annum

prior to July 1, 1969, which maximum dollar amount shall be increased by $125,000,000 on July 1, 1969, by $150,000,000 on July

1, 1970, by $200,000,000 on July 1, 1971, by such sums as may be

approved in appropriation Acts after June 30, 1974, and prior to

July 1, 1976, and by such sums as may be approved in an appropriation Act on or after October 1, 1983 (from the additional authority to enter into contracts made available on such date under

the first sentence of section 5(c)(1) of the United States Housing

Act of 1937). The aggregate amount that may be obligated over the

duration of the contracts entered into with the authority provided

on or after October 1, 1983 (other than obligations in connection

with mortgages insured under subsection (r)), may not exceed such

sums of new budget authority as may be appropriated after the
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 724

1 November 30, 1983.

2 August 22, 1974.

3 November 30, 1983.

4 November 30, 1983.

date of enactment of this sentence.1 The Secretary shall begin

issuing new commitments and reservations to provide mortgage insurance and assistance payments under this section before the expiration of the 30-day period following the approval in any appropriation Act of budget authority for this section after the date of

the enactment of this sentence.2 Upon the expiration of one year

following the date of enactment of the Housing and Community Development Act of 1974,3 the Secretary shall not enter into new contracts for assistance payments under this section utilizing authority approved in appropriation Acts prior to July 1, 1974. The Secretary shall not enter into new contracts for assistance payments

under this section (except under subsection (r)) after May 20, 1983,

utilizing amounts approved in appropriation Acts before the date of

the enactment of the Housing and Urban-Rural Recovery Act of

1983,4 except (i) pursuant to a firm commitment issued on or before

May 20, 1983, (ii) pursuant to other commitments issued by the

Secretary prior to June 30, 1981, reserving funds for housing to be

assisted under this section where such housing is included in a

project pursuant to section 119 of the Housing and Community Development Act of 1974, or (iii) pursuant to other commitments

issued on or before September 30, 1981, where housing under this

section is to be developed on land which was municipally owned on

September 30, 1981, and where a local government contributes at

least $1,000 per unit of funds obtained under title I of the Housing

and Community Development Act of 1974 and at least $2,000 per

unit of additional funds to assist housing under this section. In no

event may the Secretary enter into any new contract for assistance

payments under this section (other than a contract in connection

with a mortgage insured under subsection (r)) after September 30,

1989.

(2) Assistance payments under this section may be made only

with respect to a family whose income at the time of initial occupancy does not exceed 95 per centum of the median income for the

area, as determined by the Secretary with adjustments for smaller

and larger families, except that the Secretary may establish income

ceilings higher or lower than 95 per centum of the median for the

area on the basis of his findings that such variations are necessary

because of prevailing levels of construction costs, unusually high or

low median family incomes, or other factors.

(3) Notwithstanding the provisions of subsections (b)(2) and

(i)(3)(A) with respect to the prior construction of rehabilitation of

a dwelling, or of the project in which there is a dwelling unit, for

which assistance payments may be made, and notwithstanding the

provisions of subsection (j)(1) authorizing the purchase of housing

which is neither deteriorating nor substandard, not more than—

(A) 25 per centum of the total amount of contracts for assistance payments authorized by appropriation Acts to be

made prior to July 1, 1969, and
725 Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE

(B) 30 per centum of the total additional amount of contracts for assistance payment authorized by appropriations

Acts to be made on or after July 1, 1969,

may be made with respect to existing dwellings, or dwelling units

in existing projects. The preceding sentence shall not apply to contracts in connection with mortgages insured under subsection (r).

(4) At least 10 per centum of the total amount of contracts for

assistance payments authorized by appropriation Acts to be made

after June 30, 1971, shall be available for use only with respect to

dwellings, or dwelling units in projects, which are approved by the

Secretary prior to substantial rehabilitation.

(i)(1) The Secretary is authorized, upon application by the

mortgagee, to insure, a mortgage (including advances with respect

to property construction or rehabilitation pursuant to a self-help

program) executed by a mortgagor who meets the eligibility requirements for assistance payments prescribed by the Secretary

under subsection (b). Commitments for the insurance of such mortgages may be issued by the Secretary prior to the date of their execution or disbursement thereon, upon such terms and conditions as

the Secretary may prescribe.

(2) To be eligible for insurance under this subsection, a mortgagee shall meet the requirements of section 221(d)(2) or 234(c), except as such requirements are modified by this subsection.

(3) A mortgage to be insured under this subsection shall—

(A) involve a single-family or a two-family dwelling which

has been approved by the Secretary prior to the beginning of

construction or substantial rehabilitation, or a three-family

dwelling which is approved by the Secretary prior to the beginning of substantial rehabilitation, or a one-family unit in a condominium project (together with an undivided interest in the

common areas and facilities serving the project) which is released from a multifamily project, the construction or substantial rehabilitation of which has been completed within two

years prior to the filing of the application for assistance payments with respect to such family unit and the unit has had

no previous occupant other than the mortgagor: Provided, That

the mortgage may involve an existing dwelling or family unit

in an existing condominium project which meets such standards as the Secretary may prescribe: Provided further, That

the mortgage may involve an existing dwelling or a family unit

in an existing condominium project if assistance payments

have been made on behalf of the previous owner of the dwelling or family unit with respect to a mortgage insured under

subsection (j)(4): Provided further, That the mortgage may involve a dwelling unit in an existing project covered by a mortgage insured under section 236 or in an existing project receiving the benefits of financial assistance under section 101 of the

Housing and Urban Development Act of 1965;

(B) where it is to cover a one-family unit in a condominium

project, have a principal obligation not exceeding $40,000

($47,500 in any geographical area where the Secretary authorizes an increase on the basis of a finding that cost levels so require), except that with respect to any family with five or more
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 726

persons the foregoing limits shall be $47,500, and $55,000, respectively;

(C) involve, in the case of a dwelling unit other than a condominium or cooperative unit, a principal obligation (including

such initial service charges, appraisal, inspection, and other

fees as the Secretary shall approve) in an amount not to exceed

$40,000 ($47,500 in any geographical area where the Secretary

authorizes an increase on the basis of a finding that cost levels

so require), except that with respect to any family with five or

more persons the foregoing limits shall be $47,500 and

$55,000, respectively;

(D) involve, in the case of a two-family or three-family

dwelling, a principal obligation (including such initial service

charges, appraisal, inspection, and other fees as the Secretary

shall approve) in an amount not to exceed $60,000 ($66,250 in

any geographical area where the Secretary authorizes an increase on the basis of a finding that cost levels so require);

(E) be executed by a mortgagor who shall have paid in

cash or its equivalent, on account of the property, as least an

amount equal to 3 per centum of the Secretary’s estimate of

the cost of acquisition (excluding the mortgage insurance premium paid at the time the mortgage is insured); and

(F) bear interest at a rate not to exceed such percent per

annum on the amount of the principal obligation outstanding

at any time as the Secretary finds necessary to meet the mortgage market, taking into consideration the yields on mortgages

in the primary and secondary markets.

(4) In insuring eligible mortgages under this subsection, the

Secretary may not deny insurance on the basis that a mortgage involves a two- to three-family dwelling or is to be used to finance

substantial rehabilitation rather than new construction.

(5) As a condition of insuring a mortgage on a two- to threefamily dwelling, the Secretary shall require the mortgagor (A) not

to discriminate against prospective tenants on the basis of their receipt of or eligibility for housing assistance under any Federal,

State or local housing assistance program and (B) to agree that

during the term of the mortgage each of the rental units shall be

occupied by, or available for occupancy by, persons and families

whose incomes do not exceed 100 per centum of the area median

income.

(j)(1) In addition to mortgages insured under the provisions of

subsection (i), the Secretary is authorized, upon application by the

mortgagee, to insure a mortgage (including advances under such

mortgage during rehabilitation) which is executed by a nonprofit

organization or public body or agency to finance the purchase of

housing, and the rehabilitation of such housing if it is deteriorating

or substandard, for subsequent resale to lower income home purchasers who meet the eligibility requirements for assistance payments prescribed by the Secretary under subsection (b). Commitments for the insurance of such mortgages may be issued by the

Secretary prior to the date of their execution or disbursement

thereon, upon such terms and conditions as the Secretary may

prescribe.
727 Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE

1Section 101(c)(4) of the Housing and Urban Development Act of 1968, Pub. L. 90–448, approved August 1, 1968, provides as follows:

‘‘(4) The purchase of any individual dwelling, sold by a nonprofit organization pursuant to the

provisions of section 221(h)(5) of the National Housing Act after the date of enactment of this

section, may be financed with a mortgage insured under the provisions of section 235(j)(4) of

such Act, but such mortgage shall bear interest at the rate provided in section 235(j)(2)(C) of

such Act.’’.

(2) To be eligible for insurance under paragraph (1) of this subsection, a mortgage shall—

(A) be executed by a private nonprofit organization or public body or agency, approved by the Secretary, for the purpose

of financing the purchase (with the intention of subsequent resale) and rehabilitation where the housing involved is deteriorating or substandard, of property comprising one or more

tracts or parcels, whether or not contiguous, consisting of (i)

four or more single-family dwellings of detached, semidetached,

or row construction or (ii) four or more one-family units in a

structure or structures for which a plan of family unit ownership approved by the Secretary is established; except that in

a case not involving the rehabilitation of deteriorating or substandard housing the property purchased may consist of one or

more such dwellings or units;

(B) be in a principal amount not exceeding the appraised

value of the property at the time of its purchase under the

mortgage plus the estimated cost of any rehabilitation;

(C) bear interest at a rate not to exceed such percent per

annum on the amount of the principal obligation outstanding

at any time as the Secretary determines is necessary to meet

the mortgage market, taking into consideration the yields on

mortgages in the primary and secondary markets;

(D) provide for complete amortization (subject to paragraph (4)(E)) by periodic payments within such term as the

Secretary may prescribe; and

(E) provide for the release of individual single-family

dwellings from the lien of the mortgage upon their sale in accordance with paragraph (4).

(3) No mortgage shall be insured under paragraph (1) unless

the mortgagor shall have demonstrated to the satisfaction of the

Secretary that (A) the property involved is located in a neighborhood which is sufficiently stable and contains sufficient public facilities and amenities to support long-term values, or (B) the purchase or rehabilitation of such property plus the mortgagor’s related activities and the activities of other owners of housing in the

neighborhood, together with actions to be taken by public authorities, will be of such scope and quality as to give reasonable promise

that a stable environment will be created in the neighborhood.

(4)(A) 1 No mortgage shall be insured under paragraph (1) unless the mortgagor enters into an agreement, satisfactory to the

Secretary, that it will offer to sell the dwellings involved, after purchase and upon completion of any rehabilitation, to lower income

individuals or families meeting the eligibility requirements established by the Secretary under subsection (b).

(B) The Secretary is authorized to insure under this paragraph

mortgages executed to finance the sale of individual dwellings to
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 728

lower income purchases as provided in subparagraph (A). Any such

mortgage shall—

(i) be in a principal amount not in excess of that portion

of the unpaid principal balance of the blanket mortgage covering the property which is allocable to the individual dwelling

involved;

(ii) bear interest at the same rate as the blanket mortgage;

and

(iii) provide for complete amortization by periodic payments within a term equal to the remaining term (determined

without regard to subparagraph (E)) of such blanket mortgage.

(C) The price for which any individual dwelling is sold under

this paragraph shall be in an amount equal to that portion of the

unpaid principal balance of the blanket mortgage covering the

property which is allocable to the dwelling plus such additional

amount, not less than $200 (which may be applied in whole or in

part toward closing costs and may be paid in cash or its equivalent), as the Secretary may determine to be reasonable.

(D) Upon the sale under this paragraph of any individual

dwelling, such dwelling shall be released from the lien of the blanket mortgage. Until all of the individual dwellings in the property

covered by the blanket mortgage have been sold, the mortgagor

shall hold and operate the dwellings remaining unsold at any given

time, in such manner and under such terms as the Secretary may

prescribe, as though they constituted rental units.

(E) Upon the sale under this paragraph of all the individual

dwellings in the property covered by the blanket mortgage and the

release of all individual dwellings from the lien of the blanket

mortgage, the insurance of the blanket mortgage shall be terminated and no adjusted premium charge shall be charged by the

Secretary upon such termination.

(5) Where the Secretary has approved a plan of family unit

ownership the terms ‘‘single-family dwelling’’, ‘‘single-family dwellings’’, ‘‘individual dwelling’’, and ‘‘individual dwellings’’ shall mean

a family unit or family units, together with the undivided interest

(or interests) in the common areas and facilities.

(6) For purposes of this subsection, the terms ‘‘single-family

dwelling’’ and ‘‘single-family dwellings’’ (except for purposes of

paragraph (5)) shall include a two- to three-family dwelling which

has been approved by the Secretary.

(7) In addition to the assistance payments authorized under

subsection (b), the Secretary may make such payments to a mortgagee on behalf of a nonprofit organization or public body or agency

which is a mortgagor under the provisions of paragraph (1) in an

amount not exceeding the difference between the monthly payment

for principal, interest, and mortgage insurance premium which the

mortgagor is obligated to pay under the mortgage and the monthly

payment for principal and interest such mortgagor would be obligated to pay if the mortgage were to bear interest at the rate of

1 per centum per annum.

(8) A mortgage covering property which is not deteriorating or

substandard may be insured under this subsection only if it is situated in an area in which mortgages may be insured under section

221(h).
729 Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE

(9) In insuring eligibile mortgages under this subsection, the

Secretary may not deny insurance on the basis that a mortgage involves a two- to three-family dwelling or is to be used to finance

substantial rehabilitation rather than new construction.

(k) The Secretary shall from time to time allocate and transfer

to the Secretary of Agriculture, for use (in accordance with the

terms and conditions of this section) in rural areas and small

towns, a reasonable portion of the total authority to contract to

make assistance payments as approved in appropriation Acts under

subsection (h)(1).

(l) In determining the income of any person for the purposes of this section, there shall be deducted an amount equal to $300

for each minor person who is a member of the immediate family

of such person and living with such family, and the earnings of any

such minor persons shall not be included in the income of such person or his family.

(m) No mortgage (except a mortgage insured under subsection

(r)) shall be insured under this section after September 30, 1989,

except pursuant to a commitment to insure before that date.

(n) No mortgage may be insured under this section on a unit

in a subdivision, after the effective date of enactment of this subsection, which, when added to any other mortgages insured under

this section in that subdivision after such date, represents more

than 40 per centum of the total number of units in the subdivision,

except that the preceding limitation shall not apply with regard to

any rehabilitated unit, or to any unit or subdivision located or to

be located in an established urban neighborhood or area, where a

sound proposal is involved and where an aggregation of subsidized

units is essential to a community sponsored overall redevelopment

plan, as determined by the Secretary or to a mortgage insured

under subsection (r).

(o) The Secretary may insure a mortgage under this section involving a principal obligation which exceeds, by not more than 20

per centum, the maximum limits specified under subsection (b)(2)

or (i)(3) of this section if the mortgage relates to a dwelling in an

urban neighborhood where the Secretary determines that a community sponsored program of concentrated redevelopment or revitalization is being undertaken and the Secretary determines that such

action is necessary to enable eligible families residing in the area

who occupy substandard housing or are being involuntarily displaced to remain in the area in decent, safe, and sanitary housing.

(p) The Secretary may insure a mortgage under this section involving a principal obligation which exceeds, by not more than 10

per centum, the maximum limits specified under subsection (b)(2)

or (i)(3) of this section, or, if applicable, the maximum principal obligation insurable pursuant to subsection (o) of this section, if the

mortgage relates to a dwelling to be occupied by a physically handicapped person and the Secretary determines that such action is

necessary to reflect the cost of making such dwelling accessible to

and usable by such person.

(q)(1) Notwithstanding any other provision of this section, except subsection (n), if the Secretary determines that there is a substantial need for emergency stimulation of the housing market, the

Secretary is authorized to make and enter into contracts to make
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 730

periodic assistance payments to the extent of not to exceed 75 per

centum of the authority available pursuant to subsection (h)(1), on

behalf of homeowners, including owners of manufactured homes, to

mortgagees or other lenders holding mortgages, loans, or advances

of credit which meet the requirements of this subsection. The Secretary may establish such criteria, terms, and conditions relating

to homeowners and mortgages, loans, or advances of credit assisted

under this subsection as the Secretary deems appropriate, consistent with the provisions of this subsection. The Secretary is authorized to insure a mortgage which meets the requirements of and

is to be assisted under this subsection. The authority to enter into

contracts to provide assistance payments and to insure mortgages

under this subsection shall terminate on September 30, 1989, or at

such earlier date as the Secretary may deem appropriate, upon a

determination by the Secretary that the conditions which gave rise

to the exercise of authority under this subsection are no longer

present, except pursuant to a commitment entered into prior to

such date.

(2) Payments under this subsection may be made only on behalf of a homeowner who satisfies such eligibility requirements as

may be prescribed by the Secretary and who—

(A)(i) is a mortgagor under a mortgage which meets the requirements of and is insured under this subsection, or (ii) is

the original owner of a new manufactured home consisting of

two or more modules and a lot on which the manufactured

home is situated, where insurance under section 2 of this Act

covering the loan, advance of credit, or purchase of an obligation representing such loan or advance of credit to finance the

purchase of such manufactured home and lot has been granted

to the lender making such loan, advance of credit, or purchase

of an obligation; and

(B) has a family income, at the time of initial occupancy,

which does not exceed 130 per centum of the area median income for the area (with adjustments for smaller and larger

families, unusually high or low median family income, or other

factors), as determined by the Secretary.

(3) Assistance payments to a mortgagee or other lender by the

Secretary on behalf of a homeowner shall be made only during such

time as the homeowner shall continue to occupy the property which

secures the mortgage, loan, or advance of credit. The Secretary

may, where a mortgage insured under this subsection has been assigned to the Secretary, continue making such assistance payments.

(4) The amount of the assistance payments in the case of a

mortgage shall not at any time exceed the lesser of—

(A) the balance of the monthly payment for principal, interest, taxes, insurance, and any mortgage insurance premium

due under the mortgage remaining unpaid after applying a

minimum of 25 per centum of the mortgagor’s income, except

that the Secretary may reduce such per centum of income to

the extent he deems necessary, but not lower than 20 per centum of the mortgagor’s income; or

(B) the difference between the amount of the monthly payment for principal, interest, and any mortgage insurance pre-
731 Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE

mium which would be required if the mortgage were a level

payment mortgage bearing interest at a rate equal to the maximum interest rate which is applicable to level payment mortgages insured under section 203(b), other than mortgages subject to section 3(a)(2) of Public Law 90–301, and the monthly

payment for principal and interest which the mortgagor would

be obligated to pay if the mortgage were a level payment mortgage bearing interest at the rate of at least 91⁄2 per centum per

annum.

(5) Assistance payments on behalf of the owner of a manufactured home shall not at any time exceed the lesser of—

(A) the balance of the monthly payment for principal, interest, real and personal property taxes, insurance, and insurance premium chargeable under section 2 of this Act due under

the loan or advance of credit remaining unpaid after applying

a minimum of 25 per centum of the manufactured homeowner’s

income, except that the Secretary may reduce such per centum

of income to the extent he deems necessary, but not lower than

20 per centum of the mortgagor’s income; or

(B) the difference between the amount of the monthly payment for principal, interest, and insurance premium chargeable under section 2 of this Act which the manufactured homeowner is obligated to pay under the loan or advance of credit

and the monthly payment of principal and interest which the

owner would be obligated to pay if the loan or advance of credit

were to bear an interest rate determined by the Secretary

which shall not be less than 12 per centum per annum.

(6) The Secretary may include in the payment to the mortgagee or other lender such amount, in addition to the amount computed under paragraph (4) or (5), as the Secretary deems appropriate to reimburse the mortgagee or other lender for its reasonable and necessary expenses in handling the mortgage, loan, or advance of credit.

(7) The Secretary shall prescribe such regulations as the Secretary deems necessary to assure that the sale price of, or other

consideration paid in connection with, the purchase by a homeowner of the property with respect to which assistance payments

are to be made is not greater than the appraised value as determined by the Secretary.

(8) Assistance payments pursuant to paragraph (5) shall not be

made with respect to more than 20 per centum of the total number

of units with respect to which assistance is approved under this

subsection.

(9) The Secretary may, in addition to mortgages insured under

subsection (i) or (j), insure, upon application by the mortgagee, a

mortgage executed by a mortgagor who meets the eligibility requirements for assistance payments prescribed by the Secretary

under paragraph (2). Commitments for the insurance of such mortgages may be issued by the Secretary prior to the date of their execution or disbursement thereon, upon such terms and conditions as

the Secretary may prescribe.

(10) To be eligible for insurance under this subsection, a mortgage shall—
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 732

(A) be a first lien on real estate held in fee simple, or on

a leasehold under a lease which meets terms and conditions established by the Secretary;

(B) have been made to, and be held by, a mortgagee approved by the Secretary as responsible and able to service the

mortgage properly;

(C) involve a one- to four-family dwelling which has been

approved by the Secretary prior to the beginning of construction, or if not so approved, has been completed within one year

prior to the filing of the application for insurance and which

has never been sold other than to the mortgagor;

(D) involve a principal residence the sales price of which

does not exceed 82 per centum of the applicable maximum

principal obligation of a mortgage which may be insured in the

area pursuant to section 203(b)(2), determined without regard

to the last sentence of such section;

(E) have maturity and amortization provisions satisfactory

to the Secretary;

(F) bear interest (exclusive of premium charges for insurance, and service charges if any) at not to exceed the applicable

maximum rate for mortgages insured pursuant to section

203(b);

(G) be executed by a mortgagor who shall have paid in

cash or its equivalent, on account of the property, at least an

amount equal to 3 per centum of the Secretary’s estimate of

the cost of acquisition; and

(H) contain such other terms and conditions as the Secretary may prescribe.

(11) The Secretary shall, to the extent practicable, insure mortgages under this subsection which are secured by properties which

contribute to the conservation of land and energy resources.

(12) A mortgage to be assisted under this subsection shall,

where the Secretary deems it appropriate, provide for graduated

payments pursuant to section 245.

(13) The Secretary shall develop and utilize a system to allocate assistance under this subsection in a manner which assures

a reasonable distribution of such assistance among the various regions of the country and which takes into consideration such factors as population, relative decline in building permits, the need for

increased housing production, and other factors he deems appropriate. Assistance provided under this subsection shall not be subject to section 213 of the Housing and Community Development Act

of 1974.

(14) Upon the disposition by the homeowner of any property

assisted pursuant to this subsection, or where the homeowner rents

the property (or the owner’s unit in the case of a two- to four-family

residence) for a period longer than one year, the Secretary shall

provide for the recapture of an amount equal to the lesser of (A)

the amount of assistance actually received under this subsection,

other than any amount provided under paragraph (6), or (B) an

amount at least equal to 50 per centum of the net appreciation of

the property, as determined by the Secretary. For the purpose of

this paragraph, the term ‘‘net appreciation of the property’’ means

any increase in the value of the property over the original purchase
733 Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE

price, less the reasonable costs of sale, the reasonable costs of improvements made to the property, and any increase in the mortgage balance as of the time of sale over the original mortgage balance due to the mortgage being insured pursuant to section 245.

In providing for such recapture, the Secretary shall include incentives for the homeowner to maintain the property in a marketable

condition. Notwithstanding any other provision of law, any such assistance shall constitute a debt secured by the property to the extent that the Secretary may provide for such recapture.

(15) Procedures shall be adopted by the Secretary for recertification of the homeowner’s income at intervals of two years (or at

shorter intervals where the Secretary deems it desirable) for the

purpose of adjusting the amount of such assistance payments within the limits of the formula described in paragraph (4) or (5).

(r)(1) The Secretary is authorized, upon application of a mortgagee, to insure under this subsection a mortgage the proceeds of

which are used to refinance a mortgage insured under this section.

(2) To be eligible for insurance under this subsection, a mortgage must be executed by a mortgagor meeting the requirements

of paragraph (3) and shall—

(A) be a first lien on real estate held in fee simple, or on

a leasehold under a lease—

(i) for not less than 99 years which is renewable; or

(ii) having a period of not less than 10 years to run beyond the maturity date of the mortgage;

(B) have been made to, and held by, a mortgagee approved

by the Secretary;

(C) be in an amount not exceeding the outstanding principal balance, including any unpaid interest, due on the mortgage being refinanced;

(D) have a maturity not exceeding the unexpired term of

the mortgage being refinanced;

(E) bear an interest rate not exceeding such percent per

annum on the amount of the principal obligation outstanding

at any time as the Secretary finds necessary to meet the mortgage market, taking into consideration the yields on mortgages

in the primary and secondary markets; to the extent that the

amounts described in paragraphs (4) (A) and (B) are not otherwise paid by the Secretary, the foregoing interest rate may be

increased, in the discretion of the Secretary, to compensate the

mortgagee for its payment to, or on behalf of, the mortgagor of

such amounts; and

(F) meet the criteria for refinancing as determined by the

Secretary.

(3) Notwithstanding the provisions of subsection (h)(2), assistance payments in connection with mortgages insured under paragraph (2) shall be made only with respect to a family who is eligible for, and receiving assistance payments with respect to, the insured mortgage being refinanced.

(4) The Secretary is authorized and, to the extent provided in

appropriation Acts, may pay to the mortgagor (directly, through the

mortgagee, or otherwise)—
Sec. 235 SECTION 235 HOMEOWNERSHIP ASSISTANCE 734

(A) an amount, as approved by the Secretary, as an incentive to the mortgagor to refinance a mortgage insured under

this section; and

(B) an amount as approved by the Secretary for costs incurred in connection with the refinancing, including but not

limited to discounts, loan origination fees, and closing costs.

(5) Amounts of budget authority required for assistance payments contracts with respect to mortgages insured under this subsection shall be derived from amounts recaptured from assistance

payments contracts relating to mortgages that are being refinanced. For purposes of subsection (c)(3)(A), the amount of recaptured budget authority that the Secretary commits for assistance

payments contracts relating to mortgages insured under this subsection shall not be construed as ‘‘unused’’.

(6) The Secretary is authorized to take any actions to identify

and communicate with any mortgagor of a mortgage insured under

this section to implement the refinancing of such mortgages with

insurance under this subsection. The Secretary may take such actions directly, or under contract. Notwithstanding the restriction of

section 552a(b) of title 5 of the United States Code, upon the request of an approved mortgagee, the Secretary may disclose to such

mortgagee the name and address of any mortgagor of a mortgage

insured under this section that meets the criteria for refinancing,

pursuant to paragraph (2)(F), and the unpaid principal balance and

interest rate on such mortgage.

(7) The Secretary shall implement the provisions of this subsection by a notice published in the Federal Register.
735

ENTERPRISE ZONE HOMEOWNERSHIP OPPORTUNITY

GRANTS

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3748; 42 U.S.C. 12898a]

SEC. 186. ø42 U.S.C. 12898a¿ ENTERPRISE ZONE HOMEOWNERSHIP OPPORTUNITY GRANTS.

(a) STATEMENT OF PURPOSE.—It is the purpose of this section—

(1) to encourage homeownership by families in the United

States who are not otherwise able to afford homeownership;

(2) to encourage the redevelopment of economically depressed areas; and

(3) to provide better housing opportunities in federally approved and equivalent State-approved enterprise zones.

(b) DEFINITIONS.—For purposes of this section the following

definitions shall apply:

(1) HOME.—The term ‘‘home’’ means any 1- to 4-family

dwelling. Such term includes any dwelling unit in a condominium project or cooperative project consisting of not more

than 4 dwelling units, any town house, and any manufactured

home.

(2) METROPOLITAN STATISTICAL AREA.—The term ‘‘metropolitan statistical area’’ means a metropolitan statistical area

as established by the Office of Management and Budget.

(3) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ means a private nonprofit corporation, or other private nonprofit legal entity, that is approved by the Secretary

as to financial responsibility.

(4) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(5) STATE.—The term ‘‘State’’ means each of the several

States, the District of Columbia, the Commonwealth of Puerto

Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, the Trust Territory of the Pacific Islands,

and any other territory or possession of the United States.

(6) UNIT OF GENERAL LOCAL GOVERNMENT.—The term ‘‘unit

of general local government’’ means any borough, city, county,

parish, town, township, village, or other general purpose political subdivision of a State.

(c) ASSISTANCE TO NONPROFIT ORGANIZATIONS.—

(1) IN GENERAL.—The Secretary may provide assistance to

nonprofit organizations to carry out enterprise zone homeownership opportunity programs to promote homeownership in

federally approved and equivalent State-approved enterprise

zones in accordance with the provisions of this section. Such

assistance shall be made in the form of grants.
Sec. 186 ENTERPRISE ZONE HOMEOWNERSHIP GRANTS 736

(2) APPLICATIONS.—Applications for assistance under this

section shall be made in such form, and in accordance with

such procedures, as the Secretary may prescribe.

(d) ELIGIBLE USES OF ASSISTANCE.—

(1) IN GENERAL.—Any nonprofit organization receiving assistance under this section shall use such assistance to provide

loans to families purchasing homes constructed or rehabilitated

in accordance with an enterprise zone homeownership opportunity program approved under this section.

(2) SPECIFIC REQUIREMENTS.—Each loan made to a family

under this subsection shall—

(A) be secured by a second mortgage held by the Secretary on the property involved;

(B) be in an amount not exceeding $15,000;

(C) bear no interest; and

(D) be repayable to the Secretary upon the sales,

lease, or other transfer of such property.

(e) PROGRAM REQUIREMENTS.—

(1) IN GENERAL.—Assistance provided under this section

may be used only in connection with an enterprise zone homeownership opportunity program of construction or rehabilitation of homes.

(2) FAMILY NEED.—Each family purchasing a home under

this section shall—

(A) have a family income on the date of such purchase

that is not more than the median income for a family of

4 persons (adjusted for family size) in the metropolitan

statistical area in which a federally approved or equivalent

State-approved enterprise zone is located; and

(B) not have owned a home during the 3-year period

preceding such purchase.

(3) DOWNPAYMENT.—Each family purchasing a home under

this section shall make a downpayment of not less than 5 percent of the sale price of such home.

(4) LEASING PROHIBITION.—No family purchasing a home

under this section may lease such home.

(f) TERMS AND CONDITIONS OF ASSISTANCE.—

(1) LOCAL CONSULTATION.—No proposed enterprise zone

homeownership opportunity program may be approved by the

Secretary under this section unless the applicant involved

demonstrates to the satisfaction of the Secretary that—

(A) it has consulted with and received the support of

residents of the neighborhood in which such program is to

be located; and

(B) it has the approval of each unit of general local

government in which such program is to be located.

(2) PROGRAM SCHEDULE.—Each applicant for assistance

under this section shall submit to the Secretary an estimated

schedule for completion of its proposed enterprise zone homeownership opportunity program, which schedule shall have

been agreed to by each unit of general local government in

which such program is to be located.
737 Sec. 186 ENTERPRISE ZONE HOMEOWNERSHIP GRANTS

1So in law.

2The date of enactment was October 28, 1992.

3So in law. Probably intended to refer to this section.

(3) LOCATION.—All homes constructed or rehabilitated

under such program will be located in federally approved or

equivalent State-approved enterprise zones.

(4) SALES CONTRACTS.—Sales contracts entered into under

such program will contain provisions requiring repayment of

any loan made under this section upon the sale or other transfer of the home involved, unless the Secretary approves a

transfer of such home without repayment (in which case the

second mortgage held by the Secretary on such home shall remain in force until such loan is fully repaid).

(g) PROGRAM SELECTION CRITERIA.—

(1) IN GENERAL.—In selecting enterprise zone homeownership opportunity programs for assistance under this section

from among eligible programs, the Secretary shall make such

selection on the basis of the extent to which—

(A) non-Federal public or private entities will contribute land necessary to make each program feasible;

(B) non-Federal public and private financial or other

contributions (including tax abatements, waivers of fees related to development, waivers of construction, development, or zoning requirements, and direct financial

contributions) will reduce the cost of home 1 constructed or

rehabilitated under each program;

(C) each program will produce the greatest number of

units for the least amount of assistance provided under

this section, taking into consideration the cost differences

among different market areas; and

(D) each program provides for the involvement of local

residents in the planning, and construction or rehabilitation, of homes.

(2) EXCEPTION.—To the extent that non-Federal public entities are prohibited by the law of any State from making any

form of contribution described in subparagraph (A) or (B) of

paragraph (1), the Secretary shall not consider such form of

contribution in evaluating such program.

(h) REGULATIONS.—Not later than 180 days after the date of

enactment of this section 2, the Secretary shall issue final regulations to carry out the provisions of this title. 3 Any such regulations

shall be issued in accordance with section 553 of title 5, United

States Code, notwithstanding the provisions of subsection (a)(2) of

such section.

(i) FUNDING.—There are authorized to be appropriated to carry

out this section $30,000,000 in each of fiscal years 1993 and 1994.
738

ELIGIBILITY UNDER FIRST-TIME HOMEBUYER

PROGRAMS

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4421; 42 U.S.C. 12713]

SEC. 956. ø42 U.S.C. 12713¿ ELIGIBILITY UNDER FIRST-TIME HOMEBUYER PROGRAMS.

(a) ELIGIBILITY OF DISPLACED HOMEMAKERS AND SINGLE PARENTS FOR FEDERAL ASSISTANCE FOR FIRST-TIME HOMEBUYERS.—

(1) DISPLACED HOMEMAKERS.—No individual who is a displaced homemaker may be denied eligibility under any Federal

program to assist first-time homebuyers on the basis that the

individual, while a homemaker, owned a home with his or her

spouse or resided in a home owned by the spouse.

(2) SINGLE PARENTS.—No individual who is a single parent

may be denied eligibility under any Federal program to assist

first-time homebuyers on the basis that the individual, while

married, owned a home with his or her spouse or resided in a

home owned by the spouse.

(b) DEFINITIONS.—For purposes of this section:

(1) DISPLACED HOMEMAKER.—The term ‘‘displaced homemaker’’ means an individual who—

(A) is an adult;

(B) has not worked full-time, full-year in the labor

force for a number of years but has, during such years,

worked primarily without remuneration to care for the

home and family; and

(C) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment.

(2) FIRST-TIME HOMEBUYER.—The term ‘‘first-time homebuyer’’ means an individual who has never, or has not during

a specified period of time, had any present ownership interest

in a principal residence.

(3) SINGLE PARENT.—The term ‘‘single parent’’ means an

individual who—

(A) is unmarried or legally separated from a spouse;

and

(B)(i) has 1 or more minor children for whom the individual has custody or joint custody; or

(ii) is pregnant.

(c) APPLICABILITY.—This section shall apply to any Federal program to assist first-time homebuyers, unless the program is exempted from this section by a statute that amends this subsection

or explicitly refers to this subsection.
739

PART VI—HOUSING FOR THE HOMELESS

HOUSING ASSISTANCE FOR THE HOMELESS

EXCERPTS FROM McKINNEY-VENTO HOMELESS ASSISTANCE ACT

[Public Law 100–77, 101 Stat. 482; 42 U.S.C. 11301 et seq.]

TITLE I—GENERAL PROVISIONS

SECTION 101. ø42 U.S.C. 11301 note¿ SHORT TITLE AND TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘McKinneyVento Homeless Assistance Act’’.

(b) TABLE OF CONTENTS.—

TITLE I—GENERAL PROVISIONS

Sec. 101. Short title and table of contents.

Sec. 102. Findings and purpose.

Sec. 103. General definition of homeless individual.

Sec. 104. Funding availability and limitations.

Sec. 105. Annual program summary by Comptroller General.

TITLE II—INTERAGENCY COUNCIL ON THE HOMELESS

Sec. 201. Establishment.

Sec. 202. Membership.

Sec. 203. Functions.

Sec. 204. Director and staff.

Sec. 205. Powers.

Sec. 206. Transfer of functions.

Sec. 207. Definitions.

Sec. 208. Authorization of appropriations.

Sec. 209. Termination.

Sec. 210. Encouragement of State involvement.

TITLE III—FEDERAL EMERGENCY MANAGEMENT FOOD AND SHELTER

PROGRAM

Subtitle A—Administrative Provisions

Sec. 301. Emergency Food and Shelter Program National Board.

Sec. 302. Local boards.

Sec. 303. Role of Federal Emergency Management Agency.

Sec. 304. Records and audit of National Board and recipients of assistance.

Sec. 305. Annual report.

Subtitle B—Emergency Food and Shelter Grants

Sec. 311. Grants by the Director.

Sec. 312. Retention of interest earned.

Sec. 313. Purposes of grants.

Sec. 314. Limitation on certain costs.

Sec. 315. Disbursement of funds.

Sec. 316. Program guidelines.

Subtitle C—General Provisions

Sec. 321. Definitions.

Sec. 322. Authorization of appropriations.
Sec. 101 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 740

1Section 402 of this Act was added by section 229(a) of the Departments of Veterans Affairs

and Housing and Urban Development, and Independent Agencies Appropriations Act, 2001

(H.R. 5482, as introduced in the 106th Congress, enacted by section 1(a)(1) of Pub. L. 106–377

(114 Stat. 1441)). That Act did not make a conforming amendment to this table of contents. The

item relating to section 402 is shown as an aid to the user of this compilation. 2Section 208 of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 2001, which was enacted by reference by section

1(a)(1) of Public Law 106–377, amended section 443 to read as shown, post, in this part. Such

section 208 did not amend the item in this table of contents to conform to the amendment to

section 443.

TITLE IV—HOUSING ASSISTANCE

Subtitle A—Comprehensive Homeless Assistance Plan

Sec. 401. Housing affordability strategy.

øSec. 402. Discharge coordination policy.¿ 1

Subtitle B—Emergency Shelter Grants Program

Sec. 411. Definitions.

Sec. 412. Grant assistance.

Sec. 413. Allocation and distribution of assistance.

Sec. 414. Eligible activities.

Sec. 415. Responsibilities of recipients.

Sec. 416. Administrative provisions.

Sec. 417. Authorization of appropriations.

Sec. 418. Administrative costs.

Subtitle C—Supportive Housing Program

Sec. 421. Purpose.

Sec. 422. Definitions.

Sec. 423. Eligible activities.

Sec. 424. Supportive housing.

Sec. 425. Supportive services.

Sec. 426. Program requirements.

Sec. 427. Regulations.

Sec. 428. Reports to Congress.

Sec. 429. Authorization of appropriations.

Subtitle D—Safe Havens for Homeless Individuals Demonstration Program

Sec. 431. Establishment of demonstration.

Sec. 432. Definitions.

Sec. 433. Program assistance.

Sec. 434. Program requirements.

Sec. 435. Occupancy charge.

Sec. 436. Termination of assistance.

Sec. 437. Evaluation and report.

Sec. 438. Regulations.

Sec. 439. Authorization of appropriations.

Subtitle E—Miscellaneous Programs

Sec. 441. Section 8 assistance for single room occupancy dwellings.

Sec. 442. Community development block grant amendment.

Sec. 443. Administrative provisions. 2

Subtitle F—Shelter Plus Care Program

PART I—GENERAL REQUIREMENTS

Sec. 451. Purpose.

Sec. 452. Rental housing assistance.

Sec. 453. Supportive services requirements.

Sec. 454. Applications.

Sec. 455. Selection criteria.

Sec. 456. Required agreements.

Sec. 457. Housing standards and rent reasonableness.

Sec. 458. Tenant rent.

Sec. 459. Administrative fees.

Sec. 460. Occupancy.

Sec. 461. Termination of assistance.
741 Sec. 101 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

Sec. 462. Definitions.

Sec. 463. Authorization of appropriations.

PART II—TENANT-BASED RENTAL ASSISTANCE

Sec. 471. Authority.

Sec. 472. Housing assistance.

Sec. 473. Amount of assistance.

PART III—PROJECT-BASED RENTAL ASSISTANCE

Sec. 476. Authority.

Sec. 477. Housing assistance.

Sec. 478. Term of contract and amount of assistance.

PART IV—SPONSOR-BASED RENTAL ASSISTANCE

Sec. 481. Authority.

Sec. 482. Housing assistance.

Sec. 483. Term of contract and amount of assistance.

PART V—SECTION 8 MODERATE REHABILITATION ASSISTANCE FOR SINGLE-ROOM

OCCUPANCY DWELLINGS

Sec. 486. Authority.

Sec. 487. Fire and safety improvements.

Sec. 488. Contract requirements.

Subtitle G—Rural Homeless Housing Assistance

Sec. 491. Rural homelessness grant program.

Sec. 492. Use of FMHA inventory for transitional housing for homeless persons and

for turnkey housing.

TITLE V—IDENTIFICATION AND USE OF SURPLUS FEDERAL PROPERTY

Sec. 501. Use of unutilized and underutilized public buildings and real property to

assist the homeless.

Sec. 502. Making surplus personal property available to nonprofit agencies.

TITLE VI—HEALTH CARE FOR THE HOMELESS

Subtitle A—Primary Health Services and Substance Abuse Services

Sec. 601. Establishment of grant program.

Sec. 602. Provision of health services to the homeless by national health service

corps.

Sec. 603. Requirement of certain study with respect to homelessness.

Subtitle B—Community Mental Health Services

Sec. 611. Establishment of block grant program for services to homeless individuals

who are chronically mentally ill.

Sec. 612. Community mental health services demonstration projects for homeless

individuals who are chronically mentally ill.

Sec. 613. Community demonstration projects for alcohol and drug abuse treatment

of homeless individuals.

TITLE VII—EDUCATION AND TRAINING

øSubtitle A—[Repealed.]¿

Subtitle B—Education for Homeless Children and Youths

Sec. 721. Statement of policy.

Sec. 722. Grants for State and local activities for the education of homeless children and youths.

Sec. 723. Local educational agency subgrants for the education of homeless children

and youths.

Sec. 724. Secretarial responsibilities.

Sec. 725. Definitions.

Sec. 726. Authorization of appropriations.

Subtitle C—Job Training for the Homeless

Sec. 738. Homeless veterans’ reintegration projects.
Sec. 102 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 742

Subtitle D—Emergency Community Services Homeless Grant Program

Sec. 751. Establishment of program.

Sec. 752. Allocation of grants.

Sec. 753. Program requirements.

Sec. 754. Authorization of appropriations.

Sec. 755. Evaluation.

Sec. 756. Report by the Secretary.

Subtitle E—Miscellaneous Provisions

Sec. 761. Study of youth homelessness.

Sec. 762. Set-asides for Native Americans.

Subtitle F—Family Support Centers

Sec. 771. Definitions.

Sec. 772. General grants for the provision of services.

Sec. 773. Training and retention.

Sec. 774. Family case managers.

Sec. 775. Gateway programs.

Sec. 776. Evaluation.

Sec. 777. Report.

Sec. 778. Construction.

Sec. 779. Authorization of appropriations.

TITLE VIII—FOOD ASSISTANCE FOR THE HOMELESS

Subtitle A—Food Stamp Program

Sec. 801. Definition of homeless individual.

Sec. 802. Definition of household.

Sec. 803. Annual adjustment of income eligibility standards.

Sec. 804. Annual adjustments to the standard deduction.

Sec. 805. Ineligibility for earned income deduction.

Sec. 806. Excess shelter expense.

Sec. 807. Third party payments for certain housing.

Sec. 808. Food stamp information for the homeless.

Sec. 809. Expedited food stamp service.

Subtitle B—Temporary Emergency Food Assistance Program (TEFAP)

Sec. 811. Variety of commodities under TEFAP.

Sec. 812. Distribution of surplus flour, cornmeal, and cheese.

Sec. 813. Authorization of appropriations for food storage and distribution costs

under TEFAP.

Sec. 814. Continuation of TEFAP.

TITLE IX—VETERANS’ PROVISIONS

Sec. 901. Extension of Veterans’ Job Training Act.

SEC. 102. ø42 U.S.C. 11301¿ FINDINGS AND PURPOSE.

(a) FINDINGS.—The Congress finds that—

(1) the Nation faces an immediate and unprecedented crisis due to the lack of shelter for a growing number of individuals and families, including elderly persons, handicapped persons, families with children, Native Americans, and veterans;

(2) the problem of homelessness has become more severe

and, in the absence of more effective efforts, is expected to become dramatically worse, endangering the lives and safety of

the homeless;

(3) the causes of homelessness are many and complex, and

homeless individuals have diverse needs;

(4) there is no single, simple solution to the problem of

homelessness because of the different subpopulations of the

homeless, the different causes of and reasons for homelessness,

and the different needs of homeless individuals;

(5) due to the record increase in homelessness, States,

units of local government, and private voluntary organizations
743 Sec. 104 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1So in law.

2 July 22, 1987.

have been unable to meet the basic human needs of all the

homeless and, in the absence of greater Federal assistance,

will be unable to protect the lives and safety of all the homeless in need of assistance; and

(6) the Federal Government has a clear responsibility and

an existing capacity to fulfill a more effective and responsible

role to meet the basic human needs and to engender respect

for the human dignity of the homeless.

(b) PURPOSE.—It is the purpose of this Act—

(1) to establish an Interagency Council on the Homeless;

(2) to use public resources and programs in a more coordinated manner to meet the critically urgent needs of the homeless of the Nation; and

(3) to provide funds for programs to assist the homeless,

with special emphasis on elderly persons, handicapped persons,

families with children, Native Americans, and veterans.

SEC. 103. ø42 U.S.C. 11302¿ GENERAL DEFINITION OF HOMELESS INDIVIDUAL.

(a) IN GENERAL.—For purposes of this Act, the term ‘‘homeless’’

or ‘‘homeless individual or homeless person’’ 1 includes—

(1) an individual who lacks a fixed, regular, and adequate

nighttime residence; and

(2) an individual who has a primary nighttime residence

that is—

(A) a supervised publicly or privately operated shelter

designed to provide temporary living accommodations (including welfare hotels, congregate shelters, and transitional housing for the mentally ill);

(B) an institution that provides a temporary residence

for individuals intended to be institutionalized; or

(C) a public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for

human beings.

(b) INCOME ELIGIBILITY.— (1) IN GENERAL.—A homeless individual shall be eligible

for assistance under any program provided by this Act, only if

the individual complies with the income eligibility requirements otherwise applicable to such program.

(2) EXCEPTION.—Notwithstanding paragraph (1), a homeless individual shall be eligible for assistance under title I of

the Workforce Investment Act of 1998.

(c) EXCLUSION.—For purposes of this Act, the term ‘‘homeless’’

or ‘‘homeless individual’’ does not include any individual imprisoned or otherwise detained pursuant to an Act of the Congress or

a State law.

SEC. 104. ø42 U.S.C. 11303¿ FUNDING AVAILABILITY AND LIMITATIONS.

(a) CALCULATION.—The amounts authorized in this Act shall be

in addition to any amount appropriated for the programs involved

before the date of the enactment of this Act.2

(b) AVAILABILITY UNTIL EXPENDED.—Any amount appropriated

under an authorization in this Act shall remain available until expended.
Sec. 105 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 744

(c) LIMITATION.—Appropriations pursuant to the authorizations

in this Act shall be made in accordance with the provisions of the

Congressional Budget and Impoundment Control Act of 1974,

which prohibits the consideration of any bill that would cause the

deficit to exceed the levels established by the Balanced Budget and

Emergency Deficit Control Act of 1985, such that it shall not increase the deficit of the Federal Government for fiscal year 1987.

SEC. 105. ø42 U.S.C. 11304¿ ANNUAL PROGRAM SUMMARY BY COMPTROLLER GENERAL.

The Comptroller General of the United States may evaluate

the disbursement and use of the amounts made available by appropriation Acts under the authorizations in titles III and IV.

TITLE II—INTERAGENCY COUNCIL ON

THE HOMELESS

SEC. 201. ø42 U.S.C. 11311¿ ESTABLISHMENT.

There is established in the executive branch an independent

establishment to be known as the Interagency Council on the

Homeless.

SEC. 202. ø42 U.S.C. 11312¿ MEMBERSHIP.

(a) MEMBERS.—The Council shall be composed of the following

members:

(1) The Secretary of Agriculture, or the designee of the

Secretary.

(2) The Secretary of Commerce, or the designee of the Secretary.

(3) The Secretary of Defense, or the designee of the Secretary.

(4) The Secretary of Education, or the designee of the Secretary.

(5) The Secretary of Energy, or the designee of the Secretary.

(6) The Secretary of Health and Human Services, or the

designee of the Secretary.

(7) The Secretary of Housing and Urban Development, or

the designee of the Secretary.

(8) The Secretary of the Interior, or the designee of the

Secretary.

(9) The Secretary of Labor, or the designee of the Secretary.

(10) The Secretary of Transportation, or the designee of

the Secretary.

(11) The Secretary of Veterans Affairs, or the designee of

the Secretary.

(12) The Chief Executive Officer of the Corporation for National and Community Service, or the designee of the Chief Executive Officer.

(13) The Director of the Federal Emergency Management

Agency, or the designee of the Director.

(14) The Administrator of General Services, or the designee of the Administrator.
745 Sec. 203 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

(15) The Postmaster General of the United States, or the

designee of the Postmaster General.

(16) The heads of such other Federal agencies as the Council considers appropriate, or their designees.

(b) CHAIRPERSON.—The Council shall elect a Chairperson and

a Vice Chairperson from among its members. The positions of

Chairperson and Vice Chairperson shall rotate among its members

on an annual basis.

(c) MEETINGS.—The Council shall meet at the call of its Chairperson or a majority of its members, but not less often than annually.

(d) PROHIBITION OF ADDITIONAL PAY.—Members of the Council

shall receive no additional pay, allowances, or benefits by reason of

their service on the Council.

SEC. 203. ø42 U.S.C. 11313¿ FUNCTIONS.

(a) DUTIES.—The Council shall—

(1) review all Federal activities and programs to assist

homeless individuals;

(2) take such actions as may be necessary to reduce duplication among programs and activities by Federal agencies to

assist homeless individuals;

(3) monitor, evaluate, and recommend improvements in

programs and activities to assist homeless individuals conducted by Federal agencies, State and local governments, and

private voluntary organizations;

(4) provide professional and technical assistance, (by at

least 2, but in no case more than 5, regional coordinators employed by the Council, each having responsibility for interaction and coordination of the activities of the Council within

the 10 standard Federal regions) to States, local governments,

and other public and private nonprofit organizations, in order

to enable such governments and organizations to—

(A) interpret regulations and assist in the application

process for Federal assistance, including grants;

(B) provide assistance on the ways in which Federal

programs, other than those authorized under this Act, may

best be coordinated to complement the objectives of this

Act;

(C) develop recommendations and program ideas based

on regional specific issues in serving the homeless population; and

(D) establish a schedule for biennial regional workshops to be held by the Council in each of the 10 standard

Federal regions to further carry out and provide the assistance described in subparagraphs (A), (B), and (C) and

other appropriate assistance as necessary, of which—

(i) not less than 5 such workshops shall be held by

September 30, 1989; and

(ii) at least 1 such workshop shall be held in each

of the 10 Federal regions every 2 years, beginning on

September 30, 1988;

(5) collect and disseminate information relating to homeless individuals;
Sec. 203 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 746

1The date of enactment was July 22, 1987.

(6) prepare the annual reports required in subsection

(c)(2); and

(7) prepare and distribute to States (including State contact persons), local governments, and other public and private

nonprofit organizations, a bimonthly bulletin that describes the

Federal resources available to them to assist the homeless, including current information regarding application deadlines

and appropriate persons to contact in each Federal agency providing the resources.

(b) AUTHORITY.—In carrying out subsection (a), the Council

may—

(1) arrange Federal, regional, State, and local conferences

for the purpose of developing and coordinating effective programs and activities to assist homeless individuals; and

(2) publish a newsletter concerning Federal, State, and

local programs that are effectively meeting the needs of homeless individuals.

(c) REPORTS.—

(1) Within 90 days after the date of the enactment of this

Act, 1 and annually thereafter, the head of each Federal agency

that is a member of the Council shall prepare and transmit to

the Congress and the Council a report that describes—

(A) each program to assist homeless individuals administered by such agency and the number of homeless individuals served by such program;

(B) impediments, including any statutory and regulatory restrictions, to the use by homeless individuals of

each such program and to obtaining services or benefits

under each such program; and

(C) efforts made by such agency to increase the opportunities for homeless individuals to obtain shelter, food,

and supportive services.

(2) The Council shall prepare and transmit to the President and the Congress an annual report that—

(A) assesses the nature and extent of the problems relating to homelessness and the needs of homeless individuals;

(B) provides a comprehensive and detailed description

of the activities and accomplishments of the Federal Government in resolving the problems and meeting the needs

assessed pursuant to subparagraph (A);

(C) describes the accomplishments and activities of the

Council, in working with Federal, State, and local agencies

and public and private organizations in order to provide

assistance to homeless individuals;

(D) assesses the level of Federal assistance necessary

to adequately resolve the problems and meet the needs assessed pursuant to subparagraph (A); and

(E) specifies any recommendations of the Council for

appropriate and necessary legislative and administrative

actions to resolve such problems and meet such needs.

(d) NOTIFICATION OF OTHER FEDERAL AGENCIES.—If, in monitoring and evaluating programs and activities to assist homeless
747 Sec. 205 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

individuals conducted by other Federal agencies, the Council determines that any significant problem, abuse, or deficiency exists in

the administration of the program or activity of any Federal agency, the Council shall submit a notice of the determination of the

Council to the Inspector General of the Federal agency (or the head

of the Federal agency, in the case of a Federal agency that has no

Inspector General).

(e) PROGRAM TIMETABLES.—Not later than 90 days after the

date of the enactment of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, the head of each Federal agency

that is a member of the Council and responsible for administering

a program under this Act shall provide to the Council a timetable

regarding program funding availability and application deadlines.

The Council shall furnish such information to each State (including

the State contact person).

SEC. 204. ø42 U.S.C. 11314¿ DIRECTOR AND STAFF.

(a) DIRECTOR.—The Council shall appoint an Executive Director, who shall be compensated at a rate not to exceed the rate of

basic pay payable for level V of the Executive Schedule under section 5316 of title 5, United States Code. The Council shall appoint

an Executive Director at the first meeting of the Council held

under section 202(c).

(b) ADDITIONAL PERSONNEL.—With the approval of the Council,

the Executive Director of the Council may appoint and fix the compensation of such additional personnel as the Executive Director

considers necessary to carry out the duties of the Council.

(c) DETAILS FROM OTHER AGENCIES.—Upon request of the

Council, the head of any Federal agency may detail, on a reimbursable basis, any of the personnel of such agency to the Council to

assist the Council in carrying out its duties under this title. Upon

request of the Council, the Secretary of Health and Human Services shall detail, on a reimbursable basis, any of the personnel of

the Department of Health and Human Services who have served

the Federal Task Force on the Homeless of the Department to assist the Council in carrying out its duties under this title.

(d) ADMINISTRATIVE SUPPORT.—The Secretary of Housing and

Urban Development shall provide the Council with such administrative and support services as are necessary to ensure that the

Council carries out its functions under this title in an efficient and

expeditious manner.

(e) EXPERTS AND CONSULTANTS.—With the approval of the

Council, the Executive Director of the Council may procure temporary and intermittent services under section 3109(b) of title 5,

United States Code.

SEC. 205. ø42 U.S.C. 11315¿ POWERS.

(a) MEETINGS.—For the purpose of carrying out this title, the

Council may hold such meetings, and sit and act at such times and

places, as the Council considers appropriate.

(b) DELEGATION.—Any member or employee of the Council

may, if authorized by the Council, take any action that the Council

is authorized to take in this title.

(c) INFORMATION.—The Council may secure directly from any

Federal agency such information as may be necessary to enable the

Council to carry out this title. Upon request of the Chairperson of
Sec. 206 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 748

the Council, the head of such agency shall furnish such information

to the Council.

(d) DONATIONS.—The Council may accept, use, and dispose of

gifts or donations of services or property.

(e) MAILS.—The Council may use the United States mails in

the same manner and under the same conditions as other Federal

agencies.

SEC. 206. ø42 U.S.C. 11316¿ TRANSFER OF FUNCTIONS.

(a) TRANSFERS FROM HHS TASK FORCE.—The Council shall be

the successor to the Federal Task Force on the Homeless of the Department of Health and Human Services. The property, records,

and undistributed program funds of the Task Force shall be transferred to the Council.

(b) TERMINATION OF HHS TASK FORCE.—The Secretary of

Health and Human Services shall terminate the Federal Task

Force on the Homeless of the Department of Health and Human

Services as soon as practicable following the first meeting of the

Council.

SEC. 207. ø42 U.S.C. 11317¿ DEFINITIONS.

For purposes of this title:

(1) The term ‘‘Council’’ means the Interagency Council on

the Homeless established in section 201.

(2) The term ‘‘Federal agency’’ has the meaning given the

term ‘‘agency’’ in section 551(1) of title 5, United States Code.

SEC. 208. ø42 U.S.C. 11318¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this title

$1,500,000 for fiscal year 1993 and $1,563,000 for fiscal year 1994.

SEC. 209. ø42 U.S.C. 11319¿ TERMINATION.

The Council shall cease to exist, and the requirements of this

title shall terminate, on October 1, 2005.

SEC. 210. ø42 U.S.C. 11320¿ ENCOURAGEMENT OF STATE INVOLVEMENT.

(a) STATE CONTACT PERSONS.—Each State shall designate an

individual to serve as a State contact person for the purpose of receiving and disseminating information and communications received from the Council, including the bimonthly bulletin described

in section 203(a)(7).

(b) STATE INTERAGENCY COUNCILS AND LEAD AGENCIES.—Each

State is encouraged to establish a State interagency council on the

homeless or designate a lead agency for the State for the purpose

of assuming primary responsibility for coordinating and interacting

with the Council and State and local agencies as necessary.
749 Sec. 302 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1The date of enactment was July 22, 1987.

TITLE III—FEDERAL EMERGENCY MANAGEMENT FOOD AND SHELTER PROGRAM

Subtitle A—Administrative Provisions

SEC. 301. ø42 U.S.C. 11331¿ EMERGENCY FOOD AND SHELTER PROGRAM

NATIONAL BOARD.

(a) ESTABLISHMENT.—There is established to carry out the provisions of this title the Emergency Food and Shelter Program National Board. The Director of the Federal Emergency Management

Agency shall constitute the National Board in accordance with subsection (b) in administering the program under this title.

(b) MEMBERS.—The National Board shall consist of the Director and 6 members appointed by the Director. The initial members

of the National Board shall be appointed by the Director not later

than 30 days after the date of the enactment of this Act.1 Each

such member shall be appointed from among individuals nominated by 1 of the following organizations:

(1) The United Way of America.

(2) The Salvation Army.

(3) The National Council of Churches of Christ in the

U.S.A.

(4) Catholic Charities U.S.A.

(5) The Council of Jewish Federations, Inc.

(6) The American Red Cross.

(c) CHAIRPERSON.—The Director shall be the Chairperson of

the National Board.

(d) OTHER ACTIVITIES.—Except as otherwise specifically provided in this title, the National Board shall establish its own procedures and policies for the conduct of its affairs.

(e) TRANSFERS FROM PREVIOUS NATIONAL BOARD.—Upon the

appointment of members to the National Board under subsection (b)—

(1) the national board constituted under the emergency

food and shelter program established pursuant to section

101(g) of Public Law 99–500 or Public Law 99–591 shall cease

to exist; and

(2) the personnel, property, records, and undistributed program funds of such national board shall be transferred to the

National Board.

SEC. 302. ø42 U.S.C. 11332¿ LOCAL BOARDS.

(a) ESTABLISHMENT.—Each locality designated by the National

Board shall constitute a local board for the purpose of determining

how program funds allotted to the locality will be distributed. The

local board shall consist, to the extent practicable, of representatives of the same organizations as the National Board, except that

the mayor or other appropriate heads of government will replace

the Federal members, and except that each local board administering program funds for a locality within which is located a reservation (as such term is defined in section 3(d) of the Indian Fi-
Sec. 303 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 750

nancing Act of 1974 (25 U.S.C. 1452(d)), or a portion thereof, shall

include a board member who is a member of an Indian tribe (as

such term is defined in section 102(a)(17) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(17)). The chairperson of the local board shall be elected by a majority of the members of the local board. Local boards are encouraged to expand participation of other private nonprofit organizations on the local

board.

(b) RESPONSIBILITIES.—Each local board shall—

(1) determine which private nonprofit organizations or

public organizations of the local government in the individual

locality shall receive grants to act as service providers;

(2) monitor recipient service providers for program compliance;

(3) reallocate funds among service providers;

(4) ensure proper reporting; and

(5) coordinate with other Federal, State, and local government assistance programs available in the locality.

SEC. 303. ø42 U.S.C. 11333¿ ROLE OF FEDERAL EMERGENCY MANAGEMENT AGENCY.

(a) IN GENERAL.—The Director shall provide the National

Board with administrative support and act as Federal liaison to the

National Board.

(b) SPECIFIC SUPPORT ACTIVITIES.—The Director shall—

(1) make available to the National Board, upon request,

the services of the legal counsel and Inspector General of the

Federal Emergency Management Agency;

(2) assign clerical personnel to the National Board on a

temporary basis; and

(3) conduct audits of the National Board annually and at

such other times as may be appropriate.

SEC. 304. ø42 U.S.C. 11334¿ RECORDS AND AUDIT OF NATIONAL BOARD

AND RECIPIENTS OF ASSISTANCE.

(a) ANNUAL INDEPENDENT AUDIT OF NATIONAL BOARD.—

(1) The accounts of the National Board shall be audited

annually in accordance with generally accepted auditing standards by independent certified public accountants or independent licensed public accountants certified or licensed by a

regulatory authority of a State or other political subdivision of

the United States. The audits shall be conducted at the place

or places where the accounts of the National Board are normally kept. All books, accounts, financial records, reports, files,

and all other papers, things, or property belonging to or in use

by the National Board and necessary to facilitate the audits

shall be made available to the person or persons conducting

the audits, and full facilities for verifying transactions with

any assets held by depositories, fiscal agents, and custodians

shall be afforded to such person or persons.

(2) The report of each such independent audit shall be included in the annual report required in section 305. Such report shall set forth the scope of the audit and include such

statements as are necessary to present fairly the assets and liabilities of the National Board, surplus or deficit, with an analysis of the changes during the year, supplemented in reason-
751 Sec. 313 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

able detail by a statement of the income and expenses of the

National Board during the year, and a statement of the application of funds, together with the opinion of the independent

auditor of such statements.

(b) ACCESS TO RECORDS OF RECIPIENTS OF ASSISTANCE.—

(1) Each recipient of assistance under this title shall keep

such records as may be reasonably necessary to fully disclose

the amount and the disposition by such recipient of the proceeds of such assistance, the total cost of the project or undertaking in connection with which such assistance is given or

used, and the amount and nature of that portion of the cost of

the project or undertaking supplied by other sources, and such

other records as will facilitate an effective audit.

(2) The National Board, or any of its duly authorized representatives, shall have access for the purpose of audit and examination to any books, documents, papers, and records of the

recipient that are pertinent to assistance received under this

title.

(c) AUTHORITY OF COMPTROLLER GENERAL.—The Comptroller

General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also have access to

any books, documents, papers, and records of the National Board

and recipients for such purpose.

SEC. 305. ø42 U.S.C. 11335¿ ANNUAL REPORT.

The National Board shall transmit to the Congress an annual

report covering each year in which it conducts activities with funds

made available under this title.

Subtitle B—Emergency Food and Shelter Grants

SEC. 311. ø42 U.S.C. 11341¿ GRANTS BY THE DIRECTOR.

Not later than 30 days following the date on which appropriations become available to carry out this subtitle, the Director shall

award a grant for the full amount that the Congress appropriates

for the program under this subtitle to the National Board for the

purpose of providing emergency food and shelter to needy individuals through private nonprofit organizations and local governments

in accordance with section 313.

SEC. 312. ø42 U.S.C. 11342¿ RETENTION OF INTEREST EARNED.

Interest accrued on the balance of any grant to the National

Board shall be available to the National Board for reallocation, and

total administrative costs shall be determined based on total

amount of funds available, including interest and any private contributions that are made to the National Board.

SEC. 313. ø42 U.S.C. 11343¿ PURPOSES OF GRANTS.

(a) ELIGIBLE ACTIVITIES.—Grants to the National Board may

be used—

(1) to supplement and expand ongoing efforts to provide

shelter, food, and supportive services for homeless individuals

with sensitivity to the transition from temporary shelter to

permanent homes, and attention to the special needs of homeless individuals with mental and physical disabilities and ill-
Sec. 314 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 752

nesses, and to facilitate access for homeless individuals to

other sources of services and benefits;

(2) to strengthen efforts to create more effective and innovative local programs by providing funding for them; and

(3) to conduct minimum rehabilitation of existing mass

shelter or mass feeding facilities, but only to the extent necessary to make facilities safe, sanitary, and bring them into

compliance with local building codes.

(b) LIMITATIONS ON ACTIVITIES.— (1) The National Board may only provide funding provided

under this subtitle for—

(A) programs undertaken by private nonprofit organizations and local governments; and

(B) programs that are consistent with the purposes of

this title.

(2) The National Board may not carry out programs directly.

SEC. 314. ø42 U.S.C. 11344¿ LIMITATION ON CERTAIN COSTS.

Not more than 5 percent of the total amount appropriated for

the emergency food and shelter program for each fiscal year may

be expended for the costs of administration.

SEC. 315. ø42 U.S.C. 11345¿ DISBURSEMENT OF FUNDS.

Any amount made available by appropriation Acts under this

title shall be disbursed by the National Board before the expiration

of the 3-month period beginning on the date on which such amount

becomes available.

SEC. 316. ø42 U.S.C. 11346¿ PROGRAM GUIDELINES.

(a) GUIDELINES.—The National Board shall establish written

guidelines for carrying out the program under this subtitle, including—

(1) methods for identifying localities with the highest need

for emergency food and shelter assistance;

(2) methods for determining the amount and distribution

to such localities;

(3) eligible program costs, including maximum flexibility in

meeting currently existing needs;

(4) guidelines specifying the responsibilities and reporting

requirements of the National Board, its recipients, and service

providers;

(5) guidelines requiring each private nonprofit organization

and local government carrying out a local emergency food and

shelter program with amounts provided under this subtitle, to

the maximum extent practicable, to involve homeless individuals and families, through employment, volunteer services, or

otherwise, in providing emergency food and shelter and in otherwise carrying out the local program; and

(6) guidelines requiring each private nonprofit organization

and local government carrying out a local emergency food and

shelter program with amounts provided under this subtitle to

provide for the participation of not less than 1 homeless individual or former homeless individual on the board of directors

or other equivalent policy making entity of the organization or

governmental agency to the extent that such entity considers

and makes policies and decisions regarding the local program
753 Sec. 322 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

of the organization or locality; except that such guidelines may

grant waivers to applicants unable to meet such requirement

if the organization or government agrees to otherwise consult

with homeless or formerly homeless individuals in considering

and making such policies and decisions.

(b) PUBLICATION.—Guidelines established under subsection (a)

shall be published annually, and whenever modified, in the Federal

Register. The National Board shall not be subject to the procedural

rulemaking requirements of subchapter II of chapter 5 of title 5,

United States Code.

Subtitle C—General Provisions

SEC. 321. ø42 U.S.C. 11351¿ DEFINITIONS.

For purposes of this title:

(1) The term ‘‘Director’’ means the Director of the Federal

Emergency Management Agency.

(2) The term ‘‘emergency shelter’’ means a facility all or a

part of which is used or designed to be used to provide temporary housing.

(3) The term ‘‘local government’’ means a unit of general

purpose local government.

(4) The term ‘‘locality’’ means the geographical area within

the jurisdiction of a local government.

(5) The term ‘‘National Board’’ means the Emergency Food

and Shelter Program National Board.

(6) The term ‘‘private nonprofit organization’’ means an

organization—

(A) no part of the net earnings of which inures to the

benefit of any member, founder, contributor, or individual;

(B) that has a voluntary board;

(C) that has an accounting system, or has designated

a fiscal agent in accordance with requirements established

by the Director; and

(D) that practices nondiscrimination in the provision

of assistance.

(7) The term ‘‘State’’ means each of the several States, the

District of Columbia, the Commonwealth of Puerto Rico, the

Virgin Islands, Guam, American Samoa, the Northern Mariana

Islands, the Trust Territory of the Pacific Islands, and any

other territory or possession of the United States.

SEC. 322. ø42 U.S.C. 11352¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this title

$180,000,000 for fiscal year 1993 and $187,560,000 for fiscal year

1994.
Sec. 401 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 754

TITLE IV—HOUSING ASSISTANCE

Subtitle A—Comprehensive Homeless Assistance

Plan

SEC. 401. ø42 U.S.C. 11361¿ HOUSING AFFORDABILITY STRATEGY.

Assistance may be made under this title only if the grantee

certifies that it is following—

(1) a current housing affordability strategy which has been

approved by the Secretary in accordance with section 105 of

the Cranston-Gonzalez National Affordable Housing Act, or

(2) a comprehensive homeless assistance plan which was

approved by the Secretary during the 180-day period beginning

on the date of enactment of the Cranston-Gonzalez National

Affordable Housing Act, or during such longer period as may

be prescribed by the Secretary in any case for good cause.

SEC. 402. ø42 U.S.C. 11362¿ DISCHARGE COORDINATION POLICY.

The Secretary may not provide a grant under this title for any

governmental entity serving as an applicant unless the applicant

agrees to develop and implement, to the maximum extent practicable and where appropriate, policies and protocols for the discharge of persons from publicly funded institutions or systems of

care (such as health care facilities, foster care or other youth facilities, or correction programs and institutions) in order to prevent

such discharge from immediately resulting in homelessness for

such persons.

Subtitle B—Emergency Shelter Grants

Program

SEC. 411. ø42 U.S.C. 11371¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘local government’’ means a unit of general

purpose local government.

(2) The term ‘‘locality’’ means the geographical area within

the jurisdiction of a local government.

(3) The term ‘‘metropolitan city’’ has the meaning given

such term in section 102 of the Housing and Community Development Act of 1974.

(4) The term ‘‘operating costs’’ means expenses incurred by

a recipient operating a facility assisted under this subtitle with

respect to—

(A) the administration, maintenance, repair, and security of such housing; and

(B) utilities, fuels, furnishings, and equipment for such

housing.

(5) The term ‘‘private nonprofit organization’’ means a secular or religious organization described in section 501(c) of the

Internal Revenue Code of 1986 that is exempt from taxation

under subtitle A of such Code, has an accounting system and

a voluntary board, and practices nondiscrimination in the provision of assistance.
755 Sec. 413 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

(6) The term ‘‘recipient’’ means any governmental or private nonprofit entity that is approved by the Secretary as to

financial responsibility.

(7) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(8) The term ‘‘State’’ means each of the several States, the

District of Columbia, the Commonwealth of Puerto Rico, the

Virgin Islands, Guam, American Samoa, the Northern Mariana

Islands, the Trust Territory of the Pacific Islands, and any

other territory or possession of the United States.

(9) The term ‘‘urban county’’ has the meaning given such

term in section 102 of the Housing and Community Development Act of 1974.

ø(10) [Repealed.]¿

SEC. 412. ø42 U.S.C. 11372¿ GRANT ASSISTANCE.

The Secretary of Housing and Urban Development shall, to the

extent of amounts approved in appropriation Acts under section

417, make grants to States and local governments (and to private

nonprofit organizations providing assistance to homeless individuals, in the case of grants made with reallocated amounts) in order

to carry out activities described in section 414.

SEC. 413. ø42 U.S.C. 11373¿ ALLOCATION AND DISTRIBUTION OF ASSISTANCE.

(a) IN GENERAL.—The Secretary shall allocate assistance under

this subtitle to metropolitan cities, urban counties, and States (for

distribution to local governments and private nonprofit organizations in the States) in a manner that ensures that the percentage

of the total amount available under this subtitle for any fiscal year

that is allocated to any State, metropolitan city, or urban county

is equal to the percentage of the total amount available for section

106 of the Housing and Community Development Act of 1974 for

such prior fiscal year that is allocated to such State, metropolitan

city, or urban county.

(b) MINIMUM ALLOCATION REQUIREMENT.—If, under the allocation provisions applicable under this subtitle, any metropolitan city

or urban county would receive a grant of less than 0.05 percent of

the amounts appropriated to carry out this subtitle for any fiscal

year, such amount shall instead be reallocated to the State, except

that any city that is located in a State that does not have counties

as local governments, that has a population greater than 40,000

but less than 50,000 as used in determining the fiscal year 1987

community development block grant program allocation, and that

was allocated in excess of $1,000,000 in community development

block grant funds in fiscal year 1987, shall receive directly the

amount allocated to such city under subsection (a).

(c) DISTRIBUTIONS TO NONPROFIT ORGANIZATIONS.—Any local

government receiving assistance under this subtitle may distribute

all or a portion of such assistance to private nonprofit organizations

providing assistance to homeless individuals. Any State receiving

assistance under this subtitle may distribute all or a portion of

such assistance to private nonprofit organizations providing assistance to homeless individuals, if the local government for the locality in which the project is located certifies that it approves of the

project.
Sec. 414 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 756

1Section 506(a)(3)(C)(i) of the Native American Housing Assistance and Self-Determination

Act of 1996, Pub. L. 104–330, 110 Stat. 4044, provides that this paragraph is amended ‘‘by striking ‘, or Indian tribe’ each place it appears’’. Because the matter to be struck does not appear

in this paragraph, the amendment could not be executed. Under section 107 of such Act (110

Stat. 4030; 25 U.S.C. 4101 note), the amendments were to take effect on October 1, 1997.

(d) REALLOCATION OF FUNDS.—

(1) The Secretary shall, not less than twice during each fiscal year, reallocate any assistance provided under this subtitle

that is unused or returned or that becomes available under

subsection (b).

(2) If a city or county eligible for a grant under subsection

(a) fails to obtain approval of its comprehensive plan during

the 90-day period following the date funds authorized by this

subtitle first become available for allocation during any fiscal

year, the amount that the city or county would have received

shall be available to the State in which the city or county is

located if the State has obtained approval of its comprehensive

plan. Any amounts that cannot be allocated to a State under

the preceding sentence shall be reallocated to other States,

counties, and cities that demonstrate extraordinary need or

large numbers of homeless individuals, as determined by the

Secretary.

(3) 1 If a State or Indian tribe fails to obtain approval of

its comprehensive plan during the 90-day period following the

date funds authorized by this subtitle first become available for

allocation during any fiscal year, the amount that the State or

Indian tribe would have received shall be reallocated to other

States and to cities and counties as applicable, that demonstrate extraordinary need or large numbers of homeless individuals, as determined by the Secretary.

(e) ALLOCATIONS TO TERRITORIES.—In addition to the other allocations required in this section, the Secretary shall (for amounts

appropriated after the date of enactment of this Act) allocate assistance under this subtitle to the Virgin Islands, Guam, American

Samoa, the Northern Mariana Islands, the Trust Territory of the

Pacific Islands, and any other territory or possession of the United

States, in accordance with an allocation formula established by the

Secretary.

SEC. 414. ø42 U.S.C. 11374¿ ELIGIBLE ACTIVITIES.

(a) IN GENERAL.—Assistance provided under this subtitle may

be used for the following activities relating to emergency shelter for

homeless individuals:

(1) The renovation, major rehabilitation, or conversion of

buildings to be used as emergency shelters.

(2) The provision of essential services, including services

concerned with employment, health, drug abuse, or education,

if—

(A) such services have not been provided by the local

government during any part of the immediately preceding

12-month period, or the use of assistance under this subtitle would complement those services; and

(B) not more than 30 percent of the aggregate amount

of all assistance to a State or local government under this

subtitle is used for activities under this paragraph.
757 Sec. 415 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1So in law. Probably intended to refer to the 30 percent limitation under subsection (a)(2)(B).

(3) Maintenance, operation, insurance, utilities, and furnishings, except that not more than 10 percent of the amount

of any grant received under this subtitle may be used for costs

of staff.

(4) Efforts to prevent homelessness, such as financial assistance to families who have received eviction notices or notices of termination of utility services if—

(A) the inability of the family to make the required

payments is due to a sudden reduction in income;

(B) the assistance is necessary to avoid the evicition or

termination of services;

(C) there is a reasonable prospect that the family will

be able to resume payments within a reasonable period of

time; and

(D) the assistance will not supplant funding for preexisting homelessness prevention activities from other

sources.

Activities that are eligible for assistance under this paragraph

shall include assistance to very low-income families who are

discharged from publicly funded institutions or systems of care

(such as health care facilities, foster care or other youth facilities, or correction programs and institutions). Not more than

30 percent of the aggregate amount of all assistance to a State

or local government under this subtitle may be used for activities under this paragraph.

(b) WAIVER AUTHORITY.—The Secretary may waive the 20 1

percent limitation on the use of assistance for essential services

contained in subsection (a)(2)(B), if the local government receiving

the assistance demonstrates that the other eligible activities under

the program are already being carried out in the locality with other

resources.

SEC. 415. ø42 U.S.C. 11375¿ RESPONSIBILITIES OF RECIPIENTS.

(a) MATCHING AMOUNTS.—

(1) Except as provided in paragraph (2), each recipient

under this subtitle shall be required to supplement the assistance provided under this subtitle with an equal amount of

funds from sources other than this subtitle. Each recipient

shall certify to the Secretary its compliance with this paragraph, and shall include with such certification a description of

the sources and amounts of such supplemental funds.

(2) Each recipient under this subtitle that is a State shall

be required to supplement the assistance provided under this

subtitle with an amount of funds from sources other than this

subtitle equal to the difference between the amount received

under this subtitle and $100,000. If the amount received by the

State is $100,000 or less, the State may not be required to supplement the assistance provided under this subtitle.

(3) In calculating the amount of supplemental funds provided by a recipient under this subtitle, a recipient may include the value of any donated material or building, the value

of any lease on a building, any salary paid to staff to carry out

the program of the recipient, and the value of the time and
Sec. 415 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 758

services contributed by volunteers to carry out the program of

the recipient at a rate determined by the Secretary.

(b) ADMINISTRATION OF ASSISTANCE.—Each recipient shall act

as the fiscal agent of the Secretary with respect to assistance provided to such recipient.

(c) CERTIFICATIONS ON USE OF ASSISTANCE.—Each recipient

shall certify to the Secretary that—

(1) it will—

(A) in the case of assistance involving major rehabilitation or conversion, maintain any building for which assistance is used under this subtitle as a shelter for homeless individuals and families for not less than a 10-year period;

(B) in the case of assistance involving rehabilitation

(other than major rehabilitation or conversion), maintain

any building for which assistance is used under this subtitle as a shelter for homeless individuals and families for

not less than a 3-year period; or

(C) in the case of assistance involving solely activities

described in paragraphs (2) and (3) of section 414(a), provide services or shelter to homeless individuals and families for the period during which such assistance is provided, without regard to a particular site or structure as

long as the same general population is served;

(2) any renovation carried out with assistance under this

subtitle shall be sufficient to ensure that the building involved

is safe and sanitary;

(3) it will assist homeless individuals in obtaining—

(A) appropriate supportive services, including permanent housing, medical and mental health treatment, counseling, supervision, and other services essential for achieving independent living; and

(B) other Federal, State, local, and private assistance

available for such individuals;

(4) in the case of a recipient that is a State, it will obtain

any matching amounts required under subsection (a) in a manner so that local governments, agencies, and local non-profit organizations receiving assistance from the grant that are least

capable of providing the recipient State with such matching

amounts receive the benefit of the $100,000 subtrahend under

subsection (a)(2);

(5) it will develop and implement procedures to ensure the

confidentiality of records pertaining to any individual provided

family violence prevention or treatment services under any

project assisted under this subtitle and that the address or location of any family violence shelter project assisted under this

subtitle will, except with written authorization of the person or

persons responsible for the operation of such shelter, not be

made public;

(6) activities undertaken by the recipient with assistance

under this subtitle are consistent with any housing strategy

submitted by the grantee in accordance with section 105 of the

Cranston-Gonzalez National Affordable Housing Act; and

(7) to the maximum extent practicable, it will involve,

through employment, volunteer services, or otherwise, home-
759 Sec. 416 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1The date of enactment was July 22, 1987.

less individuals and families in constructing, renovating, maintaining, and operating facilities assisted under this subtitle, in

providing services assisted under this subtitle, and in providing services for occupants of facilities assisted under this

subtitle.

(d) PARTICIPATION OF HOMELESS INDIVIDUALS.—The Secretary

shall, by regulation, require each recipient that is not a State to

provide for the participation of not less than 1 homeless individual

or former homeless individual on the board of directors or other

equivalent policymaking entity of such recipient, to the extent that

such entity considers and makes policies and decisions regarding

any facility, services, or other assistance of the recipient assisted

under this subtitle. The Secretary may grant waivers to recipients

unable to meet the requirement under the preceding sentence if the

recipient agrees to otherwise consult with homeless or formerly

homeless individuals in considering and making such policies and

decisions.

(e) TERMINATION OF ASSISTANCE.—If an individual or family

who receives assistance under this subtitle from a recipient violates

program requirements, the recipient may terminate assistance in

accordance with a formal process established by the recipient that

recognizes the rights of individuals affected, which may include a

hearing.

SEC. 416. ø42 U.S.C. 11376¿ ADMINISTRATIVE PROVISIONS.

(a) REGULATIONS.—Not later than 60 days after the date of enactment of this Act, 1 the Secretary shall by notice establish such

requirements as may be necessary to carry out the provisions of

this subtitle. Such requirements shall be subject to section 553 of

title 5, United States Code. The Secretary shall issue requirements

based on the initial notice before the expiration of the 12-month period following the date of enactment of this Act. Prior to the

issuance of such requirements in final form, the requirements established by the Secretary implementing the provisions of the

emergency shelter grants program under the provisions made effective by section 101(g) of Public Law 99–500 or Public Law 99–591

shall govern the emergency shelter grants program under this subtitle.

(b) INITIAL ALLOCATION OF ASSISTANCE.—Not later than the expiration of the 60-day period following the date of enactment of a

law providing appropriations to carry out this subtitle, the Secretary shall notify each State, metropolitan city, and urban county

that is to receive a direct grant of its allocation of assistance under

this subtitle. Such assistance shall be allocated and may be used

notwithstanding any failure of the Secretary to issue requirements

under subsection (a).

(c) MINIMUM STANDARDS OF HABITABILITY.—The Secretary

shall prescribe such minimum standards of habitability as the Secretary determines to be appropriate to ensure that emergency shelters assisted under this section are environments that provide appropriate privacy, safety, and sanitary and other health-related

conditions for homeless persons and families. Grantees are authorized to establish standards of habitability in addition to those prescribed by the Secretary.
Sec. 417 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 760

SEC. 417. ø42 U.S.C. 11377¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this subtitle $138,000,000 for fiscal year 1993 and $143,796,000 for fiscal

year 1994.

SEC. 418. ø42 U.S.C. 11378¿ ADMINISTRATIVE COSTS.

A recipient may use up to 5 percent of any annual grant received under this subtitle for administrative purposes. A recipient

State shall share the amount available for administrative purposes

pursuant to the preceding sentence with local governments funded

by the State.

Subtitle C—Supportive Housing Program

SEC. 421. ø42 U.S.C. 11381¿ PURPOSE.

The purpose of the program under this subtitle is to promote

the development of supportive housing and supportive services, including innovative approaches to assist homeless persons in the

transition from homelessness, and to promote the provision of supportive housing to homeless persons to enable them to live as independently as possible.

SEC. 422. ø42 U.S.C. 11382¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘applicant’’ means a State, metropolitan city,

urban county, governmental entity, private nonprofit organization, or community mental health association that is a public

nonprofit organization, that is eligible to receive assistance

under this subtitle and submits an application under section

426(a).

(2) The term ‘‘disability’’ means—

(A) a disability as defined in section 223 of the Social

Security Act,

(B) to be determined to have, pursuant to regulations

issued by the Secretary, a physical, mental, or emotional

impairment which (i) is expected to be of long-continued

and indefinite duration, (ii) substantially impedes an individual’s ability to live independently, and (iii) of such a nature that such ability could be improved by more suitable

housing conditions,

(C) a developmental disability as defined in section

102 of the Developmental Disabilities Assistance and Bill

of Rights Act of 2000, or

(D) the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agency

for acquired immunodeficiency syndrome.

Subparagraph (D) shall not be construed to limit eligibility

under subparagraphs (A) through (C) or the provisions referred

to in subparagraphs (A) through (C).

ø(3) [Repealed.]¿

(4) The term ‘‘metropolitan city’’ has the meaning given

the term in section 102 of the Housing and Community Development Act of 1974.
761 Sec. 423 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

(5) The term ‘‘operating costs’’ means expenses incurred by

a recipient operating supportive housing under this subtitle

with respect to—

(A) the administration, maintenance, repair, and security of such housing;

(B) utilities, fuel, furnishings, and equipment for such

housing; and

(C) the conducting of the assessment under section

426(c)(2).

(6) The term ‘‘outpatient health services’’ means outpatient

health care, outpatient mental health services, outpatient substance abuse services, and case management.

(7) The term ‘‘private nonprofit organization’’ means an

organization—

(A) no part of the net earnings of which inures to the

benefit of any member, founder, contributor, or individual;

(B) that has a voluntary board;

(C) that has an accounting system, or has designated

a fiscal agent in accordance with requirements established

by the Secretary; and

(D) that practices nondiscrimination in the provision

of assistance.

(8) The term ‘‘project’’ means a structure or structures (or

a portion of such structure or structures) that is acquired, rehabilitated, constructed, or leased with assistance provided

under this subtitle or with respect to which the Secretary provides technical assistance or annual payments for operating

costs under this subtitle, or supportive services.

(9) The term ‘‘recipient’’ means any governmental or nonprofit entity that receives assistance under this subtitle.

(10) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(11) The term ‘‘State’’ means each of the several States,

the District of Columbia, the Commonwealth of Puerto Rico,

the Virgin Islands, Guam, American Samoa, the Northern

Mariana Islands, and Palau.

(12) The term ‘‘supportive housing’’ means a project that

meets the requirements of section 424.

(13) The term ‘‘supportive services’’ means services under

section 425.

(14) The term ‘‘urban county’’ has the meaning given the

term in section 102 of the Housing and Community Development Act of 1974.

SEC. 423. ø42 U.S.C. 11383¿ ELIGIBLE ACTIVITIES.

(a) IN GENERAL.—The Secretary may provide any project with

one or more of the following types of assistance under this subtitle:

(1) ACQUISITION AND REHABILITATION.—A grant, in an

amount not to exceed $200,000, for the acquisition, rehabilitation, or acquisition and rehabilitation, of an existing structure

(including a small commercial property or office space) to provide supportive housing other than emergency shelter or to

provide supportive services; except that the Secretary may increase the dollar limitation under this sentence to not more

than $400,000 for areas that the Secretary finds have high ac-
Sec. 423 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 762

quisition and rehabilitation costs. The repayment of any outstanding debt owed on a loan made to purchase an existing

structure shall be considered to be a cost of acquisition eligible

for a grant under this paragraph if the structure was not used

as supportive housing, or to provide supportive services, before

the receipt of assistance.

(2) NEW CONSTRUCTION.—A grant, in an amount not to ex- ceed $400,000, for new construction of a structure to provide

supportive housing.

(3) LEASING.—A grant for leasing of an existing structure

or structures, or portions thereof, to provide supportive housing

or supportive services during the period covered by the application. Grant recipients may reapply for such assistance as needed to continue the use of such structure for purposes of this

subtitle.

(4) OPERATING COSTS.—Annual payments for operating

costs of housing assisted under this subtitle, not to exceed 75

percent of the annual operating costs of such housing. Grant

recipients may reapply for such assistance as needed to continue the use of the housing for purposes of this subtitle.

(5) SUPPORTIVE SERVICES.—A grant for costs of supportive

services provided to homeless individuals. Any recipient, including program recipients under title IV of this Act before the

date of the enactment of the Housing and Community Development Act of 1992, may reapply for such assistance or for the

renewal of such assistance to continue services funded under

prior grants or to provide other services.

(6) TECHNICAL ASSISTANCE.—Technical assistance in carrying out the purposes of this subtitle.

(7) MANAGEMENT INFORMATION SYSTEM.—A grant for the

costs of implementing and operating management information

systems for purposes of collecting unduplicated counts of homeless people and analyzing patterns of use of assistance funded

under this Act.

(b) USE RESTRICTIONS.—

(1) ACQUISITION, REHABILITATION, AND NEW CONSTRUCTION.—Projects assisted under subsection (a) (1) or (2) shall be

operated for not less than 20 years for the purpose specified in

the application.

(2) OTHER ASSISTANCE.—Projects assisted under subsection

(a) (3), (4), (5), or (6) (but not under subsection (a) (1) or (2))

shall be operated for the purposes specified in the application

for the duration of the period covered by the grant.

(3) CONVERSION.—If the Secretary determines that a

project is no longer needed for use as supportive housing and

approves the use of the project for the direct benefit of low-income persons pursuant to a request for such use by the recipient operating the project, the Secretary may authorize the recipient to convert the project to such use.

(c) REPAYMENT OF ASSISTANCE AND PREVENTION OF UNDUE

BENEFITS.—

(1) REPAYMENT.—The Secretary shall require recipients to

repay 100 percent of any assistance received under subsection

(a) (1) or (2) if the project ceases to be used as supportive housing within 10 years after the project is placed in service. If
763 Sec. 424 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

such project is used as supportive housing for more than 10

years, the Secretary shall reduce the percentage of the amount

required to be repaid by 10 percentage points for each year in

excess of 10 that the project is used as supportive housing.

(2) PREVENTION OF UNDUE BENEFITS.—Except as provided

in paragraph (3), upon any sale or other disposition of a project

assisted under subsection (a) (1) or (2) occurring before the expiration of the 20-year period beginning on the date that the

project is placed in service, the recipient shall comply with

such terms and conditions as the Secretary may prescribe to

prevent the recipient from unduly benefiting from such sale or

disposition.

(3) EXCEPTION.—A recipient shall not be required to comply with the terms and conditions prescribed under paragraphs

(1) and (2) if the sale or disposition of the project results in the

use of the project for the direct benefit of very low-income persons or if all of the proceeds are used to provide supportive

housing meeting the requirements of this subtitle.

SEC. 424. ø42 U.S.C. 11384¿ SUPPORTIVE HOUSING.

(a) IN GENERAL.—Housing providing supportive services for

homeless individuals shall be considered supportive housing for

purposes of this subtitle if—

(1) the housing is safe and sanitary and meets any applicable State and local housing codes and licensing requirements

in the jurisdiction in which the housing is located; and

(2) the housing—

(A) is transitional housing;

(B) is permanent housing for homeless persons with

disabilities; or

(C) is, or is part of, a particularly innovative project

for, or alternative methods of, meeting the immediate and

long-term needs of homeless individuals and families.

(b) TRANSITIONAL HOUSING.—For purposes of this section, the

term ‘‘transitional housing’’ means housing, the purpose of which

is to facilitate the movement of homeless individuals and families

to permanent housing within 24 months or such longer period as

the Secretary determines necessary. The Secretary may deny assistance for housing based on a violation of this subsection only if

the Secretary determines that a substantial number of homeless individuals or families have remained in the housing longer than

such period.

(c) PERMANENT HOUSING FOR HOMELESS PERSONS WITH DISABILITIES.—For purposes of this section, the term ‘‘permanent housing for homeless persons with disabilities’’ means community-based

housing for homeless persons with disabilities that provides longterm housing and supportive services for not more than—

(1) 8 such persons in a single structure or contiguous

structures;

(2) 16 such persons, but only if not more than 20 percent

of the units in a structure are designated for such persons; or

(3) more than 16 persons if the applicant demonstrates

that local market conditions dictate the development of a large

project and such development will achieve the neighborhood in-
Sec. 425 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 764

tegration objectives of the program within the context of the affected community.

(d) SINGLE ROOM OCCUPANCY DWELLINGS.—A project may provide supportive housing or supportive services in dwelling units

that do not contain bathrooms or kitchen facilities and are appropriate for use as supportive housing or in projects containing some

or all such dwelling units.

SEC. 425. ø42 U.S.C. 11385¿ SUPPORTIVE SERVICES.

(a) IN GENERAL.—To the extent practicable, each project shall

provide supportive services for residents of the project and homeless persons using the project, which may be designed by the recipient or participants.

(b) REQUIREMENTS.—Supportive services provided in connection with a project shall address the special needs of individuals

(such as homeless persons with disabilities and homeless families

with children) intended to be served by a project.

(c) SERVICES.—Supportive services may include such activities

as (A) establishing and operating a child care services program for

homeless families, (B) establishing and operating an employment

assistance program, (C) providing outpatient health services, food,

and case management, (D) providing assistance in obtaining permanent housing, employment counseling, and nutritional counseling, (E) providing security arrangements necessary for the protection of residents of supportive housing and for homeless persons

using the housing or project, (F) providing assistance in obtaining

other Federal, State, and local assistance available for such residents (including mental health benefits, employment counseling,

and medical assistance, but not including major medical equipment), and (G) providing other appropriate services.

(d) PROVISION OF SERVICES.—Services provided pursuant to

this section may be provided directly by the recipient or by contract

with other public or private service providers. Such services may

be provided to homeless individuals who do not reside in supportive

housing.

(e) COORDINATION WITH SECRETARY OF HEALTH AND HUMAN

SERVICES.—

(1) APPROVAL.—Promptly upon receipt of any application

for assistance under this subtitle that includes the provision of

outpatient health services, the Secretary of Housing and Urban

Development shall consult with the Secretary of Health and

Human Services with respect to the proposed outpatient health

services. If, within 45 days of such consultation, the Secretary

of Health and Human Services determines that the proposal

for delivery of the outpatient health services does not meet

guidelines for determining the appropriateness of such proposed services, the Secretary of Housing and Urban Development may require resubmission of the application, and the Secretary of Housing and Urban Development may not approve

such portion of the application unless and until such portion

has been resubmitted in a form that the Secretary of Health

and Human Services determines meets such guidelines.

(2) GUIDELINES.—The Secretary of Housing and Urban Development and the Secretary of Health and Human Services

shall jointly establish guidelines for determining the appro-
765 Sec. 426 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

priateness of proposed outpatient health services under this

section. Such guidelines shall include any provisions necessary

to enable the Secretary of Housing and Urban Development to

meet the time limits under this subtitle for the final selection

of applications for assistance.

SEC. 426. ø42 U.S.C. 11386¿ PROGRAM REQUIREMENTS.

(a) APPLICATIONS.—

(1) FORM AND PROCEDURE.—Applications for assistance

under this subtitle shall be submitted by applicants in the

form and in accordance with the procedures established by the

Secretary. The Secretary may not give preference or priority to

any application on the basis that the application was submitted by any particular type of applicant entity.

(2) CONTENTS.—The Secretary shall require that applications contain at a minimum—

(A) a description of the proposed project, including the

activities to be undertaken;

(B) a description of the size and characteristics of the

population that would occupy the supportive housing assisted under this subtitle;

(C) a description of the public and private resources

that are expected to be made available for the project;

(D) in the case of projects assisted under section

423(a) (1) or (2), assurances satisfactory to the Secretary

that the project will be operated for not less than 20 years

for the purpose specified in the application;

(E) in the case of projects assisted under this title that

do not receive assistance under such sections, annual assurances during the period specified in the application that

the project will be operated for the purpose specified in the

application for such period;

(F) a certification from the public official responsible

for submitting the comprehensive housing affordability

strategy under section 105 of the Cranston-Gonzalez National Affordable Housing Act for the State or unit of general local government within which the project is located

that the proposed project is consistent with the approved

housing strategy of such State or unit of general local government; and

(G) a certification that the applicant will comply with

the requirements of the Fair Housing Act, title VI of the

Civil Rights Act of 1964, section 504 of the Rehabilitation

Act of 1973, and the Age Discrimination Act of 1975, and

will affirmatively further fair housing.

(3) SITE CONTROL.—The Secretary shall require that each

application include reasonable assurances that the applicant

will own or have control of a site for the proposed project not

later than the expiration of the 12-month period beginning

upon notification of an award for grant assistance, unless the

application proposes providing supportive housing assisted

under section 423(a)(3) or housing that will eventually be

owned or controlled by the families and individuals served. An

applicant may obtain ownership or control of a suitable site different from the site specified in the application. If any recipi-
Sec. 426 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 766

ent fails to obtain ownership or control of the site within 12

months after notification of an award for grant assistance, the

grant shall be recaptured and reallocated under this subtitle.

(b) SELECTION CRITERIA.—The Secretary shall select applicants

approved by the Secretary as to financial responsibility to receive

assistance under this subtitle by a national competition based on

criteria established by the Secretary, which shall include—

(1) the ability of the applicant to develop and operate a

project;

(2) the innovative quality of the proposal in providing a

project;

(3) the need for the type of project proposed by the applicant in the area to be served;

(4) the extent to which the amount of assistance to be provided under this subtitle will be supplemented with resources

from other public and private sources;

(5) the cost-effectiveness of the proposed project;

(6) the extent to which the applicant has demonstrated coordination with other Federal, State, local, private and other

entities serving homeless persons in the planning and operation of the project, to the extent practicable; and

(7) such other factors as the Secretary determines to be appropriate to carry out this subtitle in an effective and efficient

manner.

(c) REQUIRED AGREEMENTS.—The Secretary may not provide

assistance for any project under this subtitle unless the applicant

agrees—

(1) to operate the proposed project in accordance with the

provisions of this subtitle;

(2) to conduct an ongoing assessment of the supportive

services required by homeless individuals served by the project

and the availability of such services to such individuals;

(3) to provide such residential supervision as the Secretary

determines is necessary to facilitate the adequate provision of

supportive services to the residents and users of the project;

(4) to monitor and report to the Secretary on the progress

of the project;

(5) to develop and implement procedures to ensure (A) the

confidentiality of records pertaining to any individual provided

family violence prevention or treatment services through any

project assisted under this subtitle, and (B) that the address or

location of any family violence shelter project assisted under

this subtitle will not be made public, except with written authorization of the person or persons responsible for the operation of such project;

(6) to the maximum extent practicable, to involve homeless

individuals and families, through employment, volunteer services, or otherwise, in constructing, rehabilitating, maintaining,

and operating the project assisted under this subtitle and in

providing supportive services for the project; and

(7) to comply with such other terms and conditions as the

Secretary may establish to carry out this subtitle in an effective and efficient manner.

(d) OCCUPANCY CHARGE.—Each homeless individual or family

residing in a project providing supportive housing may be required
767 Sec. 427 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

to pay an occupancy charge in an amount determined by the recipient providing the project, which may not exceed the amount determined under section 3(a) of the United States Housing Act of 1937.

Occupancy charges paid may be reserved, in whole or in part, to

assist residents in moving to permanent housing.

(e) MATCHING FUNDING.—Each recipient shall be required to

supplement the amount of assistance provided under paragraphs

(1) and (2) of section 423(a) with an equal amount of funds from

sources other than this subtitle.

(f) FLOOD PROTECTION STANDARDS.—Flood protection standards applicable to housing acquired, rehabilitated, constructed, or

assisted under this subtitle shall be no more restrictive than the

standards applicable under Executive Order No. 11988 (May 24,

1977) to the other programs under this title.

(g) PARTICIPATION OF HOMELESS INDIVIDUALS.—The Secretary

shall, by regulation, require each recipient to provide for the participation of not less than 1 homeless individual or former homeless

individual on the board of directors or other equivalent policymaking entity of the recipient, to the extent that such entity considers and makes policies and decisions regarding any project, supportive services, or assistance provided under this subtitle. The

Secretary may grant waivers to applicants unable to meet the requirement under the preceding sentence if the applicant agrees to

otherwise consult with homeless or formerly homeless individuals

in considering and making such policies and decisions.

(h) LIMITATION ON USE OF FUNDS.—No assistance received

under this subtitle (or any State or local government funds used to

supplement such assistance) may be used to replace other State or

local funds previously used, or designated for use, to assist homeless persons.

(i) LIMITATION ON ADMINISTRATIVE EXPENSES.—No recipient

may use more than 5 percent of a grant received under this subtitle for administrative purposes.

(j) TERMINATION OF ASSISTANCE.—If an individual or family

who receives assistance under this subtitle (not including residents

of an emergency shelter) from a recipient violates program requirements, the recipient may terminate assistance in accordance with

a formal process established by the recipient that recognizes the

rights of individuals receiving such assistance to due process of

law, which may include a hearing.

SEC. 427. ø42 U.S.C. 11387¿ REGULATIONS.

Not later than the expiration of the 90-day period beginning on

the date of the enactment of the Housing and Community Development Act of 1992, the Secretary shall issue interim regulations to

carry out this subtitle, which shall take effect upon issuance. The

Secretary shall issue final regulations to carry out this subtitle

after notice and opportunity for public comment regarding the interim regulations, pursuant to the provisions of section 553 of title

5, United States Code (notwithstanding subsections (a)(2), (b)(B),

and (d)(3) of such section). The duration of the period for public

comment shall not be less than 60 days, and the final regulations

shall be issued not later than the expiration of the 60-day period

beginning upon the conclusion of the comment period and shall

take effect upon issuance.
Sec. 428 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 768

SEC. 428. ø42 U.S.C. 11388¿ REPORTS TO CONGRESS.

The Secretary shall submit a report to the Congress annually,

summarizing the activities carried out under this subtitle and setting forth the findings, conclusions, and recommendations of the

Secretary as a result of the activities. The report shall be submitted not later than 4 months after the end of each fiscal year (except that, in the case of fiscal year 1993, the report shall be submitted not later than 6 months after the end of the fiscal year).

SEC. 429. ø42 U.S.C. 11389¿ AUTHORIZATION OF APPROPRIATIONS.

(a) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated to carry out this subtitle $204,000,000 for fiscal

year 1993 and $212,568,000 for fiscal year 1994.

(b) SET-ASIDES.—Of any amounts appropriated to carry out

this subtitle—

(1) not less than 25 percent shall be allocated to projects

designed primarily to serve homeless families with children;

(2) not less than 25 percent shall be allocated to projects

designed primarily to serve homeless persons with disabilities;

and

(3) not less than 10 percent shall be allocated for use only

for providing supportive services under sections 423(a)(5) and

425, not provided in conjunction with supportive housing.

(c) REALLOCATIONS.—If, following the receipt of applications for

the final funding round under this subtitle for any fiscal year, any

amount set aside for assistance pursuant to subsection (b) will not

be required to fund the approvable applications submitted for such

assistance, the Secretary shall reallocate such amount for other assistance pursuant to this subtitle.

Subtitle D—Safe Havens for Homeless

Individuals Demonstration Program

SEC. 431. ø42 U.S.C. 11391¿ ESTABLISHMENT OF DEMONSTRATION.

(a) IN GENERAL.—The Secretary may make grants to applicants to demonstrate the desirability and feasibility of providing

very low-cost housing, to be known as safe havens, to homeless persons who, at the time, are unwilling or unable to participate in

mental health treatment programs or to receive other supportive

services.

(b) PURPOSES.—The demonstration program carried out under

this subtitle shall demonstrate—

(1) whether and on what basis eligible persons choose to

reside in safe havens;

(2) the extent to which, after a period of residence in a safe

haven, residents are willing to participate in mental health

treatment programs, substance abuse treatment, or other

treatment programs and to move toward a more traditional

form of permanent housing and the availability in the community of such permanent housing and treatment programs;

(3) whether safe havens are cost-effective in comparison

with other alternatives for eligible persons; and
769 Sec. 432 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

(4) the various ways in which safe havens may be used to

provide accommodations and low-demand services and referrals for eligible persons.

SEC. 432. ø42 U.S.C. 11392¿ DEFINITIONS.

For purposes of this subtitle:

(1) APPLICANT.—The term ‘‘applicant’’ means a nonprofit

corporation, public nonprofit organization, State, or unit of general local government.

(2) ELIGIBLE PERSON.—The term ‘‘eligible person’’ means

an individual who—

(A) is seriously mentally ill and resides primarily in a

public or private place not designed for, or ordinarily used

as, a regular sleeping accommodation for human beings,

which may include occasional residence in an emergency

shelter; and

(B) is currently unwilling or unable to participate in

mental health or substance abuse treatment programs or

to receive other supportive services.

Such term does not include a person whose sole impairment is

substance abuse.

(3) FACILITY.—The term ‘‘facility’’ means a structure or a

clearly identifiable portion of a structure that is assisted under

this subtitle.

(4) LOW-DEMAND SERVICES AND REFERRALS.—The term

‘‘low-demand services and referrals’’ means the provision of

health care, mental health, substance abuse, and other supportive services and referrals for services in a noncoercive

manner, which may include medication management, education, counseling, job training, and assistance in obtaining entitlement benefits and in obtaining other supportive services

including mental health treatment and substance abuse treatment.

(5) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ means an organization—

(A) no part of the net earnings of which inures to the

benefit of any member, founder, contributor, or individual;

(B) that has a voluntary board;

(C) that has an accounting system, or has designated

a fiscal agent in accordance with requirements established

by the Secretary; and

(D) that practices nondiscrimination in the provision

of assistance.

(6) OPERATING COSTS.—The term ‘‘operating costs’’ means

expenses incurred by a recipient operating a safe haven under

this subtitle with respect to—

(A) the operation of the facility, including the cost of

24-hour management, and maintenance, repair, and security;

(B) utilities, fuel, furnishings, and equipment for such

housing; and

(C) other reasonable costs necessary to the operation

of the facility, which may include appropriate outreach and

drop-in services.
Sec. 433 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 770

(7) RECIPIENT.—The term ‘‘recipient’’ means an applicant

that receives assistance under this subtitle.

(8) SAFE HAVEN.—The term ‘‘safe haven’’ means a facility—

(A) that provides 24-hour residence for eligible persons

who may reside for an unspecified duration;

(B) that provides private or semiprivate accommodations;

(C) that may provide for the common use of kitchen facilities, dining rooms, and bathrooms;

(D) that may provide supportive services to eligible

persons who are not residents on a drop-in basis; and

(E) in which overnight occupancy is limited to no more

than 25 persons.

(9) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(10) SERIOUSLY MENTALLY ILL.—The term ‘‘seriously mentally ill’’ means having a severe and persistent mental or emotional impairment that seriously limits a person’s ability to live

independently.

(11) STATE.—The term ‘‘State’’ means each of the several

States, the District of Columbia, the Commonwealth of Puerto

Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, and Palau.

(12) UNIT OF GENERAL LOCAL GOVERNMENT.—The term

‘‘unit of general local government’’ has the meaning given the

term in section 102(a) of the Housing and Community Development Act of 1974.

SEC. 433. ø42 U.S.C. 11393¿ PROGRAM ASSISTANCE.

(a) IN GENERAL.—

(1) ELIGIBLE ACTIVITIES.—The Secretary may provide assistance with respect to a program under this subtitle for the

following activities:

(A) The construction of a structure for use in providing

a safe haven or the acquisition, rehabilitation, or acquisition and rehabilitation of an existing structure for use in

providing a safe haven.

(B) The leasing of an existing structure for use in providing a safe haven.

(C) To cover the operating costs of a safe haven.

(D) To cover the costs of administering a safe haven

program, not to exceed 10 percent of the amounts made

available for activities under subparagraphs (A) through

(C).

(E) Outreach activities designed to inform eligible persons about and attract them to a safe haven program.

(F) The provision of low-demand services and referrals

for residents of a safe haven, except that grants under this

subtitle may not be used to cover more than 50 percent of

the cost of such services and referrals.

(G) Other activities that further the purposes of this

subtitle, including the modification of an existing facility to

use a portion of the facility to provide with a safe haven.

(2) PERIOD OF ASSISTANCE.—Assistance may be provided to

any safe haven program for activities under subparagraphs (B)
771 Sec. 434 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

through (F) of paragraph (1) for a period of not more than 5

years, except that the Secretary may, upon application by the

recipient, provide assistance for an additional period of time,

not to exceed 5 years, subject to—

(A) the determination of the Secretary that the performance of the recipient under this subtitle is satisfactory; and

(B) the availability of appropriations for such purpose.

(3) LIMIT ON AMOUNT.—The total amount of assistance provided to any recipient under this subsection may not exceed

$400,000 in any 5-year period.

(b) MATCHING FUNDING.—

(1) IN GENERAL.—Each recipient shall supplement a grant

provided under this subtitle with an equal amount of funds

from sources other than this subtitle. Each recipient shall certify to the Secretary that it has complied with this paragraph,

and shall include with the certification a description of the

sources and amounts of such supplemental funds.

(2) CALCULATION OF AMOUNTS.—In calculating the amount

of supplemental funds required under paragraph (1), a recipient may include any funds derived from another source, the

value of any lease on a building, any salary paid to staff to

carry out the program of the recipient, and the value of the

time and services contributed by volunteers, at a rate determined by the Secretary, to carry out the program of the recipient.

SEC. 434. ø42 U.S.C. 11394¿ PROGRAM REQUIREMENTS.

(a) APPLICATIONS.—Applications for assistance under this subtitle shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish, and

such applications shall contain at a minimum—

(1) a description of the proposed facility;

(2) a description of the number and characteristics of the

eligible persons expected to occupy the safe haven;

(3) a plan for identifying and selecting eligible persons to

participate;

(4) a program plan, containing a description of the

method—

(A) of operation of the facility, including staffing plans

and facility rules;

(B) by which the applicant will secure supportive services for residents of the safe haven;

(C) by which the applicant will monitor the willingness of residents to engage in treatment programs and

other supportive services;

(D) by which access to supportive services will be secured for residents willing to use them;

(E) by which access to permanent housing with appropriate services, such as the Shelter Plus Care program

under subtitle F, will be sought after residents are stabilized; and

(F) by which the applicant will conduct outreach activities to facilitate the entrance of eligible persons into the

safe haven;
Sec. 434 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 772

(5) a plan to ensure that adequate security precautions are

taken to make the facility safe for the residents;

(6) an estimate of program costs;

(7) a description of the resources that are expected to be

made available in accordance with section 433(b);

(8) assurances satisfactory to the Secretary that the facility will have 24-hour, on-site management, if practicable;

(9) assurances satisfactory to the Secretary that the facility will be operated for the purpose specified in the application

for each year in which assistance is provided under this subtitle;

(10) a certification by the public official responsible for

submitting the comprehensive housing affordability strategy

under section 105 of the Cranston-Gonzalez National Affordable Housing Act for the State or unit of general local government within which the facility is located that the proposed activities are consistent with the approved housing strategy for

such jurisdiction;

(11) a certification that the applicant will comply with the

requirements of the Fair Housing Act, title VI of the Civil

Rights Act of 1964, section 504 of the Rehabilitation Act of

1973, and the Age Discrimination Act of 1975, and will affirmatively further fair housing;

(12) a plan for program evaluation based on information

that is collected on a periodic basis regarding the characteristics of the residents, including their movement in and out of

the safe haven, their willingness to use low-demand services

and referrals, the availability and quality of services used, and

the movement of residents toward a more traditional form of

permanent housing after a period of residency in the safe

haven; and

(13) such other information as the Secretary may require.

(b) SITE CONTROL.—The Secretary shall require that an applicant furnish reasonable assurances that the applicant will have

control of a site for the proposed facility not later than 1 year after

notification of an award of assistance under this subtitle. If an applicant fails to obtain control of the site within this period, the

grant shall be recaptured by the Secretary and reallocated for use

under this subtitle.

(c) SELECTION CRITERIA.—The Secretary shall establish selection criteria for selecting applicants to receive assistance under this

subtitle pursuant to a national competition, which shall include—

(1) the extent to which the applicant demonstrates the

ability to develop and operate a safe haven;

(2) the extent to which there is a need for a safe haven in

the jurisdiction in which the facility will be located;

(3) the extent to which the program would link eligible

persons to permanent housing and supportive services after

stabilization in a safe haven;

(4) the cost-effectiveness of the proposed program;

(5) providing for geographical diversity among applicants

selected to receive assistance;

(6) the extent to which the safe haven would meet the

need of the eligible persons proposed to be served by the safe

haven; and
773 Sec. 435 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

(7) such other factors as the Secretary determines to be appropriate for purposes of carrying out the program established

under this subtitle in an effective and efficient manner.

(d) REQUIRED AGREEMENTS.—The Secretary may not provide

assistance under this subtitle for any safe haven program unless

the applicant agrees—

(1) to develop and operate the proposed facility as a safe

haven in accordance with the provisions of this subtitle;

(2) to ensure that the facility meets any standards of habitability established by the Secretary;

(3) to provide low-demand services and referrals for the

residents of the safe haven;

(4) to prohibit the use of illegal drugs and alcohol in the

facility;

(5) to ensure that adequate security precautions are taken

to make the facility safe for the residents;

(6) not to establish limitations on the duration of residency;

(7) not to require participation in low-demand services and

referrals as a condition of occupancy;

(8) to monitor and report to the Secretary on progress in

carrying out the safe haven program;

(9) to the maximum extent practicable, to involve eligible

persons, through employment, volunteer services, or otherwise,

in renovating, maintaining, and operating facilities assisted

under this subtitle and in providing services assisted under

this subtitle;

(10) to provide for the participation of not less than 1

homeless individual or former homeless individual on the

board of directors or other equivalent policymaking entity of

such recipient (in accordance with regulations that the Secretary shall issue), to the extent that such entity considers and

makes policies and decisions regarding any facility or services

assisted under this subtitle, or to otherwise provide for the consultation and participation of such an individual in considering

and making such policies and decisions; and

(11) to comply with such other terms and conditions as the

Secretary may establish for purposes of carrying out the program established under this subtitle in an effective and efficient manner.

The Secretary may waive the applicability of the requirement

under paragraph (10) for an applicant that is unable to meet such

requirement, if the applicant agrees to otherwise consult with

homeless or formerly homeless individuals in considering and making such policies and decisions.

SEC. 435. ø42 U.S.C. 11395¿ OCCUPANCY CHARGE.

Each eligible person who resides in a facility assisted under

this subtitle shall pay an occupancy charge in an amount determined by the recipient, but not to exceed the amount determined

under section 3(a) of the United States Housing Act of 1937. The

occupancy charge may be phased in or reduced based on the type

of living accommodations provided. The recipient may waive occupancy charges for limited periods of time for residents unwilling or

unable to pay them. Occupancy charges paid may be reserved to
Sec. 436 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 774

assist residents in moving to a more traditional form of permanent

housing.

SEC. 436. ø42 U.S.C. 11396¿ TERMINATION OF ASSISTANCE.

If an eligible person who resides in a safe haven or who receives low-demand services or referrals endangers the safety, welfare, or health of other residents, or repeatedly violates a condition

of occupancy contained in the rules for the safe haven (as set forth

in the application submitted under this subtitle), the recipient may

terminate such residency or assistance in accordance with a formal

process established by the rules for the safe haven, which may include a hearing.

SEC. 437. ø42 U.S.C. 11397¿ EVALUATION AND REPORT.

The Secretary shall conduct an evaluation of the safe haven

demonstration program under this subtitle and shall submit a report to the Congress, not later than December 31, 1994, which

shall set forth the findings of the Secretary as a result of the evaluation.

SEC. 438. ø42 U.S.C. 11398¿ REGULATIONS.

(a) IN GENERAL.—The Secretary shall, by notice published in

the Federal Register, establish such requirements as may be necessary to carry out the amendments made by this subtitle.

(b) CONSULTATION.—In establishing requirements to carry out

the provisions of this subtitle, and in considering applications

under this subtitle, the Secretary shall consult with officials of the

appropriate agencies of the Department of Health and Human

Services and with representative provider and public interest

groups.

(c) ELIGIBILITY FOR SSI AND MEDICAID.—

(1) SUPPLEMENTAL SECURITY INCOME.—All provisions of the

Supplemental Security Income program under title XVI of the

Social Security Act and of State programs in supplementation

thereof shall apply to participants in the safe havens demonstration program under this subtitle, except that no individual living in a safe haven shall—

(A) be considered an inmate of a public institution (as

provided in section 1611(e)(1)(A) of such Act); or

(B) have benefits under such title XVI reduced or terminated because of the receipt of support and maintenance

(as provided in section 1612(a)(2)(A) of such Act), to the extent such support and maintenance is received as a result

of participation in the safe havens demonstration program.

(2) MEDICAID.—A safe haven shall not be considered a hospital, nursing facility, institution for mental disease as defined

under section 1905(i) of the Social Security Act, or any other

inpatient facility, for purposes of the program under title XIX

of such Act, and individuals shall not be denied eligibility for

medicaid because of residency in such residence.

SEC. 439. ø42 U.S.C. 11399¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to carry out this subtitle $62,000,000 for fiscal year 1993 and $64,604,000 for fiscal year

1994.
775 Sec. 441 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1Section 8(e)(2) of the United States Housing Act of 1937 was repealed by section 289(b)(1)

of the Cranston-Gonzalez National Affordable Housing Act, Pub. L. 101–625, effective on October 1, 1991, except that paragraph (2) of such section 289(b) provides that section 8(e)(2) ‘‘shall

remain in effect with respect to single-room occupancy dwellings as authorized by title IV of

the Stewart B. McKinney Homeless Assistance Act.’’. Section 289(a) of Pub. L. 101–625 provides

that no new grants shall be made under such section 8(e)(2) after October 1, 1991, except for

funds allocated for single room occupancy dwellings under title IV of the Stewart B. McKinney

Homeless Assistance Act.

Immediately before such repeal, section 8(e)(2) of the United States Housing Act of 1937 provided as follows: ‘‘(2) For the purpose of upgrading and thereby preserving the Nation’s housing stock, the Secretary is authorized to make assistance payments under this section directly or through public

housing agencies pursuant to contracts with owners or prospective owners who agree to upgrade

housing so as to make and keep such housing decent, safe, and sanitary through upgrading

which involves less than substantial rehabilitation, as such upgrading and rehabilitation are defined by the Secretary, and which shall involve a minimum expenditure of $3,000 for a unit, including its prorated share of work to be accomplished on common areas or systems. The Secretary

is authorized to prescribe such terms and conditions for contracts entered into under this section

pursuant to this paragraph as the Secretary determines to be necessary and appropriate, except

that such terms and conditions, to the maximum extent feasible, shall be consistent with terms

and conditions otherwise applicable with respect to other dwelling units assisted under this section. Notwithstanding subsection (c)(1) of this section, the Secretary may, in carrying out the preceding sentence, establish a maximum monthly rent (for units upgraded pursuant to this paragraph) which exceeds the fair market rental by not more than 20 per centum if such units are

located in an area where the Secretary finds cost levels so require, except that the Secretary may

approve maximum monthly rents which exceed the fair market rentals by more than 20 but not

more than 30 per centum where the Secretary determines that special circumstances warrant

such higher rent or where necessary to the implementation of a local housing assistance plan.

The Secretary is also authorized to make assistance available under this section pursuant to this

paragraph to any unit in a housing project which, on an overall basis, reflects the need for such

upgrading. The Secretary shall increase the amount of assistance provided under this paragraph

above the amount of assistance otherwise permitted by this paragraph and subsection (c)(1), if

the Secretary determines such increase necessary to assist in the sale of multi-family housing

projects owned by the Department of Housing and Urban Development. In order to maximize the

availability of low-income housing, in providing assistance under this paragraph, the Secretary

shall include in any calculation or determination regarding the amount of the assistance to be

made available the extent to which any proceeds are available from any tax credits provided

under section 42 of the Internal Revenue Code of 1986 (or from any syndication of such credits)

with respect to the housing. For each fiscal year, the Secretary may not provide assistance pursuant to this paragraph to any project for rehabilitation of more than 100 units. Assistance pursuant to this paragraph shall be allocated according to the formula established pursuant to section

213(d) of the Housing and Community Development Act of 1974, and awarded pursuant to a

competition under such section. The Secretary shall maintain a single listing of any assistance

provided pursuant to this paragraph, which shall include a statement identifying the owner and

location of the project to which assistance was made, the amount of the assistance, and the number of units assisted.’’. 2So in law.

Subtitle E—Miscellaneous Provisions

SEC. 441. ø42 U.S.C. 11401¿ SECTION 8 ASSISTANCE FOR SINGLE ROOM

OCCUPANCY DWELLINGS.

(a) INCREASE IN BUDGET AUTHORITY.—The budget authority

available under section 5(c) of the United States Housing Act of

1937 for assistance under section 8(e)(2) of such Act 1 is authorized

to be increased by $105,000,000 on or after October 1, 1992, and

by $109,410,000 on or after October 1, 1993.

(b) USE OF FUNDS.—The amounts made available under this

section shall be used only in connection with the moderate rehabilitation of housing described in section 8(n) of the United States

Housing Act of 1937 for occupancy by homeless individuals, except

that amounts made available under this section may be used in

connection with the moderate rehabilitation of efficiency units if

the building owner agrees to pay the additional cost of rehabilitating and operating such units., 2 and except that the Secretary

may provide amounts available under this section to private nonprofit organizations that submit applications for such assistance

that are approved by the Secretary.
Sec. 441 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 776

(c) ALLOCATION.—The amounts made available under this section shall be allocated by the Secretary of Housing and Urban Development on the basis of a national competition to the applicants

that best demonstrate a need for the assistance under this section

and the ability to undertake and carry out a program to be assisted

under this section. To be considered for assistance under this section, an applicant shall submit to the Secretary of Housing and

Urban Development a written proposal containing—

(1) a description of the size and characteristics of the population within the applicant’s jurisdiction that would occupy single room occupancy dwellings;

(2) a listing of additional commitments from public and

private sources that the applicant might be able to provide in

connection with the program;

(3) an inventory of suitable housing stock to be rehabilitated with such assistance;

(4) a description of the interest that has been expressed by

builders, developers, and others (including profit and nonprofit

organizations) in participating in the program; and

(5) assurances satisfactory to the Secretary that the applicant, to the maximum extent practicable, will involve homeless

individuals and families, through employment, volunteer services, or otherwise, in rehabilitating and operating facilities assisted under this section and in providing services for occupants of such facilities.

No single city or urban county shall be eligible to receive more

than 10 percent of the assistance made available under this section.

(d) FIRE AND SAFETY IMPROVEMENTS.—Each contract for housing assistance payments entered into with the authority provided

under this section shall require the installation of a sprinkler system that protects all major spaces, hard wired smoke detectors,

and such other fire and safety improvements as may be required

by State or local law. For purposes of this subsection, the term

‘‘major spaces’’ means hallways, large common areas, and other

areas specified in local fire, building, or safety codes.

(e) COST LIMITATION.—

(1) The total cost of rehabilitation that may be compensated for in a contract for housing assistance payments entered into with the authority provided under this section shall

not exceed $14,000 per unit, plus the expenditures required by

subsection (d).

(2) The Secretary of Housing and Urban Development

shall increase the limitation contained in paragraph (1) by an

amount the Secretary determines is reasonable and necessary

to accommodate special local conditions, including—

(A) high construction costs; or

(B) stringent fire or building codes.

(3) The Secretary of Housing and Urban Development

shall increase the limitation in paragraph (1) on October 1 of

each year by an amount necessary to take into account increases in construction costs during the previous 12-month period.
777 Sec. 442 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1So in law.

(f) CONTRACT REQUIREMENTS.—Each contract for annual contributions entered into with a 1 approved applicant to obligate the

authority made available under this section shall—

(1) commit the Secretary of Housing and Urban Development to make such authority available to the approved applicant for an aggregate period of 10 years, and require that any

amendments increasing such authority shall be available for

the remainder of such 10-year period;

(2) provide the Secretary of Housing and Urban Development with the option to renew the contract for an additional

period of 10 years, subject to the availability of appropriations;

and

(3) provide that, notwithstanding any other provision of

law, first priority for occupancy of housing rehabilitated under

this section shall be given to homeless individuals.

ø(g) [Repealed.]¿

(h) PARTICIPATION OF HOMELESS INDIVIDUALS.—The Secretary

shall, by regulation, require each approved applicant receiving assistance under this section that is not a public housing agency to

provide for the participation of not less than one homeless individual or former homeless individual on the board of directors or

other equivalent policymaking entity of such applicant, to the extent that such entity considers and makes policies and decisions regarding the rehabilitation of any housing with assistance under

this section. The Secretary may grant waivers to approved applicants unable to meet the requirements under the preceding sentence if the applicant agrees to otherwise consult with homeless or

formerly homeless individuals in considering and making such policies and decisions.

(i) TERMINATION OF ASSISTANCE.—If an individual or family

who receives assistance under this section violates program requirements, the recipient of amounts made available under this

section may terminate assistance in accordance with a formal process established by the recipient that recognizes the rights of individuals receiving such assistance to due process of law.

(j) DEFINITIONS.—For purposes of this section—

(1) the term ‘‘applicant’’ means a public housing agency, or

private nonprofit organization that applies for assistance under

this section; and

(2) the term ‘‘private nonprofit organization’’ means an

organization—

(A) no part of the net earnings of which inures to the

benefit of any member, founder, contributor, or individual;

(B) that has a voluntary board;

(C) that has an accounting system, or has designated

a fiscal agent in accordance with requirements established

by the Secretary; and

(D) that practices nondiscrimination in the provision

of assistance.

SEC. 442. COMMUNITY DEVELOPMENT BLOCK GRANT AMENDMENT.

Section 102(a)(6) of the Housing and Community Development

Act of 1974 is amended in the second sentence by inserting ‘‘or

1984’’ after ‘‘fiscal year 1983’’.
Sec. 443 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 778

SEC. 443. ø42 U.S.C. 11402¿ ENVIRONMENTAL REVIEW.

For purposes of environmental review, assistance and projects

under this title shall be treated as assistance for special projects

that are subject to section 305(c) of the Multifamily Housing Property Disposition Reform Act of 1994, and shall be subject to the

regulations issued by the Secretary to implement such section.

Subtitle F—Shelter Plus Care Program

PART I—GENERAL REQUIREMENTS

SEC. 451. ø42 U.S.C. 11403¿ PURPOSE.

The purpose of the program authorized under this subtitle is

to provide rental housing assistance, in connection with supportive

services funded from sources other than this subtitle, to homeless

persons with disabilities (primarily persons who are seriously mentally ill, have chronic problems with alcohol, drugs, or both, or have

acquired immunodeficiency syndrome and related diseases) and the

families of such persons.

SEC. 452. ø42 U.S.C. 11403a¿ RENTAL HOUSING ASSISTANCE.

(a) IN GENERAL.—The Secretary is authorized, in accordance

with the provisions of this subtitle, to provide rental housing assistance under parts II, III, IV, and V.

(b) FUNDING LIMITATIONS.—To the maximum extent practicable, the Secretary shall reserve not less than 50 percent of all

funds provided under this subtitle for homeless individuals who are

seriously mentally ill or have chronic problems with alcohol, drugs,

or both.

SEC. 453. ø42 U.S.C. 11403b¿ SUPPORTIVE SERVICES REQUIREMENTS.

(a) MATCHING FUNDING.—

(1) IN GENERAL.—Each recipient shall be required to supplement the assistance provided under this subtitle with an

equal amount of funds for supportive services from sources

other than this subtitle. Each recipient shall certify to the Secretary its compliance with this paragraph, and shall include

with the certification a description of the sources and amounts

of such supplemental funds.

(2) DETERMINATION OF MATCHING AMOUNTS.—In calculating the amount of supplemental funds provided under this

subtitle, a recipient may include the value of any lease on a

building, any salary paid to staff to carry out the program of

the recipient, and the value of the time and services contributed by volunteers to carry out the program of the recipient at

a rate determined by the Secretary.

(b) RECAPTURE.—If the supportive services and funding for the

supportive services required by this section are not provided, the

Secretary may recapture any unexpended housing assistance.

SEC. 454. ø42 U.S.C. 11403c¿ APPLICATIONS.

(a) IN GENERAL.—An application for rental housing assistance

under this subtitle shall be submitted by an applicant in such

forms and in accordance with such procedures as the Secretary

shall establish.
779 Sec. 454 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1So in law.

(b) MINIMUM CONTENTS.—The Secretary shall require that an

application identify the need for the assistance in the community

to be served and shall contain at a minimum—

(1) a request for housing assistance under part II, III, IV,

or V, or a combination, specifying the number of units requested and the amount of necessary budget authority;

(2) a description of the size and characteristics of the population of eligible persons;

(3) an identification of the need for the program in the

community to be served;

(4) the identity of the proposed service provider or providers (which may be, or include, the applicant) and a statement of the qualifications of the provider or providers;

(5) a description of the supportive services that the applicant proposes to assure will be available for eligible persons;

(6) a description of the resources that are expected to be

made available to provide the supportive services required by

section 453;

(7) a description of the mechanisms for developing a housing and supportive services plan for each person and for monitoring each person’s progress in meeting that plan;

(8) reasonable assurances satisfactory to the Secretary

that the supportive services will be provided for the full term

of the housing assistance under part II, III, IV, or V, or a combination; and a certification from the applicant that it will fund

the supportive services itself if the planned resources do not

become available for any reason;

(9) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under

section 105 of the Cranston-Gonzalez National Affordable

Housing Act that the proposed activities are consistent with

the approved housing strategy of the unit of general local government within which housing assistance under this subtitle

will be provided;

(10) a plan for—

(A) in the case of rental housing assistance under part

II,1 or III, providing housing assistance;

(B) identifying and selecting eligible persons to participate, including a proposed definition of the term ‘‘chronic

problems with alcohol, other drugs, or both’’;

(C) coordinating the provision of housing assistance

and supportive services;

(D) ensuring that the service providers are providing

supportive services adequate to meet the needs of the persons served;

(E) obtaining participation of eligible persons who

have previously not been assisted under programs designed to assist the homeless or have been considered not

capable of participation in these programs; this plan shall

specifically address how homeless persons, as defined in

section 103(a)(2)(C), (and the families of such persons) will

be brought into the program;
Sec. 455 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 780

(11) in the case of housing assistance under part V, identification of the specific structures that the recipient is proposing

for assistance; and

(12) in the case of housing assistance under part IV, identification of the nonprofit entity that will be the owner or lessor of the property, and identification of the specific structures

in which the nonprofit entity proposes to house eligible persons.

SEC. 455. ø42 U.S.C. 11403d¿ SELECTION CRITERIA.

(a) IN GENERAL.—The Secretary shall establish selection criteria for a national competition for assistance under this subtitle,

which shall include—

(1) the ability of the applicant to develop and operate the

proposed assisted housing and supportive services program,

taking into account the quality of any ongoing program of the

applicant;

(2) geographic diversity among the projects to be assisted;

(3) the need for a program providing housing assistance

and supportive services for eligible persons in the area to be

served;

(4) the quality of the proposed program for providing supportive services and housing assistance;

(5) the extent to which the proposed funding for the supportive services is or will be available;

(6) the extent to which the project would meet the needs

of the homeless persons proposed to be served by the program;

(7) the extent to which the program integrates program recipients into the community served by the program;

(8) the cost-effectiveness of the proposed program; and

(9) such other factors as the Secretary specifies in regulations to be appropriate for purposes of carrying out the program established by this subtitle in an effective and efficient

manner.

(b) FUNDING LIMITATION.—No more than 10 percent of the assistance made available under this subtitle for any fiscal year may

be used for programs located within any one unit of general local

government.

(c) PARTICIPATION OF HOMELESS INDIVIDUALS.—The Secretary

shall, by regulation, require each recipient to provide for the consultation and participation of not less than one homeless individual

or former homeless individual on the board of directors or other

equivalent policymaking entity of the recipient, to the extent that

such entity considers and makes policies and decisions regarding

any housing assisted under this subtitle or services for such housing. The Secretary may grant waivers to recipients unable to meet

the requirement under the preceding sentence if the recipient

agrees to otherwise consult with homeless or formerly homeless individuals in considering and making such policies and decisions.

SEC. 456. ø42 U.S.C. 11403e¿ REQUIRED AGREEMENTS.

The Secretary may not approve assistance under this subtitle

unless the applicant agrees—

(1) to operate the proposed program in accordance with the

provisions of this subtitle;
781 Sec. 461 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

(2) to conduct an ongoing assessment of the housing assistance and supportive services required by the participants in

the program;

(3) to assure the adequate provision of supportive services

to the participants in the program;

(4) to comply with such other terms and conditions as the

Secretary may establish for purposes of carrying out the program in an effective and efficient manner; and

(5) to the maximum extent practicable, to involve homeless

individuals and families, through employment volunteer services, or otherwise, in constructing or rehabilitating housing assisted under this subtitle and in providing services required

under this subtitle.

SEC. 457. ø42 U.S.C. 11403e–1¿ HOUSING STANDARDS AND RENT REASONABLENESS.

(a) STANDARDS REQUIRED.—The Secretary shall require that—

(1) before any assistance may be provided to or on behalf

of the person, each unit shall be inspected by the applicant directly or by another entity, including the local public housing

agency, to determine that the unit meets the housing quality

standards under section 8 of the United States Housing Act of

1937 and that the occupancy charge for the dwelling unit is

reasonable; and

(2) the recipient shall make at least annual inspections of

each unit during the contract term.

(b) PROHIBITION.—No assistance may be provided for a dwelling unit (1) for which the occupancy charge is not reasonable, or

(2) which fails to meet the housing standards, unless the owner

promptly corrects the deficiency and the recipient verifies the correction.

SEC. 458. ø42 U.S.C. 11403e–2¿ TENANT RENT.

Each tenant shall pay as rent an amount determined in accordance with the provisions of section 3(a)(1) of the United States

Housing Act of 1937.

SEC. 459. ø42 U.S.C. 11403e–3¿ ADMINISTRATIVE FEES.

From amounts made available under appropriations Acts, the

Secretary shall make amounts available to pay the entity administering the housing assistance an administrative fee in an amount

determined appropriate by the Secretary for the costs of administering the housing assistance.

SEC. 460. ø42 U.S.C. 11403e–4¿ OCCUPANCY.

(a) OCCUPANCY AGREEMENT.—The occupancy agreement between a tenant and an owner of a dwelling unit assisted under this

subtitle shall be for at least one month.

(b) VACANCY PAYMENTS.—If an eligible person vacates a dwelling unit assisted under this subtitle before the expiration of the occupancy agreement, no assistance payment may be made with respect to the unit after the month that follows the month during

which the unit was vacated, unless it is occupied by another eligible person.

SEC. 461. ø42 U.S.C. 11403f¿ TERMINATION OF ASSISTANCE.

(a) AUTHORITY.—If an eligible individual who receives assistance under this subtitle violates program requirements, the recipi-
Sec. 462 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 782

ent may terminate assistance in accordance with the process established pursuant to subsection (b).

(b) PROCEDURE.—In terminating assistance under this section,

the recipient shall provide a formal process that recognizes the

rights of individuals receiving such assistance to due process of

law.

SEC. 462. ø42 U.S.C. 11403g¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘acquired immunodeficiency syndrome and

related diseases’’ has the meaning given such term in section

853 of the Cranston-Gonzalez National Affordable Housing Act.

(2) The term ‘‘applicant’’ means a State, unit of general

local government or public housing agency.

(3) The term ‘‘eligible person’’ means a homeless person

with disabilities (primarily persons who are seriously mentally

ill, have chronic problems with alcohol, drugs, or both, or have

acquired immunodeficiency syndrome and related diseases)

and the family of such a person.

ø(4) [Repealed.]¿

(5) The term ‘‘nonprofit organization’’ has the meaning

given such term by section 104 of the Cranston-Gonzalez National Affordable Housing Act, and includes community mental

health centers established as public nonprofit organizations.

(6) The term ‘‘person with disabilities’’ has the same meaning given the term in section 811 of the Cranston-Gonzalez National Affordable Housing Act.

(7) The term ‘‘public housing agency’’ has the meaning

given such term in section 3(b)(6) of the United States Housing

Act of 1937.

(8) The term ‘‘recipient’’ means an applicant approved for

participation in the program authorized under this subtitle.

(9) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(10) The term ‘‘seriously mentally ill’’ means having a severe and persistent mental or emotional impairment that seriously limits a person’s ability to live independently.

(11) The term ‘‘State’’ means each of the several States,

the District of Columbia, the Commonwealth of Puerto Rico,

the Virgin Islands, Guam, American Samoa, the Northern

Mariana Islands, the Trust Territory of the Pacific Islands, and

any other territory or possession of the United States.

(12) The term ‘‘supportive services’’ means assistance that

the Secretary determines (A) addresses the special needs of eligible persons; and (B) provides appropriate services or assists

such persons in obtaining appropriate services, including

health care, mental health services, substance and alcohol

abuse services, child care services, case management services,

counseling, supervision, education, job training, and other services essential for achieving and maintaining independent living. Inpatient acute hospital care shall not qualify as a supportive service.

(13) The term ‘‘unit of general local government’’ has the

meaning given such term in section 102 of the Housing and

Community Development Act of 1974.
783 Sec. 473 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

SEC. 463. ø42 U.S.C. 11403h¿ AUTHORIZATION OF APPROPRIATIONS.

(a) IN GENERAL.—For purposes of the housing programs under

this subtitle, there are authorized to be appropriated $266,550,000

for fiscal year 1993 and $277,745,100 for fiscal year 1994. Of any

amount appropriated in any fiscal year to carry out this subtitle—

(1) not less than 10 percent shall be available only for carrying out part II of this subtitle;

(2) not less than 10 percent shall be available only for carrying out part III of this subtitle;

(3) not less than 10 percent shall be available only for carrying out part IV of this subtitle; and

(4) not less than 10 percent shall be available only for carrying out part V of this subtitle.

(b) AVAILABILITY.—Sums appropriated under this section shall

remain available until expended.

PART II—TENANT-BASED RENTAL ASSISTANCE

SEC. 471. ø42 U.S.C. 11404¿ AUTHORITY.

The Secretary may use amounts made available under section

463 to provide tenant-based rental housing assistance for eligible

persons in accordance with this part.

SEC. 472. ø42 U.S.C. 11404a¿ HOUSING ASSISTANCE.

An eligible person on behalf of whom assistance is provided

under this part shall select the unit in which such person will live

using rental assistance under this part; except that where necessary to assure that the provision of supportive services to persons

is feasible, a recipient may require that a person participating in

the program live (1) in a particular structure or unit for up to the

first year of participation, and (2) within a particular geographic

area for the full period of participation or the period remaining

after the period referred to in paragraph (1).

SEC. 473. ø42 U.S.C. 11404b¿ AMOUNT OF ASSISTANCE.

The contract with a recipient for assistance under this part

shall be for a term of 5 years. Each contract shall provide that the

recipient shall receive aggregate amounts not to exceed the appropriate existing housing fair market rent limitation under section

8(c) of the United States Housing Act of 1937 in effect at the time

the application is approved. At the option of the recipient and subject to the availability of such amounts, the recipient may receive

in any year (1) up to 25 percent of such amounts or (2) such higher

percentage as the Secretary may approve upon a demonstration

satisfactory to the Secretary that the recipient has entered into

firm financial commitments to ensure that the housing assistance

described in the application will be provided for the full term of the

contract. Any amounts not needed for a year may be used to increase the amount available in subsequent years.
Sec. 476 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 784

PART III—PROJECT-BASED RENTAL

ASSISTANCE

SEC. 476. ø42 U.S.C. 11405¿ AUTHORITY.

The Secretary may use amounts made available under section

463 to provide project-based rental housing assistance for eligible

persons in accordance with this part.

SEC. 477. ø42 U.S.C. 11405a¿ HOUSING ASSISTANCE.

Assistance under this part shall be provided pursuant to a contract between the recipient and an owner of an existing structure.

The contract shall provide that rental assistance payments shall be

made to the owner and that the units in the structure shall be occupied by eligible persons for not less than the term of the contract.

SEC. 478. ø42 U.S.C. 11405b¿ TERM OF CONTRACT AND AMOUNT OF ASSISTANCE.

(a) TERM OF CONTRACT.—Each contract with a recipient for assistance under this part shall be for a term of 5 years, and the

owner shall have an option to renew the assistance for an additional 5-year term, subject to the availability of amounts provided

in appropriation Acts; except that if an expenditure of at least

$3,000 for each unit (including its prorated share of work on common areas or systems) is required to make the structure decent,

safe, and sanitary, and the owner agrees to carry out the rehabilitation with resources other than assistance under this subtitle

within 12 months of notification of grant approval, the contract

shall be for a term of 10 years.

(b) AMOUNT OF ASSISTANCE.—Each contract shall provide that

the recipient shall receive aggregate amounts not to exceed the appropriate existing housing fair market rental under section 8(c)(1)

of the United States Housing Act of 1937 in effect at the time the

application is approved. Any amounts not needed for a year may

be used to increase the amount available in subsequent years.

PART IV—SPONSOR-BASED RENTAL

ASSISTANCE

SEC. 481. ø42 U.S.C. 11406¿ AUTHORITY.

The Secretary may use amounts made available under section

463 to provide sponsor-based rental assistance for eligible persons

in accordance with this part.

SEC. 482. ø42 U.S.C. 11406a¿ HOUSING ASSISTANCE.

Assistance under this part shall be provided pursuant to a contract between the recipient and a private nonprofit sponsor that

owns or leases dwelling units. The contract shall provide that rental assistance payments shall be made to the sponsor and that such

assisted units shall be occupied by eligible persons.

SEC. 483. ø42 U.S.C. 11406b¿ TERM OF CONTRACT AND AMOUNT OF ASSISTANCE.

(a) TERM OF CONTRACT.—The contract with a recipient of assistance under this part shall be for a term of 5 years.

(b) AMOUNT OF ASSISTANCE.—Each contract shall provide that

the recipient shall receive aggregate amounts not to exceed the appropriate existing housing fair market rental under section 8(c)(1)
785 Sec. 491 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

of the United States Housing Act of 1937 in effect at the time the

application is approved. Any amounts not needed for a year may

be used to increase the amount available in subsequent years.

PART V—SECTION 8 MODERATE REHABILITATION ASSISTANCE FOR SINGLE-ROOM OCCUPANCY DWELLINGS

SEC. 486. ø42 U.S.C. 11407¿ AUTHORITY.

The Secretary may use amounts made available under section

463 in connection with the moderate rehabilitation of single room

occupancy housing described in section 8(n) of the United States

Housing Act of 1937 for occupancy by eligible persons in accordance

with this part. Amounts available under section 463 may be used

in connection with the moderate rehabilitation of efficiency units if

the building owner agrees to pay the additional cost of rehabilitating and operating the efficiency units.

SEC. 487. ø42 U.S.C. 11407a¿ FIRE AND SAFETY IMPROVEMENTS.

Each contract for housing assistance payments entered into

under this part shall require the installation of a sprinkler system

that protects all major spaces, hard-wired smoke detectors, and any

other fire safety improvements as may be required by State or local

law. For purposes of this section, the term ‘‘major spaces’’ means

hallways, large common areas, and other areas specified in local

fire, building, or safety codes.

SEC. 488. ø42 U.S.C. 11407b¿ CONTRACT REQUIREMENTS.

Each contract for annual contributions entered into by the Secretary with a public housing agency to obligate the authority made

available under section 463 for use under this part shall—

(1) commit the Secretary to make the authority available

to the public housing agency for an aggregate period of 10

years, and require that any amendments increasing the authority shall be available for the remainder of such 10-year period;

(2) provide the Secretary with the option to renew the contract for an additional period of 10 years, subject to the availability of authority; and

(3) provide that, notwithstanding any other provision of

law, first priority for occupancy of housing rehabilitated under

this part shall be given to homeless persons.

Subtitle G—Rural Homeless Housing

Assistance

SEC. 491. ø42 U.S.C. 11408¿ RURAL HOMELESSNESS GRANT PROGRAM.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development shall establish and carry out a rural homelessness grant

program. In carrying out the program, the Secretary may award

grants to eligible organizations in order to pay for the Federal

share of the cost of—

(1) assisting programs providing direct emergency assistance to homeless individuals and families;
Sec. 491 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 786

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

(2) providing homelessness prevention assistance to individuals and families at risk of becoming homeless; and

(3) assisting individuals and families in obtaining access to

permanent housing and supportive services.

(b) USE OF FUNDS.—

(1) IN GENERAL.—An eligible organization may use a grant

awarded under subsection (a) to provide, in rural areas—

(A) rent, mortgage, or utility assistance after 2 months

of nonpayment in order to prevent eviction, foreclosure, or

loss of utility service;

(B) security deposits, rent for the first month of residence at a new location, and relocation assistance;

(C) short-term emergency lodging in motels or shelters, either directly or through vouchers;

(D) transitional housing;

(E) rehabilitation and repairs such as insulation, window repair, door repair, roof repair, and repairs that are

necessary to make premises habitable;

(F) development of comprehensive and coordinated

support services that use and supplement, as needed, community networks of services, including—

(i) outreach services to reach eligible recipients;

(ii) case management;

(iii) housing counseling;

(iv) budgeting;

(v) job training and placement;

(vi) primary health care;

(vii) mental health services;

(viii) substance abuse treatment;

(ix) child care;

(x) transportation;

(xi) emergency food and clothing;

(xii) family violence services;

(xiii) education services;

(xiv) moving services;

(xv) entitlement assistance; and

(xvi) referrals to veterans services and legal

services; and

(G) costs associated with making use of Federal inventory property programs to house homeless families, including the program established under title V of the Stewart

B. McKinney Homeless Assistance Act 1 and the Single

Family Property Disposition Program established pursuant

to section 204(g) of the National Housing Act.

(2) CAPACITY BUILDING ACTIVITIES.—Not more than 20 percent of the funds appropriated under subsection (l)(1) for a fiscal year may be used by eligible organizations for capacity

building activities, including payment of operating costs and

staff retention.

(c) AWARD OF GRANTS.—
787 Sec. 491 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

(1) COMMUNITIES WITH POPULATIONS OF LESS THAN

10,000.—

(A) SET ASIDE.—In awarding grants under subsection

(a) for a fiscal year, the Secretary shall make available not

less than 50 percent of the funds appropriated under subsection (l)(1) for the fiscal year for grants to eligible organizations serving communities that have populations of less

than 10,000.

(B) PRIORITY WITHIN SET ASIDE.—In awarding grants

in accordance with subparagraph (A), the Secretary shall

give priority to eligible organizations serving communities

with populations of less than 5,000.

(2) COMMUNITIES WITHOUT SIGNIFICANT FEDERAL ASSISTANCE.—In awarding grants under subsection (a), including

grants awarded in accordance with paragraph (1), the Secretary shall give priority to eligible organizations serving communities not currently receiving significant Federal assistance

under this Act.

(3) STATE LIMIT.—In awarding grants under subsection (a)

for a fiscal year, the Secretary shall not award to eligible organizations within a State an aggregate sum of more than 10

percent of the funds appropriated under subsection (l)(1), for

the fiscal year.

(d) APPLICATION.—In order to be eligible to receive a grant

under subsection (a), an organization shall submit an application

to the Secretary at such time, in such manner, and containing such

information as the Secretary may require. The application shall include, at a minimum—

(1) a description of the target population and geographic

area to be served;

(2) a description of the types of assistance to be provided;

(3) an assurance that the assistance to be provided is

closely related to the identified needs of the target population;

(4) a description of the existing assistance available to the

target population, including Federal, State, and local programs, and a description of the manner in which the organization will coordinate with and expand existing assistance or provide assistance not available in the immediate area;

(5) an agreement by the organization that the organization

will collect data on the projects conducted by the organization,

including assistance provided, number and characteristics of

persons served, and causes of homelessness for persons served;

and

(6) an agreement by the organization that, to the maximum extent practicable, the organization will involve homeless individuals and families through employment, volunteer

services, and otherwise, in providing, operating, and rehabilitating housing assisted under this section and in providing

services assisted under this section and services for occupants

of housing assisted under this section.

(e) ELIGIBLE ORGANIZATIONS.—Organizations eligible to receive

a grant under subsection (a) shall include private nonprofit entities

and county and local governments.

(f) FEDERAL SHARE.—
Sec. 491 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 788

(1) IN GENERAL.—The Federal share of the costs of providing assistance under this section shall be 75 percent.

(2) NON-FEDERAL SHARE.—The non-Federal share of the

cost of providing the assistance shall be in cash or in kind, fairly evaluated, including plant, equipment, staff services, or

services delivered by volunteers.

(g) PARTICIPATION OF HOMELESS INDIVIDUALS.—The Secretary

shall, by regulation, require each eligible organization receiving a

grant under this section to provide for the participation of not less

than 1 homeless individual or former homeless individual on the

board of directors or other equivalent policy making entity of the

recipient, to the extent that such entity considers and makes policies and decisions regarding any housing, services, or other assistance of the eligible organization receiving the grant under this section. The Secretary may grant waivers to recipients unable to meet

the requirement under the preceding sentence if the recipient

agrees to otherwise consult with homeless or formerly homeless individuals in considering and making such policies and decisions.

(h) EVALUATION.— (1) IN GENERAL.—The Secretary shall conduct an evaluation of the program to—

(A) determine the effectiveness of the program in providing housing and other assistance to homeless persons in

the area served; and

(B) determine the types of assistance needed to address homelessness in rural areas.

(2) REPORT.—The Secretary shall submit to Congress, not

later than 18 months after the date on which the Secretary

first makes grants under the program, the evaluation of the

program conducted under paragraph (1), including recommendations for any Federal administrative or legislative

changes that may be necessary to improve the ability of rural

communities to prevent and respond to homelessness.

(i) TECHNICAL ASSISTANCE.—The Secretary shall provide technical assistance to eligible organizations in developing programs in

accordance with this section, and in gaining access to other Federal

resources that may be used to assist homeless persons in rural

areas. Such assistance may be provided through regional workshops, and may be provided directly or through grants to, or contracts with, nongovernmental entities.

(j) TERMINATION OF ASSISTANCE.—If an individual or family

who receives assistance under this section violates requirements of

the assistance program provided by the organization receiving a

grant under this section, the organization may terminate assistance in accordance with a formal process established by the organization that recognizes the rights of individuals receiving such assistance to due process of law, which may include a hearing.

(k) DEFINITIONS.—

For purposes of this section:

(1) PROGRAM.—The term ‘‘program’’ means the rural homelessness grant program established under this section.

(2) RURAL AREA; RURAL COMMUNITY.—The terms ‘‘rural

area’’ and ‘‘rural community’’ mean—

(A) any area or community, respectively, no part of

which is within an area designated as a standard metro-
789 Sec. 592 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1So in law. Probably intended to be designated as section 492.

politan statistical area by the Office of Management and

Budget; or

(B) any area or community, respectively, that is—

(i) within an area designated as a metropolitan

statistical area or considered as part of a metropolitan

statistical area; and

(ii) located in a rural census tract.

(3) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(l) AUTHORIZATION OF APPROPRIATIONS.— (1) IN GENERAL.—There are authorized to be appropriated to carry out this section $30,000,000 for fiscal year 1993 and

$31,260,000 for fiscal year 1994.

(2) AVAILABILITY.—Any amount paid to a grant recipient

for a fiscal year that remains unobligated at the end of the

year shall remain available to the recipient for the purposes for

which the payment was made for the next fiscal year. The Secretary shall take such action as may be necessary to recover

any amount not obligated by the recipient at the end of the

second fiscal year, and shall redistribute the amount to another eligible organization.

SEC. 592. 1 ø42 U.S.C. 11408a¿ USE OF FMHA INVENTORY FOR TRANSITIONAL HOUSING FOR HOMELESS PERSONS AND FOR

TURNKEY HOUSING.

(a) IN GENERAL.—The Secretary of Agriculture (in this section

referred to as the ‘‘Secretary’’) shall, on a priority basis, lease or

sell program and nonprogram inventory properties held by the Secretary under title V of the Housing Act of 1949—

(1) to provide transitional housing; and

(2) to provide turnkey housing for tenants of such transitional housing and for eligible families.

(b) PRIORITY.—The priority uses of inventory property under

this section shall not have a higher priority than—

(1) the disposition of such property by sale to eligible families; or

(2) the disposition of such property by transfer for use as

rental housing by eligible families.

(c) TRANSITIONAL HOUSING.— (1) LEASES AUTHORIZED.—The Secretary shall lease inventory properties to public agencies and nonprofit organizations

to provide transitional housing for homeless families and individuals and to provide such agencies the option to provide

turnkey housing opportunities for homeless persons and other

inadequately housed families.

(2) RENTAL TO ELIGIBLE FAMILIES.—A public agency or

nonprofit organization may rent housing leased to it under

paragraph (1) to a family for up to 10 years and may, during

that period, assist the tenant in obtaining a loan and credit assistance under title V of the Housing Act of 1949 to purchase

the housing from the Secretary.

(d) LEASE PROCEDURES.—

(1) IDENTIFICATION OF PROPERTY.—Upon receipt by the

Secretary of written notification from a public agency or non-
Sec. 592 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 790

profit organization that it proposes to lease a property for the

purpose of providing transitional housing or for the purpose of

providing transitional housing and turnkey housing opportunities, the Secretary shall—

(A) withdraw the property from the market for not

more than 30 days for the purpose of negotiations under

subparagraph (B);

(B) negotiate a lease agreement with the organization

or agency; and

(C) if a lease is agreed to, commence the repairs necessary to make the property meet standards for decent,

safe, and sanitary housing.

(2) LEASE TERMS.—A lease of inventory property under

this section shall—

(A) be for a period of not more than 10 years;

(B) provide for the payment of $1 for the 10-year lease;

and

(C) provide the nonprofit organization or public

agency—

(i) the right to use the property for transitional

housing; and

(ii) the option to arrange for the sale of the property to an eligible purchaser.

(e) PURCHASE PROCEDURES.— (1) IDENTIFICATION OF PROPERTY.—Upon receipt by the

Secretary of written notification from a public agency or nonprofit organization that it proposes to purchase a property for

the purpose of providing transitional housing or for the purpose of providing transitional housing and turnkey housing opportunities, the Secretary shall—

(A) withdraw the property from the market for not

more than 30 days for the purpose of negotiations under

subparagraph (B);

(B) negotiate a purchase agreement with the organization or agency; and

(C) if a purchase agreement is agreed to, commence

the repairs necessary to make the property meet standards

for decent, safe, and sanitary housing.

(2) PURCHASE TERMS.—A purchase of inventory property

under this section shall provide for a purchase price equal to

not more than the fair market value of the property minus 10

percent.

(f) EMPLOYMENT OF HOMELESS INDIVIDUALS.—A public agency

or nonprofit organization may lease or purchase property under

this section only if the agency or organization, to the maximum extent practicable, involves homeless individuals and families,

through employment, volunteer services, or otherwise, in maintaining, operating, and renovating any properties leased or acquired

under this section and in providing any services for occupants of

properties assisted under this section.

(g) PARTICIPATION OF HOMELESS INDIVIDUALS.—

(1) IN GENERAL.—The Secretary shall, by regulation, require each public agency and nonprofit organization leasing or

purchasing property under this section to provide for the participation of not less than 1 homeless individual or former
791 Sec. 501 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

homeless individual on the board of directors or other equivalent policy making entity of such agency or organization, to the

extent that such organization or applicant considers and makes

policies and decisions regarding any property acquired under

this section.

(2) WAIVER.—The Secretary may grant a waiver to a public

agency or nonprofit organization that is unable to meet the requirement of paragraph (1), if the agency or organization

agrees to otherwise consult with homeless or formerly homeless individuals in considering and making such policies and

decisions.

(h) BUDGET COMPLIANCE.—The authority provided to the Secretary under this section shall be effective only to the extent approved in advance in appropriations Acts.

TITLE V—IDENTIFICATION AND USE OF

SURPLUS FEDERAL PROPERTY

SEC. 501. ø42 U.S.C. 11411¿ USE OF UNUTILIZED AND UNDERUTILIZED

PUBLIC BUILDINGS AND REAL PROPERTY TO ASSIST THE

HOMELESS.

(a) IDENTIFICATION OF SUITABLE PROPERTY.—The Secretary of

Housing and Urban Development shall, on a quarterly basis, request information from each landholding agency regarding Federal

public buildings and other Federal real properties (including fixtures) that are excess property or surplus property or that are described as unutilized or underutilized in surveys by the heads of

landholding agencies under section 202(b)(2) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 483(b)(2)).

No later than 25 days after receiving a request from the Secretary,

the head of each landholding agency shall transmit such information to the Secretary. No later than 30 days after receiving such

information, the Secretary shall identify which of those buildings

and other properties are suitable for use to assist the homeless.

(b) AVAILABILITY OF PROPERTY.—(1) The Secretary shall

promptly notify each Federal agency with respect to any property

of that agency that the Secretary has identified under subsection

(a). No later than 45 days after receipt of such a notice, the head

of the appropriate landholding agency shall transmit to the Secretary the agency’s response to property identifications contained

in such notification, which shall include—

(A) in the case of unutilized or underutilized property—

(i) a statement of intention to determine the property

excess to the agency’s needs;

(ii) a statement of intention to make the property

available for use to assist the homeless; or

(iii) a statement of the reasons (including a full explanation of the need) the property cannot be determined excess to the agency’s needs or made available for use to assist the homeless; and

(B) in the case of excess property—

(i) a statement that there is no other compelling Federal need for the property and, therefore, the property will

be determined surplus; or
Sec. 501 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 792

(ii) a statement that there is further and compelling

Federal need for the property (including a full explanation

of such need) and that, therefore, the property is not presently available for use to assist the homeless.

(2)(A) All properties identified by the Secretary under subsection (a) shall be available for application—

(i) in the case of property other than surplus property, for

use to assist the homeless in accordance with the provisions of

this section; and

(ii) in the case of surplus property, for use to assist the

homeless either in accordance with this section or as a public

health use in accordance with paragraphs (1) and (4) of section

203(k) of the Federal Property and Administrative Services Act

of 1949 (40 U.S.C. 484(k) (1) and (4)).

(3) The Secretary shall maintain a written public record of—

(A) the identification of buildings and other properties by

the Secretary under this subsection and the reasons for such

identifications; and

(B) the responses of landholding agencies to such identifications.

(c) PUBLICATION OF PROPERTIES.—(1)(A) No later than 15 days

after the last day of the 45-day period provided for under subsection (b)(1), the Secretary shall publish in the Federal Register—

(i) a list of all properties reviewed by the Secretary under

subsection (a); and

(ii) a list of all properties that are available under subsection (b)(2) for application for use to assist the homeless.

(B) Each publication of properties shall include a description

and the location of each property (including the address and zip

code) and the current classification of each property as unutilized,

underutilized, excess property, or surplus property.

(C) The Secretary shall make available to the public upon request all information in the possession of the Department of Housing and Urban Development (other than valuation information), regardless of format, about all properties reviewed and not identified

as being suitable for use to assist the homeless, including the reasons such properties were not so identified.

(D) The Secretary shall publish separately, on an annual basis,

all properties identified as being suitable for use to assist the

homeless, but reported to be unavailable, and the reasons such

properties were unavailable.

(2)(A) No later than 15 days after the last day of the 45-day

period provided for under subsection (b)(1), the Secretary shall

transmit a copy of the list of available properties published under

paragraph (1)(A)(ii) to the Interagency Council on the Homeless.

The Council shall immediately distribute to all State and regional

homeless coordinators area-relevant portions of the list.

(B) The Secretary, the Administrator, and the Secretary of

Health and Human Services shall make such efforts as are necessary to ensure the widest possible dissemination of the information on such list.

(C) The Secretary shall establish a toll-free number to provide

the public with specific information about properties on such list.

(3) The Secretary shall make available to the public upon request all information (other than valuation information) regardless
793 Sec. 501 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

of format in the possession of the Department of Housing and

Urban Development about the properties published under paragraph (1)(A), including environmental assessment data. The Secretary shall maintain a current list of agency contacts for making

referrals of inquiries for information about specific properties.

(4)(A) On December 31 of each year, the head of each landholding agency shall report to the Secretary the current availability

status and the current classification of each property controlled by

the agency, that—

(i) was included in a list published in that year by the Secretary under paragraph (1)(A)(ii); and

(ii) remains available for application for use to assist the

homeless or has become available for application during that

year.

(B) No later than February 15 each year, the Secretary shall

publish in the Federal Register a list of all properties reported

under subparagraph (A) for the preceding year and the current

classification of the properties.

(C) For purposes of subparagraph (A), property shall not be

considered to remain available for application for use to assist the

homeless after the 60-day holding period provided under subsection

(d) if—

(i) an application for or written expression of interest in

the property is made under any law for use of the property for

any purpose; or

(ii) the Administrator receives a bona fide offer to purchase

the property or advertises for the sale of the property by public

auction.

(d) HOLDING PERIOD.—(1) Properties published under subsection (c)(1)(A)(ii) as available for application for use to assist the

homeless shall not be available for any other purpose for a period

of 60 days beginning on the date of such publication.

(2) If written notice of intent to apply for such a property for

use to assist the homeless is received by the Secretary of Health

and Human Services within the 60-day period described under

paragraph (1), such property may not be made available for any

other purpose until the date the Secretary of Health and Human

Services or other appropriate landholding agency has completed action on the application submitted under subsection (e) with respect

to that written notice of intent.

(3) Property that is reviewed by the Secretary under subsection

(a) and that is not identified by the Secretary as being suitable for

use to assist the homeless may not be made available for any other

purpose for 20 days after the determination of unsuitability to

allow for review of the determination at the request of the representative of the homeless. The Secretary shall disseminate immediately this information to the regional offices of the Department

of Housing and Urban Development and to the Interagency Council

on the Homeless.

(4)(A) Written notice of intent to apply for a property published

under subsection (c)(1)(A)(ii) may be filed at any time after the 60-

day period described in paragraph (1) has expired. In such case, an

application submitted pursuant to the notice may be approved for

disposal for use to assist the homeless only if the property remains

available for application for use to assist the homeless. If the prop-
Sec. 501 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 794

erty remains available, the use to assist the homeless shall be

given priority of consideration over other competing disposal opportunities under section 203 of the Federal Property and

Administratives Services Act of 1949 (40 U.S.C. 484), except as provided in subsection (f)(3)(A).

(B) Surplus property for which an application has been approved shall be assigned promptly to the Secretary of Health and

Human Services for disposition in accordance with and subject to

subsection (f).

(e) APPLICATION FOR PROPERTY.—(1) A representative of the

homeless may submit an application to the Secretary of Health and

Human Services for any property that is published under subsection (c)(1)(A)(ii) as available for application for use to assist the

homeless.

(2) No later than 90 days after the submission of written notice

of intent to apply for a property, an applicant shall submit a complete application to the Secretary of Health and Human Services.

The Secretary of Health and Human Services shall, with the concurrence of the appropriate landholding agency, grant reasonable

extensions.

(3) No later than 25 days after receipt of a completed application, the Secretary of Health and Human Services shall review,

make all determinations, and complete all actions on the application. The Secretary of Health and Human Services shall maintain

a written public record of all actions taken in response to an application.

(f) MAKING PROPERTY AVAILABLE TO REPRESENTATIVES OF THE

HOMELESS.—(1) Subject to the provisions of this subsection, property for which the Secretary of Health and Human Services has approved an application under subsection (e) shall be made promptly

available by permit or lease, or by deed as a public health use

under paragraphs (1) and (4) of section 203(k) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 484(k) (1)

and (4)), to the representative of the homeless that submitted the

application.

(2) Unutilized or underutilized property that is the subject of

an agency’s statement of intention under subsection (b)(1)(A)(ii)

shall be made promptly available by the appropriate landholding

agency to the approved applicant by lease or permit for a term of

not less than 1 year, unless the applicant requests a shorter term.

(3)(A) In disposing of surplus property by deed or lease under

section 203 of the Federal Property and Administrative Services

Act of 1949 (40 U.S.C. 484), the Administrator and the Secretary

of Health and Human Services shall give priority of consideration

to uses to assist the homeless, unless the Administrator or the Secretary of Health and Human Services determines that a competing

request for the property under section 203(k) of such Act is so meritorious and compelling as to outweigh the needs of the homeless.

(B) Whenever the Administrator or the Secretary of Health

and Human Services makes a determination under subparagraph

(A), the Administrator or the Secretary of Health and Human Services shall transmit to the appropriate committees of the Congress

an explanatory statement detailing the need satisfied by conveyance of the surplus property and the reasons for determining that
795 Sec. 502 McKINNEY-VENTO HOMELESS ASSISTANCE ACT

1Provisions from section 2905 of such Act are set forth, post, in this part. 2October 25, 1994.

3So in law.

4Such section is set forth, post, in this part.

such need was so meritorious and compelling as to outweigh the

needs of the homeless.

(4) For any property made available by lease to a representative of the homeless before the date of the enactment of the Stewart B. McKinney Homeless Assistance Amendments Act of 1990,

the Secretary of Health and Human Services may, upon written request by the representative, convey such property by deed to the

representative in accordance with, and subject to the requirements

of, section 203(k) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 484(k)). The lease term shall not be affected if a deed is not granted.

(g) RECORDS.—The Secretary shall maintain a written public

record of—

(1) the reasons for determinations of the Secretary under

this section that property is suitable or unsuitable for use to

assist the homeless; and

(2) the responses of landholding agencies under subsection

(b)(1).

(h) APPLICABILITY TO PROPERTY UNDER BASE CLOSURE PROCESS.—(1) The provisions of this section shall not apply to buildings

and property at military installations that are approved for closure

under the Defense Base Closure and Realignment Act of 1990 (part

A of title XXIX of Public Law 101–510; 10 U.S.C. 2687 note) 1 after

the date of the enactment of this subsection. 2

(2) For provisions relating to the use to assist the homeless of

buildings and property located at certain military installations approved for closure under such Act, or under title II of the Defense

Authorization Amendments and Base Closure and Realignment Act

(Public Law 100–526; 10 U.S.C. 2687 note), before such date, see

section 2(e) of 3 Base Closure Community Redevelopment and

Homeless Assistance Act of 1994. 4

(i) DEFINITIONS.—For purposes of this section—

(1) the term ‘‘Administrator’’ means the Administrator of

General Services;

(2) each of the terms ‘‘excess property’’ and ‘‘surplus property’’ has the meaning given that term under section 3 of the

Federal Property and Administrative Services Act of 1949 (40

U.S.C. 472);

(3) the term ‘‘landholding agency’’ means a Federal department or agency with statutory authority to control real property;

(4) the term ‘‘representative of the homeless’’ means a

State or local government agency, or private nonprofit organization, which provides services to the homeless; and

(5) the term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development, except as otherwise provided.

SEC. 502. ø42 U.S.C. 11412¿ MAKING SURPLUS PERSONAL PROPERTY

AVAILABLE TO NONPROFIT AGENCIES.

(a) ELIGIBILITY.—Section 203(j)(3)(B) of the Federal Property

and Administrative Services Act of 1949 (40 U.S.C. 484(j)(3)(B)) is
Sec. 502 McKINNEY-VENTO HOMELESS ASSISTANCE ACT 796

amended by inserting ‘‘providers of assistance to homeless individuals’’ after ‘‘health centers,’’.

(b) REQUIREMENT FOR NOTIFICATION.—Within 90 days after the

enactment of this Act, the Administrator of General Services shall

require each State agency administering a State plan under section

203(j) of the Federal Property and Administrative Services Act of

1949 to make generally available information about surplus personal property which may be used in the provision of food, shelter,

or other services to homeless individuals.

(c) COSTS.—Surplus personal property identified pursuant to

this section shall be made available to providers of assistance to

homeless individuals by a State agency distributing such property

at (1) a nominal cost to such organization or (2) at no cost when

the Administrator agrees to reimburse the State agency for the

costs of care and handling of such property.

* * * * * * *
797

USE FOR THE HOMELESS OF PROPERTY AT CLOSED

DEFENSE BASES

EXCERPT FROM DEFENSE BASE CLOSURE AND REALIGNMENT ACT OF

1990

[Public Law 101–510; 104 Stat. 1813; 10 U.S.C. 2687 note]

SEC. 2905. ø10 U.S.C. 2687 note¿ IMPLEMENTATION

(a) IN GENERAL.—* * *

(b) MANAGEMENT AND DISPOSAL OF PROPERTY.—(1) The Administrator of General Services shall delegate to the Secretary of Defense, with respect to excess and surplus real property, facilities,

and personal property located at a military installation closed or

realigned under this part—

(A) the authority of the Administrator to utilize excess

property under subchapter II of chapter 5 of title 40, United

States Code;

(B) the authority of the Administrator to dispose of surplus

property under subchapter III of chapter 5 of title 40, United

States Code;

(C) the authority to dispose of surplus property for public

airports under sections 47151 through 47153 of title 49, United

States Code; and

(D) the authority of the Administrator to determine the

availability of excess or surplus real property for wildlife conservation purposes in accordance with the Act of May 19, 1948

(16 U.S.C. 667b).

(2)(A) Subject to subparagraph (B) and paragraphs (3), (4), (5),

and (6), the Secretary of Defense shall exercise the authority delegated to the Secretary pursuant to paragraph (1) in accordance

with—

(i) all regulations governing the utilization of excess property and the disposal of surplus property under the Federal

Property and Administrative Services Act of 1949; and

(ii) all regulations governing the conveyance and disposal

of property under section 13(g) of the Surplus Property Act of

1944 (50 U.S.C. App. 1622(g)).

(B) The Secretary may, with the concurrence of the Administrator of General Services—

(i) prescribe general policies and methods for utilizing excess property and disposing of surplus property pursuant to

the authority delegated under paragraph (1); and

(ii) issue regulations relating to such policies and methods,

which shall supersede the regulations referred to in subparagraph (A) with respect to that authority.

(C) The Secretary of Defense may transfer real property or facilities located at a military installation to be closed or realigned

under this part, with or without reimbursement, to a military de-
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 798

partment or other entity (including a nonappropriated fund instrumentality) within the Department of Defense or the Coast Guard.

(D) Before any action may be taken with respect to the disposal of any surplus real property or facility located at any military

installation to be closed or realigned under this part, the Secretary

of Defense shall consult with the Governor of the State and the

heads of the local governments concerned for the purpose of considering any plan for the use of such property by the local community

concerned.

(3)(A) Not later than 6 months after the date of approval of the

closure or realignment of a military installation under this part,

the Secretary, in consultation with the redevelopment authority

with respect to the installation, shall—

(i) inventory the personal property located at the installation; and

(ii) identify the items (or categories of items) of such personal property that the Secretary determines to be related to

real property and anticipates will support the implementation

of the redevelopment plan with respect to the installation.

(B) If no redevelopment authority referred to in subparagraph

(A) exists with respect to an installation, the Secretary shall consult with—

(i) the local government in whose jurisdiction the installation is wholly located; or

(ii) a local government agency or State government agency

designated for the purpose of such consultation by the chief executive officer of the State in which the installation is located.

(C)(i) Except as provided in subparagraphs (E) and (F), the

Secretary may not carry out any of the activities referred to in

clause (ii) with respect to an installation referred to in that clause

until the earlier of—

(I) one week after the date on which the redevelopment

plan for the installation is submitted to the Secretary;

(II) the date on which the redevelopment authority notifies

the Secretary that it will not submit such a plan;

(III) twenty-four months after the date of approval of the

closure or realignment of the installation; or

(IV) ninety days before the date of the closure or realignment of the installation.

(ii) The activities referred to in clause (i) are activities relating

to the closure or realignment of an installation to be closed or realigned under this part as follows:

(I) The transfer from the installation of items of personal

property at the installation identified in accordance with subparagraph (A).

(II) The reduction in maintenance and repair of facilities

or equipment located at the installation below the minimum

levels required to support the use of such facilities or equipment for nonmilitary purposes.

(D) Except as provided in paragraph (4), the Secretary may not

transfer items of personal property located at an installation to be

closed or realigned under this part to another installation, or dispose of such items, if such items are identified in the redevelopment plan for the installation as items essential to the reuse or re-
799 Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES

development of the installation. In connection with the development of the redevelopment plan for the installation, the Secretary

shall consult with the entity responsible for developing the redevelopment plan to identify the items of personal property located at

the installation, if any, that the entity desires to be retained at the

installation for reuse or redevelopment of the installation.

(E) This paragraph shall not apply to any personal property located at an installation to be closed or realigned under this part

if the property—

(i) is required for the operation of a unit, function, component, weapon, or weapons system at another installation;

(ii) is uniquely military in character, and is likely to have

no civilian use (other than use for its material content or as

a source of commonly used components);

(iii) is not required for the reutilization or redevelopment

of the installation (as jointly determined by the Secretary and

the redevelopment authority);

(iv) is stored at the installation for purposes of distribution

(including spare parts or stock items); or

(v)(I) meets known requirements of an authorized program

of another Federal department or agency for which expenditures for similar property would be necessary, and (II) is the

subject of a written request by the head of the department or

agency.

(F) Notwithstanding subparagraphs (C)(i) and (D), the Secretary may carry out any activity referred to in subparagraph

(C)(ii) or (D) if the Secretary determines that the carrying out of

such activity is in the national security interest of the United

States.

(4)(A) The Secretary may transfer real property and personal

property located at a military installation to be closed or realigned

under this part to the redevelopment authority with respect to the

installation for purposes of job generation on the installation.

(B) With respect to military installations for which the date of

approval of closure or realignment is after January 1, 2005, the

Secretary shall seek to obtain consideration in connection with any

transfer under this paragraph of property located at the installation in an amount equal to the fair market value of the property,

as determined by the Secretary. The transfer of property of a military installation under subparagraph (A) may be without consideration if the redevelopment authority with respect to the

installation—

(i) agrees that the proceeds from any sale or lease of the

property (or any portion thereof) received by the redevelopment

authority during at least the first seven years after the date

of the initial transfer of property under subparagraph (A) shall

be used to support the economic redevelopment of, or related

to, the installation; and

(ii) executes the agreement for transfer of the property and

accepts control of the property within a reasonable time after

the date of the property disposal record of decision or finding

of no significant impact under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 800

1Section 2837(b) of the Military Construction Authorization Act for Fiscal Year 1996 (Public

Law 104–106; 110 Stat. 560) provides as follows: ‘‘Notwithstanding any other provision of law,

a department or agency of the Federal Government that enters into a lease of property under

[this subparagraph (C)] may improve the leased property using funds appropriated or otherwise

available to the department or agency for such purpose.’’.

(C) For purposes of subparagraph (B), the use of proceeds from

a sale or lease described in such subparagraph to pay for, or offset

the costs of, public investment on or related to the installation for

any of the following purposes shall be considered a use to support

the economic redevelopment of, or related to, the installation:

(i) Road construction.

(ii) Transportation management facilities.

(iii) Storm and sanitary sewer construction.

(iv) Police and fire protection facilities and other public facilities.

(v) Utility construction.

(vi) Building rehabilitation.

(vii) Historic property preservation.

(viii) Pollution prevention equipment or facilities.

(ix) Demolition.

(x) Disposal of hazardous materials generated by demolition.

(xi) Landscaping, grading, and other site or public improvements.

(xii) Planning for or the marketing of the development and

reuse of the installation.

(D) The Secretary may recoup from a redevelopment authority

such portion of the proceeds from a sale or lease described in subparagraph (B) as the Secretary determines appropriate if the redevelopment authority does not use the proceeds to support economic

redevelopment of, or related to, the installation for the period specified in subparagraph (B).

(E) 1 (i) The Secretary may transfer real property at an installation approved for closure or realignment under this part (including property at an installation approved for realignment which will

be retained by the Department of Defense or another Federal agency after realignment) to the redevelopment authority for the installation if the redevelopment authority agrees to lease, directly upon

transfer, one or more portions of the property transferred under

this subparagraph to the Secretary or to the head of another department or agency of the Federal Government. Subparagraph (B)

shall apply to a transfer under this subparagraph.

(ii) A lease under clause (i) shall be for a term of not to exceed

50 years, but may provide for options for renewal or extension of

the term by the department or agency concerned.

(iii) A lease under clause (i) may not require rental payments

by the United States.

(iv) A lease under clause (i) shall include a provision specifying

that if the department or agency concerned ceases requiring the

use of the leased property before the expiration of the term of the

lease, the remainder of the lease term may be satisfied by the same

or another department or agency of the Federal Government using

the property for a use similar to the use under the lease. Exercise
801 Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES

of the authority provided by this clause shall be made in consultation with the redevelopment authority concerned.

(v) Notwithstanding clause (iii), if a lease under clause (i) involves a substantial portion of the installation, the department or

agency concerned may obtain facility services for the leased property and common area maintenance from the redevelopment authority or the redevelopment authority’s assignee as a provision of

the lease. The facility services and common area maintenance shall

be provided at a rate no higher than the rate charged to non-Federal tenants of the transferred property. Facility services and common area maintenance covered by the lease shall not include—

(I) municipal services that a State or local government is

required by law to provide to all landowners in its jurisdiction

without direct charge; or

(II) firefighting or security-guard functions.

(F) The transfer of personal property under subparagraph (A)

shall not be subject to the provisions of subchapters II and III of

chapter 5 of title 40, United States Code, if the Secretary determines that the transfer of such property is necessary for the effective implementation of a redevelopment plan with respect to the installation at which such property is located.

(G) The provisions of section 120(h) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42

U.S.C. 9620(h)) shall apply to any transfer of real property under

this paragraph.

(H)(i) In the case of an agreement for the transfer of property

of a military installation under this paragraph that was entered

into before April 21, 1999, the Secretary may modify the agreement, and in so doing compromise, waive, adjust, release, or reduce

any right, title, claim, lien, or demand of the United States, if—

(I) the Secretary determines that as a result of changed

economic circumstances, a modification of the agreement is

necessary;

(II) the terms of the modification do not require the return

of any payments that have been made to the Secretary;

(III) the terms of the modification do not compromise,

waive, adjust, release, or reduce any right, title, claim, lien, or

demand of the United States with respect to in-kind consideration; and

(IV) the cash consideration to which the United States is

entitled under the modified agreement, when combined with

the cash consideration to be received by the United States for

the disposal of other real property assets on the installation,

are as sufficient as they were under the original agreement to

fund the reserve account established under section 204(b)(7)(C)

of the Defense Authorization Amendments and Base Closure

and Realignment Act, with the depreciated value of the investment made with commissary store funds or nonappropriated

funds in property disposed of pursuant to the agreement being

modified, in accordance with section 2906(d).

(ii) When exercising the authority granted by clause (i), the

Secretary may waive some or all future payments if, and to the extent that, the Secretary determines such waiver is necessary.
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 802

1October 5, 1999.

(iii) With the exception of the requirement that the transfer be

without consideration, the requirements of subparagraphs (B), (C),

and (D) shall be applicable to any agreement modified pursuant to

clause (i).

(I) In the case of an agreement for the transfer of property of

a military installation under this paragraph that was entered into

during the period beginning on April 21, 1999, and ending on the

date of enactment of the National Defense Authorization Act for

Fiscal Year 2000 1, at the request of the redevelopment authority

concerned, the Secretary shall modify the agreement to conform to

all the requirements of subparagraphs (B), (C), and (D). Such a

modification may include the compromise, waiver, adjustment, release, or reduction of any right, title, claim, lien, or demand of the

United States under the agreement.

(J) The Secretary may require any additional terms and conditions in connection with a transfer under this paragraph as such

Secretary considers appropriate to protect the interests of the

United States.

(5)(A) Except as provided in subparagraphs (B) and (C), the

Secretary shall take such actions as the Secretary determines necessary to ensure that final determinations under paragraph (1) regarding whether another department or agency of the Federal Government has identified a use for any portion of a military installation to be closed or realigned under this part, or will accept transfer of any portion of such installation, are made not later than 6

months after the date of approval of closure or realignment of that

installation.

(B) The Secretary may, in consultation with the redevelopment

authority with respect to an installation, postpone making the final

determinations referred to in subparagraph (A) with respect to the

installation for such period as the Secretary determines appropriate if the Secretary determines that such postponement is in the

best interests of the communities affected by the closure or realignment of the installation.

(C)(i) Before acquiring non-Federal real property as the location for a new or replacement Federal facility of any type, the head

of the Federal agency acquiring the property shall consult with the

Secretary regarding the feasibility and cost advantages of using

Federal property or facilities at a military installation closed or realigned or to be closed or realigned under this part as the location

for the new or replacement facility. In considering the availability

and suitability of a specific military installation, the Secretary and

the head of the Federal agency involved shall obtain the concurrence of the redevelopment authority with respect to the installation and comply with the redevelopment plan for the installation.

(ii) Not later than 30 days after acquiring non-Federal real

property as the location for a new or replacement Federal facility,

the head of the Federal agency acquiring the property shall submit

to Congress a report containing the results of the consultation

under clause (i) and the reasons why military installations referred

to in such clause that are located within the area to be served by

the new or replacement Federal facility or within a 200-mile radius
803 Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES

1 November 18, 1997.

of the new or replacement facility, whichever area is greater, were

considered to be unsuitable or unavailable for the site of the new

or replacement facility.

(iii) This subparagraph shall apply during the period beginning

on the date of the enactment of the National Defense Authorization

Act for Fiscal Year 1998 1 and ending on July 31, 2001.

(6)(A) Except as provided in this paragraph, nothing in this

section shall limit or otherwise affect the application of the provisions of the McKinney-Vento Homeless Assistance Act (42 U.S.C.

11301 et seq.) to military installations closed under this part. For

procedures relating to the use to assist the homeless of buildings

and property at installations closed under this part after the date

of the enactment of this sentence, see paragraph (7).

(B)(i) Not later than the date on which the Secretary of Defense completes the determination under paragraph (5) of the

transferability of any portion of an installation to be closed under

this part, the Secretary shall—

(I) complete any determinations or surveys necessary to

determine whether any building or property referred to in

clause (ii) is excess property, surplus property, or unutilized or

underutilized property for the purpose of the information referred to in section 501(a) of such Act (42 U.S.C. 11411(a)); and

(II) submit to the Secretary of Housing and Urban Development information on any building or property that is so determined.

(ii) The buildings and property referred to in clause (i) are any

buildings or property located at an installation referred to in that

clause for which no use is identified, or of which no Federal department or agency will accept transfer, pursuant to the determination

of transferability referred to in that clause.

(C) Not later than 60 days after the date on which the Secretary of Defense submits information to the Secretary of Housing

and Urban Development under subparagraph (B)(ii), the Secretary

of Housing and Urban Development shall—

(i) identify the buildings and property described in such information that are suitable for use to assist the homeless;

(ii) notify the Secretary of Defense of the buildings and

property that are so identified;

(iii) publish in the Federal Register a list of the buildings

and property that are so identified, including with respect to

each building or property the information referred to in section

501(c)(1)(B) of such Act; and

(iv) make available with respect to each building and property the information referred to in section 501(c)(1)(C) of such

Act in accordance with such section 501(c)(1)(C).

(D) Any buildings and property included in a list published

under subparagraph (C)(iii) shall be treated as property available

for application for use to assist the homeless under section 501(d)

of such Act.

(E) The Secretary of Defense shall make available in accordance with section 501(f) of such Act any buildings or property referred to in subparagraph (D) for which—
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 804

(i) a written notice of an intent to use such buildings or

property to assist the homeless is received by the Secretary of

Health and Human Services in accordance with section

501(d)(2) of such Act;

(ii) an application for use of such buildings or property for

such purpose is submitted to the Secretary of Health and

Human Services in accordance with section 501(e)(2) of such

Act; and

(iii) the Secretary of Health and Human Services—

(I) completes all actions on the application in accordance with section 501(e)(3) of such Act; and

(II) approves the application under section 501(e) of

such Act.

(F)(i) Subject to clause (ii), a redevelopment authority may express in writing an interest in using buildings and property referred to in subparagraph (D), and buildings and property referred

to in subparagraph (B)(ii) which have not been identified as suitable for use to assist the homeless under subparagraph (C), or use

such buildings and property, in accordance with the redevelopment

plan with respect to the installation at which such buildings and

property are located as follows:

(I) If no written notice of an intent to use such buildings

or property to assist the homeless is received by the Secretary

of Health and Human Services in accordance with section

501(d)(2) of such Act during the 60-day period beginning on the

date of the publication of the buildings and property under

subparagraph (C)(iii).

(II) In the case of buildings and property for which such

notice is so received, if no completed application for use of the

buildings or property for such purpose is received by the Secretary of Health and Human Services in accordance with section 501(e)(2) of such Act during the 90-day period beginning

on the date of the receipt of such notice.

(III) In the case of buildings and property for which such

application is so received, if the Secretary of Health and

Human Services rejects the application under section 501(e) of

such Act.

(ii) Buildings and property shall be available only for the purpose of permitting a redevelopment authority to express in writing

an interest in the use of such buildings and property, or to use

such buildings and property, under clause (i) as follows:

(I) In the case of buildings and property referred to in

clause (i)(I), during the one-year period beginning on the first

day after the 60-day period referred to in that clause.

(II) In the case of buildings and property referred to in

clause (i)(II), during the one-year period beginning on the first

day after the 90-day period referred to in that clause.

(III) In the case of buildings and property referred to in

clause (i)(III), during the one-year period beginning on the date

of the rejection of the application referred to in that clause.

(iii) A redevelopment authority shall express an interest in the

use of buildings and property under this subparagraph by notifying

the Secretary of Defense, in writing, of such an interest.
805 Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES

1Section 2(e) of the Base Closure Community Redevelopment and Homeless Assistance Act

of 1994 (Public Law 103–421, approved October 25, 1994) provided that paragraph (7) would

apply to an installation approved for closure before October 25, 1994, subject to certain conditions, if the redevelopment authority for the installation submits a request to the Secretary of

Defense not later than 60 days after that date.

(G)(i) Buildings and property available for a redevelopment authority under subparagraph (F) shall not be available for use to assist the homeless under section 501 of such Act while so available

for a redevelopment authority.

(ii) If a redevelopment authority does not express an interest

in the use of buildings or property, or commence the use of buildings or property, under subparagraph (F) within the applicable

time periods specified in clause (ii) of such subparagraph, such

buildings or property shall be treated as property available for use

to assist the homeless under section 501(a) of such Act.

(7) 1(A) The disposal of buildings and property located at installations approved for closure or realignment under this part after

October 25, 1994, shall be carried out in accordance with this paragraph rather than paragraph (6).

(B)(i) Not later than the date on which the Secretary of Defense completes the final determinations referred to in paragraph

(5) relating to the use or transferability of any portion of an installation covered by this paragraph, the Secretary shall—

(I) identify the buildings and property at the installation

for which the Department of Defense has a use, for which another department or agency of the Federal Government has

identified a use, or of which another department or agency will

accept a transfer;

(II) take such actions as are necessary to identify any

building or property at the installation not identified under

subclause (I) that is excess property or surplus property;

(III) submit to the Secretary of Housing and Urban Development and to the redevelopment authority for the installation

(or the chief executive officer of the State in which the installation is located if there is no redevelopment authority for the installation at the completion of the determination described in

the stem of this sentence) information on any building or property that is identified under subclause (II); and

(IV) publish in the Federal Register and in a newspaper of

general circulation in the communities in the vicinity of the installation information on the buildings and property identified

under subclause (II).

(ii) Upon the recognition of a redevelopment authority for an

installation covered by this paragraph, the Secretary of Defense

shall publish in the Federal Register and in a newspaper of general

circulation in the communities in the vicinity of the installation information on the redevelopment authority.

(C)(i) State and local governments, representatives of the

homeless, and other interested parties located in the communities

in the vicinity of an installation covered by this paragraph shall

submit to the redevelopment authority for the installation a notice

of the interest, if any, of such governments, representatives, and

parties in the buildings or property, or any portion thereof, at the

installation that are identified under subparagraph (B)(i)(II). A no-
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 806

tice of interest under this clause shall describe the need of the government, representative, or party concerned for the buildings or

property covered by the notice.

(ii) The redevelopment authority for an installation shall assist

the governments, representatives, and parties referred to in clause

(i) in evaluating buildings and property at the installation for purposes of this subparagraph.

(iii) In providing assistance under clause (ii), a redevelopment

authority shall—

(I) consult with representatives of the homeless in the

communities in the vicinity of the installation concerned; and

(II) undertake outreach efforts to provide information on

the buildings and property to representatives of the homeless,

and to other persons or entities interested in assisting the

homeless, in such communities.

(iv) It is the sense of Congress that redevelopment authorities

should begin to conduct outreach efforts under clause (iii)(II) with

respect to an installation as soon as is practicable after the date

of approval of closure or realignment of the installation.

(D)(i) State and local governments, representatives of the

homeless, and other interested parties shall submit a notice of interest to a redevelopment authority under subparagraph (C) not

later than the date specified for such notice by the redevelopment

authority.

(ii) The date specified under clause (i) shall be—

(I) in the case of an installation for which a redevelopment

authority has been recognized as of the date of the completion

of the determinations referred to in paragraph (5), not earlier

than 3 months and not later than 6 months after the date of

publication of such determination in a newspaper of general

circulation in the communities in the vicinity of the installation under subparagraph (B)(i)(IV); and

(II) in the case of an installation for which a redevelopment authority is not recognized as of such date, not earlier

than 3 months and not later than 6 months after the date of

the recognition of a redevelopment authority for the installation.

(iii) Upon specifying a date for an installation under this subparagraph, the redevelopment authority for the installation shall—

(I) publish the date specified in a newspaper of general circulation in the communities in the vicinity of the installation

concerned; and

(II) notify the Secretary of Defense of the date.

(E)(i) In submitting to a redevelopment authority under subparagraph (C) a notice of interest in the use of buildings or property at an installation to assist the homeless, a representative of

the homeless shall submit the following:

(I) A description of the homeless assistance program that

the representative proposes to carry out at the installation.

(II) An assessment of the need for the program.

(III) A description of the extent to which the program is

or will be coordinated with other homeless assistance programs

in the communities in the vicinity of the installation.
807 Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES

(IV) A description of the buildings and property at the installation that are necessary in order to carry out the program.

(V) A description of the financial plan, the organization,

and the organizational capacity of the representative to carry

out the program.

(VI) An assessment of the time required in order to commence carrying out the program.

(ii) A redevelopment authority may not release to the public

any information submitted to the redevelopment authority under

clause (i)(V) without the consent of the representative of the homeless concerned unless such release is authorized under Federal law

and under the law of the State and communities in which the installation concerned is located.

(F)(i) The redevelopment authority for each installation covered by this paragraph shall prepare a redevelopment plan for the

installation. The redevelopment authority shall, in preparing the

plan, consider the interests in the use to assist the homeless of the

buildings and property at the installation that are expressed in the

notices submitted to the redevelopment authority under subparagraph (C).

(ii)(I) In connection with a redevelopment plan for an installation, a redevelopment authority and representatives of the homeless shall prepare legally binding agreements that provide for the

use to assist the homeless of buildings and property, resources, and

assistance on or off the installation. The implementation of such

agreements shall be contingent upon the decision regarding the disposal of the buildings and property covered by the agreements by

the Secretary of Defense under subparagraph (K) or (L).

(II) Agreements under this clause shall provide for the reversion to the redevelopment authority concerned, or to such other entity or entities as the agreements shall provide, of buildings and

property that are made available under this paragraph for use to

assist the homeless in the event that such buildings and property

cease being used for that purpose.

(iii) A redevelopment authority shall provide opportunity for

public comment on a redevelopment plan before submission of the

plan to the Secretary of Defense and the Secretary of Housing and

Urban Development under subparagraph (G).

(iv) A redevelopment authority shall complete preparation of a

redevelopment plan for an installation and submit the plan under

subparagraph (G) not later than 9 months after the date specified

by the redevelopment authority for the installation under subparagraph (D).

(G)(i) Upon completion of a redevelopment plan under subparagraph (F), a redevelopment authority shall submit an application

containing the plan to the Secretary of Defense and to the Secretary of Housing and Urban Development.

(ii) A redevelopment authority shall include in an application

under clause (i) the following:

(I) A copy of the redevelopment plan, including a summary

of any public comments on the plan received by the redevelopment authority under subparagraph (F)(iii).

(II) A copy of each notice of interest of use of buildings and

property to assist the homeless that was submitted to the rede-
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 808

velopment authority under subparagraph (C), together with a

description of the manner, if any, in which the plan addresses

the interest expressed in each such notice and, if the plan does

not address such an interest, an explanation why the plan does

not address the interest.

(III) A summary of the outreach undertaken by the redevelopment authority under subparagraph (C)(iii)(II) in preparing the plan.

(IV) A statement identifying the representatives of the

homeless and the homeless assistance planning boards, if any,

with which the redevelopment authority consulted in preparing

the plan, and the results of such consultations.

(V) An assessment of the manner in which the redevelopment plan balances the expressed needs of the homeless and

the need of the communities in the vicinity of the installation

for economic redevelopment and other development.

(VI) Copies of the agreements that the redevelopment authority proposes to enter into under subparagraph (F)(ii).

(H)(i) Not later than 60 days after receiving a redevelopment

plan under subparagraph (G), the Secretary of Housing and Urban

Development shall complete a review of the plan. The purpose of

the review is to determine whether the plan, with respect to the

expressed interest and requests of representatives of the

homeless—

(I) takes into consideration the size and nature of the

homeless population in the communities in the vicinity of the

installation, the availability of existing services in such communities to meet the needs of the homeless in such communities, and the suitability of the buildings and property covered

by the plan for the use and needs of the homeless in such communities;

(II) takes into consideration any economic impact of the

homeless assistance under the plan on the communities in the

vicinity of the installation;

(III) balances in an appropriate manner the needs of the

communities in the vicinity of the installation for economic redevelopment and other development with the needs of the

homeless in such communities;

(IV) was developed in consultation with representatives of

the homeless and the homeless assistance planning boards, if

any, in the communities in the vicinity of the installation; and

(V) specifies the manner in which buildings and property,

resources, and assistance on or off the installation will be made

available for homeless assistance purposes.

(ii) It is the sense of Congress that the Secretary of Housing

and Urban Development shall, in completing the review of a plan

under this subparagraph, take into consideration and be receptive

to the predominant views on the plan of the communities in the vicinity of the installation covered by the plan.

(iii) The Secretary of Housing and Urban Development may engage in negotiations and consultations with a redevelopment authority before or during the course of a review under clause (i) with

a view toward resolving any preliminary determination of the Secretary that a redevelopment plan does not meet a requirement set
809 Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES

forth in that clause. The redevelopment authority may modify the

redevelopment plan as a result of such negotiations and consultations.

(iv) Upon completion of a review of a redevelopment plan

under clause (i), the Secretary of Housing and Urban Development

shall notify the Secretary of Defense and the redevelopment authority concerned of the determination of the Secretary of Housing

and Urban Development under that clause.

(v) If the Secretary of Housing and Urban Development determines as a result of such a review that a redevelopment plan does

not meet the requirements set forth in clause (i), a notice under

clause (iv) shall include—

(I) an explanation of that determination; and

(II) a statement of the actions that the redevelopment authority must undertake in order to address that determination.

(I)(i) Upon receipt of a notice under subparagraph (H)(iv) of a

determination that a redevelopment plan does not meet a requirement set forth in subparagraph (H)(i), a redevelopment authority

shall have the opportunity to—

(I) revise the plan in order to address the determination;

and

(II) submit the revised plan to the Secretary of Defense

and the Secretary of Housing and Urban Development.

(ii) A redevelopment authority shall submit a revised plan

under this subparagraph to such Secretaries, if at all, not later

than 90 days after the date on which the redevelopment authority

receives the notice referred to in clause (i).

(J)(i) Not later than 30 days after receiving a revised redevelopment plan under subparagraph (I), the Secretary of Housing and

Urban Development shall review the revised plan and determine if

the plan meets the requirements set forth in subparagraph (H)(i).

(ii) The Secretary of Housing and Urban Development shall notify the Secretary of Defense and the redevelopment authority concerned of the determination of the Secretary of Housing and Urban

Development under this subparagraph.

(K)(i) Upon receipt of a notice under subparagraph (H)(iv) or

(J)(ii) of the determination of the Secretary of Housing and Urban

Development that a redevelopment plan for an installation meets

the requirements set forth in subparagraph (H)(i), the Secretary of

Defense shall dispose of the buildings and property at the installation.

(ii) For purposes of carrying out an environmental assessment

of the closure or realignment of an installation, the Secretary of

Defense shall treat the redevelopment plan for the installation (including the aspects of the plan providing for disposal to State or

local governments, representatives of the homeless, and other interested parties) as part of the proposed Federal action for the installation.

(iii) The Secretary of Defense shall dispose of buildings and

property under clause (i) in accordance with the record of decision

or other decision document prepared by the Secretary in accordance

with the National Environmental Policy Act of 1969 (42 U.S.C.

4321 et seq.). In preparing the record of decision or other decision
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 810

document, the Secretary shall give substantial deference to the redevelopment plan concerned.

(iv) The disposal under clause (i) of buildings and property to

assist the homeless shall be without consideration.

(v) In the case of a request for a conveyance under clause (i)

of buildings and property for public benefit under section 550 of

title 40, United States Code, or sections 47151 through 47153 of

title 49, United States Code, the sponsoring Federal agency shall

use the eligibility criteria set forth in such section or such subchapter (as the case may be) to determine the eligibility of the applicant and use proposed in the request for the public benefit conveyance. The determination of such eligibility should be made before submission of the redevelopment plan concerned under subparagraph (G).

(L)(i) If the Secretary of Housing and Urban Development determines under subparagraph (J) that a revised redevelopment

plan for an installation does not meet the requirements set forth

in subparagraph (H)(i), or if no revised plan is so submitted, that

Secretary shall—

(I) review the original redevelopment plan submitted to

that Secretary under subparagraph (G), including the notice or

notices of representatives of the homeless referred to in clause

(ii)(II) of that subparagraph;

(II) consult with the representatives referred to in subclause (I), if any, for purposes of evaluating the continuing interest of such representatives in the use of buildings or property at the installation to assist the homeless;

(III) request that each such representative submit to that

Secretary the items described in clause (ii); and

(IV) based on the actions of that Secretary under subclauses (I) and (II), and on any information obtained by that

Secretary as a result of such actions, indicate to the Secretary

of Defense the buildings and property at the installation that

meet the requirements set forth in subparagraph (H)(i).

(ii) The Secretary of Housing and Urban Development may request under clause (i)(III) that a representative of the homeless

submit to that Secretary the following:

(I) A description of the program of such representative to

assist the homeless.

(II) A description of the manner in which the buildings and

property that the representative proposes to use for such purpose will assist the homeless.

(III) Such information as that Secretary requires in order

to determine the financial capacity of the representative to

carry out the program and to ensure that the program will be

carried out in compliance with Federal environmental law and

Federal law against discrimination.

(IV) A certification that police services, fire protection services, and water and sewer services available in the communities in the vicinity of the installation concerned are adequate

for the program.

(iii) Not later than 90 days after the date of the receipt of a

revised plan for an installation under subparagraph (J), the Secretary of Housing and Urban Development shall—
811 Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES

(I) notify the Secretary of Defense and the redevelopment

authority concerned of the buildings and property at an installation under clause (i)(IV) that the Secretary of Housing and

Urban Development determines are suitable for use to assist

the homeless; and

(II) notify the Secretary of Defense of the extent to which

the revised plan meets the criteria set forth in subparagraph

(H)(i).

(iv)(I) Upon notice from the Secretary of Housing and Urban

Development with respect to an installation under clause (iii), the

Secretary of Defense shall dispose of buildings and property at the

installation in consultation with the Secretary of Housing and

Urban Development and the redevelopment authority concerned.

(II) For purposes of carrying out an environmental assessment

of the closure or realignment of an installation, the Secretary of

Defense shall treat the redevelopment plan submitted by the redevelopment authority for the installation (including the aspects of

the plan providing for disposal to State or local governments, representatives of the homeless, and other interested parties) as part

of the proposed Federal action for the installation. The Secretary

of Defense shall incorporate the notification of the Secretary of

Housing and Urban Development under clause (iii)(I) as part of the

proposed Federal action for the installation only to the extent, if

any, that the Secretary of Defense considers such incorporation to

be appropriate and consistent with the best and highest use of the

installation as a whole, taking into consideration the redevelopment plan submitted by the redevelopment authority.

(III) The Secretary of Defense shall dispose of buildings and

property under subclause (I) in accordance with the record of decision or other decision document prepared by the Secretary in accordance with the National Environmental Policy Act of 1969 (42

U.S.C. 4321 et seq.). In preparing the record of decision or other

decision document, the Secretary shall give deference to the redevelopment plan submitted by the redevelopment authority for the

installation.

(IV) The disposal under subclause (I) of buildings and property

to assist the homeless shall be without consideration.

(V) In the case of a request for a conveyance under subclause

(I) of buildings and property for public benefit under section 550 of

title 40, United States Code, or sections 47151 through 47153 of

title 49, United States Code, the sponsoring Federal agency shall

use the eligibility criteria set forth in such section or such subchapter (as the case may be) to determine the eligibility of the applicant and use proposed in the request for the public benefit conveyance. The determination of such eligibility should be made before submission of the redevelopment plan concerned under subparagraph (G).

(M)(i) In the event of the disposal of buildings and property of

an installation pursuant to subparagraph (K) or (L), the redevelopment authority for the installation shall be responsible for the implementation of and compliance with agreements under the redevelopment plan described in that subparagraph for the installation.

(ii) If a building or property reverts to a redevelopment authority under such an agreement, the redevelopment authority shall
Sec. 2905 HOMELESS USE OF CLOSED DEFENSE BASES 812

take appropriate actions to secure, to the maximum extent practicable, the utilization of the building or property by other homeless

representatives to assist the homeless. A redevelopment authority

may not be required to utilize the building or property to assist the

homeless.

(N) The Secretary of Defense may postpone or extend any

deadline provided for under this paragraph in the case of an installation covered by this paragraph for such period as the Secretary

considers appropriate if the Secretary determines that such postponement is in the interests of the communities affected by the closure or realignment of the installation. The Secretary shall make

such determinations in consultation with the redevelopment authority concerned and, in the case of deadlines provided for under

this paragraph with respect to the Secretary of Housing and Urban

Development, in consultation with the Secretary of Housing and

Urban Development.

(O) For purposes of this paragraph, the term ‘‘communities in

the vicinity of the installation’’, in the case of an installation,

means the communities that constitute the political jurisdictions

(other than the State in which the installation is located) that comprise the redevelopment authority for the installation.

(P) For purposes of this paragraph, the term ‘‘other interested

parties’’, in the case of an installation, includes any parties eligible

for the conveyance of property of the installation under section 550

of title 40, United States Code, or sections 47151 through 47153 of

title 49, United States Code, whether or not the parties assist the

homeless.

(8)(A) Subject to subparagraph (C), the Secretary may enter

into agreements (including contracts, cooperative agreements, or

other arrangements for reimbursement) with local governments for

the provision of police or security services, fire protection services,

airfield operation services, or other community services by such

governments at military installations to be closed under this part,

or at facilities not yet transferred or otherwise disposed of in the

case of installations closed under this part, if the Secretary determines that the provision of such services under such agreements

is in the best interests of the Department of Defense.

(B) The Secretary may exercise the authority provided under

this paragraph without regard to the provisions of chapter 146 of

title 10, United States Code.

(C) The Secretary may not exercise the authority under subparagraph (A) with respect to an installation earlier than 180 days

before the date on which the installation is to be closed.

(D) The Secretary shall include in a contract for services entered into with a local government under this paragraph a clause

that requires the use of professionals to furnish the services to the

extent that professionals are available in the area under the jurisdiction of such government.

* * * * * * *
813 Sec. 2 HOMELESS USE OF CLOSED DEFENSE BASES

1 In subsection (e), the reference to ‘‘this Act’’ means the Base Closure Community Redevelopment and Homeless Assistance Act of 1994, which was enacted on October 25, 1994. 2The date of enactment was October 25, 1994.

EXCERPT FROM BASE CLOSURE COMMUNITY REDEVELOPMENT AND

HOMELESS ASSISTANCE ACT OF 1994

[Public Law 103–421; 108 Stat. 4352; 10 U.S.C. 2687 note]

SEC. 2. ø10 U.S.C. 2687 note¿ DISPOSAL OF BUILDINGS AND PROPERTY

AT MILITARY INSTALLATIONS APPROVED FOR CLOSURE.

* * * * * * *

(e) APPLICABILITY TO INSTALLATIONS APPROVED FOR CLOSURE

BEFORE ENACTMENT OF ACT.—(1)(A) Notwithstanding any provision of the 1988 base closure Act or the 1990 base closure Act, as

such provision was in effect on the day before the date of the enactment of this Act 1, and subject to subparagraphs (B) and (C), the

use to assist the homeless of building and property at military installations approved for closure under the 1988 base closure Act or

the 1990 base closure Act, as the case may be, before such date

shall be determined in accordance with the provisions of paragraph

(7) of section 2905(b) of the 1990 base closure Act, as amended by

subsection (a), in lieu of the provisions of the 1988 base closure Act

or the 1990 base closure Act that would otherwise apply to the installations.

(B)(i) The provisions of such paragraph (7) shall apply to an installation referred to in subparagraph (A) only if the redevelopment

authority for the installation submits a request to the Secretary of

Defense not later than 60 days after the date of the enactment of

this Act.

(ii) In the case of an installation for which no redevelopment

authority exists on the date of the enactment of this Act, the chief

executive officer of the State in which the installation is located

shall submit the request referred to in clause (i) and act as the redevelopment authority for the installation.

(C) The provisions of such paragraph (7) shall not apply to any

buildings or property at an installation referred to in subparagraph

(A) for which the redevelopment authority submits a request referred to in subparagraph (B) within the time specified in such subparagraph (B) if the buildings or property, as the case may be,

have been transferred or leased for use to assist the homeless

under the 1988 base closure Act or the 1990 base closure Act, as

the case may be, before the date of the enactment of this Act. 2

(2) For purposes of the application of such paragraph (7) to the

buildings and property at an installation, the date on which the

Secretary receives a request with respect to the installation under

paragraph (1) shall be treated as the date on which the Secretary

of Defense completes the final determination referred to in subparagraph (B) of such paragraph (7).

(3) Upon receipt under paragraph (1)(B) of a timely request

with respect to an installation, the Secretary of Defense shall publish in the Federal Register and in a newspaper of general circulation in the communities in the vicinity of the installation information describing the redevelopment authority for the installation.

(4)(A) The Secretary of Housing and Urban Development and

the Secretary of Health and Human Services shall not, during the
Sec. 2 HOMELESS USE OF CLOSED DEFENSE BASES 814

1October 25, 1994.

60-day period beginning on the date of the enactment of this Act,

carry out with respect to any military installation approved for closure under the 1988 base closure Act or the 1990 base closure Act

before such date any action required of such Secretaries under the

1988 base closure Act or the 1990 base closure Act, as the case may

be, or under section 501 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11411).

(B)(i) Upon receipt under paragraph (1)(A) of a timely request

with respect to an installation, the Secretary of Defense shall notify

the Secretary of Housing and Urban Development and the Secretary of Health and Human Services that the disposal of buildings

and property at the installation shall be determined under such

paragraph (7) in accordance with this subsection.

(ii) Upon receipt of a notice with respect to an installation

under this subparagraph, the requirements, if any, of the Secretary

of Housing and Urban Development and the Secretary of Health

and Human Services with respect to the installation under the provisions of law referred to in subparagraph (A) shall terminate.

(iii) Upon receipt of a notice with respect to an installation

under this subparagraph, the Secretary of Health and Human

Services shall notify each representative of the homeless that submitted to that Secretary an application to use buildings or property

at the installation to assist the homeless under the 1988 base closure Act or the 1990 base closure Act, as the case may be, that the

use of buildings and property at the installation to assist the homeless shall be determined under such paragraph (7) in accordance

with this subsection.

(5) In preparing a redevelopment plan for buildings and property at an installation covered by such paragraph (7) by reason of

this subsection, the redevelopment authority concerned shall—

(A) consider and address specifically any applications for

use of such buildings and property to assist the homeless that

were received by the Secretary of Health and Human Services

under the 1988 base closure Act or the 1990 base closure Act,

as the case may be, before the date of the enactment of this

Act 1 and are pending with that Secretary on that date; and

(B) in the case of any application by representatives of the

homeless that was approved by the Secretary of Health and

Human Services before the date of enactment of this Act, 1 ensure that the plan adequately addresses the needs of the homeless identified in the application by providing such representatives of the homeless with—

(i) properties, on or off the installation, that are substantially equivalent to the properties covered by the application;

(ii) sufficient funding to secure such substantially

equivalent properties;

(iii) services and activities that meet the needs identified in the application; or

(iv) a combination of the properties, funding, and services and activities described in clauses (i), (ii), and (iii).
815 Sec. 2 HOMELESS USE OF CLOSED DEFENSE BASES

(6) In the case of an installation to which the provisions of

such paragraph (7) apply by reason of this subsection, the date

specified by the redevelopment authority for the installation under

subparagraph (D) of such paragraph (7) shall be not less than 1

month and not more than 6 months after the date of the submittal

of the request with respect to the installation under paragraph

(1)(B).

(7) For purposes of this subsection:

(A) The term ‘‘1988 base closure Act’’ means title II of the

Defense Authorization Amendments and Base Closure and Realignment Act (Public Law 100–526; 10 U.S.C. 2687 note).

(B) The term ‘‘1990 base closure Act’’ means the Defense

Base Closure and Realignment Act of 1990 (part A of title

XXIX of Public Law 101–510; 10 U.S.C. 2687 note).
816

FHA SINGLE FAMILY PROPERTY DISPOSITION FOR

HOMELESS USE

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 4034]

SEC. 1407. FHA SINGLE FAMILY PROPERTY DISPOSITION.

(a) 30-DAY MARKETING PERIOD.—Except as provided in subsection (b), in carrying out the program for disposition of single

family properties acquired by the Department of Housing and

Urban Development for use by the homeless under subpart E of

part 291 of title 24, Code of Federal Regulations, the Secretary of

Housing and Urban Development may not make any eligible property available for lease under such program that has not been listed and made generally available for sale by the Secretary for a period of at least 30 days.

(b) EXCEPTION.—With respect to any area for which the Secretary determines that there will not be a sufficient quantity of decent, safe, and sanitary affordable housing available for use under

the program referred to in subsection (a) if eligible properties located in the area are made generally available for the 30-day period under subsection (a), the Secretary shall reserve for disposition

under such program not more than 10 percent of the total number

of eligible properties located in the area and shall not market such

properties as provided under subsection (a). The Secretary shall

consult with the unit of general local government for an area in determining which properties should be reserved for disposition

under this subsection.

(c) STATE AND LOCAL TAXES.—

(1) REQUIREMENT TO PROVIDE INFORMATION UPON REQUEST.—In carrying out the program referred to in subsection

(a), the Secretary of Housing and Urban Development shall

provide the information described in paragraph (2) to any lessee or applicant under the program who requests such information.

(2) CONTENT.—The information referred in paragraph (1)

shall identify and describe any exemptions or reductions relating to payment of property taxes under State and local laws

(for the jurisdictions for which the lessee or applicant requests

such information) that may be applicable to lessees or applicants, or to properties leased, under such program.

(3) EXEMPTION FROM ESCROW REQUIREMENT.—To the extent any lessee of a property under the program referred to in

subsection (a) is provided an exemption from any requirement

to pay State or local taxes, or a reduction in the amount of any

such taxes, the Secretary may not require the lessee to pay or
817 Sec. 1407 FHA SINGLE FAMILY PROPERTY DISPOSITION

deposit in any escrow account amounts for the payment of such

taxes.

819

1So in law.

PART VII—HOUSING FOR NATIVE AMERICANS

AND NATIVE HAWAIIANS

NATIVE AMERICAN HOUSING ASSISTANCE

EXCERPTS FROM NATIVE AMERICAN HOUSING ASSISTANCE AND

SELF-DETERMINATION ACT OF 1996

[Public Law 104–330; 110 Stat. 40; 25 U.S.C. 4101 et seq.]

SECTION 1. ø25 U.S.C. 4101 note¿ SHORT TITLE AND TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Native American Housing Assistance and Self-Determination Act of 1996’’.

(b) TABLE OF CONTENTS.—The table of contents for this Act is

as follows:

Sec. 1. Short title.

Sec. 2. Congressional findings.

Sec. 3. Administration through Office of Native American Programs.

Sec. 4. Definitions.

TITLE I—BLOCK GRANTS AND GRANT REQUIREMENTS

Sec. 101. Block grants.

Sec. 102. Indian housing plans.

Sec. 103. Review of plans.

Sec. 104. Treatment of program income and labor standards.

Sec. 105. Environmental review.

Sec. 106. Regulations.

Sec. 107. Effective date.

Sec. 108. Authorization of appropriations.

TITLE II—AFFORDABLE HOUSING ACTIVITIES

Sec. 201. National objectives and eligible families.

Sec. 202. Eligible affordable housing activities.

Sec. 203. Program requirements.

Sec. 204. Types of investments.

Sec. 205. Low-income requirement and income targeting.

øSec. 206. Repealed.]¿

Sec. 207. Lease requirements and tenant selection.

Sec. 208. Availability of records.

209. 1 Noncompliance with affordable housing requirement.

Sec. 210. Continued use of amounts for affordable housing.

TITLE III—ALLOCATION OF GRANT AMOUNTS

Sec. 301. Annual allocation.

Sec. 302. Allocation formula.

TITLE IV—COMPLIANCE, AUDITS, AND REPORTS

Sec. 401. Remedies for noncompliance.

Sec. 402. Replacement of recipient.

Sec. 403. Monitoring of compliance.

Sec. 404. Performance reports.

Sec. 405. Review and audit by Secretary.

Sec. 406. GAO audits.

Sec. 407. Reports to Congress.
Sec. 2 NATIVE AMERICAN HOUSING ASSISTANCE 820

1Title VIII was added by section 203 of the Omnibus Indian Advancement Act (Pub. L. 106–

568; 114 Stat. 2876) and substantially identical provisions were added by section 513 of

the American Homeownership and Economic Opportunity Act of 2000 (Pub. L. 106–609;

114 Stat. 2969). Neither Act made a conforming amendment to this table of contents. The

items relating to title VIII are shown as an aid to the user of this compilation.

Sec. 407. Reports to Congress.

Sec. 408. Public availability of information.

TITLE V—TERMINATION OF ASSISTANCE FOR INDIAN TRIBES UNDER

INCORPORATED PROGRAMS

Sec. 501. Repeal of provisions relating to Indian housing assistance under United

States Housing Act of 1937.

Sec. 502. Termination of Indian housing assistance under United States Housing

Act of 1937.

Sec. 503. Termination of new commitments for rental assistance.

Sec. 504. Termination of youthbuild program assistance.

Sec. 505. Termination of HOME program assistance.

Sec. 506. Termination of housing assistance for the homeless.

Sec. 507. Savings provision.

Sec. 508. Effective date.

TITLE VI—FEDERAL GUARANTEES FOR FINANCING FOR TRIBAL HOUSING

ACTIVITIES

Sec. 601. Authority and requirements.

Sec. 602. Security and repayment.

Sec. 603. Payment of interest.

Sec. 604. Training and information.

Sec. 605. Limitations on amount of guarantees.

Sec. 606. Effective date.

TITLE VII—OTHER HOUSING ASSISTANCE FOR NATIVE AMERICANS

Sec. 701. Loan guarantees for Indian housing.

Sec. 702. 50-year leasehold interest in trust or restricted lands for housing

purposes.

Sec. 703. Training and technical assistance.

Sec. 704. Public and Assisted Housing Drug Elimination Act of 1990.

Sec. 705. Effective date.

øTITLE VIII—HOUSING ASSISTANCE FOR NATIVE HAWAIIANS¿ 1

øSec. 801. Definitions.¿

øSec. 802. Block grants for affordable housing activities.¿

øSec. 803. Housing plan.¿

øSec. 804. Review of plans.¿

øSec. 805. Treatment of program income and labor standards.¿

øSec. 806. Environmental review.¿

øSec. 807. Regulations.¿

øSec. 808. Effective date.¿

øSec. 809. Affordable housing activities.¿

øSec. 810. Eligible affordable housing activities.¿

øSec. 811. Program requirements.¿

øSec. 812. Types of investments.¿

øSec. 813. Low-income requirement and income targeting.¿

øSec. 814. Lease requirements and tenant selection.¿

øSec. 815. Repayment.¿

øSec. 816. Annual allocation.¿

øSec. 817. Allocation formula.¿

øSec. 818. Remedies for noncompliance.¿

øSec. 819. Monitoring of compliance.¿

øSec. 820. Performance reports.¿

øSec. 821. Review and audit by Secretary.¿

øSec. 822. General Accounting Office audits.¿

øSec. 823. Reports to Congress.¿

øSec. 824. Authorization of appropriations.¿

SEC. 2. ø25 U.S.C. 4101¿ CONGRESSIONAL FINDINGS.

The Congress finds that—
821 Sec. 3 NATIVE AMERICAN HOUSING ASSISTANCE

(1) the Federal Government has a responsibility to promote the general welfare of the Nation—

(A) by using Federal resources to aid families and individuals seeking affordable homes in safe and healthy environments and, in particular, assisting responsible, deserving citizens who cannot provide fully for themselves

because of temporary circumstances or factors beyond their

control;

(B) by working to ensure a thriving national economy

and a strong private housing market; and

(C) by developing effective partnerships among the

Federal Government, State, tribal, and local governments,

and private entities that allow government to accept responsibility for fostering the development of a healthy

marketplace and allow families to prosper without government involvement in their day-to-day activities;

(2) there exists a unique relationship between the Government of the United States and the governments of Indian

tribes and a unique Federal responsibility to Indian people;

(3) the Constitution of the United States invests the

Congress with plenary power over the field of Indian affairs,

and through treaties, statutes, and historical relations with Indian tribes, the United States has undertaken a unique trust

responsibility to protect and support Indian tribes and Indian

people;

(4) the Congress, through treaties, statutes, and the general course of dealing with Indian tribes, has assumed a trust

responsibility for the protection and preservation of Indian

tribes and for working with tribes and their members to improve their housing conditions and socioeconomic status so that

they are able to take greater responsibility for their own economic condition;

(5) providing affordable homes in safe and healthy environments is an essential element in the special role of the United

States in helping tribes and their members to improve their

housing conditions and socioeconomic status;

(6) the need for affordable homes in safe and healthy environments on Indian reservations, in Indian communities, and

in Native Alaskan villages is acute and the Federal Government should work not only to provide housing assistance, but

also, to the extent practicable, to assist in the development of

private housing finance mechanisms on Indian lands to achieve

the goals of economic self-sufficiency and self-determination for

tribes and their members; and

(7) Federal assistance to meet these responsibilities should

be provided in a manner that recognizes the right of Indian

self-determination and tribal self-governance by making such

assistance available directly to the Indian tribes or tribally

designated entities under authorities similar to those accorded

Indian tribes in Public Law 93–638 (25 U.S.C. 450 et seq.).

SEC. 3. ø25 U.S.C. 4102¿ ADMINISTRATION THROUGH OFFICE OF NATIVE AMERICAN PROGRAMS.

The Secretary of Housing and Urban Development shall carry

out this Act through the Office of Native American Programs of the

Department of Housing and Urban Development.
Sec. 4 NATIVE AMERICAN HOUSING ASSISTANCE 822

SEC. 4. ø25 U.S.C. 4103¿ DEFINITIONS.

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

(1) ADJUSTED INCOME.—The term ‘‘adjusted income’’ means

the annual income that remains after excluding the following

amounts:

(A) YOUTHS, STUDENTS, AND PERSONS WITH DIS- ABILITIES.—$480 for each member of the family residing in

the household (other than the head of the household or the

spouse of the head of the household)—

(i) who is under 18 years of age; or

(ii) who is—

(I) 18 years of age or older; and

(II) a person with disabilities or a full-time

student.

(B) ELDERLY AND DISABLED FAMILIES.—$400 for an elderly or disabled family.

(C) MEDICAL AND ATTENDANT EXPENSES.—The amount

by which 3 percent of the annual income of the family is

exceeded by the aggregate of—

(i) medical expenses, in the case of an elderly or

disabled family; and

(ii) reasonable attendant care and auxiliary apparatus expenses for each family member who is a person with disabilities, to the extent necessary to enable

any member of the family (including a member who is

a person with disabilities) to be employed.

(D) CHILD CARE EXPENSES.—Child care expenses, to

the extent necessary to enable another member of the family to be employed or to further his or her education.

(E) EARNED INCOME OF MINORS.—The amount of any

earned income of any member of the family who is less

than 18 years of age.

(F) TRAVEL EXPENSES.—Excessive travel expenses, not

to exceed $25 per family per week, for employment- or

education-related travel.

(G) OTHER AMOUNTS.—Such other amounts as may be

provided in the Indian housing plan for an Indian tribe.

(2) AFFORDABLE HOUSING.—The term ‘‘affordable housing’’

means housing that complies with the requirements for

affordable housing under title II. The term includes permanent

housing for homeless persons who are persons with disabilities,

transitional housing, and single room occupancy housing.

(3) DRUG-RELATED CRIMINAL ACTIVITY.—The term ‘‘drug-related criminal activity’’ means the illegal manufacture, sale,

distribution, use, or possession with intent to manufacture,

sell, distribute, or use, of a controlled substance (as such term

is defined in section 102 of the Controlled Substances Act).

(4) ELDERLY FAMILIES AND NEAR-ELDERLY FAMILIES.—The

terms ‘‘elderly family’’ and ‘‘near-elderly family’’ mean a family

whose head (or his or her spouse), or whose sole member, is

an elderly person or a near-elderly person, respectively. Such

terms include 2 or more elderly persons or near-elderly persons

living together, and 1 or more such persons living with 1 or

more persons determined under the Indian housing plan for

the agency to be essential to their care or well-being.
823 Sec. 4 NATIVE AMERICAN HOUSING ASSISTANCE

(5) ELDERLY PERSON.—The term ‘‘elderly person’’ means a

person who is at least 62 years of age.

(6) FAMILY.—The term ‘‘family’’ includes a family with or

without children, an elderly family, a near-elderly family, a

disabled family, and a single person.

(7) GRANT BENEFICIARY.—The term ‘‘grant beneficiary’’

means the Indian tribe or tribes on behalf of which a grant is

made under this Act to a recipient.

(8) INCOME.—The term ‘‘income’’ means income from all

sources of each member of the household, as determined in accordance with criteria prescribed by the Secretary, except that

the following amounts may not be considered as income under

this paragraph:

(A) Any amounts not actually received by the family.

(B) Any amounts that would be eligible for exclusion

under section 1613(a)(7) of the Social Security Act.

(9) INDIAN.—The term ‘‘Indian’’ means any person who is

a member of an Indian tribe.

(10) INDIAN AREA.—The term ‘‘Indian area’’ means the area

within which an Indian tribe or a tribally designated housing

entity, as authorized by 1 or more Indian tribes, provides assistance under this Act for affordable housing.

(11) INDIAN HOUSING PLAN.—The term ‘‘Indian housing

plan’’ means a plan under section 102.

(12) INDIAN TRIBE.— (A) IN GENERAL.—The term ‘‘Indian tribe’’ means a

tribe that is a federally recognized tribe or a State recognized tribe.

(B) FEDERALLY RECOGNIZED TRIBE.—The term ‘‘federally recognized tribe’’ means any Indian tribe, band, nation, or other organized group or community of Indians,

including any Alaska Native village or regional or village

corporation as defined in or established pursuant to the

Alaska Native Claims Settlement Act, that is recognized

as eligible for the special programs and services provided

by the United States to Indians because of their status as

Indians pursuant to the Indian Self-Determination and

Education Assistance Act (25 U.S.C. 450 et seq.).

(C) STATE RECOGNIZED TRIBE.—

(i) IN GENERAL.—The term ‘‘State recognized

tribe’’ means any tribe, band, nation, pueblo, village,

or community—

(I) that has been recognized as an Indian

tribe by any State; and

(II) for which an Indian Housing Authority

has, before the effective date under section 705,

entered into a contract with the Secretary pursuant to the United States Housing Act of 1937 for

housing for Indian families and has received funding pursuant to such contract within the 5-year

period ending upon such effective date.

(ii) CONDITIONS.—Notwithstanding clause (i)—

(I) the allocation formula under section 302

shall be determined for a State recognized tribe

under tribal membership eligibility criteria in ex-
Sec. 4 NATIVE AMERICAN HOUSING ASSISTANCE 824

1October 26, 1996.

istence on the date of the enactment of this Act 1;

and

(II) nothing in this paragraph shall be construed to confer upon a State recognized tribe any

rights, privileges, responsibilities, or obligations

otherwise accorded groups recognized as Indian

tribes by the United States for other purposes.

(13) LOW-INCOME FAMILY.—The term ‘‘low-income family’’

means a family whose income does not exceed 80 percent of the

median income for the area, as determined by the Secretary

with adjustments for smaller and larger families, except that

the Secretary may, for purposes of this paragraph, establish income ceilings higher or lower than 80 percent of the median for

the area on the basis of the findings of the Secretary or the

agency that such variations are necessary because of prevailing

levels of construction costs or unusually high or low family incomes.

(14) MEDIAN INCOME.—The term ‘‘median income’’ means,

with respect to an area that is an Indian area, the greater of—

(A) the median income for the Indian area, which the

Secretary shall determine; or

(B) the median income for the United States.

(15) NEAR-ELDERLY PERSON.—The term ‘‘near-elderly person’’ means a person who is at least 55 years of age and less

than 62 years of age.

(16) NONPROFIT.—The term ‘‘nonprofit’’ means, with respect to an organization, association, corporation, or other entity, that no part of the net earnings of the entity inures to the

benefit of any member, founder, contributor, or individual.

(17) PERSON WITH DISABILITIES.—The term ‘‘person with

disabilities’’ means a person who—

(A) has a disability as defined in section 223 of the Social Security Act;

(B) is determined, pursuant to regulations issued by

the Secretary, to have a physical, mental, or emotional impairment which—

(i) is expected to be of long-continued and indefinite duration;

(ii) substantially impedes his or her ability to live

independently; and

(iii) is of such a nature that such ability could be

improved by more suitable housing conditions; or

(C) has a developmental disability as defined in section 102 of the Developmental Disabilities Assistance and

Bill of Rights Act of 2000.

Such term shall not exclude persons who have the disease of

acquired immunodeficiency syndrome or any conditions

arising from the etiologic agent for acquired immunodeficiency

syndrome. Notwithstanding any other provision of law, no individual shall be considered a person with disabilities, for purposes of eligibility for housing assisted under this Act, solely

on the basis of any drug or alcohol dependence. The Secretary
825 Sec. 4 NATIVE AMERICAN HOUSING ASSISTANCE

1October 26, 1996.

shall consult with other appropriate Federal agencies to implement the preceding sentence.

(18) RECIPIENT.—The term ‘‘recipient’’ means an Indian

tribe or the entity for one or more Indian tribes that is authorized to receive grant amounts under this Act on behalf of the

tribe or tribes.

(19) SECRETARY.—Except as otherwise specifically provided

in this Act, the term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(20) STATE.—The term ‘‘State’’ means the States 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 any

other territory or possession of the United States and Indian

tribes.

(21) TRIBALLY DESIGNATED HOUSING ENTITY.—The terms

‘‘tribally designated housing entity’’ and ‘‘housing entity’’ have

the following meaning:

(A) EXISTING IHA’S.—With respect to any Indian tribe

that has not taken action under subparagraph (B), and for

which an Indian housing authority—

(i) was established for purposes of the United

States Housing Act of 1937 before the date of the enactment of this Act 1 that meets the requirements

under the United States Housing Act of 1937,

(ii) is acting upon such date of enactment as the

Indian housing authority for the tribe, and

(iii) is not an Indian tribe for purposes of this Act,

the terms mean such Indian housing authority.

(B) OTHER ENTITIES.—With respect to any Indian tribe

that, pursuant to this Act, authorizes an entity other than

the tribal government to receive grant amounts and provide assistance under this Act for affordable housing for

Indians, which entity is established—

(i) by exercise of the power of self-government of

one or more Indian tribes independent of State

law, or

(ii) by operation of State law providing specifically

for housing authorities or housing entities for Indians,

including regional housing authorities in the State of

Alaska,

the terms mean such entity.

(C) ESTABLISHMENT.—A tribally designated housing

entity may be authorized or established by one or more Indian tribes to act on behalf of each such tribe authorizing

or establishing the housing entity.

(22) HOUSING RELATED COMMUNITY DEVELOPMENT.—

(A) IN GENERAL.—The term ‘‘housing related community development’’ means any tribally-owned and operated

facility, business, activity, or infrastructure that—

(i) is necessary to the direct construction of reservation housing; and
Sec. 101 NATIVE AMERICAN HOUSING ASSISTANCE 826

1This paragraph was amended to read as shown by section 1003(a)(1) of the Omnibus Indian

Advancement Act, Pub. L. 106–568, approved December 27, 2000. Section 503(a)(1) of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the

same day, made an amendment inserting (a second time) language identical to that added by

Pub. L. 106–568, but that amendment has not been executed in this compilation.

(ii) would help an Indian tribe or its tribally-designated housing authority reduce the cost of construction of Indian housing or otherwise promote the findings of this Act.

(B) EXCLUSION.—The term ‘‘housing and community

development’’ does not include any activity conducted by

any Indian tribe under the Indian Gaming Regulatory Act

(25 U.S.C. 2710 et seq.).

TITLE I—BLOCK GRANTS AND GRANT

REQUIREMENTS

SEC. 101. ø25 U.S.C. 4111¿ BLOCK GRANTS.

(a) AUTHORITY.—For each fiscal year, the Secretary shall (to

the extent amounts are made available to carry out this Act) make

grants under this section on behalf of Indian tribes to carry out affordable housing activities. Under such a grant on behalf of an Indian tribe, the Secretary shall provide the grant amounts for the

tribe directly to the recipient for the tribe.

(b) PLAN REQUIREMENT.—

(1) IN GENERAL.—The Secretary may make a grant under

this Act on behalf of an Indian tribe for a fiscal year

only if—

(A) the Indian tribe has submitted to the Secretary an

Indian housing plan for such fiscal year under section 102;

and

(B) the plan has been determined under section 103 to

comply with the requirements of section 102.

(2) WAIVER.—The Secretary may waive the applicability of

the requirements under paragraph (1), in whole or in part, for

a period of not more than 90 days, if the Secretary determines

that an Indian tribe has not complied with, or is unable to

comply with, those requirements due to exigent circumstances

beyond the control of the Indian tribe. 1

(c) LOCAL COOPERATION AGREEMENT.—Notwithstanding any

other provision of this Act, grant amounts provided under this Act

on behalf of an Indian tribe may not be used for rental or leasepurchase homeownership units that are owned by the recipient for

the tribe unless the governing body of the locality within which the

property subject to the development activities to be assisted with

the grant amounts is or will be situated has entered into an agreement with the recipient for the tribe providing for local cooperation

required by the Secretary pursuant to this Act. The Secretary may

waive the requirements of this subsection and subsection (d) if the

recipient has made a good faith effort to fulfill the requirements of

this subsection and subsection (d) and agrees to make payments in

lieu of taxes to the appropriate taxing authority in an amount consistent with the requirements of subsection (d)(2) until such time
827 Sec. 101 NATIVE AMERICAN HOUSING ASSISTANCE

1This sentence was added by section 1003(a)(2) of the Omnibus Indian Advancement Act, Pub.

L. 106–568, approved December 27, 2000. Section 503(a)(2) of the American Homeownership and

Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amendment adding (a second time) a sentence identical to that added by Pub. L. 106–568, but that

amendment has not been executed in this compilation.

as the matter of making such payments has been resolved in accordance with subsection (d). 1

(d) EXEMPTION FROM TAXATION.—Notwithstanding any other

provision of this Act, grant amounts provided under this Act on behalf of an Indian tribe may not be used for affordable housing activities under this Act for rental or lease-purchase dwelling units

developed under the United States Housing Act of 1937 (42 U.S.C.

1437 et seq.) or with amounts provided under this Act that are

owned by the recipient for the tribe unless—

(1) such dwelling units (which, in the case of units in a

multi-unit project, shall be exclusive of any portions of the

project not developed under the United States Housing Act of

1937 or with amounts provided under this Act) are exempt

from all real and personal property taxes levied or imposed by

any State, tribe, city, county, or other political subdivision; and

(2) the recipient for the tribe makes annual payments of

user fees to compensate such governments for the costs of providing governmental services, including police and fire protection, roads, water and sewerage systems, utilities systems and

related facilities, or payments in lieu of taxes to such taxing

authority, in an amount equal to the greater of $150 per dwelling unit or 10 percent of the difference between the shelter

rent and the utility cost, or such lesser amount as—

(A) is prescribed by State, tribal, or local law;

(B) is agreed to by the local governing body in the

agreement under subsection (c); or

(C) the recipient and the local governing body agree

that such user fees or payments in lieu of taxes shall not

be made.

(e) EFFECT OF FAILURE TO EXEMPT FROM TAXATION.—Notwithstanding subsection (d), a grant recipient that does not comply with

the requirements under such subsection may receive a block grant

under this Act, but only if the tribe, State, city, county, or other

political subdivision in which the affordable housing development

is located contributes, in the form of cash or tax remission, the

amount by which the taxes paid with respect to the development

exceed the amounts prescribed in subsection (d)(2).

(f) AMOUNT.—Except as otherwise provided under this Act, the

amount of a grant under this section to a recipient for a fiscal year

shall be—

(1) in the case of a recipient whose grant beneficiary is a

single Indian tribe, the amount of the allocation under section

301 for the Indian tribe; and

(2) in the case of a recipient whose grant beneficiary is

more than 1 Indian tribe, the sum of the amounts of the allocations under section 301 for each such Indian tribe.

(g) USE FOR AFFORDABLE HOUSING ACTIVITIES UNDER PLAN.—

Except as provided in subsection (h), amounts provided under a

grant under this section may be used only for affordable housing
Sec. 102 NATIVE AMERICAN HOUSING ASSISTANCE 828

activities under title II that are consistent with an Indian housing

plan approved under section 103.

(h) ADMINISTRATIVE AND PLANNING EXPENSES.—The Secretary

shall, by regulation, authorize each recipient to use a percentage

of any grant amounts received under this Act for comprehensive

housing and community development planning activities and for

any reasonable administrative and planning expenses of the recipient relating to carrying out this Act and activities assisted with

such amounts, which may include costs for salaries of individuals

engaged in administering and managing affordable housing activities assisted with grant amounts provided under this Act and expenses of preparing an Indian housing plan under section 102.

(i) PUBLIC-PRIVATE PARTNERSHIPS.—Each recipient shall make

all reasonable efforts, consistent with the purposes of this Act, to

maximize participation by the private sector, including nonprofit

organizations and for-profit entities, in implementing the approved

Indian housing plan.

SEC. 102. ø25 U.S.C. 4112¿ INDIAN HOUSING PLANS.

(a) PLAN SUBMISSION.—The Secretary shall provide—

(1)(A) for an Indian tribe to submit to the Secretary, for

each fiscal year, a housing plan under this section for the tribe;

or

(B) for the tribally designated housing entity for the tribe

to submit the plan as provided in subsection (d) for the tribe;

and

(2) for the review of such plans.

(b) 5-YEAR PLAN.—Each housing plan under this section shall

be in a form prescribed by the Secretary and shall contain, with respect to the 5-year period beginning with the fiscal year for which

the plan is submitted, the following information:

(1) MISSION STATEMENT.—A general statement of the

mission of the Indian tribe to serve the needs of the low-income

families in the jurisdiction of the Indian tribe during the period.

(2) GOALS AND OBJECTIVES.—A statement of the goals and

objectives of the Indian tribe to enable the tribe to serve the

needs identified in paragraph (1) during the period.

(3) ACTIVITIES PLAN.—An overview of the activities

planned during the period including an analysis of the manner

in which the activities will enable the tribe to meet its mission,

goals, and objectives.

(c) 1-YEAR PLAN.—A housing plan under this section for an Indian tribe shall be in a form prescribed by the Secretary and contain the following information relating to the upcoming fiscal year

for which the assistance under this Act is to be made available:

(1) GOALS AND OBJECTIVES.—A statement of the goals and

objectives to be accomplished during that period.

(2) STATEMENT OF NEEDS.—A statement of the housing

needs of the low-income Indian families residing in the jurisdiction of the Indian tribe and the means by which such needs

will be addressed during the period, including—

(A) a description of the estimated housing needs and

the need for assistance for the low-income Indian

families in the jurisdiction, including a description of the
829 Sec. 102 NATIVE AMERICAN HOUSING ASSISTANCE

manner in which the geographical distribution of assistance is consistent with the geographical needs and needs

for various categories of housing assistance; and

(B) a description of the estimated housing needs for all

Indian families in the jurisdiction.

(3) FINANCIAL RESOURCES.—An operating budget for the

recipient, in a form prescribed by the Secretary, that

includes—

(A) an identification and a description of the financial

resources reasonably available to the recipient to carry out

the purposes of this Act, including an explanation of the

manner in which amounts made available will leverage additional resources; and

(B) the uses to which such resources will be committed, including eligible and required affordable housing

activities under title II and administrative expenses.

(4) AFFORDABLE HOUSING RESOURCES.—A statement of the

affordable housing resources currently available and to be

made available during the period, including—

(A) a description of the significant characteristics of

the housing market in the jurisdiction, including the availability of housing from other public sources, private market housing, and the manner in which such characteristics

influence the decision of the recipient to use grant

amounts to be provided under this Act for rental assistance,

production of new units, acquisition of existing units, or rehabilitation of units;

(B) a description of the structure, coordination, and

means of cooperation between the recipient and any other

governmental entities in the development, submission, or

implementation of housing plans, including a description of

the involvement of private, public, and nonprofit organizations and institutions, and the use of loan

guarantees under section 184 of the Housing and Community Development Act of 1992, and other housing assistance provided by the Federal Government for Indian

tribes, including loans, grants, and mortgage insurance;

(C) a description of the manner in which the plan will

address the needs identified pursuant to paragraph (2);

(D) a description of the manner in which the recipient

will protect and maintain the viability of housing owned

and operated by the recipient that was developed under a

contract between the Secretary and an Indian housing authority pursuant to the United States Housing Act of 1937;

(E) a description of any existing and anticipated homeownership programs and rental programs to be carried out

during the period, and the requirements and assistance

available under such programs;

(F) a description of any existing and anticipated

housing rehabilitation programs necessary to ensure the

long-term viability of the housing to be carried out during

the period, and the requirements and assistance available

under such programs;
Sec. 102 NATIVE AMERICAN HOUSING ASSISTANCE 830

1This paragraph was added by section 1003(b) of the Omnibus Indian Advancement Act, Pub.

L. 106–568, approved December 27, 2000. Section 503(b) of the American Homeownership and

Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amend-

(G) a description of all other existing or anticipated

housing assistance provided by the recipient during the period, including transitional housing, homeless housing, college housing, supportive services housing, and the requirements and assistance available under such programs;

(H) a description of any housing to be demolished or

disposed of, a timetable for such demolition or disposition,

and any other information required by the Secretary with

respect to such demolition or disposition;

(I) a description of the manner in which the recipient

will coordinate with tribal and State welfare agencies to

ensure that residents of such housing will be provided with

access to resources to assist in obtaining employment and

achieving self-sufficiency;

(J) a description of the requirements established by

the recipient to promote the safety of residents of such

housing, facilitate the undertaking of crime prevention

measures, allow resident input and involvement, including

the establishment of resident organizations, and allow for

the coordination of crime prevention activities between the

recipient and tribal and local law enforcement officials;

and

(K) a description of the entity that will carry out the

activities under the plan, including the organizational capacity and key personnel of the entity.

(5) CERTIFICATION OF COMPLIANCE.—Evidence of compliance which shall include, as appropriate—

(A) a certification that the recipient will comply with

title II of the Civil Rights Act of 1968 in carrying out this

Act, to the extent that such title is applicable, and other

applicable Federal statutes;

(B) a certification that the recipient will maintain adequate insurance coverage for housing units that are owned

and operated or assisted with grant amounts provided

under this Act, in compliance with such requirements as

may be established by the Secretary;

(C) a certification that policies are in effect and are

available for review by the Secretary and the public governing the eligibility, admission, and occupancy of families

for housing assisted with grant amounts provided under

this Act;

(D) a certification that policies are in effect and are

available for review by the Secretary and the public governing rents charged, including the methods by which such

rents or homebuyer payments are determined, for housing

assisted with grant amounts provided under this Act; and

(E) a certification that policies are in effect and are

available for review by the Secretary and the public governing the management and maintenance of housing assisted with grant amounts provided under this Act.

(6) CERTAIN FAMILIES.— 1With respect to assistance provided under section 201(b)(2) by a recipient to Indian families
831 Sec. 103 NATIVE AMERICAN HOUSING ASSISTANCE

ment adding (a second time) a paragraph identical to that added by Pub. L. 106–568, but that

amendment has not been executed in this compilation. 1Section 1003(c) of the Omnibus Indian Advancement Act, Pub. L. 106–568, approved December 27, 2000, made amendments striking subsection (f) of this section and redesignating thenexisting subsection (g) as subsection (f), as shown. Section 503(c) of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made

amendments to this section identical to those made by Pub. L. 106–568, but those amendments

have not been executed in this compilation.

that are not low-income families, evidence that there is a need

for housing for each such family during that period that cannot

reasonably be met without such assistance.

(d) PARTICIPATION OF TRIBALLY DESIGNATED HOUSING ENTI- TY.—A plan under this section for an Indian tribe may be prepared

and submitted on behalf of the tribe by the tribally designated

housing entity for the tribe, but only if such plan contains a certification by the recognized tribal government of the grant beneficiary

that such tribe—

(1) has had an opportunity to review the plan and has authorized the submission of the plan by the housing entity; or

(2) has delegated to such tribally designated housing entity

the authority to submit a plan on behalf of the tribe without

prior review by the tribe.

(e) COORDINATION OF PLANS.—A plan under this section may

cover more than 1 Indian tribe, but only if the certification requirements under subsection (d) are complied with by each such grant

beneficiary covered.

(f) REGULATIONS.— 1The requirements relating to the contents

of plans under this section shall be established by regulation, pursuant to section 106.

SEC. 103. ø25 U.S.C. 4113¿ REVIEW OF PLANS.

(a) REVIEW AND NOTICE.— (1) REVIEW.—The Secretary shall conduct a limited review

of each Indian housing plan submitted to the Secretary to ensure that the plan complies with the requirements of section

102. The Secretary shall have the discretion to review a plan

only to the extent that the Secretary considers review is

necessary.

(2) NOTICE.—The Secretary shall notify each Indian tribe

for which a plan is submitted and any tribally designated

housing entity for the tribe whether the plan complies with

such requirements not later than 60 days after receiving the

plan. If the Secretary does not notify the Indian tribe, as required under this subsection and subsection (b), the plan shall

be considered, for purposes of this Act, to have been determined to comply with the requirements under section 102 and

the tribe shall be considered to have been notified of compliance upon the expiration of such 60-day period.

(b) NOTICE OF REASONS FOR DETERMINATION OF NONCOMPLI- ANCE.—If the Secretary determines that a plan, as submitted, does

not comply with the requirements under section 102, the Secretary

shall specify in the notice under subsection (a) the reasons for the

noncompliance and any modifications necessary for the plan to

meet the requirements under section 102.

(c) REVIEW.—After submission of the Indian housing plan or

any amendment or modification to the plan to the Secretary, to the

extent that the Secretary considers such action to be necessary to
Sec. 104 NATIVE AMERICAN HOUSING ASSISTANCE 832

1Section 5(2)(A) of the Native American Housing Assistance and Self-Determination Reauthorization Act of 2002, Pub. L. 107–292, 116 Stat. 2054, approved November 13, 2002, provided

that this paragraph was amended ‘‘in the heading, by inserting ‘RESTRICTED ACCESS OR’ before

the word ‘REDUCTION’‰’’. The amendment could not be executed.

make determinations under this subsection, the Secretary shall review the plan (including any amendments or modifications thereto)

to determine whether the contents of the plan—

(1) set forth the information required by section 102 to be

contained in an Indian housing plan;

(2) are consistent with information and data available to

the Secretary; and

(3) are not prohibited by or inconsistent with any provision

of this Act or other applicable law.

If the Secretary determines that any of the appropriate certifications required under section 102(c)(5) are not included in the

plan, the plan shall be deemed to be incomplete.

(d) UPDATES TO PLAN.—After a plan under section 102 has

been submitted for an Indian tribe for any fiscal year, the tribe

may comply with the provisions of such section for any succeeding

fiscal year (with respect to information included for the 5-year period under section 102(b) or the 1-year period under section 102(c))

by submitting only such information regarding such changes as

may be necessary to update the plan previously submitted. Not less

than once every 5 years, the tribe shall submit a complete plan.

(e) EFFECTIVE DATE.—This section and section 102 shall take

effect on the date provided by the Secretary pursuant to section

106(a) to provide for timely submission and review of Indian housing plans as necessary for the provision of assistance under this

Act in fiscal year 1998.

SEC. 104. ø25 U.S.C. 4114¿ TREATMENT OF PROGRAM INCOME AND

LABOR STANDARDS.

(a) PROGRAM INCOME.— (1) AUTHORITY TO RETAIN.—Notwithstanding any other

provision of this Act, a recipient may retain any program income that is realized from any grant amounts under this Act

if—

(A) such income was realized after the initial disbursement of the grant amounts received by the recipient; and

(B) the recipient has agreed that it will utilize such income for housing related activities in accordance with this

Act.

(2) PROHIBITION OF REDUCTION OF GRANT 1.—The Secretary

may not reduce the grant amount for any Indian tribe based

solely on—

(A) whether the recipient for the tribe retains program

income under paragraph (1);

(B) the amount of any such program income

retained;

(C) whether the recipient retains reserve amounts described in section 210; or

(D) whether the recipient has expended retained program income for housing-related activities.

(3) EXCLUSION OF AMOUNTS.—The Secretary may, by

regulation, exclude from consideration as program income any

amounts determined to be so small that compliance with the
833 Sec. 105 NATIVE AMERICAN HOUSING ASSISTANCE

1This paragraph was added by section 1003(j) of the Omnibus Indian Advancement Act, Pub.

L. 106–568, approved December 27, 2000. Section 503(i) of the American Homeownership and

Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amendment inserting (a second time) a paragraph identical to that added by Pub. L. 106–568, but that

amendment has not been executed in this compilation.

requirements of this subsection would create an unreasonable

administrative burden on the recipient.

(b) LABOR STANDARDS.— (1) IN GENERAL.—Any contract or agreement for assistance, sale, or lease pursuant to this Act shall contain a provision requiring that not less than the wages prevailing in the

locality, as determined or adopted (subsequent to a determination under applicable State, tribal, or local law) by the Secretary, shall be paid to all architects, technical engineers,

draftsmen, and technicians employed in the development, and

all maintenance laborers and mechanics employed in the operation, of the affordable housing project involved; and shall also

contain a provision that not less than the wages prevailing in

the locality, as predetermined by the Secretary of Labor pursuant to the Act of March 3, 1931 (commonly known as the

Davis-Bacon Act; chapter 411; 46 Stat. 1494; 40 U.S.C. 276a et

seq.), shall be paid to all laborers and mechanics employed in

the development of the affordable housing involved, and the

Secretary shall require certification as to compliance with the

provisions of this paragraph before making any payment under

such contract or agreement.

(2) EXCEPTIONS.—Paragraph (1) and the provisions relating to wages (pursuant to paragraph (1)) in any contract or

agreement for assistance, sale, or lease pursuant to this Act,

shall not apply to any individual who receives no compensation

or is paid expenses, reasonable benefits, or a nominal fee to

perform the services for which the individual volunteered and

who is not otherwise employed at any time in the construction

work.

(3) APPLICATION OF TRIBAL LAWS.— 1Paragraph (1) shall

not apply to any contract or agreement for assistance, sale, or

lease pursuant to this Act, if such contract or agreement is otherwise covered by one or more laws or regulations adopted by

an Indian tribe that requires the payment of not less than prevailing wages, as determined by the Indian tribe.

SEC. 105. ø25 U.S.C. 4115¿ ENVIRONMENTAL REVIEW.

(a) IN GENERAL.—

(1) RELEASE OF FUNDS.—In order to ensure that the policies of the National Environmental Policy Act of 1969 and

other provisions of law that further the purposes of such Act

(as specified in regulations issued by the Secretary) are most

effectively implemented in connection with the expenditure of

grant amounts provided under this Act, and to ensure to the

public undiminished protection of the environment, the Secretary, in lieu of the environmental protection procedures otherwise applicable, may by regulation provide for the release of

amounts for particular projects to tribes which assume all of

the responsibilities for environmental review, decisionmaking,

and action pursuant to such Act, and such other provisions of

law as the regulations of the Secretary specify, that would
Sec. 105 NATIVE AMERICAN HOUSING ASSISTANCE 834

1This subsection was added by section 1003(d) of the Omnibus Indian Advancement Act, Pub.

L. 106–568, approved December 27, 2000. Section 503(d) of the American Homeownership and

Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amendapply to the Secretary were the Secretary to undertake such

projects as Federal projects.

(2) REGULATIONS.—

(A) IN GENERAL.—The Secretary shall issue regulations to carry out this section only after consultation with

the Council on Environmental Quality.

(B) CONTENTS.—The regulations issued under this

paragraph shall—

(i) provide for the monitoring of the environmental

reviews performed under this section;

(ii) in the discretion of the Secretary, facilitate

training for the performance of such reviews; and

(iii) provide for the suspension or termination of

the assumption of responsibilities under this section.

(3) EFFECT ON ASSUMED RESPONSIBILITY.—The duty of the

Secretary under paragraph (2)(B) shall not be construed to

limit or reduce any responsibility assumed by a recipient of

grant amounts with respect to any particular release of funds.

(b) PROCEDURE.—The Secretary shall approve the release of

funds subject to the procedures authorized by this section only if,

not less than 15 days prior to such approval and prior to any commitment of funds to such projects, the tribe has submitted to the

Secretary a request for such release accompanied by a certification

that meets the requirements of subsection (c). The approval of the

Secretary of any such certification shall be deemed to satisfy the

responsibilities of the Secretary under the National Environmental

Policy Act of 1969 and such other provisions of law as the regulations of the Secretary specify insofar as those responsibilities relate

to the releases of funds for projects to be carried out pursuant

thereto that are covered by such certification.

(c) CERTIFICATION.—A certification under the procedures authorized by this section shall—

(1) be in a form acceptable to the Secretary;

(2) be executed by the chief executive officer or other officer of the tribe under this Act qualified under regulations of

the Secretary;

(3) specify that the tribe has fully carried out its responsibilities as described under subsection (a); and

(4) specify that the certifying officer—

(A) consents to assume the status of a responsible Federal official under the National Environmental Policy Act

of 1969 and each provision of law specified in regulations

issued by the Secretary insofar as the provisions of such

Act or such other provisions of law apply pursuant to subsection (a); and

(B) is authorized and consents on behalf of the tribe

and such officer to accept the jurisdiction of the Federal

courts for the purpose of enforcement of the responsibilities of the certifying officer as such an official.

(d) ENVIRONMENTAL COMPLIANCE.— 1The Secretary may waive

the requirements under this section if the Secretary determines
835 Sec. 106 NATIVE AMERICAN HOUSING ASSISTANCE

ment adding (a second time) a subsection identical to that added by Pub. L. 106–568, but that

amendment has not been executed in this compilation. 1The date of enactment was October 26, 1996.

that a failure on the part of a recipient to comply with provisions

of this section—

(1) will not frustrate the goals of the National Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.) or any other

provision of law that furthers the goals of that Act;

(2) does not threaten the health or safety of the community

involved by posing an immediate or long-term hazard to residents of that community;

(3) is a result of inadvertent error, including an incorrect

or incomplete certification provided under subsection (c)(1);

and

(4) may be corrected through the sole action of the recipient.

SEC. 106. ø25 U.S.C. 4116¿ REGULATIONS.

(a) TRANSITION REQUIREMENTS.—

(1) IN GENERAL.—Not later than 90 days after the date of

the enactment of this Act 1, the Secretary shall, by notice

issued in the Federal Register, establish any requirements

necessary to provide for the transition (upon the effectiveness

of this Act and the amendments made by this Act) from the

provision of assistance for Indian tribes and Indian housing authorities under the United States Housing Act of 1937 and

other related provisions of law to the provision of assistance in

accordance with this Act and the amendments made by this

Act.

(2) PUBLIC COMMENTS; GENERAL NOTICE OF PROPOSED

RULEMAKING.—The notice issued under paragraph (1) shall—

(A) invite public comments regarding such transition

requirements and final regulations to carry out this Act;

and

(B) include a general notice of proposed rulemaking

(for purposes of section 564(a) of title 5, United States

Code) of the final regulations under subsection (b).

(b) FINAL REGULATIONS.—

(1) TIMING.—The Secretary shall issue final regulations

necessary to carry out this Act not later than September 1,

1997, and such regulations shall take effect not later than the

effective date of this Act.

(2) NEGOTIATED RULEMAKING PROCEDURE.—

(A) IN GENERAL.—Notwithstanding sections 563(a) and

565(a) of title 5, United States Code, all regulations required under this Act, including any regulations that may

be required pursuant to amendments made to this Act

after the date of enactment of this Act, shall be issued according to a negotiated rulemaking procedure under subchapter III of chapter 5 of title 5, United States Code.

(B) COMMITTEE.— (i) IN GENERAL.—The Secretary shall establish a

negotiated rulemaking committee, in accordance with

the procedures under that subchapter, for the development of proposed regulations under subparagraph (A).
Sec. 107 NATIVE AMERICAN HOUSING ASSISTANCE 836

1October 26, 1996.

(ii) ADAPTATION.—In establishing the negotiated

rulemaking committee, the Secretary shall—

(I) adapt the procedures under the subchapter

described in clause (i) to the unique governmentto-government relationship between the Indian

tribes and the United States, and shall ensure

that the membership of the committee include

only representatives of the Federal Government

and of geographically diverse small, medium, and

large Indian tribes; and

(II) shall not preclude the participation of

tribally designated housing entities should tribes

elect to be represented by such entities.

(c) EFFECTIVE DATE.—This section shall take effect on the date

of the enactment of this Act 1.

SEC. 107. ø25 U.S.C. 4101 note¿ EFFECTIVE DATE.

Except as otherwise expressly provided in this Act, this Act

and the amendments made by this Act shall take effect on October

1, 1997.

SEC. 108. ø25 U.S.C. 4117¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated for grants under this

title such sums as may be necessary for each of fiscal years 1998

through 2007. This section shall take effect on the date of the enactment of this Act 1.

TITLE II—AFFORDABLE HOUSING

ACTIVITIES

SEC. 201. ø25 U.S.C. 4131¿ NATIONAL OBJECTIVES AND ELIGIBLE FAMILIES.

(a) PRIMARY OBJECTIVE.—The national objectives of this Act

are—

(1) to assist and promote affordable housing activities to

develop, maintain, and operate affordable housing in safe and

healthy environments on Indian reservations and in other Indian areas for occupancy by low-income Indian families;

(2) to ensure better access to private mortgage markets for

Indian tribes and their members and to promote selfsufficiency of Indian tribes and their members;

(3) to coordinate activities to provide housing for Indian

tribes and their members with Federal, State, and local activities to further economic and community development for Indian tribes and their members;

(4) to plan for and integrate infrastructure resources for

Indian tribes with housing development for tribes; and

(5) to promote the development of private capital markets

in Indian country and to allow such markets to operate and

grow, thereby benefiting Indian communities.

(b) ELIGIBLE FAMILIES.—

(1) IN GENERAL.—Except as provided under paragraphs (2)

and (4), assistance under eligible housing activities under this
837 Sec. 201 NATIVE AMERICAN HOUSING ASSISTANCE

1This paragraph (and the references in paragraph (1) to this paragraph and to paragraph (2))

were added by section 1003(e) of the Omnibus Indian Advancement Act, Pub. L. 106–568, approved December 27, 2000. However, section 210 of the Departments of Veterans Affairs and

Housing and Urban Development, and Independent Agencies Appropriations Act (enacted by reference by Public Law 106–377) also amended this section by adding paragraph (5), which contains language almost identical to the language in this paragraph.

Act shall be limited to low-income Indian families on Indian

reservations and other Indian areas.

(2) EXCEPTION TO LOW-INCOME REQUIREMENT.—A recipient

may provide assistance for homeownership activities under

section 202(2), model activities under section 202(6), or loan

guarantee activities under title VI to Indian families who are

not low-income families, to the extent that the Secretary approves the activities pursuant to such section or title because

there is a need for housing for such families that cannot reasonably be met without such assistance. The Secretary shall

establish limits on the amount of assistance that may be provided under this Act for activities for families who are not lowincome families.

(3) NON-INDIAN FAMILIES.—Notwithstanding paragraph (1),

a recipient may provide housing or housing assistance provided

through affordable housing activities assisted with grant

amounts under this Act for a non-Indian family on an Indian

reservation or other Indian area if the recipient determines

that the presence of the family on the Indian reservation or

other Indian area is essential to the well-being of Indian families and the need for housing for the family cannot reasonably

be met without such assistance.

(4) LAW ENFORCEMENT OFFICERS.— 1A recipient may provide housing or housing assistance provided through affordable

housing activities assisted with grant amounts under this Act

for a law enforcement officer on an Indian reservation or other

Indian area, if—

(A) the officer—

(i) is employed on a full-time basis by the Federal

Government or a State, county, or lawfully recognized

tribal government; and

(ii) in implementing such full-time employment, is

sworn to uphold, and make arrests for, violations of

Federal, State, county, or tribal law; and

(B) the recipient determines that the presence of the

law enforcement officer on the Indian reservation or other

Indian area may deter crime.’’.

(5) LAW ENFORCEMENT OFFICERS.—Notwithstanding paragraph (1), a recipient may provide housing or housing assistance provided through affordable housing activities assisted

with grant amounts under this Act to a law enforcement officer

on the reservation or other Indian area, who is employed fulltime by a Federal, State, county or tribal government, and in

implementing such full-time employment is sworn to uphold,

and make arrests for violations of Federal, State, county or

tribal law, if the recipient determines that the presence of the

law enforcement officer on the Indian reservation or other Indian area may deter crime.
Sec. 202 NATIVE AMERICAN HOUSING ASSISTANCE 838

1So in law. Probably should be designated as paragraph (7).

(6) PREFERENCE FOR TRIBAL MEMBERS AND OTHER INDIAN

FAMILIES.—The Indian housing plan for an Indian tribe may

require preference, for housing or housing assistance provided

through affordable housing activities assisted with grant

amounts provided under this Act on behalf of such tribe, to be

given (to the extent practicable) to Indian families who are

members of such tribe, or to other Indian families. In any case

in which the applicable Indian housing plan for an Indian tribe

provides for preference under this paragraph, the recipient for

the tribe shall ensure that housing activities that are assisted

with grant amounts under this Act for such tribe are subject

to such preference.

(6) 1 EXEMPTION.—Title VI of the Civil Rights Act of 1964

and title VIII of the Civil Rights Act of 1968 shall not apply

to actions by federally recognized tribes and the tribally designated housing entities of those tribes under this Act.

SEC. 202. ø25 U.S.C. 4132¿ ELIGIBLE AFFORDABLE HOUSING ACTIVITIES.

Affordable housing activities under this title are activities, in

accordance with the requirements of this title, to develop or to support affordable housing for rental or homeownership, or

to provide housing services with respect to affordable housing,

through the following activities:

(1) INDIAN HOUSING ASSISTANCE.—The provision of

modernization or operating assistance for housing previously

developed or operated pursuant to a contract between the Secretary and an Indian housing authority.

(2) DEVELOPMENT.—The acquisition, new construction, reconstruction, or moderate or substantial rehabilitation of affordable housing, which may include real property acquisition,

site improvement, development of utilities and utility services,

conversion, demolition, financing, administration and planning,

and other related activities.

(3) HOUSING SERVICES.—The provision of housing-related

services for affordable housing, such as housing counseling in

connection with rental or homeownership assistance, establishment and support of resident organizations and resident management corporations, energy auditing, activities related to the

provision of self-sufficiency and other services, and other services related to assisting owners, tenants, contractors, and other

entities, participating or seeking to participate in other housing activities assisted pursuant to this section.

(4) HOUSING MANAGEMENT SERVICES.—The provision of

management services for affordable housing, including preparation of work specifications, loan processing, inspections, tenant selection, management of tenant-based rental assistance,

and management of affordable housing projects.

(5) CRIME PREVENTION AND SAFETY ACTIVITIES.—The provision of safety, security, and law enforcement measures and activities appropriate to protect residents of affordable housing

from crime.

(6) MODEL ACTIVITIES.—Housing activities under model

programs that are designed to carry out the purposes of this
839 Sec. 203 NATIVE AMERICAN HOUSING ASSISTANCE

Act and are specifically approved by the Secretary as appropriate for such purpose.

(7) COMMUNITY DEVELOPMENT DEMONSTRATION PROJECT.—

(A) IN GENERAL.—Consistent with principles of Indian

self-determination and the findings of this Act, the Secretary shall conduct and submit to Congress a study of the

feasibility of establishing a demonstration project in which

Indian tribes, tribal organizations, or tribal consortia are

authorized to expend amounts received pursuant to the

Native American Housing Assistance and Self-Determination Reauthorization Act of 2002 in order to design, implement, and operate community development demonstration

projects.

(B) STUDY.—Not later than 1 year after the date of enactment of the Native American Housing Assistance and

Self-Determination Reauthorization Act of 2002, the Secretary shall submit the study conducted under subparagraph (A) to the Committee on Banking, Housing, and

Urban Affairs and the Committee on Indian Affairs of the

Senate, and the Committee on Financial Services and the

Committee on Resources of the House of Representatives.

(8) SELF-DETERMINATION ACT DEMONSTRATION PROJECT.—

(A) IN GENERAL.—Consistent with the provisions of the

Indian Self-Determination and Education Assistance Act

(25 U.S.C. 450 et seq.), the Secretary shall conduct and

submit to Congress a study of the feasibility of establishing a demonstration project in which Indian tribes and

tribal organizations are authorized to receive assistance in

a manner that maximizes tribal authority and decisionmaking in the design and implementation of Federal housing and related activity funding.

(B) STUDY.—Not later than 1 year after the date of enactment of the Native American Housing Assistance and

Self-Determination Reauthorization Act of 2002, the Secretary shall submit the study conducted under subparagraph (A) to the Committee on Banking, Housing, and

Urban Affairs and the Committee on Indian Affairs of the

Senate, and the Committee on Financial Services and the

Committee on Resources of the House of Representatives.

SEC. 203. ø25 U.S.C. 4133¿ PROGRAM REQUIREMENTS.

(a) RENTS.—

(1) ESTABLISHMENT.—Subject to paragraph (2), each

recipient shall develop written policies governing rents and

homebuyer payments charged for dwelling units assisted under

this Act, including the methods by which such rents and homebuyer payments are determined.

(2) MAXIMUM RENT.—In the case of any low-income family

residing in a dwelling unit assisted with grant amounts under

this Act, the monthly rent or homebuyer payment (as applicable) for such dwelling unit may not exceed 30 percent of the

monthly adjusted income of such family.

(b) MAINTENANCE AND EFFICIENT OPERATION.—Each recipient

who owns or operates (or is responsible for funding any entity that

owns or operates) housing developed or operated pursuant to a con-
Sec. 204 NATIVE AMERICAN HOUSING ASSISTANCE 840

tract between the Secretary and an Indian housing authority pursuant to the United States Housing Act of 1937 shall, using

amounts of any grants received under this Act, reserve and use for

operating assistance under section 202(1) such amounts as may be

necessary to provide for the continued maintenance and efficient

operation of such housing. This subsection may not be construed to

prevent any recipient (or entity funded by a recipient) from demolishing or disposing of Indian housing referred to in this subsection,

pursuant to regulations established by the Secretary.

(c) INSURANCE COVERAGE.—Each recipient shall maintain

adequate insurance coverage for housing units that are owned or

operated or assisted with grant amounts provided under this Act.

(d) ELIGIBILITY FOR ADMISSION.—Each recipient shall develop

written policies governing the eligibility, admission, and occupancy

of families for housing assisted with grant amounts provided under

this Act.

(e) MANAGEMENT AND MAINTENANCE.—Each recipient shall develop policies governing the management and maintenance of housing assisted with grant amounts under this Act.

SEC. 204. ø25 U.S.C. 4134¿ TYPES OF INVESTMENTS.

(a) IN GENERAL.—Subject to section 203 and the Indian housing plan for an Indian tribe, the recipient for that tribe shall

have—

(1) the discretion to use grant amounts for affordable housing activities through equity investments, interest-bearing

loans or advances, noninterest-bearing loans or advances, interest subsidies, leveraging of private investments, or any

other form of assistance that the Secretary has determined to

be consistent with the purposes of this Act; and

(2) the right to establish the terms of assistance.

(b) INVESTMENTS.—A recipient may invest grant amounts for

the purposes of carrying out affordable housing activities in investment securities and other obligations as approved by the Secretary.

SEC. 205. ø25 U.S.C. 4135¿ LOW-INCOME REQUIREMENT AND INCOME

TARGETING.

(a) IN GENERAL.—Housing shall qualify as affordable housing

for purposes of this Act only if—

(1) each dwelling unit in the housing—

(A) in the case of rental housing, is made available for

occupancy only by a family that is a low-income family at

the time of their initial occupancy of such unit;

(B) in the case of a contract to purchase existing housing, is made available for purchase only by a family that

is a low-income family at the time of purchase;

(C) in the case of a lease-purchase agreement for existing housing or for housing to be constructed, is made available for lease-purchase only by a family that is a low-income family at the time the agreement is entered into; and

(D) in the case of a contract to purchase housing to be

constructed, is made available for purchase only by a family that is a low-income family at the time the contract is

entered into; and

(2) except for housing assisted under section 202 of the

United States Housing Act of 1937 (as in effect before the date
841 Sec. 207 NATIVE AMERICAN HOUSING ASSISTANCE

of the effectiveness of this Act), each dwelling unit in the housing will remain affordable, according to binding commitments

satisfactory to the Secretary, for the remaining useful life of

the property (as determined by the Secretary) without regard

to the term of the mortgage or to transfer of ownership, or for

such other period that the Secretary

determines is the longest feasible period of time consistent

with sound economics and the purposes of this Act, except

upon a foreclosure by a lender (or upon other transfer in lieu

of foreclosure) if such action—

(A) recognizes any contractual or legal rights of public

agencies, nonprofit sponsors, or others to take actions that

would avoid termination of low-income affordability in the

case of foreclosure or transfer in lieu of foreclosure; and

(B) is not for the purpose of avoiding low-income affordability restrictions, as determined by the Secretary.

(b) EXCEPTION.—Notwithstanding subsection (a), housing assisted pursuant to section 201(b)(2) shall be considered affordable

housing for purposes of this Act.

øSEC. 206. [Repealed.]¿

SEC. 207. ø25 U.S.C. 4137¿ LEASE REQUIREMENTS AND TENANT SELECTION.

(a) LEASES.—Except to the extent otherwise provided by or inconsistent with tribal law, in renting dwelling units in affordable

housing assisted with grant amounts provided under this Act, the

owner or manager of the housing shall utilize leases that—

(1) do not contain unreasonable terms and conditions;

(2) require the owner or manager to maintain the housing

in compliance with applicable housing codes and quality standards;

(3) require the owner or manager to give adequate written

notice of termination of the lease, which shall be the period of

time required under State, tribal, or local law;

(4) specify that, with respect to any notice of eviction or

termination, notwithstanding any State, tribal, or local law, a

resident shall be informed of the opportunity, prior to any

hearing or trial, to examine any relevant documents, records,

or regulations directly related to the eviction or termination;

(5) require that the owner or manager may not terminate

the tenancy, during the term of the lease, except for serious or

repeated violation of the terms or conditions of the lease, violation of applicable Federal, State, tribal, or local law, or for

other good cause; and

(6) provide that the owner or manager may terminate the

tenancy of a resident for any activity, engaged in by the resident, any member of the household of the resident, or any

guest or other person under the control of the resident, that—

(A) threatens the health or safety of, or right to

peaceful enjoyment of the premises by, other residents or

employees of the owner or manager of the housing;

(B) threatens the health or safety of, or right to peaceful enjoyment of their premises by, persons residing in the

immediate vicinity of the premises; or
Sec. 208 NATIVE AMERICAN HOUSING ASSISTANCE 842

(C) is criminal activity (including drug-related criminal activity) on or off the premises.

(b) TENANT AND HOMEBUYER SELECTION.—The owner or manager of affordable rental housing assisted with grant amounts provided under this Act shall adopt and utilize written tenant and

homebuyer selection policies and criteria that—

(1) are consistent with the purpose of providing housing for

low-income families;

(2) are reasonably related to program eligibility and the

ability of the applicant to perform the obligations of the lease;

and

(3) provide for—

(A) the selection of tenants and homebuyers from a

written waiting list in accordance with the policies and

goals set forth in the Indian housing plan for the tribe that

is the grant beneficiary of such grant amounts; and

(B) the prompt notification in writing to any rejected

applicant of that rejection and the grounds for that rejection.

SEC. 208. ø25 U.S.C. 4138¿ AVAILABILITY OF RECORDS.

(a) PROVISION OF INFORMATION.—Notwithstanding any other

provision of law, except as provided in subsection (b), the National

Crime Information Center, police departments, and other law enforcement agencies shall, upon request, provide information to Indian tribes or tribally designated housing entities regarding the

criminal conviction records of adult applicants for, or tenants of,

housing assisted with grant amounts provided to such tribe or entity under this Act for purposes of applicant screening, lease enforcement, and eviction.

(b) EXCEPTION.—A law enforcement agency described in subsection (a) shall provide information under this paragraph relating

to any criminal conviction of a juvenile only to the extent that the

release of such information is authorized under the law of the applicable State, tribe, or locality.

(c) CONFIDENTIALITY.—An Indian tribe or tribally designated

housing entity receiving information under this section may use

such information only for the purposes provided in this section and

such information may not be disclosed to any person who is not an

officer, employee, or authorized representative of the tribe or entity

or the owner of housing assisted under this Act, and who has a jobrelated need to have access to the information for the purposes

under this section. For judicial eviction proceedings, disclosures

may be made to the extent necessary. The Secretary shall, by regulation, establish procedures necessary to ensure that information

provided under this section to any tribe or entity is used, and confidentiality is maintained, as required under this section.

SEC. 209. ø25 U.S.C. 4139¿ NONCOMPLIANCE WITH AFFORDABLE HOUSING REQUIREMENT.

If a recipient uses grant amounts to provide affordable housing

under this title, and at any time during the useful life of the housing the recipient does not comply with the requirement under section 205(a)(2), the Secretary shall take appropriate action under

section 401(a).
843 Sec. 302 NATIVE AMERICAN HOUSING ASSISTANCE

1The date of enactment was October 26, 1996.

SEC. 210. ø25 U.S.C. 4140¿ CONTINUED USE OF AMOUNTS FOR AFFORDABLE HOUSING.

Any funds for programs for low-income housing under the

United States Housing Act of 1937 that, on the date of the applicability of this Act to an Indian tribe, are owned by, or in the possession or under the control of, the Indian housing authority for the

tribe, including all reserves not otherwise obligated, shall be considered assistance under this Act and subject to the provisions of

this Act relating to use of such assistance.

TITLE III—ALLOCATION OF GRANT

AMOUNTS

SEC. 301. ø25 U.S.C. 4151¿ ANNUAL ALLOCATION.

For each fiscal year, the Secretary shall allocate any amounts

made available for assistance under this Act for the fiscal year, in

accordance with the formula established pursuant to section 302,

among Indian tribes that comply with the requirements under this

Act for a grant under this Act.

SEC. 302. ø25 U.S.C. 4152¿ ALLOCATION FORMULA.

(a) ESTABLISHMENT.—The Secretary shall, by regulations

issued not later than the expiration of the 12-month period beginning on the date of the enactment of this Act 1, in the manner provided under section 106, establish a formula to provide for allocating amounts available for a fiscal year for block grants under

this Act among Indian tribes in accordance with the requirements

of this section.

(b) FACTORS FOR DETERMINATION OF NEED.—The formula shall

be based on factors that reflect the need of the Indian tribes and

the Indian areas of the tribes for assistance for affordable housing

activities, including the following factors:

(1) The number of low-income housing dwelling units

owned or operated at the time pursuant to a contract between

an Indian housing authority for the tribe and the Secretary.

(2) The extent of poverty and economic distress and the

number of Indian families within Indian areas of the tribe.

(3) Other objectively measurable conditions as the

Secretary and the Indian tribes may specify.

(c) OTHER FACTORS FOR CONSIDERATION.—In establishing the

formula, the Secretary shall consider—

(1) the relative administrative capacities and other challenges faced by the recipient, including, but not limited to geographic distribution within the Indian area and technical capacity; and

(2) the extent to which terminations of assistance under

title V will affect funding available to State recognized tribes.

(d) FUNDING FOR PUBLIC HOUSING OPERATION AND

MODERNIZATION.—
Sec. 302 NATIVE AMERICAN HOUSING ASSISTANCE 844

1Section 1003(g)(1) of the Omnibus Indian Advancement Act, Pub. L. 106–568, approved December 27, 2000, and section 503(f)(1) of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, each provide that this pargraph

is amended by striking ‘‘The formula,’’ and inserting the following:

‘‘(A) IN GENERAL.—Except with respect to an Indian tribe described in subparagraph

(B), the formula’’.

Neither amendment could be executed because each included a comma in the matter proposed

to be struck. 2This subparagraph was added by section 1003(g)(2) of the Omnibus Indian Advancement Act,

Pub. L. 106–568, approved December 27, 2000. Section 503(f)(2) of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made

an amendment adding (a second time) a subparagraph identical to that added by Pub. L. 106–

568, but that amendment has not been executed in this compilation.

(1) FULL FUNDING.—The formula 1 shall provide that, if, in

any fiscal year, the total amount made available for assistance

under this Act is equal to or greater than the total amount

made available for fiscal year 1996 for assistance for the operation and modernization of public housing developed or

operated pursuant to a contract between the Secretary and an

Indian housing authority pursuant to the United States Housing Act of 1937, the amount provided for such fiscal year for

each Indian tribe for which such operating or modernization

assistance was provided for fiscal year 1996 shall not be less

than the total amount of such operating and modernization assistance provided for fiscal year 1996 for such tribe.

(B) CERTAIN INDIAN TRIBES.— 2With respect to fiscal

year 2001 and each fiscal year thereafter, for any Indian

tribe with an Indian housing authority that owns or operates fewer than 250 public housing units, the formula

shall provide that if the amount provided for a fiscal year

in which the total amount made available for assistance

under this Act is equal to or greater than the amount

made available for fiscal year 1996 for assistance for the

operation and modernization of the public housing referred

to in subparagraph (A), then the amount provided to that

Indian tribe as modernization assistance shall be equal to

the average annual amount of funds provided to the Indian tribe (other than funds provided as emergency assistance) under the assistance program under section 14 of the

United States Housing Act of 1937 (42 U.S.C. 1437l) for

the period beginning with fiscal year 1992 and ending with

fiscal year 1997.

(2) PARTIAL FUNDING.—The formula shall provide that, if,

in any fiscal year, the total amount made available for

assistance under this Act is less than the total amount made

available for fiscal year 1996 for assistance for the operation

and modernization of public housing developed or operated

pursuant to a contract between the Secretary and an Indian

housing authority pursuant to the United States Housing Act

of 1937, the amount provided for such fiscal year for each Indian tribe for which such operating or modernization assistance was provided for fiscal year 1996 shall not be less than

the amount that bears the same ratio to the total amount

available for assistance under this Act for such fiscal year that

the amount of operating and modernization assistance provided for the tribe for fiscal year 1996 bears to the total
845 Sec. 401 NATIVE AMERICAN HOUSING ASSISTANCE

1October 26, 1996.

2This subsection was amended to read as shown by section 1003(h) of the Omnibus Indian

Advancement Act, Pub. L. 106–568, approved December 27, 2000. Section 503(g) of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the

same day, also made amendments to this subsection that are identical to the amendments made

by Pub. L. 106–568. Both sets of amendments redesignated provisions, inserted new language,

and added paragraph (3). The second set of such amendments has not been executed in this

compilation.

amount made available for fiscal year 1996 for assistance for

the operation and modernization of such public housing.

(e) EFFECTIVE DATE.—This section shall take effect on the date

of the enactment of this Act 1.

TITLE IV—COMPLIANCE, AUDITS, AND

REPORTS

SEC. 401. ø25 U.S.C. 4161¿ REMEDIES FOR NONCOMPLIANCE.

(a) ACTIONS BY SECRETARY AFFECTING GRANT AMOUNTS.— 2

(1) IN GENERAL.—Except as provided in subsection (b), if

the Secretary finds after reasonable notice and opportunity for

hearing that a recipient of assistance under this Act has failed

to comply substantially with any provision of this Act, the Secretary shall—

(A) terminate payments under this Act to the recipient;

(B) reduce payments under this Act to the recipient by

an amount equal to the amount of such payments that

were not expended in accordance with this Act;

(C) limit the availability of payments under this Act to

programs, projects, or activities not affected by such failure

to comply; or

(D) in the case of noncompliance described in section

402(b), provide a replacement tribally designated housing

entity for the recipient, under section 402.

(2) CONTINUANCE OF ACTIONS.—If the Secretary takes an

action under subparagraph (A), (B), or (C) of paragraph (1), the

Secretary shall continue such action until the Secretary determines that the failure to comply has ceased.

(3) EXCEPTION FOR CERTAIN ACTIONS.—

(A) IN GENERAL.—Notwithstanding any other provision

of this subsection, if the Secretary makes a determination

that the failure of a recipient of assistance under this Act

to comply substantially with any material provision (as

that term is defined by the Secretary) of this Act is resulting, and would continue to result, in a continuing expenditure of Federal funds in a manner that is not authorized

by law, the Secretary may take an action described in

paragraph (1)(C) before conducting a hearing.

(B) PROCEDURAL REQUIREMENT.—If the Secretary

takes an action described in subparagraph (A), the Secretary shall—

(i) provide notice to the recipient at the time that

the Secretary takes that action; and
Sec. 401 NATIVE AMERICAN HOUSING ASSISTANCE 846

1This subsection was amended to read as shown by section 1003(i) of the Omnibus Indian

Advancement Act, Pub. L. 106–568, approved December 27, 2000. Section 503(h) of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the

same day, also made amendments to this subsection that are identical to the amendments made

by Pub. L. 106–568. Both sets of amendments redesignated provisions, inserted new language,

realigned margins, and added paragraphs (2), (3), and (4). The second set of such amendments

has not been executed in this compilation.

(ii) conduct a hearing not later than 60 days after

the date on which the Secretary provides notice under

clause (i).

(C) DETERMINATION.—Upon completion of a hearing

under this paragraph, the Secretary shall make a determination regarding whether to continue taking the action

that is the subject of the hearing, or take another action

under this subsection.

(b) NONCOMPLIANCE BECAUSE OF TECHNICAL INCAPACITY.— 1

(1) IN GENERAL.—If the Secretary makes a finding under

subsection (a), but determines that the failure to comply substantially with the provisions of this Act—

(A) is not a pattern or practice of activities constituting willful noncompliance, and

(B) is a result of the limited capability or capacity of

the recipient,

the Secretary may provide technical assistance for the recipient (directly or indirectly) that is designed to increase the capability and capacity of the recipient to administer assistance

provided under this Act in compliance with the requirements

under this Act, if the recipient enters into a performance

agreement with the Secretary that specifies the compliance objectives that the recipient will be required to achieve by the

termination date of the performance agreement.

(2) PERFORMANCE AGREEMENT.—The period of a performance agreement described in paragraph (1) shall be for 1 year.

(3) REVIEW.—Upon the termination of a performance

agreement entered into under paragraph (1), the Secretary

shall review the performance of the recipient that is a party to

the agreement.

(4) EFFECT OF REVIEW.—If, on the basis of a review under

paragraph (3), the Secretary determines that the recipient—

(A) has made a good faith effort to meet the compliance objectives specified in the agreement, the Secretary

may enter into an additional performance agreement for

the period specified in paragraph (2); and

(B) has failed to make a good faith effort to meet applicable compliance objectives, the Secretary shall determine the recipient to have failed to comply substantially

with this Act, and the recipient shall be subject to an action under subsection (a).

(c) REFERRAL FOR CIVIL ACTION.—

(1) AUTHORITY.—In lieu of, or in addition to, any action authorized by subsection (a), if the Secretary has reason to believe that a recipient has failed to comply substantially with

any provision of this Act, the Secretary may refer the matter

to the Attorney General of the United States with a

recommendation that an appropriate civil action be instituted.
847 Sec. 402 NATIVE AMERICAN HOUSING ASSISTANCE

(2) CIVIL ACTION.—Upon such a referral, the Attorney

General may bring a civil action in any United States district

court having venue thereof for such relief as may be

appropriate, including an action to recover the amount of the

assistance furnished under this Act that was not expended in

accordance with it, or for mandatory or injunctive relief.

(d) REVIEW.—

(1) IN GENERAL.—Any recipient who receives notice under

subsection (a) of the termination, reduction, or limitation of

payments under this Act—

(A) may, not later than 60 days after receiving such

notice, file with the United States Court of Appeals for the

circuit in which such State is located, or in the United

States Court of Appeals for the District of Columbia, a petition for review of the action of the Secretary; and

(B) upon the filing of any petition under subparagraph

(A), shall forthwith transmit copies of the petition to the

Secretary and the Attorney General of the United States,

who shall represent the Secretary in the litigation.

(2) PROCEDURE.—The Secretary shall file in the court a

record of the proceeding on which the Secretary based the action, as provided in section 2112 of title 28, United States

Code. No objection to the action of the Secretary shall be considered by the court unless such objection has been urged before the Secretary.

(3) DISPOSITION.—

(A) COURT PROCEEDINGS.—The court shall have jurisdiction to affirm or modify the action of the Secretary or

to set it aside in whole or in part. The findings of fact by

the Secretary, if supported by substantial evidence on the

record considered as a whole, shall be conclusive. The

court may order additional evidence to be taken by the

Secretary, and to be made part of the record.

(B) SECRETARY.—The Secretary—

(i) may modify the findings of fact of the Secretary, or make new findings, by reason of the new

evidence so taken and filed with the court; and

(ii) shall file—

(I) such modified or new findings, which findings with respect to questions of fact shall be conclusive if supported by substantial evidence on the

record considered as a whole; and

(II) the recommendation of the Secretary, if

any, for the modification or setting aside of the

original action of the Secretary.

(4) FINALITY.—Upon the filing of the record with the court,

the jurisdiction of the court shall be exclusive and its judgment

shall be final, except that such judgment shall be subject to review by the Supreme Court of the United States upon writ of

certiorari or certification as provided in section 1254 of title 28,

United State Code.

SEC. 402. ø25 U.S.C. 4162¿ REPLACEMENT OF RECIPIENT.

(a) AUTHORITY.—As a condition of the Secretary making a

grant under this Act on behalf of an Indian tribe, the tribe shall
Sec. 403 NATIVE AMERICAN HOUSING ASSISTANCE 848

agree that, notwithstanding any other provision of law, the

Secretary may, only in the circumstances set forth in subsection

(b), require that a replacement tribally designated housing entity

serve as the recipient for the tribe, in accordance with subsection

(c).

(b) CONDITIONS OF REMOVAL.—The Secretary may require such

replacement tribally designated housing entity for a tribe only

upon a determination by the Secretary on the record after opportunity for a hearing that the recipient for the tribe has engaged in

a pattern or practice of activities that constitutes substantial or

willful noncompliance with the requirements under this Act.

(c) CHOICE AND TERM OF REPLACEMENT.—If the Secretary requires that a replacement tribally designated housing entity serve

as the recipient for a tribe (or tribes)—

(1) the replacement entity shall be an entity mutually

agreed upon by the Secretary and the tribe (or tribes) for

which the recipient was authorized to act, except that if no

such entity is agreed upon before the expiration of the 60-day

period beginning upon the date that the Secretary makes the

determination under subsection (b), the Secretary shall act as

the replacement entity until agreement is reached upon a replacement entity; and

(2) the replacement entity (or the Secretary, as provided in

paragraph (1)) shall act as the tribally designated housing entity for the tribe (or tribes) for a period that expires upon—

(A) a date certain, which shall be specified by the Secretary upon making the determination under subsection

(b); or

(B) the occurrence of specific conditions, which conditions shall be specified in written notice provided by the

Secretary to the tribe upon making the determination

under subsection (b).

SEC. 403. ø25 U.S.C. 4163¿ MONITORING OF COMPLIANCE.

(a) ENFORCEABLE AGREEMENTS.—Each recipient, through binding contractual agreements with owners and otherwise, shall ensure long-term compliance with the provisions of this Act. Such

measures shall provide for (1) enforcement of the provisions of this

Act by the grant beneficiary or by recipients and other intended

beneficiaries, and (2) remedies for the breach of such provisions.

(b) PERIODIC MONITORING.—Not less frequently than annually,

each recipient shall review the activities conducted and housing assisted under this Act to assess compliance with the requirements

of this Act. Such review shall include onsite inspection of housing

to determine compliance with applicable requirements. The results

of each review shall be included in the performance report of the

recipient submitted to the Secretary under section 404 and made

available to the public.

(c) PERFORMANCE MEASURES.—The Secretary shall establish

such performance measures as may be necessary to assess compliance with the requirements of this Act.

SEC. 404. ø25 U.S.C. 4164¿ PERFORMANCE REPORTS.

(a) REQUIREMENT.—For each fiscal year, each recipient shall—
849 Sec. 405 NATIVE AMERICAN HOUSING ASSISTANCE

(1) review the progress it has made during such fiscal year

in carrying out the Indian housing plan (or plans) for the Indian tribes for which it administers grant amounts; and

(2) submit a report to the Secretary (in a form acceptable

to the Secretary) describing the conclusions of the review.

(b) CONTENT.—Each report under this section for a fiscal year

shall—

(1) describe the use of grant amounts provided to the recipient for such fiscal year;

(2) assess the relationship of such use to the goals identified in the Indian housing plan of the grant beneficiary;

(3) indicate the programmatic accomplishments of the recipient; and

(4) describe the manner in which the recipient would

change its programs as a result of its experiences.

(c) SUBMISSION.—The Secretary shall establish dates for submission of reports under this section, and review such reports and

make such recommendations as the Secretary considers appropriate to carry out the purposes of this Act.

(d) PUBLIC AVAILABILITY.—A recipient preparing a report

under this section shall make the report publicly available to the

citizens in the jurisdiction of the recipient in sufficient time to permit such citizens to comment on such report prior to its submission

to the Secretary, and in such manner and at such times as the recipient may determine. The report shall include a summary of any

comments received by the grant beneficiary or recipient from citizens in its jurisdiction regarding its program.

SEC. 405. ø25 U.S.C. 4165¿ REVIEW AND AUDIT BY SECRETARY.

(a) REQUIREMENTS UNDER CHAPTER 75 OF TITLE 31, UNITED

STATES CODE.—An entity designated by an Indian tribe as a housing entity shall be treated, for purposes of chapter 75 of title 31,

United States Code, as a non-Federal entity that is subject to the

audit requirements that apply to non-Federal entities under that

chapter.

(b) ADDITIONAL REVIEWS AND AUDITS.—

(1) IN GENERAL.—In addition to any audit or review under

subsection (a), to the extent the Secretary determines such action to be appropriate, the Secretary may conduct an audit or

review of a recipient in order to—

(A) determine whether the recipient—

(i) has carried out—

(I) eligible activities in a timely manner; and

(II) eligible activities and certification in accordance with this Act and other applicable law;

(ii) has a continuing capacity to carry out eligible

activities in a timely manner; and

(iii) is in compliance with the Indian housing plan

of the recipient; and

(B) verify the accuracy of information contained in any

performance report submitted by the recipient under section 404.

(2) ON-SITE VISITS.—To the extent practicable, the reviews

and audits conducted under this subsection shall include on-
Sec. 406 NATIVE AMERICAN HOUSING ASSISTANCE 850

site visits by the appropriate official of the Department of

Housing and Urban Development.

(c) REVIEW OF REPORTS.—

(1) IN GENERAL.—The Secretary shall provide each recipient that is the subject of a report made by the Secretary under

this section notice that the recipient may review and comment

on the report during a period of not less than 30 days after the

date on which notice is issued under this paragraph.

(2) PUBLIC AVAILABILITY.—After taking into consideration

any comments of the recipient under paragraph (1), the

Secretary—

(A) may revise the report; and

(B) not later than 30 days after the date on which

those comments are received, shall make the comments

and the report (with any revisions made under subparagraph (A)) readily available to the public.

(d) EFFECT OF REVIEWS.—Subject to section 401(a), after reviewing the reports and audits relating to a recipient that are submitted to the Secretary under this section, the Secretary may adjust the amount of a grant made to a recipient under this Act in

accordance with the findings of the Secretary with respect to those

reports and audits.

SEC. 406. ø25 U.S.C. 4166¿ GAO AUDITS.

To the extent that the financial transactions of Indian tribes

and recipients of grant amounts under this Act relate to amounts

provided under this Act, such transactions may be audited by the

Comptroller General of the United States under such rules and

regulations as may be prescribed by the Comptroller General. The

representatives of the General Accounting Office shall have access

to all books, accounts, records, reports, files, and other papers,

things, or property belonging to or in use by such tribes and recipients pertaining to such financial transactions and

necessary to facilitate the audit.

SEC. 407. ø25 U.S.C. 4167¿ REPORTS TO CONGRESS.

(a) IN GENERAL.—Not later than 90 days after the conclusion

of each fiscal year in which assistance under this Act is made available, the Secretary shall submit to the Congress a report that

contains—

(1) a description of the progress made in accomplishing the

objectives of this Act;

(2) a summary of the use of funds available under this Act

during the preceding fiscal year; and

(3) a description of the aggregate outstanding loan

guarantees under title VI.

(b) RELATED REPORTS.—The Secretary may require recipients

of grant amounts under this Act to submit to the Secretary such

reports and other information as may be necessary in order for the

Secretary to make the report required by subsection (a).

SEC. 408. ø25 U.S.C. 4168¿ PUBLIC AVAILABILITY OF INFORMATION.

Each recipient shall make any housing plan, policy, or annual

report prepared by the recipient available to the general public.
851 Sec. 502 NATIVE AMERICAN HOUSING ASSISTANCE

1Probably intended to repeal section 518 of such Act (relating to Indian housing child development). 2This sentence was added by section 1003(k)(3) of the Omnibus Indian Advancement Act, Pub.

L. 106–568, approved December 27, 2000. Section 503(j)(3) of the American Homeownership and

Economic Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amendment adding (a second time) a sentence identical to that added by Pub. L. 106–568, but that

amendment has not been executed in this compilation.

TITLE V—TERMINATION OF ASSISTANCE FOR INDIAN TRIBES UNDER

INCORPORATED PROGRAMS

SEC. 501. REPEAL OF PROVISIONS RELATING TO INDIAN HOUSING ASSISTANCE UNDER UNITED STATES HOUSING ACT OF 1937.

(a) REPEAL OF TITLE II.—Title II of the United States Housing

Act of 1937 (42 U.S.C 1437aa et seq.) is hereby repealed.

(b) AMENDMENTS TO TITLE I.—Title I of the United States

Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended—

* * * * * * *

(c) AMENDMENTS TO TITLE III.—Title III of the United States

Housing Act of 1937 (42 U.S.C. 1437aaa et seq.) is amended—

* * * * * * *

(d) OTHER RELATED PROVISIONS.— (1) INDIAN HOUSING CHILD DEVELOPMENT.—Section 519 1 of

the Cranston-Gonzalez National Affordable Housing Act (12

U.S.C. 1701z–6 note) is hereby repealed.

(2) PUBLIC HOUSING YOUTH SPORTS.—Section 520 of the

Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.

11903a) is amended—

* * * * * * *

(3) ALLOCATION OF FUNDS.—Section 213(d)(1)(B)(ii) of the

Housing and Community Development Act of 1974 (42 U.S.C.

1439) is amended by striking ‘‘and Indian’’.

SEC. 502. ø25 U.S.C. 4181¿ TERMINATION OF INDIAN HOUSING ASSISTANCE UNDER UNITED STATES HOUSING ACT OF 1937.

(a) TERMINATION OF ASSISTANCE.—After September 30, 1997,

financial assistance may not be provided under the United States

Housing Act of 1937 or pursuant to any commitment entered into

under such Act, for Indian housing developed or operated pursuant

to a contract between the Secretary and an Indian housing

authority, unless such assistance is provided from amounts made

available for fiscal year 1997 and pursuant to a commitment entered into before September 30, 1997. Any housing that is the subject of a contract for tenant-based assistance between the Secretary

and an Indian housing authority that is terminated under this section shall, for the following fiscal year and each fiscal year thereafter, be considered to be a dwelling unit under section 302(b)(1). 2

(b) TERMINATION OF RESTRICTIONS ON USE OF INDIAN

HOUSING.—After September 30, 1997, any housing developed or operated pursuant to a contract between the Secretary and an Indian

housing authority pursuant to the United States Housing Act of

1937 shall not be subject to any provision of such Act or any annual contributions contract or other agreement pursuant to such
Sec. 503 NATIVE AMERICAN HOUSING ASSISTANCE 852

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

Act, but shall be considered and maintained as affordable housing

for purposes of this Act.

SEC. 503. ø25 U.S.C. 4182¿ TERMINATION OF NEW COMMITMENTS FOR

RENTAL

ASSISTANCE.

After September 30, 1997, financial assistance for rental housing assistance under the United States Housing Act of 1937 may

not be provided to any Indian housing authority or tribally designated housing entity, unless such assistance is provided pursuant

to a contract for such assistance entered into by the Secretary and

the Indian housing authority before such date. Any such assistance

provided pursuant to such a contract shall be governed by the provisions of the United States Housing Act of 1937 (as in effect before

the date of the effectiveness of this Act) and the provisions of such

contract.

SEC. 504. TERMINATION OF YOUTHBUILD PROGRAM ASSISTANCE.

(a) IN GENERAL.—Subtitle D of title IV of the CranstonGonzalez National Affordable Housing Act (42 U.S.C. 12899 et seq.)

is amended—

* * * * * * *

(b) ø42 U.S.C. 12899h–1 note¿ APPLICABILITY.—The amendments under subsection (a) shall apply with respect to amounts

made available for assistance under subtitle D of title II of the

Cranston-Gonzalez National Affordable Housing Act for fiscal year

1998 and fiscal years thereafter.

SEC. 505. TERMINATION OF HOME PROGRAM ASSISTANCE.

(a) IN GENERAL.—Title II of the Cranston-Gonzalez National

Affordable Housing Act (42 U.S.C. 12721 et seq.) is amended—

* * * * * * *

(b) ø42 U.S.C. 12747 note¿ APPLICABILITY.—The amendments

under subsection (a) shall apply with respect to amounts made

available for assistance under title II of the Cranston-Gonzalez National Affordable Housing Act for fiscal year 1998 and fiscal years

thereafter.

SEC. 506. TERMINATION OF HOUSING ASSISTANCE FOR THE

HOMELESS.

(a) MCKINNEY ACT PROGRAMS.—Title IV of the Stewart B.

McKinney Homeless Assistance Act (42 U.S.C. 11361 et seq.) 1 is

amended—

* * * * * * *

(b) INNOVATIVE HOMELESS DEMONSTRATION.—Section 2(b) of

the HUD Demonstration Act of 1993 (42 U.S.C. 11301 note) is

amended—

* * * * * * *

(c) ø42 U.S.C. 11371 note¿ APPLICABILITY.—The amendments

under subsections (a) and (b) shall apply with respect to amounts

made available for assistance under title IV of the Stewart B.
853 Sec. 601 NATIVE AMERICAN HOUSING ASSISTANCE

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’. 2October 26, 1996.

McKinney Homeless Assistance Act 1 and section 2 of the HUD

Demonstration Act of 1993, respectively, for fiscal year 1998 and

fiscal years thereafter.

SEC. 507. ø25 U.S.C. 4183¿ SAVINGS PROVISION.

(a) EXISTING RIGHTS AND DUTIES.—Except as provided in

sections 502 and 503, this Act may not be construed to affect the

validity of any right, duty, or obligation of the United States or

other person arising under or pursuant to any commitment or

agreement lawfully entered into before October 1, 1997, under the

United States Housing Act of 1937, subtitle D of title IV of the

Cranston-Gonzalez National Affordable Housing Act, title II of the

Cranston-Gonzalez National Affordable Housing Act, title IV of the

Stewart B. McKinney Homeless Assistance Act 1, or section 2 of the

HUD Demonstration Act of 1993.

(b) OBLIGATIONS UNDER REPEALED PROVISIONS.—Notwithstanding the amendments made by this title, any obligation of the

Secretary made under or pursuant to subtitle D of title IV of the

Cranston-Gonzalez National Affordable Housing Act, title II of the

Cranston-Gonzalez National Affordable Housing Act, title IV of the

Stewart B. McKinney Homeless Assistance Act 1, or section 2 of the

HUD Demonstration Act of 1993 shall continue to be governed by

the provisions of such Acts (as in effect before the date of the effectiveness of the amendments made by this title).

SEC. 508. ø25 U.S.C. 4181 note¿ EFFECTIVE DATE.

Sections 502, 503, and 507 shall take effect on the date of the

enactment of this Act 2.

TITLE VI—FEDERAL GUARANTEES FOR

FINANCING FOR TRIBAL HOUSING

ACTIVITIES

SEC. 601. ø25 U.S.C. 4191¿ AUTHORITY AND REQUIREMENTS.

(a) AUTHORITY.—To such extent or in such amounts as provided in appropriations Acts, the Secretary may, subject to the limitations of this title (including limitations designed to protect and

maintain the viability of rental housing units owned or operated by

the recipient that were developed under a contract between the

Secretary and an Indian housing authority pursuant to the United

States Housing Act of 1937), and upon such terms and conditions

as the Secretary may prescribe, guarantee and make commitments

to guarantee, the notes or other obligations issued by Indian tribes

or tribally designated housing entities with tribal approval, for the

purposes of financing affordable housing activities described in section 202 and housing related community development activity as

consistent with the purposes of this Act.

(b) TERMS OF LOANS.—Notes or other obligations guaranteed

pursuant to this title shall be in such form and denominations,
Sec. 602 NATIVE AMERICAN HOUSING ASSISTANCE 854

have such maturities, and be subject to such conditions as may be

prescribed by regulations issued by the Secretary. The Secretary

may not deny a guarantee under this title on the basis of the proposed repayment period for the note or other obligation, unless the

period is more than 20 years or the Secretary determines that the

period causes the guarantee to constitute an unacceptable financial

risk.

(c) LIMITATION ON OUTSTANDING GUARANTEES.—No guarantee

or commitment to guarantee shall be made with respect to any

note or other obligation if the total outstanding notes or obligations

of the issuer guaranteed under this title (excluding any amount

defeased under the contract entered into under section 602(a)(1))

would thereby exceed an amount equal to 5 times the amount of

the grant approval for the issuer pursuant to title III.

SEC. 602. ø25 U.S.C. 4192¿ SECURITY AND REPAYMENT.

(a) REQUIREMENTS ON ISSUER.—To assure the repayment of

notes or other obligations and charges incurred under this title and

as a condition for receiving such guarantees, the Secretary shall require the Indian tribe or housing entity issuing such notes or obligations to—

(1) enter into a contract, in a form acceptable to the

Secretary, for repayment of notes or other obligations guaranteed under this title;

(2) pledge any grant for which the issuer may become eligible under this Act;

(3) demonstrate that the extent of such issuance and guarantee under this title is within the financial capacity of the

tribe and is not likely to impair the ability to use grant

amounts under title I, taking into consideration the

requirements under section 203(b); and

(4) furnish, at the discretion of the Secretary, such other

security as may be deemed appropriate by the Secretary in

making such guarantees, including increments in local tax receipts generated by the activities assisted under this Act or

disposition proceeds from the sale of land or rehabilitated property.

(b) REPAYMENT FROM GRANT AMOUNTS.—Notwithstanding any

other provision of this Act—

(1) the Secretary may apply grants pledged pursuant to

subsection (a)(2) to any repayments due the United States as

a result of such guarantees; and

(2) grants allocated under this Act for an Indian tribe or

housing entity (including program income derived therefrom)

may be used to pay principal and interest due (including such

servicing, underwriting, and other costs as may be specified in

regulations issued by the Secretary) on notes or other obligations guaranteed pursuant to this title.

(c) FULL FAITH AND CREDIT.—The full faith and credit of the

United States is pledged to the payment of all guarantees made

under this title. Any such guarantee made by the Secretary shall

be conclusive evidence of the eligibility of the obligations for such

guarantee with respect to principal and interest, and the validity

of any such guarantee so made shall be incontestable in the hands

of a holder of the guaranteed obligations.
855 Sec. 606 NATIVE AMERICAN HOUSING ASSISTANCE

1October 26, 1996.

SEC. 603. ø25 U.S.C. 4193¿ PAYMENT OF INTEREST.

The Secretary may make, and contract to make, grants, in

such amounts as may be approved in appropriations Acts, to or on

behalf of an Indian tribe or housing entity issuing notes or other

obligations guaranteed under this title, to cover not to exceed 30

percent of the net interest cost (including such servicing, underwriting, or other costs as may be specified in regulations of the Secretary) to the borrowing entity or agency of such obligations. The

Secretary may also, to the extent approved in appropriations Acts,

assist the issuer of a note or other obligation guaranteed under this

title in the payment of all or a portion of the principal and interest

amount due under the note or other obligation, if the Secretary determines that the issuer is unable to pay the amount because of

circumstances of extreme hardship beyond the control of the issuer.

SEC. 604. ø25 U.S.C. 4194¿ TRAINING AND INFORMATION.

The Secretary, in cooperation with eligible public entities, shall

carry out training and information activities with respect to the

guarantee program under this title.

SEC. 605. ø25 U.S.C. 4195¿ LIMITATIONS ON AMOUNT OF GUARANTEES.

(a) AGGREGATE FISCAL YEAR LIMITATION.—Notwithstanding

any other provision of law and subject only to the absence of qualified applicants or proposed activities and to the authority provided

in this title, to the extent approved or provided in appropriations

Acts, the Secretary may enter into commitments to

guarantee notes and obligations under this title with an aggregate

principal amount not to exceed $400,000,000 for each of fiscal years

1997 through 2007.

(b) AUTHORIZATION OF APPROPRIATIONS FOR CREDIT SUBSIDY.—

There are authorized to be appropriated to cover the costs (as such

term is defined in section 502 of the Congressional Budget Act of

1974) of guarantees under this title such sums as may be necessary

for each of fiscal years 1997 through 2007.

(c) AGGREGATE OUTSTANDING LIMITATION.—The total amount

of outstanding obligations guaranteed on a cumulative basis by the

Secretary pursuant to this title shall not at any time exceed

$2,000,000,000 or such higher amount as may be authorized to be

appropriated for this title for any fiscal year.

(d) FISCAL YEAR LIMITATIONS ON TRIBES.—The Secretary shall

monitor the use of guarantees under this title by Indian tribes. If

the Secretary finds that 50 percent of the aggregate guarantee authority under subsection (c) has been committed, the Secretary

may—

(1) impose limitations on the amount of guarantees any

one Indian tribe may receive in any fiscal year of $50,000,000;

or

(2) request the enactment of legislation increasing the aggregate outstanding limitation on guarantees under this title.

SEC. 606. ø25 U.S.C. 4191 note¿ EFFECTIVE DATE.

This title shall take effect on the date of the enactment of this

Act 1.
Sec. 702 NATIVE AMERICAN HOUSING ASSISTANCE 856

1October 26, 1996.

2This title was added by section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–

568, approved December 27, 2000. Section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amendment adding to this Act (a second time) a title almost identical to that added by Pub. L. 106–568. The

later amendment (made by Pub. L. 106–569) is shown in this compilation.

Section 512 of the American Homeownership and Economic Opportunity Act of 2000 (which

is substantially identical to section 202 of the Ominbus Indian Advancement Act), provides as

follows:

‘‘SEC. 512. FINDINGS.

‘‘The Congress finds that—

‘‘(1) the United States has undertaken a responsibility to promote the general welfare of

the United States by—

TITLE VII—OTHER HOUSING

ASSISTANCE FOR NATIVE AMERICANS

* * * * * * *

SEC. 702. ø25 U.S.C. 4211¿ 50-YEAR LEASEHOLD INTEREST IN TRUST OR

RESTRICTED LANDS FOR HOUSING PURPOSES.

(a) AUTHORITY TO LEASE.—Notwithstanding any other provision of law, any trust or restricted Indian lands, whether tribally

or individually owned, may be leased by the Indian owners, subject

to the approval of the affected Indian tribe and the Secretary of the

Interior, for housing development and residential purposes.

(b) TERM.—Each lease pursuant to subsection (a) shall be for

a term not exceeding 50 years.

(c) RULE OF CONSTRUCTION.—This section may not be construed to repeal, limit, or affect any authority to lease any trust or

restricted Indian lands that—

(1) is conferred by or pursuant to any other provision of

law; or

(2) provides for leases for any period exceeding 50 years.

(d) SELF-IMPLEMENTATION.—This section is intended to be selfimplementing and shall not require the issuance of any rule,

regulation, or order to take effect as provided in section 705.

SEC. 703. ø25 U.S.C. 4212¿ TRAINING AND TECHNICAL ASSISTANCE.

There are authorized to be appropriated for assistance for a

national organization representing Native American housing interests for providing training and technical assistance to Indian housing authorities and tribally designated housing entities such sums

as may be necessary for each of fiscal years 1997 through 2007.

* * * * * * *

SEC. 705. ø25 U.S.C. 4211 note¿ EFFECTIVE DATE.

This title and the amendments made by this title (but not including the amendments made by section 704) shall take effect on

the date of the enactment of this Act 1.

TITLE VIII—HOUSING ASSISTANCE FOR

NATIVE HAWAIIANS 2

SEC. 801. ø25 U.S.C. 4221¿ DEFINITIONS.

In this title:
857 Sec. 801 NATIVE AMERICAN HOUSING ASSISTANCE

‘‘ (A) employing its resources to remedy the unsafe and unsanitary housing conditions

and the acute shortage of decent, safe, and sanitary dwellings for families of lower income; and

‘‘(B) developing effective partnerships with governmental and private entities to accomplish the objectives referred to in subparagraph (A);

‘‘(2) the United States has a special responsibility for the welfare of the Native peoples

of the United States, including Native Hawaiians;

‘‘(3) pursuant to the provisions of the Hawaiian Homes Commission Act, 1920 (42 Stat.

108 et seq.), the United States set aside 200,000 acres of land in the Federal territory that

later became the State of Hawaii in order to establish a homeland for the native people of

Hawaii—Native Hawaiians;

‘‘(4) despite the intent of Congress in 1920 to address the housing needs of Native Hawaiians through the enactment of the Hawaiian Homes Commission Act, 1920 (42 Stat. 108

et seq.), Native Hawaiians eligible to reside on the Hawaiian home lands have been foreclosed from participating in Federal housing assistance programs available to all other eligible families in the United States;

‘‘(5) although Federal housing assistance programs have been administered on a racially

neutral basis in the State of Hawaii, Native Hawaiians continue to have the greatest unmet

need for housing and the highest rates of overcrowding in the United States;

‘‘(6) among the Native American population of the United States, Native Hawaiians experience the highest percentage of housing problems in the United States, as the percentage—

‘‘(A) of housing problems in the Native Hawaiian population is 49 percent, as compared to—

‘‘(i) 44 percent for American Indian and Alaska Native households in Indian

country; and

‘‘(ii) 27 percent for all other households in the United States; and

‘‘(B) overcrowding in the Native Hawaiian population is 36 percent as compared to

3 percent for all other households in the United States;

‘‘(7) among the Native Hawaiian population, the needs of Native Hawaiians, as that term

is defined in section 801 of the Native American Housing Assistance and Self-Determination

Act of 1996 (as added by this subtitle), eligible to reside on the Hawaiian Home Lands are

the most severe, as—

‘‘(A) the percentage of overcrowding in Native Hawaiian households on the Hawaiian

Home Lands is 36 percent; and

‘‘(B) approximately 13,000 Native Hawaiians, which constitute 95 percent of the Native Hawaiians who are eligible to reside on the Hawaiian Home Lands, are in need

of housing;

‘‘(8) applying the Department of Housing and Urban Development guidelines—

‘‘(A) 70.8 percent of Native Hawaiians who either reside or who are eligible to reside

on the Hawaiian Home Lands have incomes that fall below the median family income;

and

‘‘(B) 50 percent of Native Hawaiians who either reside or who are eligible to reside

on the Hawaiian Home Lands have incomes below 30 percent of the median family income;

‘‘(9) one-third of those Native Hawaiians who are eligible to reside on the Hawaiian Home

Lands pay more than 30 percent of their income for shelter, and one-half of those Native

Hawaiians face overcrowding;

‘‘(10) the extraordinarily severe housing needs of Native Hawaiians demonstrate that Native Hawaiians who either reside on, or are eligible to reside on, Hawaiian Home Lands

have been denied equal access to Federal low-income housing assistance programs available

to other qualified residents of the United States, and that a more effective means of addressing their housing needs must be authorized;

‘‘(11) consistent with the recommendations of the National Commission on American Indian, Alaska Native, and Native Hawaiian Housing, and in order to address the continuing

prevalence of extraordinarily severe housing needs among Native Hawaiians who either reside or are eligible to reside on the Hawaiian Home Lands, Congress finds it necessary to

extend the Federal low-income housing assistance available to American Indians and Alaska

Natives under the Native American Housing Assistance and Self-Determination Act of 1996

(25 U.S.C. 4101 et seq.) to those Native Hawaiians;

‘‘(12) under the treatymaking power of the United States, Congress had the constitutional

authority to confirm a treaty between the United States and the government that represented the Hawaiian people, and from 1826 until 1893, the United States recognized the

independence of the Kingdom of Hawaii, extended full diplomatic recognition to the Hawaiian Government, and entered into treaties and conventions with the Hawaiian monarchs to

govern commerce and navigation in 1826, 1842, 1849, 1875, and 1887;

‘‘(13) the United States has recognized and reaffirmed that—

‘‘(A) Native Hawaiians have a cultural, historic, and land-based link to the indigenous

people who exercised sovereignty over the Hawaiian Islands, and that group has never

relinquished its claims to sovereignty or its sovereign lands;

‘‘(B) Congress does not extend services to Native Hawaiians because of their race, but

because of their unique status as the indigenous people of a once sovereign nation as

to whom the United States has established a trust relationship;

‘‘(C) Congress has also delegated broad authority to administer a portion of the Federal trust responsibility to the State of Hawaii;

‘‘(D) the political status of Native Hawaiians is comparable to that of American Indians and Alaska Natives; and

Continued
Sec. 801 NATIVE AMERICAN HOUSING ASSISTANCE 858

‘‘(E) the aboriginal, indigenous people of the United States have—

‘‘(i) a continuing right to autonomy in their internal affairs; and

‘‘(ii) an ongoing right of self-determination and self-governance that has never

been extinguished;

‘‘(14) the political relationship between the United States and the Native Hawaiian people

has been recognized and reaffirmed by the United States as evidenced by the inclusion of

Native Hawaiians in—

‘‘(A) the Native American Programs Act of 1974 (42 U.S.C. 2291 et seq.);

‘‘(B) the American Indian Religious Freedom Act (42 U.S.C. 1996 et seq.);

‘‘(C) the National Museum of the American Indian Act (20 U.S.C. 80q et seq.);

‘‘(D) the Native American Graves Protection and Repatriation Act (25 U.S.C. 3001 et

seq.);

‘‘(E) the National Historic Preservation Act (16 U.S.C. 470 et seq.);

‘‘(F) the Native American Languages Act of 1992 (106 Stat. 3434);

‘‘(G) the American Indian, Alaska Native and Native Hawaiian Culture and Arts Development Act (20 U.S.C. 4401 et seq.);

‘‘(H) the Job Training Partnership Act (29 U.S.C. 1501 et seq.); and

‘‘(I) the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.); and

‘‘(15) in the area of housing, the United States has recognized and reaffirmed the political

relationship with the Native Hawaiian people through—

‘‘(A) the enactment of the Hawaiian Homes Commission Act, 1920 (42 Stat. 108 et

seq.), which set aside approximately 200,000 acres of public lands that became known

as Hawaiian Home Lands in the Territory of Hawaii that had been ceded to the United

States for homesteading by Native Hawaiians in order to rehabilitate a landless and

dying people;

‘‘(B) the enactment of the Act entitled ‘An Act to provide for the admission of the

State of Hawaii into the Union’, approved March 18, 1959 (73 Stat. 4)—

‘‘(i) by ceding to the State of Hawaii title to the public lands formerly held by

the United States, and mandating that those lands be held in public trust, for

the betterment of the conditions of Native Hawaiians, as that term is defined in

section 201 of the Hawaiian Homes Commission Act, 1920 (42 Stat. 108 et seq.);

and

‘‘(ii) by transferring the United States responsibility for the administration of

Hawaiian Home Lands to the State of Hawaii, but retaining the authority to enforce the trust, including the exclusive right of the United States to consent to

any actions affecting the lands which comprise the corpus of the trust and any

amendments to the Hawaiian Homes Commission Act, 1920 (42 Stat. 108 et seq.),

enacted by the legislature of the State of Hawaii affecting the rights of beneficiaries under the Act;

‘‘(C) the authorization of mortgage loans insured by the Federal Housing Administration for the purchase, construction, or refinancing of homes on Hawaiian Home Lands

under the National Housing Act (Public Law 479; 73d Congress; 12 U.S.C. 1701 et seq.);

‘‘(D) authorizing Native Hawaiian representation on the National Commission on

American Indian, Alaska Native, and Native Hawaiian Housing under Public Law 101–

235;

‘‘(E) the inclusion of Native Hawaiians in the definition under section 3764 of title

38, United States Code, applicable to subchapter V of chapter 37 of title 38, United

States Code (relating to a housing loan program for Native American veterans); and

‘‘(F) the enactment of the Hawaiian Home Lands Recovery Act (109 Stat. 357; 48

U.S.C. 491, note prec.) which establishes a process for the conveyance of Federal lands

to the Department of Hawaiian Homes Lands that are equivalent in value to lands acquired by the United States from the Hawaiian Home Lands inventory.’’.

(1) DEPARTMENT OF HAWAIIAN HOME LANDS; DEPARTMENT.—The term ‘‘Department of Hawaiian Home Lands’’ or

‘‘Department’’ means the agency or department of the government of the State of Hawaii that is responsible for the administration of the Hawaiian Homes Commission Act, 1920 (42 Stat.

108 et seq.).

(2) DIRECTOR.—The term ‘‘Director’’ means the Director of

the Department of Hawaiian Home Lands.

(3) ELDERLY FAMILIES; NEAR-ELDERLY FAMILIES.—

(A) IN GENERAL.—The term ‘‘elderly family’’ or ‘‘nearelderly family’’ means a family whose head (or his or her

spouse), or whose sole member, is—

(i) for an elderly family, an elderly person; or

(ii) for a near-elderly family, a near-elderly person.

(B) CERTAIN FAMILIES INCLUDED.—The term ‘‘elderly

family’’ or ‘‘near-elderly family’’ includes—
859 Sec. 802 NATIVE AMERICAN HOUSING ASSISTANCE

1This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569 approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

paragraph refers to the ‘‘Hawaiian Homes Commission Act’’ without reference to ‘‘1920’’.

(i) two or more elderly persons or near-elderly persons, as the case may be, living together; and

(ii) one or more persons described in clause (i) living with one or more persons determined under the

housing plan to be essential to their care or well-being.

(4) HAWAIIAN HOME LANDS.—The term ‘‘Hawaiian Home

Lands’’ means lands that—

(A) have the status as Hawaiian home lands under

section 204 of the Hawaiian Homes Commission Act,

1920 1 (42 Stat. 110); or

(B) are acquired pursuant to that Act.

(5) HOUSING AREA.—The term ‘‘housing area’’ means an

area of Hawaiian Home Lands with respect to which the Department of Hawaiian Home Lands is authorized to provide assistance for affordable housing under this Act.

(6) HOUSING ENTITY.—The term ‘‘housing entity’’ means

the Department of Hawaiian Home Lands.

(7) HOUSING PLAN.—The term ‘‘housing plan’’ means a plan

developed by the Department of Hawaiian Home Lands.

(8) MEDIAN INCOME.—The term ‘‘median income’’ means,

with respect to an area that is a Hawaiian housing area, the

greater of—

(A) the median income for the Hawaiian housing area,

which shall be determined by the Secretary; or

(B) the median income for the State of Hawaii.

(9) NATIVE HAWAIIAN.—The term ‘‘Native Hawaiian’’

means any individual who is—

(A) a citizen of the United States; and

(B) a descendant of the aboriginal people, who, prior

to 1778, occupied and exercised sovereignty in the area

that currently constitutes the State of Hawaii, as evidenced by—

(i) genealogical records;

(ii) verification by kupuna (elders) or kama’aina

(long-term community residents); or

(iii) birth records of the State of Hawaii.

SEC. 802. ø25 U.S.C. 4222¿ BLOCK GRANTS FOR AFFORDABLE HOUSING

ACTIVITIES.

(a) GRANT AUTHORITY.—For each fiscal year, the Secretary

shall (to the extent amounts are made available to carry out this

title) make a grant under this title to the Department of Hawaiian

Home Lands to carry out affordable housing activities for Native

Hawaiian families who are eligible to reside on the Hawaiian Home

Lands.

(b) PLAN REQUIREMENT.—

(1) IN GENERAL.—The Secretary may make a grant under

this title to the Department of Hawaiian Home Lands for a fiscal year only if—

(A) the Director has submitted to the Secretary a

housing plan for that fiscal year; and
Sec. 803 NATIVE AMERICAN HOUSING ASSISTANCE 860

(B) the Secretary has determined under section 804

that the housing plan complies with the requirements of

section 803.

(2) WAIVER.—The Secretary may waive the applicability of

the requirements under paragraph (1), in part, if the Secretary

finds that the Department of Hawaiian Home Lands has not

complied or cannot comply with those requirements due to circumstances beyond the control of the Department of Hawaiian

Home Lands.

(c) USE OF AFFORDABLE HOUSING ACTIVITIES UNDER PLAN.—

Except as provided in subsection (e), amounts provided under a

grant under this section may be used only for affordable housing

activities under this title that are consistent with a housing plan

approved under section 804.

(d) ADMINISTRATIVE EXPENSES.—

(1) IN GENERAL.—The Secretary shall, by regulation, authorize the Department of Hawaiian Home Lands to use a percentage of any grant amounts received under this title for any

reasonable administrative and planning expenses of the Department relating to carrying out this title and activities assisted with those amounts.

(2) ADMINISTRATIVE AND PLANNING EXPENSES.—The administrative and planning expenses referred to in paragraph (1)

include—

(A) costs for salaries of individuals engaged in administering and managing affordable housing activities assisted with grant amounts provided under this title; and

(B) expenses incurred in preparing a housing plan

under section 803.

(e) PUBLIC-PRIVATE PARTNERSHIPS.—The Director shall make

all reasonable efforts, consistent with the purposes of this title, to

maximize participation by the private sector, including nonprofit

organizations and for-profit entities, in implementing a housing

plan that has been approved by the Secretary under section 803.

SEC. 803. ø25 U.S.C. 4223¿ HOUSING PLAN.

(a) PLAN SUBMISSION.—The Secretary shall—

(1) require the Director to submit a housing plan under

this section for each fiscal year; and

(2) provide for the review of each plan submitted under

paragraph (1).

(b) FIVE-YEAR PLAN.—Each housing plan under this section

shall—

(1) be in a form prescribed by the Secretary; and

(2) contain, with respect to the 5-year period beginning

with the fiscal year for which the plan is submitted, the following information:

(A) MISSION STATEMENT.—A general statement of the

mission of the Department of Hawaiian Home Lands to

serve the needs of the low-income families to be served by

the Department.

(B) GOALS AND OBJECTIVES.—A statement of the goals

and objectives of the Department of Hawaiian Home Lands

to enable the Department to serve the needs identified in

subparagraph (A) during the period.
861 Sec. 803 NATIVE AMERICAN HOUSING ASSISTANCE

(C) ACTIVITIES PLANS.—An overview of the activities

planned during the period including an analysis of the

manner in which the activities will enable the Department

to meet its mission, goals, and objectives.

(c) ONE-YEAR PLAN.—A housing plan under this section shall—

(1) be in a form prescribed by the Secretary; and

(2) contain the following information relating to the fiscal

year for which the assistance under this title is to be made

available:

(A) GOALS AND OBJECTIVES.—A statement of the goals

and objectives to be accomplished during the period covered by the plan.

(B) STATEMENT OF NEEDS.—A statement of the housing needs of the low-income families served by the Department and the means by which those needs will be addressed during the period covered by the plan, including—

(i) a description of the estimated housing needs

and the need for assistance for the low-income families

to be served by the Department, including a description of the manner in which the geographical distribution of assistance is consistent with—

(I) the geographical needs of those families;

and

(II) needs for various categories of housing assistance; and

(ii) a description of the estimated housing needs

for all families to be served by the Department.

(C) FINANCIAL RESOURCES.—An operating budget for

the Department of Hawaiian Home Lands, in a form prescribed by the Secretary, that includes—

(i) an identification and a description of the financial resources reasonably available to the Department

to carry out the purposes of this title, including an explanation of the manner in which amounts made

available will be used to leverage additional resources;

and

(ii) the uses to which the resources described in

clause (i) will be committed, including—

(I) eligible and required affordable housing activities; and

(II) administrative expenses.

(D) AFFORDABLE HOUSING RESOURCES.—A statement of

the affordable housing resources currently available at the

time of the submittal of the plan and to be made available

during the period covered by the plan, including—

(i) a description of the significant characteristics

of the housing market in the State of Hawaii, including the availability of housing from other public

sources, private market housing;

(ii) the manner in which the characteristics referred to in clause (i) influence the decision of the Department of Hawaiian Home Lands to use grant

amounts to be provided under this title for—

(I) rental assistance;

(II) the production of new units;
Sec. 803 NATIVE AMERICAN HOUSING ASSISTANCE 862

(III) the acquisition of existing units; or

(IV) the rehabilitation of units;

(iii) a description of the structure, coordination,

and means of cooperation between the Department of

Hawaiian Home Lands and any other governmental

entities in the development, submission, or implementation of housing plans, including a description of—

(I) the involvement of private, public, and

nonprofit organizations and institutions;

(II) the use of loan guarantees under section

184A of the Housing and Community Development Act of 1992; and

(III) other housing assistance provided by the

United States, including loans, grants, and mortgage insurance;

(iv) a description of the manner in which the plan

will address the needs identified pursuant to subparagraph (C);

(v) a description of—

(I) any existing or anticipated homeownership

programs and rental programs to be carried out

during the period covered by the plan; and

(II) the requirements and assistance available

under the programs referred to in subclause (I);

(vi) a description of—

(I) any existing or anticipated housing rehabilitation programs necessary to ensure the longterm viability of the housing to be carried out during the period covered by the plan; and

(II) the requirements and assistance available

under the programs referred to in subclause (I);

(vii) a description of—

(I) all other existing or anticipated housing

assistance provided by the Department of Hawaiian Home Lands during the period covered by the

plan, including—

(aa) transitional housing;

(bb) homeless housing;

(cc) college housing; and

(dd) supportive services housing; and

(II) the requirements and assistance available

under such programs;

(viii)(I) a description of any housing to be demolished or disposed of;

(II) a timetable for that demolition or disposition;

and

(III) any other information required by the Secretary with respect to that demolition or disposition;

(ix) a description of the manner in which the Department of Hawaiian Home Lands will coordinate

with welfare agencies in the State of Hawaii to ensure

that residents of the affordable housing will be provided with access to resources to assist in obtaining

employment and achieving self-sufficiency;
863 Sec. 803 NATIVE AMERICAN HOUSING ASSISTANCE

1This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

subclause refers to title VIII of the Act popularly known as the ‘‘Civil Rights Act of 1968’’ rather

than to the Fair Housing Act.

(x) a description of the requirements established

by the Department of Hawaiian Home Lands to—

(I) promote the safety of residents of the affordable housing;

(II) facilitate the undertaking of crime prevention measures;

(III) allow resident input and involvement, including the establishment of resident organizations; and

(IV) allow for the coordination of crime prevention activities between the Department and

local law enforcement officials; and

(xi) a description of the entities that will carry out

the activities under the plan, including the organizational capacity and key personnel of the entities.

(E) CERTIFICATION OF COMPLIANCE.—Evidence of compliance that shall include, as appropriate—

(i) a certification that the Department of Hawaiian Home Lands will comply with—

(I) title VI of the Civil Rights Act of 1964 (42

U.S.C. 2000d et seq.) or with the Fair Housing

Act 1 (42 U.S.C. 3601 et seq.) in carrying out this

title, to the extent that such title is applicable;

and

(II) other applicable Federal statutes;

(ii) a certification that the Department will require adequate insurance coverage for housing units

that are owned and operated or assisted with grant

amounts provided under this title, in compliance with

such requirements as may be established by the Secretary;

(iii) a certification that policies are in effect and

are available for review by the Secretary and the public governing the eligibility, admission, and occupancy

of families for housing assisted with grant amounts

provided under this title;

(iv) a certification that policies are in effect and

are available for review by the Secretary and the public governing rents charged, including the methods by

which such rents or homebuyer payments are determined, for housing assisted with grant amounts provided under this title; and

(v) a certification that policies are in effect and

are available for review by the Secretary and the public governing the management and maintenance of

housing assisted with grant amounts provided under

this title.

(d) APPLICABILITY OF CIVIL RIGHTS STATUTES.—
Sec. 804 NATIVE AMERICAN HOUSING ASSISTANCE 864

1This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

paragraph refers to title VIII of the Act popularly know as the ‘‘Civil Rights Act of 1968’’ rather

than to the Fair Housing Act.

(1) IN GENERAL.—To the extent that the requirements of

title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.)

or of the Fair Housing Act 1 (42 U.S.C. 3601 et seq.) apply to

assistance provided under this title, nothing in the requirements concerning discrimination on the basis of race shall be

construed to prevent the provision of assistance under this

title—

(A) to the Department of Hawaiian Home Lands on

the basis that the Department served Native Hawaiians;

or

(B) to an eligible family on the basis that the family

is a Native Hawaiian family.

(2) CIVIL RIGHTS.—Program eligibility under this title may

be restricted to Native Hawaiians. Subject to the preceding

sentence, no person may be discriminated against on the basis

of race, color, national origin, religion, sex, familial status, or

disability.

(e) USE OF NONPROFIT ORGANIZATIONS.—As a condition of receiving grant amounts under this title, the Department of Hawaiian Home Lands shall, to the extent practicable, provide for private

nonprofit organizations experienced in the planning and development of affordable housing for Native Hawaiians to carry out affordable housing activities with those grant amounts.

SEC. 804. ø25 U.S.C. 4224¿ REVIEW OF PLANS.

(a) REVIEW AND NOTICE.—

(1) REVIEW.—

(A) IN GENERAL.—The Secretary shall conduct a review of a housing plan submitted to the Secretary under

section 803 to ensure that the plan complies with the requirements of that section.

(B) LIMITATION.—The Secretary shall have the discretion to review a plan referred to in subparagraph (A) only

to the extent that the Secretary considers that the review

is necessary.

(2) NOTICE.—

(A) IN GENERAL.—Not later than 60 days after receiving a plan under section 803, the Secretary shall notify the

Director of the Department of Hawaiian Home Lands

whether the plan complies with the requirements under

that section.

(B) EFFECT OF FAILURE OF SECRETARY TO TAKE ACTION.—For purposes of this title, if the Secretary does not

notify the Director, as required under this subsection and

subsection (b), upon the expiration of the 60-day period described in subparagraph (A)—

(i) the plan shall be considered to have been determined to comply with the requirements under section

803; and
865 Sec. 805 NATIVE AMERICAN HOUSING ASSISTANCE

1This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

subsection refers to the provision of assistance for ‘‘fiscal year 2000’’.

(ii) the Director shall be considered to have been

notified of compliance.

(b) NOTICE OF REASONS FOR DETERMINATION OF NONCOMPLI- ANCE.—If the Secretary determines that a plan submitted under

section 803 does not comply with the requirements of that section,

the Secretary shall specify in the notice under subsection (a)—

(1) the reasons for noncompliance; and

(2) any modifications necessary for the plan to meet the requirements of section 803.

(c) REVIEW.— (1) IN GENERAL.—After the Director of the Department of

Hawaiian Home Lands submits a housing plan under section

803, or any amendment or modification to the plan to the Secretary, to the extent that the Secretary considers such action

to be necessary to make a determination under this subsection,

the Secretary shall review the plan (including any amendments or modifications thereto) to determine whether the contents of the plan—

(A) set forth the information required by section 803

to be contained in the housing plan;

(B) are consistent with information and data available

to the Secretary; and

(C) are not prohibited by or inconsistent with any provision of this Act or any other applicable law.

(2) INCOMPLETE PLANS.—If the Secretary determines under

this subsection that any of the appropriate certifications required under section 803(c)(2)(E) are not included in a plan,

the plan shall be considered to be incomplete.

(d) UPDATES TO PLAN.—

(1) IN GENERAL.—Subject to paragraph (2), after a plan

under section 803 has been submitted for a fiscal year, the Director of the Department of Hawaiian Home Lands may comply with the provisions of that section for any succeeding fiscal

year (with respect to information included for the 5-year period

under section 803(b) or for the 1-year period under section

803(c)) by submitting only such information regarding such

changes as may be necessary to update the plan previously

submitted.

(2) COMPLETE PLANS.—The Director shall submit a complete plan under section 803 not later than 4 years after submitting an initial plan under that section, and not less frequently than every 4 years thereafter.

(e) EFFECTIVE DATE.—This section and section 803 shall take

effect on the date provided by the Secretary pursuant to section

807(a) to provide for timely submission and review of the housing

plan as necessary for the provision of assistance under this title for

fiscal year 2001 1.

SEC. 805. ø25 U.S.C. 4225¿ TREATMENT OF PROGRAM INCOME AND

LABOR STANDARDS.

(a) PROGRAM INCOME.—
Sec. 806 NATIVE AMERICAN HOUSING ASSISTANCE 866

(1) AUTHORITY TO RETAIN.—The Department of Hawaiian

Home Lands may retain any program income that is realized

from any grant amounts received by the Department under

this title if—

(A) that income was realized after the initial disbursement of the grant amounts received by the Department;

and

(B) the Director agrees to use the program income for

affordable housing activities in accordance with the provisions of this title.

(2) PROHIBITION OF REDUCTION OF GRANT.—The Secretary

may not reduce the grant amount for the Department of Hawaiian Home Lands based solely on—

(A) whether the Department retains program income

under paragraph (1); or

(B) the amount of any such program income retained.

(3) EXCLUSION OF AMOUNTS.—The Secretary may, by regulation, exclude from consideration as program income any

amounts determined to be so small that compliance with the

requirements of this subsection would create an unreasonable

administrative burden on the Department.

(b) LABOR STANDARDS.—

(1) IN GENERAL.—Any contract or agreement for assistance, sale, or lease pursuant to this title shall contain—

(A) a provision requiring that an amount not less than

the wages prevailing in the locality, as determined or

adopted (subsequent to a determination under applicable

State or local law) by the Secretary, shall be paid to all architects, technical engineers, draftsmen, technicians employed in the development and all maintenance, and laborers and mechanics employed in the operation, of the affordable housing project involved; and

(B) a provision that an amount not less than the

wages prevailing in the locality, as predetermined by the

Secretary of Labor pursuant to the Act commonly known

as the ‘‘Davis-Bacon Act’’ (46 Stat. 1494; chapter 411; 40

U.S.C. 276a et seq.) shall be paid to all laborers and mechanics employed in the development of the affordable

housing involved.

(2) EXCEPTIONS.—Paragraph (1) and provisions relating to

wages required under paragraph (1) in any contract or agreement for assistance, sale, or lease under this title, shall not

apply to any individual who performs the services for which

the individual volunteered and who is not otherwise employed

at any time in the construction work and received no compensation or is paid expenses, reasonable benefits, or a nominal fee for those services.

SEC. 806. ø25 U.S.C. 4226¿ ENVIRONMENTAL REVIEW.

(a) IN GENERAL.—

(1) RELEASE OF FUNDS.—

(A) IN GENERAL.—The Secretary may carry out the alternative environmental protection procedures described in

subparagraph (B) in order to ensure—
867 Sec. 806 NATIVE AMERICAN HOUSING ASSISTANCE

(i) that the policies of the National Environmental

Policy Act of 1969 (42 U.S.C. 4321 et seq.) and other

provisions of law that further the purposes of such Act

(as specified in regulations issued by the Secretary)

are most effectively implemented in connection with

the expenditure of grant amounts provided under this

title; and

(ii) to the public undiminished protection of the

environment.

(B) ALTERNATIVE ENVIRONMENTAL PROTECTION PROCEDURE.—In lieu of applying environmental protection procedures otherwise applicable, the Secretary may by regulation provide for the release of funds for specific projects to

the Department of Hawaiian Home Lands if the Director

of the Department assumes all of the responsibilities for

environmental review, decisionmaking, and action under

the National Environmental Policy Act of 1969 (42 U.S.C.

4321 et seq.), and such other provisions of law as the regulations of the Secretary specify, that would apply to the

Secretary were the Secretary to undertake those projects

as Federal projects.

(2) REGULATIONS.—

(A) IN GENERAL.—The Secretary shall issue regulations to carry out this section only after consultation with

the Council on Environmental Quality.

(B) CONTENTS.—The regulations issued under this

paragraph shall—

(i) provide for the monitoring of the environmental

reviews performed under this section;

(ii) in the discretion of the Secretary, facilitate

training for the performance of such reviews; and

(iii) provide for the suspension or termination of

the assumption of responsibilities under this section.

(3) EFFECT ON ASSUMED RESPONSIBILITY.—The duty of the

Secretary under paragraph (2)(B) shall not be construed to

limit or reduce any responsibility assumed by the Department

of Hawaiian Home Lands for grant amounts with respect to

any specific release of funds.

(b) PROCEDURE.—

(1) IN GENERAL.—The Secretary shall authorize the release

of funds subject to the procedures under this section only if,

not less than 15 days before that approval and before any commitment of funds to such projects, the Director of the Department of Hawaiian Home Lands submits to the Secretary a request for such release accompanied by a certification that

meets the requirements of subsection (c).

(2) EFFECT OF APPROVAL.—The approval of the Secretary of

a certification described in paragraph (1) shall be deemed to

satisfy the responsibilities of the Secretary under the National

Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and

such other provisions of law as the regulations of the Secretary

specify to the extent that those responsibilities relate to the releases of funds for projects that are covered by that certification.
Sec. 807 NATIVE AMERICAN HOUSING ASSISTANCE 868

1This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

subparagraph refers to ‘‘enforcement of the responsibilities of the Director’’. 2This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

section provides for issuance of final regulations not later than ‘‘October 1, 2000’’. 3This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

section refers (probably incorrectly) to the date of the enactment of the Native American Housing Assistance and Self-Determination Amendments of 2000. 4So in law. There is no subsection (b).

(c) CERTIFICATION.—A certification under the procedures under

this section shall—

(1) be in a form acceptable to the Secretary;

(2) be executed by the Director of the Department of Hawaiian Home Lands;

(3) specify that the Department of Hawaiian Home Lands

has fully carried out its responsibilities as described under subsection (a); and

(4) specify that the Director—

(A) consents to assume the status of a responsible Federal official under the National Environmental Policy Act

of 1969 (42 U.S.C. 4321 et seq.) and each provision of law

specified in regulations issued by the Secretary to the extent that those laws apply by reason of subsection (a); and

(B) is authorized and consents on behalf of the Department of Hawaiian Home Lands and the Director to accept

the jurisdiction of the Federal courts for the purpose of enforcement of the responsibilities of the Director of the Department of Hawaiian Home Lands as such official 1.

SEC. 807. ø25 U.S.C. 4227¿ REGULATIONS.

The Secretary shall issue final regulations necessary to carry

out this title not later than October 1, 2001 2.

SEC. 808. ø25 U.S.C. 4221 note¿ EFFECTIVE DATE.

Except as otherwise expressly provided in this title, this title

shall take effect on the date of the enactment of the American

Homeownership and Economic Opportunity Act of 2000 3.

SEC. 809. ø25 U.S.C. 4228¿ AFFORDABLE HOUSING ACTIVITIES.

(a) 4 NATIONAL OBJECTIVES AND ELIGIBLE FAMILIES.— (1) PRIMARY OBJECTIVE.—The national objectives of this

title are—

(A) to assist and promote affordable housing activities

to develop, maintain, and operate affordable housing in

safe and healthy environments for occupancy by low-income Native Hawaiian families;

(B) to ensure better access to private mortgage markets and to promote self-sufficiency of low-income Native

Hawaiian families;

(C) to coordinate activities to provide housing for lowincome Native Hawaiian families with Federal, State, and

local activities to further economic and community development;
869 Sec. 809 NATIVE AMERICAN HOUSING ASSISTANCE

(D) to plan for and integrate infrastructure resources

on the Hawaiian Home Lands with housing development;

and

(E) to—

(i) promote the development of private capital

markets; and

(ii) allow the markets referred to in clause (i) to

operate and grow, thereby benefiting Native Hawaiian

communities.

(2) ELIGIBLE FAMILIES.—

(A) IN GENERAL.—Except as provided under subparagraph (B), assistance for eligible housing activities under

this title shall be limited to low-income Native Hawaiian

families.

(B) EXCEPTION TO LOW-INCOME REQUIREMENT.—

(i) IN GENERAL.—The Director may provide assistance for homeownership activities under—

(I) section 810(b);

(II) model activities under section 810(f ); or

(III) loan guarantee activities under section

184A of the Housing and Community Development Act of 1992 to Native Hawaiian families who

are not low-income families, to the extent that the

Secretary approves the activities under that section to address a need for housing for those families that cannot be reasonably met without that

assistance.

(ii) LIMITATIONS.—The Secretary shall establish

limitations on the amount of assistance that may be

provided under this title for activities for families that

are not low-income families.

(C) OTHER FAMILIES.—Notwithstanding paragraph (1),

the Director may provide housing or housing assistance

provided through affordable housing activities assisted

with grant amounts under this title to a family that is not

composed of Native Hawaiians if—

(i) the Department determines that the presence

of the family in the housing involved is essential to

the well-being of Native Hawaiian families; and

(ii) the need for housing for the family cannot be

reasonably met without the assistance.

(D) PREFERENCE.—

(i) IN GENERAL.—A housing plan submitted under

section 803 may authorize a preference, for housing or

housing assistance provided through affordable housing activities assisted with grant amounts provided

under this title to be provided, to the extent practicable, to families that are eligible to reside on the

Hawaiian Home Lands.

(ii) APPLICATION.—In any case in which a housing

plan provides for preference described in clause (i), the

Director shall ensure that housing activities that are

assisted with grant amounts under this title are subject to that preference.
Sec. 810 NATIVE AMERICAN HOUSING ASSISTANCE 870

(E) USE OF NONPROFIT ORGANIZATIONS.—As a condition of receiving grant amounts under this title, the Department of Hawaiian Home Lands, shall to the extent

practicable, provide for private nonprofit organizations experienced in the planning and development of affordable

housing for Native Hawaiians to carry out affordable housing activities with those grant amounts.

SEC. 810. ø25 U.S.C. 4229¿ ELIGIBLE AFFORDABLE HOUSING ACTIVITIES.

(a) IN GENERAL.—Affordable housing activities under this section are activities conducted in accordance with the requirements

of section 811 to—

(1) develop or to support affordable housing for rental or

homeownership; or

(2) provide housing services with respect to affordable

housing, through the activities described in subsection (b).

(b) ACTIVITIES.—The activities described in this subsection are

the following:

(1) DEVELOPMENT.—The acquisition, new construction, reconstruction, or moderate or substantial rehabilitation of affordable housing, which may include—

(A) real property acquisition;

(B) site improvement;

(C) the development of utilities and utility services;

(D) conversion;

(E) demolition;

(F) financing;

(G) administration and planning; and

(H) other related activities.

(2) HOUSING SERVICES.—The provision of housing-related

services for affordable housing, including—

(A) housing counseling in connection with rental or

homeownership assistance;

(B) the establishment and support of resident organizations and resident management corporations;

(C) energy auditing;

(D) activities related to the provisions of self-sufficiency and other services; and

(E) other services related to assisting owners, tenants,

contractors, and other entities participating or seeking to

participate in other housing activities assisted pursuant to

this section.

(3) HOUSING MANAGEMENT SERVICES.—The provision of

management services for affordable housing, including—

(A) the preparation of work specifications;

(B) loan processing;

(C) inspections;

(D) tenant selection;

(E) management of tenant-based rental assistance;

and

(F) management of affordable housing projects.

(4) CRIME PREVENTION AND SAFETY ACTIVITIES.—The provision of safety, security, and law enforcement measures and activities appropriate to protect residents of affordable housing

from crime.
871 Sec. 812 NATIVE AMERICAN HOUSING ASSISTANCE

(5) MODEL ACTIVITIES.—Housing activities under model

programs that are—

(A) designed to carry out the purposes of this title; and

(B) specifically approved by the Secretary as appropriate for the purpose referred to in subparagraph (A).

SEC. 811. ø25 U.S.C. 4230¿ PROGRAM REQUIREMENTS.

(a) RENTS.—

(1) ESTABLISHMENT.—Subject to paragraph (2), as a condition to receiving grant amounts under this title, the Director

shall develop written policies governing rents and homebuyer

payments charged for dwelling units assisted under this title,

including methods by which such rents and homebuyer payments are determined.

(2) MAXIMUM RENT.—In the case of any low-income family

residing in a dwelling unit assisted with grant amounts under

this title, the monthly rent or homebuyer payment (as applicable) for that dwelling unit may not exceed 30 percent of the

monthly adjusted income of that family.

(b) MAINTENANCE AND EFFICIENT OPERATION.—

(1) IN GENERAL.—The Director shall, using amounts of any

grants received under this title, reserve and use for operating

under section 810 such amounts as may be necessary to provide for the continued maintenance and efficient operation of

such housing.

(2) DISPOSAL OF CERTAIN HOUSING.—This subsection may

not be construed to prevent the Director, or any entity funded

by the Department, from demolishing or disposing of housing,

pursuant to regulations established by the Secretary.

(c) INSURANCE COVERAGE.—As a condition to receiving grant

amounts under this title, the Director shall require adequate insurance coverage for housing units that are owned or operated or assisted with grant amounts provided under this title.

(d) ELIGIBILITY FOR ADMISSION.—As a condition to receiving

grant amounts under this title, the Director shall develop written

policies governing the eligibility, admission, and occupancy of families for housing assisted with grant amounts provided under this

title.

(e) MANAGEMENT AND MAINTENANCE.—As a condition to receiving grant amounts under this title, the Director shall develop policies governing the management and maintenance of housing assisted with grant amounts under this title.

SEC. 812. ø25 U.S.C. 4231¿ TYPES OF INVESTMENTS.

(a) IN GENERAL.—Subject to section 811 and an applicable

housing plan approved under section 803, the Director shall have—

(1) the discretion to use grant amounts for affordable housing activities through the use of—

(A) equity investments;

(B) interest-bearing loans or advances;

(C) noninterest-bearing loans or advances;

(D) interest subsidies;

(E) the leveraging of private investments; or

(F) any other form of assistance that the Secretary determines to be consistent with the purposes of this title;

and
Sec. 813 NATIVE AMERICAN HOUSING ASSISTANCE 872

(2) the right to establish the terms of assistance provided

with funds referred to in paragraph (1).

(b) INVESTMENTS.—The Director may invest grant amounts for

the purposes of carrying out affordable housing activities in investment securities and other obligations, as approved by the Secretary.

SEC. 813. ø25 U.S.C. 4232¿ LOW-INCOME REQUIREMENT AND INCOME

TARGETING.

(a) IN GENERAL.—Housing shall qualify for affordable housing

for purposes of this title only if—

(1) each dwelling unit in the housing—

(A) in the case of rental housing, is made available for

occupancy only by a family that is a low-income family at

the time of the initial occupancy of that family of that unit;

and

(B) in the case of housing for homeownership, is made

available for purchase only by a family that is a low-income family at the time of purchase; and

(2) each dwelling unit in the housing will remain affordable, according to binding commitments satisfactory to the Secretary, for—

(A) the remaining useful life of the property (as determined by the Secretary) without regard to the term of the

mortgage or to transfer of ownership; or

(B) such other period as the Secretary determines is

the longest feasible period of time consistent with sound

economics and the purposes of this title, except upon a

foreclosure by a lender (or upon other transfer in lieu of

foreclosure) if that action—

(i) recognizes any contractual or legal rights of

any public agency, nonprofit sponsor, or other person

or entity to take an action that would—

(I) avoid termination of low-income affordability, in the case of foreclosure; or

(II) transfer ownership in lieu of foreclosure;

and

(ii) is not for the purpose of avoiding low-income

affordability restrictions, as determined by the Secretary.

(b) EXCEPTION.—Notwithstanding subsection (a), housing assistance pursuant to section 809(a)(2)(B) shall be considered affordable housing for purposes of this title.

SEC. 814. ø25 U.S.C. 4233¿ LEASE REQUIREMENTS AND TENANT SELECTION.

(a) LEASES.—Except to the extent otherwise provided by or inconsistent with the laws of the State of Hawaii, in renting dwelling

units in affordable housing assisted with grant amounts provided

under this title, the Director, owner, or manager shall use leases

that—

(1) do not contain unreasonable terms and conditions;

(2) require the Director, owner, or manager to maintain

the housing in compliance with applicable housing codes and

quality standards;
873 Sec. 815 NATIVE AMERICAN HOUSING ASSISTANCE

(3) require the Director, owner, or manager to give adequate written notice of termination of the lease, which shall be

the period of time required under applicable State or local law;

(4) specify that, with respect to any notice of eviction or

termination, notwithstanding any State or local law, a resident

shall be informed of the opportunity, before any hearing or

trial, to examine any relevant documents, record, or regulations directly related to the eviction or termination;

(5) require that the Director, owner, or manager may not

terminate the tenancy, during the term of the lease, except for

serious or repeated violation of the terms and conditions of the

lease, violation of applicable Federal, State, or local law, or for

other good cause; and

(6) provide that the Director, owner, or manager may terminate the tenancy of a resident for any activity, engaged in

by the resident, any member of the household of the resident,

or any guest or other person under the control of the resident,

that—

(A) threatens the health or safety of, or right to peaceful enjoyment of the premises by, other residents or employees of the Department, owner, or manager;

(B) threatens the health or safety of, or right to peaceful enjoyment of their premises by, persons residing in the

immediate vicinity of the premises; or

(C) is criminal activity (including drug-related criminal activity) on or off the premises.

(b) TENANT OR HOMEBUYER SELECTION.—As a condition to receiving grant amounts under this title, the Director shall adopt and

use written tenant and homebuyer selection policies and criteria

that—

(1) are consistent with the purpose of providing housing for

low-income families;

(2) are reasonably related to program eligibility and the

ability of the applicant to perform the obligations of the lease;

and

(3) provide for—

(A) the selection of tenants and homebuyers from a

written waiting list in accordance with the policies and

goals set forth in an applicable housing plan approved

under section 803; and

(B) the prompt notification in writing of any rejected

applicant of the grounds for that rejection.

SEC. 815. ø25 U.S.C. 4234¿ REPAYMENT.

If the Department of Hawaiian Home Lands uses grant

amounts to provide affordable housing under activities under this

title and, at any time during the useful life of the housing, the

housing does not comply with the requirement under section

813(a)(2), the Secretary shall—

(1) reduce future grant payments on behalf of the Department by an amount equal to the grant amounts used for that

housing (under the authority of section 819(a)(2)); or

(2) require repayment to the Secretary of any amount

equal to those grant amounts.
Sec. 816 NATIVE AMERICAN HOUSING ASSISTANCE 874

1The date of enactment was December 27, 2000.

2This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In that amendment, this

subsection referred to the date of the enactment of the Hawaiian Homelands Homeownership

Act of 2000.

SEC. 816. ø25 U.S.C. 4235¿ ANNUAL ALLOCATION.

For each fiscal year, the Secretary shall allocate any amounts

made available for assistance under this title for the fiscal year, in

accordance with the formula established pursuant to section 817 to

the Department of Hawaiian Home Lands if the Department complies with the requirements under this title for a grant under this

title.

SEC. 817. ø25 U.S.C. 4236¿ ALLOCATION FORMULA.

(a) ESTABLISHMENT.—The Secretary shall, by regulation issued

not later than the expiration of the 6-month period beginning on

the date of the enactment of the Hawaiian Homelands Homeownership Act of 2000 1, in the manner provided under section 807, establish a formula to provide for the allocation of amounts available

for a fiscal year for block grants under this title in accordance with

the requirements of this section.

(b) FACTORS FOR DETERMINATION OF NEED.—The formula

under subsection (a) shall be based on factors that reflect the needs

for assistance for affordable housing activities, including—

(1) the number of low-income dwelling units owned or operated at the time pursuant to a contract between the Director

and the Secretary;

(2) the extent of poverty and economic distress and the

number of Native Hawaiian families eligible to reside on the

Hawaiian Home Lands; and

(3) any other objectively measurable conditions that the

Secretary and the Director may specify.

(c) OTHER FACTORS FOR CONSIDERATION.—In establishing the

formula under subsection (a), the Secretary shall consider the relative administrative capacities of the Department of Hawaiian

Home Lands and other challenges faced by the Department,

including—

(1) geographic distribution within Hawaiian Home Lands;

and

(2) technical capacity.

(d) EFFECTIVE DATE.—This section shall take effect on the date

of the enactment of the American Homeownership and Economic

Opportunity Act of 2000 2.

SEC. 818. ø25 U.S.C. 4237¿ REMEDIES FOR NONCOMPLIANCE.

(a) ACTIONS BY SECRETARY AFFECTING GRANT AMOUNTS.—

(1) IN GENERAL.—Except as provided in subsection (b), if

the Secretary finds after reasonable notice and opportunity for

a hearing that the Department of Hawaiian Home Lands has

failed to comply substantially with any provision of this title,

the Secretary shall—

(A) terminate payments under this title to the Department;
875 Sec. 818 NATIVE AMERICAN HOUSING ASSISTANCE

(B) reduce payments under this title to the Department by an amount equal to the amount of such payments

that were not expended in accordance with this title; or

(C) limit the availability of payments under this title

to programs, projects, or activities not affected by such failure to comply.

(2) ACTIONS.—If the Secretary takes an action under subparagraph (A), (B), or (C) of paragraph (1), the Secretary shall

continue that action until the Secretary determines that the

failure by the Department to comply with the provision has

been remedied by the Department and the Department is in

compliance with that provision.

(b) NONCOMPLIANCE BECAUSE OF A TECHNICAL INCAPACITY.—

The Secretary may provide technical assistance for the Department, either directly or indirectly, that is designed to increase the

capability and capacity of the Director of the Department to administer assistance provided under this title in compliance with the requirements under this title if the Secretary makes a finding under

subsection (a), but determines that the failure of the Department

to comply substantially with the provisions of this title—

(1) is not a pattern or practice of activities constituting

willful noncompliance; and

(2) is a result of the limited capability or capacity of the

Department of Hawaiian Home Lands.

(c) REFERRAL FOR CIVIL ACTION.—

(1) AUTHORITY.—In lieu of, or in addition to, any action

that the Secretary may take under subsection (a), if the Secretary has reason to believe that the Department of Hawaiian

Home Lands has failed to comply substantially with any provision of this title, the Secretary may refer the matter to the Attorney General of the United States with a recommendation

that an appropriate civil action be instituted.

(2) CIVIL ACTION.—Upon receiving a referral under paragraph (1), the Attorney General may bring a civil action in any

United States district court of appropriate jurisdiction for such

relief as may be appropriate, including an action—

(A) to recover the amount of the assistance furnished

under this title that was not expended in accordance with

this title; or

(B) for mandatory or injunctive relief.

(d) REVIEW.—

(1) IN GENERAL.—If the Director receives notice under subsection (a) of the termination, reduction, or limitation of payments under this Act, the Director—

(A) may, not later than 60 days after receiving such

notice, file with the United States Court of Appeals for the

Ninth Circuit, or in the United States Court of Appeals for

the District of Columbia, a petition for review of the action

of the Secretary; and

(B) upon the filing of any petition under subparagraph

(A), shall forthwith transmit copies of the petition to the

Secretary and the Attorney General of the United States,

who shall represent the Secretary in the litigation.

(2) PROCEDURE.—
Sec. 819 NATIVE AMERICAN HOUSING ASSISTANCE 876

(A) IN GENERAL.—The Secretary shall file in the court

a record of the proceeding on which the Secretary based

the action, as provided in section 2112 of title 28, United

States Code.

(B) OBJECTIONS.—No objection to the action of the Secretary shall be considered by the court unless the Department has registered the objection before the Secretary.

(3) DISPOSITION.—

(A) COURT PROCEEDINGS.—

(i) JURISDICTION OF COURT.—The court shall have

jurisdiction to affirm or modify the action of the Secretary or to set the action aside in whole or in part.

(ii) FINDINGS OF FACT.—If supported by substantial evidence on the record considered as a whole, the

findings of fact by the Secretary shall be conclusive.

(iii) ADDITION.—The court may order evidence, in

addition to the evidence submitted for review under

this subsection, to be taken by the Secretary, and to

be made part of the record.

(B) SECRETARY.—

(i) IN GENERAL.—The Secretary, by reason of the

additional evidence referred to in subparagraph (A)

and filed with the court—

(I) may—

(aa) modify the findings of fact of the Secretary; or

(bb) make new findings; and

(II) shall file—

(aa) such modified or new findings; and

(bb) the recommendation of the Secretary,

if any, for the modification or setting aside of

the original action of the Secretary.

(ii) FINDINGS.—The findings referred to in clause

(i)(II)(bb) shall, with respect to a question of fact, be

considered to be conclusive if those findings are—

(I) supported by substantial evidence on the

record; and

(II) considered as a whole.

(4) FINALITY.—

(A) IN GENERAL.—Except as provided in subparagraph

(B), upon the filing of the record under this subsection

with the court—

(i) the jurisdiction of the court shall be exclusive;

and

(ii) the judgment of the court shall be final.

(B) REVIEW BY SUPREME COURT.—A judgment under

subparagraph (A) shall be subject to review by the Supreme Court of the United States upon writ of certiorari

or certification, as provided in section 1254 of title 28,

United States Code.

SEC. 819. ø25 U.S.C. 4238¿ MONITORING OF COMPLIANCE.

(a) ENFORCEABLE AGREEMENTS.—
877 Sec. 820 NATIVE AMERICAN HOUSING ASSISTANCE

(1) IN GENERAL.—The Director, through binding contractual agreements with owners or other authorized entities, shall

ensure long-term compliance with the provisions of this title.

(2) MEASURES.—The measures referred to in paragraph (1)

shall provide for—

(A) to the extent allowable by Federal and State law,

the enforcement of the provisions of this title by the Department and the Secretary; and

(B) remedies for breach of the provisions referred to in

paragraph (1).

(b) PERIODIC MONITORING.—

(1) IN GENERAL.—Not less frequently than annually, the

Director shall review the activities conducted and housing assisted under this title to assess compliance with the requirements of this title.

(2) REVIEW.—Each review under paragraph (1) shall include onsite inspection of housing to determine compliance

with applicable requirements.

(3) RESULTS.—The results of each review under paragraph

(1) shall be—

(A) included in a performance report of the Director

submitted to the Secretary under section 820; and

(B) made available to the public.

(c) PERFORMANCE MEASURES.—The Secretary shall establish

such performance measures as may be necessary to assess compliance with the requirements of this title.

SEC. 820. ø25 U.S.C. 4239¿ PERFORMANCE REPORTS.

(a) REQUIREMENT.—For each fiscal year, the Director shall—

(1) review the progress the Department has made during

that fiscal year in carrying out the housing plan submitted by

the Department under section 803; and

(2) submit a report to the Secretary (in a form acceptable

to the Secretary) describing the conclusions of the review.

(b) CONTENT.—Each report submitted under this section for a

fiscal year shall—

(1) describe the use of grant amounts provided to the Department of Hawaiian Home Lands for that fiscal year;

(2) assess the relationship of the use referred to in paragraph (1) to the goals identified in the housing plan;

(3) indicate the programmatic accomplishments of the Department; and

(4) describe the manner in which the Department would

change its housing plan submitted under section 803 as a result of its experiences.

(c) SUBMISSIONS.—The Secretary shall—

(1) establish a date for submission of each report under

this section;

(2) review each such report; and

(3) with respect to each such report, make recommendations as the Secretary considers appropriate to carry out the

purposes of this title.

(d) PUBLIC AVAILABILITY.— (1) COMMENTS BY BENEFICIARIES.—In preparing a report

under this section, the Director shall make the report publicly
Sec. 821 NATIVE AMERICAN HOUSING ASSISTANCE 878

available to the beneficiaries of the Hawaiian Homes Commission Act, 1920 (42 Stat. 108 et seq.) and give a sufficient

amount of time to permit those beneficiaries to comment on

that report before it is submitted to the Secretary (in such

manner and at such time as the Director may determine).

(2) SUMMARY OF COMMENTS.—The report shall include a

summary of any comments received by the Director from beneficiaries under paragraph (1) regarding the program to carry

out the housing plan.

SEC. 821. ø25 U.S.C. 4240¿ REVIEW AND AUDIT BY SECRETARY.

(a) ANNUAL REVIEW.—

(1) IN GENERAL.—The Secretary shall, not less frequently

than on an annual basis, make such reviews and audits as

may be necessary or appropriate to determine whether—

(A) the Director has—

(i) carried out eligible activities under this title in

a timely manner;

(ii) carried out and made certifications in accordance with the requirements and the primary objectives

of this title and with other applicable laws; and

(iii) a continuing capacity to carry out the eligible

activities in a timely manner;

(B) the Director has complied with the housing plan

submitted by the Director under section 803; and

(C) the performance reports of the Department under

section 821 are accurate.

(2) ONSITE VISITS.—Each review conducted under this section shall, to the extent practicable, include onsite visits by employees of the Department of Housing and Urban Development.

(b) REPORT BY SECRETARY.—The Secretary shall give the Department of Hawaiian Home Lands not less than 30 days to review

and comment on a report under this subsection. After taking into

consideration the comments of the Department, the Secretary may

revise the report and shall make the comments of the Department

and the report with any revisions, readily available to the public

not later than 30 days after receipt of the comments of the Department.

(c) EFFECT OF REVIEWS.—The Secretary may make appropriate

adjustments in the amount of annual grants under this title in accordance with the findings of the Secretary pursuant to reviews

and audits under this section. The Secretary may adjust, reduce,

or withdraw grant amounts, or take other action as appropriate in

accordance with the reviews and audits of the Secretary under this

section, except that grant amounts already expended on affordable

housing activities may not be recaptured or deducted from future

assistance provided to the Department of Hawaiian Home Lands.

SEC. 822. ø25 U.S.C. 4241¿ GENERAL ACCOUNTING OFFICE AUDITS.

To the extent that the financial transactions of the Department

of Hawaiian Home Lands involving grant amounts under this title

relate to amounts provided under this title, those transactions may

be audited by the Comptroller General of the United States under

such regulations as may be prescribed by the Comptroller General.

The Comptroller General of the United States shall have access to

all books, accounts, records, reports, files, and other papers, things,
879 Sec. 824 NATIVE AMERICAN HOUSING ASSISTANCE

1This title as shown was added by section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

subsection provides authorization of appropriations of such sums as may be necessary ‘‘for each

of fiscal years 2000, 2001, 2002, 2003, and 2004’’.

This title was added by section 203 of the Omnibus Indian Advancement Act, Pub. L. 106–

568, approved December 27, 2000. Section 513 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amendment adding to this Act (a second time) a title almost identical to that added by Pub. L. 106–568. The

later amendment (made by Pub. L. 106–569) is shown in this compilation.

or property belonging to or in use by the Department of Hawaiian

Home Lands pertaining to such financial transactions and necessary to facilitate the audit.

SEC. 823. ø25 U.S.C. 4242¿ REPORTS TO CONGRESS.

(a) IN GENERAL.—Not later than 90 days after the conclusion

of each fiscal year in which assistance under this title is made

available, the Secretary shall submit to Congress a report that

contains—

(1) a description of the progress made in accomplishing the

objectives of this title;

(2) a summary of the use of funds available under this title

during the preceding fiscal year; and

(3) a description of the aggregate outstanding loan guarantees under section 184A of the Housing and Community Development Act of 1992.

(b) RELATED REPORTS.—The Secretary may require the Director to submit to the Secretary such reports and other information

as may be necessary in order for the Secretary to prepare the report required under subsection (a).

SEC. 824. ø25 U.S.C. 4243¿ AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to the Department of

Housing and Urban Development for grants under this title such

sums as may be necessary for each of fiscal years 2001, 2002, 2003,

2004, and 2005. 1
880

WAIVER OF MATCHING FUNDS REQUIREMENTS FOR

INDIAN HOUSING PROGRAMS

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4423; 25 U.S.C. 4104]

SEC. 959. ø25 U.S.C. 4104¿ WAIVER OF MATCHING FUNDS REQUIREMENTS IN INDIAN HOUSING PROGRAMS.

(a) AUTHORIZATION OF WAIVER.—For any housing program that

provides assistance through any Indian housing authority, the Secretary of Housing and Urban Development may provide assistance

under such program in any fiscal year notwithstanding any other

provision of law that requires the Indian housing authority to provide amounts to match or supplement the amounts provided under

such program, if the Indian housing authority has not received

amounts for such fiscal year under the title I of the Housing and

Community Development Act of 1974.

(b) EXTENT OF WAIVER.—The authority under subsection (a) to

provide assistance notwithstanding requirements regarding matching or supplemental amounts shall be effective only to the extent

provided by the Secretary, which shall not extend beyond the fiscal

year in which the waiver is made or beyond the receipt of any

amounts by an Indian housing authority under title I of the Housing and Community Development Act of 1974.

(c) DEFINITION OF HOUSING PROGRAM.—For purposes of this

section, the term ‘‘housing program’’ means a program under the

administration of the Secretary of Housing and Urban Development or the Secretary of Agriculture (through the Administrator of

the Farmers Home Administration) that provides assistance in the

form of contracts, grants, loans, cooperative agreements, or any

other form of assistance (including the insurance or guarantee of

a loan, mortgage, or pool of mortgages) for housing.
881

LOAN GUARANTEES FOR INDIAN AND NATIVE

HAWAIIAN HOUSING

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3739; 12 U.S.C. 1715z–13a, 1715z–13b]

SEC. 184. ø12 U.S.C. 1715z–13a¿ LOAN GUARANTEES FOR INDIAN HOUSING.

(a) AUTHORITY.—To provide access to sources of private financing to Indian families, Indian housing authorities, and Indian

tribes, who otherwise could not acquire housing financing because

of the unique legal status of Indian lands, the Secretary may guarantee not to exceed 100 percent of the unpaid principal and interest due on any loan eligible under subsection (b) made to an Indian

family, Indian housing authority, or Indian tribe.

(b) ELIGIBLE LOANS.—Loans guaranteed pursuant to this section shall meet the following requirements:

(1) ELIGIBLE BORROWERS.—The loans shall be made only to

borrowers who are Indian families, Indian housing authorities,

or Indian tribes.

(2) ELIGIBLE HOUSING.—The loan shall be used to construct, acquire, refinance, or rehabilitate 1- to 4-family dwellings that are standard housing and are located on trust land

or land located in an Indian or Alaska Native area.

(3) SECURITY.—The loan may be secured by any collateral

authorized under existing Federal law or applicable State or

tribal law.

(4) LENDERS.—The loan shall be made only by a lender approved by and meeting qualifications established by the Secretary, except that loans otherwise insured or guaranteed by

an agency of the Federal Government or made by an organization of Indians from amounts borrowed from the United States

shall not be eligible for guarantee under this section. The following lenders are deemed to be approved under this

paragraph:

(A) Any mortgagee approved by the Secretary of Housing and Urban Development for participation in the single

family mortgage insurance program under title II of the

National Housing Act.

(B) Any lender whose housing loans under chapter 37

of title 38, United States Code are automatically guaranteed pursuant to section 1802(d) of such title.

(C) Any lender approved by the Secretary of Agriculture to make guaranteed loans for single family housing

under the Housing Act of 1949.
Sec. 184 INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 882

(D) Any other lender that is supervised, approved, regulated, or insured by any agency of the Federal

Government.

(5) TERMS.—The loan shall—

(A) be made for a term not exceeding 30 years;

(B) bear interest (exclusive of the guarantee fee under

section 404 and service charges, if any) at a rate agreed

upon by the borrower and the lender and determined by

the Secretary to be reasonable, which may not exceed the

rate generally charged in the area (as determined by the

Secretary) for home mortgage loans not guaranteed or insured by any agency or instrumentality of the Federal

Government;

(C) involve a principal obligation not exceeding—

(i) 97.75 percent of the appraised value of the

property as of the date the loan is accepted for guarantee (or 98.75 percent if the value of the property is

$50,000 or less); and

(ii) the amount approved by the Secretary under

this section; and

(D) involve a payment on account of the property (i) in

cash or its equivalent, or (ii) through the value of any improvements to the property made through the skilled or

unskilled labor of the borrower, as the Secretary shall provide.

(c) CERTIFICATE OF GUARANTEE.—

(1) APPROVAL PROCESS.—Before the Secretary approves

any loan for guarantee under this section, the lender shall submit the application for the loan to the Secretary for examination. If the Secretary approves the loan for guarantee, the Secretary shall issue a certificate under this paragraph as evidence of the guarantee.

(2) STANDARD FOR APPROVAL.—The Secretary may approve

a loan for guarantee under this section and issue a certificate

under this paragraph only if the Secretary determines there is

a reasonable prospect of repayment of the loan.

(3) EFFECT.—A certificate of guarantee issued under this

paragraph by the Secretary shall be conclusive evidence of the

eligibility of the loan for guarantee under the provisions of this

section and the amount of such guarantee. Such evidence shall

be incontestable in the hands of the bearer and the full faith

and credit of the United States is pledged to the payment of

all amounts agreed to be paid by the Secretary as security for

such obligations.

(4) FRAUD AND MISREPRESENTATION.—This subsection may

not be construed to preclude the Secretary from establishing

defenses against the original lender based on fraud or material

misrepresentation or to bar the Secretary from establishing by

regulations in effect on the date of issuance or disbursement,

whichever is earlier, partial defenses to the amount payable on

the guarantee.

(d) GUARANTEE FEE.—The Secretary shall fix and collect a

guarantee fee for the guarantee of loans under this section, which

may not exceed the amount equal to 1 percent of the principal obli-
883 Sec. 184 INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES

gation of the loan. The fee shall be paid by the lender at time of

issuance of the guarantee and shall be adequate, in the determination of the Secretary, to cover expenses and probable losses. The

Secretary shall deposit any fees collected under this subsection in

the Indian Housing Loan Guarantee Fund established under subsection (i).

(e) LIABILITY UNDER GUARANTEE.—The liability under a guarantee provided under this section shall decrease or increase on a

pro rata basis according to any decrease or increase in the amount

of the unpaid obligation under the provisions of the loan agreement.

(f) TRANSFER AND ASSUMPTION.—Notwithstanding any other

provision of law, any loan guaranteed under this section, including

the security given for the loan, may be sold or assigned by the

lender to any financial institution subject to examination and supervision by an agency of the Federal Government or of any State

or the District of Columbia.

(g) DISQUALIFICATION OF LENDERS AND CIVIL MONEY

PENALTIES.—

(1) IN GENERAL.—If the Secretary determines that any

lender or holder of a guarantee certificate under subsection (c)

has failed to maintain adequate accounting records, to adequately service loans guaranteed under this section, to exercise

proper credit or underwriting judgment, or has engaged in

practices otherwise detrimental to the interest of a borrower or

the United States, the Secretary may—

(A) refuse, either temporarily or permanently, to guarantee any further loans made by such lender or holder;

(B) bar such lender or holder from acquiring additional loans guaranteed under this section; and

(C) require that such lender or holder assume not less

than 10 percent of any loss on further loans made or held

by the lender or holder that are guaranteed under this section.

(2) CIVIL MONEY PENALTIES FOR INTENTIONAL VIOLATIONS.—If the Secretary determines that any lender or holder

of a guarantee certificate under subsection (c) has intentionally

failed to maintain adequate accounting records, to adequately

service loans guaranteed under this section, or to exercise

proper credit or underwriting judgment, the Secretary may impose a civil money penalty on such lender or holder in the

manner and amount provided under section 536 of the National Housing Act with respect to mortgagees and lenders

under such Act.

(3) PAYMENT ON LOANS MADE IN GOOD FAITH.—Notwithstanding paragraphs (1) and (2), the Secretary may not refuse

to pay pursuant to a valid guarantee on loans of a lender or

holder barred under this subsection if the loans were previously made in good faith.

(h) PAYMENT UNDER GUARANTEE.—

(1) LENDER OPTIONS.—

(A) IN GENERAL.—In the event of default by the borrower on a loan guaranteed under this section, the holder

of the guarantee certificate shall provide written notice of
Sec. 184 INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 884

the default to the Secretary. Upon providing such notice,

the holder of the guarantee certificate shall be entitled to

payment under the guarantee (subject to the provisions of

this section) and may proceed to obtain payment in one of

the following manners:

(i) FORECLOSURE.—The holder of the certificate

may initiate foreclosure proceedings (after providing

written notice of such action to the Secretary) and

upon a final order by the court authorizing foreclosure

and submission to the Secretary of a claim for payment under the guarantee, the Secretary shall pay to

the holder of the certificate the pro rata portion of the

amount guaranteed (as determined pursuant to subsection (e)) plus reasonable fees and expenses as approved by the Secretary. The Secretary shall be subrogated to the rights of the holder of the guarantee

and the lender holder shall assign the obligation and

security to the Secretary.

(ii) NO FORECLOSURE.—Without seeking foreclosure (or in any case in which a foreclosure proceeding initiated under clause (i) continues for a period in excess of 1 year), the holder of the guarantee

may submit to the Secretary a request to assign the

obligation and security interest to the Secretary in return for payment of the claim under the guarantee.

The Secretary may accept assignment of the loan if

the Secretary determines that the assignment is in the

best interests of the United States. Upon assignment,

the Secretary shall pay to the holder of the

guarantee the pro rata portion of the amount guaranteed (as determined under subsection (e)). The

Secretary shall be subrogated to the rights of the holder of the guarantee and the holder shall assign the obligation and security to the Secretary.

(B) REQUIREMENTS.—Before any payment under a

guarantee is made under subparagraph (A), the holder of

the guarantee shall exhaust all reasonable possibilities of

collection. Upon payment, in whole or in part, to the holder, the note or judgment evidencing the debt shall be assigned to the United States and the holder shall have no

further claim against the borrower or the United States.

The Secretary shall then take such action to collect as the

Secretary determines appropriate.

(2) LIMITATIONS ON LIQUIDATION.—In the event of a default

by the borrower on a loan guaranteed under this section involving a security interest in restricted Indian land, the mortgagee or the Secretary shall only pursue liquidation after offering to transfer the account to an eligible tribal member, the

tribe, or the Indian housing authority serving the tribe or

tribes. If the mortgagee or the Secretary subsequently proceeds

to liquidate the account, the mortgagee or the Secretary shall

not sell, transfer, or otherwise dispose of or alienate the property except to one of the entities described in the preceding

sentence.
885 Sec. 184 INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES

(i) INDIAN HOUSING LOAN GUARANTEE FUND.— (1) ESTABLISHMENT.—There is established in the Treasury

of the United States the Indian Housing Loan Guarantee Fund

for the purpose of providing loan guarantees under this section.

(2) CREDITS.—The Guarantee Fund shall be credited

with—

(A) any amounts, claims, notes, mortgages, contracts,

and property acquired by the Secretary under this section,

and any collections and proceeds therefrom;

(B) any amounts appropriated under paragraph (7);

(C) any guarantee fees collected under subsection (d);

and

(D) any interest or earnings on amounts invested

under paragraph (4).

(3) USE.—Amounts in the Guarantee Fund shall be available, to the extent provided in appropriation Acts, for—

(A) fulfilling any obligations of the Secretary with respect to loans guaranteed under this section, including the

costs (as such term is defined in section 502 of the Congressional Budget Act of 1974) of such loans;

(B) paying taxes, insurance, prior liens, expenses necessary to make fiscal adjustment in connection with the

application and transmittal of collections, and other expenses and advances to protect the Secretary for loans

which are guaranteed under this section or held by the

Secretary;

(C) acquiring such security property at foreclosure

sales or otherwise;

(D) paying administrative expenses in connection with

this section; and

(E) reasonable and necessary costs of rehabilitation

and repair to properties that the Secretary holds or owns

pursuant to this section.

(4) INVESTMENT.—Any amounts in the Guarantee Fund determined by the Secretary to be in excess of amounts currently

required to carry out this section may be invested in obligations of the United States.

(5) LIMITATION ON COMMITMENTS TO GUARANTEE LOANS

AND MORTGAGES.—

(A) REQUIREMENT OF APPROPRIATIONS.—The authority

of the Secretary to enter into commitments to guarantee

loans under this section shall be effective for any fiscal

year to the extent or in such amounts as are or have been

provided in appropriations Acts, without regard to the fiscal year for which such amounts were appropriated.

(B) LIMITATIONS ON COSTS OF GUARANTEES.—The authority of the Secretary to enter into commitments to guarantee loans under this section shall be effective for any fiscal year only to the extent that amounts in the Guarantee

Fund are or have been made available in appropriation

Acts to cover the costs (as such term is defined in section

502 of the Congressional Budget Act of 1974) of such loan

guarantees for such fiscal year. Any amounts appropriated
Sec. 184 INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 886

pursuant to this subparagraph shall remain available until

expended.

(C) LIMITATION ON OUTSTANDING AGGREGATE PRIN- CIPAL AMOUNT.—Subject to the limitations in subparagraphs (A) and (B), the Secretary may enter into commitments to guarantee loans under this section in each of fiscal years 1997 through 2007 with an aggregate outstanding principal amount not exceeding such amount as

may be provided in appropriation Acts for such fiscal year.

(6) LIABILITIES.—All liabilities and obligations of the assets

credited to the Guarantee Fund under paragraph (2)(A) shall

be liabilities and obligations of the Guarantee Fund.

(7) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to the Guarantee Fund to carry out

this section such sums as may be necessary for each of fiscal

years 1997 through 2007.

(j) REQUIREMENTS FOR STANDARD HOUSING.—The Secretary

shall, by regulation, establish housing safety and quality standards

for use under this section. Such standards shall provide sufficient

flexibility to permit the use of various designs and materials in

housing acquired with loans guaranteed under this section. The

standards shall require each dwelling unit in any housing so acquired to—

(1) be decent, safe, sanitary, and modest in size and design;

(2) conform with applicable general construction standards

for the region;

(3) contain a heating system that—

(A) has the capacity to maintain a minimum temperature in the dwelling of 65 degrees Fahrenheit during the

coldest weather in the area;

(B) is safe to operate and maintain;

(C) delivers a uniform distribution of heat; and

(D) conforms to any applicable tribal heating code or,

if there is no applicable tribal code, an appropriate county,

State, or National code;

(4) contain a plumbing system that—

(A) uses a properly installed system of piping;

(B) includes a kitchen sink and a partitional bathroom

with lavatory, toilet, and bath or shower; and

(C) uses water supply, plumbing, and sewage disposal

systems that conform to any applicable tribal code or, if

there is no applicable tribal code, the minimum standards

established by the applicable county or State;

(5) contain an electrical system using wiring and equipment properly installed to safely supply electrical energy for

adequate lighting and for operation of appliances that conforms

to any applicable tribal code or, if there is no applicable tribal

code, an appropriate county, State, or National code;

(6) be not less than—

(A)(i) 570 square feet in size, if designed for a family

of not more than 4 persons;

(ii) 850 square feet in size, if designed for a family of

not less than 5 and not more than 7 persons; and
887 Sec. 184 INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES

1So in law.

(iii) 1020 square feet in size, if designed for a family

of not less than 8 persons, or

(B) the size provided under the applicable locally

adopted standards for size of dwelling units;

except that the Secretary, upon the request of a tribe or Indian

housing authority, may waive the size requirements under this

paragraph; and

(7) conform with the energy performance requirements for

new construction established by the Secretary under section

526(a) of the National Housing Act.

(k) ENVIRONMENTAL REVIEW.—For purposes of environmental, 1

review, decisionmaking, and action under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and any other

law that furthers the purposes of that Act, a loan guarantee under

this section shall—

(1) be treated as a grant under the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C.

4101 et seq.); and

(2) be subject to the regulations promulgated by the Secretary to carry out section 105 of the Native American Housing

Assistance and Self-Determination Act of 1996 (25 U.S.C.

4115).

(l) DEFINITIONS.—For purposes of this section:

(1) The term ‘‘family’’ means 1 or more persons maintaining a household, as the Secretary shall by regulation provide.

(2) The term ‘‘Guarantee Fund’’ means the Indian Housing

Loan Guarantee Fund established under subsection (i).

(3) The term ‘‘Indian’’ means person recognized as being

Indian or Alaska Native by an Indian tribe, the Federal Government, or any State.

(4) The term ‘‘Indian area’’ means the area within which

an Indian housing authority or Indian tribe is authorized to

provide housing.

(5) The term ‘‘Indian housing authority’’ means any entity

that—

(A) is authorized to engage in or assist in the development or operation of—

(i) low-income housing for Indians; or

(ii) housing subject to the provisions of this section; and

(B) is established—

(i) by exercise of the power of self-government of

an Indian tribe independent of State law; or

(ii) by operation of State law providing specifically

for housing authorities for Indians, including regional

housing authorities in the State of Alaska.

The term includes tribally designated housing entities under

the Native American Housing Assistance and Self-Determination Act of 1996.

(6) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.
Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 888

1This section was added by section 204 of the Omnibus Indian Advancement Act, Pub. L. 106–

568, approved December 27, 2000. Section 514 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, enacted on the same day, made an amendment adding to this Act (a second time) a section almost identical to that added by Pub. L. 106–568. The

later amendment (made by Pub. L. 106–569) is shown in this compilation.

(7) The term ‘‘standard housing’’ means a dwelling unit or

housing that complies with the requirements established under

subsection (j).

(8) TRIBE; INDIAN TRIBE.—The term ‘‘tribe’’ or ‘‘Indian

tribe’’ means any Indian tribe, band, nation, or other organized

group or community of Indians, including any Alaska Native

village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act,

that is recognized as eligible for the special programs and services provided by the United States to Indians because of their

status as Indians pursuant to the Indian Self-Determination

and Education Assistance Act of 1975.

(9) The term ‘‘trust land’’ means land title to which is held

by the United States for the benefit of an Indian or Indian

tribe or title to which is held by an Indian tribe subject to a

restriction against alienation imposed by the United States.

SEC. 184A. ø12 U.S.C. 1715z–13b¿ LOAN GUARANTEES FOR NATIVE HAWAIIAN HOUSING. 1

(a) DEFINITIONS.—In this section:

(1) DEPARTMENT OF HAWAIIAN HOME LANDS.—The term

‘‘Department of Hawaiian Home Lands’’ means the agency or

department of the government of the State of Hawaii that is

responsible for the administration of the Hawaiian Homes

Commission Act, 1920 (42 Stat. 108 et seq.).

(2) ELIGIBLE ENTITY.—The term ‘‘eligible entity’’ means a

Native Hawaiian family, the Department of Hawaiian Home

Lands, the Office of Hawaiian Affairs, and private nonprofit or

private for-profit organizations experienced in the planning

and development of affordable housing for Native Hawaiians.

(3) FAMILY.—The term ‘‘family’’ means one or more persons

maintaining a household, as the Secretary shall by regulation

provide.

(4) GUARANTEE FUND.—The term ‘‘Guarantee Fund’’ means

the Native Hawaiian Housing Loan Guarantee Fund established under subsection ( j).

(5) HAWAIIAN HOME LANDS.—The term ‘‘Hawaiian Home

Lands’’ means lands that—

(A) have the status of Hawaiian Home Lands under

section 204 of the Hawaiian Homes Commission Act (42

Stat. 110); or

(B) are acquired pursuant to that Act.

(6) NATIVE HAWAIIAN.—The term ‘‘Native Hawaiian’’

means any individual who is—

(A) a citizen of the United States; and

(B) a descendant of the aboriginal people, who, prior

to 1778, occupied and exercised sovereignty in the area

that currently constitutes the State of Hawaii, as evidenced by—

(i) genealogical records;
889 Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES

(ii) verification by kupuna (elders) or kama’aina

(long-term community residents); or

(iii) birth records of the State of Hawaii.

(7) OFFICE OF HAWAIIAN AFFAIRS.—The term ‘‘Office of Hawaiian Affairs’’ means the entity of that name established

under the constitution of the State of Hawaii.

(b) AUTHORITY.—To provide access to sources of private financing to Native Hawaiian families who otherwise could not acquire

housing financing because of the unique legal status of the Hawaiian Home Lands or as a result of a lack of access to private financial markets, the Secretary may guarantee an amount not to exceed 100 percent of the unpaid principal and interest that is due

on an eligible loan under subsection (c).

(c) ELIGIBLE LOANS.—Under this section, a loan is an eligible

loan if that loan meets the following requirements:

(1) ELIGIBLE BORROWERS.—The loan is made only to a borrower who is—

(A) a Native Hawaiian family;

(B) the Department of Hawaiian Home Lands;

(C) the Office of Hawaiian Affairs; or

(D) a private nonprofit organization experienced in the

planning and development of affordable housing for Native

Hawaiians.

(2) ELIGIBLE HOUSING.—

(A) IN GENERAL.—The loan will be used to construct,

acquire, or rehabilitate not more than 4-family dwellings

that are standard housing and are located on Hawaiian

Home Lands for which a housing plan described in subparagraph (B) applies.

(B) HOUSING PLAN.—A housing plan described in this

subparagraph is a housing plan that—

(i) has been submitted and approved by the Secretary under section 803 of the Native American

Housing Assistance and Self-Determination Act of

1996; and

(ii) provides for the use of loan guarantees under

this section to provide affordable homeownership housing on Hawaiian Home Lands.

(3) SECURITY.—The loan may be secured by any collateral

authorized under applicable Federal or State law.

(4) LENDERS.—

(A) IN GENERAL.—The loan shall be made only by a

lender approved by, and meeting qualifications established

by, the Secretary, including any lender described in subparagraph (B), except that a loan otherwise insured or

guaranteed by an agency of the Federal Government or

made by the Department of Hawaiian Home Lands from

amounts borrowed from the United States shall not be eligible for a guarantee under this section.

(B) APPROVAL.—The following lenders shall be considered to be lenders that have been approved by the Secretary:

(i) Any mortgagee approved by the Secretary for

participation in the single family mortgage insurance
Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 890

program under title II of the National Housing Act (12

U.S.C.A. 1707 et seq.).

(ii) Any lender that makes housing loans under

chapter 37 of title 38, United States Code, that are

automatically guaranteed under section 3702(d) of title

38, United States Code.

(iii) Any lender approved by the Secretary of Agriculture to make guaranteed loans for single family

housing under the Housing Act of 1949 (42 U.S.C.A.

1441 et seq.).

(iv) Any other lender that is supervised, approved,

regulated, or insured by any agency of the Federal

Government.

(5) TERMS.—The loan shall—

(A) be made for a term not exceeding 30 years;

(B) bear interest (exclusive of the guarantee fee under

subsection (e) and service charges, if any) at a rate agreed

upon by the borrower and the lender and determined by

the Secretary to be reasonable, but not to exceed the rate

generally charged in the area (as determined by the Secretary) for home mortgage loans not guaranteed or insured

by any agency or instrumentality of the Federal Government;

(C) involve a principal obligation not exceeding—

(i) 97.75 percent of the appraised value of the

property as of the date the loan is accepted for guarantee (or 98.75 percent if the value of the property is

$50,000 or less); or

(ii) the amount approved by the Secretary under

this section; and

(D) involve a payment on account of the property—

(i) in cash or its equivalent; or

(ii) through the value of any improvements to the

property made through the skilled or unskilled labor

of the borrower, as the Secretary shall provide.

(d) CERTIFICATE OF GUARANTEE.—

(1) APPROVAL PROCESS.—

(A) IN GENERAL.—Before the Secretary approves any

loan for guarantee under this section, the lender shall submit the application for the loan to the Secretary for examination.

(B) APPROVAL.—If the Secretary approves the application submitted under subparagraph (A), the Secretary

shall issue a certificate under this subsection as evidence

of the loan guarantee approved.

(2) STANDARD FOR APPROVAL.—The Secretary may approve

a loan for guarantee under this section and issue a certificate

under this subsection only if the Secretary determines that

there is a reasonable prospect of repayment of the loan.

(3) EFFECT.—

(A) IN GENERAL.—A certificate of guarantee issued

under this subsection by the Secretary shall be conclusive

evidence of the eligibility of the loan for guarantee under

this section and the amount of that guarantee.
891 Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES

(B) EVIDENCE.—The evidence referred to in subparagraph (A) shall be incontestable in the hands of the bearer.

(C) FULL FAITH AND CREDIT.—The full faith and credit

of the United States is pledged to the payment of all

amounts agreed to be paid by the Secretary as security for

the obligations made by the Secretary under this section.

(4) FRAUD AND MISREPRESENTATION.—This subsection may

not be construed—

(A) to preclude the Secretary from establishing defenses against the original lender based on fraud or material misrepresentation; or

(B) to bar the Secretary from establishing by regulations that are on the date of issuance or disbursement,

whichever is earlier, partial defenses to the amount payable on the guarantee.

(e) GUARANTEE FEE.— (1) IN GENERAL.—The Secretary shall fix and collect a

guarantee fee for the guarantee of a loan under this section,

which may not exceed the amount equal to 1 percent of the

principal obligation of the loan.

(2) PAYMENT.—The fee under this subsection shall—

(A) be paid by the lender at time of issuance of the

guarantee; and

(B) be adequate, in the determination of the Secretary,

to cover expenses and probable losses.

(3) DEPOSIT.—The Secretary shall deposit any fees collected under this subsection in the Native Hawaiian Housing

Loan Guarantee Fund established under subsection ( j).

(f ) LIABILITY UNDER GUARANTEE.—The liability under a guarantee provided under this section shall decrease or increase on a

pro rata basis according to any decrease or increase in the amount

of the unpaid obligation under the provisions of the loan agreement

involved.

(g) TRANSFER AND ASSUMPTION.—Notwithstanding any other

provision of law, any loan guaranteed under this section, including

the security given for the loan, may be sold or assigned by the

lender to any financial institution subject to examination and supervision by an agency of the Federal Government or of any State

or the District of Columbia.

(h) DISQUALIFICATION OF LENDERS AND CIVIL MONEY PENALTIES.—

(1) IN GENERAL.—

(A) GROUNDS FOR ACTION.—The Secretary may take

action under subparagraph (B) if the Secretary determines

that any lender or holder of a guarantee certificate under

subsection (d)—

(i) has failed—

(I) to maintain adequate accounting records;

(II) to service adequately loans guaranteed

under this section; or

(III) to exercise proper credit or underwriting

judgment; or

(ii) has engaged in practices otherwise detrimental

to the interest of a borrower or the United States.
Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 892

(B) ACTIONS.—Upon a determination by the Secretary

that a holder of a guarantee certificate under subsection

(d) has failed to carry out an activity described in subparagraph (A)(i) or has engaged in practices described in subparagraph (A)(ii), the Secretary may—

(i) refuse, either temporarily or permanently, to

guarantee any further loans made by such lender or

holder;

(ii) bar such lender or holder from acquiring additional loans guaranteed under this section; and

(iii) require that such lender or holder assume not

less than 10 percent of any loss on further loans made

or held by the lender or holder that are guaranteed

under this section.

(2) CIVIL MONEY PENALTIES FOR INTENTIONAL VIOLA- TIONS.—(A) IN GENERAL.—The Secretary may impose a civil

monetary penalty on a lender or holder of a guarantee certificate under subsection (d) if the Secretary determines

that the holder or lender has intentionally failed—

(i) to maintain adequate accounting records;

(ii) to adequately service loans guaranteed under

this section; or

(iii) to exercise proper credit or underwriting judgment.

(B) PENALTIES.—A civil monetary penalty imposed

under this paragraph shall be imposed in the manner and

be in an amount provided under section 536 of the National Housing Act (12 U.S.C.A. 1735f–1) with respect to

mortgagees and lenders under that Act.

(3) PAYMENT ON LOANS MADE IN GOOD FAITH.—Notwithstanding paragraphs (1) and (2), if a loan was made in good

faith, the Secretary may not refuse to pay a lender or holder

of a valid guarantee on that loan, without regard to whether

the lender or holder is barred under this subsection.

(i) PAYMENT UNDER GUARANTEE.—

(1) LENDER OPTIONS.—

(A) IN GENERAL.—

(i) NOTIFICATION.—If a borrower on a loan guaranteed under this section defaults on the loan, the holder

of the guarantee certificate shall provide written notice of the default to the Secretary.

(ii) PAYMENT.—Upon providing the notice required

under clause (i), the holder of the guarantee certificate

shall be entitled to payment under the guarantee (subject to the provisions of this section) and may proceed

to obtain payment in one of the following manners:

(I) FORECLOSURE.—

(aa) IN GENERAL.—The holder of the certificate may initiate foreclosure proceedings

(after providing written notice of that action

to the Secretary).

(bb) PAYMENT.—Upon a final order by the

court authorizing foreclosure and submission
893 Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES

to the Secretary of a claim for payment under

the guarantee, the Secretary shall pay to the

holder of the certificate the pro rata portion of

the amount guaranteed (as determined pursuant to subsection (f )) plus reasonable fees and

expenses as approved by the Secretary.

(cc) SUBROGATION.—The rights of the Secretary shall be subrogated to the rights of the

holder of the guarantee. The holder shall assign the obligation and security to the Secretary.

(II) NO FORECLOSURE.— (aa) IN GENERAL.—Without seeking foreclosure (or in any case in which a foreclosure

proceeding initiated under clause (i) continues

for a period in excess of 1 year), the holder of

the guarantee may submit to the Secretary a

request to assign the obligation and security

interest to the Secretary in return for payment of the claim under the guarantee. The

Secretary may accept assignment of the loan

if the Secretary determines that the assignment is in the best interest of the United

States.

(bb) PAYMENT.—Upon assignment, the

Secretary shall pay to the holder of the guarantee the pro rata portion of the amount

guaranteed (as determined under subsection

(f )).

(cc) SUBROGATION.—The rights of the Secretary shall be subrogated to the rights of the

holder of the guarantee. The holder shall assign the obligation and security to the Secretary.

(B) REQUIREMENTS.—Before any payment under a

guarantee is made under subparagraph (A), the holder of

the guarantee shall exhaust all reasonable possibilities of

collection. Upon payment, in whole or in part, to the holder, the note or judgment evidencing the debt shall be assigned to the United States and the holder shall have no

further claim against the borrower or the United States.

The Secretary shall then take such action to collect as the

Secretary determines to be appropriate.

(2) LIMITATIONS ON LIQUIDATION.—

(A) IN GENERAL.—If a borrower defaults on a loan

guaranteed under this section that involves a security interest in restricted Hawaiian Home Land property, the

mortgagee or the Secretary shall only pursue liquidation

after offering to transfer the account to another eligible

Hawaiian family or the Department of Hawaiian Home

Lands.

(B) LIMITATION.—If, after action is taken under subparagraph (A), the mortgagee or the Secretary subsequently proceeds to liquidate the account, the mortgagee
Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 894

or the Secretary shall not sell, transfer, or otherwise dispose of or alienate the property described in subparagraph

(A) except to another eligible Hawaiian family or to the

Department of Hawaiian Home Lands.

( j) HAWAIIAN HOUSING LOAN GUARANTEE FUND.— (1) ESTABLISHMENT.—There is established in the Treasury

of the United States the Hawaiian Housing Loan Guarantee

Fund for the purpose of providing loan guarantees under this

section.

(2) CREDITS.—The Guarantee Fund shall be credited

with—

(A) any amount, claims, notes, mortgages, contracts,

and property acquired by the Secretary under this section,

and any collections and proceeds therefrom;

(B) any amounts appropriated pursuant to paragraph

(7);

(C) any guarantee fees collected under subsection (e);

and

(D) any interest or earnings on amounts invested

under paragraph (4).

(3) USE.—Amounts in the Guarantee Fund shall be available, to the extent provided in appropriations Acts, for—

(A) fulfilling any obligations of the Secretary with respect to loans guaranteed under this section, including the

costs (as that term is defined in section 502 of the Federal

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

(B) paying taxes, insurance, prior liens, expenses necessary to make fiscal adjustment in connection with the

application and transmittal of collections, and other expenses and advances to protect the Secretary for loans

which are guaranteed under this section or held by the

Secretary;

(C) acquiring such security property at foreclosure

sales or otherwise;

(D) paying administrative expenses in connection with

this section; and

(E) reasonable and necessary costs of rehabilitation

and repair to properties that the Secretary holds or owns

pursuant to this section.

(4) INVESTMENT.—Any amounts in the Guarantee Fund determined by the Secretary to be in excess of amounts currently

required at the time of the determination to carry out this section may be invested in obligations of the United States.

(5) LIMITATION ON COMMITMENTS TO GUARANTEE LOANS

AND MORTGAGES.—

(A) REQUIREMENT OF APPROPRIATIONS.—The authority

of the Secretary to enter into commitments to guarantee

loans under this section shall be effective for any fiscal

year to the extent, or in such amounts as are, or have

been, provided in appropriations Acts, without regard to

the fiscal year for which such amounts were appropriated.

(B) LIMITATIONS ON COSTS OF GUARANTEES.—The authority of the Secretary to enter into commitments to guarantee loans under this section shall be effective for any fis-
895 Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES

1This section as shown was added by section 514 of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 204 of

the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an

amendment inserting a section almost identical to that added by Pub. L. 106–569. In such

amendment, this subparagraph provides authority to enter in loan guarantee commitments ‘‘for

each of fiscal years 2000, 2001, 2002, 2003, and 2004’’ in the stated amount. 2 This section as shown was added by section 514 of the American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 204 of

the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an

amendment inserting a section almost identical to that added by Pub. L. 106–569. In such

amendment, this paragraph authorizes appropriations of such sums as may be necessary ‘‘for

each of fiscal years 2000, 2001, 2002, 2003, and 2004’’.

cal year only to the extent that amounts in the Guarantee

Fund are or have been made available in appropriations

Acts to cover the costs (as that term is defined in section

502 of the Federal Credit Reform Act of 1990 (2 U.S.C.

661a)) of such loan guarantees for such fiscal year. Any

amounts appropriated pursuant to this subparagraph shall

remain available until expended.

(C) LIMITATION ON OUTSTANDING AGGREGATE PRINCIPAL AMOUNT.—Subject to the limitations in subparagraphs (A) and (B), the Secretary may enter into commitments to guarantee loans under this section for each of fiscal years 2001, 2002, 2003, 2004, and 2005 1 with an aggregate outstanding principal amount not exceeding

$100,000,000 for each such fiscal year.

(6) LIABILITIES.—All liabilities and obligations of the assets

credited to the Guarantee Fund under paragraph (2)(A) shall

be liabilities and obligations of the Guarantee Fund.

(7) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to the Guarantee Fund to carry out

this section such sums as may be necessary for each of fiscal

years 2001, 2002, 2003, 2004, and 2005. 2

(k) REQUIREMENTS FOR STANDARD HOUSING.—

(1) IN GENERAL.—The Secretary shall, by regulation, establish housing safety and quality standards to be applied for use

under this section.

(2) STANDARDS.—The standards referred to in paragraph

(1) shall—

(A) provide sufficient flexibility to permit the use of

various designs and materials in housing acquired with

loans guaranteed under this section; and

(B) require each dwelling unit in any housing acquired

in the manner described in subparagraph (A) to—

(i) be decent, safe, sanitary, and modest in size

and design;

(ii) conform with applicable general construction

standards for the region in which the housing is located;

(iii) contain a plumbing system that—

(I) uses a properly installed system of piping;

(II) includes a kitchen sink and a partitional

bathroom with lavatory, toilet, and bath or shower; and

(III) uses water supply, plumbing, and sewage

disposal systems that conform to any minimum
Sec. 184A INDIAN AND NATIVE HAWAIIAN HOUSING LOAN GUARANTEES 896

1 This title as shown was added by section 514 of the American Homeownership and Economic

Opportunity Act of 2000, Pub. L. 106–569, approved December 27, 2000. Section 204 of the Omnibus Indian Advancement Act, Pub. L. 106–568, enacted on the same day, made an amendment

inserting a title almost identical to that added by Pub. L. 106–569. In such amendment, this

subsection refers to title VIII of the Act popularly known as the ‘‘Civil Rights Act of 1968’’ rather

than to the Fair Housing Act.

standards established by the applicable county or

State;

(iv) contain an electrical system using wiring and

equipment properly installed to safely supply electrical

energy for adequate lighting and for operation of appliances that conforms to any appropriate county,

State, or national code;

(v) be not less than the size provided under the

applicable locally adopted standards for size of dwelling units, except that the Secretary, upon request of

the Department of Hawaiian Home Lands may waive

the size requirements under this paragraph; and

(vi) conform with the energy performance requirements for new construction established by the Secretary under section 526(a) of the National Housing

Act (12 U.S.C.A. 1735f–4), unless the Secretary determines that the requirements are not applicable.

(l) APPLICABILITY OF CIVIL RIGHTS STATUTES.—To the extent

that the requirements of title VI of the Civil Rights Act of 1964 (42

U.S.C. 2000d et seq.) or of the Fair Housing Act 1 (42 U.S.C.A. 3601

et seq.) apply to a guarantee provided under this subsection, nothing in the requirements concerning discrimination on the basis of

race shall be construed to prevent the provision of the guarantee

to an eligible entity on the basis that the entity serves Native Hawaiian families or is a Native Hawaiian family.
897

AUTHORITY TO PROVIDE HOUSING ASSISTANCE TO

STATE OF HAWAII

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[As added by Public Law 102–238; 105 Stat. 1909; 42 U.S.C. 1437f note]

SEC. 962. ø42 U.S.C. 1437f note¿ AUTHORIZATION FOR THE PROVISION

OF ASSISTANCE TO PROGRAMS ADMINISTERED BY THE

STATE OF HAWAII UNDER THE ACT OF JULY 9, 1921.

(a) ASSISTANCE AUTHORIZED.—The Secretary of Housing and

Urban Development is authorized to provide assistance, under any

housing assistance program administered by the Secretary, to the

State of Hawaii, for use by the State in meeting the responsibilities

with which it has been charged under the provisions of the Act of

July 9, 1921 (42 Stat. 108).

(b) MORTGAGE INSURANCE.—

(1) IN GENERAL.—Notwithstanding any other provision or

limitation of this Act, or the National Housing Act, including

those relating to marketability of title, the Secretary of Housing and Urban Development may provide mortgage insurance

covering any property on lands set aside under the provisions

of the Act of July 9, 1921 (42 Stat. 108), upon which there is

or will be located a multifamily residence, for which the Department of the Hawaiian Home Lands of the State of

Hawaii—

(A) is the mortgagor or co-mortgagor;

(B) guarantees in writing to reimburse the Secretary

for any mortgage insurance claim paid in connection with

such property; or

(C) offers other security that is acceptable to the Secretary, subject to appropriate conditions prescribed by the

Secretary.

(2) SALE ON DEFAULT.—In the event of a default on a mortgage insured pursuant to paragraph (1), the Department of Hawaiian Home Lands of the State of Hawaii may sell the insured property or housing unit to an eligible beneficiary as defined in the Act of July 9, 1921 (42 Stat. 108).
898

1Section 1001 of the Omnibus Indian Advancement Act, Pub. L. 106-568, approved on December 27, 2000 (the same day as the Act enacting this section) contains provisions almost identical

to this section and is not set forth in this compilation. 2 H. Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and Financial Services and established the Committee on Financial Services, which has jurisdiction over many of the areas previously under the jurisdiction of the Committee on Banking

and Financial Services. 3The date of enactment was December 27, 2000.

4 H. Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and Financial Services and established the Committee on Financial Services, which has jurisdiction over many of the areas previously under the jurisdiction of the Committee on Banking

and Financial Services.

LANDS TITLE REPORT COMMISSION

EXCERPT FROM AMERICAN HOMEOWNERSHIP AND ECONOMIC

OPPORTUNITY ACT OF 2000

[Public Law 106–569; 114 Stat. 2959; 25 U.S.C. 4043 note]

SEC. 501. ø25 U.S.C. 4043 note¿ LANDS TITLE REPORT COMMISSION. 1

(a) ESTABLISHMENT.—Subject to sums being provided in advance in appropriations Acts, there is established a Commission to

be known as the Lands Title Report Commission (hereafter in this

section referred to as the ‘‘Commission’’) to facilitate home loan

mortgages on Indian trust lands. The Commission will be subject

to oversight by the Committee on Banking and Financial Services

of the House of Representatives 2 and the Committee on Banking,

Housing, and Urban Affairs of the Senate.

(b) MEMBERSHIP.—

(1) APPOINTMENT.—The Commission shall be composed of

12 members, appointed not later than 90 days after the date

of the enactment of this Act 3 as follows:

(A) Four members shall be appointed by the President.

(B) Four members shall be appointed by the Chairperson of the Committee on Banking and Financial Services of the House of Representatives 4.

(C) Four members shall be appointed by the Chairperson of the Committee on Banking, Housing, and Urban

Affairs of the Senate.

(2) QUALIFICATIONS.—

(A) MEMBERS OF TRIBES.—At all times, not less than

eight of the members of the Commission shall be members

of federally recognized Indian tribes.

(B) EXPERIENCE IN LAND TITLE MATTERS.—All members of the Commission shall have experience in and

knowledge of land title matters relating to Indian trust

lands.

(3) CHAIRPERSON.—The Chairperson of the Commission

shall be one of the members of the Commission appointed

under paragraph (1)(C), as elected by the members of the Commission.
899 Sec. 501 LANDS TITLE REPORT COMMISSION

1 H. Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and Financial Services and established the Committee on Financial Services, which has jurisdiction over many of the areas previously under the jurisdiction of the Committee on Banking

and Financial Services.

(4) VACANCIES.—Any vacancy on the Commission shall not

affect its powers, but shall be filled in the manner in which the

original appointment was made.

(5) TRAVEL EXPENSES.—Members of the Commission shall

serve without pay, but each member shall receive travel expenses, including per diem in lieu of subsistence, in accordance

with sections 5702 and 5703 of title 5, United States Code.

(c) INITIAL MEETING.—The Chairperson of the Commission

shall call the initial meeting of the Commission. Such meeting

shall be held within 30 days after the Chairperson of the Commission determines that sums sufficient for the Commission to carry

out its duties under this Act have been appropriated for such purpose.

(d) DUTIES.—The Commission shall analyze the system of the

Bureau of Indian Affairs of the Department of the Interior for

maintaining land ownership records and title documents and

issuing certified title status reports relating to Indian trust lands

and, pursuant to such analysis, determine how best to improve or

replace the system—

(1) to ensure prompt and accurate responses to requests

for title status reports;

(2) to eliminate any backlog of requests for title status reports; and

(3) to ensure that the administration of the system will not

in any way impair or restrict the ability of Native Americans

to obtain conventional loans for purchase of residences located

on Indian trust lands, including any actions necessary to ensure that the system will promptly be able to meet future demands for certified title status reports, taking into account the

anticipated complexity and volume of such requests.

(e) REPORT.—Not later than the date of the termination of the

Commission under subsection (h), the Commission shall submit a

report to the Committee on Banking and Financial Services of the

House of Representatives 1 and the Committee on Banking, Housing, and Urban Affairs of the Senate describing the analysis and

determinations made pursuant to subsection (d).

(f ) POWERS.—

(1) HEARINGS AND SESSIONS.—The Commission may, for

the purpose of carrying out this section, hold hearings, sit and

act at times and places, take testimony, and receive evidence

as the Commission considers appropriate.

(2) STAFF OF FEDERAL AGENCIES.—Upon request of the

Commission, the head of any Federal department or agency

may detail, on a reimbursable basis, any of the personnel of

that department or agency to the Commission to assist it in

carrying out its duties under this section.

(3) OBTAINING OFFICIAL DATA.—The Commission may secure directly from any department or agency of the United

States information necessary to enable it to carry out this section. Upon request of the Chairperson of the Commission, the
Sec. 501 LANDS TITLE REPORT COMMISSION 900

1Section 1001 of the Omnibus Indian Advancement Act, Pub. L. 106-568, also provides for

establishment of a Lands Title Report Commission and is almost identical to this section. But,

subsection (g) of such section 1001 provides as follows:

‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—To carry out this section, there is authorized to be appropriated $500,000. Such sums shall remain available until expended.’’.

head of that department or agency shall furnish that information to the Commission.

(4) MAILS.—The Commission may use the United States

mails in the same manner and under the same conditions as

other departments and agencies of the United States.

(5) ADMINISTRATIVE SUPPORT SERVICES.—Upon the request

of the Commission, the Administrator of General Services shall

provide to the Commission, on a reimbursable basis, the administrative support services necessary for the Commission to

carry out its duties under this section.

(6) STAFF.—The Commission may appoint personnel as it

considers appropriate, subject to the provisions of title 5,

United States Code, governing appointments in the competitive

service, and shall pay such personnel in accordance with the

provisions of chapter 51 and subchapter III of chapter 53 of

that title relating to classification and General Schedule pay

rates.

(g) AUTHORIZATION OF APPROPRIATIONS.—There is authorized

to be appropriated to carry out this section such sums as may be

necessary, and any amounts appropriated pursuant to this subsection shall remain available until expended. 1

(h) TERMINATION.—The Commission shall terminate 1 year

after the date of the initial meeting of the Commission.
901

PART VIII—MORTGAGE INSURANCE, RELIEF,

AND FORECLOSURE AND CREDIT ENHANCEMENT FOR HOUSING

EXCERPTS FROM NATIONAL HOUSING ACT

[Public Law 479, 73d Congress; 48 Stat. 1246; 12 U.S.C. 1701 et seq.]

Be it enacted by the Senate and House of Representatives of the

United States of America in Congress assembled, That this Act may

be cited as the ‘‘National Housing Act.’’ ø12 U.S.C. 1701¿

TITLE I—HOUSING RENOVATION AND MODERNIZATION

ADMINISTRATIVE PROVISIONS

SECTION 1. ø12 U.S.C. 1702¿ The powers conferred by this Act

shall be exercised by the Secretary of Housing and Urban Development (hereinafter referred to as the ‘‘Secretary’’).

In order to carry out the provisions of this title and titles II,

III, V, VI, VII, VIII, IX, and XI, the Secretary may establish such

agencies, accept and utilize such voluntary and uncompensated

services, utilize such Federal officers and employees, and, with the

consent of the State, such State and local officers and employees,

and appoint such other officers and employees as he may find necessary, and may prescribe their authorities, duties, responsibilities,

and tenure and fix their compensation. The Secretary may delegate

any of the functions and powers conferred upon him under this

title and titles II, III, V, VI, VII, VIII, IX, and XI, to such officers,

agents, and employees as he may designate or appoint and may

make such expenditures (including expenditures for personal services and rent at the seat of government and elsewhere for law

books and books of reference, and for paper, printing, and binding)

as are necessary to carry out the provisions of this title and titles

II, III, V, VI, VII, VIII, IX, and XI without regard to any other provisions of law governing the expenditure of public funds. All such

compensation, expenses, and allowances shall be paid out of funds

made available by this Act: Provided, That, notwithstanding any

other provisions of law except provisions of law hereafter enacted

expressly in limitation hereof, all expenses of the Department of

Housing and Urban Development in connection with the examination and insurance of loans or investments under any title of this

Act, all properly capitalized expenditures, and other necessary expenses not attributable to general overhead in accordance with generally accepted accounting principles shall be considered nonadministrative and payable from funds made available by this Act,

except that, unless made pursuant to specific authorization by the

Congress therefor, expenditures made in any fiscal year pursuant

to this proviso, other than the payment of insurance claims and
Sec. 2 NATIONAL HOUSING ACT 902

other than expenditures (including services on a contract or fee

basis, but not including other personal services) in connection with

the acquisition, protection, completion, operation, maintenance, improvement, or disposition of real or personal property of the Department acquired under authority of this Act, shall not exceed 35

per centum of the income received by the Department of Housing

and Urban Development from premiums and fees during the preceding fiscal year. Except with respect to title III, for the purposes

of this section, the term ‘‘nonadministrative’’ shall not include contract expenses that are not capitalized or routinely deducted from

the proceeds of sales, and such expenses shall not be payable from

funds made available by this Act. The Secretary shall, in carrying

out the provisions of this title and titles II, III, V, VI, VII, VIII,

IX, and XI be authorized, in his official capacity to sue and be sued

in any court of competent jurisdiction, State or Federal.

INSURANCE OF FINANCIAL INSTITUTIONS

SEC. 2. ø12 U.S.C. 1703¿ (a) The Secretary is authorized and

empowered upon such terms and conditions as he may prescribe,

to insure banks, trust companies, personal finance companies,

mortgage companies, building and loan associations, installment

lending companies, and other such financial institutions, which the

Secretary finds to be qualified by experience or facilities and approves as eligible for credit insurance, against losses which they

may sustain as a result of loans and advances of credit, and purchases of obligations representing loans and advances of credit,

made by them on and after July 1, 1939, for the purpose of (i) financing alterations, repairs, and improvements upon or in connection with existing structures or manufactured homes, and the

building of new structures, upon urban, suburban, or rural real

property (including the restoration, rehabilitation, rebuilding, and

replacement of such improvements which have been damaged or

destroyed by earthquake, conflagration, tornado, hurricane, cyclone, flood, or other catastrophe), by the owners thereof or by lessees of such real property under a lease expiring not less than six

months after the maturity of the loan or advance of credit; and for

the purpose of (ii) financing the purchase of a manufactured home

to be used by the owner as his principal residence or financing the

purchase of a lot on which to place such home and paying expenses

reasonably necessary for the appropriate preparation of such lot,

including the installation of utility connections, sanitary facilities,

and paving, and the construction of a suitable pad, or financing

only the acquisition of such a lot either with or without such preparation by an owner of a manufactured home; and for the purpose

of financing the preservation of historic structures, and, as used in

this section, the term ‘‘historic structures’’ means residential structures which are registered in the National Register of Historic

Places or which are certified by the Secretary of the Interior to conform to National Register criteria; and the term ‘‘preservation’’

means restoration or rehabilitation undertaken for such purposes

as are approved by the Secretary in regulations issued by him,

after consulting with the Secretary of the Interior. In no case shall

the insurance granted by the Secretary under this section to any

such financial institution on loans, advances of credit, and pur-
903 Sec. 2 NATIONAL HOUSING ACT

chases made by such financial institution for such purposes on and

after July 1, 1939, exceed 10 per centum of the total amount of

such loans, advances of credit, and purchases: Provided, That with

respect to any loan, advance of credit, or purchase made after the

effective date of the Housing Act of 1954, the amount of any claim

for loss on any such individual loan, advance of credit, or purchase

paid by the Secretary under the provisions of this section to a lending institution shall not exceed 90 per centum of such loss.

After the effective date of the Housing Act of 1954, (i) the Secretary shall not enter into contracts for insurance pursuant to this

section except with lending institutions which are subject to the inspection and supervision of a governmental agency required by law

to make periodic examinations of their books and accounts, and

which the Secretary finds to be qualified by experience or facilities

to make and service such loans, advances or purchases, and with

such other lending institutions which the Secretary approves as eligible for insurance pursuant to this section on the basis of their

credit and their experience or facilities to make and service such

loans, advances or purchases; (ii) only such items as substantially

protect or improve the basic livability or utility of properties shall

be eligible for financing under this section, and therefore the Secretary shall from time to time declare ineligible for financing under

this section any item, product, alteration, repair, improvement, or

class thereof which he determines would not substantially protect

or improve the basic livability or utility of such properties, and he

may also declare ineligible for financing under this section any

item which he determines is especially subject to selling abuses;

and (iii) the Secretary is hereby authorized and directed, by such

regulations or procedures as he shall deem advisable, to prevent

the use of any financial assistance under this section (1) with respect to new residential structures (other than manufactured

homes) that have not been completed and occupied for at least six

months, or (2) which would, through multiple loans, result in an

outstanding aggregate loan balance with respect to the same structure exceeding the dollar amount limitation prescribed in this subsection for the type of loan involved: Provided, That this clause (iii)

may in the discretion of the Secretary be waived with respect to

the period of occupancy or completion of any such new residential

structures. The Secretary is hereby authorized and directed, with

respect to manufactured homes to be financed under this section,

to (i) prescribe minimum property standards to assure the livability

and durability of the manufactured home and the suitability of the

site on which the manufactured home is to be located; and (ii) obtain assurances from the borrower that the manufactured home

will be placed on a site which complies with the standards prescribed by the Secretary and with local zoning and other applicable

local requirements.

The insurance authority provided under this section may be

made available with respect to any existing manufactured home

that has not been insured under this section if such home was constructed in accordance with the standards issued under the National Manufactured Housing Construction and Safety Standards

Act of 1974 and it meets standards similar to the minimum property standards applicable to existing homes insured under title II.
Sec. 2 NATIONAL HOUSING ACT 904

1Section 1012(k)(1)(A) of the Housing and Community Development Act of 1992, Pub. L. 102–

550, amended the ‘‘fifth paragraph’’ of this subsection by inserting after the first sentence the

following: ‘‘Alterations, repairs, and improvements upon or in connection with existing structures may also include the evaluation and reduction of lead-based paint hazards.’’. The amendment could not be executed and the matter to be inserted by the amendment was probably intended to be inserted after the first sentence of this paragraph (the fourth paragraph). 2So in law.

3 Indented so in law.

Alterations, repairs, and improvements upon or in connection

with existing structures may include the provision of fire safety

equipment, energy conserving improvements, or the installation of

solar energy systems. 1 As used in this section—

(1) the term ‘‘fire safety equipment’’ means any device or

facility which is designed to reduce the risk of personal injury

or property damage resulting from fire and is in conformity

with such criteria and standards as shall be prescribed by the

Secretary;

(2) the term ‘‘energy conserving improvements’’ means the

purchase and installation of weatherization material as defined

in section 412(9) of the Energy Conservation in Existing Buildings Act of 1976; and 2

(3) the term ‘‘solar energy system’’ means any addition, alteration, or improvement to an existing or new structure which

is designed to utilize wind energy or solar energy either of the

active type based on mechanically forced energy transfer or of

the passive type based on convective, conductive, or radiant energy transfer or some combination of these types to reduce the

energy requirements of that structure from other energy

sources, and which is in conformity with such criteria and

standards as shall be prescribed by the Secretary in consultation with the Secretary of Energy. 2

(4) the terms ‘‘evaluation’’, ‘‘reduction’’, and ‘‘lead-based

paint hazard’’ have the same meanings given those terms in

section 1004 of the Residential Lead-Based Paint Hazard Reduction Act of 1992.

(b)(1) No insurance shall be granted under this section to any

such financial institution with respect to any obligation representing any such loan, advance of credit, or purchase by it if the

amount of such loan, advance of credit, or purchase exceeds—

(A)(i) $25,000 if made for the purpose of financing alterations, repairs and improvements upon or in connection with

existing single-family structure; and

(ii) $17,500 if made for the purpose of financing alterations, repairs and improvements upon or in connection with

existing manufactured homes;

(B) $60,000 or an average amount of $12,000 per family

unit if made for the purpose of financing the alteration, repair,

improvement, or conversion of an existing structure used or to

be used as an apartment house or a dwelling for two or more

families;

(C) 3 $48,600 if made for the purpose of financing the

purchase of a manufactured home;

(D) 3 $64,800 if made for the purpose of financing the

purchase of a manufactured home and a suitably developed lot on which to place the home; and 2
905 Sec. 2 NATIONAL HOUSING ACT

1 Indented so in law.

2So in law.

(E) 1 $16,200 if made for the purpose of financing the

purchase, by an owner of a manufactured home which is

the principal residence of that owner, of a suitably developed lot on which to place that manufactured home, and

if the owner certifies that he or she will place the manufactured home on the lot acquired with such loan within

6 months after the date of such loan. 2

(F) $15,000 per family unit if made for the purpose of financing the preservation of an historic structure; and

(G) such principal amount as the Secretary may prescribe

if made for the purpose of financing fire safety equipment for

a nursing home, extended health care facility, intermediate

health care facility, or other comparable health care facility.

(2) Because of prevailing higher costs, the Secretary may, by

regulation, in Alaska, Guam, or Hawaii, increase any dollar

amount limitation on manufactured homes or manufactured home

lot loans contained in this subsection by not to exceed 40 per centum. In other areas, the maximum dollar amounts specified in subsections (b)(1)(D) and (b)(1)(E) may be increased on an area-by-area

basis to the extent the Secretary deems necessary, but in no case

may such limits, as so increased, exceed the lesser of (A) 185 percent of the dollar amount specified, or (B) the dollar amount specified as increased by the same percentage by which 95 percent of

the median one-family house price in the area (as determined by

the Secretary) exceeds $67,500.

(3) No insurance shall be granted under this section to any

such financial institution with respect to any obligation representing any such loan, advance of credit, or purchase by it if the

term to maturity of such loan, advance of credit or purchase

exceeds—

(A)(i) twenty years and thirty-two days if made for the

purpose of financing alterations, repairs, and improvements

upon or in connection with an existing single-family structure;

and

(ii) fifteen years and thirty-two days if made for the purpose of financing alterations, repairs, and improvements upon

or in connection with an existing manufactured home;

(B) twenty years and thirty-two days if made for the purpose of financing the alteration, repair, improvement or conversion of an existing structure used or to be used as an apartment house or a dwelling for two or more families;

(C) twenty years and thirty-two days (twenty-three years

and thirty-two days in the case of a manufactured home composed of two or more modules) if made for the purpose of financing the purchase of a manufactured home;

(D) twenty years and thirty-two days (twenty-five years

and thirty-two days in the case of a manufactured home composed of two or more modules) if made for the purpose of financing the purchase of a manufactured home and a suitably

developed lot on which to place the home;

(E) twenty years and thirty-two days if made for the purpose of financing the purchase, by the owner of a manufac-
Sec. 2 NATIONAL HOUSING ACT 906

tured home which is the principal residence of that owner, of

a suitably developed lot on which to place that manufactured

home;

(F) fifteen years and thirty-two days if made for the purpose of financing the preservation of an historic structure;

(G) such term to maturity as the Secretary may prescribe

if made for the purpose of financing the construction of a new

structure for use in whole or in part for agricultural purposes;

and

(H) such term to maturity as the Secretary may prescribe

if made for the purpose of financing fire safety equipment for

a nursing home, extended health care facility, intermediate

health care facility, or other comparable health care facility.

(4) For the purpose of this subsection—

(A) the term ‘‘developed lot’’ includes an interest in a condominium project (including any interest in the common areas)

or a share in a cooperative association;

(B) a loan to finance the purchase of a manufactured home

or a manufactured home and lot may also finance the purchase

of a garage, patio, carport, or other comparable appurtenance;

and

(C) a loan to finance the purchase of a manufactured home

or a manufactured home and lot shall be secured by a first lien

upon such home or home and lot, its furnishings, equipment,

accessories, and appurtenances.

(5) No insurance shall be granted under this section to any

such financial institution with respect to any obligation representing any such loan, advance of credit, or purchase by it unless

the obligation has such maturity, bears such insurance premium

charges, and contains such other terms, conditions, and restrictions

as the Secretary shall prescribe, in order to make credit available

for the purpose of this title. Any such obligation with respect to

which insurance is granted under this section shall bear interest

at such rate as may be agreed upon by the borrower and the financial institution.

(6)(A) Any obligation with respect to which insurance is granted under this section may be refinanced and extended in accordance with such terms and conditions as the Secretary may prescribe, but in no event for an additional amount or term in excess

of any applicable maximum provided for in this subsection.

(B) The owner of a manufactured home lot purchased without

assistance under this section but otherwise meeting the requirements of this section may refinance such lot under this section in

connection with the purchase of a manufactured home if the borrower certifies that the home and lot is or will be his or her principal residence within six months after the date of the loan.

(C) The owner-occupant of a manufactured home or a home

and lot which was purchased without assistance under this section

but which otherwise meets the requirements of this section may refinance such home or home and lot under this section if the home

was constructed in accordance with standards established under

section 604 of the National Manufactured Housing Construction

and Safety Standards Act of 1974.

(7) With respect to the financing of alterations, repairs, and

improvements to existing structures or the building of new struc-
907 Sec. 2 NATIONAL HOUSING ACT

tures as authorized under clause (i) of the first sentence of section

2(a), any loan broker (as defined by the Secretary) or any other

party having a financial interest in the making of such a loan or

advance of credit or in providing assistance to the borrower in preparing the loan application or otherwise assisting the borrower in

obtaining the loan or advance of credit who knowingly (as defined

in section 536(g) of this Act) submits to any such financial institution or to the Secretary false information shall be subject to a civil

money penalty in the amount and manner provided under section

536 with respect to mortgagees and lenders under this Act.

(c)(1) Notwithstanding any other provision of law, the Secretary shall have the power, under regulations to be prescribed by

him and approved by the Secretary of the Treasury, to assign or

sell at public or private sale, or otherwise dispose of, any evidence

of debt, contract, claim, personal property, or security assigned to

or held by him in connection with the payment of insurance heretofore or hereafter granted under this section, and to collect or compromise all obligations assigned to or held by him and all legal or

equitable rights accruing to him in connection with the payment of

such insurance until such time as such obligations may be referred

to the Attorney General for suit or collection.

(2) The Secretary is authorized and empowered (a) to deal

with, complete, rent, renovate, modernize, insure, or sell for cash

or credit in his discretion, and upon such terms and conditions and

for such consideration as the Secretary shall determine to be reasonable, any real or personal property conveyed to or otherwise acquired by him, in connection with the payment of insurance heretofore or hereafter granted under this title and (b) to pursue to

final collection, by way of compromise or otherwise, all claims

against mortgagors assigned by mortgagees to the Secretary in connection with such real or personal property by way of deficiency or

otherwise: Provided, That section 3709 of the Revised Statutes

shall not be construed to apply to any contract of hazard insurance

or to any purchase or contract for services or supplies on account

of such property if the amount thereof does not exceed $1,000. The

power to convey and to execute in the name of the Secretary, deeds

of conveyance, deeds of release, assignments and satisfactions of

mortgages, and any other written instrument relating to real or

personal property or any interest therein heretofore or hereafter acquired by the Secretary pursuant to the provisions of this title may

be exercised by an officer appointed by him without the execution

of any express delegation of power or power of attorney: Provided,

That nothing in this paragraph shall be construed to prevent the

Secretary from delegating such power by order or by power of attorney, in his discretion, to any officer or agent he may appoint.

(d) The Secretary is authorized and empowered, under such

regulations as he may prescribe, to transfer to any such approved

financial institution any insurance in connection with any loans

and advances of credit which may be sold to it by another approved

financial institution.

(e) The Secretary is authorized to waive compliance with regulations heretofore or hereafter prescribed by him with respect to

the interest and maturity of and the terms, conditions, and restrictions under which loans, advances of credit, and purchases may be

insured under this section and section 6, if in his judgment the en-
Sec. 3 NATIONAL HOUSING ACT 908

forcement of such regulations would impose an injustice upon an

insured institution which has substantially complied with such regulations in good faith and refunded or credited any excess charge

made, and where such waiver does not involve an increase of the

obligation of the Secretary beyond the obligation which would have

been involved if the regulations had been fully complied with.

(f) The Secretary shall fix a premium charge for the insurance

hereafter granted under this section, but in the case of any obligation representing any loan, advance of credit, or purchase, such

premium charge shall not exceed an amount equivalent to 1 per

centum per annum of the net proceeds of such loan, advance of

credit, or purchase, for the term of such obligation, and such premium charge shall be payable in advance by the financial institution and shall be paid at such time and in such manner as may

be prescribed by the Secretary.

(g) Any payment for loss made to an approved financial institution under this section shall be final and incontestable after two

years from the date the claim was certified for payment by the Secretary, in the absence of fraud or misrepresentation on the part of

such institution, unless a demand for repurchase of the obligation

shall have been made on behalf of the United States prior to the

expiration of such two-year period.

(h) The Secretary is authorized and directed to make such

rules and regulations as may be necessary to carry out the provisions of this title.

(i) For purposes of this section, the term ‘‘manufactured home’’

includes any elder cottage housing opportunity unit that is small,

freestanding, barrier-free, energy efficient, removable, and designed

to be installed adjacent to an existing 1- to 4-family dwelling.

øLOANS TO FINANCIAL INSTITUTIONS¿

øSEC. 3. [Repealed.]¿

ALLOCATION OF FUNDS

SEC. 4. ø42 U.S.C. 1705¿ For the purposes of carrying out the

provisions of this title and titles II and III the President, in his discretion, is authorized to provide such funds or any portion thereof

by allotment to the Secretary from any funds that are available, or

may hereafter be made available, to the President for emergency

purposes.

øANNUAL REPORT¿

øSEC. 5. [Repealed.]¿

øINSURANCE OF LOANS FOR REHABILITATION OF PROPERTY DAMAGED

BY FIRES, FLOODS, AND STORMS¿

øSEC. 6. [Repealed.]¿

TAXATION

SEC. 7. ø42 U.S.C. 1706b¿ Nothing in this title shall be construed to exempt any real property acquired and held by the Secretary in connection with the payment of insurance heretofore or

hereafter granted under this title from taxation by any State or po-
909 Sec. 8 NATIONAL HOUSING ACT

1See section 216 of the National Housing Act, which is set forth, post, this part.

litical subdivision thereof, to the same extent, according to its

value, as other real property is taxed.

INSURANCE OF MORTGAGES

SEC. 8. ø12 U.S.C. 1706c¿ (a) To assist in providing adequate

housing for families of low and moderate income, particularly in

suburban and outlying areas, this section is designed to supplement systems of mortgage insurance under other provisions of the

National Housing Act by making feasible the insurance of mortgages covering properties in areas where it is not practicable to obtain conformity with many of the requirements essential to the insurance of mortgages on housing in built-up urban areas. The Secretary is authorized upon application by the mortgagee, to insure,

as hereinafter provided, any mortgage (as defined in section 201 of

this Act) offered to him which is eligible for insurance as hereinafter provided, and, upon such terms as the Secretary may prescribe, to make commitments for the insuring of such mortgages

prior to the date of their execution or disbursement thereon: Provided, That the aggregate amount of principal obligations of all

mortgages insured under this section and outstanding at any one

time shall not exceed $100,000,000, except that with the approval

of the President such aggregate amount may be increased at any

time or times by additional amounts aggregating not more than

$150,000,000 upon a determination by the President, taking into

account the general effect of any such increase upon conditions in

the building industry and upon the national economy, that such increase is in the public interest: And provided further, That no

mortgage shall be insured under this section after the effective

date of the Housing Act of 1954, except pursuant to a commitment

to insure issued on or before such date.

(b) To be eligible for insurance under this section, a mortgage

shall—

(1) have been made to, and be held by, a mortgagee approved by the Secretary as responsible and able to service the

mortgage properly;

(2) involve a principal obligation (including such initial

service charges, appraisal, inspection, and other fees as the

Secretary shall approve) in an amount not to exceed $5,700,

and not to exceed 95 per centum of the appraised value, as of

the date the mortgage is accepted for insurance, of a property

upon which there is located a dwelling designed principally for

a single-family resident, and which is approved for mortgage

insurance prior to the beginning of construction: Provided,

That the mortgagor shall be the owner and occupant 1 of the

property at the time of insurance and shall have paid on account of the property at least 5 per centum of the Secretary’s

estimate of the cost of acquisition in cash or its equivalent, or

shall be the builder constructing the dwelling, in which case

the principal obligation shall not exceed 85 per centum of the

appraised value of the property or $5,100: Provided further,

That the Secretary finds that the project with respect to which

the mortgage is executed is an acceptable risk, giving consideration to the need for providing adequate housing for families
Sec. 8 NATIONAL HOUSING ACT 910

1Section 109 of the Disaster Relief and Emergency Assistance Amendments of 1988, Pub. L.

100–707, approved Nov. 23, 1988, amended this sentence to refer to such sections of the ‘‘Disaster Relief and Emergency Assistance Act.’’ Probably intended to refer to the Robert T. Stafford

Disaster Relief and Emergency Assistance Act, renamed by section 102(a) of Pub. L. 100–707. 2See section 203(h) of the National Housing Act, which is set forth, post, this part.

of low and moderate income particularly in suburban and outlying areas: And provided further, That, where the mortgagor

is the owner and occupant of the property and establishes (to

the satisfaction of the Secretary) that his home, which he occupied as an owner or as a tenant, was destroyed or damaged to

such an extent that reconstruction is required as a result of a

flood, fire, hurricane, earthquake, storm or other catastrophe,

which the President, pursuant to sections 102(2) and 401 of the

Disaster Relief and Emergency Assistance Act 1 has determined to be a major disaster, such maximum dollar limitation

may be increased by the Secretary from $5,700 to $7,000, and

the percentage limitation may be increased by the Secretary

from 95 per centum to 100 per centum of the appraised value; 2

(3) have a maturity satisfactory to the Secretary but not

to exceed thirty years from the date of insurance of the mortgage;

(4) contain complete amortization provisions satisfactory to

the Secretary requiring periodic payments by the mortgagor

not in excess of his reasonable ability to pay as determined by

the Secretary;

(5) bear interest (exclusive of premium charges for insurance and service charges, if any) as not to exceed 5 per centum

per annum on the amount of the principal obligation outstanding at any time;

(6) provide, in a manner satisfactory to the Secretary, for

the application of the mortgagor’s periodic payments (exclusive

of the amount allocated to interest and to the premium charge

which is required for mortgage insurance as hereinafter provided and to the service charge, if any) to amortization of the

principal of the mortgage; and

(7) Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, service charges,

default reserves, delinquency charges, foreclosure proceedings,

anticipation of maturity, and other matters as the Secretary

may in his discretion prescribe.

(c) The Secretary is authorized to fix a premium charge for the

insurance of mortgages under this section, but in the case of any

mortgage, such charge shall not be less than an amount equivalent

to one-half of 1 per centum per annum nor more than an amount

equivalent to 1 per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without

taking into account delinquent payments or prepayments. Such

premium charges shall be payable by the mortgagee, either in cash

or in debentures issued by the Secretary under this section at par

plus accrued interest, in such manner as may be prescribed by the

Secretary: Provided, That the Secretary may require the payment

of one or more such premium charges at the time the mortgage is

insured, at such discount rate as he may prescribe not in excess of

the interest rate specified in the mortgage. If the Secretary finds,

upon the presentation of a mortgage for insurance and the tender
911 Sec. 9 NATIONAL HOUSING ACT

of the initial premium charge or charges so require, that the mortgage complies with the provisions of this section, such mortgage

may be accepted for insurance by endorsement or otherwise as the

Secretary may prescribe. In the event that the principal obligation

of any mortgage accepted for insurance under this section is paid

in full prior to the maturity date, the Secretary is further authorized, in his discretion, to require the payment by the mortgagee of

an adjusted premium charge in such amount as the Secretary determines to be equitable, but not in excess of the aggregate amount

of the premium charges that the mortgagee would otherwise have

been required to pay if the mortgage had continued to be insured

until such maturity date; and in the event that the principal obligation is paid in full as herein set forth, the Secretary is authorized

to refund to the mortgagee for the account of the mortgagor all, or

such portion as he shall determine to be equitable, of the current

unearned premium charges theretofore paid.

(d) The Secretary may, at any time under such terms and conditions as he may prescribe, consent to the release of the mortgagor

from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged

property from the lien of the mortgage.

(e) Any contract of insurance executed by the Secretary under

this section shall be conclusive evidence of the eligibility of the

mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved

mortgagee from the date of the execution of such contract, except

for fraud or misrepresentation on the part of such approved mortgagee.

(f) In any case in which the mortgagee under a mortgage insured under this section shall have foreclosed and taken possession

of the mortgaged property in accordance with the regulations of,

and within a period to be determined by, the Secretary, or shall,

with the consent of the Secretary, have otherwise acquired such

property from the mortgagor after default, the mortgagee shall be

entitled to receive the benefits of the insurance as provided in section 204(a) of this Act with respect to mortgages insured under section 203(b)(2)(D) of this Act.

(g) Subsections (c), (d), (e), (f), (g), (h), (j), and (k) of section 204

of this Act shall be applicable to mortgages insured under this section except that all references therein to the Mutual Mortgage Insurance Fund or the Fund shall be construed to refer to the General Insurance Fund, and all references therein to section 203 shall

be construed to refer to this section: Provided, That debentures

issued in connection with mortgages insured under this section 8

shall have the same tax exemption as debentures issued in connection with mortgages insured under section 203 of this Act.

APPLICABILITY

SEC. 9. ø12 U.S.C. 1706d¿ The provisions of sections 2 and 8

shall be applicable in the several States and Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands,

American Samoa, and the Virgin Islands.
Sec. 201 NATIONAL HOUSING ACT 912

TITLE II—MORTGAGE INSURANCE

DEFINITIONS

SEC. 201. ø12 U.S.C. 1707¿ As used in section 203 of this

title—

(a) The term ‘‘mortgage’’ means a first mortgage on real estate,

in fee simple, or on a leasehold (1) under a lease for not less than

ninety-nine years which is renewable or (2) under a lease having

a period of not less than ten years to run beyond the maturity date

of the mortgage; and the term ‘‘first mortgage’’ means such classes

of first liens as are commonly given to secure advances on, or the

unpaid purchase price of, real estate, under the laws of the State

in which the real estate is located, together with the credit instrument, if any, secured thereby.

(b) The term ‘‘mortgagee’’ includes the original lender under a

mortgage, and his successors and assigns approved by the Secretary; and the term ‘‘mortgagor’’ includes the original borrower

under a mortgage and his successors and assigns.

(c) The term ‘‘maturity date’’ means the date on which the

mortgage indebtedness would be extinguished if paid in accordance

with periodic payments provided for in the mortgage.

(d) The term ‘‘State’’ includes the several States and Puerto

Rico, the District of Columbia, Guam, the Trust Territory of the

Pacific Islands, American Samoa, and the Virgin Islands.

(e) The term ‘‘family member’’ means, with respect to a mortgagor under such section, a child, parent, or grandparent of the

mortgagor (or the mortgagor’s spouse). In determining whether any

of the relationships referred to in the preceding sentence exist, a

legally adopted son or daughter of an individual (and a child who

is a member of an individual’s household, if placed with such individual by an authorized placement agency for legal adoption by

such individual), and a foster child of an individual, shall be treated as a child of such individual by blood.

(f) The term ‘‘child’’ means, with respect to a mortgagor under

such section, a son, stepson, daughter, or stepdaughter of such

mortgagor.

FEDERAL HOUSING ADMINISTRATION OPERATIONS

SEC. 202. ø12 U.S.C. 1708¿ (a) MUTUAL MORTGAGE INSURANCE

FUND.—There is hereby created a Mutual Mortgage Insurance

Fund (hereinafter referred to as the ‘‘Fund’’), which shall be used

by the Secretary as a revolving fund for carrying out the provisions

of this title with respect to mortgages insured under section 203 as

hereinafter provided, and there shall be allocated immediately to

such Fund the sum of $10,000,000 out of funds made available to

the Secretary for the purposes of this title.

(b) ADVISORY BOARD.—There is created a Federal Housing Administration Advisory Board (‘‘Board’’) that shall review operation

of the Federal Housing Administration, including the activities of

the Mortgagee Review Board, and shall provide advice to the Federal Housing Commissioner with respect to the formulation of general policies of the Federal Housing Administration and such other

matters as the Federal Housing Commissioner may deem appro-
913 Sec. 202 NATIONAL HOUSING ACT

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. At the beginning of the 104th Congress, the Subcommittee on Housing and Community Development was

renamed the Subcommittee on Housing and Community Opportunity. However, H. Res. 5, 107th

Congress, agreed to on January 3, 2001, abolished the Committee on Banking and Financial

Services and established the Committee on Financial Services, which has jurisdiction over many

of the areas previously under the jurisdiction of the Committee on Banking and Financial Services. 2So in law.

3Probably intended to refer to section 13(c) of the Department of the Housing and Urban Development Act (relating to registration of consultants), which is set forth in part XII of this compilation. Such section was added by section 112 of the Department of Housing and Urban Development Reform Act, Pub. L. 101–235.

priate. The Advisory Board shall, in all other respects, be subject

to the provisions of the Federal Advisory Committee Act.

(1) The Advisory Board shall be composed of 15 members

to be appointed from among individuals who have substantial

expertise and broad experience in housing and mortgage lending of whom—

(A) 9 shall be appointed by the Secretary;

(B) 3 shall be appointed by the Chairman and Ranking Minority Member of the Subcommittee on Housing and

Urban Affairs of the Committee on Banking, Housing, and

Urban Affairs of the Senate; and

(C) 3 shall be appointed by the Chairman and Ranking Minority Member of the Subcommittee on Housing and

Community Development of the Committee on Banking,

Finance and Urban Affairs of the House of Representatives 1.

(2) Membership on the Advisory Board shall include—

(A) not less than 4 persons with distinguished private

sector careers in housing finance, lending, management,

development or insurance;

(B) not less than 4 persons with outstanding reputations as licensed actuaries, experts in actuarial science, or

economics related to housing;

(C) not less than 4 persons with backgrounds of leader-ship in representing the interests of housing consumers;

(D) not less than 1 person with significant experience

and a distinguished reputation for work in the enforcement, advocacy, or development of fair housing or civil

rights legislation; and

(E) not less than 1 person with a background of leadership in representing rural housing interests.

(3) Members of the Advisory Board shall be selected to ensure, to the greatest extent practicable, geographical representation or 2 every region of the country.

(4) Not more than 8 members of the Advisory Board may

be from any one political party.

(5) Membership of the Advisory Board shall not include

any person who, during the previous 24-month period, was required to register with the Secretary under section 112(c) of

the Department of Housing and Urban Development Reform

Act of 1989 3 or employed a person for purposes that required

such person to register.
Sec. 202 NATIONAL HOUSING ACT 914

1Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in part XII of this compilation, provides that certain provisions of

law requiring submittal to Congress of an annual, semiannual, or other regular periodic report

shall cease to be effective on May 15, 2000. This paragraph is covered by such provision. However, section 1102 of the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569, set forth post in part XII of this compilation, provides that such section

3003(a)(1) shall not apply to the report required to be submitted under this paragraph.

(6) Of the members of the Advisory Board first appointed,

5 shall have terms of 1 year, and 5 shall have terms of 2 years.

Their successors and all other appointees shall have terms of

3 years.

(7) The Advisory Board is empowered to confer with, request information of, and make recommendations to the Federal Housing Commissioner. The Commissioner shall promptly

provided the Advisory Board with such information as the

Board determines to be necessary to carry out its review of the

activities and policies of the Federal Housing Administration.

(8) 1 The Board shall, not later than December 31 of each

year, submit to the Secretary and the Congress a report of its

assessment of the activities of the Federal Housing Administration, including the soundness of underwriting procedures,

the adequacy of information systems, the appropriateness of

staffing patterns, the effectiveness of the Mortgagee Review

Board, and other matters related to the Federal Housing Administration’s ability to serve the nation’s homebuyers and

renters. Such report shall contain the Board’s recommendations for improvement and include any minority views.

(9) The Board shall meet in Washington, D.C., not less

than twice annually, or more frequently if requested by the

Federal Housing Commissioner or a majority of the members.

The Board shall elect a chair, vice-chair and secretary and

adopt methods of procedure. The Board may establish committees and subcommittees as needed.

(10) Subject to the provisions of Section 7 of the Federal

Advisory Committee Act, all members of the Board may be

compensated and shall be entitled to reimbursement from the

Department for traveling expenses incurred in attendance at

meetings of the Board.

(11) The Board shall terminate on January 1, 1995.

(c) MORTGAGEE REVIEW BOARD.—

(1) ESTABLISHMENT.—There is established within the Federal Housing Administration the Mortgagee Review Board

(‘‘Board’’). The Board is empowered to initiate the issuance of

a letter of reprimand, the probation, suspension or withdrawal

of any mortgagee found to be engaging in activities in violation

of Federal Housing Administration requirements or the nondiscrimination requirements of the Equal Credit Opportunity

Act, the Fair Housing Act, or Executive Order 11063.

(2) COMPOSITION.—The Board shall consist of—

(A) the Assistant Secretary of Housing/Federal Housing Commissioner;

(B) the General Counsel of the Department;

(C) the President of the Government National Mortgage Association;

(D) the Assistant Secretary for Administration;
915 Sec. 202 NATIONAL HOUSING ACT

1So in law. Section 209(c)(2) of H.R. 5482 (106th Congress, as introduced in the House of Representatives; 114 Stat. 1441A–25), enacted by section 1(a)(1) of Public Law 106–377 (114 Stat.

1441) amends subparagraph (F) by striking ‘‘or their designees.’’ and inserting ‘‘and’’. Paragraph

(3) of section 209(c) adds a new subparagraph (G) at the end. The language proposed to be

struck in subparagraph (F) does not appear and therefore that amendment could not be executed.

(E) the Assistant Secretary for Fair Housing Enforcement (in cases involving violations of nondiscrimination requirements);

(F) the Chief Financial Officer of the Department;

or their designees. 1

(G) the Director of the Enforcement Center; or their

designees.

(3) ACTIONS AUTHORIZED.—When any report, audit, investigation, or other information before the Board discloses that

a basis for an administrative action against a mortgagee exists,

the Board shall take one of the following administrative actions:

(A) LETTER OF REPRIMAND.—The Board may issue a

letter of reprimand only once to a mortgagee without taking action under subparagraphs (B), (C), or (D) of this section. A letter of reprimand shall explain the violation and

describe actions the mortgagee should take to correct the

violation.

(B) PROBATION.—The Board may place a mortgagee on

probation for a specified period of time not to exceed 6

months for the purpose of evaluating the mortgagee’s compliance with Federal Housing Administration requirements, the Equal Credit Opportunity Act, the Fair Housing Act, Executive Order 11063, or orders of the Board.

During the probation period, the Board may impose reasonable additional requirements on a mortgagee including

supervision of the mortgagee’s activities by the Federal

Housing Administration, periodic reporting to the Federal

Housing Commissioner, or submission to Federal Housing

Administration audits of internal financial statements, audits by an indpendent certified public accountant or other

audits.

(C) SUSPENSION.—The Board may issue an order temporarily suspending a mortgagee’s approval for doing business with the Federal Housing Administration if (i) there

exists adequate evidence of a violation or violations and (ii)

continuation of the mortgagee’s approval, pending or at the

completion of any audit, investigation, or other review, or

such administrative or other legal proceedings as may

ensue, would not be in the public interest or in the best

interests of the Department. Notwithstanding paragraph

(4)(A), a suspension shall be effective upon issuance by the

Board if the Board determines that there exists adequate

evidence that immediate action is required to protect the

financial interests of the Department or the public. A suspension shall last for not less than 6 months, and for not

longer than 1 year. The Board may extend the suspension

for an additional 6 months if it determines the extension

is in the public interest. If the Board and the mortgagee
Sec. 202 NATIONAL HOUSING ACT 916

agree, these time limits may be extended. During the period of suspension, the Federal Housing Administration

shall not commit to insure any mortgage originated by the

suspended mortgagee.

(D) WITHDRAWAL.—The Board may issue an order

withdrawing a mortgagee if the Board has made a determination of a serious violation or repeated violations by

the mortgagee. The Board shall determine the terms of

such withdrawal, but the term shall be not less than 1

year. Where the Board has determined that the violation

is egregious or willful, the withdrawal shall be permanent.

(E) SETTLEMENTS.—The Board may at any time enter

into a settlement agreement with a mortgagee to resolve

any outstanding grounds for an action. Agreements may

include provisions such as—

(i) cessation of any violation;

(ii) correction or mitigation of the effects of any

violation;

(iii) repayment of any sums of money wrongfully

or incorrectly paid to the mortgagee by a mortgagor,

by a seller or by the Federal Housing Administration;

(iv) actions to collect sums of money wrongfully or

incorrectly paid by the mortgagee to a third party;

(v) indemnification of the Federal Housing Administration for mortgage insurance claims on mortgages

originated in violation of Federal Housing Administration requirements;

(vi) modification of the length of the penalty imposed; or

(vii) implementation of other corrective measures

acceptable to the Secretary.

Material failure to comply with the provisions of a settlement agreement shall be sufficient cause for suspension or

withdrawal.

(4) NOTICE AND HEARING.—

(A) The Board shall issue a written notice to the mortgagee at least 30 days prior to taking any action against

the mortgagee under subparagraph (B), (C), or (D) of paragraph (3). The notice shall state the specific violations

which have been alleged, and shall direct the mortgagee to

reply in writing to the Board within 30 days. If the mortgagee fails to reply during such period, the Board may

make a determination without considering any comments

of the mortgagee.

(B) If the Board takes action against a mortgagee

under subparagraph (B), (C), or (D) of paragraph (3), the

Board shall promptly notify the mortgagee in writing of

the nature, duration, and specific reasons for the action. If,

within 30 days of receiving the notice, the mortgagee requests a hearing, the Board shall hold a hearing on the

record regarding the violations within 30 days of receiving

the request. If a mortgagee fails to request a hearing within such 30-day period, the right of the mortgagee to a

hearing shall be considered waived.
917 Sec. 202 NATIONAL HOUSING ACT

(C) In any case in which the notification of the Board

does not result in a hearing (including any settlement by

the Board and a mortgagee), any information regarding

the nature of the violation and the resolution of the action

shall be available to the public.

(5) PUBLICATION.—The Secretary shall establish and publish in the Federal Register a description of and the cause for

administrative action against a mortgagee.

(6) CEASE-AND-DESIST ORDERS.— (A) Whenever the Secretary, upon request of the Mortgagee Review Board, determines that there is reasonable

cause to believe that a mortgagee is violating, has violated,

or is about to violate, a law, rule or regulation or any condition imposed in writing by the Secretary or the Board,

and that such violation could result in significant cost to

the Federal Government or the public, the Secretary may

issue a temporary order requiring the mortgagee to cease

and desist from any such violation and to take affirmative

action to prevent such violation or a continuation of such

violation pending completion of proceedings of the Board

with respect to such violation. Such order shall include a

notice of charges in respect thereof and shall become effective upon service to the mortgagee. Such order shall remain effective and enforceable for a period not to exceed

30 days pending the completion of proceedings of the

Board with respect to such violation, unless such order is

set aside, limited, or suspended by a court in proceedings

authorized by subparagraph (B) of this paragraph. The

Board shall provide the mortgagee an opportunity for a

hearing on the record, as soon as practicable but not later

than 20 days after the temporary cease-and-desist order

has been served.

(B) Within 10 days after the mortgagee has been

served with a temporary cease-and-desist order, the mortgagee may apply to the United States district court for the

judicial district in which the home office of the mortgagee

is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting

or suspending the enforcement, operation, or effectiveness

of such order pending the completion of the administrative

proceedings pursuant to the notice of charges served upon

the mortgagee, and such court shall have jursidiction to

issue such injunction.

(C) In the case of violation or threatened violation of,

or failure to obey, a temporary cease-and-desist order

issued pursuant to this paragraph, the Secretary may

apply to the United States district court, or the United

States court of any territory, within the jurisdiction of

which the home office of the mortgagee is located, for an

injunction to enforce such order, and, if the court shall determine that there has been such violation or threatened

violation or failure to obey, it shall be the duty of the court

to issue such injunction.

(7) DEFINITION OF ‘‘MORTGAGEE’’.—For purposes of this

subsection, the term ‘‘mortgagee’’ means—
Sec. 202 NATIONAL HOUSING ACT 918

(A) a mortgagee approved under this Act;

(B) a lender or a loan correspondent approved under

title I of this Act;

(C) a branch office or subsidiary of the mortgagee,

lender, or loan correspondent; or

(D) a director, officer, employee, agent, or other person

participating in the conduct of the affairs of the mortgagee,

lender, or loan correspondent.

(8) REPORT REQUIRED.—The Board, in consultation with

the Federal Housing Administration Advisory Board, shall annually recommend to the Secretary such amendments to statute or regulation as the Board determines to be appropriate to

ensure the long term financial strength of the Federal Housing

Administration fund and the adequate support for home mortgage credit.

(d) COORDINATION OF GNMA AND FHA WITHDRAWAL ACTION.—

(1) Whenever the Federal Housing Administration or Government National Mortgage Association initiates proceedings

that could lead to withdrawing the mortgagee from participating in the program, the initiating agency shall—

(A) within 24 hours notify the other agency in writing

of the action taken;

(B) provide to the other agency the factual basis for

the action taken; and

(C) if a mortgagee is withdrawn, publish its decision

in the Federal Register.

(2) Within 60 days of receipt of a notification of action that

could lead to withdrawal under subsection (1), the Federal

Housing Administration or the Government National Mortgage

Association shall—

(A) conduct and complete its own investigation;

(B) provide written notification to the other agency of

its decision, including the factual basis for its decision; and

(C) if a mortgagee is withdrawn, publish its decision

in the Federal Register.

(e) APPRAISAL STANDARDS.—(1) The Secretary shall prescribe

standards for the appraisal of all property to be insured by the

Federal Housing Administration. Such appraisals shall be performed in accordance with uniform standards, by individuals who

have demonstrated competence and whose professional conduct is

subject to effective supervision. These standards shall require at a

minimum—

(A) that the appraisals of properties to be insured by the

Federal Housing Administration shall be performed in accordance with generally accepted appraisal standards, such as the

appraisal standards promulgated by the Appraisal Foundation

a not-for-profit corporation established on November 30, 1987

under the laws of Illinois; and

(B) that each appraisal be a written statement used in connection with a real estate transaction that is independently

and impartially prepared by a licensed or certified appraiser

setting forth an opinion of defined value of an adequately described property as of a specific date, supported by presentation and analysis of relevant market information.
919 Sec. 203 NATIONAL HOUSING ACT

(2) The Appraisal Subcommittee of the Federal Financial

Instituations Examination Council shall include the Secretary or

his designee.

(3) DIRECT ENDORSEMENT PROGRAM.—

(A) Any mortgagee that is authorized by the Secretary to

process mortgages as a direct endorsement mortgagee (pursuant to the single-family home mortgage direct endorsement

program established by the Secretary) may contract with an

appraiser chosen at the discretion of the mortgagee for the performance of appraisals in connection with such mortgages.

Such appraisers may include appraisal companies organized as

corporations, partnerships, or sole proprietorships.

(B) Any appraisal conducted pursuant to subparagraph (A)

shall be conducted by an individual who complies with the

qualifications or standards for appraisers established by the

Secretary pursuant to section 202(e) of the National Housing

Act.

(C) In conducting an appraisal, such individual may utilize

the assistance of others, who shall be under the direct supervision of the individual responsible for the appraisal. The individual responsible for the appraisal shall personally approve

and sign any appraisal report.

(4) FEE PANEL APPRAISERS.—

(A) Any individual who is an employee of an appraisal

company (including any company organized as a corporation,

partnership, or sole proprietorship) and who meets the qualifications or standards for appraisers and inclusion on appraiser

fee panels established by the Secretary, shall be eligible for assignment to conduct appraisals for mortgages under this title

in the same manner and on the same basis as other approved

appraisers.

(B) With respect to any employee of an appraisal company

described in subparagraph (A) who is offered an appraisal assignment in connection with a mortgage under this title, the

person utilizing the appraiser may contract directly with the

appraisal company employing the appraiser for the furnishing

of the appraisal services.

INSURANCE OF MORTGAGES

SEC. 203. ø12 U.S.C. 1709¿ (a) The Secretary is authorized,

upon application by the mortgagee, to insure as hereinafter provided any mortgage offered to him which is eligible for insurance

as hereinafter provided, and, upon such terms as the Secretary

may prescribe, to make commitments for the insuring of such mortgages prior to the date of their execution or disbursement thereon.

(b) To be eligible for insurance under this section a mortgage

shall comply with the following:

(1) Have been made to, and be held by, a mortgagee approved by the Secretary as responsible and able to service the

mortgage properly.

(2) Involve a principal obligation (including such initial

service charges, appraisal, inspection, and other fees as the

Secretary shall approve) in an amount—
Sec. 203 NATIONAL HOUSING ACT 920

1 Indented so in law.

2Probably intended to refer to the Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 1999, Public Law 106–74, approved

October 20, 1999.

(A) 1 not to exceed the lesser of—

(i) in the case of a 1-family residence, 95 percent

of the median 1-family house price in the area, as determined by the Secretary; in the case of a 2-family

residence, 107 percent of such median price; in the

case of a 3-family residence, 130 percent of such median price; or in the case of a 4-family residence, 150

percent of such median price; or

(ii) 87 percent of the dollar amount limitation determined under section 305(a)(2) of the Federal Home

Loan Mortgage Corporation Act for a residence of the

applicable size; except that the dollar amount limitation in effect for any area under this subparagraph

may not be less than the greater of the dollar amount

limitation in effect under this section for the area on

the date of the enactment of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act for Fiscal Year 1999 2 or 48 percent of the dollar limitation

determined under section 305(a)(2) of the Federal

Home Loan Mortgage Corporation Act for a residence

of the applicable size; and

(B) not to exceed an amount equal to the sum of—

(i) the amount of the mortgage insurance premium paid at the time the mortgage is insured; and

(ii) in the case of—

(I) a mortgage for a property with an appraised value equal to or less than $50,000, 98.75

percent of the appraised value of the property;

(II) a mortgage for a property with an appraised value in excess of $50,000 but not in excess of $125,000, 97.65 percent of the appraised

value of the property;

(III) a mortgage for a property with an appraised value in excess of $125,000, 97.15 percent

of the appraised value of the property; or

(IV) notwithstanding subclauses (II) and (III),

a mortgage for a property with an appraised value

in excess of $50,000 that is located in an area of

the State for which the average closing cost exceeds 2.10 percent of the average, for the State, of

the sale price of properties located in the State for

which mortgages have been executed, 97.75 percent of the appraised value of the property.

For purposes of the preceding sentence, the term ‘‘area’’ means

a metropolitan statistical area as established by the Office of

Management and Budget; and the median 1-family house price

for an area shall be equal to the median 1-family house price

of the county within the area that has the highest such median

price. For purposes of this paragraph, the term ‘‘average closing cost’’ means, with respect to a State, the average, for mort-
921 Sec. 203 NATIONAL HOUSING ACT

1Section 402(b)(1) of the Department of Veterans Affairs Physician and Dentist Recruitment

and Retention Act of 1991, Pub. L. 102–40, approved May 7, 1991, redesignated section 3130A

of title 38, United States Code, as section 5303A. Section 402(d)(2) of such Act provides as follows:

‘‘(2) Any reference in a provision of law other than title 38, United States Code, to a section

redesignated by subsection (b) shall be deemed to refer to the section as so redesignated’’.

gages executed for properties that are located within the State,

of the total amounts (as determined by the Secretary) of initial

service charges, appraisal, inspection, and other fees (as the

Secretary shall approve) that are paid in connection with such

mortgages. Notwithstanding any other provision of this section,

in any case where the dwelling is not approved for mortgage

insurance prior to the beginning of construction, such mortgage

shall not exceed 90 per centum of the entire appraised value

of the property as of the date the mortgage is accepted for insurance, unless (i) the dwelling was completed more than one

year prior to the application for mortgage insurance, or (ii) the

dwelling was approved for guaranty, insurance, or a direct loan

under chapter 37 of title 38, United States Code, prior to the

beginning of construction, or (iii) the dwelling is covered by a

consumer protection or warranty plan acceptable to the Secretary and satisfies all requirements which would have been

applicable if such dwelling had been approved for mortgage insurance prior to the beginning of construction. As used herein,

the term ‘‘veteran’’ means any person who served on active

duty in the armed forces of the United States for a period of

not less than 90 days (or as certified by the Secretary of Defense as having performed extra-hazardous service), and who

was discharged or released therefrom under conditions other

than dishonorable, except that persons enlisting in the armed

forces after September 7, 1980, or entering active duty after

October 16, 1981, shall have their eligibility determined in accordance with section 3103A(d) of title 38, United States

Code.1

Notwithstanding any other provision of this paragraph,

the amount which may be insured under this section may be

increased by up to 20 percent if such increase is necessary to

account for the increased cost of the residence due to the installation of a solar energy system (as defined in subparagraph

(3) of the last paragraph of section 2(a) of this Act) therein.

Notwithstanding any other provision of this paragraph,

the Secretary may not insure, or enter into a commitment to

insure, a mortgage under this section that is executed by a

first-time homebuyer and that involves a principal obligation

(including such initial service charges, appraisal, inspection,

and other fees as the Secretary shall approve) in excess of 97

percent of the appraised value of the property unless the mortgagor has completed a program of counseling with respect to

the responsibilities and financial management involved in

homeownership that is approved by the Secretary; except that

the Secretary may, in the discretion of the Secretary, waive the

applicability of this requirement.

(3) Have a maturity satisfactory to the Secretary, but not

to exceed, in any event, thirty-five years (or thirty years if such
Sec. 203 NATIONAL HOUSING ACT 922

1For provisions regarding premiums on mortgages executed during fiscal years 1991 through

1994, see section 2103(b) of the Omnibus Budget Rconciliation Act of 1990, Pub. L. 101–508 (as

mortgage is not approved for insurance prior to construction)

from the date of the beginning of amortization of the mortgage.

(4) Contain complete amortization provisions satisfactory

to the Secretary requiring periodic payments by the mortgagor

not in excess of his reasonable ability to pay as determined by

the Secretary.

(5) Bear interest at such rate as may be agreed upon by

the mortgagor and the mortgagee.

(6) Provide, in a manner satisfactory to the Secretary, for

the application of the mortgagor’s periodic payments (exclusive

of the amount allocated to interest and to the premium charge

which is required for mortgage insurance as hereinafter provided) to amortization of the principal of the mortgage.

(7) Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other

matters as the Secretary may in his discretion prescribe.

ø(8) [Repealed.]¿

(9) Be executed by a mortgagor who shall have paid on account of the property (except with respect to a mortgage executed by a mortgagor who is a veteran) at least 3 per centum,

or such larger amount as the Secretary may determine, of the

Secretary’s estimate of the cost of acquisition (excluding the

mortgage insurance premium paid at the time the mortgage is

insured) in cash or its equivalent: Provided, That with respect

to a mortgage executed by a mortgagor who is sixty years of

age or older as of the date the mortgage is endorsed for insurance or with respect to a mortgage meeting the requirements

of subsection (i) of this section, or with respect to a mortgage

covering a single-family home being purchased under the lowincome housing demonstration project assisted pursuant to section 207 of the Housing Act of 1961, or with respect to a mortgage covering a housing unit in connection with a homeownership program under the Homeownership and Opportunity

Through HOPE Act, the mortgagor’s payment required by this

subsection may be paid by a corporation or person other than

the mortgagor under such terms and conditions as the Secretary may prescribe: Provided further, That for purposes of

this paragraph, the Secretary shall consider as cash or its

equivalent any amounts borrowed from a family member (as

such term is defined in section 201), subject only to the requirements that, in any case in which the repayment of such

borrowed amounts is secured by a lien against the property,

such lien shall be subordinate to the mortgage and the sum of

the principal obligation of the mortgage and the obligation secured by such lien may not exceed 100 percent of the appraised

value of the property plus any initial service charges, appraisal, inspection, and other fees in connection with the mortgage.

(c)(1) 1 The Secretary is authorized to fix premium charge for

the insurance of mortgages under the separate sections of this title
923 Sec. 203 NATIONAL HOUSING ACT

amended by section 507(c) of the Housing and Community Development Act of 1992, Pub. L.

102–550).

but in the case of any mortgage such charge shall be not less than

an amount equivalent to one-fourth of 1 per centum per annum nor

more than an amount equivalent to 1 per centum per annum of the

amount of the principal obligation of the mortgage outstanding at

any time, without taking into account delinquent payments or prepayments: Provided, That premium charges fixed for insurance (1)

under section 245, 247, 251, 252, or 253, or any other financing

mechanism providing alternative methods for repayment of a mortgage that is determined by the Secretary to involve additional risk,

or (2) under subsections (n) or (k) are not required to be the same

as the premium charges for mortgages insured under the other provisions of this section, but in no case shall premium charges under

subsection (n) or (k) exceed 1 per centum per annum: Provided,

That any reduced premium charge so fixed and computed may, in

the discretion of the Secretary, also be made applicable in such

manner as the Secretary shall prescribe to each insured mortgage

outstanding under the section or sections involved at the time the

reduced premium charge is fixed. Such premium charges shall be

payable by the mortgagee, either in cash, or in debentures issued

by the Secretary under this title at par plus accrued interest, in

such manner as may be prescribed by the Secretary: Provided,

That debentures presented in payment of premium charges shall

represent obligations of the particular insurance fund or account to

which such premium charges are to be credited: Provided further,

That the Secretary may require the payment of one or more such

premium charges at the time the mortgage is insured, at such discount rate as he may prescribe not in excess of the interest rate

specified in the mortgage. If the Secretary finds upon the presentation of a mortgage for insurance and the tender of the initial premium charge or charges so required that the mortgage complies

with the provisions of this section, such mortgage may be accepted

for insurance by endorsement or otherwise as the Secretary may

prescribe; but no mortgage shall be accepted for insurance under

this section unless the Secretary finds that the project with respect

to which the mortgage is executed is economically sound. In the

event that the principal obligation of any mortgage accepted for insurance under this title is paid in full prior to the maturity date,

the Secretary is further authorized in his discretion to require the

payment by the mortgagee of an adjusted premium charge in such

amount as the Secretary determines to be equitable, but not in excess of the aggregate amount of the premium charges that the

mortgagee would otherwise have been required to pay if the mortgage had continued to be insured until such maturity date; and in

the event that the principal obligation is paid in full as herein set

forth, the Secretary is authorized to refund to the mortgagee for

the account of the mortgagor all, or such portion as he shall determine to be equitable, of the current unearned premium charges

theretofore paid: Provided, That with respect to mortgages (1) for

which the Secretary requires, at the time the mortgage is insured,

the payment of a single premium charge to cover the total premium obligation for the insurance of the mortgage, and (2) on

which the principal obligation is paid before the number of years
Sec. 203 NATIONAL HOUSING ACT 924

1So in law. Section 207(a)(2)(A) of the Departments of Veterans Affairs and Housing and

Urban Development, and Independent Agencies Appropriations Act, 2002 (Public Law 107–73;

115 Stat. 674) amended this paragraph by inserting after ‘‘subsection (v)’’ the following: ‘‘and

each mortgage that is insured under subsection (k) or section 234(c),’’.

on which the premium with respect to a particular mortgage was

based, or the property is sold subject to the mortgage or is sold and

the mortgage is assumed prior to such time, the Secretary shall

provide for refunds, where appropriate, of a portion of the premium

paid and shall provide for appropriate allocation of the premium

cost among the mortgagors over the term of the mortgage, in accordance with procedures established by the Secretary which take

into account sound financial and actuarial considerations.

(2) Notwithstanding any other provision of this section, each

mortgage secured by a 1- to 4-family dwelling that is an obligation

of the Mutual Mortgage Insurance Fund or of the General Insurance Fund pursuant to subsection (v) and each mortgage that is insured under subsection (k) or section 234(c),, 1 shall be subject to

the following requirements:

(A) The Secretary shall establish and collect, at the time

of insurance, a single premium payment in an amount not exceeding 2.25 percent of the amount of the original insured principal obligation of the mortgage. In the case of a mortgage for

which the mortgagor is a first-time homebuyer who completes

a program of counseling with respect to the responsibilities and

financial management involved in homeownership that is approved by the Secretary, the premium payment under this subparagraph shall not exceed 2.0 percent of the amount of the

original insured principal obligation of the mortgage. Upon

payment in full of the principal obligation of a mortgage prior

to the maturity date of the mortgage, the Secretary shall refund all of the unearned premium charges paid on the mortgage pursuant to this subparagraph.

(B) In addition to the premium under subparagraph (A),

the Secretary shall establish and collect annual premium payments in an amount not exceeding 0.50 percent of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under

subparagraph (A) and without taking into account delinquent

payments or prepayments) for the following periods:

(i) For any mortgage involving an original principal

obligation (excluding any premium collected under subparagraph (A)) that is less than 90 percent of the appraised value of the property (as of the date the mortgage

is accepted for insurance), for the first 11 years of the

mortgage term.

(ii) For any mortage involving an original principal obligation (excluding any premium collected under subparagraph (A)) that is greater than or equal to 90 percent of

such value, for the first 30 years of the mortgage term; except that notwithstanding the matter preceding clause (i),

for any mortgage involving an original principal obligation

(excluding any premium collected under subparagraph (A))

that is greater than 95 percent of such value, the annual

premium collected during the 30-year period under this

clause shall be in an amount not exceeding 0.55 percent of
925 Sec. 203 NATIONAL HOUSING ACT

the remaining insured principal balance (excluding the

portion of the remaining balance attributable to the premium collected under subparagraph (A) and without taking into account delinquent payments or prepayments).

(d) Notwithstanding any provision of this title governing maximum mortgage amounts for insuring a mortgage secured by a oneto four-family dwelling, the maximum amount of the mortgage determined under any such provision may be increased by the

amount of the mortgage insurance premium paid at the time the

mortgage is insured.

(e) Any contract of insurance heretofore or hereafter executed

by the Secretary under this title shall be conclusive evidence of the

eligibility of the loan or mortgage for insurance, and the validility

of any contract of insurance so executed shall be incontestable in

the hands of an approved financial institution or approved mortgagee from the date of the execution of such contract, except for

fraud or misrepresentation on the part of such approved financial

institution or approved mortgagee.

(f) DISCLOSURE OF OTHER MORTGAGE PRODUCTS.— (1) IN GENERAL.—In conjunction with any loan insured

under this section, an original lender shall provide to each prospective borrower a disclosure notice that provides a 1-page

analysis of mortgage products offered by that lender and for

which the borrower would qualify.

(2) NOTICE.—The notice required under paragraph (1)

shall include—

(A) a generic analysis comparing the note rate (and associated interest payments), insurance premiums, and

other costs and fees that would be due over the life of the

loan for a loan insured by the Secretary under subsection

(b) with the note rates, insurance premiums (if applicable),

and other costs and fees that would be expected to be due

if the mortgagor obtained instead other mortgage products

offered by the lender and for which the borrower would

qualify with a similar loan-to-value ratio in connection

with a conventional mortgage (as that term is used in section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) or section 302(b)(2) of

the Federal National Mortgage Association Charter Act (12

U.S.C. 1717(b)(2)), as applicable), assuming prevailing interest rates; and

(B) a statement regarding when the requirement of

the mortgagor to pay the mortgage insurance premiums

for a mortgage insured under this section would terminate,

or a statement that the requirement shall terminate only

if the mortgage is refinanced, paid off, or otherwise terminated.

(g)(1) The Secretary may insure a mortgage under this title

that is secured by a 1- to 4-family dwelling, or approve a substitute

mortgagor with respect to any such mortgage, only if the mortgagor

is to occupy the dwelling as his or her principal residence or as a

secondary residence, as determined by the Secretary. In making

this determination with respect to the occupancy of secondary residences, the Secretary may not insure mortgages with respect to

such residences unless the Secretary determines that it is nec-
Sec. 203 NATIONAL HOUSING ACT 926

1So in law.

essary to avoid undue hardship to the mortgagor. In no event may

a secondary residence under this subsection include a vacation

home, as determined by the Secretary.

(2) The occupancy requirement established in paragraph (1)

shall not apply to any mortgagor (or co-mortgagor, as appropriate)

that is—

(A) a public entity, as provided in section 214 or 247, or

any other State or local government or an agency thereof;

(B) a private nonprofit or public entity, as provided in section 221(h) or 235(j), or other private nonprofit organization

that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986 and intends to sell or lease the

mortgage property to low or moderate-income persons, as determined by the Secretary;

(C) an Indian tribe, as provided in section 248;

(D) a serviceperson who is unable to meet such requirement because of his or her duty assignment, as provided in section 216 or subsection (b)(4) or (f) of section 222;

(E) a mortgagor or co-mortgagor under subsection (k); or

(F) a mortgagor that, pursuant to section 223(a)(7), is refinancing an existing mortgage insured under this Act for not

more than the outstanding balance of the existing mortgage, if

the amount of the monthly payment due under the refinancing

mortgage is less than the amount due under the existing mortgage for the month in which the refinancing mortgage is executed.

(3) For purposes of this subsection, the term ‘‘substitute mortgagor’’ means a person who, upon the release by a mortgagee of a

previous mortgagor from personal liability on the mortgage note,

assumes such liability and agrees to pay the mortgage debt.

(h) Notwithstanding any other provision of this section, the

Secretary is authorized to insure any mortgage which involves a

principal obligation not in excess of the applicable maximum dollar

limit under subsection (b) and not in excess of 100 per centum of

the appraised value of a property upon which there is located a

dwelling designed principally for a single-family residence, where

the mortgagor establishes (to the satisfaction of the Secretary) that

his home which he occupied as an owner or as a tenant was destroyed or damaged to such an extent that reconstruction is required as a result of a flood, fire, hurricane, earthquake, storm, or

other catastrophe, which the President, pursuant to 1 Robert T.

Stafford Disaster Relief and Emergency Assistance Act, has determined to be a major disaster. In any case in which the single family residence to be insured under this subsection is within a jurisdiction in which the President has declared a major disaster to

have occurred, the Secretary is authorized, for a temporary period

not to exceed 18 months from the date of such Presidential declaration, to enter into agreements to insure a mortgage which involves

a principal obligation of up to 100 percent of the dollar limitation

determined under section 305(a)(2) of the Federal Home Loan
927 Sec. 203 NATIONAL HOUSING ACT

1This sentence was added by the Emergency Supplemental Appropriations Act of 1994, Pub.

L. 103–211, 108 Stat. 12, approved February 12, 1994. The undesignated paragraph following

the paragraph in which this amendment was made provides as follows:

‘‘Eligibility for loans made under the authority granted by the preceding paragraph shall

be limited to persons whose principal residence was damaged or destroyed as a result of the

January 1994 earthquake in Southern California: Provided, That the provisions under this

heading shall be effective only for the 18-month period following the date of enactment of this

Act.’’. 2The date of enactment was October 31, 1978.

Mortgage Corporation Act for single family residence, and not in

excess of 100 percent of the appraised value. 1

(i) The Secretary is authorized to insure under this section,

any mortgage meeting the requirements of subsection (b) of this

section, except as modified by this subsection, which involves a

principal obligation not in excess of 75 per centum of the limit on

the principal obligation applicable to a one-family residence under

subsection (b) of this section and not in excess of 97 per centum

(or, in any case where the dwelling is not approved for mortgage

insurance prior to the beginning of construction, unless the construction of the dwelling was completed more than one year prior

to the application for mortgage insurance or the dwelling was approved for guaranty, insurance, or direct loan under chapter 37 of

title 38, United States Code, prior to the beginning of construction,

90 per centum) of the appraised value of a property located in an

area where the Secretary finds it is not practicable to obtain conformity with many of the requirements essential to the insurance

of mortgages on housing in built-up urban areas, upon which there

is located a dwelling designed principally for a single-family residence: Provided, That the Secretary finds that the property with

respect to which the mortgage is executed is an acceptable risk,

giving consideration to the need for providing adequate housing for

families of low and moderate income particularly in suburban and

outlying areas or small communities: Provided further, That under

the foregoing provisions of this subsection the Secretary is authorized to insure any mortgage issued with respect to a farm home on

a plot of land two and one-half or more acres in size adjacent to

an all-weather public road.

(j) Loans secured by mortgages insured under this section shall

not be taken into account in determining the amount of real estate

loans which a national bank may make in relation to its capital

and surplus or its time and savings deposits.

(k)(1) The Secretary may, in order to assist in the rehabilitation of one- to four-family structures used primarily for residential

purposes, insure and make commitments to insure rehabilitation

loans (including advances made during rehabilitation) made by financial institutions on and after 180 days following the date of enactment of the Housing and Community Development Amendments

of 1978. 2 Such commitments to insure and such insurance shall be

made upon such terms and conditions which the Secretary may

prescribe and which are consistent with the provisions of subsections (b), (c), (e), (i) and (j) of this section, except as modified by

the provisions of this subsection.

(2) For the purpose of this subsection—

(A) the term ‘‘rehabilitation loan’’ means a loan, advance

of credit, or purchase of an obligation representing a loan or

advance of credit, made for the purpose of financing—
Sec. 203 NATIONAL HOUSING ACT 928

(i) the rehabilitation of an existing one- to four-unit

structure which will be used primarily for residential purposes;

(ii) the rehabilitation of such a structure and the refinancing of the outstanding indebtedness on such structure

and the real property on which the structure is located; or

(iii) the rehabilitation of such a structure and the purchase of the structure and the real property on which it is

located; and

(B) the term ‘‘rehabilitation’’ means the improvement (including improvements designed to meet cost-effective energy

conservation standards prescribed by the Secretary) or repair

of a structure, or facilities in connection with a structure, and

may include the provision of such sanitary or other facilities as

are required by applicable codes, a community development

plan, or a statewide property insurance plan to be provided by

the owner or tenant of the project. The term ‘‘rehabilitation’’

may also include measures to evaluate and reduce lead-based

paint hazards, as such terms are defined in section 1004 of the

Residential Lead-Based Paint Hazard Reduction Act of 1992.

(3) To be eligible for insurance under this subsection, a rehabilitation loan shall—

(A) involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount which does not exceed,

when added to any outstanding indebtedness of the borrower

which is secured by the structure and the property on which

it is located, the amount specified in subsection (b)(2); except

that, in determining the amount of the principal obligation for

purposes of this subsection, the Secretary shall establish as the

appraised value of the property an amount not to exceed the

sum of the estimated cost of rehabilitation and the Secretary’s

estimate of the value of the property before rehabilitation;

(B) bear interest at such rate as may be agreed upon by the

borrower and the financial institution;

(C) be an acceptable risk, as determined by the Secretary;

and

(D) comply with such other terms, conditions, and restrictions as the Secretary may prescribe.

(4) Any rehabilitation loan insured under this subsection may

be refinanced and extended in accordance with such terms and conditions as the Secretary may prescribe, but in no event for an additional amount or term which exceeds the maximum provided for in

this subsection.

(5) All funds received and all disbursements made pursuant to

the authority established by this subsection shall be credited or

charged as appropriate, to the General Insurance Fund, and insurance benefits shall be paid in cash out of such Fund or in debentures executed in the name of such Fund. Insurance benefits paid

with respect to loans secured by a first mortgage and insured

under this subsection shall be paid in accordance with section 204,

except that all references in section 204 to the Mutual Mortgage

Insurance Fund shall be construed as referring to the General Insurance Fund. Insurance benefits paid with respect to loans secured by a mortgage other than a first mortgage and insured under
929 Sec. 203 NATIONAL HOUSING ACT

1This paragraph was added by the Emergency Supplemental Appropriations Act of 1994, Pub.

L. 103–211, 108 Stat. 12, approved February 12, 1994, and the indentation as shown is so in

law. The undesignated paragraph following the paragraph in which this amendment was made

provides as follows:

‘‘Eligibility for loans made under the authority granted by the preceding paragraph shall

be limited to persons whose principal residence was damaged or destroyed as a result of the

January 1994 earthquake in Southern California: Provided, That the provisions under this

heading shall be effective only for the 18-month period following the date of enactment of this

Act.’’.

this subsection shall be paid in accordance with paragraphs (6) and

(7) of section 220(h), except that reference to ‘‘this subsection’’ in

such paragraphs shall be construed as referring to this subsection.

(6) 1 The Secretary is authorized, for a temporary period

not to exceed 18 months from the date on which the President

has declared a major disaster to have occurred, to enter into

agreements to insure a rehabilitation loan under this subsection which involves a principal obligation of up to 100 percent of the dollar limitation determined under section 305(a)(2)

of the Federal Home Loan Mortgage Corporation Act for a residence of the applicable size, if such loan is secured by a structure and property that are within a jurisdiction in which the

President has declared such disaster, pursuant to the Robert

T. Stafford Disaster Relief and Emergency Assistance Act, and

if such loan otherwise conforms to the loan-to-value ratio and

other requirements of this subsection.

ø(l) [Repealed.]¿

ø(m) [Repealed.]¿

(n)(1) The Secretary is authorized to insure under this section

any mortgage meeting the requirements of subsection (b) of this

section, except as modified by this subsection. To be eligible, the

mortgage shall involve a dwelling unit in a cooperative housing

project which is covered by a blanket mortgage insured under this

Act or the construction of which was completed more than a year

prior to the application for the mortgage insurance. The mortgage

amount as determined under the other provisions of subsection (b)

of this section shall be reduced by an amount equal to the portion

of the unpaid balance of the blanket mortgage covering the project

which is attributable (as of the date the mortgage is accepted for

insurance) to such unit.

(2) For the purpose of this subsection—

(A) The terms ‘‘home mortgage’’ and ‘‘mortgage’’ include a

first lien given (in accordance with the laws of the State where

the property is located and accompanied by such security and

other undertakings as may be required under regulations of

the Secretary) to secure a loan made to finance the purchase

of stock or membership in a cooperative ownership housing corporation the permanent occupancy of the dwelling units of

which is restricted to members of such corporation, where the

purchase of such stock or membership will entitle the purchaser to the permanent occupancy of one of such units.

(B) The terms ‘‘appraised value of the property’’, ‘‘value of

the property’’, and ‘‘value’’ include the appraised value of a

dwelling unit in a cooperative housing project of the type described in subparagraph (A) where the purchase of the stock or

membership involved will entitle the purchaser to the perma-
Sec. 203 NATIONAL HOUSING ACT 930

nent occupancy of that unit; and the term ‘‘property’’ includes

a dwelling unit in such a cooperative project.

(C) The terms ‘‘mortgagor’’ includes a person or persons

giving a first lien (of the type described in subparagraph (A))

to secure a loan to finance the purchase of stock or membership in a cooperative housing corporation.

(o)(1) Notwithstanding any other provision of this section or

any other section of this title, the Secretary is authorized to insure,

and to commit to insure, under subsection (b) of this section as

modified by this subsection a mortgage which meets both the requirements of this subsection and such criteria as the Secretary by

regulation may prescribe to further the purpose of this subsection,

in any community where the Secretary determines that—

(A) temporary adverse economic conditions exist throughout the community as a direct and primary result of outstanding claims to ownership of land in the community by an

American Indian tribe, band, or Nation;

(B) such ownership claims are reasonably likely to be settled, by court action or otherwise;

(C) as a direct result of the community’s temporarily impaired economic condition, owner occupants of homes in the

community have been involuntarily unemployed or underemployed and have thus incurred substantial reductions in income which significantly impair their ability to continue timely

payment of their mortgages;

(D) as a result, widespread mortgage foreclosures and distress sales of homes are likely in the community; and

(E) fifty or more individual homeowners were joined as

parties defendant or were members of a defendant class prior

to December 31, 1976, in litigation involving claims to ownership of land in the community by an American Indian tribe,

band, or Nation.

(2) A mortgage shall be eligible for insurance under subsection

(b) of this section as modified by this subsection without regard to

limitations in this title relating to a mortgagor’s reasonable ability

to pay, economic soundness, marketability of title, or any other

statutory restriction which the Secretary determines is contrary to

the purpose of this subsection, but only if the mortgagor is an

owner of a home in a community specified in paragraph (1) who,

as a direct result of the community’s temporarily impaired economic condition, has been involuntarily unemployed or underemployed and has thus incurred a substantial reduction in income

which significantly impairs the owner’s ability to continue timely

payment of the mortgage. The Secretary is authorized to encourage

or afford directly to or on behalf of mortgagors whose mortgages

are insured under subsection (b) as modified by this subsection

forebearance, assignment of mortgages to the Secretary, or such

other relief as the Secretary deems appropriate and consistent with

the purpose of this subsection. The Secretary, in connection with

any mortgage insured under subsection (b) as modified by this subsection, shall have all statutory powers, authority, and responsibilities which the Secretary has with respect to other mortgages insured under subsection (b), except that the Secretary may modify

such powers, authority, or responsibilities where the Secretary

deems such action to be necessary because of the special nature of
931 Sec. 203 NATIONAL HOUSING ACT

the mortgage involved. Notwithstanding section 202 of this title,

the insurance of a mortgage under subsection (b) of this section as

modified by this subsection shall be the obligation of the Special

Risk Insurance Fund created pursuant to section 238 of this title.

(p)(1) Notwithstanding any other provision of this section or

any other section of this title, the Secretary is authorized to insure,

and to commit to insure, under subsection (b) of this section as

modified by this subsection a mortgage which meets both the requirements of this subsection and such criteria as the Secretary by

regulation shall prescribe to further the purpose of this subsection,

in any community where the Secretary determines that—

(A) temporary adverse economic conditions exist throughout the community as a direct and primary result of outstanding claims to ownership of land in the community by an

American Indian tribe, band, or nation;

(B) such ownership claims are reasonably likely to be settled, by court action or otherwise; and

(C) fifty or more individual homeowners were joined as

parties defendant or were members of a defendant class prior

to April 1, 1980, in ligitation involving claims to ownership of

land in the community by an American Indian tribe, band,

group, or nation pursuant to a dispute involving the Articles

of Confederation, Trade and Intercourse Act of 1790, or any

similar State or Federal law.

(2) A mortgage shall be eligible for insurance under subsection

(b) of this section as modified by this subsection without regard to

limitations in this title relating to marketability of title, or any

other statutory restriction which the Secretary determines is contrary to the purpose of this subsection, but only if the mortgagor

is an owner of a home in a community specified in paragraph (1).

The Secretary, in connection with any mortgage insured under subsection (b) as modified by this subsection, shall have all statutory

powers, authority, and responsibilities which the Secretary has

with respect to other mortgages insured under subsection (b), except that the Secretary may modify such powers, authority, or responsibilities where the Secretary deems such action to be necessary because of the special nature of the mortgage involved. Notwithstanding section 202 of this title, the insurance of a mortgage

under subsection (b) of this section as modified by this subsection

shall be the obligation of the Special Risk Insurance Fund created

pursuant to section 238 of this title.

(q)(1) Notwithstanding any other provision of this section or

any other section of this title, the Secretary shall insure and commit to insure, under subsection (b) as modified by this subsection,

any mortgage secured by property located on land that—

(A) is within the Allegany Reservation of the Seneca Nation of New York Indians; and

(B) is subject to a lease entered into for a term of 99 years

pursuant to the Act of February 19, 1875 (Chapter 90; 18 Stat.

330) and the Act of September 30, 1890 (Chapter 1132; 26

Stat. 558).

(2) A mortgage shall be eligible for insurance under subsection

(b) as modified by this subsection without regard to limitations in

this title relating to marketability of title or any other statutory re-
Sec. 203 NATIONAL HOUSING ACT 932

striction that the Secretary determines is contrary to the purpose

of this subsection.

(3) The Secretary, in connection with any mortgage insured

under subsection (b) as modified by this subsection, shall have all

statutory powers, authority, and responsibilities that the Secretary

has with respect to other mortgages insured under subsection (b),

except that the Secretary may modify such powers, authority, or responsibilities if the Secretary determines such action to be necessary because of the special nature of the mortgage involved.

(4) Notwithstanding section 202, the insurance of a mortgage

under subsection (b) as modified by this subsection shall be the obligation of the Special Risk Insurance Fund created in section 238.

(r) The Secretary shall take appropriate actions to reduce

losses under the single-family mortgage insurance programs carried out under this title. Such actions shall include—

(1) an annual review by the Secretary of the rate of early

serious defaults and claims, in accordance with section 533;

(2) requiring that at least one person acquiring ownership

of a one- to four-family residential property encumbered by a

mortgage insured under this title be determined to be creditworthy under standards prescribed by the Secretary, whether

or not such person assumes personal liability under the mortgage (except that acquisitions by devise or descent shall not be

subject to this requirement);

(3) in any case where personal liability under a mortgage

is assumed, requiring that the original mortgagor be advised

of the procedures by which he or she may be released from liability; and

(4) providing counseling, either directly or through third

parties, to delinquent mortgagors whose mortgages are insured

under this section 203 (12 U.S.C. 1709), using the Fund to pay

for such counseling.

In any case where the homeowner does not request a release from

liability, the purchaser and the homeowner shall have joint and

several liability for any default for a period of 5 years following the

date of the assumption. After the close of such 5-year period, only

the purchaser shall be liable for any default on the mortgage unless the mortgage is in default at the time of the expiration of the

5-year period.

(s) Whenever the Secretary has taken any discretionary action

to suspend or revoke the approval of any mortgagee to participate

in any mortgage insurance program under this title, the Secretary

shall provide prompt notice of the action and a statement of the

reasons for the action to—

(1) the Secretary of Veterans Affairs;

(2) the chief executive officer of the Federal National Mortgage Association;

(3) the chief executive officer of the Federal Home Loan

Mortgage Corporation;

(4) the Administrator of the Farmers Home Administration;

(5) if the mortgagee is a national bank or District bank, or

a subsidiary or affiliate of such a bank, the Comptroller of the

Currency;
933 Sec. 203 NATIONAL HOUSING ACT

1The date of enactment was November 28, 1990.

(6) if the mortgagee is a State bank that is a member of

the Federal Reserve System or a subsidiary or affiliate of such

a bank, or a bank holding company or a subsidiary or affiliate

of such a company, the Board of Governors of the Federal Reserve System;

(7) if the mortgagee is a State bank that is not a member

of the Federal Reserve System or is a subsidiary or affiliate of

such a bank, the Board of Directors of the Federal Deposit Insurance Corporation; and

(8) if the mortgagee is a Federal or State savings association or a subsidiary or affiliate of a savings association, the Director of the Office of Thrift Supervision.

(t)(1) Each mortgagee (or servicer) with respect to a mortgage

under this section shall provide each mortgagor of such mortgagee

(or servicer) written notice, not less than annually, containing a

statement of the amount outstanding for prepayment of the principal amount of the mortgage and describing any requirements the

mortgagor must fulfill to prevent the accrual of any interest on

such principal amount after the date of any prepayment. This paragraph shall apply to any insured mortgage outstanding on or after

the expiration of the 90-day period beginning on the date of effectiveness of final regulations implementing this paragraph.

(2) Each mortgagee (or servicer) with respect to a mortgage

under this section shall, at or before closing with respect to any

such mortgage, provide the mortgagor with written notice (in such

form as the Secretary shall prescribe, by regulation, before the expiration of the 90-day period beginning upon the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act 1)

describing any requirements the mortgagor must fulfill upon prepayment of the principal amount of the mortgage to prevent the accrual of any interest on the principal amount after the date of such

prepayment. This paragraph shall apply to any mortgage executed

after the expiration of the period under paragraph (1).

(u)(1) No mortgagee may make or hold mortgages insured

under this section if the customary lending practices of the mortgagee, as determined by the Secretary pursuant to section 539, provide for a variation in mortgage charge rates that exceeds 2 percent for insured mortgages made by the mortgagee on dwellings located within an area. The Secretary shall ensure that any permissible variations in the mortgage charge rates of any mortgagee are

based only on actual variations in fees or costs to the mortgagee

to make the loan.

(2) For purposes of this subsection—

(A) the term ‘‘area’’ shall have the meaning given the term

under subsection (b)(2);

(B) the term ‘‘mortgage charges’’ includes the interest rate,

discount points, loan origination fee, and any other amount

charged to a mortgagor with respect to an insured mortgage;

and

(C) the term ‘‘mortgage charge rate’’ means the amount of

mortgage charges for an insured mortgage expressed as a percentage of the initial principal amount of the mortgage.
Sec. 203 NATIONAL HOUSING ACT 934

1Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in part XII of this compilation, provides that certain provisions of

law requiring submittal to Congress of an annual, semiannual, or other regular periodic report

shall cease to be effective on May 15, 2000. This subsection is covered by such provision. However, section 1102 of the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569, set forth post in part XII of this compilation, provides that such section

3003(a)(1) shall not apply to the report required to be submitted under ‘‘section 203(v) of the

National Housing Act, as added by section 504 of the Housing and Community Development

Act of 1992’’. This subsection was added by such section 504, was originally designated as subsection (v) and was subsequently redesignated. 2The date of enactment was October 21, 1998.

(v) Notwithstanding section 202 of this title, the insurance of

a mortgage under this section in connection with the assistance

provided under section 8(y) of the United States Housing Act of

1937 shall be the obligation of the General Insurance Fund created

pursuant to section 519 of this title. The provisions of subsections

(a) through (h), (j), and (k) of section 204 shall apply to such mortgages, except that (1) all references in section 204 to the Mutual

Mortgage Insurance Fund or the Fund shall be construed to refer

to the General Insurance Fund, and (2) any excess amounts described in section 204(f)(1) shall be retained by the Secretary and

credited to the General Insurance Fund. The report required under

this subsection shall include the report required under section

540(c) and the report required under section 205(g).

(w) 1 ANNUAL REPORT.—The Secretary of Housing and Urban

Development shall submit to the Congress an annual report on the

single family mortgage insurance program under this section. Each

report shall set forth—

(1) an analysis of the income groups served by the single

family insurance program, including—

(A) the percentage of borrowers whose incomes do not

exceed 100 percent of the median income for the area;

(B) the percentage of borrowers whose incomes do not

exceed 80 percent of the median income for the area; and

(C) the percentage of borrowers whose incomes do not

exceed 60 percent of the median income for the area;

(2) an analysis of the percentage of minority borrowers annually assisted by the program; the percentage of central city

borrowers assisted and the percentage of rural borrowers assisted by the program;

(3) the extent to which the Secretary in carrying out the

program has employed methods to ensure that needs of low

and moderate income families, underserved areas, and historically disadvantaged groups are served by the program; and

(4) the current impediments to having the program serve

low and moderate income borrowers; borrowers from central

city areas; borrowers from rural areas; and minority borrowers.

(x) MANAGEMENT DEFICIENCIES REPORT.—

(1) IN GENERAL.—Not later than 60 days after the date of

the enactment of this subsection 2, and annually thereafter, the

Secretary shall submit to Congress a report on the plan of the

Secretary to address each material weakness, reportable condition, and noncompliance with an applicable law or regulation

(as defined by the Director of the Office of Management and

Budget) identified in the most recent audited financial state-
935 Sec. 204 NATIONAL HOUSING ACT

1Section 601(a) of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1999, Public Law 105–276, approved October 21,

1998, amended this subsection to read as shown. Section 601(b) of such Act provides as follows:

‘‘(b) EFFECTIVE DATE.—The Secretary shall publish a notice in the Federal Register stating

the effective date of the terms and conditions prescribed by the Secretary under section 204(a)(1)

of the National Housing Act, as amended by subsection (a) of this section. Subsections (a) and

(k) of section 204 of the National Housing Act, as in effect immediately before such effective

date, shall continue to apply to any mortgage insured under section 203 of the National Housing

Act before such effective date, except that the Secretary may, at the request of the mortgagee,

pay insurance benefits as provided in subparagraphs (A) and (D) of section 204(a)(1) of such Act

to calculate insurance benefits in accordance with section 204(a)(5) of such Act.’’.

ment of the Federal Housing Administration submitted under

section 3515 of title 31, United States Code.

(2) CONTENTS OF ANNUAL REPORT.—Each report submitted

under paragraph (1) shall include—

(A) an estimate of the resources, including staff, information systems, and contract assistance, required to address each material weakness, reportable condition, and

noncompliance with an applicable law or regulation described in paragraph (1), and the costs associated with

those resources;

(B) an estimated timetable for addressing each material weakness, reportable condition, and noncompliance

with an applicable law or regulation described in paragraph (1); and

(C) the progress of the Secretary in implementing the

plan of the Secretary included in the report submitted

under paragraph (1) for the preceding year, except that

this subparagraph does not apply to the initial report submitted under paragraph (1).

PAYMENT OF INSURANCE

SEC. 204. ø12 U.S.C. 1710¿ (a) 1 IN GENERAL.— (1) AUTHORIZED CLAIMS PROCEDURES.—The Secretary may,

in accordance with this subsection and terms and conditions

prescribed by the Secretary, pay insurance benefits to a mortgagee for any mortgage insured under section 203 through any

of the following methods:

(A) ASSIGNMENT OF MORTGAGE.—The Secretary may

pay insurance benefits whenever a mortgage has been in

a monetary default for not less than 3 full monthly installments or whenever the mortgagee is entitled to foreclosure

for a nonmonetary default. Insurance benefits shall be

paid pursuant to this subparagraph only upon the assignment, transfer, and delivery to the Secretary of—

(i) all rights and interests arising under the mortgage;

(ii) all claims of the mortgagee against the mortgagor or others arising out of the mortgage transaction;

(iii) title evidence satisfactory to the Secretary;

and

(iv) such records relating to the mortgage transaction as the Secretary may require.

(B) CONVEYANCE OF TITLE TO PROPERTY.—The Secretary may pay insurance benefits if the mortgagee has acquired title to the mortgaged property through foreclosure
Sec. 204 NATIONAL HOUSING ACT 936

1 Indented so in law.

or has otherwise acquired such property from the mortgagor after a default upon—

(i) the prompt conveyance to the Secretary of title

to the property which meets the standards of the Secretary in force at the time the mortgage was insured

and which is evidenced in the manner provided by

such standards; and

(ii) the assignment to the Secretary of all claims

of the mortgagee against the mortgagor or others, arising out of mortgage transaction or foreclosure proceedings, except such claims as may have been released with the consent of the Secretary.

The Secretary may permit the mortgagee to tender to the

Secretary a satisfactory conveyance of title and transfer of

possession directly from the mortgagor or other appropriate grantor, and may pay to the mortgagee the insurance benefits to which it would otherwise be entitled if

such conveyance had been made to the mortgagee and

from the mortgagee to the Secretary.

(C) CLAIM WITHOUT CONVEYANCE OF TITLE.—The Secretary may pay insurance benefits upon sale of the mortgaged property at foreclosure where such sale is for at

least the fair market value of the property (with appropriate adjustments), as determined by the Secretary, and

upon assignment to the Secretary of all claims referred to

in clause (ii) of subparagraph (B).

(D) PREFORECLOSURE SALE.—The Secretary may pay

insurance benefits upon the sale of the mortgaged property

by the mortgagor after default and the assignment to the

Secretary of all claims referred to in clause (ii) of subparagraph (B), if—

(i) the sale of the mortgaged property has been approved by the Secretary;

(ii) the mortgagee receives an amount at least

equal to the fair market value of the property (with

appropriate adjustments), as determined by the Secretary; and

(iii) the mortgagor has received an appropriate

disclosure, as determined by the Secretary.

(2) 1 PAYMENT FOR LOSS MITIGATION.—The Secretary may pay

insurance benefits to the mortgagee to recompense the mortgagee

for all or part of any costs of the mortgagee for taking loss mitigation actions that provide an alternative to foreclosure of a mortgage

that is in default (including but not limited to actions such as special forbearance, loan modification, and deeds in lieu of foreclosure,

but not including assignment of mortgages to the Secretary under

section 204(a)(1)(A)). No actions taken under this paragraph, nor

any failure to act under this paragraph, by the Secretary or by a

mortgagee shall be subject to judicial review.

(3) DETERMINATION OF CLAIMS PROCEDURE.—The Secretary

shall publish guidelines for determining which of the procedures for payment of insurance under paragraph (1) are available to a mortgagee when it claims insurance benefits. At least
937 Sec. 204 NATIONAL HOUSING ACT

one of the procedures for payment of insurance benefits specified in paragraph (1)(A) or (1)(B) shall be available to a mortgagee with respect to a mortgage, but the same procedure shall

not be required to be available for all of the mortgages held by

a mortgagee.

(4) SERVICING OF ASSIGNED MORTGAGES.—If a mortgage is

assigned to the Secretary under paragraph (1)(A), the Secretary may permit the assigning mortgagee or its servicer to

continue to service the mortgage for reasonable compensation

and on terms and conditions determined by the Secretary. Neither the Secretary nor any servicer of the mortgage shall be required to forbear from collection of amounts due under the

mortgage or otherwise pursue loss mitigation measures.

(5) CALCULATION OF INSURANCE BENEFITS.—Insurance benefits shall be paid in accordance with section 520 and shall be

equal to the original principal obligation of the mortgage (with

such additions and deductions as the Secretary determines are

appropriate) which was unpaid upon the date of—

(A) assignment of the mortgage to the Secretary;

(B) the institution of foreclosure proceedings;

(C) the acquisition of the property after default other

than by foreclosure; or

(D) sale of the mortgaged property by the mortgagor.

(6) FORBEARANCE AND RECASTING AFTER DEFAULT.—The

mortgagee may, upon such terms and conditions as the Secretary may prescribe—

(A) extend the time for the curing of the default and

the time for commencing foreclosure proceedings or for

otherwise acquiring title to the mortgaged property, to

such time as the mortgagee determines is necessary and

desirable to enable the mortgagor to complete the mortgage payments, including an extension of time beyond the

stated maturity of the mortgage, and in the event of a subsequent foreclosure or acquisition of the property by other

means the Secretary may include in the amount of insurance benefits an amount equal to any unpaid mortgage interest; or

(B) provide for a modification of the terms of the mortgage

for the purpose of recasting, over the remaining term of the

mortgage or over such longer period pursuant to guidelines as

may be prescribed by the Secretary, the total unpaid amount

then due, with the modification to become effective currently or

to become effective upon the termination of an agreed-upon extension of the period for curing the default; and the principal

amount of the mortgage, as modified, shall be considered the

‘‘original principal obligation of the mortgage’’ for purposes of

paragraph (5).

(7) TERMINATION OF PREMIUM OBLIGATION.—The obligation

of the mortgagee to pay the premium charges for insurance

shall cease upon fulfillment of the appropriate requirements

under which the Secretary may pay insurance benefits, as described in paragraph (1). The Secretary may also terminate the

mortgagee’s obligation to pay mortgage insurance premiums

upon receipt of an application filed by the mortgagee for insur-
Sec. 204 NATIONAL HOUSING ACT 938

1September 2, 1964.

ance benefits under paragraph (1), or in the event the contract

of insurance is terminated pursuant to section 229.

(8) EFFECT ON PAYMENT OF INSURANCE BENEFITS UNDER

SECTION 230.—Nothing in this section shall limit the authority

of the Secretary to pay insurance benefits under section 230.

(9) TREATMENT OF MORTGAGE ASSIGNMENT PROGRAM.—Notwithstanding any other provision of law, or the Amended Stipulation entered as a consent decree on November 8, 1979, in

Ferrell v. Cuomo, No. 73 C 334 (N.D. Ill.), or any other order

intended to require the Secretary to operate the program of

mortgage assignment and forbearance that was operated by

the Secretary pursuant to the Amended Stipulation and under

the authority of section 230, prior to its amendment by section

407(b) of The Balanced Budget Downpayment Act, I (Public

Law 104–99; 110 Stat. 45), no mortgage assigned under this

section may be included in any mortgage foreclosure avoidance

program that is the same or substantially equivalent to such

a program of mortgage assignment and forbearance.

(b) The Secretary may at any time, under such terms and conditions as he may prescribe, consent to the release of the mortgagor

from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged

property from the lien of the mortgage.

(c) Debentures issued under this section—

(1) shall be in such form and amounts;

(2) shall be subject to such terms and conditions;

(3) shall include such provisions for redemption, if any, as

may be prescribed by the Secretary of Housing and Urban Development, with the approval of the Secretary of the Treasury;

and

(4) may be in book entry or certificated registered form, or

such other form as the Secretary of Housing and Urban Development may prescribe in regulations.

(d) The debentures issued under this section to any mortgagee

with respect to mortgages insured under section 203 shall be issued

in the name of the Mutual Mortgage Insurance Fund as obligor

and shall be negotiable, and, if in book entry form, transferable, in

the manner described by the Secretary in regulations. All such debentures shall be dated as of the date foreclosure proceedings were

instituted, or the property was otherwise acquired by the mortgagee after default: Provided, That debentures issued pursuant to

claims for insurance filed on or after the date of enactment of the

Housing Act of 1964 1 shall be dated as of the date of default or

as of such later date as the Secretary, in his discretion, may establish by regulation. The debentures shall bear interest from such

date at a rate established by the Secretary pursuant to section 224,

payable semiannually on the 1st day of January and the 1st day

of July of each year, and shall mature twenty years after the date

thereof. Such debentures as are issued in exchange for property

covered by mortgages insured under section 203 or section 207

prior to the date of enactment of the National Housing Act Amendments of 1938 shall be subject only to such Federal, State, and

local taxes as the mortgages in exchange for which they are issued
939 Sec. 204 NATIONAL HOUSING ACT

1September 2, 1964.

would be subject to in the hands of the holder of the debentures

and shall be a liability of the Mutual Mortgage Insurance Fund,

but such debentures shall be fully and unconditionally guaranteed

as to principal and interest by the United States; but any mortgagee entitled to receive any such debentures may elect to receive

in lieu thereof a cash adjustment and debentures issued as hereinafter provided and bearing the current rate of interest. Such debentures as are issued in exchange for property covered by mortgages

insured after the date of enactment of the National Housing Act

Amendments of 1938 shall be exempt, both as to principal and interest, from all taxation (except surtax, estate, inheritance, and gift

taxes) now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county,

municipality, or local taxing authority; and such debentures shall

be paid out of the Mutual Mortgage Insurance Fund, which shall

be primarily liable therefor, and they shall be fully and unconditionally guaranteed as to principal and interest by the United

States, and, in the case of debentures issued in certificated registered form, such guaranty shall be expressed on the face of the

debentures. In the event that the Mutual Mortgage Insurance

Fund fails to pay upon demand, when due, the principal of or interest on any debentures issued under this section, the Secretary of

the Treasury shall pay to the holders the amount thereof which is

hereby authorized to be appropriated, out of any money in the

Treasury not otherwise appropriated, and thereupon to the extent

of the amount so paid the Secretary of the Treasury shall succeed

to all the rights of the holders of such debentures.

(e)(1) Subject to paragraph (2) the certificate of claim issued by

the Secretary to any mortgagee shall be for an amount which the

Secretary determines to be sufficient, when added to the face value

of the debentures issued and the cash adjustment paid to the mortgagee, to equal the amount which the mortgagee would have received if, at the time of the conveyance to the Secretary of the property covered by the mortgage, the mortgagor had redeemed the

property and paid in full all obligations under the mortgage and a

reasonable amount for necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and the conveyance

thereof to the Secretary. Each such certificate of claim shall provide that there shall accrue to the holder of such certificate with

respect to the face amount of such certificate an increment at the

rate of 3 per centum per annum which shall not be compounded.

The amount to which the holder of any such certificate shall be entitled shall be determined as provided in subsection (f).

(2) A certificate of claim shall not be issued and the provisions

of paragraph (1) of this subsection shall not be applicable in the

case of a mortgage accepted for insurance pursuant to a commitment issued on or after the date of enactment of the Housing Act

of 1964.1

(f)(1) If, after deducting (in such manner and amount as the

Secretary shall determine to be equitable and in accordance with

sound accounting practice) the expenses incurred by the Secretary,

the net amounts realized from any property conveyed to the Sec-
Sec. 204 NATIONAL HOUSING ACT 940

1 August 11, 1955.

retary under this section and the claims assigned therewith exceed

the face value of the debentures issued and the cash paid in exchange for such property plus all interest paid on such debentures,

such excess shall be divided as follows:

(i) If such excess is greater than the total amount payable

under the certificate of claim issued in connection with such

property, the Secretary shall pay to the holder of such certificate the full amount so payable, and any excess remaining

thereafter shall be paid to the mortgagor of such property if

the mortgage was insured under section 203: Provided, That on

and after the date of enactment of the Housing Act of 1964,1

any excess remaining after payment to the holder of the full

amount of the certificate of claim, together with the accrued interest increment thereon, shall be retained by the Secretary

and credited to the applicable insurance fund; and

(ii) If such excess is equal to or less than the total amount

payable under such certificate of claim, the Secretary shall pay

to the holder of such certificate the full amount of such excess.

(2) Notwithstanding any other provisions of this section, the

Secretary is authorized with respect to mortgages insured pursuant

to commitments for insurance issued after the date of enactment

of the Housing Amendments of 1955,1 and, with the consent of the

mortgagee or mortgagor, as the case may be, with respect to mortgages insured pursuant to commitments issued prior to such date,

to effect the settlement of certificates of claim and refunds to mortgagors at any time after the sale or transfer of title to the property

conveyed to the Secretary under this section and without awaiting

the final liquidation of such property for the purpose of determining the net amount to be realized therefrom: Provided, That the

settlement authority created by the Housing Amendments of 1955

shall be terminated with respect to any certificates of claim outstanding as of the date of enactment of the Housing Act of 1964.

(3) With the consent of the holder thereof, the Secretary is authorized, without awaiting the final liquidation of the Secretary’s

interest in the property, to settle any certificate of claim issued

pursuant to subsection (e), with respect to which settlement had

not been effected prior to the date of enactment of the Housing Act

of 1964, by making payment in cash to the holder thereof of such

amount not exceeding the face amount of the certificate of claim,

together with the accrued interest thereon, as the Secretary may

consider appropriate: Provided, That in any case where the certificate of claim is settled in accordance with the provisions of this

paragraph, any amounts realized after the date of enactment of the

Housing Act of 1964, in the liquidation of the Secretary’s interest

in the property, shall be retained by the Secretary and credited to

the applicable insurance fund.

(g) Notwithstanding any other provision of law relating to the

acquisition, handling, or disposal of real property by the United

States, the Secretary shall have power to deal with, complete, rent,

renovate, modernize, insure, or sell for cash or credit, in his discretion, any properties conveyed to him in exchange for debentures

and certificates of claim as provided in this section; and notwithstanding any other provision of law, the Secretary shall also have
941 Sec. 204 NATIONAL HOUSING ACT

1This subsection was added by section 602 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999, Pub. L. 105–

276, approved October 21, 1998. Section 1303 of the 2002 Supplemental Appropriations Act for

Further Recovery From and Response To Terrorist Attacks on the United States, Pub. L. 107–

206, approved August 2, 2002, provides, in part, that ‘‘[t]he Secretary of Housing and Urban

Development shall begin to enter into new agreements and contracts pursuant to the Asset Control Area Demonstration Program as provided in section 602 of Public Law 105–276 not later

than September 15, 2002: Provided, That any agreement or contract entered into pursuant to

such program shall be consistent with the requirements of such section 602’’.

power to pursue to final collection, by way of compromise or otherwise, all claims against mortgagors assigned by mortgagees to the

Secretary as provided in this section: Provided, That section 3709

of the Revised Statutes shall not be construed to apply to any contract for hazard insurance, or to any purchase or contract for services or supplies on account of such property if the amount thereof

does not exceed $1,000. The Secretary shall, by regulation, carry

out a program of sales of such properties and shall develop and implement appropriate credit terms and standards to be used in carrying out the program. The power to convey and to execute in the

name of the Secretary deeds of conveyance, deeds of release, assignments and satisfactions of mortgages, and any other written instrument relating to real or personal property or any interest

therein heretofore or hereafter acquired by the Secretary pursuant

to the provisions of this Act, may be exercised by an officer appointed by him, without the execution of any express delegation of

power or power of attorney: Provided, That nothing in this subsection shall be construed to prevent the Secretary from delegating

such power by order or by power of attorney, in his discretion, to

any officer, agent, or employee he may appoint: And provided further, That a conveyance or transfer of title to real or personal property or an interest therein to the Secretary of Housing and Urban

Development, his successors and assigns, without identifying the

Secretary therein, shall be deemed a proper conveyance or transfer

to the same extent and of like effect as if the Secretary were personally named in such conveyance or transfer. The Secretary may

sell real and personal property acquired by the Secretary pursuant

to the provisions of this Act on such terms and conditions as the

Secretary may prescribe.

(h) DISPOSITION OF ASSETS IN REVITALIZATION AREAS.— 1

(1) IN GENERAL.—The purpose of this subsection is to require the Secretary to carry out a program under which eligible assets (as such term is defined in paragraph (2)) shall be

made available for sale in a manner that promotes the revitalization, through expanded homeownership opportunities, of revitalization areas. Notwithstanding the authority under the

last sentence of subsection (g), the Secretary shall dispose of

all eligible assets under the program and shall establish the

program in accordance with the requirements under this subsection.

(2) ELIGIBLE ASSETS.—For purposes of this subsection, the

term ‘‘eligible asset’’ means any of the following assets of the

Secretary:

(A) PROPERTIES.—Any property that—

(i) is designed as a dwelling for occupancy by 1 to

4 families;

(ii) is located in a revitalization area;
Sec. 204 NATIONAL HOUSING ACT 942

1Section 142 of the Community Renewal Tax Relief Act of 2000 (H.R. 5662, as introduced in

the 106th Congress, enacted by section 1(a)(7) of the Consolidated Appropriations Act, 2001,

Pub. L. 106–554) provides as follows:

‘‘SEC. 142. TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS.

‘‘In carrying out the program under section 204(h) of the National Housing Act (12 U.S.C.

1710(h)), upon the request of the chief executive officer of a county or the government of appropriate jurisdiction and not later than 60 days after such request is made, the Secretary of Housing and Urban Development shall designate as a revitalization area all portions of such county

that meet the criteria for such designation under paragraph (3) of such section.’’.

(iii) was previously subject to a mortgage insured

under the provisions of this Act; and

(iv) is owned by the Secretary pursuant to the

payment of insurance benefits under this Act.

(B) MORTGAGES.—Any mortgage that—

(i) is an interest in a property that meets the requirements of clauses (i) and (ii) of subparagraph (A);

(ii) was previously insured under the provisions of

this Act; and

(iii) is held by the Secretary pursuant to the payment of insurance benefits under this Act.

For purposes of this subsection, an asset under this subparagraph shall be considered to be located in a revitalization area, or in the asset control area of a preferred purchaser, if the property described in clause (i) is located in

such area.

(C) FUTURE INTERESTS.—Any contingent future interest of the Secretary in an asset described in subparagraph

(A) or (B).

(3) REVITALIZATION AREAS.—The Secretary shall designate

areas as revitalization areas for purposes of this subsection.

Before designation of an area as a revitalization area, the Secretary shall consult with affected units of general local government and interested nonprofit organizations. The Secretary

may designate as revitalization areas only areas that meet one

of the following requirements: 1

(A) VERY-LOW INCOME AREA.—The median household

income for the area is less than 60 percent of the median

household income for—

(i) in the case of any area located within a metropolitan area, such metropolitan area; or

(ii) in the case of any area not located within a

metropolitan area, the State in which the area is located.

(B) HIGH CONCENTRATION OF ELIGIBLE ASSETS.—A

high rate of default or foreclosure for single family mortgages insured under the National Housing Act has resulted, or may result, in the area—

(i) having a disproportionately high concentration

of eligible assets, in comparison with the concentration

of such assets in surrounding areas; or

(ii) being detrimentally impacted by eligible assets

in the vicinity of the area.

(C) LOW HOME OWNERSHIP RATE.—The rate for home

ownership of single family homes in the area is substantially below the rate for homeownership in the metropolitan area.
943 Sec. 204 NATIONAL HOUSING ACT

(4) PREFERENCE FOR SALE TO PREFERRED PURCHASERS.—

The Secretary shall provide a preference, among prospective

purchasers of eligible assets, for sale of such assets to any purchaser who—

(A) is—

(i) the unit of general local government having jurisdiction with respect to the area in which are located

the eligible assets to be sold; or

(ii) a nonprofit organization;

(B) in making a purchase under the program under

this subsection—

(i) establishes an asset control area, which shall

be an area that consists of part or all of a revitalization area; and

(ii) purchases all interests of the Secretary in all

assets of the Secretary that, at any time during the

period which shall be set forth in the sale agreement

required under paragraph (7)—

(I) are or become eligible assets; and

(II) are located in the asset control area of the

purchaser; and

(C) has the capacity to carry out the purchase of eligible assets under the program under this subsection and

under the provisions of this paragraph.

(5) AGREEMENTS REQUIRED FOR PURCHASE.—

(A) PREFERRED PURCHASERS.—Under the program

under this subsection, the Secretary may sell an eligible

asset as provided in paragraph (4) to a preferred purchaser

only pursuant to a binding agreement by the preferred

purchaser that the eligible asset will be used in conjunction with a home ownership plan that provides as follows:

(i) The plan has as its primary purpose the expansion of home ownership in, and the revitalization of,

the asset control area, established pursuant to paragraph (4)(B)(i) by the purchaser, in which the eligible

asset is located.

(ii) Under the plan, the preferred purchaser has

established, and agreed to meet, specific performance

goals for increasing the rate of home ownership for eligible assets in the asset control area that are under

the purchaser’s control. The plan shall provide that

the Secretary may waive or modify such goals or deadlines only upon a determination by the Secretary that

a good faith effort has been made in complying with

the goals through the homeownership plan and that

exceptional neighborhood conditions prevented attainment of the goal.

(iii) Under the plan, the preferred purchaser has

established rehabilitation standards that meet or exceed the standards for housing quality established

under subparagraph (B)(iii) by the Secretary, and has

agreed that each asset property for an eligible asset

purchased will be rehabilitated in accordance with

such standards.
Sec. 204 NATIONAL HOUSING ACT 944

1So in law.

(B) NON-PREFERRED PURCHASERS.—Under the program

under this subsection, the Secretary may sell an eligible

asset to a purchaser who is not a preferred purchaser only

pursuant to a binding agreement by the purchaser that

complies with the following requirements:

(i) The purchaser has agreed to meet specific performance goals established by the Secretary for home

ownership of the asset properties for the eligible assets purchased by the purchaser, except that the Secretary may, by including a provision in the sale agreement required under paragraph (7), provide for a

lower rate of home ownership in sales involving exceptional circumstances.

(ii) The purchaser has agreed that each asset

property for an eligible asset purchased will be rehabilitated to comply with minimum standards for housing quality established by the Secretary for purposes

of the program under this subsection.

(6) DISCOUNT FOR PREFERRED PURCHASERS.—

(A) IN GENERAL.—For the purpose of providing a public purpose discount for the bulk sales of eligible assets

made under the program under this subsection by preferred purchasers, each eligible asset sold through the program under this subsection to a preferred purchaser shall

be sold at a price that is discounted from the value of the

asset, as based on the appraised value of the asset property (as such term is defined in paragraph (8)).

(B) APPRAISALS.—The Secretary shall require that

each appraisal of an eligible asset under this paragraph is

based upon—

(i) the market value of the asset property in its

‘‘as is’’ physical condition, which shall take into consideration age and condition of major mechanical and

structural systems; and

(ii) the value of the property appraised for home

ownership.

(C) DISCOUNT CLASSES.—The Secretary, in the sole discretion of the Secretary, shall establish the discount under

this paragraph for an eligible asset, which shall be in one

of the following amounts:

(i) STANDARD DISCOUNT.—In the case only of eligible assets with asset properties that, at the time of

sale under this subsection, do not meet the standards

for housing quality established pursuant to paragraph

(5)(B)(ii), an amount that—

(I) is appropriate to provide reasonable resources for the improvement 1 such assets; and

(II) takes into consideration the financial safety and soundness of the Mutual Mortgage Insurance Fund.

(ii) DEEP DISCOUNT.—In the case only of eligible

assets described in clause (i) for which the Secretary

determines a deep discount is appropriate, an amount
945 Sec. 204 NATIONAL HOUSING ACT

1So in law.

that exceeds the amount of a standard discount under

clause (i). In making a determination whether a deep

discount is appropriate, the Secretary may consider

the condition of the asset property, the extent of resources available to the preferred purchaser, the comprehensive revitalization plan undertaken by such

purchaser, or any other circumstances the Secretary

considers appropriate.

(iii) MINIMAL DISCOUNT.—In the case only of eligible assets with asset properties that, at the time of

sale under this subsection, meet or substantially meet

the standards for housing quality established pursuant to paragraph (5)(B)(ii), an amount that is less than

the amount of a standard discount under clause (i) of

this subparagraph and is sufficient to provide assistance to the preferred purchaser in meeting costs associated with compliance with the program requirements

under this subsection.

(D) DETERMINATION OF DISCOUNT CLASS.—The Secretary shall, in the sole discretion of the Secretary, establish a method for determining which discount under clause

(i) or (ii) 1 subparagraph (C) shall be provided for an eligible asset that is described in such clause (i) and sold to a

preferred purchaser. The method may result in the assignment of discounts on any basis consistent with subparagraph (C) that the Secretary considers appropriate to carry

out the purposes of this subsection.

(7) SALE AGREEMENT.—The Secretary may sell an eligible

asset under this subsection only pursuant to a sale agreement

entered into under this paragraph with the purchaser, which

shall include the following provisions:

(A) ASSETS.—The sale agreement shall identify the eligible assets to be purchased and the interests sold.

(B) REVITALIZATION AREA AND ASSET CONTROL AREA.— The sale agreement shall identify—

(i) the boundaries of the specific revitalization

areas (or portions thereof) in which are located the eligible assets that are covered by the agreement; and

(ii) in the case of a preferred purchaser, the asset

control area established pursuant to paragraph

(4)(B)(i) that is covered by the agreement.

(C) FINANCING.—The sale agreement shall identify the

sources of financing for the purchase of the eligible assets.

(D) BINDING AGREEMENTS.—The sale agreement shall

contain binding agreements by the purchaser sufficient to

comply with—

(i) in the case of a preferred purchaser, the requirements under paragraph (5)(A), which agreements

shall provide that the eligible assets purchased will be

used in conjunction with a home ownership plan meeting the requirements of such paragraph, and shall set

forth the terms of the homeownership plan,

including—
Sec. 204 NATIONAL HOUSING ACT 946

(I) the goals of the plan for the eligible assets

purchased and for the asset control area subject to

the plan;

(II) the revitalization areas (or portions thereof) in which the homeownership plan is operating

or will operate;

(III) the specific use or disposition of the eligible assets under the plan; and

(IV) any activities to be conducted and services to be provided under the plan; or

(ii) in the case of a purchaser who is not a preferred purchaser, the requirements under paragraph

(5)(B).

(E) PURCHASE PRICE AND DISCOUNT.—The sale agreement shall establish the purchase price of the eligible assets, which in the case of a preferred purchaser shall provide for a discount in accordance with paragraph (6).

(F) HOUSING QUALITY.—The sale agreement shall provide for compliance of the eligible assets purchased with

the rehabilitation standards established under paragraph

(5)(A)(iii) or the minimum standards for housing quality

established under paragraph (5)(B)(ii), as applicable, and

shall specify such standards.

(G) PERFORMANCE GOALS AND SANCTIONS.—The sale

agreement shall set forth the specific performance goals

applicable to the purchaser, in accordance with paragraph

(5), shall set forth any sanctions for failure to meet such

goals and deadlines, and shall require the purchaser to

certify compliance with such goals.

(H) PERIOD COVERED.—The sale agreement shall

establish—

(i) in the case of a preferred purchaser, the time

period referred to in paragraph (4)(B)(ii); and

(ii) in the case of a purchaser who is not a preferred purchaser, the time period for purchase of eligible assets that may be covered by the purchase.

(I) OTHER TERMS.—The agreement shall contain such

other terms and conditions as may be necessary to require

that eligible assets purchased under the agreement are

used in accordance with the program under this subsection.

(8) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

(A) ASSET CONTROL AREA.—The term ‘‘asset control

area’’ means the area established by a preferred purchaser

pursuant to paragraph (4)(B)(i).

(B) ASSET PROPERTY.—The term ‘‘asset property’’

means—

(i) with respect to an eligible asset that is a property, such property; and

(ii) with respect to an eligible asset that is a mortgage, the property that is subject to the mortgage.

(C) ELIGIBLE ASSET.—The term ‘‘eligible asset’’ means

an asset described in paragraph (2).
947 Sec. 204 NATIONAL HOUSING ACT

1This subsection was added by section 602 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, Pub. L. 105–276,

approved October 21, 1998. Section 1303 of the 2002 Supplemental Appropriations Act for Further Recovery From and Response To Terrorist Attacks on the United States, Pub. L. 107–206,

approved August 2, 2002, provides, in part, that ‘‘[t]he Secretary of Housing and Urban Development shall begin to enter into new agreements and contracts pursuant to the Asset Control Area

Demonstration Program as provided in section 602 of Public Law 105–276 not later than September 15, 2002 . . . Provided further, That the Department shall develop proposed regulations

for this program not later than September 15, 2002.’’.

(D) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit

organization’’ means a private organization that—

(i) is organized under State or local laws;

(ii) has no part of its net earnings inuring to the

benefit of any member, shareholder, founder, contributor, or individual; and

(iii) complies with standards of financial responsibility that the Secretary may require.

(E) PREFERRED PURCHASER.—The term ‘‘preferred purchaser’’ means a purchaser described in paragraph (4).

(F) UNIT OF GENERAL LOCAL GOVERNMENT.—The term

‘‘unit of general local government’’ means any city, town,

township, county, parish, village, or other general purpose

political subdivision of a State.

(9) SECRETARY’S DISCRETION.—The Secretary shall have

the authority to implement and administer the program under

this subsection in such manner as the Secretary may determine. The Secretary may, in the sole discretion of the Secretary, enter into contracts to provide for the proper administration of the program with such public or nonprofit entities as

the Secretary determines are qualified.

(10) REGULATIONS.—The Secretary shall issue regulations

to implement the program under this subsection through rulemaking in accordance with the procedures established under

section 553 of title 5, United States Code, regarding substantive rules. Such regulations shall take effect not later than

the expiration of the 2-year period beginning on the date of the

enactment of the Departments of Veterans Affairs and Housing

and Urban Development, and Independent Agencies Appropriations Act, 1999. 1

(i) No mortgagee or mortgagor shall have, and no certificate of

claim shall be construed to give to any mortgagee or mortgagor,

any right or interest in any property conveyed to the Secretary or

in any claim assigned to him; nor shall the Secretary owe any duty

to any mortgagee or mortgagor with respect to the handling or disposal of any such property or the collection of any such claim.

(j) In the event that any mortgagee under a mortgage insured

under section 203 (other than a mortgagee receiving insurance benefits under clause (1)(A) of the second sentence of subsection (a))

forecloses on the mortgaged property but does not convey such

property to the Secretary in accordance with this section, and the

Secretary is given written notice thereof, or in the event that the

mortgagor pays the obligation under the mortgage in full prior to

the maturity thereof, and the mortgagee pays any adjusted premium charged required under the provisions of section 203(c), and

the Secretary is given written notice by the mortgagee of the payment of such obligation, the obligation to pay any subsequent pre-
Sec. 204 NATIONAL HOUSING ACT 948

1Section 601(c) of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1999, Public Law 105–276, approved October 21,

1998, repealed this subsection. Section 601(b) of such Act provides as follows:

‘‘(b) EFFECTIVE DATE.—The Secretary shall publish a notice in the Federal Register stating

the effective date of the terms and conditions prescribed by the Secretary under section 204(a)(1)

of the National Housing Act, as amended by subsection (a) of this section. Subsections (a) and

(k) of section 204 of the National Housing Act, as in effect immediately before such effective

date, shall continue to apply to any mortgage insured under section 203 of the National Housing

Act before such effective date, except that the Secretary may, at the request of the mortgagee,

pay insurance benefits as provided in subparagraphs (A) and (D) of section 204(a)(1) of such Act

to calculate insurance benefits in accordance with section 204(a)(5) of such Act.’’.

mium charge for insurance shall cease, and all rights of the mortgagee and the mortgagor under this section shall terminate as of

the date of such notice.

ø(k) [Repealed.]¿ 1

(l)(1) Whenever the Secretary or a contract mortgagee (pursuant to its contract with the Secretary) forecloses on a Secretaryheld single family mortgage in any Federal or State court or pursuant to a power of sale in a mortgage, the purchaser at the foreclosure sale shall be entitled to receive a conveyance of title to, and

possession of, the property, subject to the interests senior to the interests of the Secretary or the contract mortgagee, as the case may

be. Notwithstanding any State law to the contrary, there shall be

no right of redemption (including in all instances any right to possession based upon any right of redemption) in the mortgagor or

any other person subsequent to the foreclosure sale in connection

with a Secretary-held single family mortgage. The appropriate

State official or the trustee, as the case may be, shall execute and

deliver a deed or other appropriate instrument conveying title to

the purchaser at the foreclosure sale, consistent with applicable

procedures in the jurisdiction and without regard to any such right

of redemption.

(2) The following actions shall be taken in order to verify title

in the purchaser at the foreclosure sale:

(A) In the case of a judicial foreclosure in any Federal or

State court, there shall be included in the petition and in the

judgment of foreclosure a statement that the foreclosure is in

accordance with this subsection and that there is no right of

redemption in the mortgagor or any other person.

(B) In the case of a foreclosure pursuant to a power of sale

provision in the mortgage, the statement required in subparagraph (A) shall be included in the advertisement of the sale

and either in the recitals of the deed or other appropriate instrument conveying title to the purchaser at the foreclosure

sale or in an affidavit or addendum to the deed.

(3) For purposes of this subsection:

(A) The term ‘‘contract mortgagee’’ means a person or entity under a contract with the Secretary that provides for the assignment of a single-family mortgage from the Secretary to the

person or entity for the purpose of pursuing foreclosure.

(B) the term ‘‘mortgage’’ means a deed of trust, mortgage,

deed to secure debt, security agreement, or any other form of

instrument under which any interest in property, real, personal, or mixed, or any interest in property, including leaseholds, life estates, reversionary interests, and any other estates

under applicable State law, is conveyed in trust, mortgaged,

encumbered, pledged, or otherwise rendered subject to a lien,
949 Sec. 205 NATIONAL HOUSING ACT

for the purpose of securing the payment of money or the performance of an obligation.

(C) The term ‘‘Secretary-held single family mortgage’’

means a single-family mortgage held by the Secretary or by a

contract mortgagee at the time of initiation of foreclosure

that—

(i) was formerly insured by the Secretary under any

section of this title; or

(ii) was taken by the Secretary as a purchase money

mortgage in connection with the sale or other transfer of

Secretary-owned property under any section of this title.

(D) The term ‘‘single-family mortgage’’ means a mortgage that covers property on which is located a 1-to-4 family

residence.

CLASSIFICATION OF MORTGAGES AND INSURANCE FUND

SEC. 205. ø12 U.S.C. 1711¿ (a) The Secretary shall establish as

of July 1, 1954, in the Mutual Mortgage Insurance Fund a General

Surplus Account and a Participating Reserve Account. All of the assets of the General Reinsurance Account shall be transferred to the

General Surplus Account whereupon the General Reinsurance Account shall be abolished. There shall be transferred from the various group accounts to the Participating Reserve Account as of July

1, 1954, an amount equal to the aggregate amount which would

have been distributed under the provisions of section 205 in effect

on June 30, 1954, if all outstanding mortgages in such group accounts had been paid in full on said date. All of the remaining balances of said group accounts shall as of said date be transferred to

the General Surplus Account whereupon all of said group accounts

shall be abolished.

(b) The aggregate net income thereafter received or any net

loss thereafter sustained by the Mutual Mortgage Insurance Fund

in any semiannual period shall be credited or charged to the General Surplus Account and/or the Participating Reserve Account in

such manner and amounts as the Secretary may determine to be

in accord with sound actuarial and accounting practice.

(c) Upon termination of the insurance obligation of the Mutual

Mortgage Insurance Fund by payment of any mortgage insured

thereunder, the Secretary is authorized to distribute to the mortgagor a share of the Participating Reserve Account in such manner

and amount as the Secretary shall determine to be equitable and

in accordance with sound actuarial and accounting practice: Provided, That, in no event, shall any such distributable share exceed

the aggregate scheduled annual premiums of the mortgagor to the

year of termination of the insurance. The Secretary shall not distribute any share to an eligible mortgagor under this subsection beginning on the date which is 6 years after the date the Secretary

first transmitted written notification of eligibility to the last known

address of the mortgagor, unless the mortgagor has applied in accordance with procedures prescribed by the Secretary for payment

of the share within the 6-year period. The Secretary shall transfer

any amounts no longer eligible for distribution under the previous

sentence from the Participating Reserve Account to the General

Surplus Account.
Sec. 205 NATIONAL HOUSING ACT 950

1The date of enactment was November 5, 1990.

2Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in part XII of this compilation, provides that certain provisions of

law requiring submittal to Congress of an annual, semiannual, or other regular periodic report

shall cease to be effective on May 15, 2000. This subsection is covered by such provision. However, section 1102 of the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569, set forth post in part XII of this compilation, provides that such section

3003(a)(1) shall not apply to the report required to be submitted under this subsection.

(d) No mortgagor or mortgagee of any mortgage insured under

section 203 shall have any vested right in a credit balance in any

such account or be subject to any liability arising out of the mutuality of the Fund and the determination of the Secretary as to the

amount to be paid by him to any mortgagor shall be final and conclusive.

(e) In determining whether there is a surplus for distribution

to mortgagors under this section, the Secretary shall take into account the actuarial status of the entire Fund.

(f)(1) The Secretary shall ensure that the Mutual Mortgage Insurance Fund attains a capital ratio of not less than 1.25 percent

within 24 months after the date of the enactment of this subsection 1 and maintains such ratio thereafter, subject to paragraph

(2).

(2) The Secretary shall endeavor to ensure that the Mutual

Mortgage Insurance Fund attains a capital ratio of not less than

2.0 percent within 10 years after the date of the enactment of this

subsection 2, and shall ensure that the Fund maintains at least

such capital ratio at all times thereafter.

(3) Upon the expiration of the 24-month period beginning on

the date of the enactment of this subsection 2, the Secretary shall

submit to the Congress a report describing the actions the Secretary will take to ensure that the Mutual Mortgage Insurance

Fund attains the capital ratio required under paragraph (2).

(4) For purposes of this subsection:

(A) The term ‘‘capital’’ means the economic net worth of

the Mutual Mortgage Insurance Fund, as determined by the

Secretary under the annual audit required under section 538.

(B) The term ‘‘capital ratio’’ means the ratio of capital to

unamortized insurance-in-force.

(C) The term ‘‘economic net worth’’ means the current cash

available to the Fund, plus the net present value of all future

cash inflows and outflows expected to result from the outstanding mortgages in the Fund.

(D) The term ‘‘unamortized insurance-in-force’’ means the

remaining obligation on outstanding mortgages which are obligations of the Mutual Mortgage Insurance Fund, as estimated

by the Secretary.

(g) The Secretary shall provide for an independent actuarial

study of the Mutual Mortage Insurance Fund to be conducted annually and shall report annually to the Congress regarding the financial status of the Fund. 2

(h)(1) If, pursuant to the independent annual actuarial study

of the Mutual Mortgage Insurance Fund required under subsection

(g), the Secretary determines that the Mutual Mortgage Insurance

Fund is not meeting the operational goals under paragraph (2), the

Secretary may not issue distributions, and may, by regulation, propose and implement any adjustments to the insurance premiums
951 Sec. 206A NATIONAL HOUSING ACT

under section 203(c) or section 2103(b) of the Omnibus Budget Reconciliation Act of 1990. Upon determining that a premium change

is appropriate under the preceding sentence, the Secretary shall

immediately notify Congress of the proposed change and the reasons for the change. Any such premium change shall not take effect

before the expiration of the 90-day period beginning upon such notification.

(2) The operational goals referred to in paragraph (1) shall

be—

(A) maintaining an adequate capital ratio;

(B) meeting the needs of homebuyers with low

downpayments and first-time homebuyers by providing access

to mortgage credit;

(C) minimizing the risk to the Fund and to homeowners

from homeowner default; and

(D) avoiding adverse selection.

INVESTMENT OF FUNDS

SEC. 206. ø12 U.S.C. 1712¿ Moneys in the Fund not needed for

the current operations of the Department of Housing and Urban

Development related to insurance under section 203 shall be deposited with the Treasurer of the United States to the credit of the

Fund, or invested in bonds or other obligations of, or in bonds or

other obligations guaranteed as to principal and interest by the

United States or any agency of the United States: Provided, That

such moneys shall to the maximum extent feasible be invested in

such bonds or other obligations the proceeds of which will be used

to directly support the residential mortgage market. The Secretary

may, with the approval of the Secretary of the Treasury, purchase

in the open market debentures issued under the provisions of section 204. Such purchases shall be made at a price which will provide an investment yield of not less than the yield obtainable from

other investments authorized by this section. Debentures so purchased shall be canceled and not reissued, and the several group

accounts to which such debentures have been charged shall be

charged with the amounts used in making such purchases.

SEC. 206A. INDEXING OF FHA MULTIFAMILY HOUSING LOAN LIMITS.

(a) METHOD OF INDEXING.—The dollar amounts set forth in—

(1) section 207(c)(3)(A) (12 U.S.C. 1713(c)(3)(A));

(2) section 213(b)(2)(A) (12 U.S.C. 1715e(b)(2)(A));

(3) section 220(d)(3)(B)(iii)(I) (12 U.S.C.

1715k(d)(3)(B)(iii)(I));

(4) section 221(d)(3)(ii)(I) (12 U.S.C. 1715l(d)(3)(ii)(I));

(5) section 221(d)(4)(ii)(I) (12 U.S.C. 1715l(d)(4)(ii)(I));

(6) section 231(c)(2)(A) (12 U.S.C. 1715v(c)(2)(A)); and

(7) section 234(e)(3)(A) (12 U.S.C. 1715y(e)(3)(A));

(collectively hereinafter referred to as the ‘‘Dollar Amounts’’) shall

be adjusted annually (commencing in 2004) on the effective date of

the Federal Reserve Board’s adjustment of the $400 figure in the

Home Ownership and Equity Protection Act of 1994 (HOEPA). The

adjustment of the Dollar Amounts shall be calculated using the

percentage change in the Consumer Price Index for All Urban Consumers (CPI–U) as applied by the Federal Reserve Board for purposes of the above-described HOEPA adjustment.
Sec. 207 NATIONAL HOUSING ACT 952

(b) NOTIFICATION.—The Federal Reserve Board on a timely

basis shall notify the Secretary, or his designee, in writing of the

adjustment described in subsection (a) and of the effective date of

such adjustment in order to permit the Secretary to undertake publication in the Federal Register of corresponding adjustments to the

Dollar Amounts. The dollar amount of any adjustment shall be

rounded to the next lower dollar.

RENTAL HOUSING INSURANCE

SEC. 207. ø12 U.S.C. 1713¿ (a) As used in this section—

(1) The term ‘‘mortgage’’ means a first mortgage on real estate

in fee simple, or on the interest of either the lessor or lessee thereof

(A) under a lease for not less than ninety-nine years which is renewable or (B) under a lease having a period of not less than fifty

years to run from the date the mortgage was executed, upon which

there is located or upon which there is to be constructed a building

or buildings designed principally for residential use or upon which

there is located or to be constructed facilities for manufactured

homes; and the term ‘‘first mortgage’’ means such classes of first

liens as are commonly given to secure advances (including but not

being limited to advances during construction) on, or the unpaid

purchase price of, real estate under the laws of the State in which

the real estate is located, together with the credit instrument or instruments, if any, secured thereby, and may be in the form of trust

mortgages or mortgage indentures or deeds of trust securing notes,

bonds, or other credit instruments.

(2) The term ‘‘mortgagee’’ means the original lender under a

mortgage, and its successors and assigns, and includes the holders

of credit instruments issued under a trust mortgage or deed of

trust pursuant to which such holders act by and through a trustee

therein named.

(3) The term ‘‘mortgagor’’ means the original borrower under

a mortgage and its successors and assigns.

(4) The term ‘‘maturity date’’ means the date on which the

mortgage indebtedness would be extinguished if paid in accordance

with the periodic payments provided for in the mortgage.

(5) The term ‘‘slum or blighted area’’ means any area where

dwellings predominate which, by reason of dilapidation, overcrowding, faulty arrangement or design, lack of ventilation, light or

sanitation facilities, or any combination of these factors, are detrimental to safety, health, or morals.

(6) The term ‘‘rental housing’’ means housing, the occupancy of

which is permitted by the owner thereof in consideration of the

payment of agreed charges, whether or not, by the terms of the

agreement, such payment over a period of time will entitle the occupant to the ownership of the premises or space in a manufactured home court or park properly arranged and equipped to accommodate manufactured homes.

(7) The term ‘‘State’’ includes the several States, and Puerto

Rico, the District of Columbia, Guam, the Trust Territory of the

Pacific Islands, American Samoa, and the Virgin Islands.

(b) In addition to mortgages insured under section 203, the

Secretary is authorized to insure mortgages as defined in this sec-
953 Sec. 207 NATIONAL HOUSING ACT

tion (including advances on such mortgages during construction)

which cover property held by—

(1) Federal or State instrumentalities, municipal corporate instrumentalities of one or more States, or limited dividend or redevelopment or housing corporations restricted by Federal or State

laws or regulations of State banking or insurance departments as

to rents, charges, capital structure, rate of return, or methods of

operation; or

(2) any other mortgagor approved by the Secretary. The Secretary may, in the Secretary’s discretion, require any such mortgagor to be regulated or restricted as to rents or sales, charges,

capital structure, rate of return, and methods of operation so as to

provide reasonable rentals to tenants and a reasonable return on

the investment. Any such regulations or restrictions shall continue

for such period or periods as the Secretary, in the Secretary’s discretion, may require, including until the termination of all obligations of the Secretary under the insurance and during such further

period of time as the Secretary shall be the owner, holder, or reinsurer of the mortgage. The Secretary may make such contracts

with and acquire, for not to exceed $100, such stock or interest in

the mortgagor as he may deem necessary to render effective any

such regulations or restrictions. The stock or interest acquired by

the Secretary shall be paid for out of the General Insurance Fund,

and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.

The insurance of mortgages under this section is intended to

facilitate particularly the production of rental accommodations, at

reasonable rents, of design and size suitable for family living. The

Secretary is, therefore, authorized in the administration of this section to take action, by regulation or otherwise, which will direct the

benefits of mortgage insurance hereunder primarily to those

projects which make adequate provision for families with children,

and in which every effort has been made to achieve moderate rental charges.

Notwithstanding any other provisions of this section, the Secretary may not insure any mortgage under this section (except a

mortgage with respect to a manufactured home park designed exclusively for occupancy by elderly persons) unless the mortgagor

certifies under oath that in selecting tenants for the property covered by the mortgage he will not discriminate against any family

by reason of the fact that there are children in the family, and that

he will not sell the property while the insurance is in effect unless

the purchaser so certifies, such certification to be filed with the

Secretary. Violation of any such certification shall be a misdemeanor punishable by a fine not to exceed $500.

(c) To be eligible for insurance under this section a mortgage

on any property or project shall involve a principal obligation in an

amount—

ø(1) [Repealed.]¿

(2) not to exceed 90 per centum of the estimated value of

the property or project (when the proposed improvements are

completed): Provided, That this limitation shall not apply to

mortgages on housing in Alaska, or in Guam, but such a mortgage may involve a principal obligation in an amount not to exceed 90 per centum of the amount which the Secretary esti-
Sec. 207 NATIONAL HOUSING ACT 954

1Section 5(b)(1)(B) of the FHA Downpayment Simplification Act of 2002, Pub L. 107–326, 116

Stat. 2794, approved December 24, 2002, amends this paragraph as follows:

‘‘(B) by striking ‘and accept that the Secretary’ through and including ‘in this paragraph’

and inserting in lieu thereof:

‘‘(B) the Secretary may, by regulation, increase any of the dollar amount limiations

in subparagraph (A) (as such limitations may have been adjusted in accordance with

section 206A of this Act)’’.

The amendment could not be executed.

2Section 446 of the Housing and Urban-Rural Recovery Act of 1983, Pub. L. 98–181, approved

November 30, 1983, added this parenthetical in sections 207(c)(3), 220(d)(4), 221(d)(6), and

231(c)(5) of the National Housing Act. Subsection (f) of such section further provides as follows:

mates will be the replacement cost of the property or project

when the proposed improvements are completed (the value of

the property or project as such term is used in this paragraph

may include the land, the proposed physical improvements,

utilities within the boundaries of the property or project, architect’s fees, taxes, and interest accruing during construction,

and other miscellaneous charges incident to construction and

approved by the Secretary). And provided further, That nothing contained in this section shall preclude the insurance of

mortgages covering existing construction located in slum or

blighted areas, as defined in paragraph numbered (5) of subsection (a) of this section, and the Secretary may require such

repair or rehabilitation work to be completed as is, in his discretion, necessary to remove conditions detrimental to safety,

health, or morals; and

(3)(A) not to exceed, for such part of the property or

projects as may be attributable to dwelling use (excluding exterior and land improvements as defined by the Secretary),

$38,025 per family unit without bedroom, $42,120 per family

unit with one bedroom, $50,310 per family unit with two bedrooms, $62,010 per family unit with three bedrooms, and

$70,200 per family unit with four or more bedrooms, or not to

exceed $11,250 per space; except that as to projects to consist

of elevator-type structures the Secretary may, in his discretion,

increase the dollar amount limitations per family unit to not

to exceed $43,875 per family unit without a bedroom, $49,140

per family unit with one bedroom, $60,255 per family unit with

two bedrooms, $75,465 per family unit with three bedrooms,

and $85,328 per family unit with four or more bedrooms, as

the case may be, to compensate for the higher costs incident

to the construction of elevator type structures of sound standards of construction and design; and except that the Secretary

may, by regulation, increase any of the foregoing dollar amount

limitations contained in this paragraph 1 by not to exceed 110

percent in any geographical area where the Secretary finds

that cost levels so require and not to exceed 140 percent where

the Secretary determines it necessary on a project-by-project

basis, but in no case may any such increase exceed 90 percent

where the Secretary determines that a mortgage purchased or

to be purchased by the Government National Mortgage Association in implementing its special assistance functions under

section 305 of this Act (as such section existed immediately before November 30, 1983) is involved.

The mortgage shall provide for complete amortization by periodic payments (unless otherwise approved by the Secretary) 2 with-
955 Sec. 207 NATIONAL HOUSING ACT

‘‘(f) The aggregate number of dwelling units included in properties covered by mortgages insured pursuant to the authority granted in the amendments made by this section in any fiscal

year may not exceed 10,000.’’.

in such term as the Secretary shall prescribe, and shall bear interest at such rate as may be agreed upon by the mortgagor and the

mortgagee. The Secretary may consent to the release of a part or

parts of the mortgaged property from the lien of the mortgage upon

such terms and conditions as he may prescribe and the mortgage

may provide for such release. No mortgage shall be accepted for insurance under this section or section 210 unless the Secretary finds

that the property or project, with respect to which the mortgage is

executed, is economically sound. Such property or project may include five or more family units and may include such commercial

and community facilities as the Secretary deems adquate to serve

the occupants.

Notwithstanding any other provision of this paragraph, the

amount which may be insured under this section may be increased

by up to 20 percent if such increase is necessary to account for the

increased cost of the project due to the installation therein of a

solar energy system (as defined in subparagraph (3) of the last

paragraph of section 2(a) of this Act) or residential energy conservation measures (as defined in section 210(11)(A) through (G)

and (I) of Public Law 95–619) in cases where the Secretary determines that such measures are in addition to those required under

the minimum property standards and will be cost-effective over the

life of the measure.

(d) The Secretary shall collect a premium charge for the insurance of mortgages under this section which shall be payable annually in advance by the mortgagee, either in cash or in debentures

issued by the Secretary under any title and section of this Act, except debentures of the Mutual Mortgage Insurance Fund, or of the

Cooperative Management Housing Insurance Fund, at par plus

accured interest. In addition to the premium charge herein provided for, the Secretary is authorized to charge and collect such

amounts as he may deem reasonable for the appraisal of a property

or project offered for insurance and for the inspection of such property or project during construction: Provided, That such charges for

appraisal and inspection shall not aggregate more than 1 per centum of the original principal face amount of the mortgage.

(e) In the event that the principal obligation of any mortgage

accepted for insurance under this section is paid in full prior to the

maturity date, the Secretary is authorized in his discretion to require the payment by the mortgagee of an adjusted premium

charge in such amount as the Secretary determines to be equitable,

but not in excess of the aggregate amount of the premium charges

that the mortgagee would otherwise have been required to pay if

the mortgage had continued to be insured until such maturity date.

ø(f) [Repealed.]¿

(g) The failure of the mortgagor to make any payment due

under or provided to be paid by the terms of a mortgage insured

under this section shall be considered a default under such mortgage and, if such default continues for a period of thirty days, the

mortgagee shall be entitled to receive the benefits of the insurance

as hereinafter provided, upon assignment, transfer, and delivery to

the Secretary, within a period and in accordance with rules and
Sec. 207 NATIONAL HOUSING ACT 956

1September 2, 1964.

regulations to be prescribed by the Secretary of (1) all rights and

interests arising under the mortgage so in default; (2) all claims of

the mortgagee against the mortgagor or others, arising out of the

mortgage transactions; (3) all policies of title or other insurance or

surety bonds or other guaranties and any and all claims thereunder; (4) any balance of the mortgage loan not advanced to the

mortgagor; (5) any cash or property held by the mortgagee, or to

which it is entitled, as deposits made for the account of the mortgagor and which have not been applied in reduction of the principal

of the mortgage indebtedness; and (6) all records, documents,

books, papers, and accounts relating to the mortgage transaction.

Upon such assignment, transfer, and delivery the obligation of the

mortgagee to pay the premium charges for mortgage insurance

shall cease, and the Secretary shall issue to the mortgagee a certificate of claim as provided in subsection (h), and debentures having

a par value equal to the original principal face amount of the mortgage plus such amount as the mortgagee may have paid for (A)

taxes, special assessments, and water rates, which are liens prior

to the mortgage; (B) insurance on the property; and (C) reasonable

expenses for the completion and preservation of the property and

any mortgage insurance premiums paid after default, less the sum

of (i) that part of the amount of the principal obligation that has

been repaid by the mortgagor, (ii) an amount equivalent to 1 per

centum of the unpaid amount of such principal obligation, and (iii)

any net income received by the mortgagee from the property: Provided, That the mortgagee in the event of a default under the mortgage may, at its option and in accordance with regulations of, and

in a period to be determined by, the Secretary, proceed to foreclose

on and obtain possession of or otherwise acquire such property

from the mortgagor after default, and receive the benefits of the insurance as herein provided, upon (1) the prompt conveyance to the

Secretary of title to the property which meets the requirements of

the rules and regulations of the Secretary in force at the time the

mortgage was insured and which is evidenced in the manner prescribed by such rules and regulations, and (2) the assignment to

him of all claims of the mortgagee against the mortgagor or others,

arising out of the mortgage transaction or foreclosure proceedings,

except such claims that may have been released with the consent

of the Secretary. Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium charges for insurance

shall cease and the mortgagee shall be entitled to receive the benefits of the insurance as provided in this subsection, except that in

such event the 1 per centum deduction, set out in (ii) hereof, shall

not apply. Notwithstanding any other provision of this Act, upon

receipt, after the date of enactment of the Housing Act of 1964,1

of an application for insurance benefits on a mortgage insured

under this Act, the Secretary may terminate the mortgagee’s obligation to pay premium charges on the mortgage.

(h) The certificate of claim issued under this section shall be

for an amount which the Secretary determines to be sufficient,

when added to the face value of the debentures issued and the cash

adjustment paid to the mortgagee, to equal the amount which the

mortgagee would have received if, on the date of the assignment,
957 Sec. 207 NATIONAL HOUSING ACT

transfer and delivery to the Secretary provided for in subsection

(g), the mortgagor had extinguished the mortgage indebtedness by

payment in full of all obligations under the mortgage and a reasonable amount for necessary expenses incurred by the mortgagee in

connection with the foreclosure proceedings, or the acquisition of

the mortgaged property otherwise, and the conveyance thereof to

the Secretary. Each such certificate of claim shall provide that

there shall accrue to the holder of such certificate with respect to

the face amount of such certificate, an increment at the rate of 3

per centum per annum which shall not be compounded. If the net

amount realized from the mortgage, and all claims in connection

therewith, so assigned, transferred, and delivered, and from the

property covered by such mortgage and all claims in connection

with such property after deducting all expenses incurred by the

Secretary in handling, dealing with, acquiring title to, and disposing of such mortgage and property and in collecting such claims,

exceeds the face value of the debentures issued and the cash adjustment paid to the mortgagee plus all interest paid on such debentures, such excess shall be divided as follows:

(1) If such excess is greater than the total amount payable

under the certificate of claim issued in connection with such

property, the Secretary shall pay to the holder of such certificate the full amount so payable, and any excess remaining

thereafter shall be retained by the Secretary and credited to

the General Insurance Fund; and

(2) If such excess is equal to or less than the total amount

payable under such certificate of claim, the Secretary shall pay

to the holder of such certificate the full amount of such excess.

(i) Debentures issued under this section shall be executed in

the name of the General Insurance Fund as obligor, shall be negotiable, and, if in book entry form, transferable, in the manner described by the Secretary in regulations, and shall be dated as of the

date of default as determined in subsection (g) of this section, except that debentures issued pursuant to the provisions of section

220(f), section 221(g), and section 233 may be dated as of the date

the mortgage is assigned (or the property is conveyed) to the Secretary and shall bear interest from such date. They shall bear interest at a rate established by the Secretary pursuant to section

224, payable semiannually on the 1st day of January and the 1st

day of July of each year, and shall mature twenty years after the

date thereof. Such debentures as are issued in exchange for mortgages insured after the date of enactment of the National Housing

Act Amendments of 1938 shall be exempt, both as to principal and

interest, from all taxation (except surtaxes, estate, inheritance, and

gift taxes) now or hereafter imposed by the United States, by any

Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority. They shall be paid out

of the General Insurance Fund which shall be primarily liable

therefor and they shall be fully and unconditionally guaranteed as

to principal and interest by the United States, and, in the case of

debentures issued in certificated registered form, such guaranty

shall be expressed on the face of the debentures. In the event the

General Insurance Fund fails to pay upon demand, when due, the

principal of or interest on any debentures so guaranteed, the Secretary of the Treasury shall pay to the holders the amount thereof
Sec. 207 NATIONAL HOUSING ACT 958

which is hereby authorized to be appropriated, out of any money

in the Treasury not otherwise appropriated, and thereupon, to the

extent of the amount so paid, the Secretary of the Treasury shall

succeed to all the rights of the holders of such debentures.

(j) Debentures issued under this section—

(1) shall be in such form and amounts;

(2) shall be subject to such terms and conditions;

(3) shall include such provisions for redemption, if any, as

may be prescribed by the Secretary of Housing and Urban Development, with the approval of the Secretary of the Treasury;

and

(4) may be in book entry or certificated registered form, or

such other form as the Secretary of Housing and Urban Development may prescribe in regulations.

(k) The Secretary is hereby authorized either to (1) acquire

possession of and title to any property, covered by a mortgage insured under this section and assigned to him, by voluntary conveyance in extinguishment of the mortgage indebtedness, or (2) institute proceedings for foreclosure on the property covered by any

such insured mortgage and prosecute such proceedings to conclusion. The Secretary at any sale under foreclosure may, in his discretion, for the protection of the General Insurance Fund, bid any

sum up to but not in excess of the total unpaid indebtedness secured by the mortgage, plus taxes, insurance, foreclosure costs,

fees, and other expenses and may become the purchaser of the

property at such sale. In determining the amount to be bid, the

Secretary shall act consistently with the goal established in section

203(a)(1) of the Housing and Community Development Amendments of 1978. The Secretary is authorized to pay from the General

Insurance Fund such sums as may be necessary to defray such

taxes, insurance, costs, fees, and other expenses in connection with

the acquisition or foreclosure of property under this section. Pending such acquisition by voluntary conveyance or by foreclosure, the

Secretary is authorized, with respect to any mortgage assigned to

him under the provisions of subsection (g), to exercise all the rights

of a mortgagee under such mortgage, including the right to sell

such mortgage, and to take such action and advance such sums as

may be necessary to preserve or protect the lien of such mortgage.

(l) Notwithstanding any other provisions of law relating to the

acquisition, handling, or disposal of real and other property by the

United States, the Secretary shall also have power, for the protection of the interests of the General Insurance Fund, to pay out of

the General Insurance Fund all expenses or charges in connection

with, and to deal with, complete, reconstruct, rent, renovate, modernize, insure, make contracts for the management of, or establish

suitable agencies for the management of, or sell for cash or credit

or lease in his discretion, any property acquired by him under this

section; and notwithstanding any other provision of law, the Secretary shall also have power to pursue to final collection by way

of compromise or otherwise all claims assigned and transferred to

him in connection with the assignment, transfer, and delivery provided for in this section, and at any time, upon default, to foreclose

on any property secured by any mortgage assigned and transferred

to or held by him: Provided, That section 3709 of the Revised Statutes shall not be construed to apply to any contract for hazard in-
959 Sec. 209 NATIONAL HOUSING ACT

1September 23, 1959.

surance, or to any purchase or contract for services or supplies on

account of such property if the amount thereof does not exceed

$1,000.

ø(m) [Repealed.]¿

(n) In the event that a mortgage insured under this section becomes in default through failure of the mortgagor to make any payment due under or provided to be paid by the terms of the mortgage and such mortgage continues in default for a period of thirty

days, but the mortgagee does not foreclose on or otherwise acquire

the property, or does not assign and transfer such mortgage and

the credit instrument secured thereby to the Secretary, in accordance with subsection (g), and the Secretary is given written notice

thereof, or in the event that a mortgagor pays the obligation under

the mortgage in full prior to the maturity thereof, and the mortgagee pays any adjusted premium charge required under the provisions of subsection (e), and the Secretary is given written notice by

the mortgagee of the payment of such obligation, the obligation to

pay the annual premium charge for insurance shall cease, and all

rights of the mortgagee and the mortgagor under this section shall

terminate as of the date of such notice.

(o) The Secretary, with the consent of the mortgagee and the

mortgagor of a mortgage insured under this section prior to the

date of enactment of the National Housing Act Amendments of

1938, shall be empowered to reissue such mortgage insurance in

accordance with the provisions of this section as amended by such

Act, and any such insurance not so reissued shall not be affected

by the enactment of such Act.

ø(p) [Repealed.]¿

ø(q) [Repealed.]¿

(r) Notwithstanding any other provisions of this Act, the Secretary is authorized to include in any mortgage insured under any

title of this Act after the effective date of the Housing Act of 1959 1

a provision requiring the mortgagor to pay a service charge to the

Secretary in the event such mortgage is assigned to and held by

the Secretary. Such service charge shall not exceed the amount

prescribed by the Secretary for mortgage insurance premiums applicable to such mortgage.

TAXATION PROVISIONS

SEC. 208. ø12 U.S.C. 1714¿ Nothing in this title shall be construed to exempt any real property acquired and held by the Secretary under this title from taxation by any State or political subdivision thereof, to the same extent, according to its value, as other

real property is taxed.

STATISTICAL AND ECONOMIC SURVEYS

SEC. 209. ø12 U.S.C. 1715¿ The Secretary shall cause to be

made in connection with the insurance programs such statistical

surveys and legal and economic studies as he shall deem useful to

guide the development of housing and the creation of a sound mortgage market in the United States, and shall publish from time to

time the results of such surveys and studies. Expenses of such
Sec. 210 NATIONAL HOUSING ACT 960

studies and surveys, and expenses of publication and distribution

of the results of such studies and surveys, shall be charged as a

general expense of such insurance fund or funds, as the Secretary

shall determine.

øADDITIONAL HOUSING INSURANCE¿

øSEC. 210. [Repealed.]¿

RULES AND REGULATIONS

SEC. 211. ø12 U.S.C. 1715b¿ The Secretary is authorized and

directed to make such rules and regulations as may be necessary

to carry out the provisions of this title.

LABOR STANDARDS

SEC. 212. ø12 U.S.C. 1715c¿ (a) The Secretary shall not insure

under section 207 or section 210 of this title, or under section 608

of title VI, pursuant to any application for insurance filed subsequent to the effective date of this section, or under section 213 of

this title, or under title VII pursuant to any application filed subsequent to sixty days after the date of enactment of the Housing Act

of 1950, or under section 803 or 810 of title VIII, or under section

908 of title IX, a mortgage or investment which covers property on

which there is or is to be located a dwelling or dwellings, or a housing project, the construction of which was or is to be commenced

subsequent to such date, unless the principal contractor files a certificate or certificates (at such times, in course of construction or

otherwise, as the Secretary may prescribe) certifying that the laborers and mechanics employed in the construction of the dwelling

or dwellings or the housing project involved have been paid not less

than the wages prevailing in the locality in which the work was

performed for the corresponding classes of laborers and mechanics

employed on construction of a similar character, as determined by

the Secretary of Labor in accordance with the Davis-Bacon Act, as

amended (40 U.S.C. 276a—276a–5), prior to the beginning of construction and after the date of the filing of the application for insurance. The provisions of this section shall also apply to the insurance of any loan or mortgage under section 220 or section 233

which covers property on which there is located a dwelling or

dwellings designed principally for residential use for twelve or

more families. The provisions of this section shall apply to the insurance under section 221 of any mortgage described in subsection

(d)(3) or (d)(4) and (deeming the term ‘‘construction’’ as used in the

first sentence of this section to mean rehabilitation) of any mortgage described in subsection (h)(1) or section 235(j)(1) which covers

property on which there is located a dwelling or dwellings designed

principally for residential use for more than eight families; except

that compliance with such provisions may be waived by the

Secretary—

(1) with respect to mortgages described in such subsection

(d)(3) or (d)(4) in cases or classes of cases where laborers or

mechanics (not otherwise employed at any time in the construction of the project) voluntarily donate their services without compensation for the purpose of lowering their housing

costs in a cooperative housing project and the Secretary deter-
961 Sec. 213 NATIONAL HOUSING ACT

mines that any amounts saved thereby are fully credited to the

cooperative undertaking the construction, and

(2) with respect to mortgages described in such subsection

(h)(1) or section 235(j)(1), in cases or classes of cases where

prospective owners of such dwellings voluntarily donate their

services without compensation, or other persons (not otherwise

employed at any time in the rehabilitation of the property) voluntarily donate their services without compensation, and the

Secretary determines that any amounts saved thereby are fully

credited to the nonprofit organization undertaking the rehabilitation.

The provisions of this section shall also apply to the insurance of

any mortgage under section 231, 232, or 236 except that compliance with such provisions may be waived by the Secretary in cases

or classes of cases where laborers or mechanics, not otherwise employed at any time on the project, voluntarily donate their services

without full compensation for the purpose of lowering the costs of

construction and the Secretary determines that any amounts thereby saved are fully credited to the nonprofit corporation, association

or other organization undertaking the construction. The provisions

of this section shall also apply to the insurance of any mortgage

under section 234(d). The provisions of this section shall also apply

to the insurance of any mortgage under section 242, except that

compliance with such provisions may be waived by the Secretary

in cases or classes of cases where laborers or mechanics, not otherwise employed at any time on the project, voluntarily donate their

services without compensation for the purpose of lowering the costs

of construction and the Secretary determines that any amounts

thereby saved are fully credited to the nonprofit corporation, association, or other organization undertaking the construction; and

each laborer or mechanic employed on any facility covered by a

mortgage insured under section 242 shall receive compensation at

a rate not less than one and one-half times his basic rate of pay

for all hours worked in any workweek in excess of eight hours in

any workday or forty hours in the workweek, as the case may be.

The provisions of this section shall also apply to the insurance of

any mortgage under title XI; and each laborer or mechanic employed on any facility covered by a mortgage insured under such

title shall receive compensation at a rate not less than one and

one-half times his basic rate of pay for all hours worked in any

workweek in excess of eight hours in any workday or forty hours

in the workweek, as the case may be.

(b) The Secretary is authorized to make such rules and regulations as may be necessary to carry out the provisions of this section.

(c) There is hereby authorized to be appropriated for the remainder of the fiscal year ending June 30, 1939, and for each fiscal

year thereafter, a sum sufficient to meet all necessary expenses of

the Department of Labor in making the determinations provided

for in subsection (a).

COOPERATIVE HOUSING INSURANCE

SEC. 213. ø12 U.S.C. 1715e¿ (a) In addition to mortgages insured under section 207 of this title, the Secretary is authorized to
Sec. 213 NATIONAL HOUSING ACT 962

insure mortgages as defined in section 207(a) of this title (including

advances on such mortgages during construction), which cover

property held by—

(1) a nonprofit cooperative ownership housing corporation

or nonprofit cooperative ownership housing trust, the permanent occupancy of the dwelling of which is restricted to members of such corporation or to beneficiaries of such trust;

(2) a nonprofit corporation or nonprofit trust organized for

the purpose of construction of homes for members of the corporation or for beneficiaries of the trust; or

(3) a mortgagor, approved by the Secretary, which (A) has

certified to the Secretary, as a condition of obtaining the insurance of a mortgage under this section, that upon completion of

the property or project covered by such mortgage it intends to

sell such property or project to a nonprofit corporation or nonprofit trust of the character described in paragraph (1) of this

subsection at the actual cost of such property or project as certified pursuant to section 227 of this Act and will faithfully and

diligently make and carry out all reasonable efforts to consummate such sale, and (B) shall be regulated or restricted by the

Secretary as to rents, charges, capital structure, rate of return,

and methods of operation during any period while it holds the

mortgaged property or project; and for such purpose the Secretary may make such contracts with, and acquire for not to

exceed $100 such stock or interest in, any such mortgagor as

the Secretary may deem necessary to render effective such restriction or regulation, such stock or interest to be paid for out

of the Cooperative Management Housing Insurance Fund and

to be redeemed by such mortgagor at par upon the sale of such

property or project to such nonproft corporation or nonprofit

trust;

which corporations or trusts referred to in paragraphs (1) and (2)

of this subsection are regulated or restricted for the purposes and

in the manner provided in paragraphs numbered (1) and (2) of subsection (b) of section 207 of this title: Provided, That as applied to

mortgages the mortgage insurance for which is the obligation of the

Management Fund, the reference to the General Insurance Fund in

section 207(b)(2) shall be construed to refer to the Management

Fund. Nothing in this section may be construed to prevent membership in a nonprofit housing cooperative from being held in the

name of a trust, the beneficiary of which shall occupy the dwelling

unit in accordance with rules and regulations prescribed by the

Secretary.

(b) To be eligible for insurance under this section a mortgage

on any property or project of a corporation or trust of the character

described in paragraph numbered (1) of subsection (a) of this section shall involve a principal obligation in an amount—

ø(1) [Repealed.]¿

(2)(A) not to exceed, for such part of the property or project

as may be attributable to dwelling use (excluding exterior land

improvements as defined by the Secretary), $38,025 per family

unit without a bedroom, $42,120 per family unit with one bedroom, $50,310 per family unit with two bedrooms, $62,010 per

family unit with three bedrooms, and $70,200 per family unit

with four or more bedrooms, and not to exceed 98 per centum
963 Sec. 213 NATIONAL HOUSING ACT

1Punctuation so in law.

of the amount which the Secretary estimates will be the replacement cost of the property or project when the proposed

physical improvements are completed: Provided, That as to

projects to consist of elevator-type structures the Secretary

may, in his discretion, increase the dollar amount limitations

per family unit to not to exceed $43,875 per family unit without a bedroom, $49,140 per family unit with one bedroom,

$60,255 per family unit with two bedrooms, $75,465 per family

unit with three bedrooms, and $85,328 per family unit with

four or more bedrooms, as the case may be, to compensate for

the higher cost incident to the construction of elevator-type

structures of sound standards of construction and design; (B)(i)

the Secretary may, by regulation, increase any of the dollar

amount limitations in subparagraph (A) (as such limitations

may have been adjusted in accordance with section 206A of

this Act) by not to exceed 110 percent in any geographical area

where the Secretary finds that cost levels so require and not

to exceed 140 percent where the Secretary determines it necessary on a project-by-project basis, but in no case may any

such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the

Government National Mortgage Association in implementing

its special assistance functions under section 305 of this Act

(as such section existed immediately before November 30,

1983) is involved; and (ii) in the case of a mortgagor of the

character described in paragraph (3) of subsection (a) the mortgage shall involve a principal obligation in an amount not to

exceed 90 per centum of the amount which the Secretary estimates will be the replacement cost of the property or project

when the proposed physical improvements are completed; and

(iii) upon the sale of a property or project by a mortgagor of

the character described in paragraph (3) of subsection (a) to a

nonprofit cooperative ownership housing corporation or trust

within two years after the completion of such property or

project the mortgage given to finance such sale shall involve a

principal obligation in an amount not to exceed the maximum

amount computed in accordance with this subparagraph

(B)(i).. 1

(c) To be eligible for insurance under this section a mortgage

on any property or project of a corporation or trust of the character

described in paragraph numbered (2) of subsection (a) of this section shall involve a principal obligation in an amount not to exceed

a sum computed on the basis of a separate mortgage for each single-family dwelling (irrespective of whether such dwelling has a

party wall or is otherwise physically connected with another dwelling or dwellings) comprising the property or project, equal to the

total of each of the maximum principal obligations of such mortgages which would meet the requirements of section 203(b)(2) if the

mortgagor were the owner and occupant who had made any required payment on account of the property prescribed in such paragraph.

(d) Any mortgage insured under this section shall provide for

complete amortization by periodic payments within such term as
Sec. 213 NATIONAL HOUSING ACT 964

the Secretary may prescribe but not to exceed 40 years from the

beginning of amortization of the mortgage, and shall bear interest

at such rate as may be agreed upon by the mortgagor and the

mortgagee. The Secretary may consent to the release of a part or

parts of the mortgaged property from the lien of the mortgage upon

such terms and conditions as he may prescribe and the mortgage

may provide for such release, and a mortgage on any project of a

corporation or trust of the character described in paragraph numbered (2) of subsection (a) of this section may provide that, at any

time after the completion of the construction of the project, such

mortgage may be replaced, in whole or in part, by individual mortgages covering each individual dwelling in the project in amounts

not to exceed the unpaid balance of the blanket mortgage allocable

to the individual property. Each such individual mortgage may be

insured under this section. Property covered by a mortgage, insured under this section, on a property or project of a corporation

or trust of the character described in paragraph numbered (1) of

subsection (a) of this section may include five or more family units

and may include such commerical and community facilities as the

Secretary deems adequate to serve the occupants. Property held by

a corporation or trust of the character described in paragraph numbered (2) of subsection (a) of this section which is covered by a

mortgage insured under this section may include such community

facilities, and property held by a mortgagor of the character described in paragraph numbered (3) of subsection (a) of this section

which is covered by a mortgage insured under this section may include such commercial and community facilities, as the Secretary

deems adequate to serve the occupants.

(e) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l),

(m), and (n) of section 207 of this title shall be applicable to mortgages insured under this section except individual mortgages insured pursuant to subsection (d) of this section covering the individual dwellings in the project, and as to such individual mortgages

the provisions of subsections (a), (c), (d), (e), (f), (g), (h), (j), and (k)

of section 204 shall be applicable: Provided, That as applied to

mortgages or loans the insurance for which is the obligation of the

Management Fund (1) all references to the General Insurance

Fund shall be construed to refer to the Management Fund, and (2)

all references to section 207 shall be construed to refer to subsections (a)(1), (a)(3) (if the project involved is acquired by a cooperative corporation), (i) and (j) of this section.

(f) The Secretary is authorized, with respect to mortgages insured or to be insured under this section, to furnish technical advice and assistance in the organization of corporations or trusts of

the character described in subsection (a) of this section and in the

planning, development, construction, and operation of their housing

projects.

(g) Nothing in this Act shall be construed to prevent the insurance of a mortgage under this section covering a housing project

designed for occupancy by single persons, and dwelling units in

such a project shall constitute family units within the meaning of

this section.

(h) In the event that a mortgagor of the character described in

paragraph (3) of subsection (a) obtains an insured mortgage loan

pursuant to this section and fails to sell the property or project cov-
965 Sec. 213 NATIONAL HOUSING ACT

1So in law.

ered by such mortgage to a nonprofit housing corporation or nonprofit housing trust of the character described in paragraph (1) of

subsection (a) hereof, the Secretary is authorized to refuse, for such

a period of time as he shall deem appropriate under the circumstances, to insure under this section any additional investorsponsored type mortgage loans made to such mortgagor or to any

other investor-sponsored mortgagor where, in the determination of

the Secretary, any of its stockholders were identified with such

mortgagor.

(i) Nothing in this Act shall be construed to prevent the insurance of a mortgage executed by a mortgagor of the character described in paragraph (1) of subsection (a) of this section covering

property upon which dwelling units and related facilities have been

constructed prior to the filing of the application for mortgage insurance hereunder: Provided, That the Secretary determines that the

consumer interest is protected and that the mortgagor will be a

consumer cooperative. In the case of properties other than new construction, the limitations in this section upon the amount of the

mortgage shall be based upon the appraised value of the property

for continued use as a cooperative rather than upon the Secretary’s

estimate of the replacement cost. As to any project on which construction was commenced after the effective date of this subsection,

the mortgage on such project shall be eligible for insurance under

this section only in those cases where the construction was subject

to inspection by the Secretary and where there was compliance

with the provisions of section 212 of this title. As to any project on

which construction was commenced prior to the effective date of

this subsection, such inspection, and compliance with the provisions of section 212 of this title, shall not be a prerequisite.

(j)(1) With respect to any property covered by a mortgage insured under this section (or any cooperative housing project covered by a mortgage insured under section 207 as in effect prior to

the enactment of the Housing Act of 1950), the Secretary is authorized upon such terms and conditions as he may prescribe, to make

commitments to insure and to insure supplementary cooperative

loans (including advances during construction or improvement)

made by financial institutions approved by the Secretary. The Secretary is further authorized to make commitments to insure and to

insure supplementary cooperative loans (including advances during

construction or improvement) with respect to any property purchased from the Federal Government by a nonprofit corporation or

trust of the character described in paragraph (1) of subsection (a),

if the property is covered by an uninsured mortgage representing

a part of the purchase price. As used in this subsection ‘‘supplementary cooperative loan’’ means a loan, advance of credit, or purchase of an obligation representing a loan or advance of credit

made for the purpose of financing any of the following:

(A) Improvements or repairs of the property covered by

such mortgage; 1

(B) Community facilities necessary to serve the occupants

of the property; or 1

(C) Cooperative purchases and resales of memberships in

order to provide necessary refinancing for resales of member-
Sec. 213 NATIONAL HOUSING ACT 966

ships which involve increases in equity; but in such resales by

the cooperative the downpayments by the new members shall

not be less than those made on the original sales of such memberships.

(2) To be eligible for insurance under this subsection, a supplementary cooperative loan shall—

(A) be limited to an amount which, when added to the outstanding mortgage indebtedness on the property, creates a

total outstanding indebtedness which does not exceed the original principal obligation of the mortgage; except that, in the

case of improvements or additional community facilities, the

outstanding indebtedness may be increased by an amount

equal to 97 per centum of the amount which the Secretary estimates will be the value of such improvements or facilities, and

the new outstanding indebtedness may exceed the original

principal obligation of the mortgage if such new outstanding

indebtedness does not exceed the limitations imposed by subsection (b);

(B) have a maturity satisfactory to the Secretary but not

to exceed the remaining term of the mortgage; except that, in

the case of repairs or improvements to a property covered by

an uninsured mortgage dated more than twenty years prior to

the date of the commitment to insure, of such magnitude that

the Secretary deems them to be a major rehabilitation or modernization of such property, the loan may have a maturity date

up to ten years in excess of the remaining term of the uninsured mortgage;

(C) be secured in such manner as the Secretary may require;

(D) contain such other terms, conditions, and restrictions

as the Secretary may prescribe; and

(E) represent the obligation of a borrower of the character

described in paragraph (1) of subsection (a).

(k) There is hereby created a Cooperative Management Housing Insurance Fund (hereinafter referred to as the ‘‘Management

Fund’’). The Management Fund shall be used by the Secretary as

a revolving fund for carrying out the provisions of this section with

respect to mortgages or loans insured, on or after the date of the

enactment of this subsection, under subsections (a)(1), (a)(3) (if the

project is acquired by a cooperative corporation, (i) and (j). The

Management Fund shall also be used as a revolving fund for mortgages, loans, and commitments transferred to it pursuant to subsection (m). The Secretary is directed to transfer to the Management Fund from the General Insurance Fund an amount equal to

the total of the premium payments theretofore made with respect

to the insurance of mortgages and loans transferred to the Management Fund pursuant to subsection (m) minus the total of any administrative expenses theretofore incurred in connection with such

mortgages and loans, plus such other amounts as the Secretary determines to be necessary and appropriate. General expenses of operation of the Department of Housing and Urban Development relating to mortgages or loans which are the obligation of the Management Fund may be charged to the Management Fund.

(l) The Secretary shall establish in the Management Fund, as

of the date of the enactment of this subsection, a General Surplus
967 Sec. 213 NATIONAL HOUSING ACT

Account and a Participating Reserve Account. The aggregate net

income thereafter received or any net loss thereafter sustained by

the Management Fund, in any semiannual period, shall be credited

or charged to the General Surplus Account or the Participating Reserve Account or both in such manner and amounts as the Secretary may determine to be in accord with sound actuarial and accounting practice. Upon termination of the insurance obligation of

the Management Fund by payment of any mortgage or loan insured under this section, and at such time or times prior to such

termination as the Secretary may determine, the Secretary is authorized to distribute to the mortgagor or borrower a share of the

Participating Reserve Account in such manner and amount as the

Secretary shall determine to be equitable and in accordance with

sound actuarial and accounting practice: Provided, That in no

event shall the amount of the distributable share exceed the aggregate scheduled annual premiums of the mortgagor or borrower to

the year of payment of the share less the total amount of any share

or shares previously distributed by the Secretary to the mortgagor

or borrower: And provided further, That in no event may a distributable share be distributed until any funds transferred from the

General Insurance Fund to the Management Fund pursuant to

subsection (o) have been repaid in full to the General Insurance

Fund. No mortgagor, mortgagee, borrower, or lender shall have any

vested right in a credit balance in any such account or be subject

to any liability arising out of the mutuality of the Management

Fund. The determination of the Secretary as to the amount to be

paid by him to any mortgagor or borrower shall be final and conclusive.

(m) The Secretary is authorized to transfer to the Management

Fund commitments for insurance issued under subsection (a)(1), (i),

and (j) prior to the date of enactment of this subsection, and to

transfer to the Management Fund the insurance of any mortgage

or loan insured prior to the date of the enactment of this subsection

under subsection (a)(1), (a)(3) (if the project is acquired by a cooperative corporation), (i), or (j): Provided, That the insurance of any

mortgage or loan shall not be transferred under the provisions of

this subsection if on the date of the enactment of this subsection

the mortgage or loan is in default and the mortgagee or lender has

notified the Secretary in writing of its intention to file an insurance

claim. Any insurance or commitment not so transferred shall continue to be an obligation of the General Insurance Fund.

(n) Notwithstanding the limitations contained in other provisions of this Act, premium charges for mortgages or loans the insurance of which is the obligation of either the Management Fund

or the General Insurance Fund may be payable in debentures

issued in connection with mortgages or loans transferred to the

Management Fund or in connection with mortgages or loans insured pursuant to commitments transferred to the Management

Fund, as provided in subsection (m) of this section. Premium

charges on the insurance of mortgages or loans transferred to the

Management Fund or insured pursuant to commitments transferred to the Management Fund may be payable in debentures

which are the obligation of either the Management Fund or the

General Insurance Fund.
Sec. 214 NATIONAL HOUSING ACT 968

(o) Notwithstanding any other provision of this Act, the Secretary is authorized to transfer funds between the Cooperative

Management Housing Insurance Fund and the General Insurance

Fund in such amounts and at such times as he may determine,

taking into consideration the requirements of each such Fund, to

assist in carrying out effectively the insurance programs for which

such Funds were respectively established. Moneys in the Cooperative Management Housing Insurance Fund not needed for current

operations of the fund shall be deposited with the Treasurer of the

United States to the credit of the Cooperative Management Housing Insurance Fund or invested in bonds or other obligations of, or

in bonds or other obligations guaranteed as to a principal and interest by, the United States or any agency of the United States:

Provided, That such moneys shall to the maximum extent feasible

be invested in such bonds or other obligations the proceeds of

which will be used to directly support the residential mortgage

market. The Secretary may with the approval of the Secretary of

the Treasury, purchase in the open market debentures which are

the obligations of the Cooperative Management Housing Insurance

Fund. Such purchases shall be made at a price which will provide

an investment yield of not less than the yield obtainable from other

investments authorized by this subsection. Debentures so purchased shall be canceled and not reissued.

(p) Notwithstanding any other provision of this section, the

project mortgage amounts which may be insured under this section

may be increased by up to 20 per centum if such increase is necessary to account for the increased cost of the project due to the

installation therein of a solar energy system (as defined in subparagraph (3) of the last paragraph of section 2(a) of this Act) or

residential energy conservation measures (as defined in section

210(11) (A) through (G) and (I) of Public Law 95–619) in cases

where the Secretary determines that such measures are in addition

to those required under the minimum property standards and will

be cost-effective over the life of the measure.

INSURANCE OF MORTGAGES ON PROPERTY IN ALASKA, GUAM, HAWAII,

AND THE VIRGIN ISLANDS

SEC. 214. ø12 U.S.C. 1715d¿ If the Secretary of Housing and

Urban Development finds that, because of higher costs prevailing

in Alaska, Guam, Hawaii, or the Virgin Islands, it is not feasible

to construct dwellings or mobile home courts or parks on property

located in Alaska, Guam, Hawaii, or the Virgin Islands without

sacrifice of sound standards of construction, design or livability,

within the limitations as to maximum or maxima mortgage

amounts provided in this Act, the Secretary may, by regulations or

otherwise, prescribe, with respect to dollar amount, a higher maximum or maxima for the principal obligation of mortgages insured

under this Act covering property located in Alaska, Guam, Hawaii

or the Virgin Islands in such amounts as he shall find necessary

to compensate for such higher costs but not to exceed, in any event,

the maximum or maxima otherwise applicable (including increased

mortgage amounts in geographical areas where cost levels so require) by more than one-half thereof. No mortgage with respect to

a project or property in Alaska, Guam, Hawaii, or the Virgin Is-
969 Sec. 216 NATIONAL HOUSING ACT

lands shall be accepted for insurance under this Act unless the Secretary finds that the project or property is an acceptable risk, giving consideration to the acute housing shortage in Alaska, Guam,

Hawaii, or the Virgin Islands: Provided, That any such mortgage

may be insured or accepted for insurance without regard to any requirement in any other section of this Act that the Secretary finds

the project or property to be economically sound or an acceptable

risk. Notwithstanding any of the provisions of this Act or any other

law, the Alaska Housing Authority or the Government of Guam,

the Virgin Islands, or Hawaii or any agency or instrumentality

thereof shall be eligible as mortgagor or mortgagee, as the case

may be, for any of the purposes of mortgage insurance under the

provisions of this Act. Upon application by the mortgagee (1) where

the mortgagor is regulated or restricted pursuant to the last sentence of this section or (2) where the Alaska Housing Authority or

the Government of Guam, the Virgin Islands, or Hawaii or any

agency or instrumentality thereof is the mortgagor or mortgagee,

for the insurance of a mortgage under any provisions of this Act,

the Secretary is authorized to insure the mortgage (including advances thereon where otherwise authorized), and to make commitments for the insuring of any such mortgages prior to the date of

their execution or disbursement thereon, under such provisions

(and this section) without regard to any requirement that the mortgagor shall have paid a prescribed amount on account of such property. Without limiting the authority of the Secretary under any

other provision of law, the Secretary is hereby authorized, with respect to any mortgagor in such case (except where the Alaska

Housing Authority is the mortgagor or mortgagee) to require the

mortgagor to be regulated or restricted as to rents or sales,

charges, capital structure, rate of return, and methods of operation

to such an extent and in such manner as the Secretary determines

advisable to provide reasonable rentals and sales prices and a reasonable return on the investment.

ISSUANCE OF COMMITMENTS

SEC. 215. ø12 U.S.C. 1715f¿ The Secretary is hereby authorized to process applications and issue commitments with respect to

insurance of mortgages under section 8 of title I, title II, title VI,

title VIII, or title IX of this Act, even though the permanent mortgage financing may not be insured under this Act, and in the event

the mortgage is not so insured the Secretary is authorized to

charge an additional application fee determined by him to be reasonable. The Secretary is authorized to make such rules and regulations as may be necessary to carry out the provisions of this section.

WAIVER OF OCCUPANCY REQUIREMENTS FOR SERVICEMEN

SEC. 216. ø12 U.S.C. 1715g¿ The Secretary is hereby authorized to insure any mortgage otherwise eligible for insurance under

any of the provisions of this Act without regard to any requirement

with respect to the occupancy of the mortgagor of the property at

the time of insurance, where the Secretary is satisfied that the inability of the mortgagor to meet such requirement is by reason of

his entry on active duty in a uniformed service subsequent to the
Sec. 217 NATIONAL HOUSING ACT 970

filing of an application for insurance and the mortgagor expresses

an intent to meet such requirement upon his release from active

duty.

øGENERAL MORTGAGE INSURANCE AUTHORIZATION¿

øSEC. 217. [Repealed.]¿

øCREDIT FOR APPLICATION FEES PAID¿

øSEC. 218. [Repealed.]¿

øAUTHORITY TO TRANSFER AMOUNTS AMONG FUNDS¿

øSEC. 219. [Repealed.]¿

REHABILITATION AND NEIGHBORHOOD CONSERVATION HOUSING

INSURANCE

SEC. 220. ø12 U.S.C. 1715k¿ (a) The purpose of this section is

to aid in the elimination of slums and blighted conditions and the

prevention of the deterioration of residential property by

supplementing the insurance of mortgages under sections 203 and

207 of this title with a system of loan and mortgage insurance designed to assist the financing required for the rehabilitation of existing dwelling accommodations and the construction of new dwelling accommodations where such dwelling accommodations are located in an area referred to in paragraph (1) of subsection (d) of

the section.

(b) The Secretary is authorized, upon application by the mortgagee, to insure, as hereinafter provided, any mortgage (including

advances during construction on mortgages covering property of the

character described in paragraph (3)(B) of subsection (d) of this section) which is eligible for insurance as hereinafter provided, and,

upon such terms and conditions as he may prescribe, to make commitments for the insurance of such mortgages prior to the date of

their execution or disbursement thereon.

(c) As used in this section, the terms ‘‘mortgage,’’ ‘‘first mortgage,’’ ‘‘mortgagee,’’ ‘‘mortgagor,’’ ‘‘maturity date,’’ and ‘‘State’’ shall

have the same meaning as in section 201 of this Act.

(d) To be eligible for insurance under this section a mortgage

shall meet the following conditions:

(1) The mortgaged property shall—

(A) be located in (i) the area of a slum clearance and urban

redevelopment project covered by a Federal-aid contract executed or a prior approval granted, pursuant to title I of the

Housing Act of 1949 before the effective date of the Housing

Act of 1954, or (ii) an urban renewal area (as defined in title

I of the Housing Act of 1949, as amended) or (iii) the area of

an urban renewal project assisted under section 111 of the

Housing Act of 1949, as amended, or (iv) an area in which a

program of concentrated code enforcement activities is being

carried out pursuant to section 117 of the Housing Act of 1949,

or (v) an area designated by the Secretary, where concentrated

housing, physical development, and public service activities are

being or will be carried out in a coordinated manner, pursuant

to a locally developed strategy for neighborhood improvement,

conservation or preservation: Provided, That, in the case of an
971 Sec. 220 NATIONAL HOUSING ACT

area within the purview of clause (i) or (ii) of this subparagraph, a redevelopment plan or an urban renewal plan (as defined in title I of the Housing Act of 1949, as amended), as the

case may be, has been approved for such area by the governing

body of the locality involved and by the Secretary of Housing

and Urban Development and the Secretary has determined

that such plan conforms to a general plan for the locality as

a whole and that there exist the necessary authority and financial capacity to assure the completion of such redevelopment or

urban renewal plan: And provided further, That, in the case of

an area within the purview of clause (iii) of this subparagraph,

an urban renewal plan (as required for projects assisted under

such section 111) has been approved for such area by such governing body and by the Secretary, and the Secretary has determined that such plan conforms to definite local objectives respecting appropriate land uses, improved traffic, public transportation, public utilities, recreational and community facilities, and other public improvements, and that there exist the

necessary authority and financial capacity to assure the completion of such urban renewal plan, and

(B) meet such standards and conditions as the Secretary

shall prescribe to establish the acceptability of such property

for mortgage insurance under this section.

(2) The mortgaged property shall be held by—

(A) a mortgagor approved by the Secretary, and the Secretary may in his discretion require such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return and methods of operation, and for such

purpose the Secretary may make such contracts with and acquire for not to exceed $100 stock or interest in any such mortgagor as the Secretary may deem necessary to render effective

such restriction or regulations. Such stock or interest shall be

paid for out of the General Insurance Fund and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance; or

(B) by Federal or State instrumentalities, municipal corporate instrumentalities of one or more States, or limited dividend or redevelopment or housing corporations or other legal

entities restricted by or under Federal or State laws or regulations of State banking or insurance departments as to rents,

charges, capital structure, rate of return, or methods of operation.

(3) The mortgage shall—

(A)(i) involve a principal obligation (including such initial

service charges, appraisal, inspection, and other fees as the

Secretary shall approve) in an amount not to exceed the applicable maximum principal obligation which may be insured in

the area under section 203(b); or in the case of a dwelling designed principally for residential use for more than four families (but not exceeding such additional number of family units

as the Secretary may prescribe) the applicable maximum principal obligation secured by a four-family residence which may

be insured in the area under section 203(b) plus not to exceed

$9,165 for each additional family unit in excess of four located

on such property; and not to exceed an amount equal to the
Sec. 220 NATIONAL HOUSING ACT 972

sum to (1) 97 per centum (but, in any case where the dwelling

is not approved for mortgage insurance prior to the beginning

of construction, unless the construction of the dwelling was

completed more than one year prior to the application for mortgage insurance, 90 per centum) of $25,000 of the Secretary’s

estimate of replacement cost of the property, as of the date the

mortgage is accepted for insurance, and (2) 95 per centum of

such value in excess of $25,000: Provided, That in the case of

properties other than new construction, the foregoing limitations upon the amount of the mortgage shall be based upon the

sum of the estimated cost of repair and rehabilitation and the

Secretary’s estimate of the value of the property before repair

and rehabilitation rather than upon the Secretary’s estimate of

the replacement cost: Provided further, That if the mortgagor

is a veteran and the mortgage to be insured under this section

covers property upon which there is located a dwelling designed principally for a one-family residence, the principal obligation may be in an amount equal to the sum of (1) 100 per

centum of $25,000 of the Secretary’s estimate of replacement

cost of the property, as of the date the mortgage is accepted for

insurance and (2) 95 per centum of such value in excess of

$25,000. As used herein, the term ‘‘veteran’’ means any person

who served on active duty in the Armed Forces of the United

States for a period of not less than ninety days (or as certified

by the Secretary of Defense as having performed

extrahazardous service), and who was discharged or released

therefrom under conditions other than dishonorable, except

that persons enlisting in the armed forces after September 7,

1980, or entering active duty after October 16, 1981, shall have

their eligibility determined in accordance with section 3103A(d)

of title 38, United States Code; and

(ii) in no case involving refinancing have a principal obligation in an amount exceeding the sum of the estimated cost

of repair and rehabilitation and the amount (as determined by

the Secretary) required to refinance existing indebtedness secured by the property or project, plus any existing indebtedness incurred in connection with improving, repairing, or rehabilitating the property; or

(B)ø(i) [Repealed.]¿

(ii) not exceed 90 per centum of the amount which the Secretary estimates will be the replacement cost of the property

or project when the proposed improvements are completed (the

replacement cost of the property or project may include the

land, the proposed physical improvements, utilities within the

boundaries of the property or project, architect’s fees, taxes,

and interest during construction, and other miscellaneous

charges incident to construction and approved by the Secretary, and shall include an allowance for builder’s and sponsor’s profit and risk of 10 per centum of all of the foregoing

items except the land unless the Secretary, after certification

that such allowance is unreasonable shall by regulation prescribe a lesser percentage): Provided, That in the case of properties other than new construction, the foregoing limitations

upon the amount of the mortgage shall be based upon the sum

of the estimated cost of repair and rehabilitation and the Sec-
973 Sec. 220 NATIONAL HOUSING ACT

1So in law.

retary’s estimate of the value of the property before repair and

rehabilitation rather than upon the Secretary’s estimate of the

replacement cost: Provided further, That the mortgage may involve the financing of the purchase of property which has been

rehabilitated by a local public agency with Federal assistance

pursuant to section 110(c)(8) of the Housing Act of 1949, and,

in such case the foregoing limitations upon the amount of the

mortgage shall be based upon the appraised value of the property as of the date the mortgage is accepted for insurance;

(iii)(I) not to exceed, for such part of the property or project

as may be attributable to dwelling use (excluding exterior land

improvements as defined by the Secretary), $38,025 per family

unit without a bedroom, $42,120 per family unit with one bedroom, $50,310 per family unit with two bedrooms, $62,010 per

family unit with three bedrooms, and $70,200 per family unit

with four or more bedrooms, except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit

not to exceed $43,875 per family unit without a bedroom,

$49,140 per family unit with one bedroom, $60,255 per family

unit with two bedrooms, $75,465 per family unit with three

bedrooms, and $85,328 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs

incident to the construction of elevator-type structures of sound

standards of construction and design; and (II) with respect to

rehabilitation projects involving not more than five family

units, the Secretary may by regulation increase by 25 per centum any of the dollar amount limitations in subparagraph

(B)(iii)(I) (as such limitations may have been adjusted in accordance with section 206A of this Act) which are applicable to

units with two, three, or four or more bedrooms with respect

to dollar amount limitations applicable to rehabilitation

projects described in subclause (II), the Secretary may, by regulation, increase the dollar amount limitations contained in

subparagraph (B)(iii)(I) (as such limitations may have been adjusted in accordance with section 206A of this Act)) 1 by not to

exceed 110 percent in any geographical area where the Secretary finds that cost levels so require and by not to exceed 140

percent where the Secretary determines it necessary on a

project-by-project basis, but in no case may any such increase

exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions under section 305 of this Act (as such section

existed immediately before November 30, 1983) is involved);

(III) That 1 nothing contained in this subparagraph (B)(iii)(I)

shall preclude the insurance of mortgages covering existing

multifamily dwellings to be rehabilitated or reconstructed for

the purposes set forth in subsection (a) of this section; (IV)

with respect to rehabilitation projects involving not more than

five family units, the Secretary may further increase any of the

dollar limitations which would otherwise apply to such projects

by not to exceed 20 per centum if such increase is necessary
Sec. 220 NATIONAL HOUSING ACT 974

1Section 446 of the Housing and Urban-Rural Recovery Act of 1983, Pub. L. 98–181, approved

November 30, 1983, added this parenthetical in sections 207(c)(3), 220(d)(4), 221(d)(6), and

231(c)(5) of the National Housing Act. Subsection (f) of such section further provides as follows:

‘‘(f) The aggregate number of dwelling units included in properties covered by mortgages insured pursuant to the authority granted in the amendments made by this section in any fiscal

year may not exceed 10,000.’’.

to account for the increased cost of the project due to the installation therein of a solar energy system (as defined in subparagraph (3) of the last paragraph of section 2(a) of this Act)

or residential energy conservation measures (as defined in section 210(11)(A) through (G) and (I) of Public Law 95–619) in

cases where the Secretary determines that such measures are

in addition to those required under the minimum property

standards and will be cost-effective over the life of the measure; and

(iv) include such nondwelling facilities as the Secretary

deems desirable and consistent with the urban renewal plan

or, where appropriate with the locally developed strategy for

neighborhood improvement, conservation or preservation: Provided, That the project shall be predominantly residential and

any nondwelling facility included in the mortgage shall be

found by the Secretary to contribute to the economic feasibility

of the project, and the Secretary shall give due consideration

to the possible effect of the project on other business enterprises in the community.

(4) The mortgage shall provide for complete amortization by

periodic payments (unless otherwise approved by the Secretary) 1

within such terms as the Secretary may prescribe, but as to mortgages coming within the provisions of paragraph (3)(A) of this subsection (d) not to exceed the maximum maturity prescribed by the

provisions of section 203(b)(3). The mortgage shall bear interest at

such rate as may be agreed upon by the mortgagor and the mortgagee and contain such terms and provisions with respect to the

application of the mortgagor’s periodic payment to amortization of

the principal of the mortgage, insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure

proceedings, anticipation of maturity, additional and secondary

liens, and other matters as the Secretary may in the Secretary’s

discretion prescribe.

(e) The Secretary may at any time, under such terms and conditions as he may prescribe, consent to the release of the mortgagor

from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged

property from the lien of the mortgage.

(f) The mortgagee shall be entitled to receive the benefits of the

insurance as hereinafter provided—

(1) as to mortgages meeting the requirements of paragraph

(3)(A) of subsection (d) of this section, as provided in section

204(a) of this Act with respect to mortgages insured under section 203; and the provisions of subsections (b), (c), (d), (e), (f),

(g), (h), (i), and (k) of section 204 of this Act shall be applicable

to such mortgages insured under this section, except that all

references therein to the Mutual Mortgage Insurance Fund or

the Fund shall be construed to refer to the General Insurance
975 Sec. 220 NATIONAL HOUSING ACT

Fund and all references therein to section 203 shall be construed to refer to this section;

(2) as to mortgages meeting the requirements of paragraph

(3)(B) of subsection (d) of this section, as provided in section

207(g) of this Act with respect to mortgages insured under said

section 207, and the provisions of subsections (h), (i), (j), (k),

and (l) of section 207 of this Act shall be applicable to such

mortgages insured under this section, and all references therein to the Housing Insurance Fund or the Housing Fund shall

be construed to refer to the General Insurance Fund; or

(3) as to mortgages meeting the requirements of this section that are insured or initially endorsed for insurance on or

after the date of enactment of the Housing Act of 1961, notwithstanding the provisions of paragraphs (1) and (2) of this

subsection, the Secretary in his discretion, in accordance with

such regulations as he may prescribe, may make payments

pursuant to such paragraphs in cash or in debentures (as provided in the mortgage insurance contract), or may acquire a

mortgage loan that is in default and the security therefor upon

payment to the mortgagee in cash or in debentures (as provided in the mortgage insurance contract) of a total amount

equal to the unpaid principal balance of the loan plus any accrued interest and any advances approved by the Secretary

and made previously by the mortgagee under the provisions of

the mortgage. After the acquisition of the mortgage by the Secretary the mortgagee shall have no further rights, liabilities, or

obligations with respect to the loan or the security for the loan.

The appropriate provisions of sections 204 and 207 relating to

the rights, liabilities, and obligations of a mortgagee shall

apply with respect to the Secretary when he has acquired an

insured mortgage under this paragraph, in accordance with

and subject to regulations (modifying such provisions to the extent necessary to render their application for such purposes appropriate and effective) which shall be prescribed by the Secretary, except that as applied to mortgages so acquired (A) all

references in section 204 to the Mutual Mortgage Insurance

Fund or the Fund shall be construed to refer to the General

Insurance Fund, and (B) all references in section 204 to section

203 shall be construed to refer to this section. If the insurance

payment is made in cash, there shall be added to such payment an amount equivalent to the interest which the debentures would have earned, computed to a date to be established

pursuant to regulations issued by the Secretary.

ø(g) øRepealed.]¿

(h)(1) To assist further in the conservation, improvement, repair, and rehabilitation of property located in the area of an urban

renewal project, or in an area in which a program of concentrated

code enforcement activities is being carried out pursuant to section

117 of the Housing Act of 1949, as provided in paragraph (1) of

subsection (d) of this section, the Secretary is authorized upon such

terms and conditions as he may prescribe to make commitments to

insure and to insure home improvement loans (including advances

during construction or improvement) made by financial institutions
Sec. 220 NATIONAL HOUSING ACT 976

1 June 30, 1961.

2So in law. Probably should be designated as subparagraph (A).

3So in law. Probably should be designated as subparagraph (B).

4So in law. Probably should be designated as subparagraph (C).

on and after the date of enactment of the Housing Act of 1961.1 As

used in this subsection—

(A) the term ‘‘home improvement loan’’ means a loan, advance of credit, or purchase of an obligation representing a

loan or advance of credit made—

(i) for the purpose of financing the improvement of an

existing structure (or in connection with an existing structure) which was constructed not less than ten years prior

to the making of such loan, advance of credit, or purchase,

and which is used or will be used primarily for residential

purposes: Provided, That a home improvement loan shall

include a loan, advance, or purchase with respect to the

improvement of a structure which was constructed less

than ten years prior to the making of such loan, advance,

or purchase if the proceeds are or will be used primarily

for major structural improvements, or to correct defects

which were not known at the time of the completion of the

structure or which were caused by fire, flood, windstorm,

or other causalty; or

(ii) for the purpose of enabling the borrower to pay

that part of the cost of the construction or installation of

sidewalks, curbs, gutters, street paving, street lights, sewers, or other public improvements, adjacent to or in the vicinity of property owned by him and used primarily for

residential purposes, which is assessed against him or for

which he is otherwise legally liable as the owner of such

property;

(B) the term ‘‘improvement’’ means conservation, repair,

restoration, rehabilitation, conversion, alteration, enlargement,

or remodeling; and

(C) the term ‘‘financial institution’’ means a lender approved by the Secretary as eligible for insurance under section

2 or a mortgagee approved under section 203(b)(1).

(2) To be eligible for insurance under this subsection, a home

improvement loan shall—

(i) 2 not exceed the Secretary’s estimate of the cost of improvement, or $12,000 per family unit, whichever is the lesser,

and be limited as required by paragraph (11): Provided, That

the Secretary may, by regulation, increase such amount by not

to exceed 45 per centum in any geographical area where he

finds that cost levels so require;

(ii) 3 be limited to an amount which when added to any

outstanding indebtedness related to the property (as determined by the Secretary) creates a total outstanding indebtedness which does not exceed the limits provided in subsection

(d)(3) for properties (of the same type) other than new construction;

(iii) 4 bear interest at such rate as may be agreed upon by

the mortgagor and the mortgagee;
977 Sec. 220 NATIONAL HOUSING ACT

1So in law. Probably should be designated as subparagraph (D).

2So in law. Probably should be designated as subparagraph (E).

3So in law. Probably should be designated as subparagraph (F).

(iv) 1 have a maturity satisfactory to the Secretary, but not

to exceed twenty years from the beginning of amortization of

the loan;

(v) 2 comply with such other terms, conditions, and restrictions as the Secretary may prescribe; and

(vi) 3 represent the obligation of a borrower who is the

owner of the property improved, or a lessee of the property

under a lease for not less than 99 years which is renewable or

under a lease having an expiration date in excess of 10 years

later than the maturity date of the loan.

(3) Any home improvement loan insured under this subsection

may be refinanced and extended in accordance with such terms and

conditions as the Secretary may prescribe, but in no event for an

additional amount or terms in excess of the maximum provided for

in this subsection.

ø(4) [Repealed.]¿

(5) The Secretary is authorized to fix a premium charge for the

insurance of home improvement loans under this subsection but in

the case of any such loan such charge shall not be less than an

amount equivalent to one-half of 1 per centum per annum nor more

than an amount equivalent to 1 per centum per annum of the

amount of the principal obligation of the loan outstanding at any

time, without taking into account delinquent payments or prepayments. Such premium charges shall be payable by the financial institution either in cash or in debentures (at par plus accrued interest) issued by the Secretary as obligations of the General Insurance

Fund, in such manner as may be prescribed by the Secretary, and

the Secretary may require the payment of one or more such premium charges at the time the loan is insured, at such discount rate

as he may prescribe not in excess of the interest rate specified in

the loan. If the Secretary finds upon presentation of a loan for insurance and the tender of the initial premium charge or charges so

required that the loan complies with the provisions of this subsection, such loan may be accepted for insurance by endorsement

or otherwise as the Secretary may prescribe. In the event the principal obligation of any loan accepted for insurance under this subsection is paid in full prior to the maturity date, the Secretary is

authorized to refund to the financial institution for the account of

the borrower all, or such portions as he shall determine to be equitable, of the current unearned premium charges theretofore paid.

(6) In cases of defaults on loans insured under this subsection,

upon receiving notice of default, the Secretary, in accordance with

such regulations as he may prescribe, may acquire the loan and

any security therefor upon payment to the financial institution in

cash or in debentures (as provided in the loan insurance contract)

of a total amount equal to the unpaid principal balance of the loan,

plus any accrued interest, any advances approved by the Secretary

made previously by the financial institution under the provisions of

the loan instruments, and reimbursement for such collection costs,

court costs, and attorney fees as may be approved by the Secretary.

If the insurance payment is made in cash, there shall be added to

such payment an amount equivalent to the interest which the de-
Sec. 220 NATIONAL HOUSING ACT 978

bentures would have earned, computed to a date to be established

pursuant to regulations issued by the Secretary.

(7) Debentures issued under this subsection shall be executed

in the name of the General Insurance Fund as obligor, shall be negotiable, and, if in book entry form, transferable, in the manner described by the Secretary in regulations, and shall be dated as of the

date the loan is assigned to the Secretary and shall bear interest

from that date. They shall bear interest at a rate, established by

the Secretary pursuant to section 224, payable semiannually on the

1st day of January and the 1st day of July of each year, and shall

mature ten years after their date of issuance. They shall be exempt

from taxation as provided in section 207(i) with respect to debentures issued under that section. They shall be paid out of the General Insurance Fund which shall be primarily liable therefor and

they shall be fully and unconditionally guaranteed as to principal

and interest by the United States, and, in the case of debentures

issued in certificated registered form, the guaranty shall be expressed on the face of the debentures. In the event the General Insurance Fund fails to pay upon demand, when due, the principal

of or interest on any debentures so guaranteed, the Secretary of the

Treasury shall pay the holders the amount thereof which is hereby

authorized to be appropriated out of any money in the Treasury not

otherwise appropriated, and thereupon, to the extent of the amount

so paid, the Secretary of the Treasury shall succeed to all the

rights of the holders of such debentures. Debentures issued under

this subsection shall be in such form and amounts; shall be subject

to such terms and conditions; and shall include such provisions for

redemption, if any, as may be prescribed by the Secretary of Housing and Urban Development, with the approval of the Secretary of

the Treasury; and may be in book entry or certificated registered

form, or such other form as the Secretary of Housing and Urban

Development may prescribe in regulations.

(8) The provisions of subsections (c), (d), and (h) of section 2

shall apply to home improvement loans insured under this subsection and for the purposes of this subsection references in subsections (c), (d), and (h) of section 2 to ‘‘this section’’ or ‘‘this title’’

shall be construed to refer to this subsection.

(9)(A) Notwithstanding any other provisions of this Act, no

home improvement loan executed in connection with the improvement of a structure for use as rental accommodations for five or

more families shall be insured under this subsection unless the

borrower has agreed (i) to certify, upon completion of the improvement and prior to final endorsement of the loan, either that the actual cost of improvement equaled or exceeded the proceeds of the

home improvement loan, or the amount by which the proceeds of

the loan exceed the actual cost, as the case may be, and (ii) to pay

forthwith to the financial institution, for application to the reduction of the principal of the loan, the amount, if any, certified to be

in excess of the actual cost of improvement. Upon the Secretary’s

approval of the borrower’s certification as required under this paragraph, the certification shall be final and incontestable, except for

fraud or material misrepresentation on the part of the borrower.

(B) As used in subparagraph (A), the term ‘‘actual cost’’ means

the cost to the borrower of the improvement, including the amounts

paid for labor, materials, construction contracts, off-site public utili-
979 Sec. 221 NATIONAL HOUSING ACT

ties, streets, organization and legal expenses, such allocations of

general overhead items as are acceptable to the Secretary, and

other items of expense approved by the Secretary, plus a reasonable allowance for builder’s profit if the borrower is also the builder, as defined by the Secretary, and excluding the amount of any

kickbacks, rebates, or trade discounts received in connection with

the improvement.

(10) Notwithstanding any other provisions of this Act, the Secretary is authorized and empowered (i) to make expenditures and

advances out of funds made available by this Act to preserve and

protect his interest in any security for, or the lien or priority of the

lien securing, any loan or other indebtedness owing to, insured by,

or acquired by the Secretary or by the United States under this

subsection, or section 2 or 203(k); and (ii) to bid for and to purchase

at any foreclosure or other sale or otherwise acquire property

pledged, mortgaged, conveyed, attached, or levied upon to secure

the payment of any loan or other indebtedness owing to or acquired

by the Secretary or by the United States under this subsection or

section 2 or 203(k). The authority conferred by this paragraph may

be exercised as provided in the last sentence of section 204(g).

(11) Notwithstanding any other provision of this Act, no home

improvement loan made in whole or in part for the purpose specified in clause (A)(ii) of the second sentence of paragraph (1) shall

be insured under this subsection if such loan (or the portion thereof

which is attributable to such purpose), when added to the aggregate principal balance of any outstanding loans insured under this

subsection or section 203(k) which were made to the same borrower

for the purpose so specified (or the portion of such aggregate balance which is attributable to such purpose), would exceed $10,000

or such additional amount as the Secretary has by regulation prescribed in any geographical area where he finds cost levels so required pursuant to the authority vested in him by the proviso in

paragraph (2)(i) of this subsection. ø12 U.S.C. 1715k¿

HOUSING FOR MODERATE INCOME AND DISPLACED FAMILIES

SEC. 221. ø12 U.S.C. 1715l¿ (a) This section is designed to assist private industry in providing housing for low and moderate income families and displaced families.

(b) The Secretary is authorized, upon application by the mortgagee, to insure under this section as hereinafter provided any

mortgage (including advances during construction on mortgages

covering property of the character described in paragraphs (3) and

(4) of subsection (d) of this section) which is eligible for insurance

as provided herein and, upon such terms and conditions as the Secretary may prescribe, to make commitments for the insurance of

such mortgages prior to the date of their execution or disbursement

thereon.

(c) As used in this section, the terms ‘‘mortgage’’, ‘‘first mortgage’’, ‘‘mortgagee’’, ‘‘mortgagor’’, ‘‘maturity date’’ and ‘‘State’’ shall

have the same meaning as in section 201 of this Act.

(d) To be eligible for insurance under this section, a mortgage

shall—
Sec. 221 NATIONAL HOUSING ACT 980

(1) have been made to and be held by a mortgagee approved by the Secretary as responsible and able to service the

mortgage properly;

(2) be secured by property upon which there is located a

dwelling conforming to applicable standards prescribed by the

Secretary under subsection (f) of this section, and meeting the

requirements of all State laws, or local ordinances or regulations relating to the public health or safety, zoning, or otherwise, which may be applicable thereto, and shall involve a

principal obligation (including such initial service charges appraisal, inspection, and other fees as the Secretary shall approve) in an amount (A) not to exceed (i) $31,000 (or $36,000,

if the mortgagor’s family includes five or more persons) in the

case of a property upon which there is located a dwelling designed principally for a single-family residence, (ii) $35,000 in

the case of a property upon which there is located a dwelling

designed principally for a two-family residence, (iii) $48,600 in

the case of a property upon which there is located a dwelling

designed principally for a three-family residence, or (iv)

$59,400 in the case of a property upon which there is located

a dwelling designed principally for a four-family residence, except that the Secretary may increase the foregoing amounts to

not to exceed $36,000 (or $42,000 if the mortgagor’s family includes five or more persons), $45,000, $57,600, and $68,400, respectively, in any geographical area where he finds that cost

levels so require; and (B) not to exceed the appraised value of

the property (as of the date the mortgage is accepted for insurance): Provided, That (i)(1) in the case of a displaced family,

he shall have paid on account of the property at least $200 in

the case of a single family dwelling, $400 in the case of a twofamily dwelling, $600 in the case of a three-family dwelling,

and $800 in the case of a four-family dwelling, or (2) in the

case of any other family, he shall have paid on account of the

property at least 3 per centum of the Secretary’s estimate of

its acquisition cost (excluding the mortgage insurance premium

paid at the time the mortgage is insured), in cash or its equivalent; which amount in either instance may include amounts to

cover settlement costs and initial payments for taxes, hazard

insurance, and other prepaid expenses; or, (ii) in the case of repair and rehabilitation, the amount of the mortgage shall not

exceed the sum of the estimated cost of repair and rehabilitation and the Secretary’s estimate of the value of the property

before repair and rehabilitation, except that in no case involving refinancing shall such mortgage exceed such estimated cost

of repair and rehabilitation and the amount (as determined by

the Secretary) required to refinance existing indebtedness secured by the property: Provided further, That the mortgagor

shall to the maximum extent feasible be given the opportunity

to contribute the value of his labor as equity in such dwelling;

or

(3) if executed by a mortgagor which is a public body or

agency (and, except with respect to a project assisted or to be

assisted pursuant to section 8 of the United States Housing

Act of 1937, which certifies that it is not receiving financial assistance from the United States exclusively pursuant to such
981 Sec. 221 NATIONAL HOUSING ACT

Act), a cooperative (including an investor-sponsor who meets

such requirements as the Secretary may impose to assure that

the consumer interest is protected), or a limited dividend corporation (as defined by the Secretary), or a private nonprofit

corporation or association, or other mortgagor approved by the

Secretary, and regulated or supervised under Federal or State

laws or by political subdivisions of States, or agencies thereof,

or by the Secretary under a regulatory agreement or otherwise,

as to rents, charges, and methods of operation, in such form

and in such manner as in the opinion of the Secretary will effectuate the purposes of this section—

ø(i) [Repealed.]¿

(ii)(I) not exceed, for such part of the property or

project as may be attributable to dwelling use (excluding

exterior land improvements as defined by the Secretary),

$42,048 per family unit without a bedroom, $48,481 per

family unit with one bedroom, 58,469 per family unit with

two bedrooms, $74,840 per family unit with three bedrooms, and $83,375 per family unit with four or more bedrooms; except that as to projects to consist of elevator-type

structures the Secretary may, in his discretion, increase

the dollar amount limitations per family unit to not to exceed $44,250 per family unit without a bedroom, $50,724

per family unit with one bedroom, $61,680 per family unit

with two bedrooms, $79,793 per family unit with three

bedrooms, and $87,588 per family unit with four or more

bedrooms, as the case may be, to compensate for the higher costs incident to the construction of elevator-type structures of sound standards of construction and design; (II)

the Secretary may, by regulation, increase any of the dollar amount limitations in subclause (I) (as such limitations

may have been adjusted in accordance with section 206A

of this Act) by not to exceed 110 percent in any geographical area where the Secretary finds that cost levels

so require and by not to exceed 140 percent where the Secretary determines it necessary on a project-by-project

basis, but in no case may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National

Mortgage Association in implementing its special assistance functions under section 305 of this Act (as such section existed immediately before November 30, 1983) is involved; and

(iii) not exceed (1) in the case of new construction, the

amount which the Secretary estimates will be the replacement cost of the property or project when the proposed improvements are completed (the replacement cost may include the land, the proposed physical improvements, utilities within the boundaries of the land, architect’s fees,

taxes, incident to construction and approved by the Secretary), or (2) in the case of repair and rehabilitation, the

sum of the estimated cost of repair and rehabilitation and

the Secretary’s estimate of the value of the property before

repair and rehabilitation: Provided, That the mortgage

may involve the financing of the purchase of property
Sec. 221 NATIONAL HOUSING ACT 982

which has been rehabilitated by a local public agency with

Federal assistance pursuant to section 110(c)(8) of the

Housing Act of 1949, and, in such case, the amount of the

mortgage shall not exceed the appraised value of the property as of the date the mortgage is accepted for insurance:

Provided further, That in the case of any mortgagor other

than a nonprofit corporation or association, cooperative (including an investor-sponsor), or public body, or a mortgagor meeting the special requirements of subsection

(e)(1), the amount of the mortgage shall not exceed 90 per

centum of the amount otherwise authorized under this section: Provided further, That such property or project, when

constructed, or repaired and rehabilitated, shall be for use

as a rental or cooperative project, and low and moderate

income families or displaced families shall be eligible for

occupancy in accordance with such regulations and procedures as may be prescribed by the Secretary and the Secretary may adopt such requirements as he determines to

be desirable regarding consultation with local public

officals where such consultation is appropriate by reason of

the relationship of such project to projects under other

local programs; or

(4) if executed by a mortgagor and which is approved by

the Secretary—

ø(i) [Repealed.]¿

(ii)(I) not exceed, or such part of the property or

project as may be attributable to dwelling use (excluding

exterior land improvements as defined by the Secretary),

$37,843 per family unit without a bedroom, $42,954 per

family unit with one bedroom, $51,920 per family unit

with two bedrooms, $65,169 per family unit with three

bedrooms, and $73,846 per family unit with four or more

bedrooms; except that as to projects to consist of elevatortype structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit to not

to exceed $40,876 per family unit without a bedroom,

$46,859 per family unit with one bedroom, $56,979 per

family unit with two bedrooms, $73,710 per family unit

with three bedrooms, and $80,913 per family unit with

four or more bedrooms, as the case may be, to compensate

for the higher costs incident to the construction of elevatortype structures of sound standards of construction and design; (II) the Secretary may, by regulation, increase any of

the dollar limitations in subclause (I) (as such limitations

may have been adjusted in accordance with section 206A

of this Act) by not to exceed 110 percent in any geographical area where the Secretary finds that cost levels

so require and by not to exceed 140 percent where the Secretary determines it necessary on a project-by-project

basis, but in no case may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National

Mortgage Association in implementing its special assistance functions under section 305 of this Act (as such sec-
983 Sec. 221 NATIONAL HOUSING ACT

tion existed immediately before November 30, 1983) is involved;

(iii) not exceed (in the case of a property or project approved for mortgage insurance prior to the beginning of

construction) 90 per centum of the amount which the Secretary estimates will be the replacement cost of the property or project when the proposed improvements are completed (the replacement cost may include the land, the proposed physical improvements, utilities within the boundaries of the land, architect’s fees, taxes, interest during

construction, and other miscellaneous charges incident to

construction and approved by the Secretary, and shall include an allowance for builder’s and sponsor’s profit and

risk of 10 per centum of all of the foregoing items, except

the land, unless the Secretary, after certification that such

allowance is unreasonable, shall by regulation prescribe a

lesser percentage; and

(iv) not exceed 90 per centum of the sum of the estimated cost of repair and rehabilitation (including the cost

of evaluating and reducing lead-based paint hazards, as

such terms are defined in section 1004 of the Residential

Lead-Based Paint Hazard Reduction Act of 1992) and the

Secretary’s estimate of the value of the property before repair and rehabilitation of the proceeds of the mortgage are

to be used for the repair and rehabilitation of a property

or project: Provided, That the Secretary may, in his discretion, require the mortgagor to be regulated or restricted as

to rents or sales, charges, capital structure, rate of return,

and methods of operation, and for such purpose the Secretary may make such contracts with and acquire for not

to exceed $100 such stock or interest in any such mortgagor as the Secretary may deem necessary to render effective such restrictions or regulations, with such stock or

interest being paid for out of the General Insurance Fund

and being required to be redeemed by the mortgage at par

upon the termination of all obligations of the Secretary

under the insurance;

(5) bear interest at such rate as may be agreed upon by

the mortgagor and the mortgagee; and contain such terms and

provisions with respect to the application of the mortgagor’s

periodic payment to amortization of the principal of the mortgage, insurance, repairs, alterations, payment of taxes, default

reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other

matters as the Secretary may in his discretion prescribe: Provided, That a mortgage insured under the provisions of subsection (d)(3) shall bear interest (exclusive of any premium

charges for insurance and service charge, if any) at not less

than the lower of (A) 3 per centum per annum, or (B) the annual rate of interest determined, from time to time by the Secretary of the Treasury at the request of the Secretary, by estimating the average market yield to maturity on all outstanding marketable obligations of the United States, and by

adjusting such yield to the nearest one-eighth of 1 per centum,

and there shall be no differentiation in the rate of interest
Sec. 221 NATIONAL HOUSING ACT 984

1Section 446 of the Housing and Urban-Rural Recovery Act of 1983, Pub. L. 98–181, approved

November 30, 1983, added this parenthetical in sections 207(c)(3), 220(d)(4), 221(d)(6), and

231(c)(5) of the National Housing Act. Subsection (f) of such section further provides as follows:

‘‘(f) The aggregate number of dwelling units included in properties covered by mortgages insured pursuant to the authority granted in the amendments made by this section in any fiscal

year may not exceed 10,000.’’.

charged under this proviso as between mortgagors under subsection (d)(3) on the basis of differences in the types or classes

of such mortgagors; and

(6) provide for complete amortization by periodic payments

(unless otherwise approved by the Secretary) 1 within such

terms as the Secretary may prescribe, but as to mortgages

coming within the provisions of subsection (d)(2) not to exceed

from the date of the beginning of amortization of the mortgage

(i) 40 years in the case of a displaced family, (ii) 35 years in

the case of any other family if the mortgage is approved for insurance prior to construction, except that the period in such

case may be increased to not more than 40 years where the

mortgagor is not able, as determined by the Secretary, to make

the required payments under a mortgage having a shorter amortization period, and (iii) 30 years in the case of any other

family where the mortgage is not approved for insurance prior

to construction.

(e)(1) A mortgagor which may be approved by the Secretary as

provided in subsection (d)(3) includes a mortgagor which, as a condition of obtaining insurance of the mortgage and prior to the submission of its application for such insurance, has entered into an

agreement (in form and substance satisfactory to the Secretary)

with a private nonprofit corporation eligible for an insured mortgage under the provisions of subsection (d)(3), that the mortgagor

will sell the project when it is completed to the corporation at the

actual cost of the project, as certified pursuant to section 227 of

this Act. The mortgagor to whom the property is sold shall be regulated or supervised by the Secretary as provided in subsection

(d)(3) to effectuate its purposes.

(2) The Secretary may at any time, under such terms and conditions as he may prescribe, consent to the release of the mortgagor

from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged

property from the lien of the mortgage.

(f) The property or project shall comply with such standards

and conditions as the Secretary may prescribe to establish the acceptability of such property for mortgage insurance and may include such commercial and community facilities as the Secretary

deems adequate to serve the occupants: Provided, That in the case

of any such property or project located in an urban renewal area,

the provisions of section 220(d)(3)(B)(iv) shall apply with respect to

the nondwelling facilities which may be included in the mortgage:

Provided further, That in the case of a mortgage which bears interest at the below-market interest rate prescribed in the proviso of

subsection (d)(5), the provisions of section 220(d)(3)(B)(iv) shall only

apply if the mortgagor waives the right to receive dividends on its

equity investment in the portion thereof devoted to commercial facilities.
985 Sec. 221 NATIONAL HOUSING ACT

1Section 109 of the Disaster Relief and Emergency Assistance Amendments of 1988, Pub. L.

100–707, approved Nov. 23, 1988, amended this sentence to refer to such sections of the ‘‘Disaster Relief and Emergency Assistance Act.’’ Probably intended to refer to the Robert T. Stafford

Disaster Relief and Emergency Assistance Act, renamed by section 102(a) of Pub. L. 100–707.

A property or project covered by a mortgage insured under the

provisions of subsection (d)(3) or (d)(4) shall include five or more

family units: Provided, That such units, in the case of a project designed primarily for occupancy by displaced, elderly, or handicapped families, need not, with the approval of the Secretary, contain kitchen facilities, and such projects may include central dining

and other shared facilities. The Secretary is authorized to adopt

such procedures and requirements as he determines are desirable

to assure that the dwelling accommodations provided under this

section are available to displaced families. Notwithstanding any

provision of this Act, the Secretary, in order to assist further the

provision of housing for low and moderate income families, in his

discretion and under such conditions as he may prescribe, may insure a mortgage which meets the requirements of subsection (d)(3)

of this section as in effect after the date of enactment of the Housing Act of 1961, or which meets the requirements of subsection (h),

(i), or (j) with no premium charge, with a reduced premium charge,

or with a premium charge for such period or periods during the

time the insurance is in effect as the Secretary may determine, and

there is hereby authorized to be appropriated, out of any money in

the Treasury not otherwise appropriated, such amounts as may be

necessary to reimburse the General Insurance Fund for any net

losses in connection with such insurance. Any person who is sixtytwo years of age or over, or who is a handicapped person within

the meaning of section 202 of the Housing Act of 1959, or who is

a displaced person, shall be deemed to be a family within the

meaning of the terms ‘‘family’’ and ‘‘families’’ as those terms are

used in this section. Low- and moderate-income persons who are

less than 62 years of age shall be eligible for occupancy of dwelling

units in a project financed with a mortgage insured under subsection (d)(3).

In any case in which it is determined in accordance with regulations of the Secretary that facilities in existence or under construction on the date of enactment of the Housing and Urban Development Act of 1970 which could appropriately be used for classroom purposes are available in any such property or project and

that public schools in the community are overcrowded due in part

to the attendance at such schools of residents of the property or

project, such facilities may be used for such purposes to the extent

permitted in such regulations (without being subject to any of the

requirements of the proviso in section 220(d)(3)(B)(iv) except the requirements that the project be predominantly residential).

As used in this section the terms ‘‘displaced family’’, ‘‘displaced

families’’, and ‘‘displaced person’’ shall mean a family or families,

or a person, displaced from an urban renewal area, or as a result

of governmental action, or as a result of a major disaster as determined by the President pursuant to the Disaster Relief and Emergency Assistance Act.1

In order to induce advances by owners for capital improvements (excluding any owner contributions that may be required by

the Secretary as a condition for assistance under section 201 of the
Sec. 221 NATIONAL HOUSING ACT 986

1 June 30, 1961.

Housing and Community Development Amendments of 1978) to

benefit projects covered by a mortgage under the provisions of subsection (d)(3) that bears a below market interest rate prescribed in

the proviso to subsection (d)(5), in establishing the rental charge

for the project the Secretary may include an amount that would

permit a return of such advances with interest to the owner out of

project income, on such terms and conditions as the Secretary may

determine. Any resulting increase in rent contributions shall be—

(A) to a level not exceeding the lower of 30 percent of the

adjusted income of the tenant or the published existing fair

market rent for comparable housing established under section

8(c) of the United States Housing Act of 1937;

(B) phased in equally over a period of not less than 3

years, if such increase is 30 percent or more; and

(C) limited to not more than 10 percent per year if such

increase is more than 10 percent but less than 30 percent.

Assistance under section 8 of the United States Housing Act of

1937 shall be provided, to the extent available under appropriations Acts, if necessary to mitigate any adverse effects on incomeeligible tenants.

(g) The mortgagee shall be entitled to receive the benefits of

the insurance as hereinafter provided—

(1) as to mortgages meeting the requirements of paragraph

(2) of subsection (d) of this section, paragraph (5) of subsection

(h) of this section, or paragraph (2) of subsection (i) of this section as provided in section 204(a) of this Act with respect to

mortgages insured under section 203, and the provisions of

subsections (b), (c), (d), (e), (f), (g), (h), (j), and (k) of section 204

of this Act shall be applicable to such mortgages insured under

this section, except that all references therein to the Mutual

Mortgage Insurance Fund or the Fund shall be construed to

refer to the General Insurance Fund and all references therein

to section 203 shall be construed to refer to this section; or

(2) as to mortgages meeting the requirements of paragraph

(3) or (4) of subsection (d) of this section, paragraph (1) of subsection (h) of this section, or paragraph (2) of subsection (j) of

this section, as provided in section 207(g) of this Act with respect to mortgages insured under said section 207, and the provisions of subsections (h), (i), (j), (k), and (l) of section 207 of

this Act shall be applicable to such mortgages insured under

this section; or

(3) as to mortgages meeting the requirements of this section which are insured or initially endorsed for insurance on or

after the date of enactment of the Housing Act of 1961,1 notwithstanding the provisions of paragraphs (1) and (2) of this

subsection, the Secretary in his discretion, in accordance with

such regulations as he may prescribe, may make payments

pursuant to such paragraphs in cash or in debentures (as provided in the mortgage insurance contract), or may acquire a

mortgage loan that is in default and the security therefor upon

payment to the mortgagee in cash or in debentures (as provided in the mortgage insurance contract) of a total amount

equal to the unpaid principal balance of the loan plus any ac-
987 Sec. 221 NATIONAL HOUSING ACT

1 November 30, 1983.

2Section 516(d) of the Housing and Community Development Act of 1992, Pub. L. 102–550,

provides as follows:

‘‘(d) HOUSING FOR MODERATE INCOME AND DISPLACED FAMILIES.—The second sentence of

section 221(g)(4)(A) of the National Housing Act (12 U.S.C. 1715l(g)(4)(A)) is amended by striking ‘‘, subject to the cash adjustment provided herein, issue to the mortgagee debentures having

total face value’’ and inserting the following: ‘‘issue to the mortgagee debentures having a par

value’’.

The amendment could not be executed because the text proposed to be struck does not appear in this subparagraph.

crued interest and any advances approved by the Secretary

and made previously by the mortgagee under the provisions of

the mortgage, and after the acquisition of any such mortgage

by the Secretary the mortgagee shall have no further rights, liabilities, or obligations with respect to the loan or the security

for the loan. The appropriate provisions of sections 204 and

207 relating to the issuance of debentures shall apply with respect to debentures issued under this paragraph, and the appropriate provisions of sections 204 and 207 relating to the

rights, liabilities, and obligations of a mortgagee shall apply

with respect to the Secretary when he has acquired an insured

mortgage under this paragraph, in accordance with and subject

to regulations (modifying such provisions to the extent necessary to render their application for such purposes appropriate and effective) which shall be prescribed by the Secretary, except that as applied to mortgages so acquired (A) all

references in section 204 to the Mutual Mortgage Insurance

Fund or the fund shall be construed to refer to the General Insurance Fund, and (B) all references in section 204 to section

203 shall be construed to refer to this section. If the insurance

is paid in cash, there shall be added to such payment an

amount equivalent to the interest which the debentures would

have earned, computed to a date to be established pursuant to

regulations issued by the Secretary.

(4)(A) In the event any mortgage insured under this section pursuant to a commitment to insure entered into before

the effective date of this clause 1 is not in default at the expiration of twenty years from the date the mortgage was endorsed

for insurance, the mortgagee shall, within a period thereafter

to be determined by the Secretary, have the option to assign,

transfer, and deliver to the Secretary the original credit instrument and the mortgage securing the same and receive the benefits of the insurance as hereinafter provided in this paragraph, upon compliance with such requirements and conditions

as to the validity of the mortgage as a first lien and such other

matters as may be prescribed by the Secretary at the time the

loan is endorsed for insurance. Upon such assignment, transfer, and delivery the obligation of the mortgagee to pay the

premium charges for insurance shall cease, and the Secretary

shall, subject to the cash adjustment provided herein, issue to

the mortgagee debentures having a total face value 2 equal to

the amount of the original principal obligation of the mortgage

which was unpaid on the date of the assignment, plus accrued

interest to such date. Debentures issued pursuant to this paragraph shall be issued in the same manner and subject to the

same terms and conditions as debentures issued under paragraph (1) of this subsection, except that the debentures issued
Sec. 221 NATIONAL HOUSING ACT 988

pursuant to this paragraph shall be dated as of the date the

mortgage is assigned to the Secretary, shall mature ten years

after such date, and shall bear interest from such date at the

going Federal rate determined at the time of issuance. The

term ‘‘going Federal rate’’ as used herein means the annual

rate of interest which the Secretary of the Treasury shall specify as applicable to the six-month period (consisting of January

through June or July through December) which includes the

issuance date of such debentures, which applicable rate for

each six-month period shall be determined by the Secretary of

the Treasury by estimating the average yield to maturity, on

the basis of daily closing market bid quotations or prices during the month of May or the month of November, as the case

may be, next preceding such six-month period, on all outstanding marketable obligations of the United States having a

maturity date of eight to twelve years from the first day of

such month of May or November (or, if no such obligations are

outstanding, the obligation next shorter than eight years and

the obligation next longer than twelve years, respectively, shall

be used), and by adjusting such estimated average annual yield

to the nearest one-eighth of 1 per centum. The Secretary shall

have the same authority with respect to mortgages assigned to

him under this paragraph as contained in section 207(k) and

section 207(l) as to mortgages insured by the Secretary and assigned to him under section 207 of this Act.

(B) In processing a claim for insurance benefits under this

paragraph, the Secretary may direct the mortgagee to assign,

transfer, and deliver the original credit instrument and the

mortgage securing it directly to the Government National

Mortgage Association in lieu of assigning, transferring, and delivering the credit instrument and the mortgage to the Secretary. Upon the assignment, transfer, and delivery of the

credit instrument and the mortgage to the Association, the

mortgage insurance contract shall terminate and the mortgagee shall receive insurance benefits as provided in subparagraph (A). The Association is authorized to accept such loan

documents in its own name and to hold, service, and sell such

loans as agent for the Secretary. The mortgagor’s obligation to

pay a service charge in lieu of a mortgage insurance premium

shall continue as long as the mortgage is held by the Association or by the Secretary. The Secretary shall have the same authority with respect to mortgages assigned to the Secretary or

the Association under this subparagraph as provided by section

223(c).

(C)(i) In lieu of accepting assignment of the original credit

instrument and the mortgage securing the credit instrument

under subparagraph (A) in exchange for receipt of debentures,

the Secretary shall arrange for the sale of the beneficial interests in the mortgage loan through an auction and sale of the

(I) mortgage loans, or (II) participation certificates, or other

mortgage-backed obligations in a form acceptable to the Secretary (in this subparagraph referred to as ‘‘participation certificates’’). The Secretary shall arrange the auction and sale at

a price, to be paid to the mortgagee, of par plus accrued inter-
989 Sec. 221 NATIONAL HOUSING ACT

est to the date of sale. The sale price shall also include the

right to a subsidy payment described in clause (iii).

(ii)(I) The Secretary shall conduct a public auction to determine the lowest interest rate necessary to accomplish a sale

of the beneficial interests in the original credit instrument and

mortgage securing the credit instrument.

(II) A mortgagee who elects to assign a mortgage shall provide the Secretary and persons bidding at the auction a description of the characteristics of the original credit

instrument and mortgage securing the original credit instrument, which shall include the principal mortgage balance,

original stated interest rate, service fees, real estate and tenant characteristics, the level and duration of applicable Federal

subsidies, and any other information determined by the Secretary to be appropriate. The Secretary shall also provide information regarding the status of the property with respect to the

provisions of the Emergency Low Income Housing Preservation

Act of 1987 or any subsequent Act with respect to eligibility to

prepay the mortgage, a statement of whether the owner has

filed a notice of intent to prepay or a plan of action under the

Emergency Low Income Housing Preservation Act of 1987 or

any subsequent Act, and the details with respect to incentives provided under the Emergency Low Income Housing

Preservation Act of 1987 or any subsequent Act in lieu of exercising prepayment rights.

(III) The Secretary shall, upon receipt of the information

in subclause (II), promptly advertise for an auction and publish

such mortgage descriptions in advance of the auction. The Secretary may conduct the auction at any time during the 6-

month period beginning upon receipt of the information in subclause (II) but under no circumstances may the Secretary conduct an auction before 2 months after receiving the mortgagee’s written notice of intent to assign its mortgage to the Secretary.

(IV) In any auction under this subparagraph, the Secretary shall accept the lowest interest rate bid for purchase

that the Secretary determines to be acceptable. The Secretary

shall cause the accepted bid to be published in the Federal

Register. Settlement for the sale of the credit instrument and

the mortgage securing the credit instrument shall occur not

later than 30 business days after the date winning bidders are

selected in the auction, unless the Secretary determines that

extraordinary circumstances require an extension (not to exceed 60 days) of the period.

(V) If no bids are received, the bids that are received are

not acceptable to the Secretary, or settlement does not occur

within the period under subclause (IV), the mortgagee shall retain all rights (including the right to interest, at a rate to be

determined by the Secretary, for the period covering any actions taken under this subparagraph) under this section to assign the mortgage loan to the Secretary.

(iii) As part of the auction process, the Secretary shall

agree to provide a monthly interest subsidy payment from the

General Insurance Fund to the purchaser under the auction of

the original credit instrument or the mortgage securing the
Sec. 221 NATIONAL HOUSING ACT 990

1The date of enactment was November 5, 1990.

credit instrument (and any subsequent holders or assigns who

are approved mortgagees). The subsidy payment shall be paid

on the first day of each month in an amount equal to the difference between the stated interest due on the mortgage loan

and the lowest interest rate necessary to accomplish a sale of

the mortgage loan or participation certificates (less the servicing fee, if appropriate) for the then unpaid principal balance

plus accrued interest at a rate determined by the Secretary.

Each interest subsidy payment shall be treated by the holder

of the mortgage as interest paid on the mortgage. The interest

subsidy payment shall be provided until the earlier of—

(I) the maturity date of the loan;

(II) prepayment of the mortgage loan in accordance

with the Emergency Low Income Housing Preservation Act

of 1987 or any subsequent Act, where applicable; or

(III) default and full payment of insurance benefits

on the mortgage loan by the Federal Housing Administration.

(iv) The Secretary shall require that the mortgage loans or

participation certificates presented for assignment are auctioned as whole loans with servicing rights released and also

are auctioned with servicing rights retained by the current

servicer.

(v) To the extent practicable, the Secretary shall encourage

State housing finance agencies, nonprofit organizations, and

organizations representing the tenants of the property securing

the mortgage, or a qualified mortgagee participating in a plan

of action under the Emergency Low Income Housing Preservation Act of 1987 or subsequent Act to participate in the auction.

(vi) The Secretary shall implement the requirements imposed by this subparagraph within 30 days from the date of

enactment of this subparagraph1 and not be subject to the requirement of prior issuance of regulations in the Federal Register. The Secretary shall issue regulations implementing this

section within 6 months of the enactment of this subparagraph.1

(vii) Nothing in this subparagraph shall diminish or impair the low income use restrictions applicable to the project

under the original regulatory agreement or the revised agreement entered into pursuant to the Emergency Low Income

Housing Preservation Act of 1987 or subsequent Act, if any, or

other agreements for the provision of Federal assistance to the

housing or its tenants.

(viii) This subparagraph shall not apply after December

31, 2002, except that this subparagraph shall continue to apply

if the Secretary receives a mortgagee’s written notice of intent

to assign its mortgage to the Secretary on or before such date.

Not later than January 31 of each year (beginning in 1992),

the Secretary shall submit to the Congress a report including

statements of the number of mortgages auctioned and sold and

their value, the amount of subsidies committed to the program

under this subparagraph, the ability of the Secretary to coordi-
991 Sec. 221 NATIONAL HOUSING ACT

1 Indented so in law.

nate the program with the incentives provided under the

Emergency Low Income Housing Preservation Act of 1987 or

subsequent Act, and the costs and benefits derived from the

program for the Federal Government.

(ix) 1 The authority of the Secretary to conduct

multifamily auctions under this paragraph shall be effective for any fiscal year only to the extent and in

such amounts as are approved in appropriations Acts

for the costs of loan guarantees (as defined in section

502 of the Congressional Budget Act of 1974), including the cost of modifying loans.

(h)(1) In addition to mortgages insured under the provisions of

this section, the Secretary is authorized, upon application by the

mortgagee, to insure under this subsection as hereinafter provided

any mortgage (including advances under such mortgage during rehabilitation) which is executed by a nonprofit organization to finance the purchase and rehabilitation of deteriorating or substandard housing for subsequent resale to low-income home purchasers and, upon such terms and conditions as the Secretary may

prescribe, to make commitments for the insurance of such mortgages prior to the date of their execution or disbursement thereon.

(2) To be eligible for insurance under paragraph (1) of this subsection, a mortgage shall—

(A) be executed by a private nonprofit corporation or association, approved by the Secretary, for financing the purchase

and rehabilitation (with the intention of subsequent resale) of

property comprising one or more tracts or parcels, whether or

not contiguous, upon which there is located deteriorating or

substandard housing consisting of (i) four or more single-family

dwellings of detached, semidetached, or row construction, or

(ii) four or more one-family units in a structure or structures

for which a plan of family unit ownership approved by the Secretary is established;

(B) be secured by the property which is to be purchased

and rehabilitated with the proceeds thereof;

(C) be in a principal amount not exceeding the appraised

value of the property at the time of its purchase under the

mortgage plus the estimated cost of the rehabilitation;

(D) bear interest (exclusive of premium charged for insurance and service charge, if any) at the rate in effect under the

proviso in subsection (d)(5) at the time of execution;

(E) provide for complete amortization (subject to paragraph (5)(E)) by periodic payments within such term as the

Secretary may prescribe; and

(F) provide for the release of individual single-family

dwellings from the lien of the mortgage upon the sale of the

rehabilitated dwellings in accordance with paragraph (5).

(3) No mortgage shall be insured under paragraph (1) unless

the mortgagor shall have demonstrated to the satisfaction of the

Secretary that (A) the property to be rehabilitated is located in a

neighborhood which is sufficiently stable and contains sufficient

public facilities and amenities to support long-term values, or (B)

the rehabilitation to be carried out by the mortgagor plus its re-
Sec. 221 NATIONAL HOUSING ACT 992

1Section 101(c)(4) of the Housing and Urban Development Act of 1968, Pub. L. 90–448, approved August 1, 1968, provides as follows:

‘‘(4) The purchase of any individual dwelling, sold by a nonprofit organization pursuant to the

provisions of section 221(h)(5) of the National Housing Act after the date of enactment of this

section, may be financed with a mortgage insured under the provisions of section 235(j)(4) of

such Act, but such mortgage shall bear interest at the rate provided in section 235(j)(2)(C) of

such Act.’’.

lated activities and the activities of other owners of housing in the

neighborhood, together with actions to be taken by public authorities, will be of such scope and quality as to give reasonable promise

that a stable environment will be created in the neighborhood.

(4) The aggregate principal balance of all mortgages insured

under paragraph (1) and outstanding at any one time shall not exceed $50,000,000.

(5)(A)1 No mortgage shall be insured under paragraph (1) unless the mortgagor enters into an agreement (in form and substance satisfactory to the Secretary) that it will offer to sell the

dwellings involved, upon completion of their rehabilitation, to individuals or families (hereinafter referred to as ‘‘low-income purchasers’’) determined by the Secretary to have incomes below the

maximum amount specified (with respect to the area involved) in

section 101(c)(1) of the Housing and Urban Development Act of

1965.

(B) The Secretary is authorized to insure under this paragraph

mortgages executed to finance the sale of individual dwellings to

low-income purchasers as provided in subparagraph (A). Any such

mortgage shall—

(i) be in a principal amount equal to that portion of the unpaid balance of the principal mortgage covering the property

(insured under paragraph (1)) which is allocable to the individual dwelling involved; and

(ii) bear interest at the same rate as the principal mortgage or such lower rate, not less than 1 per centum, as the

Secretary may prescribe if in his judgment the purchaser’s income is sufficiently low to justify the lower rate, and provide

for complete amortization within a term equal to the remaining

term (determined without regard to subparagraph (E) of such

principal mortgage: Provided, That if the rate of interest initially prescribed is less than the rate borne by the principal

mortgage and the purchaser’s income (as determined on the

basis of periodic review) subsequently rises, the rate of interest

so prescribed shall be increased (but not above the rate borne

by such principal mortgage), under regulations of the Secretary, to the extent appropriate to reflect the increase in such

income, and the mortgage shall so provide.

(C) The price for which any individual dwelling is sold to a

low-income purchaser under this paragraph shall be the amount of

the mortgage covering the sale as determined under subparagraph

(B), except that the purchaser shall in addition thereto be required

to pay on account of the property at the time of purchase such

amount (which shall not be less than $200, but which may be applied in whole or in part toward closing costs) as the Secretary may

determine to be reasonable and appropriate in the circumstances.

(D) Upon the sale under this paragraph of any individual

dwelling, such dwelling shall be released from the lien of the principal mortgage, and such mortgage shall thereupon be replaced by
993 Sec. 221 NATIONAL HOUSING ACT

an individual mortgage insured under this paragraph to the extent

of the portion of its unpaid balance which is allocable to the dwelling covered by such individual mortgage. Until all of the individual

dwellings in the property covered by the principal mortgage have

been sold, the mortgagor shall hold and operate the dwellings remaining unsold at any given time as though they constituted rental

units in a project covered by a mortgage which is insured under

subsection (d)(3) (and which receives the benefits of the interest

rate provided for in the proviso in subsection (d)(5)).

(E) Upon the sale under this paragraph of all of the individual

dwellings in the property covered by the principal mortgage, and

the release of all individual dwellings from the lien of the principal

mortgage, the insurance of the principal mortgage shall be terminated and no adjusted premium charge shall be charged by the

Secretary upon such termination.

(F) Any mortgage insured under this paragraph shall contain

a provision that if the low-income mortgagor does not continue to

occupy the property the interest rate shall increase to the highest

rate permissible under this section and the regulations of the Secretary effective at the time of commitment for insurance of the

principal mortgage; except that the increase in interest rate shall

not be applicable if the property is sold and the purchaser is (i) the

nonprofit organization which executed the principal mortgage (ii) a

public housing agency having jurisdiction under the United States

Housing Act of 1937 over the area where the dwelling is located,

or (iii) a low-income purchaser approved for the purposes of this

paragraph by the Secretary.

(6) In addition to the mortgages that may be insured under

paragraphs (1) and (5), the Secretary is authorized to insure under

this subsection at any time within one year after the date of the

enactment of this paragraph, upon such terms and conditions as he

may prescribe, mortgages which are executed by individuals or

families that meet the income criteria prescribed in paragraph

(5)(A) and are executed for the purpose of financing the rehabilitation or improvement of single-family dwellings of detached,

semidetached, or row construction that are owned in each instance

by a mortgagor who has purchased the dwelling from a nonprofit

organization of the type described in this subsection. To be eligible

for such insurance, a mortgage shall—

(A) be in principal amount not exceeding the lesser of $18,000 or the sum of the estimated cost of repair and rehabilitation and the Secretary’s estimate of the value of the property

before repair and rehabilitation, except that in no case involving refinancing shall such mortgage exceed such estimated cost

of repair and rehabilitation and the amount (as determined by

the Secretary) required to refinance existing indebtedness secured by the property;

(B) bear interest (exclusive of premium charges for insurance and service charge, if any) at 3 per centum per annum or

such lower rate, not less than 1 per centum, as the Secretary

may prescribe if in his judgment the mortgagor’s income is sufficiently low to justify the lower rate: Provided, That, if the

rate of interest initially prescribed is less than 3 per centum

per annum and the mortgagor’s income (as determined on the

basis of periodic review) subsequently rises, the rate shall be
Sec. 221 NATIONAL HOUSING ACT 994

increased (but not above 3 per centum), under regulations of

the Secretary, to the extent appropriate to reflect the increase

in such income, and the mortgage shall so provide;

(C) involve a mortgagor that shall have paid on account of

the property at the time of the rehabilitation such amount

(which shall not be less than $200 in cash or its equivalent,

but which may be applied in whole or in part toward closing

costs) as the Secretary may determine to be reasonable and appropriate under the circumstances; and

(D) contain a provision that, if the low-income mortgagor

does not continue to occupy the property, the interest rate

shall increase to the highest rate permissible under this section and the regulations of the Secretary effective at the time

the commitment was issued for insurance of the mortgage; except that the increase in interest rate shall not be applicable

if the property is sold and the purchaser is (i) a nonprofit organization which has been engaged in purchasing and rehabilitating deteriorating and substandard housing with financing

under a mortgage insured under paragraph (1) of this subsection, (ii) a public housing agency having jurisdiction under

the United States Housing Act of 1937 over the area where the

dwelling is located, or (iii) a low-income purchaser approved for

the purposes of this paragraph by the Secretary.

(7) Where the Secretary approved a plan of family unit ownership, the terms ‘‘single-family dwelling,’’ ‘‘single-family dwellings,’’

‘‘individual dwelling,’’ and ‘‘individual dwellings’’ shall mean a family unit or family units, together with the undivided interest (or interests) in the common areas and facilities.

(8) For purposes of this subsection, the terms ‘‘single-family

dwelling’’ and ‘‘single-family dwellings’’ (except for purposes of

paragraph (7)) shall include a two-family dwelling which has been

approved by the Secretary.

(i)(1) The Secretary is authorized, with respect to any project

involving a mortgage insured under subsection (d)(3) which bears

interest at the below-market interest rate prescribed in the proviso

of subsection (d)(5), to permit a conversion of the ownership of such

project to a plan of family unit ownership. Under such plan, each

family unit shall be eligible for individual ownership and provision

shall be included for the sale of the family units, together with an

undivided interest in the common areas and facilities which serve

the project, to low or moderate income purchasers. The Secretary

shall obtain such agreements as he determines to be necessary to

assure continued maintenance of the common areas and facilities.

Upon such sale, the family unit and the undivided interest in the

common areas shall be released from the lien of the project mortgage.

(2)(A) The Secretary is authorized, upon application by the

mortgagee, to insure under this subsection mortgages financing the

purchase of individual family units under the plan prescribed in

paragraph (1). Commitments may be issued by the Secretary for

the insurance of such mortgages prior to the date of their execution

or disbursement thereon, upon such terms and conditions as the

Secretary may prescribe. To be eligible for such insurance, the

mortgage shall—
995 Sec. 221 NATIONAL HOUSING ACT

(i) be executed by a mortgagor having an income within

the limits prescribed by the Secretary for occupants of projects

financed with a mortgage insured under subsection (d)(3)

which bears interest at the below-market rate prescribed in the

proviso of subsection (d)(5);

(ii) involve a principal obligation (including such initial

service charges, and such appraisal, inspection, and other fees,

as the Secretary shall approve) in an amount not to exceed the

Secretary’s estimate of the appraised value of the family unit,

including the mortgagor’s interest in the common areas and facilities, as of the date the mortgage is accepted for insurance;

(iii) bear interest at a rate determined by the Secretary

(which may vary in accordance with the regulations of the Secretary promulgated pursuant to the last sentence of paragraph

(4) of this subsection) but not less than the below-market rate

in effect under the proviso of subsection (d)(5) at the date of

the commitment for insurance; and

(iv) provide for complete amortization by periodic payments within such terms as the Secretary may prescribe, but

not to exceed forty years from the beginning of amortization of

the mortgage.

(B) The price for which the individual family unit is sold to the

low or moderate income purchaser shall not exceed the appraised

value of the property, as determined under subparagraph (A)(ii),

except that the purchaser shall be required to pay on account of

the property at the time of purchase at least such amount, in cash

or its equivalent (which shall be not less than 3 per centum of such

price, but which may be applied in whole or in part toward closing

costs), as the Secretary may determine to be reasonable and appropriate.

(3) Upon the sale of all of the family units covered by the

project mortgage, and the release of all of the family units (including the undivided interest allocable to each unit in the common

areas and facilities) from the lien of the project mortgage, the insurance of the project mortgage shall be terminated and no adjusted premium charge shall be collected by the Secretary upon

such termination.

(4) Any mortgage covering an individual family unit insured

under this subsection shall contain a provision that, if the original

mortgagor does not continue to occupy the property, the interest

rate shall increase to the highest rate permissible under this section and the regulations of the Secretary effective at the time the

commitment was issued for the insurance of the project mortgage;

except that the requirement for an increase in interest rate shall

not be applicable if the property is sold and the purchaser is (i) a

nonprofit purchaser approved by the Secretary, or (ii) a low- or

moderate-income purchaser who has an income within the limits

prescribed by the Secretary for occupants of projects financed with

a mortgage insured under subsection (d)(3) which bears interest at

the below-market rate prescribed in the proviso of subsection (d)(5).

The mortgage shall also contain a provision that, if the Secretary

determines that the annual income of the original mortgagor (or a

purchaser described in clause (ii) of the preceding sentence) has increased to an amount enabling payment of a greater rate of interest, the interest rate of the individual mortgage may be increased
Sec. 221 NATIONAL HOUSING ACT 996

1So in law. Probably should be designated as subparagraph (A).

2So in law. Probably should be designated as subparagraph (B).

3So in law. Probably should be designated as subparagraph (C).

up to the highest rate permissible under the regulations of the Secretary for mortgages insured under this section, effective at the

time the commitment was issued for the insurance of the mortgage.

(5) For the purpose of this subsection—

(i) the term ‘‘mortgage’’, when used in relation to a mortgage insured under paragraph (2) of this subsection, includes

a first mortgage given to secure the unpaid purchase price of

a fee interest in, or a long-term leasehold interest in a onefamily unit in a multifamily project and an undivided interest

in the common areas and facilities which serve the project; and

(ii) the term ‘‘common areas and facilities’’ includes the

land and such commercial, community, and other facilities as

are approved by the Secretary.

(j)(1) The Secretary is authorized, with respect to any rental

project, involving a mortgage insured under subsection (d)(3) which

bears interest at the below-market interest rate prescribed in the

proviso of subsection (d)(5), to permit a conversion of the ownership

of such project to a cooperative approved by the Secretary. Membership in such cooperative shall be made available only to those

families having an income within the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured

under subsection (d)(3) which bears interest at such below-market

rate: Provided, That families residing in the rental project at the

time of its conversion to a cooperative who do not meet such income limits may be permitted to become members in the cooperative under such special terms and conditions as the Secretary may

prescribe.

(2) The Secretary is authorized, upon application by the mortgagee, to insure under this subsection cooperative mortgages financing the purchase of projects meeting the requirements of paragraph (1). Commitments may be issued by the Secretary for the insurance of such mortgages prior to the date of their execution or

disbursement thereon, upon such terms and conditions as the Secretary may prescribe. To be eligible for such insurance, the mortgage shall—

(i) 1 involve a principal obligation (including such initial

service charges and appraisal, inspection, and other fees as the

Secretary shall approve) in an amount not exceeding the appraised value of the property for continued use as a cooperative, which value shall be based upon a mortgage amount on

which the debt service can be met from the income of the property when operated on a nonprofit basis, after the payment of

all operating expenses, taxes, and required reserves;

(ii) 2 bear interest at the below-market rate prescribed in

the proviso of subsection (d)(5); and

(iii) 3 provide for complete amortization within such terms

as the Secretary may prescribe.

(k) With respect to any project insured under subsection (d)(3)

or (d)(4), the Secretary may further increase the dollar amount limitations which would otherwise apply for the purpose of those subsections by up to 20 per centum if such increase is necessary to account for the increased cost of the project due to the installation
997 Sec. 222 NATIONAL HOUSING ACT

therein of a solar energy system (as defined in subparagraph (3) of

the last paragraph of section 2(a) of this Act) or residential energy

conservation measures (as defined in section 210(11) (A) through

(G) and (I) of Public Law 95–619) in cases where the Secretary determines that such measures are in addition to those required

under the minimum property standards and will be cost-effective

over the life of the measure.

(l)(1) Notwithstanding any other provision of law, tenants residing in eligible multifamily housing whose incomes exceed 80 percent of area median income shall pay as rent not more than the

lower of the following amounts: (A) 30 percent of the family’s adjusted monthly income; or (B) the relevant fair market rental established under section 8(b) of the United States Housing Act of

1937 for the jurisdiction in which the housing is located. An owner

shall phase in any increase in rents for current tenants resulting

from this subsection.

(2) For purposes of this subsection, the term ‘‘eligible multifamily housing’’ means any housing financed by a loan or mortgage

that is (A) insured or held by the Secretary under subsection (d)(3)

and assisted under section 101 of the Housing and Urban Development Act of 1965 or section 8 of the United States Housing Act

1937; or (B) insured or held by the Secretary and bears interest at

a rate determined under the proviso of subsection (d)(5).

MORTGAGOR INSURANCE FOR SERVICEMEN

SEC. 222. ø12 U.S.C. 1715m¿ (a) The purpose of this section is

to aid in the provision of housing accommodations for servicemen

in the Armed Forces of the United States, servicemen in the United

States Coast Guard and their families, and servicemen in the

United States National Oceanic and Atmospheric Administration

and their families by supplementing the insurance of mortgages

under section 203 of this title with a system of mortgage insurance

specially designed to assist the financing required for the construction or purchase of dwellings by those persons. As used in this section, a ‘‘servicemen’’ means a person to whom the Secretary of Defense (or any officer or employee designated by him), the Secretary

of Transportation (or any officer or employee designated by him),

or the Secretary of Commerce (or any officer or employee designated by him), as the case may be, has issued a certificate hereunder indicating that such person requires housing, is serving on

active duty in the Armed Forces of the United States, in the United

States Coast Guard, or in the United States National Oceanic and

Atmospheric Administration and has served on active duty for

more than two years, but a certificate shall not be issued hereunder to any person ordered to active duty for training purposes

only. The Secretary of Defense, the Secretary of Transportation,

and the Secretary of Commerce, respectively, are authorized to prescribe rules and regulations governing the issuance of such certificates and may withhold issuance of more than one such certificate

to a serviceman whenever in his discretion issuance is not justified

due to circumstances resulting from military assignment, or, in the

case of the United States Coast Guard or the United States National Oceanic and Atmospheric Administration, other assignment.
Sec. 222 NATIONAL HOUSING ACT 998

1Section 222(b) was amended by section 103 of the Housing Act of 1957, Pub. L. 85–104, approved July 12, 1957, to read as shown. Section 104 of the Housing Act of 1957 provides further

that the Secretary, in establishing maximum loan-to-value ratios for mortgages insured by him

under section 222(b) ‘‘shall determine that such ratios are in the public interest after taking

into consideration (1) the effect of such ratios in the national economy and on conditions in the

building industry, and (2) availability or unavailability of residential mortgage credit assisted

under the Servicemen’s Readjustment Act of 1944, as amended’’.

(b) To be eligible for insurance under this section a mortgage

shall—

(1) meet the requirements of section 203(b) or 203(i), or

221(d)(2), or 234(c), except as such requirements are modified

by this section;

(2) involve a dwelling designed principally for a one-family

residence or a one-family unit in a condominium project;

(3) 1 have a principal obligation not in excess of the sum of (i) 97 per centum of $25,000 of the appraised value of the

property as of the date the mortgage is accepted for insurance,

and (ii) 95 per centum of such value in excess of $25,000; and

(4) be executed by a mortgagor who at the time of application for insurance is certified as a ‘‘serviceman’’ and who at the

time of insurance is the owner of the property and either occupies the property as a principal residence or certifies that his

failure to do so is the result of his military assignment, or in

the case of the United States Coast Guard or the United States

National Oceanic and Atmospheric Administration, other assignment.

(c) The Secretary may prescribe the manner in which a mortgage may be accepted for insurance under this section. Premiums

fixed by the Secretary under section 203 with resepct to, or payable

during, the period of ownership by a serviceman of the property involved shall not be payable by the mortgagee but shall be paid not

less frequently than once each year, upon request of the Secretary

to the Secretary of Defense, the Secretary of Transportation, or the

Secretary of Commerce, as the case may be, from the respective appropriations available for pay and allowances of persons eligible for

mortgage insurance under this section. As used herein, ‘‘the period

of ownership by a serviceman’’ means the period, for which premiums are fixed, prior to the date that the Secretary of Defense (or

any officer or employee or other persons designated by him), the

Secretary of Transporation (or any officer or employee or other person designated by him), or the Secretary of Commerce (or any officer or employee or other person designated by him), as the case

may be, furnishes the Secretary with a certification that such ownership (as defined by the Secretary), has terminated.

(d) Any mortgagee under a mortgage insured under this section is entitled to the benefits of the insurance as provided in section 204(a) with respect to mortgages insured under section 203.

(e) The provisions of subsections (b), (c), (d), (e), (f), (g), (h), (j),

and (k) of section 204 shall apply to mortgages insured under this

section, except that as applied to those mortgages (1) all references

to the ‘‘Fund,’’ or ‘‘Mutual Mortgage Insurance Fund,’’ shall refer

to the General Insurance Fund, and (2) all references to ‘‘section

203’’ shall refer to this section.

(f) The Secretary is authorized to transfer to this section the

insurance on any mortgage covering a single-family dwelling or a

one-family unit in a condominium project insured under this Act,
999 Sec. 223 NATIONAL HOUSING ACT

if the mortgage indebtedness thereof has been assumed by a serviceman who at the time of assumption is the owner of the property

and either occupies the property as a principal residence or certifies that his failure to do so is the result of his military assignment, or, in the case of the United States Coast Guard or the

United States National Oceanic and Atmospheric Administration,

other assignment.

(g) Where a serviceman dies while on active duty in the Armed

Forces of the United States or in the United States Coast Guard

or in the United States National Oceanic and Atmospheric Administration, leaving a surviving widow as owner of the property, the

period of ownership by the serviceman (within the meaning of subsection (c) of this section) shall extend for two years beyond the

date of the serviceman’s death or until the date the widow disposes

of the property, whichever date occurs first. The Secretary of Defense or the Secretary of Transportation, or the Secretary of Commerce, as the case may be, shall notify such widow promptly following the serviceman’s death of the additional costs to be borne

by the mortgagor following termination of the two year period.

MISCELLANEOUS HOUSING INSURANCE

SEC. 223. ø12 U.S.C. 1715n¿ (a) Notwithstanding any of the

provisions of this Act and without regard to limitations upon eligibility contained in any section or title of this Act, other than the

limitation in section 203(g), the Secretary is authorized upon application by the mortgagee, to insure or make commitments to insure

under any section or title of this Act any mortgage—

(1) executed in connection with the sale by the Government, or any agency or official thereof, of any housing acquired

or constructed under Public Law 849, Seventy-sixth Congress,

as amended; Public Law 781, Seventy-sixth Congress, as

amended or Public Laws 9, 73, or 353, Seventy-seventh Congress, as amended (including any property acquired, held, or

constructed in connection with such housing or to serve the inhabitants thereof); or

(2) executed in connection with the sale by the Secretary

of Housing and Urban Development, or by any public housing

agency with the approval of the Secretary, of any housing (including any property acquired, held, or constructed in connection with such housing or to serve the inhabitants thereof)

owned or financially assisted pursuant to the provisions of

Public Law 671, Seventy-sixth Congress; or

(3) executed in connection with the sale by the Government, or any agency or official thereof, of any of the so-called

Greenbelt towns, or parts thereof, including projects or parts

thereof, known as Greenhills, Ohio; Greenbelt, Maryland; and

Greendale, Wisconsin, developed under the Emergency Relief

Appropriation Act of 1935, or of any of the village properties

or employee’s housing under the jursidiction of the Tennessee

Valley Authority, or of any housing under the jurisdiction of

the Department of the Interior located within the town area of

Coulee Dam, Washington, acquired by the United States for

the construction, operation, and maintenance of Grand Coulee

Dam and its appurtenant works: Provided, That for the pur-
Sec. 223 NATIONAL HOUSING ACT 1000

pose of the applicant of this title to sales by the Secretary of

the Interior pursuant to subsection 3(b)(1) and 3(b)(2) of the

Coulee Dam Community Act of 1957, the selling price of the

property involved shall be deemed to be the appraised value,

or of any permanent housing under the jurisidiction of the Department of the Interior constructed under the Boulder Canyon

Project Act of December 21, 1928, as amended and supplemented, located within the Boulder City municipal area: Provided, That for purposes of the application of this title to sales

by the Secretary of the Interior pursuant to subsection 3(b)(1)

and 3(b)(2) of the Boulder City Act of 1958, the selling price

of the property involved shall be deemed to be the appraised

value; or

(4) executed in connection with the sale by the Government or any agency or official thereof, of any housing (including any property acquired, held, or constructed in connection

therewith or to serve the inhabitants thereof) pursuant to the

Atomic Energy Community Act of 1955, as amended: Provided,

That such insurance shall be issued without regard to any

preferences or priorities except those prescribed by this Act or

the Atomic Energy Community Act of 1955, as amended; or

(5) executed in connection with the sale by a State or municipality, or an agency, instrumentality, or political subdivision of either, of a project consisting of any permanent housing

(including any property acquired, held, or constructed in connection therewith or to serve the inhabitants thereof), constructed by or on behalf of such State, municipality, agency, instrumentality, or political subdivision, for the occupancy of veterans of World War II, or Korean veterans, their families, and

others; or

(6) executed in connection with the first resale, within two

years from the date of its acquisition from the Government, of

any portion of a project or property of the character described

in paragraphs (1), (2), (3), and (4) above; or

(7) given to refinance an existing mortgage insured under

this Act, or an existing mortgage held by the Secretary that is

subject to a mortgage restructuring and rental assistance sufficiency plan pursuant to the Multifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note), provided that—

(A) the principal amount of any such refinancing mortgage shall not exceed the original principal amount or the

unexpired term of such existing mortgage and shall bear

interest at such rate as may be agreed upon by the mortgagor and the mortgagee, except that (i) the principal

amount of any such refinancing mortgage may equal the

outstanding balance of an existing mortgage insured pursuant to section 245, if the amount of the monthly payment due under the refinancing mortgage is less than that

due under the existing mortgage for the month in which

the refinancing mortgage is executed; (ii) a mortgagee may

not require a minimum principal amount to be outstanding

on the loan secured by the existing mortgage; (iii) in any

case involving the refinancing of a loan in which the Secretary determines that the insurance of a mortgage for an
1001 Sec. 223 NATIONAL HOUSING ACT

1Section 103(d) of the Multifamily Housing Property Disposition Reform Act of 1994, Pub. L.

103–233, provides as follows:

‘‘(d) STREAMLINED REFINANCING.—As soon as practicable, the Secretary shall implement a

streamlined refinancing program under the authority provided in section 223 of the National

Housing Act to prevent the default of mortgages insured by the FHA which cover multifamily

housing projects, as defined in section 203(b) of the Housing and Community Development

Amendments of 1978.’’.

additional term will inure to the benefits of the applicable

insurance fund, taking into consideration the outstanding

insurance liability under the existing insured mortgage,

such refinancing mortgage may have a term not more than

twelve years in excess of the unexpired term of such existing insured mortgage; and (iv) any multifamily mortgage

that is refinanced under this paragraph shall be documented through amendments to the existing insurance

contract and shall not be structured through the provisions

of a new insurance contract; and

(B) a mortgage of the character described in paragraphs (1) through (6) of this subsection shall have a maturity and a principal obligation not in excess of the maximums prescribed under the applicable section or title of

this Act, except that in no case may the principal obligation of a mortgage referred to in paragraph (5) of this subsection exceed 90 per centum of the appraised value of the

mortgage property, and shall bear interest at such rate as

may be agreed upon by the mortgagor and the mortgagee;

(C) a mortgage that is subject to a mortgage restructuring and rental assistance sufficiency plan pursuant to

the Multifamily Assisted Housing Reform and Affordability

Act of 1997 (42 U.S.C. 1437f note) and is refinanced under

this paragraph may have a term of not more than 30

years; or 1

(8) executed in connection with the sale by the Government of any housing acquired pursuant to section 1013 of the

Demonstration Cities and Metropolitan Development Act of

1966.

(b) Notwithstanding any of the provisions of this title and

without regard to limitations upon eligibility contained in section

221, the Secretary may in his discretion insure under section

221(d)(3) any mortgage executed by a mortgagor of the character

described therein where such mortgage is given to refinance a

mortgage covering an existing property or project (other than a

one- to four-family structure) located in an urban renewal area, if

the Secretary finds that such insurance will facilitate the occupancy of dwelling units in the property or project by families of low

or moderate income or families displaced from an urban renewal

area or displaced as a result of governmental action.

(c) The Secretary shall also have authority to insure under this

Act any mortgage assigned to the Secretary in connection with payment under a contract of mortgage insurance or executed in connection with the sale by the Secretary, including a sale through another entity acting under authority of the fourth sentence of section

204(g), of any property acquired under any section or title of this

Act without regard to any limitations or requirements contained in

this Act upon eligibility of the mortgage, upon the payment of insurance premiums, or upon the terms and conditions of insurance
Sec. 223 NATIONAL HOUSING ACT 1002

settlement and the benefits of the insurance to be included in such

settlement.

(d)(1) Notwithstanding any other provision of this Act, the Secretary is authorized to insure loans made to cover the operating

losses of certain projects that have existing project mortgages insured by the Secretary. Insurance under this subsection shall be in

the Secretary’s discretion and upon such terms and conditions as

the Secretary may prescribe, and shall be provided in accordance

with the provisions of this subsection. For purposes of this subsection, the term ‘‘operating loss’’ means the amount by which the

sum of the taxes, interest on the mortgage debt, mortgage insurance premiums, hazard insurance premiums, and the expense of

maintenance and operation of the project covered by the mortgage,

exceeds the income of the project.

(2) To be eligible for insurance pursuant to this paragraph—

(A) the existing project mortgage (i) shall have been insured by the Secretary at any time before or after the date of

enactment of the Housing and Community Development Act of

1987; and (ii) shall cover any property, other than a property

upon which there is located a 1- to 4-family dwelling;

(B) the operating loss shall have occurred during the first

24 months after the date of completion of the project, as determined by the Secretary; and

(C) the loan shall be in an amount not exceeding the operating loss.

(3) To be eligible for insurance pursuant to this paragraph—

(A) the existing project mortgage (i) shall have been insured by the Secretary at any time before or after the date of

enactment of the Housing and Community Development Act of

1987; (ii) shall cover any property, other than a property upon

which there is located a 1- to 4-family dwelling; and (iii) shall

not cover a subsidized project, as defined by the Secretary;

(B) the loan shall be in an amount not exceeding 80 percent of the unreimbursed cash contributions made on or after

March 18, 1987, by the project owner for the use of the project,

during any period of consecutive months (not exceeding 24

months) in the first 10 years after the date of completion of the

project, as determined by the Secretary, except that in no

event may the amount of the loan exceed the operating loss

during such period;

(C) the loan shall be made within 10 years after the end

of the period of consecutive months referred to in the preceding

subparagraph; and

(D) the project shall meet all applicable underwriting and

other requirements of the Secretary at the time the loan is to

be made.

(4) Any loan insured pursuant to this subsection shall (A) bear

interest at such rate as may be agreed upon by the mortgagor and

mortgagee; (B) be secured in such manner as the Secretary shall

require; (C) be limited to a term not exceeding the unexpired term

of the original mortgage; and (D) be insured under the same section as the original mortgage. The Secretary may provide insurance

pursuant to paragraph (2) or (3), or pursuant to both such paragraphs, in connection with an existing project mortgage, except

that the Secretary may not provide insurance pursuant to both
1003 Sec. 223 NATIONAL HOUSING ACT

1October 28, 1992.

such paragraphs in connection with the same period of months referred to in paragraphs (2)(B) and (3)(B). The Secretary is authorized to collect a premium charge for insurance of loans pursuant

to this subsection in an amount computed at the same premium

rate as is applicable to the original mortgage. This premium shall

be payable in cash or in debentures of the insurance fund under

which the loan is insured at par plus accrued interest. In the event

of a failure of the borrower to make any payment due under such

loan or under the original mortgage, both the loan and original

mortgage shall be considered in default, and if such default continues for a period of thirty days, the lender shall be entitled to insurance benefits, computed in the same manner as for the original

mortgage, except that in determining the interest rate under section 224 for the debentures representing the portion of the claim

applicable to the loan, the date of the commitment to insure the

loan and the insurance date of the loan shall be taken into consideration rather than the commitment or insurance date for the original mortgage.

(5) A loan involving a project covered by a mortgage insured

under section 213 that is the obligation of the Cooperative Management Housing Insurance Fund shall be the obligation of such fund,

and loans involving projects covered by a mortgage insured under

section 236 or under any section of this title pursuant to subsection

(e) of this section shall be the obligation of the Special Risk Insurance Fund.

(6) In determining the amount of an operating loss loan to be

insured pursuant to this subsection, the Secretary shall not reduce

such amount solely to reflect any amounts placed in escrow (at the

time the existing project mortgage was insured) for initial operating deficits. If an operating loss loan was insured by the Secretary pursuant to this subsection before the date of the enactment

of the Housing and Community Development Act of 1992 1 and was

reduced solely to reflect the amount placed in escrow for initial operating deficits, the Secretary shall insure, to the extent of the

availability of insurance authority provided in appropriation Acts,

an increase in the existing loan or a separate loan, in an amount

equal to the lesser of (A) the maximum amount permitted under

this subsection and the applicable underwriting requirements established by the Secretary and in effect at the time the loan is to

be made, or (B) the amount of the escrow for initial operating deficits.

(e) Notwithstanding any of the provisions of this Act except

section 212, and without regard to limitations upon eligibility contained in any section of this title or title XI, other than the limitation in section 203(g), the Secretary is authorized, upon application

by the mortgagee, to insure under any section of this title or title

XI a mortgage executed in connection with the repair, rehabilitation, construction, or purchase of property located in an older, declining urban area in which the conditions are such that one or

more of the eligibility requirements applicable to the section or title

under which insurance is sought could not be met, if the Secretary

finds that (1) the area is reasonably viable, giving consideration to

the need for providing adequate housing or group practice facilities
Sec. 223 NATIONAL HOUSING ACT 1004

1October 8, 1980.

for families of low and moderate income in such area, and (2) the

property is an acceptable risk in view of such consideration. The insurance of a mortgage pursuant to this subsection shall be the obligation of the Special Risk Insurance Fund.

(f)(1) Notwithstanding any of the provisions of this Act, the

Secretary is authorized, in his discretion, to insure under any section of this title a mortgage executed in connection with the purchase or refinancing of an existing multifamily housing project or

the refinancing of existing debt of an existing hospital (or existing

nursing home, existing assisted living facility, existing intermediate care facility, existing board and care home, or any combination thereof).

(2) In the case of the purchase or refinancing under this subsection of a multifamily housing project located in an older, declining urban area, the Secretary shall make available an amount not

to exceed $30,000,000 of available purchase authority pursuant to

section 305 of this Act to reduce interest rates on low- and moderate-income rental housing in projects having 100 units or less

which otherwise could not support refinancing and moderate rehabilitation without causing excessive rent burdens on current tenants due to rent increases. The Secretary shall prescribe such

terms and conditions as he deems necessary to assure that—

(A) the refinancing is used to lower the monthly debt service only to the extent necessary to assure the continued economic viability of the project, taking into account any rent reductions to be implemented by the mortgagor; and

(B) during the mortgage term no rental increases shall be

made except those which are necessary to offset actual and

reasonable operating expense increases or other necessary expense increases and maintain reasonable profit levels approved

by the Secretary.

(3) For all insurance authorized by this subsection and provided pursuant to a commitment entered into after the date of enactment of the Housing and Community Development Act of 1980,1

the Secretary may not accept an offer to prepay or request refinancing of a mortgage secured by rental housing unless the Secretary takes appropriate action that will obligate the borrower (and

successors in interest thereof) to utilize the property as a rental

property for a period of five years from the date on which the insurance was provided (twenty years in the case of any such mortgage purchased under section 305) unless the Secretary finds

that—

(A) the conversion of the property to a cooperative, or condominium form of ownership is sponsored by a bona fide tenants’ organization representing a majority of the households in

the project;

(B) continuance of the property as rental housing is clearly

unnecessary to assure adequate rental housing opportunities

for low- and moderate-income people in the community; or

(C) continuance of the property as rental housing would

have an undesirable and deleterious effect on the surrounding

neighborhood.
1005 Sec. 224 NATIONAL HOUSING ACT

(4) In the case of refinancing of an existing hospital (or existing

nursing home, existing assisted living facility, existing intermediate care facility, existing board and care home, or any combination thereof) the Secretary shall prescribe such terms and conditions as the Secretary deems necessary to assure that—

(A) the refinancing is employed to lower the monthly debt

service costs (taking into account any fees or charges connected

with such refinancing) of such existing hospital (or existing

nursing home, existing assisted living facility, existing intermediate care facility, existing board and care home, or any

combination thereof);

(B) the proceeds of any refinancing will be employed only

to retire the existing indebtedness and pay the necessary cost

of refinancing on such existing hospital (or existing nursing

home, existing assisted living facility, existing intermediate

care facility, existing board and care home, or any combination

thereof);

(C) such existing hospital (or existing nursing home, existing assisted living facility, existing intermediate care facility,

existing board and care home, or any combination thereof) is

economically viable; and

(D) the applicable requirements for certificates, studies,

and statements of section 232 (for the existing nursing home,

existing assisted living facility, intermediate care facility,

board and care home, or any combination thereof, proposed to

be refinanced) or of section 242 (for the existing hospital proposed to be refinanced) have been met.

(5) In the case of any purchase or refinancing under this subsection involving property to be rehabilitated or developed under

section 17 of the United States Housing Act of 1937, the Secretary

may—

(A) include rehabilitation or development costs of not to exceed $20,000 per unit, except that the Secretary may increase

such amount by not to exceed 25 per centum for specific properties where cost levels so require;

(B) permit subordinated liens securing up to the full

amount of mortgage financing provided by State or local governments or agencies thereof; and

(C) pay such benefits in cash unless the mortgagee submits a written request for debenture payment.

(g) Notwithstanding any other provisions of this Act, the Secretary may, in his discretion, insure a mortgage covering a multifamily housing project including units which are not self-contained.

DEBENTURE INTEREST RATE

SEC. 224. ø12 U.S.C. 1715o¿ Notwithstanding any other provisions of this Act, debentures issued under any section of this Act

with respect to a loan or mortgage accepted for insurance on or

after thirty days following the effective date of the Housing Act of

1954 (except debentures issued pursuant to paragraph (4) of section 221(g)) shall bear interest at the rate in effect on the date the

commitment to insure the loan or mortgage was issued, or the date

the loan or mortgage was endorsed for insurance, or (when there

are two or more insurance endorsements) the date the loan or
Sec. 225 NATIONAL HOUSING ACT 1006

mortgage was initially endorsed for insurance, whichever rate is

the highest, except that debentures issued pursuant to section

220(f), section 220(h)(7), section 221(g), section 233, or section 238

may, at the discretion of the Secretary, bear interest at the rate in

effect on the date they are issued.

The Secretary shall from time to time, with the approval of the

Secretary of the Treasury, establish such interest rate in an

amount not in excess of the annual rate of interest determined by

the Secretary of the Treasury, at the request of the Secretary, by

estimating the average yield to maturity, on the basis of daily closing market bid quotations or prices during the calendar month next

preceding the establishment of such rate of interest, on all outstanding marketable obligations of the United States having a maturity date of fifteen years or more from the first day of such next

preceding month, and by adjusting such estimated average annual

yield to the nearest one-eight of 1 per centum.

OPEN-END MORTGAGES

SEC. 225. ø12 U.S.C. 1715p¿ Notwithstanding any other provisions of this Act, in connection with any mortgage insured pursuant to any section of this Act which covers a property upon which

there is located a dwelling designed principally for residential use

for not more than four families in the aggregate, the Secretary is

authorized upon such terms and conditions as he may prescribe, to

insure under said section the amount of any advance for the improvement or repair of such property made to the mortgagor pursuant to an ‘‘open-end’’ provision in the mortgage, and to add the

amount of such advance to the original principal obligation in determining the value of the mortgage for the purpose of computing

the amounts of debentures and certificate of claim to which the

mortgagee may be entitled: Provided, That the Secretary may require the payment of such charges, including charges in lieu of insurance premiums, as he may consider appropriate for the insurance of such ‘‘open-end’’ advances: Provided further, That only advances for such improvements or repairs as substantially protect or

improve the basic livability or utility of the property involved shall

be eligible for insurance under this section: Provided further, That

no such advance shall be insured under this section if the amount

thereof plus the amount of the unpaid balance of the original principal obligation of the mortgage would exceed the amount of such

original principal obligation unless the mortgagor certifies that the

proceeds of such advance will be used to finance the construction

of additional rooms or other enclosed space as a part of the dwelling: And provided further, That the insurance of ‘‘open-end’’ advances shall not be taken into account in determining the aggregate amount of principal obligations of mortgages which may be insured under this Act.

APPRAISAL AVAILABLE TO HOME BUYERS

SEC. 226. ø12 U.S.C. 1715q¿ The Secretary is hereby authorized and directed to require that, in connection with any property

upon which there is located a dwelling designed principally for a

single-family residence or a two-family residence and which is approved for mortgage insurance under section 203, 213 with respect
1007 Sec. 227 NATIONAL HOUSING ACT

to any property or project of a corporation or trust of the character

described in paragraph numbered (2) of subsection (a) thereof, 220,

231, 232, 233, 234, 235(i), 237, or 903, of this Act, the seller or

builder or such other person as may be designated by the Secretary

shall agree to deliver, prior to the sale of the property, to the person purchasing such dwelling for his own occupancy, a written

statement setting forth the amount of the appraised value of the

property as determined by the Secretary. This section shall not

apply in any case where the mortgage involved was insured or the

commitment for such insurance was issued prior to the effective

date of the Housing Act of 1954. Notwithstanding the first sentence

of this section, the Secretary is authorized to require, in connection

with any mortgage where the mortgage amount is computed on the

basis of the Secretary’s estimate of the replacement cost of the

property, or on the basis of any other estimates of the Secretary,

that a written statement setting forth such estimate or estimates,

as the cases may be, be furnished under this section in lieu of a

written statement setting forth the amount of the appraised value

of the property.

BUILDER’S COST CERTIFICATION

SEC. 227. ø12 U.S.C. 1715r¿ Notwithstanding any other provision of this Act, no mortgage covering new or rehabilitated multifamily housing or a property or project described in title XI shall

be insured under this Act unless the mortgagor has agreed (a) to

certify, upon completion of the physical improvements on the mortgaged property or project and prior to final endorsement of the

mortgage, either (i) that the approved percentage of actual cost (as

those terms are herein defined) equaled or exceeded the proceeds

of the mortgage loan or (ii) the amount by which the proceeds of

the mortgage loan exceeded such approved percentage of actual

cost, as the case may be, and (b) to pay forthwith to the mortgagee,

for application to the reduction of the principal obligation of such

mortgage, the amount, if any, certified to be in excess of such approved percentage of actual cost. Upon the Secretary’s approval of

the mortgagor’s certification as required hereunder, such certification shall be final and incontestable, except for fraud or material

misrepresentation on the part of the mortgagor. As used in this

section—

(a) The term ‘‘new or rehabilitated multifamily housing’’ means

a project or property approved for mortgage insurance prior to the

construction or the repair and rehabilitation involved and covered

by a mortgage insured or to be insured (i) under section 207, (ii)

under section 213 with respect to any property or project of a corporation or trust of the character described in paragraph numbered

(1) of subsection (a) thereof or with respect to any property or

project of a mortgagor of the character described in paragraph (3)

of subsection (a) thereof, (iii) under section 220 if the mortgage

meets the requirements of paragraph (3)(B) of subsection (d) thereof, (iv) under section 221 if the mortgage meets the requirements

of paragraph (3) or paragraph (4) of subsection (d) thereof, (v)

under section 231, (vi) under section 233 if the mortgage meets the

requirements of subsection (b), (vii) under section 810 if the mortgage meets the requirements of subsection (f), (viii) under section

234(d), or (ix) under section 236;
Sec. 227 NATIONAL HOUSING ACT 1008

(b) The term ‘‘approved percentage’’ means the percentage figure which, under applicable provisions of this Act, the Secretary is

authorized to apply to his estimate of value, cost, or replacement

cost, as the case may be, of the property or project in determining

the maximum insurable mortgage amount; except that if the mortgage is to assist the financing of repair or rehabilitation and no

part of the proceeds will be used to finance the purchase of the

land or structure involved, the approval percentage shall be 100

per centum; and

(c) The term ‘‘actual cost’’ has the following meaning: (i) in case

the mortgage is to assist the financing of new construction, the

term means the actual cost to the mortgagor of such construction,

including amounts paid for labor, materials, construction contracts,

off-site public utilities, streets, organizational and legal expenses,

such allocations of general overhead items as are acceptable to the

Secretary, and other items of expense approved by the Secretary,

plus (1) a reasonable allowance for builder’s profit if the mortgagor

is also the builder as defined by the Secretary, and (2) an amount

equal to the Secretary’s estimate of the fair market value of any

land (prior to the construction of the improvements built as a part

of the project) in the property or project owned by the mortgagor

in fee (or, in case the land in the property or project is held by the

mortgagor under a leasehold or other interest less than a fee, such

amount as the mortgagor paid for the acquisition of such leasehold

or other interest but in no event in excess of the fair market value

of such leasehold or other interest exclusive of the proposed improvements), but excluding the amount of any kickbacks, rebates,

or trade discounts received in connection with the construction of

the improvements, or (ii) in case the mortgage is to assist the financing of repair or rehabilitation, the term means the actual cost

to the mortgagor of such repair or rehabilitation, including the

amounts paid for labor, materials, construction contracts, off-site

public utilities, streets, organization and legal expenses, such allocations of general overhead items as are acceptable to the Secretary, and other items of expense approved by the Secretary, plus

(1) a reasonable allowance for builder’s profit if the mortgagor is

also the builder as defined by the Secretary, and (2) an additional

amount equal to (A) in case the land and improvements are to be

acquired by the mortgagor and the purchase price thereof is to be

financed with part of the proceeds of the mortgage, the purchase

price of such land and improvements prior to such repair or rehabilitation, or (B) in case the land and improvements are owned by

the mortgagor subject to an outstanding indebtedness to be refinanced with part of the proceeds of the mortgage, the amount of

such outstanding indebtedness secured by such land and improvements, but excluding (for the purpose of this clause (ii)) the amount

of any kickbacks, rebates, or trade discounts received in connection

with the construction of the improvements: Provided, That such additional amount under (A) of this clause (ii) shall in no event exceed the Secretary’s estimate of the fair market value of such land

and improvements prior to such repair or rehabilitation, and such

additional amount under (B) of this clause (ii) shall in no event exceed the approved percentage of the Secretary’s estimate of the fair

market value of such land and improvements prior to such repair

or rehabilitation. In the case of a mortgage insured under section
1009 Sec. 230 NATIONAL HOUSING ACT

1So in law.

2Section 407(b) of The Balanced Budget Downpayment Act, I, Pub. L. 104–99, approved January 26, 1996, amended this section to read as shown. Section 407(c) of such Act provides as follows:

‘‘(c) APPLICABILITY OF AMENDMENTS.—Except as provided in subsection (e), the amendments

made by subsections (a) and (b) shall apply with respect to mortgages insured under the National Housing Act that are executed before, on, or after October 1, 1997.’’.

Subsection (e) of section 407 of such Act provided that the amendment made by subsection

(a) would not take place under certain circumstances, which did not occur. 3 Indented so in law.

220, section 221(d)(3), section 221(d)(4), section 231, section 233, or

section 236 where the mortgagor is also the builder as defined by

the Secretary, there shall be included in the actual cost, in lieu of

the allowance for builder’s profit under clause (i) or (ii) of the preceding sentence, an allowance for builder’s and sponsor’s profit and

risk of 10 per centum (unless the Secretary, after finding that such

allowance is unreasonable, shall by regulation prescribe a lesser

percentage) of all other items entering into the term ‘‘actual cost’’

except land or amounts paid for a leasehold and amounts included

under either (A) or (B) of clause (ii) of the preceding sentence. In

the case of a mortgage insured under section 220, section 221(d)(3),

section 221(d)(4), section 231, or section 233, or section 236, where

the mortgagor is not also the builder as defined by the Secretary,

there shall be included in the actual cost an allowance for sponsor’s

profit and risk of the said 10 per centum or lesser percentage of

all other items entering into the term ‘‘actual cost’’ except land or

amounts paid for a leasehold, amounts included under either (A) or

(B) of the said clause (ii), and amounts paid by the mortgagor

under a general construction contract.

øCLASSIFICATION OF FHA EMPLOYEES¿

øSEC. 228. [Repealed.]¿

VOLUNTARY TERMINATION OF INSURANCE

SEC. 229. ø12 U.S.C. 1715t¿ Notwithstanding any other provision of this Act and with respect to any loan or mortgage heretofore

or hereafter insured under this Act, except under section 2 and except as specified under section 250 of this Act and subtitle B of the

Emergency Low Income Housing Preservation Act of 1987,,1 the

Secretary is authorized to terminate any insurance contract upon

request by the borrower or mortgagor and the financial institution

or mortgagee and upon payment of such termination charge as the

Secretary determines to be equitable, taking into consideration the

necessity of protecting the various insurance Funds. Upon such termination, borrowers and mortgagors and financial institutions and

mortgagees shall be entitled to the rights, if any, to which they

would be entitled under this Act if the insurance contract were terminated by payment in full of the insured loan or mortgage.

AUTHORITY TO ASSIST MORTGAGORS IN DEFAULT

SEC. 230. 2 ø12 U.S.C. 1715u¿

(a) 3 Upon default of any mortgage insured under this title,

mortgagees shall engage in loss mitigation actions for the purpose

of providing an alternative to foreclosure (including but not limited

to actions such as special forbearance, loss modification, and deeds

in lieu of foreclosure, but not including assignment of mortgages to
Sec. 230 NATIONAL HOUSING ACT 1010

the Secretary under section 204(a)(1)(A)) as provided in regulations

by the Secretary.

(b) PAYMENT OF PARTIAL CLAIM.—The Secretary may establish

a program for payment of a partial claim to a mortgagee that

agrees to apply the claim amount to payment of a mortgage on a

1- to 4-family residence that is in default. Any such payment under

such program to the mortgagee shall be made in the sole discretion

of the Secretary and on terms and conditions acceptable to the Secretary, except that—

(1) the amount of the payment shall be in an amount determined by the Secretary, not to exceed an amount equivalent

to 12 of the monthly mortgage payments and any costs related

to the default that are approved by the Secretary; and

(2) the mortgagor shall agree to repay the amount of the

insurance claim to the Secretary upon terms and conditions acceptable to the Secretary.

The Secretary may pay the mortgagee, from the appropriate insurance fund, in connection with any activities that the mortgagee is

required to undertake concerning repayment by the mortgagor of

the amount owed to the Secretary.

(c) ASSIGNMENT.— (1) PROGRAM AUTHORITY.—The Secretary may establish a

program for assignment to the Secretary, upon request of the

mortgagee, of a mortgage on a 1- to 4-family residence insured

under this Act.

(2) PROGRAM REQUIREMENTS.—The Secretary may accept

assignment of a mortgage under a program under this subsection only if—

(A) the mortgage was in default;

(B) the mortgagee has modified the mortgage to cure

the default and provide for mortgage payments within the

reasonable ability of the mortgagor to pay, at interest

rates not exceeding current market interest rates; and

(C) the Secretary arranges for servicing of the assigned mortgage by a mortgagee (which may include the

assigning mortgagee) through procedures that the Secretary has determined to be in the best interests of the appropriate insurance fund.

(3) PAYMENT OF INSURANCE BENEFITS.—Upon accepting assignment of a mortgage under a program established under

this subsection, the Secretary may pay insurance benefits to

the mortgagee from the appropriate insurance fund, in an

amount that the Secretary determines to be appropriate, not to

exceed the amount necessary to compensate the mortgagee for

the assignment and any losses and expenses resulting from the

mortgage modification.

(d) PROHIBITION OF JUDICIAL REVIEW.—No decision by the Secretary to exercise or forego exercising any authority under this section shall be subject to judicial review.

ø(e) [Repealed.]¿

(f) APPLICABILITY OF OTHER LAWS.—No provision of this Act, or

any other law, shall be construed to require the Secretary to provide an alternative to foreclosure for mortgagees with mortgages on

1- to 4-family residences insured by the Secretary under this Act,

or to accept assignments of such mortgages.
1011 Sec. 231 NATIONAL HOUSING ACT

HOUSING FOR ELDERLY PERSONS

SEC. 231. ø12 U.S.C. 1715v¿ (a) The purpose of this section is

to assist in relieving the shortage of housing for elderly persons

and to increase the supply of rental housing for elderly persons.

For the purposes of this section—

(1) the term ‘‘housing’’ means eight or more new or rehabilitated living units, not less than 50 per centum of which are

specially designed for the use and occupancy of elderly persons;

(2) the term ‘‘elderly person’’ means any person, married

or single, who is sixty-two years of age or over; and

(3) the terms ‘‘mortgage,’’ ‘‘mortgagee,’’ ‘‘mortgagor,’’ and

‘‘maturity date’’ shall have the meanings respectively set forth

in section 207 of this Act.

(b) The Secretary is authorized to insure any mortgage (including advances on mortgages during construction) in accordance with

the provisions of this section upon such terms and conditions as he

may prescribe and to make commitments for insurance of such

mortgages prior to the date of their execution or disbursement

thereon.

(c) To be eligible for insurance under this section, a mortgage

to provide housing for elderly persons shall—

ø(1) [Repealed.]¿

(2)(A) not to exceed, for such part of the property or project

as may be attributable to dwelling use (excluding exterior land

improvement as defined by the Secretary), $35,978 per family

unit without a bedroom, $40,220 per family unit with one bedroom, $48,029 per family unit with two bedrooms, $57,798 per

family unit with three bedrooms, and $67,950 per family unit

with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit

to not to exceed $40,876 per family unit without a bedroom,

$46,859 per family unit with one bedroom, $56,979 per family

unit with two bedrooms, $73,710 per family unit with three

bedrooms, and $80,913 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs

incident to the construction of elevator-type structures of sound

standards of construction and design; (B) the Secretary may,

by regulation, increase any of the dollar limitations in subparagraph (A) (as such limitations may have been adjusted in accordance with section 206A of this Act) by not to exceed 110

percent in any geographical area where the Secretary finds

that cost levels so require and by not to exceed 140 percent

where the Secretary determines it necessary on a project-byproject basis, but in no case may any such increase exceed 90

percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions under section 305 of this Act (as such section existed immediately before November 30, 1983) is involved; (C) the Secretary may, by regulation, increase any of the dollar limitations in subparagraph (A) (as such limitations may have been

adjusted in accordance with section 206A of this Act) by not to

exceed 20 per centum if such increase is necessary to account
Sec. 231 NATIONAL HOUSING ACT 1012

for the increased cost of the project due to the installation

therein of a solar energy system (as defined in subparagraph

(3) of the last paragraph of section 2(a) of this Act) or residential energy conservation measures (as defined in section

210(11) (A) through (G) and (I) of Public Law 95–619) in cases

where the Secretary determines that such measures are in addition to those required under the minimum property standards and will be cost-effective over the life of the measure;

(3) if executed by a mortgagor which is a public instrumentality or a private nonprofit corporation or association or other

acceptable private nonprofit organization regulated or supervised under Federal or State laws or by political subdivisions

of States, or agencies, thereof, or by the Secretary under a regulatory agreement or otherwise, as to rents, charges, and

methods of operation, in such form and in such manner as, in

the opinion of the Secretary, will effectuate the purpose of this

section, involve a principal obligation not in excess of the

amount which the Secretary estimates will be the replacement

cost of the property or project when the proposed improvements are completed (the replacement cost may include the

land, the proposed physical improvements, utilities within the

boundaries of the land, architect’s fees, taxes, interest during

construction, and other miscellaneous charges incident to construction and approved by the Secretary): Provided, That in

the case of properties other than new construction, the principal obligation shall not exceed the appraised value rather

than the Secretary’s estimate of the replacement cost;

(4) if executed by a mortgagor which is approved by the

Secretary but is not a public instrumentality or a private nonprofit organization, involve a principal obligation not in excess

(in the case of a property or project approved for mortgage insurance prior to the beginning of construction) of 90 per centum of the amount which the Secretary estimates will be the

replacement cost of the property or project when the proposed

improvements are completed (the replacement costs may include the land, the proposed physical improvements, utilities

within the boundaries of the land, architect’s fees, taxes, interest during construction, and other miscellaneous changes incident to construction and approved by the Secretary, and shall

include an allowance for builder’s and sponsor’s profit and risk

of 10 per centum of all of the foregoing items except the land

unless the Secretary, after certification that such allowance is

unreasonable, shall by regulation prescribe a lesser percentage): Provided, That in the case of properties other than new

construction the principal obligation shall not exceed 90 per

centum of the Secretary’s estimate of the value of the property

or project: And provided further, That the Secretary may in his

discretion require such mortgagor to be regulated or restricted

as to rents or sales, charges, capital structure, rate of return,

and methods of operation, and for such purpose the Secretary

may make contracts with and acquire for not to exceed $100

such stock or interest in any such mortgagor as the Secretary

may deem necessary to render effective such restrictions or

regulations; such stock or interest shall be paid for out of the

General Insurance Fund and shall be redeemed by the mort-
1013 Sec. 232 NATIONAL HOUSING ACT

1Section 446 of the Housing and Urban-Rural Recovery Act of 1983, Pub. L. 98–181, approved

November 30, 1983, added this parenthetical in sections 207(c)(3), 220(d)(4), 221(d)(6), and

231(c)(5) of the National Housing Act. Subsection (f) of such section further provides as follows:

‘‘(f) The aggregate number of dwelling units included in properties covered by mortgages insured pursuant to the authority granted in the amendments made by this section in any fiscal

year may not exceed 10,000.’’.

gagor at par upon the termination of all obligations of the Secretary under the insurance;

(5) provide for a complete amortization by periodic payments (unless otherwise approved by the Secretary) 1 within

such terms as the Secretary shall prescribe;

(6) bear interest at such rate as may be agreed upon by

the morgagor and the mortgagee; and

(7) cover a property or project which is approved for mortgage insurance prior to the beginning of construction or rehabilitation, with 50 per centum or more of the units therein specially designed for the use and occupancy of elderly persons in

accordance with standards established by the Secretary and

which may include such commercial and special facilities as

the Secretary deems adequate to serve the occupants.

(d) The Secretary may consent to the release of a part or parts

of the mortgaged property or project from the lien of any mortgage

insured under this section upon such terms and conditions as he

may prescribe, and shall prescribe such procedures as in his judgment are necessary to secure to elderly persons a preference or priority of opportunity to rent the dwelling included in such property

or project.

(e) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l),

and (n) of section 207 shall apply to mortgages insured under this

section and all references therein to section 207 shall refer to this

section.

(f) Notwithstanding any of the provisions of this section, the

housing provided under this section may include family units

which are specially designed for the use and occupancy of any person or family qualifying as a handicapped family as defined in section 202 of the Housing Act of 1959, and such special facilities as

the Secretary deems adequate to serve handicapped families (as so

defined). The Secretary may also prescribe procedures to secure to

such families preference or priority of opportunity to rent the living

units specially designed for their use and occupancy.

MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE

FACILITIES, AND BOARD AND CARE HOMES

SEC. 232. ø12 U.S.C. 1715w¿ (a) The purpose of this section is

to assist in the provision of facilities for any of the following purposes or for a combination of such purposes:

(1) The development of nursing homes for the care and

treatment of convalescents and other persons who are not

acutely ill and do not need hospital care but who require

skilled nursing care and related medical services, including additional facilities for the nonresident care of elderly individuals

and others who are able to live independently but who require

care during the day.

(2) The development of intermediate care facilities and

board and care homes for the care of persons who, while not
Sec. 232 NATIONAL HOUSING ACT 1014

in need of nursing home care and treatment, nevertheless are

unable to live fully independently and who are in need of minimum but continuous care provided by licensed or trained personnel, including additional facilities for the nonresident care

of elderly individuals and others who are able to live independently but who require care during the day.

(3) The development of assisted living facilities for the care

of frail elderly persons.

(b) For the purposes of this section—

(1) the term ‘‘nursing home’’ means a public facility, proprietary facility, or facility of a private nonprofit corporation or

association, licensed or regulated by the State (or, if there is

no State law providing for such licensing and regulation by the

State, by the municipality or other political subdivision in

which the facility is located), for the accommodation of convalescents or other persons who are not acutely ill and not in

need of hospital care but who require skilled nursing care and

related medical services, in which such nursing care and medical services are prescribed by, or are performed under the general direction of, persons licensed to provide such care or services in accordance with the laws of the State where the facility

is located;

(2) the term ‘‘intermediate care facility’’ means a proprietary facility or facility of a private nonprofit corporation or association licensed or regulated by the State (or, if there is no

State law providing for such licensing and regulation by the

State, by the municipality or other political subdivision in

which the facility is located) for the accommodation of persons

who, because of incapacitating infirmities, require minimum

but continuous care but are not in need of continuous medical

or nursing services;

(3) the term ‘‘a nursing home’’ or ‘‘intermediate care facility’’ may include such additional facilities as may be authorized

by the Secretary for the nonresident care of elderly individuals

and others who are able to live independently but who require

care during the day;

(4) the term ‘‘mortgage’’ means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof (A) under a lease, for not less than ninety-nine

years which is renewable, or (B) under a lease having a period

of not less than 10 years to run beyond the maturity date of

the mortgage. The term ‘‘first mortgage’’ means such classes of

first liens as are commonly given to secure advances (including

but not limited to advances during construction) on, or the unpaid purchase price of, real estate under the laws of the State

in which the real estate is located together with the credit instrument or instruments, if any, secured thereby, and any

mortgage may be in the form of one or more trust mortgages

or mortgage indentures or deeds of trust, securing notes,

bonds, or other credit instruments, and, by the same instrument or by a separate instrument, may create a security interest in initial equipment, whether or not attached to the realty.

The term ‘‘mortgagor’’ shall have the meaning set forth in section 207(a) of this Act;
1015 Sec. 232 NATIONAL HOUSING ACT

(5) the term ‘‘board and care home’’ means any residential

facility providing room, board, and continuous protective oversight that is regulated by a State pursuant to the provisions

of section 1616(e) of the Social Security Act, so long as the

home is located in a State that, at the time of an application

is made for insurance under this section, has demonstrated to

the Secretary that it is in compliance with the provisions of

such section 1616(e);

(6) the term ‘‘assisted living facility’’ means a public facility, proprietary facility, or facility of a private nonprofit corporation that—

(A) is licensed and regulated by the State (or if there

is no State law providing for such licensing and regulation

by the State, by the municipality or other political subdivision in which the facility is located);

(B) makes available to residents supportive services to

assist the residents in carrying out activities of daily living, such as bathing, dressing, eating, getting in and out

of bed or chairs, walking, going outdoors, using the toilet,

laundry, home management, preparing meals, shopping for

personal items, obtaining and taking medication, managing money, using the telephone, or performing light or

heavy housework, and which may make available to residents home health care services, such as nursing and therapy; and

(C) provides separate dwelling units for residents,

each of which may contain a full kitchen and bathroom,

and which includes common rooms and other facilities appropriate for the provision of supportive services to the

residents of the facility; and

(7) the term ‘‘frail elderly person’’ has the meaning given

the term in section 802(k) of the Cranston-Gonzalez National

Affordable Housing Act.

(c) The Secretary is authorized to insure any mortgage (including advances on such mortgages during construction) in accordance

with the provisions of this section upon such terms and conditions

as he may prescribe and to make commitments for insurance of

such mortgage prior to the date of its execution or disbursement

thereon.

(d) In order to carry out the purpose of this section, the Secretary is authorized to insure any mortgage which covers a new or

rehabilitated nursing home, assisted living facility, or intermediate

care facility, including a new addition to an existing nursing home,

assisted living facility, or intermediate care facility and regardless

of whether the existing home or facility is being rehabilitated, or

any combination of nursing home, assisted living facility, and intermediate care facility or a board and care home including equipment

to be used in its operation, subject to the following conditions:

(1) The mortgage shall be executed by a mortgagor approved by the Secretary. The Secretary may in his discretion

require any such mortgagor to be regulated or restricted as to

charges and methods of financing, and, in addition thereto, if

the mortgagor is a corporate entity, as to capital structure and

rate of return. As an aid to the regulation or restriction of any

mortgagor with respect to any of the foregoing matters, the
Sec. 232 NATIONAL HOUSING ACT 1016

1So in law.

Secretary may make such contracts with and acquire for not

to exceed $100 such stock or interest in such mortgagor as he

may deem necessary. Any stock or interest so purchased shall

be paid for out of the General Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.

(2) The mortgage shall involve a principal obligation in an

amount not to exceed 90 per centum of the estimated value of

the property or project, or 95 percent of the estimated value of

the property or project in the case of a mortgagor that is a private nonprofit corporation or association (under the meaning

given such term for purposes of section 221(d)(3) of this Act),

including—

(A) equipment to be used in the operation of the home

or facility or combined home and facility when the proposed improvements are completed and the equipment is

installed; or

(B) a solar energy system (as defined in subparagraph

(3) of the last paragraph of section 2(a) of this Act) or residential energy conservation measures (as defined in section 210(11) (A) through (G) and (I) of Public Law 95–619)

in cases where the Secretary determines that such measures are in addition to those required under the minimum

property standards and will be cost-effective over the life

of the measure.

(3) The mortgage shall—

(A) provide for complete amortization by periodic payments within such terms as the Secretary shall prescribe;

and

(B) bear interest at such rate as may be agreed upon

by the mortgagor and the mortgagee. The Secretary shall

not promulgate regulations or establish terms or conditions that interfere with the ability of the mortgagor and

mortgagee to determine the interest rate; and 1

(4)(A) With respect to nursing homes and intermediate

care facilities and combined nursing home and intermediate

care facilities, the Secretary shall not insure any mortgage

under this section unless he has received, from the State agency designated in accordance with section 604(a)(1) or section

1521 of the Public Health Service Act for the State in which

is located the nursing home or intermediate care facility or

combined nursing home and intermediate care facility covered

by the mortgage, a certification that (i) there is a need for such

home or facility or combined home and facility, and (ii) there

are in force in such State or in the municipality or other political subdivision of the State in which the proposed home or facility or combined home and facility is to be located reasonable

minimum standards of licensure and methods of operation governing it. No such mortgage shall be insured under this section

unless the Secretary has received such assurance as he may

deem satisfactory from the State agency that such standards

will be applied and enforced with respect to any home or facility or combined home and facility located in the State for
1017 Sec. 232 NATIONAL HOUSING ACT

which mortgage insurance is provided under this section. If no

such State agency exists, or if the State agency exists but is

not empowered to provide a certification that there is a need

for the home or facility or combined home and facility as required in clause (i) of the first sentence, the Secretary shall not

insure any mortgage under this section unless (i) the State in

which the home or facility or combined home and facility is located has conducted or commissioned and paid for the preparation of an independent study of market need and feasibility

that (I) is prepared in accordance with the principles established by the American Institute of Certified Public Accountants; (II) assesses, on a marketwide basis, the impact of the

proposed home or facility or combined home and facility on,

and its relationship to, other health care facilities and services,

the percentage of excess beds, demographic projections, alternative health care delivery systems, and the reimbursement

structure of the home, facility, or combined home and facility;

(III) is addressed to and is acceptable to the Secretary in form

and substance; and (IV) in the event the State does not prepare the study, is prepared by a financial consultant who is selected by the State or the applicant for mortgage insurance and

is approved by the Secretary; and (ii) the State complies with

the other provisions of this subparagraph that would otherwise

be required to be met by a State agency designated in accordance with section 604(a)(1) or section 1521 of the Public Health

Service Act. The proposed mortgagor may reimburse the State

for the cost of the independent feasibility study required in the

preceding sentence. In the case of a small intermediate care facility for the mentally retarded or developmentally disabled, or

a board and care home housing less than 10 individuals, the

State program agency or agencies responsible for licensing, certifying, financing, or monitoring the facility or home may, in

lieu of the requirements of clause (i) of the third sentence, provide the Secretary with written support identifying the need

for the facility or home.

(B) With respect to board and care homes, the Secretary

shall not insure any mortgage under this section unless he has

received from the appropriate State licensing agency a statement verifying that the State in which the home is or is to be

located is in compliance with the provisions of section 1616(e)

of the Social Security Act.

(C) With respect to assisted living facilities or any such facility combined with any other home or facility, the Secretary

shall not insure any mortgage under this section unless—

(i) the Secretary determines that the level of financing

acquired by the mortgagor and any other resources available for the facility will be sufficient to ensure that the facility contains dwelling units and facilities for the provision of supportive services in accordance with subsection

(b)(6);

(ii) the mortgagor provides assurances satisfactory to

the Secretary that each dwelling unit in the facility will

not be occupied by more than 1 person without the consent

of all such occupants; and
Sec. 232 NATIONAL HOUSING ACT 1018

(iii) the appropriate State licensing agency for the

State, municipality, or other political subdivision in which

the facility is or is to be located provides such assurances

as the Secretary considers necessary that the facility will

comply with any applicable standards and requirements

for such facilities.

(e) The Secretary may consent to the release of a part or parts

of the mortgaged property or project from the lien of any mortgage

insured under this section upon such terms and conditions as he

may prescribe.

(f) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l),

and (n) of section 207 shall apply to mortgages insured under this

section and all references therein to section 207 shall refer to this

section.

(g) The Secretary shall prescribe such regulations as may be

necessary to carry out the provisions of this section relating to intermediate care facilities, after consulting with the Secretary of

Health and Human Services with respect to any health or medical

aspects of the program which may be involved in such regulations.

(h) The Secretary shall also consult with the Secretary of

Health and Human Services as to the need for and the availability

of intermediate care facilities in any area for which an intermediate care facility is proposed under this section.

(i)(1) The Secretary is authorized upon such terms and condition as he may prescribe to make commitments to insure and to insure loans made by financial institutions or other approved mortgagees to nursing homes, assisted living facilities, and intermediate

care facilities or to board and care homes to provide for the purchase and installation of fire safety equipment necessary for compliance with the 1967 edition of the Life Safety Code of the National Fire Protection Association (or any subsequent edition specified by the Secretary of Health and Human Services) or other such

codes or requirements approved by the Secretary of Health and

Human Services as conditions of participation for providers of services under title XVIII and title XIX of the Social Security Act or

as mandated by a State under the provisions of section 1616(e) of

such Act.

(2) To be eligible for insurance under this subsection a loan

shall—

(A) not exceed the Secretary’s estimate of the reasonable

cost of the equipment fully installed;

(B) bear interest at such rate as may be agreed upon by

the mortgagor and the mortgagee;

(C) have a maturity satisfactory to the Secretary;

(D) be made by a financial institution or other mortgagee

approved by the Secretary as eligible for insurance under section 2 or a mortgagee approved under section 203(b)(1);

(E) comply with other such terms, conditions, and restrictions as the Secretary may prescribe; and

(F) in the case of board and care homes, be made with respect to such a home located in a State with respect to which

the Secretary has received from the appropriate State licensing

agency a statement verifying that the State in which the home

is or is to be located is in compliance with the provisions of section 1616(e) of the Social Security Act.
1019 Sec. 233 NATIONAL HOUSING ACT

(3) The provisions of paragraphs (5), (6), (7), (9), and (10) of

section 220(h) shall be applicable to loans insured under this subsection, except that all references to ‘‘home improvement loans’’

shall be construed to refer to loans under this subsection.

(4) The provisions of subsections (c), (d), and (h) of section 2

shall apply to loans insured under this subsection, and for the purpose of this subsection references in such subsections to ‘‘this section’’ or ‘‘this title’’ shall be construed to refer to this subsection.

(j) The Secretary shall establish schedules and deadlines for

the processing and approval (or provision of notice of disapproval)

of applications for mortgage insurance under this section. The Secretary shall submit a report to the Congress annually describing

such schedules and deadlines and the extent of compliance by the

Department with the schedules and deadlines during the year.

EXPERIMENTAL HOUSING

SEC. 233. ø12 U.S.C. 1715x¿ (a)(1) In order to assist in lowering housing costs and improving housing standards, quality, livability, or durability or neighborhood design through the utilization

of advanced housing technology, or experimental property standards, the Secretary is authorized to insure and to make commitments to insure, under this section, mortgages (including home improvement loans, and including advances on mortgages during construction) secured by properties including dwellings involving the

utilization and testing of advanced technology in housing design,

materials, or construction, or experimental property standards for

neighborhood design if the Secretary determines that (A) the property is an acceptable risk, giving consideration to the need for testing advanced housing technology or experimental property standards, (B) the utilization and testing of the advanced technology or

experimental property standards involved will provide data or experience which the Secretary deems to be significant in reducing

housing costs or improving housing standards, quality, livability, or

durability, or improving neighborhood design, and (C) the mortgages are eligible for insurance under the provisions of this section

and under any further terms and conditions which may be prescribed by the Secretary to establish the acceptability of the mortgages for insurance.

(2) The Secretary is further authorized to insure and to make

commitments to insure, under this section, mortgages (including

advances on mortgages during construction) secured by properties

in projects to be carried out in accordance with plans approved by

the Secretary under section 108 of the Housing and Urban Development Act of 1968.

(b) To be eligible for insurance under this section, a mortgage

shall meet the requirements of one of the other sections or titles

of this Act; except that, in lieu of determining the appraised value

or the replacement cost of the property in cases involving new construction or the estimated cost of repair and rehabilitation or improvement in cases involving existing properties, the Secretary

shall estimate the cost of replacing the property using comparable

conventional design, materials, and construction, and any limitation upon the maximum mortgage amount available to a nonoccu-
Sec. 233 NATIONAL HOUSING ACT 1020

pant owner shall not, in the discretion of the Secretary, be applicable to mortgages insured under this section.

(c) The Secretary may enter into such contracts, agreements,

and financial undertakings with the mortgagor and others as he

deems necessary or desirable to carry out the purposes of this section, and may expend available funds for such purposes, including

the correction (when he determines it necessary to protect the occupants), at any time subsequent to insurance of a mortgage, of defects or failures in the dwellings which the Secretary finds are

caused by or related to the advanced housing technology utilized in

their design or construction or experimental property standards.

Any authority which the Secretary may exercise in connection with

a mortgage, or property covered by a mortgage, insured under any

other section of this title (including payments to reduce rentals for,

or to facilitate homeownership by, lower income families) may be

exercised in connection with a mortgage, or property covered by a

mortgage, meeting the requirements, of such other section (except

as specified in subsection (b)), which is insured under this section

to the same extent and in the same manner as if the mortgage insured under this section was insured under such other section.

(d) The Secretary may make such investigations and analyses

of data, and publish and distribute such reports, as he determines

to be necessary or desirable to assure the most beneficial use of the

data and information to be acquired as a result of this section.

(e) Any mortgage or lender under a mortgage insured under

subsection (b) shall be entitled to insurance benefits determined in

the same manner as such benefits would be determined if such

mortgage or loan were insured under the section or title of this Act

for which it otherwise would have been eligible except for the experimental feature of the property involved.

(f) Notwithstanding the provisions of subsection (e) of this section, in the case of default on any mortgage insured under this section, the Secretary in his discretion, in accordance with such regulations as he may prescribe, may make payments pursuant to such

subsections in cash or in debentures (as provided in the mortgage

insurance contract), or may acquire the mortgage loan and the security therefor upon payment to the mortgagee in cash or in debentures (as provided in the mortgage insurance contract) of a total

amount equal to the unpaid principal balance of the loan plus any

accrued interest and any advances approved by the Secretary made

previously by the mortgagee under the provisions of the mortgage.

After the acquisition of the mortgage by the Secretary the mortgagee shall have no further rights, liabilities, or obligations with

respect to the mortgage. The appropriate provisions of sections 204

and 207 relating to the issuance of debentures shall apply with respect to debentures issued under this subsection, and the appropriate provisions of sections 204 and 207 relating to the rights, liabilities, and obligations of a mortgagee shall apply with respect to

the Secretary when he has acquired an insured mortgage under

this subsection, in accordance with and subject to regulations

(modifying such provisions to the extent necessary to render their

application for such purposes appropriate and effective) which shall

be prescribed by the Secretary, except that as applied to mortgages

insured under this section (1) all references in section 204 to the

Mutual Mortgage Insurance Fund or the Fund shall be construed
1021 Sec. 234 NATIONAL HOUSING ACT

1 June 30, 1961.

2The last two references in this sentence to section 203(h) were added by the Emergency Supplemental Appropriations Act of 1994, Pub. L. 103–211, 108 Stat. 12, approved February 12,

1994. The undesignated paragraph following the paragraph in which such amendments were

made provides as follows:

‘‘Eligibility for loans made under the authority granted by the preceding paragraph shall

be limited to persons whose principal residence was damaged or destroyed as a result of the

January 1994 earthquake in Southern California: Provided, That the provisions under this

Continued

to refer to the General Insurance Fund, and (2) all references in

section 204 to section 203 shall be construed to refer to this section

(g).

MORTGAGE INSURANCE FOR CONDOMINIUMS

SEC. 234. ø12 U.S.C. 1715y¿ (a) The purpose of this section is

to provide an additional means of increasing the supply of privately

owned dwelling units where, under the laws of the State in which

the property is located, real property title and ownership are established with respect to a one-family unit which is part of a multifamily project.

(b) The terms ‘‘mortgage,’’ ‘‘mortgagee,’’ ‘‘mortgagor,’’ ‘‘maturity

date,’’ and ‘‘State’’ shall have the meanings respectively set forth in

section 201, except, that the term ‘‘mortgage’’ for the purpose of

subsection (c) may include a first mortgage given to secure the unpaid purchase price of a fee interest in, or long-term leasehold interest in, a one-family unit in a multifamily project, including a

project in which the dwelling units are attached, semi-detached, or

detached, and an undivided interest in the common areas and facilities which serve the project where the mortgage is determined

by the Secretary to be eligible for insurance under this section. The

term ‘‘common areas and facilities’’ as used in this section shall be

deemed to include the land and such commercial, community, and

other facilities as are approved by the Secretary.

(c) The Secretary is authorized, in his discretion and under

such terms and conditions as he may prescribe (including the minimum number of family units in the project which shall be offered

for sale and provisions for the protection of the consumer and the

public interest), to insure any mortgage covering a one-family unit

in a multifamily project and an undivided interest in the common

areas and facilities which serve the project if (1) the mortgage

meets the requirements of this subsection and of section 203(b), except as that section is modified by this subsection, and (2) at least

80 percent of the units in the project covered by mortgages insured

under this title are occupied by the mortgagors or comortgagors.

Any project proposed to be constructed or rehabilitated after the

date of enactment of the Housing Act of 19611 with the assistance

of mortgage insurance under this Act, where the sale of family

units is to be assisted with mortgage insurance under this subsection, shall be subject to such requirements as the Secretary may

prescribe. To be eligible for insurance pursuant to this subsection,

a mortgage shall (A) involve a principal obligation in an amount

not to exceed the maximum principal obligation of a mortgage

which may be insured in the area pursuant to section 203(b)(2) or

pursuant to section 203(h) under the conditions described in section

203(h) or pursuant to section 203(h) under the conditions described

in section 203(h) 2, and (B) have a maturity satisfactory to the Sec-
Sec. 234 NATIONAL HOUSING ACT 1022

heading shall be effective only for the 18-month period following the date of enactment of this

Act. 1 Insurance is authorized by the Housing Act of 1964 for blanket mortgages to finance the construction or rehabilitation of multifamily projects to be sold as condominiums. 2Section 431(b) of the Housing and Urban-Rural Recovery Act of 1983, Pub. L. 98–181, approved November 30, 1983, amended the preceding portion of this paragraph to make the regulation of rents or charges discretionary rather than mandatory. Section 431(c) of such Act further provides as follows:

retary, but not to exceed, in any event, thirty-five years from the

date of the beginning of amortization of the mortgages. The mortgage shall contain such provisions as the Secretary determines to

be necessary for the maintenance of common areas and facilities

and the multifamily project. The mortgagor shall have exclusive

right to the use of the one-family unit covered by the mortgage

and, together with the owners of other units in the multifamily

project, shall have the right to the use of the common areas and

facilities serving the project and the obligation of maintaining all

such common areas and facilities. The Secretary may require that

the rights and obligations of the mortgagor and the owners of other

dwelling units in the project shall be subject to such controls as he

determines to be necessary and feasible to promote and protect individual owners, the multifamily project and its occupants. For the

purposes of this subsection, the Secretary is authorized in his discretion and under such terms and conditions as he may prescribe

to permit one-family units and interests in common areas and facilities in multifamily projects covered by mortgages insured under

any section of this Act other than section 213(a) (1) and (2) to be

released from the liens of those mortgages.

(d) 1 In addition to individual mortgages insured under subsection (c), the Secretary is authorized, in his discretion and under

such terms and conditions as he may prescribe, to insure blanket

mortgages (including advances on such mortgages during construction) which cover multifamily projects to be constructed or rehabilitated in cases where the mortgage is held by a mortgagor, approved by the Secretary, which—

(1) has certified to the Secretary, as a condition of obtaining the insurance of a blanket mortgage under this subsection,

that upon completion of the multifamily project covered by

such mortgage it intends to commit the ownership of the multifamily project to a plan of family unit ownership under which

each family unit would be eligible for individual mortgage insurance under subsection (c) and will faithfully and diligently

make and carry out all reasonable efforts to establish such

plan of family unit ownership and to sell such family units to

purchasers approved by the Secretary; and

(2) may, in the Secretary’s discretion, be regulated or restricted as to rents, charges, capital structure, rate of return,

and methods of operation until the termination of all obligations of the Secretary under the insurance and during such

further period of time as the Secretary shall be the owner,

holder, or reinsurer of the mortgage. The Secretary may make

such contracts with and acquire for not to exceed $100 such

stock or interest in such mortgagor as he may deem necessary

to render effective any such regulation or restriction of such

mortgagor.2 The stock or interest acquired by the Secretary
1023 Sec. 234 NATIONAL HOUSING ACT

‘‘(c) The amendments made in this section shall not apply with respect to mortgages insured

by the Secretary of Housing and Urban Development before the date of the enactment of this

Act.’’.

shall be paid for out of the General Insurance Fund, and shall

be redeemed by the mortgagor at par at any time upon the request of the Secretary after the termination of all obligations

of the Secretary under the insurance.

(e) To be eligible for insurance, a blanket mortgage on any

multi-family project of a mortgagor of the character described in

subsection (d) shall involve a principal obligation in an amount—

ø(1) [Repealed.]¿

(2) not to exceed 90 per centum of the amount which the

Secretary estimates will be the replacement cost of the project

when the proposed physical improvements are completed;

(3)(A) not to exceed, for such part of the project as may be

attributable to dwelling use (excluding exterior land improvements as defined by the Secretary), $42,048 per family unit

without a bedroom, $48,481 per family unit with one bedroom,

$58,469 per family unit with two bedrooms, $74,840 per family

unit with three bedrooms, and $83,375 per family unit with

four or more bedrooms; except that as to projects to consist of

elevator-type structures the Secretary may, in his discretion,

increase the dollar amount limitations per family unit to not

to exceed $44,250 per family unit without a bedroom, $50,724

per family unit with one bedroom, $61,680 per family unit with

two bedrooms, $79,793 per family unit with three bedrooms,

and $87,588 per family unit with four or more bedrooms, as

the case may be, to compensate for higher costs incident to the

construction of elevator-type structures of sound standards of

construction and design; (B) the Secretary may, by regulation,

increase any of the dollar limitations in subparagraph (A) (as

such limitations may have been adjusted in accordance with

section 206A of this Act) by not to exceed 110 percent in any

geographical area where the Secretary finds that cost levels so

require and by not to exceed 140 percent where the Secretary

determines it necessary on a project-by-project basis, but in no

case may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in

implementing its special assistance functions under section 305

of this Act (as such section existed immediately before November 30, 1983) is involved; and

(4) not to exceed an amount equal to the sum of the unit

mortgage amounts determined under the provisions of subsection (c) assuming the mortgagor to be the owner and occupant of each family unit.

(f) Any blanket mortgage insured under subsection (d) shall

provide for complete amortization by periodic payments within

such terms as the Secretary may prescribe but not to exceed 40

years from the beginning of amortization of the mortgage, and shall

bear interest at such rate as may be agreed upon by the mortgagor

and the mortgagee. The Secretary may consent to the release of a

part or parts of the mortgaged property from the lien of the blanket

mortgage upon such terms and conditions as he may prescribe and

the blanket mortgage may provide for such release. The project cov-
Sec. 235 NATIONAL HOUSING ACT 1024

ered by the blanket mortgage may include four or more family

units and such commercial and community facilities as the Secretary deems adequate to serve the occupants.

(g) Any mortgagee under a mortgage insured under subsection

(c) of this section is entitled to receive the benefits of the insurance

as provided in section 204(a) of this Act with respect to mortgages

insured under section 203, and the provisions of subsections (b), (c),

(d), (e), (f), (g), (h), (j), and (k) of section 204 shall be applicable to

the mortgages insured under subsection (c) of this section, except

that (1) all references in section 204 of the Mutual Mortgage Insurance Fund or the Fund shall be construed to refer to the General

Insurance Fund, (2) all references therein to section 203 shall be

construed to refer to subsection (c) of this section, and (3) the excess remaining, referred to in section 204(f)(1), shall be retained by

the Secretary and credited to the General Insurance Fund.

(h) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l),

and (n) of section 207 shall be applicable to mortgages insured

under subsection (d) of this section.

(i) The provisions of sections 225 and 230 shall be applicable

to the mortgages insured under subsection (c) of this section.

(j) The Secretary may further increase the dollar amount limitations which would otherwise apply under subsection (e) by not to

exceed 20 per centum if such increase is necessary to account for

the increased cost of a project due to the installation therein of a

solar energy system (as defined in subparagraph (3) of the last

paragraph of section 2(a) of this Act) or residential energy conservation measures (as defined in section 210(11) (A) through (G)

and (I) of Public Law 95–619) in cases where the Secretary determines that such measures are in addition to those required under

the minimum property standards and will be cost-effective over the

life of the measure.

(k) With respect to a unit in any project which was converted

from rental housing, no insurance may be provided under this section unless (1) the conversion occurred more than one year prior to

the application for insurance, (2) the mortgagor or comortgagor was

a tenant of that rental housing, (3) the conversion of the property

is sponsored by a bona fide tenants organization representing a

majority of the households in the project, or (4) before April 20,

1984 (A) application was made to the Secretary for a commitment

to insure a mortgage covering any unit in the project, (B) in the

case of direct endorsement, the mortgagee received the case number assigned by the Secretary for any unit in the project, or (C) application was made for approval of the project for guarantee, insurance, or direct loan under chapter 37 of title 38, United States

Code.

HOMEOWNERSHIP FOR LOWER INCOME FAMILIES

SEC. 235. øNOTE.—Section 235 of the National Housing Act establishes a program of homeownership assistance for lower income

families, and is set forth in Part V of this compilation.¿

RENTAL AND COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES

SEC. 236. øNOTE.—Section 236 of the National Housing Act establishes a program of rental and cooperative housing assistance
1025 Sec. 237 NATIONAL HOUSING ACT

for lower income families, and is set forth in Part IV of this compilation.¿

SPECIAL MORTGAGE INSURANCE ASSISTANCE

SEC. 237. ø12 U.S.C. 1715z–2¿ (a) The purpose of this section

is to help provide adequate housing for families of low and moderate income, including those who, for reasons of credit history, irregular income patterns caused by seasonal employment, or other

factors, are unable to meet the credit requirements of the Secretary

for the purchase of a single-family home financed by a mortgage insured under section 203, 220, 221, 234, or 235(j)(4), but who,

through the incentive of homeownership and counseling assistance,

appear to be able to achieve homeownership.

(b) The Secretary is authorized upon application by the mortgagee to insure under this section not more than 26 percent of the

total principal obligation (including such initial service charges,

and such appraisal, inspection, and other fees as the Secretary

shall approve) of any mortgage meeting the requirements of this

section.

(c) To be eligible for insurance under this section, a mortgage

shall—

(1) meet the requirements of section 203 (except subsection

(m)), 220(d)(3)(A), 221(d)(2), 221(h)(5), 221(i), 234(c), or

235(j)(4), except as such requirements are modified by this section;

(2) involve a principal obligation (including such initial

service charges, and such appraisal, inspection, and other fees,

as the Secretary shall approve) in an amount not to exceed

$70,000;

(3) be executed by a mortgagor who the Secretary has determined, after a full and complete study of the case, would not

be an acceptable credit risk for mortgage insurance purposes

under sections 203, 220, 221, 234, or 235(j)(4), because of his

credit standing, debt obligations, total annual income, or income characteristics but who the Secretary is satisfied would

be a reasonably satisfactory credit risk, consistent with the objectives stated in subsection (a), if he were to receive budget,

debt management, and related counseling, prior to and during

the 12 months immediately following the purchase of the property, from a community development financial institution

under section 103(5) of the Community Development Banking

and Financial Institutions Act of 1994: Provided, That, in determining whether the mortgagor is a reasonably satisfactory

credit risk, the Secretary shall review the credit history of the

applicant giving special consideration to those delinquent accounts which were ultimately paid by the applicant and to extenuating factors which may have caused credit accounts of the

applicant to become delinquent; and the Secretary shall also

give special consideration to income characteristics of applicants whose total income over the two years prior to their applications has remained at levels of eligibility (as required

under paragraph (4) of this subsection), but who, because of

the character of their seasonal employment or for other rea-
Sec. 237 NATIONAL HOUSING ACT 1026

1So in law.

sons, have not maintained continuous employment under one

employer during that time;

(4) require monthly payments which, in combination with

local real estate taxes on the property involved, do not exceed

36 per centum of the applicant’s income, based on his average

monthly income during the year prior to his application or the

average monthly income during the three years prior to his application, whichever is higher; and 1

(5) require the mortgagor to be subject, if necessary, to a

default mitigation effort undertaken by an intermediary community development financial institution under section 103(5)

of the Community Development Banking and Financial Institutions Act of 1994, that is acting as a sponsor and pass-through

of insurance under section 203 and is approved by the Secretary;

(6) involve a total principal obligation (including such initial service charges, and such appraisal, inspection, and other

fees as the Secretary shall approve) that is not more than 90

percent of the value of the property for which the mortgage is

provided; and

(7) involve a total principal obligation (including such initial service charges, and such appraisal, inspection, and other

fees as the Secretary shall approve) in which the mortgagor

has equity (as defined by the Secretary) of not less than 10

percent and such equity shall be subordinate to the interest of

the Secretary in the mortgaged property.

(d) The Secretary shall give preference in approving mortgage

insurance applications and in providing counseling services under

this section (1) to families which are eligible for assistance payments under section 235, (2) to families living in empowerment

zones and enterprise communities (as those terms are defined in

section 1393(b) of the Internal Revenue Code of 1986 (26 U.S.C.

1393(b)) who are eligible for homeownership assistance, and (3) to

families living in public housing units, especially those families required to leave public housing because their incomes have risen beyond the maximum prescribed income limits, and families eligible

for residence in public housing who have been displaced from federally assisted urban renewal areas.

(e) The Secretary is authorized to provide, or contract with

community development financial institutions under section 103(5)

of the Community Development Banking and Financial Institutions

Act of 1994 to provide, such budget, debt management, and related

counseling services to mortgagors whose mortgages are insured

under this section as he determines to be necessary to meet the objectives of this section. The Secretary may also provide such counseling to otherwise eligible families who lack sufficient funds to

supply a down payment to help them to save an amount necessary

for that purpose.

(f) The aggregate principal balance of the portions of mortgages

insured under this section and outstanding at one time shall not

exceed $200,000,000.

(g) Mortgages insured under this section shall be subject to an

insurance premium fee of not more than 1.25 percent of the total
1027 Sec. 238 NATIONAL HOUSING ACT

mortgage principal obligation (including such initial service

charges, and such appraisal, inspection, and other fees as the Secretary shall approve).

(h) Before insuring a mortgage under this section, the Secretary shall enter into such contracts or other agreements as may

be necessary to ensure that the mortgagee or other holder of the

mortgage shall assume not less than 10 percent and not more than

50 percent of any loss on the insured mortgage, subject to any reasonable limit on the liability of the mortgagee or holder of the

mortgage that may be specified in the event of unusual or catastrophic losses that may be incurred by any one mortgagee or mortgage holder.

(i) No guarantees may be issued under section 306(g) for the

timely payment of interest or principal on securities backed, in

whole or in part, by mortgages insured under this section.

(j) There are authorized to be appropriated such sums as may

be necessary to carry out the provisions of subsection (e) of this

section.

PAYMENT OF INSURANCE—SPECIAL RISK INSURANCE FUND

SEC. 238. ø12 U.S.C. 1715z–3¿ (a)(1) Any mortgagee under a

mortgage insured under section 235(i), 235(j)(4), 237, or 243 shall

be entitled to receive the benefits of the insurance as provided in

section 204(a) with respect to mortgages insured under section 203.

The provisions of subsections (b), (c), (d), (g), (j), and (k) of section

204 shall be applicable to mortgages insured under section 235(i),

235(j)(4), 237, or 243, except that all references therein to the ‘‘Mutual Mortgage Insurance Fund’’ shall be construed to refer to the

‘‘Special Risk Insurance Fund’’, and all references therein to section

203 shall be construed to refer to section 235(i), 235(j)(4), 237, or

243, as may be appropriate.

(2) Any mortgage under a mortgage insured under section

235(j)(1) or 236 shall be entitled to receive the benefits of insurance

as provided in section 207(g) with respect to mortgages insured

under section 207. The provisions of subsections (d), (e), (h), (i), (j),

(k), (l), and (n) of section 207 shall be applicable to mortgages insured under section 235(j)(1) or 236, except that all references

therein to the ‘‘General Insurance Fund’’ shall be construed to refer

to the ‘‘Special Risk Insurance Fund’’ and the premium charged

provided in section 207(d) shall be payable only in cash or debentures of the Special Risk Insurance Fund.

(3) In lieu of the amount of insurance benefits computed pursuant to paragraph (1) or (2) of this subsection the Secretary, in his

discretion and in accordance with such regulations as he may prescribe, may (with respect to any mortgage loan acquired by him)

compute and pay insurance benefits to the mortgagee in a total

amount equal to the unpaid principal balance of the loan plus any

accrued interest and any advances approved by the Secretary and

made previously by the mortgagee under the provisions of the

mortgage.

(b) There is hereby created a Special Risk Insurance Fund

(hereinafter referred to as the ‘‘fund’’) which shall be used by the

Secretary as a revolving fund for carrying out the mortgage insurance obligations of sections 223(e), 233(a)(2), 235, 236, 237, and
Sec. 238 NATIONAL HOUSING ACT 1028

243, and the Secretary is hereby authorized to advance to the fund,

at such times and in such amounts as he may determine to be necessary, a total sum of $20,000,000 from the General Insurance

Fund established pursuant to the provisions of section 519. Such

advance shall be repayable at such times and at such rates of interest as the Secretary deems appropriate. Premium charges, adjusted premium charges, inspection and other fees, service charges,

and any other income received by the Secretary under sections

223(e), 233(a)(2), 235, 236, and 237, together with all earnings on

the assets of the fund, shall be credited to the fund. All payments

made pursuant to claims of mortgagees with respect to mortgages

insured under sections 233(a)(2), 235, 236, 237, and 243 or pursuant to section 223(e), cash adjustments, the principal of and interest paid on debentures which are the obligation of the fund, expenses incurred in connection with or as a consequence of the acquisition and disposal of property acquired under such sections,

and all administrative expenses in connection with the mortgage

insurance operations under such sections shall be paid out of the

fund. Moneys in the fund not needed for current operations of the

fund shall be deposited with the Treasurer of the United States to

the credit of the fund or invested in bonds or obligations of, or in

bonds or other obligations guaranteed by, the United States or any

agency of the United States: Provided, That such moneys shall to

the maximum extent feasible be invested in such bonds or other obligations the proceeds of which will be used to directly support the

residential mortgage market. The Secretary, with the approval of

the Secretary of the Treasury, may purchase in the open market

debentures which are the obligation of the fund. Such purchases

shall be made at a price which will provide an investment yield of

not less than the yield obtained from other investments authorized

by this section. Debentures so purchased shall be canceled and not

reissued.

(c)(1) Notwithstanding the provisions of this or any other Act,

and without regard to limitations upon eligibility contained in any

section of this title, the Secretary is authorized, upon application

by the mortgagee, to insure under any section of this title a mortgage executed in connection with the construction, repair, rehabilitation, or purchase of property located near any installation of the

Armed Forces of the United States in federally impacted areas in

which the conditions are such that one or more of the eligibility requirements applicable to the section under which insurance is

sought could not be met, if (A) the Secretary finds that the benefits

to be derived from such use outweigh the risk of probable cost to

the Government, and (B) the Secretary of Defense certifies that

there is no intention insofar as can reasonably be foreseen to curtail substantially the personnel assigned or to be assigned to such

installation. The insurance of a mortgage pursuant to this subsection shall be the obligation of the Special Risk Insurance Fund.

(2) The Secretary is authorized (A) to establish such premiums

and other charges as may be necessary to assure that the mortgage

insurance program pursuant to this subsection is made available

on a basis which, in the Secretary’s judgment, is designed to be actuarially sound and likely to maintain the fiscal integrity of such

program, and (B) to prescribe such terms and conditions relating

to insurance pursuant to this subsection as may be found by the
1029 Sec. 240 NATIONAL HOUSING ACT

Secretary to be necessary and appropriate, and which are to the

maximum extent possible, consistent with provisions otherwise applicable to mortgage insurance and payment of insurance benefits.

(3) The Secretary shall undertake an annual assessment of

the risks associated with each of the insurance programs comprising the Special Risk Insurance Fund, and shall present

findings from such review to the Congress in the FHA Annual

Management Report.

MODIFICATIONS IN TERMS OF MORTGAGES COVERING MULTIFAMILY

PROJECTS

SEC. 239. ø12 U.S.C. 1715z–4¿ The Secretary shall not consent

to any request for an extension of the time for curing a default

under any mortgage covering multifamily housing, as defined in

the regulations of the Secretary, or for a modification of the terms

of such mortgage, except in conformity with regulations prescribed

by the Secretary in accordance with the provisions of this section.

Such regulations shall require, as a condition to the granting of

any such request, that, during the period of such extension or

modification, any part of the rents or other funds derived by the

mortgagor from the property covered by the mortgage which is not

required to meet actual and necessary expenses arising in connection with the operation of such property, including amortization

charges under the mortgage, be held in trust by the mortgagor and

distributed only with the consent of the Secretary; except that the

Secretary may provide for the granting of consent to any request

for an extension of the time for curing a default under any mortgage covering multifamily housing, or for a modification of the

terms of such mortgage, without regard to the foregoing requirement, in any case or class of cases in which an exemption from

such requirement does not (as determined by the Secretary) jeopardize the interests of the United States.

PURCHASE OF FEE SIMPLE TITLE FROM LESSORS

SEC. 240. ø12 U.S.C. 1715z–5¿ (a) The Secretary is authorized,

upon such terms and conditions as he may prescribe, to make commitments to insure and to insure loans made by financial institutions for the purpose of financing purchases by homeowners of the

fee simple title to property on which their homes are located.

(b) As used in this section—

(1) the term ‘‘financial institution’’ means a lender approved by the Secretary as eligible for insurance under section

2 or a mortgagee approved under section 203(b)(1); and

(2) the term ‘‘homeowner’’ means a lessee under a longterm ground lease.

(c) To be eligible for insurance under this section, a loan

shall—

(1) relate to property on which there is located a dwelling

designed principally for a one-, two-, three-, or four-family residence;

(2) not exceed the cost of purchasing the fee simple title,

or $10,000 ($30,000, if the property is located in Hawaii) per

family unit, whichever is the lesser;
Sec. 241 NATIONAL HOUSING ACT 1030

(3) be limited to an amount which when added to any outstanding indebtedness related to the property (as determined

by the Secretary) creates a total outstanding indebtedness

which does not exceed the applicable mortgage limit prescribed

in section 203(b);

(4) bear interest at such rate as may be agreed upon by

the mortgagor and the mortgagee;

(5) have a maturity satisfactory to the Secretary, but not

to exceed twenty years from the beginning of amortization of

the loan; and

(6) comply with such other terms, conditions, and restrictions as the Secretary may prescribe.

(d) The provisions of paragraphs (3), (5), (6), (7), (8), and (10)

of section 220(h) shall be applicable to loans insured under this section and, as applied to loans insured under this section, references

in those paragraphs to ‘‘home improvement loans’’ and ‘‘this subsection’’ shall be construed to refer to loans under this section.

SUPPLEMENTAL LOANS FOR MULTIFAMILY PROJECTS

SEC. 241. ø12 U.S.C. 1715z–6¿ (a) With respect to a multifamily project, hospital, or group practice facility covered by a

mortgage insured under any section or title of this Act or covered

by a mortgage held by the Secretary, the Secretary is authorized,

upon such terms and conditions as he may prescribe, to make commitments to insure, and to insure, supplemental loans (including

advances during construction or improvement) made by financial

institutions approved by the Secretary. As used in this section,

‘‘supplemental loan’’ means a loan, advance of credit, or purchase

of an obligation representing a loan or advance of credit made for

the purpose of financing improvements or additions to such project,

hospital, or facility: Provided, That a loan involving a nursing

home, hospital, or a group practice facility may also be made for

the purpose of financing equipment to be used in the operation of

such nursing home, hospital, or facility.

(b) To be eligible for insurance under this section, a supplemental loan shall—

(1) be limited to 90 per centum of the amount which the

Secretary estimates will be the value of such improvements,

additions, and equipment, except that such amount when

added to the outstanding balance of the mortgage covering the

project or facility, shall not exceed the maximum mortgage

amount insurable under the section or title pursuant to which

the mortgage covering such project or facility is insured or an

amount acceptable to the Secretary;

(2) have a maturity satisfactory to the Secretary;

(3) bear interest at such rate as may be agreed upon by

the borrower and the financial institution;

(4) be secured in such manner as the Secretary may require;

(5) be governed by the labor standards provisions of section 212 that are applicable to the section or title pursuant to

which the mortgage covering the project or facility is insured

or pursuant to which the original mortgage covering the project

or facility was insured; and
1031 Sec. 241 NATIONAL HOUSING ACT

(6) contain such other terms, conditions, and restrictions

as the Secretary may prescribe.

(c) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l),

and (n) of section 207 shall be applicable to loans insured under

this section, except that (1) all references to the term ‘‘mortgage’’

shall be construed to refer to the term ‘‘loan’’ as used in this section, (2) loans involving projects covered by a mortgage insured

under section 213 that is the obligation of the Cooperative Management Housing Insurance Fund shall be insured under and shall be

the obligation of such fund, and (3) loans involving projects covered

by a mortgage insured under section 236 shall be insured under

and shall be the obligation of the Special Risk Insurance Fund.

(d) Notwithstanding the foregoing, the Secretary may insure a

loan for improvements or additions to a multifamily housing

project, or a group practice or medical practice facility or hospital

or other health facility approved by the Secretary, which is not covered by a mortgage insured under this Act, if he finds that such

a loan would assist in preserving, expanding, or improving housing

opportunities, or in providing protection against fire or other hazards. Such loans shall have a maturity satisfactory to the Secretary

and shall meet such other conditions as the Secretary may prescribe. In no event shall such a loan be insured if it is for an

amount in excess of the maximum amount which could be approved

if the outstanding indebtedness, if any, covering the property were

a mortgage insured under this Act. At any sale under foreclosure

of a mortgage on a project or facility which is not insured under

this Act but which is senior to a loan assigned to the Secretary pursuant to subsection (c), the Secretary is authorized to bid, in addition to amounts authorized under section 207(k), any sum up to but

not in excess of the total unpaid indebtedness secured by such senior mortgage, plus taxes, insurance, foreclosure costs, fees, and

other expenses. In the event that, pursuant to subsection (c), the

Secretary acquires title to, or is assigned, a loan covering a project

or facility which is subject to a mortgage which is not insured

under this Act, the Secretary is authorized to make payments from

the General Insurance Fund on the debt secured by such mortgage,

and to take such other steps as the Secretary may deem appropriate to preserve or protect the Secretary’s interest in the project

or facility.

(e)(1) Notwithstanding any other provision of this section, the

Secretary may insure a loan for purchasing and installing energy

conserving improvements (as defined in subparagraph (2) of the

last paragraph of section 2(a) of this Act), for purchasing and installing a solar energy system (as defined in subparagraph (3) of

the last paragraph of section 2(a) of this Act), and for purchasing

or installing (or both) individual utility meters in a multifamily

housing project if such meters are purchased or installed in connection with other energy conserving improvements or with a solar energy system or the project meets minimum standards of energy

conservation established by the Secretary, without regard to

whether the project is covered by a mortgage under this Act.

(2) Notwithstanding the provisions of subsection (b), a loan insured under this subsection shall—

(A) not exceed an amount which the Secretary determines

is necessary for the purchase and installation of individual
Sec. 241 NATIONAL HOUSING ACT 1032

utility meters plus an amount which the Secretary deems appropriate taking into account amounts which will be saved in

operation costs over the period of repayment of the loan by reducing the energy requirements of the project as a result of the

installation of energy conserving improvements or a solar energy system therein;

(B) be insured for 90 percent of any loss incurred by the

person holding the note for the loan; except that, for cooperative multifamily projects receiving assistance under section 236

or financed with a below market interest rate mortage insured

under section 221(d)(3) of this Act, 100 percent of any such loss

may be insured;

(C) bear an interest rate not to exceed an amount which

the Secretary determines, after consulting with the Secretary

of Energy, to be necessary to meet market demands;

(D) have a maturity satisfactory to the Secretary;

(E) be insured pursuant to a premium rate established on

a sound actuarial basis to the extent practicable;

(F) be secured in such a manner as the Secretary may require;

(G) be an acceptable risk in that energy conservation or

solar energy benefits to be derived outweigh the risks of possible loss to the Federal Government; and

(H) contain such other terms, conditions, and restrictions

as the Secretary may prescribe.

(3) The provisions of subsection (c) shall apply to loans insured

under this subsection.

(4) The Secretary shall provide that any person obligated on

the note for any loan insured under this section be regulated or restricted, until the termination of all obligations of the Secretary

under the insurance, by the Secretary as to rents or sales, charges,

capital structure, rate of return, and methods of operations of the

multifamily project to such an extent and in such manner as to

provide reasonable rentals to tenants and a reasonable return on

the investment.

ø(f) [Repealed.]¿

(g)(1) When underwriting a rehabilitation loan under this section in connection with eligible multifamily housing, the Secretary

may assume that any rental assistance provided for purposes of

servicing the additional debt will be extended for the term of the

rehabilitation loan. The Secretary shall exercise prudent underwriting practices in insuring rehabilitation loans under this section. For purposes of this subsection, the term ‘‘eligible multifamily

housing’’ means any housing financed by a loan or mortgage that

is—

(A) insured or held by the Secretary under section

221(d)(3) of the National Housing Act and assisted under section 101 of the Housing and Urban Development Act of 1965

or section 8 of the United States Housing Act of 1937;

(B) insured or held by the Secretary and bears interest at

a rate determined under the proviso of section 221(d)(5) of the

National Housing Act; or

(C) insured, assisted or held by the Secretary under section 236 of the National Housing Act.
1033 Sec. 242 NATIONAL HOUSING ACT

1 Indented so in law.

(2) A mortgagee approved by the Secretary may not withhold

consent to a rehabilitation loan insured in connection with eligible

multifamily housing on which that mortgagee holds a mortgage.

MORTGAGE INSURANCE FOR HOSPITALS

SEC. 242. ø12 U.S.C. 1715z–7¿ (a) The purpose of this section

is to assist the provision of urgently needed hospitals for the care

and treatment of persons who are acutely ill or who otherwise require medical care and related services of the kind customarily furnished only (or most effectively) by hospitals. Such assistance shall

be provided regardless of the amount of public financial or other

support a hospital may receive, and the Secretary shall neither require additional security or collateral to guarantee such support,

nor impose more stringent eligibility or other requirements on publicly owned or supported hospitals.

(b) For the purposes of this section—

(1) the term ‘‘hospital’’ means a facility—

(A) which provides community service for inpatient

medical care of the sick or injured (including obstetrical

care);

(B) not more than 50 per centum of the total patient

days of which during any year are customarily assignable

to the categories of chronic convalescent and rest, drug and

alcoholic, epileptic, mentally deficient, mental, nervous and

mental, and tuberculosis; and

(C) which is a public facility, proprietary facility, or facility of a private nonprofit corporation, or association, licensed or regulated by the State (or, if there is no State

law providing for such licensing or regulation by the State,

by the municipality or other political subdivision in which

the facility is located); and

(2) the terms ‘‘mortgage’’ and ‘‘mortgagor’’ shall have the

meanings respectfully set forth in section 207(a) of this Act.

(c) The Secretary is authorized to insure any mortgage (including advances on such mortgage during construction) in accordance

with the provisions of this section upon such terms and conditions

as he may prescribe and to make commitments for insurance of

such mortgage prior to the date of its execution or disbursement

thereon. No mortgage insurance premium shall be charged with respect to the amount of principal and interest guaranteed by the Department of Health and Human Services under title VII of the Public Health Service Act.

(d) In order to carry out the purpose of this section, the Secretary is authorized to insure any mortgage which covers a new or

rehabilitated hospital, including equipment to be used in its operation, subject to the following conditions:

(1) 1 The mortgage shall be executed by a mortgagor approved

by the Secretary. The Secretary may in his discretion require any

such mortgagor to be regulated or restricted as to charges and

methods of financing, and, in addition thereto, if the mortgagor is

a corporate entity, as to capital structure and rate of return. As an

aid to the regulation or restriction of any mortgagor with respect

to any of the foregoing matters, the Secretary may make such con-
Sec. 242 NATIONAL HOUSING ACT 1034

tracts with and acquire for not to exceed $100 such stock or interest in such mortgagor as he may deem necessary. Any stock or interest so purchased shall be paid for out of the General Insurance

Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.

(2) 1 The mortgage shall involve a principal obligation in the

amount requested by the mortgagor if such amount does not exceed

90 percent of the estimated replacement cost of the property or

project including—

(A) equipment to be used in the operation of the hospital,

when the proposed improvements are completed and the equipment is installed; and

(B) a solar energy system (as defined in subparagraph (3)

of the last paragraph of section 2(a) of this Act) or residential

energy conservation measures (as defined in section 210(11)

(A) through (G) and (I) of Public Law 95–619) in cases where

the Secretary determines that such measures are in addition

to those required under the minimum property standards and

will be cost-effective over the life of the measure.

(3) 1 The mortgage shall—

(A) provide for complete amortization by periodic payments

within such terms as the Secretary shall prescribe; and

(B) bear interest at such rate as may be agreed upon by

the mortgagor and the mortgagee.

(4) 1 The Secretary shall not insure any mortgage under this

section unless he has received, from the State agency designated in

accordance with section 604(a)(1) or section 1521 of the Public

Health Service Act for the State in which is located the hospital

covered by the mortgage, a certification that (A) there is a need for

such hospital, and (B) there are in force in such State or the political subdivision of the State in which the proposed hospital would

be located reasonable minimum standards of licensure and methods of operation for hospitals. No such mortgage shall be insured

under this section unless the Secretary has received such assurance as he may deem satisfactory from the State agency that such

standards will be applied and enforced with respect to any hospital

located in the State for which mortgage insurance is provided

under this section. If no such State agency exists, or if the State

agency exists but is not empowered to provide a certification that

there is a need for the hospital as set forth in clause (A) of the first

sentence, the Secretary shall not insure any mortgage under this

section unless (A) the State in which the hospital is located has

conducted or commissioned and paid for the preparation of an independent study of market need and feasibility that (i) is prepared

in accordance with the principles established by the American Institute of Certified Public Accountants; (ii) assesses, on a

marketwide basis, the impact of the proposed hospital on, and its

relationship to, other health care facilities and services, the percentage of excess beds, demographic projections, alternative health

care delivery systems, and the reimbursement structure of the hospital; (iii) is addressed to and is acceptable to the Secretary in form

and substance; and (iv) in the event the State does not prepare the

study, is prepared by a financial consultant selected by the State

and approved by the Secretary; and (B) the State complies with the

other provisions of this paragraph that would otherwise be re-
1035 Sec. 242 NATIONAL HOUSING ACT

1 Indented so in law.

2 Indented so in law.

quired to be met by a State agency designated in accordance with

section 604(a)(1) or section 1521 of the Public Health Service Act.

The proposed mortgagor may reimburse the State for the cost of

the independent feasibility study required in the preceding sentence.

(5) 1 The Secretary shall not insure any mortgage or approve

any modification of an existing mortgage insured pursuant to this

section or section 223(f) if such insurance or modification is to be

made in connection with a guarantee, as authorized pursuant to

section 306, of a trust certificate or other security which is exempt

from Federal taxation or which is to be used to collateralize obligations which are so exempt, except that the Secretary shall not

refuse to insure such a mortgage or approve such a modification

solely on the basis that such insurance or modification is to be

made in connection with a guarantee, as authorized pursuant to

section 306, of a trust certificate or other security which is exempt

from Federal taxation or which is to be used to collateralize obligations which are so exempt if—

(A) a written application for such insurance or modification

submitted at the express direction of the hospital has been

submitted to the appropriate office of the Department of

Health, Education, and Welfare prior to March 29, 1979; or

(B) in the case of a nonprofit mortgagor which is seeking

refinancing or modification of an existing mortgage insured

pursuant to this section or section 223(f), the mortgagor (i) had

engaged an investment banker for the purpose of obtaining

such refinancing or modification, or had undertaken or arranged for the undertaking of a market or feasibility study

with respect to the advisability of obtaining such refinancing

or modification, and had made written notification of its interest in such refinancing or modification to the Department of

Health, Education, and Welfare or the Department of Housing

and Urban Development prior to June 7, 1979; and (ii) receives

from the programs established under titles XVIII and XIX of

the Social Security Act a percentage of its total revenue which

is greater than 125 per centum of the national average for hospitals which derive revenue from such titles.

This paragraph shall not limit the authority of the Secretary to approve a mortgage increase on any mortgage eligible for insurance

under this paragraph at any time prior to final endorsement of the

loan for insurance; except that such mortgage increase may not be

approved for the cost of constructing any improvements not included in the original plans and specifications approved by the Department of Health and Human Services unless approved by the

Secretary of Housing and Urban Development and by the Secretary

of Health and Human Services.

(6) 2 To the extent that a private nonprofit or public facility

mortgagor is required by the Secretary to provide cash equity in excess of the amount of the mortgage to complete the project, the

mortgagor shall be entitled, at the option of the mortgagee, to fund

the excess with a letter of credit. In such event, mortgage proceeds
Sec. 243 NATIONAL HOUSING ACT 1036

may be advanced to the mortgagor prior to any demand being

made on the letter of credit.

(e) The Secretary may consent to the release of a part or parts

of the mortgaged property or project from the lien of any mortgage

insured under this section upon such terms and conditions as he

may prescribe.

(f) The activities and functions provided for in this section shall

be carried out by the agencies involved so as to encourage programs that undertake responsibility to provide comprehensive

health care, including outpatient and preventive care, as well as

hospitalization, to a defined population, and, in the case of public

hospitals, to encourage programs that are undertaken to provide

essential health care services to all residents of a community regardless of ability to pay. The Secretary shall begin immediately to

process applications of public facilities for mortgage insurance

under this section in accordance with regulations, guidelines, and

procedures applicable to facilities of private nonprofit corporations

and associations.

(g)(1) Notwithstanding any of the other provisions of this title,

the Secretary may insure under this section a mortgage which provides permanent financing or refinancing of existing mortgage indebtedness in the case of a hospital whose permanent financing is

presently lacking, if the construction of such hospital was completed between January 1, 1966, and the date of the enactment of

this Act.

(2) The aggregate principal balance of all mortgages insured

under paragraph (1) and outstanding at any one time shall not exceed $20,000,000.

(h) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l),

and (n) of section 207 shall apply to mortgages insured under this

section and all references therein to section 207 shall be deemed

to refer to this section.

HOMEOWNERSHIP FOR MIDDLE-INCOME FAMILIES

SEC. 243. ø12 U.S.C. 1715z–8¿ (a) Whenever he determines

such action to be necessary in furtherance of the purposes set forth

in section 501 of the Emergency Home Finance Act of 1970, the

Secretary is authorized to make, and to contract to make, periodic

assistance payments on behalf of families of middle income. The assistance shall be accomplished through interest subsidy payments

to the Federal National Mortgage Association or the Federal Home

Loan Mortgage Corporation (hereinafter referred to as ‘‘the investor’’) with respect to mortgages meeting the special requirements

specified in this section and made after the date of enactment of

the Emergency Home Finance Act of 1970.

(b) To qualify for assistance payments a middle-income family

shall be a mortgagor under a mortgage which is (1) insured under

subsection (j) of this section, (2) guaranteed under chapter 37 of

title 38, United States Code, or (3) a conventional mortgage meeting the requirements of subsection (j)(3) of this section. In addition

to the foregoing requirement, the Secretary may require that the

mortgagor have an income, at the time of acquisition of the property, of not more than the median income for the area in which the
1037 Sec. 243 NATIONAL HOUSING ACT

property is located, as determined by the Secretary, with appropriate adjustments for smaller and larger families.

(c) The interest subsidy payments authorized by this section

shall cease when (1) the mortgagor no longer occupies the property

which secures the mortgage, (2) the mortgages are no longer held

by the investor, or (3) the rate of interest paid by the mortgagor

reaches the rate of interest specified on the mortgage.

(d)(1) Interest subsidy payments shall be on mortgages on

which the mortgagor makes monthly payments towards principal

and interest equal to an amount which would be required if the

mortgage bore an effective interest rate of 7 per centum per

annum, including any discounts or charges in the nature of points

or otherwise (but not including premiums, if any, for mortgage insurance) or such higher rate (not to exceed the rate specified in the

mortgage), which the mortgagor could pay by applying at least 20

per centum of his income towards homeownership expenses. As

used in this subsection, the term ‘‘monthly homeownership expense’’ includes the monthly payment for principal, interest, mortgage insurance premium, insurance, and taxes due under the mortgage.

(2) In addition to the mortgages eligible for assistance under

paragraph (1) of this subsection, the Secretary is authorized to

make periodic assistance payments on behalf of cooperative members of middle income. Such assistance payments shall be accomplished through interest subsidy payments to the investor with respect to mortgages insured (subsequent to the effective date of this

section) under section 213 which are executed by cooperatives, the

membership in which is limited to middle-income families. For purposes of this paragraph—

(A) the term ‘‘mortgagor’’, when used in subsection (b) in

the case of a mortgage covering a cooperative housing project,

means a member of the cooperative;

(B) the term ‘‘acquisition of the property’’, when used in

subsection (b), means the family’s application for a dwelling

unit; and

(C) in the case of a cooperative mortgagor, subsection (c)

shall not apply and the interest subsidy payments shall cease

when the mortgage is no longer held by the investor or the cooperative fails to limit membership to families whose incomes

at the time of their application for a dwelling unit meets such

requirements as are laid down by the Secretary pursuant to

subsection (b).

(e) The interest subsidy payments shall be in an amount equal

to the difference, as determined by the Secretary, between the total

amount of interest per calendar quarter received by the investor on

mortgages assisted under this section and purchased by it and the

total amount of interest which the investor would have received if

the yield on such mortgages was equal to the sum of (1) the average costs (expressed as an annual percentage rate) to it of all borrowed funds outstanding in the immediately preceding calendar

quarter, and (2) such per centum per annum as will provide for administrative and other expenses of the investor and a reasonable

economic return, as determined by the Secretary to be necessary

and appropriate taking into account the purpose of this section to
Sec. 243 NATIONAL HOUSING ACT 1038

1So in law. Probably should be designated as subparagraph (A).

provide additional mortgage credit at reasonable rates of interest

to middle-income families.

(f) Procedures shall be adopted by the Secretary for recertifications of the mortgagor’s income at intervals of two years (or at

shorter intervals where the Secretary deems it desirable) for the

purpose of adjusting the amount of the mortgagor’s payments pursuant to subsection (d).

(g) The Secretary shall prescribe such regulations as he deems

necessary to assure that the sales price of, or other consideration

paid in connection with the purchase by a homeowner of the property with respect to which assistance payments are to be made is

not increased above the appraised value on which the maximum

mortgage which the Secretary will insure is computed.

(h)(1) There are authorized to be appropriated such sums as

may be necessary to enable the Secretary to make interest subsidy

payments under contracts entered into under this section. The aggregate amount of contracts to make such payments shall not exceed amounts approved in appropriation Acts, and payments pursuant to such contracts shall not exceed $105,000,000 during the first

year of such contracts prior to July 1, 1971, which amount shall be

increased by an additional $105,000,000 during the first year of an

additional number of such contracts on July 1 of each of the years

1971 and 1972.

(2) No interest subsidy payments under this section shall be

made after June 30, 1973, except pursuant to contracts entered

into on or before such date.

(i) In determining the income of any family for the purposes of

this section, income from all sources of each member of the family

in the household shall be included, except that the Secretary shall

exclude income earned by any minor person.

(j)(1) The Secretary is authorized upon application by the mortgagee, to insure a mortgage executed by a mortgagor who meets

the eligibility requirements for assistance payments prescribed by

the Secretary under subsection (b). Commitments for the insurance

of such mortgages may be issued by the Secretary prior to the date

of their execution or disbursement thereon, upon such terms and

conditions as the Secretary may prescribe.

(2) To be eligible for insurance under this subsection, a mortgage shall meet the requirements of section 221(d)(2) or 234(c), except as such requirements are modified by this subsection: Provided, however, That in the discretion of the Secretary 25 per centum of the authority conferred by this section and subject to all the

terms thereof may be used for mortgages on existing housing.

(3) A mortgage to be insured under this section shall—

(i) 1 involve a single-family dwelling which has been approved by the Secretary prior to the beginning of construction,

or a one-family unit in a condominium project (together with

an undivided interest in the common areas and facilities serving the project) which is released from a multifamily project,

the construction of which has been completed within two years

prior to the filing of the application for assistance payments
1039 Sec. 244 NATIONAL HOUSING ACT

1So in law. Probably should be designated as subparagraph (B).

2So in law. Probably should be designated as subparagraph (C).

with respect to such family unit and the unit shall have had

no previous occupant other than the mortgagor;

(ii) 1 involve a single-family dwelling whose appraised

value, as determined by the Secretary, is not in excess of

$20,000 (which amount may be increased by not more than 50

per centum in any geographical area where the Secretary authorizes an increase on the basis of a finding that the cost level

so requires); and

(iii) 2 be executed by a mortgagor who shall have paid in

cash or its equivalent on account of the property (A) 3 per centum of the first $15,000 of the appraised value of the property,

(B) 10 per centum of such value in excess of $15,000 but not

in excess of $25,000, and (C) 20 per centum of such value in

excess of $25,000.

CO-INSURANCE

SEC. 244. ø12 U.S.C. 1715z–9¿ (a) In addition to providing insurance as otherwise authorized under this Act, and not withstanding any other provision of this Act inconsistent with this section, the Secretary, upon request of any mortgagee and for such

mortgage insurance premium as he may prescribe (which premium,

or other charges to be paid by the mortgagor, shall not exceed the

premium, or other charges, that would otherwise be applicable),

may insure and make a commitment to insure under any provision

of this title any mortgage, advance, or loan otherwise eligible under

such provision, pursuant to a co-insurance contract providing that

the mortgagee will—

(1) assume a percentage of any loss on the insured mortgage, advance, or loan in direct proportion to the amount of the

co-insurance, which co-insurance shall not be less than 10 per

centum, subject to any reasonable limit or limits on the liability of the mortgagee that may be specified in the event of unusual or catastrophic losses that may be incurred by any one

mortgagee; and

(2) carry out (under a delegation or otherwise and with or

without compensation but subject to audit, exception, or review

requirements) such credit approval, appraisal, inspection, commitment, property disposition, or other functions as the Secretary, pursuant to regulations, shall approve as consistent

with the purposes of this Act.

Any contract of co-insurance under this section shall contain such

provisions relating to the sharing of premiums on a sound actuarial

basis, establishment of mortgage reserves, manner of calculating

insurance benefits, conditions with respect to foreclosure, handling

and disposition of property prior to claim or settlement, rights of

assignees (which may elect not to be subject to the loss sharing

provisions), and other similar matters as the Secretary may prescribe pursuant to regulations. A mortgagee which enters into a

contract of co-insurance under this section shall not by reason of

such contract, or its adherence to such contract or applicable regulations of the Secretary, including provisions relating to the reten-
Sec. 244 NATIONAL HOUSING ACT 1040

tion of risks in the event of sale or assignment of a mortgage, be

made subject to any State law regulating the business of insurance.

(b) No insurance shall be granted pursuant to this section with

respect to dwellings or projects approved for insurance prior to the

beginning of construction unless the inspection of such construction

is conducted in accordance with at least the minimum standards

and criteria used with respect to dwellings or projects approved for

mortgage insurance pursuant to other provisions of this title.

ø(c) [Repealed.]¿

ø(d) [Repealed.]¿

(e) The Secretary shall not withdraw, deny, or delay insurance

otherwise authorized under any other provision of this Act by reason of the availability of insurance pursuant to this section. The

Secretary shall exercise his authority under this section only to the

extent that he finds that the continued exercise of such authority

will not adversely affect the flow of mortgage credit to older and

declining neighborhoods and to the purchasers of older and lower

cost housing.

(f)(1) Where the mortgage covers a multifamily housing project,

the co-insurance contract may provide that the mortgagee assume

(i) the full amount of any loss on the insured mortgage up to an

amount equal to a fixed percentage of the outstanding principal

balance of the mortgage at the time of claim for insurance benefits,

or (ii) the full amount of any losses on insured mortgages in a portfolio of mortgages approved by the Secretary up to an amount

equal to a fixed percentage of the outstanding principal balance of

all mortgages in such portfolio at the time of claim for insurance

benefits on a mortgage in the portfolio, plus a share of any loss in

excess of the amount under clause (i) or (ii), whichever is

applicable.

(2) The Secretary may make loans, from the applicable insurance fund, to public housing agencies in connection with mortgages

which have been insured pursuant to this subsection and which are

in default.

(3) The Secretary may insure and make a commitment to insure in connection with a co-insurance contract pursuant to this

subsection (A) a mortgage on a project assisted under the second

proviso in the first sentence of section 236(b) of this Act, and (B)

a mortgage or advance on a mortgage made to a public housing

agency on a project under construction which is not approved for

insurance prior to construction.

(4) As used in this subsection, the term ‘‘public housing agency’’ has the meaning given such term in section 3(b)(6) of the

United States Housing Act of 1937.

(5) Notwithstanding any other provision of this Act, the Secretary may include in the determination of replacement cost of a

project to be covered by a mortgage made to a public housing agency and insured pursuant to this subsection, such reserves and development costs, not to exceed 5 per centum of the amount otherwise allowable, as may be established or authorized by the public

housing agency consistent with such agency’s procedures and underwriting standards.
1041 Sec. 244 NATIONAL HOUSING ACT

1So in law. There is no subsection (g).

2So in law.

3Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(h) 1 Notwithstanding any other provision of this section, in the

case of a mortgage insured under section 223(f) secured by property

which is to be rehabilitated or developed under section 17 of the

United States Housing Act of 1937, such co-insurance may include

provisions that—

(1) insurance benefits shall equal the sum of (A) 90 per

centum of the mortgage on the date of institution of foreclosure

proceedings (or on the date of acquisition of the property otherwise after default), and (B) 90 per centum of interest arrears

on the date benefits are paid;

(2) the mortgagee shall remit to the Secretary, for credit

to the General Insurance Fund, 90 per centum of any proceeds

of the property, including sale proceeds, net of the mortgagee’s

actual and reasonable costs related to the property and the enforcement of security;

(3) payment of such benefits shall be made in cash unless

the mortgagee submits a written request for debenture payment; and

(4) the underwriter of co-insurance may reinsure 10 per

centum of the mortgage amount with a private mortgage insurance company or with a State mortgage insurance agency.

(i) Any mortgagee which enters into a contract of co-insurance

under this section shall have the authority to assign its interest in

any note or mortgage subject to a contract of co-insurance to a

warehouse bank or other financial institution which provides interim funding for a loan co-insured under this section, and to retain the co-insurance risk of such note or mortgage, upon such

terms and conditions as the Secretary shall prescribe.

(i) 2 The Secretary shall, by January 15 and July 15 of each

year (1) review the adequacy of capital and other requirements for

mortgagees under this section, (2) assess the compliance by mortgagees with such requirements, and (3) make such adjustment to

such requirements as the Secretary, after providing opportunity for

hearing, determines to be appropriate to improve the long-term financial soundness of the Federal Housing Administration funds.

Such requirements shall include the minimum capital or net worth

of mortgagees; the ratio that mortgagees shall maintain between

the mortgagee’s capital and the volume of mortgages co-insured by

such mortgagee; and such other requirements as the Secretary determines to be appropriate to ensure the long-term financial soundness of the Federal Housing Administration funds. The Secretary

shall submit to the Committee on Banking, Housing, and Urban

Affairs of the Senate and the Committee on Banking, Finance and

Urban Affairs of the House of Representatives 3 a report on the review and assessment under the previous sentence, and an expla-
Sec. 245 NATIONAL HOUSING ACT 1042

nation of the Secretary’s reasons for making any adjustment in requirements authorized under this section.

GRADUATED PAYMENT AND INDEXED MORTGAGES

SEC. 245. ø12 U.S.C. 1715z–10¿ (a) The Secretary may insure

under any provision of this title mortgages and loans with provisions of varying rates of amortization corresponding to anticipated

variations in family income or with monthly payments and outstanding balances adjusted by a percentage change in a selected

price index to the extent he determines such mortgages or loans (1)

have promise for expanding housing opportunities or meet special

needs, (2) can be developed to include any safeguards for mortgagors or purchasers that may be necessary to offset special risks of

such mortgages, and (3) have a potential for acceptance in the private market. Notwithstanding any other provision of this title, except as provided in subsections (b) and (c) of this section, the principal obligation (including all interest to be deferred and added to

principal) of a mortgage insured pursuant to this section may not

exceed 97 per centum of the appraised value of the property covered by the mortgage as of the date the mortgage is accepted for

insurance.

(b) Notwithstanding the provisions of subsection (a), the Secretary may insure under any provision of this title a mortgage or

loan which meets the requirements of the first sentence of subsection (a) and which has provisions for varying rates of amortization if the Secretary determines—

(1) the mortgagor could not reasonably afford to purchase

the dwelling unit by means of a mortgage insured under subsection (a) or any other mortgage insurance program under

this title;

(2) the principal obligation of the mortgage or loan initially

does not exceed the percentage of the initial appraised value

of the property specified in section 203(b) of this title as of the

date the mortgage or loan is accepted for insurance;

(3) the principal obligation of the mortgage or loan thereafter (including all interest to be deferred and added to principal) will not at any time be scheduled to exceed 97 per centum of the projected value of the property; and

(4) the principal obligation of the mortgage thereafter will

not exceed 113 per centum of the initial appraised value of the

property.

Mortgage insurance under this subsection shall be limited to mortgages executed by mortgagors who, as determined by the Secretary,

have not owned dwelling units within the preceding three years.

For the purpose of this subsection, the projected value of the property shall be calculated by the Secretary by increasing the initial

appraised value of the property at a rate not in excess of 21⁄2 per

centum per annum. The number of mortgages which are insured in

accordance with this subsection in any fiscal year may not exceed

(A) that number of mortgages the aggregate initial principal obligation of which equals 10 per centum of the aggregate amount of the

initial principal obligation of all mortgages secured by properties

improved by one- to four-family residences which are insured under

this title during the preceding fiscal year, or (B) 50,000 mortgages,

whichever is greater. No loan or mortgage may be insured under
1043 Sec. 245 NATIONAL HOUSING ACT

1February 5, 1988.

this subsection after the date of the enactment of the Housing and

Community Development Act of 1987,1 except pursuant to a commitment to insure entered into on or before such date.

(c) Notwithstanding the provisions of subsection (a), the Secretary may insure under any provision of this title a mortgage or

loan that meets the requirements of the first sentence of subsection

(a) and that has provisions permitting adjustment of monthly payments and outstanding principal according to changes or percentages of changes in a selected price index if the Secretary

determines—

(1) the principal obligation of the mortgage or loan initially

does not exceed the percentage of the initial appraised value

of the property specified in section 203(b) as of the date the

mortgage or loan is accepted for insurance; and

(2) the monthly payments and principal obligation of the

mortgage or loan thereafter will not at any time be increased

at a rate greater than the percentage change in the price index

stipulated in the initial mortgage or loan contract.

In carrying out this subsection, the Secretary shall give a priority

to mortgages executed by mortgagors who, as determined by the

Secretary, have not owned dwelling units within the preceding 3

years. The Secretary shall, not later than March 31, 1984, prescribe regulations establishing guidelines governing mortgages and

loans described in this subsection and shall, to the extent practicable, conduct a demonstration program to insure mortgages and

loans in accordance with this subsection during fiscal years 1984

and 1985. The aggregate number of mortgages and loans insured

under this subsection and section 252 in any fiscal year may not

exceed 10 percent of the aggregate number of mortgages and loans

insured by the Secretary under this title during the preceding fiscal

year.

(d)(1) The Secretary may insure, under any provision of this

title relating to multifamily housing projects, mortgages and loans

with provisions of varying rates of amortization corresponding to

anticipated variations in project income, to the extent the Secretary

determines such mortgages or loans (A) have promise for expanding housing opportunities or meet special needs; (B) can be developed to include any safeguards for mortgagors, tenants, or purchasers that may be necessary to offset special risks of such mortgages; and (C) have a potential for acceptances in the private market.

(2) Notwithstanding any other provision of this title, the principal obligation of a mortgage or loan insured pursuant to this

subsection—

(A) may not exceed initially the percentage of the initial

appraised value or replacement cost of the property involved

that is required by the provision of this title under which such

property is insured; and

(B) thereafter (including all interest to be deferred and

added to principal) may not at any time be scheduled to exceed

100 percent of the projected value of such property.

(3) For purposes of this subsection, the projected value of a

property shall be calculated by the Secretary by increasing the ini-
Sec. 246 NATIONAL HOUSING ACT 1044

tial appraised value of such property at a rate not in excess of 2.5

percent per annum.

(e) Any mortgage or loan insured pursuant to this section

which contains or sets forth any graduated mortgage provisions (including but not limited to provisions for adding deferred interest to

principal) which are authorized under this section and applicable

regulations, or which have been insured on the basis of their being

so authorized, shall not be subject to any State constitution, statute, court decree, common law, or rule of public policy (1) limiting

the amount of interest which may be charged, taken, received, or

reserved, or the manner of calculating such interest (including but

not limited to prohibitions against the charging of interest on interest), if such constitution, statute, court decree, common law, or rule

would not apply to the mortgage or loan in the absence of such

graduated payment mortgage provisions, or (2) requiring a minimum amortization of principal under the mortgage or loan. ø12

U.S.C. 1715z–10¿

SALE OF ACQUIRED PROPERTY TO COOPERATIVES

SEC. 246. ø12 U.S.C. 1715z–11¿ In any case which the Secretary sells a multifamily housing project acquired as a result of

a default on a mortgage which was insured under this Act to a cooperative which will operate it on a nonprofit basis and restrict

permanent occupancy of its dwellings to members, or to a nonprofit

corporation which operates as a consumer cooperative as defined by

the Secretary, the Secretary may accept a purchase money mortgage, or upon application of the mortgagee, insure a mortgage

under this section upon such terms and conditions as the Secretary

determines are reasonable and appropriate, in a principal amount

equal to the value of the property at the time of purchase, which

value shall be based upon a mortgage amount on which the debt

service can be met from the income of property when operated on

a nonprofit basis after payment of all operating expenses, taxes,

and required reserves; except that the Secretary may add to the

mortgage amount an amount not greater than the amount of prepaid expenses and costs involved in achieving cooperative ownership, or make such other provisions for payment of such expenses

and costs as the Secretary deems reasonable and appropriate. Prior

to such disposition of a project, funds may be expended by the Secretary for necessary repairs and improvements.

SINGLE-FAMILY MORTGAGE INSURANCE ON HAWAIIAN HOME LANDS

SEC. 247. ø12 U.S.C. 1715z–12¿ (a) The Secretary, subject to

such conditions as the Secretary may prescribe, may insure under

any provision of this title that authorizes such insurance, a mortgage covering a property upon which there is located a one- to fourfamily residence, without regard to any limitation in this Act relating to marketability of title or any other limitation in this Act that

the Secretary determines is contrary to promoting the availability

of such insurance on Hawaiian home lands, if—

(1) the mortgage is executed by a native Hawaiian on

property located within Hawaiian home lands covered under a

homestead lease issued under section 207(a) of the Hawaiian

Homes Commission Act, 1920, or under the corresponding pro-
1045 Sec. 247 NATIONAL HOUSING ACT

vision of the Constitution of the State of Hawaii adopted under

section 4 of the Act entitled ‘‘An Act to provide for the admission of the State of Hawaii into the Union’’, approved March

28, 1959 (73 Stat. 5);

(2) the property will be used as the principal residence of

the mortgagor; and

(3) the Department of Hawaiian Home Lands of the State

of Hawaii (A) is a comortgagor; (B) guarantees to reimburse

the Secretary for any mortgage insurance claim paid in connection with a property on Hawaiian home lands; or (C) offers

other security acceptable to the Secretary.

(b) Notwithstanding any other provision of this Act, the Secretary may, with respect to mortgages eligible for insurance under

subsection (a), insure and make commitments to insure advances

made during construction if the Secretary determines that the proposed construction is otherwise acceptable and that no feasible financing alternative is available.

(c) Notwithstanding any other provision of this Act, the insurance of a mortgage using the authority contained in this section

shall be the obligation of the General Insurance Fund established

in section 519. The mortgagee shall be eligible to receive the benefits of insurance as provided in section 204 with respect to mortgages insured pursuant to this section, except that (1) all references in section 204 to the Mutual Mortgage Insurance Fund or

the Fund shall be construed to refer to the General Insurance

Fund; and (2) all references in section 204 to section 203 shall be

construed to refer to the section under which the mortgage is insured.

(d) For purposes of this section:

(1) NATIVE HAWAIIAN.—The term ‘‘native Hawaiian’’ means

any descendant of not less than one-half part of the blood of

the races inhabiting the Hawaiian Islands before January 1,

1778, or, in the case of an individual who is awarded an interest in a lease of Hawaiian home lands through transfer or succession, such lower percentage as may be established for such

transfer or succession under section 208 or 209 of the Hawaiian Homes Commission Act of 1920 (42 Stat. 111), or under the

corresponding provision of the Constitution of the State of Hawaii adopted under section 4 of the Act entitled ‘‘An Act to provide for the admission of the State of Hawaii into the Union’’,

approved March 18, 1959 (73 Stat. 5).

(2) HAWAIIAN HOME LANDS.—The term ‘‘Hawaiian home

lands’’ means all lands given the status of Hawaiian home

lands under section 204 of the Hawaiian Homes Commission

Act of 1920 (42 Stat. 110), or under the corresponding provision of the Constitution of the State of Hawaii adopted under

section 4 of the Act entitled ‘‘An Act to provide for the admission of the State of Hawaii into the Union’’, approved March

18, 1959 (73 Stat. 5).

(e) CERTIFICATION OF ELIGIBILITY FOR EXISTING LESSEES.—Possession of a lease of Hawaiian home lands issued under section

207(a) of the Hawaiian Homes Commission Act of 1920 (42 Stat.

110), shall be sufficient to certify eligibility to receive a mortgage

under this section.
Sec. 248 NATIONAL HOUSING ACT 1046

SINGLE FAMILY MORTGAGE INSURANCE ON INDIAN RESERVATIONS

SEC. 248. ø12 U.S.C. 1715z–13¿ (a) The Secretary, subject to

such special conditions as the Secretary may prescribe, may insure

under any provision of this title that authorizes such insurance, a

mortgage covering a property upon which there is located a one- to

four-family residence, without regard to any limitation in this Act

relating to marketability of title or any other limitation in this Act

that the Secretary determines is contrary to promoting the availability of such insurance on Indian reservations if the mortgage (1)

is executed by an Indian tribe and the property is located on trust

or otherwise restricted land; or (2) is executed by a member of an

Indian tribe who will use the property as a principal residence and

the property is on trust or otherwise restricted land.

(b) Notwithstanding any other provision of this Act, with respect to mortgages covering a property upon which there is located

a one- to four-family residence—

(1) the Secretary may insure and make commitments to insure under this title pursuant to this section advances made

during construction where the Secretary determines that the

proposed construction is otherwise acceptable and meets an applicable tribal or national model building code, and that no feasible financing alternative is available;

(2) the applicable percentage limitation on the amount of

the principal obligation of a mortgage based on the appraised

value or replacement cost, as appropriate, of a one- to fourfamily owner-occupied residence contained in this title shall

apply in the case of all mortgages insured pursuant to this section without regard to whether the residences are owner-occupied where the residences are owned by the tribe; and

(3)(A) the Secretary may require an Indian tribe, only as

a condition of insurance made under this title pursuant to this

section, to pledge income from tribal resources or income from

tribal assets not subject to a restriction by the Secretary of the

Interior or pledge grants under title I of the Housing and Community Development Act of 1974 or any other Federal grant

program administered by the Secretary of Housing and Urban

Development to be used to reimburse the Secretary for any

mortgage insurance claims paid in connection with residences

insured pursuant to this section; or

(B) in the case of an individual Indian mortgagor, the Secretary may require a pledge of his or her share of distributed

income from tribal resources or income from tribal assets, excluding any Federal grants received by the tribe.

(c) The Secretary may not refuse to insure a mortgage under

this section to an individual home purchaser because there is no

distributed tribal or trust fund income attributable to that purchaser.

(d) Before making any commitment to insure a mortgage under

this section with respect to property located on trust or otherwise

restricted land, the Secretary shall require a showing by the tribe

that it has adopted eviction procedures to be used in the event of

a default.

(e) A mortgage insured under this section may be assumed,

subject to credit approval by the lender and the consent of the tribe
1047 Sec. 248 NATIONAL HOUSING ACT

to an assumption of the existing lease or the grant of a new lease,

without an adjustment of the interest rate. Any other sale of a

property subject to a mortgage insured under this section may be

made only if a new lease is granted, except that a sale following

a foreclosure may be accompanied by an assumption of the lease

with the consent of the tribe.

(f) Notwithstanding any other provision of this Act, the insurance of a mortgage using the authority contained in this section

shall be the obligation of the General Insurance Fund established

in section 519. The mortgagee shall be eligible to receive the benefits of insurance as provided in section 204 with respect to mortgages insured pursuant to this section, except that (1) all references in section 204 to the Mutual Mortgage Insurance Fund or

the Fund shall be construed to refer to the General Insurance

Fund; and (2) all references in section 204 to section 203 shall be

construed to refer to the section under which the mortgage is insured.

(g)(1) The Secretary shall make information regarding the status and payment history of loans insured under this section available to local credit bureaus and prospective creditors. Prior to accepting assignment of a mortgage, the Secretary shall require

mortgagees to submit documentation that mortgagors have been

counseled in a face-to-face interview, informed of the provisions of

this subsection or other available assistance, and provided with the

names and addresses of officials of the Department of Housing and

Urban Development to whom further communications shall be addressed.

(2) Notwithstanding the requirement for conveyance of title

under section 204, a mortgagee under this section shall be entitled

to receive the benefit of insurance under this section in the case of

a mortgage which is more than 90 days in default upon conveyance

of the lease agreement and the mortgage documents.

(3) In the event that any default is cured, the Secretary shall

seek to reinstate the loan with the mortgagee or another mortgagee. For purposes of this paragraph, the Secretary may provide

appropriate financial incentives to reinstate the loan commensurate with sound management of the General Insurance Fund.

(4) If the Secretary determines that a mortgagor is not making

a good-faith effort to cure a default, and that trust fund or tribal

income is available under subsection (b)(3)(B), the Secretary shall

commence proceedings for the garnishment of the mortgagor’s distributed share of tribal or trust fund income in order to collect loan

payments that are past due. Proceedings under this paragraph may

be instituted in a tribal court, court of competent jurisdiction designated by the tribe, or Federal district court.

(5) If the Secretary determines such action is necessary to protect the General Insurance Fund from undue loss, the Secretary

may initiate foreclosure proceedings with respect to any mortgage

acquired under this subsection. Such proceeding may take place in

a tribal court, a court of competent jurisdiction, or Federal district

court. Any such court shall have jurisdiction to convey to the Secretary the remaining life of a lease on the real property and to

order eviction of the delinquent mortgagor.

(h) In the administration of this section, the Secretary shall establish a premium charge for insurance that will be sufficient to
Sec. 249 NATIONAL HOUSING ACT 1048

1The date of enactment was December 21, 2000.

2Section 143(3)(C)(i) of the Community Renewal Tax Relief Act of 2000 (H.R. 5662, 106th

Congress, as introduced in the House of Representatives, enacted by section 1(a)(7) of the Consolidated Appropriations Act, 2001, Pub. L. 106–554) provides that this sentence is amended by

striking ‘‘insured’’ and inserting ‘‘for which risk of nonpayment is shared’’. The amendement did

not specify which occurrence of ‘‘insured’’ to strike and could not be executed.

cover the full costs of the mortgage insurance program under this

section, except that such charge may not exceed 3 percent per

annum of the principal amount of the mortgage outstanding at any

time. Not later than September 30, 1984, the Secretary shall determine and report to the Congress on the feasibility of eliminating

any excess amount of the premium under this section over the premium under section 203. In the event such premiums are not sufficient to cover the full costs of the mortgage insurance program

under this section, the Secretary shall make recommendations to

the Congress about changes to the program.

(i) For purposes of this section:

(1) The term ‘‘Indian tribe’’ means any Indian or Alaska

native tribe, band, nation, or other organized group or community of Indians or Alaska natives recognized as eligible for the

services provided to Indians or Alaska natives by the Secretary

of the Interior because of its status as such an entity, or that

was an eligible recipient under chapter 67 of title 31, United

States Code, prior to the repeal of such chapter.

(2) The term ‘‘trust or otherwise restricted land’’ means (A)

that area of land, as defined by the Secretary of the Interior,

over which an Indian tribe is recognized by the United States

as having governmental jurisdiction; (B) land held in trust for

the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to a restriction by the United

States against alienation; or (C) land acquired by Alaska natives under the Alaska Native Claims Settlement Act or any

other land acquired by Alaska natives pursuant to statute by

virtue of their unique status as Alaska natives.

RISK-SHARING DEMONSTRATION

SEC. 249. ø12 U.S.C. 1715z–14¿ (a) The purpose of this section

is to authorize a demonstration mortgage risk-sharing program designed to test the feasibility of entering into risk-sharing contracts

with private mortgage insurers and with insured community development financial institutions in order to reduce Government risk

and administrative costs, and to speed mortgage processing. The

Secretary shall limit the demonstration under this section to not

more than four administrative regions of the Department of Housing and Urban Development, and shall assure that the program is

in the financial interest of the Government and will not result in

loss of employment by any employees of the Department of Housing and Urban Development before the expiration of the 5-year period beginning on the date of the enactment of the Community Renewal Tax Relief Act of 2000. 1 The aggregate number of mortgages

insured under this section in any administrative region of the Department of Housing and Urban Development in any fiscal year

may not exceed 20 percent of the aggregate number of mortgages

and loans insured by the Secretary under this title in such region

during the preceding fiscal year. 2
1049 Sec. 250 NATIONAL HOUSING ACT

(b) Notwithstanding any other provision of this Act inconsistent with this section, the Secretary is authorized, in providing

mortgage insurance with respect to one- to four-family dwellings

under sections 203(b), 234, and 245, to enter into risk-sharing contracts with private mortgage insurance companies which have been

determined to be qualified insurers under section 302(b)(2)(C) and

with insured community development financial institutions. Such

contracts shall require private mortgage insurance companies and

insured community development financial institutions to—

(1) assume a secondary percentage of loss on any mortgage

insured pursuant to section 203(b), 234, or 245 covering a oneto four-family dwelling, which percentage of loss shall be set

forth in the risk-sharing contract, with the first percentage of

loss to be borne by the Secretary;

(2) perform or delegate underwriting, credit approval, appraisal, inspection, commitment, claims processing, property

disposition, or other functions as the Secretary shall approve

as consistent with the purposes of this section and shall set

forth in the risk-sharing contract.

(c) Any contract for risk-sharing under this section shall contain such provisions relating to the sharing of premiums received

by the Secretary with a private mortgage insurer or insured community development financial institution on a sound actuarial

basis, establishment of loss reserves, manner of calculating claims

on such risk-sharing contract, conditions with respect to foreclosure, handling and disposition of property prior to claim or settlement, rights of assignees, and other similar matters as the Secretary may prescribe pursuant to regulations. Pursuant to a contract under this section, a private mortgage insurance company or

insured community development financial institution shall endorse

loans for risk-sharing and take such other actions on behalf of the

Secretary and in the Secretary’s name as the Secretary may authorize.

(d) The Secretary shall require any private mortgage insurance

company or insured community development financial institution

participating in the program under this section to provide risksharing for those mortgages offered by the Secretary for inclusion

in the program.

(e) INSURED COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION.—For purposes of this section, the term ‘‘insured community

development financial institution’’ means a community development financial institution, as such term is defined in section 103

of Reigle Community Development and Regulatory Improvement

Act of 1994 (12 U.S.C. 4702) that is an insured depository institution (as such term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or an insured credit union (as such

term is defined in section 101 of the Federal Credit Union Act (12

U.S.C. 1752)).

LIMITATION ON PREPAYAMENT OF MORTGAGES ON MULTIFAMILY

RENTAL HOUSING

SEC. 250. ø12 U.S.C. 1715z–15¿ (a) During any period in which

an owner of a multifamily rental housing project is required to obtain the approval of the Secretary for prepayment of the mortgage,
Sec. 251 NATIONAL HOUSING ACT 1050

the Secretary shall not accept an offer to prepay the mortgage on

such project or permit a termination of an insurance contract pursuant to section 229 of this Act unless—

(1) the Secretary has determined that such project is no

longer meeting a need for rental housing for lower income families in the area;

(2) the Secretary (A) has determined that the tenants have

been notified of the owner’s request for approval of a prepayment; (B) has provided the tenants with an opportunity to comment on the owner’s request; and (C) has taken such comments

into consideration; and

(3) the Secretary has ensured that there is a plan for providing relocation assistance for adequate, comparable housing

for any lower income tenant who will be displaced as a result

of the prepayment and withdrawal of the project from the program.

(b) A mortgagee may foreclose the mortgage on, or acquire by

deed in lieu of foreclosure, any eligible low-income housing project

(as such term is defined in section 229 of the Low-Income Housing

Preservation and Resident Homeownership Act of 1990) only if the

mortgagee also conveys title to the project to the Secretary in connection with a claim for insurance benefits.

(c) For purposes of this section, the term ‘‘lower income families’’ has the meaning given such term in section 3(b)(2) of the

United States Housing Act of 1937.

ADJUSTABLE RATE SINGLE FAMILY MORTGAGES

SEC. 251. ø12 U.S.C. 1715z–16¿ (a) The Secretary may insure

under any provision of this title a mortgage involving property

upon which there is located a dwelling designed principally for occupancy by one to four families, where the mortgage provides for

periodic adjustments by the mortgagee in the effective rate of interest charged. Such interest rate adjustments may be accomplished

through adjustments in the monthly payment amount, the outstanding principal balance, or the mortgage term, or a combination

of these factors, except that in no case may any extension of a

mortgage term result in a total term in excess of 40 years. Adjustments in the effective rate of interest shall correspond to a specified national interest rate index approved in regulations by the

Secretary, information on which is readily accessible to the mortgagors from generally available published sources. Adjustments in

the effective rate of interest shall (1) be made on an annual basis;

(2) be limited, with respect to any single interest rate increase, to

no more than 1 percent on the outstanding loan balance; and (3)

be limited to a maximum increase of 5 percentage points above the

initial contract interest rate over the term of the mortgage.

(b) The Secretary shall require that the mortgagee make available to the mortgagor, at the time of loan application, a written explanation of the features of an adjustable rate mortgage consistent

with the disclosure requirements applicable to variable rate mortgages secured by a principal dwelling under the Truth in Lending

Act.

(c) The aggregate number of mortgages and loans insured

under this section in any fiscal year may not exceed 30 percent of
1051 Sec. 252 NATIONAL HOUSING ACT

the aggregate number of mortgages and loans insured by the Secretary under this title during the preceding fiscal year.

(d)(1) The Secretary may insure under this subsection a mortgage that meets the requirements of subsection (a), except that the

effective rate of interest—

(A) shall be fixed for a period of not less than the first 3

years of the mortgage term;

(B) shall be adjusted by the mortgagee initially upon the

expiration of such period and annually thereafter; and

(C) in the case of the initial interest rate adjustment, is

subject to the 1 percent limitation only if the interest rate remained fixed for five or fewer years.

(2) The disclosure required under subsection (b) shall be required for a mortgage insured under this subsection.

SHARED APPRECIATION MORTGAGES FOR SINGLE FAMILY HOUSING

SEC. 252. ø12 U.S.C. 1715z–17¿ (a) Notwithstanding any provision of this title that is inconsistent with this section, the Secretary

may insure, under any provision of this title providing for insurance of mortgages on properties upon which there is located a

dwelling designed principally for occupancy by one to four families,

a mortgage secured by a first lien on such a property or on the

stock allocated to a dwelling unit in a residential cooperative housing corporation, which—

(1) provides for the mortgagee to share in a predetermined

percentage of the property’s or stock’s net appreciated value;

(2) bears interest at a rate which meets criteria prescribed

by the Secretary;

(3) provides for amortization over a period of not to exceed

30 years, but the actual term of the mortgage (excluding any

refinancing) may be not less than 10 nor more than 30 years,

and contains such provisions relating to refinancing of the

principal balance of the mortgage and any contingent deferred

interest as the Secretary may provide; and

(4) meets such other conditions as the Secretary may require by regulation.

(b) The mortgagee’s share of a property’s or stock’s net appreciated value shall be payable upon sale or transfer (as defined by

the Secretary) of the property or stock or payment in full of the

mortgage, whichever occurs first. For purposes of this section, the

term ‘‘net appreciated value’’ means the amount by which the sales

price of the property or stock (less the mortgagor’s selling costs) exceeds the value of the property or stock at the time the commitment to insure is issued (with adjustments for capital improvements stipulated in the loan contract). If there has been no sale or

transfer at the time the mortgagee’s share of net appreciated value

becomes payable, the sale price for purposes of this section shall be

determined by means of an appraisal conducted in accordance with

procedures approved by the Secretary and provided for in the mortgage.

(c) In the event of a default, the mortgagee shall be entitled

to receive the benefits of insurance in accordance with section

204(a), but such insurance benefits shall not include the mortgagee’s share of net appreciated value. The term ‘‘original principal
Sec. 253 NATIONAL HOUSING ACT 1052

obligation of the mortgage’’ as used in section 204 shall not include

the mortgagee’s share of net appreciated value.

(d) Mortgages insured pursuant to this section which contain

provisions for sharing appreciation or which otherwise require or

permit increases in the outstanding loan balance which are authorized under this section or under applicable regulations shall not be

subject to any State constitution, statute, court decree, common

law, rule, or public policy limiting or prohibiting increases in the

outstanding loan balance after execution of the mortgage.

(e) In carrying out the provisions of this section, the Secretary

shall encourage the use of insurance under this section by low and

moderate income tenants who would otherwise be displaced by the

conversion of their rental housing to condominium or cooperative

ownership.

(f) The Secretary shall prescribe adequate consumer protections and disclosure requirements with respect to mortgages insured under this section, and may prescribe such other terms and

conditions as may be appropriate to carry out the provisions of this

section.

(g) The aggregate number of mortgages and loans insured

under this section and section 245(c) in any fiscal year may not exceed 10 percent of the aggregate number of mortgages and loans

insured by the Secretary under this title during the preceding fiscal

year.

SHARED APPRECIATION MORTGAGES FOR MULTIFAMILY HOUSING

SEC. 253. ø12 U.S.C. 1715z–18¿ (a) Notwithstanding any provision of this title that is inconsistent with this section, the Secretary

may insure, under any provision of this title providing for insurance of mortgages on properties including 5 or more family units,

a mortgage secured by a first lien on the property that (1) provides

for the mortgagee to share in a predetermined percentage of the

property’s net appreciated value; and (2) meets such other conditions, including limitations on the rate of interest which may be

charged, as the Secretary may require by regulation.

(b) The mortgagee’s share of a property’s net appreciated value

shall be payable upon maturity or upon payment in full of the loan

or sale or transfer (as defined by the Secretary) of the property,

whichever occurs first. The term of the mortgage shall not be less

than 15 years, and shall be repayable in equal monthly installments of principal and fixed interest during the mortgage term in

an amount which would be sufficient to retire a debt with the same

principal and fixed interest rate over a period not exceeding 30

years. In the case of a mortgage which will not be completely amortized during the mortgage term, the principal obligation of the

mortgage may not exceed 85 percent of the estimated value of the

property or project. For purposes of this section, the term ‘‘net appreciated value’’ means the amount by which the sales price of the

property (less the mortgagor’s selling costs) exceeds the actual

project cost after completion, as approved by the Secretary. If there

has been no sale or transfer at the time the mortgagee’s share of

net appreciated value becomes payable, the sales price for purposes

of this section shall be determined by means of an appraisal con-
1053 Sec. 254 NATIONAL HOUSING ACT

ducted in accordance with procedures approved by the Secretary

and provided for in the mortgage.

(c) In the event of a default, the mortgagee shall be entitled

to receive the benefits of insurance in accordance with section 207,

but such insurance benefits shall not include the mortgagee’s share

of net appreciated value. The term ‘‘original principal face amount

of the mortgage’’ as used in section 207 shall not include the mortgagee’s share of net appreciated value.

(d) The Secretary shall establish by regulation the maximum

percentage of net appreciated value which may be payable to a

mortgagee as the mortgagee’s share. The Secretary shall also establish disclosure requirements applicable to mortgagees making

mortgage loans pursuant to this section, to assure that mortgagors

are informed of the characteristics of such mortgages.

(e) Mortgages insured pursuant to this section which contain

provisions for sharing appreciation or which otherwise require or

permit increases in the outstanding loan balance which are authorized under this section or under applicable regulations shall not be

subject to any State constitution, statute, court decree, common

law, rule, or public policy limiting or prohibiting increases in the

outstanding loan balance after execution of the mortgage.

(f) The number of dwelling units included in properties covered

by mortgages insured pursuant to this section in any fiscal year

may not exceed 5,000.

SEC. 254. ø12 U.S.C. 1715z–19¿ EQUITY SKIMMING PENALTY.

(a) IN GENERAL.—Whoever, as an owner, agent, or manager, or

who is otherwise in custody, control, or possession of a multifamily

project or a 1- to 4-family residence that is security for a mortgage

note that is described in subsection (b), willfully uses or authorizes

the use of any part of the rents, assets, proceeds, income, or other

funds derived from property covered by that mortgage note for any

purpose other than to meet reasonable and necessary expenses that

include expenses approved by the Secretary if such approval is required, in a period during which the mortgage note is in default or

the project is in a nonsurplus cash position, as defined by the regulatory agreement covering the property, or the mortgagor has failed

to comply with the provisions of such other form of regulatory control imposed by the Secretary, shall be fined not more than

$500,000, imprisoned not more than 5 years, or both.

(b) MORTGAGE NOTES DESCRIBED.—For purposes of subsection

(a), a mortgage note is described in this subsection if it—

(1) is insured, acquired, or held by the Secretary pursuant

to this Act;

(2) is made pursuant to section 202 of the Housing Act of

1959 (including property still subject to section 202 program

requirements that existed before the date of enactment of the

Cranston-Gonzalez National Affordable Housing Act); or

(3) is insured or held pursuant to section 542 of the Housing and Community Development Act of 1992, but is not reinsured under section 542 of the Housing and Community Development Act of 1992.
Sec. 255 NATIONAL HOUSING ACT 1054

INSURANCE OF HOME EQUITY CONVERSION MORTGAGES FOR ELDERLY

HOMEOWNERS

SEC. 255. ø12 U.S.C. 1715z–20¿ (a) PURPOSE.—The purpose of

this section is to authorize the Secretary to carry out a program of

mortgage insurance designed—

(1) to meet the special needs of elderly homeowners by reducing the effect of the economic hardship caused by the increasing costs of meeting health, housing, and subsistence

needs at a time of reduced income, through the insurance of

home equity conversion mortgages to permit the conversion of

a portion of accumulated home equity into liquid assets; and

(2) to encourage and increase the involvement of mortgagees and participants in the mortgage markets in the making

and servicing of home equity conversion mortgages for elderly

homeowners.

(b) DEFINITIONS.—For purposes of this section:

(1) The terms ‘‘elderly homeowner’’ and ‘‘homeowner’’ mean

any homeowner who is, or whose spouse is, at least 62 years

of age or such higher age as the Secretary may prescribe.

(2) The terms ‘‘mortgagee’’, ‘‘mortgagor’’, and ‘‘State’’ have

the meanings given such terms in section 201.

(3) The term ‘‘home equity conversion mortgage’’ means a

first mortgage which provides for future payments to the

homeowner based on accumulated equity and which a housing

creditor (as defined in section 803(2) of the Garn-St Germain

Depository Institutions Act of 1982) is authorized to make (A)

under any law of the United States (other than section 804 of

such Act) or applicable agency regulations thereunder; (B) in

accordance with section 804 of such Act, notwithstanding any

State constitution, law, or regulation; or (C) under any State

constitution, law, or regulation.

(4) MORTGAGE.—The term ‘‘mortgage’’ means a first mortgage or first lien on real estate, in fee simple, on all stock allocated to a dwelling in a residential cooperative housing corporation, or on a leasehold—

(A) under a lease for not less than 99 years that is renewable; or

(B) under a lease having a period of not less than 10

years to run beyond the maturity date of the mortgage.

(5) FIRST MORTGAGE.—The term ‘‘first mortgage’’ means

such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate or all

stock allocated to a dwelling unit in a residential cooperative

housing corporation, under the laws of the State in which the

real estate or dwelling unit is located, together with the credit

instruments, if any, secured thereby.

(c) INSURANCE AUTHORITY.—The Secretary may, upon application by a mortgagee, insure any home equity conversion mortgage

eligible for insurance under this section and, upon such terms and

conditions as the Secretary may prescribe, make commitments for

the insurance of such mortgages prior to the date of their execution

or disbursement to the extent that the Secretary determines such

mortgages—
1055 Sec. 255 NATIONAL HOUSING ACT

(1) have promise for improving the financial situation or

otherwise meeting the special needs of elderly homeowners;

(2) will include appropriate safeguards for mortgagors to

offset the special risks of such mortgages; and

(3) have a potential for acceptance in the mortgage market.

(d) ELIGIBILITY REQUIREMENTS.—To be eligible for insurance

under this section, a mortgage shall—

(1) have been made to a mortgagee approved by the Secretary as responsible and able to service the mortgage properly;

(2) have been executed by a mortgagor who—

(A) qualifies as an elderly homeowner;

(B) has received adequate counseling by a third party

(other than the lender) as provided in subsection (f);

(C) has received full disclosure, as prescribed by the

Secretary, of all costs charged to the mortgagor, including

costs of estate planning, financial advice, and other services that are related to the mortgage but are not required

to obtain the mortgage, which disclosure shall clearly state

which charges are required to obtain the mortgage and

which are not required to obtain the mortgage; and

(D) meets any additional requirements prescribed by

the Secretary;

(3) be secured by a dwelling that is designed principally for

a 1- to 4-family residence in which the mortgagor occupies 1

of the units;

(4) provide that prepayment, in whole or in part, may be

made without penalty at any time during the period of the

mortgage;

(5) provide for a fixed or variable interest rate or future

sharing between the mortgagor and the mortgagee of the appreciation in the value of the property, as agreed upon by the

mortgagor and the mortgagee;

(6) contain provisions for satisfaction of the obligation satisfactory to the Secretary;

(7) provide that the homeowner shall not be liable for any

difference between the net amount of the remaining indebtedness of the homeowner under the mortgage and the amount recovered by the mortgagee from—

(A) the net sales proceeds from the dwelling that are

subject to the mortgage (based upon the amount of the accumulated equity selected by the mortgagor to be subject

to the mortgage, as agreed upon by the mortgagor and

mortgagee); or

(B) the insurance benefits paid pursuant to subsection

(i)(1)(C);

(8) contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserve,

delinquency charges, foreclosure proceedings, anticipation of

maturity, additional and secondary liens, and other matters as

the Secretary may prescribe;

(9) provide for future payments to the mortgagor based on

accumulated equity (minus any applicable fees and charges),

according to the method that the mortgagor shall select from
Sec. 255 NATIONAL HOUSING ACT 1056

among the methods under this paragraph, by payment of the

amount—

(A) based upon a line of credit;

(B) on a monthly basis over a term specified by the

mortgagor;

(C) on a monthly basis over a term specified by the

mortgagor and based upon a line of credit;

(D) on a monthly basis over the tenure of the mortgagor;

(E) on a monthly basis over the tenure of the mortgagor and based upon a line of credit; or

(F) on any other basis that the Secretary considers appropriate;

(10) provide that the mortgagor may convert the method of

payment under paragraph (9) to any other method during the

term of the mortgage, except that in the case of a fixed rate

mortgage, the Secretary may, by regulation, limit such convertibility; and

(11) have been made with such restrictions as the Secretary determines to be appropriate to ensure that the mortgagor does not fund any unnecessary or excessive costs for obtaining the mortgage, including any costs of estate planning, financial advice, or other related services.

(e) DISCLOSURES BY MORTGAGEE.—The Secretary shall require

each mortgagee of a mortgage insured under this section to make

available to the homeowner—

(1) at the time of the loan application, a written list of the

names and addresses of third-party information sources who

are approved by the Secretary as responsible and able to provide the information required by subsection (f);

(2) at least 10 days prior to loan closing, a statement informing the homeowner that the liability of the homeowner

under the mortgage is limited and explaining the homeowner’s

rights, obligations, and remedies with respect to temporary absences from the home, late payments, and payment default by

the lender, all conditions requiring satisfaction of the loan obligation, and any other information that the Secretary may require;

(3) on an annual basis (but not later than January 31 of

each year), a statement summarizing the total principal

amount paid to the homeowner under the loan secured by the

mortgage, the total amount of deferred interest added to the

principal, and the outstanding loan balance at the end of the

preceding year; and

(4) prior to loan closing, a statement of the projected total

cost of the mortgage to the homeowner based on the projected

total future loan balance (such cost expressed as a single average annual interest rate for at least 2 different appreciation

rates for the term of the mortgage) for not less than 2 projected

loan terms, as the Secretary shall determine, which shall

include—

(A) the cost for a short-term mortgage; and

(B) the cost of a loan term equaling the actuarial life

expectance of the mortgagor.
1057 Sec. 255 NATIONAL HOUSING ACT

(f) INFORMATION SERVICES FOR MORTGAGORS.—The Secretary

shall provide or cause to be provided by entities other than the

lender the information required in subsection (d)(2)(B). Such information shall be discussed with the mortgagor and shall include—

(1) options other than a home equity conversion mortgage

that are available to the homeowner, including other housing,

social service, health, and financial options;

(2) other home equity conversion options that are or may

become available to the homeowner, such as sale-leaseback financing, deferred payment loans, and property tax deferral;

(3) the financial implications of entering into a home equity conversion mortgage;

(4) a disclosure that a home equity conversion mortgage

may have tax consequences, affect eligibility for assistance

under Federal and State programs, and have an impact on the

estate and heirs of the homeowner; and

(5) any other information that the Secretary may require.

The Secretary shall consult with consumer groups, industry representatives, representatives of counseling organizations, and other

interested parties to identify alternative approaches to providing

consumer information required by this subsection that may be feasible and desirable for home equity conversion mortgages insured

under this section and other types of reverse mortgages. The Secretary may, in lieu of providing the consumer education required

by this subsection, adopt alternative approaches to consumer education that may be developed as a result of such consultations, but

only if the alternative approaches provide all of the information

specified in this subsection.

(g) LIMITATION ON INSURANCE AUTHORITY.—The aggregate

number of mortgages insured under this section may not exceed

150,000. In no case may the benefits of insurance under this section exceed the maximum dollar amount established under section

203(b)(2) for 1-family residences in the area in which the dwelling

subject to the mortgage under this section is located.

(h) ADMINISTRATIVE AUTHORITY.—The Secretary may—

(1) enter into such contracts and agreements with Federal,

State, and local agencies, public and private entities, and such

other persons as the Secretary determines to be necessary or

desirable to carry out the purposes of this section; and

(2) make such investigations and studies of data, and publish and distribute such reports, as the Secretary determines

to be appropriate.

(i) PROTECTION OF HOMEOWNER AND LENDER.—

(1) Notwithstanding any other provision of law, and in

order to further the purposes of the program authorized in this

section, the Secretary shall take any action necessary—

(A) to provide any mortgagor under this section with

funds to which the mortgagor is entitled under the insured

mortgage or ancillary contracts but that the mortgagor has

not received because of the default of the party responsible

for payment;

(B) to obtain repayment of disbursements provided

under subparagraph (A) from any source; and

(C) to provide any mortgagee under this section with

funds not to exceed the limitations in subsection (g) to
Sec. 255 NATIONAL HOUSING ACT 1058

which the mortgagee is entitled under the terms of the insured mortgage or ancillary contracts authorized in this

section.

(2) Actions under paragraph (1) may include—

(A) disbursing funds to the mortgagor or mortgagee

from the General Insurance Fund;

(B) accepting an assignment of the insured mortgage

notwithstanding that the mortgagor is not in default under

its terms, and calculating the amount and making the payment of the insurance claim on such assigned mortgage;

(C) requiring a subordinate mortgage from the mortgagor at any time in order to secure repayments of any

funds advanced or to be advanced to the mortgagor;

(D) requiring a subrogation to the Secretary of the

rights of any parties to the transaction against any defaulting parties; and

(E) imposing premium charges.

(j) SAFEGUARD TO PREVENT DISPLACEMENT OF HOMEOWNER.—

The Secretary may not insure a home equity conversion mortgage

under this section unless such mortgage provides that the homeowner’s obligation to satisfy the loan obligation is deferred until the

homeowner’s death, the sale of the home, or the occurrence of other

events specified in regulations of the Secretary. For purposes of

this subsection, the term ‘‘homeowner’’ includes the spouse of a

homeowner. Section 137(b) of the Truth in Lending Act (15 U.S.C.

1647(b)) and any implementing regulations issued by the Board of

Governors of the Federal Reserve System shall not apply to a mortgage insured under this section.

(k) INSURANCE AUTHORITY FOR REFINANCINGS.—

(1) IN GENERAL.—The Secretary may, upon application by

a mortgagee, insure under this subsection any mortgage given

to refinance an existing home equity conversion mortgage insured under this section.

(2) ANTI-CHURNING DISCLOSURE.—The Secretary shall, by

regulation, require that the mortgagee of a mortgage insured

under this subsection, provide to the mortgagor, within an appropriate time period and in a manner established in such regulations, a good faith estimate of: (A) the total cost of the refinancing; and (B) the increase in the mortgagor’s principal limit

as measured by the estimated initial principal limit on the

mortgage to be insured under this subsection less the current

principal limit on the home equity conversion mortgage that is

being refinanced and insured under this subsection.

(3) WAIVER OF COUNSELING REQUIREMENT.—The mortgagor

under a mortgage insured under this subsection may waive the

applicability, with respect to such mortgage, of the requirements under subsection (d)(2)(B) (relating to third party counseling), but only if—

(A) the mortgagor has received the disclosure required

under paragraph (2);

(B) the increase in the principal limit described in

paragraph (2) exceeds the amount of the total cost of refinancing (as described in such paragraph) by an amount to

be determined by the Secretary; and
1059 Sec. 255 NATIONAL HOUSING ACT

1The date of enactment was December 27, 2000.

(C) the time between the closing of the original home

equity conversion mortgage that is refinanced through the

mortgage insured under this subsection and the application for a refinancing mortgage insured under this subsection does not exceed 5 years.

(4) CREDIT FOR PREMIUMS PAID.—Notwithstanding section

203(c)(2)(A), the Secretary may reduce the amount of the single

premium payment otherwise collected under such section at

the time of the insurance of a mortgage refinanced and insured

under this subsection. The amount of the single premium for

mortgages refinanced under this subsection shall be determined by the Secretary based on the actuarial study required

under paragraph (5).

(5) ACTUARIAL STUDY.—Not later than 180 days after the

date of the enactment of the American Homeownership and

Economic Opportunity Act of 2000, 1 the Secretary shall conduct an actuarial analysis to determine the adequacy of the insurance premiums collected under the program under this subsection with respect to—

(A) a reduction in the single premium payment collected at the time of the insurance of a mortgage refinanced and insured under this subsection;

(B) the establishment of a single national limit on the

benefits of insurance under subsection (g) (relating to limitation on insurance authority); and

(C) the combined effect of reduced insurance premiums

and a single national limitation on insurance authority.

(6) FEES.—The Secretary may establish a limit on the

origination fee that may be charged to a mortgagor under a

mortgage insured under this subsection, except that such limitation shall provide that the origination fee may be fully financed with the mortgage and shall include any fees paid to

correspondent mortgagees approved by the Secretary.

(l) WAIVER OF UP-FRONT PREMIUMS FOR MORTGAGES TO FUND

LONG-TERM CARE INSURANCE.—

(1) IN GENERAL.—In the case of any mortgage insured

under this section under which the total amount (except as

provided in paragraph (2)) of all future payments described in

subsection (b)(3) will be used only for costs of a qualified longterm care insurance contract that covers the mortgagor or

members of the household residing in the property that is subject to the mortgage, notwithstanding section 203(c)(2), the

Secretary shall not charge or collect the single premium payment otherwise required under subparagraph (A) of such section to be paid at the time of insurance.

(2) AUTHORITY TO REFINANCE EXISTING MORTGAGE AND FINANCE CLOSING COSTS.—A mortgage described in paragraph (1)

may provide financing of amounts that are used to satisfy outstanding mortgage obligations (in accordance with such limitations as the Secretary shall prescribe) and any amounts used

for initial service charges, appraisal, inspection, and other fees

(as approved by the Secretary) in connection with such mort-
Sec. 256 NATIONAL HOUSING ACT 1060

gage, and the amount of future payments described in subsection (b)(3) under the mortgage shall be reduced accordingly.

(3) DEFINITION.—For purposes of this subsection, the term

‘‘qualified long-term care insurance contract’’ has the meaning

given such term in section 7702B of the Internal Revenue Code

of 1986 (26 U.S.C. 7702B)), except that such contract shall also

meet the requirements of—

(A) sections 9 (relating to disclosure), 24 (relating to

suitability), and 26 (relating to contingent nonforfeiture) of

the long-term care insurance model regulation promulgated by the National Association of Insurance Commissioners (as adopted as of September 2000); and

(B) section 8 (relating to contingent nonforfeiture) of

the long-term care insurance model Act promulgated by

the National Association of Insurance Commissioners (as

adopted as of September 2000).

(m) FUNDING FOR COUNSELING AND CONSUMER EDUCATION AND

OUTREACH.—Of any amounts made available for any of fiscal years

2000 through 2003 for housing counseling under section 106 of the

Housing and Urban Development Act of 1968, up to a total of

$1,000,000 shall be available to the Secretary in each such fiscal

year, in such amounts as the Secretary determines appropriate, for

the following purposes in connection with home equity conversion

mortgages insured under this section:

(1) COUNSELING.—For housing counseling authorized by

section 106 of the Housing and Urban Development Act of

1968.

(2) CONSUMER EDUCATION.—For transfer to the departmental salaries and expenses account for consumer education

and outreach activities.

DELEGATION OF INSURING AUTHORITY TO DIRECT ENDORSEMENT

MORTGAGEES

SEC. 256. ø12 U.S.C. 1715z–21¿ (a) AUTHORITY.—The Secretary may delegate, to one or more mortgagees approved by the

Secretary under the direct endorsement program, the authority of

the Secretary under this Act to insure mortgages involving property upon which there is located a dwelling designed principally for

occupancy by 1 to 4 families.

(b) CONSIDERATIONS.—In determining whether to delegate authority to a mortgagee under this section, the Secretary shall consider the experience and performance of the mortgagee compared

to the default rate of all insured mortgages in comparable markets,

and such other factors as the Secretary determines appropriate to

minimize risk of loss to the insurance funds under this Act.

(c) ENFORCEMENT OF INSURANCE REQUIREMENTS.—

(1) IN GENERAL.—If the Secretary determines that a mortgage insured by a mortgagee pursuant to delegation of authority under this section was not originated in accordance with

the requirements established by the Secretary, and the Secretary pays an insurance claim with respect to the mortgage

within a reasonable period specified by the Secretary, the Secretary may require the mortgagee approved under this section

to indemnify the Secretary for the loss.
1061 Sec. 512 NATIONAL HOUSING ACT

(2) FRAUD OR MISREPRESENTATION.—If fraud or misrepresentation was involved in connection with the origination, the

Secretary may require the mortgagee approved under this section to indemnify the Secretary for the loss regardless of when

an insurance claim is paid.

(d) TERMINATION OF MORTGAGEE’S AUTHORITY.—If a mortgagee

to which the Secretary has made a delegation under this section

violates the requirements and procedures established by the Secretary or the Secretary determines that other good cause exists, the

Secretary may cancel a delegation of authority under this section

to the mortgagee by giving notice to the mortgagee. Such a cancellation shall be effective upon receipt of the notice by the mortgagee or at a later date specified by the Secretary. A decision by

the Secretary to cancel a delegation shall be final and conclusive

and shall not be subject to judicial review.

(e) REQUIREMENTS AND PROCEDURES.—Before approving a delegation under this section, the Secretary shall issue regulations establishing appropriate requirements and procedures, including requirements and procedures governing the indemnification of the

Secretary by the mortgagee.

TITLE III—NATIONAL MORTGAGE ASSOCIATIONS

øNOTE.—Title III of the National Housing Act concerns secondary market activities, and is set forth in Part IX of this compilation.¿

øTITLE IV—INSURANCE OF SAVINGS AND LOAN

ACCOUNTS¿

øNOTE.—Title IV of the National Housing Act created the Federal Savings and Loan Insurance Corporation and authorized the

Corporation to insure the accounts of savings and loan associations.

The Corporation was abolished and title IV was repealed by the Financial Institutions Reform, Recovery, and Enforcement Act of

1989 (Public Law 101–73). Savings and loan associations are insured by the Federal Deposit Insurance Corporation and regulated

by the Director of the Office of Thrift Supervision.¿

TITLE V—MISCELLANEOUS

* * * * * * *

PENALTIES

SEC. 512. ø12 U.S.C. 1731a¿ Notwithstanding any other provision of law, the Secretary is authorized to refuse the benefits of

participation (either directly as an insured lender or as a borrower,

or indirectly as a builder, contractor, or dealer, or salesman or

sales agent for a builder, contractor or dealer) under title I, II, VI,

VII, IX, or XI of this Act to any person or firm (including but not

limited to any individual, partnership, association, trust, or corporation) if the Secretary has determined that such person or firm

(1) has knowingly or willfully violated any provision of this Act or

of title III of the Servicemen’s Readjustment Act of 1944, as

amended, or of chapter 37 of title 38, United States Code, or of any

regulation issued by the Secretary under this Act or by the Sec-
Sec. 513 NATIONAL HOUSING ACT 1062

retary of Veterans Affairs under said title III, or chapter 37, or (2)

has, in connection with any construction, alteration, repair or improvement work financed with assistance under this Act or under

said title III, or chapter 37, or in connection with contracts for financing relating to such work, violated any Federal or State penal

statute, or (3) has failed materially to properly carry out contractual obligations with respect to the completion of construction, alteration, repair, or improvement work financed with assistance

under this Act or under title III of the Servicemen’s Readjustment

Act of 1944, as amended, or of chapter 37 of title 38, United States

Code. Before any such determination is made any person or firm

with respect to whom such a determination is proposed shall be notified in writing by the Secretary and shall be entitled, upon making a written request to the Secretary to a written notice specifying

charges in reasonable detail and an opportunity to be heard and to

be represented by counsel. Determinations made by the Secretary

under this section shall be based on the preponderance of the evidence. For the purposes of compliance with this section the Secretary’s notice of a proposed determination under this section shall

be considered to have been received by the interested person or

firm if the notice is properly mailed to the best known address of

such person or firm.

PROHIBITION AGAINST TRANSIENT HOUSING

SEC. 513. ø12 U.S.C. 1731b¿ (a) The Congress hereby declares

that it has been its intent since the enactment of the National

Housing Act that housing built with the aid of mortgages insured

under this Act is to be used principally for residence use; and that

this intent excludes the use of such housing for transient or hotel

purposes while such insurance on the mortgage remains outstanding.

(b) Notwithstanding any other provisions of this Act, no new,

existing, or rehabilitated multifamily housing with respect to which

a mortgage is insured under this Act shall be operated for transient or hotel purposes unless (1) on or before May 28, 1954, the

Secretary has agreed in writing to the rental of all or a portion of

the accommodations in the project for transient or hotel purposes

(in which case no accommodations in excess of the number so

agreed to by the Secretary shall be rented on such basis), or (2) the

project covered by the insured mortgage is located in an area which

the Secretary determines to be a resort area, and the Secretary

finds that prior to May 28, 1954, a portion of the accommodations

in the project had been made available for rent for transient or

hotel purposes (in which case no accommodations in excess of the

number of which had been made available for such use shall be

rented on such basis).

(c) Notwithstanding any other provision of this Act, no mortgage with respect to multifamily housing shall be insured under

this Act (except pursuant to a commitment to insure issued prior

to the effective date of the Housing Act of 1954), and (except as to

housing coming within the provisions of clause (1) or clause (2) of

the preceding subsection) no mortgage with respect to multifamily

housing shall be insured for an additional term, unless (1) the

mortgagor certifies under oath that while such insurance remains
1063 Sec. 513 NATIONAL HOUSING ACT

outstanding he will not rent, or permit the rental of, such housing

or any part thereof for transient or hotel purposes, and (2) the Secretary has entered into such contract with, or purchased such stock

of, the mortgagor as the Secretary deems necessary to enable him

to prevent or terminate any use of such property or project for

transient or hotel purposes while the mortgage insurance remains

outstanding.

(d) The Secretary is hereby authorized and directed to enforce

the provisions of this section by all appropriate means at his disposal, as to all existing multifamily housing with respect to which

a mortgage was insured under this Act prior to the effective date

of the Housing Act of 1954 as well as to all multifamily housing

with respect to which a mortgage is hereafter insured under this

Act: Provided, That no criminal penalty shall, by reason of enactment of this section, be applicable to the rental or operation of any

such existing multifamily housing in violation of any provision of

subsection (b) of this section at any time prior to the effective date

of the Housing Act of 1954.

(e) As used in this section, (1) the term ‘‘rental for transient

or hotel purposes’’ shall have such meaning as prescribed by the

Secretary but rental for any period less than thirty days shall in

any event constitute rental for such purposes, and (2) the term

‘‘multifamily housing’’ shall mean (i) a property held by a mortgagor upon which there are located five or more single family

dwellings, or upon which there is located a two-, three-, or fourfamily dwelling, or (ii) a property or project covered by mortgage

insured or to be insured under section 207, under section 213 with

respect to any property or project of a corporation or trust of the

character described in paragraph numbered (1) of subsection (a)

thereof, under section 220 if the mortgage is within the provisions

of paragraph (3)(B) of subsection (d) thereof, under section 221 if

the mortgage is within the provisions of paragraph (3) of subsection

(d) thereof, under section 608, under section 803, or under section

908, or (iii) a project with respect to which an insurance contract

to title VII is outstanding.

(f) Promptly after receipt of written notice that any portion of

any building is being rented or operated in violation of any provision of this secton or of any rule or regulation lawfully issued

thereunder, the Secretary shall investigate the existence of the

facts alleged in the written notice and shall order such violation,

if found to exist, to cease forthwith.

(g) If such violation does not cease in accordance with such

order, the Secretary shall forward the complaint to the Attorney

General of the United States for prosecution of such civil or criminal action, if any, which the Attorney General may find to be involved in such violation.

(h) Whenever he finds a violation of any provision of this section has occurred or is about to occur, the Attorney General shall

petition the district court of the United States or the district court

of any Territory or other place subject to United States jurisdiction

within whose jurisdictional limits the person doing or committing

the acts or practices constituting the alleged violation of this section shall be found, for an order enjoining such acts or practices,

and upon a showing by the Attorney General that such acts or

practices constituting such violation have been engaged in or about
Sec. 513A NATIONAL HOUSING ACT 1064

to be engaged in, a permanent or temporary injunction, restraining

order, or other order, with or without such injunctions or restraining order, shall be granted without bond.

(i) Any person owning or operating a hotel within a radius of

fifty miles of a place where a violation of any provision of this section has occurred or is about to occur, or any group or association

or hotel owners or operators within said fifty-mile radius, at his or

their sole charge or cost, may petition any district court of the

United States or the district court of any Territory or other place

subject to United States jurisdiction within whose jurisdictional

limits the person doing or committing the acts or practices constituting the alleged violation of this section shall be found, for an

order enjoining such acts or practices, and, upon a showing that

such acts or practices constituting such violation have been engaged in or are about to be engaged in, a permanent or temporary

injunction, restraining order or other order with or without such injunction, or restraining order, shall be granted.

(j) The several district courts of the United States and the several district courts of the Territories of the United States or other

place subject to the United States jurisdiction, within whose jurisdictional limits the person doing or committing the acts or practices

constituting the alleged violation shall be found, shall, wheresoever

such acts or practices may have been done or committed, have full

power and jurisdiction to hear, try, and determine such matter

under subsections (h) and (i) of this section.

SEPARABILITY PROVISION

SEC. 513A. ø12 U.S.C. 1732¿ If any provision of this Act, or the

application thereof to any person or circumstances, is held invalid,

the remainder of the Act, and the application of such provision to

other persons or circumstances, shall not be affected thereby.

APPLICABILITY OF OTHER ACTS

SEC. 514. ø12 U.S.C. 1733¿ The provisions of section 10(a) 1

and 10b of the Federal Home Loan Bank Act, as amended (49 Stat.

294, 295); paragraph seventh of section 5136 of the Revised Statutes, as amended (49 Stat. 709); section 24 of the Federal Reserve

Act, as amended (49 Stat. 706); subsection (n) of section 77B of the

Bankruptcy Act, as amended (49 Stat. 664); section 5(c) of the Act

approved January 31, 1935, continuing and extending the functions

of the Reconstruction Finance Corporation (49 Stat. 1); and all

other provisions of law establishing rights under mortgages insured

in accordance with the provisions of the National Housing Act,

shall be held to apply to such Act, as amended.

AMENDMENT, EXTENSION, OR INCREASE OF COMMITMENT AMOUNTS

SEC. 515. ø12 U.S.C. 1734¿ At any time prior to final endorsement for insurance, the Secretary, in his discretion, may amend,

extend, or increase the amount of any commitment, provided the

mortgage, as finally endorsed for insurance is eligible for insurance

under the provisions of this Act, and the rules and regulations,

thereunder, in effect at the time the original commitment to insure

was issued.
1065 Sec. 517 NATIONAL HOUSING ACT

1September 2, 1964.

PAYMENT OF CERTAIN FUNDS TO TREASURY

SEC. 516. ø12 U.S.C. 1735¿ The following funds shall be

deemed an indebtedness to the United States of the particular insurance fund involved, and the Secretary is authorized and directed to pay the amount of such indebtedness to the Secretary of

the Treasury, with simple interest thereon from the date the funds

were advanced to the date of final payment at a rate determined

by the Secretary of the Treasury, taking into consideration the average rate on outstanding marketable obligations of the United

States from the date the funds were advanced until the date of

final payment—

(1) funds made available to the Secretary pursuant to the

provisions of sections 4 and 202, exclusive of amounts heretofore refunded, (a) for carrying out title II with respect to

mortgages insured under section 203 where such funds were

credited to the general reinsurance account in the Mutual

Mortgage Insurance Fund, and (b) for the payment of salaries

and expenses with respect to mortgage insurance under sections 207 and 210 where such funds were credited to the Housing Insurance Fund;

(2) funds made available to the Secretary pursuant to sections 602 and 802; and

(3) funds made available to the Secretary by the Secretary

of the Treasury pursuant to section 710.

Payments to the Secretary of the Treasury under this section shall

be made in such amounts and at such times as the Secretary determines, after consultations with the Secretary of the Treasury, that

funds are available for that purpose, taking into consideration the

continued solvency of the funds involved. All payments made pursuant to this section shall be covered into the Treasury as miscellaneous receipts.

PREPAYMENT OF MORTGAGES BY NONPROFIT EDUCATIONAL

INSTITUTIONS

SEC. 517. ø12 U.S.C. 1735a¿ (a) Notwithstanding any other

provision of this Act, no adjusted premium charge shall be collected

in connection with the payment in full, prior to maturity, of any

mortgage insured under this Act, if the mortgagor certifies to the

Secretary that the loan was paid in full by or on behalf of a nonprofit educational institution which intends to use the property for

educational purposes.

(b) The Secretary shall refund any adjusted premium charge

collected subsequent to July 1, 1962, and prior to the date of the

enactment of the Housing Act of 1964,1 in connection with the payment in full, prior to maturity, of any mortgage insured under this

Act, if the mortgagor under such mortgage makes the certification

prescribed by subsection (a).
Sec. 518 NATIONAL HOUSING ACT 1066

2So in law.

1September 2, 1964.

EXPENDITURES TO CORRECT OR COMPENSATE FOR SUBSTANTIAL

DEFECTS IN MORTGAGED HOMES

SEC. 518. ø12 U.S.C. 1735b¿ (a) 2

(1) The Secretary is authorized to make expenditures

under this subsection with respect to any property that—

(A) is a condominium unit (including common areas)

or is improved by a one-to-four family dwelling;

(B) was approved, before the beginning of construction,

for mortgage insurance under this Act or for guaranty, insurance, or direct loan under chapter 37 of title 38, United

States Code, or was less than a year old at the time of insurance of the mortgage and was covered by a consumer

protection or warranty plan acceptable to the Secretary;

and

(C) the Secretary finds to have structural defects.

(2) Expenditures under this subsection may be made for

(A) correcting such defects, (B) paying the claims of the owner

of the property arising from such defects, or (C) acquiring title

to the property: Provided, That such authority of the Secretary

shall exist only (A) if the owner has requested assistance from

the Secretary not later than four years (or such shorter time

as the Secretary may prescribe) after insurance of the mortgage, and (B) if the property is encumbered by a mortgage

which is insured under this Act after the date of enactment of

the Housing Act of 1964.1

(b) The Secretary is authorized to make expenditures to correct, or to reimburse the owner for the correction of, structural or

other major defects which so seriously affect use and livability as

to create a serious danger to the life or safety of inhabitants of any

one, two, three, or four family dwelling which is covered by a mortgage insured under section 235 of this Act or which is located in

an older, declining urban area and is covered by a mortgage insured under section 203 or 221 on or after August 1, 1968, but

prior to January 1, 1973, and which is more than one year old on

the date of the issuance of the insurance commitment, if (1) the

owner requests assistance from the Secretary not later than one

year after the insurance of the mortgage, or, in the case of a dwelling covered by a mortgage insured under section 203 or 221 the insurance commitment for which was issued on or after August 1,

1968, but prior to January 1, 1973, not more than four months

after the date of enactment of the Housing Authorization Act of

1976, and (2) the defect is one that existed on the date of the

issuance of the insurance commitment and is one that a proper inspection could reasonable be expected to disclose. The Secretary

may require from the seller of any such dwelling an agreement to

reimburse him for any payments made pursuant to this subsection

with respect to such dwelling. Expenditures pursuant to this subsection shall be made from the insurance fund chargeable for insurance benefits on the mortgage covering the structure to which the

expenditures relate. There are hereby authorized to be appropriated such sums as may be necessary to cover the costs of such

expenditures not otherwise provided for.
1067 Sec. 519 NATIONAL HOUSING ACT

(c) The Secretary shall by regulations prescribe the terms and

conditions under which expenditures and payments may be made

under the provisions of this section, and his decisions regarding

such expenditures or payments, and the terms and conditions

under which the same are approved or disapproved, shall be final

and conclusive and shall not be subject to judicial review.

(d) The Secretary is authorized to make expenditures to correct

or to reimburse the owner for the correction of structural or other

major defects which so seriously affect use and livability as to create a serious danger to the life or safety of inhabitants of any one-

, two-, three-, or four-family dwelling which is more than one year

old on the date of issuance of the insurance commitment, is located

in an older, declining urban area, and is covered by a mortgage insured under section 203 or 221 on or after January 1, 1973, but

prior to the date of enactment of this subsection if (1) the owner

requests assistance from the Secretary not more than one year

after the date of enactment of this subsection, and (2) the defect

is one that existed on the date of the issuance of the insurance

commitment and is one that a proper inspection could reasonably

have been expected to have disclosed. The Secretary may require

from the seller of any such dwelling an agreement to reimburse

him for any payments made pursuant to this subsection with respect to such dwelling. Expenditures pursuant to this subsection

shall be made from the insurance fund chargeable for insurance

benefits on the mortgage covering the structure to which the expenditures relate. There are hereby authorized to be appropriated

such sums as may be necessary to cover the cost of such expenditures not otherwise provided for.

(e) The Secretary of Housing and Urban Development is authorized and directed to conduct a full and complete investigation

and study and report to Congress, with recommendations, not later

than March 1, 1977, with respect to an effective program for protecting home buyers from hidden or undisclosed defects seriously

affecting the use and livability of the home, which would be applicable to existing homes financed with mortgages insured under this

Act. In the study and report the Secretary shall particularly investigate the need for, cost and feasible structure of, a national home

inspection and warranty program, with respect to such homes, to

be operated by the Federal Government out of fees assessed on the

home buyer and amortized over a period of two years. The Secretary’s report shall also present an analysis of alternative Federal

programs to meet these needs, and the cost and means of financing

such programs. In the report the Secretary shall also outline administrative steps which can be taken to provide disclosure to purchasers of existing homes financed with mortgages insured under

this Act of the actual condition of the home and the types of repairs

or replacements likely to be needed within a period of two years,

such as repairs or replacement of furnace, roof or major appliances,

based on age and useful life expectancy of such appurtenances.

ESTABLISHMENT OF GENERAL INSURANCE FUND

SEC. 519. ø12 U.S.C. 1735c¿ (a) There is hereby created a General Insurance Fund which shall be used by the Secretary, on and

after the date of the enactment of the Housing and Urban Develop-
Sec. 519 NATIONAL HOUSING ACT 1068

ment Act of 1965, as a revolving fund for carrying out all the insurance provisions of this Act with the exception of those specified in

subsection (e). All mortgages or loans insured under this Act pursuant to commitments issued on or after the date of the enactment

of the Housing and Urban Development Act of 1965, except those

specified in subsection (e), and all loans reported for insurance

under section 2 on or after the date of the enactment of the Housing and Urban Development Act of 1965, shall be insured under

the General Insurance Fund. The Secretary shall transfer to the

General Insurance Fund—

(1) the assets and liabilities of all insurance accounts and

funds, except the Mutual Mortgage Insurance Fund, existing

under this Act immediately prior to the enactment of the Housing and Urban Development Act of 1965;

(2) all outstanding commitments for insurance issued prior

to the date of the enactment of the Housing and Urban Development Act of 1965, except those specified in subsection (e);

(3) the insurance on all mortgages and loans insured prior

to the date of the enactment of the Housing and Urban Development Act of 1965, except insurance specified in subsection

(e); and

(4) the insurance of all loans made by approved financial

institutions pursuant to section 2 prior to the date of the enactment of the Housing and Urban Development Act of 1965.

(b) The general expenses of the operations of the Department

of Housing and Urban Development relating to mortgages and

loans which are the obligation of the General Insurance Fund may

be charged to the General Insurance Fund.

(c) Moneys in the General Insurance Fund not needed for the

current operations of the Department of Housing and Urban Development with respect to mortgages and loans which are the obligation of the General Insurance Fund shall be deposited with the

Treasurer of the United States to the credit of such Fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by, the United States

or any agency of the United States: Provided, That such moneys

shall to the maximum extent feasible be invested in such bonds or

other obligations the proceeds of which will be used to directly support the residential mortgage market.

The Secretary may, with the approval of the Secretary of the

Treasury, purchase in the open market debentures issued as obligations of the General Insurance Fund or issued prior to the enactment of the Housing and Urban Development Act of 1965 under

other provisions of this Act, except debentures issued under the

Mutual Mortgage Insurance Fund. Such purchases shall be made

at a price which will provide an investment yield of not less than

the yield obtainable from other investments authorized by this section. Debentures so purchased shall be canceled and not reissued.

(d) Premium charges, adjusted premium charges, and appraisals and other fees received on account of the insurance of any mortgage or loan which is the obligation of the General Insurance Fund,

the receipts derived from the property covered by such mortgages

and loans and from the claims, debts, contracts, property, and security assigned to the Secretary in connection therewith, and all

earnings on the assets of the Fund shall be credited to the General
1069 Sec. 520 NATIONAL HOUSING ACT

Insurance Fund. The principal of, and interest paid and to be paid

on, debentures which are the obligation of such Fund, cash insurance payments and adjustments, and expenses incurred in the handling, management, renovation, and disposal of properties acquired, in connection with mortgages and loans which are the obligation of such Fund, shall be charged to such Fund.

(e) The General Insurance Fund shall not be used for carrying

out the provisions of sections 203(b) (except as provided in section

203(v)), 203(h) and 203(i), or the provisions of section 213 to the

extent that they involve mortgages the insurance for which is the

obligation of the Cooperative Management Housing Insurance

Fund created by section 213(k), or the provisions of sections 223(e),

233(a)(2), 235, 236 and 237; and nothing in this section shall apply

to or affect mortgages, loans, commitments, or insurance under

such provisions.

(f) RISK ASSESSMENT.—The Secretary shall undertake an annual assessment of the risks associated with each of the insurance

programs comprising the General Insurance Fund, and shall

present findings from such review to the Congress in the FHA Annual Management Report.

OPTIONAL CASH PAYMENTS OF INSURANCE BENEFITS

SEC. 520. ø12 U.S.C. 1735d¿ (a) Notwithstanding any other

provisions of this Act with respect to the payment of insurance benefits, the Secretary is authorized, in his discretion, to pay in cash

or in debentures any insurance claim or part thereof which is paid

on or after the date of the enactment of the Housing and Urban

Development Act of 1965 on a mortgage or a loan which was insured under any section of this Act either before or after such date.

If payment is made in cash, it shall be an amount equivalent to

the face amount of the debentures that would otherwise be issued

plus an amount equivalent to the interest which the debentures

would have earned, computed to a date to be established pursuant

to regulations issued by the Secretary.

(b) The Secretary is authorized to borrow from the Treasury

from time to time such amounts as the Secretary shall determine

are necessary (1) to make payments in cash (in lieu of issuing debentures guaranteed by the United States, as provided in this Act)

pursuant to the provisions of this section, and (2) to make payments for reinsured and directly insured losses under title XII of

this Act: Provided, however, That borrowings to make payments for

reinsured and directly insured losses under title XII shall be limited to $250,000,000 or such further sum as the Congress, by joint

resolution, may from time to time determine. Notes or other obligations issued by the Secretary in borrowing under this subsection

shall be subject to such terms and conditions as the Secretary of

the Treasury may prescribe. Each sum borrowed pursuant to this

subsection shall bear interest at a rate determined by the Secretary

of the Treasury, taking into consideration the average market yield

on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of

such notes or other obligations.
Sec. 521 NATIONAL HOUSING ACT 1070

1December 15, 1989.

APPROVAL OF TECHNICALLY SUITABLE MATERIALS

SEC. 521. ø12 U.S.C. 1735e¿ The Secretary shall adopt a uniform procedure for the acceptance of materials and products to be

used in structures approved for mortgages or loans insured under

this Act. Under such procedure any material or product which the

Secretary finds is technically suitable for the use proposed shall be

accepted. Acceptance of a material or product as technically suitable shall not be deemed to restrict the discretion of the Secretary

to determine that a structure, with respect to which a mortgage is

executed, is economically sound or an acceptable risk.

WATER AND SEWER FACILITIES

SEC. 522. ø12 U.S.C. 1735f¿ Notwithstanding any other provision of this Act, no mortgage which covers new construction shall

be approved for insurance under this Act (except pursuant to a

commitment made prior to the date of the enactment of the Housing and Urban Development Act of 1965) if the mortgaged property

includes housing which is not served by a public or adequate community water and sewerage system: Provided, That this limitation

shall be applicable only to property which is not served by a system

approved by the Secretary pursuant to title X of this Act, as such

title existed immediately before the date of the enactment of the

Department of Housing and Urban Development Reform Act of

1989,1 and which is situated in an area certified by appropriate

local officials to be an area where the establishment of public or

adequate community water and sewerage systems is economically

feasible: Provided further, That for purposes of this section the economic feasibility of establishing such public or adequate community

water and sewerage systems shall be determined without regard to

whether such establishment is authorized by law or is subject to

approval by one or more local governments or public bodies.

WAIVER OF DEDUCTION ON ASSIGNMENT OF PROPERTY TO SECRETARY

IN LIEU OF FORECLOSURE

SEC. 523. ø12 U.S.C. 1735f–1¿ Notwithstanding any other provision of this Act, from and after the date of the enactment of the

Demonstration Cities and Metropolitan Development Act of 1966,

the Secretary, under such terms and conditions as he may approve,

may waive all or a part of the 1 per centum deduction otherwise

made from insurance benefits with respect to multifamily housing

or land development mortgages assigned to him, where the assignment is made at his request in lieu of foreclosure of the mortgage.

FHA REHABILITATION STANDARDS FOR HOUSING IN URBAN RENEWAL

AREAS

SEC. 524. ø12 U.S.C. 1735f–2¿ In determining whether properties should be approved by the Secretary prior to rehabilitation

and covered by mortgages insured under title II of this Act, the

Secretary shall apply uniform property standards as between properties located outside urban renewal areas and those located within

urban renewal areas.
1071 Sec. 527 NATIONAL HOUSING ACT

1 November 9, 1978.

2 November 30, 1983.

ADVANCES

SEC. 525. ø12 U.S.C. 1735f–3¿ The Secretary is authorized to

insure mortgage proceeds advanced during construction or rehabilitation or otherwise prior to final endorsement of a project mortgage

for the purpose of (1) financing improvements to the property and

the purchase of materials and building components delivered to the

property, and (2) providing funds to cover the cost of building components where such components have been assembled and specifically identified for incorporation into the property but are located

at a site other than the mortgaged property, with such security as

the Secretary may require.

MINIMUM PROPERTY STANDARDS

SEC. 526. ø12 U.S.C. 1735f–4¿ (a) To the maximum extent feasible, the Secretary of Housing and Urban Development shall promote the use of energy saving techniques through minimum property standards established by him for newly constructed residential

housing, other than manufactured homes, subject to mortgages insured under this Act. Such standards shall establish energy performance requirements that will achieve a significant increase in

the energy efficiency of new construction. Such requirements shall

be implemented as soon as practicable after the date of enactment

of this sentence.1 Following the effective date of this sentence,2 the

energy performance requirements developed and established by the

Secretary under this subsection for newly constructed residential

housing, other than manufactured homes, shall be at least as effective in performance as the energy performance requirements incorporated in the minimum property standards that were in effect

under this subsection on September 30, 1982.

(b) The Secretary may require that each property, other than

a manufactured home, subject to a mortgage insured under this Act

shall, with respect to health and safety, comply with one of the nationally recognized model building codes, or with a State or local

building code based on one of the nationally recognized model

building codes or their equivalent. The Secretary shall be responsible for determining the comparability of the State and local codes

to such model codes and for selecting for compliance purposes an

appropriate nationally recognized model building code where no

such model code has been duly adopted or where the Secretary determines the adopted code is not comparable.

PROHIBITION AGAINST DISCRIMINATION ON ACCOUNT OF SEX IN

EXTENSION OF MORTGAGE ASSISTANCE

SEC. 527. ø12 U.S.C. 1735f–5¿ (a) No federally related mortgage loan, or Federal insurance, guaranty, or other assistance in

connection therewith (under this or any other Act), shall be denied

to any person on account of sex; and every person engaged in making mortgage loans secured by residential real property shall consider without prejudice the combined income of both husband and

wife for the purpose of extending mortgage credit in the form of a
Sec. 528 NATIONAL HOUSING ACT 1072

federally related mortgage loan to a married couple or either member thereof.

(b) For purposes of subsection (a), the term ‘‘federally related

mortgage loan’’ means any loan which—

(1) is secured by residential real property designed principally for the occupancy of from one to four families; and

(2)(A) is made in whole or in part by any lender the deposits or accounts of which are insured by any agency of the Federal Government, or is made in whole or in part by any lender

which is itself regulated by any agency of the Federal Government; or

(B) is made in whole or in part, or insured, guaranteed,

supplemented, or assisted in any way, by the Secretary of

Housing and Urban Development or any other officer or agency

of the Federal Government or under or in connection with a

housing or urban development program administered by the

Secretary of Housing and Urban Development or a housing or

related program administered by any other such officer or

agency; or

(C) is eligible for purchase by the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation, or from

any financial institution from which it could be purchased by

the Federal Home Loan Mortgage Corporation; or

(D) is made in whole or in part by any ‘‘creditor’’, as defined in section 103(f) of the Consumer Credit Protection Act

of 1968 (15 U.S.C. 1602(f)), who makes or invests in residential

real estate loans aggregating more than $1,000,000 per year.

SECONDARY MORTGAGES ON INSURED PROPERTIES

SEC. 528. ø12 U.S.C. 1735f–6¿ In carrying out the provisions

of title II of this Act with respect to insuring mortgages secured by

one- to four-family dwelling unit, the Secretary may not deny such

insurance for any such mortgage solely because the dwelling unit

which secures such mortgage will be subject to a secondary mortgage or loan made or insured, or other secondary lien held, by any

State or local governmental agency or instrumentality under terms

and conditions approved by the Secretary.

EXEMPTION FROM STATE USURY LAWS

SEC. 529. ø12 U.S.C. 1735f–7¿ (a) The provisions of the constitution of any State expressly limiting the rate or amount of interest, discount points, or other charges which may be charged,

taken, received, or reserved by lenders and the provisions of any

State law expressly limiting the rate or amount of interest, discount points, or other charges which may be charged, taken, received, or reserved shall not apply to any loan, mortgage, or advance which is insured under title I or II of this Act.

(b) The provisions of subsection (a) shall apply to loans, mortgages, or advances made or executed in any State until the effective date (after the date of enactment of this section) of a provision

of law of that State limiting the rate or amount of interest, discount points, or other charges on any such loan, mortgage, or advance.
1073 Sec. 533 NATIONAL HOUSING ACT

TIME OF PAYMENT OF PREMIUM CHARGES

SEC. 530. ø12 U.S.C. 1735f–8¿ In carrying out the provisions

of titles I, II, IV, VII, VIII, IX, and XI pertaining to the payment

of loan or mortgage insurance premium charges by a financial institution, other mortgagees, or agent thereof to the Federal Government in connection with a loan or mortgage insurance program established pursuant to any of these titles, the Secretary shall require that payment of such premiums be made (1) in the case of

loans or mortgages respecting one- to four-family residences,

promptly upon their receipt from the borrower, and (2) in any other

case, promptly when due to the Secretary; except that the Secretary may approve payment of such premiums within twenty-four

months of such receipt or due date, as appropriate, if the financial

institution, mortgagee, or agent thereof pays interest, at a rate

specified by the Secretary, to the insurance fund for the period beginning twenty days after receipt from the borrower or after the

due date, as appropriate, and ending upon payment of the premiums to the Federal Government.

LIMITATION ON COMMITMENTS TO INSURE LOANS AND MORTGAGES

SEC. 531. ø12 U.S.C. 1735f–9¿ (a) The authority of the Secretary to enter into commitments to insure loans and mortgages

under this Act shall be effective for any fiscal year only to such extent or in such amounts as are or have been provided in appropriation Acts for such fiscal year.

(b) Notwithstanding any other provision of law and subject

only to the absence of qualified requests for insurance, to the authority provided in this Act, and to the limitation in subsection (a),

the Secretary shall enter into commitments to insure mortgages

under this Act with an aggregate principal amount of

$110,165,000,000 during fiscal year 1993 and $68,673,868,600 during fiscal year 1994.

PURCHASER-BROKER ARRANGEMENT

SEC. 532. ø12 U.S.C. 1735f–10¿ In carrying out the provisions

of title II of this Act with respect to insuring mortgages secured by

a one- to four-family residence, the Secretary may not exclude from

the principal amount which may be insured under such title any

sum solely on the basis that such sum is to be paid by the purchaser to a broker who has been the purchaser’s agent in the purchase of the residence, but the principal amount of the mortgage,

when such sum is added, shall not exceed the limitation as to maximum mortgage amount provided in title II.

SEC. 533. ø12 U.S.C. 1735F–11¿ REVIEW OF MORTGAGEE PERFORMANCE AND AUTHORITY TO TERMINATE.—

(a) PERIODIC REVIEW OF MORTGAGEE PERFORMANCE.—To reduce losses in connection with single family mortgage insurance

programs under this Act, at least once a year the Secretary shall

review the rate of early defaults and claims for insured single family mortgages originated or underwritten by each mortgagee.

(b) COMPARISON WITH OTHER MORTGAGEES.—For each mortgagee, the Secretary shall compare the rate of early defaults and

claims for insured single family mortgage loans originated or underwritten by the mortgagee in an area with the rate of early de-
Sec. 534 NATIONAL HOUSING ACT 1074

1Section 209 of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 2002, Pub. L. 107–73, 115 Stat. 675, amended

this section in its entirety. Such Act was approved on November 26, 2001.

faults and claims for other mortgagees originating or underwriting

insured single family mortgage loans in the area. For purposes of

this section, the term ‘‘area’’ means each geographic area in which

the mortgagee is authorized by the Secretary to originate insured

single family mortgages.

(c) TERMINATION OF MORTGAGEE ORIGINATION APPROVAL.—(1)

Notwithstanding section 202(c) of this Act, the Secretary may terminate the approval of a mortgagee to originate or underwrite single family mortgages if the Secretary determines that the mortgage

loans originated or underwritten by the mortgagee present an unacceptable risk to the insurance funds. The determination shall be

based on the comparison required under subsection (b) and shall be

made in accordance with regulations of the Secretary. The Secretary may rely on existing regulations published before this section takes effect. 1

(2) The Secretary shall give a mortgagee at least 60 days prior

written notice of any termination under this subsection. The termination shall take effect at the end of the notice period, unless the

Secretary withdraws the termination notice or extends the notice

period. If requested in writing by the mortgagee within 30 days of

the date of the notice, the mortgagee shall be entitled to an informal conference with the official authorized to issue termination notices on behalf of the Secretary (or a designee of that official). At

the informal conference, the mortgagee may present for consideration specific factors that it believes were beyond its control and

that caused the excessive default and claim rate.

ASSURANCE OF ADEQUATE PROCESSING OF APPLICATIONS FOR LOAN

AND MORTGAGE INSURANCE

SEC. 534. ø12 U.S.C. 1735f–12¿ (a) STATE OFFICES.—In order

to ensure the adequate processing of applications for insurance of

loans and mortgages under this Act, the Secretary shall maintain

not less than one office in each State to carry out the provisions

of this Act.

(b) EXPEDITED PROCEDURE FOR RTC PROPERTIES.—To assist

the Resolution Trust Corporation in disposing of the property to

which it acquires title and to ensure the timely processing of applications for insurance of loans and mortgages under this Act that

will be used to purchase multifamily residential property from the

Resolution Trust Corporation, the Secretary shall establish an expedited procedure for considering such applications.

PROHIBITION OF REQUIREMENT OF MINIMUM PRINCIPAL LOAN

AMOUNT

SEC. 535. ø12 U.S.C. 1735f–13¿ A mortgagee or lender may not

require, as a condition of providing a loan insured under this Act

or secured by a mortgage insured under this Act, that the principal

amount of the loan exceed a minimum amount established by the

mortgagee or lender.
1075 Sec. 536 NATIONAL HOUSING ACT

1 Indented so in law.

SEC. 536. ø12 U.S.C. 1735f–14¿ CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, AND OTHER PARTICIPANTS IN FHA

PROGRAMS.

(a) IN GENERAL.—

(1) AUTHORITY.—If a mortgagee approved under the Act, a

lender holding a contract of insurance under title I, or a principal, officer, or employee of such mortgagee or lender, or other

person or entity participating in either an insured mortgage or

title I loan transaction under this Act or providing assistance

to the borrower in connection with any such loan, including

sellers of the real estate involved, borrowers, closing agents,

title companies, real estate agents, mortgage brokers, appraisers, loan correspondents and dealers, knowingly and materially

violates any applicable provision of subsection (b), the Secretary may impose a civil money penalty on the mortgagee or

lender, or such other person or entity, in accordance with this

section. The penalty under this paragraph shall be in addition

to any other available civil remedy or any available criminal

penalty, and may be imposed whether or not the Secretary imposes other administrative sanctions. The penalty shall be in

addition to any other available civil remedy or any available

criminal penalty, and may be imposed whether or not the Secretary imposes other administrative sanctions.

(2) AMOUNT OF PENALTY.—The amount of the penalty, as

determined by the Secretary, may not exceed $5,000 for each

violation except that the maximum penalty for all violations by

any particular mortgagee or lender or such other person or entity during any 1-year period shall not exceed $1,000,000. Each

violation of the provisions of subsection (b)(1) shall constitute

a separate violation with respect to each mortgage or loan application. In the case of a continuing violation, as determined

by the Secretary, each day shall constitute a separate violation.

1In the case of the mortgagee’s failure to engage in loss mitigation activities, as provided in section 536(b)(1)(I), the penalty shall

be in the amount of three times the amount of any insurance benefits claimed by the mortgagee with respect to any mortgage for

which the mortgagee failed to engage in such loss mitigation actions.

(b) VIOLATIONS FOR WHICH A PENALTY MAY BE IMPOSED.—

(1) VIOLATIONS.—The Secretary may impose a civil money

penalty under subsection (a) for any knowing and material violation by a mortgagee or lender, as follows:

(A) Except where expressly permitted by statute, regulation, or contract approved by the Secretary, transfer of a

mortgage insured under this Act to a mortgagee not approved by the Secretary, or transfer of a loan to a transferee that is not holding a contract of insurance under title

I of this Act.

(B) Failure of a nonsupervised mortgagee, as defined

by the Secretary—

(i) to segregate all escrow funds received from a

mortgagor for ground rents, taxes, assessments, and

insurance premiums; or
Sec. 536 NATIONAL HOUSING ACT 1076

1Section 2704(d)(13)(B) of the Economic Growth and Regulatory Paperwork Reduction Act of

1996 (title II of division A of the Omnibus Consolidated Appropriations Act, 1997; Public Law

104–208) amends ‘‘section 526(b)(1)(B)(ii) (12 U.S.C. 1735f–14(b)(1)(B)(ii)) ’’ by striking ‘‘Bank Insurance Fund for banks and through the Savings Association Insurance Fund for savings associations’’ and inserting ‘‘Deposit Insurance Fund’’. The amendment was probably intended to be

made to this paragraph.

Section 2704(c) of such Act provides that such amendment ‘‘shall become effective on January,

1, 1999, if no insured depository institution is a savings association on that date.’’. 2 Indented so in law.

(ii) to deposit these funds in a special account

with a depository institution whose accounts are insured by the Federal Deposit Insurance Corporation

through the Bank Insurance Fund for banks and

through the Savings Association Insurance Fund for

savings associations 1, or by the National Credit Union

Administration.

(C) Use of escrow funds for any purpose other than

that for which they were received.

(D) Submission to the Secretary of information that

was false, in connection with any mortgage insured under

this Act, or any loan that is covered by a contract of insurance under title I of this Act.

(E) With respect to an officer, director, principal, or

employee—

(i) hiring such an individual whose duties will involve, directly or indirectly, programs administered by

the Secretary, while that person was under suspension

or withdrawal by the Secretary; or

(ii) retaining in employment such an individual

who continues to be involved, directly or indirectly, in

programs administered by the Secretary, while that

person was under suspension or withdrawal by the

Secretary.

(F) Falsely certifying to the Secretary or submitting to

the Secretary a false certification by another person or

entity.

(G) Failure to comply with an agreement, certification,

or condition of approval set forth on, or applicable to—

(i) the application of a mortgagee or lender for approval by the Secretary; or

(ii) the notification by a mortgagee or lender to

the Secretary concerning establishment of a branch office.

(H) Violation of any provisions of title I, II, or X (as

such title existed immediately before the effective date of

the Department of Housing and Urban Development Reform Act of 1989) of this Act or any implementing regulation or handbook that is issued under this Act.

(I) 2 Failure to engage in loss mitigation actions as provided in

section 230(a) of this Act.

(2) The Secretary may impose a civil money penalty under

subsection (a) for any knowing and material violation by a

principal, officer, or employee of a mortgagee or lender, or

other participants in either an insured mortgage or title I loan

transaction under this Act or provision of assistance to the borrower in connection with any such loan, including sellers of the
1077 Sec. 536 NATIONAL HOUSING ACT

real estate involved, borrowers, closing agents, title companies,

real estate agents, mortgage brokers, appraisers, loan correspondents, and dealers for—

(A) submission to the Secretary of information that

was false, in connection with any mortgage insured under

this Act, or any loan that is covered by a contract of insurance under title I of this Act;

(B) falsely certifying to the Secretary or submitting to

the Secretary a false certification by another person or entity; or

(C) failure by a loan correspondent or dealer to submit

to the Secretary information which is required by regulations or directives in connection with any loan that is covered by a contract of insurance under title I.

(3) NOTIFICATION TO ATTORNEY GENERAL.—Before taking

action to impose a civil money penalty for a violation under

paragraph (1)(D) or (F), or paragraph (2)(A), (B), or (C), the

Secretary shall inform the Attorney General of the United

States.

(c) AGENCY PROCEDURES.— (1) ESTABLISHMENT.—The Secretary shall establish standards and procedures governing the imposition of civil money

penalties under subsection (a). These standards and

procedures—

(A) shall provide for the Secretary to make the determination to impose the penalty or to use an administrative

entity (such as the Mortgagee Review Board, established

pursuant to section 202(c) of the National Housing Act) to

make the determination;

(B) shall provide for the imposition of a penalty only

after the mortgagee or lender or such other person or entity has been given an opportunity for a hearing on the

record; and

(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from

a hearing.

(2) FINAL ORDERS.—If no hearing is requested within 15

days of receipt of the notice of opportunity for hearing, the imposition of the penalty shall constitute a final and

unappealable determination. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If the Secretary does not review the determination or order within 90 days of the issuance

of the determination or order, the determination or order shall

be final.

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (a), consideration shall be given to such factors as the gravity of the

offense, any history of prior offenses (including those before enactment of this section), ability to pay the penalty, injury to

the public, benefits received, deterrence of future violations,

and such other factors as the Secretary may determine in regulations to be appropriate.

(4) REVIEWABILITY OF IMPOSITION OF PENALTY.—The Secretary’s determination or order imposing a penalty under sub-
Sec. 536 NATIONAL HOUSING ACT 1078

section (a) shall not be subject to review, except as provided in

subsection (d).

(d) JUDICIAL REVIEW OF AGENCY DETERMINATION.— (1) IN GENERAL.—After exhausting all administrative remedies established by the Secretary under subsection (c)(1), a

mortgagee or lender or such other person or entity against

whom the Secretary has imposed a civil money penalty under

subsection (a) may obtain a review of the penalty and such ancillary issues (such as any administrative sanctions under 24

C.F.R. parts 24 and 25) as may be addressed in the notice of

determination to impose a penalty under subsection (c)(1)(A) in

the appropriate court of appeals of the United States, by filing

in such court, within 20 days after the entry of such order or

determination, a written petition praying that the Secretary’s

determination or order be modified or be set aside in whole or

in part.

(2) OBJECTIONS NOT RAISED IN HEARING.—The court shall

not consider any objection that was not raised in the hearing

conducted pursuant to subsection (c)(1) unless a demonstration

is made of extraordinary circumstances causing the failure to

raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence not presented at the

hearing is material and that there were reasonable grounds for

the failure to present such evidence at the hearing, the court

shall remand the matter to the Secretary for consideration of

the additional evidence.

(3) SCOPE OF REVIEW.—The decisions, findings, and determinations of the Secretary shall be reviewed pursuant to section 706 of title 5, United States Code.

(4) ORDER TO PAY PENALTY.—Notwithstanding any other

provision of law, in any such review, the court shall have the

power to order payment of the penalty imposed by the Secretary.

(e) ACTION TO COLLECT PENALTY.—If any mortgagee or lender

or such other person or entity fails to comply with the Secretary’s

determination or order imposing a civil money penalty under subsection (a), after the determination or order is no longer subject to

review as provided by subsections (c)(1) and (d), the Secretary may

request the Attorney General of the United States to bring an action in an appropriate United States district court to obtain a monetary judgment against the mortgagee or lender or such other person or entity and such other relief as may be available. The monetary judgment may, in the court’s discretion, include the attorneys

fees and other expenses incurred by the United States in connection with the action. In an action under this subsection, the validity and appropriateness of the Secretary’s determination or order

imposing the penalty shall not be subject to review.

(f) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(g) DEFINITION OF KNOWINGLY.—The term ‘‘knowingly’’ means

having actual knowledge of or acting with deliberate ignorance of

or reckless disregard for the prohibitions under this section.

(h) REGULATIONS.—The Secretary shall issue such regulations

as the Secretary deems appropriate to implement this section.
1079 Sec. 537 NATIONAL HOUSING ACT

1So in law.

(i) DEPOSIT OF PENALTIES IN INSURANCE FUNDS.—Notwithstanding any other provision of law, all civil money penalties collected under this section shall be deposited in the appropriate insurance fund or funds established under this Act, as determined by

the Secretary.

CIVIL MONEY PENALTIES AGAINST MULTIFAMILY MORTGAGORS

Sec. 537. ø12 U.S.C. 1735f–15¿ (a) IN GENERAL.—The penalties

set forth in this section shall be in addition to any other available

civil remedy or any available criminal penalty, and may be imposed

whether or not the Secretary imposes other administrative sanctions. The Secretary may not impose penalties under this section

for violations a material cause of which are the failure of the Department, an agent of the Department, or a public housing agency

to comply with existing agreements.

(b) PENALTY FOR VIOLATION OF AGREEMENT AS CONDITION OF

TRANSFER OF PHYSICAL ASSETS, FLEXIBLE SUBSIDY LOAN, CAPITAL

IMPROVEMENT LOAN, MODIFICATION OF MORTGAGE TERMS, OR

WORK-OUT AGREEMENT.— (1) AUTHORITY.—Whenever a mortgagor of property that

includes 5 or more living units and that has a mortgage insured, co-insured, or held pursuant to this Act, who has agreed

in writing, as a condition of a transfer of physical assets, a

flexible subsidy loan, a capital improvement loan, a modification of the mortgage terms, or a workout agreement, to use

nonproject income to make cash contributions for payments

due under the note and mortgage, for payments to the reserve

for replacements, to restore the project to good physical condition, or to pay other project liabilities, knowingly and materially fails to comply with any of these commitments, the Secretary may impose a civil money penalty on that mortgagor, on

a general partner of a partnership mortgagor, or on any officer

or director of a corporate mortgagor in accordance with the

provisions of this section.

(2) AMOUNT OF PENALTY.—The amount of the penalty, as

determined by the Secretary, for a violation of this subsection

may not exceed the amount of the loss the Secretary would experience at a foreclosure sale, or a sale after foreclosure, of the

property involved.

(c) OTHER VIOLATIONS.— (1) 1

(A)LIABLE PARTIES.—The Secretary may also impose a

civil money penalty under this section on—

(i) any mortgagor of a property that includes 5 or

more living units and that has a mortgage insured, coinsured, or held pursuant to this Act;

(ii) any general partner of a partnership mortgagor of such property;

(iii) any officer or director of a corporate mortgagor;

(iv) any agent employed to manage the property

that has an identity of interest with the mortgagor,

with the general partner of a partnership mortgagor,
Sec. 537 NATIONAL HOUSING ACT 1080

or with any officer or director of a corporate mortgagor

of such property; or

(v) any member of a limited liability company that

is the mortgagor of such property or is the general

partner of a limited partnership mortgagor or is a

partner of a general partnership mortgagor.

(B) VIOLATIONS.—A penalty may be imposed under

this section upon any liable party under subparagraph (A)

that knowingly and materially takes any of the following

actions:

(i) Conveyance, transfer, or encumbrance of any of

the mortgaged property, or permitting the conveyance,

transfer, or encumbrance of such property, without the

prior written approval of the Secretary.

(ii) Assignment, transfer, disposition, or encumbrance of any personal property of the project, including rents, or paying out any funds, except for reasonable operating expenses and necessary repairs, without the prior written approval of the Secretary.

(iii) Conveyance, assignment, or transfer of any

beneficial interest in any trust holding title to the

property, or the interest of any general partner in a

partnership owning the property, or any right to manage or receive the rents and profits from the mortgaged property, without the prior written approval of

the Secretary.

(iv) Remodeling, adding to, reconstructing, or demolishing any part of the mortgaged property or subtracting from any real or personal property of the

project, without the prior written approval of the Secretary.

(v) Requiring, as a condition of the occupancy or

leasing of any unit in the project, any consideration or

deposit other than the prepayment of the first month’s

rent, plus a security deposit in an amount not in excess of 1 month’s rent, to guarantee the performance

of the covenants of the lease.

(vi) Not holding any funds collected as security deposits separate and apart from all other funds of the

project in a trust account, the amount of which at all

times equals or exceeds the aggregate of all outstanding obligations under the account.

(vii) Payment for services, supplies, or materials

which exceeds $500 and substantially exceeds the

amount ordinarily paid for such services, supplies, or

materials in the area where the services are rendered

or the supplies or materials furnished.

(viii) Failure to maintain at any time the mortgaged property, equipment, buildings, plans, offices,

apparatus, devices, books, contracts, records, documents, and other related papers (including failure to

keep copies of all written contracts or other instruments which affect the mortgaged property) in reasonable condition for proper audit and for examination
1081 Sec. 537 NATIONAL HOUSING ACT

and inspection at any reasonable time by the Secretary or any duly authorized agents of the Secretary.

(ix) Failure to maintain the books and accounts of

the operations of the mortgaged property and of the

project in accordance with requirements prescribed by

the Secretary.

(x) Failure to furnish the Secretary, by the expiration of the 60-day period beginning on the 1st day

after the completion of each fiscal year, with a complete annual financial report based upon an examination of the books and records of the mortgagor prepared and certified to by an independent public accountant or a certified public accountant and certified

to by an officer of the mortgagor, unless the Secretary

has approved an extension of the 60-day period in

writing. The Secretary shall approve an extension

where the mortgagor demonstrates that failure to comply with this subparagraph is due to events beyond

the control of the mortgagor.

(xi) At the request of the Secretary, the agents of

the Secretary, the employees of the Secretary, or the

attorneys of the Secretary, failure to furnish monthly

occupancy reports or failure to provide specific answers to questions upon which information is sought

relative to income, assets, liabilities, contracts, the operation and condition of the property, or the status of

the mortgage.

(xii) Failure to make promptly all payments due

under the note and mortgage, including mortgage insurance premiums, tax and insurance escrow payments, and payments to the reserve for replacements

when there is adequate project income available to

make such payments.

(xiii) Failure to maintain the premises, accommodations, any living unit in the project, and the

grounds and equipment appurtenant thereto in good

repair and condition in accordance with regulations

and requirements of the Secretary, except that nothing

in this clause shall have the effect of altering the provisions of an existing regulatory agreement or federally insured mortgage on the property.

(xiv) Failure, by a mortgagor, a general partner of

a partnership mortgagor, or an officer or director of a

corporate mortgagor, to provide management for the

project that is acceptable to the Secretary pursuant to

regulations and requirements of the Secretary.

(xv) Failure to provide access to the books,

records, and accounts related to the operations of the

mortgaged property and of the project.

The pay out of surplus cash, as defined by and provided for in

the regulatory agreement, shall not constitute a violation of

this subsection.

(2) AMOUNT OF PENALTY.—A penalty imposed for a violation under this subsection, as determined by the Secretary,

may not exceed $25,000.
Sec. 537 NATIONAL HOUSING ACT 1082

(d) AGENCY PROCEDURES.—

(1) ESTABLISHMENT.—The Secretary shall establish standards and procedures governing the imposition of civil money

penalties under subsections (b) and (c). These standards and

procedures—

(A) shall provide for the Secretary or other department

official (such as the Assistant Secretary for Housing) to

make the determination to impose a penalty;

(B) shall provide for the imposition of a penalty only

after the mortgagor, general partner of a partnership

mortgagor, officer or director of a corporate mortgagor, or

identity of interest agent employed to manage the property

has been given an opportunity for a hearing on the record;

and

(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from

a hearing.

(2) FINAL ORDERS.—If no hearing is requested within 15

days of receipt of the notice of opportunity for hearing, the imposition of the penalty shall constitute a final and

unappealable determination. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If the Secretary does not review the determination or order within 90 days of the issuance

of the determination or order, the determination or order shall

be final.

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (b) or (c),

consideration shall be given to such factors as the gravity of

the offense, any history of prior offenses (including offenses occurring before enactment of this section), ability to pay the

penalty, injury to the tenants, injury to the public, benefits received, deterrence of future violations, and such other factors

as the Secretary may determine in regulations to be appropriate.

(4) REVIEWABILITY OF IMPOSITION OF PENALTY.—The Secretary’s determination or order imposing a penalty under subsection (b) or (c) shall not be subject to review, except as provided in subsection (e).

(5) PAYMENT OF PENALTY.—No payment of a civil money

penalty levied under this section shall be payable out of project

income.

(e) JUDICIAL REVIEW OF AGENCY DETERMINATION.—

(1) IN GENERAL.—After exhausting all administrative remedies established by the Secretary under subsection (d)(1), an

entity or person against whom the Secretary has imposed a

civil money penalty under subsection (b) or (c) may obtain a review of the penalty and such ancillary issues as may be addressed in the notice of determination to impose a penalty

under subsection (d)(1)(A) in the appropriate court of appeals

of the United States, by filing in such court, within 20 days

after the entry of such order or determination, a written petition praying that the Secretary’s order or determination be

modified or be set aside in whole or in part.
1083 Sec. 537 NATIONAL HOUSING ACT

(2) OBJECTIONS NOT RAISED IN HEARING.—The court shall

not consider any objection that was not raised in the hearing

conducted pursuant to subsection (d)(1) unless a demonstration

is made of extraordinary circumstances causing the failure to

raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence not presented at such

hearing is material and that there were reasonable grounds for

the failure to present such evidence at the hearing, the court

shall remand the matter to the Secretary for consideration of

such additional evidence.

(3) SCOPE OF REVIEW.—The decisions, findings, and determinations of the Secretary shall be reviewed pursuant to section 706 of title 5, United States Code.

(4) ORDER TO PAY PENALTY.—Notwithstanding any other

provision of law, in any such review, the court shall have the

power to order payment of the penalty imposed by the Secretary.

(f) CIVIL MONEY PENALTIES AGAINST MULTIFAMILY MORTGA- GORS, GENERAL PARTNERS OF PARTNERSHIP MORTGAGORS, OFFICERS

AND DIRECTORS OF CORPORATE MORTGAGORS, AND CERTAIN MAN- AGING AGENTS.—If a mortgagor, general partner of a partnership

mortgagor, officer or director of a corporate mortgagor, or identity

of interest agent employed to manage the property fails to comply

with the Secretary’s determination or order imposing a civil money

penalty under subsection (b) or (c), after the determination or order

is no longer subject to review as provided by subsections (d)(1) and

(e), the Secretary may request the Attorney General of the United

States to bring an action in an appropriate United States district

court to obtain a monetary judgment against the mortgagor, general partner of a partnership mortgagor, officer or director of a corporate mortgagor, or identity of interest agent employed to manage

the property and such other relief as may be available. The monetary judgment may, in the court’s discretion, include the attorneys

fees and other expenses incurred by the United States in connection with the action. In an action under this subsection, the validity and appropriateness of the Secretary’s determination or order

imposing the penalty shall not be subject to review.

(g) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(h) DEFINITION OF KNOWINGLY.—The term ‘‘knowingly’’ means

having actual knowledge of or acting with deliberate ignorance of

or reckless disregard for the prohibitions under this section.

(i) REGULATIONS.—The Secretary shall issue such regulations

as the Secretary deems appropriate to implement this section.

(j) DEPOSIT OF PENALTIES IN INSURANCE FUNDS.—Notwithstanding any other provision of law, all civil money penalties collected under this section shall be deposited in the fund established

under section 201(j) of the Housing and Community Development

Amendments of 1978.

(k) IDENTITY OF INTEREST MANAGING AGENT.—In this section,

the terms ‘‘agent employed to manage the property that has an

identity of interest’’ and ‘identity of interest agent’ mean an

entity—

(1) that has management responsibility for a project;
Sec. 538 NATIONAL HOUSING ACT 1084

1The date of enactment was November 28, 1990.

(2) in which the ownership entity, including its general

partner or partners (if applicable) and its officers or directors

(if applicable), has an ownership interest; and

(3) over which the ownership entity exerts effective control.

ANNUAL AUDITED FINANCIAL STATEMENTS

SEC. 538. ø12 U.S.C. 1735f–16¿ With respect to fiscal year

1989 and for every fiscal year thereafter, the Secretary shall make

available to the public a financial statement of the insurance funds

established under this Act that will present their financial condition on a cash and accrual basis, consistent with generally accepted

accounting principles. Each financial statement shall be audited by

an independent accounting firm selected by the Secretary and the

results of such audit shall be made available to the public.

EXAMINATIONS AND SANCTIONS FOR CERTAIN VIOLATIONS

SEC. 539. (a) ø12 U.S.C. 1735f–17¿ EXAMINATIONS AND SANC- TIONS.—(1) In connection with any examination of a mortgagee approved by the Secretary pursuant to this Act, the Secretary

shall assess the performance of the mortgagee in meeting the

requirements of sections 203(t), 223(a)(7)(B), and 535. Where

the Secretary determines that a mortgagee is not in compliance with these requirements, the Secretary shall refer the

matter to the Mortgagee Review Board for investigation and

appropriate action.

(2) Not later than 180 days after the date of the enactment

of the Cranston-Gonzalez National Affordable Housing Act,1

the Secretary shall by notice establish a procedure under

which (A) any person may file a request that the Secretary determine whether a mortgagee is in compliance with sections

203(t), 223(a)(7)(B), and 535, (B) the Secretary shall inform the

person of the disposition of the request, and (C) the Secretary

shall publish in the Federal Register the disposition of any

case referred by the Secretary to the Mortgagee Review Board.

Such procedures shall be established by regulation under section 553 of title 5, United States Code. The Secretary shall

issue regulations based on the initial notice before the expiration of the 8-month period beginning on the date of the notice.

(3) The Secretary shall submit to Congress, not less than

annually, a report regarding any actions taken to carry out

this section. The report shall include a list of all requests filed

pursuant to paragraph (2) and any action taken pursuant to

such requests.

(b) MONITORING AND REVIEW.—The Secretary shall continually

monitor and undertake a thorough review of the implementation of

this section to assess the impact of the section on the lending practices of mortgagees and the availability of mortgages insured under

this Act. The Secretary shall monitor the availability of credit, the

number and type of lenders participating in the program, whether

there is any change in the composition or practices of such lenders

and any other factors the Secretary considers appropriate. The Secretary shall submit to the Congress findings detailing the results
1085 Sec. 540 NATIONAL HOUSING ACT

1The date of enactment was November 28, 1990.

of such monitoring and review not later than 18 months after the

enactment of the Cranston-Gonzalez National Affordable Housing

Act.

INFORMATION REGARDING EARLY DEFAULTS AND FORECLOSURES ON

INSURED MORTGAGES

SEC. 540. ø12 U.S.C. 1735f–18¿ (a) IN GENERAL.—The Secretary of Housing and Urban Development shall collect and maintain information regarding early defaults on mortgages as provided

under this section. The Secretary shall make such information

available for public inspection upon request. Information shall be

collected quarterly with respect to each applicable collection period

(as such term is defined in subsection (c)) and shall be available

for inspection not more than 30 days after the conclusion of the calendar quarter relating to each such period. Information shall first

be made available under this section for the applicable collection

period relating to the first calendar quarter ending more than 180

days after the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act.1

(b) CONTENTS.—

(1) MORTGAGE LENDER ANALYSIS.—Information collected

under this section shall include, for each lender originating

mortgages during the applicable collection period that are insured pursuant to section 203 and secured by property in a

designated census tract, the following information with respect

to such mortgages:

(A) The name of the lender and the number of each

designated census tract in which the lender originated 1 or

more such mortgages during the applicable collection period.

(B) The total number of such mortgages originated by

such lender during the applicable collection period in each

designated census tract and the number of mortgages

originated each year in each designated census tract.

(C) The total number of defaults and foreclosures on

such mortgages during the applicable collection period in

each designated census tract and the number of defaults

and foreclosures in each designated census tract in each

year of the period.

(D) For each designated census tract, the percentage of

such lender’s total insured mortgages originated during

each year of the applicable collection period (with respect

to properties within such census tract) on which defaults

or foreclosures have occurred during the applicable collection period.

(E) The total of all such originations, defaults, and

foreclosures on insured mortgages originated by such lender during the applicable collection period for all designated

census tracts and the percentage of the total number of

such lender’s insured mortgage originations on which defaults or foreclosures have occurred during the applicable

collection period.
Sec. 541 NATIONAL HOUSING ACT 1086

1Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in part XII of this compilation, provides that certain provisions of

law requiring submittal to Congress of an annual, semiannual, or other regular periodic report

shall cease to be effective on May 15, 2000. This subsection is covered by such provision. However, section 1102 of the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569, set forth post in part XII of this compilation, provides that such section

3003(a)(1) shall not apply to the report required to be submitted under this subsection. 2So in law.

(2) OTHER INFORMATION.—Information collected under this

section shall also include the following:

(A) For each lender referred to under paragraph (1),

the total number of insured mortgages originated by the

lender secured by properties not located in a designated

census tract, the total number of defaults and foreclosures

on such mortgages, and the percentage of such mortgages

originated on which defaults or foreclosures occurred during the applicable collection period.

(B) For each designated census tract, the total number

of mortgages originated during the applicable collection period that are insured pursuant to section 203, the number

of defaults and foreclosures occurring on such mortgages

during such period, and the percentage of the total insured

mortgage originations during the period on which defaults

or foreclosures occurred.

(c) ANNUAL REPORTS.—The Secretary shall submit to the Congress annually a report containing the information collected and

maintained under subsection (b) for the relevant year. 1

(d) DEFINITIONS.—For purposes of this section:

(1) APPLICABLE COLLECTION PERIOD.—The term ‘‘applicable

collection period’’ means the 5-year period ending on the last

day of the calendar quarter for which information under this

section is collected.

(2) DESIGNATED CENSUS TRACT.—The term ‘‘designated

census tract’’ means a census tract located within a metropolitan statistical area, as defined pursuant to regulations issued

by the Secretary of Commerce.

PARTIAL PAYMENT OF CLAIMS ON DEFAULTED MORTGAGES AND IN

CONNECTION WITH MORTGAGE RESTRUCTURING

SEC. 541. ø12 U.S.C. 1735f–19¿ (a) DEFAULTED MORTGAGES.—

Notwithstanding any other provision of law, if the Secretary is requested to accept assignment of a mortgage insured by the Secretary that covers a multifamily housing project (as such term is

defined in section 203(b) of the Housing and Community Development Amendments of 1978 or a health care facility (including a

nursing home, intermediate care facility, or board and care home

(as those terms are defined in section 232 of this Act), a hospital

(as that term is defined in section 242 of this Act), or a group practice facility (as that term is defined in section 1106 of this Act))) 2

and the Secretary determines that partial payment would be less

costly to the Federal Government than other reasonable alternatives for maintaining the low-income character of the project, or

for keeping the health care facility operational to serve community

needs, the Secretary may request the mortgagee, in lieu of assignment, to—
1087 Sec. 542 NATIONAL HOUSING ACT

(1) accept partial payment of the claim under the mortgage

insurance contract; and

(2) recast the mortgage, under such terms and conditions

as the Secretary may determine.

(b) EXISTING MORTGAGES.—Notwithstanding any other provision of law, the Secretary, in connection with a mortgage restructuring under section 514 of the Multifamily Assisted Housing Reform and Affordability Act of 1997, may make a one time, nondefault partial or full payment of claim under one or more mortgage insurance contracts, which shall include a determination by

the Secretary or the participating administrative entity, in accordance with the Multifamily Assisted Housing Reform and Affordability Act of 1997, of the market value of the project and a restructuring of the mortgage, under such terms and conditions as are

permitted by section 517(a) of such Act.

(c) REPAYMENT.—As a condition to a partial claim payment

under this section, the mortgagor shall agree to repay to the Secretary the amount of such payment and such obligation shall be secured by a second mortgage on the property on such terms and conditions as the Secretary may determine.

SEC. 542. ø12 U.S.C. 1735f–20¿ AUTHORIZATION OF APPROPRIATIONS

FOR GENERAL AND SPECIAL RISK INSURANCE FUNDS.

There are authorized to be appropriated such sums as may be

necessary for each of fiscal years 1994 and 1995, to be allocated in

any manner that the Secretary determines appropriate, for the following costs incurred in conjunction with programs authorized

under the General Insurance Fund, as provided by section 519, and

the Special Risk Insurance Fund, as provided by section 238:

(1) The cost to the Government, as defined in section 502

of the Congressional Budget Act, of new insurance commitments.

(2) The cost to the Government, as defined in section 502

of the Congressional Budget Act, of modifications to existing

loans, loan guarantees, or insurance commitments.

(3) The cost to the Government, as defined in section 502

of the Congressional Budget Act, of loans provided under section 203(f) of the Housing and Community Development

Amendments of 1978.

(4) The costs of the rehabilitation of multifamily housing

projects (as defined in section 203(b) of the Housing and Community Development Amendments of 1978) upon disposition by

the Secretary.

TITLE VI—WAR HOUSING INSURANCE

øNOTE.—Title VI of the National Housing Act authorized the

Secretary to ensure mortgages for sale and rental housing to relieve the acute housing shortage and provide housing for World

War II veterans.¿

TITLE VII—INSURANCE FOR INVESTMENTS IN RENTAL

HOUSING FOR FAMILIES OF MODERATE INCOME

øNOTE.—Title VII of the National Housing Act provided a special system of insurance designed to encourage equity investment

in rental housing for families of moderate income.¿
Sec. 801 NATIONAL HOUSING ACT 1088

1So in law. There are no section headings in this title.

TITLE VIII—ARMED SERVICES HOUSING MORTGAGE

INSURANCE 1

SEC. 801. ø12 U.S.C. 1748¿ As used in this title—

(a) The term ‘‘mortgage’’ means a first mortgage on real estate,

in fee simple, or on a leasehold (1) under a lease for not less than

ninety-nine years which is renewable; or (2) under a lease for a period of not less than fifty years to run from the date the mortgage

was executed; and the term ‘‘first mortgage’’ means such classes of

first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate, under the law of the State in

which the real estate is located, together with the credit instruments, if any, secured thereby.

(b) The term ‘‘mortgagee’’ includes the original lender under a

mortgage, and his successors and assigns approved by the Secretary; and the term ‘‘mortgagor’’ includes the original borrower

under a mortgage, his successors and assigns.

(c) The term ‘‘maturity date’’ means the date on which the

mortgage indebtedness would be extinguished if paid in accordance

with periodic payments provided for in the mortgage.

(d) The term ‘‘housing accommodations’’ means housing designed for occupancy by military personnel and their dependents,

assigned to duty at or near the military installation where such

housing units are constructed.

(e) The term ‘‘personnel’’ shall include military and civilian

personnel approved by the Secretary of Defense, or his designee,

and the dependents of all such personnel.

(f) The term ‘‘military’’ includes Army, Navy, Marine Corps, Air

Force, and Coast Guard.

(g) The term ‘‘State’’ includes the several States and Puerto

Rico, the District of Columbia, Guam, the Virgin Islands, the Canal

Zone, and Midway Island.

øSEC. 802. [Repealed.]¿

SEC. 803. ø12 U.S.C. 1748b¿ (a) In order to assist in relieving

the acute shortage and urgent need for family housing which now

exists at or in areas adjacent to military installations because of

uncertainty as to the permanency of such installations and to increase the supply of necessary family housing accommodations for

personnel at such installations, the Secretary is authorized, upon

application of the mortgagee, to insure mortgages (including advances on such mortgages during construction) which are eligible

for insurance as hereinafter provided, and, upon such terms as the

Secretary may prescribe, to make commitments for so insuring

such mortgages prior to the date of their execution or disbursement

thereon: Provided, That the aggregate amount of principal obligations of all mortgages insured under this title (except mortgages insured pursuant to the provisions of this title in effect prior to the

enactment of the Housing Amendments of 1955) shall not exceed

$2,300,000,000: And provided further, That the limitation in section 217 of this Act shall not apply to this title: And provided further, That no more mortgages shall be insured under this section

after October 1, 1962, except pursuant to a commitment to insure

before such date, and not more than twenty-eight thousand family
1089 Sec. 803 NATIONAL HOUSING ACT

1 Indented so in law.

housing units shall be contracted for after June 30, 1959, pursuant

to any mortgage insured under this section after such date.

(b) To be eligible for insurance under this title a mortgage

shall meet the following conditions:

(1) 1 The mortgaged property shall be held by a mortgagor approved by the Secretary. The Secretary may, in his discretion, require such mortgagor to be regulated or restricted as to capital

structure, and methods of operation. The Secretary may make such

contracts with, and acquire for not to exceed $100 stock or interest

in, any such mortgagor, as the Secretary may deem necessary to

render effective such restriction or regulation. Such stock or interest shall be paid for out of the General Insurance Fund, and shall

be redeemed by the mortgagor at par upon the termination of all

obligations of the Secretary under the insurance.

(2) 1 The mortgaged property shall be designed for use for residential purposes by personnel of the armed services and situated

at or near a military installation, and the Secretary of Defense or

his designee shall have certified that there is no intention, so far

as can reasonably be foreseen, to substantially curtail the personnel assigned or to be assigned to such installation, and (i) shall

have determined that for reasons of safety, security, or other essential military requirements, it is necessary that the personnel involved reside in public quarters: Provided however, That for the

purposes of this subsection housing covered by a mortgage insured,

or for which a commitment to insure has been issued, under section

803 prior to the enactment of the ‘‘Housing Amendments of 1955’’

may be considered the same as available quarters, and (ii) with the

approval of the Secretary, shall have determined that adequate

housing is not available for such personnel at reasonable rentals

within reasonable commuting distance of the installation and that

the mortgaged property will not, so far as can reasonably be foreseen, substantially curtail occupancy in existing housing covered by

mortgages insured under this Act. The housing accommodations

shall comply with such standards and conditions as the Secretary

may prescribe to establish the acceptability of such property for

mortgage insurance, except that the certification of the Secretary

of Defense or his designee shall (for purposes of mortgage insurance under this title) be conclusive evidence to the Secretary of the

existence of the need for such housing. However, if the Secretary

does not concur in the housing needs as certified by the Secretary

of Defense, the Secretary may require the Secretary of Defense to

guarantee the General Insurance Fund against loss with respect to

the mortgage covering such housing. There are hereby authorized

to be appropriated such sums as may be necessary to provide for

payment to meet losses arising from such guaranty.

(3) 1 The mortgage shall involve a principal obligation in an

amount—

(A) not to exceed the amount which the Secretary estimates will be the replacement cost of the property or project

when the proposed improvements are completed (the cost of

the property or project as such term is used in this paragraph

may include the cost of the land, the physical improvements,

and utilities within the boundaries of the property or project);
Sec. 803 NATIONAL HOUSING ACT 1090

1 June 8, 1960.

(B) not to exceed an average of $16,500 per family unit for

such part of such property or project (including ranges, refrigerators, shades, screens, and fixtures) as may be attributable

to dwelling use: Provided, That the replacement cost of the

property or project as determined by the Secretary, including

the estimated value of any usable utilities within the boundaries of the property or project where owned by the United

States and not provided for out of the proceeds of the mortgage, shall not exceed an average of $16,500 per family unit:

Provided further, That should the financing of housing to be

constructed pursuant to a single invitation for bids be accomplished by two or more mortgages, the principal obligation of

any single mortgage may exceed an average of $16,500 per

family unit if the sum of the principal obligations of all mortgages for such housing does not exceed an average of $16,500

per family unit: And provided further, That subject to the limitations of this paragraph no family unit included in any mortgaged property shall be contracted for after the date of enactment of the Military Construction Act of 1960 1 if the cost of

such unit exceeds $19,800; and

(C) not to exceed the bid of the eligible bidder with respect

to the property or project under section 403 of the Housing

Amendments of 1955.

The mortgage shall provide for complete amortization by periodic

payments within such terms as the Secretary shall prescribe, but

not to exceed thirty years from the beginning of amortization of the

mortgage, and shall bear interest (exclusive of premium charges for

insurance) at not to exceed 41⁄2 per centum per annum of the

amount of the principal obligation outstanding at any time. The

Secretary may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage upon such terms and

conditions as he may prescribe and the mortgage may provide for

such release. The property or project may include such nondwelling

facilities as the Secretary deems adequate to serve the occupants.

(c) The Secretary is authorized to fix a premium charge for the

insurance of mortgages under this title but in the case of any mortgage such charge shall not be less than an amount equivalent to

one-half of 1 per centum per annum nor more than an amount

equivalent to 11⁄2 per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without

taking into account delinquent payments or prepayments. Such

premium charges shall be payable by the mortgagee, either in cash,

or in debentures issued by the Secretary under this title at par

plus accrued interest, in such manner as may be prescribed by the

Secretary: Provided, That the Secretary may require the payment

of one or more such premium charges at the time the mortgage is

insured, at such discount rate as he may prescribe not in excess of

the interest rate specified in the mortgage. If the Secretary finds,

upon the presentation of a mortgage for insurance and the tender

of the initial premium charge and such other charges as the Secretary may require, that the mortgage complies with the provisions

of this title, such mortgage may be accepted for insurance by endorsement or otherwise as the Secretary may prescribe. In the
1091 Sec. 803 NATIONAL HOUSING ACT

event that the principal obligation of any mortgage accepted for insurance under this title is paid in full prior to the maturity date,

the Secretary is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he shall determine

to be equitable, of the current unearned premium charges theretofore paid. The Secretary may reduce the payment of premiums provided for herein. The Secretary is further authorized to reduce the

amount of the premium charge below one-half of 1 per centum per

annum with respect to any mortgage on property acquired by the

Secretary of Defense or his designee if the mortgage is insured pursuant to the provisions of this title as in effect prior to August 11,

1955.

(d) The failure of the mortgagor to make any payment due

under or provided to be paid by the terms of a mortgage insured

under this title shall be considered a default under such mortgage,

and, if such default continues for a period of thirty days, the mortgagee shall be entitled to receive the benefits of the insurance as

hereinafter provided, upon assignment, transfer, and delivery to

the Secretary, within a period and in accordance with rules and

regulations to be prescribed by the Secretary of (1) all rights and

interests arising under the mortgage so in default; (2) all claims of

the mortgagee against the mortgagor or others, arising out of the

mortgage transactions; (3) all policies of title or other insurance or

surety bonds or other guaranties and any and all claims thereunder; (4) any balance of the mortgage loan not advanced to the

mortgagor; (5) any cash or property held by the mortgagee, or to

which it is entitled, as deposits made for the account of the mortgagor and which have not been applied in reduction of the principal

of the mortgage indebtedness; and (6) all records, documents,

books, papers, and accounts relating to the mortgage transaction.

Upon such assignment, transfer, and delivery, the obligation of the

mortgagee to pay the premium charges for mortgage insurance

shall cease, and the Secretary shall, subject to the cash adjustment

provided for in subsection (e) of this section, issue to the mortgagee

debentures having a total face value equal to the value of the mortgage, and a certificate of claim as hereinafter provided. For the

purposes of this subsection, the value of the mortgage shall be determined in accordance with rules and regulations prescribed by

the Secretary, by adding to the amount of the original principal obligation of the mortgage which was unpaid on the date of default,

the amount the mortgagee may have paid for (A) taxes, special assessments, and water rates, which are liens prior to the mortgage;

(B) insurance on the property; and (C) reasonable expenses for the

completion and preservation of the property and any mortgage insurance premiums paid after default; less the sum of (i) any

amount received on account of the mortgage after such date; and

(ii) any net income received by the mortgagee from the property

after such date.

(e) Debentures issued under this title shall be in such form and

denominations in multiples of $50, shall be subject to such terms

and conditions, and shall include such provisions for redemption, if

any, as may be prescribed by the Secretary with the approval of

the Secretary of the Treasury, and may be in coupon or registered

form. Any difference between the value of the mortgage determined

as herein provided and the aggregate face value of the debentures
Sec. 803 NATIONAL HOUSING ACT 1092

issued not to exceed $50, shall be adjusted by the payment of cash

by the Secretary to the mortgagee from the General Insurance

Fund.

(f) Debentures issued under this title shall be executed in the

name of the General Insurance Fund as obligor, shall be signed by

the Secretary, by either his written or engraved signature, and

shall be negotiable. All such debentures shall be dated as of the

date of default as determined in accordance with subsection (d) of

this section, and shall bear interest from such date at a rate established by the Secretary pursuant to section 224, payable semiannually on the 1st day of January and the 1st day of July each year,

and shall mature twenty years after the date thereof. Such debentures shall be exempt, both as to principal and interest, from all

taxation (except surtaxes, estate, inheritance, and gift taxes) now

or hereafter imposed by any Territory, dependency, or possession of

the United States or by the District of Columbia, or by any State,

county, municipality, or local taxing authority. They shall be paid

out of the General Insurance Fund, which shall be primarily liable

therefor, and they shall be fully and unconditionally guaranteed as

to principal and interest by the United States, and such guaranty

shall be expressed on the face of the debentures. In the event the

General Insurance Fund fails to pay upon demand, when due, the

principal of or interest on any debentures so guaranteed, the Secretary of the Treasury shall pay to the holders the amount thereof

which is hereby authorized to be appropriated, and thereupon to

the extent of the amount so paid the Secretary of the Treasury

shall succeed to all the rights of the holders of such debentures.

(g) The certificate of claim issued by the Secretary to any mortgagee in connection with the insurance of mortgages under this

title shall be for an amount determined in accordance with subsections (e) and (f) of section 604 of this Act, except that any

amount remaining after the payment of the full amount under the

certificate of claim shall be retained by the Secretary and credited

to the General Insurance Fund.

(h) The provisions of section 207(k) and section 207(l) of this

Act shall be applicable to mortgages insured under this title and

to property acquired by the Secretary hereunder, except that, as

applied to such mortgages and property, the reference in section

207(k) to subsection (g) shall be construed to refer to subsection (d)

of this section.

(i) The Secretary shall also have power to insure under this

title or title II any mortgage executed in connection with the sale

by him of any property acquired under this title without regard to

any limit as to eligibility, time or aggregate amount contained in

this title or title II.

(j) Any contract of insurance executed by the Secretary under

this title shall be conclusive evidence of the eligibility of the mortgage for insurance and the validity of any contract of insurance so

executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for

fraud or misrepresentation on the part of such approved mortgagee.

(k) The Secretary shall not insure any mortgage under this section unless the principal contractor or contractors engaged in the

construction of the project involved file a certificate or certificates
1093 Sec. 809 NATIONAL HOUSING ACT

1Section 4 of Pub. L. 216, 84th Congress, 69 Stat. 448, approved August 3, 1955, amended

the Renegotiation Act of 1951 to provide for renegotiation of any contract awarded for the construction of housing financed with a mortgage or mortgages insured under the provisions of title

VIII, as amended.

(at such times, in the course of construction or otherwise, as the

Secretary may prescribe) certifying that the laborers and mechanics employed in the construction of such project have been paid not

less than one and one-half times the regular rate of pay for employment in excess of eight hours in any one day or in excess of forty

hours in any one week.

øSEC. 804. [Repealed.]¿

SEC. 805. ø12 U.S.C. 1748d¿ Whenever the Secretary of the

Army, Navy, or Air Force determines that it is necessary to lease

any land held by the United States on or near a military installation to effectuate the purposes of this title, he may lease such land

upon such terms and conditions as will, in his opinion, best serve

the national interest. The authority conferred by this section shall

be in addition to and not in derogation of any other power or authority of the Secretary of the Army, Navy, or Air Force.

SEC. 806. ø12 U.S.C. 1748e¿ The second sentence of section

214 of the National Housing Act, as amended, relating to housing

in the State of Alaska, shall not apply to mortgages insured under

this title on property in said State.

SEC. 807. ø12 U.S.C. 1748f¿ The Secretary is authorized and

directed to make such rules and regulations as may be necessary

to carryout the provisions of this title.

SEC. 808. ø12 U.S.C. 1748g¿ Except in the case of mortgages

on multifamily rental housing projects insured under section 810,

the cost certification required under section 227 of this Act shall

not be required with respect to mortgages insured under the provisions of this title as amended by the Housing Amendments of

1955.1

SEC. 809. ø12 U.S.C. 1748h–1¿ (a) Notwithstanding any other

provisions of this title and in addition to mortgages insured under

section 803, the Secretary may insure any mortgage under this section which meets the eligibility requirements set forth in section

203(b) of this Act: Provided, That a mortgage insured under this

section shall have been executed by a mortgagor who at the time

of insurance is the owner of the property and either occupies the

property or certifies that his failure to do so is the result of a

change in his employment by the Armed Forces or a contractor

thereof and to whom the Secretary of Defense or his designee has

issued a certificate indicating that such person requires housing

and is at the date of the certificate a civilian employee at a research or development installation of one of the military departments of the United States or a contractor thereof and is considered by such military department to be an essential, nontemporary

employee at such date. Such certificate shall be conclusive evidence

to the Secretary of the employment status of the mortgagor and of

the mortgagor’s need for housing.

(b) No mortgage shall be insured under this section unless the

Secretary of Defense or his designee shall have certified to the Secretary that the housing is necessary to provide adequate housing

for such civilians employed in connection with such a research or

development installation and that there is no present intention to
Sec. 809 NATIONAL HOUSING ACT 1094

substantially curtail the number of such civilian personnel assigned or to be assigned to such installation. Such certification

shall be conclusive evidence to the Secretary of the need for such

housing but if the Secretary determines that insurance of mortgages on such housing is not an acceptable risk, he may require the

Secretary of Defense to guarantee the General Insurance Fund

from loss with respect to mortgages insured pursuant to this section: Provided, That the Secretary shall relieve the Secretary of Defense from any obligation to guarantee the General Insurance Fund

from loss with respect to a mortgage assumed by a person ineligible to receive a certificate under subsection (a), if the original

mortgagor is issued another certificate with respect to a mortgage

insured under this section on property which the Secretary determines is not an acceptable risk. There are hereby authorized to be

appropriated such sums as may be necessary to provide for payment to meet losses arising from such guaranty.

(c) The Secretary may accept any mortgage for insurance

under this section without regard to any requirement in any other

section of this Act, that the project or property be economically

sound or an acceptable risk.

(d) Any mortgagee under a mortagage insured under this section is entitled to the benefits of insurance as provided in section

204(a) with respect to mortgages insured under section 203.

(e) The provisions of subsections (b), (c), (d), (e), (f), (g), (h), (j),

and (k) of section 204 shall apply to mortgages insured under this

section except that as applicable to those mortgages: (1) all references to the ‘‘Fund’’ or ‘‘Mutual Mortgage Insurance Fund’’ shall

refer to the ‘‘General Insurance Fund’’ and (2) all references to section 203 shall refer to this section.

(f) The provisions of sections 801, 802, 803(c), 803(i), 803(j),

804(a), 804(b), and 807 and the provisions of section 803(a) relating

to the aggregate amount of all mortgages insured under this title,

shall be applicable to mortgages insured under this section.

(g)(1) A mortgage secured by property which is intended to provide housing for a person (i) employed or assigned to duty at or in

connection with any research or development installation of the

National Aeronautics and Space Administration and which is located at or near such installation, or (ii) employed at any research

or development installation of the Atomic Energy Commission and

which is located at or near such installation, may (if the mortgage

otherwise meets the requirements of this section) be insured by the

Secretary under the provisions of this section. The Administrator

of the National Aeronautics and Space Administration (or his designee), in the case of any mortgage secured by property intended

to provide housing for any person employed or assigned to duty at

any such installation of the National Aeronautics and Space

Administation, or the Chairman of the Atomic Energy Commission

(or his designee), in the case of any mortgage secured by property

intended to provide housing for any person employed at such installation of the Atomic Energy Commission, is authorized to guarantee and indemnify the General Insurance Fund against loss to

the extent required by the Secretary, in accordance with the provisions of subsection (b) of this section.

(2) For purpose of this subsection—
1095 Sec. 810 NATIONAL HOUSING ACT

1So in law. Probably should be designated as subparagraph (A).

2So in law. Probably should be designated as subparagraph (B).

3So in law. Probably should be designated as subparagraph (C).

4So in law. Probably should be designated as subparagraph (D).

(i) 1 The terms ‘‘Armed Forces’’, ‘‘one of the military departments of the United States’’, ‘‘military department’’, ‘‘Secretary

of Defense or his designee’’, and ‘‘Secretary’’, when used in subsections (a) and (b) of this section, shall be deemed to refer to

the National Aeronautics and Space Administration (or the Administrator thereof), or the Atomic Energy Commission (or the

Chairman thereof), as may be appropriate;

(ii) 2 The term ‘‘Secretary of the Army, Navy, or Air Force’’,

when used in section 805, shall be deemed to refer to the National Aeronautics and Space Administration or the Administrator thereof, as may be appropriate;

(iii) 3 The terms ‘‘civilian employee’’, ‘‘civilians’’, and ‘‘civilian personnel’’, as used in this section, shall be deemed to refer

to (A) employees of the National Aeronautics and Space Administration or a contractor thereof or to military personnel assigned to duty at an installation of the National Aeronautics

and Space Administration, or (B) persons employed at or in

connection with any research or development installation of

the Atomic Energy Commission, as the case may be; and

(iv) 4 The term ‘‘military installation’’ when used in section

805 shall be deemed to refer to an installation of the National

Aeronautics and Space Administration.

SEC. 810. ø12 U.S.C. 1748h–2¿ (a) Notwithstanding any other

provision of this title, the Secretary may insure and make commitments to insure any mortgage under this section which meets the

eligibility requirements hereinafter set forth.

(b) No mortgage shall be insured under this section unless (1)

the housing which is covered by the insured mortgage is necessary

in the interest of national security in order to provide adequate

housing for (A) military personnel and essential civilian personnel

serving or employed in connection with any installation of one of

the armed services of the United States, or (B) essential personnel

employed or assigned to duty at or in connection with any research

or development installation of the National Aeronautics and Space

Administration or of the Atomic Energy Commission, (2) there is

no present intention to curtail substantially the number of such

personnel assigned or to be assigned to the installation, (3) adequate housing is not available for such personnel at reasonable

rentals within reasonable commuting distances of such installations, and (4) the mortgaged property will not so far as can be reasonably foreseen substantially curtail occupancy in any existing

housing in the vicinity of the installation which is covered by mortgages insured under this Act.

(c) The Secretary may accept any mortgage for insurance

under this section without regard to any requirement in any other

section of this Act that the property or project be economically

sound.

(d) The Secretary shall require each project covered by a mortgage insured under this section to be held for rental for a period

of not less than five years after the project or dwelling is made

available for initial occupancy or until he finds that the housing
Sec. 810 NATIONAL HOUSING ACT 1096

may be released from such rental condition. The Secretary shall

prescribe such procedures as in his judgment are necessary to secure reasonable preference or priority in the sale or rental of dwellings covered by a mortgage insured under this section for military

personnel and essential civilian employees of the armed services,

employees of contractors for the armed services and persons described in clause (1)(B) of subsection (b) of this section.

(e) For the purpose of providing multifamily rental housing

projects or housing projects consisting of individual single-family

dwellings for sale, the Secretary is authorized to insure mortgages

(including advances on such mortgages during construction) which

cover property held by a mortgagor approved by the Secretary. Any

such mortgagor shall possess powers necessary therefor and incidental thereto and shall until the termination of all obligations of

the Secretary under such insurance be regulated or restricted as to

rents or sales, charges, capital structure, rate of return, and methods of operation to such extent and in such manner as to provide

reasonable rentals to tenants and a reasonable return on the investment. The Secretary may make such contracts with, and acquire for not to exceed $100 such stock or interest in, any such

mortgagor as he may deem necessary to render effective such restriction or regulation. Such stock or interest shall be paid for out

of the General Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.

(f) To be eligible for insurance under this section, a mortgage

on any multifamily rental property or project shall involve a principal obligation in an amount not to exceed, for such part of such

property or project as may be attributable to dwelling use, $9,000

per family unit without a bedroom, $12,500 per family unit with

one bedroom, $15,000 per family unit with two bedrooms, and

$18,500 per family unit with three or more bedrooms and not to

exceed 90 per centum of the estimated value of the property or

project when the proposed physical improvements are completed.

The Secretary may, by regulation, increase any of the foregoing dollar amount limitations contained in this paragraph by not to exceed 45 per centum in any geographical area where he finds that

cost levels so require.

(g) To be eligible for insurance under this section a mortgage

on any property or project constructed for eventual sale or singlefamily dwellings, shall involve a principal obligation in an amount

not to exceed a sum computed on the basis of a separate mortgage

for each single-family dwelling (irrespective of whether such dwelling has a party wall or is otherwise physically connected with another dwelling or dwellings) comprising the property, or project

equal to the total of each of the maximum principal obligations of

such mortgages which would meet the requirements of section

203(b)(2) of this Act if the mortgagor were the owner and occupant

who had made the required payment on account of the property

prescribed in such paragraph.

(h) Any mortgage insured under this section shall provide for

complete amortization by periodic payments within such terms as

the Secretary may prescribe but not to exceed the maximum term

applicable to mortgages under section 207 of this Act and shall

bear interest at such rate as may be agreed upon by the mortgagor
1097 Sec. 811 NATIONAL HOUSING ACT

and the mortgagee, except that individual mortgages of the character described in subsection (g) covering the individual dwellings

in the project may have a term not in excess of the maximum term

applicable to mortgages insured under section 203 of this Act or the

unexpired term of the project mortgage at the time of the release

of the mortgaged property from such project mortgage, whichever

is the greater, and shall bear interest at such rate as may be

agreed upon by the mortgagor and the mortgagee. The Secretary

may consent to the release of a part or parts of the mortgaged

property from the lien of the mortgage upon such terms and conditions as he may prescribe and the mortgage may provide for such

release, and a mortgage of the character described in subsection (g)

of this section may provide that, at any time after the release of

the project from the rental period prescribed by subsection (d), such

mortgage may be replaced, in whole or in part, by individual mortgages covering each individual dwelling in the project in amounts

not to exceed the unpaid balance of the blanket mortgage allocable

to the individual property. Each such individual mortgage may be

insured under this section. Property covered by a mortgage insured

under this section may include eight or more family units and may

include such commercial and community facilities as the Secretary

deems adequate to serve the occupants.

(i) The aggregate number of dwelling units (including all units

in multifamily projects or individual dwellings) covered by outstanding commitments to insure and mortgages insured under this

section shall at no time exceed five thousand dwelling units.

(j) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (l),

and (n) of section 207 of this title shall be applicable to mortgages

insured under this section except individual mortgages of the character described in subsection (g) of this section covering the individual dwellings in the project, and as to such individual mortgages

the provisions of subsections (a), (c), (d), (e), (f), (g), (h), (j), and (k)

of section 204 shall be applicable: Provided, That wherever the

word ‘‘Fund’’, or ‘‘Mutual Mortgage Insurance Fund’’ appear in section 204, such reference shall refer to the General Insurance Fund

with respect to mortgages insured under this section.

(k) The provisions of sections 801, 802, 803(c), 803(i), 803(j),

804(a), 804(b), and 807 and the provisions of section 803(a) relating

to the aggregate amount of all mortgages insured under this title

shall be applicable to mortgages insured under this section.

SEC. 811. ø12 U.S.C. 1748h–3¿ (a) The Secretary is authorized

to make payments in lieu of taxes on any real property to which

title has been or is hereafter acquired by him in fee under section

803 as effective prior to August 11, 1955, and on which taxes or

payments in lieu of such taxes were payable or paid prior to acquisition by the Secretary. Such payments may be made in connection

with tax years occurring prior to or subsequent to the date of the

enactment of this section. The amount of any such payments shall

not exceed taxes on similar property and shall not include interest

or penalties. If the Secretary has acquired or hereafter acquires

title in fee to real property by foreclosure or by transfer from some

other department or agency of the Government or otherwise during

a tax year, he may make a payment in lieu of taxes prorated for

that portion of the year remaining after his acquisition of title.

This subsection shall not authorize any lien against property held
Sec. 1101 NATIONAL HOUSING ACT 1098

1Subsections (b) and (c) of section 133 of the Department of Housing and Urban Development

Reform Act of 1989, Pub. L. 101–235, approved December 15, 1989, provide as follows:

‘‘(b) APPLICABILITY.—On or after the date of enactment of this Act, no mortgage may be insured under title X, as such title existed immediately before such date, except pursuant to a

commitment to insure made before such date.

‘‘(c) SAVINGS PROVISION.—Any contract of insurance entered into under title X before the date

of enactment of this Act shall be governed by the provisions of such title as such title existed

immediately before such date.’’.

by the Secretary, nor the payment of any tax, nor any payment in

lieu of any tax, on any interest of the Secretary as lessee or mortgagee.

(b) Nothing in this title shall be construed to exempt any real

property which has been or is hereafter acquired and held by the

Secretary under section 809 or 810 from taxation by any State or

political subdivision thereof, to the same extent, according to its

value, as other real property is taxed.

TITLE IX—NATIONAL DEFENSE HOUSING INSURANCE

øNOTE.—Title IX of the National Housing Act provides a new

mortgage insurance program designed to encourage the production

of housing in critical defense housing areas.¿

øTITLE X—MORTGAGE INSURANCE FOR LAND

DEVELOPMENT¿

øNOTE.—Title X of the National Housing Act provided a mortgage insurance program designed to encourage purchase of raw

acreage and development of improved buildings and related sites in

an orderly and economical manner. Title X was repealed by section

133(a) of Public Law 101–235.1¿

TITLE XI—MORTGAGE INSURANCE FOR GROUP PRACTICE

FACILITIES

INSURANCE OF MORTGAGES

SEC. 1101. ø12 U.S.C. 1749aaa¿ (a) The Secretary is authorized (1) to insure mortgages (including advances on such mortgages

during construction) upon such terms and conditions as he may

prescribe, in accordance with the provisions of this title, and (2) to

make commitments for the insuring of such mortgages prior to the

date of their execution or disbursement thereon.

(b) To be eligible for insurance under this title, the mortgage

shall (1) be executed by a mortgagor that is a group practice unit

or organization or other mortgagor, approved by the Secretary, (2)

be made to and held by a mortgagee approved by the Secretary as

responsible and able to service the mortgage properly, and (3) cover

a property or project which is approved for mortgage insurance

prior to the beginning of construction or rehabilitation and is designed for use as a group practice facility or medical practice facility which the Secretary finds will be constructed in an economical

manner, will not be of elaborate or extravagant design or materials, and will be adequate and suitable for carrying out the purposes of this title. No mortgage shall be insured under this title unless it is shown to the satisfaction of the Secretary that the applicant would be unable to obtain the mortgage loan without such insurance on terms comparable to those specified in subsection (c).
1099 Sec. 1102 NATIONAL HOUSING ACT

(c) The mortgage shall—

ø(1) [Repealed.]¿

(2) not exceed 90 per centum of the amount which the Secretary estimates will be the replacement cost of the property

or project when construction or rehabilitation is completed. The

replacement cost of the property may include the land and the

proposed physical improvements, equipment, utilities within

the boundaries of the property, a solar energy system (as defined in subparagraph (3) of the last paragraph of section 2(a)

of this Act) or residential energy conservation measures (as defined in section 210(11) (A) through (G) and (I) of Public Law

95–619) in cases where the Secretary determines that such

measures are in addition to those required under the minimum

property standards and will be cost-effective over the life of the

measure, architects’ fees, taxes, and interest accruing during

construction or rehabilitation, and other miscellaneous charges

incident to construction or rehabilitation and approved by the

Secretary;

(3) have a maturity satisfactory to the Secretary but not

to exceed twenty-five years from the beginning of amortization

of the mortgage, and provide for complete amortization of the

principal obligation by periodic payments within such terms as

the Secretary shall prescribe; and

(4) bear interest at such rate as may be agreed upon by

the mortgagor and the mortgagee.

(d) Any contract of insurance executed by the Secretary under

this title shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract for insurance

so executed shall be incontestable in the hands of an approved

mortgagee from the date of the execution of such contract, except

for fraud or misrepresentation on the part of such approved mortgagee.

(e) Each mortgage insured under this title shall contain an undertaking (in accordance with regulations prescribed under this

title and in force at the time the mortgage is approved for insurance) to the effect that, except as authorized by the Secretary and

the mortgagee, the property will be used as a group practice facility

or medical practice facility until the mortgage has been paid in full

or the contract of insurance otherwise terminated.

(f) No mortgage shall be insured under this title unless the

mortgagor and the mortgagee certify (1) that they will keep such

records relating to the mortgage transaction and indebtedness, to

the construction of the facility covered by the mortgage, and to the

use of such facility as a group practice facility or medical practice

facility as are prescribed by the Secretary at the time of such certification, (2) that they will make such reports as may from time

to time be required by the Secretary pertaining to such matters,

and (3) that the Secretary shall have access to and the right to examine and audit such records.

PREMIUMS

SEC. 1102. ø12 U.S.C. 1749aaa–1¿ The Secretary shall fix premium charges for the insurance of mortgages under this title, but

such charges shall not be more than 1 per centum per annum of
Sec. 1103 NATIONAL HOUSING ACT 1100

the amount of the principal obligation of the mortgage outstanding

at any time, without taking into account delinquent payments or

prepayments. In addition to the premium charge, the Secretary is

authorized to charge and collect such amounts as he may deem reasonable for the analysis of a proposed project and the appraisal and

inspection of the property and improvements. Where the principal

obligation of any mortgage accepted for insurance under this title

is paid in full prior to the maturity date, the Secretary is authorized to require the payment by the mortgagee of an adjusted premium charge. This charge shall be in such amount as the Secretary

determines to be equitable, but not in excess of the aggregate

amount of the premium charges that the mortgagee would otherwise have been required to pay if the mortgage had continued to

be insured until the maturity date. Where such prepayment occurs,

the Secretary is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he shall determine

to be equitable, of the current unearned premium charges theretofore paid. Premium charges fixed under this section shall be payable by the mortgagee either in cash, or in debentures which are

the obligation of the General Insurance Fund at par plus accrued

interest, at such times and in such manner as may be prescribed

by the Secretary.

PAYMENT OF INSURANCE BENEFITS

SEC. 1103.ø12 U.S.C. 1749aaa–2¿ The mortgagee shall be entitled to receive the benefits of the insurance under this title in the

manner provided in subsection (g) of section 207 with respect to

mortgages insured under that section. For such purpose the provisions of subsections (g), (h), (i), (j), (k), (l), and (n) of section 207

shall apply to mortgages insured under this title and all references

in such subsection to section 207 shall be deemed to refer to this

title.

REGULATIONS

SEC. 1104. ø12 U.S.C. 1749aaa–3¿ The Secretary shall prescribe such regulations as may be necessary to carry out this title,

after consulting with the Secretary of Health and Human Services

with respect to any health or medical aspects of the program under

this title which may be involved in such regulations.

ADMINISTRATION

SEC. 1105. ø12 U.S.C. 1749aaa–4¿ (a) At the request of individuals or organizations operating or contemplating the operation of

group practice facilities or medical practice facility (as defined in

section 1106), the Secretary may provide or obtain technical assistance in the planning for and construction of such facilities.

(b) With a view to avoiding unnecessary duplication of existing

staffs and facilities of the Federal Government, the Secretary is authorized to utilize available services and facilities of any agency of

the Federal Government in carrying out the provisions of this title,

and to pay for such services and facilities, either in advance or by

way of reimbursement, in accordance with an agreement between

the Secretary and the head of such agency.
1101 Sec. 1106 NATIONAL HOUSING ACT

DEFINITIONS

SEC. 1106. ø12 U.S.C. 1749aaa–5¿ For the purposes of this

title—

(1) The term ‘‘group practice facility’’ means a facility in a

State for the provision of preventive, diagnostic, and treatment

services to ambulatory patients (in which patient care is under the

professional supervision of persons licensed to practice medicine or

osteopathy in the State or, in the case of optometric care or treatment, is under the professional supervision of persons licensed to

practice optometry in the State, or, in the case of dental diagnosis

or treatment, is under the professional supervision of persons licensed to practice dentistry in the State, or, in the case of podiatric

care or treatment, is under the professional supervision of persons

licensed to practice podiatry in the State) and which is primarily

for the provision of such health services by a medical or dental

group.

(2) The term ‘‘medical practice facility’’ means an adequately

equipped facility in which not more than four persons licensed to

practice medicine in the State where the facility is located can provide, as may be appropriate, preventive, diagnostic, and treatment

services, and which is situated in a rural area or small town, or

in a low-income section of an urban area, in which there exists, as

determined by the Secretary, a critical shortage of physicians. As

used in this paragraph—

(A) the term ‘‘small town’’ means any town, village, or city

having a population of not more than 10,000 inhabitants according to the most recent available data compiled by the Bureau of the Census; and

(B) the term ‘‘low-income section of an urban area’’ means

a section of a larger urban area in which the median family

income is substantially lower, as determined by the Secretary,

than the median family income for the area as a whole.

(3) The term ‘‘medical or dental group’’ means a partnership or

other association or group of persons licensed to practice medicine,

osteopathy or surgery in the State, or of persons licensed to practice optometry in the State, or of persons licensed to practice dentistry in the State, or of persons licensed to practice podiatry in the

State or of any combination of such persons, who, as their principal

professional activity and as a group responsibility, engage or undertake to engage in the coordinated practice of their profession

primarily in one or more group practice facilities, and who (in this

connection) share common overhead expenses (if and to the extent

such expenses are paid by members of the group), medical and

other records, and substantial portions of the equipment and the

professional, technical, and administrative staffs, and which partnership or association or group is composed of at least such professional personnel and make available at least such health services

as may be provided in regulations prescribed under this title.

(4) The term ‘‘group practice unit or organization’’ means—

(A) a private nonprofit agency or organization undertaking

to provide, directly or through arrangements with a medical or

dental group, comprehensive medical care, osteopathic care, optometric care, dental care, or podiatric care, or any combination thereof, which may include hospitalization, to members or
Sec. 1106 NATIONAL HOUSING ACT 1102

subscribers primarily on a group practice prepayments basis;

or

(B) a private nonprofit agency or organization established

for the purpose of improving the availability of medical, optometric, osteopathic, or dental or podiatric, care in the community or having some function or functions related to the provision of such care, which will, through lease or other arrangement, make the group practice facility with respect to which

assistance has been requested under this title available to a

medical or dental group for use by it.

(5) The term ‘‘nonprofit organization’’ means a corporation,

assocation, foundation, trust, or other organization not part of the

net earnings of which inures, or may lawfully inure, to the benefit

of any private shareholder or individual except, in the case of an

organization the purposes of which include the provision of personal health services to its members or subscribers or their dependents under a plan of such organization for the provision of such

services to them (which plan may include the provision of other

services or insurance benefits to them), through the provision of

such health services (or such other services or insurance benefits)

to such members or subscribers or dependents under such plan.

(6) The term ‘‘State’’ includes the Commonwealth of Puerto

Rico, Guam, the Virgin Islands, American Samoa, and the District

of Columbia.

(7) The term ‘‘mortgage’’ means a first mortgage on real estate

in fee simple, or on the interest of either the lessor or lessee thereof

(A) under a lease for not less than ninety-nine years which is renewable, or (B) under a lease having a period of not less than fifty

years to run from the date the mortgage was executed. The term

‘‘first mortgage’’ means such classes of first liens as are commonly

given to secure advances (including but not limited to advances

during construction) on, or the unpaid purchase price of, real estate

under the laws of the State in which the real estate is located, together with the credit instrument or instruments, if any, secured

thereby, and any mortgage may be in the form of one or more trust

mortgages or mortgage indentures or deeds of trust, securing notes,

bonds, or other credit instruments, and, by the same instrument or

by a separate instrument, may create a security interest in initial

equipment, whether or not attached to the realty.

(8) The term ‘‘mortgagee’’ means the original lender under a

mortgage, and his or its successors and assigns, and includes the

holders of credit instruments issued under a trust mortgage or

deed of trust pursuant to which such holders act by and through

a trustee named therein.

(9) The term ‘‘mortgagor’’ means the original borrower under

a mortgage and his or its successors and assigns.

TITLE XII—NATIONAL INSURANCE DEVELOPMENT

PROGRAM

øNOTE.—Title XII of the National Housing Act concerns national property and crime insurance and is not included in this

compilation.¿
1103

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

ESTIMATES OF USE OF INSURING AUTHORITY

EXCERPT FROM PUBLIC LAW 99–289

[100 Stat. 412; 12 U.S.C. 1721 note]

SEC. 3. ø12 U.S.C. 1721 note¿ ADMINISTRATIVE PROVISION.

(a) The Secretary of Housing and Urban Development (hereinafter referred to as the ‘‘Secretary’’) shall estimate the rates at

which the authority to make commitments to insure mortgages and

loans under the National Housing Act, and the authority to make

commitments to issue guarantees under section 306(g) of that Act,

are likely to be used for the remainder of any fiscal year. The Secretary shall make these estimates at such times as the Secretary

deems appropriate, but not less frequently than monthly.

(b) If an estimate under subsection (a) indicates that either

limitation on authority to make commitments for a fiscal year referred to in subsection (a) will be reached before the end of that

fiscal year, or in any event whenever 75 per centum of either authority to make commitments has been utilized, the Secretary shall

promptly so notify the Committee on Appropriations and the Committee on Banking, Housing, and Urban Affairs of the Senate and

the Committee on Appropriations and the Committee on Banking,

Finance and Urban Affairs of the House of Representatives 1.
1104

RIGHT OF REDEMPTION IN CASE OF SUBORDINATE

LIENS OF FHA—RESALES OF FHA FINANCED HOUSING

EXCERPTS FROM THE HOUSING ACT OF 1950

[Public Law 475, 81st Congress; 64 Stat. 81; 12 U.S.C. 1701k, 1701l]

TITLE V—MISCELLANEOUS PROVISIONS

* * * * * * *

SEC. 505. ø12 U.S.C. 1701k¿ The right to redeem provided for

by title 28, United States Code, section 2410(c), shall not arise in

any case in which the subordinate lien or interest of the United

States derives from the issuance of insurance under the National

Housing Act, as amended.

* * * * * * *

SEC. 508. ø12 U.S.C. 1701l¿ It is the intent of Congress that

no sale of a dwelling on which a mortgage is insured under the National Housing Act, as amended, shall be financed, while such

mortgage is so insured, at an interest rate higher than that prescribed by the Secretary of Housing and Urban Development. It is

the further intent of Congress that no such sale shall be made,

while such mortgage is so insured, on terms less favorable to the

purchaser as to amortization, retirement, foreclosure, or forfeiture

than those contained in such mortgage.
1105

BUILDERS WARRANTY—FHA HOUSING

EXCERPT FROM HOUSING ACT OF 1954

[Public Law 560, 83d Congress; 68 Stat. 642; 12 U.S.C. 1701j–1]

SEC. 801. ø12 U.S.C. 1701j–1¿ (a) The Secretary of Housing

and Urban Development is hereby authorized and directed to require that, in connection with any property upon which there is located a dwelling designed principally for not more than a four-family residence and which is approved for mortgage insurance prior

to the beginning of construction, the seller or builder, and such

other person as may be required by the said Secretary to become

warrantor, shall deliver to the purchaser or owner of such property

a warranty that the dwelling is constructed in substantial conformity with the plans and specifications (including any amendments thereof, or changes and variations therein, which have been

approved in writing by the Secretary of Housing and Urban Development) on which the Secretary of Housing and Urban Development based his valuation of the dwelling: Provided, That the Secretary of Housing and Urban Development shall deliver to the

builder, seller, or other warrantor his written approval (which shall

be conclusive evidence of such approval) of any amendment of, or

change or variation in, such plans and specifications which the Secretary deems to be a substantial amendment thereof, or change or

variation therein, and shall file a copy of such written approval

with such plans and specifications: Provided further, That such

warranty shall apply only with respect to such instances of substantial nonconformity to such approved plans and specifications

(including any amendment thereof, or changes or variations therein, which have been approved in writing, as provided herein, by the

Secretary of Housing and Urban Development) as to which the purchaser or homeowner has given written notice to the warrantor

within one year from the date of conveyance of title to, or initial

occupancy of, the dwelling, whichever first occurs: Provided further,

That such warranty shall be in addition to, and not in derogation

of, all other rights and privileges which such purchaser or owner

may have under any other law or instrument: And provided further, That the provisions of this section shall apply to any such

property covered by a mortgage insured by the Secretary of Housing and Urban Development on and after October 1, 1954, unless

such mortgage is insured pursuant to a commitment therefor made

prior to October 1, 1954.
Sec. 801 BUILDERS WARRANTY 1106

(b) The Secretary of Housing and Urban Development is further directed to permit copies of the plans and specifications (including written approvals of any amendments thereof, or changes

or variations therein, as provided herein) for dwellings in connection with which warranties are required by subsection (a) of this

section to be made available in their appropriate local offices for inspection or for copying by any purchaser, homeowner, or warrantor

during such hours or periods of time as the said Secretary may determine to be reasonable.
1107

PENALTIES FOR FRAUD

EXCERPT FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1970

[Public Law 91–609; 84 Stat. 1814; 12 U.S.C. 1709–2]

EQUITY SKIMMING

SEC. 912. ø12 U.S.C. 1709–2¿ Whoever, with intent to defraud,

willfully engages in a pattern or practice of—

(1) purchasing one- to four-family dwellings (including condominiums and cooperatives) which are subject to a loan in default at time of purchase or in default within one year subsequent to the purchase and the loan is secured by a mortgage

or deed of trust insured or held by the Secretary of Housing

and Urban Development or guaranteed by the Department of

Veterans Affairs, or the loan is made by the Department of

Veterans Affairs,

(2) failing to make payments under the mortgage or deed

of trust as the payments become due, regardless of whether the

purchaser is obligated on the loan, and

(3) applying or authorizing the application of rents from

such dwellings for his own use,

shall be fined not more than $250,000 or imprisoned not more than

5 years, or both. This section shall apply to a purchaser of such a

dwelling, or a beneficial owner under any business organization or

trust purchasing such dwelling, or to an officer, director, or agent

of any such purchaser. Nothing in this section shall apply to the

purchaser of only one such dwelling.

EXCERPT FROM THE HOUSING AND COMMUNITY DEVELOPMENT ACT

OF 1974

[Public Law 93–383; 88 Stat. 740; 12 U.S.C. 1701l–1]

MORTGAGE PROCEEDS FRAUDULENTLY MISAPPROPRIATED BY

MORTGAGOR

SEC. 819. ø12 U.S.C. 1701l–1¿ The Secretary of Housing and

Urban Development shall take action to secure the payment of any

deficiency after foreclosure on a mortgage insured or assisted under

Federal law where the Secretary has reason to believe that mortgage proceeds have been fraudulently misappropriated by the mortgagor.
Sec. 421 PENALTIES FOR FRAUD 1108

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1913; 12 U.S.C. 1715z–4a]

SEC. 421. ø12 U.S.C. 1715z–4a¿ DOUBLE DAMAGES REMEDY FOR UNAUTHORIZED USE OF MULTIFAMILY HOUSING PROJECT ASSETS AND INCOME.

(a) ACTION TO RECOVER ASSETS OR INCOME.— (1) The Secretary of Housing and Urban Development (referred to in this section as the ‘‘Secretary’’) may request the Attorney General to bring an action in a United States district

court to recover any assets or income and by any person in violation of (A) a regulatory agreement that applies to a multifamily project whose mortgage is insured or held by the Secretary under title II of the National Housing Act; (B) a regulatory agreement that applies to a multifamily project whose

mortgage is insured or held by the Secretary under section 202

of the Housing Act of 1959 (including property subject to section 202 of such Act as it existed before enactment of the Cranston-Gonzalez National Affordable Housing Act of 1990); (C) a

regulatory agreement or such other form of regulatory control

as may be imposed by the Secretary that applies to mortgages

insured or held by the Secretary under section 542 of the

Housing and Community Development Act of 1992, but not reinsured under section 542 of the Housing and Community Development Act of 1992; or (D) any applicable regulation. For

purposes of this section, a use of assets or income in violation

of the regulatory agreement, or such other form of regulatory

control as may be imposed by the Secretary, or any applicable

regulation shall include any use for which the documentation

in the books and accounts does not establish that the use was

made for a reasonable operating expense or necessary repair of

the project and has not been maintained in accordance with

the requirements of the Secretary and in reasonable condition

for proper audit.

(2) For purposes of a mortgage insured or held by the Secretary under title II of the National Housing Act, under section

202 of the Housing Act of 1959 (including section 202 of such

Act as it existed before enactment of the Cranston-Gonzalez

National Affordable Housing Act of 1990) and under section

542 of the Housing and Community Development Act of 1992,

the term ‘‘any person’’ shall mean any person or entity which

owns a project, as identified in the regulatory agreement, including but not limited to any stockholder holding 25 percent

or more interest of a corporation that owns the project; any

beneficial owner under any business or trust; any officer, director, or partner of an entity owning the project; and any heir,

assignee, successor in interest, or agent of any owner.

(b) INITIATION OF PROCEEDINGS AND TEMPORARY RELIEF.—The

Attorney General, upon request of the Secretary, shall have the exclusive authority to authorize the initiation of proceedings under

this section. Pending final resolution of any action under this section, the court may grant appropriate temporary or preliminary relief, including restraining orders, injunctions, and acceptance of

satisfactory performance bonds, to protect the interests of the Sec-
1109 Sec. 421 PENALTIES FOR FRAUD

retary and to prevent use of assets or income in violation of the

regulatory agreement, or such other form of regulatory control as

may be imposed by the Secretary, and any applicable regulation

and to prevent loss of value of the realty and personalty involved.

(c) AMOUNT RECOVERABLE.—In any judgment favorable to the

United States entered under this section, the Attorney General

may recover double the value of the assets and income of the

project that the court determines to have been used in violation of

the regulatory agreement, or such other form of regulatory control

as may be imposed by the Secretary, or any applicable regulation,

plus all costs relating to the action, including but not limited to

reasonable attorney and auditing fees. Notwithstanding any other

provision of law, the Secretary may apply the recovery, or any portion of the recovery, to the project or to the applicable insurance

fund under the National Housing Act or, in the case of any project

for which the mortgage is held by the Secretary under section 202

of the Housing Act of 1959 (including property subject to section

202 of such Act as it existed before enactment of the Cranston-Gonzalez National Affordable Housing Act of 1990), to the project or to

the Department for use by the appropriate office within the Department for administrative costs related to enforcement of the requirements of the various programs administered by the Secretary,

as appropriate.

(d) TIME LIMITATION.—Notwithstanding any other statute of

limitations, the Secretary may request the Attorney General to

bring an action under this section at any time up to and including

6 years after the latest date that the Secretary discovers any use

of project assets and income in violation of the regulatory agreement, or such other form of regulatory control as may be imposed

by the Secretary, or any applicable regulation.

(e) CONTINUED AVAILABILITY OF OTHER REMEDIES.—The remedy provided by this section is in addition to any other remedies

available to the Secretary or the United States.
1110

1So in law.

INSURANCE OF BMIR AND SECTION 202 MORTGAGES

UNDER SECTION 236

EXCERPT FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 90–448; 82 Stat. 476; 12 U.S.C. 1715z–1 note]

RENTAL AND COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES

SEC. 201. (a) Title II of the National Housing Act is amended

by adding after section 235 (as added by section 101 of this Act)

the following new section:

* * * * * * *

(c) ø12 U.S.C. 1715z–1 note¿ The Secretary of Housing and

Urban Development is authorized, upon such terms and conditions

as he may prescribe, to transfer to section 236(j) of the National

Housing Act the insurance of a mortgage which has not be 1 finally

endorsed for insurance under section 221(d)(3) of such Act and

which has been approved for the below-market interest rate prescribed in the proviso of section 221(d)(5) of such Act.

(d) ø12 U.S.C. 1715z–1 note¿ The Secretary of Housing and

Urban Development is authorized, upon such terms and conditions

as he may prescribe, to insure under section 236(j) of the National

Housing Act a mortgage meeting the requirements of such section

which is given to refinance a mortgage loan made under section

202 of the Housing Act of 1959: Provided, That the application for

such insurance is filed with the Secretary on or before the date of

project completion, or within such reasonable time thereafter as the

Secretary may permit.
1111

RESIDENTIAL WATER TREATMENT

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1915; 12 U.S.C. 1701z–15]

SEC. 424. ø12 U.S.C. 1701z–15¿ APPROVAL OF INDIVIDUAL RESIDENTIAL

WATER PURIFICATION OR TREATMENT UNITS.

(a) IN GENERAL.—When the existing water supply does not

meet the minimum property standards established by the Department of Housing and Urban Development and a permanent alternative acceptable water supply is not available, a continuous supply of water may be provided through the use of approved residential water treatment equipment or a water purification unit that

provides bacterially and chemically safe drinking water.

(b) APPROVAL PROCESS.—A performance-based approval of the

equipment or unit and the maintenance, monitoring, and replacement plan for such equipment or unit shall be certified by field offices of the Department of Housing and Urban Development based

upon general standards recognized by the Department as modified

for local or regional conditions. As a part of such approved plan,

a separate monthly escrow account may be required to be established through the lender to cover the cost of the approved yearly

maintenance and monitoring schedule and projected replacement of

the equipment or unit.
1112

DEREGULATION OF RENTS

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1915; 12 U.S.C. 1715z–1c]

SEC. 425. ø12 U.S.C. 1715z–1c¿ REGULATION OF RENTS IN INSURED

PROJECTS.

After December 1, 1987, the Secretary of Housing and Urban

Development shall control rents and charges as they were controlled prior to April 19, 1983, for any multifamily housing project

insured under the National Housing Act if—

(1) during the period of April 19, 1983, through December

1, 1987, the project owner and the Secretary have not executed, and the project owner has not filed a written request

with the Secretary to enter into, an amendment to the regulatory agreement pursuant to regulations published by the Secretary on April 19, 1983, or June 4, 1986, electing to deregulate rents or utilize an alternative formula for determining the

maximum allowable rents pursuant to regulations published by

the Secretary on April 19, 1983, or June 4, 1986; and

(2)(A) the project was, as of December 1, 1987, receiving a

housing assistance payment under a contract pursuant to section 8 of the United States Housing Act of 1937 (other than

under the existing housing certificate program of section

8(b)(1) of such Act); or

(B) not less than 50 percent of the units in the project are

occupied by lower income families (as defined in section 3(a)(2)

of the United States Housing Act of 1937).
1113

1The date of enactment was November 28, 1990.

DELEGATED PROCESSING

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4138; 12 U.S.C. 1713 note]

SEC. 328. ø12 U.S.C. 1713 note¿ DELEGATION OF PROCESSING.

(a) AUTHORITY.—Not later than the expiration of the 60-day

period beginning on the date of enactment of this Act,1 the Secretary of Housing and Urban Development shall implement a system of mortgage insurance for mortgages insured under section

207, 221, 223, 232, or 241 of the National Housing Act that delegates processing functions to selected approved mortgagees or other

individuals and entities expressly approved by the Department of

Housing and Urban Development. Under such system, the Secretary shall retain the authority to approve rents, expenses, property appraisals, and mortgage amounts and to execute a firm commitment.

(b) FULL INSURANCE PROGRAM.—Notwithstanding subsection

(a), the Secretary shall maintain a viable system for full insurance

programs under such Act under which all processing functions are

performed by officers and employees of the Department of Housing

and Urban Development.
1114

UP-FRONT MORTGAGE INSURANCE PREMIUM

EXCERPT FROM OMNIBUS BUDGET RECONCILIATION ACT OF 1993

[Public Law 103–66; 107 Stat. 340; 12 U.S.C. 1709 note]

SEC. 3005. ø12 U.S.C. 1709 note¿ MUTUAL MORTGAGE INSURANCE FUND

PREMIUMS.

To improve the actuarial soundness of the Mutual Mortgage

Insurance Fund under the National Housing Act, the Secretary of

Housing and Urban Development shall increase the rate at which

the Secretary earns the single premium payment collected at the

time of insurance of a mortgage that is an obligation of such Fund

(with respect to the rate in effect on the date of the enactment of

this Act). In establishing such increased rate, the Secretary shall

consider any current audit findings and reserve analyses and information regarding the expected average duration of mortgages that

are obligations of such Fund and may consider any other information that the Secretary determines to be appropriate.
1115

EMERGENCY MORTGAGE RELIEF

EXCERPT FROM EMERGENCY HOUSING ACT OF 1975

[Public Law 94–50; 89 Stat. 249; 12 U.S.C. 2701 et seq.]

SHORT TITLE

SECTION 1. ø12 U.S.C. 2701 note¿ That this Act may be cited

as the ‘‘Emergency Housing Act of 1975’’.

TITLE I—EMERGENCY MORTGAGE RELIEF

SHORT TITLE

SEC. 101. ø12 U.S.C. 2701 note¿ This title may be cited as the

‘‘Emergency Homeowners’ Relief Act.’’

FINDINGS AND PURPOSE

SEC. 102. ø12 U.S.C. 2701¿ (a) The Congress finds that—

(1) the Nation is in a severe recession and that the sharp

downturn in economic activity has driven large numbers of

workers into unemployment and has reduced the incomes of

many others;

(2) as a result of these adverse economic conditions the capacity of many homeowners to continue to make mortgage payments has deteriorated and may further deteriorate in the

months ahead, leading to the possibility of widespread mortgage foreclosures and distress sales of homes; and

(3) many of these homeowners could retain their homes

with temporary financial assistance until economic conditions

improve.

(b) It is the purpose of this title to provide a standby authority

which will prevent widespread mortgage foreclosures and distress

sales of homes resulting from the temporary loss of employment

and income through a program of emergency loans and advances

and emergency mortgage relief payments to homeowners to defray

mortgage expenses.

MORTGAGES ELIGIBLE FOR ASSISTANCE

SEC. 103. ø12 U.S.C. 2702¿ No assistance shall be extended

with respect to any mortgage under this title unless—

(1) the holder of the mortgage has indicated to the mortgagor its intention to foreclose;

(2) the mortgagor and holder of the mortgage have indicated in writing to the Secretary of Housing and Urban Development (hereinafter referred to as the ‘‘Secretary’’) and to any

agency or department of the Federal Government responsible

for the regulation of the holder that circumstances (such as the
Sec. 104 EMERGENCY MORTGAGE RELIEF 1116

volume of delinquent loans in its portfolio) make it probable

that there will be a foreclosure and that the mortgagor is in

need of emergency mortgage relief as authorized by this title,

except that such statement by the holder of the mortgage may

be waived by the Secretary if in his judgment such waiver

would further the purposes of this title;

(3) payments under the mortgage have been delinquent for

at least three months;

(4) the mortgagor has incurred a substantial reduction in

income as a result of involuntary unemployment or underemployment due to adverse economic conditions and is financially unable to make full mortgage payments;

(5) there is a reasonable prospect that the mortgagor will

be able to make the adjustments necessary for a full resumption of mortgage payments; and

(6) the mortgaged property is the principal residence of the

mortgagor.

LIMITS OF ASSISTANCE

SEC. 104. ø12 U.S.C. 2703¿ (a) Assistance under this title with

respect to a mortgage which meets the requirements of section 103

may be provided in the form of emergency mortgage relief loans

and advances of credit insured pursuant to section 105 or in the

form of emergency mortgage relief payments made by the Secretary

pursuant to section 106.

(b) Assistance under this title on behalf of a homeowner may

be made available in an amount up to the amount of the principal,

interest, taxes, ground rents, hazard insurance, and mortgage insurance premiums due under the homeowner’s mortgage, but such

assistance shall not exceed the lesser of $250 per month or the

amount determined to be reasonably necessary to supplement such

amount as the homeowner is capable of contributing toward such

mortgage payment.

(c) Monthly payments may be provided under this title either

with the proceeds of an insured loan or advance of credit or with

emergency mortgage relief payments for up to twelve months, and,

in accordance with criteria prescribed by the Secretary, such

monthly payments may be extended once for up to twelve additional months. A mortgagor receiving the benefit of mortgage relief

assistance pursuant to this title shall be required, in accordance,

with criteria prescribed by the Secretary, to report any increase in

income which will permit a reduction or termination of such assistance during this period.

(d) Emergency loans or advances of credit made and insured

under section 105, and emergency mortgage relief payments made

under section 106, shall be repayable by the homeowner upon such

terms and conditions as the Secretary shall prescribe, except that

interest on a loan or advance of credit insured under section 105

or emergency mortgage relief payments made under section 106

shall not be charged at a rate which exceeds the maximum interest

rate applicable with respect to mortgages insured pursuant to section 203(b) of the National Housing Act.
1117 Sec. 105 EMERGENCY MORTGAGE RELIEF

(e) The Secretary may provide for the deferral of the commencement of the repayment of a loan or advance insured under

section 105 or emergency mortgage relief payments made under

section 106 until one year following the date of the last disbursement of the proceeds of the loan or advance or payments or for

such longer period as the Secretary determines would further the

purpose of this title. The Secretary shall by regulation require such

security for the repayment of insured loans or advances of credit

or emergency mortgage relief payments as he deems appropriate

and may require that such repayment be secured by a lien on the

mortgaged property.

EMERGENCY MORTGAGE RELIEF LOANS AND ADVANCES

SEC. 105. ø12 U.S.C. 2704¿ (a) The Secretary is authorized,

upon such terms and conditions as the Secretary may prescribe, to

insure banks, trust companies, finance companies, mortgage companies, savings and loan associations, insurance companies, credit

unions, and such other financial institutions, which the Secretary

finds to be qualified by experience and facilities and approves as

eligible for insurance, against losses which they may sustain as a

result of emergency loans or advances of credit made in accordance

with the provisons of section 104 and this section with respect to

mortgages eligible for assistance under this title.

(b) In no case shall the insurance granted by the Secretary

under this section to any financial institution on loans and advances made by such financial institution for the purposes of this

title exceed 40 per centum of the total amount of such loans and

advances made by the institution, except that, with respect to any

individual loan or advance of credit, the amount of any claim for

loss on such individual loan or advance of credit paid by the Secretary under the provision of this section shall not exceed 90 per

centum of such loss.

(c) The Secretary is authorized to fix a premium charge or

charges for the insurance granted under this section, but in the

case of any loan or advance credit, such charge or charges shall not

exceed an amount equivalent to one-half of 1 per centum per

annum of the principal obligation of such loan or advance of credit

outstanding at any time.

(d) The Secretary is authorized and empowered to waive compliance with any rule or regulation prescribed by the Secretary for

the purposes of this section if, in the Secretary’s judgment, the enforcement of such rule or regulation would impose an injustice

upon an insured lending institution which has substantially complied with such regulations in good faith. Any payment for loss

made to an insured financial institution under this section shall be

final and incontestable after two years from the date the claim was

certified for payment by the Secretary, in the absence of fraud or

misrepresentation on the part of such institution unless a demand

for repurchase of the obligation shall have been made on behalf of

the United States prior to the expiration of such two-year period.

The Secretary is authorized to transfer to any financial institution

approved for insurance under this title any insurance in connection
Sec. 106 EMERGENCY MORTGAGE RELIEF 1118

1So in law.

with any loan which may be sold to it by another insured financial

institution.

(e) The aggregate amount of loans and advances insured under

this section shall not exceed $1,500,000,000 at any one time.

EMERGENCY MORTGAGE RELIEF PAYMENTS

SEC. 106. ø12 U.S.C. 2705¿ (a) In the case of any mortgagee

which would otherwise be eligible to participate in the program authorized under section 105 but does not qualify for an advance or

advances as authorized by section 113 of this title or under section

10, 10b, or 11 of the Federal Home Loan Bank Act or otherwise

elects not to participate in the program authorized under section

105, the Secretary is authorized to make repayable emergency

mortgage relief payments directly to such mortgagee on behalf of

homeowners whose mortgages are held by such financial institution

and who are delinquent in their mortgage payments.

(b) Emergency mortgage relief payments shall be made under

this section only with respect to a mortgage which meets the requirements of section 103 and only on such terms and conditions

as the Secretary may prescribe, subject to the provisions of section

104.

(c) The Secretary may make such delegations and accept such

certifications with respect to the processing of mortgage relief payments provided under this section as he deems appropriate to facilitate the prompt and efficient implementation of the assistance

authorized under this section.

EMERGENCY HOMEOWNERS’ RELIEF FUND

SEC. 107. ø12 U.S.C. 2706¿ (a) To carry out the purposes of

this title, the Secretary is authorized to establish in the Treasury

of the United States an Emergency Homeowners’ Relief Fund

(hereinafter in this title referred to as the ‘‘fund’’) which shall be

available to the Secretary without fiscal year limitation—

(1) for making payments in connection with defaulted

loans or advances of credit insured under section 105 of this

title;

(2) for making emergency mortgage relief payments under

section 106 of this title; 1

(3) to pay such administrative expenses (or portion of such

expenses) of carrying out the provisions of this title as the Secretary may deem necessary.

(b) The fund shall be credited with—

(1) all amounts received by the Secretary as premium

charges for insurance or as repayment for emergency mortgage

relief payments under this title and all receipts, earnings, collections, or proceeds derived from any claim or other assets acquired by the Secretary under this Act; and

(2) such amounts as may be appropriated for the purposes

of this title.
1119 Sec. 109 EMERGENCY MORTGAGE RELIEF

AUTHORITY OF THE SECRETARY

SEC. 108. ø12 U.S.C. 2707¿ (a) The Secretary is authorized to

make such rules and regulations as may be necessary to carry out

the provisions of this title.

(b) Notwithstanding any other provision of law relating to the

acquisition, handling, improvement, or disposal of real or other

property by the United States, the Secretary shall have power, for

the protection of the interest of the fund authorized under this

title, to pay out of such fund all expenses or charges in connection

with the acquisition, handling, improvement, or disposal of any

property, real or personal, acquired by the Secretary as a result of

recoveries under security, subrogation, or other rights.

(c) In the performance of, with respect to, the functions, powers, and duties vested in the Secretary by this title, the Secretary

shall—

(1) have the power, notwithstanding any other provision of

law, whether before or after default, to provide by contract or

otherwise for the extinguishment upon default of any redemption, equitable, legal, or other right, title in any mortgage,

deed, trust, or other instrument held by or held on behalf of

the Secretary under the provisions of this title; and

(2) have the power to foreclose on any property or commence any action to protect or enforce any right conferred

upon the Secretary by law, contract, or other agreement, and

bid for and purchase at any foreclosure or other sale any property in connection with which assistance has been provided

pursuant to this title. In the event of any such acquisition, the

Secretary may, notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property

by the United States, complete, remodel and convert, dispose

of, lease, and otherwise deal with, such property. Notwithstanding any other provision of law, the Secretary also shall

have power to pursue to final collection by way of compromise

or otherwise all claims acquired by him in connection with any

security, subrogation, or other rights obtained by him in administering this title.

AUTHORIZATION AND EXPIRATION DATE

SEC. 109. ø12 U.S.C. 2708¿ (a) There are authorized to be appropriated for purposes of this title such sums as may be necessary, except that the funds authorized to be appropriated for section 106 shall not exceed $500,000,000. Any amounts so appropriated shall remain available until expended.

(b) No loans or advance of credit shall be insured and no emergency mortgage relief payments made under this title after September 30, 1977, except if such loan or advance or such payments

are made with respect to a mortgagor receiving the benefit of a

loan or advance insured, or emergency mortgage relief payments

made, under this title on such date.
Sec. 110 EMERGENCY MORTGAGE RELIEF 1120

1So in law.

NOTIFICATION

SEC. 110. ø12 U.S.C. 2709¿ Each Federal supervisory agency

with respect to financial institutions subject to its jurisdiction, and

the Secretary, with respect to other approved mortgagees, shall (1)

prior to October 1, 1977, take appropriate action, not inconsistent

with laws relating to the safety or soundness of such institutions

or mortgagee, as the case may be, to waive or relax limitations pertaining to the operations of such institutions or mortgagees with

respect to mortgage delinquencies in order to cause or encourage

forebearance in residential mortgage loan foreclosures, and (2)

until one year from the date of enactment of this title, request each

such institution or mortgagee to notify that Federal supervisory

agency, the Secretary, and the mortgagor, at least thirty days prior

to instituting foreclosure proceedings in connection with any mortgage loan. As used in this title the term ‘‘Federal supervisory agency’’ means the Board of Governors of the Federal Reserve System,

the Board of Directors of the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Federal Home Loan

Bank Board, the Federal Savings and Loan Insurance Corporation,

and the National Credit Union Administration.

REPORTS

SEC. 111. ø12 U.S.C. 2710¿ Within sixty days after enactment

of this title and within each sixty-day period thereafter prior to October 1, 1977, the Secretary shall make a report to the Congress

on (1) the current rate of deliquencies and foreclosures in the housing market areas of the country which should be of immediate concern if the purposes of this title is 1 to be achieved; (2) the extent

of, and prospect for continuance of, voluntary forebearance by mortgagees in such housing market areas; (3) actions being taken by

governmental agencies to encourage forebearance by mortgages in

such housing market areas; (4) actions taken and actions likely to

be taken with respect to making assistance under this title available to alleviate hardships resulting from any serious rates of delinquencies and foreclosures; and (5) the current default status and

projected default trends with respect to mortgages covering multifamily properties with special attention to mortgages insured under

the various provisions of the National Housing Act and with recommendations on how such defaults and prospective defaults may

be cured or avoided in a manner which, while giving weight to the

financial interests of the United States, takes into full consideration the urgent needs of the many low- and moderate-income families that currently occupy such multifamily properties.

NONAPPLICABILITY OF OTHER LAWS

SEC. 112. ø12 U.S.C. 2711¿ Notwithstanding any provision of

law which limits the nature, amount, term, form, or rate of interest, or the nature, amount, or form of security of loans or advances

of credit, loans, or advances of credit may be made in accordance

with the provisions of this title without regard to such provision of

law.
1121 Sec. 113 EMERGENCY MORTGAGE RELIEF

FEDERAL DEPOSIT INSURANCE CORPORATION ADVANCES

SEC. 113. ø12 U.S.C. 2712¿ Notwithstanding any other provision of law, the Federal Deposit Insurance Corporation is authorized, upon such terms and conditions as the Corporation may prescribe, to make such advances to any insured bank as the Corporation determines may be necessary or appropriate to facilitate participation by such bank in the program authorized by this title. For

the purpose of obtaining such funds as it determines are necessary

for such advances, the Corporation may borrow from the Treasury

as authorized in section 14 of the Federal Deposit Insurance Act

(12 U.S.C. 1824; 64 Stat. 890), and the Secretary of the Treasury

is authorized and directed to make loans to the Corporation for

such purpose in the same manner as loans may be made for insurance purposes under such section, subject to the maximum limitation on outstanding aggregate loans there provided.
1122

REPORT ON DELINQUENCIES AND FORECLOSURES

EXCERPT FROM HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

[Public Law 98–181; 97 Stat. 1237; 12 U.S.C. 1701p–1]

PERIODIC REPORT ON RESIDENTIAL MORTGAGE DELINQUENCIES AND

FORECLOSURES

SEC. 469. ø12 U.S.C. 1701p–1¿ As soon as practicable following

the date of the enactment of this Act, the Secretary of Housing and

Urban Development, with the cooperation of the Federal Home

Loan Bank Board, the Federal Deposit Insurance Corporation, the

Board of Governors of the Federal Reserve System, and the Comptroller of the Currency, shall develop a method of accurately reporting to the Congress on a periodic basis with respect to residential

mortgage delinquencies and foreclosures. Each such report shall include information with respect to the number of residential mortgage foreclosures, and the number of sixty- and ninety-day residential mortgage delinquencies, in the Nation and in each State.
1123

1The text of this title consists of title VIII of the bill S. 2281, 103d Congress, as reported (S.

Rep. 103–307). The title was enacted by the Departments of Veterans Affairs and Housing and

Urban Development, and Independent Agencies Appropriations Act, 1995, Pub. L. 103–327, 108

Stat. 2316, approved September 28, 1994, by incorporating such title by reference in such Act.

NONJUDICIAL FORECLOSURE OF MORTGAGES FOR

SINGLE FAMILY HOUSING

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1995

[Public Law 103–327; 108 Stat. 2316; 12 U.S.C. 3751 et seq.]

TITLE VIII 1—NONJUDICIAL FORECLOSURE OF DEFAULTED SINGLE

FAMILY MORTGAGES

SEC. 801. ø12 U.S.C. 3751 note¿ SHORT TITLE.

This title may be cited as the ‘‘Single Family Mortgage Foreclosure Act of 1994’’.

SEC. 802. ø12 U.S.C. 3751¿ FINDINGS AND PURPOSE.

(a) FINDINGS.—The Congress finds that—

(1) the disparate State laws under which mortgages are

foreclosed on behalf of the Secretary covering 1- to 4-family

residential properties—

(A) burden certain programs administered by the Secretary;

(B) increase the costs of collecting obligations; and

(C) generally are a detriment to the community in

which the properties are located;

(2) the long periods required to complete the foreclosure of

such mortgages under certain State laws—

(A) lead to deterioration in the condition of the properties involved;

(B) necessitate substantial Federal holding expenditures;

(C) increase the risk of vandalism, fire loss, depreciation, damage, and waste with respect to the properties;

and

(D) adversely affect the neighborhoods in which the

properties are located;

(3) these conditions seriously impair the ability of the Secretary to protect the Federal financial interest in the affected

properties and frustrate attainment of the objectives of the underlying Federal program authority;

(4) the availability of uniform and more expeditious procedures, with no right of redemption in the mortgagor or others,
Sec. 803 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE 1124

for the foreclosure of these mortgages by the Secretary will

tend to ameliorate these conditions; and

(5) providing the Secretary with a nonjudicial foreclosure

procedure will reduce unnecessary litigation by removing many

foreclosures from the courts if they contribute to overcrowded

calendars.

(b) PURPOSE.—The purpose of this title is to create a uniform

Federal foreclosure remedy for single family mortgages that—

(1) are held by the Secretary pursuant to title I or title II

of the National Housing Act; or

(2) secure loans obligated by the Secretary under section

312 of the Housing Act of 1964.

SEC. 803. ø12 U.S.C. 3752¿ DEFINITIONS.

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

(1) BONA FIDE PURCHASER.—The term ‘‘bona fide purchaser’’ means a purchaser for value in good faith and without

notice of any adverse claim, and who acquires the security

property free of any adverse claim.

(2) COUNTY.—The term ‘‘county’’ has the same meaning as

in section 2 of title 1, United States Code.

(3) MORTGAGE.—The term ‘‘mortgage’’ means a deed of

trust, mortgage, deed to secure debt, security agreement, or

any other form of instrument under which any property (real,

personal or mixed), or any interest in property (including leaseholds, life estates, reversionary interests, and any other estates

under applicable State law), is conveyed in trust, mortgaged,

encumbered, pledged, or otherwise rendered subject to a lien

for the purpose of securing the payment of money or the performance of an obligation.

(4) MORTGAGE AGREEMENT.—The term ‘‘mortgage agreement’’ means the note or debt instrument and the mortgage instrument, deed of trust instrument, trust deed, or instrument

or instruments creating the mortgage, including any instrument incorporated by reference therein and any instrument or

agreement amending or modifying any of the foregoing.

(5) MORTGAGOR.—The term ‘‘mortgagor’’ means the obligor,

grantor, or trustee named in the mortgage agreement and, unless the context otherwise indicates, includes the current owner

of record of the security property whether or not such owner

is personally liable on the mortgage debt.

(6) OWNER.—The term ‘‘owner’’ means any person who has

an ownership interest in property and includes heirs, devises,

executors, administrators, and other personal representatives,

and trustees of testamentary trusts if the owner of record is

deceased.

(7) PERSON.—The term ‘‘person’’ includes any individual,

group of individuals, association, partnership, corporation, or

organization.

(8) RECORD; RECORDED.—The terms ‘‘record’’ and ‘‘recorded’’ include ‘‘register’’ and ‘‘registered’’ in the instance of

registered land.

(9) SECURITY PROPERTY.—The term ‘‘security property’’

means the property (real, personal or mixed) or an interest in
1125 Sec. 805 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE

property (including leaseholds, life estates, reversionary interests, and any other estates under applicable State law), together with fixtures and other interests subject to the lien of

the mortgage under applicable State law.

(10) SINGLE FAMILY MORTGAGE.—The term ‘‘single family

mortgage’’ means a mortgage that covers property on which

there is located a 1- to 4-family residence, and that—

(A) is held by the Secretary pursuant to title I or title

II of the National Housing Act; or

(B) secures a loan obligated by the Secretary under

section 312 of the Housing Act of 1964, as it existed before

the repeal of that section by section 289 of the CranstonGonzalez National Affordable Housing Act (except that a

mortgage securing such a loan that covers property containing nonresidential space and a 1- to 4-family dwelling

shall not be subject to this title).

(11) STATE.—The term ‘‘State’’ means—

(A) the several States;

(B) the District of Columbia;

(C) the Commonwealth of Puerto Rico;

(D) the United States Virgin Islands;

(E) Guam;

(F) American Samoa;

(G) the Northern Mariana Islands;

(H) the Trust Territory of the Pacific Islands; and

(I) Indian tribes, as defined by the Secretary.

SEC. 804. ø12 U.S.C. 3753¿ APPLICABILITY.

Single family mortgages encumbering real estate located in

any State may be foreclosed by the Secretary in accordance with

this title, or pursuant to other foreclosure procedures available, at

the option of the Secretary.

SEC. 805. ø12 U.S.C. 3754¿ DESIGNATION OF FORECLOSURE COMMISSIONER.

(a) IN GENERAL.—The Secretary may designate a person or

persons to serve as a foreclosure commissioner or commissioners

for the purpose of foreclosing upon a single family mortgage.

(b) POWER OF SALE.—A foreclosure commissioner designated

under this section shall have a nonjudicial power of sale.

(c) QUALIFICATIONS.—The foreclosure commissioner, if a natural person, shall be a resident of the State in which the security

property is located and, if not a natural person, the foreclosure

commissioner must be duly authorized to transact business under

laws of the State in which the security property is located. No person shall be designated as a foreclosure commissioner unless that

person is responsible, financially sound, and competent to conduct

a foreclosure.

(d) DESIGNATION PROCEDURE.—

(1) WRITTEN DESIGNATION.—The Secretary may designate

a foreclosure commissioner by executing a written designation

stating the name and business or residential address of the

commissioner, except that if a person is designated in his or

her capacity as an official or employee of a government or cor-
Sec. 806 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE 1126

porate entity, such person may be designated by his or her

unique title or position instead of by name.

(2) SUBSTITUTE COMMISSIONERS.—The Secretary may, with

or without cause, designate a substitute foreclosure commissioner to replace a previously designated foreclosure commissioner.

(3) NUMBER.—More than 1 foreclosure commissioner may

be designated at any time.

SEC. 806. ø12 U.S.C. 3755¿ PREREQUISITES TO FORECLOSURE.

(a) IN GENERAL.—

(1) UPON BREACH OF COVENANT OR CONDITION.—The Secretary is authorized to foreclose a mortgage under this title

upon the breach of a covenant or condition in the mortgage

agreement.

(2) NO OTHER PENDING PROCEEDINGS.—

(A) PRIOR TO COMMENCEMENT.—No foreclosure may be

commenced under this title unless any previously pending

judicial or nonjudicial proceeding that has been separately

instituted by the Secretary to foreclose the mortgage (other

than under this title), has been withdrawn, dismissed, or

otherwise terminated.

(B) AFTER COMMENCEMENT.—No separately instituted

foreclosure proceeding on a mortgage which is the subject

of a foreclosure proceeding under this title shall be instituted by the Secretary during the pendency of foreclosure

pursuant to this title.

(b) OTHER RIGHTS UNAFFECTED.—Nothing in this title shall

preclude the Secretary from—

(1) enforcing any right, other than foreclosure, under applicable Federal or State law, including any right to obtain a

monetary judgment; or

(2) foreclosing under this title if the Secretary has obtained or is seeking any other remedy available pursuant to

Federal or State law, or under the mortgage agreement, including the appointment of a receiver, mortgagee-in-possession

status, or relief under an assignment of rents.

SEC. 807. ø12 U.S.C. 3756¿ COMMENCEMENT OF FORECLOSURE.

(a) REQUEST TO FORECLOSURE COMMISSIONER.—If the Secretary, as holder of a single family mortgage, determines that the

prerequisites to foreclosure set forth in section 806 are satisfied,

the Secretary may request the foreclosure commissioner to commence foreclosure of a single family mortgage. Upon such request,

the foreclosure commissioner shall commence foreclosure of the

mortgage, by commencing service of a notice of default and foreclosure sale in accordance with sections 808 and 809.

(b) DESIGNATION OF SUBSTITUTE FORECLOSURE COMMIS- SIONER.—After commencement of a foreclosure under this title, the

Secretary may designate a substitute foreclosure commissioner at

any time before the time of the foreclosure sale, and the foreclosure

shall continue without prejudice, unless the substitute commissioner, in that commissioner’s sole discretion, finds that continuation of the foreclosure sale will unfairly affect the interests of the

mortgagor. If the substitute commissioner makes such a finding,
1127 Sec. 809 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE

the substitute commissioner shall cancel the foreclosure sale, or adjourn such sale in accordance with section 811(c).

(c) WRITTEN NOTICE.—Upon designation of a substitute foreclosure commissioner, a copy of the written notice of such designation described in section 805 shall be served—

(1) by mail, as provided in section 809 (except that the

minimum time periods between mailing and the date of foreclosure sale prescribed in such section shall not apply); or

(2) in any other manner which, in the substitute commissioner’s sole discretion, is conducive to achieving timely notice

of such substitution.

SEC. 808. ø12 U.S.C. 3757¿ NOTICE OF DEFAULT AND FORECLOSURE

SALE.

The notice of default and foreclosure sale to be served in accordance with this title shall set forth—

(1) the name and address of the foreclosure commissioner;

(2) the date on which the notice is issued;

(3) the names of—

(A) the Secretary;

(B) the original mortgagee (if other than the Secretary); and

(C) the original mortgagor;

(4) the street address or a description of the location of the

security property, and a description of the security property,

sufficient to identify the property to be sold;

(5) the date of the mortgage, the office in which the mortgage is recorded, and the liber number and folio or other appropriate description of the location of recordation of the mortgage;

(6) identification of the failure to make payment, including

the due date of the earliest installment payment remaining

wholly unpaid as of the date on which the notice is issued upon

which the foreclosure is based, or a description of any other default or defaults upon which foreclosure is based, and the acceleration of the secured indebtedness;

(7) the date, time, and location of the foreclosure sale;

(8) a statement that the foreclosure is being conducted

pursuant to this title;

(9) a description of the types of costs, if any, to be paid by

the purchaser upon transfer of title;

(10) the amount and method of deposit to be required at

the foreclosure sale (except that no deposit shall be required of

the Secretary) and the time and method of payment of the balance of the foreclosure purchase price; and

(11) any other appropriate terms of sale or information, as

the Secretary may determine.

SEC. 809. ø12 U.S.C. 3758¿ SERVICE OF NOTICE OF FORECLOSURE SALE.

The foreclosure commissioner shall serve the notice of default

and foreclosure sale described in section 808 upon the following

persons and in the following manner, and no additional notice shall

be required to be served, notwithstanding any notice requirements

of any State or local law:
Sec. 809 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE 1128

(1) TIMING.—Not less than 21 days before the date of the

foreclosure sale, the notice of default and foreclosure sale shall

be filed in the manner authorized for filing a notice of an action concerning real property according to the law of the State

in which the security property is located or, if none, in the

manner authorized by section 3201 of title 28, United States

Code.

(2) NOTICE BY MAIL.— (A) IN GENERAL.—The notice of foreclosure sale shall

be sent by certified or registered mail, postage prepaid and

return receipt requested, to the following:

(i) CURRENT OWNER.—The current security property owner of record, as the record existed 45 days before the date originally set for the foreclosure sale

(whether or not the notice describes a sale adjourned).

(ii) MORTGAGORS.—All mortgagors of record or

other persons who appear on the basis of the record to

be liable for part or all of the mortgage debt, as the

record existed 45 days before the date originally set

for the foreclosure sale (whether or not the notice describes a sale adjourned).

(iii) DWELLING UNITS.—All dwelling units in the

security property (whether or not the notice describes

a sale adjourned).

(iv) OTHER LIENHOLDERS.—All persons holding

liens of record upon the security property, as the

record existed 45 days before the date originally set

for the foreclosure sale (whether or not the notice describes a sale adjourned).

(B) TIMING.—

(i) NOTICE UNDER CLAUSES (i) AND (ii).—Notice

under clauses (i) and (ii) of subparagraph (A) shall be

mailed not less than 21 days before the date of the

foreclosure sale, and shall be mailed to the current

owner and mortgagor at the last known address of the

current owner and mortgagor, or, if none, to the address of the security property, or, at the discretion of

the foreclosure commissioner, to any other address believed to be that of such current owner and mortgagor.

(ii) NOTICE UNDER CLAUSE (iii).—Notice under

clause (iii) of subparagraph (A) shall be mailed not

less than 21 days before the date of the foreclosure

sale. If the names of the occupants of the security

property are not known to the Secretary, or the security property has more than 1 dwelling, the notice

shall be posted at the security property not less than

21 days before the foreclosure sale.

(iii) NOTICE UNDER CLAUSE (iv).—Notice under

clause (iv) of subparagraph (A) shall be mailed not less

than 21 days before the date of the foreclosure sale,

and shall be mailed to each such lienholder’s address

of record or, at the discretion of the foreclosure commissioner, to any other address believed to be that of

such lienholder.
1129 Sec. 810 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE

(C) EFFECTIVENESS OF NOTICE.—Notice by mail pursuant to this section or section 807(c) shall be deemed duly

given upon mailing, whether or not received by the addressee and whether or not a return receipt is received or

the notice is returned.

(3) PUBLICATION.—

(A) IN GENERAL.—A copy of the notice of default and

foreclosure sale shall be published once a week during 3

successive calendar weeks before the date of the foreclosure sale. Such publication shall be in a newspaper or

newspapers having general circulation in the county or

counties in which the security property being sold is located. To the extent practicable, the newspaper or newspapers chosen shall be a newspaper or newspapers having

circulation conducive to achieving notice of foreclosure by

publication. A legal newspaper that is accepted as a newspaper of legal record in the county or counties in which the

security property being sold is located shall be considered

a newspaper having general circulation for the purposes of

this paragraph.

(B) EXCEPTION.—If there is no newspaper published at

least weekly which has a general circulation in one of the

counties in which the security property being sold is located, copies of the notice of default and foreclosure sale

shall be posted not less than 21 days before the date of the

foreclosure sale—

(i) at the courthouse of any county or counties in

which the security property is located; and

(ii) at the place where the sale is to be held.

SEC. 810. ø12 U.S.C. 3759¿ PRESALE REINSTATEMENT.

(a) WITHDRAWAL AND CANCELLATION.—

(1) IN GENERAL.—Except as provided in sections 807(b) and

811(c), the foreclosure commissioner shall withdraw the security property from foreclosure and cancel the foreclosure sale

only if—

(A) the Secretary directs the foreclosure commissioner

to do so before or at the time of the sale;

(B) the foreclosure commissioner finds, upon application of the mortgagor not less than 3 days before the date

of the sale, that the default or defaults upon which the

foreclosure is based did not exist at the time of service of

the notice of default and foreclosure sale; or

(C)(i) in the case of a foreclosure involving a monetary

default, there is tendered to the foreclosure commissioner

before public auction is completed the entire amount of

principal and interest which would be due if payments

under the mortgage had not been accelerated;

(ii) in the case of a foreclosure involving a nonmonetary default, the foreclosure commissioner, upon application of the mortgagor before the date of foreclosure sale,

finds that such default is cured; and

(iii) there is tendered to the foreclosure commissioner

before public auction is completed—
Sec. 811 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE 1130

(I) all amounts due under the mortgage agreement

(excluding additional amounts which would have been

due if mortgage payments had been accelerated);

(II) all amounts of expenditures secured by the

mortgage; and

(III) all costs of foreclosure incurred for which

payment from the proceeds of foreclosure is provided

in section 812.

(2) DISCRETIONARY NONCANCELLATION.—The Secretary

may refuse to cancel a foreclosure sale pursuant to paragraph

(1)(C) if the current mortgagor or owner of record has, on one

or more previous occasions, caused a foreclosure of the mortgage, commenced pursuant to this title or otherwise, to be canceled by curing a default.

(b) OPPORTUNITY OF SECRETARY TO DISPUTE WITHDRAWAL.—

Before withdrawing the security property from foreclosure under

subparagraph (B) or (C) of subsection (a)(1), the foreclosure commissioner shall afford the Secretary a reasonable opportunity to

demonstrate why the security property should not be so withdrawn.

(c) EFFECT OF CANCELLATION.—

(1) MORTGAGE UNAFFECTED.—In any case in which a foreclosure commenced under this title is canceled, the mortgage

shall continue in effect as though acceleration had not occurred.

(2) COMMENCEMENT OF NEW FORECLOSURE SALE.—Cancellation of a foreclosure sale under this title shall have no effect on the commencement of a subsequent foreclosure proceeding under this title.

(d) NOTICE OF CANCELLATION.—The foreclosure commissioner

shall file a notice of cancellation in the same place and manner

provided for filing the notice of default and foreclosure sale in section 809.

SEC. 811. ø12 U.S.C. 3760¿ CONDUCT OF SALE; ADJOURNMENT.

(a) IN GENERAL.—

(1) MANNER AND TIME.—A foreclosure sale pursuant to this

title shall be held at public auction and shall be scheduled to

begin between the hours of 9 o’clock ante meridian and 4

o’clock post meridian local time.

(2) LOCATION.—The foreclosure sale shall be held at a location specified in the notice of default and foreclosure sale and

such location shall be at a place where foreclosure real estate

auctions are customarily held in the county or counties in

which the property to be sold is located, or at a courthouse

therein, or at or on the property to be sold. Sale of security

property situated in two or more counties may be held in any

1 of the counties in which any part of the security property is

situated.

(3) SALE OF MULTIPLE PROPERTIES.—The foreclosure commissioner may designate the order in which multiple security

properties are sold.

(b) DUTIES OF FORECLOSURE COMMISSIONER.—

(1) CONDUCT OF SALE.—
1131 Sec. 811 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE

(A) IN GENERAL.—The foreclosure commissioner shall

conduct the foreclosure sale in accordance with the provisions of this title and in a manner fair to both the mortgagor and the Secretary.

(B) WRITTEN BIDS.—Written one-price sealed bids shall

be accepted by the foreclosure commissioner from the Secretary and other persons for entry by announcement by

the foreclosure commissioner at the sale.

(C) AUCTIONEER.—The foreclosure commissioner may

serve as auctioneer, or, in accordance with regulations of

the Secretary, may employ an auctioneer to be paid from

the commission provided for in section 812(5).

(2) ELIGIBLE PARTICIPANTS.— (A) IN GENERAL.—The Secretary, and any other person

who has submitted a written one-price bid, may bid at the

foreclosure sale.

(B) PROHIBITED PARTICIPANTS.—The foreclosure commissioner or any relative, related business entity, or employee of the foreclosure commissioner or a related business entity shall not be permitted to bid in any manner on

the security property subject to foreclosure sale, except

that the foreclosure commissioner or an auctioneer may be

directed by the Secretary to enter a bid on the Secretary’s

behalf.

(c) ADJOURNMENT OR CANCELLATION OF SALE.—

(1) GENERAL AUTHORITY.—The foreclosure commissioner

may, before or at the time of the foreclosure sale, adjourn or

cancel the foreclosure sale if the commissioner determines, in

the commissioner’s discretion, that—

(A) circumstances are not conducive to a sale which is

fair to the mortgagor and the Secretary; or

(B) additional time is necessary to determine whether

the security property should be withdrawn from foreclosure, as provided in section 810.

(2) ADJOURNMENT TO SAME OR LATER DAY.—The foreclosure

commissioner may adjourn a foreclosure sale to a later hour

the same day by announcing or posting the new time and place

of the foreclosure sale, or may adjourn the foreclosure sale for

not less than 9 and not more than 31 days, in which case the

commissioner shall serve a notice of default and foreclosure

sale revised to recite the fact that the foreclosure sale has been

adjourned to a specified date, as well as any other information

the foreclosure commissioner deems appropriate. Such notice

shall be served by publication and mailing in accordance with

section 809, except that publication may be made on any of 3

separate days before the revised date of foreclosure sale, and

mailing may be made at any time not less than 7 days before

the date to which the foreclosure sale has been adjourned.

(d) CASH DEPOSITS.—The foreclosure commissioner may require a bidder to make a cash deposit in an amount or percentage

set by the foreclosure commissioner and stated in the notice of foreclosure sale before the bid is accepted. A successful bidder at the

foreclosure sale who fails to comply with the terms of the sale may

be required to forfeit the cash deposit or, at the election of the fore-
Sec. 812 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE 1132

closure commissioner after consultation with the Secretary, shall

be liable to the Secretary for any costs incurred as a result of such

failure.

(e) PRESUMPTION OF VALIDITY OF SALE.—Any foreclosure sale

held in accordance with this title shall be conclusively presumed to

have been conducted in a legal, fair, and reasonable manner. The

sale price shall be conclusively presumed to be reasonable and

equal to the fair market value of the property.

SEC. 812. ø12 U.S.C. 3761¿ FORECLOSURE COSTS.

The following foreclosure costs shall be paid from the sale proceeds before satisfaction of any other claim to such sale proceeds:

(1) ADVERTISING AND POSTAGE.—Necessary advertising

costs and postage incurred in giving notice pursuant to sections

809 and 811.

(2) MILEAGE.—Mileage (determined by the most reasonable

road distance) for posting notices and for the foreclosure commissioner’s or auctioneer’s attendance at the sale, as provided

in section 1821 of title 28, United States Code.

(3) TITLE AND LIEN SEARCH.—Reasonable and necessary

costs incurred in connection with any search of title and lien

records.

(4) RECORDATION FEES.—Costs incurred to record documents.

(5) COMMISSION.—A commission for the foreclosure commissioner (if the foreclosure commissioner is not an employee

of the United States) for the conduct of the foreclosure, to the

extent such a commission is authorized by the Secretary.

SEC. 813. ø12 U.S.C. 3762¿ DISPOSITION OF SALE PROCEEDS.

(a) PRIORITY PAYMENTS.—Money realized from a foreclosure

sale shall be made available for obligation and expenditure in the

following order:

(1) COSTS OF FORECLOSURE.—To cover the costs of the foreclosure proceeding described in section 812.

(2) TAX LIENS.—To pay valid tax liens or assessments if required by the notice of default and foreclosure sale.

(3) PRIOR LIENS.—To pay any liens recorded before the recording of the mortgage which are required to be paid in conformity with the terms of sale in the notice of default and foreclosure sale.

(4) SERVICE CHARGES AND ADVANCES.—To pay service

charges and advances for taxes, assessments, and property insurance premiums.

(5) INTEREST.—To pay any outstanding interest.

(6) PRINCIPAL.—To pay the principal outstanding balance

secured by the mortgage (including expenditures for the necessary protection, preservation, and repair of the security property as authorized under the mortgage agreement and interest

thereon if provided for in the mortgage agreement).

(7) LATE CHARGES OR FEES.—To pay any late charges or

fees.

(b) OTHER PAYMENTS.—

(1) OTHER LIENHOLDERS AND THE MORTGAGOR.—Any surplus of proceeds from a foreclosure sale, after payment of the
1133 Sec. 814 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE

items described in subsection (a) shall be paid in the following

order:

(A) First, to holders of liens recorded after the mortgage in the order of priority under Federal law or the law

of the State in which the security property is located.

(B) Second, to the appropriate mortgagor.

(2) DISPUTED CLAIMS.—If the person to whom such surplus

is to be paid cannot be located, or if the surplus available is

insufficient to pay all claimants and the claimants cannot

agree on the allocation of the surplus, or if any person claiming

an interest in the mortgage proceeds does not agree that some

or all of the sale proceeds should be paid to a claimant as provided in this section, that part of the sale proceeds in question

may be deposited by the foreclosure commissioner with an appropriate official or court authorized under law to receive disputed funds in such circumstances. If a procedure for the deposit of disputed funds is not available, and the foreclosure

commissioner files a bill of interpleader or is sued as a stakeholder to determine entitlement to such funds, the foreclosure

commissioner’s necessary costs incurred in taking or defending

such action shall be deductible from the disputed funds.

SEC. 814. ø12 U.S.C. 3763¿ TRANSFER OF TITLE AND POSSESSION.

(a) DELIVERY OF DEEDS.—The foreclosure commissioner shall,

upon delivery of a deed or deeds to the purchaser or purchasers

(which shall be without warranty or covenants to the purchaser or

purchasers) obtain the balance of the purchase price in accordance

with the terms of sale provided in the notice of default and foreclosure sale. Notwithstanding any State law to the contrary, delivery of a deed by the foreclosure commissioner shall be a conveyance

of the property, and constitute passage of title to the mortgaged

property, and no judicial proceedings shall be required ancillary or

supplementary to the procedures provided in this title to assure the

validity of the conveyance or confirmation of such conveyance.

(b) RIGHT OF POSSESSION.—A purchaser at a foreclosure sale

held pursuant to this title shall be entitled to possession upon passage of title under subsection (a) to the mortgaged property, subject

to any interest or interests not barred under section 816. Any person remaining in possession of the mortgaged property after the

passage of title shall be deemed a tenant at sufferance subject to

eviction under local law.

(c) DEATH OF PURCHASER.—If a purchaser dies before execution

and delivery of the deed conveying the property to the purchaser,

the foreclosure commissioner shall execute and deliver the deed to

a representative of the decedent purchaser’s estate upon payment

of the purchase price in accordance with the terms of sale. Such delivery to the representative of the purchaser’s estate shall have the

same effect as if accomplished during the lifetime of the purchaser.

(d) BONA FIDE PURCHASER.—The purchaser of property under

this title shall be presumed to be a bona fide purchaser.

(e) NO RIGHT OF REDEMPTION.—

(1) IN GENERAL.—There shall be no right of redemption, or

right of possession based upon a right of redemption, in the
Sec. 815 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE 1134

mortgagor or others subsequent to a foreclosure completed pursuant to this title.

(2) CERTAIN PROVISIONS.—Section 204(l) of the National

Housing Act and section 701 of the Department of Housing and

Urban Development Reform Act of 1989 shall not apply to

mortgages foreclosed under this title.

(f) TAXES.—When a mortgage foreclosed pursuant to this title

is conveyed to the Secretary, no tax shall be imposed or collected

with respect to the foreclosure commissioner’s deed (including any

tax customarily imposed upon the deed instrument or upon the

conveyance or transfer of title to the property). Failure to collect or

pay a tax of the type and under the circumstances stated in the

preceding sentence shall not be grounds for refusing to record such

a deed, for failing to recognize such recordation as imparting notice, or for denying the enforcement of such a deed and its provisions in any State or Federal court.

SEC. 815. ø12 U.S.C. 3764¿ RECORD OF FORECLOSURE AND SALE.

(a) STATEMENTS INCLUDED.—To establish a sufficient record of

foreclosure and sale, the foreclosure commissioner shall include in

the recitals of the deed to the purchaser, or prepare as an affidavit

or addendum to the deed, a statement setting forth—

(1) the date, time, and place of the foreclosure sale;

(2) that the mortgage was held by the Secretary, the date

of the mortgage, the office in which the mortgage was recorded,

and the liber number and folio or other appropriate description

of the recordation of the mortgage;

(3) the particulars of the foreclosure commissioner’s service

of the notice of default and foreclosure sale in accordance with

sections 809 and 811;

(4) the date and place of filing the notice of default and

foreclosure sale;

(5) that the foreclosure was conducted in accordance with

the provisions of this title and with the terms of the notice of

default and foreclosure sale; and

(6) the sale amount.

(b) EFFECT OF STATEMENTS.—The items set forth in subsection

(a) shall—

(1) be prima facie evidence of the truth of such facts in any

Federal or State court; and

(2) evidence a conclusive presumption in favor of bona fide

purchasers and encumbrancers for value without notice.

Encumbrancers for value include liens placed by lenders who provide the purchaser with purchase money in exchange for a security

interest in the newly-conveyed property.

(c) RECORDATION OF INSTRUMENTS.—The deed executed by the

foreclosure commissioner, the foreclosure commissioner’s affidavit

(if prepared) and any other instruments submitted for recordation

in relation to the foreclosure of the security property under this

title shall be accepted for recordation by the registrar of deeds or

other appropriate official of the county or counties in which the security property is located upon tendering of payment of the usual

recording fees for such instruments, and without regard to the com-
1135 Sec. 819 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE

pliance of those instruments with any other local filing requirements.

SEC. 816. ø12 U.S.C. 3765¿ EFFECT OF SALE.

A sale, made and conducted as prescribed in this title to a

bona fide purchaser, shall bar all claims upon, or with respect to,

the property sold, for each of the following persons:

(1) NOTICE RECIPIENTS.—Any person to whom the notice of

default and foreclosure sale was mailed as provided in this

title, and the heir, devisee, executor, administrator, successor,

or assignee claiming under any such person.

(2) SUBORDINATE CLAIMANTS WITH KNOWLEDGE.—Any person claiming any interest in the property subordinate to that

of the mortgage, if such person had actual knowledge of the

foreclosure sale.

(3) NONRECORDED CLAIMANTS.—Any person claiming any

interest in the property, whose assignment, mortgage, or other

conveyance was not duly recorded or filed in the proper place

for recording or filing, or whose judgment or decree was not

duly docketed or filed in the proper place for docketing or filing, before the date on which the notice of the foreclosure sale

was first served by publication, as required by section 809(3),

and the executor, administrator, or assignee of such a person.

(4) OTHER PERSONS.—Any person claiming an interest in

the property under a statutory lien or encumbrance created

subsequent to the recording or filing of the mortgage being

foreclosed, and attaching to the title or interest of any person

designated in any of the foregoing paragraphs.

SEC. 817. ø12 U.S.C. 3766¿ COMPUTATION OF TIME.

Periods of time provided for in this title shall be calculated in

consecutive calendar days, including the day or days on which the

actions or events occur or are to occur for which the period of time

is provided and including the day on which an event occurs or is

to occur from which the period is to be calculated.

SEC. 818. ø12 U.S.C. 3767¿ SEVERABILITY.

If any part of this title shall, for any reason, be adjudged by

a court of competent jurisdiction to be invalid, or invalid as applied

to a class of cases, such judgment shall not affect, impair, or invalidate the remainder thereof, and shall be confined in its operation

to the part thereof directly involved in the controversy in which

such judgment shall have been rendered.

SEC. 819. ø12 U.S.C. 3768¿ DEFICIENCY JUDGMENT.

(a) IN GENERAL.—

(1) REFERRAL TO ATTORNEY GENERAL.—If after deducting

the payments provided for in section 813 of this title, the price

at which the security property is sold at a foreclosure sale is

less than the unpaid balance of the debt secured by the security property, resulting in a deficiency, the Secretary may refer

the matter to the Attorney General who may commence an action or actions against any or all debtors to recover the deficiency, unless such an action is specifically prohibited by the

mortgage.
Sec. 819 SINGLE FAMILY HOUSING MORTGAGE FORECLOSURE 1136

(2) OTHER RECOVERIES.—In any action instituted pursuant

to this section the United States may recover—

(A) any amount authorized by section 3011 of title 28,

United States Code; and

(B) the costs of the action.

(b) LIMITATION.—Any action commenced to recover a deficiency

under this section must be brought not later than 6 years after the

date of the last sale of the security property.
1137

FORECLOSURE OF MORTGAGES FOR MULTIFAMILY

HOUSING

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT

AMENDMENTS OF 1981

[Public Law 97–35; 95 Stat. 422; 12 U.S.C. 3701 et seq.]

TITLE III—BANKING, HOUSING, AND RELATED

PROGRAMS

Subtitle A—Housing and Community Development

* * * * * * *

PART 6—MULTIFAMILY MORTGAGE FORECLOSURE

SHORT TITLE

SEC. 361. ø12 U.S.C. 3701 note¿ This part may be cited as the

‘‘Multifamily Mortgage Foreclosure Act of 1981’’.

FINDINGS AND PURPOSE

SEC. 362. ø12 U.S.C. 3701¿ (a) The Congress finds that—

(1) disparate State laws under which the Secretary of

Housing and Urban Development forecloses multifamily mortgages burden the programs administered by the Secretary pursuant to these authorities, and cause detriment to the residents of the affected projects and the community generally;

(2) long periods to complete the foreclosure of these mortgages under certain State laws lead to deterioration in the condition of the properties involved; necessitate substantial Federal management and holding expenditures; increase the risk

of vandalism, fire loss, depreciation, damage, and waste with

respect to the properties; and adversely affect the residents of

the projects and the neighborhoods in which the properties are

located;

(3) these conditions seriously impair the Secretary’s ability

to protect the Federal financial interest in the affected properties and frustrate attainment of the objectives of the underlying Federal program authorities, as well as the national

housing goal of ‘‘a decent home and a suitable living environment for every American family’’;

(4) application of State redemption periods to these mortgages following their foreclosure would impair the saleability of

the properties involved and discourage their rehabilitation and

improvement, thereby compounding the problems referred to in

clause (3);
Sec. 363 MULTIFAMILY HOUSING MORTGAGE FORECLOSURE 1138

(5) the availability of a uniform and more expeditious procedure for the foreclosure of these mortgages by the Secretary

and continuation of the practice of not applying postsale redemption periods to such mortgages will tend to ameliorate

these conditions; and

(6) providing the Secretary with a nonjudicial foreclosure

procedure will reduce unnecessary litigation by removing many

foreclosures from the courts where they contribute to overcrowded calendars.

(b) The purpose of this part is to create a uniform Federal foreclosure remedy for multifamily mortgages.

DEFINITIONS

SEC. 363. ø12 U.S.C. 3702¿ As used in this part—

(1) ‘‘mortgage’’ means a deed of trust, mortgage, deed to secure debt, security agreement, or any other form of instrument

under which any interest in property, real, personal or mixed,

or any interest in property including leaseholds, life estates, reversionary interests, and any other estates under applicable

State law, is conveyed in trust, mortgaged, encumbered,

pledged, or otherwise rendered subject to a lien, for the purpose of securing the payment of money or the performance of

an obligation;

(2) ‘‘multifamily mortgage’’ means a mortgage held by the

Secretary pursuant to—

(A) section 608 or 801, or title II or X, of the National

Housing Act;

(B) section 312 of the Housing Act of 1964, as it existed immediately before its repeal by section 289 of the

Cranston-Gonzalez National Affordable Housing Act;

(C) section 202 of the Housing Act of 1959, as it existed immediately before its amendment by section 801 of

the Cranston-Gonzalez National Affordable Housing Act;

(D) section 202 of the Housing Act of 1959, as amended by section 801 of the Cranston-Gonzalez National Affordable Housing Act; and

(E) section 811 of the Cranston-Gonzalez National Affordable Housing Act.

(3) ‘‘mortgage agreement’’ means the note or debt instrument and the mortgage instrument, deed of trust instrument,

trust deed, or instrument or instruments creating the mortgage, including any instrument incorporated by reference

therein (including any applicable regulatory agreement), and

any instrument or agreement amending or modifying any of

the foregoing;

(4) ‘‘mortgagor’’ means the obligor, grantor, or trustor

named in the mortgage agreement and, unless the contest otherwise indicates, includes the current owner of record of the security property whether or not personally liable on the mortgage debt;

(5) ‘‘person’’ includes any individual, group of individuals,

association, partnership, corporation, or organization;
1139 Sec. 365 MULTIFAMILY HOUSING MORTGAGE FORECLOSURE

(6) ‘‘record’’ and ‘‘recorded’’ include ‘‘register’’ and ‘‘registered’’ in the instance of registered land;

(7) ‘‘security property’’ means the property, real, personal

or mixed, or an interest in property, including leaseholds, life

estates, reversionary interests, and any other estates under applicable State law, together with fixtures and other interests

subject to the lien of the mortgage under applicable State law;

(8) ‘‘State’’ means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the territories and possessions of the United States, and the Trust Territory of the

Pacific Islands, and Indian tribes as defined by the Secretary;

(9) ‘‘county’’ means county as defined in section 2 of title

I, United States Code; and

(10) ‘‘Secretary’’ means the Secretary of Housing and

Urban Development.

APPLICABILITY

SEC. 364. ø12 U.S.C. 3703¿ Multifamily mortgages held by the

Secretary encumbering real estate located in any State may be

foreclosed by the Secretary in accordance with this part, or pursuant to other foreclosure procedures available, at the option of the

Secretary. If the Secretary forecloses on any such mortgage pursuant to such other foreclosure procedures available, the provisions of

section 367(b) may be applied at the discretion of the Secretary.

DESIGNATION OF FORECLOSURE COMMISSIONER

SEC. 365. ø12 U.S.C. 3704¿ A foreclosure commissioner or commissioners designated pursuant to this part shall have a nonjudicial power of sale as provided in this part. Where the Secretary

is the holder of a multi-family mortgage, the Secretary may designate a foreclosure commissioner and, with or without cause, may

designate a substitute foreclosure commissioner to replace a previously designated foreclosure commissioner, by executing a duly

acknowledged, written designation stating the name and business

or residential address of the commissioner or substitute commissioner. The designation shall be effective upon execution. Except as

provided in section 368(b), a copy of the designation shall be mailed

with each copy of the notice of default and foreclosure sale served

by mail in accordance with section 369(1). The foreclosure commissioner, if a natural person, shall be a resident of the State in which

the security property is located and, if not a natural person, the

foreclosure commissioner must be duly authorized to transact business under the laws of the State in which the security property is

located. The foreclosure commissioner shall be a person who is responsible, financially sound and competent to conduct the foreclosure. More than one foreclosure commissioner may be designated. If a natural person is designated as foreclosure commissioner or substitute foreclosure commissioner, such person shall be

designated by name, except that where such person is designated

in his or her capacity as an official or employee of the government

of the State or subdivision thereof in which the security property

is located, such person may be designated by his or her unique title

or position instead of by name. The Secretary shall be a guarantor
Sec. 366 MULTIFAMILY HOUSING MORTGAGE FORECLOSURE 1140

of payment of any judgment against the foreclosure commissioner

for damages based upon the commissioner’s failure properly to perform the commissioner’s duties. As between the Secretary and the

mortgagor, the Secretary shall bear the risk of any financial default by the foreclosure commissioner. In the event that the Secretary makes any payment pursuant to the preceding two sentences, the Secretary shall be fully subrogated to the rights satisfied by such payment.

PREREQUISITES TO FORECLOSURE

SEC. 366. ø12 U.S.C. 3705¿ Foreclosure by the Secretary under

this part of a multi-family mortgage may be commenced, as provided in section 368, upon the breach of a covenant or condition in

the mortgage agreement for which foreclosure is authorized under

the mortgage, except that no such foreclosure may be commenced

unless any previously pending proceeding, judicial or nonjudicial,

separately instituted by the Secretary to foreclose the mortgage

other than under this part has been withdrawn, dismissed, or otherwise terminated. No such separately instituted foreclosure proceeding on the mortgage shall be instituted by the Secretary during

the pendency of foreclosure pursuant to this part. Nothing in this

part shall preclude the Secretary from enforcing any right, other

than foreclosure, under applicable State law, including any right to

obtain a monetary judgment. Nothing in this part shall preclude

the Secretary from foreclosing under this part where the Secretary

has obtained or is seeking any other remedy available pursuant to

Federal or State law or under the mortgage agreement, including,

but not limited to, the appointment of a receiver, mortgagee-inpossesion status, relief under an assignment of rents, or transfer

to a nonprofit entity pursuant to section 202 of the Housing Act of

1959 (as amended by section 801 of the Cranston-Gonzalez National Affordable Housing Act) or section 811 of the Cranston-Gonzalez National Affordable Housing Act.

NOTICE OF DEFAULT AND FORECLOSURE SALE

SEC. 367. ø12 U.S.C. 3706¿ (a) The notice of default and foreclosure sale to be served in accordance with this part shall be subscribed with the name and address of the foreclosure commissioner

and the date on which subscribed, and shall set forth the following

information:

(1) the names of the Secretary, the original mortgagee and

the original mortgagor;

(2) the street address or a description of the location of the

security property, and a description of the security property, or

so much thereof as is to be offered for sale, sufficient to identify the property to be sold;

(3) the date of the mortgage, the office in which the mortgage is recorded, and the liber and folio or other description of

the location of recordation of the mortgage;

(4) the failure to make payment, including the due date of

the earliest installment payment remaining wholly unpaid as

of the date the notice is subscribed, or the description of other
1141 Sec. 368 MULTIFAMILY HOUSING MORTGAGE FORECLOSURE

default or defaults upon which foreclosure is based, and the acceleration of the secured indebtedness;

(5) the date, time, and place of the foreclosure sale;

(6) a statement that the foreclosure is being conducted

pursuant to this part;

(7) the types of costs, if any, to be paid by the purchaser

upon transfer of title; and

(8) the amount and method of deposit to be required at the

foreclosure sale (except that no deposit shall be required of the

Secretary), the time and method of payment of the balance of

the foreclosure purchase price and other appropriate terms of

sale.

(b)(1) Except as provided in paragraph (2)(A), the Secretary

may require, as a condition and term of sale, that the purchaser

at a foreclosure sale under this part agree to continue to operate

the security property in accordance with the terms of the program

under which the mortgage insurance or assistance was provided, or

any applicable regulatory or other agreement in effect with respect

to such property immediately prior to the time of foreclosure sale.

(2)(A) In any case where the majority of the residential units

in a property subject to such a sale are occupied by residential tenants at the time of the sale, the Secretary shall require, as a condition and term of sale, any purchaser (other than the Secretary) to

operate the property in accordance with such terms, as appropriate,

of the programs referred to in paragraph (1).

(B) In any case where the Secretary is the purchaser of a multifamily project, the Secretary shall manage and dispose of such

project in accordance with the provisions of section 203 of the

Housing and Community Development Amendments of 1978.

COMMENCEMENT OF FORECLOSURE

SEC. 368. ø12 U.S.C. 3707¿ (a) If the Secretary as holder of a

multifamily mortgage determines that the prerequisites to foreclosure set forth in section 366 are satisfied, the Secretary may request the foreclosure commissioner to commence foreclosure of the

mortgage. Upon such request, the foreclosure commissioner shall

commence foreclosure of the mortgage, by commencing service of a

notice of default and foreclosure sale in accordance with section

369.

(b) Subsequent to commencement of a foreclosure under this

part, the Secretary may designate a substitute foreclosure commissioner at any time up to forty-eight hours prior to the time of foreclosure sale, and the foreclosure shall continue without prejudice,

unless the substitute commissioner, in his or her sole discretion,

finds that continuation of the foreclosure sale will unfairly affect

the interests of the mortgagor. In the event that the substitute

commissioner makes such a finding, the substitute commissioner

shall cancel the foreclosure sale, or adjourn such sale in the manner provided in section 369B(c). Upon designation of a substitute

foreclosure commissioner, a copy of the written notice of such designation referred to in section 365 shall be served upon the persons

set forth in section 369(1) of this part (1) by mail as provided in

such section 369 (except that the minimum time periods between
Sec. 369 MULTIFAMILY HOUSING MORTGAGE FORECLOSURE 1142

mailing and the date of foreclosure sale prescribed in such section

shall not apply to notice by mail pursuant to this subsection), or

(2) in any other manner, which in the substitute commissioner’s

sole discretion, is conducive to achieving timely notice of such substitution. In the event a substitute foreclosure commissioner is designated less than forty-eight hours prior to the time of the foreclosure sale, the pending foreclosure shall be terminated and a new

foreclosure shall be commenced by commencing service of a new notice of default and foreclosure sale.

SERVICE OF NOTICE OF DEFAULT AND FORECLOSURE SALE

SEC. 369. ø12 U.S.C. 3708¿ The foreclosure commissioner shall

serve the notice of default and foreclosure sale provided for in section 367 upon the following persons and in the following manner,

and no additional notice shall be required to be served notwithstanding any notice requirements of any State or local law—

(1) NOTICE BY MAIL.—The notice of default and foreclosure

sale, together with the designation required by section 365,

shall be sent by certified or registered mail, postage prepaid

and return receipt requested, to the following persons:

(A) the current security property owner of record, as

the record exists forty-five days prior to the date originally

set for foreclosure sale, whether or not the notice describes

a sale adjourned as provided in this part;

(B) the original mortgagor and all subsequent mortgagors of record or other persons who appear of record or in

the mortgage agreement to be liable for part or all of the

mortgage debt, as the record exists forty-five days prior to

the date originally set for foreclosure sale, whether or not

the notice describes a sale adjourned as provided in this

part, except any such mortgagors or persons who have

been released; and

(C) all persons holding liens of record upon the security property, as the record exists forty-five days prior to

the date originally set for foreclosure sale, whether or not

the notice describes a sale adjourned as provided in this

part.

Notice under clauses (A) and (B) of this paragraph shall be

mailed at least twenty-one days prior to the date of foreclosure

sale, and shall be mailed to the owner or mortgagor at the address stated in the mortgage agreement, or, if none, to the address of the security property, or, at the discretion of the foreclosure commissioner, to any other address believed to be that

of such owner or mortgagor. Notice under clause (C) of this

paragraph shall be mailed at least ten days prior to the date

of foreclosure sale, and shall be mailed to each such

lienholder’s address as stated of record or, at the discretion of

the foreclosure commissioner, to any other address believed to

be that of such lienholder. Notice by mail pursuant to this subsection or section 368(b) of this part shall be deemed duly

given upon mailing, whether or not received by the addressee

and whether or not a return receipt is received or the letter is

returned.
1143 Sec. 369A MULTIFAMILY HOUSING MORTGAGE FORECLOSURE

(2) PUBLICATION.—A copy of the notice of default and foreclosure sale shall be published, as provided herein, once a week

during three successive calendar weeks, and the date of last

publication shall be not less than four nor more than twelve

days prior to the sale date. The information included in the notice of default and foreclosure sale pursuant to section

367(a)(4) may be omitted, in the foreclosure commissioner’s discretion, from the published notice. Such publication shall be in

a newspaper or newspapers having general circulation in the

county or counties in which the security property being sold is

located. To the extent practicable, the newspaper or newspapers chosen shall be a newspaper or newspapers, if any is

available, having circulation conducive to achieving notice of

foreclosure by publication. Should there be no newspaper published at least weekly which has a general circulation in one

of the counties in which the security property being sold is located, copies of the notice of default and foreclosure sale shall

be posted in at least three public places in each such county

at least twenty-one days prior to the date of sale.

(3) POSTING.—A copy of the notice of default and foreclosure sale shall be posted in a prominent place at or on the

real property to be sold at least seven days prior to the foreclosure sale, and entry upon the premises for this purpose

shall be privileged as against all persons. If the property consists of two or more noncontiguous parcels of land, a copy of

the notice of default and foreclosure sale shall be posted in a

prominent place on each such parcel. If the security property

consists of two or more separate buildings, a copy of the notice

of default and foreclosure sale shall be posted in a prominent

place on each such building. Posting at or on the premises

shall not be required where the foreclosure commissioner, in

the commissioner’s sole discretion, finds that the act of posting

will likely cause a breach of the peace or that posting may result in an increased risk of vandalism or damage to the property.

PRESALE REINSTATEMENT

SEC. 369A. ø12 U.S.C. 3709¿ (a) Except as provided in sections

368(b) and 369B(c) the foreclosure commissioner shall withdraw

the security property from foreclosure and cancel the foreclosure

sale only if—

(1) the Secretary so directs the commissioner prior to or at

the time of sale;

(2) the commissioner finds, upon application of the mortgagor at least three days prior to the date of sale, that the default or defaults upon which the foreclosure is based did not

exist at the time of service of the notice of default and foreclosure sale; or

(3)(A) in the case of a foreclosure involving a monetary default, there is tendered to the foreclosure commissioner before

public auction is completed the entire amount of principal and

interest which would be due if payments under the mortgage

had not been accelerated; (B) in the case of a foreclosure

involing a nonmonetary default, the foreclosure commissioner,
Sec. 369B MULTIFAMILY HOUSING MORTGAGE FORECLOSURE 1144

upon application of the mortgagor before the date of foreclosure

sale, finds that such default is cured; and (C) there is tendered

to the foreclosure commissioner before public auction is completed all amounts due under the mortgage agreement (excluding additional amounts which would have been due if mortgage

payments had been accelerated), all amounts of expenditures

secured by the mortgagee and all costs of foreclosure incurred

for which payment from the proceeds of foreclosure is provided

in section 369C, except that the Secretary shall have discretion

to refuse to cancel a foreclosure pursuant to this paragraph (3)

if the current mortgagor or owner of record has on one or more

previous occasions caused a foreclosure of the mortgage, commenced pursuant to this part or otherwise, to be canceled by

curing a default.

(b) Prior to withdrawing the security property from foreclosure

in the circumstances described in subsection (a)(2) or (a)(3), the

foreclosure commissioner shall afford the Secretary a reasonable

opportunity to demonstrate why the security property should not

be so withdrawn.

(c) In any case in which a foreclosure commenced under this

part is canceled, the mortgage shall continue in effect as though acceleration had not occurred.

(d) If the foreclosure commissioner cancels a foreclosure sale

under this part a new foreclosure may be subsequently commenced

as provided in this part.

CONDUCT OF SALE; ADJOURNMENT

SEC. 369B. ø12 U.S.C. 3710¿ (a) The date of foreclosure sale

set forth in the notice of default and foreclosure sale shall not be

prior to thirty days after the due date of the earliest installment

wholly unpaid or the earliest occurrence of any uncured nonmonetary default upon which foreclosure is based. Foreclosure sale pursuant to this part shall be at public auction, and shall be scheduled

to begin between the hours of 9 o’clock ante meridian and 4 o’clock

post meridian local time on a day other than Sunday or a public

holiday as defined by section 6103(a) of title 5, United States Code,

or State law. The foreclosure sale shall be held at a location specified in the notice of default and foreclosure sale, which shall be a

location where foreclosure real estate auctions are customarily held

in the county or one of the counties in which the property to be sold

is located, or at a courthouse therein, or at or on the property to

be sold. Sale of security property situated in two or more counties

may be held in any one of the counties in which any part of the

security property is situated.

(b) The foreclosure commissioner shall conduct the foreclosure

sale in accordance with the provisions of this part and in a manner

fair to both the mortgagor and the Secretary. The foreclosure commissioner shall attend the foreclosure sale in person, or, if there

are two or more commissioners, at least one shall attend the foreclosure sale. In the event that no foreclosure commissioner is a natural person, the foreclosure commissioner shall cause its duly authorized employee to attend the foreclosure sale to act on its behalf.

Written one-price sealed bids shall be accepted by the foreclosure

commissioner from the Secretary and other persons for entry by
1145 Sec. 369D MULTIFAMILY HOUSING MORTGAGE FORECLOSURE

announcement by the commissioner at the sale. The Secretary and

any other person may bid at the foreclosure sale, including the Secretary or any other person who has submitted a written one-price

bid, except that the foreclosure commissioner or any relative, related business entity or employee of such commissioner or entity

shall not be permitted to bid in any manner on the security property subject to foreclosure sale. The foreclosure commissioner may

serve as auctioneer, or, in accordance with regulations of the Secretary, may employ an auctioneer to be paid from the commission

provided for in section 369C(5).

(c) The foreclosure commissioner shall have discretion, prior to

or at the time of sale, to adjourn or cancel the foreclosure sale if

the commissioner determines, in the commissioner’s sole discretion,

that circumstances are not conducive to a sale which is fair to the

mortgagor and the Secretary or that additional time is necessary

to determine whether the security property should be withdrawn

from foreclosure as provided in section 369A. The foreclosure commissioner may adjourn a sale to a later hour the same day without

the giving of further notice, or may adjourn the foreclosure sale for

not less than nine nor more than twenty-four days, in which case

the commissioner shall serve a notice of default and foreclosure

sale revised to recite that the foreclosure sale has been adjourned

to a specified date and to include any corrections the foreclosure

commissioner deems appropriate. Such notice shall be served by

publication, mailing and posting in accordance with section 369, except that publication may be made on any of three separate days

prior to the revised date of foreclosure sale, and mailing may be

made at any time at least seven days prior to the date to which

the foreclosure sale has been adjourned.

FORECLOSURE COSTS

SEC. 369C. ø12 U.S.C. 3711¿ The following foreclosure costs

shall be paid from the sale proceeds prior to satisfaction of any

other claim to such sale proceeds:

(1) necessary advertising costs and postage incurred in giving notice pursuant to sections 369 and 369B;

(2) mileage for posting notices and for the foreclosure commissioner’s attendance at the sale at the rate provided in section 1921 of title 28, United States Code, for mileage by the

most reasonable road distance;

(3) reasonable and necessary costs actually incurred in

connection with any necessary search of title and lien records;

(4) necessary out-of-pocket costs incurred by the foreclosure commissioner to record documents; and

(5) a commission for the foreclosure commissioner for the

conduct of the foreclosure to the extent authorized by regulations issued by the Secretary.

DISPOSITION OF SALE PROCEEDS

SEC. 369D. ø12 U.S.C. 3712¿ Money realized from a foreclosure

sale shall be made available for obligation and expenditure—

(1) first to cover the costs of foreclosure provided for in section 369C;
Sec. 369E MULTIFAMILY HOUSING MORTGAGE FORECLOSURE 1146

(2) then to pay valid tax liens or assessments prior to the

mortgage;

(3) then to pay any liens recorded prior to the recording of

the mortgage which are required to be paid in conformity with

the terms of sale in the notice of default and foreclosure sale;

(4) then to service charges and advancements for taxes, assessments, and property insurance premiums;

(5) then to the interest;

(6) then to the principal balance secured by the mortgage

(including expenditures for the necessary protection, preservation, and repair of the security property as authorized under

the mortgage agreement and interest thereon if provided for in

the mortgage agreement); and

(7) then to late charges.

Any surplus after payment of the foregoing shall be paid to holders

of liens recorded after the mortgage and then to the appropriate

mortgagor. If the person to whom such surplus is to be paid cannot

be located, or if the surplus available is insufficient to pay all

claimants and the claimants cannot agree on the allocation of the

surplus, or if any person claiming an interest in the mortgage proceeds does not agree that some or all of the sale proceeds should

be paid to a claimant as provided in this section, that part of the

sale proceeds in question may be deposited by the foreclosure commissioner with an appropriate official or court authorized under

law to receive disputed funds in such circumstances. If such a procedure for the deposit of disputed funds is not available, and the

foreclosure commissioner files a bill of interpleader or is sued as a

stakeholder to determine entitlement to such funds, the foreclosure

commissioner’s necessary costs in taking or defending such action

shall be deductible from the disputed funds.

TRANSFER OF TITLE AND POSSESSION

SEC. 369E. ø12 U.S.C. 3713¿ (a) The foreclosure commissioner

shall deliver a deed or deeds to the purchaser or purchasers and

obtain the balance of the purchase price in accordance with the

terms of sale provided in the notice of default and foreclosure sale.

(b) Subject to subsection (c), the foreclosure deed or deeds shall

convey all of the right, title, and interest in the security property

covered by the deed which the Secretary as holder, the foreclosure

commissioner, the mortgagor, and any other persons claiming by,

through, or under them, had on the date of execution of the mortgage, together with all of the right, title, and interest thereafter acquired by any of them in such property up to the hour of sale, and

no judicial proceeding shall be required ancillary or supplementary

to the procedures provided in this part to assure the validity of the

conveyance or confirmation of such conveyance.

(c) A purchaser at a foreclosure sale held pursuant to this part

shall be entitled to possession upon passage of title to the mortgaged property, subject to an interest or interests senior to that of

the mortgage and subject to the terms of any lease of a residential

tenant for the remaining term of the lease or for one year, whichever period is shorter. Any other person remaining in possession

after the sale and any residential tenant remaining in possession

after the applicable period shall be deemed a tenant at sufferance.
1147 Sec. 369H MULTIFAMILY HOUSING MORTGAGE FORECLOSURE

(d) There shall be no right of redemption, or right of possession

based upon right of redemption, in the mortgagor or others subsequent to a foreclosure pursuant to this part.

(e) When conveyance is made to the Secretary, no tax shall be

imposed or collected with respect to the foreclosure commissioner’s

deed, whether as a tax upon the instrument or upon the privilege

of conveying or transferring title to the property. Failure to collect

or pay a tax of the type and under the circumstances stated in the

preceding sentence shall not be grounds for refusing to record such

a deed, for failing to recognize such recordation as imparting notice

or for denying the enforcement of such a deed and its provisions

in any State or Federal court.

RECORD OF FORECLOSURE AND SALE

SEC. 369F. ø12 U.S.C. 3714¿ (a) To establish a sufficient record

of foreclosure and sale, the foreclosure commissioner shall include

in the recitals of the deed to the purchaser or prepare an affidavit

or addendum to the deed stating—

(1) that the mortgage was held by the Secretary;

(2) the particulars of the foreclosure commissioner’s service

of notice of default and foreclosure sale in accordance with sections 369 and 369B;

(3) that the foreclosure was conducted in accordance with

the provisions of this part and with the terms of the notice of

default and foreclosure sale;

(4) a correct statement of the costs of foreclosure, calculated in accordance with section 369C; and

(5) the name of the successful bidder and the amount of

the successful bid.

(b) The deed executed by the foreclosure commissioner, the

foreclosure commissioner’s affidavit and any other instruments

submitted for recordation in relation to the foreclosure of the security property under this part shall be accepted for recordation by

the registrar of deeds or other appropriate official of the county or

counties in which the security property is located upon tendering

of payment of the usual recording fees for such instruments.

COMPUTATION OF TIME

SEC. 369G. ø12 U.S.C. 3715¿ Periods of time provided for in

this part shall be calculated in consecutive calendar days including

the day or days on which the actions or events occur or are to occur

for which the period of time is provided and including the day on

which an event occurs or is to occur from which the period is to

be calculated.

SEPARABILITY

SEC. 369H. ø12 U.S.C. 3716¿ If any clause, sentence, paragraph or part of this part shall, for any reason, be adjudged by a

court of competent jurisdiction to be invalid or invalid as applied

to a class of cases, such judgment shall not affect, impair, or invalidate the remainder thereof and of this part, but shall be confined

in its operation to the clause, sentence, paragraph, or part thereof
Sec. 369I MULTIFAMILY HOUSING MORTGAGE FORECLOSURE 1148

directly involved in the controversy in which such judgment shall

have been rendered.

REGULATIONS

SEC. 369I. ø12 U.S.C. 3717¿ The Secretary is authorized to

issue such regulations as may be necessary to carry out the provisions of this part.
1149

1Provisions identical to the provisions of this section were enacted as section 513 of the Housing and Community Development Act of 1992, Pub. L. 102–550, approved October 28, 1992. 2The date of enactment was October 24, 1992.

ENERGY EFFICIENT MORTGAGES PILOT PROGRAM

EXCERPT FROM ENERGY POLICY ACT OF 1992

[Public Law 102–486; 106 Stat. 2792; 42 U.S.C. 12712 note]

SEC. 106. ø42 U.S.C. 12712 note¿ ENERGY EFFICIENT MORTGAGES PILOT

PROGRAM. 1

(a) ESTABLISHMENT OF PILOT PROGRAM.— (1) IN GENERAL.—Not later than 6 months after the date

of enactment of this Act 2, the Secretary of Housing and Urban

Development (hereafter referred to as the ‘‘Secretary’’) shall establish an energy efficient mortgage pilot program in 5 States,

to promote the purchase of existing energy efficient residential

buildings and the installation of cost-effective improvements in

existing residential buildings.

(2) PILOT PROGRAM.—The pilot program established under

this subsection shall include the following criteria, where applicable:

(A) ORIGINATION.—The lender shall originate a housing loan that is insured under title II of the National

Housing Act in accordance with the applicable requirements.

(B) APPROVAL.—The mortgagor’s base loan application

shall be approved if the mortgagor’s income and credit

record is found to be satisfactory.

(C) COST OF IMPROVEMENTS.—The cost of cost-effective

energy efficiency improvements shall not exceed the greater of—

(i) 5 percent of the property value (not to exceed

$8,000); or

(ii) $4,000.

(3) AUTHORITY FOR MORTGAGEES.—In granting mortgages

under the pilot program established pursuant to this subsection, the Secretary shall grant mortgagees the authority—

(A) to permit the final loan amount to exceed the loan

limits established under title II of the National Housing

Act by an amount not to exceed 100 percent of the cost of

the cost-effective energy efficiency improvements, if the

mortgagor’s request to add the cost of such improvements

is received by the mortgagee prior to funding of the base

loan;

(B) to hold in escrow all funds provided to the mortgagor to undertake the energy efficiency improvements

until the efficiency improvements are actually installed;

and
Sec. 106 ENERGY EFFICIENT MORTGAGES PILOT PROGRAM 1150

1The date of enactment was October 24, 1992.

(C) to transfer or sell the energy efficient mortgage to

the appropriate secondary market agency, after the mortgage is issued, but before the energy efficiency improvements are actually installed.

(4) PROMOTION OF PILOT PROGRAM.—The Secretary shall

encourage participation in the energy efficient mortgage pilot

program by—

(A) making available information to lending agencies

and other appropriate authorities regarding the availability and benefits of energy efficient mortgages;

(B) requiring mortgagees and designated lending authorities to provide written notice of the availability and

benefits of the pilot program to mortgagors applying for financing in those States designated by the Secretary as

participating under the pilot program; and

(C) requiring each applicant for a mortgage insured

under title II of the National Housing Act in those States

participating under the pilot program to sign a statement

that such applicant has been informed of the program requirements and understands the benefits of energy efficient mortgages.

(5) TRAINING PROGRAM.—Not later than 9 months after the

date of enactment of this Act 1, the Secretary, in consultation

with the Secretary of Energy, shall establish and implement a

program for training personnel at relevant lending agencies,

real estate companies, and other appropriate organizations regarding the benefits of energy efficient mortgages and the operation of the pilot program under this subsection.

(6) REPORT.—Not later than 18 months after the date of

enactment of this Act 1, the Secretary shall prepare and submit

a report to the Congress describing the effectiveness and implementation of the energy efficient mortgage pilot program as

described under this subsection, and assessing the potential for

expanding the pilot program nationwide.

(b) EXPANSION OF PROGRAM.—Not later than the expiration of

the 2-year period beginning on the date of the implementation of

the energy efficient mortgage pilot program under this section, the

Secretary of Housing and Urban Development shall expand the

pilot program on a nationwide basis and shall expand the program

to include new residential housing, unless the Secretary determines

that either such expansion would not be practicable, in which case

the Secretary shall submit to the Congress, before the expiration

of such period, a report explaining why either expansion would not

be practicable.

(c) DEFINITIONS.—For purposes of this section:

(1) The term ‘‘base loan’’ means any mortgage loan for a

residential building eligible for insurance under title II of the

National Housing Act or title 38, United States Code, that does

not include the cost of cost-effective energy improvements.

(2) The term ‘‘cost-effective’’ means, with respect to energy

efficiency improvements to a residential building, improvements that result in the total present value cost of the im-
1151 Sec. 106 ENERGY EFFICIENT MORTGAGES PILOT PROGRAM

1The date of enactment was October 28, 1992.

provements (including any maintenance and repair expenses)

being less than the total present value of the energy saved over

the useful life of the improvement, when 100 percent of the

cost of improvements is added to the base loan. For purposes

of this paragraph, savings and cost-effectiveness shall be determined pursuant to a home energy rating report sufficient for

purposes of the Federal National Mortgage Association and the

Federal Home Loan Mortgage Corporation, or by other technically accurate methods.

(3) The term ‘‘energy efficient mortgage’’ means a mortgage on a residential building that recognizes the energy savings of a home that has cost-effective energy saving construction or improvements (including solar water heaters, solar-assisted air conditioners and ventilators, super-insulation, and

insulating glass and film) and that has the effect of not disqualifying a borrower who, but for the expenditures on energy

saving construction or improvements, would otherwise have

qualified for a base loan.

(4) The term ‘‘residential building’’ means any attached or

unattached single family residence.

(d) RULE OF CONSTRUCTION.—This section may not be construed to affect any other programs of the Secretary of Housing

and Urban Development for energy-efficient mortgages. The pilot

program carried out under this section shall not replace or result

in the termination of such other programs.

(e) REGULATIONS.—The Secretary shall issue any regulations

necessary to carry out this section not later than the expiration of

the 180-day period beginning on the date of the enactment of this

Act 1. The regulations shall be issued after notice and opportunity

for public comment pursuant to the provisions of section 553 of title

5, United States Code (notwithstanding subsections (a)(2), (b)(B),

and (d)(3) of such section).

(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated such sums as may be necessary to carry out this

section.
1152

MULTIFAMILY HOUSING FINANCE IMPROVEMENT

PILOT PROGRAMS

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3794; 12 U.S.C. 1707 note]

TITLE V—MORTGAGE INSURANCE AND

SECONDARY MORTGAGE MARKET

* * * * * * *

Subtitle C—Improvement of Financing for

Multifamily Housing

SEC. 541. ø12 U.S.C. 1707 note¿ SHORT TITLE.

This subtitle may be cited as the ‘‘Multifamily Housing Finance Improvement Act’’.

SEC. 542. ø12 U.S.C. 1707 note¿ MULTIFAMILY MORTGAGE CREDIT PROGRAMS.

(a) IN GENERAL.—The Secretary of Housing and Urban Development (hereinafter referred to as the ‘‘Secretary’’) shall carry out

programs through the Federal Housing Administration to provide

new forms of Federal credit enhancement for multifamily loans. In

carrying out the programs, the Secretary shall include an evaluation of the effectiveness of entering into partnerships or other contractual arrangements including reinsurance and risk-sharing

agreements with State or local housing finance agencies, the Federal Housing Finance Board, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, qualified financial institutions, and other State or local mortgage insurance

companies or bank lending consortia.

(b) RISK-SHARING PROGRAM.— (1) IN GENERAL.—The Secretary shall carry out a program

in conjunction with qualified participating entities to provide

Federal credit enhancement for loans for affordable multifamily housing through a system of risk-sharing agreements

with such entities.

(2) PROGRAM REQUIREMENTS.— (A) IN GENERAL.—In carrying out the program under

this subsection, the Secretary shall enter into risk-sharing

agreements with qualified participating entities.

(B) MORTGAGE INSURANCE AND REINSURANCE.—Agreements under subparagraph (A) may provide for (i) mortgage insurance through the Federal Housing Administra-
1153 Sec. 542 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS

tion of loans for affordable multifamily housing originated

by or through, or purchased by, qualified participating entities, and (ii) reinsurance, including reinsurance of pools

of loans, on affordable multifamily housing. In entering

into risk-sharing agreements under this subsection covering mortgages, the Secretary may give preference to

mortgages that are not already in the portfolios of qualified participating entities.

(C) RISK APPORTIONMENT.—Agreements entered into

under this subsection between the Secretary and a qualified participating entity shall specify the percentage of loss

that each of the parties to the agreement will assume in

the event of default of the insured or reinsured multifamily mortgage. Such agreements shall specify that the

qualified participating entity and the Secretary shall share

any loss in accordance with the risk-sharing agreement.

(D) REIMBURSEMENT CAPACITY.—Agreements entered

into under this subsection between the Secretary and a

qualified participating entity shall provide evidence acceptable to the Secretary of the capacity of such entity to fulfill

any reimbursement obligations made pursuant to this subsection. Evidence of such capacity which may be considered by the Secretary may include—

(i) a pledge of the full faith and credit of a qualified participating entity to fulfill any obligations entered into by the entity;

(ii) reserves pledged or otherwise restricted by the

qualified participating entity in an amount equal to an

agreed upon percentage of the loss assumed by the entity under subparagraph (C);

(iii) funds pledged through a State or local guarantee fund; or

(iv) any other form of evidence mutually agreed

upon by the Secretary and the qualified participating

entity.

(E) UNDERWRITING STANDARDS.—The Secretary shall

allow any qualified participating entity to use its own underwriting standards and loan terms and conditions for

purposes of underwriting loans to be insured under this

subsection, except as provided in this section, without further review by the Secretary, except that the Secretary

may impose additional underwriting criteria and loan

terms and conditions for contractual agreements where the

Secretary retains more than 50 percent of the risk of loss.

Any financing permitted on property insured under this

subsection other than the first mortgage shall be expressly

subordinate to the insured mortgage.

(F) AUTHORITY OF SECRETARY.—The Secretary, upon

request of a qualified participating entity, may insure or

reinsure and make commitments to insure or reinsure

under this section any mortgage, advance, loan, or pool of

mortgages otherwise eligible under this section, pursuant

to a risk-sharing agreement providing that the qualified

participating entity will carry out (under a delegation or
Sec. 542 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS 1154

otherwise, and with or without compensation, but subject

to audit, exception, or review requirements) such credit approval, appraisal, inspection, issuance of commitments, approval of insurance of advances, cost certification, servicing, property disposition, or other functions as the Secretary shall approve as consistent with the purpose of this

section. All appraisals of property for mortgage insurance

under this section shall be completed by a Certified General Appraiser in accordance with the Uniform Standards

of Professional Appraisal Practice.

(G) DISCLOSURE OF RECORDS.—Qualified participating

entities shall make available to the Secretary or the Secretary’s designee, at the Secretary’s request, such financial

and other records as the Secretary deems necessary for

purposes of review and monitoring for the program under

this section.

(3) DEVELOPMENT OF ALTERNATIVES.—The Secretary shall

develop and assess a variety of risk-sharing alternatives, including arrangements under which the Secretary assumes an

appropriate share of the risk related to long-term mortgage

loans on newly constructed or acquired multifamily rental

housing, mortgage refinancings, bridge financing for construction, and other forms of multifamily housing mortgage lending

that the Secretary deems appropriate to carry out the purposes

of this subsection. Such alternatives shall be designed—

(A) to ensure that other parties bear a share of the

risk, in percentage amount and in position of exposure,

that is sufficient to create strong, market-oriented incentives for other participating parties to maintain sound underwriting and loan management practices;

(B) to develop credit mechanisms, including sound underwriting criteria, processing methods, and credit enhancements, through which resources of the Federal Housing Administration can assist in increasing multifamily

housing lending as needed to meet the expected need in

the United States;

(C) to provide a more adequate supply of mortgage

credit for sound multifamily rental housing projects in underserved urban and rural markets;

(D) to encourage major financial institutions to expand

their participation in mortgage lending for sound multifamily housing, through means such as mitigating uncertainties regarding actions of the Federal Government (including the possible failure to renew short-term subsidy

contracts);

(E) to increase the efficiency, and lower the costs to

the Federal Government, of processing and servicing multifamily housing mortgage loans insured by the Federal

Housing Administration; and

(F) to improve the quality and expertise of Federal

Housing Administration staff and other resources, as required for sound management of reinsurance and other

market-oriented forms of credit enhancement.
1155 Sec. 542 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS

(4) ELIGIBILITY STANDARDS.—The Secretary shall establish

and enforce standards for eligibility under this subsection of

qualified participating entities under this subsection, as the

Secretary determines to be appropriate.

(5) INSURANCE AUTHORITY.—Using any authority provided

in appropriation Acts to insure mortgages under the National

Housing Act, the Secretary may enter into commitments under

this subsection for risk-sharing units.

(6) FEES.—The Secretary shall establish and collect premiums and fees under this subsection as the Secretary determines appropriate to (A) achieve the purpose of this subsection, and (B) compensate the Federal Housing Administration for the risks assumed and related administrative costs.

(7) NON-FEDERAL PARTICIPATION.—The Secretary shall

carry out this subsection, to the maximum extent practicable,

with the participation of well-established residential mortgage

originators, financial institutions that invest in multifamily

housing mortgages, multifamily housing sponsors, and such

other private sector experts in multifamily housing finance as

the Secretary determines to be appropriate.

(8) PROHIBITION ON GINNIE MAE SECURITIZATION.—The

Government National Mortgage Association shall not securitize

any multifamily loans insured or reinsured under this subsection.

(9) QUALIFICATION AS AFFORDABLE HOUSING.—Multifamily

housing securing loans insured or reinsured under this subsection shall qualify as affordable only if the housing is occupied by families and bears rents not greater than the gross

rent for rent-restricted residential units as determined under

section 42(g) of the Internal Revenue Code of 1986.

(10) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.—

The requirements of section 102(d) of the Department of Housing and Urban Development Reform Act of 1989 may be satisfied in connection with a commitment to insure a mortgage

under this subsection by a certification by a housing credit

agency (including an entity established by a State that provides mortgage insurance) to the Secretary that the combination of assistance within the jurisdiction of the Secretary and

other government assistance provided in connection with a

property for which a mortgage is to be insured shall not be any

greater than is necessary to provide affordable housing.

(11) IMPLEMENTATION.—The Secretary shall take any administrative actions necessary to initiate the program under

this subsection.

(c) HOUSING FINANCE AGENCY PROGRAM.—

(1) IN GENERAL.—The Secretary shall carry out a specific

program in conjunction with qualified housing finance agencies

(including entities established by States that provide mortgage

insurance) to provide Federal credit enhancement for loans for

affordable multifamily housing through a system of risk-sharing agreements with such agencies.
Sec. 542 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS 1156

1Section 235(5) of H.R. 5482 (106th Congress, as introduced in the House of Representatives;

114 Stat. 1441A–35), enacted by section 1(a)(1) of Public Law 106–377 (114 Stat. 1441) amends

section 542 by striking ‘‘pilot’’ and ‘‘PILOT’’ each place such terms appear. The heading for paragraph (2) probably should have been amended by striking ‘‘PROGRAM’’ and inserting ‘‘PROGRAM’’.

(2) PROGRAM 1 REQUIREMENTS.—

(A) IN GENERAL.—In carrying out the program authorized under this subsection, the Secretary shall enter into

risk-sharing agreements with qualified housing finance

agencies.

(B) MORTGAGE INSURANCE.—Agreements under subparagraph (A) shall provide for full mortgage insurance

through the Federal Housing Administration of the loans

for affordable multifamily housing originated by or

through qualified housing finance agencies and for reimbursement to the Secretary by such agencies for either all

or a portion of the losses incurred on the loans insured.

(C) RISK APPORTIONMENT.—Agreements entered into

under this subsection between the Secretary and a qualified housing finance agency shall specify the percentage of

loss that each of the parties to the agreement will assume

in the event of default of the insured multifamily mortgage. Such agreements shall specify that the qualified

housing finance agency and the Secretary shall share any

loss in accordance with the risk-sharing agreement.

(D) REIMBURSEMENT CAPACITY.—Agreements entered

into under this subsection between the Secretary and a

qualified housing finance agency shall provide evidence of

the capacity of such agency to fulfill any reimbursement

obligations made pursuant to this subsection. Evidence of

such capacity may include—

(i) a pledge of the full faith and credit of a qualified State or local agency to fulfill any obligations entered into by the qualified housing finance agency;

(ii) reserves pledged or otherwise restricted by the

qualified housing finance agency in an amount equal

to an agreed upon percentage of the loss assumed by

the housing finance agency under subparagraph (C);

(iii) funds pledged through a State or local guarantee fund; or

(iv) any other form of evidence mutually agreed

upon by the Secretary and the qualified housing finance agency.

(E) UNDERWRITING STANDARDS.—The Secretary shall

allow any qualified housing finance agency to use its own

underwriting standards and loan terms and conditions for

purposes of underwriting loans to be insured under this

subsection without further review by the Secretary, except

that the Secretary may impose additional underwriting criteria and loan terms and conditions for contractual agreements where the Secretary retains more than 50 percent

of the risk of loss.

(F) DISCLOSURE OF RECORDS.—Qualified housing finance agencies shall make available to the Secretary such
1157 Sec. 542 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS

1The date of enactment was October 28, 1992.

financial and other records as the Secretary deems necessary for program review and monitoring purposes.

(3) MORTGAGE INSURANCE PREMIUMS.—The Secretary shall

establish a schedule of insurance premium payments for mortgages insured under this subsection based on the percentage of

loss the Secretary may assume. Such schedule shall reflect

lower or nominal premiums for qualified housing finance agencies that assume a greater share of the risk apportioned according to paragraph (2)(C).

(4) INSURANCE AUTHORITY.—Using any authority provided

in appropriation Acts to insure mortgages under the National

Housing Act, the Secretary may enter into commitments under

this subsection for risk-sharing units.

(5) IDENTITY OF INTEREST.—Notwithstanding any other

provision of law, the Secretary shall not apply identity of interest provisions to agreements entered into with qualified State

housing finance agencies under this subsection.

(6) PROHIBITION ON GINNIE MAE SECURITIZATION.—The

Government National Mortgage Association shall not securitize

any multifamily loans insured under this subsection.

(7) QUALIFICATION AS AFFORDABLE HOUSING.—Multifamily

housing securing loans insured under this subsection shall

qualify as affordable only if the housing is occupied by families

and bears rents not greater than the gross rent for rent-restricted residential units as determined under section 42(g) of

the Internal Revenue Code of 1986.

(8) REGULATIONS.—Not later than 90 days after the date

of enactment of this Act 1, the Secretary shall issue such regulations as may be necessary to carry out this subsection.

(9) ENVIRONMENTAL AND OTHER REVIEWS.—

(A) ENVIRONMENTAL REVIEWS.—

(i) IN GENERAL.—(I) In order to assure that the

policies of the National Environmental Policy Act of

1969 and other provisions of law which further the

purposes of such Act (as specified in regulations issued

by the Secretary) are most effectively implemented in

connection with the insurance of mortgages under subsection (c)(2), and to assure to the public undiminished

protection of the environment, the Secretary may,

under such regulations, in lieu of the environmental

protection procedures otherwise applicable, provide for

agreements to endorse for insurance mortgages under

subsection (c)(2) upon the request of qualified housing

finance agencies under this subsection, if the State or

unit of general local government, as designated by the

Secretary in accordance with regulations, assumes all

of the responsibilities for environmental review, decisionmaking, and action pursuant to such Act, and

such other provisions of law as the regulations of the

Secretary may specify, that would otherwise apply to

the Secretary with respect to the insurance of mortgages on particular properties.
Sec. 542 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS 1158

(II) The Secretary shall issue regulations to carry

out this subparagraph only after consultation with the

Council on Environmental Quality. Such regulations

shall, among other matters, provide—

(aa) for the monitoring of the performance of

environmental reviews under this subparagraph;

(bb) subject to the discretion of the Secretary,

for the provision or facilitation of training for such

performance; and

(cc) subject to the discretion of the Secretary,

for the suspension or termination by the Secretary

of the qualified housing finance agency’s responsibilities under subclause (I).

(III) The Secretary’s duty under subclause (II)

shall not be construed to limit any responsibility assumed by a State or unit of general local government

with respect to any particular property under subclause (I).

(ii) PROCEDURE.—The Secretary shall approve a

mortgage for the provision of mortgage insurance subject to the procedures authorized by this paragraph

only if, not less than 15 days prior to such approval,

prior to any approval, commitment, or endorsement of

mortgage insurance on the property on behalf of the

Secretary, and prior to any commitment by the qualified housing finance agency to provide financing under

the risk-sharing agreement with respect to the property, the qualified housing finance agency submits to

the Secretary a request for such approval, accompanied by a certification of the State or unit of general

local government that meets the requirements of

clause (iii). The Secretary’s approval of any such certification shall be deemed to satisfy the Secretary’s responsibilities under the National Environmental Policy Act of 1969 and such other provisions of law as the

regulations of the Secretary specify insofar as those responsibilities relate to the provision of mortgage insurance on the property that is covered by such certification.

(iii) CERTIFICATION.—A certification under the procedures authorized by this paragraph shall—

(I) be in a form acceptable to the Secretary;

(II) be executed by the chief executive officer

or other officer of the State or unit of general local

government who qualifies under regulations of the

Secretary;

(III) specify that the State or unit of general

local government under this section has fully carried out its responsibilities as described under

clause (i); and

(IV) specify that the certifying officer consents

to assume the status of a responsible Federal official under the National Environmental Policy Act

of 1969 and under each provision of law specified
1159 Sec. 542 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS

in regulations issued by the Secretary insofar as

the provisions of such Act or such other provisions

of law apply pursuant to clause (i), and is authorized and consents on behalf of the State or unit of

general local government and himself or herself to

accept the jurisdiction of the Federal courts for

the purpose of enforcement of the responsibilities

as such an official.

(iv) APPROVAL BY STATES.—In cases in which a

unit of general local government carries out the responsibilities described in clause (i), the Secretary may

permit the State to perform those actions of the Secretary described in clause (ii) and the performance of

such actions by the State, where permitted by the Secretary, shall be deemed to satisfy the Secretary’s responsibilities referred to in the second sentence of

clause (ii).

(B) LEAD-BASED PAINT POISONING PREVENTION.—In

carrying out the requirements of section 302 of the LeadBased Paint Poisoning Prevention Act, the Secretary may

provide by regulation for the assumption of all or part of

the Secretary’s duties under such Act by qualified housing

finance agencies, for purposes of this section.

(C) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.—The requirements of section 102(d) of the Department of Housing and Urban Development Reform Act of

1989 may be satisfied in connection with a commitment to

insure a mortgage under this subsection by a certification

by a housing credit agency (including an entity established

by a State that provides mortgage insurance) to the Secretary that the combination of assistance within the jurisdiction of the Secretary and other government assistance

provided in connection with a property for which a mortgage is to be insured shall not be any greater than is necessary to provide affordable housing.

(10) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

(A) MORTGAGE.—The term ‘‘mortgage’’ means a first

mortgage on real estate that is—

(i) owned in fee simple; or

(ii) subject to a leasehold interest that—

(I) has a term of not less than 99 years and

is renewable; or

(II) has a remaining term that extends beyond

the maturity of the mortgage for a period of not

less than 10 years.

(B) FIRST MORTGAGE.—The term ‘‘first mortgage’’

means a single first lien given to secure advances on, or

the unpaid purchase price of, real estate, under the laws

of the State in which the real estate is located, together

with the credit instrument, if any, secured thereby. Any

other financing permitted on property insured under this

section must be expressly subordinate to the insured mortgage.
Sec. 543 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS 1160

(C) UNIT OF GENERAL LOCAL GOVERNMENT; STATE.— The terms ‘‘unit of general local government’’ and ‘‘State’’

have the same meanings as in section 102(a) of the Housing and Community Development Act of 1974.

SEC. 543. ø12 U.S.C. 1707 note¿ NATIONAL INTERAGENCY TASK FORCE

ON MULTIFAMILY HOUSING.

(a) PURPOSE.—The purpose of this section is to establish a National Interagency Task Force on Multifamily Housing to develop

recommendations for establishing a national database on multifamily housing loans.

(b) ESTABLISHMENT OF TASK FORCE.—There is established a

Task Force known as the National Interagency Task Force on Multifamily Housing (hereafter in this section referred to as the ‘‘Task

Force’’).

(c) MEMBERSHIP OF TASK FORCE.— (1) FEDERAL OFFICIALS.—The Task Force shall be composed of—

(A) the Secretary of Housing and Urban Development;

(B) the Chairperson of the Federal Housing Finance

Board;

(C) the Comptroller of the Currency;

(D) the Chairman of the Board of Governors of the

Federal Reserve System;

(E) the Director of the Office of Thrift Supervision;

(F) the Chairperson of the Federal Deposit Insurance

Corporation;

(G) the Chairperson of the Federal National Mortgage

Association; and

(H) the Chairperson of the Federal Home Loan Mortgage Corporation,

or their designees, and the persons appointed under paragraphs (2) and (3).

(2) APPOINTMENTS BY THE SECRETARY.—The Secretary

shall appoint as members of the Task Force—

(A) 1 individual who is a representative of a State

housing finance agency;

(B) 1 individual who is a representative of a local

housing finance agency;

(C) 1 individual who is a representative of the building

industry with experience in multifamily housing; and

(D) 1 individual who is a representative of the life insurance industry with experience in multifamily loan performance data.

(3) APPOINTMENTS BY THE CHAIRPERSON OF THE FHFB.—

The Chairman of the Federal Housing Finance Board shall appoint as members of the Task Force—

(A) 1 individual who is a representative from the financial services industry with experience in multifamily

housing underwriting;

(B) 1 individual who is a representative from the nonprofit housing development sector with experience in subsidized multifamily housing development; and

(C) 1 individual who is a representative from a nationally recognized rating agency.
1161 Sec. 543 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS

1The date of enactment was October 28, 1992.

(d) ADMINISTRATION.— (1) CHAIRPERSONS.—The Task Force shall be chaired jointly by the Secretary and the Chairman of the Federal Housing

Finance Board.

(2) MEETINGS.—The Task Force shall meet no less than 4

times, at the call of the Chairpersons of the Task Force.

(3) QUORUM.—A majority of the members of the Task

Force shall constitute a quorum for the transaction of business.

(4) VOTING.—Each member of the Task Force shall be entitled to 1 vote, which shall be equal to the vote of every other

member of the Task Force.

(5) VACANCIES.—Any vacancy on the Task Force shall not

affect its powers, but shall be filled in the manner in which the

original appointment was made.

(6) PROHIBITION ON ADDITIONAL PAY.—Members of the

Task Force shall serve without compensation, but shall be reimbursed for travel, subsistence, and other necessary expenses

incurred in the performance of their duties as members of the

Task Force.

(e) FUNCTIONS OF THE TASK FORCE.—

(1) IN GENERAL.—The Task Force shall conduct a multifamily housing financial data project in order to improve the

availability and efficiency of financing for multifamily rental

housing. The project shall—

(A) analyze available data regarding the performance

of multifamily housing mortgage loans in all regions of the

country;

(B) prepare a comprehensive national database on the

operation and financing of multifamily housing that will

provide reliable information appropriate to meet the projected needs of lenders, investors, sponsors, property managers, and public officials;

(C) identify important factors that affect the long-term

financial and operational soundness of multifamily housing

properties, including factors relating to project credit risk,

project underwriting, interest rate risk, real estate market

conditions, public subsidies, tax policies, borrower characteristics, program management standards, and government

policies;

(D) develop common definitions, standards, and procedures that will improve multifamily housing underwriting

and accelerate the development of a strong, competitive,

and efficient secondary market for multifamily housing

loans; and

(E) make available appropriate information to various

organizations in forms that will assist in improving multifamily housing loan underwriting and servicing.

(2) FINAL REPORT.—Not later than 1 year following the enactment of this Act 1, the Task Force shall submit to the Congress a final report which shall contain the information, evaluations, and recommendations specified in paragraph (1).

(f) AUTHORITY OF TASK FORCE.—
Sec. 543 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS 1162

(1) RULES AND REGULATIONS.—The Task Force may adopt

such rules and regulations as may be necessary to establish its

procedures and to govern the manner of its operations, organization and personnel.

(2) ACCESS TO DATA.—The members of the Task Force representing the Comptroller of the Currency, the Office of Thrift

Supervision, the Board of Governors of the Federal Reserve

System, the Federal Deposit Insurance Corporation, the Secretary of Housing and Urban Development, the Federal Housing Finance Board, the Federal National Mortgage Association,

and the Federal Home Loan Mortgage Corporation shall make

available to the Task Force a representative sample of multifamily housing mortgage loans in order for the Task Force to

make its findings and recommendations, except that—

(A) all information obtained shall be used only for the

purposes authorized in this section;

(B) the Task Force shall maintain the confidentiality

of all such information obtained in the manner established

for the material by the submitting entity, and such data

shall not be subject to release under section 552 of title 5,

United States Code;

(C) only aggregate data shall be publicly released by

the Task Force unless it receives the explicit permission of

the mortgage originator or government-sponsored enterprise from which the information is obtained; and

(D) any officer or employee of the Secretary, the Office

of Thrift Supervision, the Board of Governors of the Federal Reserve, the Office of the Comptroller of the Currency,

the Federal Deposit Insurance Corporation, or the Federal

Housing Finance Board shall be subject to the penalties

under section 1906 of title 18, United States Code, if—

(i) by virtue of employment or official position, the

officer or employee has possession of or access to any

book, record, or information made available under this

subsection and established as confidential under subparagraph (C); and

(ii) the officer or employee discloses the material

in any manner other than to an officer or employee of

the same Federal agency employing the officer or employee, or other than pursuant to the exemptions

under section 1906.

(3) SAMPLE DATA.—In order to ensure a representative

sample of multifamily housing data, the Department of Housing and Urban Development, the Office of Thrift Supervision,

the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation are authorized to request loan

data from a representative sample of mortgage originators or

the government-sponsored enterprises regulated by these agencies, and mortgages originated by housing finance agencies and

life insurance companies, except that—

(A) all information obtained shall be used only for the

purposes authorized in this section;
1163 Sec. 543 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS

(B) the Task Force shall maintain the confidentiality

of all such information obtained in the manner established

for the material by the submitting entity, and such data

shall not be subject to release under section 552 of title 5,

United States Code;

(C) only aggregate data shall be publicly released by

the Task Force unless it receives the explicit permission of

the mortgage originator or government-sponsored enterprise from which the information is obtained; and

(D) any officer or employee of the Secretary, the Office

of Thrift Supervision, the Board of Governors of the Federal Reserve, the Office of the Comptroller of the Currency,

the Federal Deposit Insurance Corporation, or the Federal

Housing Finance Board shall be subject to the penalties

under section 1906 of title 18, United States Code, if—

(i) by virtue of employment or official position, the

officer or employee has possession of or access to any

book, record, or information made available under this

subsection and established as confidential under subparagraph (C); and

(ii) the officer or employee discloses the material

in any manner other than to an officer or employee of

the same Federal agency employing the officer or employee, or other than pursuant to the exemptions

under section 1906.

(4) AGENCY RESOURCES.—The Task Force may, with the

consent of any Federal agency or department represented on

the Task Force, utilize the information, services, staff and facilities of such agency or department on a reimbursable basis,

to assist the Task Force in carrying out its duties under this

section.

(5) MAILS.—The Task Force may use the United States

mails in the same manner and under the same conditions as

other Federal agencies.

(6) CONTRACTING.—The Task Force may, to such extent

and in such amounts as are provided in appropriations Acts,

enter into contracts with private firms, institutions, and individuals for the purpose of discharging its duties under this section.

(7) STAFF.—The Task Force may appoint and fix the compensation of such personnel as it deems advisable, in accordance with the provisions of title 5, United States Code, governing appointments to the competitive service, and the provisions of chapter 51 and subchapter III of chapter 53 of such

title, relating to classification of General Schedule pay rates.

(g) INDEPENDENT EVALUATION.—The Comptroller General of

the United States shall be authorized to conduct an independent

analysis of the findings and recommendations submitted by the

Task Force to the Congress under this section.

(h) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated to carry out this section not to exceed

$6,000,000 for fiscal year 1993 and $6,252,000 for fiscal year 1994.

Funds appropriated under this subsection shall remain available

until expended.
Sec. 544 MULTIFAMILY HOUSING FINANCE PILOT PROGRAMS 1164

SEC. 544. ø12 U.S.C. 1707 note¿ DEFINITIONS.

For purposes of this subtitle:

(1) The term ‘‘multifamily housing’’ means housing accommodations on the mortgaged property that are designed principally for residential use, conform to standards satisfactory to

the Secretary, and consist of not less than 5 rental units on 1

site. These units may be detached, semidetached, row house, or

multifamily structures.

(2) The term ‘‘qualified housing finance agency’’ means any

State or local housing finance agency that—

(A) carries the designation of ‘‘top tier’’ or its equivalent, as evaluated by Standard and Poors or any other nationally recognized rating agency;

(B) receives a rating of ‘‘A’’ for its general obligation

bonds from a nationally recognized rating agency; or

(C) otherwise demonstrates its capacity as a sound

and experienced agency based on, but not limited to, its

experience in financing multifamily housing, fund balances, administrative capabilities, investment policy, internal controls and financial management, portfolio quality,

and State or local support.

(3) The term ‘‘reinsurance agreement’’ means a contractual

obligation under which the Secretary, in exchange for appropriate compensation, agrees to assume a specified portion of

the risk of loss that a lender or other party has previously assumed with respect to a mortgage on a multifamily housing

property.

(4) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(5) The term ‘‘qualified participating entity’’ means an entity approved by the Secretary for participation in the pilot

program under this subsection, which may include—

(A) the Federal National Mortgage Association;

(B) the Federal Home Loan Mortgage Corporation;

(C) State housing finance and mortgage insurance

agencies; and

(D) the Federal Housing Finance Board.
1165

PREVENTING MORTGAGE DEFAULTS ON INSURED

MULTIFAMILY HOUSING PROJECTS

EXCERPT FROM MULTIFAMILY HOUSING PROPERTY DISPOSITION

REFORM ACT OF 1994

[Public Law 103–233; 108 Stat. 362; 12 U.S.C. 1715z–1a note]

SEC. 103. PREVENTING MORTGAGE DEFAULTS ON MULTIFAMILY

HOUSING PROJECTS.

* * * * * * *

(h) ø12 U.S.C. 1715z–1a note¿ ALTERNATIVE USES FOR PREVENTION OF DEFAULT.—

(1) IN GENERAL.—Subject to notice to and comment by existing tenants, to prevent the imminent default of a multifamily housing project subject to a mortgage insured under

title II of the National Housing Act, the Secretary may authorize the mortgagor to use the project for purposes not contemplated by or permitted under the regulatory agreement,

if—

(A) such other uses are acceptable to the Secretary;

(B) such other uses would be otherwise insurable

under title II of the National Housing Act;

(C) the outstanding principal balance on the mortgage

covering such project is not increased;

(D) any financial benefit accruing to the mortgagor

shall, subject to the discretion of the Secretary, be applied

to project reserves or project rehabilitation; and

(E) such other use serves a public purpose.

(2) DISPLACEMENT PROTECTION.—The Secretary may take

actions under paragraph (1) only if—

(A) tenant-based rental assistance under section 8 of

the United States Housing Act of 1937 is made available

to each eligible family residing in the project that is displaced as a result of such actions; and

(B) the Secretary determines that sufficient habitable,

affordable (as such term is defined in section 203(b) of the

Housing and Community Development Amendments of

1978) rental housing is available in the market area in

which the project is located to ensure use of such assistance.

(3) IMPLEMENTATION.—The Secretary shall, by notice published in the Federal Register, which shall take effect upon

publication, establish such requirements as may be necessary

to implement the amendments made by this subsection. The

notice shall invite public comments and, not later than 12

months after the date on which the notice is published, the

Secretary shall issue final regulations based on the initial notice, taking into account any public comments received.

1167

PART IX—SECONDARY MARKET FOR

MORTGAGE LOANS

FEDERAL NATIONAL MORTGAGE ASSOCIATION AND

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

EXCERPT FROM NATIONAL HOUSING ACT

(FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT)

øPublic Law 479, 73d Congress; 48 Stat. 1252; 12 U.S.C. 1716 et seq.¿

TITLE III—NATIONAL MORTGAGE ASSOCIATIONS

PURPOSES

SEC. 301. ø12 U.S.C. 1716¿ The Congress hereby declares that

the purposes of this title are to establish secondary market facilities for residential mortgages, to provide that the operations thereof shall be financed by private capital to the maximum extent feasible, and to authorize such facilities to—

(1) provide stability in the secondary market for residential mortgages;

(2) respond appropriately to the private capital market;

(3) provide ongoing assistance to the secondary market for

residential mortgages (including activities relating to mortgages on housing for low- and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities) by increasing the liquidity of

mortgage in investments and improving the distribution of investment capital available for residential mortgage financing;

(4) promote access to mortgage credit throughout the Nation (including central cities, rural areas, and underserved

areas) by increasing the liquidity of mortgage investments and

improving the distribution of investment capital available for

residential mortgage financing; and

(5) manage and liquidate federally owned mortgage portfolios in an orderly manner, with a minimum of adverse effect

upon the residential mortgage market and minimum loss to

the Federal Government.

CREATION OF ASSOCIATION

SEC. 302. ø12 U.S.C. 1717¿ (a)(1) There is hereby created a

body corporate to be known as the ‘‘Federal National Mortgage Association’’ which shall be in the Department of Housing and Urban

Development. The Association shall have succession until dissolved

by Act of Congress. It shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in

civil actions, to be a resident thereof. Agencies or offices may be es-
Sec. 302 FNMA AND GNMA 1168

tablished by the Association in such other place or places as it may

deem necessary or appropriate in the conduct of its business.

(2) On September 1, 1968, the body corporate described in the

foregoing paragraph shall cease to exist in that form and is hereby

partitioned into two separate and distinct bodies corporate, each of

which shall have continuity and corporate succession as a separated portion of the previously existing body corporate, as follows:

(A) One of such separated portions shall be a body corporate

without capital stock to be known as the Government National

Mortgage Association (hereinafter referred to as the ‘‘Association’’),

which shall be in the Department of Housing and Urban Development and which shall retain the assets and liabilities acquired and

incurred under sections 305 and 306 prior to such date, including

any and all liabilities incurred pursuant to section 302(c). The Association shall have succession until dissolved by Act of Congress.

It shall maintain its principal office in the District of Columbia or

the metropolitan area thereof and shall be deemed, for purposes of

jurisdiction and venue in civil actions, to be a District of Columbia

corporation. Agencies or offices may be established by the Association in such other place or places as it may deem necessary or appropriate in the conduct of its business.

(B) The other such separated portion shall be a body corporate

to be known as Federal National Mortgage Association (hereinafter

referred to as the ‘‘corporation’’), which shall retain the assets and

liabilities acquired and incurred under sections 303 and 304 prior

to such date. The corporation shall have succession until dissolved

by Act of Congress. It shall maintain its principal office in the District of Columbia or the metropolitan area thereof and shall be

deemed, for purposes of jurisdiction and venue in civil actions to be

a District of Columbia corporation.

(3) The partition transaction effected pursuant to the foregoing

paragraph constitutes a reorganization within the meaning of section 368(a)(1)(E) of the Internal Revenue Code of 1954; and for the

purposes of such Code, no gain or loss is recognized by the previously existing body corporate’s by reason of the partition, and the

basis and holding period of the assets of the corporation immediately following such partition are the same as the basis and holding period of such assets immediately prior to such partition.

(b)(1) For the purposes set forth in section 301 and subject to

the limitations and restrictions of this title, each of the bodies corporate named in subsection (a)(2) is authorized, pursuant to commitments or otherwise, to purchase, service, sell, or otherwise deal

in any mortgages which are insured under the National Housing

Act or title V of the Housing Act of 1949, or which are insured or

guaranteed under the Servicemen’s Readjustment Act of 1944 or

chapter 37 of title 38, United States Code; and to purchase, service,

sell, or otherwise deal in any loans made or guaranteed under part

B of title VI of the Public Health Service Act; and the corporation

is authorized to lend on the security of any such mortgages and to

purchase, sell, or otherwise deal in any securities guaranteed by

the Association under section 306(g): Provided, That (1) the Association may not purchase any mortgage at a price exceeding 100

per centum of the unpaid principal amount thereof at the time of

purchase, with adjustments for interest and any comparable items;

(2) the Association may not purchase any mortgage, except a mort-
1169 Sec. 302 FNMA AND GNMA

gage insured under title V of the Housing Act of 1949, if it offered

by, or covers property held by a State, territorial, or municipal instrumentality; and (3) the Association may not purchase any mortgage under section 305, except a mortgage insured under section

220 or title VIII or section 203(k) or under title X with respect to

a new community approved under section 1004 thereof, or insured

under section 213 and covering property located in an urban renewal area, or a mortgage covering property located in Alaska,

Guam, or Hawaii, if the original principal obligation thereof exceeds or exceeded $55,000 in the case of property upon which is located a dwelling designed principally for a one-family residence; or

$60,000 in the case of a two- or three-family residence, or $68,750

in the case of a four-family residence; or in the case of a property

containing more than four dwelling units, $38,000 per dwelling

unit (or such higher amount not in excess of $45,000 per dwelling

unit as the Secretary may by regulation specify in any geographical

area where the Secretary finds that cost levels so require) for that

part of the property (attributable to dwelling use). Notwithstanding

the provisions of clause (3) of the preceding sentence, the Association may purchase a mortgage under section 305 with an original

principal obligation which exceeds the otherwise applicable maximum amount per dwelling unit if the mortgage is insured under

section 207(c)(3), 213(b)(2), 220(d)(3)(B)(iii), 221(d)(3)(ii),

221(d)(4)(ii), 231(c)(2), 234(e)(3), or 236. For the purposes of this

title, the term ‘‘mortgages’’ and ‘‘home mortgages’’ shall be inclusive of any mortgages or other loans insured under any of the provisions of the National Housing Act or title V of the Housing Act

of 1949.

(2) For the purposes set forth in section 301(a), the corporation

is authorized, pursuant to commitments or otherwise, to purchase,

service, sell, lend on the security of, or otherwise deal in mortgages

which are not insured or guaranteed as provided in paragraph (1)

(such mortgages referred to hereinafter as ‘‘conventional mortgages’’). No such purchase of a conventional mortgage secured by

a property comprising one- to four-family dwelling units shall be

made if the outstanding principal balance of the mortgage at the

time of purchase exceeds 80 per centum of the value of the property securing the mortgage, unless (A) the seller retains a participation of not less than 10 per centum in the mortgage; (B) for such

period and under such circumstances as the corporation may require, the seller agrees to repurchase or replace the mortgage upon

demand of the corporation in the event that the mortgage is in default; or (C) that portion of the unpaid principal balance of the

mortgage which is in excess of such 80 per centum is guaranteed

or insured by a qualified insurer as determined by the corporation.

The corporation shall not issue a commitment to purchase a conventional mortgage prior to the date the mortgage is originated, if

such mortgage is eligible for purchase under the preceding sentence only by reason of compliance with the requirements of clause

(A) of such sentence. The corporation may purchase a conventional

mortgage which was originated more than one year prior to the

purchase date only if the seller is the Federal Deposit Insurance

Corporation, the Resolution Trust Corporation, the National Credit

Union Administration, or any other seller currently engaged in

mortgage lending or investing activities. For the purpose of this
Sec. 302 FNMA AND GNMA 1170

1Section 246 of the National Energy Conservation Policy Act, Pub. L. 95–619, approved November 9, 1978, added this paragraph. It was amended and rewritten by section 339(a) of the

Housing and Community Development Act of 1980, Pub. L. 96–399, approved October 8, 1980.

Section 339(a)(2) of such Act provides, in part, as follows: ‘‘When the Federal National Mortgage

Association submits its proposal to the Secretary of Housing and Urban Development to implement the authority granted by the amendment made by this paragraph, the Secretary of Housing and Urban Development shall, within 75 days, approve such proposal or transmit to the

Congress a report explaining why such proposal has not been approved.’’ 2Paragraph (4) was added by section 339(b) of the Housing and Community Development Act

of 1980, Pub. L. 96–399, approved October 8, 1980, which also provides, in part, as follows:

‘‘When the Federal National Mortgage Association submits its proposal to the Secretary of Housing and Urban Development to implement the authority granted by the amendment made by

this paragraph, the Secretary of Housing and Urban Development shall, within 75 days, approve

section, the term ‘‘conventional mortgages’’ shall include a mortgage, lien, or other security interest on the stock or membership

certificate issued to a tenant-stockholder or resident-member of a

cooperative housing corporation, as defined in section 216 of the Internal Revenue Code of 1954, and on the proprietary lease, occupancy agreement, or right of tenancy in the dwelling unit of the

tenant-stockholder or resident-member in such cooperative housing

corporation. The corporation shall establish limitations governing

the maximum original principal obligation of conventional mortgages that are purchased by it; in any case in which the corporation purchases a participation interest in such a mortgage, the limitation shall be calculated with respect to the total original principal obligation of the mortgage and not merely with respect to the

interest purchased by the corporation. Such limitations shall not

exceed $93,750 for a mortgage secured by a single-family residence,

$120,000 for a mortgage secured by a two-family residence,

$145,000 for a mortgage secured by a three-family residence, and

$180,000 for a mortgage secured by a four-family residence, except

that such maximum limitations shall be adjusted effective January

1 of each year beginning with 1981. Each such adjustment shall be

made by adding to each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase during the twelve-month period ending with the previous

October in the national average one-family house price in the

monthly survey of all major lenders conducted by the Federal

Housing Finance Board. The foregoing limitations may be increased by not to exceed 50 per centum with respect to properties

located in Alaska, Guam, Hawaii, and the Virgin Islands.

(3) 1 The corporation is authorized to purchase, service, sell,

lend on the security of, and otherwise deal in loans or advances of

credit for the purchase and installation of home improvements, including energy conserving improvements or solar energy systems

described in the last paragraph of section 2(a) of the National

Housing Act and residential energy conservation measures as described in section 210(11) of the National Energy Conservation Policy Act and financed by a public utility in accordance with the requirements of title II of such Act. To be eligible for purchase, any

such loan or advance of credit (other than a loan or advance made

with respect to energy conserving improvements or solar energy

systems or residential energy conservation measures) not insured

under title I of the National Housing Act shall be secured by a lien

against the property to be improved.

(4) 2 The corporation is authorized to purchase, service, sell,

lend on the security of, and otherwise deal in loans or advances of
1171 Sec. 302 FNMA AND GNMA

such proposal or transmit to the Congress a report explaining why such proposal has not been

approved.’’

credit secured by mortgages or other liens against manufactured

homes.

(5)(A) The corporation is authorized to purchase, service, sell,

lend on the security of, and otherwise deal in (i) conventional mortgages that are secured by a subordinate lien against a one-to-fourfamily residence that is the principal residence of the mortgagor;

and (ii) conventional mortgages that are secured by a subordinate

lien against a property comprising five or more family dwelling

units. If the corporation, pursuant to paragraphs (1) through (4),

shall have purchased, serviced, sold, or otherwise dealt with any

other outstanding mortgage secured by the same residence, the aggregate original amount of such other mortgage and the mortgage

authorized to be purchased, serviced, sold, or otherwise dealt with

under this paragraph shall not exceed the applicable limitation determined under paragraph (2).

(B) The corporation shall establish limitations governing the

maximum original principal obligation of conventional mortgages

described in subparagraph (A). In any case in which the corporation purchases a participation interest in such a mortgage, the limitation shall be calculated with respect to the total original principal obligation of such mortgage described in subpargraph (A) and

not merely with respect to the interest purchased by the corporation. Such limitations shall not exceed (i) with respect to mortgages

described in subparagraph (A)(i), 50 per centum of the single-family residence mortgage limitation determined under paragraph (2);

and (ii) with respect to mortgages described in subparagraph

(A)(ii), the applicable limitation determined under paragraph (2).

(C) No subordinate mortgage against a one- to four-family residence shall be purchased by the corporation if the total outstanding

indebtedness secured by the property as a result of such mortgage

exceeds 80 per centum of the value of such property unless (i) that

portion of such total outstanding indebtedness that exceeds such 80

per centum is guaranteed or insured by a qualified insurer as determined by the corporation; (ii) the seller retains a participation

of not less than 10 per centum in the mortgage; or (iii) for such period and under such circumstances as the corporation may require,

the seller agrees to repurchase or replace the mortgage upon demand of the corporation in the event that the mortgage is in default. The corporation shall not issue a commitment to purchase a

subordinate mortgage prior to the date the mortgage is originated,

if such mortgage is eligible for purchase under the preceding sentence only by reason of compliance with the requirements of clause

(ii) of such sentence.

(6) The corporation may not implement any new program (as

such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) before obtaining the approval of the Secretary under section 1322 of such Act.

(c)(1) Notwithstanding any other provision of this Act or of any

other law, the Association is authorized under section 306 to create, accept, execute, and otherwise administer in all respects such

trusts, receiverships, conservatorships, liquidating or other agencies, or other fiduciary and representative undertakings and activi-
Sec. 302 FNMA AND GNMA 1172

ties, hereinafter in this subsection called ‘‘trusts’’, as might be appropriate for financing purposes; and in relation thereto the Association may acquire, hold and manage, dispose of, and otherwise

deal in any mortgages or other types of obligations in which any

department or agency of the United States listed in paragraph (2)

of this subsection may have a financial interest. The Association

may join in any such undertakings and activities notwithstanding

that it is also serving in a fiduciary or representative capacity; and

is authorized to guarantee any participations or other instruments,

whether evidence of property rights or debt, issued for such financing purposes. Participations or other instruments issued by the Association pursuant to this subsection shall to the same extent as

securities which are direct obligations of or obligations guaranteed

as to principal or interest by the United States be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. The amounts of any mortgages

and other obligations acquired by the Association under section

306, pursuant to this subsection, shall not be included in the total

amounts set forth in section 306(c).

(2) Subject to the limitations provided in paragraph (4) of this

subsection, one or more trusts may be established as provided in

this subsection by each of the following departments or agencies:

(A) The Farmers Home Administration of the Department

of Agriculture, but only with respect to operating loans, direct

farm ownership loans, direct housing loans, and direct soil and

water loans. Such trusts may not be established with respect

to loans for housing for the elderly under sections 502 and

515(a) of the Housing Act of 1949, nor with respect to loans for

nonfarm recreational development.

(B) The Department of Education, but only with respect to

loans made by the Secretary of Education for construction of

academic facilities, and loans to help finance student loan programs.

(C) The Department of Housing and Urban Development.

(D) The Department of Veterans Affairs.

(E) The Export-Import Bank.

(F) The Small Business Administration.

The head of each such department or agency, hereinafter in this

subsection called the ‘‘trustor’’, is authorized to set aside a part or

all of any obligations held by the trustor and subject them to a

trust or trusts and, incident thereto, shall guarantee to the trustee

timely payment thereof. The trust instrument may provide for the

issuance and sale of beneficial interests or participations, by the

trustee, in such obligations or in the right to receive interest and

principal collections therefrom; and may provide for the substitution or withdrawal of such obligations, or for the substitution of

cash for obligations. The trust or trusts shall be exempt from all

taxation. The trust instrument may also contain other appropriate

provisions in keeping with the purposes of this subsection. The Association shall be named and shall act as trustee of any such trusts

and, for the purposes thereof, the title to such obligations shall be

deemed to have passed to the Association in trust. The trust instrument shall provide that custody, control, and administration of the

obligations shall remain in the trustor subjecting the obligations to

the trust, subject to transfer to the trustee in event of default or
1173 Sec. 302 FNMA AND GNMA

probable default, as determined by the trustee, in the payment of

principal and interest of the beneficial interests or participations.

Collections from obligations subject to the trusts shall be dealt with

as provided in the instrument creating the trust. The trust instrument shall provide that the trustee will promptly pay to the trustor

the full net proceeds of any sale of beneficial interests or participations to the extent they are based upon such obligations or collections. Such proceeds shall be dealt with as otherwise provided by

law for sales or repayment of such obligations. The effect of both

past and future sales of any issue of beneficial interests or participations shall be the same, to the extent of the principal of such

issue, as the direct sale with recourse of the obligations subject to

the trust. Any trustor creating a trust or trusts hereunder is authorized to purchase, through the facilities of the trustee, outstanding beneficial interests or participations to the extent of the

amount of the trustor’s responsibility to the trustee on beneficial

interests or participations outstanding, and to pay the trustor’s

proper share of the costs and expenses incurred by the Association

as trustee pursuant to the trust instrument.

(3) When any trustor guarantees to the trustee the timely payment of obligations the trustor subjects to a trust pursuant to this

subsection, and it becomes necessary for such trustor to meet his

responsibilities under such guaranty, the trustor is authorized to

fulfill such guaranty.

(4) Beneficial interests or participations shall not be issued for

the account of any trustor in an aggregate principal amount greater than is authorized with respect to such trustor in an appropriation Act. Any such authorization shall remain available only for the

fiscal year for which it is granted and for the succeeding fiscal

year.

(5) The Association, as trustee, is authorized to issue and sell

beneficial interests or participations under this subsection, notwithstanding that there may be insufficiency in aggregate receipts from

obligations subject to the related trust to provide for the payment

by the trustee (on a timely basis out of current receipts or otherwise) of all interest or principal on such interests or participations

(after provision for all costs and expenses incurred by the trustee,

fairly prorated among trustors). There are authorized to be appropriated without fiscal year limitation such sums as may be necessary to enable any trustor to pay the trustee such insufficiency

as the trustee may require on account of outstanding beneficial interests or participations authorized to be issued pursuant to paragraph (4) of this subsection. Such trustor shall make timely payments to the trustee from such appropriations, subject to and in accord with the trust instrument. In the event that the insufficiency

required by the trustee is on account of principal maturities of outstanding beneficial interests or participations authorized to be

issued pursuant to paragraph (4) of this subsection, or pursuant

hereto, the trustee is authorized to elect to issue additional beneficial interests or participations for refinancing purposes in lieu of

requiring any trustor or trustors to make payments to the trustee

from appropriated funds or other sources. Each such issue of beneficial interests or participations shall be in an amount determined

by the trustee but not in excess of the aggregate amount which the

trustee would otherwise require the trustor or trustors to pay from
Sec. 303 FNMA AND GNMA 1174

appropriated funds or other sources, and may be issued without regard to the provisions of paragraph (4) of this subsection. All refinancing issues of beneficial interests or participations shall be

deemed to have been issued pursuant to the authority contained in

the appropriation Act or Acts under which the beneficial interests

or participations were originally issued.

CAPITALIZATION—FEDERAL NATIONAL MORTGAGE ASSOCIATION

SEC. 303. ø12 U.S.C. 1718¿ (a) The corporation shall have common stock, without par value, which shall be vested with all voting

rights, each share being entitled to one vote with rights of cumulative voting at all elections of directors. The corporation may

eliminate such rights of cumulative voting by a resolution adopted

by its board of directors and approved by the holders of a majority

of the shares of common stock voting in person or by proxy at the

annual meeting, or other special meeting, at which such resolution

is considered. The corporation may have preferred stock on such

terms and conditions as the board of directors shall prescibe. The

free transferability of the stock at all times to any person, firm,

corporation, or other entity shall not be restricted except that, as

to the corporation, it shall be transferable only on the books of the

corporation. The corporation may issue shares of common stock in

return for appropriate payments into capital or capital and surplus.

(b)(1) The corporation may impose charges or fees, which may

be regarded as elements of pricing, with the objective that all costs

and expenses of the operations of the corporation should be within

its income derived from such operations and that such operations

should be fully self-supporting.

(2) All earnings from the operations of the corporation shall annually be transferred to the general surplus account of the corporation. At any time, funds of the general surplus account may, in the

discretion of the board of directors, be transferred to reserves.

(c)(1) Except as provided in paragraph (2), the corporation may

make such capital distributions (as such term is defined in section

1303 of the Federal Housing Enterprises Financial Safety and

Soundness Act of 1992) as may be declared by the board of directors. All capital distributions shall be charged against the general

surplus account of the corporation.

(2) The corporation may not make any capital distribution that

would decrease the total capital of the corporation (as such term

is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) to an amount less than

the risk-based capital level for the corporation established under

section 1361 of such Act or that would decrease the core capital of

the corporation (as such term is defined in section 1303 of such

Act) to an amount less than the minimum capital level for the corporation established under section 1362 of such Act, without prior

written approval of the distribution by the Director of the Office of

Federal Housing Enterprise Oversight of the Department of Housing and Urban Development.

(d) Notwithstanding any other provision of law, any institution,

including a national bank or State member bank of the Federal Reserve System or any member of the Federal Deposit Insurance Corporation, trust company, or other banking organization, organized
1175 Sec. 304 FNMA AND GNMA

under any law of the United States, including the laws relating to

the District of Columbia, shall be authorized to purchase shares of

common stock of the corporation and to hold or dispose of such

stock, subject to the provisions of this title.

SECONDARY MARKET OPERATIONS—FEDERAL NATIONAL MORTGAGE

ASSOCIATION

SEC. 304. ø12 U.S.C. 1719¿ (a)(1) To carry out the purposes set

forth in paragraph (a) of section 301, the operations of the corporation under this section shall be confined so far as practicable, to

mortgages which are deemed by the corporation to be of such quality, type, and class as to meet, generally, the purchase standards

imposed by private institutional mortgage investors. In the interest

of assuring sound operation, the prices to be paid by the corporation for mortgages purchased in its secondary market operations

under this section, should be established, from time to time, within

the range of market prices for the particular class of mortgages involved, as determined by the corporation.

The volume of the corporation’s purchases and sales, and the

establishment of the purchase prices, sale prices, and charges or

fees, in its secondary market operations under this section, should

be determined by the corporation from time to time, and such determinations should be consistent with the objectives that such

purchases and sales should be effected only at such prices and on

such terms as will reasonably prevent excessive use of the corporation’s facilities, and that the operations of the corporation under

this section should be within its income derived from such operations and that such operations should be fully self-supporting.

Nothing in this title shall prohibit the corporation from purchasing,

and making commitments to purchase, any mortgage with respect

to which the Secretary of Housing and Urban Development has entered into a contract with the corporation to make interest subsidy

payments under section 243 of the National Housing Act.

(2) The volume of the corporation’s lending activities and the

establishment of its loan ratios, interest rates, maturities, and

charges or fees in its secondary market operations under this section, should be determined by the corporation from time to time;

and such determinations, in conjunction with determinations made

under paragraph (1), should be consistent with the objectives that

the lending activities should be conducted on such terms as will

reasonably prevent excessive use of the corporation’s facilities, and

that the operations of the corporation under this section should be

within its income derived from such operations and that such operations should be fully self-supporting. The corporation shall not be

permitted to use its lending authority (A) to advance funds to a

mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the secondary market;

or (B) to originate mortgage loans. Notwithstanding any Federal,

State, or other law to the contrary, the corporation is hereby empowered, in connection with any loan under this section, whether

before or after any default, to provide by contract with the borrower for the settlement or extinguishment, upon default, of any

redemption, equitable, legal, or other right, title, or interest of the

borrower in any mortgage or mortgages that constitute the security
Sec. 304 FNMA AND GNMA 1176

for the loan; and with respect to any such loan, in the event of default and pursuant otherwise to the terms of the contract, the

mortgages that constitute such security shall become the absolute

property of the corporation.

(b) For the purposes of this section, the corporation is authorized to issue, upon the approval of the Secretary of the Treasury,

and have outstanding at any one time obligations having such maturities and bearing such rate or rates of interest as may be determined by the corporation with the approval of the Secretary of the

Treasury, to be redeemable at the option of the corporation before

maturity in such manner as may be stipulated in such obligations.

The corporation shall insert appropriate language in all of its obligations issued under this subsection clearly indicating that such

obligations, together with the interest thereon, are not guaranteed

by the United States and do not constitute a debt or obligation of

the United States or of any agency or instrumentality thereof other

than the corporation. The corporation is authorized to purchase in

the open market any of its obligations outstanding under this subsection at any time and at any price.

(c) The Secretary of the Treasury is authorized in the Secretary’s discretion to purchase any obligations issued pursuant to

subsection (b) of this section, as now or hereafter in force, and for

such purpose the Secretary of the Treasury is authorized to use as

a public debt transaction the proceeds of the sale of any securities

hereafter issued under chapter 31 of title 31, United States Code,

and the purposes for which securities may be issued under chapter

31 of title 31, United States Code, are extended to include such

purchases. The Secretary of the Treasury shall not at any time

purchase any obligations under this subsection if such purchase

would increase the aggregate principal amount of the Secretary’s

then outstanding holding of such obligations under this subsection

to an amount greater than $2,250,000,000. Each purchase of obligations by the Secretary of the Treasury under this subsection

shall be upon such terms and conditions as to yield a return at a

rate determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the making of such purchase. The Secretary of the Treasury

may, at any time, sell, upon such terms and conditions and at such

price or prices as the Secretary shall determine, any of the obligations acquired by the Secretary under this subsection. All redemptions, purchases and sales by the Secretary of the Treasury of such

obligations under this subsection shall be treated as public debt

transactions of the United States.

(d) To provide a greater degree of liquidity to the mortgage investment market and an additional means of financing its operations under this section, the corporation is authorized to set aside

any mortgages held by it under this section, and, upon approval of

the Secretary of the Treasury, to issue and sell securities based

upon the mortgages so set aside. Securities issued under this subsection may be in the form of debt obligations or trust certificates

of beneficial interest, or both. Securities issued under this subsection shall have such maturities and bear such rate or rates of

interest as may be determined by the corporation with the approval

of the Secretary of the Treasury. Securities issued by the corpora-
1177 Sec. 305 FNMA AND GNMA

tion under this subsection shall, to the same extent as securities

which are direct obligations of or obligations guaranteed as to principal and interest by the United States, be deemed to be exempt

securities within the meaning of laws administered by the Securities and Exchange Commission. Mortgages set aside pursuant to

this subsection shall at all times be adequate to enable the corporation to make timely principal and interest payments on the securities issued and sold pursuant to this subsection. The corporation

shall insert appropriate language in all of the securities issued

under this subsection clearly indicating that such securities, together with the interest thereon, are not guaranteed by the United

States and do not constitute a debt or obligation of the United

States or any agency or instrumentality thereof other than the corporation.

(e) For the purposes of this section, the corporation is authorized to issue, upon the approval of the Secretary of the Treasury,

obligations which are subordinated to any or all other obligations

of the corporation, including subsequent obligations. The obligations issued under this subsection shall have such maturities and

bear such rate or rates of interest as may be determined by the corporation with the approval of the Secretary of the Treasury and

may be made redeemable at the option of the corporation before

maturity in such manner as may be stipulated in such obligations.

Any of such obligations may be made convertible into shares of

common stock in such manner, at such price or prices, and at such

time or times as may be stipulated therein. Obligations issued by

the corporation under this subsection shall, to the same extent as

securities which are direct obligations of or obligations guaranteed

as to principal or interest by the United States, be deemed to be

exempt securities within the meaning of laws administered by the

Securities and Exchange Commission. The corporation shall insert

appropriate language in all of its obligations issued under this subsection clearly indicating that such obligations, together with the

interest thereon, are not guaranteed by the United States and do

not constitute a debt or obligation of the United States or of any

agency or instrumentality thereof other than the corporation. The

corporation is authorized to purchase in the open market any of its

obligations outstanding under this subsection at any time and at

any price.

(f) Except for fees paid pursuant to section 309(g) of this Act

and assessments pursuant to section 1316 of the Federal Housing

Enterprises Financial Safety and Soundness Act of 1992, no fee or

charge may be assessed or collected by the United States (including

any executive department, agency, or independent establishment of

the United States) on or with regard to the purchase, acquisition,

sale, pledge, issuance, guarantee, or redemption of any mortgage,

asset, obligation, trust certificate of beneficial interest, or other security by the corporation. No provision of this subsection shall affect the purchase of any obligation by the Secretary of the Treasury

pursuant to subsection (c).

øSPECIAL ASSISTANCE FUNCTIONS—GOVERNMENT NATIONAL

MORTGAGE ASSOCIATION¿

øSEC. 305. Repealed.]¿
Sec. 306 FNMA AND GNMA 1178

MANAGEMENT AND LIQUIDATION FUNCTIONS—GOVERNMENT

NATIONAL MORTGAGE ASSOCIATION

SEC. 306. ø12 U.S.C. 1721¿ (a) To carry out the purposes set

forth in paragraph (c) of section 301, the Association is authorized

and directed, as of the close of the cutoff date determined by the

Association pursuant to section 303(d) of this title, to establish separate accountability for all of its assets and liabilities (exclusive of

capital, surplus, surplus reserves, and undistributed earnings to be

evidenced by preferred stock as provided in section 303(d) hereof,

but inclusive of all rights and obligations under any outstanding

contracts), and to maintain such separate accountability for the

management and orderly liquidation of such assets and liabilities

as provided in this section.

(b) For the purposes of this section and to assure that, to the

maximum extent, and as rapidly as possible, private financing will

be substituted for Treasury borrowings otherwise required to carry

mortgages held under the aforesaid separate accountability, the Association is authorized to issue, upon the approval of the Secretary

of the Treasury, and have outstanding at any one time obligations

having such maturities and bearing such rate or rates of interest

as may be determined by the Association with the approval of the

Secretary of the Treasury, to be redeemable at the option, of the

Association before maturity in such manner as may be stipulated

in such obligations; but in no event shall any such obligations be

issued if, at the time of such proposed issuance, and as a consequence thereof, the resulting aggregate amount of its outstanding

obligations under this subsection would exceed the amount of the

Association’s ownership under the aforesaid separate accountability, free from any liens or encumbrances, of cash, mortgages,

and obligations of the United States or guaranteed thereby, or obligations, participations, or other instruments which are lawful investments for fiduciary, trust, or public funds. The proceeds of any

private financing effected under this subsection shall be paid to the

Secretary of the Treasury in reduction of the indebtedness of the

Association to the Secretary of the Treasury under the aforesaid

separate accountability. The Association shall insert appropriate

language in all of its obligations issued under this subsection clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the United States and do not constitute

a debt or obligation of the United States or of any agency or instrumentality thereof other than the Association. The Association is authorized to purchase in the open market any of its obligations outstanding under this subsection at any time and at any price.

(c) No mortgage shall be purchased by the Association in its

operations under this section except pursuant to and in accordance

with the terms of a contract or commitment to purchase the same

made prior to the cutoff date provided for in section 303(d), which

contract or commitment became a part of the aforesaid separate accountability, and the total amount of mortgages and commitments

held by the Association under this section shall not, in any event,

exceed $3,350,000,000: Provided, That such maximum amount

shall be progressively reduced by the amount of cash realizations

on account of principal of mortgages held under the aforesaid separate accountability and by cancellation of any commitments to pur-
1179 Sec. 306 FNMA AND GNMA

1Section 306(b) of the Housing Act of 1959, Pub. L. 86–372, approved September 23, 1959,

provides as follows:

‘‘(b) In connection with the sale of any mortgages to the Federal National Mortgage Association pursuant to section 306(e) of the Federal National Mortgage Association Charter Act, the

Housing and Home Finance Administrator is authorized and any other official unit, or agency

selling such mortgages thereunder is directed, to transfer to the Association from time to time,

from authorizations, limitations, and funds available for administrative expenses of such official,

unit, or agency in connection with the same mortgages, such amounts thereof as said Administrator determines to be required for administrative expenses of the Association in connection

with the purchase, servicing, and sale of such mortgages: Provided, That no such transfer shall

be made after a budget estimate of the Association with respect to the same mortgages has been

submitted to and finally acted upon by the Congress.’’.

chase mortgages thereunder, as reflected by the books of the Association, with the objective that the entire aforesaid maximum

amount shall be eliminated with the orderly liquidation of all mortgages held under the aforesaid separate accountability: And provided further, That nothing in this subsection shall preclude the

Association from granting such usual and customary increases in

the amounts of outstanding commitments (resulting from increased

costs or otherwise) as have theretofore been covered by like increases in commitments granted by the agencies of the Federal

Government insuring or guaranteeing the mortgages. There shall

be excluded from the total amounts set forth in this subsection the

amounts of any mortgages which, subsequent to May 31, 1954, are

transferred by law to the Association and held under the aforesaid

separate accountability.

(d) The Association may issue to the Secretary of the Treasury

its obligations in an amount outstanding at any one time sufficient

to enable the Association to carry out it functions under this section, such obligations to mature not more than five years from their

respective dates of issue, to be redeemable at the option of the Association before maturity in such manner as may be stipulated in

such obligations. Each such obligation shall bear interest at a rate

determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding

the issuance of the obligation of the Association. The Secretary of

the Treasury is authorized to purchase any obligations of the Association to be issued under this section, and for such purpose the

Secretary of the Treasury is authorized to use as a public debt

transaction the proceeds from the sale of any securities issued

under chapter 31 of title 31, United States Code, and the purposes

for which securities may be issued under chapter 31 of title 31,

United States Code, are extended to include any purchases of the

Association’s obligations hereunder.

(e) Notwithstanding any other provision of law, the Association

is authorized, under the aforesaid separate accountability, to make

commitments to purchase, and to purchase, service, or sell any obligations offered to it by the Secretary of Housing and Urban Development, or any mortgages covering residential property offered to

it by any Federal instrumentality, or the head thereof.1 There shall

be excluded from the total amounts set forth in subsetion (c) the

amounts of any obligations or mortgages purchased by the Association pursuant to this subsection.

(f) Notwithstanding any of the provisions of this Act or of any

other law, an amount equal to the net decrease for the preceding

fiscal year in the aggregate principal amount of all mortgages
Sec. 306 FNMA AND GNMA 1180

owned by the Association under this section shall, as of July 1 of

each of the years 1961 through 1964, be transferred to and merged

with the authority provided under section 305(a), and the amount

of such authority as specified in section 305(c) shall be increased

by an amount so transferred.

(g)(1) The Association is authorized, upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on such trust certificates or other

securities as shall (i) be issued by the corporation under section

304(d), or by any other issuer approved for the purposes of this

subsection by the Association, and (ii) be based on and backed by

a trust or pool composed of mortgages which are insured under the

National Housing Act or title V of the Housing Act of 1949, or

which are insured or guaranteed under the Servicemen’s Readjustment Act of 1944 or chapter 37 of title 38, United States Code; or

guaranteed under section 184 of the Housing and Community Development Act of 1992. The Association shall collect from the issuer

a reasonable fee for any guaranty under this subsection and shall

make such charges as it may determine to be reasonable for the

analysis of any trust or other security arrangement proposed by the

issuer. In the event the issuer is unable to make any payment of

principal of or interest on any security guaranteed under this subsection, the Association shall make such payment as and when due

in cash, and thereupon shall be subrogated fully to the rights satisfied by such payment. In any case in which (I) Federal law requires

the reduction of the interest rate on any mortgage backing a security guaranteed under this subsection, (II) the mortgagor under the

mortgage is a person in the military service, and (III) the issuer

of such security fails to receive from the mortgagor the full amount

of interest payment due, the Association may make payments of interest on the security in amounts not exceeding the difference between the amount payable under the interest rate on the mortgage

and the amount of interest actually paid by the mortgagor. The Association is hereby empowered, in connection with any guaranty

under this subsection, whether before or after any default, to provide by contract with the issuer for the extinguishment, upon default by the issuer, of any redemption, equitable, legal, or other

right, title, or interest of the issuer in any mortgage or mortgages

constituting the trust or pool against which the guaranteed securities are issued; and with respect to any issue of guaranteed securities, in the event of default and pursuant otherwise to the terms

of the contract, the mortgages that constitute such trust or pool

shall become the absolute property of the Association subject only

to the unsatisfied rights of the holders of the securities based on

and backed by such trust or pool. No State or local law, and no

Federal law (except Federal law enacted expressly in limitation of

this subsection after the effective date of this sentence), shall preclude or limit the exercise by the Association of (A) its power to

contract with the issuer on the terms stated in the preceding sentence, (B) its rights to enforce any such contract with the issuer,

or (C) its ownership rights, as provided in the preceding sentence,

in the mortgages constituting the trust or pool against which the

guaranteed securities are issued. The full faith and credit of the

United States is pledged to the payment of all amounts which may

be required to be paid under any guaranty under this subsection.
1181 Sec. 306 FNMA AND GNMA

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1995, Pub. L. 103–327, 108 Stat. 2314, provides as follows:

‘‘Notwithstanding subsection 306(g)(3) of the National Housing Act, as amended, fees charged

for the guaranty of, or commitment to guaranty, multiclass securities backed by a trust or pool

of securities or notes guaranteed by the Government National Mortgage Association prior to

February 1, 1993, and other related fees, shall be charged in an amount the Association deems

appropriate.’’.

There shall be excluded from the total amounts set forth in subsection (c) the amounts of any mortgages acquired by the Association as a result of its operations under this subsection.

(2) Notwithstanding any other provision of law and subject

only to the absence of qualified requests for guarantees, to the authority provided in this subsection, and to the extent of or in such

amounts as any funding limitation approved in appropriation Acts,

the Association shall enter into commitments to issue guarantees

under this subsection in an aggregate amount of $110,000,000,000

during fiscal year 1996. There are authorized to be appropriated to

cover the costs (as such term is defined in section 502 of the Congressional Budget Act of 1974) of guarantees issued under this Act

by the Association such sums as may be necessary for fiscal year

1996.

(3)(A) 1 No fee or charge in excess of 6 basis points may be assessed or collected by the United States (including any executive

department, agency, or independent establishment of the United

States) on or with regard to any guaranty of the timely payment

of principal or interest on securities or notes based on or backed

by mortgages that are secured by 1- to 4-family dwellings and (i)

insured by the Federal Housing Administration under title II of the

National Housing Act; or (ii) insured or guaranteed under the Serviceman’s Readjustment Act of 1944, chapter 37 of title 38, United

States Code, or title V of the Housing Act of 1949.

(B) The fees charged for the guaranty of securities or on notes

based on or backed by mortgages not referred to in subparagraph

(A), as authorized by other provisions of law, shall be set by the

Association at a level not more than necessary to create reserves

sufficient to meet anticipated claims based upon actuarial analysis,

and for no other purpose.

(C) Fees or charges for the issuance of commitments or miscellaneous administrative fees of the Association shall not be on a

competitive auction basis and shall remain at the level set for such

fees or charges as of September 1, 1985, except that such fees or

charges may be increased if reasonably related to the cost of administering the program, and for no other purpose.

(D) Not less than 90 days before increasing any fee or charge

under subparagraph (B) or (C), the Secretary shall submit to the

Congress a certification that such increase is solely for the purpose

specified in such subparagraph.

(E)(i) Notwithstanding subparagraphs (A) through (D), fees

charged for the guarantee of, or commitment to guarantee,

multiclass securities backed by a trust or pool of securities or notes

guaranteed by the Association under this subsection, and other related fees shall be charged by the Association in an amount the Association deems appropriate. The Association shall take such action

as may be necessary to reasonably assure that such portion of the

benefit, resulting from the Association’s multiclass securities pro-
Sec. 307 FNMA AND GNMA 1182

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1995, Pub. L. 103–327, 108 Stat. 2315, provides as follows:

‘‘Beginning fiscal year 1995, the Government National Mortgage Association shall permit

Ginnie Mae II mortgage-backed securities to be eligible as collateral for multiclass securities

that such Association guarantees, in accordance with the Notice published at 59 Fed. Reg. 27290

(May 26, 1994) and successor Notices.’’.

gram, as the Association determines is appropriate accrues to mortgagors who execute eligible mortgages after the date of the enactment of this subparagraph.

(ii) The Association shall provide for the initial implementation

of the program for which fees are charged under the first sentence

of clause (i) by notice published in the Federal Register. The notice

shall be effective upon publication and shall provide an opportunity

for public comment. Not later than 12 months after publication of

the notice, the Association shall issue regulations for such program

based on the notice, comments received, and the experience of the

Association in carrying out the program during such period.

(iii) The Association shall consult with persons or entities in

such manner as the Association deems appropriate to ensure the

efficient commencement and operation of the multiclass securities

program.

(iv) No State or local law, and no Federal law (except Federal

law enacted expressly in limitation of this clause after the effective

date of this subparagraph) shall preclude or limit the exercise by

the Association of its power to contract with persons or entities,

and its rights to enforce such contracts, for the purpose of ensuring

the efficient commencement and continued operation of the

multiclass securities program. 1

SEPARATE ACCOUNTABILITY

SEC. 307. ø12 U.S.C. 1722¿ All of the benefits and burdens incident to the administration of the functions and operations of the

Association under sections 305 and 306, respectively, of this title,

after allowance for related obligations of the Association, its prorated expenses, and the like, including amounts required for the establishment of such reserves as the Secretary of Housing and

Urban Development shall deem appropriate, shall inure solely to

the Secretary of the Treasury, and such related earnings or other

amounts as become available shall be paid annually by the Association to the Secretary of the Treasury for covering into miscellaneous receipts.

MANAGEMENT

SEC. 308. ø12 U.S.C. 1723¿ (a) All the powers and duties of the

Government National Mortgage Association shall be vested in the

Secretary of Housing and Urban Development and the Association

shall be administered under the direction of the Secretary. Within

the limitations of law, the Secretary shall determine the general

policies which shall govern the operations of the Association, and

shall have power to adopt, amend and repeal by laws governing the

performance of the powers and duties granted to or imposed upon

it by law.

There is hereby established in the Department of Housing and

Urban Development the position of President, Government Na-
1183 Sec. 309 FNMA AND GNMA

tional Mortgage Association, who shall be appointed by the President, by and with the advice and consent of the Senate. The Secretary shall select and effect the appointment of qualified persons

to fill the offices of vice president, and such other offices as may

be provided for in the bylaws. Persons appointed under the preceding sentence shall perform such executive functions, powers,

and duties as may be prescribed by the bylaws or by the Secretary,

and such persons shall be executive officers of the Association and

shall discharge all such executive functions, powers, and duties.

(b) The Federal National Mortgage Association shall have a

board of directors, which shall consist of eighteen persons, five of

whom shall be appointed annually by the President of the United

States, and the remainder of whom shall be elected annually by the

common stockholders. The board shall at all times have as members appointed by the President at least one person from the homebuilding industry, at least one person from the mortgage lending

industry, at least one person from the real estate industry, and at

least one person from an organization that has represented consumer or community interests for not less than 2 years or one person who has demonstrated a career commitment to the provision

of housing for low-income households. Each member of the board

of directors shall be appointed or elected for a term ending on the

date of the next annual meeting of the stockholders, except that

any such appointed member may be removed from office by the

President for good cause. Any elective seat on the board which becomes vacant after the annual election of the directors shall be

filled by the board, but only for the unexpired portion of the term.

Any appointive seat which becomes vacant shall be filled by appointment of the President, but only for the unexpired portion of

the term. Within the limitations of law and regulation, the board

shall determine the general policies which shall govern the operations of the corporation, and shall have power to adopt, amend,

and repeal by laws governing the performance of the powers and

duties granted to or imposed upon it by law. The board of directors

shall select and effect the appointment of qualified persons to fill

the offices of president and vice president, and such other offices

as may be provided for in the bylaws. Any member of the board

who is a full-time officer or employee of the Federal Government

shall not, as such member, receive compensation for his services.

GENERAL POWERS

SEC. 309. ø12 U.S.C. 1723a¿ (a) Each of the bodies corporate

named in section 302(a)(2) shall have power to adopt, alter, and

use a corporate seal, which shall be judicially noted; to enter into

and perform contracts, leases, cooperative agreements, or other

transactions, on such terms as it may deem appropriate, with any

agency or instrumentality of the United States, or with any State,

Territory, or possession, or the Commonwealth of Puerto Rico, or

with any political subdivision thereof, or with any person, firm, association, or corporation; to execute, in accordance with its bylaws,

all instruments necessary or appropriate in the exercise of any of

its powers; in its corporate name, to sue and to be sued, and to

complain and to defend, in any court of competent jurisdiction,

State or Federal, but no attachment, injunction, or other similar

process, mesne or final, shall be issued against the property of the
Sec. 309 FNMA AND GNMA 1184

Association or against the Association with respect to its property;

to conduct its business without regard to any qualification or similar statute in any State of the United States, including the District

of Columbia, the Commonwealth of Puerto Rico, and the Territories

and possessions of the United States; to lease, purchase, or acquire

any property, real, personal, or mixed, or any interest therein, to

hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to sell, for cash or credit, lease, or otherwise

dispose of the same, at such time and in such manner as and to

the extent that the Association may deem necessary or appropriate;

to prescribe, repeal, and amend or modify, rules, regulations, or requirements governing the manner in which its general business

may be conducted; to accept gifts or donations or services, or of

property, real, personal, or mixed, tangible, or intangible, in aid of

any of its purposes; and to do all things as are necessary or incidental to the proper management of its affairs and the proper conduct of its business.

(b) Except as may be otherwise provided in this title, in chapter 91 of title 31, United States Code, or in other laws specifically

applicable to Government corporations, the Association shall determine the necessity for and the character and amount of its obligations and expenditures and the manner in which they shall be incurred, allowed, paid, and accounted for.

(c)(1) The Association, including its franchise, capital, reserves,

surplus, mortgages or other security holdings, and income shall be

exempt from all taxation now or hereafter imposed by the United

States, by any territory, dependency, or possession thereof, or by

any State, county, municipality, or local taxing authority, except

that any real property of the Association shall be subject to State,

territorial, county, municipal, or local taxation to the same extent

according to its value as other real property is taxed.

(2) The corporation, including its franchise, capital, reserves,

surplus, mortgages or other security holdings, and income, shall be

exempt from all taxation now or hereafter imposed by any State,

territory, possession, Commonwealth, or dependency of the United

States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of

the corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent as other real property is

taxed.

(d)(1) Subject to the provisions of section 308(a), the Secretary

of Housing and Urban Development shall have power to select and

appoint or employ such officers, attorneys, employees, and agents

of the Association, to vest them with such powers and duties, and

to fix and to cause the Association to pay such compensation to

them for their services, as he may determine, subject to the civil

service and classification laws. Bonds may be required for the

faithful performance of their duties, and the Association may pay

the premiums therefor. With the consent of any Government corporation or Federal Reserve bank, or of any board, commission,

independent establishment, or executive department of the Government, the Association may avail itself on a reimbursable basis of

the use of information, services, facilities, officers, and employees

thereof, including any field service thereof, in carrying out the provisions of this title.
1185 Sec. 309 FNMA AND GNMA

(2) The board of directors of the corporation shall have the

power to select and appoint or employ such officers, attorneys, employees, and agents, to vest them with such powers and duties, and

to fix and to cause the corporation to pay such compensation to

them for their services, as the board of directors determines reasonable and comparable with compensation for employment in

other similar businesses (including other publicly held financial institutions or major financial services companies) involving similar

duties and responsibilities, except that a significant portion of potential compensation of all executive officers (as such term is defined in paragraph (3)(C)) of the corporation shall be based on the

performance of the corporation; and any such action shall be without regard to the Federal civil service and classification laws. Appointments, promotions, and separations so made shall be based on

merit and efficiency, and no political tests or qualifications shall be

permitted or given consideration. Each officer and employee of the

corporation who is employed by the corporation prior to January

31, 1972 and who on the day previous to the beginning of such employment will have been subject to the civil service retirement law

(subch. III of ch. 83 of title 5, United States Code) shall, so long

as the employment of such officer or employee by the corporation

continues without a break in continuity of service, continue to be

subject to such law; and for the purpose of such law the employment of such officer or employee by the corporation without a break

in continuity of service shall be deemed to be employment by the

Government of the United States. The corporation shall contribute

to the Civil Service Retirement and Disability Fund a sum as provided by section 8334(a) of title 5, United States Code, except that

such sum shall be determined by applying to the total basic pay (as

defined in 5 U.S.C. 8331(3) and except as hereinafter provided)

paid to the employees of the corporation who are covered by the

civil service retirement law, the per centum rate determined annually by the United States Civil Service Commission to be the excess

of the total normal cost per centum rate of the civil service retirement system over the employee deduction rate specified in section

8334(a) of title 5, United States Code. The corporation shall also

pay into the Civil Service Retirement and Disability Fund such

portion of the cost of administration of the fund as is determined

by the United States Civil Service Commission to be attributable

to its employees. Notwithstanding the foregoing provisions, there

shall not be considered for the purposes of the civil service retirement law that portion of the basic pay in any one year of any officer or employee of the corporation which exceeds the basic pay provided for positions listed in section 5312 of title 5, United States

Code, on the last day of such year: Provided, That with respect to

any person whose employment is made subject to the civil service

retirement law by section 806 of the Housing and Community Development Act of 1974, there shall not be considered for the purposes of such law that portion of the basic pay of such person in

any one year which exceeds the basic pay provided for positions

listed in section 5316 of such title 5 on the last day of such year;

except as provided in this subsection, the corporation shall not be

subject to the provisions of title 5, United States Code.

(3)(A) Not later than June 30, 1993, and annually thereafter,

the corporation shall submit a report to the Committee on Banking,
Sec. 309 FNMA AND GNMA 1186

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services. 2October 28, 1992.

Finance and Urban Affairs of the House of Representatives 1 and

the Committee on Banking, Housing, and Urban Affairs of the Senate on (i) the comparability of the compensation policies of the corporation with the compensation policies of other similar businesses,

(ii) in the aggregate, the percentage of total cash compensation and

payments under employee benefit plans (which shall be defined in

a manner consistent with the corporation’s proxy statement for the

annual meeting of shareholders for the preceding year) earned by

executive officers of the corporation during the preceding year that

was based on the corporation’s performance, and (iii) the comparability of the corporation’s financial performance with the performance of other similar businesses. The report shall include a

copy of the corporation’s proxy statement for the annual meeting

of shareholders for the preceding year.

(B) Notwithstanding the first sentence of paragraph (2), after

the date of the enactment of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 2, the corporation may

not enter into any agreement or contract to provide any payment

of money or other thing of current or potential value in connection

with the termination of employment of any executive officer of the

corporation, unless such agreement or contract is approved in advance by the Director of the Office of Federal Housing Enterprise

Oversight of the Department of Housing and Urban Development.

The Director may not approve any such agreement or contract unless the Director determines that the benefits provided under the

agreement or contract are comparable to benefits under such agreements for officers of other public and private entities involved in

financial services and housing interests who have comparable duties and responsibilities. For purposes of this subparagraph, any renegotiation, amendment, or change after such date of enactment to

any such agreement or contract entered into on or before such date

of enactment shall be considered entering into an agreement or

contract.

(C) For purposes of this paragraph, the term ‘‘executive officer’’

has the meaning given the term in section 1303 of the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992.

(e) No individual, association, partnership, or corporation, except the bodies corporate named in section 302(a)(2) of this title,

shall hereafter use the words ‘‘Federal National Mortgage Association’’, ‘‘Government National Mortgage Association’’ or any combination of such words, as the name or a part thereof under which

the individual, association, partnership, or corporation shall do

business. Violations of the foregoing sentence may be enjoyed by

any court of general jurisdiction at the suit of the proper body corporate. In any such suit, the plaintiff may recover any actual damages flowing from such violations, and, in addition, shall be entitled

to punitive damages (regardless of the existence or nonexistence of
1187 Sec. 309 FNMA AND GNMA

actual damages) of not exceeding $100 for each day during which

such violation is committed or repeated.

(f) In order that the Association may be supplied with such

forms of obligations or certificates as it may need for issuance

under this title, the Secretary of the Treasury is authorized, upon

request of the Association, to prepare such forms as shall be suitable and approved by the Association, to be held in the Treasury

subject to delivery, upon order of the Association. The engraved

plates, dies, bed-pieces, and other material executed in connection

therewith shall remain in the custody of the Secretary of the Treasury. The Association shall reimburse the Secretary of the Treasury

for any expenses incurred in the preparation, custody, and delivery

of such forms.

(g) The Federal Reserve banks are authorized and directed to

act as depositaries, custodians, and fiscal agents for each of the

bodies corporate named in section 302(a)(2), for its own account or

as fiduciary, and such banks shall be reimbursed for such services

in such manner as may be agreed upon; and each of such bodies

corporate may itself act in such capacities, for its own account or

as fiduciary, and for the account of others.

ø(h) [Repealed.]¿

ø(i) [Repealed.]¿

(j)(1) The programs, activities, receipts, expenditures, and financial transactions of the corporation shall be subject to audit by

the Comptroller General of the United States under such rules and

regulations as may be prescribed by the Comptroller General. The

representatives of the General Accounting Office shall have access

to such books, accounts, financial records, reports, files, and such

other papers, things, or property belonging to or in use by the corporation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or

securities held by depositories, fiscal agents, and custodians. A report on each such audit shall be made by the Comptroller General

to the Congress. The corporation shall reimburse the General Accounting Office for the full cost of any such audit as billed therefor

by the Comptroller General.

(2) To carry out this subsection, the representatives of the General Accounting Office shall have access, upon request to the corporation or any auditor for an audit of the corporation under subsection (l), to any books, accounts, financial records, reports, files,

or other papers, things, or property belonging to or in use by the

corporation and used in any such audit and to any papers, records,

files, and reports of the auditor used in such an audit.

(k)(1) The corporation shall submit to the Director of the Office

of Federal Housing Enterprise Oversight of the Department of

Housing and Urban Development annual and quarterly reports of

the financial condition and operations of the corporation which

shall be in such form, contain such information, and be submitted

on such dates as the Director shall require.

(2) Each such annual report shall include—

(A) financial statements prepared in accordance with generally accepted accounting principles;

(B) any supplemental information or alternative presentation that the Director may require; and
Sec. 309 FNMA AND GNMA 1188

(C) an assessment (as of the end of the corporation’s most

recent fiscal year), signed by the chief executive officer and

chief accounting or financial officer of the corporation, of—

(i) the effectiveness of the internal control structure

and procedures of the corporation; and

(ii) the compliance of the corporation with designated

safety and soundness laws.

(3) The corporation shall also submit to the Director any other

reports required by the Director pursuant to section 1314 of the

Federal Housing Enterprises Financial Safety and Soundness Act

of 1992.

(4) Each report of financial condition shall contain a declaration by the president, vice president, treasurer, or any other officer

designated by the board of directors of the corporation to make

such declaration, that the report is true and correct to the best of

such officer’s knowledge and belief.

(l)(1) The corporation shall have an annual independent audit

made of its financial statements by an independent public accountant in accordance with generally accepted auditing standards.

(2) In conducting an audit under this subsection, the independent public accountant shall determine and report on whether

the financial statements of the corporation (A) are presented fairly

in accordance with generally accepted accounting principles, and

(B) to the extent determined necessary by the Director, comply

with any disclosure requirements imposed under subsection

(k)(2)(B).

(m)(1) The corporation shall collect, maintain, and provide to

the Secretary, in a form determined by the Secretary, data relating

to its mortgages on housing consisting of 1 to 4 dwelling units.

Such data shall include—

(A) the income, census tract location, race, and gender of

mortgagors under such mortgages;

(B) the loan-to-value ratios of purchased mortgages at the

time of origination;

(C) whether a particular mortgage purchased is newly

originated or seasoned;

(D) the number of units in the housing subject to the mortgage and whether the units are owner-occupied; and

(E) any other characteristics that the Secretary considers

appropriate, to the extent practicable.

(2) The corporation shall collect, maintain, and provide to the

Secretary, in a form determined by the Secretary, data relating to

its mortgages on housing consisting of more than 4 dwelling units.

Such data shall include—

(A) census tract location of the housing;

(B) income levels and characteristics of tenants of the

housing (to the extent practicable);

(C) rent levels for units in the housing;

(D) mortgage characteristics (such as the number of units

financed per mortgage and the amount of loans);

(E) mortgagor characteristics (such as nonprofit, for-profit,

limited equity cooperatives);

(F) use of funds (such as new construction, rehabilitation,

refinancing);

(G) type of originating institution; and
1189 Sec. 309 FNMA AND GNMA

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(H) any other information that the Secretary considers appropriate, to the extent practicable.

(3)(A) Except as provided in subparagraph (B), this subsection

shall apply only to mortgages purchased by the corporation after

December 31, 1992.

(B) This subsection shall apply to any mortgage purchased by

the corporation after the date determined under subparagraph (A)

if the mortgage was originated before such date, but only to the extent that the data referred in paragraph (1) or (2), as applicable,

is available to the corporation.

(n)(1) The corporation shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives 1,

the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Secretary a report on its activities under subpart B of

part 2 of subtitle A of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992.

(2) The report under this subsection shall—

(A) include, in aggregate form and by appropriate category,

statements of the dollar volume and number of mortgages on

owner-occupied and rental properties purchased which relate

to each of the annual housing goals established under such

subpart;

(B) include, in aggregate form and by appropriate category,

statements of the number of families served by the corporation,

the income class, race, and gender of homebuyers served, the

income class of tenants of rental housing (to the extent such

information is available), the characteristics of the census

tracts, and the geographic distribution of the housing financed;

(C) include a statement of the extent to which the mortgages purchased by the corporation have been used in conjunction with public subsidy programs under Federal law;

(D) include statements of the proportion of mortgages on

housing consisting of 1 to 4 dwelling units purchased by the

corporation that have been made to first-time homebuyers, as

soon as providing such data is practicable, and identifying any

special programs (or revisions to conventional practices) facilitating homeownership opportunities for first-time homebuyers;

(E) include, in aggregate form and by appropriate category,

the data provided to the Secretary under subsection (m)(1)(B);

(F) compare the level of securitization versus portfolio activity;

(G) assess underwriting standards, business practices, repurchase requirements, pricing, fees, and procedures, that affect the purchase of mortgages for low- and moderate-income

families, or that may yield disparate results based on the race

of the borrower, including revisions thereto to promote affordable housing or fair lending;
Sec. 310 FNMA AND GNMA 1190

(H) describe trends in both the primary and secondary

multifamily housing mortgage markets, including a description

of the progress made, and any factors impeding progress toward standardization and securitization of mortgage products

for multifamily housing;

(I) describe trends in the delinquency and default rates of

mortgages secured by housing for low- and moderate-income

families that have been purchased by the corporation, including a comparison of such trends with delinquency and default

information for mortgage products serving households with incomes above the median level that have been purchased by the

corporation, and evaluate the impact of such trends on the

standards and levels of risk of mortgage products serving lowand moderate-income families;

(J) describe in the aggregate the seller and servicer network of the corporation, including the volume of mortgages

purchased from minority-owned, women-owned, and community-oriented lenders, and any efforts to facilitate relationships

with such lenders;

(K) describe the activities undertaken by the corporation

with nonprofit and for-profit organizations and with State and

local governments and housing finance agencies, including how

the corporation’s activities support the objectives of comprehensive housing affordability strategies under section 105 of the

Cranston-Gonzalez National Affordable Housing Act; and

(L) include any other information that the Secretary considers appropriate.

(3)(A) The corporation shall make each report under this subsection available to the public at the principal and regional offices

of the corporation.

(B) Before making a report under this subsection available to

the public, the corporation may exclude from the report information

that the Secretary has determined is proprietary information under

section 1326 of the Federal Housing Enterprises Financial Safety

and Soundness Act of 1992.

(o)(1) Not later than 4 months after the date of enactment of

the Federal Housing Enterprises Financial Safety and Soundness

Act of 1992, the corporation shall appoint an Affordable Housing

Advisory Council to advise the corporation regarding possible methods for promoting affordable housing for low- and moderate-income

families.

(2) The Affordable Housing Advisory Council shall consist of 15

individuals, who shall include representatives of community-based

and other nonprofit and for-profit organizations and State and local

government agencies actively engaged in the promotion, development, or financing of housing for low- and moderate-income families.

INVESTMENT OF FUNDS

SEC. 310. ø12 U.S.C. 1723b¿ Moneys of the Association not invested in mortgages or other security holdings or in operating facilities shall be kept in cash on hand or on deposit, or invested in

obligations of the United States or guaranteed thereby, or in obligations, participations or other instruments which are lawful investments for fiduciary, trust, or public funds.
1191 Sec. 317 FNMA AND GNMA

OBLIGATIONS OF ASSOCIATION LEGAL INVESTMENTS

SEC. 311. ø12 U.S.C. 1723c¿ All obligations, participations, or

other instruments issued by either of the bodies corporate named

in section 302(a)(2) shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority and control

of the United States or any officer or officers thereof. All stock, obligations, securities, participations, or other instruments issued

pursuant to this title shall, to the same extent as securities which

are direct obligations of or obligations guaranteed as to principal

or interest by the United States, be deemed to be exempt securities

within the meaning of laws administered by the Securities and Exchange Commission.

SHORT TITLE

SEC. 312. ø12 U.S.C. 1716 note¿ This title III may be referred

to as the ‘‘Federal National Mortgage Association Charter Act’’.

øINTERIM AUTHORITY TO PURCHASE CERTAIN MORTGAGES¿

øSEC. 313. [Repealed.]¿

øPURCHASE OF ENERGY CONSERVING IMPROVEMENT LOANS TO LOW- AND MODERATE-INCOME FAMILIES¿

øSEC. 314. [Repealed.]¿

øAUTHORITY OF SOLAR ENERGY AND ENERGY CONSERVATION BANK TO

PURCHASE LOANS AND ADVANCES OF CREDIT FOR ENERGY CON- SERVING IMPROVEMENTS OR SOLAR ENERGY SYSTEMS]

øSEC. 315. [Repealed.]¿

øAUTHORITY OF SOLAR ENERGY AND ENERGY CONSERVATION BANK TO

PURCHASE MORTGAGES SECURED BY NEWLY CONSTRUCTED HOMES

WITH SOLAR ENERGY SYSTEMS¿

øSEC. 316. [Repealed.]¿

CIVIL MONEY PENALTIES AGAINST ISSUERS

SEC. 317. ø12 U.S.C. 1723i¿ (a) IN GENERAL. (1) AUTHORITY.—Whenever an issuer or custodian approved under section 306(g) knowingly and materially violates

any provisions of subsection (b), the Secretary of Housing and

Urban Development may impose a civil money penalty on the

issuer or the custodian in accordance with the provisions of

this section. The penalty shall be in addition to any other

available civil remedy or any available criminal penalty and

may be imposed whether or not the Secretary imposes other

administrative sanctions.

(2) AMOUNT OF PENALTY.—The amount of the penalty, as

determined by the Secretary, may not exceed $5,000 for each

violation, except that the maximum penalty for all violations

by a particular issuer or custodian during any one-year period

shall not exceed $1,000,000. Each violation of a provision of

subsection (b)(1) shall constitute a separate violation with respect to each pool of mortgages. In the case of a continuing vio-
Sec. 317 FNMA AND GNMA 1192

1Section 2704(d)(13)(A) of the Economic Growth and Regulatory Paperwork Reduction Act of

1996 (title II of division A of the Omnibus Consolidated Appropriations Act, 1997; Public Law

104–208) amends this subparagraph by striking ‘‘Bank Insurance Fund for banks or through

the Savings Association Insurance Fund for savings associations’’ and inserting ‘‘Deposit Insurance Fund’’. Section 2704(c) of such Act provides that such amendment ‘‘shall become effective

on January, 1, 1999, if no insured depository institution is a savings association on that date.’’. 2So in law.

lation, as determined by the Secretary, each day shall constitute a separate violation.

(b) VIOLATIONS FOR WHICH A PENALTY MAY BE IMPOSED.— (1) VIOLATIONS.—The violations by an issuer or a custodian for which the Secretary may impose a civil money penalty

under subsection (a) are the following:

(A) Failure to make timely payments of principal and

interest to holders of securities guaranteed under section

306(g).

(B) 1 Failure to segregate cash flow from pooled mortgages or to deposit either principal and interest funds or

escrow funds into special accounts with a depository institution whose accounts are insured by the National Credit

Union Administration or by the Federal Deposit Insurance

Corporation through the Bank Insurance Fund for banks

or through the Savings Association Insurance Fund for

savings associations.

(C) Use of escrow funds for any purpose other than

that for which they were received.

(D) Transfer of servicing for a pool of mortgages to an

issuer not approved under this title, unless expressly permitted by statute, regulation, or contract approved by the

Secretary.

(E) Failure to maintain a minimum net worth in accordance with requirements prescribed by the Association; 2

(F) Failure to promptly notify the Association in writing of any changes that materially affect the business status of an issuer.

(G) Submission to the Association of false information

in connection with any securities guaranteed, or mortgages

pooled, under section 306(g).

(H) Hiring, or retaining in employment, an officer, director, principal, or employee whose duties involve, directly or indirectly, programs administered by the Association while such person was under suspension or debarment

by the Secretary.

(I) Submission to the Association of a false certification either on its own behalf or on behalf of another person or entity.

(J) Failure to comply with an agreement, certification,

or condition of approval set forth on, or applicable to, the

application for approval as an issuer of securities under

section 306(g).

(K) Violation of any provisions of this title or any implementing regulation, handbook, or participant letter

issued under authority of this title.

(2) NOTIFICATION TO ATTORNEY GENERAL.—Before taking

action to impose a civil money penalty for a violation under
1193 Sec. 317 FNMA AND GNMA

paragraph (1)(G) or paragraph (1)(I), the Secretary shall inform the Attorney General of the United States.

(c) AGENCY PROCEDURES.— (1) ESTABLISHMENT.—The Secretary shall establish standards and procedures governing the imposition of civil money

penalties under subsection (a). The standards and

procedures—

(A) shall provide for the Secretary to make the determination to impose the penalty;

(B) shall provide for the imposition of a penalty only

after an issuer or a custodian has been given notice of, and

opportunity for, a hearing on the record; and

(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from

a hearing.

(2) FINAL ORDERS.—If no hearing is requested with 15 days

of receipt of a notice of opportunity for hearing, the imposition

of a penalty shall constitute a final and unappealable determination. If the Secretary reviews the determination or order,

the Secretary may affirm, modify, or reverse that determination or order. If the Secretary does not review the determination or order within 90 days of the issuance of the determination or order, the determination or order shall be final.

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (a), consideration shall be given to such factors as the gravity of the

offense, any history of prior offenses (including offenses occurring before enactment of this section), ability to pay the penalty, injury to the public, benefits received, deterrence of future

violations, and such other factors as the Secretary may determine by regulations.

(4) REVIEWABILITY OF IMPOSITION OF PENALTY.—The Secretary’s determination or order imposing a penalty under subsection (a) shall not be subject to review, except as provided in

subsection (d).

(d) JUDICIAL REVIEW OF AGENCY DETERMINATION.—

(1) IN GENERAL.—After exhausting all administrative remedies established by the Secretary under subsection (c)(1), an

issuer or a custodian against which the Secretary has imposed

a civil money penalty under subsection (a) may obtain a review

of the penalty and such ancillary issues as may be addressed

in the notice provided under subsection (c)(1)(A) in the appropriate court of appeals of the United States, by filing in such

court, within 20 days after the entry of such order or determination, a written petition praying that the Secretary’s order

or determination be modified or be set aside in whole or in

part.

(2) OBJECTIONS NOT RAISED IN HEARING.—A court shall not

consider any objection that was not raised in the hearing conducted pursuant to subsection (c)(1) unless a demonstration is

made of extraordinary circumstances causing the failure to

raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence, which was not presented at such hearing, is material and that there were reasonable grounds for the failure to present such evidence at the
Sec. 317 FNMA AND GNMA 1194

hearing, the court shall remand the matter to the Secretary for

consideration of such additional evidence.

(3) SCOPE OF REVIEW.—The decisions, findings, and determinations of the Secretary shall be reviewed pursuant to section 706 of title 5, United States Code.

(4) ORDER TO PAY PENALTY.—Notwithstanding any other

provision of law, the court shall have the power in any such

review to order payment of the penalty imposed by the Secretary.

(e) ACTION TO COLLECT PENALTY.—If any issuer or custodian

fails to comply with the Secretary’s determination or order imposing a civil money penalty under subsection (a), after the determination or order is no longer subject to review as provided by subsections (c)(1) and (d), the Secretary may request the Attorney General of the United States to bring an action in an appropriate

United States district court to obtain a monetary judgment against

the issuer or custodian and such other relief as may be available.

The monetary judgment may, in the discretion of the court, include

any attorneys fees and other expenses incurred by the United

States in connection with the action. In an action under this subsection, the validity and appropriateness of the Secretary’s determination or order imposing the penalty shall not be subject to review.

(f) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(g) DEFINITION OF KNOWINGLY.—The term ‘‘knowingly’’ means

having actual knowledge of or acting with deliberate ignorance of

or reckless disregard for the prohibitions under this section.

(h) REGULATIONS.—The Secretary shall issue such regulations

as the Secretary deems appropriate to implement this section.

(i) DEPOSIT OF PENALTIES.—The Secretary shall deposit all civil

money penalties collected under this section into moneys of the Association pursuant to section 307.
1195

GNMA ADMINISTRATIVE EXPENSES

EXCERPT FROM HOUSING ACT OF 1959

[Public Law 86–372; 73 Stat. 654; 12 U.S.C. 1721 note]

SEC. 306. * * *

(b) ø12 U.S.C. 1721 note¿ In connection with the sale of any

mortgages to the Government National Mortgage Association pursuant to section 306(e) of the Federal National Mortgage Association Charter Act, the Secretary of Housing and Urban Development

is authorized and any other official, unit, or agency selling such

mortgages thereunder is directed, to transfer to the Association

from time to time, from authorizations, limitations, and funds

available for administrative expenses of such official, unit, or agency in connection with the same mortgages, such amounts thereof as

said Secretary determines to be required for administrative expenses of the Association in connection with the purchase, servicing, and sale of such mortgages: Provided, That no such transfer

shall be made after a budget estimate of the Association with respect to the same mortgages has been submitted to and finally

acted upon by the Congress.
1196

1September 1, 1968, was established as the effective date.

FNMA AND GNMA—PARTITION

EXCERPTS FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 90–448; 82 Stat. 536; 12 U.S.C. 1716b]

TITLE VIII—SECONDARY MORTGAGE MARKET

PURPOSES

SEC. 801. ø12 U.S.C. 1716b¿ The purposes of this title include

the partition of the Federal National Mortgage Association as heretofore existing into two separate and distinct corporations, each of

which shall have continuity and corporate succession as a separated portion of the previously existing corporation. One of such

corporations, to be known as Federal National Mortgage Association, will be a Government-sponsored private corporation, will retain the assets and liabilities of the previously existing corporation

accounted for under section 304 of the Federal National Mortgage

Association Charter Act, and will continue to operate the secondary

market operations authorized by such section 304. The other to be

known as Government National Mortgage Association, will remain

in the Government, will retain the assets and liabilities of the previously existing corporation accounted for under sections 305 and

306 of such Act, and will continue to operate the special assistance

functions and management and liquidating functions authorized by

such sections 305 and 306.

* * * * * * *

EFFECTIVE DATE

SEC. 808. ø12 U.S.C. 1716b note¿ The amendments made by

this title shall be effective from and after a date, no more than one

hundred and twenty days following the date of enactment of this

Act, as established by the Secretary of Housing and Urban Development.1 Notice of the establishment of such effective date shall be

published in the Federal Register at least thirty days prior thereto.

SAVINGS PROVISIONS

SEC. 809. ø12 U.S.C. 1716b note¿ (a) No cause of action by or

against the Federal National Mortgage Association existing prior to

the effective date established pursuant to section 808 shall abate

by reason of the enactment of this title. Any such cause of action

may thereafter be asserted by or against the appropriate corporate

body named in section 302(a)(2) of the National Housing Act.

(b) No suit, action, or other proceeding commenced by or

against the Federal National Mortgage Association, or any officer
1197 Sec. 810 FNMA AND GNMA—PARTITION

thereof in his official capacity, prior to the effective date established pursuant to section 808 shall abate by reason of the enactment of this title. A court may at any time thereafter during the

pendency of any such litigation, on its own motion or that of any

party, order that the litigation may be maintained by or against

the appropriate corporate body named in section 302(a)(2) of the

National Housing Act or the appropriate corresponding officer

thereof.

TRANSITIONAL PROVISIONS

SEC. 810. ø12 U.S.C. 1716b note¿ (a) On the effective date established pursuant to section 808 of this Act, each share of outstanding nonvoting common stock, with a par value of $100 per

share, of the Federal National Mortgage Association shall be

changed into and shall become one share of voting common stock,

without par value, of such corporation. For the purposes of the Internal Revenue Code of 1954, no gain or loss is recognized by the

holders of such stock on such change, and the basis and holder period of such stock in the hands of the stockholders immediately

after such change are the same as the basis and holding period of

such stock in their hands immediately prior to such change.

ø(b) [Repealed.]¿

ø(c) [Repealed.]¿

(d) Those persons who are the officers and employees of the

Federal National Mortgage Association immediately prior to the effective date established pursuant to section 808 shall become the

officers and employees of the Government National Mortgage Association on such date. The Federal National Mortgage Association

and the Government National Mortgage Association shall provide

by contract for the conditions and methods under which and by

which the Federal National Mortgage Association during the transitional period may employ those individuals who are employees of

the Government National Mortgage Association on such effective

date; and may provide by contract for the operation by either of

such corporations of any of the functions of the other. The Secretary of Housing and Urban Development shall make every reasonable effort to place in other comparable Federal positions any

individuals who are career or career-conditional employees of the

Government National Mortgage Association on such effective date

and who are subsequently during the transitional period neither

employed by the Federal National Mortgage Association nor retained by the Government National Mortgage Association.
1198

1October 8, 1980.

FNMA MORTGAGE–BACKED SECURITIES PROGRAM

PROPOSAL

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1980

[Public Law 96–399; 94 Stat. 1652; 12 U.S.C. 1723a note]

MORTGAGE-BACKED SECURITIES PROGRAM

SEC. 330. ø12 U.S.C. 1723a note¿ If the Federal National Mortgage Association submits to the Secretary of Housing and Urban

Development or the Secretary of the Treasury, after the date of enactment of this section,1 a proposal with respect to undertaking a

mortgage-backed securities program, the Secretary of Housing and

Urban Development or the Secretary of the Treasury, as the case

may be, shall, within 90 days after submission of such proposal, approve the proposal or transmit to the Congress a report explaining

why the proposal has not been approved.
1199

FEDERAL HOME LOAN MORTGAGE CORPORATION

EXCERPT FROM EMERGENCY HOME FINANCE ACT OF 1970

[Public Law 91–351; 84 Stat. 450; 12 U.S.C. 1451 et seq.]

TITLE III—FEDERAL HOME LOAN MORTGAGE

CORPORATION

SHORT TITLE AND STATEMENT OF PURPOSE

SEC. 301. ø12 U.S.C. 1451 note¿ (a) This title may be cited as

the ‘‘Federal Home Loan Mortgage Corporation Act’’.

(b) It is the purpose of the Federal Home Loan Mortgage

Corporation—

(1) to provide stability in the secondary market for residential mortgages;

(2) to respond appropriately to the private capital market;

(3) to provide ongoing assistance to the secondary market

for residential mortgages (including activities relating to mortgages on housing for low- and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities) by increasing the liquidity of

mortgage investments and improving the distribution of investment capital available for home mortgage financing; and

(4) to promote access to mortgage credit throughout the

Nation (including central cities, rural areas, and underserved

areas) by increasing the liquidity of mortgage investments and

improving the distribution of investment capital available for

residential mortgage financing.

DEFINITIONS

SEC. 302. ø12 U.S.C. 1451¿ As used in this title—

(a) The term ‘‘Board of Directors’’ means the Board of Directors

of the Corporation.

(b) The term ‘‘Corporation’’ means the Federal Home Loan

Mortgage Corporation created by this title.

(c) The term ‘‘law’’ includes any law of the United States or of

any State (including any rule of law or of equity).

(d) The term ‘‘mortgage’’ includes such classes of liens as are

commonly given or are legally effective to secure advances on, or

the unpaid purchase price of, real estate under the laws of the

State in which the real estate is located or a manufactured home

that is personal property under the laws of the State in which the

manufactured home is located, together with the credit instruments, if any, secured thereby, and includes interests in mortgages.

(e) The term ‘‘organization’’ means any corporation, partnership, association, business trust, or business entity.
Sec. 302 FHLMC 1200

(f) The term ‘‘prescribe’’ means to prescribe by regulations or

otherwise.

(g) The term ‘‘property’’ includes any property, whether real,

personal, mixed, or otherwise, including without limitation on the

generality of the foregoing choses in action and mortgages, and includes any interest in any of the foregoing.

(h) The term ‘‘residential mortgage’’ means a mortgage which

(1) is a mortgage on real estate, in fee simple or under a leasehold

having such term as may be prescribed by the Corporation, upon

which there is located a structure or structures designed in whole

or in part for residential use, or which comprises or includes one

or more condominium units or dwelling units (as defined by the

Corporation) and (2) has such characteristics and meets such requirements as to amount, term, repayment provisions, number of

families, status as a lien on such real estate, and otherwise, as may

be prescribed by the Corporation.

The term ‘‘residential mortgage’’ also includes a loan or advance of credit insured under title I of the National Housing Act

whose original proceeds are applied for in order to finance energy

conserving improvements, or the addition of a solar energy system,

to residential real estate. The term ‘‘residential mortgage’’ also includes a loan or advance of credit for such purposes, or purchased

from any public utility carrying out activities in accordance with

the requirements of title II of the National Energy Conservation

Policy Act if the residential mortgage to be purchased is a loan or

advance of credit the original proceeds of which are applied for in

order to finance the purchase and installation of residential energy

conservation measures (as defined in section 210(11) of the National Energy Conservation Policy Act) in residential real estate,

not having the benefit of such insurance and includes loans made

where the lender relies for purposes of repayment primarily on the

borrower’s general credit standing and forecast of income, with or

without other security. The term ‘‘residential mortgage’’ is also

deemed to include a secured loan or advance of credit the proceeds

of which are intended to finance the rehabilitation, renovation,

modernization, refurbishment, or improvement of properties as to

which the Corporation may purchase a ‘‘residential mortgage’’ as

defined under the first sentence of this subsection. Such term shall

also include other secured loans that are secured by a subordinate

lien against a property as to which the Corporation may purchase

a residential mortgage as defined under the first sentence of this

subsection. A ‘‘secured loan or advance of credit’’ is one in which

a security interest is taken in the rehabilitated, renovated, modernized, refurbished, or improved property. Such term shall also include a mortgage, lien, or other security interest on the stock or

membership certificate issued to a tenant-stockholder, or residentmember by a cooperative housing corporation, as defined in section

216 of the Internal Revenue Code of 1954, and on the proprietary

lease, occupancy agreement, or right of tenancy in the dwelling

unit of tenant-stockholder or resident-member in such cooperative

housing corporation. The term ‘‘residential mortgage’’ also includes

a loan or advance of credit secured by a mortgage or other lien on

a manufactured home that is the principal residence of the bor-
1201 Sec. 303 FHLMC

rower, without regard to whether the security property is real, personal, or mixed.

(i) The term ‘‘conventional mortgage’’ means a mortgage other

than a mortgage as to which the Corporation has the benefit of any

guaranty, insurance or other obligation by the United States or any

of its agencies or instrumentalities.

(j) The term ‘‘security’’ has the meaning ascribed to it by section 2 of the Securities Act of 1933.

(k) The term ‘‘State’’, whether used as a noun or otherwise, includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the

United States.

(l) The term ‘‘mortgage insurance program’’ includes, in the

case of a residential mortgage secured by a manufactured home,

any manufactured home lending program under title I of the National Housing Act.

ESTABLISHMENT OF THE CORPORATION

SEC. 303. ø12 U.S.C. 1452¿ (a)(1) There is hereby created the

Federal Home Loan Mortgage Corporation, which shall be a body

corporate under the direction of a Board of Directors. Within the

limitations of law and regulation, the Board of Directors shall determine the general policies that govern the operations of the Corporation. The principal office of the Corporation shall be in the District of Columbia or at any other place determined by the Corporation.

(2)(A) The Board of Directors of the Corporation shall consist

of 18 persons, 5 of whom shall be appointed annually by the President of the United States and the remainder of whom shall be

elected annually by the voting common stockholders. The Board of

Directors shall at all times have as members appointed by the

President of the United States at least 1 person from the homebuilding industry, at least 1 person from the mortgage lending industry, at least 1 person from the real estate industry, and at least

1 person from an organization that has represented consumer or

community interests for not less than 2 years or 1 person who has

demonstrated a career commitment to the provision of housing for

low-income households.

(B) Each member of the Board of Directors shall be such or

elected for a term ending on the date of the next annual meeting

of the voting common stockholders, except that any appointed

member may be removed from office by the President for good

cause.

(C) Any appointive seat on the Board of Directors that becomes

vacant shall be filled by appointment by the President of the

United States, but only for the unexpired portion of the term. Any

elective seat on the Board of Directors that becomes vacant after

the annual election of the directors shall be filled by the Board of

Directors, but only for the unexpired portion of the term.

(D) Any member of the Board of Directors who is a full-time

officer or employee of the Federal Government shall not, as such

member, receive compensation for services as such a member.

(b)(1) Except as provided in paragraph (2), the Corporation

may make such capital distributions (as such term is defined in
Sec. 303 FHLMC 1202

1 Item 1 of the section that is designated as section 2 and follows section 664 of the Treasury,

Postal Service, and General Government Appropriations Act, 1997 (as enacted by section 101(f)

of P.L. 104–208) provides that ‘‘12 U.S.C. 90 is amended by adding at the end’’ a new provision.

The U.S. Code citation corresponds to section 5153 of title LXLL of the Revised Statutes of the

section 1303 of the Federal Housing Enterprises Financial Safety

and Soundness Act of 1992) as may be declared by the Board of Directors.

(2) The Corporation may not make any capital distribution

that would decrease the total capital of the Corporation (as such

term is defined in section 1303 of the Federal Housing Enterprises

Financial Safety and Soundness Act of 1992) to an amount less

than the risk-based capital level for the Corporation established

under section 1361 of such Act or that would decrease the core capital of the Corporation (as such term is defined in section 1303 of

such Act) to an amount less than the minimum capital level for the

Corporation established under section 1362 of such Act, without

prior written approval of the distribution by the Director of the Office of Federal Housing Enterprise Oversight of the Department of

Housing and Urban Development.

(c) The Corporation shall have power (1) to adopt, alter, and

use a corporate seal; (2) to have succession until dissolved by Act

of Congress; (3) to make and enforce such bylaws, rules, and regulations as may be necessary or appropriate to carry out the purposes or provisions of this title; (4) to make and perform contracts,

agreements, and commitments; (5) to prescribe and impose fees and

charges for services by the Corporation; (6) to settle, adjust, and

compromise, and with or without consideration or benefit to the

Corporation to release or waive in whole or in part, in advance or

otherwise, any claim, demand, or right of, by, or against the Corporation; (7) to sue and be sued, complain and defend, in any State,

Federal, or other court; (8) to acquire, take, hold, and own, and to

deal with and dispose of any property; and (9) to determine its necessary expenditures and the manner in which the same shall be incurred, allowed, and paid, and appoint, employ, and fix and provide

for the compensation and benefits of officers, employees, attorneys,

and agents as the Board of Directors determines reasonable and

comparable with compensation for employment in other similar

businesses (including publicly held financial institutions or other

major financial services companies) involving similar duties and responsibilities, except that a significant portion of potential compensation of all executive officers (as such term is defined in subsection (h)(3)) of the Corporation shall be based on the performance

of the Corporation, all without regard to any other law except as

may be provided by the Corporation or by laws hereafter enacted

by the Congress expressly in limitation of this sentence. The Corporation, with the consent of any such department, establishment,

or instrumentality, including any field services thereof, may utilize

and act through any such department, establishment, or instrumentality and may avail itself of the use of information, services,

facilities, and personnel thereof, and may pay compensation therefor, and all of the foregoing are hereby authorized to provide the

same to the Corporation as it may request.

(d) 1 Funds of the Corporation may be invested in such investments as the Board of Directors may prescribe. Any Federal Re-
1203 Sec. 303 FHLMC

United States (relating to depositories of public moneys and financial agents of Government).

The matter to be added is as follows:

‘‘Notwithstanding the Federal Property and Administrative Services Act of 1949, as amended,

the Secretary may select associations as financial agents in accordance with any process the Secretary deems appropriate and their reasonable duties may include the provision of electronic

benefit transfer services (including State-administered benefits with the consent of the States),

as defined by the Secretary.’’.

Item 2 of such section reads as follows: ‘‘2. Make conforming changes to 12 U.S.C. 265, 266,

391, 1452(d), 1767, 1789a, 2013, 2122 and to 31 U.S.C. 3122 and 3303.’’. The U.S. Code citation

of 12 U.S.C. 1452(d) corresponds to this subsection.

serve bank or Federal home loan bank, or any bank as to which

at the time of its designation by the Corporation there is outstanding a designation by the Secretary of the Treasury as a general or other depositary of public money, may be designated by the

Corporation as a depositary or custodian or as a fiscal or other

agent of the Corporation, and is hereby authorized to act as such

depositary, custodian, or agent. When designated for that purpose

by the Secretary of the Treasury, the Corporation shall be a depositary of public money, under such regulations as may be prescribed

by the Secretary of the Treasury, and may also be employed as fiscal or other agent of the United States, and it shall perform all

such reasonable duties as such depositary or agent as may be required of it.

(e) The Corporation, including its franchise, activities, capital,

reserves, surplus, and income, shall be exempt from all taxation

now or hereafter imposed by any territory, dependency, or possession of the United States or by any State, county, municipality, or

local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local

taxation to the same extent according to its value as other real

property is taxed.

(f) Notwithstanding section 1349 of title 28 of the United

States Code or any other provision of law, (1) the Corporation shall

be deemed to be an agency included in sections 1345 and 1442 of

such title 28; (2) all civil actions to which the Corporation is a

party shall be deemed to arise under the laws of the United States,

and the district courts of the United States shall have original jurisdiction of all such actions, without regard to amount or value;

and (3) any civil or other action, case or controversy in a court of

a State, or in any court other than a district court of the United

States, to which the Corporation is a party may at any time before

the trial thereof be removed by the Corporation, without the giving

of any bond or security, to the district court of the United States

for the district and division embracing the place where the same

is pending, or, if there is no such district court, to the district court

of the United States for the district in which the principal office of

the Corporation is located, by following any procedure for removal

of causes in effect at the time of such removal.

(g) All mortgages, obligations, or other securities which are or

have been sold by the Corporation pursuant to section 305 or section 306 of this title shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposits of which shall be under the authority and control of the United States or any officers thereof.

(h)(1) Not later than June 30, 1993, and annually thereafter,

the Corporation shall submit a report to the Committee on Bank-
Sec. 304 FHLMC 1204

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

ing, Finance and Urban Affairs of the House of Representatives 1

and the Committee on Banking, Housing, and Urban Affairs of the

Senate on (A) the comparability of the compensation policies of the

Corporation with the compensation policies of other similar businesses, (B) in the aggregate, the percentage of total cash compensation and payments under employee benefit plans (which shall be

defined in a manner consistent with the Corporation’s proxy statement for the annual meeting of shareholders for the preceding

year) earned by executive officers of the Corporation during the

preceding year that was based on the Corporation’s performance,

and (C) the comparability of the Corporation’s financial performance with the performance of other similar businesses. The report

shall include a copy of the Corporation’s proxy statement for the

annual meeting of shareholders for the preceding year.

(2) Notwithstanding the first sentence of subsection (c), after

the date of the enactment of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, the Corporation may not

enter into any agreement or contract to provide any payment of

money or other thing of current or potential value in connection

with the termination of employment of any executive officer of the

Corporation, unless such agreement or contract is approved in advance by the Director of the Office of Federal Housing Enterprise

Oversight of the Department of Housing and Urban Development.

The Director may not approve any such agreement or contract unless the Director determines that the benefits provided under the

agreement or contract are comparable to benefits under such agreements for officers of other public and private entities involved in

financial services and housing interests who have comparable duties and responsibilities. For purposes of this paragraph, any renegotiation, amendment, or change after such date of enactment to

any such agreement or contract entered into on or before such date

of enactment shall be considered entering into an agreement or

contract.

(3) For purposes of this subsection, the term ‘‘executive officer’’

has the meaning given the term in section 1303 of the Federal

Housing Enterprises Financial Safety and Soundness Act of 1992.

CAPITAL STOCK

SEC. 304. ø12 U.S.C. 1453¿ (a) The common stock of the Corporation shall consist of voting common stock, which shall be

issued to such holders in the manner and amount, and subject to

any limitations on concentration of ownership, as may be established by the Corporation.

(b) The voting common stock shall have such par value and

other characteristics as the Corporation provides. The voting common stock shall be vested with all voting rights, each share being

entitled to 1 vote. The free transferability of the voting common
1205 Sec. 305 FHLMC

stock at all times to any person, firm, corporation or other entity

shall not be restricted except that, as to the Corporation, it shall

be transferable only on the books of the Corporation.

MORTGAGE OPERATIONS

SEC. 305. ø12 U.S.C. 1454¿ (a)(1) The Corporation is authorized to purchase, and make commitments to purchase, residential

mortgages. The Corporation may hold and deal with, and sell or

otherwise dispose of, pursuant to commitments or otherwise, any

such mortgage or interest therein. The operations of the Corporation under this section shall be confined so far as practicable to residential mortgages which are deemed by the Corporation to be of

such quality, type, and class as to meet generally the purchase

standards imposed by private institutional mortgage investors. The

Corporation may establish requirements, and impose charges or

fees, which may be regarded as elements of pricing, for different

classes of sellers or servicers, and for such purposes the Corporation is authorized to classify sellers or services according to type,

size, location, assets, or, without limitation on the generality of the

foregoing, on such other basis or bases of differentiation as the Corporation may consider necessary or appropriate to effectuate the

purposes or provisions of this Act. The Corporation may specify requirements concerning among other things, (A) minimum net

worth; (B) supervisory mechanisms; (C) warranty compensation

mechanisms; (D) prior approval of facilities; (E) prior origination

and servicing experience with respect to different types of mortgages; (F) capital contributions and substitutes; (G) mortgage purchase volume limits; and (H) reduction of mortgage purchases during periods of borrowing. With respect to any particular type of

seller, the Corporation shall not be required to make available programs involving prior approval of mortgages, optional delivery of

mortgages, and purchase of other than conventional mortgages to

an extent greater than the Corporation elects to make such programs available to other types of eligible sellers. Any requirements

specified by the Corporation pursuant to the preceding three sentences must bear a rational relationship to the purposes or provisions of this Act, but will not be considered discriminatory solely

on the grounds of differential effects on types of eligible sellers. Insofar as is practicable, the Corporation shall make reasonable efforts to encourage participation in its programs by each type of eligible seller. Nothing in this section authorizes the Corporation to

impose any charge or fee upon any mortgagee approved by the Secretary of Housing and Urban Development for participation in any

mortgage insurance program under the National Housing Act solely because of such status.

(2) No conventional mortgages secured by a property comprising one- to four-family dwelling units shall be purchased under

this section if the outstanding principal balance of the mortgage at

the time of purchase exceeds 80 per centum of the value of the

property securing the mortgage, unless (A) the seller retains a participation of not less than 10 per centum in the mortgage; (B) for

such period and under such circumstances as the Corporation may

require, the seller agrees to repurchase or replace the mortgage
Sec. 305 FHLMC 1206

1Section 202(a) of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1999, Public Law 105–276, approved October 21,

1998, amended this sentence by striking ‘‘or’’ at the end of clause (B) and by striking the period

at the end of the sentence and adding the following: ‘‘; or (D) the mortgage is subject to default

loss protection that the Corporation determines is financially equal or superior, on an individual

or pooled basis, to the protection provided by clause (C) of this sentence: Provided, That if the

Director of the Office of Federal Housing Enterprise Oversight subsequently finds that such default loss protection determined by the Corporation does not provide such equal or superior protection, the Corporation shall provide such additional default loss protection for such mortgage,

as approved by the Director of the Office of Federal Housing Enterprise Oversight, necessary

to provide such equal or superior protection.’’.

Section 122 of division A of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Public Law 105–277, approved October 21, 1998, provides that ‘‘[u]pon enactment of H.R. 4194, the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999, section 202 of that Act is hereby repealed.’’.

upon demand of the Corporation in the event that the mortgage is

in default; or (C) that portion of the unpaid principal balance of the

mortgage which is in excess of such 80 per centum is guaranteed

or insured by a qualified insurer as determined by the Corporation 1. The Corporation shall not issue a commitment to purchase

a conventional mortgage prior to the date the mortgage is originated, if such mortgage is eligible for purchase under the preceding

sentence only by reason of compliance with the requirements of

clause (A) of such sentence. The Corporation may purchase a conventional mortgage which was originated more than one year prior

to the purchase date only if the seller is the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the National

Credit Union Administration, or any other seller currently engaged

in mortgage lending or investing activities. With respect to any

transaction in which a seller contemporaneously sells mortgages

originated more than one year old prior to the date of sale to the

Corporation and receives in payment for such mortgages securities

representing undivided interests only in those mortgages, the Corporation shall not impose any fee or charge upon an eligible seller

which is not a member of a Federal Home Loan Bank which differs

from that imposed upon an eligible seller which is such a member.

The Corporation shall establish limitations governing the maximum original principal obligation of conventional mortgages that

are purchased by it; in any case in which the Corporation purchases a participation interest in such a mortgage, the limitation

shall be calculated with respect to the total original principal obligation of the mortgage and not merely with respect to the interest

purchased by the Corporation. Such limitations shall not exceed

$93,750 for a mortgage secured by a single-family residence,

$120,000 for a mortgage secured by a two-family residence, and

$145,000 for a mortgage secured by a three-family residence, and

$180,000 for a mortgage secured by a four-family residence, except

that such maximum limitations shall be adjusted effective January

1 of each year beginning with 1981. Each such adjustment shall be

made by adding to each such amount (as it may have been previously adjusted) a percentage thereof equal to the percentage increase during the twelve-month period ending with the previous

October in the national average one-family house price in the

monthly survey of all major lenders conducted by the Federal

Housing Finance Board. The foregoing limitations may be in-
1207 Sec. 305 FHLMC

creased by not to exceed 50 per centum with respect to properties

located in Alaska, Guam, Hawaii, and the Virgin Islands.

(3) The sale or other disposition by the Corporation of a mortgage under this section may be with or without recourse, and shall

be upon such terms and conditions relating to resale, repurchase,

guaranty, substitution, replacement, or otherwise as the Corporation may prescribe.

(4)(A) The Corporation is authorized to purchase, service, sell,

lend on the security of, and otherwise deal in (i) residential mortgages that are secured by a subordinate lien against a one- to fourfamily residence that is the principal residence of the mortgagor;

and (ii) residential mortgages that are secured by a subordinate

lien against a property comprising five or more family dwelling

units. If the Corporation shall have purchased, serviced, sold, or

otherwise dealt with any other outstanding mortgage, secured by

the same residence, the aggregate original amount of such other

mortgages and the mortgage authorized to be purchased, serviced,

sold, or otherwise dealt with under this paragraph shall not exceed

the applicable limitation determined under paragraph (2).

(B) The Corporation shall establish limitations governing the

maximum original principal obligation of such mortgages. In any

case in which the Corporation purchases a participation interest in

such a mortgage, the limitation shall be calculated with respect to

the total original principal obligation of such mortgage secured by

a subordinate lien and not merely with respect to the interest purchased by the Corporation. Such limitations shall not exceed (i)

with respect to mortgages described in subparagraph (A)(i), 50 per

centum of the single-family residence mortgage limitation determined under paragraph (2); and (ii) with respect to mortgages described in subparagraph (A)(ii), the applicable limitation determined under paragraph (2).

(C) No subordinate mortgage against a one- to four-family residence shall be purchased by the Corporation if the total outstanding indebtedness secured by the property as a result of such

mortgage exceeds 80 per centum of the value of such property unless (i) that portion of such total outstanding indebtedness that exceeds such 80 per centum is guaranteed or insured by a qualified

insurer as determined by the Corporation; (ii) the seller retains a

participation of not less than 10 per centum in the mortgage; or

(iii) for such period and under such circumstances as the Corporation may require, the seller agrees to repurchase or replace the

mortgage upon demand of the Corporation in the event that the

mortgage is in default. The Corporation shall not issue a commitment to purchase a subordinate mortgage prior to the date the

mortgage is originated, if such mortgage is eligible for purchase

under the preceding sentence only by reason of compliance with the

requirements of clause (iii) of such sentence.

(5) The Corporation is authorized to lend on the security of,

and to make commitments to lend on the security of, any mortgage

that the Corporation is authorized to purchase under this section.

The volume of the Corporation’s lending activities and the establishment of its loan ratios, interest rates, maturities, and charges

or fees in its secondary market operations under this paragraph,

shall be determined by the Corporation from time to time; and such
Sec. 306 FHLMC 1208

determinations shall be consistent with the objectives that the

lending activities shall be conducted on such terms as will reasonably prevent excessive use of the Corporation’s facilities, and that

the operations of the Corporation under this paragraph shall be

within its income derived from such operations and that such operations shall be fully self-supporting. The corporation shall not be

permitted to use its lending authority under this paragraph (A) to

advance funds to a mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages in the

secondary market; or (B) to originate mortgage loans. Notwithstanding any Federal, State, or other law to the contrary, the Corporation is hereby empowered, in connection with any loan under

this paragraph, whether before or after any default, to provide by

contract with the borrower for the settlement or extinguishment,

upon default, of any redemption, equitable, legal, or other right,

title, or interest of the borrower in any mortgage or mortgages that

constitute the security for the loan; and with respect to any such

loan, in the event of default and pursuant otherwise to the terms

of the contract, the mortgages that constitute such security shall

become the absolute property of the Corporation.

(b) Notwithstanding any other law, authority to enter into and

to perform and carry out any transactions or matter referred to in

this section is conferred on any Federal home loan bank, Resolution

Trust Corporation, the Federal Deposit Insurance Corporation, the

National Credit Union Administration, any Federal savings and

loan association, any Federal home loan bank member, and any

other financial institution the deposits or accounts of which are insured by any agency of the United States to the extent that Congress has the power to confer such authority.

(c) The Corporation may not implement any new program (as

such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992) before obtaining the approval of the Secretary under section 1322 of such Act.

OBLIGATIONS AND SECURITIES

SEC. 306. ø12 U.S.C. 1455¿ (a) The Corporation is authorized,

upon such terms and conditions as it may prescribe, to borrow, to

give security, to pay interest or other return, and to issue notes,

debentures, bonds, or other obligations, or other securities, including without limitation mortgage-backed securities guaranteed by

the Government National Mortgage Association in the manner provided in section 306(g) of the National Housing Act. Any obligation

or security of the Corporation shall be valid and binding notwithstanding that a person or persons purporting to have executed or

attested the same may have died, become under disability, or

ceased to hold office or employment before the issuance thereof.

(b) The Corporation may, by regulations or by writing executed

by the Corporation, establish prohibitions or restrictions upon the

creation of indebtedness or obligations of the Corporation or of

liens or charges upon property of the Corporation, including afteracquired property, and create liens and charges, which may be

floating liens or charges, upon all or any part or parts of the property of the Corporation, including after-acquired property. Such
1209 Sec. 306 FHLMC

prohibitions, restrictions, liens, and charges shall have effect, including without limitation on the generality of the foregoing such

rank and priority, as may be provided by regulations of the Corporation or by writings executed by the Corporation, and shall create causes of action which may be enforced by action in the United

States District Court for the District of Columbia or in the United

States district court for any judicial district in which any of the

property affected is located. Process in any such action may run to

and be served in any judicial district or any place subject to the

jurisdiction of the United States.

(c)(1) The Secretary of the Treasury may purchase any obligations issued under subsection (a). For such purpose, the Secretary

may use a public debt transaction the proceeds of the sale of any

securities issued under chapter 31 of title 31, United States Code,

and the purposes for which securities may be issued under such

chapter are extended to include such purpose.

(2) The Secretary of the Treasury shall not at any time purchase any obligations under this subsection if the purchase would

increase the aggregate principal amount of the outstanding holdings of obligations under this subsection by the Secretary to an

amount greater than $2,250,000,000.

(3) Each purchase of obligations by the Secretary of the Treasury under this subsection shall be upon terms and conditions established to yield a rate of return determined by the Secretary to

be appropriate, taking into consideration the current average rate

on outstanding marketable obligations of the United States as of

the last day of the month preceding the making of the purchase.

(4) The Secretary of the Treasury may at any time sell, upon

terms and conditions and at prices determined by the Secretary,

any of the obligations acquired by the Secretary under this subsection.

(5) All redemptions, purchases and sales by the Secretary of

the Treasury of obligations under this subsection shall be treated

as public debt transactions of the United States.

(d) The provisions of this section and of any restriction, prohibition, lien, or charge referred to in subsection (b) shall be fully effective notwithstanding any other law, including without limitation

on the generality of the foregoing any law of or relating to sovereign immunity or priority.

(e)(1) Any person, trust, or organization created pursuant to or

existing under the laws of the United States or any State shall be

authorized to purchase, hold, and invest in mortgages, obligations,

or other securities which are or have been sold by the Corporation

pursuant to this section or pursuant to section 305 of this title to

the same extent that such person, trust, or organization is authorized under any applicable law to purchase, hold, or invest in obligations issued by or guaranteed as to principal and interest by the

United States or any agency or instrumentality thereof. Where

State law limits the purchase, holding, or investment in obligations

issued by the United States by such a person, trust, or organization, such Corporation mortgages, obligations, and other securities

shall be considered to be obligations issued by the United States

for purposes of the limitation.
Sec. 306 FHLMC 1210

1So in law. This subsection, as in effect before it was amended by section 1382(n)(2) of the

Housing and Community Development Act of 1992, Pub. L. 102–550, approved October 28, 1992,

indicates that this reference was probably intended to refer to section 306(c). 2So in law. Probably intended to refer to section 1316 of such Act, relating to assessments.

(2) The provisions of paragraph (1) shall not apply with respect

to a particular person, trust, or organization or class thereof in any

State which, after December 21, 1979, enacts a statute which specifically names the Corporation and either prohibits or provides for

a more limited authority to purchase, hold, or invest in such securities by such person, trust, or organization or class thereof than is

provided in paragraph (1). The enactment by any State of any statute of the type described in the preceding sentence shall not affect

the validity of any contractual commitment to purchase, hold, or invest which was made prior thereto.

(3) Any authority granted by paragraph (1) and not granted by

any other Federal statute shall expire as of the end of June 30,

1985. Such expiration shall not affect the validity of the contractual

commitment to purchase, hold, or invest, which was made prior

thereto pursuant to paragraph (1), and shall not affect the validity

of any contractual commitment or other action to purchase, hold,

or invest pursuant to any other authorization.

(f) The Corporation may have preferred stock on such terms

and conditions as the Board of Directors shall prescribe. Any preferred stock shall not be entitled to vote with respect to the election

of any member of the Board of Directors.

(g) All securities issued or guaranteed by the Corporation

(other than securities guaranteed by the Corporation that are

backed by mortgages not purchased by the Corporation) shall, to

the same extent as securities that are direct obligations of or obligations guaranteed as to principal or interest by the United States,

be deemed to be exempt securities within the meaning of the laws

administered by the Securities and Exchange Commission.

(h)(1) The Corporation may not guarantee mortgage-backed securities or mortgage related payment securities backed by mortgages not purchased by the Corporation.

(2) The Corporation shall insert appropriate language in all of

the obligations and securities of the Corporation issued under this

section and section 305 clearly indicating that such obligations and

securities, together with the interest thereon, are not guaranteed

by the United States and do not constitute a debt or obligation of

the United States or any agency or instrumentality thereof other

than the Corporation.

(i) Except for fees paid pursuant to sections 303(c) and

1316(c) 1 of this Act and assessments pursuant to section 106 2 of

the Federal Housing Enterprises Financial Safety and Soundness

Act of 1992, no fee or charge may be assessed or collected by the

United States (including any executive department, agency, or

independent establishment of the United States) on or with regard

to the purchase, acquisition, sale, pledge, issuance, guarantee, or

redemption of any mortgage, asset, obligation, or other security by

the Corporation. No provision of this subsection shall affect the

purchase of any obligation by any Federal home loan bank pursuant to section 303(a).
1211 Sec. 307 FHLMC

1 August 9, 1989.

(j)(1) Any notes, debentures, or substantially identical types of

unsecured obligations of the Corporation evidencing money borrowed, whether general or subordinated, shall be issued upon the

approval of the Secretary of the Treasury and shall have such maturities and bear such rate or rates of interest as may be determined by the Corporation with the approval of the Secretary of the

Treasury.

(2) Any notes, debentures, of substantially identical types of

unsecured obligations of the Corporation having maturities of 1

year or less that the corporation has issued or is issuing as of the

date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 1 shall be deemed to have been

approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 365 days after such

date of enactment.

(3) Any notes, debentures or substantially identical types of

unsecured obligations of the Corporation having maturities of more

than 1 year that the Corporation has issued or is issuing as of the

date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 1 shall be deemed to have been

approved by the Secretary of the Treasury as required by this subsection. Such deemed approval shall expire 60 days after such date

of enactment.

(k)(1) Any securities in the form of debt obligations or trust

certificates of beneficial interest, or both, and based upon mortgages held and set aside by the Corporation, shall be issued upon

the approval of the Secretary of the Treasury and shall have such

maturities and shall bear such rate or rates of interest as may be

determined by the Corporation with the approval of the Secretary

of the Treasury.

(2) Any securities in the form of debt obligations or trust certificates of beneficial interest, or both, and based upon mortgages

held and set aside by the Corporation, that the Corporation has

issued or is issuing as of the date of the enactment of the Financial

Institutions Reform, Recovery, and Enforcement Act of 1989 1 shall

be deemed to have been approved by the Secretary of the Treasury

as required by this subsection.

MISCELLANEOUS PROVISIONS

SEC. 307. ø12 U.S.C. 1456¿ (a) All rights and remedies of the

Corporation, including without limitation on the generality of the

foregoing any rights and remedies of the Corporation on, under, or

with respect to any mortgage or any obligation secured thereby,

shall be immune from impairment, limitation, or restriction by or

under (1) any law (except laws enacted by the Congress expressly

in limitation of this sentence) which becomes effective after the acquisition by the Corporation of the subject or property on, under,

or with respect to which such right or remedy arises or exists or

would so arise or exist in the absence of such law, or (2) any administrative or other action which becomes effective after such acquisition. The Corporation is authorized to conduct its business

without regard to any qualification or similar statute in any State.
Sec. 307 FHLMC 1212

(b)(1) The programs, activities, receipts, expenditures, and financial transactions of the Corporation shall be subject to audit by

the Comptroller General of the United States under such rules and

regulations as may be prescribed by the Comptroller General. The

representatives of the General Accounting Office shall have access

to all books, accounts, financial records, reports, files and all other

papers, things, or property belonging to or in use by the Corporation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or

securities held by depositaries, fiscal agents, and custodians. A report on each such audit shall be made by the Comptroller General

to the Congress. The Corporation shall reimburse the General Accounting Office for the full cost of any such audit as billed therefor

by the Comptroller General.

(2) To carry out this subsection, the representatives of the General Accounting Office shall have access, upon request to the Corporation or any auditor for an audit of the Corporation under subsection (d), to any books, accounts, financial records, reports, files,

or other papers, things, or property belonging to or in use by the

Corporation and used in any such audit and to any papers, records,

files, and reports of the auditor used in such an audit.

(c)(1) The Corporation shall submit to the Director of the Office

of Federal Housing Enterprise Oversight of the Department of

Housing and Urban Development annual and quarterly reports of

the financial condition and operations of the Corporation which

shall be in such form, contain such information, and be submitted

on such dates as the Director shall require.

(2) Each such annual report shall include—

(A) financial statements prepared in accordance with generally accepted accounting principles;

(B) any supplemental information or alternative presentation that the Director may require; and

(C) an assessment (as of the end of the Corporation’s most

recent fiscal year), signed by the chief executive officer and

chief accounting or financial officer of the Corporation, of—

(i) the effectiveness of the internal control structure

and procedures of the Corporation; and

(ii) the compliance of the Corporation with designated

safety and soundness laws.

(3) The Corporation shall also submit to the Director any other

reports required by the Director pursuant to section 1314 of the

Federal Housing Enterprises Financial Safety and Soundness Act

of 1992.

(4) Each report of financial condition shall contain a declaration by the president, vice president, treasurer, or any other officer

designated by the Board of Directors of the Corporation to make

such declaration, that the report is true and correct to the best of

such officer’s knowledge and belief.

(d)(1) The Corporation shall have an annual independent audit

made of its financial statements by an independent public accountant in accordance with generally accepted auditing standards.

(2) In conducting an audit under this subsection, the independent public accountant shall determine and report on whether

the financial statements of the Corporation (A) are presented fairly
1213 Sec. 307 FHLMC

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

in accordance with generally accepted accounting principles, and

(B) to the extent determined necessary by the Director, comply

with any disclosure requirements imposed under subsection

(c)(2)(B).

(e)(1) The Corporation shall collect, maintain, and provide to

the Secretary, in a form determined by the Secretary, data relating

to its mortgages on housing consisting of 1 to 4 dwelling units.

Such data shall include—

(A) the income, census tract location, race, and gender of

mortgagors under such mortgages;

(B) the loan-to-value ratios of purchased mortgages at the

time of origination;

(C) whether a particular mortgage purchased is newly

originated or seasoned;

(D) the number of units in the housing subject to the mortgage and whether the units are owner-occupied; and

(E) any other characteristics that the Secretary considers

appropriate, to the extent practicable.

(2) The Corporation shall collect, maintain, and provide to the

Secretary, in a form determined by the Secretary, data relating to

its mortgages on housing consisting of more than 4 dwelling units.

Such data shall include—

(A) census tract location of the housing;

(B) income levels and characteristics of tenants of the

housing (to the extent practicable);

(C) rent levels for units in the housing;

(D) mortgage characteristics (such as the number of units

financed per mortgage and the amount of loans);

(E) mortgagor characteristics (such as nonprofit, for-profit,

limited equity cooperatives);

(F) use of funds (such as new construction, rehabilitation,

refinancing);

(G) type of originating institution; and

(H) any other information that the Secretary considers appropriate, to the extent practicable.

(3)(A) Except as provided in subparagraph (B), this subsection

shall apply only to mortgages purchased by the Corporation after

December 31, 1992.

(B) This subsection shall apply to any mortgage purchased by

the Corporation after the date determined under subparagraph (A)

if the mortgage was originated before such date, but only to the extent that the data referred in paragraph (1) or (2), as applicable,

is available to the Corporation.

(f)(1) The Corporation shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives 1, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Secretary a report on its activities under subpart B of
Sec. 307 FHLMC 1214

part 2 of subtitle A of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992.

(2) The report under this subsection shall—

(A) include, in aggregate form and by appropriate category,

statements of the dollar volume and number of mortgages on

owner-occupied and rental properties purchased which relate

to each of the annual housing goals established under such

subpart;

(B) include, in aggregate form and by appropriate category,

statements of the number of families served by the Corporation, the income class, race, and gender of homebuyers served,

the income class of tenants of rental housing (to the extent

such information is available), the characteristics of the census

tracts, and the geographic distribution of the housing financed;

(C) include a statement of the extent to which the mortgages purchased by the Corporation have been used in conjunction with public subsidy programs under Federal law;

(D) include statements of the proportion of mortgages on

housing consisting of 1 to 4 dwelling units purchased by the

Corporation that have been made to first-time homebuyers, as

soon as providing such data is practicable, and identifying any

special programs (or revisions to conventional practices) facilitating homeownership opportunities for first-time homebuyers;

(E) include, in aggregate form and by appropriate category,

the data provided to the Secretary under subsection (e)(1)(B);

(F) compare the level of securitization versus portfolio activity;

(G) assess underwriting standards, business practices, repurchase requirements, pricing, fees, and procedures, that affect the purchase of mortgages for low- and moderate-income

families, or that may yield disparate results based on the race

of the borrower, including revisions thereto to promote affordable housing or fair lending;

(H) describe trends in both the primary and secondary

multifamily housing mortgage markets, including a description

of the progress made, and any factors impeding progress, toward standardization and securitization of mortgage products

for multifamily housing;

(I) describe trends in the delinquency and default rates of

mortgages secured by housing for low- and moderate-income

families that have been purchased by the Corporation, including a comparison of such trends with delinquency and default

information for mortgage products serving households with incomes above the median level that have been purchased by the

Corporation, and evaluate the impact of such trends on the

standards and levels of risk of mortgage products serving lowand moderate-income families;

(J) describe in the aggregate the seller and servicer network of the Corporation, including the volume of mortgages

purchased from minority-owned, women-owned, and community-oriented lenders, and any efforts to facilitate relationships

with such lenders;

(K) describe the activities undertaken by the Corporation

with nonprofit and for-profit organizations and with State and
1215 Sec. 308 FHLMC

local governments and housing finance agencies, including how

the Corporation’s activities support the objectives of comprehensive housing affordability strategies under section 105 of

the Cranston-Gonzalez National Affordable Housing Act; and

(L) include any other information that the Secretary considers appropriate.

(3)(A) The Corporation shall make each report under this subsection available to the public at the principal and regional offices

of the Corporation.

(B) Before making a report under this subsection available to

the public, the Corporation may exclude from the report information that the Secretary has determined is proprietary information

under section 1326 of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992.

(g)(1) Not later than 4 months after the date of enactment of

the Federal Housing Enterprises Financial Safety and Soundness

Act of 1992, the Corporation shall appoint an Affordable Housing

Advisory Council to advise the Corporation regarding possible

methods for promoting affordable housing for low- and moderateincome families.

(2) The Affordable Housing Advisory Council shall consist of 15

individuals, who shall include representatives of community-based

and other nonprofit and for-profit organizations and State and local

government agencies actively engaged in the promotion, development, or financing of housing for low- and moderate-income families.

PENAL PROVISIONS

SEC. 308. ø12 U.S.C. 1457¿ Except as expressly authorized by

statute of the United States, no individual or organization (except

the Corporation) shall use the term ‘‘Federal Home Loan Mortgage

Corporation’’, or any combination of words including the words

‘‘Federal’’, and ‘‘Home Loan’’, and ‘‘Mortgage’’, as a name or part

thereof under which any individual or organization does any business, but this sentence shall not make unlawful the use of any

name under which business is being done on the date of the enactment of this Act. No individual or organization shall use or display

(1) any sign, device, or insigne prescribed or approved by the Corporation for use or display by the Corporation or by members of the

Federal home loan banks, (2) any copy, reproduction, or colorable

imitation of any such signs, device, or insigne, or (3) any sign, device, or insigne reasonably calculated to convey the impression that

it is a sign, device, or insigne used by the Corporation or prescribed

or approved by the Corporation, contrary to regulations of the Corporation prohibiting, or limiting or restricting, such use or display

by such individual or organization. An organization violating this

subsection shall for each violation be punished by a fine of not

more than $10,000. An officer or member of an organization participating or knowingly acquiescing in any violation of this subsection

shall be punished by a fine of not more than $5,000 or imprisonment for not more than one year, or both. An individual violating

this subsection shall for each violation be punished as set forth in

the sentence next preceding this sentence.
Sec. 309 FHLMC 1216

TERRITORIAL APPLICABILITY

SEC. 309. ø12 U.S.C. 1458¿ Notwithstanding any other law,

this title shall be applicable to the several States, the District of

Columbia, the Commonwealth of Puerto Rico, and the territories

and possessions of the United States.

SEPARABILITY

SEC. 310. ø12 U.S.C. 1459¿ Notwithstanding any other evidences of the intention of Congress, it is hereby declared to be the

controlling intent of Congress that if any provision of this title, or

the application thereof to any person or circumstances, is held invalid, the remainder of this title, or the application of such provision to persons or circumstances other than those as to which it is

held invalid, shall not be affected thereby.
1217

FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY

AND SOUNDNESS ACT OF 1992

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3941; 12 U.S.C. 4501 et seq.]

TITLE XIII—GOVERNMENT SPONSORED

ENTERPRISES

SEC. 1301. ø12 U.S.C. 4501 note¿ SHORT TITLE.

This title may be cited as the ‘‘Federal Housing Enterprises Financial Safety and Soundness Act of 1992’’.

SEC. 1302. ø12 U.S.C. 4501¿ CONGRESSIONAL FINDINGS.

The Congress finds that—

(1) the Federal National Mortgage Association and the

Federal Home Loan Mortgage Corporation (referred to in this

section collectively as the ‘‘enterprises’’), and the Federal Home

Loan Banks (referred to in this section as the ‘‘Banks’’), have

important public missions that are reflected in the statutes

and charter Acts establishing the Banks and the enterprises;

(2) because the continued ability of the Federal National

Mortgage Association and the Federal Home Loan Mortgage

Corporation to accomplish their public missions is important to

providing housing in the United States and the health of the

Nation’s economy, more effective Federal regulation is needed

to reduce the risk of failure of the enterprises;

(3) considering the current operating procedures of the

Federal National Mortgage Association, the Federal Home

Loan Mortgage Corporation, and the Federal Home Loan

Banks, the enterprises and the Banks currently pose low financial risk of insolvency;

(4) neither the enterprises nor the Banks, nor any securities or obligations issued by the enterprises or the Banks, are

backed by the full faith and credit of the United States;

(5) an entity regulating the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation

should have sufficient autonomy from the enterprises and special interest groups;

(6) an entity regulating such enterprises should have the

authority to establish capital standards, require financial disclosure, prescribe adequate standards for books and records

and other internal controls, conduct examinations when necessary, and enforce compliance with the standards and rules

that it establishes;
Sec. 1303 GSE FINANCIAL SAFETY AND SOUNDNESS 1218

(7) the Federal National Mortgage Association and the

Federal Home Loan Mortgage Corporation have an affirmative

obligation to facilitate the financing of affordable housing for

low- and moderate-income families in a manner consistent

with their overall public purposes, while maintaining a strong

financial condition and a reasonable economic return; and

(8) the Federal Home Loan Bank Act should be amended

to emphasize that providing for financial safety and soundness

of the Federal Home Loan Banks is the primary mission of the

Federal Housing Finance Board.

SEC. 1303. ø12 U.S.C. 4502¿ DEFINITIONS.

For purposes of this title:

(1) AFFILIATE.—Except as provided by the Director, the

term ‘‘affiliate’’ means any entity that controls, is controlled by,

or is under common control with, an enterprise.

(2) CAPITAL DISTRIBUTION.—

(A) IN GENERAL.—The term ‘‘capital distribution’’

means—

(i) any dividend or other distribution in cash or in

kind made with respect to any shares of, or other ownership interest in, an enterprise, except a dividend

consisting only of shares of the enterprise;

(ii) any payment made by an enterprise to repurchase, redeem, retire, or otherwise acquire any of its

shares, including any extension of credit made to finance an acquisition by the enterprise of such shares;

and

(iii) any transaction that the Director determines

by regulation to be, in substance, the distribution of

capital.

(B) EXCEPTION.—Any payment made by an enterprise

to repurchase its shares for the purpose of fulfilling an obligation of the enterprise under an employee stock ownership plan that is qualified under section 401 of the Internal Revenue Code of 1986 or any substantially equivalent

plan, as determined by the Director, shall not be considered a capital distribution.

(3) COMPENSATION.—The term ‘‘compensation’’ means any

payment of money or the provision of any other thing of current or potential value in connection with employment.

(4) CORE CAPITAL.—The term ‘‘core capital’’ means, with

respect to an enterprise, the sum of the following (as determined in accordance with generally accepted accounting principles):

(A) The par or stated value of outstanding common

stock.

(B) The par or stated value of outstanding perpetual,

noncumulative preferred stock.

(C) Paid-in capital.

(D) Retained earnings.

The core capital of an enterprise shall not include any amounts

that the enterprise could be required to pay, at the option of

investors, to retire capital instruments.
1219 Sec. 1303 GSE FINANCIAL SAFETY AND SOUNDNESS

1October 28, 1992.

(5) DIRECTOR.—The term ‘‘Director’’ means the Director of

the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development.

(6) ENTERPRISE.—The term ‘‘enterprise’’ means—

(A) the Federal National Mortgage Association and

any affiliate thereof; and

(B) the Federal Home Loan Mortgage Corporation and

any affiliate thereof.

(7) EXECUTIVE OFFICER.—The term ‘‘executive officer’’

means, with respect to an enterprise, the chairman of the

board of directors, chief executive officer, chief financial officer,

president, vice chairman, any executive vice president, and any

senior vice president in charge of a principal business unit, division, or function.

(8) LOW-INCOME.—The term ‘‘low-income’’ means—

(A) in the case of owner-occupied units, income not in

excess of 80 percent of area median income; and

(B) in the case of rental units, income not in excess of

80 percent of area median income, with adjustments for

smaller and larger families, as determined by the

Secretary.

(9) MEDIAN INCOME.—The term ‘‘median income’’ means,

with respect to an area, the unadjusted median family income

for the area, as determined and published annually by the Secretary.

(10) MODERATE-INCOME.—The term ‘‘moderate-income’’

means—

(A) in the case of owner-occupied units, income not in

excess of area median income; and

(B) in the case of rental units, income not in excess of

area median income, with adjustments for smaller and

larger families, as determined by the Secretary.

(11) MORTGAGE PURCHASES.—The term ‘‘mortgage purchases’’ includes mortgages purchased for portfolio or

securitization.

(12) MULTIFAMILY HOUSING.—The term ‘‘multifamily housing’’ means a residence consisting of more than 4 dwelling

units.

(13) NEW PROGRAM.—The term ‘‘new program’’ means any

program for the purchasing, servicing, selling, lending on the

security of, or otherwise dealing in, conventional mortgages

that—

(A) is significantly different from programs that have

been approved under this Act or that were approved or engaged in by an enterprise before the date of the enactment

of this Act 1; or

(B) represents an expansion, in terms of the dollar volume or number of mortgages or securities involved, of programs above limits expressly contained in any prior approval.
Sec. 1304 GSE FINANCIAL SAFETY AND SOUNDNESS 1220

(14) OFFICE.—The term ‘‘Office’’ means the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development.

(15) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(16) SINGLE FAMILY HOUSING.—The term ‘‘single family

housing’’ means a residence consisting of 1 to 4 dwelling units.

(17) STATE.—The term ‘‘State’’ means the States 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, the Trust

Territory of the Pacific Islands, and any other territory or possession of the United States.

(18) TOTAL CAPITAL.—The term ‘‘total capital’’ means, with

respect to an enterprise, the sum of the following:

(A) The core capital of the enterprise;

(B) A general allowance for foreclosure losses, which—

(i) shall include an allowance for portfolio mortgage losses, an allowance for nonreimbursable foreclosure costs on government claims, and an allowance

for liabilities reflected on the balance sheet for the enterprise for estimated foreclosure losses on mortgagebacked securities; and

(ii) shall not include any reserves of the enterprise

made or held against specific assets.

(C) Any other amounts from sources of funds available

to absorb losses incurred by the enterprise, that the Director by regulation determines are appropriate to include in

determining total capital.

(19) VERY LOW-INCOME.—The term ‘‘very low-income’’

means—

(A) in the case of owner-occupied units, income not in

excess of 60 percent of area median income; and

(B) in the case of rental units, income not in excess of

60 percent of area median income, with adjustments for

smaller and larger families, as determined by the

Secretary.

SEC. 1304. ø12 U.S.C. 4503¿ PROTECTION OF TAXPAYERS AGAINST LIABILITY.

This title and the amendments made by this title may not be

construed as obligating the Federal Government, either directly or

indirectly, to provide any funds to the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or

the Federal Home Loan Banks, or to honor, reimburse, or otherwise guarantee any obligation or liability of the Federal Home

Loan Mortgage Corporation, the Federal National Mortgage Association, or the Federal Home Loan Banks. This title and the

amendments made by this title may not be construed as implying

that any such enterprise or Bank, or any obligations or securities

of such an enterprise or Bank, are backed by the full faith and

credit of the United States.
1221 Sec. 1313 GSE FINANCIAL SAFETY AND SOUNDNESS

Subtitle A—Supervision and Regulation of

Enterprises

PART 1—FINANCIAL SAFETY AND SOUNDNESS

REGULATOR

SEC. 1311. ø12 U.S.C. 4511¿ ESTABLISHMENT OF OFFICE OF FEDERAL

HOUSING ENTERPRISE OVERSIGHT.

There is hereby established an office within the Department of

Housing and Urban Development, which shall be known as the Office of Federal Housing Enterprise Oversight.

SEC. 1312. ø12 U.S.C. 4512¿ DIRECTOR.

(a) APPOINTMENT.—The Office shall be under the management

of a Director, who shall be appointed by the President, by and with

the advice and consent of the Senate, from among individuals who

are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a demonstrated understanding of mortgage security markets and housing

finance. An individual may not be appointed as Director if the individual has served as an executive officer or director of an enterprise at any time during the 3-year period ending upon the nomination of such individual for appointment as Director.

(b) TERM.—The Director shall be appointed for a term of 5

years.

(c) VACANCY.—A vacancy in the position of Director shall be

filled in the manner in which the original appointment was made

under subsection (a).

(d) SERVICE AFTER END OF TERM.—A Director may serve after

the expiration of the term for which the Director was appointed

until a successor Director has been appointed.

(e) DEPUTY DIRECTOR.—

(1) IN GENERAL.—The Office shall have a Deputy Director

who shall be appointed by the Director from among individuals

who are citizens of the United States, have a demonstrated understanding of financial management or oversight, and have a

demonstrated understanding of mortgage security markets and

housing finance. An individual may not be appointed as Deputy Director if the individual has served as an executive officer

or director of an enterprise at any time during the 3-year period ending upon the appointment of such individual as Deputy

Director.

(2) FUNCTIONS.—The Deputy Director shall have such

functions, powers, and duties as the Director shall prescribe. In

the event of the death, resignation, sickness, or absence of the

Director, the Deputy Director shall serve as acting Director

until the return of the Director or the appointment of a successor pursuant to subsection (c).

SEC. 1313. ø12 U.S.C. 4513¿ DUTY AND AUTHORITY OF DIRECTOR.

(a) DUTY.—The duty of the Director shall be to ensure that the

enterprises are adequately capitalized and operating safely, in accordance with this title.
Sec. 1313 GSE FINANCIAL SAFETY AND SOUNDNESS 1222

1Section 202(b) of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1999, Public Law 105–276, approved October 21,

1998, amended this subsection by redesignating paragraphs (9), (10), and (11) and inserting a

new paragraph (9), as follows:

‘‘(9) default loss protection levels under section 305(a)(2)(D) of the Federal Home Loan

Mortgage Corporation Act;’’.

Section 122 of division A of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Public Law 105–277, approved October 21, 1998, provides that ‘‘[u]pon enactment of H.R. 4194, the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999, section 202 of that Act is hereby repealed.’’.

(b) AUTHORITY EXCLUSIVE OF SECRETARY.—The Director is authorized, without the review or approval of the Secretary, to make

such determinations, take such actions, and perform such functions

as the Director determines necessary regarding—

(1) the issuance of regulations to carry out this part, subtitle B, and subtitle C (including the establishment of capital

standards pursuant to subtitle B);

(2) examinations of the enterprises under section 1317;

(3) determining the capital levels of the enterprises and

classification of the enterprises within capital classifications

established under subtitle B;

(4) decisions to appoint conservators for the enterprises;

(5) administrative and enforcement actions under subtitle

B, actions taken under subtitle C with respect to enforcement

of subtitle B, and other matters relating to safety and

soundness;

(6) approval of payments of capital distributions by the enterprises under section 303(c)(2) of the Federal National Mortgage Association Charter Act and section 303(b)(2) of the Federal Home Loan Mortgage Corporation Act;

(7) requiring the enterprises to submit reports under section 1314 of this title, section 309(k) of the Federal National

Mortgage Association Charter Act, and section 307(c) of the

Federal Home Loan Mortgage Corporation Act;

(8) prohibiting the payment of excessive compensation by

the enterprises to any executive officer of the enterprises under

section 1318;

(9) 1 the management of the Office, including the establishment and implementation of annual budgets, the hiring of, and

compensation levels for, personnel of the Office, and annual assessments for the costs of the Office;

(10) conducting research and financial analysis; and

(11) the submission of reports required by the Director

under this title.

(c) AUTHORITY SUBJECT TO APPROVAL OF SECRETARY.—Any determinations, actions, and functions of the Director not referred to

in subsection (b) shall be subject to the review and approval of the

Secretary.

(d) DELEGATION OF AUTHORITY.—The Director may delegate to

officers and employees of the Office any of the functions, powers,

and duties of the Director, as the Director considers appropriate.

(e) INDEPENDENCE IN PROVIDING INFORMATION TO CONGRESS.— The Director shall not be required to obtain the prior approval,

comment, or review of any officer or agency of the United States

before submitting to the Congress, or any committee or sub-
1223 Sec. 1315 GSE FINANCIAL SAFETY AND SOUNDNESS

committee thereof, any reports, recommendations, testimony, or

comments if such submissions include a statement indicating that

the views expressed therein are those of the Director and do not

necessarily represent the views of the Secretary or the President.

SEC. 1314. ø12 U.S.C. 4514¿ AUTHORITY TO REQUIRE REPORTS BY ENTERPRISES.

(a) SPECIAL REPORTS AND REPORTS OF FINANCIAL CONDITION.—

(1) FINANCIAL CONDITION.—The Director may require an

enterprise to submit reports of financial condition and operations (in addition to the annual and quarterly reports required under section 309(k) of the Federal National Mortgage

Association Charter Act and section 307(c) of the Federal

Home Loan Mortgage Corporation Act).

(2) SPECIAL REPORTS.—The Director may also require an

enterprise to submit special reports whenever, in the judgment

of the Director, such reports are necessary to carry out the purposes of this title.

(3) LIMITATION.—The Director may not require the inclusion, in any report pursuant to paragraph (1) or (2), of any information that is not reasonably obtainable by the enterprise.

(4) NOTICE AND DECLARATION.—The Director shall notify

the enterprise, a reasonable period in advance of the date for

submission of any report under this subsection, of any specific

information to be contained in the report and the date for the

submission of the report. Each report under this subsection

shall contain a declaration by the president, vice president,

treasurer, or any other officer designated by the board of directors of the enterprise to make such declaration, that the report

is true and correct to the best of such officer’s knowledge and

belief.

(b) CAPITAL DISTRIBUTIONS.—The Director may require an enterprise to submit a report to the Director after the declaration of

any capital distribution by the enterprise and before making the

capital distribution. The report shall be made in such form and

under such circumstances and shall contain such information as

the Director shall require.

SEC. 1315. ø12 U.S.C. 4515¿ PERSONNEL.

(a) OFFICE PERSONNEL.—The Director may appoint and fix the

compensation of such officers and employees of the Office as the Director considers necessary to carry out the functions of the Director

and the Office. Officers and employees may be paid without regard

to the provisions of chapter 51 and subchapter III of chapter 53 of

title 5, United States Code, relating to classification and General

Schedule pay rates.

(b) COMPARABILITY OF COMPENSATION WITH FEDERAL BANKING

AGENCIES.—In fixing and directing compensation under subsection

(a), the Director shall consult with, and maintain comparability

with compensation of officers and employees of the Office of the

Comptroller of the Currency, the Board of Governors of the Federal

Reserve System, the Federal Deposit Insurance Corporation, and

the Office of Thrift Supervision.

(c) PERSONNEL OF OTHER FEDERAL AGENCIES.—In carrying out

the duties of the Office, the Director may use information, services,
Sec. 1316 GSE FINANCIAL SAFETY AND SOUNDNESS 1224

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

staff, and facilities of any executive agency, independent agency, or

department on a reimbursable basis, with the consent of such agency or department.

(d) REIMBURSEMENT OF HUD.—The Director shall reimburse

the Department of Housing and Urban Development for reasonable

costs incurred by the Department that are directly related to the

operations of the Office.

(e) OUTSIDE EXPERTS AND CONSULTANTS.—Notwithstanding

any provision of law limiting pay or compensation, the Director

may appoint and compensate such outside experts and consultants

as the Director determines necessary to assist the work of the Office.

(f) EQUAL OPPORTUNITY REPORT.—Not later than the expiration of the 180-day period beginning upon the appointment of the

Director under section 1312, the Director shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives 1 and the Committee on Banking, Housing, and Urban

Affairs of the Senate a report containing—

(1) a complete description of the equal opportunity, affirmative action, and minority business enterprise utilization programs of the Office; and

(2) such recommendations for administrative and legislative action as the Director determines appropriate to carry out

such programs.

SEC. 1316. ø12 U.S.C. 4516¿ FUNDING.

(a) ANNUAL ASSESSMENTS.—The Director may, to the extent

provided in appropriation Acts, establish and collect from the enterprises annual assessments in an amount not exceeding the

amount sufficient to provide for reasonable costs and expenses of

the Office, including the expenses of any examinations under section 1317. The initial annual assessment shall include any startup

costs of the Office and any anticipated costs and expenses of the

Office for the following fiscal year.

(b) ALLOCATION OF ANNUAL ASSESSMENT TO ENTERPRISES.— (1) AMOUNT OF PAYMENT.—Each enterprise shall pay to

the Director a proportion of the annual assessment made pursuant to subsection (a) that bears the same ratio to the total

annual assessment that the total assets of each enterprise

bears to the total assets of both enterprises.

(2) TIMING OF PAYMENT.—The annual assessment shall be payable semiannually for each fiscal year, on October 1 and April 1.

(3) DEFINITION.—For the purpose of this section, the term

‘‘total assets’’ means, with respect to an enterprise, the sum

of—

(A) on-balance-sheet assets of the enterprise, as determined in accordance with generally accepted accounting

principles;
1225 Sec. 1316 GSE FINANCIAL SAFETY AND SOUNDNESS

1The date of enactment was October 28, 1992.

(B) the unpaid principal balance of outstanding mortgage-backed securities issued or guaranteed by the enterprise that are not included in subparagraph (A); and

(C) other off-balance-sheet obligations as determined

by the Director.

(c) DEFICIENCIES DUE TO INCREASED COSTS OF REGULATION.— The semiannual payments made pursuant to subsection (b) by any

enterprise that is not classified (for purposes of subtitle B) as adequately capitalized may be increased, as necessary, in the discretion of the Director to pay additional estimated costs of regulation

of the enterprise.

(d) SURPLUS.—If any amount from any annual assessment collected from an enterprise remains unobligated at the end of the

year for which the assessment was collected, such amount shall be

credited to the assessment to be collected from the enterprise for

the following year.

(e) INITIAL SPECIAL ASSESSMENT.—Not later than the expiration of the 30-day period beginning on the date of the enactment

of this Act, 1 the enterprises shall each pay into the Federal Housing Enterprises Oversight Fund established under subsection (f) an

initial assessment of $1,500,000 to cover the startup costs of the

Office, including space and modifications thereof, capital equipment, supplies, recruitment, and activities of the Office during the

period preceding the first annual assessment under subsection (a).

Any amounts collected from an enterprise under this subsection

shall be credited against the first annual assessment collected pursuant to subsection (a), and are hereby appropriated, and shall be

available and used, without fiscal year limitation, as provided in

this section.

(f) FUND.—There is established in the Treasury of the United

States a fund to be known as the Federal Housing Enterprises

Oversight Fund. Any assessments collected pursuant to this section

shall be deposited in the Fund. Amounts in the Fund shall be

available, to the extent provided in appropriation Acts and subsection (e), for—

(1) carrying out the responsibilities of the Director relating

to the enterprises; and

(2) necessary administrative and nonadministrative expenses of the Office to carry out the purposes of this title.

(g) BUDGET AND FINANCIAL REPORTS.— (1) FINANCIAL OPERATING PLANS AND FORECASTS.—Before

the beginning of each fiscal year, the Director shall submit a

copy of the financial operating plans and forecasts for the Office to the Secretary and the Director of the Office of Management and Budget.

(2) REPORTS OF OPERATIONS.—As soon as practicable after

the end of each fiscal year and each quarter thereof, the Director shall submit a copy of the report of the results of the operations of the Office during such period to the Secretary and the

Director of the Office of Management and Budget.

(3) INCLUSION IN PRESIDENT’S BUDGET.—The annual plans,

forecasts, and reports required under this subsection shall be
Sec. 1317 GSE FINANCIAL SAFETY AND SOUNDNESS 1226

included (A) in the Budget of the United States in the appropriate form, and (B) in the congressional justifications of the

Department of Housing and Urban Development for each fiscal

year in a form determined by the Secretary.

SEC. 1317. ø12 U.S.C. 4517¿ EXAMINATIONS.

(a) ANNUAL EXAMINATION.—The Director shall annually conduct an on-site examination under this section of each enterprise

to determine the condition of the enterprise for the purpose of ensuring its financial safety and soundness.

(b) OTHER EXAMINATIONS.—In addition to annual examinations

under subsection (a), the Director may conduct an examination

under this section whenever the Director determines that an examination is necessary to determine the condition of an enterprise for

the purpose of ensuring its financial safety and soundness.

(c) EXAMINERS.—The Director shall appoint examiners to conduct examinations under this section. The Director may contract

with the Comptroller of the Currency, the Board of Governors of

the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Director of the Office of Thrift Supervision for the

services of examiners. The Director shall reimburse such agencies

for any costs of providing examiners from amounts available in the

Federal Housing Enterprises Oversight Fund.

(d) LAW APPLICABLE TO EXAMINERS.—The Director and each

examiner shall have the same authority and each examiner shall

be subject to the same disclosures, prohibitions, obligations, and

penalties as are applicable to examiners employed by the Federal

Reserve banks.

(e) TECHNICAL EXPERTS.—The Director may obtain the services

of any technical experts the Director considers appropriate to provide temporary technical assistance relating to examinations to the

Director, officers, and employees of the Office. The Director shall

describe, in the record of each examination, the nature and extent

of any such temporary technical assistance.

(f) OATHS, EVIDENCE, AND SUBPOENA POWERS.—In connection

with examinations under this section, the Director shall have the

authority provided under section 1379B.

SEC. 1318. ø12 U.S.C. 4518¿ PROHIBITION OF EXCESSIVE COMPENSATION.

(a) IN GENERAL.—The Director shall prohibit the enterprises

from providing compensation to any executive officer of the enterprise that is not reasonable and comparable with compensation for

employment in other similar businesses (including other publicly

held financial institutions or major financial services companies)

involving similar duties and responsibilities.

(b) PROHIBITION OF SETTING COMPENSATION.—In carrying out

subsection (a), the Director may not prescribe or set a specific level

or range of compensation.

SEC. 1319. ø12 U.S.C. 4519¿ AUTHORITY TO PROVIDE FOR REVIEW OF

ENTERPRISES BY RATING ORGANIZATION.

The Director may, on such terms and conditions as the Director deems appropriate, contract with any entity effectively recognized by the Division of Market Regulation of the Securities and

Exchange Commission as a nationally recognized statistical rating
1227 Sec. 1319B GSE FINANCIAL SAFETY AND SOUNDNESS

1The date of enactment was October 28, 1992.

2Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

organization for the purposes of the capital rules for broker-dealers,

to conduct a review of the enterprises.

SEC. 1319A. ø12 U.S.C. 4520¿ EQUAL OPPORTUNITY IN SOLICITATION OF

CONTRACTS.

(a) IN GENERAL.—Each enterprise shall establish a minority

outreach program to ensure the inclusion (to the maximum extent

possible) in contracts entered into by the enterprises of minorities

and women and businesses owned by minorities and women, including financial institutions, investment banking firms, underwriters, accountants, brokers, and providers of legal services.

(b) REPORT.—Not later than the expiration of the 180-day period beginning on the date of the enactment of this Act, 1 each enterprise shall submit to the Committee on Banking, Finance and

Urban Affairs of the House of Representatives 2 and the Committee

on Banking, Housing, and Urban Affairs of the Senate a report describing the actions taken by the enterprise pursuant to subsection

(a).

SEC. 1319B. ø12 U.S.C. 4521¿ ANNUAL REPORTS BY DIRECTOR.

(a) GENERAL REPORT.—The Director shall submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives 2 and the Committee on Banking, Housing, and Urban

Affairs of the Senate, not later than June 15 of each year, a written

report, which shall include—

(1) a description of the actions taken, and being undertaken, by the Director to carry out this title;

(2) a description of the financial safety and soundness of

each enterprise, including the results and conclusions of the

annual examinations of the enterprises conducted under section 1317(a);

(3) any recommendations for legislation to enhance the financial safety and soundness of the enterprises; and

(4) a description of—

(A) whether the procedures established by each enterprise pursuant to section 102(b)(3) of the Flood Disaster

Protection Act of 1973 are adequate and being complied

with, and

(B) the results and conclusions of any examination, as

determined necessary by the Director, to determine the

compliance of the enterprises with the requirements of section 102(b)(3) of such Act, which shall include a description

of the methods used to determine compliance and the

types and sources of deficiencies (if any), and identify any

corrective measures that have been taken to remedy any

such deficiencies,

except that the information described in this paragraph shall

be included only in each of the first, third, and fifth annual re-
Sec. 1319C GSE FINANCIAL SAFETY AND SOUNDNESS 1228

1The date of enactment was September 23, 1994.

2Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

ports under this subsection required to be submitted after the

expiration of the 1-year period beginning on the date of enactment of the Riegle Community Development and Regulatory

Improvement Act of 1994 1.

(b) REPORT ON ENFORCEMENT ACTIONS.—Not later than March

15 of each year, the Director shall submit to the Committee on

Banking, Finance and Urban Affairs of the House of Representatives 2 and the Committee on Banking, Housing, and Urban Affairs

of the Senate a written report describing, for the preceding calendar year, the requests by the Director to the Attorney General

for enforcement actions under subtitle C and describing the disposition of each request, which shall include statements of—

(1) the total number of requests made by the Director;

(2) the number of requests that resulted in the commencement of litigation by the Department of Justice;

(3) the number of requests that did not result in the commencement of litigation by the Department of Justice;

(4) with respect to requests that resulted in the commencement of litigation—

(A) the number of days between the date of the request and the commencement of the litigation; and

(B) the number of days between the date of the commencement and termination of the litigation; and

(5) the number of litigation requests pending at the beginning of the calendar year, the number of requests made during

the calendar year, the number of requests for which action was

completed during the calendar year, and the number of requests pending at the end of the calendar year.

SEC. 1319C. ø12 U.S.C. 4522¿ PUBLIC DISCLOSURE OF FINAL ORDERS

AND AGREEMENTS.

(a) IN GENERAL.—The Director shall make available to the

public—

(1) any written agreement or other written statement for

which a violation may be redressed by the Director or any

modification to or termination thereof, unless the Director, in

the Director’s discretion, determines that public disclosure

would be contrary to the public interest or determines under

subsection (c) that public disclosure would seriously threaten

the financial health or security of the enterprise;

(2) any order that is issued with respect to any administrative enforcement proceeding initiated by the Director under

subtitle C and that has become final; and

(3) any modification to or termination of any final order

made public pursuant to this subsection.

(b) HEARINGS.—All hearings on the record with respect to any

action of the Director or notice of charges issued by the Director
1229 Sec. 1319F GSE FINANCIAL SAFETY AND SOUNDNESS

1The date of enactment was October 28, 1992.

shall be open to the public, unless the Director, in the Director’s

discretion, determines that holding an open hearing would be contrary to the public interest.

(c) DELAY OF PUBLIC DISCLOSURE UNDER EXCEPTIONAL CIRCUMSTANCES.—If the Director makes a determination in writing

that the public disclosure of any final order pursuant to subsection

(a) would seriously threaten the financial health or security of the

enterprise, the Director may delay the public disclosure of such

order for a reasonable time.

(d) DOCUMENTS FILED UNDER SEAL IN PUBLIC ENFORCEMENT

HEARINGS.—The Director may file any document or part thereof

under seal in any hearing under subtitle C if the Director determines in writing that disclosure thereof would be contrary to the

public interest.

(e) RETENTION OF DOCUMENTS.—The Director shall keep and

maintain a record, for not less than 6 years, of all documents described in subsection (a) and all enforcement agreements and other

supervisory actions and supporting documents issued with respect

to or in connection with any enforcement proceeding initiated by

the Director under subtitle C.

(f) DISCLOSURES TO CONGRESS.—This section may not be construed to authorize the withholding of any information from, or to

prohibit the disclosure of any information to, the Congress or any

committee or subcommittee thereof.

SEC. 1319D. ø12 U.S.C. 4523¿ LIMITATION ON SUBSEQUENT EMPLOYMENT.

Neither the Director nor any former officer or employee of the

Office who, while employed by the Office, was compensated at a

rate in excess of the lowest rate for a position classified higher

than GS–15 of the General Schedule under section 5107 of title 5,

United States Code, may accept compensation from an enterprise

during the 2-year period beginning on the date of separation from

employment by the Office.

SEC. 1319E. ø12 U.S.C. 4524¿ AUDITS BY GAO.

The Comptroller General shall audit the operations of the Office in accordance with generally accepted Government auditing

standards. All books, records, accounts, reports, files, and property

belonging to, or used by, the Office shall be made available to the

Comptroller General. Audits under this section shall be conducted

annually for the first 2 fiscal years following the date of the enactment of this Act 1 and as appropriate thereafter.

SEC. 1319F. ø12 U.S.C. 4525¿ INFORMATION, RECORDS, AND MEETINGS.

For purposes of subchapter II of chapter 5 of title 5, United

States Code—

(1) the Office, and

(2) the Department of Housing and Urban Development,

with respect to activities under this title,

shall be considered agencies responsible for the regulation or supervision of financial institutions.
Sec. 1319G GSE FINANCIAL SAFETY AND SOUNDNESS 1230

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

SEC. 1319G. ø12 U.S.C. 4526¿ REGULATIONS AND ORDERS.

(a) AUTHORITY.—The Director shall issue any regulations and

orders necessary to carry out the duties of the Director and to carry

out this title before the expiration of the 18-month period beginning on the appointment of the Director under section 1312. Such

regulations and orders shall be subject to the approval of the Secretary only to the extent provided in subsections (b) and (c) of section 1313.

(b) NOTICE AND COMMENT.—Any regulations issued by the Director under this section shall be issued after notice and opportunity for public comment pursuant to the provisions of section 553

of title 5, United States Code.

(c) CONGRESSIONAL REVIEW.—The Director may not publish

any regulation for comment under subsection (b) unless, not less

than 15 days before it is published for comment, the Director has

submitted a copy of the regulation, in the form it is intended to be

proposed, to the Committee on Banking, Finance and Urban Affairs

of the House of Representatives 1 and the Committee on Banking,

Housing, and Urban Affairs of the Senate.

PART 2—AUTHORITY OF SECRETARY

Subpart A—General Authority

SEC. 1321. ø12 U.S.C. 4541¿ REGULATORY AUTHORITY.

Except for the authority of the Director of the Office of Federal

Housing Enterprise Oversight described in section 1313(b) and all

other matters relating to the safety and soundness of the enterprises, the Secretary of Housing and Urban Development shall

have general regulatory power over each enterprise and shall make

such rules and regulations as shall be necessary and proper to ensure that this part and the purposes of the Federal National Mortgage Association Charter Act and the Federal Home Loan Mortgage Corporation Act are accomplished.

SEC. 1322. ø12 U.S.C. 4542¿ PRIOR APPROVAL AUTHORITY FOR NEW

PROGRAMS.

(a) AUTHORITY.—The Secretary shall require each enterprise to

obtain the approval of the Secretary for any new program of the

enterprise before implementing the program.

(b) STANDARD FOR APPROVAL.— (1) PERMANENT STANDARD.—Except as provided in paragraph (2), the Secretary shall approve any new program of an

enterprise for purposes of subsection (a) unless—

(A) for a new program of the Federal National Mortgage Association, the Secretary determines that the program is not authorized under paragraph (2), (3), (4), or (5)
1231 Sec. 1322 GSE FINANCIAL SAFETY AND SOUNDNESS

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

of section 302(b) of the Federal National Mortgage Association Charter Act, or under section 304 of such Act;

(B) for a new program of the Federal Home Loan

Mortgage Corporation, the Secretary determines that the

program is not authorized under section 305(a) (1), (4), or

(5) of the Federal Home Loan Mortgage Corporation Act;

or

(C) the Secretary determines that the new program is

not in the public interest.

(2) TRANSITION STANDARD.—Before the date occurring 12

months after the date of the effectiveness of the regulations

under section 1361(e) establishing the risk-based capital test,

the Secretary shall approve any new program of an enterprise

for purposes of subsection (a) unless—

(A) The Secretary makes a determination as described

in paragraph (1) (A), (B), or (C); or

(B) the Director determines that the new program

would risk significant deterioration of the financial condition of the enterprise.

(c) PROCEDURE FOR APPROVAL.—

(1) SUBMISSION OF REQUEST.—To obtain the approval of

the Secretary for purposes of subsection (a), an enterprise shall

submit to the Secretary a written request for approval of the

new program that describes the program.

(2) RESPONSE.—The Secretary shall, not later than the expiration of the 45-day period beginning upon the submission of

a request for approval, approve the request or submit to the

Committee on Banking, Finance and Urban Affairs of the

House of Representatives 1 and the Committee on Banking,

Housing, and Urban Affairs of the Senate a report explaining

the reasons for not approving the request. The Secretary may

extend such period for a single additional 15-day period only

if the Secretary requests additional information from the

enterprise.

(3) FAILURE TO RESPOND.—If the Secretary fails to approve

the request or fails to submit a report under paragraph (2)

during the period under such paragraph, the request shall be

considered to have been approved.

(4) REVIEW OF DISAPPROVAL.—

(A) UNAUTHORIZED NEW PROGRAMS.—If the Secretary

submits a report under paragraph (2) of this subsection

disapproving a request for approval on the grounds under

subparagraph (A) or (B) of subsection (b)(1), the Secretary

shall provide the enterprise submitting the request with a

timely opportunity to review and supplement the administrative record.
Sec. 1323 GSE FINANCIAL SAFETY AND SOUNDNESS 1232

(B) NEW PROGRAMS NOT IN PUBLIC INTEREST.—If the

Secretary submits a report under paragraph (2) of this

subsection disapproving a request for approval on the

grounds under subsection (b)(1)(C) or (b)(2)(B), the Secretary shall provide the enterprise submitting the request

notice of, and opportunity for, a hearing on the record regarding such disapproval.

SEC. 1323. ø12 U.S.C. 4543¿ PUBLIC ACCESS TO MORTGAGE INFORMATION.

(a) IN GENERAL.—The Secretary shall make available to the

public, in forms useful to the public (including forms accessible by

computers), the data submitted by the enterprises in the reports required under section 309(m) of the Federal National Mortgage Association Charter Act or section 307(e) of the Federal Home Loan

Mortgage Corporation Act.

(b) ACCESS.—

(1) PROPRIETARY DATA.—Except as provided in paragraph

(2), the Secretary may not make available to the public data

that the Secretary determines pursuant to section 1326 are

proprietary information.

(2) EXCEPTION.—The Secretary shall not restrict access to

the data provided in accordance with section 309(m)(1)(A) of

the Federal National Mortgage Association Charter Act or section 307(e)(1)(A) of the Federal Home Loan Mortgage Corporation Act.

(c) FEES.—The Secretary may charge reasonable fees to cover

the cost of making data available under this section to the public.

SEC. 1324. ø12 U.S.C. 4544¿ ANNUAL HOUSING REPORT.

(a) IN GENERAL.—After reviewing and analyzing the reports

submitted under section 309(n) of the Federal National Mortgage

Association Charter Act and section 307(f) of the Federal Home

Loan Mortgage Corporation Act, the Secretary shall submit a report, as part of the annual report under section 1328(a) of this title,

on the extent to which each enterprise is achieving the annual

housing goals established under subpart B of this part and the purposes of the enterprise established by law.

(b) CONTENTS.—The report shall—

(1) aggregate and analyze census tract data to assess the

compliance of each enterprise with the central cities, rural

areas, and other underserved areas housing goal and to determine levels of business in central cities, rural areas, underserved areas, low- and moderate-income census tracts, minority

census tracts, and other geographical areas deemed appropriate by the Secretary;

(2) aggregate and analyze data on income to assess the

compliance of each enterprise with the low- and moderate-income and special affordable housing goals;

(3) aggregate and analyze data on income, race, and gender by census tract and compare such data with larger demographic, housing, and economic trends;

(4) examine actions that each enterprise has undertaken

or could undertake to promote and expand the annual goals es-
1233 Sec. 1325 GSE FINANCIAL SAFETY AND SOUNDNESS

tablished under sections 1332, 1333, and 1334, and the purposes of the enterprise established by law;

(5) examine the primary and secondary multifamily housing mortgage markets and describe—

(A) the availability and liquidity of mortgage credit;

(B) the status of efforts to provide standard credit

terms and underwriting guidelines for multifamily housing

and to securitize such mortgage products; and

(C) any factors inhibiting such standardization and

securitization;

(6) examine actions each enterprise has undertaken and

could undertake to promote and expand opportunities for firsttime homebuyers; and

(7) describe any actions taken under section 1325(5) with

respect to originators found to violate fair lending procedures.

SEC. 1325. ø12 U.S.C. 4545¿ FAIR HOUSING.

The Secretary shall—

(1) by regulation, prohibit each enterprise from discriminating in any manner in the purchase of any mortgage because

of race, color, religion, sex, handicap, familial status, age, or

national origin, including any consideration of the age or location of the dwelling or the age of the neighborhood or census

tract where the dwelling is located in a manner that has a discriminatory effect;

(2) by regulation, require each enterprise to submit data to

the Secretary to assist the Secretary in investigating whether

a mortgage lender with which the enterprise does business has

failed to comply with the Fair Housing Act;

(3) by regulation, require each enterprise to submit data to

the Secretary to assist in investigating whether a mortgage

lender with which the enterprise does business has failed to

comply with the Equal Credit Opportunity Act, and shall submit any such information received to the appropriate Federal

agencies, as provided in section 704 of the Equal Credit Opportunity Act, for appropriate action;

(4) obtain information from other regulatory and enforcement agencies of the Federal Government and State and local

governments regarding violations by lenders of the Fair Housing Act and the Equal Credit Opportunity Act and make such

information available to the enterprises;

(5) direct the enterprises to undertake various remedial actions, including suspension, probation, reprimand, or settlement, against lenders that have been found to have engaged in

discriminatory lending practices in violation of the Fair Housing Act or the Equal Credit Opportunity Act, pursuant to a

final adjudication on the record, and after opportunity for an

administrative hearing, in accordance with subchapter II of

chapter 5 of title 5, United States Code; and

(6) periodically review and comment on the underwriting

and appraisal guidelines of each enterprise to ensure that such

guidelines are consistent with the Fair Housing Act and this

section.
Sec. 1326 GSE FINANCIAL SAFETY AND SOUNDNESS 1234

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

SEC. 1326. ø12 U.S.C. 4546¿ PROHIBITION OF PUBLIC DISCLOSURE OF

PROPRIETARY INFORMATION.

(a) IN GENERAL.—The Secretary may, by regulation or order,

provide that certain information shall be treated as proprietary information and not subject to disclosure under section 1323 of this

title, section 309(n)(3) of the Federal National Mortgage Association Charter Act, or section 307(f)(3) of the Federal Home Loan

Mortgage Corporation Act.

(b) PROTECTION OF INFORMATION ON HOUSING ACTIVITIES.—

The Secretary shall not provide public access to, or disclose to the

public, any information required to be submitted by an enterprise

under section 309(n) of the Federal National Mortgage Association

Charter Act or section 307(f) of the Federal Home Loan Mortgage

Corporation Act that the Secretary determines is proprietary.

(c) NONDISCLOSURE PENDING CONSIDERATION.—This section

may not be construed to authorize the disclosure of information to,

or examination of data by, the public or a representative of any

person or agency pending the issuance of a final decision under this

section.

SEC. 1327. ø12 U.S.C. 4547¿ AUTHORITY TO REQUIRE REPORTS BY ENTERPRISES.

The Secretary shall require each enterprise to submit reports

on its activities to the Secretary as the Secretary considers

appropriate.

SEC. 1328. ø12 U.S.C. 4548¿ REPORTS BY SECRETARY.

(a) ANNUAL REPORT.—The Secretary shall, not later than June

30 of each year, submit a report to the Committee on Banking, Finance and Urban Affairs of the House of Representatives 1 and the

Committee on Banking, Housing, and Urban Affairs of the Senate

on the activities of each enterprise.

(b) VIEWS ON BUDGET AND FINANCIAL PLANS OF ENTERPRISES.—On an annual basis, the Secretary shall provide the Committees referred to in subsection (a) with comments on the plans,

forecasts, and reports required under section 1316(g).

Subpart B—Housing Goals

SEC. 1331. ø12 U.S.C. 4561¿ ESTABLISHMENT.

(a) IN GENERAL.—The Secretary shall establish, by regulation,

housing goals under this subpart for each enterprise. The housing

goals shall include a low- and moderate-income housing goal pursuant to section 1332, a special affordable housing goal pursuant to

section 1333, and a central cities, rural areas, and other underserved areas housing goal pursuant to section 1334. The Secretary

shall implement this subpart in a manner consistent with section

301(3) of the Federal National Mortgage Association Charter Act
1235 Sec. 1332 GSE FINANCIAL SAFETY AND SOUNDNESS

and section 301(b)(3) of the Federal Home Loan Mortgage Corporation Act.

(b) CONSIDERATION OF UNITS IN MULTIFAMILY HOUSING.—In

establishing any goal under this subpart, the Secretary may take

into consideration the number of housing units financed by any

mortgage on multifamily housing purchased by an enterprise.

(c) ADJUSTMENT OF HOUSING GOALS.—Except as otherwise provided in this title, from year to year the Secretary may, by regulation, adjust any housing goal established under this subpart.

SEC. 1332. ø12 U.S.C. 4562¿ LOW- AND MODERATE-INCOME HOUSING

GOAL.

(a) IN GENERAL.—The Secretary shall establish an annual goal

for the purchase by each enterprise of mortgages on housing for

low- and moderate-income families. The Secretary may establish

separate specific subgoals within the goal under this section and

such subgoals shall not be enforceable under the provisions of section 1336, any other provision of this title, or any provision of the

Federal National Mortgage Association Charter Act or the Federal

Home Loan Mortgage Corporation Act.

(b) FACTORS TO BE APPLIED.—In establishing the goal under

this section, the Secretary shall consider—

(1) national housing needs;

(2) economic, housing, and demographic conditions;

(3) the performance and effort of the enterprises toward

achieving the low- and moderate-income housing goal in previous years;

(4) the size of the conventional mortgage market serving

low- and moderate-income families relative to the size of the

overall conventional mortgage market;

(5) the ability of the enterprises to lead the industry in

making mortgage credit available for low- and moderate-income families; and

(6) the need to maintain the sound financial condition of

the enterprises.

(c) USE OF BORROWER AND TENANT INCOME.— (1) IN GENERAL.—The Secretary shall monitor the performance of each enterprise in carrying out this section and shall

evaluate such performance (for purposes of section 1336) based

on—

(A) in the case of an owner-occupied dwelling, the

mortgagor’s income at the time of origination of the mortgage; or

(B) in the case of a rental dwelling—

(i) the income of the prospective or actual tenants

of the property, where such data are available; or

(ii) the rent levels affordable to low- and moderate-income families, where the data referred to in

clause (i) are not available.

(2) AFFORDABILITY.—For the purpose of paragraph

(1)(B)(ii), a rent level shall be considered affordable if it does

not exceed 30 percent of the maximum income level of the income categories referred to in this section, with appropriate adjustments for unit size as measured by the number of

bedrooms.
Sec. 1333 GSE FINANCIAL SAFETY AND SOUNDNESS 1236

1The date of enactment was October 28, 1992.

(d) TRANSITION.— (1) INTERIM TARGET.—Notwithstanding any other provision

of this section, during the 2-year period beginning on January 1, 1993, the annual target under this section for low- and

moderate-income mortgage purchases for each enterprise shall

be 30 percent of the total number of dwelling units financed by

mortgage purchases of the enterprise.

(2) INTERIM GOAL.—During such 2-year period, the Secretary shall establish a separate annual goal for each enterprise, the achievement of which shall require—

(A) an enterprise that is not meeting the target under

paragraph (1) upon January 1, 1993, to improve its performance relative to such target annually and, to the maximum extent feasible, to meet such target at the conclusion

of such 2-year period; and

(B) an enterprise that is meeting the target under

paragraph (1) upon January 1, 1993, to improve its performance relative to the target.

(3) IMPLEMENTATION.—The Secretary shall establish any

requirements necessary to implement the transition provisions

under this subsection by notice, after providing the enterprises

with an opportunity to review and comment not less than 30

days before the issuance of such notice. Such notice shall be

issued not later than the expiration of the 90-day period beginning upon the date of the enactment of this Act 1 and shall be

effective upon issuance.

SEC. 1333. ø12 U.S.C. 4563¿ SPECIAL AFFORDABLE HOUSING GOAL.

(a) ESTABLISHMENT.— (1) IN GENERAL.—The Secretary shall establish a special

annual goal designed to adjust the purchase by each enterprise

of mortgages on rental and owner-occupied housing to meet the

then-existing unaddressed needs of, and affordable to, low-income families in low-income areas and very low-income families. The special affordable housing goal established under this

section for an enterprise shall not be less than 1 percent of the

dollar amount of the mortgage purchases by the enterprise for

the previous year.

(2) STANDARDS.—In establishing the special affordable

housing goal for an enterprise, the Secretary shall consider—

(A) data submitted to the Secretary in connection with

the special affordable housing goal for previous years;

(B) the performance and efforts of the enterprise toward achieving the special affordable housing goal in previous years;

(C) national housing needs within the categories set

forth in this section;

(D) the ability of the enterprise to lead the industry in

making mortgage credit available for low-income and very

low-income families; and

(E) the need to maintain the sound financial condition

of the enterprise.

(b) FULL CREDIT ACTIVITIES.—
1237 Sec. 1333 GSE FINANCIAL SAFETY AND SOUNDNESS

(1) IN GENERAL.—The Secretary shall give full credit toward achievement of the special affordable housing goal under

this section (for purposes of section 1336) to the following activities:

(A) FEDERALLY RELATED MORTGAGES.—The purchase

or securitization of federally insured or guaranteed mortgages, if—

(i) such mortgages cannot be readily securitized

through the Government National Mortgage Association or any other Federal agency;

(ii) participation of the enterprise substantially

enhances the affordability of the housing subject to

such mortgages; and

(iii) the mortgages involved are on housing that

otherwise qualifies under such goal to be considered

for purposes of such goal.

(B) PORTFOLIOS.—The purchase or refinancing of existing, seasoned portfolios of loans, if—

(i) the seller is engaged in a specific program to

use the proceeds of such sales to originate additional

loans that meet such goal; and

(ii) such purchases or refinancings support additional lending for housing that otherwise qualifies

under such goal to be considered for purposes of such

goal.

(C) RTC AND FDIC LOANS.—The purchase of direct

loans made by the Resolution Trust Corporation or the

Federal Deposit Insurance Corporation, if such loans—

(i) are not guaranteed by such agencies themselves or other Federal agencies;

(ii) are made with recourse provisions similar to

those offered through private mortgage insurance or

other conventional sellers; and

(iii) are made for the purchase of housing that

otherwise qualifies under such goal to be considered

for purposes of such goal.

(2) EXCLUSION.—No credit toward the achievement of the

special affordable housing goal may be given to the purchase

or securitization of mortgages associated with the refinancing

of the existing enterprise portfolios.

(c) USE OF BORROWER AND TENANT INCOME.—

(1) IN GENERAL.—The Secretary shall monitor the performance of each enterprise in carrying out this section and shall

evaluate such performance (for purposes of section 1336) based

on—

(A) in the case of an owner-occupied dwelling, the

mortgagor’s income at the time of origination of the mortgage; or

(B) in the case of a rental dwelling—

(i) the income of the prospective or actual tenants

of the property, where such data are available; or

(ii) the rent levels affordable to low-income and

very low-income families, where the data referred to in

clause (i) are not available.
Sec. 1333 GSE FINANCIAL SAFETY AND SOUNDNESS 1238

(2) AFFORDABILITY.—For the purpose of paragraph

(1)(B)(ii), a rent level shall be considered affordable if it does

not exceed 30 percent of the maximum income level of the income categories referred to in this section, with appropriate adjustments for unit size as measured by the number of

bedrooms.

(d) TRANSITION.—

(1) FNMA MORTGAGE PURCHASES.—Notwithstanding any

other provision of this section, during the 2-year period beginning on January 1, 1993, the special affordable housing goal

for the Federal National Mortgage Association shall include

mortgage purchases of not less than $2,000,000,000 (for such

2-year period), with one-half of such purchases consisting of

mortgages on single family housing and one-half consisting of

mortgages on multifamily housing.

(2) FHLMC MORTGAGE PURCHASES.—Notwithstanding any

other provision of this section, during the 2-year period beginning on January 1, 1993, the special affordable housing goal

for the Federal Home Loan Mortgage Corporation shall include

mortgage purchases of not less than $1,500,000,000 (for such

2-year period), with one-half of such purchases consisting of

mortgages on single family housing and one-half consisting of

mortgages on multifamily housing.

(3) INCOME CHARACTERISTICS FOR MORTGAGE PURCHASES.—

(A) MULTIFAMILY MORTGAGES.—The special affordable

housing goals established under paragraphs (1) and (2)

shall provide that, of mortgages on multifamily housing

that are purchased and contribute to the achievement of

such goals—

(i) 45 percent shall be mortgages on multifamily

housing affordable to low-income families; and

(ii) 55 percent shall be mortgages on multifamily

housing in which—

(I) at least 20 percent of the units are affordable to families whose incomes do not exceed 50

percent of the median income for the area; or

(II) at least 40 percent of the units are affordable to very low-income families.

(B) SINGLE FAMILY MORTGAGES.—The special affordable housing goals established under paragraphs (1) and

(2) shall provide that, of mortgages on single family housing that are purchased and contribute to the achievement

of such goals—

(i) 45 percent shall be mortgages of low-income

families who live in census tracts in which the median

income does not exceed 80 percent of the area median

income; and

(ii) 55 percent shall be mortgages of very low-income families.

(C) COMPLIANCE WITH SPECIAL AFFORDABLE HOUSING

GOALS.—Only the portion of mortgages on multifamily

housing purchased by an enterprise that are attributable

to units affordable to low-income families shall contribute
1239 Sec. 1334 GSE FINANCIAL SAFETY AND SOUNDNESS

1The date of enactment was October 28, 1992.

to the achievement of the special affordable housing goals

under subparagraph (A)(ii).

(4) IMPLEMENTATION.—The Secretary shall establish any

requirements necessary to implement the transition provisions

under this subsection by notice, after providing the enterprises

with an opportunity to review and comment not less than 30

days before the issuance of such notice. Such notice shall be

issued not later than the expiration of the 90-day period beginning upon the date of the enactment of this Act 1 and shall be

effective upon issuance.

SEC. 1334. ø12 U.S.C. 4564¿ CENTRAL CITIES, RURAL AREAS, AND

OTHER UNDERSERVED AREAS HOUSING GOAL.

(a) IN GENERAL.—The Secretary shall establish an annual goal

for the purchase by each enterprise of mortgages on housing located in central cities, rural areas, and other underserved areas.

The Secretary may establish separate subgoals within the goal

under this section and such subgoals shall not be enforceable under

the provisions of section 1336, any other provision of this title, or

any provision of the Federal National Mortgage Association Charter Act or the Federal Home Loan Mortgage Corporation Act.

(b) FACTORS TO BE APPLIED.—In establishing the housing goal

under this section, the Secretary shall consider—

(1) urban and rural housing needs and the housing needs

of underserved areas;

(2) economic, housing, and demographic conditions;

(3) the performance and efforts of the enterprises toward

achieving the central cities, rural areas, and other underserved

areas housing goal in previous years;

(4) the size of the conventional mortgage market for central cities, rural areas, and other underserved areas relative to

the size of the overall conventional mortgage market;

(5) the ability of the enterprises to lead the industry in

making mortgage credit available throughout the United

States, including central cities, rural areas, and other underserved areas; and

(6) the need to maintain the sound financial condition of

the enterprises.

(c) LOCATION OF PROPERTIES.—The Secretary shall monitor the

performance of each enterprise in carrying out this section and

shall evaluate such performance (for purposes of section 1336)

based on the location of the properties subject to mortgages purchased by each enterprise.

(d) TRANSITION.— (1) INTERIM TARGET.—Notwithstanding any other provision

of this section, during the 2-year period beginning on January

1, 1993, the annual target under this section for purchases by

each enterprise of mortgages on housing located in central cities shall be 30 percent of the total number of dwelling units

financed by mortgage purchases of the enterprise.

(2) INTERIM GOAL.—During such 2-year period, the Secretary shall establish a separate annual goal for each enterprise, the achievement of which shall require—
Sec. 1335 GSE FINANCIAL SAFETY AND SOUNDNESS 1240

1The date of enactment was October 28, 1992.

(A) an enterprise that is not meeting the target under

paragraph (1) upon January 1, 1993, to improve its performance relative to such target annually and, to the maximum extent feasible, to meet such target at the conclusion

of such 2-year period; and

(B) an enterprise that is meeting the target under

paragraph (1) upon January 1, 1993, to improve its performance relative to the target.

(3) DEFINITION OF CENTRAL CITY.—For purposes of this

subsection, the term ‘‘central city’’ means any political subdivision designated as a central city by the Office of Management

and Budget.

(4) IMPLEMENTATION.—The Secretary shall establish any

requirements necessary to implement the transition provisions

under this subsection by notice, after providing the enterprises

with an opportunity to review and comment not less than 30

days before the issuance of such notice. Such notice shall be

issued not later than the expiration of the 90-day period beginning upon the date of the enactment of this Act 1 and shall be

effective upon issuance.

SEC. 1335. ø12 U.S.C. 4565¿ OTHER REQUIREMENTS.

(a) IN GENERAL.—To meet the low- and moderate-income housing goal under section 1332, the special affordable housing goal

under section 1333, and the central cities, rural areas, and other

underserved areas housing goal under section 1334, each enterprise

shall—

(1) design programs and products that facilitate the use of

assistance provided by the Federal Government and State and

local governments;

(2) develop relationships with nonprofit and for-profit organizations that develop and finance housing and with State and

local governments, including housing finance agencies;

(3) take affirmative steps to—

(A) assist primary lenders to make housing credit

available in areas with concentrations of low-income and

minority families, and

(B) assist insured depository institutions to meet their

obligations under the Community Reinvestment Act of

1977,

which shall include developing appropriate and prudent underwriting standards, business practices, repurchase requirements, pricing, fees, and procedures;

(4) develop the institutional capacity to help finance lowand moderate-income housing, including housing for first-time

homebuyers; and

(5) assist in maintaining the affordability of assisted units

in eligible multifamily housing projects with expiring contracts,

as defined under the Multifamily Assisted Housing Reform and

Affordability Act of 1997.

(b) AFFORDABLE HOUSING GOALS.—Actions taken under subsection (a)(5) shall constitute part of the contribution of each entity
1241 Sec. 1336 GSE FINANCIAL SAFETY AND SOUNDNESS

1Section 1002 of the Miscellaneous Appropriations Act, 2001, H.R. 5666, 106th Congress, as

introduced in the House of Representatives, enacted by section 1(a)(4) of the Consolidated Appropriations Act, 2001, Pub. L. 106–554, provides as follows:

‘‘SEC. 1002. For purposes of part 2, subpart B of the Federal Housing Enterprises Financial

Safety and Soundness Act of 1992 (Public Law 102–550), notwithstanding any other provision

of law or regulation, for purposes of measuring the extent of compliance with the housing goals

for the years 2001, 2002, and 2003, the Secretary of Housing and Urban Development shall assign, in the case of the Federal Home Loan Mortgage Corporation, 1.35 units of credit toward

achievement of each housing goal for each unit of multifamily housing (excepting units located

in properties having between 5 and 50 units) qualifying as affordable under such housing goal.’’.

in meeting its affordable housing goals under sections 1332, 1333,

and 1334 for any fiscal year, as determined by the Secretary.

SEC. 1336. ø12 U.S.C. 4566¿ MONITORING AND ENFORCING COMPLIANCE WITH HOUSING GOALS.

(a) IN GENERAL.—

(1) AUTHORITY.—The Secretary shall monitor and enforce

compliance with the housing goals established under sections

1332, 1333, and 1334, as provided in this section.

(2) GUIDELINES.—The Secretary shall establish guidelines

to measure the extent of compliance with the housing goals,

which may assign full credit, partial credit, or no credit toward

achievement of the housing goals to different categories of

mortgage purchase activities of the enterprises, based on such

criteria as the Secretary deems appropriate. 1

(3) EXTENT OF COMPLIANCE.—In determining compliance

with the housing goals established under this subpart, the

Secretary—

(A) shall consider any single mortgage purchased by

an enterprise as contributing to the achievement of each

housing goal for which such mortgage purchase qualifies;

and

(B) may take into consideration the number of housing

units financed by any mortgage on housing purchased by

an enterprise.

(b) NOTICE AND DETERMINATION OF FAILURE TO MEET

GOALS.—

(1) NOTICE.—If the Secretary determines that an enterprise has failed, or that there is a substantial probability that

an enterprise will fail, to meet any housing goal established

under section 1332, 1333, or 1334, the Secretary shall provide

written notice to the enterprise of such a determination, the

reasons for such determination, the requirement to submit a

housing plan under subsection (c) of this section, and the information on which the Secretary based the determination or imposed such requirement.

(2) RESPONSE PERIOD.—

(A) IN GENERAL.—During the 30-day period beginning

on the date that an enterprise is provided notice under

paragraph (1), the enterprise may submit to the Secretary

any written information that the enterprise considers appropriate for consideration by the Secretary in determining

whether such failure has occurred or whether the achievement of such goal was or is feasible.
Sec. 1336 GSE FINANCIAL SAFETY AND SOUNDNESS 1242

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(B) EXTENDED PERIOD.—The Secretary may extend the

period under subparagraph (A) for good cause for not more

than 30 additional days.

(C) SHORTENED PERIOD.—The Secretary may shorten

the period under subparagraph (A) for good cause.

(D) FAILURE TO RESPOND.—The failure of an enterprise

to provide information during the 30-day period under this

paragraph (as extended or shortened) shall waive any

right of the enterprise to comment on the proposed determination or action of the Secretary.

(3) CONSIDERATION OF INFORMATION AND DETERMINATION.—

(A) IN GENERAL.—After the expiration of the response

period under paragraph (2) or upon receipt of information

provided during such period by the enterprise, whichever

occurs earlier, the Secretary shall determine (i) whether

the enterprise has failed, or there is a substantial probability that the enterprise will fail, to meet the housing

goal, and (ii) whether (taking into consideration market

and economic conditions and the financial condition of the

enterprise) the achievement of the housing goal was or is

feasible.

(B) CONSIDERATIONS.—In making such determinations,

the Secretary shall take into consideration any relevant information submitted by the enterprise during the response

period.

(C) NOTICE.—The Secretary shall provide written notice to the enterprise, the Committee on Banking, Finance

and Urban Affairs of the House of Representatives 1, and

the Committee on Banking, Housing, and Urban Affairs of

the Senate, of—

(i) each determination that an enterprise has

failed, or that there is a substantial probability that

the enterprise will fail, to meet a housing goal;

(ii) each determination that the achievement of a

housing goal was or is feasible; and

(iii) the reasons for each such determination.

Such notice shall respond to any information submitted

during the response period.

(c) HOUSING PLANS.—

(1) REQUIREMENT.—If the Secretary finds pursuant to subsection (b), that an enterprise has failed, or that there is a substantial probability that an enterprise will fail, to meet any

housing goal established under section 1332, 1333, or 1334,

and that the achievement of the housing goal was or is feasible, the Secretary shall require the enterprise to submit a
1243 Sec. 1337 GSE FINANCIAL SAFETY AND SOUNDNESS

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

housing plan under this subsection for approval by the Secretary.

(2) CONTENTS.—Each housing plan shall be a feasible plan

describing the specific actions the enterprise will take—

(A) to achieve the goal for the next calendar year; or

(B) if the Secretary determines that there is a substantial probability that the enterprise will fail to meet a

goal in the current year, to make such improvements as

are reasonable in the remainder of such year.

The plan shall be sufficiently specific to enable the Secretary

to monitor compliance periodically.

(3) DEADLINE FOR SUBMISSION.—The Secretary shall, by

regulation, establish a deadline for an enterprise to submit a

housing plan to the Secretary, which may not be more than 45

days after the enterprise is provided notice under subsection

(b)(3) that a housing plan is required. The regulations shall

provide that the Secretary may extend the deadline to the extent that the Secretary determines necessary. Any extension of

the deadline shall be in writing and for a time certain.

(4) APPROVAL.—The Secretary shall review each housing

plan submitted under this subsection and, not later than 30

days after submission of the plan, approve or disapprove the

plan. The Secretary may extend the period for approval or disapproval for a single additional 30-day period if the Secretary

determines it necessary. The Secretary shall approve any plan

that the Secretary determines is likely to succeed, and conforms with the Federal National Mortgage Association Charter

Act or the Federal Home Loan Mortgage Corporation Act (as

applicable), this title, and any other applicable laws and regulations.

(5) NOTICE OF APPROVAL AND DISAPPROVAL.—The Secretary

shall provide written notice to any enterprise submitting a

housing plan of the approval or disapproval of the plan (which

shall include the reasons for any disapproval of the plan) and

of any extension of the period for approval or disapproval.

(6) RESUBMISSION.—If the initial housing plan submitted

by an enterprise is disapproved, the enterprise shall submit an

amended plan acceptable to the Secretary within 30 days or

such longer period that the Secretary determines is in the public interest.

SEC. 1337. ø12 U.S.C. 4567¿ REPORTS DURING TRANSITION.

Each enterprise shall submit to the Secretary, the Committee

on Banking, Finance and Urban Affairs of the House of Representatives 1, and the Committee on Banking, Housing, and Urban Affairs of the Senate, a report for each transitional housing goal for

the enterprise under section 1332(d), 1333(d), or 1334(d), describing

the actions the enterprise plans to take to meet such goal. Each
Sec. 1338 GSE FINANCIAL SAFETY AND SOUNDNESS 1244

such report shall be submitted within 45 days after the establishment of the goal for which the report is submitted.

SEC. 1338. ø12 U.S.C. 4562 note¿ EFFECTIVE DATE OF TRANSITION

GOALS.

The housing goals established under sections 1332(d), 1333(d),

and 1334(d) shall not become effective until January 1, 1993.

Subpart C—Enforcement of Housing Goals

SEC. 1341. ø12 U.S.C. 4581¿ CEASE-AND-DESIST PROCEEDINGS.

(a) GROUNDS FOR ISSUANCE.—The Secretary may issue and

serve a notice of charges under this section upon an enterprise if,

in the determination of the Secretary—

(1) the enterprise has failed to submit a housing plan that

substantially complies with section 1336(c) within the applicable period;

(2) the enterprise is engaging or has engaged, or the Secretary has reasonable cause to believe that the enterprise is

about to engage, in any failure to make a good faith effort to

comply with a housing plan for the enterprise submitted and

approved under section 1336(c); or

(3) the enterprise has failed to submit the information required under subsection (m) or (n) of section 309 of the Federal

National Mortgage Association Charter Act, subsection (e) or

(f) of section 307 of the Federal Home Loan Mortgage Corporation Act, or section 1337 of this title.

(b) PROCEDURE.—

(1) NOTICE OF CHARGES.—Each notice of charges shall contain a statement of the facts constituting the alleged conduct

and shall fix a time and place at which a hearing will be held

to determine on the record whether an order to cease and desist from such conduct should issue.

(2) ISSUANCE OF ORDER.—If the Secretary finds on the

record made at such hearing that any conduct specified in the

notice of charges has been established (or the enterprise consents pursuant to section 1342(a)(4)), the Secretary may issue

and serve upon the enterprise an order requiring the enterprise to (A) submit a housing plan in compliance with section

1336(c), (B) comply with the housing plan, or (C) provide the

information required under subsection (m) or (n) of section 309

of the Federal National Mortgage Association Charter Act, subsection (e) or (f) of section 307 of the Federal Home Loan Mortgage Corporation Act, or section 1337 of this title.

(c) EFFECTIVE DATE.—An order under this section shall become

effective upon the expiration of the 30-day period beginning on the

service of the order upon the enterprise (except in the case of an

order issued upon consent, which shall become effective at the time

specified therein), and shall remain effective and enforceable as

provided in the order, except to the extent that the order is stayed,

modified, terminated, or set aside by action of the Secretary or otherwise, as provided in this subpart.

(d) TRANSITION PERIOD LIMITATION.—The Secretary may not

impose any cease-and-desist order under this section for any failure
1245 Sec. 1343 GSE FINANCIAL SAFETY AND SOUNDNESS

by an enterprise, during the 2-year period beginning on the January 1, 1993, to comply with an approved housing plan, unless the

Secretary determines that the enterprise has intentionally failed to

make a good faith effort to comply with the approved plan.

SEC. 1342. ø12 U.S.C. 4582¿ HEARINGS.

(a) REQUIREMENTS.—

(1) VENUE AND RECORD.—Any hearing under section 1341

or 1345 shall be held on the record and in the District of Columbia.

(2) TIMING.—Any such hearing shall be fixed for a date not

earlier than 30 days nor later than 60 days after service of the

notice of charges under section 1341(b)(1) or determination to

impose a penalty under section 1345(c)(1), unless an earlier or

a later date is set by the hearing officer at the request of the

enterprise served.

(3) PROCEDURE.—Any such hearing shall be conducted in

accordance with chapter 5 of title 5, United States Code.

(4) FAILURE TO APPEAR.—If the enterprise served fails to

appear at the hearing through a duly authorized representative, such enterprise shall be deemed to have consented to the

issuance of the cease-and-desist order or the imposition of the

penalty for which the hearing is held.

(b) ISSUANCE OF ORDER.—

(1) IN GENERAL.—After any such hearing, and within 90

days after the enterprise has been notified that the case has

been submitted to the Secretary for final decision, the Secretary shall render the decision (which shall include findings

of fact upon which the decision is predicated) and shall issue

and serve upon the enterprise an order or orders consistent

with the provisions of this subpart.

(2) MODIFICATION.—Judicial review of any such order shall

be exclusively as provided in section 1343. Unless such a petition for review is timely filed as provided in section 1343, and

thereafter until the record in the proceeding has been filed as

so provided, the Secretary may at any time, modify, terminate,

or set aside any such order, upon such notice and in such manner as the Secretary considers proper. Upon such filing of the

record, the Secretary may modify, terminate, or set aside any

such order with permission of the court.

SEC. 1343. ø12 U.S.C. 4583¿ JUDICIAL REVIEW.

(a) COMMENCEMENT.—An enterprise that is a party to a proceeding under section 1341 or 1345 may obtain review of any final

order issued under such section by filing in the United States

Court of Appeals for the District of Columbia Circuit, within 30

days after the date of service of such order, a written petition praying that the order of the Secretary be modified, terminated, or set

aside. The clerk of the court shall transmit a copy of the petition

to the Secretary.

(b) FILING OF RECORD.—Upon receiving a copy of a petition,

the Secretary shall file in the court the record in the proceeding,

as provided in section 2112 of title 28, United States Code.

(c) JURISDICTION.—Upon the filing of a petition, such court

shall have jurisdiction, which upon the filing of the record by the
Sec. 1344 GSE FINANCIAL SAFETY AND SOUNDNESS 1246

Secretary shall (except as provided in the last sentence of section

1342(b)(2)) be exclusive, to affirm, modify, terminate, or set aside,

in whole or in part, the order of the Secretary.

(d) REVIEW.—Review of such proceedings shall be governed by

chapter 7 of title 5, United States Code.

(e) ORDER TO PAY PENALTY.—Such court shall have the authority in any such review to order payment of any penalty imposed by the Secretary under this subpart.

(f) NO AUTOMATIC STAY.—The commencement of proceedings

for judicial review under this section shall not, unless specifically

ordered by the court, operate as a stay of any order issued by the

Secretary.

SEC. 1344. ø12 U.S.C. 4584¿ ENFORCEMENT AND JURISDICTION.

(a) ENFORCEMENT.—The Secretary may request the Attorney

General of the United States to bring an action in the United

States District Court for the District of Columbia for the enforcement of any effective notice or order issued under section 1341 or

1345. Such court shall have jurisdiction and power to order and require compliance herewith.

(b) LIMITATION ON JURISDICTION.—Except as otherwise provided in this subpart, no court shall have jurisdiction to affect, by

injunction or otherwise, the issuance or enforcement of any notice

or order under section 1341 or 1345, or to review, modify, suspend,

terminate, or set aside any such notice or order.

SEC. 1345. ø12 U.S.C. 4585¿ CIVIL MONEY PENALTIES.

(a) AUTHORITY.—The Secretary may impose a civil money penalty, in accordance with the provisions of this section, on any enterprise that has failed—

(1) to submit a housing plan that substantially complies

with section 1336(c) within the applicable period;

(2) to make a good faith effort to comply with a housing

plan for the enterprise submitted and approved under section

1336(c); or

(3) to submit the information required under subsection

(m) or (n) of section 309 of the Federal National Mortgage Association Charter Act, subsection (e) or (f) of section 307 of the

Federal Home Loan Mortgage Corporation Act, or section 1337

of this title.

(b) AMOUNT OF PENALTY.—The amount of the penalty, as determined by the Secretary, may not exceed—

(1) for any failure described in subsection (a)(1), $25,000

for each day that the failure occurs; and

(2) for any failure described in subsection (a) (2) or (3),

$10,000 for each day that the failure occurs.

(c) PROCEDURES.—

(1) ESTABLISHMENT.—The Secretary shall establish standards and procedures governing the imposition of civil money

penalties under this section. Such standards and procedures—

(A) shall provide for the Secretary to notify the enterprise in writing of the Secretary’s determination to impose

the penalty, which shall be made on the record;
1247 Sec. 1346 GSE FINANCIAL SAFETY AND SOUNDNESS

(B) shall provide for the imposition of a penalty only

after the enterprise has been given an opportunity for a

hearing on the record pursuant to section 1342; and

(C) may provide for review by the Director for any determination or order, or interlocutory ruling, arising from

a hearing.

(2) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under this section, the Secretary shall give consideration to such factors as the gravity of

the offense, any history of prior offenses, ability to pay the penalty, injury to the public, benefits received, deterrence of future

violations, and such other factors as the Secretary may determine, by regulation, to be appropriate.

(d) ACTION TO COLLECT PENALTY.—If an enterprise fails to

comply with an order by the Secretary imposing a civil money penalty under this section, after the order is no longer subject to review as provided by sections 1342 and 1343, the Secretary may request the Attorney General of the United States to bring an action

in the United States District Court for the District of Columbia to

obtain a monetary judgment against the enterprise and such other

relief as may be available. The monetary judgment may, in the

court’s discretion, include the attorneys fees and other expenses incurred by the United States in connection with the action. In an

action under this subsection, the validity and appropriateness of

the order imposing the penalty shall not be subject to review.

(e) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(f) TRANSITION PERIOD LIMITATION.—The Secretary may not

impose any civil money penalty under this section for any failure

by an enterprise, during the 2-year period beginning on January

1, 1993, to comply with an approved housing plan, unless the Secretary determines that the enterprise has intentionally failed to

make a good faith effort to comply with an approved plan.

(g) DEPOSIT OF PENALTIES.—The Secretary shall deposit any

civil money penalties collected under this section into the general

fund of the Treasury.

SEC. 1346. ø12 U.S.C. 4586¿ PUBLIC DISCLOSURE OF FINAL ORDERS

AND AGREEMENTS.

(a) IN GENERAL.—The Secretary shall make available to the

public—

(1) any written agreement or other written statement for

which a violation may be redressed by the Secretary or any

modification to or termination thereof, unless the Secretary, in

the Secretary’s discretion, determines that public disclosure

would be contrary to the public interest or determines under

subsection (c) that public disclosure would seriously threaten

the financial health or security of the enterprise;

(2) any order that is issued with respect to any administrative enforcement proceeding initiated by the Secretary under

this subpart and that has become final in accordance with sections 1342 and 1343; and

(3) any modification to or termination of any final order

made public pursuant to this subsection.
Sec. 1347 GSE FINANCIAL SAFETY AND SOUNDNESS 1248

(b) HEARINGS.—All hearings with respect to any notice of

charges issued by the Secretary shall be open to the public, unless

the Secretary, in the Secretary’s discretion, determines that holding an open hearing would be contrary to the public interest.

(c) DELAY OF PUBLIC DISCLOSURE UNDER EXCEPTIONAL CIRCUMSTANCES.—If the Secretary makes a determination in writing

that the public disclosure of any final order pursuant to subsection

(a) would seriously threaten the financial soundness of the enterprise, the Secretary may delay the public disclosure of such order

for a reasonable time.

(d) DOCUMENTS FILED UNDER SEAL IN PUBLIC ENFORCEMENT

HEARINGS.—The Secretary may file any document or part thereof

under seal in any hearing under this subpart if the Secretary determines in writing that disclosure thereof would be contrary to the

public interest.

(e) RETENTION OF DOCUMENTS.—The Secretary shall keep and

maintain a record, for not less than 6 years, of all documents described in subsection (a) and all enforcement agreements and other

supervisory actions and supporting documents issued with respect

to or in connection with any enforcement proceeding initiated by

the Secretary under this subpart.

(f) DISCLOSURES TO CONGRESS.—This section may not be construed to authorize the withholding, or to prohibit the disclosure,

of any information to the Congress or any committee or subcommittee thereof.

SEC. 1347. ø12 U.S.C. 4587¿ NOTICE OF SERVICE.

Any service required or authorized to be made by the Secretary

under this subpart may be made by registered mail or in such

other manner reasonably calculated to give actual notice, as the

Secretary may by regulation or otherwise provide.

SEC. 1348. ø12 U.S.C. 4588¿ SUBPOENA AUTHORITY.

(a) IN GENERAL.—In the course of or in connection with any

administrative proceeding under this subpart, the Secretary shall

have the authority—

(1) to administer oaths and affirmations;

(2) to take and preserve testimony under oath;

(3) to issue subpoenas and subpoenas duces tecum; and

(4) to revoke, quash, or modify subpoenas and subpoenas

duces tecum issued by the Secretary.

(b) WITNESSES AND DOCUMENTS.—The attendance of witnesses

and the production of documents provided for in this section may

be required from any place in any State at any designated place

where such proceeding is being conducted.

(c) ENFORCEMENT.—The Secretary may request the Attorney

General of the United States to bring an action in the United

States district court for the judicial district in which such proceeding is being conducted, or where the witness resides or conducts business, or the United States District Court for the District

of Columbia, for enforcement of any subpoena or subpoena duces

tecum issued pursuant to this section. Such courts shall have jurisdiction and power to order and require compliance therewith.

(d) FEES AND EXPENSES.—Witnesses subpoenaed under this

section shall be paid the same fees and mileage that are paid wit-
1249 Sec. 1354 GSE FINANCIAL SAFETY AND SOUNDNESS

1The date of enactment was October 28, 1992.

nesses in the district courts of the United States. Any court having

jurisdiction of any proceeding instituted under this section by an

enterprise may allow to any such party such reasonable expenses

and attorneys fees as the court deems just and proper. Such expenses and fees shall be paid by the enterprise or from its assets.

SEC. 1349. ø12 U.S.C. 4589¿ REGULATIONS.

The Secretary shall issue any final regulations necessary to

implement the provisions of this part (not including the provisions

of sections 1332(d), 1333(d), and 1334(d), relating to transition

housing goals) not later than the expiration of the 18-month period

beginning on the date of the enactment of this Act. 1 Such regulations shall be issued after notice and opportunity for public comment pursuant to the provisions of section 553 of title 5, United

States Code.

PART 3—MISCELLANEOUS PROVISIONS

SEC. 1351. AMENDMENTS TO TITLE 5, UNITED STATES CODE.

(a) DIRECTOR AT LEVEL II OF EXECUTIVE SCHEDULE.—Section

5313 of title 5, United States Code, is amended by inserting at the

end the following new item:

‘‘Director of the Office of Federal Housing Enterprise Oversight, Department of Housing and Urban Development.’’.

(b) EXCLUSION FROM SENIOR EXECUTIVE SERVICE.—Section

3132(a)(1)(D) of title 5, United States Code, is amended by inserting ‘‘the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development,’’ after ‘‘Farm Credit

Administration,’’.

SEC. 1352. PROHIBITION OF MERGER OF OFFICE.

Section 5 of the Department of Housing and Urban Development Act (42 U.S.C. 3534) is amended by adding at the end the following new subsection:

‘‘(d) Notwithstanding any other provision of this Act, the Secretary may not merge or consolidate the Office of Federal Housing

Enterprise Oversight of the Department, or any of the functions or

responsibilities of such Office, with any function or program administered by the Secretary.’’.

SEC. 1353. PROTECTION OF CONFIDENTIAL INFORMATION.

Section 1905 of title 18, United States Code, is amended by inserting ‘‘any person acting on behalf of the Office of Federal Housing Enterprise Oversight,’’ after ‘‘or agency thereof,’’.

SEC. 1354. ø12 U.S.C. 4601¿ REVIEW OF UNDERWRITING GUIDELINES.

(a) STUDY.—Each of the enterprises shall conduct a study to review the underwriting guidelines of the enterprise. The studies

shall examine—

(1) the extent to which the underwriting guidelines prevent or inhibit the purchase or securitization of mortgages for

housing located in mixed-use, urban center, and predominantly

minority neighborhoods and for housing for low- and moderateincome families;
Sec. 1355 GSE FINANCIAL SAFETY AND SOUNDNESS 1250

1The date of enactment was October 28, 1992.

2Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(2) the standards employed by private mortgage insurers

and the extent to which such standards inhibit the purchase

and securitization by the enterprises of mortgages described in

paragraph (1); and

(3) the implications of implementing underwriting standards that—

(A) establish a downpayment requirement for mortgagors of 5 percent or less;

(B) allow the use of cash on hand as a source for

downpayments; and

(C) approve borrowers who have a credit history of delinquencies if the borrower can demonstrate a satisfactory

credit history for at least the 12-month period ending on

the date of the application for the mortgage.

(b) REPORT.—Not later than the expiration of the 1-year period

beginning on the date of the enactment of this Act, 1 each enterprise shall submit to the Secretary, the Committee on Banking, Finance and Urban Affairs of the House of Representatives 2, and the

Committee on Banking, Housing, and Urban Affairs of the Senate

a report regarding the study conducted by the enterprise under

subsection (a). Each report shall include any recommendations of

the enterprise for better meeting the housing needs of low- and

moderate-income families.

SEC. 1355. ø12 U.S.C. 4602¿ STUDIES OF EFFECTS OF PRIVATIZATION

OF FNMA AND FHLMC.

(a) IN GENERAL.—The Comptroller General of the United

States, the Secretary of Housing and Urban Development, the Secretary of the Treasury, and the Director of the Congressional Budget Office shall each conduct and submit to the Committee on Banking, Finance and Urban Affairs of the House of Representatives 2

and the Committee on Banking, Housing, and Urban Affairs of the

Senate, not later than the expiration of the 2-year period beginning

on the date of the enactment of this Act, 1 a study regarding the

desirability and feasibility of repealing the Federal charters of the

Federal National Mortgage Association and the Federal Home Loan

Mortgage Corporation, eliminating any Federal sponsorship of the

enterprises, and allowing the enterprises to continue to operate as

fully private entities.

(b) REQUIREMENTS.—Each study shall particularly examine the

effects of such privatization on—

(1) the requirements applicable to the Federal National

Mortgage Association and the Federal Home Loan Mortgage

Corporation under Federal law and the costs to the enterprises;

(2) the cost of capital to the enterprises;
1251 Sec. 1356 GSE FINANCIAL SAFETY AND SOUNDNESS

1See footnote 2 on preceding page.

(3) housing affordability and availability and the cost of

homeownership;

(4) the level of secondary mortgage market competition

subsequently available in the private sector;

(5) whether increased amounts of capital would be necessary for the enterprises to continue operation;

(6) the secondary market for residential loans and the liquidity of such loans; and

(7) any other factors that the Comptroller General, the

Secretary of Housing and Urban Development, the Secretary of

the Treasury, or the Director of the Congressional Budget Office deems appropriate to enable the Congress to evaluate the

desirability and feasibility of privatization of the enterprises.

(c) INFORMATION.—The Federal National Mortgage Association

and the Federal Home Loan Mortgage Corporation shall provide

full and prompt access to the Comptroller General, the Secretary

of Housing and Urban Development, the Secretary of the Treasury,

and the Director of the Congressional Budget Office to any books,

records, and other information requested for the purposes of conducting the studies under this section.

(d) VIEWS OF THE FNMA AND FHLMC.—

(1) CONSIDERATION IN STUDIES.—In conducting the studies

under this section, the Comptroller General, the Secretary of

Housing and Urban Development, the Secretary of the Treasury, and the Director of the Congressional Budget Office shall

each consider the views of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

(2) DIRECT REPORT.—The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation may

each report directly to the Committee on Banking, Finance and

Urban Affairs of the House of Representatives 1 and the Committee on Banking, Housing, and Urban Affairs of the Senate

on its own analysis of the desirability and feasibility of repealing the Federal charters of the enterprises, eliminating any

Federal sponsorship, and allowing the enterprises to continue

to operate as fully private entities.

SEC. 1356. ø12 U.S.C. 4603¿ TRANSITION.

Before the expiration of the period ending 18 months after the

appointment of the Director under section 1312, any rules and regulations promulgated before the date of the enactment of this Act

by the Secretary pursuant to the Federal National Mortgage Association Charter Act or the Federal Home Loan Mortgage Corporation Act shall remain in effect unless modified, terminated, superseded, or revoked by operation of law or in accordance with law.

Such rules and regulations shall terminate, effective upon the expiration of such period.
Sec. 1361 GSE FINANCIAL SAFETY AND SOUNDNESS 1252

Subtitle B—Required Capital Levels for

Enterprises and Special Enforcement

Powers

SEC. 1361. ø12 U.S.C. 4611¿ RISK-BASED CAPITAL LEVELS.

(a) RISK-BASED CAPITAL TEST.—The Director shall, by regulation, establish a risk-based capital test under this section for the

enterprises. When applied to an enterprise, the risk-based capital

test shall determine the amount of total capital for the enterprise

that is sufficient for the enterprise to maintain positive capital during a 10-year period in which the following circumstances occur (in

this section referred to as the ‘‘stress period’’):

(1) CREDIT RISK.—With respect to mortgages owned or

guaranteed by the enterprise and other obligations of the enterprise, losses occur throughout the United States at a rate of

default and severity (based on any measurements of default

reasonably related to prevailing practice for that industry in

determining capital adequacy) reasonably related to the rate

and severity that occurred in contiguous areas of the United

States containing an aggregate of not less than 5 percent of the

total population of the United States that, for a period of not

less than 2 years, experienced the highest rates of default and

severity of mortgage losses, in comparison with such rates of

default and severity of mortgage losses in other such areas for

any period of such duration.

(2) INTEREST RATE RISK.—

(A) IN GENERAL.—Interest rates decrease as described

in subparagraph (B) or increase as described in subparagraph (C), whichever would require more capital for the

enterprise.

(B) DECREASES.—The 10-year constant maturity

Treasury yield decreases during the first year of the stress

period and will remain at the new level for the remainder

of the stress period. The yield decreases to the lesser of—

(i) 600 basis points below the average yield during

the preceding 9 months, or

(ii) 60 percent of the average yield during the preceding 3 years,

but in no case to a yield less than 50 percent of the average yield during the preceding 9 months.

(C) INCREASES.—The 10-year constant maturity Treasury yield increases during the first year of the stress period and will remain at the new level for the remainder of

the stress period. The yield increases to the greater of—

(i) 600 basis points above the average yield during

the preceding 9 months, or

(ii) 160 percent of the average yield during the

preceding 3 years,

but in no case to a yield greater than 175 percent of the

average yield during the preceding 9 months.

(D) DIFFERENT TERMS TO MATURITY.—Yields of Treasury instruments with other terms to maturity will change
1253 Sec. 1361 GSE FINANCIAL SAFETY AND SOUNDNESS

relative to the 10-year constant maturity Treasury yield in

patterns and for durations that are reasonably related to

historical experience and are judged reasonable by the Director.

(E) LARGE INCREASES IN YIELDS.—If the 10-year constant maturity Treasury yield is assumed to increase by

more than 50 percent over the average yield during the

preceding 9 months, the Director shall adjust the losses in

paragraphs (1) and (3) to reflect a correspondingly higher

rate of general price inflation.

(3) NEW BUSINESS.— (A) IN GENERAL.—Any contractual commitments of the

enterprise to purchase mortgages or issue securities will

be fulfilled. The characteristics of resulting mortgage purchases, securities issued, and other financing will be consistent with the contractual terms of such commitments,

recent experience, and the economic characteristics of the

stress period. No other purchases of mortgages shall be assumed, except as provided in subparagraph (B).

(B) ADDITIONAL NEW BUSINESS.—The Director may,

after consideration of each of the studies required by subparagraph (C), assume that the enterprise conducts additional new business during the stress period consistent

with the following—

(i) AMOUNT AND PRODUCT TYPES.—The amount

and types of mortgages purchased and their financing

will be reasonably related to recent experience and the

economic characteristics of the stress period.

(ii) LOSSES.—Default and loss severity characteristics of mortgages purchased will be reasonably related

to historical experience.

(iii) PRICING.—Prices charged by the enterprise in

purchasing new mortgages will be reasonably related

to recent experience and the economic characteristics

of the stress period. The Director may assume that a

reasonable period of time would lapse before the enterprise would recognize and react to the characteristics

of the stress period.

(iv) INTEREST RATE RISK.—Interest rate risk on

new mortgages purchased will occur to an extent reasonably related to historical experience.

(v) RESERVES.—The enterprise must maintain reserves during and at the end of the stress period on

new business conducted during the first 5 years of the

stress period reasonably related to the expected future

losses on such business, consistent with generally accepted accounting principles and industry accounting

practice.

(C) STUDIES.—Within 1 year after regulations are first

issued under subsection (e), the Director of the Congressional Budget Office, and the Comptroller General of the

United States shall each submit to the Committee on

Banking, Housing, and Urban Affairs of the Senate and

the Committee on Banking, Finance and Urban Affairs of
Sec. 1361 GSE FINANCIAL SAFETY AND SOUNDNESS 1254

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

the House of Representatives 1 a study of the advisability

and appropriate form of any new business assumptions

under subparagraph (B).

(D) EFFECTIVE DATE.—The provisions of subparagraph

(B) shall become effective 4 years after regulations are

first issued under subsection (e).

(4) OTHER ACTIVITIES.—Losses or gains on other activities,

including interest rate and foreign exchange hedging activities,

shall be determined by the Director, on the basis of available

information, to be consistent with the stress period.

(b) CONSIDERATIONS.—

(1) IN GENERAL.—In establishing the risk-based capital

test under subsection (a), the Director shall take into account

appropriate distinctions among types of mortgage products, differences in seasoning of mortgages, and any other factors the

Director considers appropriate.

(2) CONSISTENCY.—Characteristics of the stress period

other than those specifically set forth in subsection (a), such as

prepayment experience and dividend policies, will be those determined by the Director, on the basis of available information,

to be most consistent with the stress period.

(c) RISK-BASED CAPITAL LEVEL.—For purposes of this subtitle,

the risk-based capital level for an enterprise shall be equal to the

sum of the following amounts:

(1) CREDIT AND INTEREST RATE RISK.—The amount of total

capital determined by applying the risk-based capital test

under subsection (a) to the enterprise.

(2) MANAGEMENT AND OPERATIONS RISK.—To provide for

management and operations risk, 30 percent of the amount of

total capital determined by applying the risk-based capital test

under subsection (a) to the enterprise.

(d) DEFINITIONS.—For purposes of this section:

(1) SEASONING.—The term ‘‘seasoning’’ means the change

over time in the ratio of the unpaid principal balance of a

mortgage to the value of the property by which such mortgage

loan is secured, determined on an annual basis by region, in

accordance with the Constant Quality Home Price Index published by the Secretary of Commerce (or any index of similar

quality, authority, and public availability that is regularly used

by the Federal Government).

(2) TYPE OF MORTGAGE PRODUCT.—The term ‘‘type of mortgage product’’ means a classification of one or more mortgage

products, as established by the Director, which have similar

characteristics from each set of characteristics under the following subparagraphs:

(A) The property securing the mortgage is—
1255 Sec. 1361 GSE FINANCIAL SAFETY AND SOUNDNESS

(i) a residential property consisting of 1 to 4 dwelling units; or

(ii) a residential property consisting of more than

4 dwelling units.

(B) The interest rate on the mortgage is—

(i) fixed; or

(ii) adjustable.

(C) The priority of the lien securing the mortgage is—

(i) first; or

(ii) second or other.

(D) The term of the mortgage is—

(i) 1 to 15 years;

(ii) 16 to 30 years; or

(iii) more than 30 years.

(E) The owner of the property is—

(i) an owner-occupant; or

(ii) an investor.

(F) The unpaid principal balance of the mortgage—

(i) will amortize completely over the term of the

mortgage and will not increase significantly at any

time during the term of the mortgage;

(ii) will not amortize completely over the term of

the mortgage and will not increase significantly at any

time during the term of the mortgage; or

(iii) may increase significantly at some time during the term of the mortgage.

(G) Any other characteristics of the mortgage, as the

Director may determine.

(e) REGULATIONS.—

(1) ISSUANCE.—The Director shall issue final regulations

establishing the risk-based capital test under this section not

later than the expiration of the 18-month period beginning on

the date of the appointment of the Director. Such regulations

shall be issued after notice and opportunity for public comment

pursuant to the provisions of section 553 of title 5, United

States Code, and shall take effect upon issuance.

(2) CONTENTS.—The regulations under this subsection

shall contain specific requirements, definitions, methods, variables, and parameters used under the risk-based capital test

and in implementing the test (such as loan loss severity, float

income, loan-to-value ratios, taxes, yield curve slopes, default

experience, and prepayment rates). The regulations shall be

sufficiently specific to permit an individual other than the Director to apply the test in the same manner as the Director.

(3) CONFIDENTIALITY OF INFORMATION.—Any person that

receives any book, record, or information from the Director or

an enterprise to enable the risk-based capital test to be applied

shall—

(A) maintain the confidentiality of the book, record, or

information in a manner that is generally consistent with

the level of confidentiality established for the material by

the Director or the enterprise; and
Sec. 1362 GSE FINANCIAL SAFETY AND SOUNDNESS 1256

1The date of enactment was October 28, 1992.

(B) be exempt from section 552 of title 5, United

States Code, with respect to the book, record, or information.

(f) AVAILABILITY OF MODEL.—The Director shall provide copies

of the statistical model or models used to implement the risk-based

capital test under this section to the Secretary, the Board of Governors of the Federal Reserve System, the Director of the Office of

Management and Budget, the Comptroller General of the United

States, and the Director of the Congressional Budget Office. The

Director shall make copies of such model or models available for

public acquisition and may charge a reasonable fee for such copies.

SEC. 1362. ø12 U.S.C. 4612¿ MINIMUM CAPITAL LEVELS.

(a) IN GENERAL.—For purposes of this subtitle, the minimum

capital level for each enterprise shall be the sum of—

(1) 2.50 percent of the aggregate on-balance sheet assets of

the enterprise, as determined in accordance with generally accepted accounting principles;

(2) 0.45 percent of the unpaid principal balance of outstanding mortgage-backed securities and substantially equivalent instruments issued or guaranteed by the enterprise that

are not included in paragraph (1); and

(3) 0.45 percent of other off-balance sheet obligations of the

enterprise not included in paragraph (2) (excluding commitments in excess of 50 percent of the average dollar amount of

the commitments outstanding each quarter over the preceding

4 quarters), except that the Director shall adjust such percentage to reflect differences in the credit risk of such obligations

in relation to the instruments included in paragraph (2).

(b) TRANSITION.—Notwithstanding subsection (a), during the

18-month period beginning upon the date of the enactment of this

Act, 1 the minimum capital level for each enterprise shall be the

sum of—

(1) 2.25 percent of the aggregate on-balance sheet assets of

the enterprise, as determined in accordance with generally accepted accounting principles;

(2) 0.40 percent of the unpaid principal balance of outstanding mortgage-backed securities and substantially equivalent instruments issued or guaranteed by the enterprise that

are not included in paragraph (1); and

(3) 0.40 percent of other off-balance sheet obligations of the

enterprise not included in paragraph (2) (excluding commitments in excess of 50 percent of the average dollar amount of

the commitments outstanding each quarter over the preceding

4 quarters), except that the Director shall adjust such percentage to reflect differences in the credit risk of such obligations

in relation to the instruments included in paragraph (2).

SEC. 1363. ø12 U.S.C. 4613¿ CRITICAL CAPITAL LEVELS.

For purposes of this subtitle, the critical capital level for each

enterprise shall be the sum of—
1257 Sec. 1364 GSE FINANCIAL SAFETY AND SOUNDNESS

(1) 1.25 percent of the aggregate on-balance sheet assets of

the enterprise, as determined in accordance with generally accepted accounting principles;

(2) 0.25 percent of the unpaid principal balance of outstanding mortgage-backed securities and substantially equivalent instruments issued or guaranteed by the enterprise that

are not included in paragraph (1); and

(3) 0.25 percent of other off-balance sheet obligations of the

enterprise not included in paragraph (2) (excluding commitments in excess of 50 percent of the average dollar amount of

the commitments outstanding each quarter over the preceding

4 quarters), except that the Director shall adjust such percentage to reflect differences in the credit risk of such obligations

in relation to the instruments included in paragraph (2).

SEC. 1364. ø12 U.S.C. 4614¿ CAPITAL CLASSIFICATIONS.

(a) IN GENERAL.—For purposes of this subtitle, the Director

shall classify the enterprises according to the following capital classifications:

(1) ADEQUATELY CAPITALIZED.—An enterprise shall be classified as adequately capitalized if the enterprise—

(A) maintains an amount of total capital that is equal

to or exceeds the risk-based capital level established for

the enterprise under section 1361; and

(B) maintains an amount of core capital that is equal

to or exceeds the minimum capital level established for the

enterprise under section 1362.

(2) UNDERCAPITALIZED.—An enterprise shall be classified

as undercapitalized if—

(A) the enterprise—

(i) does not maintain an amount of total capital

that is equal to or exceeds the risk-based capital level

established for the enterprise; and

(ii) maintains an amount of core capital that is

equal to or exceeds the minimum capital level established for the enterprise; or

(B) the enterprise is otherwise classified as undercapitalized under subsection (b)(1) of this section.

(3) SIGNIFICANTLY UNDERCAPITALIZED.—An enterprise shall

be classified as significantly undercapitalized if—

(A) the enterprise—

(i) does not maintain an amount of total capital

that is equal to or exceeds the risk-based capital level

established for the enterprise;

(ii) does not maintain an amount of core capital

that is equal to or exceeds the minimum capital level

established for the enterprise; and

(iii) maintains an amount of core capital that is

equal to or exceeds the critical capital level established for the enterprise under section 1363; or

(B) the enterprise is otherwise classified as significantly undercapitalized under subsection (b)(2) of this section or section 1365(b).
Sec. 1365 GSE FINANCIAL SAFETY AND SOUNDNESS 1258

1The date of enactment was October 28, 1992.

(4) CRITICALLY UNDERCAPITALIZED.—An enterprise shall be

classified as critically undercapitalized if—

(A) the enterprise—

(i) does not maintain an amount of total capital

that is equal to or exceeds the risk-based capital level

established for the enterprise; and

(ii) does not maintain an amount of core capital

that is equal to or exceeds the critical capital level for

the enterprise; or

(B) is otherwise classified as critically undercapitalized

under subsection (b)(3) of this section or section 1366(b)(5).

(b) DISCRETIONARY CLASSIFICATION.—If at any time the Director determines in writing that an enterprise is engaging in conduct

not approved by the Director that could result in a rapid depletion

of core capital or that the value of the property subject to mortgages held or securitized by the enterprise has decreased significantly, the Director may classify the enterprise—

(1) as undercapitalized, if the enterprise is otherwise classified as adequately capitalized;

(2) as significantly undercapitalized, if the enterprise is

otherwise classified as undercapitalized; and

(3) as critically undercapitalized, if the enterprise is otherwise classified as significantly undercapitalized.

(c) QUARTERLY DETERMINATION.—The Director shall determine

the capital classification of the enterprises for purposes of this subtitle on not less than a quarterly basis (and as appropriate under

subsection (b)). The first such determination shall be made during

the 3-month period beginning on the appointment of the Director.

(d) IMPLEMENTATION.—Notwithstanding any other provision of

this section, during the period beginning on the date of the enactment of this Act 1 and ending upon the effective date of section

1365 (as provided in section 1365(c)), an enterprise shall be classified as adequately capitalized if the enterprise maintains an

amount of core capital that is equal to or exceeds the minimum

capital level for the enterprise under section 1362.

SEC. 1365. ø12 U.S.C. 4615¿ SUPERVISORY ACTIONS APPLICABLE TO

UNDERCAPITAL- IZED ENTERPRISES.

(a) MANDATORY ACTIONS.—

(1) CAPITAL RESTORATION PLAN.—An enterprise that is

classified as undercapitalized shall, within the time period provided in section 1369C (b) and (d), submit to the Director a

capital restoration plan that complies with section 1369C and

carry out the plan after approval.

(2) RESTRICTION ON CAPITAL DISTRIBUTIONS.—An enterprise that is classified as undercapitalized may not make any

capital distribution that would result in the enterprise being

reclassified as significantly undercapitalized or critically

undercapitalized.

(b) DISCRETIONARY RECLASSIFICATION FROM UNDERCAPITALIZED

TO SIGNIFICANTLY UNDERCAPITALIZED.—The Director may reclassify as significantly undercapitalized an enterprise that is classified
1259 Sec. 1366 GSE FINANCIAL SAFETY AND SOUNDNESS

as undercapitalized (and the enterprise shall be subject to the provisions of section 1366) if—

(1) the enterprise does not submit a capital restoration

plan that is substantially in compliance with section 1369C

within the applicable period or the Director does not approve

the capital restoration plan submitted by the enterprise; or

(2) the Director determines that the enterprise has failed

to make, in good faith, reasonable efforts necessary to comply

with the capital restoration plan and fulfill the schedule for the

plan approved by the Director.

(c) EFFECTIVE DATE.—This section shall take effect upon the

expiration of the 1-year period beginning on the date of the effectiveness of the regulations issued under section 1361(e) establishing the risk-based capital test.

SEC. 1366. ø12 U.S.C. 4616¿ SUPERVISORY ACTIONS APPLICABLE TO

SIGNIFICANTLY UNDERCAPITALIZED ENTERPRISES.

(a) MANDATORY SUPERVISORY ACTIONS.—

(1) CAPITAL RESTORATION PLAN.—An enterprise that is

classified as significantly undercapitalized shall, within the

time period under section 1369C (b) and (d), submit to the Director a capital restoration plan that complies with section

1369C and carry out the plan after approval.

(2) RESTRICTIONS ON CAPITAL DISTRIBUTIONS.—

(A) PRIOR APPROVAL.—An enterprise that is classified

as significantly undercapitalized may not make any capital

distribution that would result in the enterprise being reclassified as critically undercapitalized. An enterprise that

is classified as significantly undercapitalized enterprise

may not make any other capital distribution unless the Director approves the distribution.

(B) STANDARD FOR APPROVAL.—The Director may approve a capital distribution by an enterprise classified as

significantly undercapitalized only if the Director determines that the distribution (i) will enhance the ability of

the enterprise to meet the risk-based capital level and the

minimum capital level for the enterprise promptly, (ii) will

contribute to the long-term financial safety and soundness

of the enterprise, or (iii) is otherwise in the public interest.

(b) DISCRETIONARY SUPERVISORY ACTIONS.—In addition to any

other actions taken by the Director (including actions under subsection (a)), the Director may, at any time, take any of the following actions with respect to an enterprise that is classified as

significantly undercapitalized:

(1) LIMITATION ON INCREASE IN OBLIGATIONS.—Limit any

increase in, or order the reduction of, any obligations of the enterprise, including off-balance sheet obligations.

(2) LIMITATION ON GROWTH.—Limit or prohibit the growth

of the assets of the enterprise or require contraction of the assets of the enterprise.

(3) ACQUISITION OF NEW CAPITAL.—Require the enterprise

to acquire new capital in a form and amount determined by

the Director.
Sec. 1367 GSE FINANCIAL SAFETY AND SOUNDNESS 1260

(4) RESTRICTION OF ACTIVITIES.—Require the enterprise to

terminate, reduce, or modify any activity that the Director determines creates excessive risk to the enterprise.

(5) RECLASSIFICATION FROM SIGNIFICANTLY TO CRITICALLY

UNDERCAPITALIZED.—The Director may reclassify as critically

undercapitalized an enterprise that is classified as significantly

undercapitalized (and the enterprise shall be subject to the

provisions of section 1367) if—

(A) the enterprise does not submit a capital restoration plan that is substantially in compliance with section

1369C within the applicable period or the Director does

not approve the capital restoration plan submitted by the

enterprise; or

(B) the Director determines that the enterprise has

failed to make, in good faith, reasonable efforts necessary

to comply with the capital restoration plan and fulfill the

schedule for the plan approved by the Director.

(6) CONSERVATORSHIP.—Appoint a conservator for the enterprise in accordance with the provisions of section 1369 (excluding subsection (a) (1) and (2)), but only if the Director

determines—

(A) that the amount of core capital of the enterprise is

less than the minimum capital level established for the enterprise under section 1362; and

(B) that alternative remedies available to the Director

under this title are not satisfactory.

(c) EFFECTIVE DATE.—This section shall take effect upon the

first classification of the enterprises within capital classifications

that occurs under section 1364.

SEC. 1367. ø12 U.S.C. 4617¿ APPOINTMENT OF CONSERVATORS FOR

CRITICALLY UNDERCAPITALIZED ENTERPRISES.

(a) APPOINTMENT.— (1) IN GENERAL.—Upon a determination and notice under

section 1368(d) that an enterprise is critically undercapitalized

and not later than 30 days after providing notice under section

1369(a)(3), the Director shall appoint a conservator for the enterprise in accordance with the provisions of section 1369 (excluding subsections (a) (1) and (2)).

(2) EXCEPTION.—Notwithstanding paragraph (1), the Director may determine not to appoint a conservator for an enterprise classified as critically undercapitalized, but only pursuant

to a written finding by the Director, with the written concurrence of the Secretary of the Treasury, that—

(A) the appointment of a conservator would have serious adverse effects on economic conditions of national financial markets or on the financial stability of the housing

finance market; and

(B) the public interest would be better served by taking some other enforcement action authorized under this

title.

(b) AUTHORITY.—The Director shall have the authority to take

any actions under sections 1365 and 1366 with respect to an enterprise under conservatorship.

(c) APPROVAL OF ACTIVITIES.—
1261 Sec. 1368 GSE FINANCIAL SAFETY AND SOUNDNESS

(1) CONSERVATOR.—The conservator of any enterprise classified as critically undercapitalized may undertake an activity

subject to the approval of the Secretary under section 1322 of

this title only with the additional approval of the Director.

(2) NO CONSERVATOR.—If the Director determines under

subsection (a)(2) not to appoint a conservator for an enterprise

classified as critically undercapitalized, the provisions of section 1366 shall apply with respect to the enterprise.

(d) EFFECTIVE DATE.—This section shall take effect upon the

first classification of the enterprises within capital classifications

that occurs under section 1364.

SEC. 1368. ø12 U.S.C. 4618¿ NOTICE OF CLASSIFICATION AND ENFORCEMENT ACTION.

(a) NOTICE.—Before taking any action referred to in subsection

(b), the Director shall provide to the enterprise written notice of the

proposed action, which states the reasons for the proposed action

and the information on which the proposed action is based.

(b) APPLICABILITY.—The requirements of subsection (a) shall

apply to the following actions:

(1) Classification or reclassification of an enterprise within

a particular capital classification under section 1364.

(2) Any discretionary supervisory action pursuant to section 1365.

(3) Any discretionary supervisory action pursuant to section 1366 except a decision to appoint a conservator under section 1366(b)(6).

Notice of classification under paragraph (1) and notice of supervisory actions under paragraph (2) or (3) may be provided together

in a single notice under subsection (a).

(c) RESPONSE PERIOD.— (1) IN GENERAL.—During the 30-day period beginning on

the date that an enterprise is provided notice under subsection

(a) of a proposed action, the enterprise may submit to the Director any information relevant to the action that the enterprise considers appropriate for consideration by the Director in

determining whether to take such action. The Director may, at

the discretion of the Director, hold an informal administrative

hearing to receive and discuss such information and the proposed determination.

(2) EXTENDED PERIOD.—The Director may extend the period under paragraph (1) for good cause for not more than 30

additional days.

(3) SHORTENED PERIOD.—The Director may shorten the period under paragraph (1) if the Director determines that the

condition of the enterprise so requires or the enterprise consents.

(4) FAILURE TO RESPOND.—The failure of an enterprise to

provide information during the response period under this subsection (as extended or shortened) shall waive any right of the

enterprise to comment on the proposed action of the Director.

(d) CONSIDERATION OF INFORMATION AND DETERMINATION.—

After the expiration of the response period under subsection (c) or

upon receipt of information provided during such period by the enterprise, whichever occurs earlier, the Director shall determine
Sec. 1369 GSE FINANCIAL SAFETY AND SOUNDNESS 1262

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

whether to take the action proposed, taking into consideration any

relevant information submitted by the enterprise during the response period. The Director shall provide written notice of a determination to take action and the reasons for such determination to

the enterprise, the Committee on Banking, Finance and Urban Affairs of the House of Representatives 1, and the Committee on

Banking, Housing, and Urban Affairs of the Senate. Such notice

shall respond to any information submitted during the response period.

(e) EFFECTIVE DATE OF ACTIONS.—An action referred to in subsection (b) shall take effect upon receipt by the enterprise of notice

of the determination of the Director under subsection (d), unless

otherwise provided in such notice.

SEC. 1369. ø12 U.S.C. 4619¿ APPOINTMENT OF CONSERVATORS.

(a) APPOINTMENT.— (1) DISCRETIONARY AUTHORITY.—The Director may, after

providing notice under paragraph (3), appoint a conservator for

an enterprise upon a determination in writing—

(A) that alternative remedies available to the Director

under this title are not satisfactory; and

(B) that—

(i) the enterprise is not likely to pay its obligations in the normal course of business;

(ii) the enterprise has incurred or is reasonably

likely to incur losses that would deplete substantially

all of its core capital and it is unlikely that the enterprise will replenish its core capital within a reasonable

period;

(iii) the enterprise has concealed or is concealing

books, papers, records, or assets of the enterprise that

are material to the discharge of the Director’s responsibilities under this subtitle, or has refused or is

refusing to submit such books, papers, records, or

information regarding the affairs of the enterprise for

inspection to the Director upon request; or

(iv) the enterprise has willfully violated, or is willfully violating, a final cease-and-desist order under

section 1371.

(2) CONSENT OF ENTERPRISE.—Notwithstanding paragraph

(1), the Director may appoint a conservator for an enterprise

if the enterprise, by an affirmative vote of a majority of the

members of its board of directors or by an affirmative vote of

a majority of its shareholders, consents to such appointment.

(3) NOTICE.—Upon making a determination under paragraph (1) of this subsection or under section 1366 or 1367 to

appoint a conservator for an enterprise, or upon consent of the

enterprise under paragraph (2) to such an appointment, the
1263 Sec. 1369 GSE FINANCIAL SAFETY AND SOUNDNESS

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

Director shall provide written notice to the enterprise, the

Committee on Banking, Finance and Urban Affairs of the

House of Representatives 1, and the Committee on Banking,

Housing, and Urban Affairs of the Senate—

(A) that a conservator will be appointed for the

enterprise;

(B) stating the reasons for the appointment of the conservator; and

(C) identifying the person or governmental agency that

the Director intends to appoint as conservator.

(4) QUALIFICATIONS.—The conservator shall be—

(A) the Director or any other governmental agency; or

(B) any person that—

(i) has no claim against, or financial interest in,

the enterprise or other basis for a conflict of interest;

and

(ii) has the financial and management expertise

necessary to direct the operations and affairs of the

enterprise.

(b) JUDICIAL REVIEW.—

(1) TIMING AND JURISDICTION.—Except as provided in paragraph (2), an enterprise for which a conservator is appointed

(pursuant to this section or section 1366 or 1367) may bring an

action in the United States District Court for the District of

Columbia for an order requiring the Director to terminate the

appointment of the conservator. The court, upon the merits,

shall dismiss such action or shall direct the Director to terminate the appointment of the conservator. Such an action may

be commenced only during the 20-day period beginning upon

the appointment of the conservator.

(2) CONSENSUAL APPOINTMENTS.—Appointment of a conservator pursuant to consent of the enterprise under subsection

(a)(2) shall not be subject to judicial review under this subsection.

(3) STANDARD OF REVIEW.—A decision of the Director to appoint a conservator may be set aside under this subsection only

if the court finds that the decision was arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with applicable laws.

(4) LIMITATION ON JURISDICTION.—Except as otherwise provided in this subsection, no court may take any action regarding the removal of a conservator or otherwise restrain or affect

the exercise of powers or functions of a conservator.

(c) REPLACEMENT.—The Director may, without notice or hearing, replace a conservator with another conservator. Such replacement shall not affect the right of the enterprise under subsection
Sec. 1369A GSE FINANCIAL SAFETY AND SOUNDNESS 1264

(b) to obtain judicial review of the decision of the Director to appoint a conservator.

(d) EXAMINATIONS.—The Director may examine and supervise

any enterprise in conservatorship during the period in which the

enterprise continues to operate as a going concern.

(e) TERMINATION.—

(1) DISCRETIONARY.—At any time the Director determines

that termination of a conservatorship pursuant to an appointment under subsection (a) is in the public interest and may

safely be accomplished, the Director may terminate the conservatorship and permit the enterprise to resume the transaction of its business subject to such terms, conditions, and

limitations as the Director may prescribe.

(2) MANDATORY.—The Director shall terminate a conservatorship initiated pursuant to section 1366 or 1367 upon a

determination by the Director that the enterprise has maintained an amount of core capital that is equal to or exceeds the

minimum capital level for the enterprise established under section 1362, and may by written order prescribe such terms, conditions, and limitations on the enterprise as the Director considers appropriate.

(3) TERMS.—Any terms, conditions, and limitations imposed by the Director upon termination of a conservatorship

shall be enforceable and reviewable under the provisions of

sections 1374 and 1375, to the same extent as any cease-anddesist order issued pursuant to subtitle C.

SEC. 1369A. ø12 U.S.C. 4620¿ POWERS OF CONSERVATORS.

(a) GENERAL POWERS.—A conservator shall have all the powers

of the shareholders, directors, and officers of the enterprise under

conservatorship and may operate the enterprise in the name of the

enterprise, unless the Director provides otherwise.

(b) ADDITIONAL POWER.—A conservator may avoid any security

interest taken by a creditor with the intent to hinder, delay, or defraud the enterprise or the creditors of the enterprise.

(c) LIMITATIONS BY DIRECTOR.—A conservator shall be subject

to any rules, regulations, and orders issued from time to time by

the Director and, except as otherwise specifically provided in such

rules, regulations, or orders or in section 1369B, shall have the

same rights and privileges and be subject to the same duties, restrictions, penalties, conditions, and limitations applicable to directors, officers, or employees of the enterprise.

(d) ENFORCEMENT OF CONTRACTS.—

(1) IN GENERAL.—A conservator may enforce any contract

described in paragraph (2), notwithstanding any provision of

the contract providing for the termination, default, acceleration, or other exercise of rights upon, or solely by reason of, the

insolvency of the enterprise or the appointment of a conservator.

(2) ENFORCEABLE CONTRACTS.—Any contract that is within

a class of contracts shall be enforceable under paragraph (1) if

the Director—
1265 Sec. 1369B GSE FINANCIAL SAFETY AND SOUNDNESS

(A) determines that the continued enforceability of

such class of contracts is necessary to achieve the purpose

of the conservatorship; and

(B) specifically provides for the enforceability of such

class of contracts in a regulation or order, issued for the

purpose of this subsection, which describes such class.

(3) APPLICABILITY.—This subsection and any regulation or

order issued under this subsection shall apply only to contracts

entered into, modified, extended, or renewed after the effective

date of the regulation or order.

(e) STAYS.— (1) IN GENERAL.—Not later than 45 days after appointment

pursuant to section 1366, 1367, or 1369, or 45 days after receipt of actual notice of an action or proceeding that is pending

at the time of appointment, a conservator may request that

any judicial action or proceeding to which the conservator or

the enterprise is or may become a party be stayed for a period

not exceeding 45 days after the request. Upon petition, the

court shall grant such stay as to all parties.

(2) FEDERAL AGENCY AS CONSERVATOR.—In any case in

which the conservator appointed for an enterprise is a Federal

agency or an officer or employee of the Federal Government,

the conservator may make a request for a stay under paragraph (1) only with the prior consent of the Attorney General

and subject to the direction and control of the Attorney General.

(f) PAYMENT OF CREDITORS.—The Director may require a conservator to set aside and make available for payment to creditors

any amounts that the Director determines may safely be used for

such purpose. All creditors who are similarly situated shall be

treated in a similar manner.

(g) COMPENSATION OF CONSERVATOR AND EMPLOYEES.—A conservator and professional employees (other than Federal employees) appointed to represent or assist the conservator may be compensated for activities conducted as conservator. Compensation

may not be provided in amounts greater than the compensation

paid to employees of the Federal Government for similar services,

except that the Director may provide for compensation at higher

rates (but not in excess of rates prevailing in the private sector),

if the Director determines that compensation at higher rates is necessary in order to recruit and retain competent personnel.

(h) EXPENSES.—All expenses of a conservatorship pursuant to

this section (including compensation pursuant to subsection (f))

shall be paid by the enterprise under conservatorship and shall be

secured by a lien on the enterprise, which shall have priority over

any other lien.

(i) CONFLICTS OF INTEREST AND FINANCIAL DISCLOSURE.—A

conservator shall be subject to any laws and regulations relating to

conflicts of interest and financial disclosure that apply to employees of the Office.

SEC. 1369B. ø12 U.S.C. 4621¿ LIABILITY PROTECTION FOR CONSERVATORS.

(a) FEDERAL AGENCIES AND EMPLOYEES.—In any case in which

a conservator appointed under this subtitle is a Federal agency or
Sec. 1369C GSE FINANCIAL SAFETY AND SOUNDNESS 1266

an officer or employee of the Federal Government, the provisions

of chapters 161 and 171 of title 28, United States Code, shall apply

with respect to the liability of the conservator for acts or omissions

performed pursuant to and in the course of the duties and responsibilities of the conservatorship.

(b) OTHER CONSERVATORS.—In any case where the conservator

is not a conservator described in subsection (a), the conservator

shall not be personally liable for damages in tort or otherwise for

acts or omissions performed pursuant to and in the course of the

duties and responsibilities of the conservatorship, unless such acts

or omissions constitute gross negligence or any form of intentional

tortious conduct or criminal conduct.

(c) INDEMNIFICATION.—The Director, with the approval of the

Attorney General, may indemnify the conservator on such terms as

the Director considers appropriate.

SEC. 1369C. ø12 U.S.C. 4622¿ CAPITAL RESTORATION PLANS.

(a) CONTENTS.—Each capital restoration plan submitted under

this subtitle shall set forth a feasible plan for restoring the core

capital of the enterprise subject to the plan to an amount not less

than the minimum capital level for the enterprise and for restoring

the total capital of the enterprise to an amount not less than the

risk-based capital level for the enterprise. Each capital restoration

plan shall—

(1) specify the level of capital the enterprise will achieve

and maintain;

(2) describe the actions that the enterprise will take to become classified as adequately capitalized;

(3) establish a schedule for completing the actions set forth

in the plan;

(4) specify the types and levels of activities (including existing and new programs) in which the enterprise will engage

during the term of the plan; and

(5) describe the actions that the enterprise will take to

comply with any mandatory and discretionary requirements

imposed under this subtitle.

(b) DEADLINES FOR SUBMISSION.—The Director shall, by regulation, establish a deadline for submission of a capital restoration

plan, which may not be more than 45 days after the enterprise is

notified in writing that a plan is required. The regulations shall

provide that the Director may extend the deadline to the extent

that the Director determines it necessary. Any extension of the

deadline shall be in writing and for a time certain.

(c) APPROVAL.—The Director shall review each capital restoration plan submitted under this section and, not later than 30 days

after submission of the plan, approve or disapprove the plan. The

Director may extend the period for approval or disapproval for any

plan for a single additional 30-day period if the Director determines

it necessary. The Director shall provide written notice to any enterprise submitting a plan of the approval or disapproval of the plan

(which shall include the reasons for any disapproval of the plan)

and of any extension of the period for approval or disapproval.

(d) RESUBMISSION.—If the Director disapproves the initial capital restoration plan submitted by the enterprise, the enterprise
1267 Sec. 1371 GSE FINANCIAL SAFETY AND SOUNDNESS

shall submit an amended plan acceptable to the Director within 30

days or such longer period that the Director determines is in the

public interest.

SEC. 1369D. ø12 U.S.C. 4623¿ JUDICIAL REVIEW OF DIRECTOR ACTION.

(a) JURISDICTION.— (1) FILING OF PETITION.—An enterprise that is not classified as critically undercapitalized and is the subject of a classification under section 1364 or a discretionary supervisory action taken under this subtitle by the Director (other than action to appoint a conservator under section 1366 or 1367 or action under section 1369) may obtain review of the classification

or action by filing, within 10 days after receiving written notice

of the Director’s action, a written petition requesting that the

classification or action of the Director be modified, terminated,

or set aside.

(2) PLACE FOR FILING.—A petition filed pursuant to this

subsection shall be filed in the United States Court of Appeals

for the District of Columbia Circuit.

(b) SCOPE OF REVIEW.—The Court may modify, terminate, or

set aside an action taken by the Director and reviewed by the

Court pursuant to this section only if the court finds, on the record

on which the Director acted, that the action of the Director was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with applicable laws.

(c) UNAVAILABILITY OF STAY.—The commencement of proceedings for judicial review pursuant to this section shall not operate as a stay of any action taken by the Director. Pending judicial

review of the action, the court shall not have jurisdiction to stay,

enjoin, or otherwise delay any supervisory action taken by the Director with respect to an enterprise that is classified as significantly or critically undercapitalized or any action of the Director

that results in the classification of an enterprise as significantly or

critically undercapitalized.

(d) LIMITATION ON JURISDICTION.—Except as provided in this

section, no court shall have jurisdiction to affect, by injunction or

otherwise, the issuance or effectiveness of any classification or action of the Director under this subtitle (other than appointment of

a conservator under section 1366 or 1367 or action under section

1369) or to review, modify, suspend, terminate, or set aside such

classification or action.

Subtitle C—Enforcement Provisions

SEC. 1371. ø12 U.S.C. 4631¿ CEASE-AND-DESIST PROCEEDINGS.

(a) GROUNDS FOR ISSUANCE AGAINST ADEQUATELY CAPITALIZED

ENTERPRISES.—The Director may issue and serve a notice of

charges under this section upon an enterprise that is classified (for

purposes of subtitle B) as adequately capitalized or upon any executive officer or director of such an enterprise, if in the determination of the Director, the enterprise, executive officer, or director is

engaging or has engaged, or the Director has reasonable cause to

believe that the enterprise, executive officer, or director is about to

engage, in—
Sec. 1371 GSE FINANCIAL SAFETY AND SOUNDNESS 1268

(1) any conduct that threatens to cause a significant depletion of the core capital of the enterprise;

(2) any conduct or violation that may result in the

issuance of an order described in subsection (d)(1); or

(3) any conduct that violates—

(A) any provision of this title, the Federal National

Mortgage Association Charter Act, the Federal Home Loan

Mortgage Corporation Act, or any order, rule, or regulation

under any such title or Act, except that the Director may

not enforce compliance with any housing goal established

under subpart B of part 2 of subtitle A of this title, with

section 1336 or 1337 of this title, or with subsection (m) or

(n) of section 309 of the Federal National Mortgage Association Charter Act or subsection (e) or (f) of section 307

of the Federal Home Loan Mortgage Corporation Act; or

(B) any written agreement entered into by the enterprise with the Director.

(b) GROUNDS FOR ISSUANCE AGAINST UNDERCAPITALIZED, SIGNIFICANTLY UNDERCAPITALIZED, AND CRITICALLY UNDERCAPITALIZED ENTERPRISES.—The Director may issue and serve a notice of

charges under this section upon an enterprise classified (for purposes of subtitle B) as undercapitalized, significantly undercapitalized, or critically undercapitalized, or any executive officer or director of any such enterprise, if in the determination of the Director

the enterprise, executive officer, or director is engaging or has engaged, or the Director has reasonable cause to believe that the enterprise, executive officer, or director is about to engage, in—

(1) any conduct likely to result in a material depletion of

the core capital of the enterprise, or

(2) any conduct or violation described in paragraph (2) or

(3) of subsection (a),

except that the Director may not enforce compliance with any housing goal established under subpart B of part 2 of subtitle A of this

title, with section 1336 or 1337 of this title, or with subsection (m)

or (n) of section 309 of the Federal National Mortgage Association

Charter Act or subsection (e) or (f) of section 307 of the Federal

Home Loan Mortgage Corporation Act.

(c) PROCEDURE.—

(1) NOTICE OF CHARGES.—Each notice of charges under

this section shall contain a statement of the facts constituting

the alleged conduct or violation and shall fix a time and place

at which a hearing will be held to determine on the record

whether an order to cease and desist from such conduct or violation should issue.

(2) ISSUANCE OF ORDER.—If the Director finds on the

record made at such hearing that any conduct or violation

specified in the notice of charges has been established (or the

enterprise consents pursuant to section 1373(a)(4)), the Director may issue and serve upon the enterprise, executive officer,

or director an order requiring such party to cease and desist

from any such conduct or violation and to take affirmative action to correct or remedy the conditions resulting from any

such conduct or violation.
1269 Sec. 1372 GSE FINANCIAL SAFETY AND SOUNDNESS

(d) AFFIRMATIVE ACTION TO CORRECT CONDITIONS RESULTING

FROM VIOLATIONS OR ACTIVITIES.—The authority under this section

and section 1372 to issue any order requiring an enterprise, executive officer, or director to take affirmative action to correct or remedy any condition resulting from any conduct or violation with respect to which such order is issued includes the authority—

(1) to require an executive officer or a director to make restitution to, or provide reimbursement, indemnification, or guarantee against loss to the enterprise to the extent that such

person—

(A) was unjustly enriched in connection with such conduct or violation; or

(B) engaged in conduct or a violation that would subject such person to a civil penalty pursuant to section

1376(b)(3);

(2) to require an enterprise to seek restitution, or to obtain

reimbursement, indemnification, or guarantee against loss;

(3) to restrict the growth of the enterprise;

(4) to require the enterprise to dispose of any asset involved;

(5) to require the enterprise to rescind agreements or

contracts;

(6) to require the enterprise to employ qualified officers or

employees (who may be subject to approval by the Director at

the direction of the Director); and

(7) to require the enterprise to take such other action as

the Director determines appropriate.

(e) AUTHORITY TO LIMIT ACTIVITIES.—The authority to issue an

order under this section or section 1372 includes the authority to

place limitations on the activities or functions of the enterprise or

any executive officer or director of the enterprise.

(f) EFFECTIVE DATE.—An order under this section shall become

effective upon the expiration of the 30-day period beginning on the

service of the order upon the enterprise, executive officer, or director concerned (except in the case of an order issued upon consent,

which shall become effective at the time specified therein), and

shall remain effective and enforceable as provided in the order, except to the extent that the order is stayed, modified, terminated,

or set aside by action of the Director or otherwise, as provided in

this subtitle.

SEC. 1372. ø12 U.S.C. 4632¿ TEMPORARY CEASE-AND-DESIST ORDERS.

(a) GROUNDS FOR ISSUANCE AND SCOPE.—Whenever the Director determines that any conduct or violation, or threatened conduct

or violation, specified in the notice of charges served upon the enterprise, executive officer, or director pursuant to section 1371 (a)

or (b), or the continuation thereof, is likely—

(1) to cause insolvency,

(2) to cause a significant depletion of the core capital of the

enterprise, or

(3) otherwise to cause irreparable harm to the enterprise,

prior to the completion of the proceedings conducted pursuant to

section 1371(c), the Director may issue a temporary order requiring

the enterprise, executive officer, or director to cease and desist
Sec. 1372 GSE FINANCIAL SAFETY AND SOUNDNESS 1270

from any such conduct or violation and to take affirmative action

to prevent or remedy such insolvency, depletion, or harm pending

completion of such proceedings. Such order may include any requirement authorized under section 1371(d).

(b) EFFECTIVE DATE.—An order issued pursuant to subsection

(a) shall become effective upon service upon the enterprise, executive officer, or director and, unless set aside, limited, or suspended

by a court in proceedings pursuant to subsection (d), shall remain

in effect and enforceable pending the completion of the proceedings

pursuant to such notice and shall remain effective until the Director dismisses the charges specified in the notice or until superseded

by a cease-and-desist order issued pursuant to section 1371.

(c) INCOMPLETE OR INACCURATE RECORDS.— (1) TEMPORARY ORDER.—If a notice of charges served under

section 1371 (a) or (b) specifies on the basis of particular facts

and circumstances that the books and records of the enterprise

served are so incomplete or inaccurate that the Director is unable, through the normal supervisory process, to determine the

financial condition of the enterprise or the details or the purpose of any transaction or transactions that may have a material effect on the financial condition of that enterprise, the Director may issue a temporary order requiring—

(A) the cessation of any activity or practice which gave

rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or

(B) affirmative action to restore the books or records

to a complete and accurate state.

(2) EFFECTIVE PERIOD.—Any temporary order issued under

paragraph (1)—

(A) shall become effective upon service; and

(B) unless set aside, limited, or suspended by a court

in proceedings pursuant to subsection (d), shall remain in

effect and enforceable until the earlier of—

(i) the completion of the proceeding initiated

under section 1371 in connection with the notice of

charges; or

(ii) the date the Director determines, by examination or otherwise, that the books and records of the enterprise are accurate and reflect the financial condition of the enterprise.

(d) JUDICIAL REVIEW.—An enterprise, executive officer, or director that has been served with a temporary order pursuant to

this section may apply to the United States District Court for the

District of Columbia within 10 days after such service for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of the order pending the completion of the

administrative proceedings pursuant to the notice of charges served

upon the enterprise, executive officer, or director under section

1371 (a) or (b). Such court shall have jurisdiction to issue such injunction.

(e) ENFORCEMENT BY ATTORNEY GENERAL.—In the case of violation or threatened violation of, or failure to obey, a temporary

order issued pursuant to this section, the Director may request the

Attorney General of the United States to bring an action in the
1271 Sec. 1374 GSE FINANCIAL SAFETY AND SOUNDNESS

United States District Court for the District of Columbia for an injunction to enforce such order or may, under the direction and control of the Attorney General, bring such an action. If the court finds

any such violation, threatened violation, or failure to obey, the

court shall issue such injunction.

SEC. 1373. ø12 U.S.C. 4633¿ HEARINGS.

(a) REQUIREMENTS.—

(1) VENUE AND RECORD.—Any hearing under section 1371

or 1376(c) shall be held on the record and in the District of Columbia.

(2) TIMING.—Any such hearing shall be fixed for a date not

earlier than 30 days nor later than 60 days after service of the

notice of charges under section 1371 or determination to impose a penalty under section 1376, unless an earlier or a later

date is set by the hearing officer at the request of the party

served.

(3) PROCEDURE.—Any such hearing shall be conducted in

accordance with chapter 5 of title 5, United States Code.

(4) FAILURE TO APPEAR.—If the party served fails to appear

at the hearing through a duly authorized representative, such

party shall be deemed to have consented to the issuance of the

cease-and-desist order or the imposition of the penalty for

which the hearing is held.

(b) ISSUANCE OF ORDER.—

(1) IN GENERAL.—After any such hearing, and within 90

days after the parties have been notified that the case has

been submitted to the Director for final decision, the Director

shall render the decision (which shall include findings of fact

upon which the decision is predicated) and shall issue and

serve upon each party to the proceeding an order or orders consistent with the provisions of this subtitle.

(2) MODIFICATION.—Judicial review of any such order shall

be exclusively as provided in section 1374. Unless such a petition for review is timely filed as provided in section 1374, and

thereafter until the record in the proceeding has been filed as

so provided, the Director may at any time, modify, terminate,

or set aside any such order, upon such notice and in such manner as the Director considers proper. Upon such filing of the

record, the Director may modify, terminate, or set aside any

such order with permission of the court.

SEC. 1374. ø12 U.S.C. 4634¿ JUDICIAL REVIEW.

(a) COMMENCEMENT.—Any party to a proceeding under section

1371 or 1376 may obtain review of any final order issued under

such section by filing in the United States Court of Appeals for the

District of Columbia Circuit, within 30 days after the date of service of such order, a written petition praying that the order of the

Director be modified, terminated, or set aside. The clerk of the

court shall transmit a copy of the petition to the Director.

(b) FILING OF RECORD.—Upon receiving a copy of a petition,

the Director shall file in the court the record in the proceeding, as

provided in section 2112 of title 28, United States Code.

(c) JURISDICTION.—Upon the filing of a petition, such court

shall have jurisdiction, which upon the filing of the record by the
Sec. 1375 GSE FINANCIAL SAFETY AND SOUNDNESS 1272

Director shall (except as provided in the last sentence of section

1373(b)(2)) be exclusive, to affirm, modify, terminate, or set aside,

in whole or in part, the order of the Director.

(d) REVIEW.—Review of such proceedings shall be governed by

chapter 7 of title 5, United States Code.

(e) ORDER TO PAY PENALTY.—Such court shall have the authority in any such review to order payment of any penalty imposed by the Director under this subtitle.

(f) NO AUTOMATIC STAY.—The commencement of proceedings

for judicial review under this section shall not, unless specifically

ordered by the court, operate as a stay of any order issued by the

Director.

SEC. 1375. ø12 U.S.C. 4635¿ ENFORCEMENT AND JURISDICTION.

(a) ENFORCEMENT.—The Director may request the Attorney

General of the United States to bring an action in the United

States District Court for the District of Columbia for the enforcement of any effective notice or order issued under this subtitle or

subtitle B or may, under the direction and control of the Attorney

General, bring such an action. Such court shall have jurisdiction

and power to order and require compliance herewith.

(b) LIMITATION ON JURISDICTION.—Except as otherwise provided in this subtitle and sections 1369 and 1369D, no court shall

have jurisdiction to affect, by injunction or otherwise, the issuance

or enforcement of any notice or order under section 1371, 1372, or

1376, or subtitle B, or to review, modify, suspend, terminate, or set

aside any such notice or order.

SEC. 1376. ø12 U.S.C. 4636¿ CIVIL MONEY PENALTIES.

(a) IN GENERAL.—The Director may impose a civil money penalty in accordance with this section on any enterprise, or any executive officer or director of any enterprise, that—

(1) violates any provision of this title, the Federal National

Mortgage Association Charter Act, the Federal Home Loan

Mortgage Corporation Act, or any order, rule, or regulation

under any such title or Act, except that the Director may not

enforce compliance with any housing goal established under

subpart B of part 2 of subtitle A of this title, with section 1336

or 1337 of this title, or with subsection (m) or (n) of section 309

of the Federal National Mortgage Association Charter Act or

subsection (e) or (f) of section 307 of the Federal Home Loan

Mortgage Corporation Act;

(2) violates any final or temporary order issued pursuant

to section 1365, 1366, 1371, or 1372;

(3) violates any written agreement between the enterprise

and the Director; or

(4) engages in any conduct that causes or is likely to cause

a loss to the enterprise.

(b) AMOUNT OF PENALTY.—

(1) FIRST TIER.—The Director may impose a penalty on an

enterprise for any violation described in paragraphs (1)

through (3) of subsection (a). The amount of a penalty under

this paragraph shall not exceed $5,000 for each day that a violation continues.
1273 Sec. 1376 GSE FINANCIAL SAFETY AND SOUNDNESS

(2) SECOND TIER.—The Director may impose a penalty on

an executive officer or director in an amount not to exceed

$10,000, or on an enterprise in an amount not to exceed

$25,000, for each day that a violation or conduct described in

subsection (a) continues, if the Director finds that the violation

or conduct—

(A) is part of a pattern of misconduct; or

(B) involved recklessness and caused or would be likely to cause a material loss to the enterprise.

(3) THIRD TIER.—The Director may impose a penalty on an

executive officer or director in an amount not to exceed

$100,000, or on an enterprise in an amount not to exceed

$1,000,000, for each day that a violation or conduct described

in subsection (a) continues, if the Director finds that the violation or conduct was knowing and caused or would be likely to

cause a substantial loss to the enterprise.

(c) PROCEDURES.— (1) ESTABLISHMENT.—The Director shall establish standards and procedures governing the imposition of civil money

penalties under subsections (a) and (b). Such standards and

procedures—

(A) shall provide for the Director to notify the enterprise in writing of the Director’s determination to impose

the penalty, which shall be made on the record;

(B) shall provide for the imposition of a penalty only

after the enterprise, executive officer, or director has been

given an opportunity for a hearing on the record pursuant

to section 1373; and

(C) may provide for review by the Director of any determination or order, or interlocutory ruling, arising from

a hearing.

(2) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under this section, the Director shall give consideration to such factors as the gravity of

the violation, any history of prior violations, the effect of the

penalty on the safety and soundness of the enterprise, any injury to the public, any benefits received, and deterrence of future violations, and any other factors the Director may determine by regulation to be appropriate.

(3) REVIEW OF IMPOSITION OF PENALTY.—The order of the

Director imposing a penalty under this section shall not be

subject to review, except as provided in section 1374.

(d) ACTION TO COLLECT PENALTY.—If an enterprise, executive

officer, or director fails to comply with an order of the Director imposing a civil money penalty under this section, after the order is

no longer subject to review as provided under subsection (c)(1) and

section 1374, the Director may request the Attorney General of the

United States to bring an action in the United States District

Court for the District of Columbia to obtain a monetary judgment

against the enterprise, executive officer, or director and such other

relief as may be available, or may, under the direction and control

of the Attorney General, bring such an action. The monetary judgment may, in the discretion of the court, include any attorneys fees

and other expenses incurred by the United States in connection
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1October 28, 1992.

with the action. In an action under this subsection, the validity and

appropriateness of the order of the Director imposing the penalty

shall not be subject to review.

(e) SETTLEMENT BY DIRECTOR.—The Director may compromise,

modify, or remit any civil money penalty which may be, or has

been, imposed under this section.

(f) AVAILABILITY OF OTHER REMEDIES.—Any civil money penalty under this section shall be in addition to any other available

civil remedy and may be imposed whether or not the Director imposes other administrative sanctions.

(g) PROHIBITION OF REIMBURSEMENT OR INDEMNIFICATION.—An

enterprise may not reimburse or indemnify any individual for any

penalty imposed under subsection (b)(3).

(h) DEPOSIT OF PENALTIES.—The Director shall deposit any

civil money penalties collected under this section into the general

fund of the Treasury.

(i) APPLICABILITY.—A penalty under this section may be imposed only for conduct or violations under subsection (a) occurring

after the date of the enactment of this Act. 1

SEC. 1377. ø12 U.S.C. 4637¿ NOTICE AFTER SEPARATION FROM SERVICE.

The resignation, termination of employment or participation,

or separation of a director or executive officer of an enterprise shall

not affect the jurisdiction and authority of the Director to issue any

notice and proceed under this subtitle against any such director or

executive officer, if such notice is served before the end of the 2-

year period beginning on the date such director or executive officer

ceases to be associated with the enterprise.

SEC. 1378. ø12 U.S.C. 4638¿ PRIVATE RIGHTS OF ACTION.

This title and the amendments made by this title shall not create any private right of action on behalf of any person against an

enterprise, or any director or executive officer of an enterprise, or

impair any existing private right of action under other applicable

law.

SEC. 1379. ø12 U.S.C. 4639¿ PUBLIC DISCLOSURE OF FINAL ORDERS

AND AGREEMENTS.

(a) IN GENERAL.—The Director shall make available to the

public—

(1) any written agreement or other written statement for

which a violation may be redressed by the Director or any

modification to or termination thereof, unless the Director, in

the Director’s discretion, determines that public disclosure

would be contrary to the public interest;

(2) any order that is issued with respect to any administrative enforcement proceeding initiated by the Director under

this subtitle and that has become final in accordance with sections 1373 and 1374; and

(3) any modification to or termination of any final order

made public pursuant to this subsection.

(b) HEARINGS.—All hearings on the record with respect to any

notice of charges issued by the Director shall be open to the public,
1275 Sec. 1379B GSE FINANCIAL SAFETY AND SOUNDNESS

unless the Director, in the Director’s discretion, determines that

holding an open hearing would be contrary to the public interest.

(c) DELAY OF PUBLIC DISCLOSURE UNDER EXCEPTIONAL CIRCUMSTANCES.—If the Director makes a determination in writing

that the public disclosure of any final order pursuant to subsection

(a) would seriously threaten the financial health or security of the

enterprise, the Director may delay the public disclosure of such

order for a reasonable time.

(d) DOCUMENTS FILED UNDER SEAL IN PUBLIC ENFORCEMENT

HEARINGS.—The Director may file any document or part thereof

under seal in any hearing commenced by the Director if the Director determines in writing that disclosure thereof would be contrary

to the public interest.

(e) RETENTION OF DOCUMENTS.—The Director shall keep and

maintain a record, for not less than 6 years, of all documents described in subsection (a) and all enforcement agreements and other

supervisory actions and supporting documents issued with respect

to or in connection with any enforcement proceeding initiated by

the Director under this subtitle or any other law.

(f) DISCLOSURES TO CONGRESS.—This section may not be construed to authorize the withholding, or to prohibit the disclosure,

of any information to the Congress or any committee or subcommittee thereof.

SEC. 1379A. ø12 U.S.C. 4640¿ NOTICE OF SERVICE.

Any service required or authorized to be made by the Director

under this subtitle may be made by registered mail, or in such

other manner reasonably calculated to give actual notice as the Director may by regulation or otherwise provide.

SEC. 1379B. ø12 U.S.C. 4641¿ SUBPOENA AUTHORITY.

(a) IN GENERAL.—In the course of or in connection with any

administrative proceeding under this subtitle, the Director shall

have the authority—

(1) to administer oaths and affirmations;

(2) to take and preserve testimony under oath;

(3) to issue subpoenas and subpoenas duces tecum; and

(4) to revoke, quash, or modify subpoenas and subpoenas

duces tecum issued by the Director.

(b) WITNESSES AND DOCUMENTS.—The attendance of witnesses

and the production of documents provided for in this section may

be required from any place in any State at any designated place

where such proceeding is being conducted.

(c) ENFORCEMENT.—The Director may request the Attorney

General of the United States to bring an action in the United

States district court for the judicial district in which such proceeding is being conducted, or where the witness resides or conducts business, or the United States District Court for the District

of Columbia, for enforcement of any subpoena or subpoena duces

tecum issued pursuant to this section or may, under the direction

and control of the Attorney General, bring such an action. Such

courts shall have jurisdiction and power to order and require compliance therewith.

(d) FEES AND EXPENSES.—Witnesses subpoenaed under this

section shall be paid the same fees and mileage that are paid wit-
Sec. 1381 GSE FINANCIAL SAFETY AND SOUNDNESS 1276

nesses in the district courts of the United States. Any court having

jurisdiction of any proceeding instituted under this section by an

enterprise may allow to any such party such reasonable expenses

and attorneys fees as the court deems just and proper. Such expenses and fees shall be paid by the enterprise or from its assets.

Subtitle D—Amendments to Charter Acts

of Enterprises

SEC. 1381. AMENDMENTS TO FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER ACT.

* * * * * * *

SEC. 1382. AMENDMENTS TO FEDERAL HOME LOAN MORTGAGE CORPORATION ACT.

* * * * * * *

SEC. 1383. ø12 U.S.C. 1451 note¿ IMPLEMENTATION.

(a) IN GENERAL.—The Secretary of Housing and Urban Development and the Director, as appropriate, shall issue any final regulations necessary to implement the amendments made by this subtitle not later than the expiration of the 18-month period beginning

on the date of the enactment of this Act.

(b) NOTICE AND COMMENT.—The regulations under this section

shall be issued after notice and opportunity for public comment

pursuant to the provisions of section 553 of title 5, United States

Code.

Subtitle E—Regulation of Federal Home

Loan Bank System

* * * * * * *
1277

FEDERAL AGRICULTURAL MORTGAGE CORPORATION

TITLE VIII OF FARM CREDIT ACT OF 1971

(As added by Public Law 100–233; 101 Stat. 1686; 12 U.S.C. 2279aa et seq.)

TITLE VIII—AGRICULTURAL MORTGAGE

SECONDARY MARKET

SEC. 8.0. ø12 U.S.C. 2279aa¿ DEFINITIONS.

For purposes of this title:

(1) AGRICULTURAL REAL ESTATE.—The term ‘‘agricultural

real estate’’ means—

(A) a parcel or parcels of land, or a building or structure affixed to the parcel or parcels, that—

(i) is used for the production of one or more agricultural commodities or products; and

(ii) consists of a minimum acreage or is used in

producing minimum annual receipts, as determined by

the Corporation; or

(B) a principal residence that is a single family, moderate-priced residential dwelling located in a rural area,

excluding—

(i) any community having a population in excess

of 2,500 inhabitants; and

(ii) any dwelling, excluding the land to which the

dwelling is affixed, with a value exceeding $100,000

(as adjusted for inflation).

(2) BOARD.—The term ‘‘Board’’ means—

(A) the interim board of directors established in section 8.2(a); and

(B) the permanent board of directors established in

section 8.2(b);

as the case may be.

(3) CERTIFIED FACILITY.—The term ‘‘certified facility’’

means—

(A) an agricultural mortgage marketing facility that is

certified under section 8.5; or

(B) the Corporation and any affiliate thereof.

(4) CORPORATION.—The term ‘‘Corporation’’ means the

Federal Agricultural Mortgage Corporation established in section 8.1.

(5) GUARANTEE.—The term ‘‘guarantee’’ means the guarantee of timely payment of the principal and interest on securities representing interests in, or obligations backed by, pools of

qualified loans, in accordance with this title.
FAMC 1278

(6) INTERIM BOARD.—The term ‘‘interim board’’ means the

interim board of directors established in section 8.2(a).

(7) ORIGINATOR.—The term ‘‘originator’’ means any Farm

Credit System institution, bank, insurance company, business

and industrial development company, savings and loan association, association of agricultural producers, agricultural cooperative, commercial finance company, trust company, credit union,

or other entity that originates and services agricultural mortgage loans.

(8) PERMANENT BOARD.—The term ‘‘permanent board’’

means the permanent board of directors established in section

8.2(b).

(9) QUALIFIED LOAN.—The term ‘‘qualified loan’’ means an

obligation—

(A)(i) that is secured by a fee-simple or leasehold mortgage with status as a first lien, on agricultural real estate

located in the United States that is not subject to any legal

or equitable claims deriving from a preceding fee-simple or

leasehold mortgage;

(ii) of—

(I) a citizen or national of the United States or an

alien lawfully admitted for permanent residence in the

United States; or

(II) a private corporation or partnership whose

members, stockholders, or partners holding a majority

interest in the corporation or partnership are individuals described in subclause (I); and

(iii) of a person, corporation, or partnership that has

training or farming experience that, under criteria established by the Corporation, is sufficient to ensure a reasonable likelihood that the loan will be repaid according to its

terms; or

(B) that is the portion of a loan guaranteed by the Secretary of Agriculture pursuant to the Consolidated Farm

and Rural Development Act (7 U.S.C. 1921 et seq.), except

that—

(i) subsections (b) through (d) of section 8.6, and

sections 8.8 and 8.9, shall not apply to the portion of

a loan guaranteed by the Secretary or to an obligation,

pool, or security representing an interest in or obligation backed by a pool of obligations relating to the portion of a loan guaranteed by the Secretary; and

(ii) the portion of a loan guaranteed by the Secretary shall be considered to meet all standards for

qualified loans for all purposes under this Act.

(10) STATE.—The term ‘‘State’’ has the meaning given such

term in section 5.51.
1279 Sec. 8.2 FAMC

Subtitle A—Establishment and Activities of

Federal Agricultural Mortgage Corporation

SEC. 8.1. ø12 U.S.C. 2279aa–1¿ FEDERAL AGRICULTURAL MORTGAGE

CORPORATION.

(a) ESTABLISHMENT.—

(1) IN GENERAL.—There is hereby established a corporation

to be known as the Federal Agricultural Mortgage Corporation,

which shall be a federally chartered instrumentality of the

United States.

(2) INSTITUTION WITHIN FARM CREDIT SYSTEM.—The Corporation shall be an institution of the Farm Credit System.

(3) LIABILITY.—

(A) CORPORATION.—The Corporation shall not be liable

for any debt or obligation of any other institution of the

Farm Credit System.

(B) SYSTEM INSTITUTIONS.—The Farm Credit System

and System institutions (other than the Corporation) shall

not be liable for any debt or obligation of the Corporation.

(b) DUTIES.—The Corporation shall—

(1) in consultation with originators, develop uniform underwriting, security appraisal, and repayment standards for

qualified loans;

(2) determine the eligibility of agricultural mortgage marketing facilities to contract with the Corporation for the provision of guarantees for specific mortgage pools;

(3) provide guarantees for the timely repayment of principal and interest on securities representing interests in, or obligations backed by, pools of qualified loans; and

(4) purchase qualified loans and issue securities representing interests in, or obligations backed by, the qualified

loans, guaranteed for the timely repayment of principal and interest.

SEC. 8.2. ø12 U.S.C. 2279aa–2¿ BOARD OF DIRECTORS.

(a) INTERIM BOARD.—

(1) NUMBER AND APPOINTMENT.—Until the permanent

board of directors established in subsection (b) first meets with

a quorum of its members present, the Corporation shall be

under the management of an interim board of directors composed of 9 members appointed by the President within 90 days

after the date of the enactment of this title as follows:

(A) 3 members appointed from among persons who are

representatives of banks, other financial institutions or entities, and insurance companies.

(B) 3 members appointed from among persons who are

representatives of the Farm Credit System institutions.

(C) 2 members appointed from among persons who are

farmers or ranchers who are not serving, and have not

served, as directors or officers of any financial institution

or entity, of which not more than 1 may be a stockholder

of any Farm Credit System institution.
Sec. 8.2 FAMC 1280

(D) 1 member appointed from among persons who represent the interests of the general public and are not serving, and have not served, as directors or officers of any financial institution or entity.

(2) POLITICAL AFFILIATION.—Not more than 5 members of

the interim board shall be of the same political party.

(3) VACANCY.—A vacancy in the interim board shall be

filled in the manner in which the original appointment was

made.

(4) CONTINUATION OF MEMBERSHIP.—If—

(A) any member of the interim board who was appointed to such board from among persons who are representatives of banks, other financial institutions or entities, insurance companies, or Farm Credit System institutions ceases to be such a representative; or

(B) any member who was appointed from among persons who are not or have not been directors or officers of

any financial institution or entity becomes a director or an

officer of any financial institution or entity;

such member may continue as a member for not longer than

the 45-day period beginning on the date such member ceases

to be such a representative or becomes such a director or officer, as the case may be.

(5) TERMS.—The members of the interim board shall be appointed for the life of such board.

(6) QUORUM.—5 members of the interim board shall constitute a quorum.

(7) CHAIRPERSON.—The President shall designate 1 of the

members of the interim board as the chairperson of the interim

board.

(8) MEETINGS.—The interim board shall meet at the call of

the chairperson or a majority of its members.

(9) VOTING COMMON STOCK.—

(A) INITIAL OFFERING.—Upon the appointment of sufficient members of the interim board to convene a meeting

with a quorum present, the interim board shall arrange for

an initial offering of common stock and shall take whatever other actions are necessary to proceed with the operations of the Corporation.

(B) PURCHASERS.—Subject to subparagraph (C), the

voting common stock shall be offered to banks, other financial entities, insurance companies, and System institutions

under such terms and conditions as the interim board may

adopt.

(C) DISTRIBUTION.—The voting stock shall be fairly

and broadly offered to ensure that no institution or institutions acquire a disproportionate amount of the total

amount of voting common stock outstanding of a class and

that capital contributions and issuances of voting common

stock for the contributions are fairly distributed between

entities eligible to hold class A and class B stock, as provided under section 8.4.
1281 Sec. 8.2 FAMC

(10) TERMINATION.—The interim board shall terminate

when the permanent board of directors established in subsection (b) first meets with a quorum present.

(b) PERMANENT BOARD.—

(1) ESTABLISHMENT.—Immediately after the date that

banks, other financial institutions or entities, insurance companies, and System institutions have subscribed and fully paid

for at least $20,000,000 of common stock of the Corporation,

the Corporation shall arrange for the election and appointment

of a permanent board of directors. After the termination of the

interim board, the Corporation shall be under the management

of the permanent board.

(2) COMPOSITION.—The permanent board shall consist of

15 members, of which—

(A) 5 members shall be elected by holders of common

stock that are insurance companies, banks, or other financial institutions or entities;

(B) 5 members shall be elected by holders of common

stock that are Farm Credit System institutions; and

(C) 5 members shall be appointed by the President, by

and with the advice and consent of the Senate—

(i) which members shall not be, or have been, officers or directors of any financial institutions or entities;

(ii) which members shall be representatives of the

general public;

(iii) of which members not more than 3 shall be

members of the same political party; and

(iv) of which members at least 2 shall be experienced in farming or ranching.

(3) PRESIDENTIAL APPOINTEES.—The President shall appoint the members of the permanent board referred to in paragraph (2)(C) not later than the later of—

(A) the date referred to in paragraph (1); or

(B) the expiration of the 270-day period beginning on

the date of the enactment of this title.

(4) VACANCY.—

(A) ELECTED MEMBERS.—Subject to paragraph (6), a

vacancy among the members elected to the permanent

board in the manner described in subparagraph (A) or (B)

of paragraph (2) shall be filled by the permanent board

from among persons eligible for election to the position for

which the vacancy exists.

(B) APPOINTED MEMBERS.—A vacancy among the members appointed to the permanent board under paragraph

(2)(C) shall be filled in the manner in which the original

appointment was made.

(5) CONTINUATION OF MEMBERSHIP.—If—

(A) any member of the permanent board who was appointed or elected to the permanent board from among persons who are representatives of banks, other financial institutions or entities, insurance companies, or Farm Credit

System institutions ceases to be such a representative; or
Sec. 8.3 FAMC 1282

(B) any member who was appointed from persons who

are not or have not been directors or officers of any financial institution or entity becomes a director or an officer of

any financial institution or entity;

such member may continue as a member for not longer than

the 45-day period beginning on the date such member ceases

to be such a representative, officer, or employee or becomes

such a director or officer, as the case may be.

(6) TERMS.—

(A) APPOINTED MEMBERS.—The members appointed by

the President shall serve at the pleasure of the President.

(B) ELECTED MEMBERS.—The members elected under

subparagraphs (A) and (B) of subsection (b)(2) shall each

be elected annually for a term ending on the date of the

next annual meeting of the common stockholders of the

Corporation and shall serve until their successors are

elected and qualified. Any seat on the permanent board

that becomes vacant after the annual election of the directors shall be filled by the members of the permanent board

from the same category of directors, but only for the unexpired portion of the term.

(C) VACANCY APPOINTMENT.—Any member appointed

to fill a vacancy occurring before the expiration of the term

for which the predecessor of the member was appointed

shall be appointed only for the remainder of such term.

(D) SERVICE AFTER EXPIRATION OF TERM.—A member

may serve after the expiration of the term of the member

until the successor of the member has taken office.

(7) QUORUM.—8 members of the permanent board shall

constitute a quorum.

(8) NO ADDITIONAL PAY FOR FEDERAL OFFICERS OR EMPLOYEES.—Members of the permanent board who are fulltime

officers or employees of the United States shall receive no additional pay by reason of service on the permanent board.

(9) CHAIRPERSON.—The President shall designate 1 of the

members of the permanent board who are appointed by the

President as the chairperson of the permanent board.

(10) MEETINGS.—The permanent board shall meet at the

call of the chairperson or a majority of its members.

(c) OFFICERS AND STAFF.—The Board may appoint, employ, fix

the pay of, and provide other allowances and benefits for such officers and employees of the Corporation as the Board determines to

be appropriate.

SEC. 8.3. ø12 U.S.C. 2279aa–3¿ POWERS AND DUTIES OF CORPORATION

AND BOARD.

(a) GUARANTEES.—After the Board has been duly constituted,

subject to the other provisions of this title and other commitments

and requirements established pursuant to law, the Corporation

may provide guarantees on terms and conditions determined by the

Corporation of securities issued on the security of, or in participation in, pooled interests in qualified loans.

(b) DUTIES OF THE BOARD.—

(1) IN GENERAL.—The Board shall—
1283 Sec. 8.3 FAMC

(A) determine the general policies that shall govern

the operations of the Corporation;

(B) select, appoint, and determine the compensation of

qualified persons to fill such offices as may be provided for

in the bylaws of the Corporation; and

(C) assign to such persons such executive functions,

powers, and duties as may be prescribed by the bylaws of

the Corporation or by the Board.

(2) EXECUTIVE OFFICERS AND FUNCTIONS.—The persons

elected or appointed under paragraph (1)(B) shall be the executive officers of the Corporation and shall discharge the executive functions, powers, and duties of the Corporation.

(c) POWERS OF THE CORPORATION.—The Corporation shall be a

body corporate and shall have the following powers:

(1) To operate under the direction of its Board.

(2) To issue stock in the manner provided in section 8.4.

(3) To adopt, alter, and use a corporate seal, which shall

be judicially noted.

(4) To provide for a president, 1 or more vice presidents,

secretary, treasurer, and such other officers, employees, and

agents, as may be necessary, define their duties and compensation levels, all without regard to title 5, United States Code,

and require surety bonds or make other provisions against

losses occasioned by acts of such persons.

(5) To provide guarantees in the manner provided under

section 8.6.

(6) To have succession until dissolved by a law enacted by

the Congress.

(7) To prescribe bylaws, through the Board, not inconsistent with law, that shall provide for—

(A) the classes of the stock of the Corporation; and

(B) the manner in which—

(i) the stock shall be issued, transferred, and retired;

(ii) the officers, employees, and agents of the Corporation are selected;

(iii) the property of the Corporation is acquired,

held, and transferred;

(iv) the commitments and other financial assistance of the Corporation are made;

(v) the general business of the Corporation is conducted; and

(vi) the privileges granted by law to the Corporation are exercised and enjoyed;

(8) To prescribe such standards as may be necessary to

carry out this title.

(9) To enter into contracts and make payments with respect to the contracts.

(10) To sue and be sued in its corporate capacity and to

complain and defend in any action brought by or against the

Corporation in any State or Federal court of competent jurisdiction.
Sec. 8.4 FAMC 1284

1Section 105(1) of the Farm Credit System Reform Act of 1996 (P.L. 104–105) provided that

section 8.3(d) was amended by striking ‘‘may act as depositories for, or’’ and inserting ‘‘shall act

as depositories for, and’’. The amendment could not be executed because the phrase intended

to be struck does not appear.

(11) To make and perform contracts, agreements, and commitments with persons and entities both inside and outside of

the Farm Credit System.

(12) To acquire, hold, lease, mortgage or dispose of, at public or private sale, real and personal property, purchase or sell

any securities or obligations, and otherwise exercise all the

usual incidents of ownership of property necessary and convenient to the business of the Corporation.

(13) To purchase, hold, sell, or assign a qualified loan, to

issue a guaranteed security, representing an interest in, or an

obligation backed by, the qualified loan, and to perform all the

functions and responsibilities of an agricultural mortgage marketing facility operating as a certified facility under this title.

(14) To establish, acquire, and maintain affiliates (as such

term is defined in section 8.11(e)) under applicable State laws

to carry out any activities that otherwise would be performed

directly by the Corporation under this title.

(15) To exercise such other incidental powers as are necessary to carry out the powers, duties, and functions of the

Corporation in accordance with this title.

(d) FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL

AGENTS.—The Federal Reserve banks may act as depositaries for,

or 1 as fiscal agents or custodians of, the Corporation.

(e) ACCESS TO BOOK-ENTRY SYSTEM.—The Corporation shall

have access to the book-entry system of the Federal Reserve System.

SEC. 8.4. ø12 U.S.C. 2279aa–4¿ STOCK ISSUANCE.

(a) VOTING COMMON STOCK.—

(1) ISSUE.—The Corporation shall issue voting common

stock having such par value as may be fixed by the Board from

time to time. Each share of voting common stock shall be entitled to one vote with rights of cumulative voting at all elections

of directors. Voting shall be by classes as described in section

8.2(a)(9). The stock shall be divided into two classes with the

same par value per share. Class A stock may be held only by

entities that are not Farm Credit System institutions and that

are entitled to vote for directors specified in section

8.2(b)(2)(A), including national banking associations (which

shall be allowed to purchase and hold such stock). Class B

stock may be held only by Farm Credit System institutions

that are entitled to vote for directors specified in section

8.2(b)(2)(B).

(2) LIMITATION ON ISSUE.—After the date the permanent

board first meets with a quorum of its members present, voting

common stock of the Corporation may be issued only to originators and certified facilities.

(3) AUTHORITY OF BOARD TO ESTABLISH TERMS AND PROCEDURES.—The Board shall adopt such terms, conditions, and

procedures with regard to the issue of stock under this section
1285 Sec. 8.4 FAMC

as may be necessary, including the establishment of a maximum amount limitation on the number of shares of voting

common stock that may be outstanding at any time.

(4) TRANSFERABILITY.—Subject to such limitations as the

Board may impose, any share of any class of voting common

stock issued under this section shall be transferable among the

institutions or entities to which shares of such class of common

stock may be offered under paragraph (1), except that, as to

the Corporation, such shares shall be transferable only on the

books of the Corporation.

(5) MAXIMUM NUMBER OF SHARES.—No stockholder, other

than a holder of class B stock, may own, directly or indirectly,

more than 33 percent of the outstanding shares of such class

of the voting common stock of the Corporation.

(b) REQUIRED CAPITAL CONTRIBUTIONS.—

(1) IN GENERAL.—The Corporation may require each originator and each certified facility to make, or commit to make,

such nonrefundable capital contributions to the Corporation as

are reasonable and necessary to meet the administrative expenses of the Corporation.

(2) STOCK ISSUED AS CONSIDERATION FOR CONTRIBUTION.—

The Corporation, from time to time, shall issue to each originator or certified facility voting common stock evidencing any

capital contributions made pursuant to this subsection.

(c) DIVIDENDS.—

(1) IN GENERAL.—Such dividends as may be declared by

the Board, in the discretion of the Board, shall be paid by the

Corporation to the holders of the voting common stock of the

Corporation pro rata based on the total number of shares of

both classes of stock outstanding.

(2) RESERVES REQUIREMENT.—No dividend may be declared

or paid by the Board under this section unless the Board determines that adequate provision has been made for the reserve

required under section 8.10(c)(1).

(3) DIVIDENDS PROHIBITED WHILE OBLIGATIONS ARE OUTSTANDING.—No dividend may be declared or paid by the Board

under this section while any obligation issued by the Corporation to the Secretary of the Treasury under section 8.13 remains outstanding.

(d) NONVOTING COMMON STOCK.—The Corporation is authorized to issue nonvoting common stock having such par value as

may be fixed by the Board from time to time. Such nonvoting common stock shall be freely transferable, except that, as to the Corporation, such stock shall be transferable only on the books of the

Corporation. Such dividends as may be declared by the Board, in

the discretion of the Board, may be paid by the Corporation to the

holders of the nonvoting common stock of the Corporation, subject

to paragraphs (2) and (3) of subsection (c).

(e) PREFERRED STOCK.—

(1) AUTHORITY OF BOARD.—The Corporation is authorized

to issue nonvoting preferred stock having such par value as

may be fixed by the Board from time to time. Such preferred

stock issued shall be freely transferable, except that, as to the
Sec. 8.5 FAMC 1286

Corporation, such stock shall be transferred only on the books

of the Corporation.

(2) RIGHTS OF PREFERRED STOCK.—Subject to paragraphs

(2) and (3) of subsection (c), the holders of the preferred stock

shall be entitled to such rate of cumulative dividends, and such

holders shall be subject to such redemption or other conversion

provisions, as may be provided for at the time of issuance. No

dividends shall be payable on any share of common stock at

any time when any dividend is due on any share of preferred

stock and has not been paid.

(3) PREFERENCE ON TERMINATION OF BUSINESS.—In the

event of any liquidation, dissolution, or winding up of the business of the Corporation, the holders of the preferred shares of

stock shall be paid in full at the par value thereof, plus all accrued dividends, before the holders of the common shares receive any payment.

SEC. 8.5. ø12 U.S.C. 2279aa–5¿ CERTIFICATION OF AGRICULTURAL

MORTGAGE MARKETING FACILITIES.

(a) ELIGIBILITY STANDARDS.— (1) ESTABLISHMENT REQUIRED.—Within 120 days after the

date on which the permanent board first meets with a quorum

present, the Corporation shall issue standards for the certification of agricultural mortgage marketing facilities (other than

the Corporation), including eligibility standards in accordance

with paragraph (2).

(2) MINIMUM REQUIREMENTS.—To be eligible to be certified

under the standards referred to in paragraph (1), an agricultural mortgage marketing facility (other than the Corporation)

shall—

(A) be an institution of the Farm Credit System or a

corporation, association, or trust organized under the laws

of the United States or of any State;

(B) meet or exceed capital standards established by

the Board;

(C) have as one of the purposes of the facility, the sale

or resale of securities representing interests in, or obligations backed by, pools of qualified loans that have been

provided guarantees by the Corporation;

(D) demonstrate managerial ability with respect to agricultural mortgage loan underwriting, servicing, and marketing that is acceptable to the Corporation;

(E) adopt appropriate agricultural mortgage loan underwriting, appraisal, and servicing standards and procedures that meet or exceed the standards established by the

Board;

(F) for purposes of enabling the Corporation to examine the facility, agree to allow officers or employees of the

Corporation to have access to all books, accounts, financial

records, reports, files, and all other papers, things, or property, of any type whatsoever, belonging to or used by the

Corporation that are necessary to facilitate an examination

of the operations of the facility in connection with securities, and the pools of qualified loans that back securities,

for which the Corporation has provided guarantees; and
1287 Sec. 8.6 FAMC

(G) adopt appropriate minimum standards and procedures relating to loan administration and disclosure to borrowers concerning the terms and rights applicable to loans

for which guarantee is provided, in conformity with uniform standards established by the Corporation.

(3) NONDISCRIMINATION REQUIREMENT.—The standards established under this subsection shall not discriminate between

or against Farm Credit System and non-Farm Credit System

applicants.

(b) CERTIFICATION BY CORPORATION.—Within 60 days after receiving an application for certification under this section, the Corporation shall certify the facility if the facility meets the standards

established by the Corporation under subsection (a)(1).

(c) MAXIMUM TIME PERIOD FOR CERTIFICATION.—Any certification by the Corporation of an agricultural mortgage marketing

facility shall be effective for a period determined by the Corporation of not to exceed 5 years.

(d) REVOCATION.—

(1) IN GENERAL.—After notice and an opportunity for a

hearing, the Corporation may revoke the certification of an agricultural mortgage marketing facility if the Corporation determines that the facility no longer meets the standards referred

to in subsection (a).

(2) EFFECT OF REVOCATION.—Revocation of a certification

shall not affect any pool guarantee that has been issued by the

Corporation.

(e) AFFILIATION OF FCS INSTITUTIONS WITH FACILITY.—

(1) ESTABLISHMENT OF AFFILIATE AUTHORIZED.—Notwithstanding any other provision of this Act, any Farm Credit System institution, acting for such institution alone or in conjunction with one or more other such institutions, may establish

and operate, as an affiliate, an agricultural mortgage marketing facility if, within a reasonable time after such establishment, such facility obtains and thereafter retains certification

under subsection (b) as a certified facility.

(2) EXCLUSIVE AGENCY AGREEMENT AUTHORIZED.—Any

number of Farm Credit System institutions (other than the

Corporation) may enter into an agreement with any certified

facility (including an affiliate established under paragraph (1))

to sell the qualified loans of such institutions exclusively to or

through the facility.

SEC. 8.6. ø12 U.S.C. 2279aa–6¿ GUARANTEE OF QUALIFIED LOANS.

(a) GUARANTEE AUTHORIZED FOR CERTIFIED FACILITIES.—

(1) IN GENERAL.—Subject to the requirements of this section and on such other terms and conditions as the Corporation

shall consider appropriate, the Corporation—

(A) shall guarantee the timely payment of principal

and interest on the securities issued by a certified facility

that represents interests solely in, or obligations fully

backed by, any pool consisting solely of qualified loans

which meet the standards established under section 8.8

and which are held by such facility; and
Sec. 8.6 FAMC 1288

(B) may issue a security, guaranteed as to the timely

payment of principal and interest, that represents an interest solely in, or an obligation fully backed by, a pool

consisting of qualified loans that—

(i) meet the standards established under section

8.8; and

(ii) have been purchased and held by the Corporation.

(2) INABILITY OF FACILITY TO PAY.—If the facility is unable

to make any payment of principal or interest on any security

for which a guarantee has been provided by the Corporation

under paragraph (1), the Corporation shall make such payment

as and when due in cash, and on such payment shall be subrogated fully to the rights satisfied by such payment.

(3) POWER OF CORPORATION.—Notwithstanding any other

provision of law, the Corporation is empowered, in connection

with any guarantee under this subsection, whether before or

after any default, to provide by contract with the facility for

the extinguishment, on default by the facility, of any redemption, equitable, legal, or other right, title, or interest of the facility in any mortgage or mortgages constituting the pool

against which the guaranteed securities are issued. With respect to any issue of guaranteed securities, in the event of default and pursuant otherwise to the terms of the contract, the

mortgages that constitute such pool shall become the absolute

property of the Corporation subject only to the unsatisfied

rights of the holders of the securities based on and backed by

such pool.

(b) OTHER RESPONSIBILITIES OF AND LIMITATIONS ON CERTIFIED

FACILITIES.—As a condition for providing any guarantees under

this section for securities issued by a certified facility that represent interests in, or obligations backed by, any pool of qualified

loans, the Corporation shall require such facility to agree to comply

with the following requirements:

(1) LOAN DEFAULT RESOLUTION.—The facility shall act in

accordance with the standards of a prudent institutional lender

to resolve loan defaults.

(2) SUBROGATION OF UNITED STATES AND CORPORATION TO

INTERESTS OF FACILITY.—The proceeds of any collateral, judgments, settlements, or guarantees received by the facility with

respect to any loan in such pool, shall be applied, after payment of costs of collection—

(A) first, to reduce the amount of any principal outstanding on any obligation of the Corporation that was

purchased by the Secretary of the Treasury under section

8.13 to the extent the proceeds of such obligation were

used to make guarantees in connection with such securities; and

(B) second, to reimburse the Corporation for any such

guarantee payments.

(3) LOAN SERVICING.—The originator of any loan in such

pool shall be permitted to retain the right to service the loan.

(4) MINORITY PARTICIPATION IN PUBLIC OFFERINGS.—The

facility shall take such steps as may be necessary to ensure
1289 Sec. 8.6 FAMC

that minority owned or controlled investment banking firms,

underwriters, and bond counsels throughout the United States

have an opportunity to participate to a significant degree in

any public offering of securities.

(5) NO DISCRIMINATION AGAINST STATES WITH BORROWERS

RIGHTS.—The facility may not refuse to purchase qualified

loans originating in States that have established borrowers

rights laws either by statute or under the constitution of such

States, except that the facility may require discounts or charge

fees reasonably related to costs and expenses arising from such

statutes or constitutional provisions.

(c) ADDITIONAL AUTHORITY OF THE BOARD.—To ensure the liquidity of securities for which guarantees have been provided

under this section, the Board shall adopt appropriate standards

regarding—

(1) the characteristics of any pool of qualified loans serving

as collateral for such securities; and

(2) transfer requirements.

(d) AGGREGATE PRINCIPAL AMOUNTS OF QUALIFIED LOANS.— (1) INITIAL YEAR.—During the first year after the date of

the enactment of this title, the Corporation may not provide

guarantees for securities representing interests in, or obligations backed by, qualified loans (other than loans which back

securities issued by Farm Credit System institutions for which

the Corporation provides a guarantee) in an aggregate principal amount in excess of 2 percent of the total agricultural

real estate debt outstanding at the close of the prior calendar

year (as published by the Board of Governors of the Federal

Reserve System), less all Farmers Home Administration agricultural real estate debt.

(2) SECOND YEAR.—During the year following the year referred to in paragraph (1), the Corporation may not provide

guarantees for securities representing interests in, or obligations backed by, qualified loans (other than loans which back

securities issued by Farm Credit System institutions for which

the Corporation provides a guarantee) in an additional principal amount in excess of 4 percent of the total agricultural

real estate debt outstanding at the close of the prior calendar

year, less all Farmers Home Administration agricultural real

estate debt.

(3) THIRD YEAR.—During the year following the year referred to in paragraph (2), the Corporation may not provide

guarantees for securities representing interests in, or obligations backed by, qualified loans (other than loans which back

securities issued by Farm Credit System institutions for which

the Corporation provides a guarantee) in an additional principal amount in excess of 8 percent of the total agricultural

real estate debt outstanding at the close of the prior calendar

year, less all Farmers Home Administration agricultural real

estate debt.

(4) SUBSEQUENT YEARS.—In years subsequent to the year

referred to in paragraph (3), the Corporation may provide

guarantees without regard to the principal amount of the

qualified loans guaranteed.
Sec. 8.8 FAMC 1290

(e) PURCHASE OF GUARANTEED SECURITIES.—

(1) PURCHASE AUTHORITY.—The Corporation (and affiliates) may purchase, hold, and sell any securities guaranteed

under this section by the Corporation that represent interests

in, or obligations backed by, pools of qualified loans. Securities

issued under this section shall have maturities and bear rates

of interest as determined by the Corporation.

(2) ISSUANCE OF DEBT OBLIGATIONS.—The Corporation (and

affiliates) may issue debt obligations solely for the purpose of

obtaining amounts for the purchase of any securities under

paragraph (1), for the purchase of qualified loans (as defined

in section 8.0(9)), and for maintaining reasonable amounts for

business operations (including adequate liquidity) relating to

activities under this subsection.

(3) TERMS AND LIMITATIONS.—

(A) TERMS.—The obligations issued under this subsection shall have maturities and bear rates of interest as

determined by the Corporation, and may be redeemable at

the option of the Corporation before maturity in the manner stipulated in the obligations.

(B) REQUIREMENT.—Each obligation shall clearly indicate that the obligation is not an obligation of, and is not

guaranteed as to principal and interest by, the Farm Credit Administration, the United States, or any other agency

or instrumentality of the United States (other than the

Corporation).

(C) AUTHORITY.—The Corporation may not issue obligations pursuant to paragraph (2) under this subsection

while any obligation issued by the Corporation under section 8.13(a) remains outstanding.

øSEC. 8.7. [Repealed.]¿

SEC. 8.8. ø12 U.S.C. 2279aa–8¿ STANDARDS FOR QUALIFIED LOANS.

(a) STANDARDS.—Not later than 120 days after the appointment and election of the permanent Board, the Corporation, in consultation with originators, shall establish uniform underwriting, security appraisal, and repayment standards for qualified loans. In

establishing standards for qualified loans, the Corporation shall

confine corporate operations, so far as practicable, to mortgage

loans that are deemed by the Board to be of such quality so as to

meet, substantially and generally, the purchase standards imposed

by private institutional mortgage investors.

(b) MINIMUM CRITERIA.—To further the purpose of this title to

provide a new source of long-term fixed rate financing to assist

farmers and ranchers to purchase agricultural real estate, the

standards established by the Board pursuant to subsection (a)

shall, at a minimum—

(1) provide that no agricultural mortgage loan with a loanto-value ratio in excess of 80 percent may be treated as a qualified loan;

(2) require each borrower to demonstrate sufficient cashflow to adequately service the agricultural mortgage loan;

(3) contain sufficient documentation standards;
1291 Sec. 8.9 FAMC

(4) contain adequate standards to protect the integrity of

the appraisal process with respect to any agricultural mortgage

loans;

(5) contain adequate standards to ensure that the borrower

is or will be actively engaged in agricultural production, and

require the borrower to certify to the originator that the borrower intends to continue agricultural production on the site

involved;

(6) minimize speculation in agricultural real estate for

nonagricultural purposes; and

(7) in establishing the value of agricultural real estate,

consider the purpose for which the real estate is taxed.

(c) LOAN AMOUNT LIMITATION.— (1) IN GENERAL.—A loan may not be treated as a qualified loan if the principal amount of such loan exceeds $2,500,000,

adjusted for inflation, except as provided in paragraph (2).

(2) ACREAGE EXCEPTION.—Paragraph (1) shall not apply

with respect to any agricultural mortgage loan described in

such paragraph if such loan is secured by agricultural real estate that, in the aggregate, comprises not more than 1,000

acres.

(d) CONGRESSIONAL REVIEW.—No standard prescribed under

subsection (a) shall take effect before the later of—

(1) the end of a period consisting of 30 legislative days and

beginning on the date such standards are submitted to the

Congress; or

(2) the end of a period consisting of 90 calendar days and

beginning on such date.

(e) NONDISCRIMINATION REQUIREMENT.—The standards established under subsection (a) shall not discriminate against small

originators or small agricultural mortgage loans that are at least

$50,000. The Board shall promote and encourage the inclusion of

qualified loans for small farms and family farmers in the agricultural mortgage secondary market.

SEC. 8.9. ø12 U.S.C. 2279aa–9¿ EXEMPTION FROM RESTRUCTURING AND

BORROWERS RIGHTS PROVISIONS FOR POOLED LOANS.

(a) RESTRUCTURING.—Notwithstanding any other provision of

law, sections 4.14, 4.14A, 4.14B, 4.14C, 4.14D, and 4.36 shall not

apply to any loan included in a pool of qualified loans backing securities or obligations for which the Corporation provides guarantee.

The loan servicing standards established by the Corporation shall

be patterned after similar standards adopted by other federally

sponsored secondary market facilities.

(b) BORROWERS RIGHTS.—At the time of application for a loan

(as defined in section 4.14A(a)(5)), originators that are Farm Credit

System institutions shall give written notice to each applicant of

the terms and conditions of the loan, setting forth separately terms

and conditions for pooled loans and loans that are not pooled. This

notice shall include a statement, if applicable, that the loan may

be pooled and that, if pooled, sections 4.14, 4.14A, 4.14B, 4.14C,

4.14D, and 4.36 shall not apply. This notice also shall inform the

applicant that he or she has the right not to have the loan pooled.

Within 3 days from the time of commitment, an applicant has the

right to refuse to allow the loan to be pooled, thereby retaining
Sec. 8.10 FAMC 1292

rights under sections 4.14, 4.14A, 4.14B, 4.14C, 4.14D, and 4.36, if

applicable.

SEC. 8.10. ø12 U.S.C. 2279aa–10¿ FUNDING FOR GUARANTEE; RESERVES

OF CORPORATION.

(a) GUARANTEE.—The Corporation shall provide guarantees for

securities representing interests in, or obligations backed by, pools

of qualified loans through commitments issued by the Corporation

providing for guarantees.

(b) GUARANTEE FEES.—

(1) INITIAL FEE.—At the time a guarantee is issued by the

Corporation, the Corporation shall assess the certified facility

a fee of not more than 1⁄2 of 1 percent of the initial principal

amount of each pool of qualified loans.

(2) ANNUAL FEES.—Beginning in the second year after the

date the guarantee is issued under paragraph (1), the Corporation may, at the end of each year, assess the certified facility

an annual fee of not more than 1⁄2 of 1 percent of the principal

amount of the loans then constituting the pool.

(3) DETERMINATION OF AMOUNT.—The Corporation shall

establish such fees on the amount of risk incurred by the Corporation in providing the guarantees with respect to which

such fee is assessed, as determined by the Corporation. Fees

assessed under paragraphs (1) and (2) shall be established on

an actuarially sound basis.

(4) REVIEW BY GAO.—The Comptroller General of the

United States may review, and submit to the Congress a report

regarding, the actuarial soundness and reasonableness of the

fees established by the Corporation under this subsection.

(c) CORPORATION RESERVE AGAINST GUARANTEES LOSSES

REQUIRED.—

(1) IN GENERAL.—So much of the fees assessed under this

section as the Board determines to be necessary shall be set

aside by the Corporation in a segregated account as a reserve

against losses arising out of the guarantee activities of the Corporation.

(2) EXHAUSTION OF RESERVE REQUIRED.—The Corporation

may not issue obligations to the Secretary of the Treasury

under section 8.13 in order to meet the obligations of the Corporation with respect to any guarantees provided under this

title until the reserve established under paragraph (1) has

been exhausted.

(d) FEES TO COVER ADMINISTRATIVE COSTS AUTHORIZED.—The

Corporation may impose charges or fees in reasonable amounts in

connection with the administration of its activities under this title

to recover its costs for performing such administration.

SEC. 8.11. ø12 U.S.C. 2279aa–11¿ SUPERVISION, EXAMINATION, AND REPORT OF CONDITION.

(a) REGULATION.—

(1) AUTHORITY.—Notwithstanding any other provision of

this Act, the Farm Credit Administration shall have the authority to provide, acting through the Office of Secondary Market Oversight—
1293 Sec. 8.11 FAMC

(A) for the examination of the Corporation and its affiliates; and

(B) for the general supervision of the safe and sound

performance of the powers, functions, and duties vested in

the Corporation and its affiliates by this title, including

through the use of the authorities granted to the Farm

Credit Administration under—

(i) part C of title V; and

(ii) beginning 6 months after December 13, 1991,

section 5.17(a)(9).

(2) CONSIDERATIONS.—In exercising its authority pursuant

to this section, the Farm Credit Administration shall

consider—

(A) the purposes for which the Corporation was created;

(B) the practices appropriate to the conduct of secondary markets in agricultural loans; and

(C) the reduced levels of risk associated with appropriately structured secondary market transactions.

(3) OFFICE OF SECONDARY MARKET OVERSIGHT.— (A) Not later than 180 days after the date of enactment of this paragraph, the Farm Credit Administration

Board shall establish within the Farm Credit Administration the Office of Secondary Market Oversight.

(B) The Farm Credit Administration Board shall carry

out the authority set forth in this section through the Office of Secondary Market Oversight.

(C) The Office of Secondary Market Oversight shall be

managed by a full-time Director who shall be selected by

and report to the Farm Credit Administration Board.

(b) EXAMINATIONS AND AUDITS.—

(1) IN GENERAL.—The financial transactions of the Corporation shall be examined by examiners of the Farm Credit

Administration in accordance with the principles and procedures applicable to commercial corporate transactions under

such rules and regulations as may be prescribed by the Administration.

(2) FREQUENCY.—The examinations shall occur at such

times as the Farm Credit Administration Board may determine, but in no event less than once each year.

(3) ACCESS.—The examiners shall—

(A) have access to all books, accounts, financial

records, reports, files, and all other papers, things, or property belonging to or in use by the Corporation and necessary to facilitate the audit; and

(B) be afforded full access for verifying transactions

with certified facilities and other entities with whom the

Corporation conducts transactions.

(c) ANNUAL REPORT OF CONDITION.—The Corporation shall

make and publish an annual report of condition as prescribed by

the Farm Credit Administration. Each report shall contain financial statements prepared in accordance with generally accepted accounting principles and contain such additional information as the

Farm Credit Administration may by regulation prescribe. The fi-
Sec. 8.12 FAMC 1294

nancial statements of the Corporation shall be audited by an independent public accountant.

(d) FCA ASSESSMENTS TO COVER COSTS.—The Farm Credit Administration shall assess the Corporation for the cost to the Administration of any regulatory activities conducted under this section,

including the cost of any examination.

(e) DEFINITION OF AFFILIATE.—As used in this title, the term

‘‘affiliate’’ shall mean an entity effectively controlled or owned by

the Corporation, except that such term shall not include an originator (as defined in section 8.0(7)).

(f) The Farm Credit Administration Board shall ensure that—

(1) the Office of Secondary Market Oversight has access to

a sufficient number of qualified and trained employees to adequately supervise the secondary market activities of the Corporation; and

(2) the supervision of the powers, functions, and duties of

the Corporation is performed, to the extent practicable, by personnel who are not responsible for the supervision of the banks

and associations of the Farm Credit System.

SEC. 8.12. ø12 U.S.C. 2279aa–12¿ SECURITIES IN CREDIT ENHANCED

POOLS.

(a) FEDERAL LAWS.—

(1) APPLICABILITY OF CERTAIN FEDERAL SECURITIES LAWS.—

For purposes of section 3(a)(2) of the Securities Act of 1933, no

security representing an interest in, or obligations backed by,

a pool of qualified loans for which guarantees have been provided by the Corporation shall be deemed to be a security

issued or guaranteed by a person controlled or supervised by,

or acting as an instrumentality of, the Government of the

United States. No such security shall be deemed to be a ‘‘government security’’ for purposes of the Securities Exchange Act

of 1934 or for purposes of the Investment Company Act of

1940.

(2) NO FULL FAITH AND CREDIT OF THE UNITED STATES.—

Each security for which credit enhancement has been provided

by the Corporation shall clearly indicate that the security is

not an obligation of, and is not guaranteed as to principal or

interest by, the Farm Credit Administration, the United

States, or any other agency or instrumentality of the United

States (other than the Corporation).

(b) STATE SECURITIES LAWS.—

(1) GENERAL EXEMPTION.—Any security or obligation that

has been provided a guarantee by the Corporation shall be exempt from any law of any State with respect to or requiring

registration or qualification of securities or real estate to the

same extent as any obligation issued by, or guaranteed as to

principal and interest by, the United States or any agency or

instrumentality of the United States.

(2) STATE OVERRIDE.—The provisions of paragraph (1) shall

not be applicable to any State that, during the 8-year period

beginning on the date of the enactment of this title, enacts a

law that—

(A) specifically refers to this subsection; and
1295 Sec. 8.12 FAMC

(B) expressly provides that paragraph (1) shall not

apply to the State.

(c) AUTHORIZED INVESTMENTS.—

(1) IN GENERAL.—Securities representing an interest in, or

obligations backed by, pools of qualified loans with respect to

which the Corporation has provided a guarantee shall be authorized investments of any person, trust, corporation, partnership, association, business trust, or business entity created

pursuant to or existing under the laws of the United States or

any State to the same extent that the person, trust, corporation, partnership, association, business trust, or business entity

is authorized under any applicable law to purchase, hold, or invest in obligations issued by or guaranteed as to principal and

interest by the United States or any agency or instrumentality

of the United States. Such securities or obligations may be accepted as security for all fiduciary, trust, and public funds, the

investment or deposits of which shall be under the authority

and control of the United States or any State or any officers

of either.

(2) STATE LIMITATIONS ON PURCHASE, HOLDING, OR INVESTMENT.—If State law limits the purchase, holding, or investment in obligations issued by the United States by the person,

trust, corporation, partnership, association, business trust, or

business entity, securities or obligations of a certified facility

issued on which the Corporation has provided a guarantee

shall be considered to be obligations issued by the United

States for purposes of the limitation.

(3) NONAPPLICABILITY OF PROVISIONS.—

(A) SUBSEQUENT STATE LAW.—Paragraphs (1) and (2)

shall not apply with respect to a particular person, trust,

corporation, partnership, association, business trust, or

business entity, or class thereof, in any State that, prior to

the expiration of the 8-year period beginning on the date

of the enactment of this title, enacts a law that specifically

refers to this section and either prohibits or provides for

a more limited authority to purchase, hold, or invest in the

securities by any person, trust, corporation, partnership,

association, business trust, or business entity, or class

thereof, than is provided in paragraphs (1) and (2).

(B) EFFECT OF SUBSEQUENT STATE LAW.—The enactment by any State of a law of the type described in subparagraph (A) shall not affect the validity of any contractual commitment to purchase, hold, or invest that was

made prior to the effective date of the law and shall not

require the sale or other disposition of any securities acquired prior to the effective date of the law.

(d) STATE USURY LAWS SUPERSEDED.—A provision of the Constitution or law of any State shall not apply to an agricultural loan

made by an originator or a certified facility in accordance with this

title for sale to the Corporation or to a certified facility for inclusion

in a pool for which the Corporation has provided, or has committed

to provide, a guarantee, if the loan, not later than 180 days after

the date the loan was made, is sold to the Corporation or included
Sec. 8.13 FAMC 1296

in a pool for which the Corporation has provided a guarantee, if the

provision—

(1) limits the rate or amount of interest, discount points,

finance charges, or other charges that may be charged, taken,

received, or reserved by an agricultural lender or a certified

facility; or

(2) limits or prohibits a prepayment penalty (either fixed

or declining), yield maintenance, or make-whole payment that

may be charged, taken, or received by an agricultural lender

or a certified facility in connection with the full or partial payment of the principal amount due on a loan by a borrower in

advance of the scheduled date for the payment under the terms

of the loan, otherwise known as a prepayment of the loan

principal.

SEC. 8.13. ø12 U.S.C. 2279aa–13¿ AUTHORITY TO ISSUE OBLIGATIONS

TO COVER GUARANTEE LOSSES OF CORPORATION.

(a) SALE OF OBLIGATIONS TO TREASURY.— (1) IN GENERAL.—Subject to the limitations contained in

section 8.10(c) and the requirement of paragraph (2), the Corporation may issue obligations to the Secretary of the Treasury

the proceeds of which may be used by the Corporation solely

for the purpose of fulfilling the obligations of the Corporation

under any guarantee provided by the Corporation under this

title.

(2) CERTIFICATION.—The Secretary of the Treasury may

purchase obligations of the Corporation under paragraph (1)

only if the Corporation certifies to the Secretary that—

(A) the requirements of section 8.10(c) have been fulfilled; and

(B) the proceeds of the sale of such obligations are

needed to fulfill the obligations of the Corporation under

any guarantee provided by the Corporation under this

title.

(b) EXPEDITIOUS TRANSACTION REQUIRED.—Not later than 10

business days after receipt by the Secretary of the Treasury of any

certification by the Corporation under subsection (a)(2), the Secretary of the Treasury shall purchase obligations issued by the Corporation in an amount determined by the Corporation to be sufficient to meet the guarantee liabilities of the Corporation.

(c) LIMITATION ON AMOUNT OF OUTSTANDING OBLIGATIONS.— The aggregate amount of obligations issued by the Corporation

under subsection (a)(1) which may be held by the Secretary of the

Treasury at any time (as determined by the Secretary) shall not exceed $1,500,000,000.

(d) TERMS OF OBLIGATION.—

(1) INTEREST.—Each obligation purchased by the Secretary

of the Treasury shall bear interest at a rate determined by the

Secretary, taking into consideration the average rate on outstanding marketable obligations of the United States as of the

last day of the last calendar month ending before the date of

the purchase of such obligation.

(2) REDEMPTION.—The Secretary of the Treasury shall require that such obligations be repurchased by the Corporation

within a reasonable time.
1297 Sec. 8.31 FAMC

(e) COORDINATION WITH TITLE 31, UNITED STATES CODE.—

(1) AUTHORITY TO USE PROCEEDS FROM SALE OF TREASURY

SECURITIES.—For the purpose of purchasing obligations of the

Corporation, the Secretary of the Treasury may use as a public

debt transaction the proceeds from the sale by the Secretary of

any securities issued under chapter 31 of title 31, United

States Code, and the purposes for which securities may be

issued under such chapter are extended to include such purchases.

(2) TREATMENT OF TRANSACTIONS.—All purchases and sales

by the Secretary of the Treasury of obligations issued by the

Corporation under this section shall be treated as public debt

transactions of the United States.

(f) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to

be appropriated to the Secretary of the Treasury $1,500,000,000,

without fiscal year limitation, to carry out the purposes of this title.

SEC. 8.14. ø12 U.S.C. 2279aa–14¿ FEDERAL JURISDICTION.

Notwithstanding section 1349 of title 28, United States Code,

or any other provision of law:

(1) The Corporation shall be considered an agency under

sections 1345 and 1442 of such title.

(2) All civil actions to which the Corporation is a party

shall be deemed to arise under the laws of the United States

and, to the extent applicable, shall be deemed to be governed

by Federal common law. The district courts of the United

States shall have original jurisdiction of all such actions, without regard to amount of value.

(3) Any civil or other action, case, or controversy in a court

of a State or any court, other than a district court of the

United States, to which the Corporation is a party may at any

time before trial be removed by the Corporation, without the

giving of any bond or security—

(A) to the District Court of the United States for the

district and division embracing the place where the same

is pending; or

(B) if there is no such district court, to the District

Court of the United States for the district in which the

principal office of the Corporation is located;

by following any procedure for removal for causes in effect at

the time of such removal.

(4) No attachment or execution shall be issued against the

Corporation or any of the property of the Corporation before

final judgment in any Federal, State, or other court.

Subtitle B—Regulation of Financial Safety

and Soundness of Federal Agricultural

Mortgage Corporation

SEC. 8.31. ø12 U.S.C. 2279bb¿ DEFINITIONS.

For purposes of this subtitle:
Sec. 8.32 FAMC 1298

(1) COMPENSATION.—The term ‘‘compensation’’ means any

payment of money or the provision of any other thing of current or potential value in connection with employment.

(2) CORE CAPITAL.—The term ‘‘core capital’’ means, with

respect to the Corporation, the sum of the following (as determined in accordance with generally accepted accounting principles):

(A) The par value of outstanding common stock.

(B) The par value of outstanding preferred stock.

(C) Paid-in capital.

(D) Retained earnings.

(3) DIRECTOR.—The term ‘‘Director’’ means the Director of

the Office of Secondary Market Oversight of the Farm Credit

Administration, selected under section 8.11(a)(3).

(4) OFFICE.—The term ‘‘Office’’ means the Office of Secondary Market Oversight of the Farm Credit Administration,

established in section 8.11(a).

(5) REGULATORY CAPITAL.—The term ‘‘regulatory capital’’

means, with respect to the Corporation, the core capital of the

Corporation plus an allowance for losses and guarantee claims,

as determined in accordance with generally accepted accounting principles.

(6) STATE.—The term ‘‘State’’ means the States 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, the Trust

Territory of the Pacific Islands, and any other territory or possession of the United States.

SEC. 8.32. ø12 U.S.C. 2279bb–1¿ RISK-BASED CAPITAL LEVELS.

(a) RISK-BASED CAPITAL TEST.—Not sooner than the expiration

of the 3-year period beginning on the date of enactment of the

Farm Credit System Reform Act of 1996, the Director of the Office

of Secondary Market Oversight shall, by regulation, establish a

risk-based capital test under this section for the Corporation. When

applied to the Corporation, the risk-based capital test shall determine the amount of regulatory capital for the Corporation that is

sufficient for the Corporation to maintain positive capital during a

10-year period in which both of the following circumstances occur:

(1) CREDIT RISK.—With respect to securities representing

an interest in, or obligations backed by, a pool of qualified

loans owned or guaranteed by the Corporation and other obligations of the Corporation, losses on the underlying qualified

loans occur throughout the United States at a rate of default

and severity (based on any measurements of default reasonably related to prevailing industry practice in determining capital adequacy) reasonably related to the rate and severity that

occurred in contiguous areas of the United States containing

an aggregate of not less than 5 percent of the total population

of the United States that, for a period of not less than 2 years

(as established by the Director), experienced the highest rates

of default and severity of agricultural mortgage losses, in comparison with such rates of default and severity of agricultural
1299 Sec. 8.32 FAMC

mortgage losses in other such areas for any period of such duration, as determined by the Director.

(2) INTEREST RATE RISK.—Interest rates on Treasury obligations of varying terms increase or decrease over the first 12

months of such 10-year period by not more than the lesser of

(A) 50 percent (with respect to the average interest rates on

such obligations during the 12-month period preceding the 10-

year period), or (B) 600 basis points, and remain at such level

for the remainder of the period. This paragraph may not be

construed to require the Director to determine interest rate

risk under this paragraph based on the interest rates for various long-term and short-term obligations all increasing or all

decreasing concurrently.

(b) CONSIDERATIONS.—

(1) ESTABLISHMENT OF TEST.—In establishing the riskbased capital test under subsection (a)—

(A) the Director shall take into account appropriate

distinctions based on various types of agricultural mortgage products, varying terms of Treasury obligations, and

any other factors the Director considers appropriate;

(B) the Director shall conform loan data used in determining credit risk to the minimum geographic and commodity diversification standards applicable to pools of

qualified loans eligible for guarantee;

(C) the Director may take into account retained subordinated participating interests under section 8.6(b)(2) (as

in effect before the date of the enactment of the Farm

Credit System Reform Act of 1996);

(D) the Director may take into account other methods

or tests to determine credit risk developed by the Corporation before December 13, 1991; and

(E) the Director shall consider any other information

submitted by the Corporation in writing during the 180-

day period beginning on December 13, 1991.

(2) REVISING TEST.—Upon the expiration of the 8-year period beginning on December 13, 1991, the Director shall examine the risk-based capital test under subsection (a) and may revise the test. In making examinations and revisions under this

paragraph, the Director shall take into account that, before December 13, 1991, the Corporation has not issued guarantees for

pools of qualified loans. To the extent that the revision of the

risk-based capital test causes a change in the classification of

the Corporation within the enforcement levels established

under section 8.35, the Director shall waive the applicability of

any additional enforcement actions available because of such

change for a reasonable period of time, to permit the Corporation to increase the amount of regulatory capital of the Corporation accordingly.

(c) RISK-BASED CAPITAL LEVEL.—For purposes of this subtitle,

the risk-based capital level for the Corporation shall be equal to

the sum of the following amounts:

(1) CREDIT AND INTEREST RATE RISK.—The amount of regulatory capital determined by applying the risk-based capital
Sec. 8.33 FAMC 1300

test under subsection (a) to the Corporation, adjusted to account for foreign exchange risk.

(2) MANAGEMENT AND OPERATIONS RISK.—To provide for

management and operations risk, 30 percent of the amount of

regulatory capital determined by applying the risk-based capital test under subsection (a) to the Corporation.

(d) SPECIFIED CONTENTS.—

(1) IN GENERAL.—The regulations establishing the riskbased capital test under this section shall—

(A) be issued by the Director for public comment in

the form of a notice of proposed rulemaking, to be first

published after the expiration of the period referred to in

subsection (a); and

(B) contain specific requirements, definitions, methods,

variables, and parameters used under the risk-based capital test and in implementing the test (such as loan loss

severity, float income, loan-to-value ratios, taxes, yield

curve slopes, default experience, prepayment rates, and

performance of pools of qualified loans).

(2) SPECIFICITY.—The regulations referred to in paragraph

(1) shall be sufficiently specific to permit an individual other

than the Director to apply the test in the same manner as the

Director.

(e) AVAILABILITY OF MODEL.—The Director shall make copies of

the statistical model or models used to implement the risk-based

capital test under this section available for public acquisition and

may charge a reasonable fee for such copies.

SEC. 8.33. ø12 U.S.C. 2279bb–2¿ MINIMUM CAPITAL LEVEL.

(a) IN GENERAL.—Except as provided in subsection (b), for purposes of this subtitle, the minimum capital level for the Corporation shall be an amount of core capital equal to the sum of—

(1) 2.75 percent of the aggregate on-balance sheet assets of

the Corporation, as determined in accordance with generally

accepted accounting principles; and

(2) 0.75 percent of the aggregate off-balance sheet obligations of the Corporation, which, for the purposes of this subtitle, shall include—

(A) the unpaid principal balance of outstanding securities that are guaranteed by the Corporation and backed by

pools of qualified loans;

(B) instruments that are issued or guaranteed by the

Corporation and are substantially equivalent to instruments described in subparagraph (A); and

(C) other off-balance sheet obligations of the Corporation.

(b) TRANSITION PERIOD.—

(1) IN GENERAL.—For purposes of this subtitle, the minimum capital level for the Corporation—

(A) prior to January 1, 1997, shall be the amount of

core capital equal to the sum of—

(i) 0.45 percent of aggregate off-balance sheet obligations of the Corporation;
1301 Sec. 8.35 FAMC

(ii) 0.45 percent of designated on-balance sheet assets of the Corporation, as determined under paragraph (2); and

(iii) 2.50 percent of on-balance sheet assets of the

Corporation other than assets designated under paragraph (2);

(B) during the 1-year period ending December 31,

1997, shall be the amount of core capital equal to the sum

of—

(i) 0.55 percent of aggregate off-balance sheet obligations of the Corporation;

(ii) 1.20 percent of designated on-balance sheet assets of the Corporation, as determined under paragraph (2); and

(iii) 2.55 percent of on-balance sheet assets of the

Corporation other than assets designated under paragraph (2);

(C) during the 1-year period ending December 31,

1998, shall be the amount of core capital equal to—

(i) if the Corporation’s core capital is not less than

$25,000,000 on January 1, 1998, the sum of—

(I) 0.65 percent of aggregate off-balance sheet

obligations of the Corporation;

(II) 1.95 percent of designated on-balance

sheet assets of the Corporation, as determined

under paragraph (2); and

(III) 2.65 percent of on-balance sheet assets of

the Corporation other than assets designated

under paragraph (2); or

(ii) if the Corporation’s core capital is less than

$25,000,000 on January 1, 1998, the amount determined under subsection (a); and

(D) on and after January 1, 1999, shall be the amount

determined under subsection (a).

(2) DESIGNATED ON-BALANCE SHEET ASSETS.—For purposes

of this subsection, the designated on-balance sheet assets of

the Corporation shall be—

(A) the aggregate on-balance sheet assets of the Corporation acquired under section 8.6(e); and

(B) the aggregate amount of qualified loans purchased

and held by the Corporation under section 8.3(c)(13).

SEC. 8.34. ø12 U.S.C. 2279bb–3¿ CRITICAL CAPITAL LEVEL.

For purposes of this subtitle, the critical capital level for the

Corporation shall be an amount of core capital equal to 50 percent

of the total minimum capital amount determined under section

8.33.

SEC. 8.35. ø12 U.S.C. 2279bb–4¿ ENFORCEMENT LEVELS.

(a) IN GENERAL.—The Director shall classify the Corporation,

for purposes of this subtitle, according to the following enforcement

levels:

(1) LEVEL I.—The Corporation shall be classified as within

level I if the Corporation—
Sec. 8.35 FAMC 1302

(A) maintains an amount of regulatory capital that is

equal to or exceeds the risk-based capital level established

under section 8.32; and

(B) equals or exceeds the minimum capital level established under section 8.33.

(2) LEVEL II.—The Corporation shall be classified as within

level II if—

(A) the Corporation—

(i) maintains an amount of regulatory capital that

is less than the risk-based capital level; and

(ii) equals or exceeds the minimum capital level;

or

(B) the Corporation is otherwise classified as within

level II under subsection (b) of this section.

(3) LEVEL III.—The Corporation shall be classified as within level III if—

(A) the Corporation—

(i) does not equal or exceed the minimum capital

level; and

(ii) equals or exceeds the critical capital level established under section 8.34; or

(B) the Corporation is otherwise classified as within

level III under subsection (b) of this section.

(4) LEVEL IV.—The Corporation shall be classified as within level IV if the Corporation—

(A) does not equal or exceed the critical capital level;

or

(B) is otherwise classified as within level IV under

subsection (b) of this section.

(b) DISCRETIONARY CLASSIFICATION.—If at any time the Director determines in writing (and provides written notification to the

Corporation and the Farm Credit Administration) that the Corporation is taking any action not approved by the Director that

could result in a rapid depletion of core capital or that the value

of the property subject to mortgages securitized by the Corporation

or property underlying securities guaranteed by the Corporation,

has decreased significantly, the Director may classify the

Corporation—

(1) as within level II, if the Corporation is otherwise within level I;

(2) as within level III, if the Corporation is otherwise within level II; or

(3) as within level IV, if the Corporation is otherwise within level III.

(c) QUARTERLY DETERMINATION.—The Director shall determine

the classification of the Corporation for purposes of this subtitle on

not less than a quarterly basis (and as appropriate under subsection (b)). The first such determination shall be made for the

quarter ending March 31, 1992.

(d) NOTICE.—Upon determining under subsection (b) or (c) that

the Corporation is within level II or III, the Director shall provide

written notice to the Congress and to the Corporation—

(1) that the Corporation is within such level;
1303 Sec. 8.37 FAMC

(2) that the Corporation is subject to the provisions of section 8.36 or 8.37, as applicable; and

(3) stating the reasons for the classification of the Corporation within such level.

(e) IMPLEMENTATION.—Notwithstanding paragraphs (1) and (2)

of subsection (a), during the period beginning on December 13,

1991, and ending on the effective date of the risk based capital regulation issued by the Director under section 8.32, the Corporation

shall be classified as within level I if the Corporation equals or exceeds the minimum capital level established under section 8.33.

SEC. 8.36. ø12 U.S.C. 2279bb–5¿ MANDATORY ACTIONS APPLICABLE TO

LEVEL II.

(a) CAPITAL RESTORATION PLAN.—If the Corporation is classified as within level II, the Corporation shall, within the time period

determined by the Director, submit to the Director a capital restoration plan and, after approval, carry out the plan.

(b) RESTRICTION ON DIVIDENDS.—If the Corporation is classified as within level II, the Corporation may not make any payment

of dividends that would result in the Corporation being reclassified

as within level III or IV.

(c) RECLASSIFICATION FROM LEVEL II TO LEVEL III.—The Director shall immediately reclassify the Corporation as within level III

(and the Corporation shall be subject to the provisions of section

8.37), if—

(1) the Corporation is within level II; and

(2)(A) the Corporation does not submit a capital restoration plan that is approved by the Director; or

(B) the Director determines that the Corporation has failed

to make, in good faith, reasonable efforts necessary to comply

with such a capital restoration plan and fulfill the schedule for

the plan approved by the Director.

(d) EFFECTIVE DATE.—This section shall take effect upon the

expiration of the 30-month period beginning on the date of the enactment of this section.

SEC. 8.37. ø12 U.S.C. 2279bb–6¿ SUPERVISORY ACTIONS APPLICABLE TO

LEVEL III.

(a) MANDATORY SUPERVISORY ACTIONS.—

(1) CAPITAL RESTORATION PLAN.—If the Corporation is classified as within level III, the Corporation shall, within the time

period determined by the Director, submit to the Director a

capital restoration plan and, after approval, carry out the plan.

(2) RESTRICTIONS ON DIVIDENDS.—

(A) PRIOR APPROVAL.—If the Corporation is classified

as within level III, the Corporation—

(i) may not make any payment of dividends that

would result in the Corporation being reclassified as

within level IV; and

(ii) may make any other payment of dividends

only if the Director approves the payment before the

payment.

(B) STANDARD FOR APPROVAL.—If the Corporation is

classified as within level III, the Director may approve a

payment of dividends by the Corporation only if the Direc-
Sec. 8.38 FAMC 1304

tor determines that the payment (i) will enhance the ability of the Corporation to meet the risk-based capital level

and the minimum capital level promptly, (ii) will contribute to the long-term safety and soundness of the Corporation, or (iii) is otherwise in the public interest.

(3) RECLASSIFICATION FROM LEVEL III TO LEVEL IV.—The

Director shall immediately reclassify the Corporation as within

level IV if—

(A) the Corporation is classified as within level III;

and

(B)(i) the Corporation does not submit a capital restoration plan that is approved by the Director; or

(ii) the Director determines that the Corporation has

failed to make, in good faith, reasonable efforts necessary

to comply with such a capital restoration plan and fulfill

the schedule for the plan approved by the Director.

(b) DISCRETIONARY SUPERVISORY ACTIONS.—In addition to any

other actions taken by the Director (including actions under subsection (a)), the Director may, at any time, take any of the following actions if the Corporation is classified as within level III:

(1) LIMITATION ON INCREASE IN OBLIGATIONS.—Limit any

increase in, or order the reduction of, any obligations of the

Corporation, including off-balance sheet obligations.

(2) LIMITATION ON GROWTH.—Limit or prohibit the growth

of the assets of the Corporation or require contraction of the

assets of the Corporation.

(3) PROHIBITION ON DIVIDENDS.—Prohibit the Corporation

from making any payment of dividends.

(4) ACQUISITION OF NEW CAPITAL.—Require the Corporation to acquire new capital in any form and in any amount sufficient to provide for the reclassification of the Corporation as

within level II.

(5) RESTRICTION OF ACTIVITIES.—Require the Corporation

to terminate, reduce, or modify any activity that the Director

determines creates excessive risk to the Corporation.

(6) CONSERVATORSHIP.—Appoint a conservator for the Corporation consistent with this Act.

(c) EFFECTIVE DATE.—This section shall take effect on January

1, 1992.

SEC. 8.38. ø12 U.S.C. 2279bb–7¿ RECAPITALIZATION OF THE CORPORATION.

(a) MANDATORY RECAPITALIZATION.—The Corporation shall increase the core capital of the Corporation to an amount equal to or

greater than $25,000,000, not later than the earlier of—

(1) the date that is 2 years after the date of enactment of

this section; or

(2) the date that is 180 days after the end of the first calendar quarter that the aggregate on-balance sheet assets of the

Corporation, plus the outstanding principal of the off-balance

sheet obligations of the Corporation, equal or exceed

$2,000,000,000.

(b) RAISING CORE CAPITAL.—In carrying out this section, the

Corporation may issue stock under section 8.4 and otherwise em-
1305 Sec. 8.41 FAMC

ploy any recognized and legitimate means of raising core capital in

the power of the Corporation under section 8.3.

(c) LIMITATION ON GROWTH OF TOTAL ASSETS.—During the 2-

year period beginning on the date of enactment of this section, the

aggregate on-balance sheet assets of the Corporation plus the outstanding principal of the off-balance sheet obligations of the Corporation may not exceed $3,000,000,000 if the core capital of the

Corporation is less than $25,000,000.

(d) ENFORCEMENT.—If the Corporation fails to carry out subsection (a) by the date required under paragraph (1) or (2) of subsection (a), the Corporation may not purchase a new qualified loan

or issue or guarantee a new loan-backed security until the core capital of the Corporation is increased to an amount equal to or greater than $25,000,000.

Subtitle C—Receivership, Conservatorship, and Liquidation of the Federal Agricultural Mortgage Corporation

SEC. 8.41. ø12 U.S.C. 2279cc¿ CONSERVATORSHIP; LIQUIDATION; RECEIVERSHIP.

(a) VOLUNTARY LIQUIDATION.—The Corporation may voluntarily liquidate only with the consent of, and in accordance with a

plan of liquidation approved by, the Farm Credit Administration

Board.

(b) INVOLUNTARY LIQUIDATION.— (1) IN GENERAL.—The Farm Credit Administration Board

may appoint a conservator or receiver for the Corporation

under the circumstances specified in section 4.12(b).

(2) APPLICATION.—In applying section 4.12(b) to the Corporation under paragraph (1)—

(A) the Corporation shall also be considered insolvent

if the Corporation is unable to pay its debts as they fall

due in the ordinary course of business;

(B) a conservator may also be appointed for the Corporation if the authority of the Corporation to purchase

qualified loans or issue or guarantee loan-backed securities

is suspended; and

(C) a receiver may also be appointed for the Corporation if—

(i)(I) the authority of the Corporation to purchase

qualified loans or issue or guarantee loan-backed securities is suspended; or

(II) the Corporation is classified under section

8.35 as within level III or IV and the alternative actions available under subtitle B are not satisfactory;

and

(ii) the Farm Credit Administration determines

that the appointment of a conservator would not be

appropriate.

(3) NO EFFECT ON SUPERVISORY ACTIONS.—The grounds for

appointment of a conservator for the Corporation under this

subsection shall be in addition to those in section 8.37.
Sec. 8.41 FAMC 1306

(c) APPOINTMENT OF CONSERVATOR OR RECEIVER.— (1) QUALIFICATIONS.—Notwithstanding section 4.12(b), if a

conservator or receiver is appointed for the Corporation, the

conservator or receiver shall be—

(A) the Farm Credit Administration or any other governmental entity or employee, including the Farm Credit

System Insurance Corporation; or

(B) any person that—

(i) has no claim against, or financial interest in,

the Corporation or other basis for a conflict of interest

as the conservator or receiver; and

(ii) has the financial and management expertise

necessary to direct the operations and affairs of the

Corporation and, if necessary, to liquidate the Corporation.

(2) COMPENSATION.— (A) IN GENERAL.—A conservator or receiver for the

Corporation and professional personnel (other than a Federal employee) employed to represent or assist the conservator or receiver may be compensated for activities conducted as, or for, a conservator or receiver.

(B) LIMIT ON COMPENSATION.—Compensation may not

be provided in amounts greater than the compensation

paid to employees of the Federal Government for similar

services, except that the Farm Credit Administration may

provide for compensation at higher rates that are not in

excess of rates prevailing in the private sector if the Farm

Credit Administration determines that compensation at

higher rates is necessary in order to recruit and retain

competent personnel.

(C) CONTRACTUAL ARRANGEMENTS.—The conservator

or receiver may contract with any governmental entity, including the Farm Credit System Insurance Corporation, to

make personnel, services, and facilities of the entity available to the conservator or receiver on such terms and compensation arrangements as shall be mutually agreed, and

each entity may provide the same to the conservator or receiver.

(3) EXPENSES.—A valid claim for expenses of the conservatorship or receivership (including compensation under

paragraph (2)) and a valid claim with respect to a loan made

under subsection (f) shall—

(A) be paid by the conservator or receiver from funds

of the Corporation before any other valid claim against the

Corporation; and

(B) may be secured by a lien, on such property of the

Corporation as the conservator or receiver may determine,

that shall have priority over any other lien.

(4) LIABILITY.—If the conservator or receiver for the Corporation is not a Federal entity, or an officer or employee of

the Federal Government, the conservator or receiver shall not

be personally liable for damages in tort or otherwise for an act

or omission performed pursuant to and in the course of the

conservatorship or receivership, unless the act or omission con-
1307 Sec. 8.41 FAMC

stitutes gross negligence or any form of intentional tortious

conduct or criminal conduct.

(5) INDEMNIFICATION.—The Farm Credit Administration

may allow indemnification of the conservator or receiver from

the assets of the conservatorship or receivership on such terms

as the Farm Credit Administration considers appropriate.

(d) JUDICIAL REVIEW OF APPOINTMENT.—

(1) IN GENERAL.—Notwithstanding subsection (i)(1), not

later than 30 days after a conservator or receiver is appointed

under subsection (b), the Corporation may bring an action in

the United States District Court for the District of Columbia

for an order requiring the Farm Credit Administration Board

to remove the conservator or receiver. The court shall, on the

merits, dismiss the action or direct the Farm Credit Administration Board to remove the conservator or receiver.

(2) STAY OF OTHER ACTIONS.—On the commencement of an

action under paragraph (1), any court having jurisdiction of

any other action or enforcement proceeding authorized under

this Act to which the Corporation is a party shall stay the action or proceeding during the pendency of the action for removal of the conservator or receiver.

(e) GENERAL POWERS OF CONSERVATOR OR RECEIVER.—The

conservator or receiver for the Corporation shall have such powers

to conduct the conservatorship or receivership as shall be provided

pursuant to regulations adopted by the Farm Credit Administration Board. Such powers shall be comparable to the powers available to a conservator or receiver appointed pursuant to section

4.12(b).

(f) BORROWINGS FOR WORKING CAPITAL.—

(1) IN GENERAL.—If the conservator or receiver of the Corporation determines that it is likely that there will be insufficient funds to pay the ongoing administrative expenses of the

conservatorship or receivership or that there will be insufficient liquidity to fund maturing obligations of the conservatorship or receivership, the conservator or receiver may borrow

funds in such amounts, from such sources, and at such rates

of interest as the conservator or receiver considers necessary or

appropriate to meet the administrative expenses or liquidity

needs of the conservatorship or receivership.

(2) WORKING CAPITAL FROM FARM CREDIT BANKS.—A Farm

Credit bank may loan funds to the conservator or receiver for

a loan authorized under paragraph (1) or, in the event of receivership, a Farm Credit bank may purchase assets of the

Corporation.

(g) AGREEMENTS AGAINST INTERESTS OF CONSERVATOR OR RECEIVER.—No agreement that tends to diminish or defeat the right,

title, or interest of the conservator or receiver for the Corporation

in any asset acquired by the conservator or receiver as conservator

or receiver for the Corporation shall be valid against the conservator or receiver unless the agreement—

(1) is in writing;

(2) is executed by the Corporation and any person claiming

an adverse interest under the agreement, including the obligor,
Sec. 8.41 FAMC 1308

contemporaneously with the acquisition of the asset by the

Corporation;

(3) is approved by the Board or an appropriate committee

of the Board, which approval shall be reflected in the minutes

of the Board or committee; and

(4) has been, continuously, from the time of the agreement’s execution, an official record of the Corporation.

(h) REPORT TO THE CONGRESS.—On a determination by the receiver for the Corporation that there are insufficient assets of the

receivership to pay all valid claims against the receivership, the receiver shall submit to the Secretary of the Treasury, the Committee

on Agriculture of the House of Representatives, and the Committee

on Agriculture, Nutrition, and Forestry of the Senate a report on

the financial condition of the receivership.

(i) TERMINATION OF AUTHORITIES.—

(1) CORPORATION.—The charter of the Corporation shall be

canceled, and the authority provided to the Corporation by this

title shall terminate, on such date as the Farm Credit Administration Board determines is appropriate following the placement of the Corporation in receivership, but not later than the

conclusion of the receivership and discharge of the receiver.

(2) OVERSIGHT.—The Office of Secondary Market Oversight

established under section 8.11 shall be abolished, and section

8.11(a) and subtitle B shall have no force or effect, on such

date as the Farm Credit Administration Board determines is

appropriate following the placement of the Corporation in receivership, but not later than the conclusion of the receivership

and discharge of the receiver.
1309

1Pursuant to the Department of Agriculture Reorganization Act of 1994 (title II of Public Law

103–354) the Farmers Home Administration has been abolished. The Rural Housing Service

now has responsibility for housing loan programs formerly administered by the FmHA, community service loans programs, and other rural housing and community development programs.

See 59 Fed. Reg. 66517 (December 27, 1994) and 61 Fed. Reg. 2899 (January 30, 1996).

PART X—RURAL HOUSING

EXCERPT FROM HOUSING ACT OF 1949

[Public Law 171, 81st Cong.; 63 Stat. 432; 42 U.S.C. 1471 et seq.]

TITLE V—FARM HOUSING

FINANCIAL ASSISTANCE BY THE SECRETARY OF AGRICULTURE

SEC. 501. ø42 U.S.C. 1471¿ (a) The Secretary of Agriculture

(hereinafter referred to as the ‘‘Secretary’’) is authorized, subject to

the terms and conditions of this title, to extend financial assistance, through the Farmers Home Administration, 1 (1) to owners of

farms in the United States and in the Commonwealth of Puerto

Rico, the Virgin Islands, the territories and possessions of the

United States, and the Trust Territory of the Pacific Islands, to enable them to construct, improve, alter, repair, or replace dwellings

and other farm buildings on their farms, and to purchase buildings

and land constituting a minimum adequate site, in order to provide

them, their tenants, lessees, sharecroppers, and laborers with decent, safe and sanitary living conditions and adequate farm buildings as specified in this title, and (2) to owners of other real estate

in rural areas for the construction, improvement, alteration, or repair of dwellings, related facilities, and farm buildings, and to rural

residents, including persons who reside in reservations or villages

of Indian tribes, for such purposes and for the purchase of buildings and the purchase of land constituting a minimum adequate

site, in order to enable them to provide dwellings and related facilities for their own use and buildings adequate for their farming operations, and (3) to elderly or handicapped persons or families who

are or will be the owners of land in rural areas for the construction,

improvement, alteration, or repair of dwellings and related facilities, the purchase of dwellings and related facilities and the purchase of land constituting a minimum adequate site, in order to

provide them with adequate dwellings and related facilities for

their own use and (4) to an owner described in clause (1), (2), or

(3) for refinancing indebtedness which—

(A) was incurred for an eligible purpose described in such

clause, and

(B)(i) if not refinanced, is likely to result (because of circumstances beyond the control of the applicant) at an early

date in the loss of the applicant’s necessary dwelling or essential farm service buildings, or
Sec. 501 RURAL HOUSING 1310

1This paragraph was added by section 1012(m) of the Housing and Community Development

Act of 1992, Pub. L. 102–550. It probably should have been added at the end of subsection (b)

of this section and designated as paragraph (9).

(ii) if combined (in the case of a dwelling that the Secretary finds not to be decent, safe, and sanitary) with a loan

for improvement, rehabilitation, or repairs and not refinanced,

is likely to result in the applicant’s continuing to be deprived

of a decent, safe, and sanitary dwelling.

(5) 1 DEFINITIONS.—For purposes of this title, the terms

‘‘repair’’, ‘‘repairs’’, ‘‘rehabilitate’’, and ‘‘rehabilitation’’ include

measures to evaluate and reduce lead-based paint hazards, as

such terms are defined in section 1004 of the Residential LeadBased Paint Hazard Reduction Act of 1992.

(b)(1) For the purpose of this title, the term ‘‘farm’’ shall mean

a parcel or parcels of land operated as a single unit which is used

for the production of one or more agricultural commodities and

which customarily produces or is capable of producing such commodities for sale and for home use of a gross annual value of not

less than the equivalent of gross annual value of $400 in 1944, as

determined by the Secretary. The Secretary shall promptly determine whether any parcel or parcels of land constitute a farm for

the purposes of this title whenever requested to do so by any interested Federal, State, or local public agency, and his determination

shall be conclusive.

(2) For the purposes of this title, the terms ‘‘owner’’ and ‘‘mortgage’’ shall be deemed to include, respectively, the lessee and other

security interest in, any leasehold interest which the Secretary determines has an unexpired term (A) in the case of a loan, for a period sufficiently beyond the repayment period of the loan to provide

adequate security and a reasonable probability of accomplishing

the objectives for which the loan is made, and (B) in the case of

a grant for a period sufficient to accomplish the objectives for

which the grant is made.

(3) For the purposes of this title, the term ‘‘elderly or handicapped persons or families’’ means families which consist of two or

more persons, the head of which (of his or her spouse) is at least

sixty-two years of age or is handicapped. Such term also means a

single person who is at least sixty-two years of age or is handicapped. A person shall be considered handicapped if such person is

determined, pursuant to regulations issued by the Secretary, to

have an impairment which (A) is expected to be of long-continued

and indefinite duration, (B) substantially impedes his ability to live

independently, and (C) is of such a nature of such ability could be

improved by more suitable housing conditions, or if such person

has a developmental disability as defined in section 102 of the Developmental Disabilities Assistance and Bill of Rights Act of 2000.

The Secretary shall prescribe such regulations as may be necessary

to prevent abuses in determinig, under the definitions contained in

this paragraph, eligibility of families and persons for admission to

and occupancy of housing constructed wih assistance under this

title. Notwithstanding the preceding provisions of this paragraph,

such term also includes two or more elderly (sixty-two years of age

or over) or handicapped persons living together, one or more such

persons living with another person who is determined (under regulations prescribed by the Secretary) to be essential to the care or
1311 Sec. 501 RURAL HOUSING

1See section 736 of the Agriculture, Rural Development, Food and Drug Administration, and

Related Agencies Appropriations Act, 2001, set forth post, in this part for provisions regarding

income limits for isolated rural areas in Alaska. 2 Indented so in law.

well-being of such persons, and the surviving member or members

of any family described in the first sentence of this paragraph who

were living, in a unit assisted under this title, with the deceased

member of the family at the time of his or her death.

(4) For the purpose of this title, the terms ‘‘low income families

or persons’’ and ‘‘very low-income families or persons’’ means those

families and persons whose incomes do not exceed the respective

levels established for lower income families and very low-income

families under the United States Housing Act of 1937. 1 Notwithstanding the preceding sentence, the maximum income levels established for purposes of this title for such families and persons in

the Virgin Islands shall not be less than the highest such levels established for purposes of this title for such families and persons in

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

Trust Territory of the Pacific Islands. The temporary absence of a

child from the home due to placement in foster care should not be

considered in considering family composition and family size.

(5)(A) For the purpose of this title, the terms ‘‘income’’ and ‘‘adjusted income’’ have the meanings given by sections 3(b)(4) and

3(b)(5), respectively, of the United States Housing Act of 1937.

(B) 2 For purposes of this title, for fiscal years 2002 and

2003, the term ‘‘income’’ does not include dividends received

from the Alaska Permanent Fund by a person who was under

the age of 18 years when that person qualified for the dividend.

(6) For the purposes of this title, the term ‘‘Indian tribe’’ means

any Indian tribe, band, group, and nation, including Alaska Indians, Aleuts, and Eskimos, and any Alaskan Native Village, of the

United States, which is considered an eligible recipient under the

Indian Self-Determination and Education Assistance Act (Public

Law 93–638) or was considered an eligible recipient under chapter

67 of title 31, United States Code, prior to the repeal of such chapter.

(7) For the purpose of this title, the term ‘‘rural resident’’ shall

include a family or a person who is a renter of a dwelling unit in

a rural area.

(8) For the purposes of this title, the term ‘‘adequate dwelling’’

means a decent, safe, and sanitary dwelling unit.

(c) In order to be eligible for the assistance authorized by paragraph (a), the applicant must show (1) that he is the owner of a

farm which is without a decent, safe, and sanitary dwelling for

himself and his family and necessary resident farm labor, or for the

family of the operating tenant, lessee, or sharecropper or without

other farm buildings adequate for the type of farming in which he

engages or desires to engage or that he is the owner of other real

estate in a rural area or a rural resident without an adequate

dwelling or related facilities for his own use or buildings adequate

for his farming operations, or that the applicant is an elderly or

handicapped person or family in a rural area without an adequate

dwelling or related facility for its own use or that he is the owner

of a farm or other real estate in a rural area who needs refinancing
Sec. 501 RURAL HOUSING 1312

of indebtedness described in clause (4) of subsection (a); (2) that he

is without sufficient resources to provide the necessary housing and

buildings on his own account; and (3) that he is unable to secure

the credit necessary for such housing and buildings from other

sources upon terms and conditions which he could reasonably be

expected to fulfill. If an applicant is a State or local public agency

or Indian tribe—

(A) the provisions of clause (3) shall not apply to its application; and

(B) the applicant shall be eligible to participate in any program under this title if the persons or families to be served by

the applicant with the assistance being sought would be eligible to participate in such program.

(d) As used in this title (except in sections 503 and 504(b)), the

terms ‘‘farm,’’ ‘‘farm dwelling,’’ and ‘‘farm housing’’ shall include

dwellings or other essential buildings of eligible applicants.

(e) The Secretary shall establish procedures under which borrowers under this title are required to make periodic payments for

the purpose of taxes, insurance, and other necessary expenses as

the Secretary may deem appropriate. Notwithstanding any other

provision of law, such payments shall not be considered public

funds. The Secretary shall direct the disbursement of the funds at

the appropriate time or times for the purposes for which the funds

were escrowed. The Secretary shall pay the same rate of interest

on escrowed funds as is required to be paid on escrowed funds held

by other lenders in any State where State law requires payment

of interest on escrowed funds, subject to appropriations to the extent that additional budget authority is necessary to carry out this

sentence. If the prepayments made by the borrower are not sufficient to pay the amount due, advances may be made by the Secretary to pay the costs in full, which advances shall be charged to

the account of the borrower, bear interest, and be payable in a

timely fashion as determined by the Secretary. The Secretary shall

notify a borrower in writing when loan payments are delinquent.

(f) With respect to any limitation on the amount of any loan

which may be made, insured, or guaranteed under this title for the

purchase of a dwelling unit, the Secretary may increase such

amount by up to 20 percent if such increase is necessary to account

for the increased cost of the dwelling unit due to the installation

of a solar energy system (as defined in subparagraph (3) of the last

paragraph of section 2(a) of the National Housing Act) therein.

(g) The programs authorized by this title shall be carried out,

consistent with program goals and objectives so that the involuntary displacement of families and businesses is avoided.

(h) The Secretary may not restrict the availability of assistance

under this title for any alien for whom assistance may not be

restrictedunder section 214 of the Housing and Community Development Act of 1980.

(i) For the purposes of this title, the term ‘‘development cost’’

shall include the packaging of loan and grant applications and actions related thereto by public and private nonprofit organizations

tax exempt under the Internal Revenue Code of 1986.

(j) PROGRAM TRANSFERS.—Notwithstanding any other provision

of law, the Secretary shall not transfer any program authorized by

this title to the Rural Development Administration.
1313 Sec. 502 RURAL HOUSING

LOANS FOR HOUSING AND BUILDINGS ON ADEQUATE FARMS

SEC. 502. ø42 U.S.C. 1472¿ (a)(1) If the Secretary determines

that an applicant is eligible for assistance as provided in section

501 and that the applicant has the ability to repay in full the sum

to be loaned, with interest giving due consideration to the income

and earnings capacity of the applicant and his family from the

farm and other sources, and the maintenance of a reasonable

standard of living for the owner and the occupants of said farm, a

loan may be made by the Secretary to said applicant for a period

of not to exceed thirty-three years from the making of the loan with

interest. The Secretary may accept the personal liability of any person with adequate repayment ability who will cosign the applicant’s note to compensate for any deficiency in the applicant’s repayment ability. At the borrower’s option, the borrower may prepay

to the Secretary as escrow agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the

Secretary may require in accordance with section 501(e).

(2) The Secretary may extend the period of any loan made

under this section if the Secretary determines that such extension

is necessary to permit the making of such loan to any person whose

income does not exceed 60 per centum of the median income for the

area and who would otherwise be denied such loan because the

payments required under a shorter period would exceed the financial capacity of such person. The aggregate period for which any

loan may be extended under this paragraph may not exceed 5

years.

(3)(A) Notwithstanding any other provision of this title, a loan

may be made under this section for the purchase of a dwelling located on land owned by a community land trust, if the borrower

and the loan otherwise meet the requirements applicable to loans

under this section.

(B) For purposes of this paragraph, the term ‘‘community land

trust’’ means a community housing development organization as

such term is defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act (except that the requirements under

section 104(6)(C) and section 104(6)(D) shall not apply for purposes

of this paragraph)—

(i) that is not sponsored by a for-profit organization;

(ii) that is established to carry out the activities under

clause (iii);

(iii) that—

(I) acquires parcels of land, held in perpetuity, primarily for conveyance under long-term ground leases;

(II) transfers ownership of any structural improvements located on such leased parcels to the lessees; and

(III) retains a preemptive option to purchase any such

structural improvement at a price determined by formula

that is designed to ensure that the improvement remains

affordable to low- and moderate-income families in perpetuity; and

(iv) that has its corporate membership open to any adult

resident of a particular geographic area specified in the bylaws

of the organization.
Sec. 502 RURAL HOUSING 1314

1So in law.

2December 15, 1989.

3So in law.

(b) The instruments under which the loan is made and the security given shall—

(1) provide for security upon the applicant’s equity in the

farm or such other security or collateral, if any, as may be

found necessary by the Secretary reasonably to assure repayment of the indebtedness;

(2) provide for the repayment of principal and interest in

accordance with schedules and repayment plans prescribed by

the Secretary, except that any prepayment of a loan made or

insured under section 514 or 515 shall be subject to the provisions of subsection (c);

(3) except for guaranteed loans, contain the agreement of

the borrower that he will, at the request of the Secretary, proceed with diligence to refinance the balance of the indebtedness through cooperative or other responsible private credit

sources whenever the Secretary determines, in the light of the

borrower’s circumstances, including his earning capacity and

the income from the farm, that he is able to do so upon reasonable terms and conditions; 1

(4) be in such form and contain such covenants as the Secretary shall prescribe to secure the payment of the loan with

interest, protect the security, and assure that the farm will be

maintained in repair and that waste and exhaustion of the

farm will be prevented.

(c)(1)(A) The Secretary may not accept an offer to prepay, or

request refinancing in accordance with subsection (b)(3) of, any

loan made or insured under section 514 or 515 of this title pursuant to a contract entered into after December 21, 1979, but before

the date of the enactment of the Department of Housing and Urban

Development Reform Act of 1989,2 unless the Secretary takes appropriate action which will obligate the borrower (and successors in

interest thereof) to utilize the assisted housing and related facilities for the purposes specified in section 514 or 515, as the case

may be, for a period of—

(i) fifteen years from the date on which the loan was made

in the case of a loan made or insured pursuant to a contract

entered into after December 21, 1979, but before the date of

the enactment of the Department of Housing and Urban Development Reform Act of 1989, and 1 utilized for housing and related facilities which have not received assistance under section 521 (a)(1)(B), (a)(2), or (5) 3 of this title or section 8 of the

United States Housing Act of 1937; or

(ii) twenty years from the date on which the loan was

made in the case of any or other such loan;

or until the Secretary determines (prior to the end of such period)

that there is no longer a need for such housing and related facilities to be so utilized or that Federal or other financial assistance

provided to the residents of such housing will no longer be

provided.

(B) The Secretary may not accept an offer to prepay, or request

refinancing in accordance with subsection (b)(3) of, any initial loan

made or insured under section 515 pursuant to a contract entered
1315 Sec. 502 RURAL HOUSING

1December 15, 1989.

2October 8, 1980.

3Section 599C(e)(2)(A)(iii) of the Quality Housing and Work Responsibility Act of 1998, title

V of Public Law 105–276, approved October 21, 1998, provides that this clause is amended ‘‘by

‘or 521(a)(5)’ after ‘section 521(a)(2)’ ’’. The amendment provision probably intended to insert the

reference to section 521(a)(5) after the reference to section 521(a)(2). 4So in law. Section 514(j) does not contain paragraphs.

into on or after the date of the enactment of the Department of

Housing and Urban Development Reform Act of 1989.

(2) If any loan which was made or insured under section 514

or 515 pursuant to a contract entered into prior to the date of enactment of the Department of Housing and Urban Development Reform Act of 1989 1, is prepaid or refinanced on or after the date of

enactment of the Housing and Community Development Act of

1980 2, and tenants of the housing and related facilities financed

with such loan are displaced due to a change in the use of the

housing, or to an increase in rental or other charges, as a result

of such prepayment or refinancing, the Secretary shall provide such

tenants a priority for relocation in alternative housing assisted pursuant to this title.

(3) NOTICE OF OFFER TO PREPAY.—Not less than 30 days after

receiving an offer to prepay any loan made or insured under section 514 or 515, the Secretary shall provide written notice of the

offer or request to the tenants of the housing and related facilities

involved, to interested nonprofit organizations, and to any appropriate State and local agencies.

(4)(A) AGREEMENT BY BORROWER TO EXTEND LOW INCOME

USE.—Before accepting any offer to prepay, or requesting refinancing in accordance with subsection (b)(3) of, any loan made or

insured under section 514 or 515 pursuant to a contract entered

into prior to the date of enactment of the Department of Housing

and Urban Development Reform Act of 1989 1, the Secretary shall

make reasonable efforts to enter into an agreement with the borrower under which the borrower will make a binding commitment

to extend the low income use of the assisted housing and related

facilities involved for not less than the 20-year period beginning on

the date on which the agreement is executed.

(B) ASSISTANCE AVAILABLE TO BORROWER TO EXTEND LOW IN- COME USE.—To the extent of amounts provided in appropriation

Acts, the agreement under subparagraph (A) may provide for 1 or

more of the following forms of assistance that the Secretary, after

taking into account local market conditions, determines to be necessary to extend the low income use of the housing and related facilities involved:

(i) Increase in the rate of return on investment.

(ii) Reduction of the interest rate on the loan through the

provision of interest credits under section 521(a)(1)(B), or additional assistance or an increase in assistance provided under

section 521(a)(5).

(iii) 3 Additional rental assistance, or an increase in assistance provided under existing contracts, under section 521(a)(2)

or under section 8 of the United States Housing Act of 1937.

(iv) An equity loan to the borrower under paragraphs (1)

and (2) of section 515(c) or under paragraphs (1) and (2) of section 514(j), 4 except that an equity loan referred to in this

clause may not be made available after the date of the enact-
Sec. 502 RURAL HOUSING 1316

1 August 6, 1996.

2 Indented so in law.

3December 15, 1989.

ment of the Act entitled ‘‘An Act making appropriations for Agriculture, Rural Development, Food and Drug Administration,

and Related Agencies programs for the fiscal year ending September 30, 1997, and for other purposes’’ 1, unless the Secretary determines that the other incentives available under

this subparagraph are not adequate to provide a fair return on

the investment of the borrower, to prevent prepayment of the

loan insured under section 514 or 515, or to prevent the displacement of tenants of the housing for which the loan was

made.

(v) Incremental rental assistance in connection with loans

under clauses (ii) and (iv) to the extent necessary to avoid increases in the rental payments of current tenants not receiving

rental assistance under section 521(a)(2) or under section 8 of

the United States Housing Act of 1937, or current tenants of

projects not assisted under section 521(a)(5).

(vi) 2 In the case of a project that has received

rental assistance under section 8 of the United States

Housing Act of 1937, permitting the owner to receive

rent in excess of the amount determined necessary by

the Secretary to defray the cost of long-term repair or

maintenance of such a project.

(C) APPROVAL OF ASSISTANCE.—The Secretary may approve assistance under subparagraph (B) for assisted housing only if the restrictive period has expired for any loan for the housing made or

insured under section 514 or 515 pursuant to a contract entered

into after December 21, 1979, but before the date of the enactment

of the Department of Housing and Urban Development Reform Act

of 1989 3, and the Secretary determines that the combination of assistance provided—

(i) is necessary to provide a fair return on the investment

of the borrower; and

(ii) is the least costly alternative for the Federal Government that is consistent with carrying out the purposes of this

subsection.

(5)(A) OFFER TO SELL TO NONPROFIT ORGANIZATIONS AND PUB- LIC AGENCIES.— (i) IN GENERAL.—If the Secretary determines after a reasonable period that an agreement will not be entered into with

a borrower under paragraph (4), the Secretary shall require

the borrower (except as provided in subparagraph (G)) to offer

to sell the assisted housing and related facilities involved to

any qualified nonprofit organization or public agency at a fair

market value determined by 2 independent appraisers, one of

whom shall be selected by the Secretary and one of whom shall

be selected by the borrower. If the 2 appraisers fail to agree

on the fair market value, the Secretary and the borrower shall

jointly select a third appraiser, whose appraisal shall be binding on the Secretary and the borrower.

(ii) PERIOD FOR WHICH REQUIREMENT APPLICABLE.—If, upon

the expiration of 180 days after an offer is made to sell housing

and related facilities under clause (i), no qualified nonprofit or-
1317 Sec. 502 RURAL HOUSING

ganization or public agency has made a bona fide offer to purchase, the Secretary may accept the offer to prepay, or may request refinancing in accordance with subsection (b)(3) of, the

loan. This clause shall apply only when funds are available for

purposes of carrying out a transfer under this paragraph.

(B) QUALIFIED NONPROFIT ORGANIZATIONS AND PUBLIC AGENCIES.—

(i) LOCAL NONPROFIT ORGANIZATION OR PUBLIC AGENCY.—

A local nonprofit organization or public agency may purchase

housing and related facilities under this paragraph only if—

(I) the organization or agency is determined by the

Secretary to be capable of managing the housing and related facilities (either directly or through a contract) for

the remaining useful life of the housing and related facilities; and

(II) the organization or agency has entered into an

agreement that obligates it (and successors in interest

thereof) to maintain the housing and related facilities as

affordable for very low-income families or persons and low

income families or persons for the remaining useful life of

the housing and related facilities.

(ii) NATIONAL OR REGIONAL NONPROFIT ORGANIZATION.—If

the Secretary determines that there is no local nonprofit organization or public agency qualified to purchase the housing and

related facilities involved, the Secretary shall require the borrower to offer to sell the assisted housing and related facilities

to an existing qualified national or regional nonprofit organization.

(iii) SELECTION OF QUALIFIED PURCHASER.—The Secretary

shall promulgate regulations that establish criteria for selecting a qualified nonprofit organization or public agency to purchase housing and related facilities when more than 1 such organization or agency has made a bona fide offer. Such regulations shall give a priority to those organizations or agencies

with the greatest experience in developing or managing low income housing or community development projects and with the

longest record of service to the community.

(C) FINANCING OF SALE.—To facilitate the sale described in

subparagraph (A), the Secretary shall—

(i) to the extent provided in appropriation Acts, make an

advance to the nonprofit organization or public agency whose

offer to purchase is accepted under this paragraph to cover any

direct costs (other than the purchase price) incurred by the organization or agency in purchasing and assuming responsibility for the housing and related facilities involved;

(ii) approve the assumption, by the nonprofit organization

or public agency involved, of the loan made or insured under

section 514 or 515;

(iii) to the extent provided in appropriation Acts, transfer

any rental assistance payments that are received under section

521(a)(2)(A) or under section 8 of the United States Housing

Act of 1937, or any assistance payments received under section

521(a)(5), with respect to the housing and related facilities involved; and
Sec. 502 RURAL HOUSING 1318

1December 15, 1989

2February 5, 1988.

(iv) to the extent provided in appropriation Acts, provide

a loan under section 515(c)(3) to the nonprofit organization or

public agency whose offer to purchase is accepted under this

paragraph to enable the organization or agency to purchase the

housing and related facilities involved.

(D) RENT LIMITATION AND ASSISTANCE.—The Secretary shall, to

the extent provided in appropriation Acts, provide to each nonprofit

organization or public agency purchasing housing and related facilities under this paragraph financial assistance (in the form of

monthly payments or forgiveness of debt) in an amount necessary

to ensure that the monthly rent payment made by each low income

family or person residing in the housing does not exceed the maximum rent permitted under section 521(a)(2)(A) or, in the case of

housing assisted under section 521(a)(5), does not exceed the rents

established for the project under such section.

(E) RESTRICTION ON SUBSEQUENT TRANSFERS.—Except as provided in subparagraph (B)(ii), the Secretary may not approve the

transfer of any housing and related facilities purchased under this

paragraph during the remaining useful life of the housing and related facilities, unless the Secretary determines that—

(i) the transfer will further the provision of housing and

related facilities for low income families or persons; or

(ii) there is no longer a need for such housing and related

facilities by low income families or persons.

(F) GENERAL RESTRICTION ON PREPAYMENTS AND

REFINANCINGS.—Following the transfer of the maximum number of

dwelling units set forth in subparagraph (H)(i) in any fiscal year

or the maximum number of dwelling units for which budget authority is available in any fiscal year, the Secretary may not accept

in such fiscal year any offer to prepay, or request refinancing in accordance with subsection (b)(3) of, any loan made or insured under

section 514 or 515 pursuant to a contract entered into prior to the

date of enactment of the Department of Housing and Urban Development Reform Act of 1989 1, except in accordance with subparagraph (G). The limitation established in this subparagraph shall

not apply to an offer to prepay, or request to refinance, if, following

the date on which such offer or request is made (or following the

date of the enactment of the Housing and Community Development

Act of 1987,2 whichever occurs later) a 15-month period expires

during which no budget authority is available to carry out this

paragraph. For purposes of this subparagraph, the Secretary shall

allocate budget authority under this paragraph in the order in

which offers to prepay, or request to refinance, are made.

(G) EXCEPTION.—This paragraph shall not apply to any offer to

prepay, or any request to refinance in accordance with subsection

(b)(3), any loan made or insured under section 514 or 515 pursuant

to a contract entered into prior to the date of enactment of the Department of Housing and Urban Development Reform Act of 1989 1, if—

(i) the borrower enters into an agreement with the Secretary that obligates the borrower (and successors in interest

thereof)—
1319 Sec. 502 RURAL HOUSING

(I) to utilize the assisted housing and related facilities

for the purposes specified in section 514 or 515, as the case

may be, for a period determined by the Secretary (but not

less than the period described in paragraph (1)(B) calculated from the date on which the loan is made or insured); and

(II) upon termination of the period described in paragraph (1)(B), to offer to sell the assisted housing and related facilities to a qualified nonprofit organization or public agency in accordance with this paragraph; or

(ii) the Secretary determines that housing opportunities of

minorities will not be materially affected as a result of the prepayment or refinancing, and that—

(I) the borrower (and any successor in interest thereof)

are obligated to ensure that tenants of the housing and related facilities financed with the loan will not be displaced

due to a change in the use of the housing, or to an increase

in rental or other charges, as a result of the prepayment

or refinancing; or

(II) there is an adequate supply of safe, decent, and affordable rental housing within the market area of the

housing and related facilities and sufficient actions have

been taken to ensure that the rental housing will be made

available to each tenant upon displacement.

(H) FUNDING.— (i) BUDGET LIMITATION.—Not more than 5,000 dwelling

units may be transferred under this paragraph in any fiscal

year, and the budget authority that may be provided under

this paragraph for any fiscal year may not exceed the amounts

required to carry out this paragraph with respect to such number.

(ii) REIMBURSEMENT OF RURAL HOUSING INSURANCE

FUND.—There are authorized to be appropriated to the Rural

Housing Insurance Fund such sums as may be necessary to reimburse the Fund for financial assistance provided under this

paragraph, paragraph (4), and section 517(j)(7).

(I) DEFINITIONS.—For purposes of this paragraph:

(i) LOCAL NONPROFIT ORGANIZATION.—The term ‘‘local nonprofit organization’’ means a nonprofit organization that—

(I) has a broad based board reflecting various interests

in the community or trade area; and

(II) is a non-for-profit charitable organization whose

principal purposes include developing or managing low income housing or community development projects.

(ii) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ means any private organization—

(I) no part of the net earnings of which inures to the

benefit of any member, founder, contributor, or individual;

(II) that is approved by the Secretary as to financial

responsibility; and

(III) that does not have among its officers or directorate persons or parties with a material interest (or persons or parties related to any person or party with such an

interest) in loans financed under section 515 that have

been prepaid.
Sec. 502 RURAL HOUSING 1320

1 November 30, 1983. 2Section 105(b)(1) of the Housing and Community Development Technical Amendments Act

of 1984, Pub. L. 98–479, approved October 17, 1984, amended paragraphs (1) and (2) to read

as shown. Section 105(b)(2) of such Act provides as follows:

‘‘(2) Notwithstanding any other provision of law, the provisions of section 502(d) of the Housing Act of 1949, as amended by paragraph (1), shall apply with respect to fiscal year 1985 and

thereafter, and the provisions of such section, as so amended, may not be changed or superseded

except by another provision of law which amends such section.’’.

(J) REGULATIONS.—Notwithstanding section 534, the Secretary

shall issue final regulations to carry out this paragraph not later

than 60 days after the date of the enactment of the Housing and

Community Development Act of 1987. The Secretary shall provide

for the regulations to take effect not later than 45 days after the

date on which the regulations are issued.

(d) On and after the effective date of the Rural Housing

Amendments of 19831—

(1) not less than 40 percent of the funds approved in appropriation Acts for use under this section shall be set aside

and made available only for very low-income families or persons; and

(2) not less than 30 percent of the funds allocated to each

State under this section shall be available only for very lowincome families or persons.2

(e)(1) A loan which may be made or insured under this section

with respect to housing shall be made or insured with respect to

a manufactured home or with respect to a manufactured home and

lot, whether such home or such home and lot is real property, personal property, or mixed real and personal property, if—

(A) the manufactured home meets the standards prescribed pursuant to title VI of the Housing and Community Development Act of 1974;

(B) the manufactured home, or the manufactured home

and lot, meets the installation, structural, and site requirements which would apply under title II of the National Housing Act; and

(C) the manufactured home meets the energy conserving

requirements established under paragraph (2), or until the energy conserving requirements are established under paragraph

(2), the manufactured home meets the energy conserving requirements applicable to housing other than manufactured

housing financed under this title.

(2) Energy conserving requirements established by the Secretary for the purpose of paragraph (1)(C) shall—

(A) reduce the operating costs for a borrower by maximizing the energy savings and be cost-effective over the life of

the manufactured home or the term of the loan, whichever is

shorter, taking into account variations in climate, types of energy used, the cost to modify the home to meet such requirements, and the estimated value of the energy saved over the

term of the mortgage; and

(B) be established so that the increase in the annual loan

payment resulting from the added energy conserving requirements in excess of those required by the standards prescribed

under title VI of the Housing and Community Development Act

of 1974 shall not exceed the projected savings in annual energy

costs.
1321 Sec. 502 RURAL HOUSING

1Section 751 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001 (H.R. 5426, as introduced in the 106th Congress, enacted by section 1(a) of Pub. L. 106–387), provides as follows:

‘‘SEC. 751. Hereafter, the Secretary of Agriculture shall consider any borrower whose income

does not exceed 115 percent of the median family income of the United States as meeting the

Continued

(3) A loan that may be made or insured under this section with

respect to a manufactured home on a permanent foundation, or a

manufactured home on a permanent foundation and a lot, shall be

repayable over the same period as would be applicable under section 203(b) of the National Housing Act.

(f) REMOTE RURAL AREAS.—

(1) LOAN SUPPLEMENTS.—The Secretary may supplement

any loan under this section to finance housing located in a remote rural area or on tribal allotted or Indian trust land with

a grant in an amount not greater than the amount by which

the reasonable land acquisition and construction costs of the

security property exceeds the appraised value of such property.

(2) PROHIBITION.—The Secretary may not refuse to make,

insure, or guarantee a loan that otherwise meets the requirements under this section solely on the basis that the housing

involved is located in an area that is excessively rural in character or excessively remote or on tribal allotted or Indian trust

land.

(g) DEFERRED MORTGAGE DEMONSTRATION.—

(1) AUTHORITY.—With respect to families or persons otherwise eligible for assistance under subsection (d) but having incomes below the amount determined to qualify for a loan under

this section, the Secretary may defer mortgage payments beyond the amount affordable at 1 percent interest, taking into

consideration income, taxes and insurance. Deferred mortgage

payments shall be converted to payment status when the ability of the borrower to repay improves. Deferred amounts shall

not exceed 25 percent of the amount of the payment due at 1

percent interest and shall be subject to recapture.

(2) INTEREST.—Interest on principal deferred shall be

set at 1 percent and any interest payments deferred under

this subsection shall not be treated as principal in calculating

indebtedness.

(3) FUNDING.—Subject to approval in appropriations Acts,

not more than 10 percent of the amount approved for each of

fiscal years 1993 and 1994 for loans under this section may be

used to carry out this subsection.

(h) GUARANTEED LOANS.—

(1) AUTHORITY.—The Secretary shall, to the extent provided in appropriation Acts, provide guaranteed loans in accordance with this section, section 517(d), and the last sentence

of section 521(a)(1)(A), except as modified by the provisions of

this subsection. Loans shall be guaranteed under this subsection in an amount equal to 90 percent of the loan.

(2) ELIGIBLE BORROWERS.—Loans guaranteed pursuant to

this subsection shall be made only to borrowers who are low

or moderate income families or persons, whose incomes do not

exceed 115 percent of the median income of the area, as determined by the Secretary. 1
Sec. 502 RURAL HOUSING 1322

eligibility requirements for a borrower contained in section 502(h)(2) of the Housing Act of 1949

(42 U.S.C. 1472(h)(2)).’’. 1Section 743(b) of the Agriculture, Rural Development, Food and Drug Administration, and

Related Agencies Appropriations Act, 1992, Pub. L. 102–142, provided that this subparagraph

is amended ‘‘by striking all that follows ‘rural area’ and by inserting a ‘.’ ‘after rural area’. ’’.

The amendment to insert a period could not be executed.

(3) ELIGIBLE HOUSING.—Loans may be guaranteed pursuant to this subsection only if the loan is used to acquire or construct a single-family residence that is—

(A) to be used as the principal residence of the borrower;

(B) eligible for assistance under this section, section

203(b) of the National Housing Act, or chapter 37 of title

38, United States Code; and

(C) located in a rural area 1

(4) PRIORITY AND COUNSELING FOR FIRST-TIME HOMEBUYERS.—

(A) In providing guaranteed loans under this subsection, the Secretary shall give priority to first-time

homebuyers (as defined in paragraph (12)(A)).

(B) The Secretary may require that, as a condition of

receiving a guaranteed loan pursuant to this subsection, a

borrower who is a first-time homebuyer successfully complete a program of homeownership counseling under section 106(a)(1)(iii) of the Housing and Urban Development

Act of 1968 and obtain certification from the provider of

the program that the borrower is adequately prepared for

the obligations of homeownership.

(5) ELIGIBLE LENDERS.—Guaranteed loans pursuant to this

subsection may be made only by lenders approved by and

meeting qualifications established by the Secretary.

(6) LOAN TERMS.—Loans guaranteed pursuant to this subsection shall—

(A) be made for a term not to exceed 30 years;

(B) involve a rate of interest that is fixed over the

term of the loan and does not exceed the rate for loans

guaranteed under chapter 37 of title 38, United States

Code, or comparable loans in the area that are not guaranteed; and

(C) involve a principal obligation (including initial

service charges, appraisal, inspection, and other fees as

the Secretary may approve)—

(i) for a first-time homebuyer, in any amount not

in excess of 100 percent of the appraised value of the

property as of the date the loan is accepted or the acquisition cost of the property, whichever is less; and

(ii) for any borrower other than a first-time homebuyer, in an amount not in excess of the percentage of

the property or the acquisition cost of the property

that the Secretary shall determine, such percentage or

cost in any event not to exceed 100 percent of the appraised value of the property as of the date the loan

is accepted or the acquisition cost of the property,

whichever is less.
1323 Sec. 502 RURAL HOUSING

1Section 739 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001 (H.R. 5426, as introduced in the 106th Congress, enacted by section 1(a) of Pub. L. 106–387), provides as follows:

‘‘SEC. 739. Hereafter, notwithstanding section 502(h)(7) of the Housing Act of 1949 (42 U.S.C.

1472(h)(7)), the fee collected by the Secretary of Agriculture with respect to a guaranteed loan

under such section 502(h) at the time of the issuance of such guarantee may be in an amount

equal to not more than 2 percent of the principal obligation of the loan.’’.

(7) GUARANTEE FEE.—With respect to a guaranteed loan

under this subsection, the Secretary may collect from the lender at the time of issuance of the guarantee a fee equal to not

more than 1 percent of the principal obligation of the loan. 1

(8) REFINANCING.—Any guaranteed loan under this subsection may be refinanced and extended in accordance with

terms and conditions that the Secretary shall prescribe, but in

no event for an additional amount or term which exceeds the

limitations under this subsection.

(9) NONASSUMPTION.—Notwithstanding the transfer of

property for which a guaranteed loan under this subsection

was made, the borrower of a guaranteed loan under this subsection may not be relieved of liability with respect to the loan.

(10) GEOGRAPHICAL TARGETING.—In providing guaranteed

loans under this subsection, the Secretary shall establish

standards to target and give priority to areas that have a demonstrated need for additional sources of mortgage financing for

low and moderate income families.

(11) ALLOCATION.—The Secretary shall provide that, in

each fiscal year, guaranteed loans under this subsection shall

be allocated among the States on the basis of the need of eligible borrowers in each State for such loans in comparison with

the need of eligible borrowers for such loans among all States.

(12) DEFINITIONS.—For purposes of this subsection:

(A) The term ‘‘displaced homemaker’’ means an individual who—

(i) is an adult;

(ii) has not worked full-time full-year in the labor

force for a number of years but has, during such years,

worked primarily without remuneration to care for the

home and family; and

(iii) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment.

(B) The term ‘‘first-time homebuyer’’ means any individual who (and whose spouse) has had no present ownership in a principal residence during the 3-year period ending on the date of purchase of the property acquired with

a guaranteed loan under this subsection except that—

(i) any individual who is a displaced homemaker

may not be excluded from consideration as a first-time

homebuyer under this subparagraph on the basis that

the individual, while a homemaker, owned a home

with his or her spouse or resided in a home owned by

the spouse; and

(ii) any individual who is a single parent may not

be excluded from consideration as a first-time homebuyer under this subparagraph on the basis that the
Sec. 502 RURAL HOUSING 1324

1 Capitalization of header so in law.

individual, while married, owned a home with his or

her spouse or resided in a home owned by the spouse.

(C) The term ‘‘single parent’’ means an individual

who—

(i) is unmarried or legally separated from a

spouse; and

(ii)(I) has 1 or more minor children for whom the

individual has custody or joint custody; or

(II) is pregnant.

(D) The term ‘‘State’’ means the States of the United

States, the Commonwealth of Puerto Rico, the District of

Columbia, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the

Trust Territories of the Pacific, and any other possession

of the United States.

(13) GUARANTEES FOR REFINANCING LOANS.—

(A) IN GENERAL.— 1Upon the request of the borrower,

the Secretary shall, to the extent provided in appropriation

Acts and subject to subparagraph (F), guarantee a loan

that is made to refinance an existing loan that is made

under this section or guaranteed under this subsection,

and that the Secretary determines complies with the requirements of this paragraph.

(B) INTEREST RATE.—To be eligible for a guarantee

under this paragraph, the refinancing loan shall have a

rate of interest that is fixed over the term of the loan and

does not exceed the interest rate of the loan being refinanced.

(C) SECURITY.—To be eligible for a guarantee under

this paragraph, the refinancing loan shall be secured by

the same single-family residence as was the loan being refinanced, which shall be owned by the borrower and occupied by the borrower as the principal residence of the borrower.

(D) AMOUNT.—To be eligible for a guarantee under

this paragraph, the principal obligation under the refinancing loan shall not exceed an amount equal to the sum

of the balance of the loan being refinanced and such closing costs as may be authorized by the Secretary, which

shall include a discount not exceeding 200 basis points and

an origination fee not exceeding such amount as the Secretary shall prescribe.

(E) OTHER REQUIREMENTS.—The provisions of the last

sentence of paragraph (1) and paragraphs (2), (5), (6)(A),

(7), and (9) shall apply to loans guaranteed under this

paragraph, and no other provisions of paragraphs (1)

through (12) shall apply to such loans.

(F) AUTHORITY TO ESTABLISH LIMITATION.—The Secretary may establish limitations on the number of loans

guaranteed under this paragraph, which shall be based on

market conditions and other factors as the Secretary considers appropriate.
1325 Sec. 504 RURAL HOUSING

LOANS FOR HOUSING AND BUILDINGS ON ADEQUATE FARMS

SEC. 503. ø42 U.S.C. 1473¿ If the Secretary determines (a)

that, because of the inadequacy of the income of an eligible applicant from the farm to be improved and from other sources, said applicant may not reasonably be expected to make annual repayments of principal and interest in an amount sufficient to repay the

loan in full within the period of time prescribed by the Secretary

as authorized in this title; (b) that the income of the applicant may

be sufficiently increased within a period of not to exceed five years

by improvement or enlargement of the farm or an adjustment of

the farm practices or methods; and (c) that the applicant has

adopted and may reasonably be expected to put into effect a plan

of farm improvement, enlargements, or adjusted practices or production which, in the opinion of the Secretary, will increase the applicant’s income from said farm within a period of not to exceed

five years to the extent that the applicant may be expected thereafter to make annual repayments of principal and interest sufficient to repay the balance of the indeptedness less payments in

cash and credits for the contributions to be made by the Secretary

as hereinafter provided, the Secretary may make a loan in an

amount necessary to provide adequate farm dwellings and buildings on said farm under the terms and conditions prescribed in section 502. In addition, the Secretary may agree with the borrower

to make annual contributions during the said five-year period in

the form of credits on the borrower’s indebtedness in an amount

not to exceed the annual installment of interest and 50 per centum

of the principal payments accruing during any installment year up

to and including the fifth installment year, subject to the conditions

that the borrower’s income is, in fact, insufficient to enable the borrower to make payments in accordance with the plan or schedule

prescribed by the Secretary and that the borrower pursues his plan

of farm reorganization and improvements or enlargement with due

diligence.

This agreement with respect to credits or principal and interest upon the borrower’s indebtedness shall not be assignable nor

accure to the benefit of any third party without the written consent

of the Secretary and the Secretary shall have the right, at his option, to cancel the agreement upon the sale of the farm or the execution or creation of any lien thereon subsequent to the lien given

to the Secretary, or to refuse to release the lien given to the Secretary except upon payment in cash of the entire original principal

plus accrued interest thereon less actual cash payments of principal and interest when the Secretary determines that the release

of the lien would permit the benefits of this section to accure to a

person not eligible to receive such benefits.

OTHER SPECIAL LOANS AND GRANTS FOR MINOR IMPROVEMENTS TO

FARM HOUSING AND BUILDINGS

SEC. 504. ø42 U.S.C. 1474¿ (a) The Secretary may make a

loan, grant, or combined loan and grant to an eligible very low-income applicant in order to improve or modernize a rural dwelling,

to make the dwelling safer or more sanitary, or to remove hazards.

The Secretary may make a loan or grant under this subsection to

the applicant to cover the cost of any or all repairs, improvements,
Sec. 504 RURAL HOUSING 1326

or additions such as repairing roofs, providing sanitary waste facilities, providing a convenient and sanitary water supply, repairing

or providing structural supports, or making similar repairs, additions, improvements, including all preliminary and installation

costs in obtaining central water and sewer service. The maximum

amount of a grant, a loan, or a loan and grant shall not exceed

such limitations as the Secretary determines to be appropriate.

Any portion of the sums advanced to the borrower treated as a loan

shall be secured and be repayable within twenty years in accordance with the principles and conditions set forth in this title, except that a loan for less than $7,500 need be evidenced only by a

promissory note. Sums made available by grant may be made subject to the conditions set forth in this title for the protection of the

Government with respect to contributions made on loans made by

the Secretary.

(b) In order to encourage adequate family-size farms the Secretary may make loans under this section and section 503 to any

applicant whose farm needs enlargement or development in order

to provide income sufficient to support decent, safe, and sanitary

housing and other farm buildings and may use the funds made

available under clause (b) of section 513 for such purposes.

(c)(1) In addition to other duties specified in this section, the

Secretary shall develop and conduct a weatherization program for

the purpose of making grants to finance the purchase or installation, or both, of weatherization materials in dwelling units occupied

by low-income families. Such grants shall be made to low-income

families who own dwelling units or, subject to the provisions of

paragraph (2), to owners of such units for the benefit of the lowincome tenants residing therein. In making grants under this subsection, the Secretary shall give priority to the weatherization of

dwelling units occupied by low-income elderly or handicapped persons. The Secretary shall, in carrying out this section, consult with

the Director of the Community Services Administration and the

Secretary of Energy for the purpose of coordinating the weatherization program under this subsection, section 222(a)(12) of the Economic Opportunity Act of 1964, and part A of the Energy Conservation in Existing Buildings Act of 1976.

(2) In the case of any grant made under this subsection to an

owner of a rental dwelling unit the Secretary shall provide that (A)

the benefits of weatherization assistance in connection with such

unit will accrue primarily to the low-income family residing therein, (B) the rents on such dwelling unit will not be raised because

of any increase in value thereof due solely to weatherization assistance provided under this subsection, and (C) no undue or excessive

enhancement will occur to the value of such unit.

(3) In carrying out this subsection, the Secretary shall (A) implement the weatherization standards described in paragraphs

(2)(A) and (3) of section 413(b) of the Energy Conservation in Existing Buildings Act of 1976, and (B) provide that, with respect to any

dwelling unit, not more than $800 of any grant made under this

section be expended on weatherization materials and related matters described in section 415(c) of the Energy Conservation in Existing Buildings Act of 1976, except that the Secretary shall increase such amount to not more than $1,500 to cover labor costs

in areas where the Secretary, in consultation with the Secretary of
1327 Sec. 506 RURAL HOUSING

Labor, determines there is an insufficient number of volunteers

and training participants and public service employment workers,

assisted pursuant to title I of the Workforce Investment Act of 1998

or the Older American Community Service Employment Act, available to work on weatherization projects under the supervision of

qualified supervisors.

(4) For purposes of this subsection, the terms ‘‘elderly,’’ ‘‘handicapped person,’’ ‘‘low income,’’ and ‘‘weatherization materials’’ shall

have the same meanings given such terms in paragraphs (3), (5),

(7), and (9), respectively, of section 412 of the Energy Conservation

in Existing Buildings Act of 1976.

LOAN PAYMENT MORATORIUM AND FORECLOSURE PROCEDURES

SEC. 505. ø42 U.S.C. 1475¿ (a) MORATORIUM.—During any

time that any such loan is outstanding, the Secretary is authorized

under regulations to be prescribed by him to grant a moratorium

upon the payment of interest and principal on such loan for so long

a period as he deems necessary, upon a showing by the borrower

that due to circumstances beyond his control, he is unable to continue making payments of such principal and interest when due

without unduly impairing his standard of living. In cases of extreme hardship under the foregoing circumstances, the Secretary is

further authorized to cancel interest due and payable on such

loans during the moratorium. Should any foreclosure of such a

mortgage securing such a loan upon which a moratorium has been

granted occur, no deficiency judgment shall be taken against the

mortgagor if he shall have faithfully tried to meet his obligation.

(b) FORECLOSURE PROCEDURE.—In foreclosing on any mortgage

held by the Secretary under this title, the Secretary shall follow

the foreclosure procedures of the State in which the property involved is located to the extent such procedures are more favorable

to the borrower than the foreclosure procedures that would otherwise be followed by the Secretary. This subsection shall be subject

to the availability of amounts approved in appropriations Acts, to

the extent additional budget authority is necessary to carry out

this subsection.

TECHNICAL SERVICES AND RESEARCH

SEC. 506. ø42 U.S.C. 1476¿ (a) In connection with financial assistance authorized in this title the Secretary shall require that all

new buildings and repairs financed under this title shall be substantially constructed and in accordance with such building plans

and specifications as may be required by the Secretary. Buildings

and repairs constructed with funds advanced pursuant to this title

shall be supervised and inspected as required by the Secretary. In

addition to the financial assistance authorized in this title the Secretary is authorized to furnish, through such agencies as he may

determine, to any person, including a person eligible for financial

assistance under this title, without charge or at such charges as

the Secretary may determine, technical services such as building

plans, specifications, construction supervision and inspection, and

advice and information regarding farm dwellings and other buildings.
Sec. 506 RURAL HOUSING 1328

(b) The Secretary is further authorized and directed to conduct

research, technical studies, and demonstrations relating to the mission and programs of the Farmers Home Administration and the

national housing goals defined in section 2 of this Act. In connection with such activities, the Secretary shall seek to promote the

construction of adequate farm and other rural housing, with particular attention to the housing needs of the elderly, handicapped,

migrant and seasonal farmworkers, Indians and other identifiable

groups with special needs. The Secretary shall conduct such activities for the purposes of stimulating construction and improving the

architectural design and utility of dwellings and buildings. In carrying out this subsection, the Secretary may permit demonstrations

involving innovative housing units and systems which do not meet

existing published standards, rules, regulations, or policies if the

Secretary finds that in so doing, the health and safety of the population of the area in which the demonstration is carried out will not

be adversely affected, except that the aggregate expenditures for

such demonstrations may not exceed $10,000,000 in any fiscal year.

(c) The Secretary is further authorized to carry out a program

of research, study, and analysis of farm housing in the United

States to develop data and information on—

(1) the adequacy of existing farm housing;

(2) the nature and extent of current and prospective needs

for farm housing, including needs for financing and for improved design, utility, and comfort, and the best methods of

satisfying such needs;

(3) problems faced by farmers and other persons eligible

under section 501 in purchasing, constructing, improving, altering, repairing, and replacing farm housing;

(4) the interrelation of farm housing problems and the

problems of housing in urban and suburban areas; and

(5) any other matters bearing upon the provision of adequate farm housing.

(d) In order to carry out this section, the Secretary shall establish a research capacity within the Farmers Home Administration

which shall have authority to undertake, or to contract with any

public or private body to undertake, research authorized by this

section.

(e) The Secretary of Agriculture shall prepare and submit to

the President and to the Congress estimates of national rural housing needs and reports with respect to the progress being made toward meeting such needs and correlate and recommend proposals

for such executive action or legislation necessary or desirable for

the furtherance of the national housing objective and policy established by this Act with respect to rural housing together with such

other reports or information as may be required of the Secretary

by the President or the Congress.

(f)(1) The Secretary shall conduct a study of housing which is

available for migrant and settled farmworkers. In conducting such

study, the Secretary shall—

(A) determine the location, number, quality, and condition

of housing units which are available to such farmworkers and

the cost assessed such farmworkers for occupying such units;

(B) recommend legislative, administrative, and other action (including the need for new authority for such action)
1329 Sec. 508 RURAL HOUSING

1Section 12 of the President’s Proclamation 3080, January 1, 1955. 20 Fed. Reg. 178, 175, provides that January 31, 1955, is determined as the date ending the period during which persons

must have served in the military forces of the United States in order that such persons come

within the meaning of the terms ‘‘veterans’’ and ‘‘deceased servicemen,’’ contained in section 507,

by reason of service during the period beginning June 27, 1950.

which may be taken for the purpose of improving both the

availability and the condition of such housing units; and

(C) determine the possible roles which individual farmworkers, farmworker associations, individual farmers, farmer

associations, and public and private nonprofit agencies can perform in improving the housing conditions of farmworkers.

(2) The Secretary shall transmit the results of the study described in paragraph (1) to each House of the Congress within one

year after the date of the enactment of this subsection.

PREFERENCE FOR VETERANS AND FAMILIES OF DECEASED

SERVICEMEN

SEC. 507. ø42 U.S.C. 1477¿ As between eligible applicants

seeking assistance under sections 501 to 504, inclusive, the Secretary shall give preference to veterans and the families of deceased servicemen. As used herein, a ‘‘veteran’’ shall mean a person

who served in the military forces of the United States during any

war between the United States and any other nation or during the

period beginning June 27, 1950, and ending on such date as shall

be determined by Presidential proclamation,1 or during the period

beginning after January 31, 1955, and ending on August 4, 1964,

or during the Vietnam era (as defined in section 101(29) of title 38,

United States Code), and who was discharged or released therefrom on conditions other than dishonorable. ‘‘Deceased servicemen’’

shall mean persons who served in the military forces of the United

States during any war between the United States and any other

nation or during the period beginning June 27, 1950, and ending

on such date as shall be determined by Presidential proclamation,1

or during the period beginning after January 31, 1955, and ending

on August 4, 1964, or during the Vietnam era (as defined in section

101(29) of title 38, United States Code), and who died in service before the termination of such war or such period or era.

LOCAL COMMITTEES TO ASSIST SECRETARY

SEC. 508. ø42 U.S.C. 1478¿ (a) For the purposes of this subsection and subsection (b) of this section, the Secretary may use the

services of any existing committee of farmers operating (pursuant

to laws or regulations carried out by the Department of Agriculture) in any county or parish in which activities are carried on

under this title. In any county or parish in which activities are carried on under this title and in which no existing satisfactory committee is available, the Secretary is authorized to appoint a committee composed of three persons residing in the county or parish.

Each member of such existing or newly appointed committee shall

be allowed compensation at the rate determined by the Secretary

while engaged in the performance of duties under this title and, in

addition, shall be allowed such amounts as the Secretary may prescribe for necessary traveling and subsistence expenses. One member of the committee shall be designated by the Secretary as chairman. The Secretary shall prescribed rules governing the procedures
Sec. 509 RURAL HOUSING 1330

of the committee, furnish forms and equipment necessary for the

performance of their duties, and authorize and provide for the compensation of such clerical assistance as he deems may be required

by any committee.

(b) The committees utilized or appointed pursuant to this section may examine applications of persons desiring to obtain the

benefits of section 501(a) (1) and (2) as they relate to the successful

operation of a farm, and may submit recommendations to the Secretary with respect to each applicant as to whether the applicant

is eligible to receive such benefits, whether by reason of his character, ability, and experience he is likely successfully to carry out

undertakings required of him under a loan under such section, and

whether the farm with respect to which the application is made is

of such character that there is a reasonable likelihood that the

making of the loan requested will carry out the purposes of this

title. The committees may also certify to the Secretary with respect

to the amount of any loan.

GENERAL POWERS OF SECRETARY

SEC. 509. ø42 U.S.C. 1479¿ (a) The Secretary, for the purposes

of this title, shall have the power to determine and prescribe the

standards of adequate farm housing and other buildings, by farms

or localities, taking into consideration, among other factors, the

type of housing which will provide decent, safe, and sanitary dwelling for the needs of the family using the housing, the type and

character of the farming operations to be conducted, and the size

and earning capacity of the land. The Secretary shall approve a

residential building as meeting such standards if the building is

constructed in accordance with (1) the minimum standards prescribed by the Secretary, (2) the minimum property standards prescribed by the Secretary of the Housing and Urban Development

for mortgages insured under title II of the National Housing Act,

(3) the standards contained in any of the voluntary national model

building codes, or (4) in the case of manufactured housing, the

standards referred to in section 502(e) of this Act. To the maximum

extent feasible, the Secretary shall promote the use of energy saving techniques through standards established by such Secretary for

newly constructed residential housing assisted under this title.

Such standards shall, insofar as is practicable, be consistent with

the standards established pursuant to section 526 of the National

Housing Act and shall incorporate the energy performance requirements developed pursuant to such section.

(b) The Secretary may require any recipient of a loan or grant

to agree that the availability of improvements constructed or repaired with the proceeds of the loan or grant under this title shall

not be a justification for directly or indirectly changing the terms

or conditions of the lease or occupancy agreement with the occupants of such farms to the latter’s disadvantage without the approval of the Secretary.

(c) The Secretary is authorized, after October 1, 1977, with respect to any unit or dwelling newly constructed during the period

beginning eighteen months prior to the date of enactment of the

Housing and Community Development Act of 1977 and purchased

with financial assistance authorized by this title which he finds to

have structural defects to make expenditures for (1) correcting such
1331 Sec. 509 RURAL HOUSING

defects, (2) paying the claims of the owner of the property arising

from such defects, or (3) acquiring title to the property, if such assistance is requested by the owner of the property within eighteen

months after financial assistance under this title is rendered to the

owner of the property or, in the case of property with respect to

which assistance was made available within eighteen months prior

to the date of enactment of the Housing and Community Development Act of 1977, within thirty-six months after such date of enactment. Expenditures pursuant to this subsection may be paid from

the Rural Housing Insurance Fund. Decisions by the Secretary regarding such expenditures or payments under this subsection, and

the terms and conditions under which the same are approved or

disapproved, shall not be subject to judicial review.

(d) In the event of default involving a security interest in tribal

allotted or trust land, the Secretary shall only pursue liquidation

after offering to transfer the account to an eligible tribal member,

the tribe, or the Indian housing authority serving the tribe or

tribes. If the Secretary subsequently proceeds to liquidate the account, the Secretary shall not sell, transfer, or otherwise dispose of

or alienate the property except to one of the entities described in

the preceding sentence.

(e) The Secretary shall, by regulation, prescribe the terms and

conditions under which expenditures and payments may be made

under the provisions of this section.

(f) HOUSING IN UNDERSERVED AREAS.— (1) DESIGNATION OF UNDERSERVED AREA.—The Secretary

shall designate as targeted underserved areas 100 counties and

communities in each fiscal year that have severe, unmet housing needs as determined by the Secretary. A county or community shall be eligible for designation if, during the 5-year period preceding the year in which the designation is made, it

has received an average annual amount of assistance under

this title that is substantially lower than the average annual

amount of such assistance received during that 5-year period

by other counties and communities in the State that are eligible for such assistance calculated on a per capita basis, and

has—

(A) 20 percent or more of its population at or below

the poverty level; and

(B) 10 percent or more of its population residing in

substandard housing.

As used in this paragraph, the term ‘‘poverty level’’ has the

meaning given the term in section 102(a)(9) of the Housing and

Community Development Act of 1974.

(2) PREFERENCES.—In selecting projects to receive assistance with amounts set aside under paragraph (4), the Secretary shall give preference to any project located in a county

or community that has, at the time of designation and as determined by the Secretary—

(A) 28 percent or more of its population at or below

poverty level; and

(B) 13 percent or more of its population residing in

substandard housing.

In designating underserved areas under paragraph (1), in each

fiscal year the Secretary shall designate not less than 5 coun-
Sec. 509 RURAL HOUSING 1332

ties or communities that contain tribal allotted or Indian trust

land.

(3) OUTREACH PROGRAM AND REVIEW.— (A) OUTREACH.—The Secretary shall publicize the

availability to targeted underserved areas of grants and

loans under this title and promote, to the maximum extent

feasible, efforts to apply for those grants and loans for

housing in targeted underserved areas.

(B) REVIEW.—Upon the receipt of data from the 1990

decennial census, the Secretary shall conduct a review of

any designations made under paragraph (1) and preferences given under paragraph (2) and the eligibility of

communities and counties for such designation and preference, examining the effects of such data on such eligibility. The Secretary shall submit to the Congress, not

later than 9 months after the availability of the data, a report regarding the review, which shall include any recommendations of the Secretary for modifications in the

standards for designation and preference.

(4) SET-ASIDE FOR TARGETED UNDERSERVED AREAS AND

COLONIAS.—

(A) IN GENERAL.—The Secretary shall set aside and reserve for assistance in targeted underserved areas an

amount equal to 5.0 percent in each fiscal year of the aggregate amount of lending authority under sections 502,

504, 514, 515, and 524. During each fiscal year, the Secretary shall set aside from amounts available for assistance under paragraphs (2) and (5) of section 521(a), an

amount that is appropriate to provide assistance with respect to the lending authority under sections 514 and 515

that is set aside for such fiscal year. The Secretary shall

establish a procedure to reallocate any assistance set aside

in any fiscal year for targeted underserved areas that has

not been expended during a reasonable period in such year

for use in (i) colonias that have applied for and are eligible

for assistance under subparagraph (B) or paragraph (7)

and did not receive assistance, and (ii) counties and communities eligible for designation as targeted underserved

areas but which were not so designated. The procedure

shall also provide that any assistance reallocated under

the preceding sentence that has not been expended by a

reasonable date established by the Secretary (which shall

be after the expiration of the period referred to in the preceding sentence) shall be made available and allocated

under the laws and regulations relating to such assistance,

notwithstanding this subsection.

(B) PRIORITY FOR COLONIAS.—

(i) Notwithstanding the designation of counties

and communities as targeted underserved areas under

paragraph (1) and the provisions of section 520,

colonias shall be eligible for assistance with amounts

reserved under subparagraph (A), as provided in this

subparagraph.

(ii) In providing assistance from amounts reserved

under this paragraph in each fiscal year, the Secretary
1333 Sec. 509 RURAL HOUSING

shall give priority to any application for assistance to

be used in, or in close proximity to, and serving the

residents of, a colonia located in a State described

under clause (iii). After the Secretary has provided assistance under the priority for colonias located in a

State in an amount equal to 5 percent of the total

amount of assistance allocated under this title to such

State in the fiscal year, the priority shall not apply to

any applications for colonias in such State.

(iii) This paragraph shall apply to any State for

any fiscal year following 2 fiscal years in which the

State obligated the total amount of assistance allocated to it under this title during each of such 2 fiscal

years.

(5) LIST OF UNDERSERVED AREAS.—The Secretary shall

publish annually the current list of targeted underserved areas

in the Federal Register.

(6) PROJECT PREPARATION ASSISTANCE.—

(A) IN GENERAL.—The Secretary may make grants to

eligible applicants under subparagraph (D) to promote the

development of affordable housing in targeted underserved

areas and colonias.

(B) USE.—A grant under this paragraph shall not exceed an amount that the Secretary determines to equal the

customary and reasonable costs incurred in preparing an

application for a loan under section 502, 504, 514, 515, or

524, or a grant under section 533 (including preapplication

planning, site analysis, market analysis, and other necessary technical assistance). The Secretary shall adjust the

loan or grant amount under such sections to take account

of project preparation costs that have been paid from grant

proceeds under this paragraph and that normally would be

reimbursed with proceeds of the loan or grant.

(C) APPROVAL.—The Secretary shall approve a properly submitted application or issue a written statement indicating the reasons for disapproval not later than 60 days

after the receipt of the application.

(D) ELIGIBILITY.—For purposes of this paragraph, an

eligible applicant may be a nonprofit organization or corporation, a community housing development organization,

State, unit of general local government, or agency of a

State or unit of general local government.

(E) AVAILABILITY OF FUNDING.—Any amounts appropriated to carry out this paragraph shall remain available

until expended.

(7) PRIORITY FOR COLONIAS.—

(A) IN GENERAL.—In providing assistance under this

title in any fiscal year described under subparagraph (B),

each State in which colonias are located shall give priority

to any application for assistance to be used in a colonia.

The priority under this subparagraph shall not apply in

such State after 5 percent of the assistance available in

such fiscal year has been allocated for colonias qualifying

for the priority.
Sec. 510 RURAL HOUSING 1334

1 November 28, 1990.

(B) COVERED YEARS.—This paragraph shall apply to

any fiscal year following 2 fiscal years in which the State

did not obligate the total amount of assistance allocated it

under this title during each of such 2 fiscal years.

(8) DEFINITION OF COLONIA.—For purposes of this subsection, the term ‘‘colonia’’ means any identifiable community

that—

(A) is in the State of Arizona, California, New Mexico,

or Texas;

(B) is in the area of the United States within 150

miles of the border between the United States and Mexico,

except that the term does not include any standard metropolitan statistical area that has a population exceeding

1,000,000;

(C) is determined to be a colonia on the basis of objective criteria, including lack of potable water supply, lack of

adequate sewage systems, and lack of decent, safe, and

sanitary housing; and

(D) was in existence as a colonia before the date of the

enactment of the Cranston-Gonzalez National Affordable

Housing Act.1

ADMINISTRATIVE PROVISIONS

SEC. 510. ø42 U.S.C. 1480¿ In carrying out the provisions of

this title, the Secretary shall have the power to—

(a) make contracts for services and supplies without regard

to the provisions of section 3709 of the Revised Statutes, as

amended, when the aggregate amount involved is less than

$300;

(b) enter into subordination, subrogation, or other agreements satisfactory to the Secretary;

(c) compromise, adjust, reduce, or charge-off claims, and

adjust, modify, subordinate, or release the terms of security instruments, leases, contracts, and agreements entered into or

administered by the Secretary under this title, as circumstances may require, including the release of borrowers or

others obligated on a debt from personal liability with or without payment of any consideration at the time of the compromise, adjustment, reduction, or charge-off of any claim;

(d) collect all claims and obligations arising out of or under

any mortgage, lease, contract, or agreement entered into pursuant to this title, and, if in his judgment necessary and advisable, to pursue to same to final collection in any court having

jurisdiction: Provided, That the prosecution and defense of all

litigation under this title shall be conducted under the supervision of the Attorney General and the legal representation

shall be by the United States attorneys for the districts, respectively, in which such litigation may arise and by such

other attorney or attorneys as may, under law, be designated

by the Attorney General; except that—

(1) prosecution and defense of any litigation under section 502 shall be conducted, at the discretion of the Secretary, by—
1335 Sec. 510 RURAL HOUSING

(A) the United States attorneys for the districts in

which the litigation arises and any other attorney that

the Attorney General may designate under law, under

the supervision of the Attorney General;

(B) the General Counsel of the Department of

Agriculture; or

(C) any other attorney with whom the Secretary

enters into a contract after a determination by the

Secretary that—

(i) the attorney will provide competent and

cost-effective representation for the Farmers

Home Administration; and

(ii) representation by the attorney will either

(I) accelerate the process by which a family or person eligible for assistance under section 502 will

be able to purchase and occupy the housing involved; or (II) preserve the quality of the housing

involved; and

(2) the Secretary shall annually submit to the Congress a report describing activities carried out under paragraph (1)(C), including the cost of entering into contracts

with such attorneys and the savings resulting from

expedited foreclosure proceedings;

(e) bid for and purchase at any foreclosure or other sale or

otherwise to acquire the property pledged or mortgaged to

secure a loan or other indebtedness owing under this title, to

accept title to any property so purchased or acquired, to operate or lease such property for such period as may be necessary

or advisable, to protect the interest of the United States therein, to repair and rehabilitate such property, and to sell or otherwise dispose of the property so purchased or acquired by

such terms and for such considerations as the Secretary shall

determine to be reasonable and to make loans as provided

herein to provide adequate farm dwellings and buildings for

the purchasers of such property; except that the Secretary may

not sell or otherwise dispose of such property unless (1) the

Secretary assures that such property will meet decent, safe,

and sanitary standards, including cost-effective energy conservation standards prescribed under section 509(a), (2) the recipient of the property is obligated, as a condition of the sale

or other disposition of the property, to meet such standards

with respect to the property before such property is occupied,

or (3) such recipient is precluded, as a condition of the sale or

other disposition of the property, from using the property for

residential purposes and the authority of the Secretary under

this paragraph includes the authority to transfer section 502

inventory properties for use as rental or cooperative units

under section 515 with mortgages containing repayment terms

with up to fifty years, or for use as rental units under section

514 with mortgages containing repayment terms with up to 33

years, to private nonprofit organizations, public bodies, or forprofit entities, which have good records of providing low income housing under section 515; such a transfer may be made

even where rental assistance may be required so long as the

authority to provide such assistance is available after taking
Sec. 511 RURAL HOUSING 1336

into account the requirements of section 521(d)(1); where the

Secretary determines the transfer will contribute to the provision of housing for very low-income persons and families, the

transfer may be made at the lesser of the appraised value or

the Farmers Home Administration’s investment;

(f) continue processing as expeditiously as possible applications on hand received prior to the time an area has been determined by the Secretary not to be ‘‘rural’’ or a ‘‘rural area’’,

as those terms are defined in section 520, and make loans or

grants to such applicants who are found to be eligible on the

same basis as though the area were still rural;

(g) issue rules and regulations which assure that applicants denied assistance under this title or persons or organizations whose assistance under this title is being substantially

reduced or terminated are given written notice of the reasons

for denial, reduction or termination and are provided at least

an opportunity to appeal an adverse decision and to present

additional information relevant to that decision to a person,

other than the person making the original determination, who

has authority to reverse the decision, except that rules issued

under this subsection may not exclude from their coverage decisions made by the Secretary that are not based on objective

standards contained in published regulations;

(h) notwithstanding that an area ceases, or has ceased, to

be ‘‘rural’’, in a ‘‘rural area’’, or an eligible area, make assistance under this title available for subsequent loans to permit

necessary dwelling repairs and rehabilitation and in connection

with transfers and assumptions of property securing any loan

made, insured, or held by the Secretary or in connection with

any property held by the Secretary under this title on the same

basis as though the area were still rural;

(i) utilize with respect to the indebtedness arising from

loans and payments made under this title, all the powers and

authorities given to him under the Act approved December 20,

1944, entitled ‘‘An Act to authorize the Secretary of Agriculture

to compromise, adjust, or cancel certain indebtedness, and for

other purposes’’ (58 Stat. 836), as such Act now provides or

may hereafter be amended;

(j) utilize the services of fee inspectors and fee appraisers

to expedite the processing of applications for loans and grants

under this title, which services shall be utilized in any case in

which a county or district office is unable to expeditiously process such loan and grant applications, and to include the cost

of such services in the amount of such loans and grants; and

(k) make such rules and regulations as he deems necessary

to carry out the purpose of this title.

LOAN FUNDS

SEC. 511. ø42 U.S.C. 1481¿ The Secretary may issue notes and

other obligations for purchase by the Secretary of the Treasury for

the purpose of making direct loans under this title. The notes and

obligations issued by the Secretary shall be secured by the obligations of borrowers and the Secretary’s commitments to make contributions under this title and shall be repaid from the payment of
1337 Sec. 513 RURAL HOUSING

principal and interest on the obligations of the borrowers and from

funds appropriated hereunder. The notes and other obligations

issued by the Secretary shall be in such forms and denominations,

shall have such maturities, and shall be subject to such terms and

conditions as may be prescribed by the Secretary with the approval

of the Secretary of the Treasury. Each such note or other obligation

shall bear interest at the average rate, as determined by the Secretary of the Treasury, payable by the Treasury upon its marketable public obligations outstanding at the beginning of the fiscal

year in which such note or other obligation is issued, which are neither due nor callable for redemption for 15 years from their date

of issue. The Secretary of the Treasury is authorized and directed

to purchase any notes and obligations of the Secretary issued hereunder and for such purpose is authorized to use as a public debt

transaction the proceeds from the sale or any securities issued

under chapter 31 of title 31, United States Code, and the purposes

for which securities may be issued under such chapter are extended to include any purchases of such obligations. The Secretary

of the Treasury may at any time sell any of the notes or obligations

acquired by him under this section. All redemptions, purchases,

and sales by the Secretary of the Treasury of such notes or obligation shall be treated as public debt transactions of the United

States.

øCONTRIBUTIONS¿

øSEC. 512. [Repealed.]¿

PROGRAM LEVELS AND AUTHORIZATIONS

SEC. 513. ø42 U.S.C. 1483¿ (a) IN GENERAL.—(1) The Secretary

may, to the extent approved in appropriation Acts, insure and

guarantee loans under this title during fiscal years 1993 and 1994,

in aggregate amounts not to exceed $2,446,855,600 and

$2,549,623,535, respectively, as follows:

(A) For insured or guaranteed loans under section 502 on

behalf of low-income borrowers receiving assistance under section 521(a)(1), $1,676,484,000 for fiscal year 1993 and

$1,746,896,328 for fiscal year 1994.

(B) For guaranteed loans under section 502(h) on behalf of

low- and moderate-income borrowers, such sums as may be appropriated for fiscal years 1993 and 1994.

(C) For loans under section 504, $12,400,000 for fiscal year

1993 and $12,920,800 for fiscal year 1994.

(D) For insured loans under section 514, $16,821,600 for

fiscal year 1993 and $17,528,107 for fiscal year 1994.

(E) For insured loans under section 515, $739,500,000 for

fiscal year 1993 and $770,559,000 for fiscal year 1994.

(F) For loans under section 523(b)(1)(B), $800,000 for fiscal

year 1993 and $833,600 for fiscal year 1994.

(G) For site loans under section 524, $850,000 for fiscal

year 1993 and $885,700 for fiscal year 1994.

(2) Notwithstanding any other provision of law, insured and

guaranteed loan authority in this title for any fiscal year beginning

after September 30, 1984, shall not be transferred or used for any

purpose not specified in this title.
Sec. 513 RURAL HOUSING 1338

(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated for fiscal years 1993 and 1994, and to remain

available until expended, the following amounts: (1) For grants under section 502(f)(1), $1,100,000 for fiscal year 1993 and $1,146,200 for fiscal year 1994. (2) For grants under section 504, $21,100,000 for fiscal year 1993 and $21,986,200 for fiscal year 1994. (3) For purposes of section 509(c), $600,000 for fiscal year 1993 and $625,200 for fiscal year 1994.

(4) For project preparation grants under section 509(f)(6), $5,300,000 in fiscal year 1993 and $5,522,600 in fiscal year

1994.

(5) In fiscal years 1993 and 1994, such sums as may be

necessary to meet payments on notes or other obligations

issued by the Secretary under section 511 equal to—

(A) the aggregate of the contributions made by the

Secretary in the form of credits on principal due on loans

made pursuant to section 503; and

(B) the interest due on a similar sum represented by

notes or other obligations issued by the Secretary.

(6) For grants for service coordinators under section 515(y),

$1,000,000 in fiscal year 1993 and $1,042,000 in fiscal year

1994.

(7) For financial assistance under section 516—

(A) for low-rent housing and related facilities for domestic farm labor under subsections (a) through (j) of such

section, $21,700,000 for fiscal year 1993 and $22,611,400

for fiscal year 1994; and

(B) for housing for rural homeless and migrant farmworkers under subsection (k) of such section, $10,500,000

for fiscal year 1993 and $10,941,000 for fiscal year 1994.

(8) For grants under section 523(f), $13,900,000 for fiscal

year 1993 and $14,483,800 for fiscal year 1994. (9) For grants under section 533, $30,800,000 for fiscal year 1993 and $32,093,600 for fiscal year 1994.

(c) RENTAL ASSISTANCE.—(1) The Secretary, to the extent approved in appropriations Acts for fiscal years 1993 and 1994, may

enter into rental assistance payment contracts under section

521(a)(2)(A) aggregating $414,100,000 for fiscal year 1993 and

$431,492,200 for fiscal year 1994.

(2) Any authority approved in appropriation Acts for fiscal year

1988 or any succeeding fiscal year for rental assistance payment

contracts under section 521(a)(2)(A) or contracts for operating assistance under section 521(a)(5) shall be used by the Secretary—

(A) to renew rental assistance payment contracts or operating assistance contracts that expire during such fiscal year;

(B) to provide amounts required to continue assistance

payments for the remaining period of an existing contract, in

any case in which the original amount of assistance is used

prior to the end of the term of the contract; and

(C) to make additional rental assistance payment contracts

or operating assistance contracts for existing or newly constructed dwelling units.

(d) SUPPLEMENTAL RENTAL ASSISTANCE CONTRACTS.—The Secretary, to the extent approved in appropriations Acts for fiscal
1339 Sec. 514 RURAL HOUSING

years 1993 and 1994, may enter into 5-year supplemental rental

assistance contracts under section 502(c)(5)(D) aggregating

$12,178,000 for fiscal year 1993 and $12,689,476 for fiscal year

1994.

(e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated for rural housing vouchers under section 542,

$130,000,000 for fiscal year 1993 and $140,000,000 for fiscal year

1994.

INSURANCE OF LOANS FOR THE PROVISION OF HOUSING AND RELATED

FACILITIES FOR DOMESTIC FARM LABOR

SEC. 514. ø42 U.S.C. 1484¿ (a) The Secretary is authorized to

insure and make commitments to insure loans made by lenders

other than the United States to the owner of any farm or any association of farmers for the purpose of providing housing and related

facilities for domestic farm labor, or to any Indian tribe for such

purpose, or to any State (or political subdivision thereof), or any

broad-based public or private nonprofit organization, or any limited

partnership in which the general partner is a nonprofit entity, or

any nonprofit organization of farm workers incorporated within the

State for the purpose of providing housing and related facilities for

domestic farm labor any place within the State where a need exists. All such loans shall be made in accordance with terms and

conditions substantially identical with those specified in section

502, except that—

(1) no such loan shall be insured in an amount in excess

of the value of the farm involved less any prior liens in the

case of a loan to an individual owner of a farm, or the total

estimated value of the structures and facilities with respect to

which the loan is made in the case of any other loan;

(2) no such loan shall be insured if it bears interest at a

rate in excess of 1 per centum per annum;

(3) out of interest payments by the borrower the Secretary

shall retain a charge in an amount not less than one-half of

1 per centum per annum of the unpaid principal balance of the

loan;

(4) the insurance contracts and agreements with respect to

any loan may contain provisions for servicing the loan by the

Secretary or by the lender, and for the purchase by the Secretary of the loan if it is not in default, on such terms and conditions as the Secretary may prescribe; and

(5) the Secretary may take mortgages creating a lien running to the United States for the benefit of the insurance fund

referred to in subsection (b) notwithstanding the fact that the

note may be held by the lender or his assignee.

(b) The Secretary shall utilize the insurance fund created by

section 11 of the Bankhead Jones Farm Tenant Act (7 U.S.C.

1005a) and the provisions of section 13 (a), (b), and (c) of such Act

(7 U.S.C. 1005c (a), (b), and (c)) to discharge obligations under insurance contracts made pursuant to this section, and

(1) the Secretary may utilize the insurance fund to pay

taxes, insurance, prior liens, and other expenses to protect the

security for loans which have been insured hereunder and to
Sec. 514 RURAL HOUSING 1340

acquire such security property at foreclosure sales or otherwise;

(2) the notes and security therefor acquired by the Secretary under insurance contracts made pursuant to this section

shall become a part of the insurance fund. Loans insured

under this section may be held in the fund and collected in accordance with their terms or may be sold and reinsured. All

proceeds from such collections, including the liquidation of security and the proceeds of sales, shall become a part of the insurance fund; and

(3) of the charges retained by the Secretary out of interest

payments by the borrower, amounts not less than one-half of

1 per centum per annum of the unpaid principal balance of the

loan shall be deposited in and become a part of the insurance

fund. The remainder of such charges shall be deposited in the

Treasury of the United States and shall be available for administrative expenses of the Farmers Home Administration, to be

transferred annually to and become merged with any appropriation for such expenses.

(c) Any contract of insurance executed by the Secretary under

this section shall be an obligation of the United States and incontestable except for fraud or misrepresentation of which the holder

of the contract has actual knowledge.

ø(d) [Repealed.]¿

(e) Amounts made available pursuant to section 513 of this Act

shall be available for administrative expenses incurred under this

section.

(f) As used in this section—

(1) the term ‘‘housing’’ means (A) new structures (including

household furnishings) suitable for dwelling use by domestic

farm labor, and (B) existing structures (including household

furnishings) which can be made suitable for dwelling use by

domestic farm labor by rehabilitation, alteration, conversion, or

improvements;

(2) the term ‘‘related facilities’’ means (A) new stuctures

(including household furnishings) suitable for use as dining

halls, community rooms or buildings, or infirmaries, or for

other essential services facilities, (B) existing structures (including household furnishings) which can be made suitable for

the above uses by rehabilitation, alteration, conversion, or improvement and (C) necessary for an adequate site; and

(3) the term ‘‘domestic farm labor’’ means any person (and

the family of such person) who receives a substantial portion

of his or her income from primary production of agricultural or

aquacultural commodities or the handling of such commodities

in the unprocessed stage, without respect to the source of employment, except that—

(A) such person shall be a citizen of the United States

or a person legally admitted for permanent residence;

(B) such term includes any person (and the family of

such person) who is retired or disabled, but who was domestic farm labor at the time of retirement or becoming

disabled; and

(C) in applying this paragraph with respect to vacant

units in farm labor housing, the Secretary shall make
1341 Sec. 515 RURAL HOUSING

units available for occupancy in the following order of priority:

(i) to active farm laborers (and their families);

(ii) to retired or disabled farm laborers (and their

families) who were active in the local farm labor market at the time of retiring or becoming disabled; and

(iii) to other retired or disabled farm laborers (and

their families).

(g) The Secretary may waive the interest rate limitation contained in subsection (a)(2) and the requirement of section 501(c)(3)

in any case in which the Secretary determines that qualified public

or private nonprofit sponsors are not currently available and are

not likely to become available within a reasonable period of time

and such waiver is necessary to permit farmers to provide housing

and related facilities for migrant domestic farm laborers, except

that the benefits resulting from such waiver shall accrue to the

tenants, and the interest rate on a loan insured under this section

and for which the Secretary permits such waiver shall be no less

than one-eighth of 1 per centum above the average interest rate on

notes or other obligations which are issued under section 511 and

have maturities comparable to such a loan.

(h) In making available assistance in any area under this section or section 516, the Secretary shall—

(1) in determining the need for the assistance, take into

consideration the housing needs only of domestic farm labor,

including migrant farmworkers, in the area; and

(2) in determining whether to provide such assistance,

make such determination without regard to the extent or nature of other housing needs in the area.

(i) Housing and related facilities constructed with loans under

this section may be used for tenants eligible for occupancy under

section 515 if the Secretary determines that—

(1) there is no longer a need in the area for farm labor

housing; or

(2) the need for such housing in the area has diminished

to the extent that the purpose of the loan, providing housing

for domestic farm labor, can no longer be met.

DIRECT AND INSURED LOANS TO PROVIDE HOUSING AND RELATED

FACILITIES FOR ELDERLY PERSONS AND FAMILIES IN RURAL AREAS

SEC. 515. ø42 U.S.C. 1485¿ (a) The Secretary is authorized to

make loans to private nonprofit corporations and consumer cooperatives and Indian tribes to provide rental or cooperative housing and related facilities for elderly or handicapped persons or families of low or moderate income or other persons and families of low

income in rural areas, in accordance with terms and conditions

substantially identical with those specified in section 502; except

that—

(1) no such loan shall exceed the development cost or the

value of the security, whichever is less;

(2) such a loan may be made for a period of up to 30 years

from the making of the loan; and

(3) such a loan, when made to a consumer cooperative for

cooperative housing purposes, may, notwithstanding any other
Sec. 515 RURAL HOUSING 1342

provision of law, be made upon the condition that any person

who is admitted as an eligible member and tenant of the cooperative may not subsequently be deprived of his membership

or tenancy by reason of his no longer meeting the income eligibility requirements established by the Secretary.

There is authorized to be appropriated not to exceed $50,000,000

which shall constitute a revolving fund to be used by the Secretary

in carrying out this subsection.

(b) The Secretary is authorized to insure and make commitments to insure loans made to any individual, corporation, association, trust, Indian tribe, or partnership to provide rental or cooperative housing and related facilities for elderly or handicapped persons or families or other persons and families of moderate income

in rural areas, in accordance with terms and conditions substantially identical with those specified in section 502; except that—

(1) no such loan shall exceed the development cost or the

value of the security, whichever is less;

(2) such a loan may be made for a period of up to 30 years

from the making of the loan, but the Secretary may provide for

periodic payments based on an amortization schedule of 50

years with a final payment of the balance due at the end of the

term of the loan;

(3) for insuring such loans, the Secretary shall utilize the

Agricultural Credit Insurance Fund subject to all the provisions of section 309 and the second and third sentences of section 308 of the Consolidated Farmers Home Administration

Act of 1961, including the authority in section 309(f)(1) of that

Act to utilize the insurance fund to make, sell, and insure

loans which could be insured under this subsection; but the aggregate of the principal amounts of such loans made by the

Secretary and not disposed of shall not exceed $10,000,000 outstanding at any one time; and the Secretary may take liens

running to the United States though the notes may be held by

other lenders;

(4) such a loan, when made to a consumer cooperative for

cooperative housing purposes, may, notwithstanding any other

provision of law, be made upon the condition that any person

who is admitted as an eligible member and tenant of the cooperative may not subsequently be deprived of his membership

or tenancy by reason of his no longer meeting the income eligibility requirements established by the Secretary;

(5) loans may be made to owners who are otherwise eligible under this section to purchase and convert single-family

residences to rental units of two or more dwellings; and

(6) the Secretary may make a new loan to the current borrower to finance the final payment of the original loan for an

additional period not to exceed twenty years, if—

(A) the Secretary determines—

(i) it is more cost-efficient and serves the tenant

base more effectively to maintain the current property

than to build a new property in the same location; or

(ii) the property has been maintained to such an

extent that it warrants retention in the current portfolio because it can be expected to continue providing
1343 Sec. 515 RURAL HOUSING

decent, safe, and affordable rental units for the balance of the loan; and

(B) the Secretary determines—

(i) current market studies show that a need for

low-income rural rental housing still exists for that

area; and

(ii) any other criteria established by the Secretary

has been met.

(c) With respect to a loan made or insured under subsection (a)

or (b), the Secretary is authorized to—

(1) make or insure an equity loan in the form of a supplemental loan for the purpose of equity takeout to the owner of

housing financed with a loan made or insured under this section pursuant to a contract entered into before December 15,

1989, for the purpose of extending the affordability of the housing for low income families or persons and very low-income

families or persons for not less than 20 years, except that such

loan may not exceed 90 percent of the value of the equity in

the project as determined by the Secretary;

(2) transfer and reamortize an existing loan in connection

with assistance provided under paragraph (1); and

(3) make or insure a loan to enable a nonprofit organization or public agency to make a purchase described in section

502(c)(5).

(d) No loan shall be made or insured under subsection (a) or

(b) unless the Secretary finds that the construction involved will be

undertaken in an economical manner and will not be of elaborate

or extravagant design or materials. However, specifically designed

equipment required by elderly or handicapped persons or families

shall not be considered elaborate or extravagant. A loan may be

made or insured under subsection (a) or (b) with respect to detached units, including those on scattered sites, for cooperative

housing.

(e) As used in this section—

(1) the term ‘‘housing’’ means new or existing housing suitable for dwelling use by occupants eligible under this section,

and such term also means manufactured home rental parks

where either the lots or both the lots and the homes are available for use by occupants eligible under this section; and such

term also means congregate housing facilities for elderly or

handicapped persons or families who require some supervision

and central services but are otherwise able to care for themselves; such housing for the handicapped may be utilized in

conjunction with educational and training facilities;

(2) the term ‘‘related facilities’’ includes cafeterias or dining halls, community rooms or buildings, appropriate recreation facilities, and other essential service, facilities;

(3) the term ‘‘congregate housing’’ means housing in which

(A) some of the units may not have kitchen facilities, and (B)

there is a central dining facility to provide wholesome and economic meals for elderly or handicapped persons or families;

and

(4) the term ‘‘development cost’’ means the costs of constructing, purchasing, improving, altering, or repairing new or

existing housing and related facilities and purchasing and im-
Sec. 515 RURAL HOUSING 1344

1 August 6, 1996.

proving the necessary land, including necessary and appropriate fees and charges, initial operating expenses up to 2 per

centum of the aforementioned costs, approved by the Secretary,

impact fees, local charges for installation, provision, or use of

infrastructure, and local assessments for public improvements

and services imposed by State and local governments. Such

fees and charges may include payments of qualified consulting

organizations or foundations which operate on a nonprofit

basis and which render services or assistance to nonprofit corporations or consumer cooperatives who provide housing and

related facilities for low or moderate income families. Notwithstanding the first sentence of this paragraph, the term ‘‘development cost’’ shall not include any initial operating expenses

in the case of any nonprofit corporation or consumer cooperative that is financing housing under this section and has been

allocated a low-income housing tax credit by a housing credit

agency pursuant to section 42 of the Internal Revenue Code of

1986.

(f) Amounts made available pursuant to section 513 of this Act

shall be available for administrative expenses incurred under this

section.

(g) Notwithstanding the provisions of subsections (a) and (b) of

this section, the Secretary may make and insure loans to consumer

cooperatives to enable such cooperatives to finance the transfers of

memberships in the cooperatives upon such terms and conditions

as low- and moderate-income persons can reasonably afford, except

that such loans shall not be made upon terms more favorable than

are authorized under section 521(a), and that the total loan to a

cooperative under this section shall not exceed the value of the

property.

(h) PROJECT TRANSFERS.—After the date of the enactment of

the Act entitled ‘‘An Act making appropriations for Agriculture,

Rural Development, Food and Drug Administration, and Related

Agencies programs for the fiscal year ending September 30, 1997,

and for other purposes’’ 1, the ownership or control of a project for

which a loan is made or insured under this section may be transferred only if the Secretary determines that such transfer would

further the provision of housing and related facilities for low-income families or persons and would be in the best interests of residents and the Federal Government.

(i) After approving a project involving newly constructed or

substantially rehabilitated units under this section, the Secretary

shall limit cost increases to those approved by the Secretary. The

Secretary may approve those increases only for unforeseen factors

beyond the owner’s control, design changes required by the Secretary or the local government, or changes in financing approved

by the Secretary.

(j) For the purpose of achieving the lowest cost in providing

units in newly constructed projects assisted under this section, the

Secretary shall give a preference in entering into contracts under

this section for projects which are to be located on specific tracts

of land provided by States, units of local government, or others if
1345 Sec. 515 RURAL HOUSING

the Secretary determines that the tract of land is suitable for such

housing, and that affording such preference will be cost effective.

(k) The Secretary shall assure that management fees are not

excessive when a project developed under this section is managed

by the developer or an affiliate of the developer.

(l) For purposes of determining the market feasibility of any

project to be assisted under this section—

(1) in the case of any applicant who applies for rental assistance payments under section 521 in connection with such

project, the Secretary shall consider the availability of such

rental assistance payments with respect to the project and

shall require such applicant to demonstrate that a market exists for persons and families eligible for such rental assistance

payments; and

(2) in the case of any applicant whose project is expected

to utilize any assistance under a program of a State, or political subdivision thereof, that is similar to such assistance payments under section 521, the Secretary shall only require such

applicant to demonstrate that—

(A) a market exists for persons and families eligible

for such program of assistance;

(B) such program of assistance will provide rental assistance for a period of not less than five years, and, at the

option of the applicant, either that there is a reasonable

assurance that the contract for assistance will be extended

or renewed, or for the term of the loan remaining after the

period of such assistance, that an adequate rental market

exists for the project without such assistance; and

(C) during the term of such rental assistance contracts, such State or political subdivision shall make available the amounts required for such rental assistance not

less than annually.

(m) The Secretary shall establish standards for housing and related facilities rehabilitated or repaired with amounts received

under a loan made or insured under this section. Standards established by the Secretary under this subsection shall provide that except for substantial rehabilitation the particular items or systems

repaired or rehabilitated must meet appropriate levels of quality or

performance comparable to those levels prescribed by the Secretary

of Housing and Urban Development for rehabilitation, but shall not

require that such items or systems or the remainder of the property meet the standards which are applicable to new construction.

The Secretary shall ensure that standards prescribed under this

subsection provide decent, safe, and sanitary housing and related

facilities.

(n) The Secretary may not deny assistance under this section

or section 521 on the basis that the project involved is to be located

on more than one site.

(o) The Secretary may not (1) deny assistance under this section on the basis that rental assistance payments under section 521

may be required unless the authority to provide such assistance is

not available; or (2) promulgate any regulation that would have the

effect of denying occupancy to eligible persons on the basis that

such persons require rental assistance payments under section 521.
Sec. 515 RURAL HOUSING 1346

1 November 30, 1983. 2So in law.

(p)(1) To the extent assistance is available under section

521(a)(2), not more than 25 per centum of the dwelling units which

were available for occupancy under this section prior to the date of

enactment of this subsection,1 and which will be leased on or after

such date shall be available for leasing by low income persons and

families other than very low-income persons and families.

(2) To the extent assistance is available under section

521(a)(2), not more than 5 per centum of the dwelling units which

become available for occupancy under this section on or after the

date of enactment of this subsection 1 shall be available for leasing

by low income persons and families other than very low-income

persons and families.

(3) Units in projects financed under this section which become

available for occupancy after the date of enactment of this subsection 1 shall not be available for occupancy by persons and families other than very low-income persons and families if the authority to provide assistance for such persons is available.

(4) In projects financed under this section, units that have

been allocated a low-income housing tax credit by a housing credit

agency pursuant to section 42 of the Internal Revenue Code of 1986

shall not be available for occupancy by persons or families other

than persons or families with incomes not in excess of the qualifying income applicable to such units pursuant to subparagraph (A)

or (B) of section 42(g)(1) of such Code.

(5) The Secretary shall coordinate the processing of any application for a loan under this section for a project and the processing

of any application for assistance under section 521(a)(2) with respect to housing units in the same project in an economical and efficient manner. At the time the Secretary enters into a commitment to make or insure a loan under this section the Secretary

shall obligate amounts for assistance payments under section

521(a)(2) for the project, to the extent that such amounts are available and the Secretary determines such assistance is necessary for

the market feasibility of the project.

(q) In determining the income of a person or family occupying

housing financed under this section, the Secretary shall consider

the value of that person’s or family’s assets in the same manner

as the Secretary of Housing and Urban Development considers

such value for the purpose of the United States Housing Act of

1937.

(r)(1) the 2 Secretary—

(A) may require that the initial operating reserve under

this section may be in the form of an irrevocable letter of credit; and

(B) except as provided in paragraph (2), may require not

more than a 3 percent contribution to equity, except that the

Secretary shall require a 5 percent contribution in the case of

a project that is allocated a low-income housing tax credit pursuant to section 42 of the Internal Revenue Code of 1986.

(2) The Secretary may adjust the amount of equity contribution

to ensure that assistance provided is not more than is necessary to
1347 Sec. 515 RURAL HOUSING

1The date of enactment was August 6, 1996.

provide affordable housing after taking account of assistance from

all Federal, State, and local sources.

(3) Not later than 60 days after the date of enactment of the

Act entitled ‘‘An Act making appropriations for Agriculture, Rural

Development, Food and Drug Administration, and Related Agencies

programs for the fiscal year ending September 30, 1997, and for

other purposes’’ 1, the Secretary shall issue regulations to implement subsection (r)(2) in accordance with the negotiated rulemaking procedures set forth in subchapter III of chapter 5 of title

5, United States Code: Provided, That if the negotiated rulemaking

is not completed within the designated time, the Secretary shall

proceed to promulgate regulations under the rulemaking authority

contained in 5 U.S.C. 557.

(s) No fee other than a late fee may be imposed by or for the

Secretary or any other Federal agency on or with respect to a loan

made or insured under this section.

(t) EQUITY TAKEOUT LOANS.—

(1) AUTHORITY.—The Secretary is authorized to guarantee

an equity loan (in the form of a supplemental loan) to an

owner of housing financed with a loan made or insured under

subsection (b), only if the Secretary determines, after taking

into account local market conditions, that there is reasonable

likelihood that the housing will continue as decent, safe, and

sanitary housing for the remaining life of the original loan on

the project made or insured under subsection (b) and that such

an equity loan is—

(A) necessary to provide a fair return on the owner’s

investment in the housing;

(B) the least costly alternative for the Federal Government that is consistent with carrying out the purposes of

this subsection; and

(C) would not impose an undue hardship on tenants or

an unreasonable cost to the Federal Government.

The amount of loans guaranteed under this subsection shall be

subject to limits provided in appropriations Acts.

(2) TIMING.—The Secretary is authorized to guarantee an

equity loan under this subsection after the expiration of the 20-

year period beginning on the date that an existing loan under

subsection (b) of this section was made or insured. Not more

than one equity loan under this subsection may be provided for

any project.

(3) AMOUNT OF THE TAKEOUT.—The amount of an equity

loan under this subsection shall not exceed the difference between the outstanding principal on debt secured by the project

and 90 percent of the appraised value of the project. The appraised value of the project shall be determined by 2 independent appraisers, 1 of whom shall be selected by the Secretary and 1 of whom shall be selected by the owner. If the 2

appraisers fail to agree on the value of the project, the Secretary and the owner shall jointly select a third appraiser

whose appraisal shall be binding on the Secretary and the

owner. The amount of the equity loan shall not exceed 30 per-
Sec. 515 RURAL HOUSING 1348

1 November 28, 1990.

cent of the amount of the original appraised value of the

project made or insured under subsection (b).

(4) SUBMISSION OF PLAN.—An owner requesting an equity

loan under this subsection shall submit a plan acceptable to

the Secretary to ensure that the cost of amortizing an equity

loan under paragraph (1) does not result in the displacement

of very-low-income tenants or substantially alter the income

mix of the tenants in the project.

(5) REGULATIONS.—The Secretary shall issue final regulations within 180 days from the date of enactment of this subsection.

(6) EFFECTIVE DATE.—The requirements of this subsection

shall apply to any loan obligated under this section on or after

December 15, 1989. This subsection shall not require retroactive reserve account payments with respect to any loan that

was obligated on or after December 15, 1989, and on or before

June 16, 1990, but reserve account payments shall be required

for such loans beginning on the date of the enactment of this

paragraph.1

(u) REUSE OF LOAN AUTHORITY.—Loan authority that is obligated under this section but that is not expended due to any action

that removes the original borrower, may be reallocated to a different borrower during the same fiscal year in which the loan authority was obligated. Any loan authority under this section appropriated or made available within limits established in appropriations Acts shall remain available until expended.

(v) ASSUMPTION OF LOANS.—The Secretary may provide for the

assumption or transfer of a loan or loan obligation under this section to any person or entity qualified to receive a loan or loan obligation under this section in any case of default or foreclosure with

respect to the original borrower. The Secretary shall provide in

each assumption or transfer under this subsection for the assumption of the obligations, rights, and interests under the terms of the

loan or loan obligation or such other terms as the Secretary determines appropriate.

(w) SET-ASIDE OF RURAL RENTAL HOUSING FUNDS.—

(1) AUTHORITY.—Except as provided in paragraph (2), the

Secretary shall set aside from amounts made available for each

State for loans under this section, not less than 9 percent of

the amounts available in each fiscal year. Amounts set aside

shall be available only for nonprofit entities in the State, which

may not be wholly or partially owned or controlled by a forprofit entity. A partnership, that has as its general partner a

nonprofit entity or the nonprofit entity’s for-profit subsidiary,

is eligible to receive funds set aside under this subsection to

sponsor a project which is receiving low-income housing tax

credits authorized under section 42 of the Internal Revenue

Code of 1986. For the purposes of this subsection, a nonprofit

entity is an organization that—

(A) will own an interest in a project to be financed

under this section and will materially participate in the

development and the operation of the project;
1349 Sec. 515 RURAL HOUSING

(B) is a private organization that has nonprofit, tax exempt status under section 501(c)(3) or section 501(c)(4) of

the Internal Revenue Code of 1986;

(C) has among its purposes the planning, development,

or management of low-income housing or community development projects; and

(D) is not affiliated with or controlled by a for-profit

organization.

(2) MINIMUM STATE SET-ASIDE.—If the amount set aside

under paragraph (1) for any State is less than $750,000 in any

fiscal year, the Secretary shall pool such amount together with

set-aside amounts from other States whose set-aside is less

than $750,000, and shall make such amounts available for

such eligible entities under paragraph (1) in any such State.

The Secretary shall establish a procedure to provide that any

amounts pooled under this paragraph from the allocation for

any State in any fiscal year that are not obligated during a

reasonable period in such year shall be made available for any

such eligible entities under paragraph (1) in such State. The

Secretary may provide amounts available for reallocation

under this subsection in excess of $750,000 in a given State,

if such amounts are necessary to finance a project under this

section.

(3) UNUSED AMOUNTS.— (A) EQUITABLE DISTRIBUTION.—Any amounts set aside

under this subsection from the allocation for any State

that are not obligated by 9 months after the allocation,

shall first be pooled and made available to any other eligible nonprofit entity in any State as defined in this subsection. The Secretary shall make reasonable efforts to ensure that pooled funds are distributed under this subparagraph in an equitable manner.

(B) RETURN TO THE STATES.—After funds have been

pooled and obligated for 30 days, the Secretary shall return any remaining funds to the States on a proportional

basis for use by any other eligible entity as defined in this

section.

(x) UNIFORM PROJECT COSTS; COORDINATION OF HOUSING RESOURCES AND TAX BENEFITS.—The Secretary shall—

(1) establish standard guidelines for State offices that describe allowable development costs which are required for development of all projects under this section, without regard to

whether the project was allocated a low-income housing tax

credit;

(2) require each State to establish a process for coordinating the selection of projects under this section with the

housing needs and priorities as established in a State comprehensive housing affordability strategy under section 105 of

the Cranston-Gonzalez National Affordable Housing Act and a

low-income housing tax credit allocation plan under section 42

of the Internal Revenue Code of 1986; and

(3) develop, in consultation with housing credit agencies

(as that term is defined under section 42 of the Internal Revenue Code of 1986), uniform procedures for identifying and

sharing information on project costs, builder profit, identity of
Sec. 515 RURAL HOUSING 1350

interests relationships, and other factors, as appropriate, with

the relevant housing credit agency for projects that are allocated a low-income housing tax credit pursuant to section 42(h)

of the Internal Revenue Code of 1986 for the purpose of achieving compliance with section 102(d) of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C.

3545(d)).

(y) SERVICE COORDINATORS.— (1) GRANTS.—The Secretary may make grants under this

subsection, with respect to any project that the Secretary determines has a sufficient number of frail elderly residents, for

the cost of employing or otherwise retaining the services of one

or more individuals to coordinate services provided to frail elderly residents of the project (in this subsection referred to as

a ‘‘service coordinator’’), who shall be responsible for—

(A) assessing the supportive service needs of frail elderly residents of the project, based on objective criteria

and interviews with such residents;

(B) working with service providers to design the provision of services to meet the needs of frail elderly residents

of the project, taking into consideration the needs and desires of such residents and their ability and willingness to

pay for such services, as expressed by the residents;

(C) mobilizing public and private resources to obtain

funding for such services for such residents;

(D) monitoring and evaluating the impact and effectiveness of any supportive services provided for such residents;

(E) consulting and coordinating with any appropriate

public and private agencies regarding the provision of supportive services; and

(F) performing such other duties that the Secretary

deems appropriate to enable frail elderly persons residing

in federally assisted housing to live with dignity and independence.

(2) QUALIFICATIONS.—Individuals employed as service coordinators pursuant to this subsection shall meet the minimum

qualifications and standards established under section

802(d)(4) of the Cranston-Gonzalez National Affordable Housing Act for service coordinators under a congregate housing

services program.

(3) APPLICATION AND SELECTION.—The Secretary shall provide for the form and manner of applications for grants under

this subsection and for the selection of applicants to receive the

grants.

(4) DEFINITION OF FRAIL ELDERLY.—For purposes of this

subsection, the term ‘‘frail elderly’’ has the meaning given the

term in section 802(k) of the Cranston-Gonzalez National Affordable Housing Act.

(z) ACCOUNTING AND RECORDKEEPING REQUIREMENTS.—

(1) ACCOUNTING STANDARDS.—The Secretary shall require

that borrowers in programs authorized by this section maintain accounting records in accordance with generally accepted

accounting principles for all projects that receive funds from

loans made or guaranteed by the Secretary under this section.
1351 Sec. 515 RURAL HOUSING

(2) RECORD RETENTION REQUIREMENTS.—The Secretary

shall require that borrowers in programs authorized by this

section retain for a period of not less than 6 years and make

available to the Secretary in a manner determined by the Secretary, all records required to be maintained under this subsection and other records identified by the Secretary in applicable regulations.

(aa) DOUBLE DAMAGES FOR UNAUTHORIZED USE OF HOUSING

PROJECTS ASSETS AND INCOME.—

(1) ACTION TO RECOVER ASSETS OR INCOME.—

(A) IN GENERAL.—The Secretary may request the Attorney General to bring an action in a United States district court to recover any assets or income used by any person in violation of the provisions of a loan made or guaranteed by the Secretary under this section or in violation of

any applicable statute or regulation.

(B) IMPROPER DOCUMENTATION.—For purposes of this

subsection, a use of assets or income in violation of the applicable loan, loan guarantee, statute, or regulation shall

include any use for which the documentation in the books

and accounts does not establish that the use was made for

a reasonable operating expense or necessary repair of the

project or for which the documentation has not been maintained in accordance with the requirements of the Secretary and in reasonable condition for proper audit.

(C) DEFINITION.—For the purposes of this subsection,

the term ‘‘person’’ means—

(i) any individual or entity that borrows funds in

accordance with programs authorized by this section;

(ii) any individual or entity holding 25 percent or

more interest of any entity that borrows funds in accordance with programs authorized by this section;

and

(iii) any officer, director, or partner of an entity

that borrows funds in accordance with programs authorized by this section.

(2) AMOUNT RECOVERABLE.—

(A) IN GENERAL.—In any judgment favorable to the

United States entered under this subsection, the Attorney

General may recover double the value of the assets and income of the project that the court determines to have been

used in violation of the provisions of a loan made or guaranteed by the Secretary under this section or any applicable statute or regulation, plus all costs related to the action, including reasonable attorney and auditing fees.

(B) APPLICATION OF RECOVERED FUNDS.—Notwithstanding any other provision of law, the Secretary may use

amounts recovered under this subsection for activities authorized under this section and such funds shall remain

available for such use until expended.

(3) TIME LIMITATION.—Notwithstanding any other provision of law, an action under this subsection may be commenced

at any time during the 6-year period beginning on the date

that the Secretary discovered or should have discovered the
Sec. 516 RURAL HOUSING 1352

violation of the provisions of this section or any related statutes or regulations.

(4) CONTINUED AVAILABILITY OF OTHER REMEDIES.—The

remedy provided in this subsection is in addition to and not in

substitution of any other remedies available to the Secretary or

the United States.

FINANCIAL ASSISTANCE TO PROVIDE LOW-RENT HOUSING FOR

DOMESTIC FARM LABOR

SEC. 516. ø42 U.S.C. 1486¿ (a) Upon the application of any

State or political subdivision thereof, or any Indian tribe, or any

broad-based public or private nonprofit organization incorporated

within the State, or any nonprofit organization of farmworkers incorporated within the State, the Secretary is authorized to provide

financial assistance for the provision of low-rent housing and related facilities (which may be located any place within the State)

for domestic farm labor, if he finds that—

(1) the housing and related facilities for which financial assistance is requested will fulfill a pressing need in the area in

which such housing and facilities will be located, and there is

reasonable doubt that the same can be provided without financial assistance under this section;

(2) the applicant will contribute, from its own resources or

from funds borrowed under section 514 or elsewhere, at least

10 per centum of the total development cost;

(3) the types of housing and related facilities to be provided are most practical, giving due consideration to the purposes to be served thereby and the needs of the occupants

thereof, and such housing and facilities shall be durable and

suitable for year-around occupancy or use, unless the Secretary

finds that there is no need for such year-around occupancy or

use in that area; and

(4) the construction will be undertaken in an economical

manner, and the housing and related facilities will not be of

elaborate or extravagant design or materials.

(b) The amount of any financial assistance provided under this

section for low-rent housing and related facilities shall not exceed

90 per centum of the total development cost thereof, as determined

by the Secretary, less such amount as the Secretary determines can

be practicably obtained from other sources (including a loan under

section 514).

(c) No financial assistance for low-rent housing and related facilities shall be made available under this section unless, to any extent and for any periods required by the Secretary, the applicant

agrees—

(1) that the rentals charged domestic farm labor shall not

exceed such amounts as may be approved by the Secretary giving due consideration to the income and earning capacity of the

tenants, and the necessary costs of operating and maintaining

such housing;

(2) that such housing shall be maintained at all times in

a safe and sanitary condition in accordance with such standards as may be prescribed by State or local law, or, in the ab-
1353 Sec. 516 RURAL HOUSING

sence of such standards, in accordance with such minimum requirements as the Secretary shall prescribe; and

(3) an absolute priority will be given at all times in granting occupancy of such housing and facilities to domestic farm

labor.

(d) The Secretary may make payments pursuant to any contract for financial assistance under this section at such times and

in such manner as may be specified in the contract. In each contract, the Secretary shall include such covenants, conditions, or

provisions as he deems necessary to insure that the housing and

related facilities, for which financial assistance is made available,

be used only in conformity with the provisions of this section.

(e) The Secretary shall prescribe regulations to insure that

Federal funds expended under this section are not wasted or dissipated. The Secretary shall not give priority for funding under this

section to any one of the groups listed in subsection (a) over any

of the others so listed.

(f) All laborers and mechanics employed by contractors or subcontractors on projects assisted by the Secretary which are undertaken by approved applicants under this section shall be paid

wages at rates not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a—

276a–5). The Secretary shall not extend any financial assistance

under this section for any project without first obtaining adequate

assurance that these labor standards will be maintained on the

construction work; except that compliance with such standards

may be waived by the Secretary in cases or classes of cases where

laborers or mechanics, not otherwise employed at any time on the

project, voluntarily donate their services without compensation for

the purpose of lowering the costs of construction and the Secretary

determines that any amounts thereby saved are fully credited to

the person, corporation, association, organization, or other entity

undertaking the project. The Secretary of Labor shall have, with

respect to the labor standards specified in this section, the authority and functions set forth in Reorganization Plan Numbered 14 of

1950 (15 F.R. 3176; 64 Stat. 1267; 5 U.S.C. 133z–15), and section

2 of the Act of June 13, 1934, as amended (40 U.S.C. 276).

(g) As used in this section—

(1) the term ‘‘low-rent housing’’ means rental housing

within the financial reach of families of low income consisting

of (A) new structures (including household furnishings) suitable for dwelling use by domestic farm labor, and (B) existing

structures (including household furnishings) which can be

made suitable for dwelling use by domestic farm labor by rehabilitation, alteration, conversion, or improvement;

(2) the terms ‘‘related facilities’’ and ‘‘domestic farm labor’’

shall have the meaning assigned to them in section 514(f);

(3) the term ‘‘development cost’’ shall have the meaning assigned to it in section 515(d)(4); and

(4) the term ‘‘domestic farm labor’’ has the meaning given

such term in section 514(f)(3).

(h) Notwithstanding the provisions of subsection (a)(3), the

Secretary may, upon a finding of persistent need for migrant farmworker housing in any area, provide assistance to eligible appli-
Sec. 516 RURAL HOUSING 1354

cants for 90 per centum of the development costs of such housing

in such area to be used solely by migrant farmworkers while they

are away from their residence. Such housing shall be constructed

in such a manner as to be safe and weatherproof for the time it

is to be occupied, be equipped with potable water and modern sanitation facilities (including a kitchen sink, toilet, and bathing facilities), and meet such other requirements as the Secretary may prescribe.

(i) The Secretary shall utilize not more than 10 per centum of

the amounts available for any fiscal year for purposes of this section for financial assistance to eligible private and public nonprofit

agencies to encourage the development of domestic and migrant

farm labor housing projects under this title.

(j) Housing and related facilities constructed with grants under

this section may be used for tenants eligible for occupancy under

section 515 if the Secretary determines that—

(1) there is no longer a need in the area for farm labor

housing; or

(2) the need for such housing in the area has diminished

to the extent that the purpose of the grant, providing housing

for domestic farm labor, can no longer be met.

(k) HOUSING FOR RURAL HOMELESS AND MIGRANT FARMWORKERS.—

(1) IN GENERAL.—The Secretary may provide financial assistance for providing affordable rental housing and related facilities for migrant farmworkers and homeless individuals (and

the families of such individuals) to applicants as provided in

this subsection.

(2) TYPES OF ASSISTANCE.—

(A) IN GENERAL.—The Secretary may provide the following assistance for housing under this subsection:

(i) An advance, in an amount not to exceed

$400,000, of the cost of acquisition, substantial rehabilitation, or acquisition and rehabilitation of an existing structure or construction of a new structure for

use in the provision of housing under this subsection.

The repayment of any outstanding debt owed on a

loan made to purchase an existing structure shall be

considered to be a cost of acquisition eligible for an advance under this subparagraph if the structure was

not used for the purposes under this subsection prior

to the receipt of assistance.

(ii) A grant, in an amount not to exceed $400,000,

for moderate rehabilitation of an existing structure for

use in the provision of housing under this subsection.

(iii) Annual payments for operating costs of such

housing (without regard to whether the housing is an

existing structure), not to exceed 75 percent of the annual operating costs of such housing.

(B) AVAILABLE ASSISTANCE.—A recipient may receive

assistance under both clauses (i) and (ii) of subparagraph

(A). The Secretary may increase the limit contained in

such clauses to $800,000 in areas which the Secretary

finds have high acquisition and rehabilitation costs.
1355 Sec. 516 RURAL HOUSING

(C) REPAYMENT OF ADVANCE.—Any advance provided

under subparagraph (A)(i) shall be repaid on such terms as

may be prescribed by the Secretary when the project

ceases to be used as housing in accordance with the provisions of this subsection. Recipients shall be required to

repay 100 percent of the advance if the housing is used for

purposes under this subsection for fewer than 10 years following initial occupancy. If the housing is used for such

purposes for more than 10 years, the percentage of the

amount that shall be required to be repaid shall be reduced by 10 percentage points for each year in excess of

10 that the property is so used.

(D) PREVENTION OF UNDUE BENEFITS.—Upon any sale

or other disposition of housing acquired or rehabilitated

with assistance under this subsection prior to the close of

20 years after the housing is placed in service, other than

a sale or other disposition resulting in the use of the

project for the direct benefit of low income persons or

where all of the proceeds are used to provide housing for

migrant farmworkers and homeless individuals (and the

families of such individuals), the recipient shall comply

with such terms and conditions as the Secretary may prescribe to prevent the recipient from unduly benefiting from

the sale or other disposition of the project.

(3) PROGRAM REQUIREMENTS.— (A) APPLICATIONS.—

(i) Applications for assistance under this subsection shall be submitted by an applicant in such

form and in accordance with such procedures as the

Secretary shall establish.

(ii) The Secretary shall require that applications

contain at a minimum (I) a description of the proposed

housing, (II) a description of the size and characteristics of the population that would occupy the housing,

(III) a description of any public and private resources

that are expected to be made available in connection

with the housing, (IV) a description of the housing

needs for migrant farmworkers and homeless individuals (and the families of such individuals) in the area

to be served by the housing, and (V) assurances satisfactory to the Secretary that the housing assisted will

be operated for not less than 10 years for the purpose

specified in the application.

(iii) The Secretary shall require that an application furnish reasonable assurances that the housing

will be available for occupancy by homeless individuals (and the families of such individuals) only on an

emergency and temporary basis during the offseason

and shall be otherwise available for occupancy by migrant farmworkers (and their families).

(iv) The Secretary shall require that an application furnish reasonable assurances that the applicant

will own or have control of a site for the proposed

housing not later than 6 months after notification of

an award for grant assistance. An applicant may ob-
Sec. 516 RURAL HOUSING 1356

1The date of enactment was November 28, 1990.

tain ownership or control of a suitable site different

from the site specified in the application. If an applicant fails to obtain ownership or control of the site

within 1 year after notification of an award for grant

assistance, the grant shall be recaptured and reallocated.

(B) SELECTION CRITERIA.—The Secretary shall establish selection criteria for a national competition for assistance under this subsection, which shall include—

(i) the ability of the applicant to develop and operate the housing;

(ii) the feasibility of the proposal in providing the

housing;

(iii) the need for such housing in the area to be

served;

(iv) the cost effectiveness of the proposed housing;

(v) the extent to which the project would meet the

needs of migrant farmworkers and homeless individuals (and the families of such individuals) in the

State;

(vi) the extent to which the applicant has control

of the site of the proposed housing; and

(vii) such other factors as the Secretary determines to be appropriate for purposes of this subsection.

(C) REQUIRED AGREEMENTS.—The Secretary may not

approve assistance for any housing under this subsection

unless the applicant agrees—

(i) to operate the proposed project as housing for

migrant farmworkers and homeless individuals (and

the families of such individuals) in compliance with

the provisions of this subsection and the application

approved by the Secretary;

(ii) to monitor and report to the Secretary on the

progress of the housing; and

(iii) to comply with such other terms and conditions as the Secretary may establish for purposes of

this subsection.

(D) OCCUPANT RENT.—Each migrant farmworker and

homeless individual residing in a facility assisted under

this subsection shall pay as rent an amount determined in

accordance with the provisions of section 3(a) of the United

States Housing Act of 1937.

(4) GUIDELINES.— (A) REGULATIONS.—Not later than 120 days after the

date of enactment of the Cranston-Gonzalez National Affordable Housing Act,1 the Secretary shall by notice establish such requirements as may be necessary to carry out

the provisions of this subsection.

(B) LIMITATION ON USE OF FUNDS.—No assistance received under this subsection (or any State or local government funds used to supplement such assistance) may be

used to replace other public funds previously used, or des-
1357 Sec. 517 RURAL HOUSING

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

ignated for use, to assist homeless individuals (and the

families of such individuals) or migrant farmworkers.

(5) LIMITATION ON ADMINISTRATIVE EXPENSES.—No recipient may use more than 5 percent of an advance or grant received under this subsection for administrative purposes.

(6) REPORTS TO CONGRESS.—The Secretary shall submit

annually to the Congress a report summarizing the activities

carried out under this subsection and setting forth the findings, conclusions, and recommendations of the Secretary as a

result of the activities. The report shall be submitted not later

than 3 months after the end of each fiscal year.

(7) DEFINITIONS.—For purposes of this subsection:

(A) The term ‘‘applicant’’ means a State, political subdivision thereof, Indian tribe, any private nonprofit organization incorporated within the State that has applied for

a grant under this subsection.

(B) The term ‘‘homeless individual’’ has the same

meaning given the term under section 103 of the Stewart

B. McKinney Homeless Assistance Act 1.

(C) The term ‘‘migrant farmworker’’—

(i) means any person (and the family of such person) who (I) receives a substantial portion of his or her

income from primary production of agricultural or

aquacultural commodities, the handling of such commodities in the unprocessed stage, or the processing of

such commodities, without respect to the source of employment, and (II) establishes residence in a location

on a seasonal or temporary basis, in an attempt to receive an income as described in subclause (I); and

(ii) includes any person (and the family of such

person) who is retired or disabled, but who met the requirements of clause (i) at the time of retirement or

becoming disabled.

(D) The term ‘‘operating costs’’ means expenses incurred by a recipient providing housing under this subsection with respect to the administration, maintenance,

repair, and security of such housing and utilities, fuel, furnishings, and equipment for such housing.

INSURED RURAL HOUSING LOANS

SEC. 517. ø42 U.S.C. 1487¿ (a) The Secretary may insure loans

meeting the requirements of section 502, and may make loans in

accordance with the requirements of such section to be sold and insured. The amount of such a loan to a low income person or family

shall not exceed the amount necessary to provide adequate housing

which is modest in size, design, and cost (as determined by the

Secretary).

(b) The Secretary may insure loans in accordance with the requirements of sections 514 (exclusive of subsections (a)(3), (a)(5),

and (b)), 515 (exclusive of subsections (a) and (b)(3)), 524 and 526
Sec. 517 RURAL HOUSING 1358

1 April 7, 1986.

and may make loans meeting such requirements to be sold and insured. Upon the expiration of ninety days after the original capitalization of the Rural Housing Insurance Fund, created by subsection

(e) of this section, no new loans shall be made or insured under section 514 or 515(b), except in conformity with this section. The notes

held in the Agricultural Credit Insurance Fund (7 U.S.C. 1929)

which evidence loans made or insured by the Secretary under section 514 or 515(b), the rights and liabilities of that Fund under insurance contracts relating to such loans held by insured investors,

the mortgages securing the obligations of the borrowers under such

loans held in that Fund or by insured investors, and all rights to

subsequent collections on and proceeds of such notes, contracts,

and mortgages, are hereby transferred to the Rural Housing Insurance Fund and for the purposes of this title and any other Act shall

be subject to the provisions of this section as if created pursuant

thereto. The Rural Housing Insurance Fund shall compensate the

Agricultural Credit Insurance Fund for the aggregate unpaid principal balance plus accrued interest of the notes so transferred.

(c) The Secretary may use the Rural Housing Insurance Fund

for the purpose of making loans to be sold and insured under this

section. Any loan made and sold by the Secretary under this section after the date of the enactment of the Housing and Community Development Reconciliation Amendments of 1985 1 (and any

loan made by other lenders under this title that is insured or guaranteed in accordance with this section, is purchased by the Secretary, and is sold by the Secretary under this section after such

date) shall be sold to the public and may not be sold to the Federal

Financing Bank, unless such sale to the Federal Financing Bank

is required to service transactions under this title between the Secretary and the Federal Financing Bank occurring on or before such

date.

(d)(1) The Secretary may, in conformity with subsections (a),

(b), and (m), insure the payment of principal and interest on loans

made by lenders other than the United States, and on loans made

from or otherwise acquired by the Rural Housing Insurance Fund

which are sold by the Secretary. Any contract of insurance executed by the Secretary hereunder shall be an obligation supported

by the full faith and credit of the United States, and shall be incontestable except for fraud or material misrepresentation of which

the holder has actual knowledge. In connection with loans insured

under this section, the Secretary may take liens running to the

United States notwithstanding the fact that the notes evidencing

such loans may be held by lenders other than the United States.

Notes evidencing such loans shall be freely assignable, but the Secretary shall not be bound by any such assignment until notice

thereof is given to and acknowledged by him.

(2) Each loan made by the Secretary or other lenders under

this title that is insured or guaranteed in accordance with this subsection shall, when offered for sale to the public, be accompanied

by an agreement by the Secretary to pay to the holder of such loan

(through an agreement to purchase such loan or through such

other means as the Secretary determines to be appropriate) the difference between the rate of interest paid by the borrower of such
1359 Sec. 517 RURAL HOUSING

1See also section 310C of the Consolidated Farm and Rural Development Act (7 USC 1933).

loan and the market rate of interest (as determined by the Secretary) on obligations having comparable periods to maturity on

the date of such sale.

(3) Each loan made by the Secretary or other lenders under

this title that is insured or guaranteed in accordance with this subsection shall, when offered for sale to the public, be accompanied

by agreements for the benefit of the borrower under the loan that

provide that—

(A) the purchaser or any assignee of the loan shall not diminish any substantive or procedural right of the borrower

arising under this title;

(B) upon any substantial default of the borrower, but prior

to foreclosure, the loan shall be assigned to the Secretary for

the purpose of avoiding foreclosure; and

(C) following any assignment under subparagraph (B) and

before commencing any action to foreclose or otherwise dispossess the borrower, the Secretary shall afford the borrower

all substantive and procedural rights arising under this title,

including consideration for interest subsidy, moratorium, reamortization, refinancing, and appeal of any adverse decision

to an impartial officer.

(4) From the proceeds of loan sales under paragraph (2), the

Secretary shall set aside as a reserve against future losses not less

than 5 percent of the outstanding face amount of the loans held by

the public at any time.1

(e) There is hereby created the Rural Housing Insurance Fund

(hereinafter referred to as the ‘‘Fund’’ which shall be used by the

Secretary as a revolving fund for carrying out the provisions of this

section. The guaranteed loan program under this title shall be operated separately from the insured loan program operated under

this title and no funds designated for one program may be transferred to another program. There are authorized to be appropriated

to the Secretary such sums as may be necessary for the purposes

of the Fund.

(f) Money in the Fund not needed for current operations shall

be invested in direct obligations of the United States or obligations

guaranteed by the United States.

(g) All funds, claims, notes, mortgages, contracts, and property

acquired by the Secretary under this section, and all collections

and proceeds therefrom, shall constitute assets of the Fund; and all

liabilities and obligations of such assets shall be liabilities and obligations of the Fund. Loans may be held in the Fund and collected

in accordance with their terms or may be sold by the Secretary

with or without agreements for insurance thereof. The Secretary is

authorized to make agreements with respect to servicing loans held

or insured by him under this section and purchasing such insured

loans on such terms and conditions as he may prescribe.

(h) The Secretary is authorized to issue notes to the Secretary

of the Treasury to obtain funds necessary for discharging obligations under this section and for authorized expenditures out of the

Fund, but, except as may be authorized in appropriations Acts, not

for the original or any additional capital of the Fund. Such notes

shall be in such form and denominations and have such maturities
Sec. 517 RURAL HOUSING 1360

and be subject to such terms and conditions as may be prescribed

by the Secretary with the approval of the Secretary of the Treasury. Each note shall bear interest at the average rate, as determined by the Secretary of the Treasury, payable by the Treasury

upon its marketable public obligations outstanding at the beginning of the fiscal year in which such note is issued, which are neither due nor callable for redemption for fifteen years from their

date of issue. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder,

and for that purpose the Secretary of the Treasury is authorized

to use as a public debt transaction the proceeds from the sale of

any securities issued under chapter 31 of title 31, United States

Code, and the purposes for which such securities may be issued

under such chapter are extended to include purchases of notes

issued by the Secretary. All redemptions, purchases, and sales by

the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States. The notes issued by the

Secretary to the Secretary of the Treasury shall constitute obligations of the Fund.

(i) The Secretary may retain out of interest payments by the

borrower an annual charge in an amount specified in the insurance

or sale agreement applicable to the loan. Of the charges retained

by the Secretary, if any, not to exceed 1 per centum per annum of

the unpaid balance of the loan shall be deposited in the Fund. Any

retained charges not deposited in the Fund shall be available for

administrative expenses in carrying out the provisions of this title,

to be transferred annually, and become merged with any appropriation for administrative expenses of the Farmers Home Administration, when and in such amounts as may be authorized in appropriation Acts.

(j) The Secretary may also utilize the Fund—

(1) to pay amounts to which the holder of the note is entitled in accordance with an insurance or sale agreement under

this section accruing between the date of any payment by the

borrower to the Secretary and the date of transmittal of any

such payments to the holder of the note; and in the discretion

of the Secretary, payments other than final payments need not

be remitted to the holder until due or until the next agreed annual or semiannual remittance date;

(2) to pay the holder of any note insured under this section

any defaulted installment or, upon assignment of the note to

the Secretary at the Secretary’s request, or pursuant to a purchase agreement, the entire balance outstanding on the note;

(3) to pay taxes, insurance, prior liens, expenses necessary

to make fiscal adjustments in connection with the application

and transmittal of collections or necessary to obtain credit reports on applicants or borrowers, and other services customary

in the industry, independent audits of project expenses, construction inspections, commercial appraisals, servicing of loans,

and other related program services and expenses, and other expenses and advances to protect the security for loans which are

insured under this section or held in the Fund, and to acquire

such security property at foreclosure sale or otherwise;

(4) to make assistance payments authorized by section

521(a);
1361 Sec. 519 RURAL HOUSING

1 April 7, 1986.

(5) after October 1, 1977, and as approved in appropriations Acts, to make advances authorized by section 501(e);

(6) to make payments and take other actions in accordance

with agreements entered into under paragraph (2) and (3) of

subsection (d); and

(7) to provide advances and assistance required to carry

out paragraphs (4) and (5) of section 502(c).

(k) Any sale by the Secretary of loans individually or in blocks,

pursuant to subsections (c) and (g), shall be treated as a sale of assets for the purposes of chapter 11 of title 31, United States Code,

notwithstanding the fact that the Secretary, under an agreement

with the purchaser, holds the debt instruments evidencing the

loans and holds or reinvests payments thereon as trustee and custodian for the purchaser.

(l) The Secretary may also, upon the application of lenders,

builders, or sellers and upon compliance with requirements specified by him, make commitments upon such terms and conditions as

he shall prescribe to make or insure loans under this section to eligible applicants.

(m) The assets and liabilities of, and authorizations applicable

to, the Rural Housing Direct Loan Account are hereby transferred

to the Fund, and such Account is hereby abolished. Such assets

and their proceeds, including loans made out of the Fund pursuant

to this section, shall be subject to all of the provisions of this section.

(n) The Secretary may guarantee and service loans made for

the purchase of eligible residential properties under section 21A(c)

of the Federal Home Loan Bank Act in accordance with subsection

(d) of this section and the last sentence of section 521(a)(1)(A).

(o)(1) The Secretary shall promulgate rules which encourage

the rehabilitation or purchase of existing buildings for the purpose

of providing housing which is economical in cost and operation.

(2) Not later than the expiration of the 90-day period following

the date of the enactment of the Housing and Community Development Reconciliation Amendments of 1985,1 the Secretary shall

issue regulations to facilitate the marketability in the secondary

mortgage market of loans insured or guaranteed under this section.

Such regulations shall ensure that such loans are competitive with

other loans and mortgages insured or guaranteed by the Federal

Government.

øRURAL HOUSING DIRECT LOAN ACCOUNT¿

øSEC. 518. [Repealed.]¿

SUMS EXCESS TO THE NEEDS OF THE RURAL HOUSING INSURANCE

FUND

SEC. 519. ø42 U.S.C. 1489¿ Any sums in the Rural Housing Insurance Fund which the Secretary determines are in excess of

amounts needed to meet the obligations and carry out the purposes

of such Fund shall be returned to miscellaneous receipts of the

Treasury.
Sec. 520 RURAL HOUSING 1362

DEFINITION OF RURAL AREA

SEC. 520. ø42 U.S.C. 1490¿ As used in this title, the terms

‘‘rural’’ and ‘‘rural area’’ mean any open country, or any place,

town, village, or city which is not (except in the cases of Pajaro, in

the State of California, and Guadalupe, in the State of Arizona)

part of or associated with an urban area and which (1) has a population not in excess of 2,500 inhabitants, or (2) has a population in

excess of 2,500 but not in excess of 10,000 if it is rural in character,

or (3) has a population in excess of 10,000 but not in excess of

20,000, and (A) is not contained within a standard metropolitan

statistical area, and (B) has a serious lack of mortgage credit for

lower and moderate-income families, as determined by the Secretary and the Secretary of Housing and Urban Development. For

purposes of this title, any area classifed as ‘‘rural’’ or a ‘‘rural area’’

prior to October 1, 1990, and determined not to be ‘‘rural’’ or a

‘‘rural area’’ as a result of data received from or after the 1990 or

2000 decennial census shall continue to be so classified until the

receipt of data from the decennial census in the year 2010, if such

area has a population in excess of 10,000 but not in excess of

25,000, is rural in character, and has a serious lack of mortgage

credit for lower and moderate-income families. Notwithstanding

any other provision of this section, the city of Plainview, Texas,

shall be considered a rural area for purposes of this title, and the

city of Altus, Oklahoma, shall be considered a rural area for purposes of this title until the receipt of data from the decennial census in the year 2000.

LOANS TO PROVIDE OCCUPANT-OWNED, RENTAL, AND COOPERATIVE

HOUSING FOR LOW- AND MODERATE-INCOME PERSONS AND FAMILIES

SEC. 521. ø42 U.S.C. 1490a¿ (a)(1)(A) Not withstanding the

provisions of sections 502, 517(a) and 515, loans to persons of low

or moderate income under section 502 or 517(a)(1), or 526(a), loans

under section 515 or 526(c) to provide rental or cooperative housing

and related facilities for persons and families of low or moderate

income or elderly persons and elderly families, and loans under section 526 to provide condominium housing for persons and families

of low or moderate income, shall bear interest at a rate prescribed

by the Secretary at not less than a rate determined by the Secretary of the Treasury upon the request of the Secretary taking

into consideration the current average market yield on outstanding

marketable obligations of the United States with remaining periods

of maturity comparable to the average maturities of such loans, adjusted to the nearest one-eighth of 1 per centum. Any loan guaranteed under this title shall bear interest at such rate as may be

agreed upon by the borrower and the lender.

(B) From the interest rate so determined, the Secretary may

provide the borrower with assistance in the form of credits so as

to reduce the effective interest rate to a rate not less than 1 per

centum per annum for such periods of time as the Secretary may

determine for applicants described in subparagraph (A) if without

such assistance such applicants could not afford the dwelling or

make payments on the indebtedness of the rental or cooperative

housing. In the case of assistance provided under this subparagraph with respect to a loan under section 502, the Secretary may
1363 Sec. 521 RURAL HOUSING

not reduce, cancel, or refuse to renew the assistance due to an increase in the adjusted income of the borrower if the reduction, cancellation, or nonrenewal will cause the borrower to be unable to

reasonably afford the resulting payments required under the loan.

(C) For persons of low income under section 502 or 517(a) who

the Secretary determines are unable to afford a dwelling with the

assistance provided under subparagraph (B) and when the Secretary determines that assisted rental housing programs (as authorized under this title, the National Housing Act, and the United

States Housing Act of 1937) would be unsuitable in the area in

which such persons reside, the Secretary may provide additional

assistance, pursuant to amounts approved in appropriation Acts

and for such periods of time as the Secretary may determine, which

may be in an amount not to exceed the difference between (i) the

amount determined by the Secretary to be necessary to pay the

principal indebtedness, interest, taxes, insurance, utilities, and

maintenance, and (ii) 25 per centum of the income of such applicant. The amount of such additional assistance which may be approved in appropriation Acts may not exceed an aggregate amount

of $100,000,000. Such additional assistance may not be so approved

with respect to any fiscal year beginning on or after October 1,

1981.

(D)(i) With respect to borrowers under section 502 or 517(a)

who have received assistance under subparagraph (B) or (C), the

Secretary shall provide for the recapture of all or a portion of such

assistance rendered upon the disposition or nonoccupancy of the

property by the borrower. In providing for such recapture, the Secretary shall make provisions to provide incentives for the borrower

to maintain the property in a marketable condition. Notwithstanding any other provisions of law, any such assistance whenever

rendered shall constitute a debt secured by the Security instruments given by the borrower to the Secretary to the extent that the

Secretary may provide for recapture of such assistance.

(ii) In determining the amount recaptured under this subparagraph with respect to any loan made pursuant to section 502(a)(3)

for the purchase of a dwelling located on land owned by a community land trust, the Secretary shall determine any appreciation of

the dwelling based on any agreement between the borrower and

the community land trust that limits the sale price or appreciation

of the dwelling.

(E) Except for Federal or State laws relating to taxation, the

assistance rendered to any borrower under subparagraphs (B) and

(C) shall not be considered to be income or resources for any purpose under any Federal or State laws including, but not limited to,

laws relating to welfare and public assistance programs.

(F) Loans subject to the interest rates and assistance provided

under this paragraph (1) may be made only when the Secretary determines the needs of the applicant for necessary housing cannot

be met with financial assistance from other sources including assistance under the National Housing Act and the United States

Housing Act of 1937.

(G) Interest on loans under section 502 or 517(a) to victims of

a natural disaster shall not exceed the rate which would be applicable to such loans under section 502 without regard to this section.
Sec. 521 RURAL HOUSING 1364

(2)(A) The Secretary shall make and insure loans under this

section and sections 514, 515, and 517 to provide rental or cooperative housing and related facilities for persons and families of low

income in multifamily housing projects, and shall make, and contract to make, assistance payments to the owners of such rental,

congregate, or cooperative housing in order to make available to

low-income occupants of such housing rentals at rates commensurate to income and not exceeding the highest of (i) 30 per centum

of monthly adjusted income, (ii) 10 per centum of monthly income,

or (iii) if the person or family is receiving payments for welfare assistance from a public agency, the portion of such payments which

is specifically designated by such agency to meet the person’s or

family’s housing costs. Any rent or contribution of any recipient

shall not increase as a result of this section or any other provision

of Federal law or regulation by more than 10 per centum during

any twelve-month period, unless the increase above 10 per centum

is attributable to increases in income which are unrelated to this

subsection or other law or regulation.

(B) The owner of any project assisted under this paragraph or

paragraph (5) shall be required to provide at least annually a budget of operating expenses and record of tenants’ income. The budget

(and the income, in the case of a project assisted under this paragraph) shall be used to determine the amount of the assistance for

each project.

(C) The project owner shall accumulate, safeguard, and periodically pay to the Secretary any rental charges collected in excess of

basic rental charges as established by the Secretary in conformity

with subparagraph (A). These funds may be credited to the appropriation and used by the Secretary for making such assistance payments through the end of the next fiscal year. Notwithstanding the

preceding sentence, excess funds received from tenants in projects

financed under section 515 during a fiscal year shall be available

during the next succeeding fiscal year, together with funds provided under subparagraph (D), to the extent approved in appropriations Acts, to make assistance payments to reduce rent overburden

on behalf of tenants of any such project whose rents exceed the levels referred to in subparagraph (A). In providing assistance to relieve rent overburden, the Secretary shall provide assistance with

respect to very low-income and low-income families to reduce housing rentals to the levels specified in subparagraph (A).

(D) The Secretary, to the extent approved in appropriation

Acts, may enter into rental assistance contracts aggregating not

more than $398,000,000 in carrying out subparagraph (A) with respect to the fiscal year ending on September 30, 1982.

(E) In order to assist elderly or handicapped persons or families who elect to live in a shared housing arrangement in which

they benefit as a result of sharing the facilities of a dwelling with

others in a manner that effectively and efficiently meets their housing needs and thereby reduces their costs of housing, the Secretary

shall permit rental assistance to be used by such persons or families if the shared housing arrangement is in a single-family dwelling. For the purpose of this subparagraph, the Secretary shall prescribe minimum habitability standards to assure decent, safe, and

sanitary housing for such families while taking into account the

special circumstances of shared housing.
1365 Sec. 521 RURAL HOUSING

1 November 30, 1983.

(3)(A) In the case of loans under sections 514 and 515 approved

prior to the effective date of this paragraph 1 with respect to which

rental assistance is provided, the rent for tenants receiving such

assistance shall not exceed the highest of (i) 30 per centum of

monthly adjusted income, (ii) 10 per centum of monthly income, or

(iii) if the person or family is receiving payments for welfare assistance from a public agency, the portion of such payments which is

specifically designated by such agency to meet the person’s or family’s housing costs.

(B) In the case of a section 515 loan approved prior to the effective date of this paragraph 1 with respect to which interest credits

are provided, the tenant’s rent shall not exceed the highest of (i)

30 per centum of monthly adjusted income, (ii) 10 per centum of

monthly income, or (iii) if the person or family is receiving payments for welfare assistance from a public agency, the portion of

such payments which is specifically designated by such agency to

meet the person’s or family’s housing costs, or, where no rental assistance authority is available, the rent level established on a basis

of a 1 per centum interest rate on debt service.

(C) No rent for a unit financed under section 514 or 515 shall

be increased as a result of this subsection or other provision of Federal law or Federal regulation by more than 10 per centum in any

twelve-month period, unless the increase above 10 per centum is

attributable to increases in income which are unrelated to this subsection or other law, or regulation.

(4) In the case of a loan with respect to the purchase of a manufactured home with respect to which rental assistance is provided,

the monthly payment for principal and interest on the manufactured home and for lot rental and utilities shall not exceed the

highest of (A) 30 per centum of monthly adjusted income, (B) 10

per centum of monthly income, or (C) if the person or family is receiving payments for welfare assistance from a public agency, the

portion of such payments which is specifically designated by such

agency to meet the person’s or family’s housing costs.

(5) OPERATING ASSISTANCE FOR MIGRANT FARMWORKER

PROJECTS.—

(A) AUTHORITY.—In the case of housing (and related facilities) for migrant farmworkers provided or assisted with a loan

under section 514 or a grant under section 516, the Secretary

may, at the request of the owner of the project, use amounts

provided for rental assistance payments under paragraph (2) to

provide assistance for the costs of operating the project. Any

tenant or unit assisted under this paragraph may not receive

rental assistance under paragraph (2).

(B) AMOUNT.—In any fiscal year, the assistance provided

under this paragraph for any project shall not exceed an

amount equal to 90 percent of the operating costs for the

project for the year, as determined by the Secretary. The

amount of assistance to be provided for a project under this

paragraph shall be an amount that makes units in the project

available to migrant farmworkers in the area of the project at

rates not exceeding 30 percent of the monthly adjusted incomes
Sec. 521 RURAL HOUSING 1366

of such farmworkers, based on the prevailing incomes of such

farmworkers in the area.

(C) SUBMISSION OF INFORMATION.—The owner of a project

assisted under this paragraph shall be required to provide to

the Secretary, at least annually, a budget of operating expenses and estimated rental income, which the Secretary may

use to determine the amount of assistance for the project.

(D) DEFINITIONS.—For purposes of this paragraph, the following definitions shall apply:

(i) The term ‘‘migrant farmworker’’ has the same

meaning given such term in section 516(k)(7).

(ii) The term ‘‘operating cost’’ means expenses incurred

in operating a project, including expenses for—

(I) administration, maintenance, repair, and security of the project;

(II) utilities, fuel, furnishings, and equipment for

the project; and

(III) maintaining adequate reserve funds for the

project.

(b) Housing and related facilities provided with loans described

in subsection (a) shall be located in rural areas; and applicants eligible for such loans under section 502 or 517(a)(1), or for occupancy

of housing provided with such loans under section 515, shall include otherwise qualified nonrural residents who will become rural

residents.

(c) There shall be reimbursed to the Rural Housing Insurance

Fund by annual appropriations (1) the amounts by which nonprincipal payments made from the fund during each fiscal year to the

holders of insured loans described in subsection (a)(1) exceed interest due from the borrowers during each year, and (2) the amount

of assistance payments described in subsections (a)(2) and (a)(5).

There are authorized to be appropriated to the Rural Housing Insurance Fund such sums as may be necessary to reimburse such

fund for the amount of assistance payments described in subsection

(a)(1)(C). The Secretary may from time to time issue notes to the

Secretary of the Treasury under section 517(h) and section 526 to

obtain amounts equal to such unreimbursed payments, pending the

annual reimbursement by appropriation.

(d)(1) In utilizing the rental assistance payments authority

pursuant to subsection (a)(2)—

(A) the Secretary shall make such assistance available in

existing projects for units occupied by low income families or

persons to extend expiring contracts or to provide additional

assistance when necessary to provide the full amount authorized pursuant to existing contracts;

(B) any such authority remaining after carrying out subparagraph (A) shall be used in projects receiving commitments

under section 514, 515, or 516 after fiscal year 1983 for contracts to assist very low-income families or persons to occupy

the units in such projects, except that not more than 5 percent

of the units assisted may be occupied by low income families

or persons who are not very low-income families or persons;

and
1367 Sec. 522 RURAL HOUSING

(C) any such authority remaining after carrying out subparagraphs (A) and (B) may be used to provide further assistance to existing projects under section 514, 515, or 516.

(2) The Secretary shall transfer rental assistance contract authority under this section from projects where such authority is unused after initial rentup and not needed because of a lack of eligible tenants in the area to projects where such authority is needed.

(e) Any rent or contribution of any recipient or any tenant in

a project assisted under subsection (a)(5) shall not increase as a result of this section, any amendment thereto, or any other provision

of Federal law or regulation by more than 10 per centum during

any twelve-month period, unless the increase above 10 per centum

is attributable to increases in income which are unrelated to this

subsection or other law or regulation.

HOUSING FOR RURAL TRAINEES

SEC. 522. ø42 U.S.C. 1490b¿ (a) Upon the application of any

State or political subdivision thereof, or any public or private nonprofit organization, the Secretary is authorized after consultation

with the Secretary of Labor, the Secretary of Health and Human

Services, the Secretary of Housing and Urban Development, and

the Director of the Office of Economic Opportunity and after the

Secretary determines that the housing and related facilities cannot

reasonably be provided in any other way to provide financial and

technical assistance for the establishment, in rural areas, of housing and related facilities for trainees and their families who are

residents of a rural area and have a rural background, while such

trainees are enrolled and participating in training courses designed

to improve their employment capability. The selection of training

sites and location of housing shall be made with due regard to the

economic viability of the area, and only after consideration of a

labor area survey and full coordination among all Government

agencies having primary responsibilities for administering related

programs.

(b) Housing and related facilities assisted under this section

shall be safe and sanitary, constructed in the most economical

manner, and of modest design, giving due consideration to the purposes to be served and the needs of the occupants, and may, in the

discretion of the Secretary, include mobile family quarters. Design

and location shall be such as to facilitate, as feasible, the use of

such housing and related facilities for other purposes when no

longer needed for the primary purpose.

(c) The applicant shall contribute the necessary land, or funds

to acquire such land, from its own resources, including land acquired by donation or from funds repayable under subsection (e) or

borrowed from other sources.

(d) No financial assistance shall be made available under this

section unless, to the extent and for the periods required by the

Secretary, the applicant agrees that—

(1) such housing will be maintained at all times in a safe

and sanitary condition in accordance with standards prescribed

by State or local law, or, in the absence of such standards, with

requirements prescribed by the Secretary;
Sec. 522 RURAL HOUSING 1368

(2) priority shall be given at all times, in granting occupancy of such housing and facilities, to the trainees and their

families described in subsection (a); and

(3) rentals charged them shall not exceed amounts approved by the Secretary after considering the portion of the actual total family income which the family can afford to pay for

rent while meeting its other immediate needs during occupancy.

(e) The Secretary may make advances pursuant to any contract

for financial assistance under this section at such times and in

such manner as may be specified in the contract. Such advances for

the purchase of land shall be repayable with interest and within

a period not to exceed thirty-three years and may be made upon

such security, if any, as the Secretary requires. Advances for other

purposes may be made repayable with or without interest or nonrepayable, as determined by the Secretary on the basis of the anticipated income and cost of operation of the housing and related

facilities and the ability of each applicant to finance such facilities.

Any advances shall be limited to cover the capital costs of constructing such facilities, plus interest on borrowings to cover such

costs.

(f) Should housing and related facilities assisted pursuant to a

contract under this section be sold to an ineligible transferee or diverted to a use other than its primary purpose within a period

specified in the contract, all advances made under such contract

shall be repaid to the Secretary, up to the amount of the sales price

or the fair value of the property as determined by the Secretary,

whichever is higher, with interest from the date of the sale or diversion. If no suitable alternate use of the property is available, as

determined by the Secretary, after the purpose of this section can

no longer be served, the property shall be returned to its original

condition by the recipient of the assistance.

(g) Interest charged on advances made under this section shall

be at a rate, prescribed by the Secretary, which shall be not less

than a rate determined by the Secretary of the Treasury taking

into consideration the current average market yield on outstanding

marketable obligations of the United States with remaining periods

to maturity comparable to the average maturities of such loans adjusted to the nearest one-eighth of 1 per centum, less not to exceed

the difference between the adjusted rate determined by the Secretary of the Treasury and 1 per centum per annum, as determined

by the Secretary.

(h) The Secretary shall prescribe regulations to insure that

Federal funds expended under this section are not wasted or dissipated.

(i) As used in this section (1) the term ‘‘related facilities’’ shall

include any necessary community rooms or buildings, infirmaries,

utilities, access roads, water and sewer services, and the minimum

fixed or movable equipment determined by the Secretary to be necessary to make the housing reasonably habitable by trainees and

their families; and (2) the term ‘‘trainee’’ means any person receiving training under any federally assisted training program.

(j) There are authorized to be appropriated such sums as may

be necessary to carry out this section.
1369 Sec. 523 RURAL HOUSING

MUTUAL AND SELF-HELP HOUSING

SEC. 523. ø42 U.S.C. 1490c¿ (a) The purposes of this section

are (1) to make financial assistance available on reasonable terms

and conditions in rural areas and small towns to needy low-income

individuals and their families who, with the benefit of technical assistance and overall guidance and supervision, participate in approved programs of mutual or self-help housing by acquiring and

developing necessary land, acquiring building materials, providing

their own labor, and working cooperatively with others for the provision of decent, safe, and sanitary dwellings for themselves, their

families, and others in the area or town involved, and (2) to facilitate the efforts of both public and private nonprofit organizations

providing assistance to such individuals to contribute their technical and supervisory skills toward more effective and comprehensive programs of mutual or self-help housing in rural areas and

small towns wherever necessary.

(b) In order to carry out the purposes of this section, the Secretary of Agriculture (in this section referred to as the ‘‘Secretary’’)

is authorized—

(1)(A) to make grants to, or contract with, public or private

nonprofit corporations, agencies, institutions, organizations, Indian tribes, and other associations approved by him, to pay

part or all of the costs of developing, conducting, administering, or coordinating effective and comprehensive programs

of technical and supervisory assistance which will aid needy

low-income individuals and their families in carrying out mutual or self-help housing efforts, including the repair of units

financed under section 502 that are being held in inventory;

and

(B) to establish the Self-Help Housing Land Development

Fund, referred to herein as the Self-Help Fund, to be used by

the Secretary as a revolving fund for making loans, on such

terms and conditions and in such amounts as he deems necessary, to public or private nonprofit organizations and to Indian tribes for the acquisition and development of land as

building sites to be subdivided and sold to families, nonprofit

organizations, and cooperatives eligible for assistance under

section 235 or 236 of the National Housing Act or section 521

of this Act. Such a loan, with interest at a rate not to exceed

3 percent per annum shall be repaid within a period not to exceed two years from the making of the loan, or within such additional period as may be authorized by the Secretary in any

case as being necessary to carry out the purposes hereof: Provided, That the Secretary may advance funds under this paragraph to organizations receiving assistance under clause (A) to

enable them to establish revolving accounts for the purchase of

land options and any such advances may bear interest at a

rate determined by the Secretary and shall be repaid to the

Secretary at the expiration of the period for which the grant

to the organization involved was made;

(2) to make grants to, or contract with, national or regional

private nonprofit corporations to provide training and technical

assistance to public or private nonprofit corporations, agencies,

institutions, organizations, and other associations, including
Sec. 523 RURAL HOUSING 1370

Indian tribes, eligible to receive assistance under this section

in order to expand the use of authorities contained in this section and to improve performance; and

(3) to make loans, on such terms and conditions and in

such amounts as he deems necessary, to needy low-income individuals participating in programs of mutual or self-help

housing approved by him, for the acquisition and development

of land and for the purchase of such other building materials

as may be necessary in order to enable them, by providing substantially all of their own labor, and by cooperating with others

participating in such programs, to carry out to completion the

construction of decent, safe, and sanitary dwellings for such individuals and their families, subject to the following limitations:

(A) there is reasonable assurance of repayment of the

loan;

(B) the amount of the loan, together with other funds

which may be available, is adequate to achieve the purpose

for which the loan is made;

(C) the credit assistance is not otherwise available on

like terms or conditions from private sources or through

other Federal, State, or local programs;

(D) the loan bears interest at a rate not to exceed 3

per centum per annum on the unpaid balance of principal,

plus such additional charge, if any, toward covering other

costs of the loan program as the Secretary may determine

to be consistent with its purposes; and

(E) the loan is repayable within not more than thirtythree years.

(c) In determining whether to extend financial assistance

under paragraph (1) or (2) of subsection (b), the Secretary shall

take into consideration, among other factors, the suitability of the

area within which construction will be carried out to the type of

dwelling which can be provided under mutual or self-help housing

programs, the extent to which the assistance will facilitate the provision of more decent, safe, and sanitary housing conditions than

presently exist in the area, the extent to which the assistance will

be utilized efficiently and expeditiously, the extent to which the assistance will effect an increase in the standard of living of low-income individuals participating in the mutual or self-help housing

program, and whether the assistance will fulfill a need in the area

which is not otherwise being met through other programs, including those carried out by other Federal, State, or local agencies.

(d) As used in this section, the term ‘‘construction’’ includes the

erection of new dwellings, and the rehabilitation, alteration, conversion, or improvement of existing structures.

(e) The Secretary is authorized to establish appropriate criteria

and procedures in order to determine the eligibility of applicants

for the financial assistance provided under this section, including

criteria and procedures with respect to the periodic review of any

construction carried out with such financial assistance.

ø(f) [Repealed.]¿

(g) Amounts appropriated under this subsection, together with

principal collections from loans made under appropriations in any

previous fiscal years, shall be deposited in the Self-Help Housing
1371 Sec. 524 RURAL HOUSING

1 Indented so in law.

Land Development Fund, which shall be available, to the extent

approved in appropriation Acts, as a revolving fund for making

loans under subsection (b)(1)(B); except that not more than

$5,000,000 may be made available during fiscal year 1985. Instruments and property acquired by the Secretary in or as a result of

making such loans shall be assets of the Self-Help Housing Land

Development Fund.

(h) The Secretary shall issue rules and regulations for the orderly processing and review of applications under this section and

rules and regulations protecting the rights of grantees under this

section in the event he determines to end grant assistance prior to

the termination date of any grant agreement.

FINANCIAL ASSISTANCE TO NONPROFIT ORGANIZATIONS TO PROVIDE

SITES FOR RURAL HOUSING FOR LOW- AND MODERATE-INCOME FAM- ILIES

SEC. 524. ø42 U.S.C. 1490d¿ (a)(1) IN GENERAL.—The Secretary

may make loans, on such terms and conditions and in such

amounts he deems necessary, to public or private nonprofit organizations and to Indian tribes for the acquisition and development of

land as building sites to be subdivided and sold to families, nonprofit organizations, public agencies, and cooperatives eligible for

assistance under any section of this title or under any other law

which provides financial assistance for housing low- and moderateincome families. Such a loan shall bear interest at a rate prescribed by the Secretary taking into consideration a rate determined annually by the Secretary of the Treasury as the current average market yield on outstanding marketable obligations of the

United States with remaining periods to maturity comparable to

the average maturities of such loans, adjusted to the nearest oneeighth of 1 per centum, and shall be repaid within a period not to

exceed two years from the making of the loan or within such additional period as may be authorized by the Secretary in any case as

being necessary to carry out the purposes of this section.

(2) 1 REVOLVING FUNDS.—The Secretary may make grants

to nonprofit housing agencies to establish revolving loan funds

for the acquisition and preparation of building sites for low-income housing. Any proceeds and repayments from such loans

shall be returned to the revolving loan fund to be used for purposes related to this section. Loan funds and interest payments

shall be used solely for the acquisition of land; the preparation

of land for building sites; the payment of reimbursable legal

and technical costs; and technical assistance and administrative costs, not to exceed 10 percent of the fund.

(b) In determining whether to extend financial assistance

under this section, the Secretary shall take into consideration,

among other factors, (1) the suitability of the area to the types of

dwellings which can feasibly be provided, and (2) the extent to

which the assistance will (i) facilitate providing needed decent,

safe, and sanitary housing, (ii) be utilized efficiently and expeditiously, and (iii) fulfill a need in the area which is not otherwise

being met through other programs, including those being carried

out by other Federal, State, or local agencies. ø42 U.S.C. 1490d¿
Sec. 525 RURAL HOUSING 1372

PROGRAMS OF TECHNICAL AND SUPERVISORY ASSISTANCE FOR LOW- INCOME FAMILIES

SEC. 525. ø42 U.S.C. 1490e¿ (a) The Secretary may make

grants to or enter into contracts with public or private nonprofit

corporations, agencies, institutions, organizations, Indian tribes,

and other associations approved by him, to pay part or all of the

cost of developing, conducting, administering or coordinating effective and comprehensive programs of technical and supervisory assistance which will aid needy low-income individuals and families

in benefiting from Federal, State, and local housing programs in

rural areas. In processing applications for such grants or contracts

made by private nonprofit corporations, agencies, institutions, organizations, and other associations, the Secretary shall give preference to those which are sponsored (including assistance to the

applicant in processing the application, implementing the technical

assistance program, and carrying out the obligations of the grant

or contract) by a State, county, municipality, or other governmental

entity or public body.

(b) The Secretary is authorized to make loans to public or private nonprofit corporations, agencies, institutions, organizations,

Indian tribes, and other associations approved by him for the necessary expenses, prior to construction, of planning, and obtaining

financing for, the rehabilitation or construction of housing for lowincome individuals or families under any Federal, State, or local

housing program which is or could be used in rural areas. Such

loans shall be made without interest and shall be for the reasonable costs expected to be incurred in planning, and in obtaining financing for, such housing prior to the availability of financing, including but not limited to preliminary surveys and analyses of market needs, preliminary site engineering and architectural fees, and

construction loan fees and discounts. The Secretary shall require

repayment of loans made under this subsection, under such terms

and conditions as he may require, upon completion of the housing

or sooner.

ø(c) [Repealed.]¿

(d) All funds appropriated for the purpose of subsection (b)

shall be deposited in a fund which shall be known as the low-income sponsor fund, and which shall be available without fiscal year

limitation and be administered by the Secretary as a revolving

fund for carrying out the purposes of that subsection. Sums received in repayment of loans made under subsection (b) shall be deposited in such fund.

CONDOMINIUM HOUSING

SEC. 526. ø42 U.S.C. 1490f¿ (a) The Secretary is authorized,

upon such terms and conditions (substantially identical insofar as

may be feasible with those specified in section 502) as he may prescribe, to make loans to persons and families of low or moderate

income, and to insure and make commitments to insure loans made

to persons and families of low or moderate income, to assist them

in purchasing dwelling units in condominiums located in rural

areas.

(b) Any loan made or insured under subsection (a) shall cover

a one-family dwelling unit in a condominium, and shall be subject
1373 Sec. 529 RURAL HOUSING

to such provisions as the Secretary determines to be necessary for

the maintenance of the common areas and facilities of the condominium project and to such additional requirements as the Secretary deems appropriate for the protection of the consumer.

(c) In addition to individual loans made or insured under subsection (a) the Secretary is authorized, upon such terms and conditions (substantially identical insofar as may be feasible with those

specified in section 515) as he may prescribe, to make or insure

blanket loans to a borrower who shall certify to the Secretary, as

a condition of obtaining such loan or insurance, that upon completion of the multifamily project the ownership of the project will be

committed to a plan of family unit ownership under which (1) each

family unit will be eligible for a loan or insurance under subsection

(a), and (2) the individual dwelling units in the project will be sold

only on a condominium basis and only to purchasers eligible for a

loan or insurance under subsection (a). The principal obligation of

any blanket loan made or insured under this subsection shall in no

case exceed the sum of the individual amounts of the loans which

could be made or insured with respect to the individual dwelling

units in the project under subsection (a).

(d) As used in this section, the term ‘‘condominium’’ means a

multiunit housing project which is subject to a plan of family unit

ownership acceptable to the Secretary under which each dwelling

unit is individually owned and each such owner holds an undivided

interest in the common areas and facilities which serve the project.

øMOBILE HOMES¿

øSEC. 527. [Repealed.]¿

TAXATION OF PROPERTY HELD BY SECRETARY

SEC. 528. ø42 U.S.C. 1490h¿ All property subject to a lien held

by the United States or the title to which is acquired or held by

the Secretary under this title other than property used for administrative purposes shall be subject to taxation by a State, Commonwealth, territory, possession, district, and local political subdivisions in the same manner and to the same extent as other property

is taxed: Provided, That no tax shall be imposed or collected on or

with respect to any instrument if the tax is based on—

(1) the value of any notes or mortgages or other lien instruments held by or transferred to the Secretary;

(2) any notes or lien instruments administered under this

title which are made, assigned, or held by a person otherwise

liable for such tax; or

(3) the value of any property conveyed or transferred to

the Secretary, whether as a tax on the instrument, the privilege of conveying or transferring, or the recordation thereof;

nor shall the failure to pay or collect any such tax be a ground

for refusal to record or file such instruments, or for failure to

impart notice, or prevent the enforcement of its provisions in

any State or Federal court.

øMINIMUM PROPERTY STANDARDS FOR ENERGY CONSERVATION¿

øSEC. 529. [Repealed.]¿
Sec. 530 RURAL HOUSING 1374

CONDITION ON RENT INCREASES IN 514, 515, AND 517 PROJECTS

SEC. 530. ø42 U.S.C. 1490j¿ The Secretary may not approve

any increase in rental payments, with respect to units in which the

tenants are paying rentals in excess of 30 per centum of their incomes, in any project which is assisted under section 514, 515, or

517 and under section 521(a)(1)(B) unless the project owner is receiving, or has applied for (within the most recent period of 180

days prior to the effective date of such increase), assistance payments with respect to such project under section 521(a)(2)(A) or

521(a)(5) of this title or section 8 of the United States Housing Act

of 1937.

FHA INSURANCE

SEC. 531. ø42 U.S.C. 1490k¿ The Secretary is authorized to act

as an agent of the Secretary of Housing and Urban Development

to recommend insurance of any mortgage meeting the requirements

of section 203 of the National Housing Act.

PROCESSING OF APPLICATIONS

SEC. 532. ø42 U.S.C. 1490l¿ (a) Except as otherwise provided

in subsection (c), the Secretary shall, in making assistance available under this title, give a priority to applications submitted by—

(1) persons and families that have the greatest housing assistance needs because of their low income and their residing

in inadequate dwellings;

(2) applicants applying for assistance for projects that will

serve such persons and families; and

(3) applicants residing in areas which are the most rural

in character.

(b) In making available the assistance authorized by section

513 and section 521(a) with respect to projects involving insured

and guaranteed loans and interest credits and rental assistance

payments, the Secretary shall process and approve requests for

such assistance in a manner that provides for a preliminary reservation of assistance at the time of initial approval of the project.

(c) PRIORITIZATION OF SECTION 515 HOUSING ASSISTANCE.—

(1) IN GENERAL.—The Secretary shall make assistance

under section 515 available pursuant to an objective procedure

established by the Secretary, under which the Secretary shall

identify counties and communities having the greatest need for

such assistance and designate such counties and communities

to receive such assistance.

(2) OBJECTIVE MEASURES.—The Secretary shall use the following objective measures to determine the need for rental

housing assistance under paragraph (1):

(A) The incidence of poverty.

(B) The lack of affordable housing and the existence of

substandard housing.

(C) The lack of mortgage credit.

(D) The rural characteristics of the location.

(E) Other factors as determined by the Secretary,

demonstrating the need for affordable housing.
1375 Sec. 533 RURAL HOUSING

(3) INFORMATION.—In administering this subsection, the

Secretary shall use information from the most recent decennial

census of the United States, relevant comprehensive affordable

housing strategies under section 105 of the Cranston-Gonzalez

National Affordable Housing Act, and other reliable sources obtained by the Secretary which demonstrate the need for affordable housing in rural areas.

(4) DESIGNATION.—A designation under this subsection

shall not be effective for a period of more than 3 years, but

may be renewed by the Secretary in accordance with the procedure set forth in this subsection. The Secretary shall take such

other reasonable actions as the Secretary considers to be appropriate to notify the public of such designations.

HOUSING PRESERVATION GRANTS

SEC. 533. ø42 U.S.C. 1490m¿ (a) The purpose of this section is

to authorize the Secretary to make grants to eligible grantees including private nonprofit organizations, Indian tribes, general units

of local government, counties, States, and consortia of other eligible

grantees, in order to—

(1) rehabilitate or replace single family housing in rural

areas which is owned by low- and very low-income persons and

families, and

(2) rehabilitate or replace rental properties or cooperative

housing which has a membership resale structure that enables

the cooperative to maintain affordability for persons of low income in rural areas serving low- and very low-income occupants.

The Secretary may also provide tenant-based assistance as provided under section 8 of the United States Housing Act of 1937 or

section 542 of this title upon the request of grantees in order to

minimize the displacement of very low-income tenants residing in

units rehabilitated or replaced with assistance under this section.

(b) Preservation programs assisted under this section shall—

(1) be used to provide loans or grants to owners of single

family housing in order to cover the cost of repairs and improvements;

(2) be used to provide loans or grants, not to exceed

$15,000 per unit, to owners of single family housing to replace

existing housing if repair or rehabilitation of the housing is determined by the Secretary not to be practicable and the owner

of the housing is unable to afford a loan under section 502 for

replacement housing;

(3) be used to provide interest reduction payment;

(4) be used to provide loans or grants to owners of rental

housing, except that rental rehabilitation or replacement assistance provided under this subsection for any structure shall

not exceed 75 per centum of the total costs associated with the

rehabilitation or replacement of that structure;

(5) be used to provide other comparable assistance that the

Secretary deems appropriate to carry out the purpose of this

section, designed to reduce the costs of such repair, rehabilitation, and replacement in order to make such housing affordable

by persons of low income and, to the extent feasible, by persons
Sec. 533 RURAL HOUSING 1376

and families whose incomes do not exceed 50 per centum of the

area median income;

(6) benefit low- and very low-income persons and families

in rural areas, without causing the displacement of current

residents; and

(7) raise health and safety conditions to meet those specified in section 509(a).

(c)(1) The Secretary shall allocate grant funds under this section for use in each State on the basis of a formula contained in

a regulation prescribed by the Secretary using the average of the

ratios between—

(A) the population of the rural areas in that State and the

population of the rural areas of all States;

(B) the extent of poverty in the rural areas in that State

and the extent of poverty in the rural areas of all States; and

(C) the extent of substandard housing in the rural areas

of that State and the extent of substandard housing in the

rural areas of all States.

Any funds which are allocated to a State but uncommitted to

grantees will be transferred to the State office of the Farmers

Home Administration in a timely manner and be used for authorized rehabilitation activities under section 504. Funds obligated,

but subsequently unspent and deobligated, may remain available,

to the extent provided in appropriations Acts, for use as housing

preservation grants in ensuing fiscal years.

(2) Unless there is only one eligible grantee in a State, a single

grantee may not receive more than 50 per centum of a State’s allocation.

(d)(1) Eligible grantees may submit a statement of activity to

the Secretary at the time specified by the program administrator,

containing a description of its proposed preservation program. The

statement shall consist of the activities each entity proposes to undertake for the fiscal year, and the projected progress in carrying

out those activities. The statement of activities shall be made available to the public for comment.

(2) In preparing such statement, the grantee shall consult with

and consider the views of appropriate local officials.

(3) The Secretary shall evaluate the merits of each statement

on the basis of such criteria as the Secretary shall prescribe, including the extent—

(A) to which the repair, rehabilitation, and replacement activities will assist persons of low income who lack adequate

shelter, with priority given to applications assisting the maximum number of persons and families whose incomes do not

exceed 50 per centum of the area median income;

(B) to which the repair, rehabilitation, and replacement activities include the participation of other public or private organizations in providing assistance, in addition to the assistance

provided under this section, in order to lower the costs of such

activities or provide for the leveraging of available funds to

supplement the rural housing preservation grant program;

(C) to which such activities will be undertaken in rural

areas having populations below 10,000 or in remote parts of

other rural areas;
1377 Sec. 533 RURAL HOUSING

(D) to which the repair, rehabilitation, and replacement activities may be expected to result in achieving the greatest degree of repair or improvement for the least cost per unit or

dwelling;

(E) to which the program would minimize displacement;

(F) to which the program would alleviate overcrowding in

rural residences inhabited by low- and very low-income persons

and families;

(G) to which the program would minimize the use of grant

funds for administrative purposes; and

(H) to which the owner agrees to meet the requirement of

subsection (e)(1)(B)(iv) for a period longer than 5 years;

and shall assess the demonstrated capacity of the grantee to carry

out the program as well as the financial feasibility of the program.

(4) The amount of assistance provided under this section with

respect to any housing shall be the least amount that the Secretary

determines is necessary to provide, through the repair and rehabilitation, or replacement, of such housing, decent housing of modest

design that is affordable for persons of low income.

(5) A grantee may use housing preservation grant funds under

this section for replacement housing only after providing documentation to the Secretary that—

(A) the existing housing is in such poor condition that rehabilitation is not economically feasible;

(B) the owner of the housing lacks the income or repayment ability necessary to qualify for a loan under section 502;

and

(C) the grantee will extend assistance to the owner of the

housing under terms that the owner can afford.

(e)(1) Assistance under this section may be provided with respect to rental or cooperative housing only if—

(A) the owner has entered into such agreements with the

Secretary as may be necessary to assure compliance with the

requirements of this section, to assure the financial feasibility

of such housing, and to carry out the other provisions of this

section;

(B) the owner agrees—

(i) to pass on to the tenants any reduction in the debt

service payments resulting from the assistance provided

under this section;

(ii) not to convert the units to condominium ownership

(or in the case of a cooperative, to condominium ownership

or any form of cooperative ownership not eligible for assistance under this section);

(iii) not to refuse to rent a dwelling unit in the structure to a family solely because the family is receiving or

is eligible to receive assistance under any Federal, State,

or local housing assistance program; and

(iv) that the units repaired and rehabilitated with

such assistance will be occupied, or available for occupancy, by persons of low income;

during the 5-year period beginning on the date on which the

units in the housing are available for occupancy;

(C) the unit of general local government or nonprofit organization that receives the assistance certifies to the satisfaction
Sec. 533 RURAL HOUSING 1378

1The date of enactment of the section was November 30, 1983.

of the Secretary that the assistance will be made available in

conformity with Public Law 88–352 and Public Law 90–284;

(D) the owner agrees to enter into and abide by written

leases with the tenants, which leases shall provide that tenants may be evicted only for good cause; and

(E) the unit of general local government or nonprofit organization will agree to supervise repairs and rehabilitation and

will agree to have a disinterested party inspect such repairs

and rehabilitation.

(2) Assistance under this section provided with respect to any

housing other than rental or cooperative housing may be provided

only if the owner complies with the requirements set forth in subparagraph (E) of paragraph (1) and any other requirements established by the Secretary to carry out the purpose of this section.

(3)(A) The Secretary shall provide that if the owner or his or

her successors in interest fail to carry out the agreements described

in subparagraphs (A) and (B) of paragraph (1) during the applicable period, the owner of his or her successors in interest shall make

a payment to the Secretary of an amount that equals the total

amount of assistance provided under this section with respect to

such housing, plus interest thereon (without compounding), for

each year and any fraction thereof that the assistance was outstanding, at a rate determined by the Secretary taking into account

the average yield on outstanding marketable long-term obligations

of the United States during the month preceding the date on which

the assistance was made available.

(B) Notwithstanding any other provision of law, any assistance

provided under this section shall constitute a debt, which is payable in the case of any failure to carry out the agreements described in subparagraphs (A), (B), and (C) of paragraph (1), and

shall be secured by the security instruments provided by the owner

to the Secretary.

(f) The Secretary shall provide for such advance payments of

assistance under this section as the Secretary determines is necessary to effectively carry out the provisions of this section.

(g) The Secretary shall, at least on an annual basis, make such

review and audits as may be necessary or appropriate to determine

whether the grantee has carried out its activities in a timely manner and in accordance with the requirements of this section, the degree to which the activities assisted benefitted low income families

or persons and very low-income families or persons who lacked adequate housing, and whether the grantee has a continuing capacity

to carry out the activities in a timely manner. The Secretary may

adjust, reduce, or withdraw resources made available to grantees

receiving assistance under this section, or take other action as appropriate in accordance with the findings of these reviews and audits. Any amounts which became available as a result of actions

under this subsection shall be reallocated as housing preservation

grants to such grantee or grantees as the Secretary may determine.

(h)(1) The Secretary is authorized to prescribe such rules and

regulations and make such delegations of authority as he deems

necessary to carry out this section within 90 days after the date of

enactment of this section.1
1379 Sec. 535 RURAL HOUSING

(2) The Secretary shall, not later than the expiration of the 30-

day period following the date of the enactment of the Housing and

Community Development Act of 1987 issue regulations to carry out

the program of grants under subsection (a)(2).

(i) The Secretary shall establish procedures which support national historic preservation objectives and which assure that, if any

rehabilitation proposed to be assisted under this section would affect property that is included or is eligible for inclusion on the National Register of Historic Places, such activity shall not be undertaken unless (1) it will reasonably meet the standards for rehabilitation issued by the Secretary of the Interior and the appropriate

State historic preservation officer is afforded the opportunity to

comment on the specific rehabilitation plan, or (2) the Advisory

Council on Historic Preservation is afforded an opportunity to comment on cases for which the recipient of assistance, in consultation

with the State historic preservation officer, determines that the

proposed rehabilitation activity cannot reasonably meet such standards or would adversely affect historic property as defined therein.

REVIEW OF RULES AND REGULATIONS

SEC. 534. ø42 U.S.C. 1490n¿ (a) Notwithstanding any other

provision of law, no rule or regulation pursuant to this title may

become effective unless it has first been published for public comment in the Federal Register for at least 60 days, and published

in final form for at least 30 days.

(b) The Secretary shall transmit to the chairman and ranking

Member of the Committee on Banking, Housing, and Urban Affairs

of the Senate and the Committee on Banking, Finance and Urban

Affairs of the House, all rules and regulations at least 15 days before they are sent to the Federal Register for purposes of subsection (a).

(c) The provisions of this section shall not apply to a rule or

regulation which the Secretary certifies is issued on an emergency

basis.

(d) The Secretary shall include with each rule or regulation required to be transmitted to the Committees under this section a detailed summary of all changes required by the Office of Management and Budget that prohibit, modify, postpone, or disapprove

such rule or regulation in whole or part.

RECIPROCITY IN APPROVAL OF HOUSING SUBDIVISIONS AMONG

FEDERAL AGENCIES

SEC. 535. ø42 U.S.C. 1490o¿ (a) The Secretary of Agriculture,

the Secretary of Housing and Urban Development, and the Secretary of Veterans Affairs shall each accept an administrative approval of any housing subdivision made by any of the others so that

not later than January 1, 1984, there is total reciprocity for housing subdivision approvals among the agencies which they head.

(b) For purposes of complying with subsection (a), the Secretary of Housing and Urban Development shall consider the

issuance by the Secretary of Veterans Affairs of a certificate of reasonable value for 1 or more properties in a subdivision to be an administrative approval for the entire subdivision. This subsection

shall not apply after September 30, 1994.
Sec. 536 RURAL HOUSING 1380

(c) Before the expiration of the period referred to in subsection

(b), the Secretary of Housing and Urban Development shall report

to the Congress on housing subdivision approval policies and practices, if any, of the Departments of Housing and Urban Development and Agriculture and the Department of Veterans Affairs. The

report shall focus on the administration of environmental laws in

connection with any such policies and practices, and shall recommend any statutory, regulatory, and administrative changes

needed to achieve total reciprocity for such housing subdivision approvals. The Secretary of Housing and Urban Development shall

consult with the foregoing agencies, and such other agencies as the

Secretary selects, in preparing the report.

(d) For loans made under this title, the Secretary may accept

subdivisions that have been approved by local, county, or State

agencies.

ACCOUNTABILITY

SEC. 536. ø42 U.S.C. 1490p¿ (a) NOTICE REGARDING ASSISTANCE.—

(1) PUBLICATION OF NOTICE OF AVAILABILITY.—The Secretary shall publish in the Federal Register notice of the availability of any assistance under any program or discretionary

fund administered by the Secretary under this title.

(2) PUBLICATION OF APPLICATION PROCEDURES.—The Secretary shall publish in the Federal Register a description of the

form and procedures by which application for the assistance

may be made, and any deadlines relating to the award or allocation of the assistance. Such description shall be sufficient to

enable any eligible applicant to apply for such assistance.

(3) PUBLICATION OF SELECTION CRITERIA.—Not less than 30

days before any deadline by which applications or requests for

assistance under any program or discretionary fund administered by the Secretary must be submitted, the Secretary shall

publish in the Federal Register the criteria by which selection

for the assistance will be made. Such criteria shall include any

objective measures of housing need, project merit, or efficient

use of resources that the Secretary determines are appropriate

and consistent with the statute under which the assistance is

made available.

(4) DOCUMENTATION OF DECISIONS.—

(A) The Secretary shall award or allocate assistance

only in response to a written application in a form approved in advance by the Secretary, except where other

award or allocation procedures are specified in statute.

(B) The Secretary shall ensure that documentation

and other information regarding each application for assistance is sufficient to indicate the basis on which any

award or allocation was made or denied. The preceding

sentence shall apply to—

(i) any application for an award or allocation of assistance made by the Secretary to a State, unit of general local government, or other recipient of assistance,

and
1381 Sec. 536 RURAL HOUSING

(ii) any application for a subsequent award or allocation of such assistance by such State, unit of general

local government or other recipient.

(C) The Secretary shall ensure that each application

and all related documentation and other information referred to in subparagraph (B) is readily available for public

inspection for a period of not less than 10 years, beginning

not less than 30 days following the date on which the

award or allocation is made.

(5) EMERGENCY EXCEPTION.—The Secretary may waive the

requirements of paragraphs (1), (2), and (3) if the Secretary determines that the waiver is required for adequate response to

an emergency. Not less than 30 days after providing a waiver

under the preceding sentence, the Secretary shall publish in

the Federal Register the Secretary’s reasons for so doing.

(b) DISCLOSURES BY APPLICANTS.—The Secretary shall require

the disclosure of information with respect to any application for assistance under this title submitted by any applicant who has received or, in the determination of the Secretary, can reasonably be

expected to receive assistance under this title in excess of $200,000

in the aggregate during any fiscal year. Such information shall include the following:

(1) OTHER GOVERNMENT ASSISTANCE.—Information regarding any related assistance from the Federal Government, a

State, or a unit of general local government, or any agency or

instrumentality thereof, that is expected to be made available

with respect to the project or activities for which the applicant

is seeking assistance under this title. Such related assistance

shall include but not be limited to any loan, grant, guarantee,

insurance, payment, rebate, subsidy, credit, tax benefit, or any

other form of direct or indirect assistance.

(2) INTERESTED PARTIES.—The name and pecuniary interest of any person who has a pecuniary interest in the project

or activities for which the applicant is seeking assistance. Persons with a pecuniary interest in the project or activity shall

include but not be limited to any developers, contractors, and

consultants involved in the application for assistance under

this title or the planning, development, or implementation of

the project or activity. For purposes of this paragraph, residency of an individual in housing for which assistance is being

sought shall not, by itself, be considered a pecuniary interest.

(3) EXPECTED SOURCES AND USES.—A report satisfactory to

the Secretary of the expected sources and uses of funds that

are to be made available for the project or activity.

(c) UPDATING OF DISCLOSURE.—During the period when an application is pending or assistance is being provided, the applicant

shall update the disclosure required under the previous subsection

within 30 days of any substantial change.

ø(d) [Repealed.]¿

(e) REMEDIES AND PENALTIES.—

(1) ADMINISTRATIVE REMEDIES.—If the Secretary receives

or obtains information providing a reasonable basis to believe

that a violation of subsection (b), (c), or (d) this section has occurred, the Secretary shall—
Sec. 536 RURAL HOUSING 1382

1So in law.

(A) in the case of a selection that has not been made,

determine whether to terminate the selection process or

take other appropriate actions; and

(B) in the case of a selection that has been made, determine whether to—

(i) void or rescind the selection, subject to review

and determination on the record after opportunity for

a hearing;

(ii) impose sanctions upon the violator, including

debarment, subject to review and determination on the

record after opportunity for a hearing;

(iii) recapture any funds that have been disbursed;

(iv) permit the violating applicant selected to continue to participate in the program; or

(v) take any other actions that the Secretary considers appropriate.

The Secretary shall publish in the Federal Register a descriptive statement of each determination made and action taken

under this paragraph.

(2) CIVIL PENALTIES.—Whoever violates any section 1 of

this section shall be subject to the imposition of a civil penalty

in a civil action brought by the United States in an appropriate

district court of the United States. A civil penalty under this

paragraph may not exceed—

(A) $100,000 in the case of an individual; or

(B) $1,000,000 in the case of an applicant other than

an individual.

(3) DEPOSIT OF PENALTIES IN INSURANCE FUNDS.—Notwithstanding any other provision of law, all civil money penalties

collected under this section shall be deposited in the Rural

Housing Insurance Fund.

(4) NONEXCLUSIVENESS OF REMEDIES.—This subsection

may not be construed to limit the applicability of any requirements, sanctions, penalties, or remedies established under any

other law. The Secretary shall not be relieved of any obligation

to carry out the requirements of this section because such

other requirements, sanctions, penalties, or remedies apply.

(f) LIMITATION OF ASSISTANCE.—The Secretary shall certify

that assistance provided by the Secretary to any housing project

shall not be more than is necessary to provide affordable housing

after taking account of assistance from all Federal, State, and local

sources. The Secretary shall adjust the amount of assistance provided to an applicant to compensate for any changes reported

under subsection (c).

(g) REGULATIONS.—Not less than 180 days following enactment

of this Act, the Secretary shall promulgate regulations to implement this section.

(h) DEFINITION.—For purposes of this section, the term ‘‘assistance’’ means any housing grant, loan, guarantee, insurance, rebate,

subsidy, tax credit benefit, or other form of direct or indirect assistance, for the original construction or development of the project.

(i) REPORT BY THE SECRETARY.—The Secretary shall submit to

the Congress, not later than 180 days following the date of enact-
1383 Sec. 538 RURAL HOUSING

1The date of enactment was December 15, 1989.

ment of this section,1 a report describing actions taken to carry out

this section, including actions to inform and educate officers and

employees of the Department of Agriculture regarding the provisions of this section.

SEC. 537. ø42 U.S.C. 1490p–1¿ OFFICE OF RURAL HOUSING PRESERVATION.

(a) ESTABLISHMENT.—There is established within the Farmers

Home Administration an Office of Rental Housing Preservation

(hereafter in this section referred to as the ‘‘Office’’). The Office

shall be headed by a Director designated by the Secretary of

Agriculture.

(b) PURPOSES.—The purposes of the Office are:

(1) to review and process applications under section 502(c)

and section 515(t) related to the preservation of rural rental

housing;

(2) to provide technical or financial assistance to any other

projects needing such assistance;

(3) to coordinate and direct all other activities related to

the preservation of rural housing; and

(4) to monitor compliance of projects prepaid or receiving

incentives under the Housing Act of 1949.

SEC. 538. ø42 U.S.C. 1490p–2¿ LOAN GUARANTEES FOR MULTIFAMILY

RENTAL HOUSING IN RURAL AREAS.

(a) AUTHORITY.—The Secretary may make commitments to

guarantee eligible loans for the development costs of eligible housing and related facilities, and may guarantee such eligible loans, in

accordance with this section.

(b) EXTENT OF GUARANTEE.—A guarantee made under this section shall guarantee repayment of an amount not exceeding the

total of the amount of the unpaid principal and interest of the loan

for which the guarantee is made. The liability of the United States

under any guarantee under this section shall decrease or increase

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

portion of the obligation.

(c) ELIGIBLE BORROWERS.—A loan guaranteed under this section may be made to a nonprofit organization, an agency or body

of any State government or political subdivision thereof, an Indian

tribe, or a private entity.

(d) ELIGIBLE HOUSING.—A loan may be guaranteed under this

section only if the loan is used for the development costs of housing

and related facilities (as such terms are defined in section 515(e))

that—

(1) consists of 5 or more adequate dwellings;

(2) is available for occupancy only by low or moderate income families or persons, whose incomes at the time of initial

occupancy do not exceed 115 percent of the median income of

the area, as determined by the Secretary;

(3) will remain available as provided in paragraph (2), according to such binding commitments as the Secretary may require, for the period of the original term of the loan guaranteed, unless the housing is acquired by foreclosure (or instrument in lieu of foreclosure) or the Secretary waives the applica-
Sec. 538 RURAL HOUSING 1384

bility of such requirement for the loan only after determining,

based on objective information, that—

(A) there is no longer a need for low- and moderateincome housing in the market area in which the housing

is located;

(B) housing opportunities for low-income households

and minorities will not be reduced as a result of the waiver; and

(C) additional Federal assistance will not be necessary

as a result of the waiver; and

(4) is located in a rural area.

(e) ELIGIBLE LENDERS.— (1) REQUIREMENT.—A loan may be guaranteed under this

section only if the loan is made by a lender that the Secretary

determines—

(A) meets the qualifications, and has been approved by

the Secretary of Housing and Urban Development, to

make loans for multifamily housing that are to be insured

under the National Housing Act;

(B) meets the qualifications, and has been approved by

the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, to make loans for

multifamily housing that are to be sold to such corporations; or

(C) meets any qualifications that the Secretary may,

by regulation, establish for participation of lenders in the

loan guarantee program under this section.

(2) ELIGIBILITY LIST AND ANNUAL AUDIT.—The Secretary

shall establish a list of eligible lenders and shall annually conduct an audit of each lender included in the list for purposes

of determining whether such lender continues to be an eligible

lender.

(f) LOAN TERMS.—Each loan guaranteed pursuant to this section shall—

(1) be made for a period of not less than 25 nor greater

than 40 years from the date the loan was made and may provide for amortization of the loan over a period of not to exceed

40 years with a final payment of the balance due at the end

of the loan term;

(2) involve a rate of interest agreed upon by the borrower

and the lender that does not exceed the maximum allowable

rate established by the Secretary for purposes of this section

and is fixed over the term of the loan;

(3) involve a principal obligation (including initial service

charges, appraisal, inspection, and other fees as the Secretary

may approve) not to exceed—

(A) in the case of a borrower that is a nonprofit organization or an agency or body of any State or local government, 97 percent of the development costs of the housing

and related facilities or the value of the housing and facilities, whichever is less;

(B) in the case of a borrower that is a for-profit entity

not referred to in subparagraph (A), 90 percent of the development costs of the housing and related facilities or the

value of the housing and facilities, whichever is less; and
1385 Sec. 538 RURAL HOUSING

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

property as may be attributable to dwelling use, the applicable maximum per unit dollar amount limitations under

section 207(c) of the National Housing Act;

(4) be secured by a first mortgage on the housing and related facilities for which the loan is made, or otherwise, as the

Secretary may determine necessary to ensure repayment of the

obligation; and

(5) for at least 20 percent of the loans made under this section, the Secretary shall provide the borrower with assistance

in the form of credits pursuant to section 521(a)(1)(B) to the

extent necessary to reduce the rate of interest under paragraph

(2) to the applicable Federal rate, as such term is used in section 42(i)(2)(D) of the Internal Revenue Code of 1986.

(g) GUARANTEE FEE.—At the time of issuance of a loan guaranteed under this section, the Secretary may collect from the lender

a fee equal to not more than 1 percent of the principal obligation

of the loan.

(h) AUTHORITY FOR LENDERS TO ISSUE CERTIFICATES OF GUAR- ANTEE.—The Secretary may authorize certain eligible lenders to determine whether a loan meets the requirements for guarantee

under this section and, subject to the availability of authority to

enter into guarantees under this section, execute a firm commitment for a guarantee binding upon the Secretary and issue a certificate of guarantee evidencing a guarantee, without review and

approval by the Secretary of the specific loan. The Secretary may

establish standards for approving eligible lenders for a delegation

of authority under this subsection.

(i) PAYMENT UNDER GUARANTEE.—

(1) NOTICE OF DEFAULT.—In the event of default by the

borrower on a loan guaranteed under this section, the holder

of the guarantee certificate for the loan shall provide written

notice of the default to the Secretary.

(2) FORECLOSURE.—After receiving notice under paragraph

(1) and providing written notice of action under this paragraph

to the Secretary, the holder of the guarantee certificate for the

loan may initiate foreclosure proceedings for the loan in a court

of competent jurisdiction, in accordance with regulations issued

by the Secretary, to obtain possession of the security property.

After the court issues a final order authorizing foreclosure on

the property, the holder of the certificate shall be entitled to

payment by the Secretary under the guarantee (in the amount

provided under subsection (b)) upon (A) submission to the Secretary of a claim for payment under the guarantee, and (B) assignment to the Secretary of all the claims of the holder of the

guarantee against the borrower or others arising out of the

loan transaction or foreclosure proceedings, except claims released with the consent of the Secretary.

(3) ASSIGNMENT BY SECRETARY.—After receiving notice

under paragraph (1), the Secretary may accept assignment of

the loan if the Secretary determines that the assignment is in

the best interests of the United States. Assignment of a loan

under this paragraph shall include conveyance to the Secretary

of title to the security property, assignment to the Secretary of

all rights and interests arising under the loan, and assignment
Sec. 538 RURAL HOUSING 1386

to the Secretary of all claims against the borrower or others

arising out of the loan transaction. Upon assignment of a loan

under this paragraph, the holder of a guarantee certificate for

the loan shall be entitled to payment by the Secretary under

the guarantee (in the amount provided under subsection (b)).

(4) REQUIREMENTS.—Before any payment under a guarantee is made under paragraph (2) or (3), the holder of the

guarantee certificate shall exhaust all reasonable possibilities

of collection on the loan guaranteed. Upon payment, in whole

or in part, to the holder, the note or judgment evidencing the

debt shall be assigned to the United States and the holder

shall have no further claim against the borrower or the United

States. The Secretary shall then take such action to collect as

the Secretary determines appropriate.

(j) VIOLATION OF GUARANTEE REQUIREMENTS BY LENDERS

ISSUING GUARANTEES.— (1) INDEMNIFICATION.—If the Secretary determines that a

loan guaranteed by an eligible lender pursuant to delegation of

authority under subsection (h) was not originated in accordance with the requirements under this section and the Secretary pays a claim under the guarantee for the loan, the Secretary may require the eligible lender authorized under subsection (h) to issue the guarantee certificate for the loan—

(A) to indemnify the Secretary for the loss, if the payment under the guarantee was made within a reasonable

period specified by the Secretary; or

(B) to indemnify the Secretary for the loss regardless

of when payment under the guarantee was made, if the

Secretary determines that fraud or misrepresentation was

involved in connection with the origination of the loan.

(2) TERMINATION OF AUTHORITY TO ISSUE GUARANTEES.— The Secretary may cancel a delegation of authority under subsection (h) to an eligible lender if the Secretary determines

that the lender has violated the requirements and procedures

for guaranteed loans under this section or for other good cause.

Any such cancellation shall be made by giving notice to the eligible lender and shall take effect upon receipt of the notice by

the mortgagee or at a later date, as the Secretary may provide.

A decision by the Secretary to cancel a delegation shall be final

and conclusive and shall not be subject to judicial review.

(k) REFINANCING.—Any loan guaranteed under this section

may be refinanced and extended in accordance with terms and conditions that the Secretary shall prescribe, but in no event for an

additional amount or term that exceeds the limitations under subsection (f).

(l) GEOGRAPHICAL TARGETING.—

(1) STUDY.—The Secretary shall provide for an independent entity to conduct a study to determine the extent to

which borrowers in the United States will utilize loan guarantees under this section, the rural areas in the United States in

which borrowers can best utilize and most need loans guaranteed under this section, and the rural areas in the United

States in which housing of the type eligible for a loan guarantee under this section is most needed by low- and moderateincome families. The Secretary shall require the independent
1387 Sec. 538 RURAL HOUSING

1The date of enactment was March 28, 1996.

entity conducting the study to submit a report to the Secretary

and to the Congress describing the results of the study not

later than the expiration of the 90-day period beginning on the

date of the enactment of the Homesteading and Housing Opportunity Program Extension Act of 1996 1. (2) TARGETING.—In providing loan guarantees under this

section, the Secretary shall establish standards to target and

give priority to rural areas in which borrowers can best utilize

and most need loans guaranteed under this section, as determined by the Secretary based on the results of the study under

paragraph (1) and any other information the Secretary considers appropriate.

(m) INAPPLICABILITY OF CREDIT-ELSEWHERE TEST.—Section

501(c) shall not apply to guarantees, or loans guaranteed, under

this section.

(n) TENANT PROTECTIONS.—The Secretary shall establish

standards for the treatment of tenants of housing developed using

amounts from a loan guaranteed under this section, which shall incorporate, to the extent applicable, existing standards applicable to

tenants of housing developed with loans made under section 515.

Such standards shall include standards for fair housing and equal

opportunity, lease and grievance procedures, and tenant appeals of

adverse actions.

(o) HOUSING STANDARDS.—The standards established under

section 515(m) for housing and related facilities assisted under section 515 shall apply to housing and related facilities the development costs of which are financed in whole or in part with a loan

guaranteed under this section.

(p) LIMITATION ON COMMITMENTS TO GUARANTEE LOANS.—

(1) REQUIREMENT OF APPROPRIATIONS FOR COST SUBSIDY.—

The authority of the Secretary to enter into commitments to

guarantee loans under this section, and to guarantee loans,

shall be effective for each fiscal year only to the extent that appropriations of budget authority to cover the costs (as such

term is defined in section 502 of the Congressional Budget Act

of 1974) of the guarantees are made in advance for such fiscal

year.

(2) ANNUAL LIMITATION ON AMOUNT OF LOAN GUARANTEE.— In each fiscal year, the Secretary may enter into commitments

to guarantee loans under this section only to the extent that

the costs of the guarantees entered into in such fiscal year do

not exceed such amount as may be provided in appropriation

Acts for such fiscal year.

(q) REPORT.— (1) IN GENERAL.—The Secretary shall submit a report to

the Congress, not later than the expiration of the 2-year period

beginning on the date of the enactment of the Housing Opportunity Program Extension Act of 1996 1, describing the program under this section for guaranteeing loans.

(2) CONTENTS.—The report shall—

(A) describe the types of borrowers providing housing

with loans guaranteed under this section, the areas served

by the housing provided and the geographical distribution
Sec. 538 RURAL HOUSING 1388

of the housing, the levels of income of the residents of the

housing, the number of dwelling units provided, the extent

to which borrowers under such loans have obtained other

financial assistance for development costs of housing provided with the loans, and the extent to which borrowers

under such loans have used low-income housing tax credits

provided under section 42 of the Internal Revenue Code of

1986 in connection with the housing provided with the

loans;

(B) analyze the financial viability of the housing provided with loans guaranteed under this section and the

need for project-based rental assistance for such housing;

(C) include any recommendations of the Secretary for

expanding or improving the program under this section for

guaranteeing loans; and

(D) include any other information regarding the program for guaranteeing loans under this section that the

Secretary considers appropriate.

(r) DEFINITIONS.—For purposes of this section, the following

definitions shall apply:

(1) The term ‘‘development cost’’ has the meaning given

the term in section 515(e).

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

by the Secretary to meet the requirements of subparagraph

(A), (B), (C), or (D) of subsection (e)(1).

(3) The terms ‘‘housing’’ and ‘‘related facilities’’ have the

meanings given such terms in section 515(e).

(4) INDIAN TRIBE.—The term ‘‘Indian tribe’’ means—

(A) any Indian tribe, band, nation, or other organized

group or community of Indians, including any Alaska Native village or regional or village corporation, as defined by

or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), that is recognized as

eligible for the special programs and services provided by

the United States to Indians because of their status as Indians pursuant to the Indian Self-Determination and Education Assistance Act of 1975 (25 U.S.C. 450 et seq.); or

(B) any entity established by the governing body of an

Indian tribe described in subparagraph (A) for the purpose

of financing economic development.

(s) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated for each fiscal year for costs (as such term is defined in section 502 of the Congressional Budget Act of 1974) of

loan guarantees made under this section such sums as may be necessary for such fiscal year to provide guarantees under this section

for eligible loans having an aggregate principal amount of

$500,000,000.

(t) TAX-EXEMPT FINANCING.—The Secretary may not deny a

guarantee under this section on the basis that the interest on the

loan or on an obligation supporting the loan for which a guarantee

is sought is exempt from inclusion in gross income for purposes of

chapter I of the Internal Revenue Code of 1986.

(u) FEE AUTHORITY.—Any amounts collected by the Secretary

pursuant to the fees charged to lenders for loan guarantees issued

under this section shall be used to offset costs (as defined by sec-
1389 Sec. 541 RURAL HOUSING

1So in law. There are no sections 538 through 540.

tion 502 of the Congressional Budget Act of 1974 (2 U.S.C. 661a))

of loan guarantees made under this section.

(v) DEFAULTS OF LOANS SECURED BY RESERVATION LANDS.—In

the event of a default involving a loan to an Indian tribe or tribal

corporation made under this section which is secured by an interest

in land within such tribe’s reservation (as determined by the Secretary of the Interior), including a community in Alaska incorporated by the Secretary of the Interior pursuant to the Indian Reorganization Act (25 U.S.C. 461 et seq.), the lender shall only pursue liquidation after offering to transfer the account to an eligible

tribal member, the tribe, or the Indian housing authority serving

the tribe. If the lender subsequently proceeds to liquidate the account, the lender shall not sell, transfer, or otherwise dispose of or

alienate the property except to one of the entities described in the

preceding sentence.

DISASTER ASSISTANCE

SEC. 541.1 ø42 U.S.C. 1490q¿ (a) AUTHORITY.— (1) IN GENERAL.—Notwithstanding any other provision of

this title, in the event of a natural disaster, so declared by the

President under the Robert T. Stafford Disaster Relief and

Emergency Assistance Act, the Secretary shall allocate, for assistance under this section to the States affected for use in the

counties designated as disaster areas and the counties contiguous to such counties, amounts made available to the Secretary by an appropriations Act for such purpose. Allocations

under this section may be made for each of the fiscal years

ending during the 3-year period beginning on the declaration

of the disaster by the President.

(2) AMOUNT.—Subject to the availability of amounts pursuant to appropriations Acts, assistance under paragraph (1)

shall be made in an amount equal to the product of—

(A) the sum of the official State estimate of the number of dwelling units in the counties described in paragraph (1) within the eligible service area of the Farmers

Home Administration (or otherwise if the Secretary provides for a waiver under subsection (d)) that are destroyed

or seriously damaged; and

(B) 20 percent of the average cost of all dwelling units

assisted by the Secretary in the State during the previous

3 years.

(b) USE.—The assistance made available under this section

may be used for the housing purposes authorized under this title,

and the Secretary shall issue such regulations as may be necessary

to carry out this section to assure the prompt and expeditious use

of such funds for the restoration of decent, safe, and sanitary housing within the areas described in subsection (a)(1). In implementing

this section, the Secretary shall evaluate the natural hazards to

which any permanent replacement housing is exposed and shall

take appropriate action to mitigate such hazards.

(c) ELIGIBILITY.—Notwithstanding any other provision of this

title, assistance allocated under this section shall be available to

units of general local government and their agencies and to local
Sec. 542 RURAL HOUSING 1390

nonprofit organizations, agencies, and corporations for the construction or rehabilitation of housing for agricultural employees

and their families.

(d) WAIVER OF RURAL AREA REQUIREMENTS.—The Secretary

may waive the application of the provisions of section 520 with respect to assistance under this section, as the Secretary considers

appropriate.

(e) RURAL HOUSING INSURANCE FUND.—The Secretary is authorized to advance from the Rural Housing Insurance Fund such

sums as may be necessary to meet the requirements of subsection

(a)(1), subject to limits previously approved in appropriations Acts.

SEC. 542. ø42 U.S.C. 1490r¿ RURAL HOUSING VOUCHER PROGRAM.

(a) IN GENERAL.—To such extent or in such amounts as are approved in appropriation Acts, the Secretary shall carry out a rural

housing voucher program to assist very low-income families and

persons to reside in rental housing in rural areas. For such purposes, the Secretary may provide assistance using a payment

standard based on the fair market rental rate established by the

Secretary for the area. The monthly assistance payment for any

family shall be the amount by which the payment standard for the

area exceeds 30 per centum of the family’s monthly adjusted income, except that such monthly assistance payment shall not exceed the amount which the rent for the dwelling unit (including the

amount allowed for utilities in the case of a unit with separate utility metering) exceeds 10 per centum of the family’s monthly gross

income.

(b) COORDINATION AND LIMITATION.—In carrying out the rural

housing voucher program under this section, the Secretary shall—

(1) coordinate activities under this section with activities

assisted under sections 515 and 533 of this title; and

(2) enter into contracts for assistance for not more than

5000 units in any fiscal year.

SEC. 543. ø42 U.S.C. 1490s¿ ENFORCEMENT PROVISIONS.

(a) EQUITY SKIMMING.— (1) CRIMINAL PENALTY.—Whoever, as an owner, agent, employee, or manager, or is otherwise in custody, control, or possession of property that is security for a loan made or guaranteed under this title, willfully uses, or authorizes the use, of

any part of the rents, assets, proceeds, income, or other funds

derived from such property, for any purpose other than to meet

actual, reasonable, and necessary expenses of the property, or

for any other purpose not authorized by this title or the regulations adopted pursuant to this title, shall be fined under title

18, United States Code, or imprisoned not more than 5 years,

or both.

(2) CIVIL SANCTIONS.—An entity or individual who as an

owner, operator, employee, or manager, or who acts as an

agent for a property that is security for a loan made or guaranteed under this title where any part of the rents, assets, proceeds, income, or other funds derived from such property are

used for any purpose other than to meet actual, reasonable,

and necessary expenses of the property, or for any other purpose not authorized by this title or the regulations adopted

pursuant to this title, shall be subject to a fine of not more
1391 Sec. 543 RURAL HOUSING

than $25,000 per violation. The sanctions provided in this

paragraph may be imposed in addition to any other civil sanctions or civil monetary penalties authorized by law.

(b) CIVIL MONETARY PENALTIES.—

(1) IN GENERAL.—The Secretary may, after notice and opportunity for a hearing, impose a civil monetary penalty in accordance with this subsection against any individual or entity,

including its owners, officers, directors, general partners, limited partners, or employees, who knowingly and materially violate, or participate in the violation of, the provisions of this

title, the regulations issued by the Secretary pursuant to this

title, or agreements made in accordance with this title, by—

(A) submitting information to the Secretary that is

false;

(B) providing the Secretary with false certifications;

(C) failing to submit information requested by the Secretary in a timely manner;

(D) failing to maintain the property subject to loans

made or guaranteed under this title in good repair and

condition, as determined by the Secretary;

(E) failing to provide management for a project which

received a loan made or guaranteed under this title that

is acceptable to the Secretary; or

(F) failing to comply with the provisions of applicable

civil rights statutes and regulations.

(2) CONDITIONS FOR RENEWAL OR EXTENSION.—The Secretary may require that expiring loan or assistance agreements

entered into under this title shall not be renewed or extended

unless the owner executes an agreement to comply with additional conditions prescribed by the Secretary, or executes a

new loan or assistance agreement in the form prescribed by the

Secretary.

(3) AMOUNT.—

(A) IN GENERAL.—The amount of a civil monetary penalty imposed under this subsection shall not exceed the

greater of—

(i) twice the damages the Department of Agriculture, the guaranteed lender, or the project that is

secured for a loan under this section suffered or would

have suffered as a result of the violation; or

(ii) $50,000 per violation.

(B) DETERMINATION.—In determining the amount of a

civil monetary penalty under this subsection, the Secretary

shall take into consideration—

(i) the gravity of the offense;

(ii) any history of prior offenses by the violator (including offenses occurring prior to the enactment of

this section);

(iii) the ability of the violator to pay the penalty;

(iv) any injury to tenants;

(v) any injury to the public;

(vi) any benefits received by the violator as a result of the violation;

(vii) deterrence of future violations; and
Sec. 543 RURAL HOUSING 1392

(viii) such other factors as the Secretary may establish by regulation.

(4) PAYMENT OF PENALTIES.—No payment of a penalty assessed under this section may be made from funds provided

under this title or from funds of a project which serve as security for a loan made or guaranteed under this title.

(5) REMEDIES FOR NONCOMPLIANCE.—

(A) JUDICIAL INTERVENTION.—If a person or entity

fails to comply with a final determination by the Secretary

imposing a civil monetary penalty under this subsection,

the Secretary may request the Attorney General of the

United States to bring an action in an appropriate United

States district court to obtain a monetary judgment

against such individual or entity and such other relief as

may be available. The monetary judgment may, in the

court’s discretion, include the attorney’s fees and other expenses incurred by the United States in connection with

the action.

(B) REVIEWABILITY OF DETERMINATION.—In an action

under this paragraph, the validity and appropriateness of

a determination by the Secretary imposing the penalty

shall not be subject to review.
1393

1Subsection (a) of this section is set forth in part XII of this compilation.

PERFORMANCE GOALS FOR FMHA

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3884; 42 U.S.C. 1471 note]

SEC. 925. PERFORMANCE GOALS.

(a) PERFORMANCE GOALS FOR THE DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT.— 1 * * *.

(b) ø42 U.S.C. 1471 note¿ PERFORMANCE GOALS FOR THE FARMERS HOME ADMINISTRATION.—

(1) IN GENERAL.—The Secretary of Agriculture may establish performance goals for the major housing programs of the

Farmers Home Administration in order to measure progress towards meeting the objectives of national housing policy.

(2) FORM OF GOALS.—The performance goals referred to in

paragraph (1) shall be expressed in terms sufficient to measure

progress.

(3) REPORT.—The Secretary of Agriculture shall prepare a

report to the Congress on the progress made in attaining the

performance goals for each program, citing the actual results

achieved in such program for the previous year.

(4) FAILURE TO MEET GOALS.—If a performance standard or

goal has not been met, the report under paragraph (3) shall include an explanation of why the goal was not met, propose

plans for achieving the performance goal, and recommend any

legislative or regulatory changes necessary for achievement of

the goal.
1394

COLLATERAL SECURITY FOR FARMER APPLICANTS

EXCERPT FROM DEPARTMENT OF AGRICULTURE AND RELATED

AGENCIES APPROPRIATION ACT, 1969

øPublic Law 90–463; 82 Stat. 651; 42 U.S.C. 1474a¿

RURAL HOUSING DIRECT LOAN ACCOUNT

* * * Hereafter, farmer applicants for direct or insured rural

housing loans shall be required to provide only such collateral security as is required of owners of nonfarm tracts.
1395

INTEREST RATE LIMITATION

EXCERPT FROM SUPPLEMENTAL APPROPRIATIONS ACT, 1985

øPublic Law 99–88; 99 Stat. 296; 7 U.S.C. 1927a¿

FARMERS HOME ADMINISTRATION

* * * * * * *

LOAN PROGRAMS

Effective October 1, 1981, and thereafter, in the case of water

and waste disposal and community facility borrowers, and effective

November 12, 1983, and thereafter, in the case of housing and farm

borrowers, upon request of the borrower, the interest rate charged

by the Farmers Home Administration to such borrowers shall be

the lower of the rates in effect at either the time of loan approval

or loan closing and any Farmers Home Administration grant funds

associated with such loans shall be set in amount based on the interest rate in effect at the time of loan approval.
1396

EXEMPTION FROM DWELLING SIZE LIMITATION

EXCERPT FROM RURAL DEVELOPMENT, AGRICULTURE AND RELATED

AGENCIES APPROPRIATIONS ACT, 1988

[Public Law 100–202, § 101(k); 101 Stat. 1329–356; 42 U.S.C. 1479 note]

SEC. 632. ø42 U.S.C. 1479 note¿ During fiscal year 1988 and

each succeeding fiscal year, the Secretary of Agriculture shall permit each district office of the Farmers Home Administration to exempt any existing dwelling from any limitation established by the

Secretary on the number of square feet of living area that may be

contained in a dwelling to be eligible for a loan under section 502

of the Housing Act of 1949, if the dwelling is modest in design,

size, and cost for the area in which it is located.
1397

COLLECTION OF CERTAIN DATA

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1944; 42 U.S.C. 3608a]

SEC. 562. ø42 U.S.C. 3608a¿ COLLECTION OF CERTAIN DATA.

(a) IN GENERAL.—To assess the extent of compliance with Federal fair housing requirements (including the requirements established under title VI of Public Law 88–352 and title VIII of Public

Law 90–284), the Secretary of Agriculture shall collect, not less

than annually, data on the racial and ethnic characteristics of persons eligible for, assisted, or otherwise benefiting under each community development, housing assistance, and mortgage and loan

insurance and guarantee program administered by such Secretary.

Such data shall be collected on a building by building basis if the

Secretary determines such collection to be appropriate.

(b) REPORTS TO CONGRESS.—The Secretary of Agriculture shall

include in the annual report of such Secretary to the Congress a

summary and evaluation of the data collected by such Secretary

under subsection (a) during the preceding year.
1398

RURAL ASSISTANCE PROGRAM INCOME LIMITS FOR

ISOLATED RURAL AREAS OF ALASKA

EXCERPT FROM AGRICULTURE, RURAL DEVELOPMENT, FOOD AND

DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2001

[Public Law 106–387; 114 Stat. ?; 7 U.S.C. 1926 note]

SEC. 736. ø7 U.S.C. 1926 note¿ Notwithstanding any other provision of law, for any fiscal year, in the case of a high cost, isolated

rural area of the State of Alaska that is not connected to a road

system—

(1) in the case of assistance provided by the Rural Housing

Service for single family housing under title V of the Housing

Act of 1949 (7 U.S.C. 1471 et seq.), the maximum income level

for the assistance shall be 150 percent of the average income

level in metropolitan areas of the State;

(2) * * *

* * * * * * *
1399

PART XI—REGULATORY PROGRAMS

INTERSTATE LAND SALES FULL DISCLOSURE ACT

EXCERPT FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 90–448; 82 Stat. 590; 15 U.S.C. 1701 et seq.]

TITLE XIV—INTERSTATE LAND SALES

SHORT TITLE

SEC. 1401.ø15 U.S.C. 1701 note¿ This title may be cited as the

‘‘Interstate Land Sales Full Disclosure Act.’’

DEFINITIONS

SEC. 1402. ø15 U.S.C. 1701¿ For the purposes of this title, the

term—

(1) ‘‘Secretary’’ means the Secretary of Housing and Urban

Development;

(2) ‘‘person’’ means an individual, or an unincorporated organization, partnership, association, corporation, trust, or estate;

(3) ‘‘subdivision’’ means any land which is located in any

State or in a foreign country and is divided or is proposed to

be divided into lots, whether contiguous or not, for the purpose

of sale or lease as part of a common promotional plan;

(4) ‘‘common promotional plan’’ means a plan, undertaken

by a single developer or a group of developers acting in concert,

to offer lots for sale or lease; where such land is offered for sale

by such a developer or group of developers acting in concert,

and such land is contiguous or is known, designated, or advertised as a common unit or by a common name, such land shall

be presumed, without regard to the number of lots covered by

each individual offering, as being offered for sale or lease as

part of a common promotional plan;

(5) ‘‘developer’’ means any person who, directly or indirectly, sells or leases, or offers to sell or lease, or advertises for

sale or lease any lots in a subdivision;

(6) ‘‘agent’’ means any person who represents, or acts for

or on behalf of, a developer in selling or leasing, or offering to

sell or lease, any lot or lots in a subdivision; but shall not include an attorney at law whose representation or another person consists solely of rendering legal services;

(7) ‘‘blanket encumbrance’’ means a trust deed, mortgage,

judgment, or any other lien or encumbrance, including an option or contract to sell or a trust agreement, affecting a subdivision or affecting more than one lot offered within a subdivision, except that such term shall not include any lien or other
Sec. 1403 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1400

encumbrance arising as the result of the imposition of any tax

assessment by any public authority;

(8) ‘‘interstate commerce’’ means trade or commerce among

the several states or between any foreign country and any

state;

(9) ‘‘State’’ includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories

and possessions of the United States;

(10) ‘‘purchaser’’ means an actual or prospective purchaser

or lessee of any lot in a subdivision; and

(11) ‘‘offer’’ includes any inducement, solicitation, or attempt to encourage a person to acquire a lot in a subdivision.

EXEMPTIONS

SEC. 1403. ø15 U.S.C. 1702¿ (a) Unless the method of disposition is adopted for the purpose of evasion of this title, the provisions of this title shall not apply to—

(1) the sale or lease of lots in a subdivision containing less

than twenty-five lots;

(2) the sale or lease of any improved land on which there

is a residential, commercial, condominium, or industrial building, or the sale or lease of land under a contract obligating the

seller or lessor to erect such a building thereon within a period

of two years;

(3) the sale of evidences of indebtedness secured by a mortgage or deed of trust on real estate;

(4) the sale of securities issued by a real estate investment

trust;

(5) the sale or lease of real estate by any government or

government agency;

(6) the sale or lease of cemetery lots;

(7) the sale or lease of lots to any person who acquires

such lots for the purpose of engaging in the business of constructing residential, commercial, or industrial buildings or for

the purpose of resale or lease of such lots to persons engaged

in such business; or

(8) the sale or lease of real estate which is zoned by the

appropriate governmental authority for industrial or commercial development or which is restricted to such use by a declaration of covenants, conditions, and restrictions which has

been recorded in the official records of the city or county in

which such real estate is located, when—

(A) local authorities have approved access from such

real estate to a public street or highway;

(B) the purchaser or lessee of such real estate is a duly

organized corporation, partnership, trust, or business entity engaged in commercial or industrial business;

(C) the purchaser or lessee of such real estate is represented in the transaction of sale or lease by a representative of its own selection;

(D) the purchaser or lessee of such real estate affirms

in writing to the seller or lessor that it either (i) is purchasing or leasing such real estate substantially for its

own use, or (ii) has a binding commitment to sell, lease,
1401 Sec. 1403 INTERSTATE LAND SALES FULL DISCLOSURE ACT

or sublease such real estate to an entity which meets the

requirements of subparagraph (B), is engaged in commercial or industrial business, and is not affiliated with the

seller, lessor, or agent thereof; and

(E) a policy of title insurance or a title opinion is

issued in connection with the transaction showing that

title to the real estate purchased or leased is vested in the

seller or lessor, subject only to such exceptions as may be

approved in writing by such purchaser or the lessee prior

to recordation of the instrument of conveyance or execution

of the lease, but (i) nothing herein shall be construed as

requiring the recordation of a lease, and (ii) any purchaser

or lessee may waive, in writing in a separate document,

the requirement of this subparagraph that a policy of title

insurance or title opinion be issued in connection with the

transaction.

(b) Unless the method of disposition is adopted for the purpose

of evasion of this title, the provisions requiring registration and

disclosure (as specified in section 1404(a)(1) and sections 1405

through 1408) shall not apply to—

(1) the sale or lease of lots in a subdivision containing

fewer than one hundred lots which are not exempt under subsection (a);

(2) the sale or lease of lots in a subdivision if, within the

twelve-month period commencing on the date of the first sale

or lease of a lot in such subdivision after the effective date of

this subsection or on such other date within that twelve-month

period as the Secretary may prescribe, not more than twelve

lots are sold or leased, and the sale or lease of the first twelve

lots in such subdivision in any subsequent twelve-month period, if not more than twelve lots have been sold or leased in

any preceding twelve-month period after the effective date of

this subsection;

(3) the sale or lease of lots in a subdivision if each

noncontiguous part of such subdivision contains not more than

twenty lots, and if the purchaser or lessee (or spouse thereof)

has made a personal, on-the-lot inspection of the lot purchased

or leased, prior to signing of the contract or agreement to purchase or lease;

(4) the sale or lease of lots in a subdivision in which each

of the lots is at least twenty acres (inclusive of easements for

ingress and egress or public utilities);

(5) the sale or lease of a lot which is located within a municipality or county where a unit of local government specifies

minimum standards for the development of subdivision lots

taking place within its boundaries, when—

(A)(i) the subdivision meets all local codes and standards, and (ii) each lot is either zoned for single family residences or, in the absence of a zoning ordinance, is limited

exclusively to single family residences;

(B)(i) the lot is situated on a paved street or highway

which has been built to standards applicable to streets and

highways maintained by the unit of local government in

which the subdivision is located and is acceptable to such

unit, or, where such street or highway is not complete, a
Sec. 1403 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1402

bond or other surety acceptable to the municipality or

county in the full amount of the cost of completing such

street or highway has been posted to assure completion to

such standards, and (ii) the unit of local government or a

homeowners association has accepted or is obligated to accept the responsibility of maintaining such street or highway, except that, in any case in which a homeowners association has accepted or is obligated to accept such responsibility, a good faith written estimate of the cost of carrying

out such responsibility over the first ten years of ownership or lease is provided to the purchaser or lessee prior

to the signing of the contract or agreement to purchase or

lease;

(C) at the time of closing, potable water, sanitary sewage disposal, and electricity have been extended to the lot

or the unit of local government is obligated to install such

facilities within one hundred and eighty days, and, for subdivisions which do not have a central water or sewage disposal system, rather than installation of water or sewer facilities, there must be assurances that an adequate potable

water supply is available year-round and that the lot is approved for the installation of a septic tank;

(D) the contract of sale requires delivery of a warranty

deed (or, where such deed is not commonly used in the jurisdiction where the lot is located, a deed or grant which

warrants that the grantor has not conveyed the lot to another person and that the lot is free from encumbrances

made by the grantor or any other person claiming by,

through, or under him) to the purchaser within one hundred and eighty days after the signing of the sales contract;

(E) at the time of closing, a title insurance binder or

a title opinion reflecting the condition of the title shall be

in existence and issued or presented to the purchaser or

lessee showing that, subject only to such exceptions as

may be approved in writing by the purchaser or lessee at

the time of closing, marketable title to the lot is vested in

the seller or lessor;

(F) the purchaser or lessee (or spouse thereof) has

made a personal, on-the-lot inspection of the lot purchased

or leased, prior to signing of the contract or agreement to

purchase or lease; and

(G) there are no offers, by direct mail or telephone solicitation, of gifts, trips, dinners, or other such promotional

techniques to induce prospective purchasers or lessees to

visit the subdivision or to purchase or lease a lot;

(6) the sale or lease of a lot, if a mobile home is to be erected or placed thereon as a residence, where the lot is sold as

a homesite by one party and the home by another, under contracts that obligate such sellers to perform, contingent upon

the other seller carrying out its obligations so that a completed

mobile home will be erected or placed on the completed homesite within a period of two years, and provide for all funds received by the sellers to be deposited in escrow accounts (controlled by parties independent of the sellers) until the trans-
1403 Sec. 1403 INTERSTATE LAND SALES FULL DISCLOSURE ACT

actions are completed, and further provide that such funds

shall be released to the buyer on demand without prejudice if

the land with the mobile home erected or placed thereon is not

conveyed within such two-year period. Such homesite must

conform to all local codes and standards for mobile home subdivisions, if any, must provide potable water, sanitary sewage

disposal, electricity, access by roads, the purchaser must receive marketable title to the lot, and where common facilities

are to be provided, they must be completed or fully funded;

(7)(A) the sale or lease of real estate by a developer who

is engaged in a sales operation which is intrastate in nature.

For purposes of this exemption, a lot may be sold only if—

(i) the lot is free and clear of all liens, encumberances,

and adverse claims;

(ii) the purchaser or lessee (or spouse thereof) has

made a personal on-the-lot inspection of the lot to be purchased or leased;

(iii) each purchase or lease agreement contains—

(I) a clear and specific statement describing a good

faith estimate of the year of completion of, and the

party responsible for, providing and maintaining the

roads, water facilities, sewer facilities and any existing

or promised amenities; and

(II) a nonwaivable provision specifying that the

contract or agreement may be revoked at the option of

the purchaser or lessee until midnight of the seventh

day following the signing of such contract or agreement or until such later time as may be required pursuant to applicable State laws; and

(iv) the purchaser or lessee has, prior to the time the

contract or lease is entered into, acknowledged in writing

the receipt of a written statement by the developer containing good faith estimates of the cost of providing electric, water, sewage, gas, and telephone service to such a

lot.

(B) As used in subparagraph (A)(i) of this paragraph, the

terms ‘‘liens’’, ‘‘encumbrances’’, and ‘‘adverse claims’’ do not include United States land patents and similar Federal grants or

reservations, property reservations which land developers commonly convey or dedicate to local bodies or public utilities for

the purpose of bringing public services to the land being developed, taxes and assessments imposed by a State, by any other

public body having authority to assess and tax property, or by

a property owners’ association, which, under applicable State

or local law, constitute liens on the property before they are

due and payable or beneficial property restrictions which

would be enforceable by other lot owners or lessees in the subdivision, if—

(i) the developer, prior to the time the contract of sale

or lease is entered into, has furnished each purchaser or

lessee with a statement setting forth in descriptive and

concise terms all such liens, reservations, taxes, assessments and restrictions which are applicable to the lot to be

purchased or leased; and
Sec. 1403 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1404

(ii) receipt of such statement has been acknowledged

in writing by the purchaser or lessee.

(C) For the purpose of this paragraph, a sales operation is

‘‘intrastate in nature’’ if the developer is subject to the laws of

the State in which the land is located, and each lot in the subdivision, other than those which are exempt under section

1403(a), (b)(6), or (b)(8), is sold or leased to residents of the

State in which the land is located; or

(8) the sale or lease of a lot in a subdivision containing

fewer than three hundred lots if—

(A) the principal residence of the purchaser or lessee

is within the same standard metropolitan statistical area,

as defined by the Office of Management and Budget, as

the lot purchased or leased;

(B) the lot is free and clear of liens (such as mortgages, deeds of trust, tax liens, mechanics liens, or judgments) at the time of the signing of the contract or agreement and until a deed is delivered to the purchaser or the

lease expires. As used in this subparagraph, the term

‘‘liens’’ does not include (i) United States land patents and

similar Federal grants or reservations, (ii) property reservations which lands developers commonly convey or

dedicate to local bodies or public utilities for the purpose

of bringing public services to the land being developed, (iii)

taxes and assessments imposed by a State, by any other

public body having authority to assess and tax property, or

by a property owners’ association, which, under applicable

State or local law, constitute liens on the property before

they are due and payable or beneficial property restrictions which would be enforceable by other lot owners or

lessees in the subdivision, or (iv) other interests described

in regulations prescribed by the Secretary;

(C) the purchaser or lessee (or spouse thereof) has

made a personal on-the-lot inspection of the lot to be purchased or leased;

(D) each purchase or lease agreement contains (i) a

clear and specific statement describing a good faith estimate of the year of completion of and the party responsible

for providing and maintaining the roads, water facilities

sewer facilities and any existing or promised amenities;

and (ii) a non waivable provision specifying that the contract or agreement may be revoked at the option of the

purchaser or lessee until midnight of the seventh day following the signing of such contract or agreement or until

such later time as may be required pursuant to applicable

State laws;

(E) the purchaser or lessee has, prior to the time the

contract or lease is entered into, acknowledged in writing

receipt of a written statement by the developer setting

forth (i) in descriptive and concise terms all liens, reservations, taxes, assessments, beneficial property restrictions

which would be enforceable by other lot owners or lessees

in the subdivision, and adverse claims which are applicable to the lot to be purchased or leased, and (ii) good faith
1405 Sec. 1404 INTERSTATE LAND SALES FULL DISCLOSURE ACT

estimates of the cost of providing electric, water, sewer,

gas, and telephone service to such lot;

(F) the developer executes and supplies to the purchaser a written instrument designating a person within

the State of residence of the purchaser as his agent for

service of process and acknowledging that the developer

submits to the legal jurisdiction of the State in which the

purchaser or lessee resides; and

(G) the developer executes a written affirmation to the

effect that he has complied with the provisions of this

paragraph, such affirmation to be given on a form provided

by the Secretary, which shall include the following: the

name and address of the developer; the name and address

of the purchaser or lessee; a legal description of the lot;

and affirmation that the provisions of this paragraph have

been complied with; a statement that the developer submits to the jurisdiction of this title with regard to the sale

of lease; and the signature of the developer.

(c) The Secretary may from time to time, pursuant to rules and

regulations issued by him, exempt from any of the provisions of

this title any subdivision or any lots in a subdivision, if he finds

that the enforcement of this title with respect to such subdivision

or lots is not necessary in the public interest and for the protection

of purchasers by reason of the small amount involved or the limited

character of the public offering.

REQUIREMENTS RELATING TO THE SALE OR LEASE OF LOTS

SEC. 1404. ø15 U.S.C. 1703¿ (a) It shall be unlawful for any

developer or agent, directly or indirectly, to make use of any means

or instruments of transportation or communication in interstate

commerce, or of the mails—

(1) with respect to the sale or lease of any lot not exempt

under section 1403—

(A) to sell or lease any lot unless a statement of record

with respect to such lot is in effect in accordance with section 1407;

(B) to sell or lease any lot unless a printed property

report, meeting the requirements of section 1408, has been

furnished to the purchaser or lessee in advance of the signing of any contract or agreement by such purchaser of lessee;

(C) to sell or lease any lot where any part of the statement of record or the property report contained an untrue

statement of a material fact or omitted to state a material

fact required to be stated therein pursuant to sections

1405 through 1408 of this title or any regulations thereunder; or

(D) to display or deliver to prospective purchasers or

lessees advertising and promotional material which is inconsistent with information required to be disclosed in the

property report; or

(2) with respect to the sale or lease, or offer to sell or lease,

any lot not exempt under section 1403(a)—
Sec. 1404 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1406

(A) to employ any device, scheme, or artifice to defraud;

(B) to obtain money or property by means of any untrue statement of a material fact, or any omission to state

a material fact necessary in order to make the statements

made (in light of the circumstances in which they were

made and within the context of the overall offer and sale

or lease) not misleading, with respect to any information

pertinent to the lot or subdivision;

(C) to engage in any transaction, practice, or course of

business which operates or would operate as a fraud or deceit upon a purchaser; or

(D) to represent that roads, sewers, water, gas, or electric service, or recreational amenities will be provided or

completed by the developer without stipulating in the contract of sale or lease that such services or amenities will

be provided or completed.

(b) Any contract or agreement for the sale or lease of a lot not

exempt under section 1403 may be revoked at the option of the

purchaser or lessee until midnight of the seventh day following the

signing of such contract or agreement or until such later time as

may be required pursuant to applicable State laws, and such a contract or agreement shall clearly provide this right.

(c) In the case of any contract or agreement for the sale or

lease of a lot for which a property report is required by this title

and the property report has not been given to the purchaser or lessee in advance or his or her signing such contract or agreement,

such contract or agreement may be revoked at the option of the

purchaser or lessee within two years from the date of such signing,

and such contract or agreement shall clearly provide this right.

(d) Any contract or agreement which is for the sale or lease of

a lot not exempt under section 1403 and which does not provide—

(1) a description of the lot which makes such lot clearly

identifiable and which is in a form acceptable for recording by

the appropriate public official responsible for maintaining land

records in the jurisdiction in which the lot is located;

(2) that, in the event of a default or breach of the contract

or agreement by the purchaser or lessee, the seller or lessor (or

successor thereof) will provide the purchaser or lessee with

written notice of such default or breach and of the opportunity,

which shall be given such purchaser or lessee, to remedy such

default or breach within twenty days after the date of the receipt of such notice; and

(3) that, if the purchaser or lessee loses rights and interest

in the lot as a result of a default or breach of the contract or

agreement which occurs after the purchaser or lessee has paid

15 per centum of the purchase price of the lot, excluding any

interest owed under the contract or agreement, the seller or

lessor (or succesor thereof) shall refund to such a purchaser or

lessee any amount which remains after subtracting (A) 15 per

centum of the purchase price of the lot, excluding any interest

owed under the contract or agreement, or the amount of damages incurred by the seller or lessor (or successor thereof) as

a result of such breach, whichever is greater, from (B) the

amount paid by the purchaser or lessee with respect to the
1407 Sec. 1406 INTERSTATE LAND SALES FULL DISCLOSURE ACT

purchase price of the lot, excluding any interest paid under the

contract or agreement,

may be revoked at the option of the purchaser or lessee for two

years from the date of the signing of such contract or agreement.

This subsection shall not apply to the sale of a lot for which, within

one hundred and eighty days after the signing of the sales contract,

the purchaser receives a warranty deed (or, where such deed is not

commonly used in the jurisdiction where the lot is located, a deed

or grant that warrants at least that the grantor has not conveyed

the lot to another person and that the lot is free from encumbrances made by the grantor or any other person claiming by,

through, or under him or her).

(e) If a contract or agreement is revoked pursuant to subsection (b), (c), or (d), if the purchaser or lessee tenders to the seller

or lessor (or successor thereof) an instrument conveying his or her

rights and interests in the lot, and if the rights and interests and

the lot are in a condition which is substantially similar to the condition in which they were conveyed or purported to be conveyed to

the purchaser or lessee, such purchaser or lessee shall be entitled

to all money paid by him or her under such contract or agreement.

REGISTRATION OF SUBDIVISIONS

SEC. 1405. ø15 U.S.C. 1704¿ (a) A subdivision may be registered by filing with the Secretary a statement of record, meeting

the requirements of this title and such rules and regulations as

may be prescribed by the Secretary in furtherance of the provisions

of this title. A statement of record shall be deemed effective only

as to the lots specified therein.

(b) At the time of filing a statement of record, or any amendment thereto, the developer shall pay to the Secretary a fee, not

in excess of $1,000, in accordance with a schedule to be fixed by

the regulations of the Secretary, which fees may be used by the

Secretary to cover all or part of the cost of rendering services under

this title, and such expenses as are paid from such fees shall be

considered non-administrative.

(c) The filing with the Secretary of a statement of record, or

of an amendment thereto, shall be deemed to have taken place

upon the receipt thereof, accompanied by payment of the fee required by subsection (b).

(d) The information contained in or filed with any statement

of record shall be made available to the public under such regulations as the Secretary may prescribe and copies thereof shall be

furnished to every applicant at such reasonable charge as the Secretary may prescribe.

INFORMATION REQUIRED IN STATEMENT OF RECORD

SEC. 1406. ø15 U.S.C. 1705¿ The statement of record shall contain the information and be accompanied by the documents specified hereinafter in this section—

(1) the name and address of each person having an interest in the lots in the subdivision to be covered by the statement of record and the extent of such interest;

(2) a legal description of, and a statement of the total area

included in, the subdivision and a statement of the topography
Sec. 1407 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1408

thereof, together with a map showing the division proposed

and the dimensions of the lots to be covered by the statement

of record and their relation to existing streets and roads;

(3) a statement of the condition of the title to the land

comprising the subdivision, including all encumbrances and

deed restrictions and convenants applicable thereto;

(4) a statement of the general terms and conditions, including the range of selling prices or rents at which it is proposed to dispose of the lots in the subdivision;

(5) a statement of the present condition of access to the

subdivision, the existence of any unusual conditions relating to

noise or safety which affect the subdivision and are known to

the developer, the availability of sewage disposal facilities and

other public utilities (including water, electricity, gas and telephone facilities) in the subdivision, the proximity in miles to

the subdivision to nearby municipalities, and the nature of any

improvements to be installed by the developer and his estimated schedule for completion;

(6) in the case of any subdivision or portion thereof against

which there exists a blanket encumbrance, a statement of the

consequences for an individual purchaser of a failure, by the

person or persons bound, to fulfill obligations under the instrument or instruments creating such encumbrance and the steps,

if any, taken to protect the purchaser in such eventuality;

(7)(A) copy of its articles of incorporation, with all amendments thereto, if the developer is a corporation; (B) copies of

all instruments by which the trust is created or declared, if the

developer is a trust; (C) copies of its articles of partnership or

association and all other papers pertaining to its organization,

if the developer is a partnership, unincorporated association,

joint stock company, or any other form of organization; and (D)

if the purported holder of legal title is a person other than developer, copies of the above documents for such person;

(8) copies of the deed or other instrument establishing title

to the subdivision in the developer or other person and copies

of any instrument creating a lien or encumbrance upon the

title of developer or other person or copies of the opinion or

opinions of counsel in respect to the title to the subdivision in

the developer or other person or copies of the title insurance

policy guaranteeing such title;

(9) copies of all forms of conveyance to be used in selling

or leasing lots to purchasers;

(10) copies of instruments creating easements or other

restrictions;

(11) such certified and uncertified financial statements of

the developer as the Secretary may require; and

(12) such other information and such other documents and

certifications as the Secretary may require as being reasonably

necessary or appropriate for the protection of purchasers.

TAKING EFFECT OF STATEMENTS OF RECORD AND AMENDMENTS

THERETO

SEC. 1407. ø15 U.S.C. 1706¿ (a) Except as hereinafter provided, the effective date of a statement of record, or any amend-
1409 Sec. 1407 INTERSTATE LAND SALES FULL DISCLOSURE ACT

ment thereto, shall be the thirtieth day after the filing thereof or

such earlier date as the Secretary may determine, having due regard to the public interest and the protection of purchaser. If any

amendment to any such statement is filed prior to the effective

date of the statement, the statement shall be deemed to have been

filed when such amendment was filed; except that such an amendment filed with the consent of the Secertary, or filed pursuant to

an order of the Secretary, shall be treated as being filed as of the

date of the filing of the statement of record. When a developer

records additional lands to be offered for disposition, he may consolidate the subsequent statement of record with any earlier recording offering subdivided land for disposition under the same

promotional plan. At the time of consolidation the developer shall

include in the consolidated statement of record any material

changes in the information contained in the earlier statement.

(b) If it appears to the Secretary that a statement of record,

or any amendment thereto, is on its face incomplete or inaccurate

in any material respect, the Secretary shall so advise the developer

within a reasonable time after the filing of the statement or the

amendment, but prior to the date the statement or amendment

would otherwise be effective. Such notification shall serve to suspend the effective date of the statement or the amendment until

thirty days after the developer files such additional information as

the Secretary shall require. Any developer, upon receipt of such notice, may request a hearing, and such hearing shall be held within

twenty days of receipt of such request by the Secretary.

(c) If, at any time subsequent to the effective date of a statement or record, a change shall occur affecting any material fact required to be contained in the statement, the developer shall

promptly file an amendment thereto. Upon receipt of any such

amendment, the Secretary may, if he determines such action to be

necessary or appropriate in the public interest or for the protection

of purchasers, suspend the statement of record until the amendment becomes effective.

(d) If it appears to the Secretary at any time that a statement

of record, which is in effect, includes any untrue statement of a material fact or omits to state any material fact required to be stated

therein or necessary to make the statements therein not misleading, the Secretary may, after notice, and after opportunity for

hearing (at a time fixed by the Secretary) within fifteen days after

such notice, issue an order suspending the statement of record.

When such statement has been amended in accordance with such

order, the Secretary shall so declare and thereupon the order shall

cease to be effective.

(e) The Secretary is hereby empowered to make an examination in any case to determine whether an order should issue under

subsection (d). In making such examination, the Secretary or anyone designated by him shall have access to and may demand the

production of any books and papers of, and many administer oaths

and affirmations to and examine, the developer, any agents, or any

other person, in respect of any matter relevant to the examination.

If the developer or any agents shall fail to cooperate, or shall obstruct or refuse to permit the making of an examination, such conduct shall be proper ground for the issuance of an order suspending

the statement of record.
Sec. 1408 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1410

(f) Any notice required under this section shall be sent to or

served on the developer or his authorized agent.

INFORMATION REQUIRED IN PROPERTY REPORT

SEC. 1408. ø15 U.S.C. 1707¿ (a) A property report relating to

the lots in a subdivision shall contain such of the information contained in the statement of record, and any amendments thereto, as

the Secretary may deem necessary, but need not include the documents referred to in paragraphs (7) to (11), inclusive, of section

1406. A property report shall also contain such other information

as the Secretary may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of

purchasers.

(b) The property report shall not be used for any promotional

purposes before the statement of record becomes effective and then

only if it is used in its entirety. No person may advertise or represent that the Secretary approves or recommends the subdivision

or the sale or lease of lots therein. No portion of the property report

shall be underscored, italicized, or printed in larger, or bolder type

than the balance of the statement unless the Secretary requires or

permits it.

CERTIFICATION OF SUBSTANTIALLY EQUIVALENT STATE LAW

SEC. 1409. ø15 U.S.C. 1708¿ (a)(1) A State shall be certified if

the Secretary determines—

(A) that, when taken as a whole, the laws and regulations

of the State applicable to the sale or lease of lots not exempt

under section 1403 require the seller or lessor of such lots to

disclose information which is at least substantially equivalent

to the information required to be disclosed by section 1408; and

(B) that the State’s administration of such laws and regulations provides, to the maximum extent practicable, that such

information is accurate.

(2) In the case of any State which is not certified under paragraph (1), such State shall be certified if the Secretary

determines—

(A) that when taken as a whole, the laws and regulations

of the State applicable to the sale or lease of lots not exempt

under section 1403 provide sufficient protection for purchasers

and lessees with respect to the matters for which information

is required to be disclosed by section 1408 but which is not required to be disclosed by such State’s laws and regulations;

and

(B) that the State’s administration of such laws and regulations provides, to the maximum extent practicable, that (i)

information required to be disclosed by such laws and regulations is accurate, and (ii) sufficient protection for purchasers

and lessees is made available with respect to the matters for

which information is not required to be disclosed.

(3) Any State requesting certification must agree to accept a

property report covering land located in another certified State but

offered for sale or lease in the State requesting certification if the

property report has been approved by the other certified State.
1411 Sec. 1410 INTERSTATE LAND SALES FULL DISCLOSURE ACT

Such property report shall be the only property report required by

the State with respect to the sale or lease of such land.

(b) After the Secretary has certified a State under subsection

(a), the Secretary shall accept for filing under sections 1405

through 1408 (and declare effective as the Federal statement of

record and property report which shall be used in all States in

which the lots are offered for sale or lease) disclosure materials

found acceptable, and any related documentation required, by State

authorities in connection with the sale or lease of lots located within the State. The Secretary may accept for such filing, and declare

effective as the Federal statement of record and property report,

such materials and documentation found acceptable by the State in

connection with the sale or lease of lots located outside that State.

Nothing in this subsection shall preclude the Secretary from exercising the authority conferred by subsections (d) and (e) of section

1407.

(c) If a State fails to meet the standards for certification pursuant to subsection (a), the Secretary shall notify the State in writing

of the changes in State law, regulation, or administration that are

needed in order to obtain certification.

(d) The Secretary shall periodically review the laws and regulations, and the administration thereof, of States certified under subsection (a), and may withdraw such certification upon a determination that such laws, regulations, and the administration thereof,

taken as a whole, no longer meet the requirements of subsection

(a).

(e) Nothing in this title may be construed to prevent or limit

the authority of any State or local government to enact and enforce

with regard to the sale of land any law, ordinance, or code not in

conflict with this title. In administering this title, the Secretary

shall cooperate with State authorities charged with the responsibility of regulating the sale or lease of lots which are subject to this

title.

CIVIL LIABILITIES

SEC. 1410. ø15 U.S.C. 1709¿ (a) A purchaser or lessee may

bring an action at law or in equity against a developer or agent if

the sale or lease was made in violation of section 1404(a). In a suit

authorized by this subsection, the court may order damages, specific performance, or such other relief as the court deems fair, just,

and equitable. In determining such relief the court may take into

account, but not be limited to, the following factors: the contract

price of the lot or leasehold; the amount the purchaser or lessee actually paid; the cost of any improvements to the lot; the fair market value of the lot or leasehold at the time relief is determined;

and the fair market value of the lot or leasehold at the time such

lot was purchased or leased.

(b) A purchaser or lessee may bring an action at law or in equity against the seller or lessor (or successor thereof) to enforce any

right under subsection (b), (c), (d), or (e) of section 1404.

(c) The amount recoverable in a suit authorized by this section

may include, in addition to matters specified in subsections (a) and

(b), interest, court costs, and reasonable amounts for attorneys’

fees, independent appraisers’ fees, and travel to and from the lot.
Sec. 1411 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1412

(d) Every person who becomes liable to make any payment

under this section may recover contribution as in cases of contract

from any person who, if sued separately, would have been liable to

make the same payment.

COURT REVIEW OF ORDERS

SEC. 1411. ø15 U.S.C. 1710¿ (a) Any person, aggrieved by an

order or determination of the Secretary issued after a hearing, may

obtain a review of such order or determination in the court of appeals of the United States, within any circuit wherein such person

resides or has his principal place of business, or in the United

States Court of Appeals for the District of Columbia, by filing in

such court, within sixty days after the entry of such order or determination, a written petition praying that the order or determination of the Secretary be modified or be set aside in whole or in part.

A copy of such petition shall be forthwith transmitted by the clerk

of the court to the Secretary, and thereupon the Secretary shall file

in the court the record upon which the order or determination complained of was entered, as provided in section 2112 of title 28,

United States Code. No objection to an order or determination of

the Secretary shall be considered by the court unless such objection

shall have been urged before the Secretary. The finding of the Secretary as to the facts, if supported by substantial evidence, shall be

conclusive. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the

court that such additional evidence is material and that there were

reasonable grounds for failure to adduce such evidence in the hearing before the Secretary, the court may order such additional evidence to be taken before the Secretary and to be adduced upon a

hearing in such manner and upon such terms and conditions as to

the court may seem proper. The Secretary may modify his findings

as to the facts by reason of the additional evidence so taken, and

shall file such modified or new findings, which, if supported by substantial evidence, shall be conclusive, and his recommendation, if

any, for the modification or setting aside of the original order.

Upon the filing of such petition, the jurisdiction of the court shall

be exclusive and its judgment and decree, affirming, modifying, or

setting aside, in whole or in part, any order of the Secretary, shall

be final, subject to review by the Supreme Court of the United

States upon certiorari or certification as provided in section 1254

of title 28, United States Code.

(b) The commencement of proceedings under subsection (a)

shall not, unless specifically ordered by the court, operate as a stay

of the Secretary’s order.

LIMITATION OF ACTIONS

SEC. 1412. ø15 U.S.C. 1711¿ (a) No action shall be maintained

under section 1410 with respect to—

(1) a violation of subsection (a)(1) or (a)(2)(D) of section

1404 more than three years after the date of signing of the

contract of sale or lease; or

(2) a violation of subsection (a)(2)(A), (a)(2)(B), or (a)(2)(C)

of section 1404 more than three years after discovery of the
1413 Sec. 1415 INTERSTATE LAND SALES FULL DISCLOSURE ACT

violation or after discovery should have been made by the exercise of reasonable diligence.

(b) No action shall be maintained under section 1410 to enforce

a right created under subsection (b), (c), (d), or (e) of section 1404

unless brought within three years after the signing of the contract

or lease, notwithstanding delivery of a deed to a purchaser.

CONTRARY STIPULATION VOID

SEC. 1413. ø15 U.S.C. 1712¿ Any condition, stipulation, or provision binding any person acquiring any lot in a subdivision to

waive compliance with any provision of this title of the rules and

regulations of the Secretary shall be void.

ADDITIONAL REMEDIES

SEC. 1414. ø15 U.S.C. 1713¿ The rights and remedies provided

by this title shall be in addition to any and all other rights and

remedies that may exist at law or in equity.

INVESTIGATIONS, INJUNCTIONS, AND PROSECUTION OF OFFENSES

SEC. 1415. ø15 U.S.C. 1714¿ (a) Whenever it shall appear to

the Secretary that any person is engaged or about to engage in any

acts or practices which constitute or will constitute a violation of

the provisions of this title, or of any rule or regulation prescribed

pursuant thereto, he may, in his discretion, bring an action in any

district court of the United States, or the United States District

Court for the District of Columbia to enjoin such acts or practices,

and, upon a proper showing, a permanent or temporary injunction

or restraining order shall be granted without bond. The Secretary

may transmit such evidence as may be available concerning such

acts or practices to the Attorney General who may, in his discretion, institute the appropriate criminal proceedings under this title.

(b) The Secretary may, in his discretion, make such investigations as he deems necessary to determine whether any person has

violated or is about to violate any provision of this title or any rule

or regulation prescribed pursuant thereto, and may require or permit any person to file with him a statement in writing, under oath

or otherwise as the Secretary shall determine, as to all the facts

and circumstances concerning the matter to be investigated. The

Secretary is authorized, in his discretion, to publish information

concerning any such violations, and to investigate any facts, conditions, practices, or matters whcih he may deem necessary or proper

to aid in the enforcement of the provisions of this title, in the prescribing of rules and regulations thereunder or in securing information to service as a basis for recommending further legislation concerning the matters to which this title relates.

(c) For the purpose of any such investigation, or any other proceeding under this title, the Secretary, or any officer designated by

him, is empowered to administer oaths and affirmations, subpena

witnesses, compel their attendance, take evidence, and require the

production of any books, papers, correspondence, memorandums, or

other records which the Secretary deems relevant or material to

the inquiry. Such attendance of witnesses and the production of

any such records may be required from any place in the United

States or any State at any designated place of hearing.
Sec. 1416 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1414

(d) In case of contumacy by, or refusal to obey a subpena

issued to, any person, the Secretary may invoke the aid of any

court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, correspondence, memorandums, and other records and documents. And such

court may issue an order requiring such person to appear before

the Secretary or any officer designated by the Secretary, there to

produce records, if so ordered, or to give testimony touching the

matter under investigation or in question; and any failure to obey

such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the

judicial district whereof such person is an inhabitant or wherever

he may be found.

ADMINISTRATION

SEC. 1416. ø15 U.S.C. 1715¿ (a) The authority and responsibility for administering this title shall be in the Secretary of Housing and Urban Development who may delegate any of his functions,

duties, and powers to employees of the Department of Housing and

Urban Development or to boards of such employees including functions, duties, and powers with respect to investigating, hearing, determining, ordering, or otherwise acting as to any work, business,

or matter under this title. The persons to whom such delegations

are made with respect to hearing functions, duties, and powers

shall be appointed and shall serve in the Department in compliance

with sections 3105, 3344, 5372, and 7521 of title 5 of the United

States Code. The Secretary shall by rule prescribed such rights of

appeal from the decisions of his administrative law judges to other

administrative law judges or to other officers in the Department,

to boards of officers or to himself, as shall be apropriate and in accordance with law.

(b) All hearings shall be public and appropriate records thereof

shall be kept, and any order issued after such hearing shall be

based on the record made in such hearing which shall be conducted

in accordance with provisions of subchapter II of chapter 5, and

chapter 7, of title 5, United States Code.

(c) The Secretary shall conduct all actions with respect to rulemaking or adjudication under this title in accordance with the provisions of chapter 5 of title 5, United States Code. Notice shall be

given of any adverse action or final disposition and such notice and

the entry of any order shall be accompanied by a written statement

of supporting facts and legal authority.

UNLAWFUL REPRESENTATIONS

SEC. 1417. ø15 U.S.C. 1716¿ The fact that a statement of

record with respect to a subdivision has been filed or is in effect

shall not be deemed a finding by the Secretary that the statement

of record is true and accurate on its face, or be held to mean the

Secretary has in any way passed upon the merits of, or given approval to, such subdivision. It shall be unlawful to make, or cause

to be made, to any prospective purchaser any representation contrary to the foregoing.
1415 Sec. 1418a INTERSTATE LAND SALES FULL DISCLOSURE ACT

PENALTIES

SEC. 1418. ø15 U.S.C. 1717¿ Any person who willfully violates

any of the provisions of this title, or the rules and regulations prescribed pursuant thereto, or any person who willfully, in a statement of record filed under, or in a property report issued pursuant

to, this title, makes any untrue statement of a material fact or

omits to state any material fact required to be stated therein, shall

upon conviction be fined not more than $10,000 or imprisoned not

more than 5 years, or both.

CIVIL MONEY PENALTIES

SEC. 1418a. ø15 U.S.C. 1717a¿ (a) IN GENERAL.— (1) AUTHORITY.—Whenever any person knowingly and materially violates any of the provisions of this title or any rule,

regulation, or order issued under this title, the Secretary may

impose a civil money penalty on such person in accordance

with the provisions of this section. The penalty shall be in addition to any other available civil remedy or any available

criminal penalty, and may be imposed whether or not the Secretary imposes other administrative sanctions.

(2) AMOUNT OF PENALTY.—The amount of the penalty, as determined by the Secretary, may not exceed $1,000 for each

violation, except that the maximum penalty for all violations

by a particular person during any 1–year period shall not exceed $1,000,000. Each violation of this title, or any rule, regulation, or order issued under this title, shall constitute a separate violation with respect to each sale or lease or offer to sell

or lease. In the case of a continuing violation, as determined

by the Secretary, each day shall constitute a separate violation.

(b) AGENCY PROCEDURES.— (1) ESTABLISHMENT.—The Secretary shall establish standards and procedures governing the imposition of civil money

penalties under subsection (a). The standards and

procedures—

(A) shall provide for the imposition of a penalty only

after a person has been given an opportunity for a hearing

on the record; and

(B) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from

a hearing.

(2) FINAL ORDERS.—If no hearing is requested within 15

days of receipt of the notice of opportunity for hearing, the imposition of the penalty shall constitute a final and

unappealable determination. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If the Secretary does not review the determination or order within 90 days of the issuance

of the determination or order, the determination or order shall

be final.

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (a), consideration shall be given to such factors as the gravity of the

offense, any history of prior offenses (including offenses occurring before enactment of this section), ability to pay the pen-
Sec. 1419 INTERSTATE LAND SALES FULL DISCLOSURE ACT 1416

alty, injury to the public, benefits received, deterrence of future

violations, and such other factors as the Secretary may determine in regulations to be appropriate.

(4) REVIEWABILITY OF IMPOSITION OF PENALTY.—The Secretary’s determination or order imposing a penalty under subsection (a) shall not be subject to review, except as provided in

subsection (c).

(c) JUDICIAL REVIEW OF AGENCY DETERMINATION.—

(1) IN GENERAL.—After exhausting all administrative remedies established by the Secretary under subsection (b)(1), a

person aggrieved by a final order of the Secretary assessing a

penalty under this section may seek judicial review pursuant

to section 1411.

(2) ORDER TO PAY PENALTY.—Notwithstanding any other

provision of law, in any such review, the court shall have the

power to order payment of the penalty imposed by the Secretary.

(d) ACTION TO COLLECT PENALTY.—If any person fails to comply with the determination or order of the Secretary imposing a

civil money penalty under subsection (a), after the determination

or order is no longer subject to review as provided by subsections

(b) and (c), the Secretary may request the Attorney General of the

United States to bring an action in any appropriate United States

district court to obtain a monetary judgment against the person

and such other relief as may be available. The monetary judgment

may, in the discretion of the court, include any attorneys fees and

other expenses incurred by the United States in connection with

the action. In an action under this subsection, the validity and appropriateness of the Secretary’s determination or order imposing

the penalty shall not be subject to review.

(e) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(f) DEFINITION OF KNOWINGLY.—The term ‘‘knowingly’’ means

having actual knowledge of or acting with deliberate ignorance of

or reckless disregard for the prohibitions under this section.

(g) REGULATIONS.—The Secretary shall issue such regulations

as the Secretary deems appropriate to implement this section.

(h) USE OF PENALTIES FOR ADMINISTRATION.—Civil money penalties collected under this section shall be paid to the Secretary

and, upon approval in an appropriation Act, may be used by the

Secretary to cover all or part of the cost of rendering services under

this title.

RULES, REGULATIONS, AND ORDERS

SEC. 1419. ø15 U.S.C. 1718¿ The Secretary shall have authority from time to time to make, issue, amend, and rescind such rules

and regulations and such orders as are necessary or appropriate to

the exercise of the functions and powers conferred upon him elsewhere in this title. For the purpose of his rules and regulations, the

Secretary may classify persons and matters within his jurisdiction

and prescribe different requirements for different classes of persons

or matters.
1417 Sec. 1423 INTERSTATE LAND SALES FULL DISCLOSURE ACT

1The date of enactment was August 1, 1968.

JURISDICTION OF OFFENSES AND SUITS

SEC. 1420. ø15 U.S.C. 1719¿ The district courts of the United

States, the United States courts of any territory, and the United

States District Court for the District of Columbia shall have jurisdiction of offenses and violations under this title and under the this

title and under the rules and regulations prescribed by the Secretary pursuant thereto, and concurrent with State courts, of all

suits in equity and actions at law brought to enforce any liability

or duty created by this title. Any such suit or action may be

brought to enforce any liability or duty created by this title. Any

such suit or action may be brought in the district where the defendant is found or is an inhabitant or transacts business, or in the

district where the offer or sale took place, if the defendant participated therein, and process in such cases may be served in any

other district of which the defendant is an inhabitant or wherever

the defendant may be found. Judgments and decrees so rendered

shall be subject to review as provided in sections 1254 and 1291

of title 28, United State Code. No case arising under this title and

brought in any State court of competent jurisdiction shall be removed to any court of the United States, except where the United

States or any officer or employee of the United States in his official

capacity is a party. No costs shall be assessed for or against the

Secretary in any proceeding under this title brought by or against

him in the Supreme Court or such other courts.

øREPORT TO CONGRESS¿

øSEC. 1421. [Repealed.]¿

APPROPRIATIONS

SEC. 1422. ø15 U.S.C. 1720¿ There are authorized to be appropriated such sums as may be necessary to carry out this title.

EFFECTIVE DATE

SEC. 1423. ø15 U.S.C. 1701 note¿ This title shall take effect

upon the expiration of two hundred and seventy days after the date

of its enactment.1
1418

REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

[Public Law 93–533; 88 Stat. 1724; 12 U.S.C. 2601 et seq.]

SHORT TITLE

SECTION 1. ø12 U.S.C. 2601 note¿ This Act may be cited as the

‘‘Real Estate Settlement Procedures Act of 1974’’.

FINDINGS AND PURPOSE

SEC. 2. ø12 U.S.C. 2601¿ (a) The Congress finds that significant reforms in the real estate settlement process are needed to insure that consumers throughout the Nation are provided with

greater and more timely information on the nature and costs of the

settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country. The Congress also finds that

it has been over two years since the Secretary of Housing and

Urban Development and the Administrator of Veterans’ Affairs

submitted their joint report to the Congress on ‘‘Mortgage Settlement Costs’’ and that the time has come for the recommendations

for Federal legislative action made in that report to be implemented.

(b) It is the purpose of this Act to effect certain changes in the

settlement process for residential real estate that will result—

(1) in more effective advance disclosure to home buyers

and sellers of settlement costs;

(2) in the elimination of kickbacks or referral fees that

tend to increase unnecessarily the costs of certain settlement

services;

(3) in a reduction in the amounts home buyers are required to place in escrow accounts established to insure the

payment of real estate taxes and insurance; and

(4) in significant reform and modernization of local record

keeping of land title information.

DEFINITIONS

SEC. 3. ø12 U.S.C. 2602¿ For purposes of this Act—

(1) the term ‘‘federally related mortgage loan’’ includes any

loan (other than temporary financing such as a construction

loan) which—

(A) is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, including any such secured loan, the proceeds of which are used to prepay or

pay off an existing loan secured by the same property; and
1419 Sec. 3 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

(B)(i) is made in whole or in part by any lender the

deposits or accounts of which are insured by any agency of

the Federal Government, or is made in whole or in part by

any lender which is regulated by any agency of the Federal

Government; or

(ii) is made in whole or in part, or insured, guaranteed, supplemented, or assisted in any way, by the Secretary or any other officer or agency of the Federal Government or under or in connection with a housing or urban

development program administered by the Secretary or a

housing or related program administered by any other

such officer or agency; or

(iii) is intended to be sold by the originating lender to

the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home

Loan Mortgage Corporation, or a financial institution from

which it is to be purchased by the Federal Home Loan

Mortgage Corporation; or

(iv) is made in whole or in part by any ‘‘creditor’’, as

defined in section 103(f) of the Consumer Credit Protection

Act (15 U.S.C. 1602(f)), who makes or invests in residential real estate loans aggregating more than $1,000,000

per year, except that for the purpose of this Act, the term

‘‘creditor’’ does not include any agency or instrumentality

of any state;

(2) the term ‘‘thing of value’’ includes any payment, advance, funds, loan, service, or other consideration;

(3) the term ‘‘settlement services’’ includes any service provided in connection with a real estate settlement including, but

not limited to, the following: title searchers, title examinations,

the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property

surveys, the rendering of credit reports or appraisals, pest and

fungus inspections, services rendered by a real estate agent or

broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan

processing, and the underwriting and funding of loans), and

the handling of the processing, and closing or settlement;

(4) the term ‘‘title company’’ means any institution which

is qualified to issue title insurance, directly or through its

agents, and also refers to any duly authorized agent of a title

company;

(5) the term ‘‘person’’ includes individuals, corporations,

associations, partnerships, and trusts;

(6) the term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development;

(7) the term ‘‘affiliated business arrangement’’ means an

arrangement in which (A) a person who is in a position to refer

business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate

of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in

a provider of settlement services; and (B) either of such per-
Sec. 4 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1420

sons directly or indirectly refers such business to that provider

or affirmately influences the selection of that provider; and

(8) the term ‘‘associate’’ means one who has one or more

of the following relationships with a person in a position to

refer settlement business: (A) a spouse, parent, or child of such

person; (B) a corporation or business entity that controls, is

controlled by, or is under common control with such person; (C)

an employer, officer, director, partner, franchisor, or franchisee

of such person; or (D) anyone who has an agreement, arrangement, or understanding, with such person, the purpose or substantial effect of which is to enable the person in a position to

refer settlement business to benefit financially from the

referals of such business.

UNIFORM SETTLEMENT STATEMENT

SEC. 4. ø12 U.S.C. 2603¿ (a) The Secretary, in consultation

with the Administrator of Veterans’ Affairs, the Federal Deposit Insurance Corporation, and the Director of the Office of Thrift Supervision, shall develop and prescribe a standard form for the statement of settlement costs which shall be used (with such variations

as may be necessary to reflect differences in legal and administrative requirements or practices in different areas of the country) as

the standard real estate settlement form in all transactions in the

United States which involve federally related mortgage loans. Such

form shall conspicuously and clearly itemize all charges imposed

upon the borrower and all charges imposed upon the seller in connection with the settlement and shall indicate whether any title insurance premium included in such charges covers or insures the

lender’s interest in the property, the borrower’s interest, or both.

The Secretary may, by regulation, permit the deletion from the

form prescribed under this section of items which are not, under

local laws or customs, applicable in any locality, except that such

regulation shall require that the numerical code prescribed by the

Secretary be retained in forms to be used in all localities. Nothing

in this section may be construed to require that that part of the

standard form which relates to the borrower’s transaction to be furnished to the seller, or to require that that part of the standard

form which relates to the seller be furnished to the borrower.

(b) The form prescribed under this section shall be completed

and made available for inspection by the borrower at or before settlement by the person conducting the settlement, except that (1)

the Secretary may exempt from the requirements of this section

settlements occurring in localities where the final settlement statement is not customarily provided at or before the date of settlement, or settlements where such requirements are impractical and

(2) the borrower may, in accordance with regulations of the Secretary, waive his right to have the form made available at such

time. Upon the request of the borrower to inspect the form prescribed under this section during the business day immediately

preceding the day of settlement, the person who will conduct the

settlement shall permit the borrower to inspect those items which

are known to such person during such preceding day.
1421 Sec. 6 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

SPECIAL INFORMATION BOOKLETS

SEC. 5. ø12 U.S.C. 2604¿ (a) The Secretary shall prepare and

distribute booklets to help persons borrowing money to finance the

purchase of residential real estate better to understand the nature

and costs of real estate settlement services. The Secretary shall distribute such booklets to all lenders which make federally related

mortgage loans.

(b) Each booklet shall be in such form and detail as the Secretary shall prescribe and, in addition to such other information as

the Secretary may provide, shall include in clear and concise

language—

(1) a description and explanation of the nature and purpose of each cost incident to a real estate settlement;

(2) an explanation and sample of the standard real estate

settlement form developed and prescribed under section 4;

(3) a description and explanation of the nature and purpose of escrow accounts when used in connection with loans secured by residential real estate;

(4) an explanation of the choices available to buyers of residential real estate in selecting persons to provide necessary

services incident to a real estate settlement; and

(5) an explanation of the unfair practices and unreasonable

or unnecessary charges to be avoided by the prospective buyer

with respect to a real estate settlement.

(c) Each lender shall include with the booklet a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur in connection with the settlement as prescribed by the Secretary. Such booklets shall take into

consideration differences in real estate settlement procedures

which may exist among the several States and territories of the

United States and among separate political subdivisions within the

same State and territory.

(d) Each lender referred to in subsection (a) shall provide the

booklet described in such subsection to each person from whom it

receives or for whom it prepares a written application to borrow

money to finance the purchase of residential real estate. Such booklet shall be provided by delivering it or placing it in the mail not

later than 3 business days after the lender receives the application,

but no booklet need be provided if the lender denies the application

for credit before the end of the 3-day period.

(e) Booklets may be printed and distributed by lenders if their

form and content are approved by the Secretary as meeting the requirements of subsection (b) of this section.

SERVICING OF MORTGAGE LOANS AND ADMINISTRATION OF ESCROW

ACCOUNTS

SEC. 6. ø12 U.S.C. 2605¿ (a) DISCLOSURE TO APPLICANT RELATING TO ASSIGNMENT, SALE, OR TRANSFER OF LOAN SERVICING.—

Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while

the loan is outstanding.
Sec. 6 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1422

1So in law.

(b) NOTICE BY TRANSFEROR OR 1 LOAN SERVICING AT TIME OF

TRANSFER.—

(1) NOTICE REQUIREMENT.—Each servicer of any federally

related mortgage loan shall notify the borrower in writing of

any assignment, sale, or transfer of the servicing of the loan

to any other person.

(2) TIME OF NOTICE.—

(A) IN GENERAL.—Except as provided under subparagraphs (B) and (C), the notice required under paragraph

(1) shall be made to the borrower not less than 15 days before the effective date of transfer of the servicing of the

mortgage loan (with respect to which such notice is made).

(B) EXCEPTION FOR CERTAIN PROCEEDINGS.—The notice

required under paragraph (1) shall be made to the borrower not more than 30 days after the effective date of assignment, sale, or transfer of the servicing of the mortgage

loan (with respect to which such notice is made) in any

case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by—

(i) termination of the contract for servicing the

loan for cause;

(ii) commencement of proceedings for bankruptcy

of the servicer; or

(iii) commencement of proceedings by the Federal

Deposit Insurance Corporation or the Resolution Trust

Corporation for conservatorship or receivership of the

servicer (or an entity by which the servicer is owned

or controlled).

(C) EXCEPTION FOR NOTICE PROVIDED AT CLOSING.—

The provisions of subparagraphs (A) and (B) shall not

apply to any assignment, sale, or transfer of the servicing

of any mortgage loan if the person who makes the loan

provides to the borrower, at settlement (with respect to the

property for which the mortgage loan is made), written notice under paragraph (3) of such transfer.

(3) CONTENTS OF NOTICE.—The notice required under paragraph (1) shall include the following information:

(A) The effective date of transfer of the servicing described in such paragraph.

(B) The name, address, and toll-free or collect call telephone number of the transferee servicer.

(C) A toll-free or collect call telephone number for (i)

an individual employed by the transferor servicer, or (ii)

the department of the transferor servicer, that can be contacted by the borrower to answer inquiries relating to the

transfer of servicing.

(D) The name and toll-free or collect call telephone

number for (i) an individual employed by the transferee

servicer, or (ii) the department of the transferee servicer,

that can be contacted by the borrower to answer inquiries

relating to the transfer of servicing.
1423 Sec. 6 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

(E) The date on which the transferor servicer who is

servicing the mortgage loan before the assignment, sale, or

transfer will cease to accept payments relating to the loan

and the date on which the transferee servicer will begin to

accept such payments.

(F) Any information concerning the effect the transfer

may have, if any, on the terms of or the continued availability of mortgage life or disability insurance or any other

type of optional insurance and what action, if any, the borrower must take to maintain coverage.

(G) A statement that the assignment, sale, or transfer

of the servicing of the mortgage loan does not affect any

term or condition of the security instruments other than

terms directly related to the servicing of such loan.

(c) NOTICE BY TRANSFEREE OF LOAN SERVICING AT TIME OF

TRANSFER.—

(1) NOTICE REQUIREMENT.—Each transferee servicer to

whom the servicing of any federally related mortgage loan is

assigned, sold, or transferred shall notify the borrower of any

such assignment, sale, or transfer.

(2) TIME OF NOTICE.— (A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the notice required under paragraph

(1) shall be made to the borrower not more than 15 days

after the effective date of transfer of the servicing of the

mortgage loan (with respect to which such notice is made).

(B) EXCEPTION FOR CERTAIN PROCEEDINGS.—The notice

required under paragraph (1) shall be made to the borrower not more than 30 days after the effective date of assignment, sale, or transfer of the servicing of the mortgage

loan (with respect to which such notice is made) in any

case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by—

(i) termination of the contract for servicing the

loan for cause;

(ii) commencement of proceedings for bankruptcy

of the servicer; or

(iii) commencement of proceedings by the Federal

Deposit Insurance Corporation or the Resolution Trust

Corporation for conservatorship or receivership of the

servicer (or an entity by which the servicer is owned

or controlled).

(C) EXCEPTION FOR NOTICE PROVIDED AT CLOSING.—

The provisions of subparagraphs (A) and (B) shall not

apply to any assignment, sale, or transfer of the servicing

of any mortgage loan if the person who makes the loan

provides to the borrower, at settlement (with respect to the

property for which the mortgage loan is made), written notice under paragraph (3) of such transfer.

(3) CONTENTS OF NOTICE.—Any notice required under

paragraph (1) shall include the information described in subsection (b)(3).

(d) TREATMENT OF LOAN PAYMENTS DURING TRANSFER PERIOD.—During the 60-day period beginning on the effective date of
Sec. 6 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1424

transfer of the servicing of any federally related mortgage loan, a

late fee may not be imposed on the borrower with respect to any

payment on such loan and no such payment may be treated as late

for any other purposes, if the payment is received by the transferor

servicer (rather than the transferee servicer who should properly

receive payment) before the due date applicable to such payment.

(e) DUTY OF LOAN SERVICER TO RESPOND TO BORROWER INQUIRIES.—

(1) NOTICE OF RECEIPT OF INQUIRY.—

(A) IN GENERAL.—If any servicer of a federally related

mortgage loan receives a qualified written request from

the borrower (or an agent of the borrower) for information

relating to the servicing of such loan, the servicer shall

provide a written response acknowledging receipt of the

correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested

is taken within such period.

(B) QUALIFIED WRITTEN REQUEST.—For purposes of

this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer,

that—

(i) includes, or otherwise enables the servicer to

identify, the name and account of the borrower; and

(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the

account is in error or provides sufficient detail to the

servicer regarding other information sought by the

borrower.

(2) ACTION WITH RESPECT TO INQUIRY.—Not later than 60

days (excluding legal public holidays, Saturdays, and Sundays)

after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any

action with respect to the inquiry of the borrower, the servicer

shall—

(A) make appropriate corrections in the account of the

borrower, including the crediting of any late charges or

penalties, and transmit to the borrower a written notification of such correction (which shall include the name and

telephone number of a representative of the servicer who

can provide assistance to the borrower);

(B) after conducting an investigation, provide the borrower with a written explanation or clarification that

includes—

(i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the

borrower is correct as determined by the servicer; and

(ii) the name and telephone number of an individual employed by, or the office or department of, the

servicer who can provide assistance to the borrower; or

(C) after conducting an investigation, provide the borrower with a written explanation or clarification that

includes—
1425 Sec. 6 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

(i) information requested by the borrower or an

explanation of why the information requested is unavailable or cannot be obtained by the servicer; and

(ii) the name and telephone number of an individual employed by, or the office or department of, the

servicer who can provide assistance to the borrower.

(3) PROTECTION OF CREDIT RATING.—During the 60-day period beginning on the date of the servicer’s receipt from any

borrower of a qualified written request relating to a dispute regarding the borrower’s payments, a servicer may not provide

information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request,

to any consumer reporting agency (as such term is defined

under section 603 of the Fair Credit Reporting Act).

(f) DAMAGES AND COSTS.—Whoever fails to comply with any

provision of this section shall be liable to the borrower for each

such failure in the following amounts:

(1) INDIVIDUALS.—In the case of any action by an individual, an amount equal to the sum of—

(A) any actual damages to the borrower as a result of

the failure; and

(B) any additional damages, as the court may allow, in

the case of a pattern or practice of noncompliance with the

requirements of this section, in an amount not to exceed

$1,000.

(2) CLASS ACTIONS.—In the case of a class action, an

amount equal to the sum of—

(A) any actual damages to each of the borrowers in the

class as a result of the failure; and

(B) any additional damages, as the court may allow, in

the case of a pattern or practice of noncompliance with the

requirements of this section, in an amount not greater

than $1,000 for each member of the class, except that the

total amount of damages under this subparagraph in any

class action may not exceed the lesser of—

(i) $500,000; or

(ii) 1 percent of the net worth of the servicer.

(3) COSTS.—In addition to the amounts under paragraph

(1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees

incurred in connection with such action as the court may determine to be reasonable under the circumstances.

(4) NONLIABILITY.—A transferor or transferee servicer

shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days

after discovering an error (whether pursuant to a final written

examination report or the servicer’s own procedures) and before the commencement of an action under this subsection and

the receipt of written notice of the error from the borrower, the

servicer notifies the person concerned of the error and makes

whatever adjustments are necessary in the appropriate account

to ensure that the person will not be required to pay an

amount in excess of any amount that the person otherwise

would have paid.
Sec. 6 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1426

(g) ADMINISTRATION OF ESCROW ACCOUNTS.—If the terms of

any federally related mortgage loan require the borrower to make

payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer

shall make payments from the escrow account for such taxes, insurance premiums, and other charges in a timely manner as such

payments become due.

(h) PREEMPTION OF CONFLICTING STATE LAWS.—Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall

be considered to have complied with the provisions of any such

State law or regulation requiring notice to a borrower at the time

of application for a loan or transfer of the servicing of a loan if such

person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of

the borrower.

(i) DEFINITIONS.—For purposes of this section:

(1) EFFECTIVE DATE OF TRANSFER.—The term ‘‘effective

date of transfer’’ means the date on which the mortgage payment of a borrower is first due to the transferee servicer of a

mortgage loan pursuant to the assignment, sale, or transfer of

the servicing of the mortgage loan.

(2) SERVICER.—The term ‘‘servicer’’ means the person responsible for servicing of a loan (including the person who

makes or holds a loan if such person also services the loan).

The term does not include—

(A) the Federal Deposit Insurance Corporation or the

Resolution Trust Corporation, in connection with assets acquired, assigned, sold, or transferred pursuant to section

13(c) of the Federal Deposit Insurance Act or as receiver

or conservator of an insured depository institution; and

(B) the Government National Mortgage Association,

the Federal National Mortgage Association, the Federal

Home Loan Mortgage Corporation, the Resolution Trust

Corporation, or the Federal Deposit Insurance Corporation, in any case in which the assignment, sale, or transfer

of the servicing of the mortgage loan is preceded by—

(i) termination of the contract for servicing the

loan for cause;

(ii) commencement of proceedings for bankruptcy

of the servicer; or

(iii) commencement of proceedings by the Federal

Deposit Insurance Corporation or the Resolution Trust

Corporation for conservatorship or receivership of the

servicer (or an entity by which the servicer is owned

or controlled).

(3) SERVICING.—The term ‘‘servicing’’ means receiving any

scheduled periodic payments from a borrower pursuant to the

terms of any loan, including amounts for escrow accounts described in section 10, and making the payments of principal

and interest and such other payments with respect to the

amounts received from the borrower as may be required pursuant to the terms of the loan.
1427 Sec. 8 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

(j) TRANSITION.—

(1) ORIGINATOR LIABILITY.—A person who makes a federally related mortgage loan shall not be liable to a borrower because of a failure of such person to comply with subsection (a)

with respect to an application for a loan made by the borrower

before the regulations referred to in paragraph (3) take effect.

(2) SERVICER LIABILITY.—A servicer of a federally related

mortgage loan shall not be liable to a borrower because of a

failure of the servicer to perform any duty under subsection

(b), (c), (d), or (e) that arises before the regulations referred to

in paragraph (3) take effect.

(3) REGULATIONS AND EFFECTIVE DATE.—The Secretary

shall, by regulations that shall take effect not later than April

20, 1991, establish any requirements necessary to carry out

this section. Such regulations shall include the model disclosure statement required under subsection (a)(2).

SEC. 7. ø12 U.S.C. 2606¿ EXEMPTED TRANSACTIONS.

(a) IN GENERAL.—This Act does not apply to credit transactions

involving extensions of credit—

(1) primarily for business, commercial, or agricultural purposes; or

(2) to government or governmental agencies or instrumentalities.

(b) INTERPRETATION.—In prescribing regulations under section

19(a), the Secretary shall ensure that, with respect to subsection

(a) of this section, the exemption for credit transactions involving

extensions of credit primarily for business, commercial, or agricultural purposes, as provided in section 7(1) of the Real Estate Settlement Procedures Act of 1974 shall be the same as the exemption

for such credit transactions under section 104(1) of the Truth in

Lending Act.

PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES

SEC. 8. ø12 U.S.C. 2607¿ (a) No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to

any agreement or understanding, oral or otherwise, that business

incident to or a part of a real estate settlement service involving

a federally related mortgage loan shall be referred to any person.

(b) No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the

rendering of a real estate settlement service in connection with a

transaction involving a federally related mortgage loan other than

for services actually performed.

(c) Nothing in this section shall be construed as prohibiting (1)

the payment of a fee (A) to attorneys at law for services actually

rendered or (B) by a title company to its duly appointed agent for

services actually performed in the issuance of a policy of title insurance or (C) by a lender to its duly appointed agent for services actually performed in the making of a loan, (2) the payment to any

person of a bona fide salary or compensation or other payment for

goods or facilities actually furnished or for services actually performed, (3) payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and
Sec. 8 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1428

1 Comma so in law.

brokers, (4) affiliated business arrangements so long as (A) a disclosure is made of the existence of such an arrangement to the person

being referred and, in connection with such referral, such person

is provided a written estimate of the charge or range of charges

generally made by the provider to which the person is referred (i)

in the case of a face-to-face referral or a referral made in writing

or by electronic media, at or before the time of the referral (and

compliance with this requirement in such case may be evidenced

by a notation in a written, electronic, or similar system of records

maintained in the regular course of business); (ii) in the case of a

referral made by telephone, within 3 business days after the referral by telephone, 1 (and in such case an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within 3 business days shall be

made to the person being referred during the telephone referral);

or (iii) in the case of a referral by a lender (including a referral by

a lender to an affiliated lender), at the time the estimates required

under section 5(c) are provided (notwithstanding clause (i) or (ii));

and any required written receipt of such disclosure (without regard

to the manner of the disclosure under clause (i), (ii), or (iii)) may

be obtained at the closing or settlement (except that a person making a face-to-face referral who provides the written disclosure at or

before the time of the referral shall attempt to obtain any required

written receipt of such disclosure at such time and if the person

being referred chooses not to acknowledge the receipt of the disclosure at that time, that fact shall be noted in the written, electronic,

or similar system of records maintained in the regular course of

business by the person making the referral), (B) such person is not

required to use any particular provider of settlement services, and

(C) the only thing of value that is received from the arrangement,

other than the payments permitted under this subsection, is a return on the ownership interest or franchise relationship, or (5) such

other payments or classes of payments or other transfers as are

specified in regulations prescribed by the Secretary, after consultation with the Attorney General, the Secretary of Veterans Affairs,

the Federal Home Loan Bank Board, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve

System, and the Secretary of Agriculture. For purposes of the preceding sentence, the following shall not be considered a violation of

clause (4)(B): (i) any arrangement that requires a buyer, borrower,

or seller to pay for the services of an attorney, credit reporting

agency, or real estate appraiser chosen by the lender to represent

the lender’s interest in a real estate transaction, or (ii) any arrangement where an attorney or law firm represents a client in a

real estate transaction issues or arranges for the issuance of a policy of title insurance in the transaction directly as agent or through

a separate corporate title insurance agency that may be established

by that attorney or law firm and operated as an adjunct to his or

its law practice.

(d)(1) Any person or persons who violate the provisions of this

section shall be fined not more than $10,000 or imprisoned for not

more than one year, or both.
1429 Sec. 10 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

(2) Any person or persons who violate the prohibitions or limitations of this section shall be jointly and severally liable to the

person or persons charged for the settlement service involved in the

violation in an amount equal to three times the amount of any

charge paid for such settlement service.

(3) No person or persons shall be liable for a violation of the

provisions of section 8(c)(4)(A) if such person or persons proves by

a preponderance of the evidence that such violation was not intentional and resulted from a bona fide error notwithstanding maintenance of procedures that are reasonably adapted to avoid such

error.

(4) The Secretary, the Attorney General of any State, or the insurance commissioner of any State may bring an action to enjoin

violations of this section.

(5) In any private action brought pursuant to this subsection,

the court may award to the prevailing party the court costs of the

action together with reasonable attorneys fees.

(6) No provision of State law or regulation that imposes more

stringent limitations on affiliated business arrangements shall be

construed as being inconsistent with this section.

TITLE COMPANIES

SEC. 9. ø12 U.S.C. 2608¿ (a) No seller of property that will be

purchased with the assistance of a federally related mortgage loan

shall require directly or indirectly, as a condition to selling the

property, that title insurance covering the property to be purchased

by the buyer from any particular title company.

(b) Any seller who violates the provisions of subsection (a) shall

be liable to the buyer in an amount equal to three times all charges

made for such title insurance.

ESCROW ACCOUNTS

SEC. 10. ø12 U.S.C. 2609¿ (a) IN GENERAL.—A lender, in connection with a federally related mortgage loan, may not require the

borrower or prospective borrower—

(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring

payment of taxes, insurance premiums, or other charges with

respect to the property, in connection with the settlement, an

aggregate sum (for such purpose) in excess of a sum that will

be sufficient to pay such taxes, insurance premiums and other

charges attributable to the period beginning on the last date

on which each such charge would have been paid under the

normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent

lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the

estimated total amount of such taxes, insurance premiums and

other charges to be paid on dates, as provided above, during

the ensuing twelve-month period; or

(2) to deposit in any such escrow account in any month beginning with the first full installment payment under the

mortgage a sum (for the purpose of assuring payment of taxes,
Sec. 10 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1430

insurance premiums and other charges with respect to the

property) in excess of the sum of (A) one-twelfth of the total

amount of the estimated taxes, insurance premiums and other

charges which are reasonably anticipated to be paid on dates

during the ensuing twelve months which dates are in accordance with the normal lending practice of the lender and local

custom, provided that the selection of each such date constitutes prudent lending practice, plus (B) such amount as is

necessary to maintain an additional balance in such escrow account not to exceed one-sixth of the estimated total amount of

such taxes, insurance premiums and other charges to be paid

on dates, as provided above, during the ensuing twelve-month

period: Provided, however, That in the event the lender determines there will be or is a deficiency he shall not be prohibited

from requiring additional monthly deposits in such escrow account to avoid or eliminate such deficiency.

(b) NOTIFICATION OF SHORTAGE IN ESCROW ACCOUNT.—If the

terms of any federally related mortgage loan require the borrower

to make payments to the servicer (as the term is defined in section

6(i)) of the loan for deposit into an escrow account for the purpose

of assuring payment of taxes, insurance premiums, and other

charges with respect to the property, the servicer shall notify the

borrower not less than annually of any shortage of funds in the escrow account.

(c) ESCROW ACCOUNT STATEMENTS.—

(1) INITIAL STATEMENT.—

(A) IN GENERAL.—Any servicer that has established an

escrow account in connection with a federally related mortgage loan shall submit to the borrower for which the escrow account has been established a statement clearly

itemizing the estimated taxes, insurance premiums, and

other charges that are reasonably anticipated to be paid

from the escrow account during the first 12 months after

the establishment of the account and the anticipated dates

of such payments.

(B) TIME OF SUBMISSION.—The statement required

under subparagraph (A) shall be submitted to the borrower at closing with respect to the property for which the

mortgage loan is made or not later than the expiration of

the 45-day period beginning on the date of the establishment of the escrow account.

(C) INITIAL STATEMENT AT CLOSING.—Any servicer may

submit the statement required under subparagraph (A) to

the borrower at closing and may incorporate such statement in the uniform settlement statement required under

section 4. The Secretary shall issue regulations prescribing

any changes necessary to the uniform settlement statement under section 4 that specify how the statement required under subparagraph (A) of this section shall be incorporated in the uniform settlement statement.

(2) ANNUAL STATEMENT.—

(A) IN GENERAL.—Any servicer that has established or

continued an escrow account in connection with a federally

related mortgage loan shall submit to the borrower for
1431 Sec. 11 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

1The date of enactment was November 28, 1990.

2So in law. Probably intended to refer to subsection (c).

which the escrow account has been established or continued a statement clearly itemizing, for each period described in subparagraph (B) (during which the servicer

services the escrow account), the amount of the borrower’s

current monthly payment, the portion of the monthly payment being placed in the escrow account, the total amount

paid into the escrow account during the period, the total

amount paid out of the escrow account during the period

for taxes, insurance premiums, and other charges (as separately identified), and the balance in the escrow account at

the conclusion of the period.

(B) TIME OF SUBMISSION.—The statement required

under subparagraph (A) shall be submitted to the borrower not less than once for each 12-month period, the

first such period beginning on the first January 1st that

occurs after the date of the enactment of the CranstonGonzalez National Affordable Housing Act,1 and shall be

submitted not more than 30 days after the conclusion of

each such 1-year period.

(d) PENALTIES.—

(1) IN GENERAL.—In the case of each failure to submit a

statement to a borrower as required under subsection (c), the

Secretary shall assess to the lender or escrow servicer failing

to submit the statement a civil penalty of $50 for each such

failure, but the total amount imposed on such lender or escrow

servicer for all such failures during any 12-month period referred to in subsection (b) 2 may not exceed $100,000.

(2) INTENTIONAL VIOLATIONS.—If any failure to which paragraph (1) applies is due to intentional disregard of the requirement to submit the statement, then, with respect to such

failure—

(A) the penalty imposed under paragraph (1) shall be

$100; and

(B) in the case of any penalty determined under subparagraph (A), the $100,000 limitation under paragraph

(1) shall not apply.

LIMITATIONS AND DISCLOSURES WITH RESPECT TO CERTAIN

FEDERALLY RELATED MORTGAGE LOANS

SEC. 11. (a) The Federal Deposit Insurance Act is amended by

adding at the end thereof the following new section:

‘‘SEC. 25. (a) No insured bank, or mutual savings or cooperative bank which is not an insured bank, shall make any federally

related mortgage loan to any agent, trustee, nominee, or other person acting in a fiduciary capacity without the prior condition that

the identity of the person receiving the beneficial interest of such

loan shall at all times be revealed to the bank. At the request of

the Corporation, the bank shall report to the Corporation on the

identity of such person and the nature and amount of the loan, discount, or other extension of credit.
Sec. 12 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1432

‘‘(b) In addition to other available remedies, this section may

be enforced with respect to mutual savings and cooperative banks

which are not insured banks in accordance with section 8 of this

Act, and for such purpose such mutual savings and cooperative

banks shall be held and considered to be State nonmember insured

banks and the appropriate Federal agency with respect to such mutual savings and cooperative banks shall be the Federal Deposit Insurance Corporation.’’

(b) Title IV of the National Housing Act is amended by adding

at the end thereof the following new section:

‘‘SEC. 413. No insured institution shall make any federally related mortgage loan to any agent, trustee, nominee, or other person

acting in a fiduciary capacity without the prior condition that the

identity of the person receiving the beneficial interest of such loan

shall at all times be revealed to the institution. At the request of

the Federal Home Loan Bank Board, the insured institution shall

report to the Board on the identity of such person and the nature

and amount of the loan.’’

(c) The Federal Deposit Insurance Corporation or the Federal

Home Loan Bank Board as appropriate may by regulation exempt

classes or types of transactions from the provisions added by this

section if the Corporation or the Board determines that the purposes of such provisions would not be advanced materially by their

application to such transactions.

PROHIBITION OF FEES FOR PREPARATION OF TRUTH-IN-LENDING,

UNIFORM SETTLEMENT, AND ESCROW ACCOUNT STATEMENTS

SEC. 12. ø12 U.S.C. 2610¿ No fee shall be imposed or charge

made upon any other person (as a part of settlement costs or otherwise) by a lender in connection with a federally related mortgage

loan made by it (or a loan for the purchase of a mobile home), or

by a servicer (as the term is defined under section 6(i)), for or on

account of the preparation and submission by such lender or

servicer of the statement or statements required (in connection

with such loan) by sections 4 and 10(c) of this Act or by the Truth

in Lending Act.

øSEC. 13. [Repealed.]¿

øSEC. 14. [Repealed.]¿

øSEC. 15. [Repealed.]¿

JURISDICTION OF COURTS

SEC. 16. ø12 U.S.C. 2614¿ Any action pursuant to the provisions of section 6, 8, or 9 may be brought in the United States district court or in any other court of competent jurisdiction, for the

district in which the property involved is located, or where the violation is alleged to have occurred, within 3 years in the case of a

violation of section 6 and 1 year in the case of a violation of section

8 or 9 from the date of the occurrence of the violation, except that

actions brought by the Secretary, the Attorney General of any

State, or the insurance commissioner of any State may be brought

within 3 years from the date of the occurrence of the violation.
1433 Sec. 19 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

VALIDITY OF CONTRACTS AND LIENS

SEC. 17. ø12 U.S.C. 2615¿ Nothing in this Act shall affect the

validity or enforceability of any sale or contract for the sale of real

property or any loan, loan agreement, mortgage, or lien made or

arising in connection with a federally related mortgage loan.

RELATION TO STATE LAWS

SEC. 18. ø12 U.S.C. 2616¿ This Act does not annul, alter, or

affect, or exempt any person subject to the provisions of this Act

from complying with, the laws of any State with respect to settlement practices, except to the extent that those laws are inconsistent with any provision of this Act, and then only to the extent

of the inconsistency. The Secretary is authorized to determine

whether such inconsistencies exist. The Secretary may not determine that any State law is inconsistent with any provision of this

Act if the Secretary determines that such laws gives greater protection to the consumer. In making these determinations the Secretary shall consult with the appropriate Federal agencies.

AUTHORITY OF THE SECRETARY

SEC. 19. ø12 U.S.C. 2617¿ (a) The Secretary is authorized to

prescribe such rules and regulations, to make such interpretations,

and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of this Act.

(b) No provision of this Act or the laws of any State imposing

any liability shall apply to any act done or omitted in good faith

in conformity with any rule, regulation, or interpretation thereof by

the Secretary or the Attorney General, notwithstanding that after

such act or omission has occurred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other

authority to be invalid for any reason.

(c)(1) The Secretary may investigate any facts, conditions,

practices, or matters that may be deemed necessary or proper to

aid in the enforcement of the provisions of this Act, in prescribing

of rules and regulations thereunder, or in securing information to

serve as a basis for recommending further legislation concerning

real estate settlement practices. To aid in the investigations, the

Secretary is authorized to hold such hearings, administer such

oaths, and require by subpena the attendance and testimony of

such witnesses and production of such documents as the Secretary

deems advisable.

(2) Any district court of the United States within the jurisdiction of which an inquiry is carried on may, in the case of contumacy or refusal to obey a subpena of the Secretary issued under

this section, issue an order requiring compliance therewith; and

any failure to obey such order of the court may be punished by

such court as a contempt thereof.

(d) DELAY OF EFFECTIVENESS OF RECENT FINAL REGULATION

RELATING TO PAYMENTS TO EMPLOYEES.—

(1) IN GENERAL.—The amendment to part 3500 of title 24

of the Code of Federal Regulations contained in the final regulation prescribed by the Secretary and published in the Federal
Sec. 20 REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 1434

1The date of enactment was December 22, 1974.

Register on June 7, 1996, which will, as of the effective date

of such amendment—

(A) eliminate the exemption for payments by an employer to employees of such employer for referral activities

which is currently codified as section 3500.14(g)(1)(vii) of

such title 24; and

(B) replace such exemption with a more limited exemption in new clauses (vii), (viii), and (ix) of section

3500.14 of such title 24,

shall not take effect before July 31, 1997.

(2) CONTINUATION OF PRIOR RULE.—The regulation codified

as section 3500.14(g)(1)(vii) of title 24 of the Code of Federal

Regulations, relating to employer-employee payments, as in effect on May 1, 1996, shall remain in effect until the date the

amendment referred to in paragraph (1) takes effect in accordance with such paragraph.

(3) PUBLIC NOTICE OF EFFECTIVE DATE.—The Secretary

shall provide public notice of the date on which the amendment referred to in paragraph (1) will take effect in accordance

with such paragraph not less than 90 days and not more than

180 days before such effective date.

EFFECTIVE DATE

SEC. 20. ø12 U.S.C. 2601 note¿ The provisions of this Act, and

the amendments made thereby, shall become effective one hundred

and eighty days after the date of the enactment of this Act.1
1435

1The date of enactment was September 30, 1996.

SIMPLIFICATION OF DISCLOSURES UNDER REAL

ESTATE SETTLEMENT PROCEDURES ACT OF 1974

EXCERPT FROM TITLE II OF DIVISION A OF OMNIBUS CONSOLIDATED

APPROPRIATIONS ACT, 1997 (ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION ACT OF 1996)

[Public Law 104–208; 110 Stat. 3009–398; 12 U.S.C. 2601 note]

SEC. 2101. ø12 U.S.C. 2601 note¿ SIMPLIFICATION AND UNIFICATION OF

DISCLOSURES REQUIRED UNDER RESPA AND TILA FOR

MORTGAGE TRANSACTIONS.

(a) IN GENERAL.—With respect to credit transactions which are

subject to the Real Estate Settlement Procedures Act of 1974 and

the Truth in Lending Act, the Board of Governors of the Federal

Reserve System (hereafter in this section referred to as the

‘‘Board’’) and the Secretary of Housing and Urban Development

(hereafter in this section referred to as the ‘‘Secretary’’) shall take

such action as may be necessary before the end of the 6-month period beginning on the date of enactment of this Act 1— (1) to simplify and improve the disclosures applicable to

such transactions under such Acts, including the timing of the

disclosures; and

(2) to provide a single format for such disclosures which

will satisfy the requirements of each such Act with respect to

such transactions.

(b) REGULATIONS.—To the extent that it is necessary to prescribe any regulation in order to effect any changes required to be

made under subsection (a), the proposed regulation shall be published in the Federal Register before the end of the 6-month period

referred to in subsection (a).

(c) RECOMMENDATIONS FOR LEGISLATION.—If the Board and the

Secretary find that legislative action may be necessary or appropriate in order to simplify and unify the disclosure requirements

under the Real Estate Settlement Procedures Act of 1974 and the

Truth in Lending Act, the Board and the Secretary shall submit a

report containing recommendations to the Congress concerning

such action.
1436

1The date of enactment was July 24, 1970.

SETTLEMENT COSTS FOR FHA AND VA

EXCERPT FROM EMERGENCY HOME FINANCE ACT OF 1970

[Public Law 91–351; 84 Stat. 461; 12 U.S.C. 1710 note]

SETTLEMENT COSTS IN THE FINANCING OF FEDERAL HOUSING

ADMINISTRATION AND VETERANS’ ADMINISTRATION ASSISTED HOUSING

SEC. 701. ø12 U.S.C. 1710 note¿ (a) With respect to housing

built, rehabilitated, or sold with assistance provided under the National Housing Act or under chapter 37 of title 38, United States

Code, the Secretary of Housing and Urban Development and the

Administrator of Veterans’ Affairs are respectively authorized and

directed to prescribe standards governing the amounts of settlement costs allowable in connection with the financing of such housing in any such area. Such standards shall—

(1) be established after consultation between the Secretary

and the Administrator;

(2) be consistent in any area for housing assisted under

the National Housing Act and housing assisted under chapter

37 of title 38, United States Code; and

(3) be based on the Secretary’s and the Administrator’s estimates of the reasonable charge for necessary services involved in settlements for particular classes of mortgages and

loans.

(b) The Secretary and the Administrator shall undertake a

joint study and make recommendations to the Congress not later

than one year after the date of enactment of this Act 1 with respect

to legislative and administrative actions which should be taken to

reduce mortgage settlement costs and to standardize these costs for

all geographic areas.
1437

MANUFACTURED HOME STANDARDS

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1974

[Public Law 93–383; 88 Stat. 700; 42 U.S.C. 5401 et seq.]

TITLE VI—MANUFACTURED HOME CONSTRUCTION AND

SAFETY STANDARDS

SHORT TITLE

SEC. 601. ø42 U.S.C. 5401 note¿ This title may be cited as the

‘‘National Manufactured Housing Construction and Safety Standards Act of 1974’’.

SEC. 602. ø42 U.S.C. 5401¿ FINDINGS AND PURPOSES.

(a) FINDINGS.—Congress finds that—

(1) manufactured housing plays a vital role in meeting the

housing needs of the Nation; and

(2) manufactured homes provide a significant resource for

affordable homeownership and rental housing accessible to all

Americans.

(b) PURPOSES.—The purposes of this title are—

(1) to protect the quality, durability, safety, and affordability of manufactured homes;

(2) to facilitate the availability of affordable manufactured

homes and to increase homeownership for all Americans;

(3) to provide for the establishment of practical, uniform,

and, to the extent possible, performance-based Federal construction standards for manufactured homes;

(4) to encourage innovative and cost-effective construction

techniques for manufactured homes;

(5) to protect residents of manufactured homes with respect to personal injuries and the amount of insurance costs

and property damages in manufactured housing, consistent

with the other purposes of this section;

(6) to establish a balanced consensus process for the development, revision, and interpretation of Federal construction

and safety standards for manufactured homes and related regulations for the enforcement of such standards;

(7) to ensure uniform and effective enforcement of Federal

construction and safety standards for manufactured homes;

and

(8) to ensure that the public interest in, and need for, affordable manufactured housing is duly considered in all determinations relating to the Federal standards and their enforcement.
Sec. 603 MANUFACTURED HOME STANDARDS 1438

DEFINITIONS

SEC. 603. ø42 U.S.C. 5402¿ As used in this title, the term—

(1) ‘‘manufactured home construction’’ means all activities

relating to the assembly and manufacture of a manufactured

home including but not limited to those relating to durability,

quality, and safety;

(2) ‘‘retailer’’ means any person engaged in the sale, leasing, or distribution of new manufactured homes primarily to

persons who in good faith purchase or lease a manufactured

home for purposes other than resale;

(3) ‘‘defect’’ includes any defect in the performance, construction, components, or material of a manufactured home

that renders the home or any part thereof not fit for the ordinary use for which it was intended;

(4) ‘‘distributor’’ means any person engaged in the sale and

distribution of manufactured homes for resale;

(5) ‘‘manufacturer’’ means any person engaged in manufacturing or assembling manufactured homes, including any person engaged in importing manufactured homes for resale;

(6) ‘‘manufactured home’’ means a structure, transportable

in one or more sections, which, in the traveling mode, is eight

body feet or more in width or forty body feet or more in length,

or, when erected on site, is three hundred twenty or more

square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent

foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical

systems contained therein; except that such term shall include

any structure which meets all the requirements of this paragraph except the size requirements and with respect to which

the manufacturer voluntarily files a certification required by

the Secretary and complies with the standards established

under this title; and except that such term shall not include

any self-propelled recreational vehicle;

(7) ‘‘Federal manufactured home construction and safety

standard’’ means a reasonable standard for the construction,

design, and performance of a manufactured home which meets

the needs of the public including the need for quality, durability, and safety;

(8) ‘‘manufactured home safety’’ means the performance of

a manufactured home in such a manner that the public is protected against any unreasonable risk of the occurrence of accidents due to the design or construction of such manufactured

home, or any unreasonable risk of death or injury to the user

or to the public if such accidents do occur;

(9) ‘‘imminent safety hazard’’ means an imminent and unreasonable risk of death or severe personal injury;

(10) ‘‘purchaser’’ means the first person purchasing a manufactured home in good faith for purposes other than resale;

(11) ‘‘Secretary’’ means the Secretary of Housing and

Urban Development;
1439 Sec. 603 MANUFACTURED HOME STANDARDS

(12) ‘‘State’’ includes each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam,

the Virigin Islands, the Canal Zone, and American Samoa;

(13) ‘‘United States district courts’’ means the Federal district courts of the United States and the United States courts

of the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Canal Zone, and American Samoa;

(14) ‘‘administering organization’’ means the recognized,

voluntary, private sector, consensus standards body with specific experience in developing model residential building codes

and standards involving all disciplines regarding construction

and safety that administers the consensus standards through

a development process;

(15) ‘‘consensus committee’’ means the committee established under section 604(a)(3);

(16) ‘‘consensus standards development process’’ means the

process by which additions, revisions, and interpretations to

the Federal manufactured home construction and safety standards and enforcement regulations shall be developed and recommended to the Secretary by the consensus committee;

(17) ‘‘primary inspection agency’’ means a State agency or

private organization that has been approved by the Secretary

to act as a design approval primary inspection agency or a production inspection primary inspection agency, or both;

(18) ‘‘design approval primary inspection agency’’ means a

State agency or private organization that has been approved by

the Secretary to evaluate and either approve or disapprove

manufactured home designs and quality control procedures;

(19) ‘‘installation standards’’ means reasonable specifications for the installation of a manufactured home, at the place

of occupancy, to ensure proper siting, the joining of all sections

of the home, and the installation of stabilization, support, or

anchoring systems;

(20) ‘‘monitoring’’ means the process of periodic review of

the primary inspection agencies, by the Secretary or by a State

agency under an approved State plan pursuant to section 623,

in accordance with regulations promulgated under this title,

giving due consideration to the recommendations of the consensus committee under section 604(b), which process shall be

for the purpose of ensuring that the primary inspection agencies are discharging their duties under this title; and

(21) ‘‘production inspection primary inspection agency’’

means a State agency or private organization that has been approved by the Secretary to evaluate the ability of manufactured home manufacturing plants to comply with approved

quality control procedures and with the Federal manufactured

home construction and safety standards promulgated hereunder, including the inspection of homes in the plant.
Sec. 604 MANUFACTURED HOME STANDARDS 1440

1Section 104(c) of the Energy Policy Act of 1992, Pub. L. 102-486, approved October 24, 1992,

provides as follows:

‘‘(c) EXCEPTION TO FEDERAL PREEMPTION.—If the Secretary of Housing and Urban Development has not issued, within 1 year after the date of the enactment of this Act, final regulations

pursuant to section 604 of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5403) that establish thermal insulation and energy efficiency standards for manufactured housing that take effect before January 1, 1995, then States may establish thermal insulation and energy efficiency standards for manufactured housing if such standards are at least as stringent as thermal performance standards for manufactured housing contained in the Second Public Review Draft of BSR/ASHRAE 90.2P entitled ‘‘Energy Efficient Design of Low-Rise Residential Buildings’’ and all public reviews of Independent Substantive

Changes to such document that have been approved on or before the date of the enactment of

this Act.’’. 2The date of enactment was December 27, 2000.

FEDERAL MANUFACTURED HOME CONSTRUCTION AND SAFETY

STANDARDS

SEC. 604. ø42 U.S.C. 5403¿ (a) 1 ESTABLISHMENT.—

(1) AUTHORITY.—The Secretary shall establish, by order,

appropriate Federal manufactured home construction and safety standards, each of which—

(A) shall—

(i) be reasonable and practical;

(ii) meet high standards of protection consistent

with the purposes of this title; and

(iii) be performance-based and objectively stated,

unless clearly inappropriate; and

(B) except as provided in subsection (b), shall be established in accordance with the consensus standards development process.

(2) CONSENSUS STANDARDS AND REGULATORY DEVELOPMENT

PROCESS.—

(A) INITIAL AGREEMENT.—Not later than 180 days

after the date of the enactment of the Manufactured Housing Improvement Act of 2000, 2 the Secretary shall enter

into a contract with an administering organization. The

contractual agreement shall—

(i) terminate on the date on which a contract is

entered into under subparagraph (B); and

(ii) require the administering organization to—

(I) recommend the initial members of the consensus committee under paragraph (3);

(II) administer the consensus standards development process until the termination of that

agreement; and

(III) administer the consensus development

and interpretation process for procedural and enforcement regulations and regulations specifying

the permissible scope and conduct of monitoring

until the termination of that agreement.

(B) COMPETITIVELY PROCURED CONTRACT.—Upon the

expiration of the 4-year period beginning on the date on

which all members of the consensus committee are appointed under paragraph (3), the Secretary shall, using

competitive procedures (as such term is defined in section

4 of the Office of Federal Procurement Policy Act), enter

into a competitively awarded contract with an admin-
1441 Sec. 604 MANUFACTURED HOME STANDARDS

istering organization. The administering organization shall

administer the consensus process for the development and

interpretation of the Federal standards, the procedural

and enforcement regulations, and regulations specifying

the permissible scope and conduct of monitoring, in accordance with this title.

(C) PERFORMANCE REVIEW.—The Secretary—

(i) shall periodically review the performance of the

administering organization; and

(ii) may replace the administering organization

with another qualified technical or building code organization, pursuant to competitive procedures, if the

Secretary determines in writing that the administering organization is not fulfilling the terms of the

agreement or contract to which the administering organization is subject or upon the expiration of the

agreement or contract.

(3) CONSENSUS COMMITTEE.— (A) PURPOSE.—There is established a committee to be

known as the ‘‘consensus committee’’, which shall, in accordance with this title—

(i) provide periodic recommendations to the Secretary to adopt, revise, and interpret the Federal manufactured housing construction and safety standards

in accordance with this subsection;

(ii) provide periodic recommendations to the Secretary to adopt, revise, and interpret the procedural

and enforcement regulations, including regulations

specifying the permissible scope and conduct of monitoring in accordance with subsection (b);

(iii) be organized and carry out its business in a

manner that guarantees a fair opportunity for the expression and consideration of various positions and for

public participation; and

(iv) be deemed to be an advisory committee not

composed of Federal employees.

(B) MEMBERSHIP.—The consensus committee shall be

composed of—

(i) twenty-one voting members appointed by the

Secretary, after consideration of the recommendations

of the administering organization, from among individuals who are qualified by background and experience

to participate in the work of the consensus committee;

and

(ii) one nonvoting member appointed by the Secretary to represent the Secretary on the consensus

committee.

(C) DISAPPROVAL.—The Secretary shall state, in writing, the reasons for failing to appoint any individual recommended under paragraph (2)(A)(ii)(I).

(D) SELECTION PROCEDURES AND REQUIREMENTS.—

Each member of the consensus committee shall be appointed in accordance with selection procedures, which

shall be based on the procedures for consensus committees
Sec. 604 MANUFACTURED HOME STANDARDS 1442

promulgated by the American National Standards Institute (or successor organization), except that the American

National Standards Institute interest categories shall be

modified for purposes of this paragraph to ensure equal

representation on the consensus committee of the following

interest categories:

(i) PRODUCERS.—Seven producers or retailers of

manufactured housing.

(ii) USERS.—Seven persons representing consumer

interests, such as consumer organizations, recognized

consumer leaders, and owners who are residents of

manufactured homes.

(iii) GENERAL INTEREST AND PUBLIC OFFICIALS.— Seven general interest and public official members.

(E) BALANCING OF INTERESTS.— (i) IN GENERAL.—In order to achieve a proper balance of interests on the consensus committee, the Secretary, in appointing the members of the consensus

committee—

(I) shall ensure that all directly and materially affected interests have the opportunity for

fair and equitable participation without dominance by any single interest; and

(II) may reject the appointment of any one or

more individuals in order to ensure that there is

not dominance by any single interest.

(ii) DOMINANCE DEFINED.—In this subparagraph,

the term ‘‘dominance’’ means a position or exercise of

dominant authority, leadership, or influence by reason

of superior leverage, strength, or representation.

(F) ADDITIONAL QUALIFICATIONS.—

(i) FINANCIAL INDEPENDENCE.—No individual appointed under subparagraph (D)(ii) shall have, and

three of the individuals appointed under subparagraph

(D)(iii) shall not have—

(I) a significant financial interest in any segment of the manufactured housing industry; or

(II) a significant relationship to any person

engaged in the manufactured housing industry.

(ii) POST-EMPLOYMENT BAN.—Each individual described in clause (i) shall be subject to a ban disallowing compensation from the manufactured housing

industry during the period of, and during the 1-year

following, the membership of the individual on the

consensus committee.

(G) MEETINGS.—

(i) NOTICE; OPEN TO PUBLIC.—The consensus committee shall provide advance notice of each meeting of

the consensus committee to the Secretary and cause to

be published in the Federal Register advance notice of

each such meeting. All meetings of the consensus committee shall be open to the public.

(ii) REIMBURSEMENT.—Members of the consensus

committee in attendance at meetings of the consensus
1443 Sec. 604 MANUFACTURED HOME STANDARDS

committee shall be reimbursed for their actual expenses as authorized by section 5703 of title 5, United

States Code, for persons employed intermittently in

Government service.

(H) ADMINISTRATION.—The consensus committee and

the administering organization shall—

(i) operate in conformance with the procedures established by the American National Standards Institute for the development and coordination of American

National Standards; and

(ii) apply to the American National Standards Institute and take such other actions as may be necessary to obtain accreditation from the American National Standards Institute.

(I) STAFF AND TECHNICAL SUPPORT.—The administering organization shall, upon the request of the consensus committee—

(i) provide reasonable staff resources to the consensus committee; and

(ii) furnish technical support in a timely manner

to any of the interest categories described in subparagraph (D) represented on the consensus committee,

if—

(I) the support is necessary to ensure the informed participation of the consensus committee

members; and

(II) the costs of providing the support are reasonable.

(J) DATE OF INITIAL APPOINTMENTS.—The initial appointments of all the members of the consensus committee

shall be completed not later than 90 days after the date on

which a contractual agreement under paragraph (2)(A) is

entered into with the administering organization.

(4) REVISIONS OF STANDARDS.—

(A) IN GENERAL.—Beginning on the date on which all

members of the consensus committee are appointed under

paragraph (3), the consensus committee shall, not less

than once during each 2-year period—

(i) consider revisions to the Federal manufactured

home construction and safety standards; and

(ii) submit proposed revised standards, if approved

in a vote of the consensus committee by two-thirds of

the members, to the Secretary in the form of a proposed rule, including an economic analysis.

(B) PUBLICATION OF PROPOSED REVISED STANDARDS.—

(i) PUBLICATION BY THE SECRETARY.—The consensus committee shall provide a proposed revised

standard under subparagraph (A)(ii) to the Secretary

who shall, not later than 30 days after receipt, cause

such proposed revised standard to be published in the

Federal Register for notice and comment in accordance

with section 553 of title 5, United States Code. Unless

clause (ii) applies, the Secretary shall provide an opportunity for public comment on such proposed revised
Sec. 604 MANUFACTURED HOME STANDARDS 1444

standard in accordance with such section 553 and any

such comments shall be submitted directly to the consensus committee, without delay.

(ii) PUBLICATION OF REJECTED PROPOSED REVISED

STANDARDS.—If the Secretary rejects the proposed revised standard, the Secretary shall cause to be published in the Federal Register the rejected proposed

revised standard, the reasons for rejection, and any

recommended modifications set forth.

(C) PRESENTATION OF PUBLIC COMMENTS; PUBLICATION

OF RECOMMENDED REVISIONS.—

(i) PRESENTATION.—Any public comments, views,

and objections to a proposed revised standard published under subparagraph (B) shall be presented by

the Secretary to the consensus committee upon their

receipt and in the manner received, in accordance with

procedures established by the American National

Standards Institute.

(ii) PUBLICATION BY THE SECRETARY.—The consensus committee shall provide to the Secretary any

revision proposed by the consensus committee, which

the Secretary shall, not later than 30 calendar days

after receipt, cause to be published in the Federal Register a notice of the recommended revisions of the consensus committee to the standards, a notice of the submission of the recommended revisions to the Secretary, and a description of the circumstances under

which the proposed revised standards could become effective.

(iii) PUBLICATION OF REJECTED PROPOSED REVISED

STANDARDS.—If the Secretary rejects the proposed revised standard, the Secretary shall cause to be published in the Federal Register the rejected proposed

revised standard, the reasons for rejection, and any

recommended modifications set forth.

(5) REVIEW BY THE SECRETARY.—

(A) IN GENERAL.—The Secretary shall either adopt,

modify, or reject a standard, as submitted by the consensus committee under paragraph (4)(A).

(B) TIMING.—Not later than 12 months after the date

on which a standard is submitted to the Secretary by the

consensus committee, the Secretary shall take action regarding such standard under subparagraph (C).

(C) PROCEDURES.—If the Secretary—

(i) adopts a standard recommended by the consensus committee, the Secretary shall—

(I) issue a final order without further rulemaking; and

(II) cause the final order to be published in

the Federal Register;

(ii) determines that any standard should be rejected, the Secretary shall—

(I) reject the standard; and
1445 Sec. 604 MANUFACTURED HOME STANDARDS

1December 27, 2000.

(II) cause to be published in the Federal Register a notice to that effect, together with the reason or reasons for rejecting the proposed standard;

or

(iii) determines that a standard recommended by

the consensus committee should be modified, the Secretary shall—

(I) cause to be published in the Federal Register the proposed modified standard, together

with an explanation of the reason or reasons for

the determination of the Secretary; and

(II) provide an opportunity for public comment in accordance with section 553 of title 5,

United States Code.

(D) FINAL ORDER.—Any final standard under this

paragraph shall become effective pursuant to subsection

(c).

(6) FAILURE TO ACT.—If the Secretary fails to take final action under paragraph (5) and to cause notice of the action to

be published in the Federal Register before the expiration of

the 12-month period beginning on the date on which the proposed revised standard is submitted to the Secretary under

paragraph (4)(A)—

(A) the Secretary shall appear in person before the appropriate housing and appropriations subcommittees and

committees of the House of Representatives and the Senate (referred to in this paragraph as the ‘‘committees’’) on

a date or dates to be specified by the committees, but in

no event later than 30 days after the expiration of that 12-

month period, and shall state before the committees the

reasons for failing to take final action as required under

paragraph (5); and

(B) if the Secretary does not appear in person as required under subparagraph (A), the Secretary shall thereafter, and until such time as the Secretary does appear as

required under subparagraph (A), be prohibited from expending any funds collected under authority of this title in

an amount greater than that collected and expended in the

fiscal year immediately preceding the date of the enactment of the Manufactured Housing Improvement Act of

2000, 1 indexed for inflation as determined by the Congressional Budget Office.

(b) OTHER ORDERS.— (1) REGULATIONS.—The Secretary may issue procedural

and enforcement regulations and revisions to existing regulations as necessary to implement the provisions of this title. The

consensus committee may submit to the Secretary proposed

procedural and enforcement regulations and recommendations

for the revision of such regulations.

(2) INTERPRETATIVE BULLETINS.—The Secretary may issue

interpretative bulletins to clarify the meaning of any Federal

manufactured home construction and safety standard or proce-
Sec. 604 MANUFACTURED HOME STANDARDS 1446

dural and enforcement regulation. The consensus committee

may submit to the Secretary proposed interpretative bulletins

to clarify the meaning of any Federal manufactured home construction and safety standard or procedural and enforcement

regulation.

(3) REVIEW BY CONSENSUS COMMITTEE.—Before issuing a

procedural or enforcement regulation or an interpretative

bulletin—

(A) the Secretary shall—

(i) submit the proposed procedural or enforcement

regulation or interpretative bulletin to the consensus

committee; and

(ii) provide the consensus committee with a period

of 120 days to submit written comments to the Secretary on the proposed procedural or enforcement regulation or the interpretative bulletin; and

(B) if the Secretary rejects any significant comment

provided by the consensus committee under subparagraph

(A), the Secretary shall provide a written explanation of

the reasons for the rejection to the consensus committee;

and

(C) following compliance with subparagraphs (A) and

(B), the Secretary shall—

(i) cause the proposed regulation or interpretative

bulletin and the consensus committee’s written comments, along with the Secretary’s response thereto, to

be published in the Federal Register; and

(ii) provide an opportunity for public comment in

accordance with section 553 of title 5, United States

Code.

(4) REQUIRED ACTION.—Not later than 120 days after the

date on which the Secretary receives a proposed regulation or

interpretative bulletin submitted by the consensus committee,

the Secretary shall—

(A) approve the proposal and cause the proposed regulation or interpretative bulletin to be published for public

comment in accordance with section 553 of title 5, United

States Code; or

(B) reject the proposed regulation or interpretative

bulletin and—

(i) provide to the consensus committee a written

explanation of the reasons for rejection; and

(ii) cause to be published in the Federal Register

the rejected proposed regulation or interpretive bulletin, the reasons for rejection, and any recommended

modifications set forth.

(5) AUTHORITY TO ACT AND EMERGENCY.—If the Secretary

determines, in writing, that such action is necessary to address

an issue on which the Secretary determines that the consensus

committee has not made a timely recommendation following a

request by the Secretary, or in order to respond to an emergency that jeopardizes the public health or safety, the Secretary may issue an order that is not developed under the pro-
1447 Sec. 604 MANUFACTURED HOME STANDARDS

cedures set forth in subsection (a) or in this subsection, if the

Secretary—

(A) provides to the consensus committee a written description and sets forth the reasons why action is necessary and all supporting documentation; and

(B) issues the order after notice and an opportunity for

public comment in accordance with section 553 of title 5,

United States Code, and causes the order to be published

in the Federal Register.

(6) CHANGES.—Any statement of policies, practices, or procedures relating to construction and safety standards, regulations, inspections, monitoring, or other enforcement activities

that constitutes a statement of general or particular applicability to implement, interpret, or prescribe law or policy by the

Secretary is subject to subsection (a) or this subsection. Any

change adopted in violation of subsection (a) or this subsection

is void.

(7) TRANSITION.—Until the date on which the consensus

committee is appointed pursuant to section 604(a)(3), the Secretary may issue proposed orders, pursuant to notice and comment in accordance with section 553 of title 5, United States

Code, that are not developed under the procedures set forth in

this section for new and revised standards.

(c) Each order establishing a Federal manufactured home construction and safety standard shall specify the date such standard

is to take effect, which shall not be sooner than one hundred and

eighty days or later than one year after the date such order is

issued, unless the Secretary finds, for good cause shown, that an

earlier or later effective date is in the public interest, and publishes

his reasons for such finding.

(d) Whenever a Federal manufactured home construction and

safety standard established under this title is in effect, no State or

political subdivision of a State shall have any authority either to

establish, or to continue in effect, with respect to any manufactured

home covered, any standard regarding construction or safety applicable to the same aspect of performance of such manufactured

home which is not identical to the Federal manufactured home construction and safety standard. Federal preemption under this subsection shall be broadly and liberally construed to ensure that disparate State or local requirements or standards do not affect the

uniformity and comprehensiveness of the standards promulgated

under this section nor the Federal superintendence of the manufactured housing industry as established by this title. Subject to section 605, there is reserved to each State the right to establish

standards for the stabilizing and support systems of manufactured

homes sited within that State, and for the foundations on which

manufactured homes sited within that State are installed, and the

right to enforce compliance with such standards, except that such

standards shall be consistent with the purposes of this title and

shall be consistent with the design of the manufacturer.

(e) CONSIDERATIONS IN ESTABLISHING AND INTERPRETING

STANDARDS AND REGULATIONS.—The consensus committee, in recommending standards, regulations, and interpretations, and the
Sec. 604 MANUFACTURED HOME STANDARDS 1448

Secretary, in establishing standards or regulations or issuing interpretations under this section, shall—

(1) consider relevant available manufactured home construction and safety data, including the results of the research,

development, testing, and evaluation activities conducted pursuant to this title, and those activities conducted by private organizations and other governmental agencies to determine how

to best protect the public;

(2) consult with such State or interstate agencies (including legislative committees) as he deems appropriate;

(3) consider whether any such proposed standard is reasonable for the particular type of manufactured home or for the

geographic region for which it is prescribed;

(4) consider the probable effect of such standard on the

cost of the manufactured home to the public; and

(5) consider the extent to which any such standard will

contribute to carrying out the purposes of this title.

(f) The Secretary shall exclude from the coverage of this title

any structure which the manufacturer certifies, in a form prescribed by the Secretary, to be:

(1) designed only for erection or installation on a site-built

permanent foundation;

(2) not designed to be moved once so erected or installed;

(3) designed and manufactured to comply with a nationally

recognized model building code or an equivalent local code, or

with a State or local modular building code recognized as generally equivalent to building codes for site-built housing, or

with minimum property standards adopted by the Secretary

pursuant to title II of the National Housing Act; and

(4) to the manufacturer’s knowledge is not intended to be

used other than on a site-built permanent foundation.

(g)(1) The Federal manufactured home construction and safety

standards established by the Secretary under this section shall include preemptive energy conservation standards in accordance with

this subsection.

(2) The energy conservation standards established under this

subsection shall be cost-effective energy conservation performance

standards designed to ensure the lowest total of construction and

operating costs.

(3) The energy conservation standards established under this

subsection shall take into consideration the design and factory construction techniques of manufactured homes and shall provide for

alternative practices that result in net estimated energy consumption equal to or less than the specified standards.

(h) The Secretary shall develop a new standard for hardboard

panel siding on manufactured housing taking into account durability, longevity, consumer’s costs for maintenance and any other

relevant information pursuant to subsection (e). The Secretary

shall consult with the National Manufactured Home Advisory

Council and the National Commission on Manufactured Housing in

establishing the new standard. The new performance standard developed shall ensure the durability of hardboard sidings for at least

a normal life of a mortgage with minimum maintenance required.

Not later than 180 days from the date of enactment of this sub-
1449 Sec. 605 MANUFACTURED HOME STANDARDS

section, the Secretary shall update the standards for hardboard siding.

SEC. 605. ø42 U.S.C. 5404¿ MANUFACTURED HOME INSTALLATION.

(a) PROVISION OF INSTALLATION DESIGN AND INSTRUCTIONS.—

A manufacturer shall provide with each manufactured home, design and instructions for the installation of the manufactured home

that have been approved by a design approval primary inspection

agency. After establishment of model standards under subsection

(b)(2), a design approval primary inspection agency may not give

such approval unless a design and instruction provides equal or

greater protection than the protection provided under such model

standards.

(b) MODEL MANUFACTURED HOME INSTALLATION STANDARDS.—

(1) PROPOSED MODEL STANDARDS.—Not later than 18

months after the date on which the initial appointments of all

the members of the consensus committee are completed, the

consensus committee shall develop and submit to the Secretary

proposed model manufactured home installation standards,

which shall, to the maximum extent practicable, taking into account the factors described in section 604(e), be consistent

with—

(A) the manufactured home designs that have been approved by a design approval primary inspection agency;

and

(B) the designs and instructions for the installation of

manufactured homes provided by manufacturers under

subsection (a).

(2) ESTABLISHMENT OF MODEL STANDARDS.—Not later than

12 months after receiving the proposed model standards submitted under paragraph (1), the Secretary shall develop and

establish model manufactured home installation standards,

which shall, to the maximum extent practicable, taking into account the factors described in section 604(e), be consistent

with—

(A) the manufactured home designs that have been approved by a design approval primary inspection agency;

and

(B) the designs and instructions for the installation of

manufactured homes provided by manufacturers under

subsection (a).

(3) FACTORS FOR CONSIDERATION.— (A) CONSENSUS COMMITTEE.—In developing the proposed model standards under paragraph (1), the consensus

committee shall consider the factors described in section

604(e).

(B) SECRETARY.—In developing and establishing the

model standards under paragraph (2), the Secretary shall

consider the factors described in section 604(e).

(4) ISSUANCE.—The model manufactured home installation

standards shall be issued after notice and an opportunity for

public comment in accordance with section 553 of title 5,

United States Code.

(c) MANUFACTURED HOME INSTALLATION PROGRAMS.—
Sec. 605 MANUFACTURED HOME STANDARDS 1450

1The date of enactment was December 27, 2000.

(1) PROTECTION OF MANUFACTURED HOUSING RESIDENTS

DURING INITIAL PERIOD.—During the 5-year period beginning

on the date of the enactment of the Manufactured Housing Improvement Act of 2000, 1 no State or manufacturer may establish or implement any installation standards that, in the determination of the Secretary, provide less protection to the residents of manufactured homes than the protection provided by

the installation standards in effect with respect to the State or

manufacturer, as applicable, on the date of the enactment of

the Manufactured Housing Improvement Act of 2000. 1

(2) INSTALLATION STANDARDS.— (A) ESTABLISHMENT OF INSTALLATION PROGRAM.—Not

later than the expiration of the 5-year period described in

paragraph (1), the Secretary shall establish an installation

program that meets the requirements of paragraph (3) for

the enforcement of installation standards in each State described in subparagraph (B) of this paragraph.

(B) IMPLEMENTATION OF INSTALLATION PROGRAM.—Beginning on the expiration of the 5-year period described in

paragraph (1), the Secretary shall implement the installation program established under subparagraph (A) in each

State that does not have an installation program established by State law that meets the requirements of paragraph (3).

(C) CONTRACTING OUT OF IMPLEMENTATION.—In carrying out subparagraph (B), the Secretary may contract

with an appropriate agent to implement the installation

program established under that subparagraph, except that

such agent shall not be a person or entity other than a

government, nor an affiliate or subsidiary of such a person

or entity, that has entered into a contract with the Secretary to implement any other regulatory program under

this title.

(3) REQUIREMENTS.—An installation program meets the requirements of this paragraph if it is a program regulating the

installation of manufactured homes that includes—

(A) installation standards that, in the determination of

the Secretary, provide protection to the residents of manufactured homes that equals or exceeds the protection provided to those residents by—

(i) the model manufactured home installation

standards established by the Secretary under subsection (b)(2); or

(ii) the designs and instructions provided by manufacturers under subsection (a), if the Secretary determines that such designs and instructions provide protection to the residents of manufactured homes that

equals or exceeds the protection provided by the model

manufactured home installation standards established

by the Secretary under subsection (b)(2);

(B) the training and licensing of manufactured home

installers; and
1451 Sec. 606 MANUFACTURED HOME STANDARDS

(C) inspection of the installation of manufactured

homes.

JUDICIAL REVIEW OF ORDERS

SEC. 606. ø42 U.S.C. 5405¿ (a)(1) In a case of actual controversy as to the validity of any order under section 604, any person who may be adversely affected by such order when it is effective may at any time prior to the sixtieth day after such order is

issued file a petition with the United States court of appeals for the

circuit wherein such person resides or has his principal place of

business, for judicial review of such order. A copy of the petition

shall be forthwith transmitted by the clerk of the court to the Secretary or other officer designated by him for that purpose. The Secretary thereupon shall file in the court the record of the proceedings on which the Secretary based his order, as provided in

section 2112 of title 28, United States Code.

(2) If the petitioner applies to the court for leave to adduce additional evidence, and shows to the satisfaction of the court that

such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the Secretary, the court may order such additional

evidence (and evidence in rebuttal thereof) to be taken before the

Secretary, and to be adduced upon the hearing, in such manner

and upon such terms and conditions as to the court may seem

proper. The Secretary may modify his findings as to the facts, or

make new findings, by reason of the additional evidence so taken,

and he shall file such modified or new findings, and his recommendation, if any, for the modification or setting aside of his

original order, with the return of such additional evidence.

(3) Upon the filing of the petition referred to in paragraph (1)

of this subsection, the court shall have jurisdiction to review the

order in accordance with the provisions of sections 701 through 706

of title 5, United States Code, and to grant appropriate relief.

(4) The judgment of the court affirming or setting aside, in

whole or in part, any such order of the Secretary shall be final,

subject to review by the Supreme Court of the United States upon

certiorari or certification as provided in section 1254 of title 28,

United States Code.

(5) Any action instituted under this subsection shall survive,

notwithstanding any change in the person occupying the office of

Secretary of any vacancy in such office.

(6) The remedies provided for in this subsection shall be in addition to and not in substitution for any other remedies provided

by law.

(b) A certified copy of the transcript of the record and proceedings under this section shall be furnished by the Secretary to

any interested party at his request and payment of the costs thereof, and shall be admissible in any criminal, exclusion of imports,

or other proceedings arising under or in respect of this title, irrespective of whether proceedings with respect to the order have previously been initiated or become final under subsection (a).
Sec. 607 MANUFACTURED HOME STANDARDS 1452

PUBLIC INFORMATION

SEC. 607. ø42 U.S.C. 5406¿ (a) Whenever any manufacturer is

opposed to any action of the Secretary under section 604 or under

any other provision of this title on the grounds of increased cost or

for other reasons, the manufacturer shall submit to the Secretary

such cost and other information (in such detail as the Secretary

may by rule or order prescribe) as may be necessary in order to

properly evaluate the manufacturer’s statement. The Secretary

shall submit such cost and other information to the consensus committee for evaluation.

(b) Such information shall be available to the public unless the

manufacturer establishes that it contains a trade secret or that disclosure of any portion of such information would put the manufacturer at a substantial competitive disadvantage. Notice of the availability of such information shall be published promptly in the Federal Register. If the Secretary determines that any portion of such

information contains a trade secret or that the disclosure of any

portion of such information would put the manufacturer at a substantial competitive disadvantage, such portion may be disclosed to

the public only in such manner as to preserve the confidentiality

of such trade secret or in such combined or summary form so as

not to disclose the identity of any individual manufacturer, except

that any such information may be disclosed to other officers or employees concerned with carrying out this title or when relevant in

any proceeding under this title. Nothing in this subsection shall authorize the withholding of information by the Secretary or any officer or employee under his control from the duly authorized committees of the Congress.

(c) For purposes of this section, ‘‘cost information’’ means information with respect to alleged cost increases resulting from action

by the Secretary, in such a form as to permit the public, the consensus committee, and the Secretary to make an informed judgment on the validity of the manufacturer’s statements. Such term

includes both the manufacturer’s statements. Such term includes

both the manufacturer’s cost and the cost to retail purchasers.

(d) Nothing in this section shall be construed to restrict the authority of the Secretary to obtain or require submission of information under any other provision of this title.

RESEARCH, TESTING, DEVELOPMENT, AND TRAINING

SEC. 608. ø42 U.S.C. 5407¿ (a) The Secretary shall conduct research, testing, development, and training necessary to carry out

the purposes of this title, including, but not limited to—

(1) collecting data from any source for the purpose of determining the relationship between manufactured home performance characteristics and (A) accidents involving manufactured homes, and (B) the occurrence of death, personal injury,

or damage resulting from such accidents;

(2) procuring (by negotiation or otherwise) experimental

and other manufactured homes for research and testing purposes;

(3) selling or otherwise disposing of test manufactured

homes and reimbursing the proceeds of such sale or disposal
1453 Sec. 610 MANUFACTURED HOME STANDARDS

into the current appropriation available for the purpose of carrying out this title;

(4) encouraging the government-sponsored housing entities

to actively develop and implement secondary market

securitization programs for the FHA manufactured home loans

and those of other loan programs, as appropriate, thereby promoting the availability of affordable manufactured homes to increase homeownership for all people in the United States; and

(5) reviewing the programs for FHA manufactured home

loans and developing any changes to such programs to promote

the affordability of manufactured homes, including changes in

loan terms, amortization periods, regulations, and procedures.

(b) The Secretary is authorized to conduct research, testing, development, and training as authorized to be carried out by subsection (a) of this section by contracting for or making grants for

the conduct of such research, testing, development, and training to

States, interstate agencies, and independent institutions.

(c) DEFINITIONS.—For purposes of this section, the following

definitions shall apply:

(1) GOVERNMENT-SPONSORED HOUSING ENTITIES.—The term

‘‘government-sponsored housing entities’’ means the Government National Mortgage Association of the Department of

Housing and Urban Development, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation.

(2) FHA MANUFACTURED HOME LOAN.—The term ‘‘FHA

manufactured home loan’’ means a loan that—

(A) is insured under title I of the National Housing

Act and is made for the purpose of financing alterations,

repairs, or improvements on or in connection with an existing manufactured home, the purchase of a manufactured

home, the purchase of a manufactured home and a lot on

which to place the home, or the purchase only of a lot on

which to place a manufactured home; or

(B) is otherwise insured under the National Housing

Act and made for or in connection with a manufactured

home.

COOPERATION WITH PUBLIC AND PRIVATE AGENCIES

SEC. 609. ø42 U.S.C. 5408¿ The Secretary is authorized to advise, assist, and cooperate with other Federal agencies and with

State and other interested public and private agencies, in the planning and development of—

(1) manufactured home construction and safety standards;

and

(2) methods for inspecting and testing to determine compliance with manufactured home standards.

PROHIBITED ACTS

SEC. 610. ø42 U.S.C. 5409¿ (a) No person shall—

(1) make use of any means of transportation or communication affecting interstate or foreign commerce or the mails

to manufacture for sale, lease, sell, offer for sale or lease, or
Sec. 610 MANUFACTURED HOME STANDARDS 1454

introduce or deliver, or import into the United States, any

manufactured home which is manufactured on or after the effective date of any applicable Federal manufactured home construction and safety standard under this title and which does

not comply with such standard, except as provided in subsection (b), where such manufacture, lease, sale, offer for sale

or lease, introduction, delivery, or importation affects commerce;

(2) fail or refuse to permit access to or copying of records,

or fail to make reports or provide information, or fail or refuse

to permit entry or inspection, as required under section 614;

(3) fail to furnish notification of any defect as required by

section 615;

(4) fail to issue a certification required by section 616, or

issue a certification to the effect that a manufactured home

conforms to all applicable Federal manufactured home construction and safety standards, if such person in the exercise

of due care has reason to know that such certification is false

or misleading in a material respect;

(5) fail to comply with a final order issued by the Secretary

under this title;

(6) issue a certification pursuant to subsection (h) of section 604, if such person in the exercise of due care has reason

to know that such certification is false or misleading in a material respect; or

(7) after the expiration of the period specified in section

605(c)(2)(B), fail to comply with the requirements for the installation program required by section 605 in any State that

has not adopted and implemented a State installation program.

(b)(1) Paragraph (1) of subsection (a) shall not apply to the

sale, the offer for sale, or the introduction or delivery for introduction in interstate commerce of any manufactured home after the

first purchase of it in good faith for purposes other than resale.

(2) For purposes of section 611, paragraph (1) of subsection (a)

shall not apply to any person who establishes that he did not have

reason to know in the exercise of due care that such manufactured

home is not in conformity with applicable Federal manufactured

home construction and safety standards, or to any person who,

prior to such first purchase, holds a certificate issued by the manufacturer or importer of such manufactured home to the effect that

such manufactured home conforms to all applicable Federal manufactured home construction and safety standards, unless such person knows that such manufactured home does not so conform.

(3) A manufactured home offered for importation in violation

of paragraph (1) of subsection (a) shall be refused admission into

the United States under joint regulations issued by the Secretary

of the Treasury and the Secretary, except that the Secretary of the

Treasury and the Secretary may, by such regulations, provide for

authorizing the importation of such manufactured home into the

United States upon such terms and conditions (including the furnishing of a bond) as may appear to them appropriate to insure

that any such manufactured home will be brought into conformity

with any applicable Federal manufactured home construction or
1455 Sec. 612 MANUFACTURED HOME STANDARDS

safety standard prescribed under this title, or will be exported

from, or forfeited to, the United States.

(4) The Secretary of the Treasury and the Secretary may, by

joint regulations, permit the importation of any manufactured

home after the first purchase of it in good faith for purposes other

than resale.

(5) Paragraph (1) of subsection (a) shall not apply in the case

of a manufactured home intended solely for export, and so labeled

or tagged on the manufactured home itself and on the outside of

the container, if any, in which it is to be exported.

(c) Compliance with any Federal manufactured home construction or safety standard issued under this title does not exempt any

person from any liability under common law.

CIVIL AND CRIMINAL PENALTY

SEC. 611. ø42 U.S.C. 5410¿ (a) Whoever violates any provision

of section 610, or any regulation or final order issued thereunder,

shall be liable to the United States for a civil penalty of not to exceed $1,000 for each such violation. Each violation of a provision

of section 610, or any regulation or order issued thereunder shall

constitute, a separate violation with respect to each manufactured

home or with respect to each failure or refusal to allow or perform

an act required thereby, except that the maximum civil penalty

may not exceed $1,000,000 for any related series of violations occurring within one year from the date of the first violation.

(b) An individual or a director, officer, or agent of a corporation

who knowingly and willfully violates section 610 in a manner

which threatens the health or safety of any purchaser shall be

fined not more than $1,000 or imprisoned not more than one year,

or both.

JURISDICTION AND VENUE

SEC. 612. ø42 U.S.C. 5411¿ (a) The United States district

courts shall have jurisdiction, for cause shown and subject to the

provisions of rule 65 (a) and (b) of the Federal Rules of Civil Procedure, to restrain violations of this title, or to restrain the sale, offer

for sale, or the importation into the United States, of any manufactured home which is determined, prior to the first purchase of such

manufactured home in good faith for purposes other than resale,

not to conform to applicable Federal manufactured home construction and safety standards prescribed pursuant to this title or to

contain a defect which constitutes an imminent safety hazard, upon

petition by the appropriate United States attorney or the Attorney

General on behalf of the United States. Whenever practicable, the

Secretary shall give notice to any person against whom an action

for injunctive relief is contemplated and afford him an opportunity

to present his views and the failure to give such notice and afford

such opportunity shall not preclude the granting of appropriate relief.

(b) In any proceeding for criminal contempt for violation of an

injunction or restraining order issued under this section, which violation also constitutes a violation of this title, trial shall be by the

court or, upon demand of the accused, by a jury. Such trial shall
Sec. 613 MANUFACTURED HOME STANDARDS 1456

be conducted in accordance with the practice and procedure applicable in the case of proceedings subject to the provisions of rule

42(b) of the Federal Rules of Criminal Procedure.

(c) Actions under subsection (a) of this section and section 611

may be brought in the district wherein any act or transaction constituting the violation occurred, or in the district wherein the defendant is found or is an inhabitant or transacts business, and

process in such cases may be served in any other district of which

the defendant is an inhabitant or wherever the defendant may be

found.

(d) In any action brought by the United States under subsection (a) of this section or section 611, subpenas by the United

States for witnesses who are required to attend at United States

district court may run into any other district.

(e) It shall be the duty of every manufacturer offering a manufactured home for importation into the United States to designate

in writing an agent upon whom service of all administrative and

judicial processes, notices, orders, decisions, and requirements may

be made for and on behalf of such manufacturer, and to file such

designation with the Secretary, which designation may from time

to time be changed by like writing, similarly filed. Service of all administrative and judicial processes, notices, orders, decisions, and

requirements may be made upon such manufacturer by service

upon such designated agent at his office or usual place of residence

with like effect as if made personally upon such manufacturer, and

in default of such designation of such agent, service of process or

any notice, order, requirement, or decision in any proceeding before

the Secretary or in any judicial proceeding pursuant to this title

may be made by mailing such process, notice, order, requirement,

or decision to the Secretary by registered or certified mail.

NONCOMPLIANCE WITH STANDARDS

SEC. 613. ø42 U.S.C. 5412¿ (a) If the Secretary or a court of

appropriate jurisdiction determines that any manufactured home

does not conform to applicable Federal manufactured home construction and safety standards, or that it contains a defect which

constitutes an imminent safety hazard, after the sale of such manufactured home by a manufacturer to a distributor or a retailer and

prior to the sale of such manufactured home by such distributor or

retailer to a purchaser—

(1) the manufacturer shall immediately repurchase such

manufactured home from such distributor or retailer at the

price paid by such distributor or retailer, plus all transportation charges involved and a reasonable reimbursement of not

less than 1 per centum per month of such price paid prorated

from the date of receipt by certified mail of notice of such nonconformance to the date of repurchase by the manufacturer; or

(2) the manufacturer, at his own expense, shall immediately furnish the purchasing distributor or retailer the required conforming part or parts or equipment for installation

by the distributor or retailer on or in such manufactured home,

and for the installation involved the manufacturer shall reimburse such distributor or retailer for the reasonable value of
1457 Sec. 614 MANUFACTURED HOME STANDARDS

such installation plus a reasonable reimbursement of not less

than 1 per centum per month of the manufacturer’s or distributor’s selling price prorated from the date of receipt by certified mail of notice of such nonconformance to the date such

vehicle is brought into conformance with applicable Federal

standards, so long as the distributor or retailer proceeds with

reasonable diligence with the installation after the required

part or equipment is received.

The value of such reasonable reimbursements as specified in paragraphs (1) and (2) of this subsection shall be fixed by mutual agreement of the parties, or, failing such agreement, by the court pursuant to the provisions of subsection (b).

(b) If any manufacturer fails to comply with the requirements

of subsection (a), then the distributor or retailer, as the case may

be, to whom such manufactured home has been sold may bring an

action seeking a court injunction compelling compliance with such

requirements on the part of such manufacturer. Such action may

be brought in any district court in the United States in the district

in which such manufacturer resides, or is found, or has an agent,

without regard to the amount in controversy, and the person bringing the action shall also be entitled to recover any damage sustained by him, as well as all court costs plus reasonable attorneys’

fees. Any action brought pursuant to this section shall be forever

barred unless commenced within three years after the cause of action shall have accrued.

INSPECTION OF MANUFACTURED HOMES AND RECORDS

SEC. 614. ø42 U.S.C. 5413¿ (a) The Secretary is authorized to

conduct such inspections and investigations as may be necessary to

promulgate or enforce Federal manufactured home construction

and safety standards established under this title or otherwise to

carry out his duties under this title. He shall furnish the Attorney

General and, when appropriate, the Secretary of the Treasury any

information obtained indicating noncompliance with such standards for appropriate action.

(b)(1) For purposes of enforcement of this title, persons duly

designated by the Secretary, upon presenting appropriate credentials to the owner, operator, or agent in charge, are authorized—

(A) to enter, at reasonable times and without advance notice any factory, warehouse, or establishment in which manufactured homes are manufactured, stored, or held for sale; and

(B) to inspect, at reasonable times and within reasonable

limits and in a reasonable manner, any such factory, warehouse, or establishment, and to inspect such books, papers,

records, and documents as are set forth in subsection (c). Each

such inspection shall be commenced and completed with reasonable promptness.

(2) The Secretary is authorized to contract with State and local

governments and private inspection organizations to carry out his

functions under this subsection.

(c) For the purpose of carrying out the provisions of this title,

the Secretary is authorized—
Sec. 614 MANUFACTURED HOME STANDARDS 1458

(1) to hold such hearings, take such testimony, sit and act

at such times and places, administer such oaths, and require,

by subpena or otherwise, the attendance and testimony of such

witnesses and the production of such books, papers, correspondence, memorandums, contracts, agreements, or other

records, as the Secretary or such officer or employee deems advisable. Witnesses summoned pursuant to this subsection shall

be paid the same fees and mileage that are paid witnesses in

the courts of the United States;

(2) to examine and copy any documentary evidence of any

person having materials or information relevant to any function of the Secretary under this title;

(3) to require, by general or special orders, any person to

file, in such form as the Secretary may prescribe, reports or

answers in writing to specific questions relating to any function of the Secretary under this title. Such reports and answers

shall be made under oath or otherwise, and shall be filed with

the Secretary within such reasonable period as the Secretary

may prescribe;

(4) to request from any Federal agency any information he

deems necessary to carry out his functions under this title, and

each such agency is authorized and directed to cooperate with

the Secretary and to furnish such information upon request

made by the Secretary, and the head of any Federal agency is

authorized to detail, on a reimbursable basis, any personnel of

such agency to assist in carrying out the duties of the Secretary under this title; and

(5) to make available to the public any information which

may indicate the existence of a defect which relates to manufactured home construction or safety or of the failure of a manufactured home to comply with applicable manufactured home

construction and safety standards. The Secretary shall disclose

so much of other information obtained under this subsection to

the public as he determines will assist in carrying out this

title; but he shall not (under the authority of this sentence)

make available or disclose to the public any information which

contains or relates to a trade secret or any information the disclosure of which would put the person furnishing such information at a substantial competitive disadvantage, unless he determines that it is necessary to carry out the purposes of this

title.

(d) Any of the district courts of the United States within the

jurisdiction of which an inquiry is carried on may, in the case of

contumacy or refusal to obey a subpena or order of the Secretary

issued under paragraph (1) or paragraph (3) of subsection (c) of this

section, issue an order requiring compliance therewith; and any

failure to obey such order of the court may be punished by such

court as a contempt thereof.

(e) Each manufacturer of manufactured homes shall submit

the building plans for every model of such manufactured homes to

the Secretary or his designee for the purpose of inspection under

this section. The manufacturer must certify that each such building

plan meets the Federal construction and safety standards in force

at that time before the model involved is produced.
1459 Sec. 615 MANUFACTURED HOME STANDARDS

(f) Each manufacturer, distributor, and retailer of manufactured homes shall establish and maintain such records, make such

reports, and provide such information as the Secretary may reasonably require to enable him to determine whether such manufacturer, distributor, or retailer has acted or is acting in compliance

with this title and Federal manufactured home construction and

safety standards prescribed pursuant to this title and shall, upon

request of a person duly designated by the Secretary, permit such

person to inspect appropriate books, papers, records, and documents relevant to determining whether such manufacturer, distributor, or retailer has acted or is acting in compliance with this

title and manufactured home construction and safety standards

prescribed pursuant to this title.

(g) Each manufacturer of manufactured homes shall provide to

the Secretary such performance data and other technical data related to performance and safety as may be required to carry out

the purposes of this title. These shall include records of tests and

test results which the Secretary may require to be performed. The

Secretary is authorized to require the manufacturer to give notification of such performance and technical data to—

(1) each prospective purchaser of a manufactured home before its first sale for purposes other than resale, at each location where any such manufacturer’s manufactured homes are

offered for sale by a person with whom such manufacturer has

a contractual, proprietary, or other legal relationship and in a

manner determined by the Secretary to be appropriate, which

may include, but is not limited to, printed matter (A) available

for retention by such prospective purchaser, and (B) sent by

mail to such prospective purchaser upon his request; and

(2) the first person who purchases a manufactured home

for purposes other than resale, at the time of such purchase or

in printed matter placed in the manufactured home.

(h) All information reported to or otherwise obtained by the

Secretary or his representative pursuant to subsection (b), (c), (f),

or (g) which contains or relates to a trade secret, or which, if disclosed would put the person furnishing such information at a substantial competitive disadvantage, shall be considered confidential,

except that such information may be disclosed to other officers or

employees concerned with carrying out this title or when relevant

in any proceeding under this title. Nothing in this section shall authorize the withholding of information by the Secretary or any officer or employee under his control from the duly authorized committees of the Congress.

NOTIFICATION AND CORRECTION OF DEFECTS

SEC. 615. ø42 U.S.C. 5414¿ (a) Every manufacturer of manufactured homes shall furnish notification of any defect in any manufactured home produced by such manufacturer which he determines, in good faith, relates to a Federal manufactured home construction or safety standard or contains a defect which constitutes

an imminent safety hazard to the purchaser of such manufactured

home, within a reasonable time after such manufacturer has discovered such defect.
Sec. 615 MANUFACTURED HOME STANDARDS 1460

(b) The notification required by subsection (a) shall be

accomplished—

(1) by mail to the first purchaser (not including any retailer or distributor of such manufacturer) of the manufactured

home containing the defect, and to any subsequent purchaser

to whom any warranty on such manufactured home has been

transferred;

(2) by mail to any other person who is a registered owner

of such manufactured home and whose name and address has

been ascertained pursuant to procedures established under

subsection (f); and

(3) by mail or other more expeditious means to the retailer

or retailers of such manufacturer to whom such manufactured

home was delivered.

(c) The notification required by subsection (a) shall contain a

clear description of such defect or failure to comply, an evaluation

of the risk to manufactured home occupants’ safety reasonably related to such defect, and a statement of the measures needed to repair the defect. The notification shall also inform the owner whether the defect is a construction or safety defect which the manufacturer will have corrected at no cost to the owner of the manufactured home under subsection (g) or otherwise, or is a defect which

must be corrected at the expense of the owner.

(d) Every manufacturer of manufactured homes shall furnish

to the Secretary a true or representative copy of all notices, bulletins, and other communications to the retailers of such manufacturer or purchasers of manufactured homes of such manufacturer

regarding any defect in any such manufactured home produced by

such manufacturer. The Secretary shall disclose to the public so

much of the information contained in such notices or other information obtained under section 614 as he deems will assist in carrying

out the purposes of this title, but he shall not disclose any information which contains or relates to a trade secret, or which, if disclosed would put such manufacturer at a substantial competitive

disadvantage, unless he determines that it is necessary to carry out

the purposes of this title.

(e) If the Secretary determines that any manufactured home—

(1) does not comply with an applicable Federal manufactured home construction and safety standard prescribed pursuant to section 604; or

(2) contains a defect which constitutes an imminent safety

hazard,

then he shall immediately notify the manufacturer of such manufactured home of such defect or failure to comply. The notice shall

contain the findings of the Secretary and shall include all information upon which the findings are based. The Secretary shall afford

such manufacturer an opportunity to present his views and evidence in support thereof, to establish that there is no failure of

compliance. If after such presentation by the manufacturer the Secretary determines that such manufactured home does not comply

with applicable Federal manufactured home construction or safety

standards, or contains a defect which constitutes an imminent safety hazard, the Secretary shall direct the manufacturer to furnish

the notification specified in subsections (a) and (b) of this section.
1461 Sec. 615 MANUFACTURED HOME STANDARDS

1So in law.

(f) Every manufacturer of manufactured homes shall maintain

a record of the name and address of the first purchaser of each

manufactured home (for purposes other than resale), and, to the

maximum extent feasible, shall maintain procedures for

ascertaining the name and address of any subsequent purchaser

thereof and shall maintain a record of names and addresses so

ascertained. Such records shall be kept for each home produced by

a manufacturer. The Secretary may establish by order procedures

to be followed by manufacturers in establishing and maintaining

such records, including procedures to be followed by distributors

and retailers to assist manufacturers to secure the information required by this subsection. Such procedures shall be reasonable for

the particular type of manufactured home for which they are

prescribed.

(g) A manufacturer required to furnish notification of a defect

under subsection (a) or (e) shall also bring the manufactured home

into compliance with applicable standards and correct the defect or

have the defect corrected within a reasonable period of time at no

expense to the owner, but only if—

(1) the defect presents an unreasonable risk of injury or

death to occupants of the affected manufactured home or

homes; 1

(2) the defect can be related to an error in design or assembly of the manufactured home by the manufacturer.

The Secretary may direct the manufacturer to make such corrections after providing an opportunity for oral and written presentation of views by interested persons. Nothing in this section shall

limit the rights of the purchaser or any other person under any

contract or applicable law.

(h) The manufacturer shall submit his plan for notifying owners of the defect and for repairing such defect (if required under

subsection (g)) to the Secretary for his approval before implementing such plan. Whenever a manufacturer is required under

subsection (g) to correct a defect, the Secretary shall approve with

or without modification, after consultation with the manufacturer

of the manufactured home involved, such manufacturer’s remedy

plan including the date when, and the method by which, the notification and remedy required pursuant to this section shall be effectuated. Such date shall be the earliest practicable one but shall not

be more than sixty days after the date of discovery or determination of the defects or failure to comply, unless the Secretary grants

an extension of such period for good cause shown and publishes a

notice of such extension in the Federal Register. Such manufacturer is bound to implement such remedy plan as approved by the

Secretary.

(i) Where a defect or failure to comply in a manufactured home

cannot be adequately repaired within sixty days from the date of

discovery or determination of the defect, the Secretary may require

that the manufactured home be replaced with a new or equivalent

home without charge, or that the purchase price be refunded in

full, less a reasonable allowance for depreciation based on actual
Sec. 616 MANUFACTURED HOME STANDARDS 1462

use if the home has been in the possession of the owner for more

than one year.

CERTIFICATION OF CONFORMITY WITH CONSTRUCTION AND SAFETY

STANDARDS

SEC. 616. ø42 U.S.C. 5415¿ Every manufacturer of manufactured homes shall furnish to the distributor or retailer at the time

of delivery of each such manufactured home produced by such manufacturer certification that such manufactured home conforms to

all applicable Federal construction and safety standards. Such certification shall be in the form of a label or tag permanently affixed

to each such manufactured home.

CONSUMER INFORMATION

SEC. 617. ø42 U.S.C. 5416¿ The Secretary shall develop guidelines for a consumer’s manual to be provided to manufactured

home purchasers by the manufacturer. These manuals should identify and explain the purchasers’ responsibilities for operation,

maintenance, and repair of their manufactured homes.

EFFECT UPON ANTITRUST LAWS

SEC. 618. ø42 U.S.C. 5417¿ Nothing contained in this title

shall be deemed to exempt from the antitrust laws of the United

States any conduct that would otherwise be unlawful under such

laws, or to prohibit under the antitrust laws of the United States

any conduct that would be lawful under such laws. As used in this

section, the term ‘‘antitrust laws’’ includes, but is not limited to,

the Act of July 2, 1890, as amended; the Act of October 14, 1914,

as amended; the Federal Trade Commission Act (15 U.S.C. 41 et

seq.); and sections 73 and 74 of the Act of August 27, 1894, as

amended.

USE OF RESEARCH AND TESTING FACILITIES OF PUBLIC AGENCIES

SEC. 619. ø42 U.S.C. 5418¿ The Secretary, in exercising the

authority under this title, shall utilize the services, research and

testing facilities of public agencies and independent testing laboratories to the maximum extent practicable in order to avoid duplication.

SEC. 620. ø42 U.S.C. 5419¿ AUTHORITY TO COLLECT FEE.

(a) IN GENERAL.—In carrying out inspections under this title,

in developing standards and regulations pursuant to section 604,

and in facilitating the acceptance of the affordability and availability of manufactured housing within the Department, the Secretary may—

(1) establish and collect from manufactured home manufacturers a reasonable fee, as may be necessary to offset the

expenses incurred by the Secretary in connection with carrying

out the responsibilities of the Secretary under this title,

including—

(A) conducting inspections and monitoring;

(B) providing funding to States for the administration

and implementation of approved State plans under section
1463 Sec. 620 MANUFACTURED HOME STANDARDS

1December 27, 2000.

623, including reasonable funding for cooperative educational and training programs designed to facilitate uniform enforcement under this title, which funds may be

paid directly to the States or may be paid or provided to

any person or entity designated to receive and disburse

such funds by cooperative agreements among participating

States, provided that such person or entity is not otherwise an agent of the Secretary under this title;

(C) providing the funding for a noncareer administrator within the Department to administer the manufactured housing program;

(D) providing the funding for salaries and expenses of

employees of the Department to carry out the manufactured housing program;

(E) administering the consensus committee as set

forth in section 604;

(F) facilitating the acceptance of the quality, durability, safety, and affordability of manufactured housing

within the Department; and

(G) the administration and enforcement of the installation standards authorized by section 605 in States in

which the Secretary is required to implement an installation program after the expiration of the 5-year period set

forth in section 605(c)(2)(B), and the administration and

enforcement of a dispute resolution program described in

section 623(c)(12) in States in which the Secretary is required to implement such a program after the expiration

of the 5-year period set forth in section 623(g)(2); and

(2) subject to subsection (e), use amounts from any fee collected under paragraph (1) of this subsection to pay expenses

referred to in that paragraph, which shall be exempt and separate from any limitations on the Department regarding fulltime equivalent positions and travel.

(b) CONTRACTORS.—In using amounts from any fee collected

under this section, the Secretary shall ensure that separate and

independent contractors are retained to carry out monitoring and

inspection work and any other work that may be delegated to a

contractor under this title.

(c) PROHIBITED USE.—No amount from any fee collected under

this section may be used for any purpose or activity not specifically

authorized by this title, unless such activity was already engaged

in by the Secretary prior to the date of the enactment of the Manufactured Housing Improvement Act of 2000. 1

(d) MODIFICATION.—Beginning on the date of the enactment of

the Manufactured Housing Improvement Act of 2000, 1 the amount

of any fee collected under this section may only be modified—

(1) as specifically authorized in advance in an annual appropriations Act; and

(2) pursuant to rulemaking in accordance with section 553

of title 5, United States Code.

(e) APPROPRIATION AND DEPOSIT OF FEES.—
Sec. 621 MANUFACTURED HOME STANDARDS 1464

1Section 1 of Public Law 107–18, approved July 5, 2001, provides as follows:

‘‘SECTION 1. MANUFACTURED HOUSING.

‘‘(a) AVAILABILITY OF FEES.—Notwithstanding section 620(e)(2) of the National Manufactured

Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5419(e)(2)), any fees collected

under that Act, including any fees collected before the date of enactment of the American Homeownership and Economic Opportunity Act of 2000 (12 U.S.C. 1701 note) and remaining unobligated on the date of enactment of this Act, shall be available for expenditure to offset the expenses incurred by the Secretary under the National Manufactured Housing Construction and

Safety Standards Act of 1974 (42 U.S.C. 5401 et seq.), otherwise in accordance with section 620

of that Act.

‘‘(b) DURATION.—The authority for the use of fees provided for in subsection (a) shall remain

in effect during the period beginning in fiscal year 2001 and ending on the effective date of the

first appropriations Act referred to in section 620(e)(2) of the National Manufactured Housing

Construction and Safety Standards Act of 1974 (42 U.S.C. 5419(e)(2)) that is enacted with respect to a fiscal year after fiscal year 2001.’’.

The American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–569, was

enacted on December 27, 2000.

(1) IN GENERAL.—There is established in the Treasury of

the United States a fund to be known as the ‘‘Manufactured

Housing Fees Trust Fund’’ for deposit of amounts from any fee

collected under this section. Such amounts shall be held in

trust for use only as provided in this title.

(2) APPROPRIATION.—Amounts from any fee collected under

this section shall be available for expenditure only to the extent approved in advance in an annual appropriations Act. Any

change in the expenditure of such amounts shall be specifically

authorized in advance in an annual appropriations Act. 1

(3) PAYMENTS TO STATES.—On and after the effective date

of the Manufactured Housing Improvement Act of 2000, the

Secretary shall continue to fund the States having approved

State plans in the amounts which are not less than the allocated amounts, based on the fee distribution system in effect

on the day before such effective date.

PENALTIES ON INSPECTIONS

SEC. 621. ø42 U.S.C. 5420¿ Any person, other than an officer

or employee of the United States, or a person exercising inspection

functions under a State plan pursuant to section 623, who knowingly and willfully fails to report a violation of any construction or

safety standard established under section 604 may be fined up to

$1,000 or imprisoned for up to one year, or both.

PROHIBITION ON WAIVER OF RIGHTS

SEC. 622. ø42 U.S.C. 5421¿ The rights afforded manufactured

home purchasers under this title may not be waived, and any provision of a contract or agreement entered into after the enactment

of this title to the contrary shall be void.

STATE JURISDICTION; STATE PLANS

SEC. 623. ø42 U.S.C. 5422¿ (a) Nothing in this title shall prevent any State agency or court from asserting jurisdiction under

State law over any manufactured home construction or safety issue

with respect to which no Federal manufactured home construction

and safety standard has been established pursuant to the provisions of section 604.
1465 Sec. 623 MANUFACTURED HOME STANDARDS

1The date of enactment was December 27, 2000.

(b) Any State which, at any time, desires to assume responsibility for enforcement and manufactured home safety and construction standards relating to any issue with respect to which a Federal standard has been established under section 604, shall submit

to the Secretary a State plan for enforcement of such standards.

(c) The Secretary shall approve the plan submitted by a State

under subsection (b), or any modification thereof, if such plan in

his judgment—

(1) designates a State agency or agencies as the agency or

agencies responsible for administering the plan throughout the

State;

(2) provides for the enforcement of manufactured home

safety and construction standards promulgated under section

604;

(3) provides for a right of entry and inspection of all factories, warehouses, or establishments in such State in which

manufactured homes are manufactured and for the review of

plans, in a manner which is identical to that provided in section 614;

(4) provides for the imposition of the civil and criminal

penalties under section 611;

(5) provides for the notification and correction procedures

under section 615;

(6) provides for the payment of inspection fees by manufacturers in amounts adequate to cover the cost of inspections;

(7) contains satisfactory assurances that the State agency

or agencies have or will have the legal authority and qualified

personnel necessary for the enforcement of such standards;

(8) give satisfactory assurances that such State will devote

adequate funds to the administration and enforcement of such

standards;

(9) requires manufacturers, distributors, and retailers in

such State to make reports to the Secretary in the same manner and to the same extent as if the State plan were not in effect;

(10) provides that the State agency or agencies will make

such reports to the Secretary in such form and containing such

information as the Secretary shall from time to time require;

(11) with respect to any State plan submitted on or after

the expiration of the 5-year period beginning on the date of the

enactment of the Manufactured Housing Improvement Act of

2000, 1 provides for an installation program established by

State law that meets the requirements of section 605(c)(3);

(12) with respect to any State plan submitted on or after

the expiration of the 5-year period beginning on the date of the

enactment of the Manufactured Housing Improvement Act of

2000, 1 provides for a dispute resolution program for the timely

resolution of disputes between manufacturers, retailers, and

installers of manufactured homes regarding responsibility, and

for the issuance of appropriate orders, for the correction or repair of defects in manufactured homes that are reported during

the 1-year period beginning on the date of installation; and
Sec. 623 MANUFACTURED HOME STANDARDS 1466

1The date of enactment was December 27, 2000.

(13) complies with such other requirements as the Secretary may by regulation prescribe for the enforcement of this

title.

(d) If the Secretary rejects a plan submitted under subsection

(b), he shall afford the State submitting the plan due notice and

opportunity for a hearing before so doing.

(e) After the Secretary approves a State plan submitted under

subsection (b), he may, but shall not be required to, exercise his authority under this title with respect to enforcement of manufactured home construction and safety standards in the State involved.

(f) The Secretary shall, on the basis of reports submitted by the

designated State agency and his own inspections, make a continuing evaluation of the manner in which each State having a

plan approved under this section is carrying out such plan. Such

evaluation shall be made by the Secretary at least annually for

each State, and the results of such evaluation and the inspection

reports on which it is based shall be promptly submitted to the appropriate committees of the Congress. Whenever the Secretary

finds, after affording due notice and opportunity for a hearing, that

in the administration of the State plan there is a failure to comply

substantially with any provision of the State plan or that the State

plan has become inadequate, he shall notify the State agency or

agencies of his withdrawal of approval of such plan. Upon receipt

of such notice by such State agency or agencies such plan shall

cease to be in effect, but the State may retain jurisdiction in any

case commenced before the withdrawal of the plan in order to enforce manufactured home standards under the plan whenever the

issues involved do not relate to the reasons for the withdrawal of

the plan.

(g) ENFORCEMENT OF DISPUTE RESOLUTION STANDARDS.—

(1) ESTABLISHMENT OF DISPUTE RESOLUTION PROGRAM.—

Not later than the expiration of the 5-year period beginning on

the date of the enactment of the Manufactured Housing Improvement Act of 2000, 1 the Secretary shall establish a dispute

resolution program that meets the requirements of subsection

(c)(12) for dispute resolution in each State described in paragraph (2) of this subsection. The order establishing the dispute

resolution program shall be issued after notice and opportunity

for public comment in accordance with section 553 of title 5,

United States Code.

(2) IMPLEMENTATION OF DISPUTE RESOLUTION PROGRAM.— Beginning on the expiration of the 5-year period described in

paragraph (1), the Secretary shall implement the dispute resolution program established under paragraph (1) in each State

that has not established a dispute resolution program that

meets the requirements of subsection (c)(12).

(3) CONTRACTING OUT OF IMPLEMENTATION.—In carrying

out paragraph (2), the Secretary may contract with an appropriate agent to implement the dispute resolution program established under paragraph (2), except that such agent shall not

be a person or entity other than a government, nor an affiliate
1467 Sec. 627 MANUFACTURED HOME STANDARDS

1The date of enactment was August 22, 1974.

or subsidiary of such a person or entity, that has entered into

a contract with the Secretary to implement any other regulatory program under this title.

GRANTS TO STATES

SEC. 624. ø42 U.S.C. 5423¿ (a) The Secretary is authorized to

make grants to the States which have designated a State agency

under section 623 to assist them—

(1) in identifying their needs and responsibilities in the

area of manufactured home construction and safety standards;

or

(2) in developing State plans under section 623.

(b) The Governor of each State shall designate the appropriate

State agency for receipt of any grant made by the Secretary under

this section.

(c) Any State agency designated by the Governor of a State desiring a grant under this section shall submit an application therefor to the Secretary. The Secretary shall review and either accept

or reject such application.

(d) The Federal share for each State grant under subsection (a)

of this section may not exceed 90 per centum of the total cost to

the State in identifying its needs and developing its plan. In the

event the Federal share for all States under such subsection is not

the same, the differences among the States shall be established on

the basis of objective criteria.

RULES AND REGULATIONS

SEC. 625. ø42 U.S.C. 5424¿ The Secretary is authorized to

issue, amend, and revoke such rules and regulations as he deems

necessary to carry out this title.

AUTHORIZATION OF APPROPRIATIONS

SEC. 626. ø42 U.S.C. 5426¿ There are authorized to be appropriated such sums as may be necessary to carry out the provisions

of this title.

EFFECTIVE DATE

SEC. 627. ø42 U.S.C. 5401 note¿ The provisions of this title

shall take effect upon the expiration of 180 days following the date

of enactment of this title.1
1468

LEAD-BASED PAINT POISONING PREVENTION ACT

[Public Law 91–695; 84 Stat. 2078; 42 U.S.C. 4801 et seq.]

Be it enacted by the Senate and House of Representatives of the Unitd States of

America in Congress assembled,

That this Act may be cited as the ‘‘Lead-Based Paint Poisoning

Prevention Act’’. ø42 U.S.C. 4801 note¿

øTITLE I—GRANTS FOR THE DETECTION AND TREATMENT

OF LEAD-BASED PAINT POISONING¿

øRepealed.¿

øTITLE II—GRANTS FOR THE ELIMINATION OF LEAD-BASED

PAINT POISONING¿

øRepealed.¿

TITLE III—FEDERAL DEMONSTRATION AND RESEARCH

PROGRAM

FEDERAL DEMONSTRATION AND RESEARCH PROGRAM

SEC. 301. ø42 U.S.C. 4821¿ (a) The Secretary of Housing and

Urban Development, in consultation with the Secretary of Health,

Education, and Welfare, shall develop and carry out a demonstration and research program to determine the nature and extent of

the problem of lead-based paint poisoning in the United States,

particularly in urban areas, including the methods by which the

lead-based paint hazard can most effectively be removed from interior surfaces, porches, and exterior surfaces of residential housing

to which children may be exposed.

(b) The Chairman of the Consumer Product Safety Commission

shall conduct appropriate research on multiple layers of dried paint

film, containing the various lead compounds commonly used, in

order to ascertain the safe level of lead in residential paint products. No later than December 31, 1974, the Chairman shall submit

to Congress a full and complete report of his findings and recommendations as developed pursuant to such programs, together

with a statement of any legislation which should be enacted or any

changes in existing law which should be made in order to carry out

such recommendations.

REQUIREMENTS FOR HOUSING RECEIVING FEDERAL ASSISTANCE

SEC. 302. ø42 U.S.C. 4822¿ (a) GENERAL REQUIREMENTS.—

(1) ELIMINATION OF HAZARDS.—The Secretary of Housing

and Urban Development (hereafter in this section referred to

as the ‘‘Secretary’’) shall establish procedures to eliminate as

far as practicable the hazards of lead-based paint poisoning
1469 Sec. 302 LEAD-BASED PAINT POISONING PREVENTION ACT

with respect to any existing housing which may present such

hazards and which is covered by an application for mortgage

insurance or housing assistance payments under a program administered by the Secretary or otherwise receives more than

$5,000 in project-based assistance under a Federal housing

program. Beginning on January 1, 1995, such procedures shall

apply to all such housing that constitutes target housing, as

defined in section 1004 of the Residential Lead-Based Paint

Hazard Reduction Act of 1992, and shall provide for appropriate measures to conduct risk assessments, inspections, interim controls, and abatement of lead-based paint hazards. At

a minimum, such procedures shall require—

(A) the provision of lead hazard information pamphlets, developed pursuant to section 406 of the Toxic Substances Control Act, to purchasers and tenants;

(B) periodic risk assessments and interim controls in

accordance with a schedule determined by the Secretary,

the initial risk assessment of each unit constructed prior

to 1960 to be conducted not later than January 1, 1996,

and, for units constructed between 1960 and 1978—

(i) not less than 25 percent shall be performed by

January 1, 1998;

(ii) not less than 50 percent shall be performed by

January 1, 2000; and

(iii) the remainder shall be performed by January

1, 2002;

(C) inspection for the presence of lead-based paint

prior to federally-funded renovation or rehabilitation that

is likely to disturb painted surfaces;

(D) reduction of lead-based paint hazards in the course

of rehabilitation projects receiving less than $25,000 per

unit in Federal funds;

(E) abatement of lead-based paint hazards in the

course of substantial rehabilitation projects receiving more

than $25,000 per unit in Federal funds;

(F) where risk assessment, inspection, or reduction activities have been undertaken, the provision of notice to occupants describing the nature and scope of such activities

and the actual risk assessment or inspection reports (including available information on the location of any remaining lead-based paint on a surface-by-surface basis);

and

(G) such other measures as the Secretary deems appropriate.

(2) ADDITIONAL MEASURES.—The Secretary may establish

such other procedures as may be appropriate to carry out the

purposes of this section.

(3) DISPOSITION OF FEDERALLY OWNED HOUSING.—

(A) PRE-1960 TARGET HOUSING.—Beginning on January

1, 1995, procedures established under paragraphs (1) and

(2) shall require the inspection and abatement of leadbased paint hazards in all federally owned target housing

constructed prior to 1960.
Sec. 302 LEAD-BASED PAINT POISONING PREVENTION ACT 1470

(B) TARGET HOUSING CONSTRUCTED BETWEEN 1960 AND

1978.—Beginning on January 1, 1995, procedures established under paragraphs (1) and (2) shall require an inspection for lead-based paint and lead-based paint hazards

in all federally owned target housing constructed between

1960 and 1978. The results of such inspections shall be

made available to prospective purchasers, identifying the

presence of lead-based paint and lead-based paint hazards

on a surface-by-surface basis. The Secretary shall have the

discretion to waive the requirement of this subparagraph

for housing in which a federally funded risk assessment,

performed by a certified contractor, has determined no

lead-based paint hazards are present.

(C) BUDGET AUTHORITY.—To the extent that subparagraphs (A) and (B) increase the cost to the Government of

outstanding direct loan obligations or loan guarantee commitments, such activities shall be treated as modifications

under section 504(e) of the Federal Credit Reform Act of

1990 and shall be subject to the availability of appropriations. To the extent that paragraphs (A) and (B) impose

additional costs to the Resolution Trust Corporation and

the Federal Deposit Insurance Corporation, its requirements shall be carried out only if appropriations are provided in advance in an appropriations Act. In the absence

of appropriations sufficient to cover the costs of subparagraphs (A) and (B), these requirements shall not apply to

the affected agency or agencies.

(D) DEFINITIONS.—For the purposes of this subsection,

the terms ‘‘inspection’’, ‘‘abatement’’, ‘‘lead-based paint hazard’’, ‘‘federally owned housing’’, ‘‘target housing’’, ‘‘risk assessment’’, and ‘‘certified contractor’’ have the same meaning given such terms in section 1004 of the Residential

Lead-Based Paint Hazard Reduction Act of 1992.

(4) DEFINITIONS.—For purposes of this subsection, the

terms ‘‘risk assessment’’, ‘‘inspection’’, ‘‘interim control’’, ‘‘abatement’’, ‘‘reduction’’, and ‘‘lead-based paint hazard’’ have the

same meaning given such terms in section 1004 of the Residential Lead-Based Paint Hazard Reduction Act of 1992.

(b) MEASUREMENT CRITERIA.—The procedures established by

the Secretary under this section for the risk assessment, interim

control, inspection, and abatement of lead-based paint hazards in

housing covered by this section shall be based upon guidelines developed pursuant to section 1017 of the Residential Lead-Based

Paint Hazard Reduction Act of 1992.

(c) INSPECTION REQUIREMENTS.—The Secretary shall require

the inspection of all intact and nonintact interior and exterior

painted surfaces of housing subject to this section for lead-based

paint using an approved x-ray fluorescence analyzer, atomic absorption spectroscopy, or comparable approved sampling or testing

technique. A certified inspector or laboratory shall certify in writing the precise results of the inspection. If the results equal or exceed a level of 1.0 milligrams per centimeter squared or 0.5 percent

by weight, the results shall be provided to any potential purchaser

or tenant of the housing. The Secretary shall periodically review
1471 Sec. 302 LEAD-BASED PAINT POISONING PREVENTION ACT

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1990, Pub. L. 101–144, 103 Stat. 853, provides as follows:

‘‘If the Secretary of the Department of Housing and Urban Development has not issued the

lead-based paint technical guidelines on reliable testing protocols, safe and effective abatement

techniques, cleanup methods and acceptable post-abatement lead dust levels by April 1, 1990,

the Department’s September 29, 1989, draft guidelines shall take effect and remain in force

until revised by the Secretary.’’

and reduce the level below 1.0 milligram per centimeter squared or

0.5 percent by weight to the extent that reliable technology makes

feasible the detection of a lower level and medical evidence supports the imposition of a lower level. The requirements of this subsection shall apply as provided in subsection (d).

(d) ABATEMENT REQUIRED.1— (1) TRANSITIONAL TESTING AND ABATEMENT IN PUBLIC

HOUSING RECEIVING MODERNIZATION ASSISTANCE.—In the case

of public housing assisted with capital assistance provided

under section 9 of the United States Housing Act of 1937, the

Secretary shall require the inspection described in subsection

(c) for—

(A) a random sample of dwellings and common areas

in all public housing projects assisted under such section;

and

(B) each dwelling in any public housing project in

which there is a dwelling determined under subparagraph

(A) to have lead-based paint hazards, except that the Secretary shall not require the inspection of each dwelling if

the Secretary requires the abatement of the lead-based

paint hazards for the surfaces of each dwelling in the public housing project that correspond to the surfaces in the

sample determined to have such hazards under subparagraph (A).

The Secretary shall require the inspection of all housing subject to this paragraph in accordance with the modernization

schedule. A public housing agency may elect to test for leadbased paint using atomic absorption spectroscopy and may

elect to abate lead-based paint and dust containing lead under

standards more stringent than that in subsection (c), including

the abatement of lead-based paint and dust which exceeds the

standard of lead permitted in paints by the Consumer Product

Safety Commission under this Act, and such abatement shall

qualify for capital assistance provided under section 9 of the

United States Housing Act of 1937. The Secretary shall require

abatement of lead-based paint and lead-based paint hazards in

housing in which the test results equal or exceed the standard

established by or under subsection (c). Final inspection and

certification after abatement shall be made by a qualified inspector, industrial hygienist, or local public health official.

(2) ABATEMENT DEMONSTRATION PROGRAM.—

(A) ABATEMENT DEMONSTRATION PROGRAM.—In carrying out the requirements of this subsection with respect

to single-family and multifamily properties owned by the

Department of Housing and Urban Development and public housing, the Secretary shall utilize a sufficient variety

of abatement methods in a sufficient number of areas and

circumstances to demonstrate their relative cost-effective-
Sec. 302 LEAD-BASED PAINT POISONING PREVENTION ACT 1472

ness and their applicability to various types of housing.

For purposes of the demonstration, a public housing agency may elect to test for lead-based paint using atomic absorption spectroscopy and may elect to abate lead-based

paint and dust containing lead under standards more

stringent than that in subsection (c), including the abatement of lead-based paint and dust which exceeds the

standard of lead permitted in paints by the Consumer

Product Safety Commission under this Act, and such

abatement shall qualify for assistance under section 14 of

the United States Housing Act of 1937.

(B) REPORT.—Not later than 18 months after the effective date of the regulations issued to carry out this subsection, the Secretary shall transmit to the Congress the

findings and recommendations of the Secretary as a result

of the demonstration program, including any recommendations of the Secretary for legislation to revise the requirements of this subsection. Based on the demonstration, the

Secretary shall prepare and include in the report a comprehensive and workable plan for the cost-effective inspection and abatement of public housing in accordance with

paragraph (3), including an estimate of the total cost of

abatement in accordance with paragraph (3)(B). In preparing such report, the Secretary shall examine—

(i) the most reliable technology available for detecting lead-based paint, including X-ray fluorescence

and atomic absorption spectroscopy;

(ii) the most efficient and cost-effective methods

for abatement, including removal, containment, or encapsulation of the contaminated components, procedures which minimize the generation of dust (including the high efficiency vacuum removal of leaded

dust), and procedures that provide for offsite disposal

of the removed components, in compliance with all applicable regulatory standards and procedures;

(iii) safety considerations in testing, abatement,

and worker protection;

(iv) the overall accuracy and reliability of laboratory testing of physical samples, x-ray fluorescence

machines, and other available testing procedures;

(v) availability of qualified samplers and testers;

(vi) an estimate of the amount, characteristics,

and regional distribution of housing in the United

States that contains lead-based paint hazards at differing levels of contamination; and

(vii) the merits of an interim containment protocol

for public housing dwellings that are determined to

have lead-based paint hazards but for which comprehensive improvement assistance under section 14

of the United States Housing Act of 1937 is not available.

(3) TESTING AND ABATEMENT OF OTHER PUBLIC HOUSING.—

(A) REQUIRED INSPECTION.—The Secretary shall require the inspection described in subsection (c) for—
1473 Sec. 302 LEAD-BASED PAINT POISONING PREVENTION ACT

(i) a random sample of dwellings and common

areas in all public housing that is not subject to paragraph (1); and

(ii) each dwelling in any public housing project in

which there is a dwelling determined under clause (i)

to have lead-based paint hazards, except that the Secretary shall not require the inspection of each dwelling

if the Secretary requires the abatement of the leadbased paint hazards for the surfaces of each dwelling

in the public housing project that correspond to the

surfaces in the sample determined to have such hazards under clause (i).

(B) SCHEDULE.—The Secretary shall require the inspection of all housing subject to this paragraph prior to

the expiration of 5 years after the report is required to be

transmitted under paragraph (2)(B). The Secretary may

prioritize, within such 5-year period, inspections on the

basis of vacancy, age of housing, or projected modernization or rehabilitation. The Secretary shall require abatement and final inspection and certification of such housing

in accordance with the last two sentences of paragaph (1).

(4) REPORT REQUIRED.—Not later than 9 months after completion of the demonstration required by paragraph (2), the

Secretary shall, based on the demonstration, prepare and

transmit to the Congress, a comprehensive and workable plan,

including any recommendations for changes in legislation, for

the prompt and cost effective inspection and abatement of privately owned single family and multifamily housing, including

housing assisted under section 8 of the United States Housing

Act of 1937. After the expiration of the 9-month period referred

to in the preceding sentence, the Secretary may not obligate or

expend any funds or otherwise carry out activities related to

any other policy development and research project until the report is transmitted.

(e) EXCEPTIONS.—The provisions of this section shall not apply

to—

(1) housing for the elderly or handicapped, except for any

dwelling in such housing in which any child who is less than

7 years of age resides or is expected to reside;

(2) any project for which an application for insurance is

submitted under section 231, 232, 241, or 242 of the National

Housing Act; or

(3) any 0-bedroom dwelling.

(f) FUNDING.—The Secretary shall carry out the provisions of

this section utilizing available Federal funding sources. The Secretary shall use funds available under the Capital Fund under

section 9 of the United States Housing Act of 1937 to carry out this

section in public housing. The Secretary shall submit annually to

the Congress an estimate of the funds required to carry out the

provisions of this section with the reports required by paragraphs

(2)(B) and (4).

(g) INTERPRETATION OF SECTION.—This section may not be construed to affect the responsibilities of the Environmental Protection
Sec. 401 LEAD-BASED PAINT POISONING PREVENTION ACT 1474

1 January 13, 1971.

Agency with respect to the protection of the public health from hazards posed by lead-based paint.

TITLE IV—PROHIBITION AGAINST FUTURE USE OF LEADBASED PAINT

PROHIBITION AGAINST USE OF LEAD-BASED PAINT IN CONSTRUCTION

OF FACILITIES AND THE MANUFACTURE OF CERTAIN TOYS AND

UTENSILS

SEC. 401. ø42 U.S.C. 4831¿ (a) The Secretary of Health, Education, and Welfare shall take such steps and impose such conditions as may be necessary or appropriate to prohibit the application

of lead-based paint to any cooking utensil, drinking utensil, or eating utensil manufactured and distributed after the date of enactment of this Act. 1

(b) The Secretary of Housing and Urban Development shall

take steps and impose such conditions as may be necessary or appropriate to prohibit the use of lead-based paint in residential

structures constructed or rehabilitated by the Federal Government,

or with Federal assistance in any form after the date of enactment

of this Act.

(c) The Consumer Product Safety Commission shall take such

steps and impose such conditions as may be necessary or appropriate to prohibit the application of lead-based paint to any toy or

furniture article.

TITLE V—GENERAL

DEFINITIONS

SEC. 501. ø42 U.S.C. 4841¿ As used in this Act—

(1) The term ‘‘State’’ means the several States, the District

of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States.

(2) The term ‘‘units of general local government’’ means (A)

any city, county, township, town, borough, parish, village, or

other general purpose political subdivision of a State, (B) any

combination of units of general local government in one or

more States, (C) an Indian tribe, or (D) with respect to leadbased paint poisoning elimination activities in their urban

areas, the territories and possessions of the United States.

(3)(A) Except as provided in subparagraph (B), the term

‘‘lead-based paint’’ means any paint containing more than fivetenths of 1 per centum lead by weight (calculated as lead

metal) in the total nonvolatile content of the paint, or the

equivalent measure of lead in the dried film of paint already

applied, or both.

(B)(i) The Consumer Product Safety Commission shall,

during the six-month period beginning on the date of the enactment of the National Health Promotion and Disease Prevention Act of 1976, determine, on the basis of available data and

information and after providing opportunity for an oral hearing

and considering recommendations of the Secretary of Health,
1475 Sec. 504 LEAD-BASED PAINT POISONING PREVENTION ACT

Education, and Welfare (including those of the Centers for Disease Control and Prevention) and of the National Academy of

Sciences, whether or not a leval of lead in paint which is greater than six one-hundredth of 1 per centum but not in excess

of five-tenths of 1 per centum is safe. If the Commission determines, in accordance with the preceding sentence, that another

level of lead is safe, the term ‘‘lead-based paint’’ means, with

respect to paint which is manufactured after the expiration of

the six-month period beginning on the date of the Commission’s determination, paint containing by weight (calculated as

lead metal) in the total nonvolatile content of the paint more

than the level of lead determined by the Commission to be safe

or the equivalent measure of lead in the dried film of paint already applied, or both.

(ii) Unless the definition of the term ‘‘lead-based paint’’ has

been established by a determination of the Consumer Product

Safety Commission pursuant to clause (i) of this subparagraph,

the term ‘‘lead-based paint’’ means, with respect to paint which

is manufactured after expiration of the twelve-month period

beginning on such date of enactment, paint containing more

than six one-hundredths of 1 per centum lead by weight (calculated as lead metal) in the total nonvolatile content of the

paint, or the equivalent measure of lead in the dried film of

paint already applied, or both.

CONSULTATION WITH OTHER DEPARTMENTS AND AGENCIES

SEC. 502. ø42 U.S.C. 4842¿ In carrying out their respective authorities under this Act, the Secretary of Housing and Urban Development and the Secretary of Health, Education, and Welfare

shall each cooperate with and seek the advice of the heads of any

other departments or agencies regarding any programs under their

respective responsibilities which are related to, or would be affected

by, such authority.

APPROPRIATIONS

SEC. 503. ø42 U.S.C. 4843¿ (a) There are authorized to be appropriated to carry out this Act, $10,000,000 for the fiscal year

1976, $12,000,000 for the fiscal year 1977, and $14,000,000 for the

fiscal year 1978.

(b) Any amounts appropriated under this section shall remain

available until expended when so provided in appropriation Acts;

and any amounts authorized for one fiscal year but not appropriated may be appropriated for the succeeding fiscal year.

EFFECT UPON STATE LAW

SEC. 504. ø42 U.S.C. 4846¿ It is hereby expressly declared that

it is the intent of the Congress to supersede any and all laws of

the States and units of local government insofar as they may now

or hereafter provide for a requirement, prohibition, or standard relating to the lead content in paints or other similar surface-coating

materials which differs from the provisions of this Act or regulations issued pursuant to this Act. Any law, regulation, or ordinance
Sec. 504 LEAD-BASED PAINT POISONING PREVENTION ACT 1476

purporting to establish such different requirement, prohibition, or

standard shall be null and void.
1477

RESIDENTIAL LEAD-BASED PAINT HAZARD REDUCTION

ACT OF 1992

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3897; 42 U.S.C. 4851 et seq.]

TITLE X—RESIDENTIAL LEAD-BASED

PAINT HAZARD REDUCTION ACT OF

1992

SEC. 1001. ø42 U.S.C. 4851 note¿ SHORT TITLE.

This title may be cited as the ‘‘Residential Lead-Based Paint

Hazard Reduction Act of 1992’’.

SEC. 1002. ø42 U.S.C. 4851¿ FINDINGS.

The Congress finds that—

(1) low-level lead poisoning is widespread among American

children, afflicting as many as 3,000,000 children under age 6,

with minority and low-income communities disproportionately

affected;

(2) at low levels, lead poisoning in children causes intelligence quotient deficiencies, reading and learning disabilities,

impaired hearing, reduced attention span, hyperactivity, and

behavior problems;

(3) pre-1980 American housing stock contains more than

3,000,000 tons of lead in the form of lead-based paint, with the

vast majority of homes built before 1950 containing substantial

amounts of lead-based paint;

(4) the ingestion of household dust containing lead from

deteriorating or abraded lead-based paint is the most common

cause of lead poisoning in children;

(5) the health and development of children living in as

many as 3,800,000 American homes is endangered by chipping

or peeling lead paint, or excessive amounts of lead-contaminated dust in their homes;

(6) the danger posed by lead-based paint hazards can be

reduced by abating lead-based paint or by taking interim

measures to prevent paint deterioration and limit children’s exposure to lead dust and chips;

(7) despite the enactment of laws in the early 1970’s requiring the Federal Government to eliminate as far as practicable lead-based paint hazards in federally owned, assisted,

and insured housing, the Federal response to this national crisis remains severely limited; and

(8) the Federal Government must take a leadership role in

building the infrastructure—including an informed public,
Sec. 1003 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1478

State and local delivery systems, certified inspectors, contractors, and laboratories, trained workers, and available financing

and insurance—necessary to ensure that the national goal of

eliminating lead-based paint hazards in housing can be

achieved as expeditiously as possible.

SEC. 1003. ø42 U.S.C. 4851a¿ PURPOSES.

The purposes of this Act are—

(1) to develop a national strategy to build the infrastructure necessary to eliminate lead-based paint hazards in all

housing as expeditiously as possible;

(2) to reorient the national approach to the presence of

lead-based paint in housing to implement, on a priority basis,

a broad program to evaluate and reduce lead-based paint hazards in the Nation’s housing stock;

(3) to encourage effective action to prevent childhood lead

poisoning by establishing a workable framework for lead-based

paint hazard evaluation and reduction and by ending the current confusion over reasonable standards of care;

(4) to ensure that the existence of lead-based paint hazards

is taken into account in the development of Government housing policies and in the sale, rental, and renovation of homes

and apartments;

(5) to mobilize national resources expeditiously, through a

partnership among all levels of government and the private

sector, to develop the most promising, cost-effective methods

for evaluating and reducing lead-based paint hazards;

(6) to reduce the threat of childhood lead poisoning in

housing owned, assisted, or transferred by the Federal Government; and

(7) to educate the public concerning the hazards and

sources of lead-based paint poisoning and steps to reduce and

eliminate such hazards.

SEC. 1004. ø42 U.S.C. 4851b¿ DEFINITIONS.

For the purposes of this Act, the following definitions shall

apply:

(1) ABATEMENT.—The term ‘‘abatement’’ means any set of

measures designed to permanently eliminate lead-based paint

hazards in accordance with standards established by appropriate Federal agencies. Such term includes—

(A) the removal of lead-based paint and lead-contaminated dust, the permanent containment or encapsulation

of lead-based paint, the replacement of lead-painted surfaces or fixtures, and the removal or covering of lead contaminated soil; and

(B) all preparation, cleanup, disposal, and

postabatement clearance testing activities associated with

such measures.

(2) ACCESSIBLE SURFACE.—The term ‘‘accessible surface’’

means an interior or exterior surface painted with lead-based

paint that is accessible for a young child to mouth or chew.

(3) CERTIFIED CONTRACTOR.—The term ‘‘certified contractor’’ means—
1479 Sec. 1004 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

1So in law. Probably intended to refer to section 101.

(A) a contractor, inspector, or supervisor who has completed a training program certified by the appropriate Federal agency and has met any other requirements for certification or licensure established by such agency or who

has been certified by any State through a program which

has been found by such Federal agency to be at least as

rigorous as the Federal certification program; and

(B) workers or designers who have fully met training

requirements established by the appropriate Federal agency.

(4) CONTRACT FOR THE PURCHASE AND SALE OF RESIDENTIAL REAL PROPERTY.—The term ‘‘contract for the purchase and

sale of residential real property’’ means any contract or agreement in which one party agrees to purchase an interest in real

property on which there is situated 1 or more residential dwellings used or occupied, or intended to be used or occupied, in

whole or in part, as the home or residence of 1 or more persons.

(5) DETERIORATED PAINT.—The term ‘‘deteriorated paint’’

means any interior or exterior paint that is peeling, chipping,

chalking or cracking or any paint located on an interior or exterior

surface or fixture that is damaged or deteriorated.

(6) EVALUATION.—The term ‘‘evaluation’’ means risk assessment, inspection, or risk assessment and inspection.

(7) FEDERALLY ASSISTED HOUSING.—The term ‘‘federally assisted housing’’ means residential dwellings receiving projectbased assistance under programs including—

(A) section 221(d)(3) or 236 of the National Housing

Act;

(B) section 1 1 of the Housing and Urban Development

Act of 1965;

(C) section 8 of the United States Housing Act of 1937;

or

(D) sections 502(a), 504, 514, 515, 516 and 533 of the

Housing Act of 1949.

(8) FEDERALLY OWNED HOUSING.—The term ‘‘federally

owned housing’’ means residential dwellings owned or managed by a Federal agency, or for which a Federal agency is a

trustee or conservator. For the purpose of this paragraph, the

term ‘‘Federal agency’’ includes the Department of Housing

and Urban Development, the Farmers Home Administration,

the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, the General Services Administration, the Department of Defense, the Department of Veterans Affairs, the

Department of the Interior, the Department of Transportation,

and any other Federal agency.

(9) FEDERALLY SUPPORTED WORK.—The term ‘‘federally

supported work’’ means any lead hazard evaluation or reduction activities conducted in federally owned or assisted housing

or funded in whole or in part through any financial assistance

program of the Department of Housing and Urban Develop-
Sec. 1004 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1480

ment, the Farmers Home Administration, or the Department of

Veterans Affairs.

(10) FRICTION SURFACE.—The term ‘‘friction surface’’

means an interior or exterior surface that is subject to abrasion

or friction, including certain window, floor, and stair surfaces.

(11) IMPACT SURFACE.—The term ‘‘impact surface’’ means

an interior or exterior surface that is subject to damage by repeated impacts, for example, certain parts of door frames.

(12) INSPECTION.—The term ‘‘inspection’’ means a surfaceby-surface investigation to determine the presence of leadbased paint as provided in section 302(c) of the Lead-Based

Paint Poisoning Prevention Act and the provision of a report

explaining the results of the investigation.

(13) INTERIM CONTROLS.—The term ‘‘interim controls’’

means a set of measures designed to reduce temporarily

human exposure or likely exposure to lead-based paint hazards, including specialized cleaning, repairs, maintenance,

painting, temporary containment, ongoing monitoring of leadbased paint hazards or potential hazards, and the establishment and operation of management and resident education

programs.

(14) LEAD-BASED PAINT.—The term ‘‘lead-based paint’’

means paint or other surface coatings that contain lead in excess of limits established under section 302(c) of the LeadBased Paint Poisoning Prevention Act.

(15) LEAD-BASED PAINT HAZARD.—The term ‘‘lead-based

paint hazard’’ means any condition that causes exposure to

lead from lead-contaminated dust, lead-contaminated soil, leadcontaminated paint that is deteriorated or present in accessible

surfaces, friction surfaces, or impact surfaces that would result

in adverse human health effects as established by the appropriate Federal agency.

(16) LEAD-CONTAMINATED DUST.—The term ‘‘lead-contaminated dust’’ means surface dust in residential dwellings that

contains an area or mass concentration of lead in excess of levels determined by the appropriate Federal agency to pose a

threat of adverse health effects in pregnant women or young

children.

(17) LEAD-CONTAMINATED SOIL.—The term ‘‘lead-contaminated soil’’ means bare soil on residential real property that

contains lead at or in excess of the levels determined to be hazardous to human health by the appropriate Federal agency.

(18) MORTGAGE LOAN.—The term ‘‘mortgage loan’’ includes

any loan (other than temporary financing such as a construction loan) that—

(A) is secured by a first lien on any interest in residential real property; and

(B) either—

(i) is insured, guaranteed, made, or assisted by

the Department of Housing and Urban Development,

the Department of Veterans Affairs, or the Farmers

Home Administration, or by any other agency of the

Federal Government; or
1481 Sec. 1004 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

(ii) is intended to be sold by each originating mortgage institution to any federally chartered secondary

mortgage market institution.

(19) ORIGINATING MORTGAGE INSTITUTION.—The term ‘‘originating mortgage institution’’ means a lender that provides

mortgage loans.

(20) PRIORITY HOUSING.—The term ‘‘priority housing’’

means target housing that qualifies as affordable housing

under section 215 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12745), including housing that receives assistance under subsection (b) or (o) of section 8 of the

United States Housing Act of 1937 (42 U.S.C. 1437f(b) or (o)).

(21) PUBLIC HOUSING.—The term ‘‘public housing’’ has the

same meaning given the term in section 3(b) of the United

States Housing Act of 1937 (42 U.S.C. 1437a(b)(1)).

(22) REDUCTION.—The term ‘‘reduction’’ means measures

designed to reduce or eliminate human exposure to lead-based

paint hazards through methods including interim controls and

abatement.

(23) RESIDENTIAL DWELLING.—The term ‘‘residential dwelling’’ means—

(A) a single-family dwelling, including attached structures such as porches and stoops; or

(B) a single-family dwelling unit in a structure that

contains more than 1 separate residential dwelling unit,

and in which each such unit is used or occupied, or intended to be used or occupied, in whole or in part, as the

home or residence of 1 or more persons.

(24) RESIDENTIAL REAL PROPERTY.—The term ‘‘residential

real property’’ means real property on which there is situated

1 or more residential dwellings used or occupied, or intended

to be used or occupied, in whole or in part, as the home or residence of 1 or more persons.

(25) RISK ASSESSMENT.—The term ‘‘risk assessment’’

means an on-site investigation to determine and report the existence, nature, severity and location of lead-based paint hazards in residential dwellings, including—

(A) information gathering regarding the age and history of the housing and occupancy by children under age

6;

(B) visual inspection;

(C) limited wipe sampling or other environmental

sampling techniques;

(D) other activity as may be appropriate; and

(E) provision of a report explaining the results of the

investigation.

(26) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(27) TARGET HOUSING.—The term ‘‘target housing’’ means

any housing constructed prior to 1978, except housing for the

elderly or persons with disabilities (unless any child who is

less than 6 years of age resides or is expected to reside in such

housing for the elderly or persons with disabilities) or any 0-

bedroom dwelling. In the case of jurisdictions which banned
Sec. 1011 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1482

the sale or use of lead-based paint prior to 1978, the Secretary,

at the Secretary’s discretion, may designate an earlier date.

Subtitle A—Lead-Based Paint Hazard

Reduction

SEC. 1011. ø42 U.S.C. 4852¿ GRANTS FOR LEAD-BASED PAINT HAZARD

REDUCTION IN TARGET HOUSING.

(a) GENERAL AUTHORITY.—The Secretary is authorized to provide grants to eligible applicants to evaluate and reduce lead-based

paint hazards in housing that is not federally assisted housing, federally owned housing, or public housing, in accordance with the

provisions of this section. Grants shall only be made under this section to provide assistance for housing which meets the following

criteria—

(1) for grants made to assist rental housing, at least 50

percent of the units must be occupied by or made available to

families with incomes at or below 50 percent of the area median income level and the remaining units shall be occupied or

made available to families with incomes at or below 80 percent

of the area median income level, and in all cases the landlord

shall give priority in renting units assisted under this section,

for not less than 3 years following the completion of lead abatement activities, to families with a child under the age of six

years, except that buildings with five or more units may have

20 percent of the units occupied by families with incomes above

80 percent of area median income level;

(2) for grants made to assist housing owned by owner-occupants, all units assisted with grants under this section shall be

the principal residence of families with income at or below 80

percent of the area median income level, and not less than 90

percent of the units assisted with grants under this section

shall be occupied by a child under the age of six years or shall

be units where a child under the age of six years spends a significant amount of time visiting; and

(3) notwithstanding paragraphs (1) and (2), Round II

grantees who receive assistance under this section may use

such assistance for priority housing.

(b) ELIGIBLE APPLICANTS.—A State or unit of local government

that has an approved comprehensive housing affordability strategy

under section 105 of the Cranston-Gonzalez National Affordable

Housing Act (42 U.S.C. 12705) is eligible to apply for a grant under

this section.

(c) FORM OF APPLICATIONS.—To receive a grant under this section, a State or unit of local government shall submit an application in such form and in such manner as the Secretary shall prescribe. An application shall contain—

(1) a copy of that portion of an applicant’s comprehensive

housing affordability strategy required by section 105(b)(16) of

the Cranston-Gonzalez National Affordable Housing Act (42

U.S.C. 12701 et seq.);

(2) a description of the amount of assistance the applicant

seeks under this section;
1483 Sec. 1011 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

(3) a description of the planned activities to be undertaken

with grants under this section, including an estimate of the

amount to be allocated to each activity;

(4) a description of the forms of financial assistance to

owners and occupants of housing that will be provided through

grants under this section; and

(5) such assurances as the Secretary may require regarding the applicant’s capacity to carry out the activities.

(d) SELECTION CRITERIA.—The Secretary shall award grants

under this section on the basis of the merit of the activities proposed to be carried out and on the basis of selection criteria, which

shall include—

(1) the extent to which the proposed activities will reduce

the risk of lead-based paint poisoning to children under the age

of 6 who reside in housing;

(2) the degree of severity and extent of lead-based paint

hazards in the jurisdiction to be served;

(3) the ability of the applicant to leverage State, local, and

private funds to supplement the grant under this section;

(4) the ability of the applicant to carry out the proposed activities; and

(5) such other factors as the Secretary determines appropriate to ensure that grants made available under this section

are used effectively and to promote the purposes of this Act.

(e) ELIGIBLE ACTIVITIES.—A grant under this section may be

used to—

(1) perform risk assessments and inspections in housing;

(2) provide for the interim control of lead-based paint hazards in housing;

(3) provide for the abatement of lead-based paint hazards

in housing;

(4) provide for the additional cost of reducing lead-based

paint hazards in units undergoing renovation funded by other

sources;

(5) ensure that risk assessments, inspections, and abatements are carried out by certified contractors in accordance

with section 402 of the Toxic Substances Control Act, as added

by section 1021 of this Act;

(6) monitor the blood-lead levels of workers involved in

lead hazard reduction activities funded under this section;

(7) assist in the temporary relocation of families forced to

vacate housing while lead hazard reduction measures are being

conducted;

(8) educate the public on the nature and causes of lead poisoning and measures to reduce exposure to lead, including exposure due to residential lead-based paint hazards;

(9) test soil, interior surface dust, and the blood-lead levels

of children under the age of 6 residing in housing after leadbased paint hazard reduction activity has been conducted, to

assure that such activity does not cause excessive exposures to

lead; and

(10) carry out such other activities that the Secretary determines appropriate to promote the purposes of this Act.
Sec. 1011 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1484

(f) FORMS OF ASSISTANCE.—The applicant may provide the

services described in this section through a variety of programs, including grants, loans, equity investments, revolving loan funds,

loan funds, loan guarantees, interest write-downs, and other forms

of assistance approved by the Secretary.

(g) TECHNICAL ASSISTANCE AND CAPACITY BUILDING.— (1) IN GENERAL.—The Secretary shall develop the capacity

of eligible applicants to carry out the requirements of section

105(b)(16) of the Cranston-Gonzalez National Affordable Housing Act and to carry out activities under this section. In fiscal

years 1993 and 1994, the Secretary may make grants of up to

$200,000 for the purpose of establishing State training, certification or accreditation programs that meet the requirements of

section 402 of the Toxic Substances Control Act, as added by

section 1021 of this Act.

(2) SET-ASIDE.—Of the total amount approved in appropriation Acts under subsection (o), there shall be set aside to

carry out this subsection $3,000,000 for fiscal year 1993 and

$3,000,000 for fiscal year 1994.

(h) MATCHING REQUIREMENT.—Each recipient of a grant under

this section shall make contributions toward the cost of activities

that receive assistance under this section in an amount not less

than 10 percent of the total grant amount under this section.

(i) PROHIBITION OF SUBSTITUTION OF FUNDS.—Grants under

this subtitle may not be used to replace other amounts made available or designated by State or local governments for use for the

purposes under this subtitle.

(j) LIMITATION ON USE.—An applicant shall ensure that not

more than 10 percent of the grant will be used for administrative

expenses associated with the activities funded.

(k) FINANCIAL RECORDS.—An applicant shall maintain and

provide the Secretary with financial records sufficient, in the

determination of the Secretary, to ensure proper accounting and

disbursing of amounts received from a grant under this section.

(l) REPORT.—An applicant under this section shall submit to

the Secretary, for any fiscal year in which the applicant expends

grant funds under this section, a report that—

(1) describes the use of the amounts received;

(2) states the number of risk assessments and the number

of inspections conducted in residential dwellings;

(3) states the number of residential dwellings in which

lead-based paint hazards have been reduced through interim

controls;

(4) states the number of residential dwellings in which

lead-based paint hazards have been abated; and

(5) provides any other information that the Secretary determines to be appropriate.

(m) NOTICE OF FUNDING AVAILABILITY.—The Secretary shall

publish a Notice of Funding Availability pursuant to this section

not later than 120 days after funds are appropriated for this section.

(n) RELATIONSHIP TO OTHER LAW.—Effective 2 years after the

date of promulgation of regulations under section 402 of the Toxic

Substances Control Act, no grants for lead-based paint hazard eval-
1485 Sec. 1012 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

1Probably intended to refer to the HOME Investment Partnerships Act.

uation or reduction may be awarded to a State under this section

unless such State has an authorized program under section 404 of

the Toxic Substances Control Act.

(o) ENVIRONMENTAL REVIEW.—

(1) IN GENERAL.—For purposes of environmental review,

decisionmaking, and action pursuant to the National Environmental Policy Act of 1969 and other provisions of law that further the purposes of such Act, a grant under this section shall

be treated as assistance under the HOME Investment Partnership Act 1, established under title II of the Cranston-Gonzalez

National Affordable Housing Act, and shall be subject to the

regulations promulgated by the Secretary to implement section

288 of such Act.

(2) APPLICABILITY.—This subsection shall apply to—

(A) grants awarded under this section; and

(B) grants awarded to States and units of general local

government for the abatement of significant lead-based

paint and lead dust hazards in low- and moderate-income

owner-occupied units and low-income privately owned

rental units pursuant to title II of the Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1992 (Public

Law 102–139, 105 Stat. 736).

(p) AUTHORIZATION OF APPROPRIATIONS.—For the purposes of

carrying out this Act, there are authorized to be appropriated

$125,000,000 for fiscal year 1993 and $250,000,000 for fiscal year

1994.

SEC. 1012. EVALUATION AND REDUCTION OF LEAD-BASED PAINT

HAZARDS IN FEDERALLY ASSISTED HOUSING.

(a) GENERAL REQUIREMENTS.—Section 302 of the Lead-Based

Paint Poisoning Prevention Act (42 U.S.C. 4822) is amended—

* * * * * * *

(b) MEASUREMENT CRITERIA.—Section 302(b) of the Lead-Based

Paint Poisoning Prevention Act (42 U.S.C. 4822(b)) is

amended * * *.

(c) INSPECTION.—Section 302(c) of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4822(c)) is amended—

* * * * * * *

(d) PUBLIC HOUSING.—Section 302(d)(1) of the Lead-Based

Paint Poisoning Prevention Act (42 U.S.C. 4822(d)(1)) is amended—

* * * * * * *

(e) HOME INVESTMENT PARTNERSHIPS.—Section 212(a) of the

Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.

12742(a)) is amended by adding at the end the following new paragraph:

* * * * * * *
Sec. 1013 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1486

(f) COMMUNITY DEVELOPMENT BLOCK GRANTS.—Section 105(a)

of the Housing and Community Development Act of 1974 (42

U.S.C. 5305(a)) is amended—

* * * * * * *

(g) SECTION 8 RENTAL ASSISTANCE.—Section 8(c)(2)(B) of the

United States Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(B)) is

amended * * *.

(h) HOPE FOR PUBLIC AND INDIAN HOUSING HOMEOWNERSHIP.—The United States Housing Act of 1937 (42 U.S.C. 1437 et

seq.) is amended—

* * * * * * *

(i) HOPE FOR HOMEOWNERSHIP OF MULTIFAMILY UNITS.—The

Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.

12701 et seq.) is amended—

* * * * * * *

(j) HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES.— The Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.

12701 et seq.) is amended—

* * * * * * *

(k) FHA INSURANCE FOR SINGLE FAMILY HOMES.—

(1) HOME IMPROVEMENT LOANS.—Section 2(a) of the National Housing Act (12 U.S.C. 1703(a)) is amended in the fifth

paragraph—

* * * * * * *

(2) REHABILITATION LOANS.—Section 203(k)(2)(B) of the

National Housing Act (12 U.S.C. 1709(k)(2)(B)) is

amended * * *.

(l) FHA INSURANCE FOR MULTIFAMILY HOUSING.—Section

221(d)(4)(iv) of the National Housing Act (12 U.S.C. 1715l(d)(4)(iv))

is amended * * *.

(m) RURAL HOUSING.—Section 501(a) of the Housing Act of

1949 (42 U.S.C. 1471) is amended by adding at the end the following:

* * * * * * *

SEC. 1013. DISPOSITION OF FEDERALLY OWNED HOUSING.

Section 302(a) of the Lead-Based Paint Poisoning Prevention

Act (42 U.S.C. 4822(a)) (as amended by section 1012(a)) is amended

by striking the fourth sentence and adding at the end the folliwng:

* * * * * * *

SEC. 1014. COMPREHENSIVE HOUSING AFFORDABILITY STRATEGY.

Section 105 of the Cranston-Gonzalez National Affordable

Housing Act (42 U.S.C. 12705) is amended—

* * * * * * *

SEC. 1015. ø42 U.S.C. 4852a¿ TASK FORCE ON LEAD-BASED PAINT HAZARD REDUCTION AND FINANCING.

(a) IN GENERAL.—The Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall establish

a task force to make recommendations on expanding resources and
1487 Sec. 1016 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

efforts to evaluate and reduce lead-based paint hazards in private

housing.

(b) MEMBERSHIP.—The task force shall include individuals representing the Department of Housing and Urban Development, the

Farmers Home Administration, the Department of Veterans Affairs, the Federal Home Loan Mortgage Corporation, the Federal

National Mortgage Association, the Environmental Protection

Agency, employee organizations in the building and construction

trades industry, landlords, tenants, primary lending institutions,

private mortgage insurers, single-family and multifamily real estate interests, nonprofit housing developers, property liability insurers, public housing agencies, low-income housing advocacy organizations, national, State and local lead-poisoning prevention advocates and experts, and community-based organizations located in

areas with substantial rental housing.

(c) RESPONSIBILITIES.—The task force shall make recommendations to the Secretary and the Administrator of the Environmental

Protection Agency concerning—

(1) incorporating the need to finance lead-based paint hazard reduction into underwriting standards;

(2) developing new loan products and procedures for financing lead-based paint hazard evaluation and reduction activities;

(3) adjusting appraisal guidelines to address lead safety;

(4) incorporating risk assessments or inspections for leadbased paint as a routine procedure in the origination of new

residential mortgages;

(5) revising guidelines, regulations, and educational pamphlets issued by the Department of Housing and Urban Development and other Federal agencies relating to lead-based paint

poisoning prevention;

(6) reducing the current uncertainties of liability related to

lead-based paint in rental housing by clarifying standards of

care for landlords and lenders, and by exploring the ‘‘safe harbor’’ concept;

(7) increasing the availability of liability insurance for

owners of rental housing and certified contractors and establishing alternative systems to compensate victims of lead-based

paint poisoning; and

(8) evaluating the utility and appropriateness of requiring

risk assessments or inspections and notification to prospective

lessees of rental housing.

(d) COMPENSATION.—The members of the task force shall not

receive Federal compensation for their participation.

SEC. 1016. ø42 U.S.C. 4852b¿ NATIONAL CONSULTATION ON LEADBASED PAINT HAZARD REDUCTION.

In carrying out this Act, the Secretary shall consult on an ongoing basis with the Administrator of the Environmental Protection

Agency, the Director of the Centers for Disease Control, other Federal agencies concerned with lead poisoning prevention, and the

task force established pursuant to section 1015.
Sec. 1017 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1488

1The date of enactment was October 28, 1992.

SEC. 1017. ø42 U.S.C. 4852c¿ GUIDELINES FOR LEAD-BASED PAINT HAZARD EVALUATION AND REDUCTION ACTIVITIES.

Not later than 12 months after the date of enactment of this

Act 1, the Secretary, in consultation with the Administrator of the

Environmental Protection Agency, the Secretary of Labor, and the

Secretary of Health and Human Services (acting through the Director of the Centers for Disease Control), shall issue guidelines for

the conduct of federally supported work involving risk assessments,

inspections, interim controls, and abatement of lead-based paint

hazards. Such guidelines shall be based upon criteria that measure

the condition of the housing (and the presence of children under

age 6 for the purposes of risk assessments) and shall not be based

upon criteria that measure the health of the residents of the

housing.

SEC. 1018. ø42 U.S.C. 4852d¿ DISCLOSURE OF INFORMATION CONCERNING LEAD UPON TRANSFER OF RESIDENTIAL PROPERTY.

(a) LEAD DISCLOSURE IN PURCHASE AND SALE OR LEASE OF

TARGET HOUSING.—

(1) LEAD-BASED PAINT HAZARDS.—Not later than 2 years

after the date of enactment of this Act, 1 the Secretary and the

Administrator of the Environmental Protection Agency shall

promulgate regulations under this section for the disclosure of

lead-based paint hazards in target housing which is offered for

sale or lease. The regulations shall require that, before the

purchaser or lessee is obligated under any contract to purchase

or lease the housing, the seller or lessor shall—

(A) provide the purchaser or lessee with a lead hazard

information pamphlet, as prescribed by the Administrator

of the Environmental Protection Agency under section 406

of the Toxic Substances Control Act;

(B) disclose to the purchaser or lessee the presence of

any known lead-based paint, or any known lead-based

paint hazards, in such housing and provide to the purchaser or lessee any lead hazard evaluation report available to the seller or lessor; and

(C) permit the purchaser a 10-day period (unless the

parties mutually agree upon a different period of time) to

conduct a risk assessment or inspection for the presence of

lead-based paint hazards.

(2) CONTRACT FOR PURCHASE AND SALE.—Regulations promulgated under this section shall provide that every contract

for the purchase and sale of any interest in target housing

shall contain a Lead Warning Statement and a statement

signed by the purchaser that the purchaser has—

(A) read the Lead Warning Statement and understands its contents;

(B) received a lead hazard information pamphlet; and

(C) had a 10-day opportunity (unless the parties mutually agreed upon a different period of time) before becoming obligated under the contract to purchase the housing
1489 Sec. 1018 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

to conduct a risk assessment or inspection for the presence

of lead-based paint hazards.

(3) CONTENTS OF LEAD WARNING STATEMENT.—The Lead

Warning Statement shall contain the following text printed in

large type on a separate sheet of paper attached to the contract:

‘‘Every purchaser of any interest in residential real property on

which a residential dwelling was built prior to 1978 is notified that

such property may present exposure to lead from lead-based paint

that may place young children at risk of developing lead poisoning.

Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence

quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller

of any interest in residential real property is required to provide

the buyer with any information on lead-based paint hazards from

risk assessments or inspections in the seller’s possession and notify

the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards is recommended prior to purchase.’’.

(4) COMPLIANCE ASSURANCE.—Whenever a seller or lessor

has entered into a contract with an agent for the purpose of

selling or leasing a unit of target housing, the regulations promulgated under this section shall require the agent, on behalf

of the seller or lessor, to ensure compliance with the requirements of this section.

(5) PROMULGATION.—A suit may be brought against the

Secretary of Housing and Urban Development and the Administrator of the Environmental Protection Agency under section

20 of the Toxic Substances Control Act to compel promulgation

of the regulations required under this section and the Federal

district court shall have jurisdiction to order such promulgation.

(b) PENALTIES FOR VIOLATIONS.—

(1) MONETARY PENALTY.—Any person who knowingly violates any provision of this section shall be subject to civil

money penalties in accordance with the provisions of section

102 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545).

(2) ACTION BY SECRETARY.—The Secretary is authorized to

take such lawful action as may be necessary to enjoin any violation of this section.

(3) CIVIL LIABILITY.—Any person who knowingly violates

the provisions of this section shall be jointly and severally liable to the purchaser or lessee in an amount equal to 3 times

the amount of damages incurred by such individual.

(4) COSTS.—In any civil action brought for damages pursuant to paragraph (3), the appropriate court may award court

costs to the party commencing such action, together with reasonable attorney fees and any expert witness fees, if that party

prevails.

(5) PROHIBITED ACT.—It shall be a prohibited act under

section 409 of the Toxic Substances Control Act for any person

to fail or refuse to comply with a provision of this section or
Sec. 1021 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1490

1The date of enactment was October 28, 1992.

with any rule or order issued under this section. For purposes

of enforcing this section under the Toxic Substances Control

Act, the penalty for each violation applicable under section 16

of that Act shall not be more than $10,000.

(c) VALIDITY OF CONTRACTS AND LIENS.—Nothing in this section shall affect the validity or enforceability of any sale or contract

for the purchase and sale or lease of any interest in residential real

property or any loan, loan agreement, mortgage, or lien made or

arising in connection with a mortgage loan, nor shall anything in

this section create a defect in title.

(d) EFFECTIVE DATE.—The regulations under this section shall

take effect 3 years after the date of the enactment of this title. 1

Subtitle B—Lead Exposure Reduction

SEC. 1021. CONTRACTOR TRAINING AND CERTIFICATION.

(a) AMENDMENT TO THE TOXIC SUBSTANCES CONTROL ACT.— The Toxic Substances Control Act (15 U.S.C. 2601 et seq.) is

amended by adding after title III the following new title:

‘‘TITLE IV—LEAD EXPOSURE

REDUCTION

* * * * * * *

Subtitle C—Worker Protection

SEC. 1031. ø42 U.S.C. 4853¿ WORKER PROTECTION.

Not later than 180 days after the enactment of this Act, 1 the

Secretary of Labor shall issue an interim final regulation regulating occupational exposure to lead in the construction industry.

Such interim final regulation shall provide employment and places

of employment to employees which are as safe and healthful as

those which would prevail under the Department of Housing and

Urban Development guidelines published at Federal Register 55,

page 38973 (September 28, 1990) (Revised Chapter 8). Such interim final regulations shall take effect upon issuance (except that

such regulations may include a reasonable delay in the effective

date), shall have the legal effect of an Occupational Safety and

Health Standard, and shall apply until a final standard becomes effective under section 6 of the Occupational Safety and Health Act

of 1970.

SEC. 1032. ø42 U.S.C. 4853a¿ COORDINATION BETWEEN ENVIRONMENTAL PROTECTION AGENCY AND DEPARTMENT OF

LABOR.

The Secretary of Labor, in promulgating regulations under section 1031, shall consult and coordinate with the Administrator of

the Environmental Protection Agency for the purpose of achieving

the maximum enforcement of title IV of the Toxic Substances Control Act and the Occupational Safety and Health Act of 1970 while
1491 Sec. 1053 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

1Probably intended to refer to section 1011(p).

imposing the least burdens of duplicative requirements on those

subject to such title and Act and for other purposes.

SEC. 1033. NIOSH RESPONSIBILITIES.

Section 22 of the Occupational Safety and Health Act of 1970

is amended by adding the following new subsection at the end

thereof:

* * * * * * *

Subtitle D—Research and Development

PART 1—HUD RESEARCH

SEC. 1051. ø42 U.S.C. 4854¿ RESEARCH ON LEAD EXPOSURE FROM

OTHER SOURCES.

The Secretary, in cooperation with other Federal agencies,

shall conduct research on strategies to reduce the risk of lead exposure from other sources, including exterior soil and interior lead

dust in carpets, furniture, and forced air ducts.

SEC. 1052. ø42 U.S.C. 4854a¿ TESTING TECHNOLOGIES.

The Secretary, in cooperation with other Federal agencies,

shall conduct research to—

(1) develop improved methods for evaluating lead-based

paint hazards in housing;

(2) develop improved methods for reducing lead-based

paint hazards in housing;

(3) develop improved methods for measuring lead in paint

films, dust, and soil samples;

(4) establish performance standards for various detection

methods, including spot test kits;

(5) establish performance standards for lead-based paint

hazard reduction methods, including the use of encapsulants;

(6) establish appropriate cleanup standards;

(7) evaluate the efficacy of interim controls in various hazard situations;

(8) evaluate the relative performance of various abatement

techniques;

(9) evaluate the long-term cost-effectiveness of interim control and abatement strategies; and

(10) assess the effectiveness of hazard evaluation and reduction activities funded by this Act.

SEC. 1053. ø42 U.S.C. 4854b¿ AUTHORIZATION.

Of the total amount approved in appropriation Acts under section 1011(o) 1, there shall be set aside to carry out this part

$5,000,000 for fiscal year 1993, and $5,000,000 for fiscal year 1994.
Sec. 1056 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992 1492

1Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in part XII of this compilation, provides that certain provisions of

law requiring submittal to Congress of an annual, semiannual, or other regular periodic report

shall cease to be effective on May 15, 2000. This section is covered by such provision. However,

section 1102 of the American Homeownership and Economic Opportunity Act of 2000, Public

Law 106–569, set forth post in part XII of this compilation, provides that such section 3003(a)(1)

shall not apply to the report required to be submitted under this section.

PART 2—GAO REPORT

SEC. 1056. ø42 U.S.C. 4855¿ FEDERAL IMPLEMENTATION AND INSURANCE STUDY.

(a) FEDERAL IMPLEMENTATION STUDY.—The Comptroller General of the United States shall assess the effectiveness of Federal

enforcement and compliance with lead safety laws and regulations,

including any changes needed in annual inspection procedures to

identify lead-based paint hazards in units receiving assistance

under subsections (b) and (o) of section 8 of the United States

Housing Act of 1937.

(b) INSURANCE STUDY.—The Comptroller General of the United

States shall assess the availability of liability insurance for owners

of residential housing that contains lead-based paint and persons

engaged in lead-based paint hazard evaluation and reduction activities. In carrying out the assessment, the Comptroller General

shall—

(1) analyze any precedents in the insurance industry for

the containment and abatement of environmental hazards,

such as asbestos, in federally assisted housing;

(2) provide an assessment of the recent insurance experience in the public housing lead hazard identification and reduction program; and

(3) recommend measures for increasing the availability of

liability insurance to owners and contractors engaged in federally supported work.

Subtitle E—Reports

SEC. 1061. ø42 U.S.C. 4856¿ REPORTS OF THE SECRETARY OF HOUSING

AND URBAN DEVELOPMENT. 1

(a) ANNUAL REPORT.—The Secretary shall transmit to the Congress an annual report that—

(1) sets forth the Secretary’s assessment of the progress

made in implementing the various programs authorized by this

title;

(2) summarizes the most current health and environmental studies on childhood lead poisoning, including studies

that analyze the relationship between interim control and

abatement activities and the incidence of lead poisoning in

resident children;

(3) recommends legislative and administrative initiatives

that may improve the performance by the Department of Housing and Urban Development in combating lead hazards

through the expansion of lead hazard evaluation and reduction

activities;
1493 Sec. 1061 RES. LEAD-BASED PAINT HAZARD RED. ACT OF 1992

1The date of enactment was October 28, 1992.

(4) describes the results of research carried out in accordance with subtitle D; and

(5) estimates the amount of Federal assistance annually

expended on lead hazard evaluation and reduction activities.

(b) BIENNIAL REPORT.—

(1) IN GENERAL.—24 months after the date of enactment of

this Act, 1 and at the end of every 24-month period thereafter,

the Secretary shall report to the Congress on the progress of

the Department of Housing and Urban Development in implementing expanded lead-based paint hazard evaluation and reduction activities.

(2) CONTENTS.—The report shall—

(A) assess the effectiveness of section 1018 in making

the public aware of lead-based paint hazards;

(B) estimate the extent to which lead-based paint hazard evaluation and reduction activities are being conducted

in the various categories of housing;

(C) monitor and report expenditures for lead-based

paint hazard evaluation and reduction for programs within

the jurisdiction of the Department of Housing and Urban

Development;

(D) identify the infrastructure needed to eliminate

lead-based paint hazards in all housing as expeditiously as

possible, including cost-effective technology, standards and

regulations, trained and certified contractors, certified laboratories, liability insurance, private financing techniques,

and appropriate Government subsidies;

(E) assess the extent to which the infrastructure described in subparagraph (D) exists, make recommendations

to correct shortcomings, and provide estimates of the costs

of measures needed to build an adequate infrastructure;

and

(F) include any additional information that the Secretary deems appropriate.
1494

HOME MORTGAGE DISCLOSURE ACT OF 1975

EXCERPT FROM PUBLIC LAW 94–200

[Public Law 94–200; 89 Stat. 1125; 12 U.S.C. 2801 et seq.]

TITLE III—HOME MORTGAGE DISCLOSURE

SHORT TITLE

SEC. 301. ø12 U.S.C. 2801 note¿ This title may be cited as the

‘‘Home Mortgage Disclosure Act of 1975’’.

FINDINGS AND PURPOSES

SEC. 302. ø12 U.S.C. 2801¿ (a) The Congress finds that some

depository institutions have sometimes contributed to the decline of

certain geographic areas by their failure pursuant to their chartering responsibilities to provide adequate home financing to qualified applicants on reasonable terms and conditions.

(b) The purpose of this title is to provide the citizens and public officials of the United States with sufficient information to enable them to determine whether depository institutions are filling

their obligations to serve the housing needs of the communities and

neighborhoods in which they are located and to assist public officials in their determination of the distribution of public sector investments in a manner designed to improve the private investment

environment.

(c) Nothing in this title is intended to, nor shall it be construed

to, encourage unsound lending practices or the allocation of credit.

DEFINITIONS

SEC. 303. ø12 U.S.C. 2802¿ For purposes of this title—

(1) the term ‘‘mortgage loan’’ means a loan which is secured by residential real property or a home improvement loan;

(2) the term ‘‘depository institution’’—

(A) means—

(i) any bank (as defined in section 3(a)(1) of the

Federal Deposit Insurance Act);

(ii) any savings association (as defined in section

3(b)(1) of the Federal Deposit Insurance Act); and

(iii) any credit union,

which makes federally related mortgage loans as determined by the Board; and

(B) includes any other lending institution (as defined

in paragraph (4)) other than any institution described in

subparagraph (A);

(3) the term ‘‘completed application’’ means an application

in which the creditor has received the information that is regu-
1495 Sec. 304 HOME MORTGAGE DISCLOSURE ACT OF 1975

larly obtained in evaluating applications for the amount and

type of credit requested;

(4) the term ‘‘other lending institutions’’ means any person

engaged for profit in the business of mortgage lending;

(5) the term ‘‘Board’’ means the Board of Governors of the

Federal Reserve System; and

(6) the term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

MAINTENANCE OF RECORDS AND PUBLIC DISCLOSURE

SEC. 304. ø12 U.S.C. 2803¿ (a)(1) Each depository institution

which has a home office or branch office located within a primary

metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary metropolitan statistical areas, as defined by the

Department of Commerce shall compile and make available, in accordance with regulations of the Board, to the public for inspection

and copying at the home office, and at least one branch office within each primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not

comprised of designated primary metropolitan statistical areas in

which the depository institution has an office the number and total

dollar amount of mortgage loans which were (A) originated (or for

which the institution received completed applications), or (B) purchased by that institution during each fiscal year (beginning with

the last full fiscal year of that institution which immediately preceded the effective date of this title).

(2) The information required to be maintained and made available under paragraph (1) shall also be itemized in order to clearly

and conspicuously disclose the following:

(A) The number and dollar amount for each item referred

to in paragraph (1), by census tracts for mortgage loans secured by property located within any county with a population

of more than 30,000, within that primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary metropolitan statistical areas, otherwise, by county, for

mortgage loans secured by property located within any other

county within that standard metropolitan statistical area.

(B) The number and dollar amount for each item referred

to in paragraph (1) for all such mortgage loans which are secured by property located outside that primary metropolitan

statistical area, metropolitan statistical area, or consolidated

metropolitan statistical area that is not comprised of designated primary metropolitan statistical areas.

For the purpose of this paragraph, a depository institution which

maintains offices in more than one primary metropolitan statistical

area, metropolitan statistical area, or consolidated metropolitan

statistical area that is not comprised of designated primary metropolitan statistical areas shall be required to make the information

required by this paragraph available at any such office only to the

extent that such information relates to mortgage loans which were

originated or purchased (or for which completed applications were

received) by an office of that depository institution located in the
Sec. 304 HOME MORTGAGE DISCLOSURE ACT OF 1975 1496

primary metropolitan statistical area, metropolitan statistical area,

or consolidated metropolitan statistical area that is not comprised

of designated primary metropolitan statistical areas in which the

office making such information available is located. For purposes of

this paragraph, other lending institutions shall be deemed to have

a home office or branch office within a primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary

metropolitan statistical areas if such institutions have originated or

purchased or received completed applications for at least 5 mortgage loans in such area in the preceding calendar year.

(b) Any item of information relating to mortgage loans required

to be maintained under subsection (a) shall be further itemized in

order to disclose for each such item—

(1) the number and dollar amount of mortgage loans which

are insured under title II of the National Housing Act or under

title V of the Housing Act of 1949 or which are guaranteed

under chapter 37 of title 38, United States Code;

(2) the number and dollar amount of mortgage loans made

to mortgagors who did not, at the time of execution of the

mortgage, intend to reside in the property securing the mortgage loan;

(3) the number and dollar amount of home improvement

loans; and

(4) the number and dollar amount of mortgage loans and

completed applications involving mortgagors or mortgage applicants grouped according to census tract, income level, racial

characteristics, and gender.

(c) Any information required to be compiled and made available under this section, other than loan application register information under subsection (j), shall be maintained and made available for a period of five years after the close of the first year during

which such information is required to be maintained and made

available.

(d) Notwithstanding the provisions of subsection (a)(1), data required to be disclosed under this section for 1980 and thereafter

shall be disclosed for each calendar year. Any depository institution

which is required to make disclosures under this section but which

has been making disclosures on some basis other than a calendar

year basis shall make available a separate disclosure statement

containing data for any period prior to calendar year 1980 which

is not covered by the last full year report prior to the 1980 calendar

year report.

(e) Subject to subsection (h), the Board shall prescribe a standard format for the disclosures required under this section.

(f) The Federal Financial Institutions Examination Council, in

consultation with the Secretary, shall implement a system to facilitate access to data required to be disclosed under this section. Such

system shall include arrangements for a central depository of data

in each primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not

comprised of designated primary metropolitan statistical areas.

Disclosure statements shall be made available to the public for inspection and copying at such central depository of data for all de-
1497 Sec. 304 HOME MORTGAGE DISCLOSURE ACT OF 1975

pository institutions which are required to disclose information

under this section (or which are exempted pursuant to section

306(b)) and which have a home office or branch office within such

primary metropolitan statistical area, metropolitan statistical area,

or consolidated metropolitan statistical area that is not comprised

of designated primary metropolitan statistical areas.

(g) The requirements of subsections (a) and (b) shall not apply

with respect to mortgage loans that are—

(1) made (or for which completed applications are received)

by any mortgage banking subsidiary of a bank holding company or savings and loan holding company or by any savings

and loan service corporation that originates or purchases mortgage loans; and

(2) approved (or for which completed applications are received) by the Secretary for insurance under title I or II of the

National Housing Act.

(h) SUBMISSION TO AGENCIES.—The data required to be disclosed under susbsection (b)(4) shall be submitted to the appropriate agency for each institution reporting under this title. Notwithstanding the requirement of section 304(a)(2)(A) for disclosure

by census tract, the Board, in cooperation with other appropriate

regulators, including—

(1) the Office of the Comptroller of the Currency for national banks and Federal branches and Federal agencies of foreign banks;

(2) the Director of the Office of Thrift Supervision for savings associations;

(3) the Federal Deposit Insurance Corporation for banks

insured by the Federal Deposit Insurance Corporation (other

than members of the Federal Reserve System), mutual savings

banks, insured State branches of foreign banks, and any other

depository institution described in section 303(2)(A) which is

not otherwise referred to in this paragraph;

(4) the National Credit Union Administration Board for

credit unions; and

(5) the Secretary of Housing and Urban Development for

other lending institutions not regulated by the agencies referred to in paragraphs (1) through (4),

shall develop regulations prescribing the format for such disclosures, the method for submission of the data to the appropriate

regulatory agency, and the procedures for disclosing the information to the public. These regulations shall also require the collection of data required to be disclosed under subsection (b)(4) with

respect to loans sold by each institution reporting under this title,

and, in addition, shall require disclosure of the class of the purchaser of such loans. Any reporting institution may submit in writing to the appropriate agency such additional data or explanations

as it deems relevant to the decision to originate or purchase mortgage loans.

(i) EXEMPTION FROM CERTAIN DISCLOSURE REQUIREMENTS.—

The requirements of subsection (b)(4) shall not apply with respect

to any depository institution described in section 303(2)(A) which

has total assets, as of the most recent full fiscal year of such institution, of $30,000,000 or less.
Sec. 304 HOME MORTGAGE DISCLOSURE ACT OF 1975 1498

(j) LOAN APPLICATION REGISTER INFORMATION.— (1) IN GENERAL.—In addition to the information required

to be disclosed under subsections (a) and (b), any depository institution which is required to make disclosures under this section shall make available to the public, upon request, loan application register information (as defined by the Board by regulation) in the form required under regulations prescribed by

the Board.

(2) FORMAT OF DISCLOSURE.— (A) UNEDITED FORMAT.—Subject to subparagraph (B),

the loan application register information described in paragraph (1) may be disclosed by a depository institution

without editing or compilation and in the format in which

such information is maintained by the institution.

(B) PROTECTION OF APPLICANT’S PRIVACY INTEREST.— The Board shall require, by regulation, such deletions as

the Board may determine to be appropriate to protect—

(i) any privacy interest of any applicant, including

the deletion of the applicant’s name and identification

number, the date of the application, and the date of

any determination by the institution with respect to

such application; and

(ii) a depository institution from liability under

any Federal or State privacy law.

(C) CENSUS TRACT FORMAT ENCOURAGED.—It is the

sense of the Congress that a depository institution should

provide loan register information under this section in a

format based on the census tract in which the property is

located.

(3) CHANGE OF FORM NOT REQUIRED.—A depository institution meets the disclosure requirement of paragraph (1) if the

institution provides the information required under such paragraph in the form in which the institution maintains such information.

(4) REASONABLE CHARGE FOR INFORMATION.—Any depository institution which provides information under this subsection may impose a reasonable fee for any cost incurred in

reproducing such information.

(5) TIME OF DISCLOSURE.—The disclosure of the loan application register information described in paragraph (1) for any

year pursuant to a request under paragraph (1) shall be

made—

(A) in the case of a request made on or before March

1 of the succeeding year, before April 1 of the succeeding

year; and

(B) in the case of a request made after March 1 of the

succeeding year, before the end of the 30-day period beginning on the date the request is made.

(6) RETENTION OF INFORMATION.—Notwithstanding subsection (c), the loan application register information described

in paragraph (1) for any year shall be maintained and made

available, upon request, for 3 years after the close of the 1st

year during which such information is required to be maintained and made available.
1499 Sec. 304 HOME MORTGAGE DISCLOSURE ACT OF 1975

(7) MINIMIZING COMPLIANCE COSTS.—In prescribing regulations under this subsection, the Board shall make every effort

to minimize the costs incurred by a depository institution in

complying with this subsection and such regulations.

(k) DISCLOSURE OF STATEMENTS BY DEPOSITORY INSTITU- TIONS.—(1) IN GENERAL.—In accordance with procedures established by the Board pursuant to this section, any depository institution required to make disclosures under this section—

(A) shall make a disclosure statement available, upon

request, to the public no later than 3 business days after

the institution receives the statement from the Federal Financial Institutions Examination Council; and

(B) may make such statement available on a floppy

disc which may be used with a personal computer or in

any other media which is not prohibited under regulations

prescribed by the Board.

(2) NOTICE THAT DATA IS SUBJECT TO CORRECTION AFTER

FINAL REVIEW.—Any disclosure statement provided pursuant to

paragraph (1) shall be accompanied by a clear and conspicuous

notice that the statement is subject to final review and revision, if necessary.

(3) REASONABLE CHARGE FOR INFORMATION.—Any depository institution which provides a disclosure statement pursuant to paragraph (1) may impose a reasonable fee for any cost

incurred in providing or reproducing such statement.

(l) PROMPT DISCLOSURES.—

(1) IN GENERAL.—Any disclosure of information pursuant

to this section or section 310 shall be made as promptly as possible.

(2) MAXIMUM DISCLOSURE PERIOD.—

(A) 6- AND 9-MONTH MAXIMUM PERIODS.—Except as

provided in subsections (j)(5) and (k)(1) and regulations

prescribed by the Board and subject to subparagraph (B),

any information required to be disclosed for any year beginning after December 31, 1992, under—

(i) this section shall be made available to the public before September 1 of the succeeding year; and

(ii) section 310 shall be made available to the public before December 1 of the succeeding year.

(B) SHORTER PERIODS ENCOURAGED AFTER 1994.—With

respect to disclosures of information under this section or

section 310 for any year beginning after December 31,

1993, every effort shall be made—

(i) to make information disclosed under this section available to the public before July 1 of the succeeding year; and

(ii) to make information required to be disclosed

under section 310 available to the public before September 1 of the succeeding year.

(3) IMPROVED PROCEDURE.—The Federal Financial Institutions Examination Council shall make such changes in the system established pursuant to subsection (f) as may be necessary

to carry out the requirements of this subsection.
Sec. 305 HOME MORTGAGE DISCLOSURE ACT OF 1975 1500

(m) OPPORTUNITY TO REDUCE COMPLIANCE BURDEN.— (1) IN GENERAL.— (A) SATISFACTION OF PUBLIC AVAILABILITY REQUIRE- MENTS.—A depository institution shall be deemed to have

satisfied the public availability requirements of subsection

(a) if the institution compiles the information required

under that subsection at the home office of the institution

and provides notice at the branch locations specified in

subsection (a) that such information is available from the

home office of the institution upon written request.

(B) PROVISION OF INFORMATION UPON REQUEST.—Not

later than 15 days after the receipt of a written request for

any information required to be compiled under subsection

(a), the home office of the depository institution receiving

the request shall provide the information pertinent to the

location of the branch in question to the person requesting

the information.

(2) FORM OF INFORMATION.—In complying with paragraph

(1), a depository institution shall, in the sole discretion of the

institution, provide the person requesting the information

with—

(A) a paper copy of the information requested; or

(B) if acceptable to the person, the information

through a form of electronic medium, such as a computer

disk.

ENFORCEMENT

SEC. 305. ø12 U.S.C. 2804¿ (a) The Board shall prescribe such

regulations as may be necessary to carry out the purposes of this

title. These regulations may contain such classifications, differentiations, or other provisions, and may provide for such adjustments

and exceptions for any class of transactions, as in the judgment of

the Board are necessary and proper to effectuate the purposes of

this title, and prevent circumvention or evasion thereof, or to facilitate compliance therewith.

(b) Compliance with the requirements imposed under this title

shall be enforced under—

(1) section 8 of the Federal Deposit Insurance Act, in the

case of—

(A) national banks, and Federal branches and Federal

agencies of foreign banks, by the Office of the Comptroller

of the Currency;

(B) member banks of the Federal Reserve System

(other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies,

and insured State branches of foreign banks), commercial

lending companies owned or controlled by foreign banks,

and organizations operating under section 25 or 25(a) of

the Federal Reserve Act, by the Board; and

(C) banks insured by the Federal Deposit Insurance

Corporation (other than members of the Federal Reserve

System), mutual savings banks as defined in section 3(f) of

the Federal Deposit Insurance Act (12 U.S.C. 1813(f)), insured State branches of foreign banks, and any other
1501 Sec. 306 HOME MORTGAGE DISCLOSURE ACT OF 1975

depository institution not referred to in this paragraph or

paragraph (2) or (3) of this subsection, by the Board of Directors of the Federal Deposit Insurance Corporation;

(2) section 8 of the Federal Deposit Insurance Act, by the

Director of the Office of Thrift Supervision, in the case of a

savings association the deposits of which are insured by the

Federal Deposit Insurance Corporation;

(3) the Federal Credit Union Act, by the Administrator of

the National Credit Union Administration with respect to any

credit union; and

(4) other lending institutions, by the Secretary of Housing

and Urban Development.

The terms used in paragraph (1) that are not defined in this title

or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them

in section 1(b) of the International Banking Act of 1978 (12 U.S.C.

3101).

(c) For the purpose of the exercise by any agency referred to

in subsection (b) of its powers under any Act referred to in that

subsection, a violation of any requirement imposed under this title

shall be deemed to be a violation of a requirement imposed under

that Act. In addition to its powers under any provision of law specifically referred to in subsection (b), each of the agencies referred

to in that subsection may exercise, for the purpose of enforcing

compliance with any requirement imposed under this title, any

other authority conferred on it by law.

RELATION TO STATE LAWS

SEC. 306. ø12 U.S.C. 2805¿ (a) This title does not annul, alter,

or affect, or exempt any State chartered depository institution subject to the provisions of this title from complying with the laws of

any State or subdivision thereof with respect to public disclosure

and recordkeeping by depositor institutions, except to the extent

that those laws are inconsistent with any provision of this title,

and then only to the extent of the inconsistency. The Board is authorized to determine whether such inconsistencies exist. The

Board may not determine that any such law is inconsistent with

any provision of this title if the Board determines that such law requires the maintenance of records with greater geographic or other

detail than is required under this title, or that such law otherwise

provides greater disclosure than is required under this title.

(b) The Board may by regulation exempt from the requirements of this title any State chartered depository institution within

any State or subdivision thereof if it determines that, under the

law of such State or subdivision, that instititution is subject to requirements substantially similar to those imposed under this title,

and that such law contains adequate provisions for enforcement.

Notwithstanding any other provision of this subsection, compliance

with the requirements imposed under this subsection shall be enforced under—

(1) section 8 of the Federal Deposit Insurance Act in the

case of national banks, by the Comptroller of the Currency;

and
Sec. 307 HOME MORTGAGE DISCLOSURE ACT OF 1975 1502

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

(2) section 8 of the Federal Deposit Insurance Act, by the

Director of the Office of Thrift Supervision in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation.

RESEARCH AND IMPROVED METHODS

SEC. 307. ø12 U.S.C. 2806¿ (a)(1) The Director of the Office of

Thrift Supervision, with the assistance of the Secretary, the Director of the Bureau of the Census, the Comptroller of the Currency,

the Board of Governors of the Federal Reserve System, the Federal

Deposit Insurance Corporation, and such other persons as the Director of the Office of Thrift Supervision, deems appropriate, shall

develop, or assist in the improvement of, methods of matching addresses and census tracts to facilitate compliance by depository institutions in as economical a manner as possible with the requirements of this title.

(2) There is authorized to be appropriated such sums as may

be necessary to carry out this subsection.

(3) The Director of the Office of Thrift Supervision, is authorized to utilize, contract with, act through, or compensate any person or agency in order to carry out this subsection.

(b) The Director of the Office of Thrift Supervision, shall recommend to the Committee on Banking, Finance and Urban Affairs

of the House of Representatives 1 and the Committee on Banking,

Housing, and Urban Affairs of the Senate such additional legislation as the Director of the Office of Thrift Supervision, deems appropriate to carry out the purpose of this title.

SEC. 308. ø12 U.S.C. 2807¿ REPORT.

The Board, in consultation with the Secretary of Housing and

Urban Development, shall report annually to the Congress on the

utility of the requirements of section 304(b)(4).

EFFECTIVE DATE

SEC. 309. ø12 U.S.C. 2808¿ (a) IN GENERAL.—This title shall

take effect on the one hundred and eightieth day beginning after

the date of its enactment. Any institution specified in section

303(2)(A) which has total assets as of its last full fiscal year of

$10,000,000 or less is exempt from the provisions of this title. The

Board, in consultation with the Secretary, may exempt institutions

described in section 303(2)(B) that are comparable within their respective industries to institutions that are exempt under the preceding sentence (as determined without regard to the adjustment

made by subsection (b)).

(b) CPI ADJUSTMENTS.—

(1) IN GENERAL.—Subject to paragraph (2), the dollar

amount applicable with respect to institutions described in sec-
1503 Sec. 311 HOME MORTGAGE DISCLOSURE ACT OF 1975

1September 30, 1996.

tion 303(2)(A) under the 2d sentence of subsection (a) shall be

adjusted annually after December 31, 1996, by the annual percentage increase in the Consumer Price Index for Urban Wage

Earners and Clerical Workers published by the Bureau of

Labor Statistics.

(2) 1-TIME ADJUSTMENT FOR PRIOR INFLATION.—The first

adjustment made under paragraph (1) after the date of the enactment of the Economic Growth and Regulatory Paperwork

Reduction Act of 1996 1 shall be the percentage by which—

(A) the Consumer Price Index described in such paragraph for the calendar year 1996, exceeds

(B) such Consumer Price Index for the calendar year

1975.

(3) ROUNDING.—The dollar amount applicable under paragraph (1) for any calendar year shall be the amount determined in accordance with subparagraphs (A) and (B) of paragraph (2) and rounded to the nearest multiple of $1,000,000.

COMPILATION OF AGGREGATE DATA

SEC. 310. ø12 U.S.C. 2809¿ (a) Beginning with data for calendar year 1980, the Federal Financial Institutions Examination

Council shall compile each year, for each primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary

metropolitan statistical areas, aggregate data by census tract for

all depository institutions which are required to disclose data under

section 304 or which are exempt pursuant to section 306(b). The

Council shall also produce tables indicating, for each primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary metropolitan statistical areas, aggregate lending

patterns for various categories of census tracts grouped according

to location, age of housing stock, income level, and racial characteristics.

(b) The Board shall provide staff and data processing resources

to the Council to enable it to carry out the provisions of subsection

(a).

(c) The data and tables required pursuant to subsection (a)

shall be made available to the public by no later than December

31 of the year following the calendar year on which the data is

based.

DISCLOSURE BY THE SECRETARY

SEC. 311. ø12 U.S.C. 2810¿ Beginning with data for calendar

year 1980, the Secretary shall make publicly available data in the

Secretary’s possession for each mortgagee which is not otherwise

subject to the requirements of this title and which is not exempt

pursuant to section 306(b), (and for each mortgagee making mortgage loans exempted under section 304(g)), with respect to mortgage loans approved (or for which completed applications are received) by the Secretary for insurance under title I or II of the National Housing Act. Such data to be disclosed shall consist of data
Sec. 312 HOME MORTGAGE DISCLOSURE ACT OF 1975 1504

comparable to the data which would be disclosed if such mortgagee

were subject to the requirements of section 304. Disclosure statements containing data for each such mortgagee for a primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary metropolitan statistical areas shall, at a minimum, be publicly available at the central depository of data established pursuant to section 304(f) for such primary metropolitan statistical area, metropolitan statistical area, or consolidated metropolitan statistical area that is not comprised of designated primary

metropolitan statistical areas. The Secretary shall also compile and

make publicly available aggregate data for such mortgagees by census tract, and tables indicating aggregate lending patterns, in a

manner comparable to the information required to be made publicly available in accordance with section 310.

øTERMINATION OF AUTHORITY¿

øSEC. 312. [Repealed.]¿
1505

1Sections 801 through 806 of this title do not have section headings.

COMMUNITY REINVESTMENT ACT OF 1977

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1977

[Public Law 95–128; 91 Stat. 1147; 12 U.S.C. 2901 et seq.]

TITLE VIII—COMMUNITY REINVESTMENT 1

SEC. 801. ø12 U.S.C. 2901 note¿ This title may be cited as the

‘‘Community Reinvestment Act of 1977’’.

SEC. 802. ø12 U.S.C. 2901¿ (a) The Congress finds that—

(1) regulated financial institutions are required by law to

demonstrate that their deposit facilities serve the convenience

and needs of the communities in which they are chartered to

do business;

(2) the convenience and needs of communities include the

need for credit services as well as deposit services; and

(3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local

communities in which they are chartered.

(b) It is the purpose of this title to require each appropriate

Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to

help meet the credit needs of the local communities in which they

are chartered consistent with the safe and sound operation of such

institutions.

SEC. 803. ø12 U.S.C. 2902¿ For the purposes of this title—

(1) the term ‘‘appropriate Federal financial supervisory

agency’’ means—

(A) the Comptroller of the Currency with respect to

national banks;

(B) the Board of Governors of the Federal Reserve System with respect to State chartered banks which are members of the Federal Reserve System and bank holding companies;

(C) the Federal Deposit Insurance Corporation with

respect to State chartered banks and savings banks which

are not members of the Federal Reserve System and the

deposits of which are insured by the Corporation; and

(2) section 8 of the Federal Deposit Insurance Act, by the

Director of the Office of Thrift Supervision, in the case of a

savings association (the deposits of which are insured by the

Federal Deposit Insurance Corporation) and a savings and loan

holding company;
SEC. 804 COMMUNITY REINVESTMENT ACT OF 1977 1506

1So in law.

(2) 1 the term ‘‘regulated financial institution’’ means an

insured depository institution (as defined in section 3 of the

Federal Deposit Insurance Act); and

(3) the term ‘‘application for a deposit facility’’ means an

application to the appropriate Federal financial supervisory

agency otherwise required under Federal law or regulations

thereunder for—

(A) a charter for a national bank or Federal savings

and loan association;

(B) deposit insurance in connection with a newly chartered State bank, savings bank, savings and loan association or similar institution;

(C) the establishment of a domestic branch or other facility with the ability to accept deposits of a regulated financial institution;

(D) the relocation of the home office or a branch office

of a regulated financial institution;

(E) the merger or consolidation with, or the acquisition

of the assets, or the assumption of the liabilities of a regulated financial institution requiring approval under section

18(c) of the Federal Deposit Insurance Act or under regulations issued under the authority of title IV of the National

Housing Act; or

(F) the acquisition of shares in, or the assets of, a regulated financial institution requiring approval under section 3 of the Bank Holding Company Act of 1956 or section

408 (e) of the National Housing Act.

(4) A 1 financial institution whose business predominately

consists of serving the needs of military personnel who are not

located within a defined geographic area may define its ‘‘entire

community’’ to include its entire deposit customer base without

regard to geographic proximity.

SEC. 804. ø12 U.S.C. 2903¿ (a) IN GENERAL.—In connection

with its examination of a financial institution, the appropriate Federal financial supervisory agency shall—

(1) assess the institution’s record of meeting the credit

needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution; and

(2) take such record into account in its evaluation of an application for a deposit facility by such institution.

(b) MAJORITY-OWNED INSTITUTIONS.—In assessing and taking

into account, under subsection (a), the record of a nonminorityowned and nonwomen-owned financial institution, the appropriate

Federal financial supervisory agency may consider as a factor capital investment, loan participation, and other ventures undertaken

by the institution in cooperation with minority- and women-owned

financial institutions and low-income credit unions provided that

these activities help meet the credit needs of local communities in

which such institutions and credit unions are chartered.

(c) FINANCIAL HOLDING COMPANY REQUIREMENT.—
1507 Sec. 807 COMMUNITY REINVESTMENT ACT OF 1977

1The date of enactment was October 12, 1977.

(1) IN GENERAL.—An election by a bank holding company

to become a financial holding company under section 4 of the

Bank Holding Company Act of 1956 shall not be effective if—

(A) the Board finds that, as of the date the declaration

of such election and the certification is filed by such holding company under section 4(l)(1)(C) of the Bank Holding

Company Act of 1956, not all of the subsidiary insured depository institutions of the bank holding company had

achieved a rating of ‘‘satisfactory record of meeting community credit needs’’, or better, at the most recent examination of each such institution; and

(B) the Board notifies the company of such finding before the end of the 30-day period beginning on such date.

(2) LIMITED EXCLUSIONS FOR NEWLY ACQUIRED INSURED DE- POSITORY INSTITUTIONS.—Any insured depository institution acquired by a bank holding company during the 12-month period

preceding the date of the submission to the Board of the declaration and certification under section 4(l)(1)(C) of the Bank

Holding Company Act of 1956 may be excluded for purposes of

paragraph (1) during the 12-month period beginning on the

date of such acquisition if—

(A) the bank holding company has submitted an affirmative plan to the appropriate Federal financial supervisory agency to take such action as may be necessary in

order for such institution to achieve a rating of ‘‘satisfactory record of meeting community credit needs’’, or better,

at the next examination of the institution; and

(B) the plan has been accepted by such agency.

(3) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

(A) BANK HOLDING COMPANY; FINANCIAL HOLDING COM- PANY.—The terms ‘‘bank holding company’’ and ‘‘financial

holding company’’ have the meanings given those terms in

section 2 of the Bank Holding Company Act of 1956.

(B) BOARD.—The term ‘‘Board’’ means the Board of

Governors of the Federal Reserve System.

(C) INSURED DEPOSITORY INSTITUTION.—The term ‘‘insured depository institution’’ has the meaning given the

term in section 3(c) of the Federal Deposit Insurance Act.

SEC. 805. ø12 U.S.C. 2904¿ Each appropriate Federal financial

supervisory agency shall include in its annual report to the Congress a section outlining the actions it has taken to carry out its

responsibilities under this title.

SEC. 806. ø12 U.S.C. 2905¿ Regulations to carry out the purposes of this title shall be published by each appropriate Federal

financial supervisory agency, and shall take effect no later than

390 days after the date of enactment of this title.1

SEC. 807. ø12 U.S.C. 2906¿ WRITTEN EVALUATIONS.

(a) REQUIRED.— (1) IN GENERAL.—Upon the conclusion of each examination

of an insured depository institution under section 804, the appropriate Federal financial supervisory agency shall prepare a
Sec. 807 COMMUNITY REINVESTMENT ACT OF 1977 1508

1 Indented so in law.

written evaluation of the institution’s record of meeting the

credit needs of its entire community, including low- and moderate-income neighborhoods.

(2) PUBLIC AND CONFIDENTIAL SECTIONS.—Each written

evaluation required under paragraph (1) shall have a public

section and a confidential section.

(b) PUBLIC SECTION OF REPORT.— (1) FINDINGS AND CONCLUSIONS.— (A) CONTENTS OF WRITTEN EVALUATION.—The public

section of the written evaluation shall—

(i) 1 state the appropriate Federal financial supervisory

agency’s conclusions for each assessment factor identified

in the regulations prescribed by the Federal financial supervisory agencies to implement this Act;

(ii) discuss the facts and data supporting such conclusions; and

(iii) contain the institution’s rating and a statement

describing the basis for the rating.

(B) METROPOLITAN AREA DISTINCTIONS.—The information required by clauses (i) and (ii) of subparagraph (A)

shall be presented separately for each metropolitan area in

which a regulated depository institution maintains one or

more domestic branch offices.’’.

(2) ASSIGNED RATING.—The institution’s rating referred to

in paragraph (1)(C) shall be one of the following:

(A) ‘‘Outstanding record of meeting community credit

needs’’.

(B) ‘‘Satisfactory record of meeting community credit

needs’’.

(C) ‘‘Needs to improve record of meeting community

credit needs’’.

(D) ‘‘Substantial noncompliance in meeting community

credit needs’’.

Such ratings shall be disclosed to the public on and after July

1, 1990.

(c) CONFIDENTIAL SECTION OF REPORT.— (1) PRIVACY OF NAMED INDIVIDUALS.—The confidential section of the written evaluation shall contain all references that

identify any customer of the institution, any employee or officer of the institution, or any person or organization that has

provided information in confidence to a Federal or State financial supervisory agency.

(2) TOPICS NOT SUITABLE FOR DISCLOSURE.—The confidential section shall also contain any statements obtained or made

by the appropriate Federal financial supervisory agency in the

course of an examination which, in the judgment of the agency,

are too sensitive or speculative in nature to disclose to the institution or the public.

(3) DISCLOSURE TO DEPOSITORY INSTITUTION.—The confidential section may be disclosed, in whole or part, to the institution, if the appropriate Federal financial supervisory agency determines that such disclosure will promote the objectives
1509 Sec. 807 COMMUNITY REINVESTMENT ACT OF 1977

of this Act. However, disclosure under this paragraph shall not

identify a person or organization that has provided information

in confidence to a Federal or State financial supervisory agency.

(d) INSTITUTIONS WITH INTERSTATE BRANCHES.—

(1) STATE-BY-STATE EVALUATION.—In the case of a regulated financial institution that maintains domestic branches in

2 or more States, the appropriate Federal financial supervisory

agency shall prepare—

(A) a written evaluation of the entire institution’s

record of performance under this title, as required by subsections (a), (b), and (c); and

(B) for each State in which the institution maintains

1 or more domestic branches, a separate written evaluation of the institution’s record of performance within such

State under this title, as required by subsections (a), (b),

and (c).

(2) MULTISTATE METROPOLITAN AREAS.—In the case of a

regulated financial institution that maintains domestic

branches in 2 or more States within a multistate metropolitan

area, the appropriate Federal financial supervisory agency

shall prepare a separate written evaluation of the institution’s

record of performance within such metropolitan area under

this title, as required by subsections (a), (b), and (c). If the

agency prepares a written evaluation pursuant to this paragraph, the scope of the written evaluation required under paragraph (1)(B) shall be adjusted accordingly.

(3) CONTENT OF STATE LEVEL EVALUATION.—A written

evaluation prepared pursuant to paragraph (1)(B) shall—

(A) present the information required by subparagraphs

(A) and (B) of subsection (b)(1) separately for each metropolitan area in which the institution maintains 1 or more

domestic branch offices and separately for the remainder

of the nonmetropolitan area of the State if the institution

maintains 1 or more domestic branch offices in such nonmetropolitan area; and

‘‘(B) describe how the Federal financial supervisory

agency has performed the examination of the institution,

including a list of the individual branches examined.

(e) DEFINITIONS.—For purposes of this section the following

definitions shall apply:

(1) DOMESTIC BRANCH.—The term ‘‘domestic branch’’

means any branch office or other facility of a regulated financial institution that accepts deposits, located in any State.

(2) METROPOLITAN AREA.—The term ‘‘metropolitan area’’

means any primary metropolitan statistical area, metropolitan

statistical area, or consolidated metropolitan statistical area,

as defined by the Director of the Office of Management and

Budget, with a population of 250,000 or more, and any other

area designated as such by the appropriate Federal financial

supervisory agency.

(3) STATE.—The term ‘‘State’’ has the same meaning as in

section 3 of the Federal Deposit Insurance Act.
Sec. 808 COMMUNITY REINVESTMENT ACT OF 1977 1510

SEC. 808. ø12 U.S.C. 2907¿ OPERATION OF BRANCH FACILITIES BY MINORITIES AND WOMEN.

(a) IN GENERAL.—In the case of any depository institution

which donates, sells on favorable terms (as determined by the appropriate Federal financial supervisory agency), or makes available

on a rent-free basis any branch of such institution which is located

in any predominantly minority neighborhood to any minority depository institution or women’s depository institution, the amount

of the contribution or the amount of the loss incurred in connection

with such activity may be a factor in determining whether the depository institution is meeting the credit needs of the institution’s

community for purposes of this title.

(b) DEFINITIONS.—For purposes of this section—

(1) MINORITY DEPOSITORY INSTITUTION.—The term ‘‘minority institution’’ means a depository institution (as defined in

section 3(c) of the Federal Deposit Insurance Act)—

(A) more than 50 percent of the ownership or control

of which is held by 1 or more minority individuals; and

(B) more than 50 percent of the net profit or loss of

which accrues to 1 or more minority individuals.

(2) WOMEN’S DEPOSITORY INSTITUTION.—The term ‘‘women’s depository institution’’ means a depository institution (as

defined in section 3(c) of the Federal Deposit Insurance Act)—

(A) more than 50 percent of the ownership or control

of which is held by 1 or more women;

(B) more than 50 percent of the net profit or loss of

which accrues to 1 or more women; and

(C) a significant percentage of senior management positions of which are held by women.

(3) MINORITY.—The term ‘‘minority’’ has the meaning

given to such term by section 1204(c)(3) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

SEC. 809. ø12 U.S.C 2908¿ SMALL BANK REGULATORY RELIEF.

(a) IN GENERAL.—Except as provided in subsections (b) and (c),

any regulated financial institution with aggregate assets of not

more than $250,000,000 shall be subject to routine examination

under this title—

(1) not more than once every 60 months for an institution

that has achieved a rating of ‘‘outstanding record of meeting

community credit needs’’ at its most recent examination under

section 804;

(2) not more than once every 48 months for an institution

that has received a rating of ‘‘satisfactory record of meeting

community credit needs’’ at its most recent examination under

section 804; and

(3) as deemed necessary by the appropriate Federal financial supervisory agency, for an institution that has received a

rating of less than ‘satisfactory record of meeting community

credit needs’ at its most recent examination under section 804.

(b) NO EXCEPTION FROM CRA EXAMINATIONS IN CONNECTION

WITH APPLICATIONS FOR DEPOSIT FACILITIES.—A regulated financial institution described in subsection (a) shall remain subject to

examination under this title in connection with an application for

a deposit facility.
1511 Sec. 808 COMMUNITY REINVESTMENT ACT OF 1977

(c) DISCRETION.—A regulated financial institution described in

subsection (a) may be subject to more frequent or less frequent examinations for reasonable cause under such circumstances as may

be determined by the appropriate Federal financial supervisory

agency.
1512

1The date of enactment was August 10, 1987.

ADJUSTABLE RATE MORTGAGE CAPS

EXCERPT FROM COMPETITIVE EQUALITY BANKING ACT OF 1987

[Public Law 100–86; 100 Stat. 662; 12 U.S.C. 3806]

SEC. 1204. ø12 U.S.C. 3806¿ ADJUSTABLE RATE MORTGAGE CAPS.

(a) IN GENERAL.—Any adjustable rate mortgage loan originated

by a creditor shall include a limitation on the maximum interest

rate that may apply during the term of the mortgage loan.

(b) REGULATIONS.—The Board of Governors of the Federal Reserve System shall prescribe regulations to carry out the purposes

of this section.

(c) ENFORCEMENT.—Any violation of this section shall be treated as a violation of the Truth in Lending Act and shall be subject

to administrative enforcement under section 108 or civil damages

under section 130 of such Act, or both.

(d) DEFINITIONS.—For the purpose of this section—

(1) the term ‘‘creditor’’ means a person who regularly extends credit for personal, family, or household purposes; and

(2) the term ‘‘adjustable rate mortgage loan’’ means any

consumer loan secured by a lien on a one- to four-family dwelling unit, including a condominium unit, cooperative housing

unit, or mobile home, where the loan is made pursuant to an

agreement under which the creditor may, from time to time,

adjust the rate of interest.

(e) EFFECTIVE DATE.—This section shall take effect upon the

expiration of 120 days after the date of enactment of this Act.1
1513

RECOMMENDED POLICY ON RADON

EXCERPT FROM STEWART B. McKINNEY HOMELESS ASSISTANCE

AMENDMENTS ACT OF 1988

[Public Law 100–628; 102 Stat. 3283; 15 U.S.C. 2661 note]

SEC. 1091. ø15 U.S.C. 2661 note¿ REPORT ON RECOMMENDED POLICY

FOR DEALING WITH RADON IN ASSISTED HOUSING.

(a) PURPOSES.—The purposes of this section are—

(1) to require the Department of Housing and Urban Development to develop an effective departmental policy for dealing with radon contamination that utilizes any Environmental

Protection Agency guidelines and standards to ensure that occupants of housing covered by this section are not exposed to

hazardous levels of radon; and

(2) to require the Department of Housing and Urban Development to assist the Environmental Protection Agency in reducing radon contamination.

(b) PROGRAM.—

(1) APPLICABILITY.—The housing covered by this section

is—

(A) multifamily housing owned by the Department of

Housing and Urban Development;

(B) public housing and Indian housing assisted under

the United States Housing Act of 1937;

(C) housing receiving project-based assistance under

section 8 of the United States Housing Act of 1937;

(D) housing assisted under section 236 of the National

Housing Act; and

(E) housing assisted under section 221(d)(3) of the National Housing Act.

(2) IN GENERAL.—The Secretary of Housing and Urban Development shall develop and recommend to the Congress a policy for dealing with radon contamination that specifies programs for education, research, testing, and mitigation of radon

hazards in housing covered by this section.

(3) STANDARDS.—In developing the policy, the Secretary

shall utilize any guidelines, information, or standards established by the Environmental Protection Agency for—

(A) testing residential and nonresidential structures

for radon;

(B) identifying elevated radon levels;

(C) identifying when remedial actions should be taken;

and

(D) identifying geographical areas that are likely to

have elevated levels of radon.

(4) COORDINATION.—In developing the policy, the Secretary

shall coordinate the efforts of the Department of Housing and
Sec. 1091 RECOMMENDED POLICY ON RADON 1514

1For authority of EPA, see title III of the Toxic Substances Control Act (15 U.S.C. 2661 et

seq.), as added by Pub. L. 100–551.

Urban Development with the Environmental Protection Agency, and other appropriate Federal agencies, and shall consult

with State and local governments, the housing industry, consumer groups, health organizations, appropriate professional

organizations, and other appropriate experts.

(5) REPORT.—The Secretary shall submit a report to the

Congress within 1 year after the date of the enactment of this

Act that describes the Secretary’s recommended policy for dealing with radon contamination and the Secretary’s reasons for

recommending such policy. The report shall include an estimate of the housing covered by this section that is likely to

have hazardous levels of radon.

(c) COOPERATION WITH ENVIRONMENTAL PROTECTION AGENCY.—Within 6 months after the date of the enactment of this Act,

the Secretary and the Administrator of the Environmental Protection Agency shall enter into a memorandum of understanding describing the Secretary’s plan to assist the Administrator in carrying

out the Environmental Protection Agency’s authority to assess the

extent of radon contamination in the United States and assist in

the development of measures to avoid and reduce radon contamination.1

(d) DEFINITIONS.—For purposes of this section:

(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the

Administrator of the Environmental Protection Agency.

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(e) AUTHORIZATION.—Funds available for housing covered by

this section shall be available to carry out this section with respect

to such housing.
1515

1The date of enactment was November 28, 1990.

SEISMIC SAFETY PROPERTY STANDARDS

EXCERPT FROM CRANSTON-GONZALEZ NATIONAL AFFORDABLE

HOUSING ACT

[Public Law 101–625; 104 Stat. 4416; 42 U.S.C. 7704a]

SEC. 947. ø42 U.S.C. 7704a¿ REPORT ON SEISMIC SAFETY PROPERTY

STANDARDS.

(a) AUTHORITY.—The Secretary of Housing and Urban Development (in this section referred to as the ‘‘Secretary’’) shall assess the

risk of earthquake-related damage to properties assisted under programs administered by the Secretary and shall develop seismic

safety standards for such properties. This section may not be construed to prohibit the Secretary from deferring to local building

codes that meet the requirements of the seismic safety standards

developed under this section.

(b) STANDARDS.—The standards shall be designed to reduce the

risk of loss of life to building occupants to the maximum extent feasible and to reduce the risk of shake-related property damage to

the maximum extent practicable.

(c) CONSULTATION.—In carrying out this section, the Secretary

shall consult with the Director of the Federal Emergency Management Agency and may utilize the resources under the National

Earthquake Hazards Reduction Program (established under the

Earthquake Hazards Reduction Act of 1977) and any other resources as may be required to carry out the activities under this

section.

(d) REPORTS.—

(1) SUBMISSION AND CONTENTS.—This Secretary shall submit a report to the Congress, not less than biennially, containing a statement of the findings of the risk assessment

study conducted under this section, including risk assessment

of properties located in seismic risk zones and a compilation of

the standards developed pursuant to this section. The report

shall also include a statement of the activities undertaken by

the Secretary to carry out this section and the amount and

sources of any funds expended by the Secretary for such purposes. The report shall also include a statement of the activities undertaken by the Secretary to carry out the requirements

of Executive Order No. 12699 (January 5, 1990) and the

amount and sources of any funds expended by the Secretary

for such purposes.

(2) INITIAL SUBMISSION.—The first report required under

this subsection shall be submitted not later than the expiration

of the 18-month period beginning on the date of the enactment

of this Act.1
1516

FIRE SAFETY SYSTEMS IN FEDERALLY ASSISTED

HOUSING

EXCERPT FROM FEDERAL FIRE PREVENTION AND CONTROL ACT OF

1974

[Public Law 102–522; 106 Stat. 3412; 15 U.S.C. 2227]

SEC. 31. ø15 U.S.C. 2227¿ FIRE SAFETY SYSTEMS IN FEDERALLY ASSISTED BUILDINGS.

(a) DEFINITIONS.—For purposes of this section, the following

definitions apply:

(1) The term ‘‘affordable cost’’ means the cost to a Federal

agency of leasing office space in a building that is protected by

an automatic sprinkler system or equivalent level of safety,

which cost is no more than 10 percent greater than the cost of

leasing available comparable office space in a building that is

not so protected.

(2) The term ‘‘automatic sprinkler system’’ means an electronically supervised, integrated system of piping to which

sprinklers are attached in a systematic pattern, and which,

when activated by heat from a fire—

(A) will protect human lives by discharging water over

the fire area, in accordance with the National Fire Protection Association Standard 13, 13D, or 13R, whichever is

appropriate for the type of building and occupancy being

protected, or any successor standard thereto; and

(B) includes an alarm signaling system with appropriate warning signals (to the extent such alarm systems

and warning signals are required by Federal, State, or

local laws or regulations) installed in accordance with the

National Fire Protection Association Standard 72, or any

successor standard thereto.

(3) The term ‘‘equivalent level of safety’’ means an alternative design or system (which may include automatic sprinkler systems), based upon fire protection engineering analysis,

which achieves a level of safety equal to or greater than that

provided by automatic sprinkler systems.

(4) The term ‘‘Federal employee office building’’ means any

office building in the United States, whether owned or leased

by the Federal Government, that is regularly occupied by more

than 25 full-time Federal employees in the course of their employment.

(5) The term ‘‘housing assistance’’—

(A) means assistance provided by the Federal Government to be used in connection with the provision of housing, that is provided in the form of a grant, contract, loan,

loan guarantee, cooperative agreement, interest subsidy,

insurance, or direct appropriation; and
1517 Sec. 31 FIRE SAFETY SYSTEMS IN FED. ASSISTED HOUSING

1October 26, 1992.

(B) does not include assistance provided by the

Secretary of Veterans Affairs; the Federal Emergency

Management Agency; the Secretary of Housing and Urban

Development under the single family mortgage insurance

programs under the National Housing Act or the homeownership assistance program under section 235 of such

Act; the National Homeownership Trust; the Federal Deposit Insurance Corporation under the affordable housing

program under section 40 of the Federal Deposit Insurance

Act; or the Resolution Trust Corporation under the affordable housing program under section 21A(c) of the Federal

Home Loan Bank Act.

(6) The term ‘‘hazardous areas’’ means those areas in a

building referred to as hazardous areas in National Fire Protection Association Standard 101, known as the Life Safety

Code, or any successor standard thereto.

(7) The term ‘‘multifamily property’’ means—

(A) in the case of housing for Federal employees or

their dependents, a residential building consisting of more

than 2 residential units that are under one roof; and

(B) in any other case, a residential building consisting

of more than 4 residential units that are under one roof.

(8) The term ‘‘prefire plan’’ means specific plans for fire

fighting activities at a property or location.

(9) The term ‘‘rebuilding’’ means the repairing or reconstructing of portions of a multifamily property where the cost

of the alterations is 70 percent or more of the replacement cost

of the completed multifamily property, not including the value

of the land on which the multifamily property is located.

(10) The term ‘‘renovated’’ means the repairing or reconstructing of 50 percent or more of the current value of a Federal employee office building, not including the value of the

land on which the Federal employee office building is located.

(11) The term ‘‘smoke detectors’’ means single or multiple

station, self-contained alarm devices designed to respond to the

presence of visible or invisible particles of combustion, installed in accordance with the National Fire Protection Association Standard 74 or any successor standard thereto.

(12) The term ‘‘United States’’ means the States collectively.

(b) FEDERAL EMPLOYEE OFFICE BUILDINGS.— * * *.

(c) HOUSING.—(1)(A) Except as otherwise provided in this paragraph, no Federal funds may be used for the construction, purchase, lease, or operation by the Federal Government of housing in

the United States for Federal employees or their dependents

unless—

(i) in the case of a multifamily property acquired or rebuilt

by the Federal Government after the date of enactment of this

section 1, the housing is protected, before occupancy by Federal

employees or their dependents, by an automatic sprinkler sys-
Sec. 31 FIRE SAFETY SYSTEMS IN FED. ASSISTED HOUSING 1518

1October 26, 1992.

tem (or equivalent level of safety) and hard-wired smoke detectors; and

(ii) in the case of any other housing, the housing, before—

(I) occupancy by the first Federal employees (or their

dependents) who do not occupy such housing as of such

date of enactment; or

(II) the expiration of 3 years after such date of

enactment,

whichever occurs first, is protected by hard-wired smoke

detectors.

(B) Nothing in this paragraph shall be construed to supersede

any guidelines or requirements applicable to housing for Federal

employees that call for a higher level of fire safety protection than

is required under this paragraph.

(C) Housing covered by this paragraph that does not have an

adequate and reliable electrical system shall not be subject to the

requirement under subparagraph (A) for protection by hard-wired

smoke detectors, but shall be protected by battery operated smoke

detectors.

(D) If funding has been programmed or designated for the

demolition of housing covered by this paragraph, such housing

shall not be subject to the fire protection requirements of subparagraph (A), but shall be protected by battery operated smoke detectors.

(2)(A)(i) Housing assistance may not be used in connection

with any newly constructed multifamily property, unless after the

new construction the multifamily property is protected by an automatic sprinkler system and hard-wired smoke detectors.

(ii) For purposes of clause (i), the term ‘‘newly constructed multifamily property’’ means a multifamily property of 4 or more stories above ground level—

(I) that is newly constructed after the date of enactment

of this section 1; and

(II) for which (a) housing assistance is used for such new

construction, or (b) a binding commitment is made, before commencement of such construction, to provide housing assistance

for the newly constructed property.

(iii) Clause (i) shall not apply to any multifamily property for

which, before such date of enactment, a binding commitment is

made to provide housing assistance for the new construction of the

property or for the newly constructed property.

(B)(i) Except as provided in clause (ii), housing assistance may

not be used in connection with any rebuilt multifamily property,

unless after the rebuilding the multifamily property complies with

the chapter on existing apartment buildings of National Fire Protection Association Standard 101 (known as the Life Safety Code)

or any successor standard to that standard, as in effect at the earlier of (I) the time of any approval by the Department of Housing

and Urban Development of the specific plan or budget for rebuilding, or (II) the time that a binding commitment is made to provide

housing assistance for the rebuilt property.
1519 Sec. 31 FIRE SAFETY SYSTEMS IN FED. ASSISTED HOUSING

1The date of enactment was October 26, 1992.

(ii) If any rebuilt multifamily property is subject to, and in

compliance with, any provision of a State or local fire safety standard or code that prevents compliance with a specific provision of

National Fire Protection Association Standard 101 or any successor

standard to that standard, the requirement under clause (i) shall

not apply with respect to such specific provision.

(iii) For purposes of this subparagraph, the term ‘‘rebuilt multifamily property’’ means a multifamily property of 4 or more stories

above ground level—

(I) that is rebuilt after the last day of the second fiscal

year that ends after the date of enactment of this section 1; and

(II) for which (a) housing assistance is used for such rebuilding, or (b) a binding commitment is made, before commencement of such rebuilding, to provide housing assistance

for the rebuilt property.

(C) After the expiration of the 180-day period beginning on the

date of enactment of this section 1, housing assistance may not be

used in connection with any other dwelling unit, unless the unit is

protected by a hard-wired or battery-operated smoke detector. For

purposes of this subparagraph, housing assistance shall be considered to be used in connection with a particular dwelling unit only

if such assistance is provided (i) for the particular unit, in the case

of assistance provided on a unit-by-unit basis, or (ii) for the multifamily property in which the unit is located, in the case of assistance provided on a structure-by-structure basis.

(d) REGULATIONS.—The Administrator of General Services, in

cooperation with the United States Fire Administration, the National Institute of Standards and Technology, and the Department

of Defense, within 2 years after the date of enactment of this section 1, shall promulgate regulations to further define the term

‘‘equivalent level of safety’’, and shall, to the extent practicable,

base those regulations on nationally recognized codes.

(e) STATE AND LOCAL AUTHORITY NOT LIMITED.—Nothing in

this section shall be construed to limit the power of any State or

political subdivision thereof to implement or enforce any law, rule,

regulation, or standard that establishes requirements concerning

fire prevention and control. Nothing in this section shall be construed to reduce fire resistance requirements which otherwise

would have been required.

(f) PREFIRE PLAN.—The head of any Federal agency that owns,

leases, or operates a building or housing unit with Federal funds

shall invite the local agency or voluntary organization having responsibility for fire protection in the jurisdiction where the building

or housing unit is located to prepare, and biennially review, a

prefire plan for the building or housing unit.

(g) REPORTS TO CONGRESS.—(1) * * *.

(2) Within 10 years after the date of enactment of this section 1, each Federal agency providing housing to Federal employees

or housing assistance shall submit a report to Congress on the

progress of that agency in implementing subsection (c) and on

plans for continuing such implementation.
Sec. 31 FIRE SAFETY SYSTEMS IN FED. ASSISTED HOUSING 1520

1The date of enactment was October 26, 1992.

(3)(A) The National Institute of Standards and Technology

shall conduct a study and submit a report to Congress on the use,

in combination, of fire detection systems, fire suppression systems,

and compartmentation. Such study shall—

(i) quantify performance and reliability for fire detection

systems, fire suppression systems, and compartmentation, including a field assessment of performance and determination of

conditions under which a reduction or elimination of 1 or more

of those systems would result in an unacceptable risk of fire

loss; and

(ii) include a comparative analysis and compartmentation

using fire resistive materials and compartmentation using noncombustible materials.

(B) The National Institute of Standards and Technology shall

obtain funding from non-Federal sources in an amount equal to 25

percent of the cost of the study required by subparagraph (A).

Funding for the National Institute of Standards and Technology for

carrying out such study shall be derived from amounts otherwise

authorized to be appropriated, for the Building and Fire Research

Center at the National Institute of Standards and Technology, not

to exceed $750,000. The study shall commence until receipt of all

matching funds from non-Federal sources. The scope and extent of

the study shall be determined by the level of project funding. The

Institute shall submit a report to Congress on the study within 30

months after the date of enactment of this section 1.

(h) RELATION TO OTHER REQUIREMENTS.—In the implementation of this section, the process for meeting space needs in urban

areas shall continue to give first consideration to a centralized community business area and adjacent areas of similar character to the

extent of any Federal requirement therefor.
1521

HOMEOWNERS PROTECTION ACT OF 1998

[Public Law 105–216; 112 Stat. 897; 12 U.S.C. 4901 et seq.]

SECTION 1. ø12 U.S.C. 4901 note¿ SHORT TITLE; TABLE OF CONTENTS.

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

Protection Act of 1998’’.

(b) TABLE OF CONTENTS.—The table of contents for this Act is

as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Definitions.

Sec. 3. Termination of private mortgage insurance.

Sec. 4. Disclosure requirements.

Sec. 5. Notification upon cancellation or termination.

Sec. 6. Disclosure requirements for lender paid mortgage insurance.

Sec. 7. Fees for disclosures.

Sec. 8. Civil liability.

Sec. 9. Effect on other laws and agreements.

Sec. 10. Enforcement.

Sec. 11. Construction.

Sec. 12. Amendment to Higher Education Act of 1965.

Sec. 13. Effective date.

Sec. 14. Abolishment of the Thrift Depositor Protection Oversight Board.

SEC. 2. ø12 U.S.C. 4901¿ DEFINITIONS.

In this Act, the following definitions shall apply:

(1) ADJUSTABLE RATE MORTGAGE.—The term ‘‘adjustable

rate mortgage’’ means a residential mortgage that has an interest rate that is subject to change. A residential mortgage

that: (A) does not fully amortize over the term of the obligation; and (B) contains a conditional right to refinance or modify

the unamortized principal at the maturity date of the term,

shall be considered to be an adjustable rate mortgage for purposes of this Act.

(2) CANCELLATION DATE.—The term ‘‘cancellation date’’

means—

(A) with respect to a fixed rate mortgage, at the option

of the mortgagor, the date on which the principal balance

of the mortgage—

(i) based solely on the initial amortization schedule for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is

first scheduled to reach 80 percent of the original

value of the property securing the loan; or

(ii) based solely on actual payments, reaches 80

percent of the original value of the property securing

the loan; and

(B) with respect to an adjustable rate mortgage, at the

option of the mortgagor, the date on which the principal

balance of the mortgage—

(i) based solely on the amortization schedule then

in effect for that mortgage, and irrespective of the out-
Sec. 2 HOMEOWNERS PROTECTION ACT OF 1998 1522

standing balance for that mortgage on that date, is

first scheduled to reach 80 percent of the original

value of the property securing the loan; or

(ii) based solely on actual payments, first reaches

80 percent of the original value of the property securing the loan.

(3) FIXED RATE MORTGAGE.—The term ‘‘fixed rate mortgage’’ means a residential mortgage that has an interest rate

that is not subject to change.

(4) GOOD PAYMENT HISTORY.—The term ‘‘good payment history’’ means, with respect to a mortgagor, that the mortgagor

has not—

(A) made a mortgage payment that was 60 days or

longer past due during the 12-month period beginning 24

months before the later of (i) the date on which the mortgage reaches the cancellation date, or (ii) the date that the

mortgagor submits a request for cancellation under section

3(a)(1); or

(B) made a mortgage payment that was 30 days or

longer past due during the 12-month period preceding the

later of (i) the date on which the mortgage reaches the

cancellation date, or (ii) the date that the mortgagor submits a request for cancellation under section 3(a)(1).

(5) INITIAL AMORTIZATION SCHEDULE.—The term ‘‘initial

amortization schedule’’ means a schedule established at the

time at which a residential mortgage transaction is consummated with respect to a fixed rate mortgage, showing—

(A) the amount of principal and interest that is due at

regular intervals to retire the principal balance and accrued interest over the amortization period of the loan;

and

(B) the unpaid principal balance of the loan after each

scheduled payment is made.

(6) AMORTIZATION SCHEDULE THEN IN EFFECT.—The term

‘‘amortization schedule then in effect’’ means, with respect to

an adjustable rate mortgage, a schedule established at the

time at which the residential mortgage transaction is consummated or, if such schedule has been changed or recalculated, is the most recent schedule under the terms of the

note or mortgage, which shows—

(A) the amount of principal and interest that is due at

regular intervals to retire the principal balance and accrued interest over the remaining amortization period of

the loan; and

(B) the unpaid balance of the loan after each such

scheduled payment is made.

(7) MIDPOINT OF THE AMORTIZATION PERIOD.—The term

‘‘midpoint of the amortization period’’ means, with respect to a

residential mortgage transaction, the point in time that is halfway through the period that begins upon the first day of the

amortization period established at the time a residential mortgage transaction is consummated and ends upon the completion of the entire period over which the mortgage is scheduled

to be amortized.
1523 Sec. 2 HOMEOWNERS PROTECTION ACT OF 1998

1The date of enactment was July 29, 1998.

(8) MORTGAGE INSURANCE.—The term ‘‘mortgage insurance’’ means insurance, including any mortgage guaranty insurance, against the nonpayment of, or default on, an individual mortgage or loan involved in a residential mortgage

transaction.

(9) MORTGAGE INSURER.—The term ‘‘mortgage insurer’’

means a provider of private mortgage insurance, as described

in this Act, that is authorized to transact such business in the

State in which the provider is transacting such business.

(10) MORTGAGEE.—The term ‘‘mortgagee’’ means the holder of a residential mortgage at the time at which that mortgage transaction is consummated.

(11) MORTGAGOR.—The term ‘‘mortgagor’’ means the original borrower under a residential mortgage or his or her successors or assignees.

(12) ORIGINAL VALUE.—The term ‘‘original value’’, with respect to a residential mortgage transaction, means the lesser

of the sales price of the property securing the mortgage, as reflected in the contract, or the appraised value at the time at

which the subject residential mortgage transaction was consummated. In the case of a residential mortgage transaction

for refinancing the principal residence of the mortgagor, such

term means only the appraised value relied upon by the mortgagee to approve the refinance transaction.

(13) PRIVATE MORTGAGE INSURANCE.—The term ‘‘private

mortgage insurance’’ means mortgage insurance other than

mortgage insurance made available under the National Housing Act, title 38 of the United States Code, or title V of the

Housing Act of 1949.

(14) RESIDENTIAL MORTGAGE.—The term ‘‘residential mortgage’’ means a mortgage, loan, or other evidence of a security

interest created with respect to a single-family dwelling that is

the principal residence of the mortgagor.

(15) RESIDENTIAL MORTGAGE TRANSACTION.—The term

‘‘residential mortgage transaction’’ means a transaction consummated on or after the date that is 1 year after the date of

enactment of this Act 1, in which a mortgage, deed of trust,

purchase money security interest arising under an installment

sales contract, or equivalent consensual security interest is created or retained against a single-family dwelling that is the

principal residence of the mortgagor to finance the acquisition,

initial construction, or refinancing of that dwelling.

(16) SERVICER.—The term ‘‘servicer’’ has the same meaning as in section 6(i)(2) of the Real Estate Settlement Procedures Act of 1974, with respect to a residential mortgage.

(17) SINGLE-FAMILY DWELLING.—The term ‘‘single-family

dwelling’’ means a residence consisting of 1 family dwelling

unit.

(18) TERMINATION DATE.—The term ‘‘termination date’’

means—

(A) with respect to a fixed rate mortgage, the date on

which the principal balance of the mortgage, based solely
Sec. 3 HOMEOWNERS PROTECTION ACT OF 1998 1524

on the initial amortization schedule for that mortgage, and

irrespective of the outstanding balance for that mortgage

on that date, is first scheduled to reach 78 percent of the

original value of the property securing the loan; and

(B) with respect to an adjustable rate mortgage, the

date on which the principal balance of the mortgage, based

solely on the amortization schedule then in effect for that

mortgage, and irrespective of the outstanding balance for

that mortgage on that date, is first scheduled to reach 78

percent of the original value of the property securing the

loan.

SEC. 3. ø12 U.S.C. 4902¿ TERMINATION OF PRIVATE MORTGAGE INSURANCE.

(a) BORROWER CANCELLATION.—A requirement for private

mortgage insurance in connection with a residential mortgage

transaction shall be canceled on the cancellation date or any later

date that the mortgagor fulfills all of the requirements under paragraphs (1) through (4), if the mortgagor—

(1) submits a request in writing to the servicer that cancellation be initiated;

(2) has a good payment history with respect to the residential mortgage;

(3) is current on the payments required by the terms of the

residential mortgage transaction; and

(4) has satisfied any requirement of the holder of the mortgage (as of the date of a request under paragraph (1)) for—

(A) evidence (of a type established in advance and

made known to the mortgagor by the servicer promptly

upon receipt of a request under paragraph (1)) that the

value of the property securing the mortgage has not declined below the original value of the property; and

(B) certification that the equity of the mortgagor in

the residence securing the mortgage is unencumbered by

a subordinate lien.

(b) AUTOMATIC TERMINATION.—A requirement for private mortgage insurance in connection with a residential mortgage transaction shall terminate with respect to payments for that mortgage

insurance made by the mortgagor—

(1) on the termination date if, on that date, the mortgagor

is current on the payments required by the terms of the residential mortgage transaction; or

(2) if the mortgagor is not current on the termination date,

on the first day of the first month beginning after the date that

the mortgagor becomes current on the payments required by

the terms of the residential mortgage transaction.

(c) FINAL TERMINATION.—If a requirement for private mortgage

insurance is not otherwise canceled or terminated in accordance

with subsection (a) or (b), in no case may such a requirement be

imposed on residential mortgage transactions beyond the first day

of the month immediately following the date that is the midpoint

of the amortization period of the loan if the mortgagor is current

on the payments required by the terms of the mortgage.

(d) TREATMENT OF LOAN MODIFICATIONS.—If a mortgagor and

mortgagee (or holder of the mortgage) agree to a modification of the
1525 Sec. 3 HOMEOWNERS PROTECTION ACT OF 1998

terms or conditions of a loan pursuant to a residential mortgage

transaction, the cancellation date, termination date, or final termination shall be recalculated to reflect the modified terms and conditions of such loan.

(e) NO FURTHER PAYMENTS.—No payments or premiums may

be required from the mortgagor in connection with a private mortgage insurance requirement terminated or canceled under this

section—

(1) in the case of cancellation under subsection (a), more

than 30 days after the later of—

(A) the date on which a request under subsection (a)(1)

is received; or

(B) the date on which the mortgagor satisfies any evidence and certification requirements under subsection

(a)(4);

(2) in the case of termination under subsection (b), more

than 30 days after the termination date or the date referred

to in subsection (b)(2), as applicable; and

(3) in the case of termination under subsection (c), more

than 30 days after the final termination date established under

that subsection.

(f) RETURN OF UNEARNED PREMIUMS.—

(1) IN GENERAL.—Not later than 45 days after the termination or cancellation of a private mortgage insurance requirement under this section, all unearned premiums for private

mortgage insurance shall be returned to the mortgagor by the

servicer.

(2) TRANSFER OF FUNDS TO SERVICER.—Not later than 30

days after notification by the servicer of termination or cancellation of private mortgage insurance under this Act with respect to a mortgagor, a mortgage insurer that is in possession

of any unearned premiums of that mortgagor shall transfer to

the servicer of the subject mortgage an amount equal to the

amount of the unearned premiums for repayment in accordance with paragraph (1).

(g) EXCEPTIONS FOR HIGH RISK LOANS.—

(1) IN GENERAL.—The termination and cancellation provisions in subsections (a) and (b) do not apply to any residential

mortgage transaction that, at the time at which the residential

mortgage transaction is consummated, has high risks associated with the extension of the loan—

(A) as determined in accordance with guidelines published by the Federal National Mortgage Association and

the Federal Home Loan Mortgage Corporation, in the case

of a mortgage loan with an original principal balance that

does not exceed the applicable annual conforming loan

limit for the secondary market established pursuant to section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act, so as to require the imposition or continuation of a private mortgage insurance requirement beyond

the terms specified in subsection (a) or (b) of section 3; or

(B) as determined by the mortgagee in the case of any

other mortgage, except that termination shall occur—
Sec. 3 HOMEOWNERS PROTECTION ACT OF 1998 1526

1The date of enactment was July 29, 1998.

(i) with respect to a fixed rate mortgage, on the

date on which the principal balance of the mortgage,

based solely on the initial amortization schedule for

that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled

to reach 77 percent of the original value of the property securing the loan; and

(ii) with respect to an adjustable rate mortgage,

on the date on which the principal balance of the

mortgage, based solely on the amortization schedule

then in effect for that mortgage, and irrespective of

the outstanding balance for that mortgage on that

date, is first scheduled to reach 77 percent of the original value of the property securing the loan.

(2) TERMINATION AT MIDPOINT.—A private mortgage insurance requirement in connection with a residential mortgage

transaction described in paragraph (1) shall terminate in accordance with subsection (c).

(3) RULE OF CONSTRUCTION.—Nothing in this subsection

may be construed to require a residential mortgage or residential mortgage transaction described in paragraph (1)(A) to be

purchased by the Federal National Mortgage Association or the

Federal Home Loan Mortgage Corporation.

(4) GAO REPORT.—Not later than 2 years after the date of

the enactment of this Act 1, the Comptroller General of the

United States shall submit to the Congress a report describing

the volume and characteristics of residential mortgages and

residential mortgage transactions that, pursuant to paragraph

(1) of this subsection, are exempt from the application of subsections (a) and (b). The report shall—

(A) determine the number or volume of such mortgages and transactions compared to residential mortgages

and residential mortgage transactions that are not classified as high-risk for purposes of paragraph (1); and

(B) identify the characteristics of such mortgages and

transactions that result in their classification (for purposes

of paragraph (1)) as having high risks associated with the

extension of the loan and describe such characteristics,

including—

(i) the income levels and races of the mortgagors

involved;

(ii) the amount of the downpayments involved and

the downpayments expressed as percentages of the acquisition costs of the properties involved;

(iii) the types and locations of the properties involved;

(iv) the mortgage principal amounts; and

(v) any other characteristics of such mortgages

and transactions that may contribute to their classification as high risk for purposes of paragraph (1), including whether such mortgages are purchase-money
1527 Sec. 4 HOMEOWNERS PROTECTION ACT OF 1998

mortgages or refinancings and whether and to what

extent such loans are low-documentation loans.

(h) ACCRUED OBLIGATION FOR PREMIUM PAYMENTS.—The cancellation or termination under this section of the private mortgage

insurance of a mortgagor shall not affect the rights of any mortgagee, servicer, or mortgage insurer to enforce any obligation of

such mortgagor for premium payments accrued prior to the date on

which such cancellation or termination occurred.

SEC. 4. ø12 U.S.C. 4903¿ DISCLOSURE REQUIREMENTS.

(a) DISCLOSURES FOR NEW MORTGAGES AT TIME OF TRANSACTION.—

(1) DISCLOSURES FOR NON-EXEMPTED TRANSACTIONS.—In

any case in which private mortgage insurance is required in

connection with a residential mortgage transaction (other than

a residential mortgage transaction described in section 3(g)(1)),

at the time at which the transaction is consummated, the

mortgagee shall provide to the mortgagor—

(A) if the transaction relates to a fixed rate

mortgage—

(i) a written initial amortization schedule; and

(ii) written notice—

(I) that the mortgagor may cancel the requirement in accordance with section 3(a) of this Act

indicating the date on which the mortgagor may

request cancellation, based solely on the initial

amortization schedule;

(II) that the mortgagor may request cancellation in accordance with section 3(a) of this Act

earlier than provided for in the initial amortization schedule, based on actual payments;

(III) that the requirement for private mortgage insurance will automatically terminate on

the termination date in accordance with section

3(b) of this Act, and what that termination date is

with respect to that mortgage; and

(IV) that there are exemptions to the right to

cancellation and automatic termination of a requirement for private mortgage insurance in accordance with section 3(g) of this Act, and whether

such an exemption applies at that time to that

transaction; and

(B) if the transaction relates to an adjustable rate

mortgage, a written notice that—

(i) the mortgagor may cancel the requirement in

accordance with section 3(a) of this Act on the cancellation date, and that the servicer will notify the

mortgagor when the cancellation date is reached;

(ii) the requirement for private mortgage insurance will automatically terminate on the termination

date, and that on the termination date, the mortgagor

will be notified of the termination or that the requirement will be terminated as soon as the mortgagor is

current on loan payments; and
Sec. 4 HOMEOWNERS PROTECTION ACT OF 1998 1528

1The date of enactment was July 29, 1998.

(iii) there are exemptions to the right of cancellation and automatic termination of a requirement for

private mortgage insurance in accordance with section

3(g) of this Act, and whether such an exemption applies at that time to that transaction.

(2) DISCLOSURES FOR EXCEPTED TRANSACTIONS.—In the

case of a residential mortgage transaction described in section

3(g)(1), at the time at which the transaction is consummated,

the mortgagee shall provide written notice to the mortgagor

that in no case may private mortgage insurance be required

beyond the date that is the midpoint of the amortization period

of the loan, if the mortgagor is current on payments required

by the terms of the residential mortgage.

(3) ANNUAL DISCLOSURES.—If private mortgage insurance

is required in connection with a residential mortgage transaction, the servicer shall disclose to the mortgagor in each such

transaction in an annual written statement—

(A) the rights of the mortgagor under this Act to cancellation or termination of the private mortgage insurance

requirement; and

(B) an address and telephone number that the mortgagor may use to contact the servicer to determine whether the mortgagor may cancel the private mortgage insurance.

(4) APPLICABILITY.—Paragraphs (1) through (3) shall apply

with respect to each residential mortgage transaction consummated on or after the date that is 1 year after the date of

enactment of this Act. 1

(b) DISCLOSURES FOR EXISTING MORTGAGES.—If private mortgage insurance was required in connection with a residential mortgage entered into at any time before the effective date of this Act,

the servicer shall disclose to the mortgagor in each such transaction in an annual written statement—

(1) that the private mortgage insurance may, under certain

circumstances, be canceled by the mortgagor (with the consent

of the mortgagee or in accordance with applicable State law);

and

(2) an address and telephone number that the mortgagor

may use to contact the servicer to determine whether the mortgagor may cancel the private mortgage insurance.

(c) INCLUSION IN OTHER ANNUAL NOTICES.—The information

and disclosures required under subsection (b) and subsection (a)(3)

may be provided on the annual disclosure relating to the escrow account made as required under the Real Estate Settlement Procedures Act of 1974, or as part of the annual disclosure of interest

payments made pursuant to Internal Revenue Service regulations,

and on a form promulgated by the Internal Revenue Service for

that purpose.

(d) STANDARDIZED FORMS.—The mortgagee or servicer may use

standardized forms for the provision of disclosures required under

this section, which disclosures shall relate to the mortgagor’s rights

under this Act.
1529 Sec. 6. HOMEOWNERS PROTECTION ACT OF 1998

SEC. 5. ø12 U.S.C. 4904¿ NOTIFICATION UPON CANCELLATION OR TERMINATION.

(a) IN GENERAL.—Not later than 30 days after the date of cancellation or termination of a private mortgage insurance requirement in accordance with this Act, the servicer shall notify the

mortgagor in writing—

(1) that the private mortgage insurance has terminated

and that the mortgagor no longer has private mortgage insurance; and

(2) that no further premiums, payments, or other fees shall

be due or payable by the mortgagor in connection with the private mortgage insurance.

(b) NOTICE OF GROUNDS.—

(1) IN GENERAL.—If a servicer determines that a mortgage

did not meet the requirements for termination or cancellation

of private mortgage insurance under subsection (a) or (b) of

section 3, the servicer shall provide written notice to the mortgagor of the grounds relied on to make the determination (including the results of any appraisal used to make the determination).

(2) TIMING.—Notice required by paragraph (1) shall be

provided—

(A) with respect to cancellation of private mortgage insurance under section 3(a), not later than 30 days after the

later of—

(i) the date on which a request is received under

section 3(a)(1); or

(ii) the date on which the mortgagor satisfies any

evidence and certification requirements under section

3(a)(3); and

(B) with respect to termination of private mortgage insurance under section 3(b), not later than 30 days after the

scheduled termination date.

SEC. 6. ø12 U.S.C. 4905¿ DISCLOSURE REQUIREMENTS FOR LENDER

PAID MORTGAGE INSURANCE.

(a) DEFINITIONS.—For purposes of this section—

(1) the term ‘‘borrower paid mortgage insurance’’ means

private mortgage insurance that is required in connection with

a residential mortgage transaction, payments for which are

made by the borrower;

(2) the term ‘‘lender paid mortgage insurance’’ means private mortgage insurance that is required in connection with a

residential mortgage transaction, payments for which are made

by a person other than the borrower; and

(3) the term ‘‘loan commitment’’ means a prospective mortgagee’s written confirmation of its approval, including any applicable closing conditions, of the application of a prospective

mortgagor for a residential mortgage loan.

(b) EXCLUSION.—Sections 3 through 5 do not apply in the case

of lender paid mortgage insurance.

(c) NOTICES TO MORTGAGOR.—In the case of lender paid mortgage insurance that is required in connection with a residential

mortgage transaction—
Sec. 7 HOMEOWNERS PROTECTION ACT OF 1998 1530

(1) not later than the date on which a loan commitment is

made for the residential mortgage transaction, the prospective

mortgagee shall provide to the prospective mortgagor a written

notice—

(A) that lender paid mortgage insurance differs from

borrower paid mortgage insurance, in that lender paid

mortgage insurance may not be canceled by the mortgagor,

while borrower paid mortgage insurance could be

cancelable by the mortgagor in accordance with section

3(a) of this Act, and could automatically terminate on the

termination date in accordance with section 3(b) of this

Act;

(B) that lender paid mortgage insurance—

(i) usually results in a residential mortgage having a higher interest rate than it would in the case of

borrower paid mortgage insurance; and

(ii) terminates only when the residential mortgage

is refinanced (under the meaning given such term in

the regulations issued by the Board of Governors of

the Federal Reserve System to carry out the Truth in

Lending Act (15 U.S.C. 1601 et seq.)), paid off, or otherwise terminated; and

(C) that lender paid mortgage insurance and borrower

paid mortgage insurance both have benefits and disadvantages, including a generic analysis of the differing costs

and benefits of a residential mortgage in the case lender

paid mortgage insurance versus borrower paid mortgage

insurance over a 10-year period, assuming prevailing interest and property appreciation rates;

(D) that lender paid mortgage insurance may be taxdeductible for purposes of Federal income taxes, if the

mortgagor itemizes expenses for that purpose; and

(2) not later than 30 days after the termination date that

would apply in the case of borrower paid mortgage insurance,

the servicer shall provide to the mortgagor a written notice indicating that the mortgagor may wish to review financing options that could eliminate the requirement for private mortgage insurance in connection with the residential mortgage

transaction.

(d) STANDARD FORMS.—The servicer of a residential mortgage

transaction may develop and use a standardized form or forms for

the provision of notices to the mortgagor, as required under subsection (c).

SEC. 7. ø12 U.S.C. 4906¿ FEES FOR DISCLOSURES.

No fee or other cost may be imposed on any mortgagor with

respect to the provision of any notice or information to the mortgagor pursuant to this Act.

SEC. 8. ø12 U.S.C. 4907¿ CIVIL LIABILITY.

(a) IN GENERAL.—Any servicer, mortgagee, or mortgage insurer

that violates a provision of this Act shall be liable to each mortgagor to whom the violation relates for—

(1) in the case of an action by an individual, or a class action in which the liable party is not subject to section 10, any
1531 Sec. 9 HOMEOWNERS PROTECTION ACT OF 1998

actual damages sustained by the mortgagor as a result of the

violation, including interest (at a rate determined by the court)

on the amount of actual damages, accruing from the date on

which the violation commences;

(2) in the case of—

(A) an action by an individual, such statutory damages

as the court may allow, not to exceed $2,000; and

(B) in the case of a class action—

(i) in which the liable party is subject to section

10, such amount as the court may allow, except that

the total recovery under this subparagraph in any

class action or series of class actions arising out of the

same violation by the same liable party shall not exceed the lesser of $500,000 or 1 percent of the net

worth of the liable party, as determined by the court;

and

(ii) in which the liable party is not subject to section 10, such amount as the court may allow, not to

exceed $1,000 as to each member of the class, except

that the total recovery under this subparagraph in any

class action or series of class actions arising out of the

same violation by the same liable party shall not exceed the lesser of $500,000 or 1 percent of the gross

revenues of the liable party, as determined by the

court;

(3) costs of the action; and

(4) reasonable attorney fees, as determined by the court.

(b) TIMING OF ACTIONS.—No action may be brought by a mortgagor under subsection (a) later than 2 years after the date of the

discovery of the violation that is the subject of the action.

(c) LIMITATIONS ON LIABILITY.—

(1) IN GENERAL.—With respect to a residential mortgage

transaction, the failure of a servicer to comply with the requirements of this Act due to the failure of a mortgage insurer

or a mortgagee to comply with the requirements of this Act,

shall not be construed to be a violation of this Act by the

servicer.

(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1)

shall be construed to impose any additional requirement or liability on a mortgage insurer, a mortgagee, or a holder of a

residential mortgage.

SEC. 9. ø12 U.S.C. 4908¿ EFFECT ON OTHER LAWS AND AGREEMENTS.

(a) EFFECT ON STATE LAW.—

(1) IN GENERAL.—With respect to any residential mortgage

or residential mortgage transaction consummated after the effective date of this Act, and except as provided in paragraph

(2), the provisions of this Act shall supersede any provisions of

the law of any State relating to requirements for obtaining or

maintaining private mortgage insurance in connection with

residential mortgage transactions, cancellation or automatic

termination of such private mortgage insurance, any disclosure

of information addressed by this Act, and any other matter

specifically addressed by this Act.
Sec. 10 HOMEOWNERS PROTECTION ACT OF 1998 1532

1The date of enactment was July 29, 1998.

(2) PROTECTION OF EXISTING STATE LAWS.— (A) IN GENERAL.—The provisions of this Act do not supersede protected State laws, except to the extent that the

protected State laws are inconsistent with any provision of

this Act, and then only to the extent of the inconsistency.

(B) INCONSISTENCIES.—A protected State law shall not

be considered to be inconsistent with a provision of this

Act if the protected State law—

(i) requires termination of private mortgage insurance or other mortgage guaranty insurance—

(I) at a date earlier than as provided in this

Act; or

(II) when a mortgage principal balance is

achieved that is higher than as provided in this

Act; or

(ii) requires disclosure of information—

(I) that provides more information than the

information required by this Act; or

(II) more often or at a date earlier than is required by this Act.

(C) PROTECTED STATE LAWS.—For purposes of this

paragraph, the term ‘‘protected State law’’ means a State

law—

(i) regarding any requirements relating to private

mortgage insurance in connection with residential

mortgage transactions;

(ii) that was enacted not later than 2 years after

the date of the enactment of this Act 1; and

(iii) that is the law of a State that had in effect,

on or before January 2, 1998, any State law described

in clause (i).

(b) EFFECT ON OTHER AGREEMENTS.—The provisions of this Act

shall supersede any conflicting provision contained in any agreement relating to the servicing of a residential mortgage loan entered into by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or any private investor or

note holder (or any successors thereto).

SEC. 10. ø12 U.S.C. 4909¿ ENFORCEMENT.

(a) IN GENERAL.—Compliance with the requirements imposed

under this Act shall be enforced under—

(1) section 8 of the Federal Deposit Insurance Act—

(A) by the appropriate Federal banking agency (as defined in section 3(q) of the Federal Deposit Insurance Act)

in the case of insured depository institutions (as defined in

section 3(c)(2) of such Act);

(B) by the Federal Deposit Insurance Corporation in

the case of depository institutions described in clause (i),

(ii), or (iii) of section 19(b)(1)(A) of the Federal Reserve Act

that are not insured depository institutions (as defined in

section 3(c)(2) of the Federal Deposit Insurance Act); and

(C) by the Director of the Office of Thrift Supervision

in the case of depository institutions described in clause (v)
1533 Sec. 12 HOMEOWNERS PROTECTION ACT OF 1998

and or (vi) of section 19(b)(1)(A) of the Federal Reserve Act

that are not insured depository institutions (as defined in

section 3(c)(2) of the Federal Deposit Insurance Act);

(2) the Federal Credit Union Act, by the National Credit

Union Administration Board in the case of depository institutions described in clause (iv) of section 19(b)(1)(A) of the Federal Reserve Act; and

(3) part C of title V of the Farm Credit Act of 1971 (12

U.S.C. 2261 et seq.), by the Farm Credit Administration in the

case of an institution that is a member of the Farm Credit System.

(b) ADDITIONAL ENFORCEMENT POWERS.— (1) VIOLATION OF THIS ACT TREATED AS VIOLATION OF

OTHER ACTS.—For purposes of the exercise by any agency referred to in subsection (a) of such agency’s powers under any

Act referred to in such subsection, a violation of a requirement

imposed under this Act shall be deemed to be a violation of a

requirement imposed under that Act.

(2) ENFORCEMENT AUTHORITY UNDER OTHER ACTS.—In addition to the powers of any agency referred to in subsection (a)

under any provision of law specifically referred to in such subsection, each such agency may exercise, for purposes of enforcing compliance with any requirement imposed under this Act,

any other authority conferred on such agency by law.

(c) ENFORCEMENT AND REIMBURSEMENT.—In carrying out its

enforcement activities under this section, each agency referred to

in subsection (a) shall—

(1) notify the mortgagee or servicer of any failure of the

mortgagee or servicer to comply with 1 or more provisions of

this Act;

(2) with respect to each such failure to comply, require the

mortgagee or servicer, as applicable, to correct the account of

the mortgagor to reflect the date on which the mortgage insurance should have been canceled or terminated under this Act;

and

(3) require the mortgagee or servicer, as applicable, to reimburse the mortgagor in an amount equal to the total unearned premiums paid by the mortgagor after the date on

which the obligation to pay those premiums ceased under this

Act.

SEC. 11. ø12 U.S.C. 4910¿ CONSTRUCTION.

(a) PMI NOT REQUIRED.—Nothing in this Act shall be construed to impose any requirement for private mortgage insurance

in connection with a residential mortgage transaction.

(b) NO PRECLUSION OF CANCELLATION OR TERMINATION AGREEMENTS.—Nothing in this Act shall be construed to preclude cancellation or termination, by agreement between a mortgagor and

the holder of the mortgage, of a requirement for private mortgage

insurance in connection with a residential mortgage transaction before the cancellation or termination date established by this Act for

the mortgage.

SEC. 12. AMENDMENT TO HIGHER EDUCATION ACT OF 1965.

* * * * * * *
Sec. 13 HOMEOWNERS PROTECTION ACT OF 1998 1534

1The date of enactment was July 29, 1998.

SEC. 13. ø12 U.S.C. 4901 note¿ EFFECTIVE DATE.

This Act, other than section 14, shall become effective 1 year

after the date of enactment of this Act. 1

SEC. 14. ABOLISHMENT OF THE THRIFT DEPOSITOR PROTECTION

OVERSIGHT BOARD.

* * * * * * *
1535

PART XII—ORGANIZATION AND ADMINISTRATION OF DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

ACT

[Public Law 89–174; 79 Stat. 667; 42 U.S.C. 3531 et seq.]

Be it enacted by the Senate and House of Representatives

of the United States of America in Congress assembled, That this

Act may be cited as the ‘‘Department of Housing and Urban Development Act’’. ø42 U.S.C. 3531 note¿

DECLARATION OF PURPOSE

SEC. 2. ø42 U.S.C. 3531¿ The Congress hereby declares that

the general welfare and security of the Nation and the health and

living standards of our people require, as a matter of national purpose, sound development of the Nation’s communities and metropolitan areas in which the vast majority of its people live and work.

To carry out such purpose, and in recognition of the increasing

importance of housing and urban development in our national life,

the Congress finds that establishment of an executive department

is desirable to achieve the best administration of the principal programs of the Federal Government which provide assistance for

housing and for the development of the Nation’s communities; to

assist the President in achieving maximum coordination of the various Federal activities which have a major effect upon urban community, suburban, or metropolitan development; to encourage the

solution of problems of housing, urban development, and mass

transportation through State, county, town, village, or other local

and private action, including promotion of interstate, regional, and

metropolitan cooperation; to encourage the maximum contributions

that may be made by vigorous private homebuilding and mortgage

lending industries to housing, urban development, and the national

economy; and to provide for full and appropriate consideration, at

the national level, of the needs and interests of the Nation’s communities and of the people who live and work in them.

ESTABLISHMENT OF DEPARTMENT

SEC. 3. ø42 U.S.C. 3532¿ (a) There is hereby established at the

seat of government an executive department to be known as the

Department of Housing and Urban Development (hereinafter referred to as the ‘‘Department’’). There shall be at the head of the

Department a Secretary of Housing and Urban Development (hereinafter referred to as the ‘‘Secretary’’), who shall be appointed by

the President by and with the advice and consent of the Senate.
Sec. 3 DEPARTMENT OF HUD ACT 1536

The Department shall be administered under the supervision and

direction of the Secretary.

(b) The Secretary shall, among his responsibilities advise the

President with respect to Federal programs and activities relating

to housing and urban development; develop and recommend to the

President policies for fostering the orderly growth and development

of the Nation’s urban areas; exercise leadership at the direction of

the President in coordinating Federal activities affecting housing

and urban development; provide technical assistance and information, including a clearinghouse service to aid State, county, town,

village, or other local governments in developing solutions to community and metropolitan development problems; consult and cooperate with State Governors and State agencies, including, when

appropriate, holding informal public hearings, with respect to Federal and State programs for assisting communities in developing

solutions to community and metropolitan development problems

and for encouraging effective regional cooperation in the planning

and conduct of community and metropolitan development programs

and projects; encourage comprehensive planning by the State and

local governments with a view to coordinating Federal, State, and

local urban and community development activities; encourage private enterprise to serve as large a part of the Nation’s total housing and urban development needs as it can and develop the fullest

cooperation with private enterprise in achieving the objectives of

the Department; and conduct continuing comprehensive studies,

and make available findings, with respect to the problems of housing and urban development.

(c) Nothing in this Act shall be construed to deny or limit the

benefits of any program, function, or activity assigned to the Department by this or any other Act to any community on the basis

of its population or corporate status, except as may be expressly

provided by law.

(d) The Secretary shall—

(1) promote the coordination of all programs under the jurisdiction of the Secretary that are carried on within an enterprise zone designated pursuant to section 701 of the Housing

and Community Development Act of 1987;

(2) expedite, to the greatest extent possible, the consideration of applications for programs referred to in paragraph (1)

through the consolidation of forms or otherwise; and

(3) provide, whenever possible, for the consolidation of

periodic reports required under programs referred to in paragraph (1) into one summary report submitted at such intervals

as may be designated by the Secretary.
1537 Sec. 4 DEPARTMENT OF HUD ACT

1Section 112(a)(4) of the Federal Employees Pay Comparability Act of 1990, which consists

of section 529 of Pub. L. 101–509, approved November 5, 1990, replaced ‘‘Under Secretary’’ with

‘‘Deputy Secretary’’. Subsection (b) of such section deemed any reference to the ‘‘Under Secretary

of Housing and Urban Development’’ in any statute, reorganization plan, regulation, executive

order, or any document issued pursuant thereto in force on the date of enactment of such Act

to be a reference to the ‘‘Deputy Secretary of Housing and Urban Development’’. 2Section 215 of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Act, 1996 (as contained in section 101(e) of the Omnibus Consolidated

Rescissions and Appropriations Act of 1996, Pub. L. 104–134) provides as follows:

‘‘EMPLOYMENT LIMITATIONS

‘‘SEC. 215. (a) By the end of fiscal year 1996 the Department of Housing and Urban Development shall employ no more than eight Assistant Secretaries, notwithstanding section 4(a) of the

Department of Housing and Urban Development Act.

‘‘(b) By the end of fiscal year 1996 the Department of Housing and Urban Development shall

employ no more than 77 schedule C and 20 non-career senior executive service employees.’’.

UNDER SECRETARY AND OTHER OFFICERS AND OFFICES

SEC. 4. ø42 U.S.C. 3533¿ (a) There shall be in the Department

a Deputy Secretary,1 eight Assistant Secretaries 2, and a general

counsel, who shall be appointed by the President by and with the

advice and consent of the Senate, and who shall perform such functions, powers, and duties as the Secretary shall prescribe from time

to time.

(b) There shall be in the Department a Federal Housing Commissioner, who shall be one of the Assistant Secretaries, who shall

head a Federal Housing Administration within the Department,

who shall have such duties and powers as may be prescribed by the

Secretary, and who shall administer, under the supervision and direction of the Secretary, departmental programs relating to the private mortgage market. The Secretary shall ensure, to the extent

practicable, that managers of Federal Housing Administration programs, at each level of the Department, shall be accountable for

program operation, risk management, management of cash and

other Federal assets, and program financing related to activities

over which such managers have responsibility.

(c) There shall be in the Department a Director of Urban Program Coordination, who shall be designated by the Secretary. He

shall assist the Secretary in carrying out his responsibilities to the

President with respect to achieving maximum coordination of the

programs of the various departments and agencies of the Government which have a major impact on community development. In

providing such assistance, the Director shall make such studies of

urban and community problems as the Secretary shall request, and

shall develop recommendations relating to the administration of

Federal programs affecting such problems, particularly with respect to achieving effective cooperation among the Federal, State,

and local agencies concerned. Subject to the direction of the Secretary, the Director shall, in carrying out his responsibilities, (1)

establish and maintain close liaison with the Federal departments

and agencies concerned, and (2) consult with State, local, and regional officials, and consider their recommendations with respect to

such programs.

(d) There shall be in the Department an Assistant to the Secretary, designated by the Secretary, who shall be responsible for

providing information and advice to nonprofit organizations desiring to sponsor housing projects assisted under programs administered by the Department.
Sec. 4 DEPARTMENT OF HUD ACT 1538

1Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in this part, provides that certain provisions of law requiring submittal to Congress of an annual, semiannual, or other regular periodic report shall cease to be

effective on May 15, 2000. This paragraph is covered by such provision. However, section 1102

of the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569,

set forth post in this part, provides that such section 3003(a)(1) shall not apply to the report

required to be submitted under this paragraph. 2The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1992, Pub. L. 102–139, 105 Stat. 753, provides as follows:

‘‘That there shall be established, in the Office of the Secretary, an Office of Lead Based Paint

Abatement and Poisoning Prevention to be headed by a career Senior Executive Service employee who shall be responsible for all lead-based paint abatement and poisoning prevention ac-

(e)(1)(A) There shall be in the Department a Special Assistant

for Indian and Alaska Native Programs, who shall be located in the

Office of the Assistant Secretary for Public and Indian Housing.

The Special Assistant for Indian and Alaska Native Programs shall

be designated by the Secretary not later than 60 days after the

date of enactment of this subsection.

(B) The Special Assistant for Indian and Alaska Native Programs shall be appointed based solely on merit and shall be covered under the provisions of title 5, United States Code, governing

appointments in the competitive service.

(C) The Special Assistant for Indian and Alaska Native Programs shall be responsible for—

(i) administering, in coordination with the relevant office

in the Department, the provision of housing assistance to Indian tribes or Indian housing authorities under each program

of the Department that provides for such assistance;

(ii) administering the community development block grant

program for Indian tribes under title I of the Housing and

Community Development Act of 1974 and the provision of assistance to Indian tribes under such Act;

(iii) directing, coordinating, and assisting in managing any

regional offices of the Department that administer Indian programs to the extent of such programs; and

(iv) coordinating all programs of the Department relating

to Indian and Alaska Native housing and community development.

(D) The Secretary shall include in the annual report under section 8 a description of the extent of the housing needs for Indian

families and community development needs of Indian tribes in the

United States and the activities of the Department, and extent of

such activities, in meeting such needs.

(2) The Secretary shall, not later than December 1 of each

year, submit to Congress an annual report 1 which shall include—

(A) a description of his actions during the current year and

a projection of his activities during the succeeding years;

(B) estimate of the cost of the projected activities for succeeding fiscal years;

(C) a statistical report on the conditions of Indian and

Alaska Native housing; and

(D) recommendations for such legislative, administrative,

and other actions, as he deems appropriate.

(f) There shall be in the Department a Federal Housing Administration Comptroller, designated by the Secretary, who shall

be responsible for overseeing the financial operations of the Federal

Housing Administration. 2
1539 Sec. 6 DEPARTMENT OF HUD ACT

tivities (including, but not limited to, research, abatement, training regulations and policy

development)’’.

The Departments of Veterans Affairs and Housing and Urban Development, and Independent

Agencies Appropriations Act, 1993, Pub. L. 102–389, 106 Stat. 1593, provides as follows:

‘‘Notwithstanding any other provision of this or any other Act with respect to any fiscal year,

the Office of Lead-Based Paint Abatement and Poisoning Prevention shall be contained within

the Office of the Secretary, and said Office shall have ultimate responsibility within the Department of Housing and Urban Development, except for the Secretary, for all matters related to

the abatement of lead in housing, and research related to lead abatement, consistent with the

responsibilities outlined for the Office in Senate Report 102–107.’’. 1Section 10(b), of Pub. L. 90–83, 81 Stat. 195, 233, approved Sept. 11, 1967, repealed this

subsection, which amended section 158 of the Revised Statutes to include the Department of

Housing and Urban Development. However, in section 10(b) of the Department of Transportation Act, Pub. L. 89–670, 80 Stat. 931, 948, approved October 15, 1966, the Department of

Housing and Urban Development was included in the recodified section 101 of title 5, United

States Code.

TRANSFERS TO DEPARTMENT

SEC. 5. ø42 U.S.C. 3534¿ (a) Except as otherwise provided in

subsection (b) of this section, there are hereby transferred to and

vested in the Secretary all of the functions, powers, and duties of

the Housing and Home Finance Agency, of the Federal Housing

Administration and the Public Housing Administration in that

Agency, and of the heads, and other officers and offices of said

agencies.

(b) The Government National Mortgage Association, together

with its functions, powers, and duties, is hereby transferred to the

Department. The next to the last sentence of section 308 of the

Federal National Mortgage Association Charter Act is hereby repealed.

(c) The President shall undertake studies of the organization

of housing and urban development functions and programs within

the Federal Government, and he shall provide the Congress with

the findings and conclusions of such studies, together with his recommendations regarding the transfer of such functions and programs to or from the Department. Notwithstanding any other provision of this Act, none of the functions of the Secretary of the Interior authorized under the Land and Water Conservation Fund Act

of 1965 (78 Stat. 897) or other functions carried out by the Bureau

of Outdoor Recreation shall be transferred from the Department of

the Interior or in any way be limited geographically unless specifically provided for by reorganization plan pursuant to provisions of

the Reorganization Act of 1949 (63 Stat. 203), as amended, or by

statute.

(d) Notwithstanding any other provision of this Act, the Secretary may not merge or consolidate the Office of Federal Housing

Enterprise Oversight of the Department, or any of the functions or

responsibilities of such Office, with any function or program administered by the Secretary.

CONFORMING AMENDMENTS

SEC. 6. (a) Section 19(d)(1) of title 3 of the United States Code

is hereby amended by striking out the period at the end thereof

and inserting a comma and the following: ‘‘Secretary of Health,

Education, and Welfare, Secretary of Housing and Urban Development.’’

ø(b) [Repealed.]¿ 1
Sec. 7 DEPARTMENT OF HUD ACT 1540

(c) The amendment made by subsection (b) of this section shall

not be construed to make applicable to the Department any provision of law inconsistent with this Act.

ADMINISTRATIVE PROVISIONS

SEC. 7. ø42 U.S.C. 3535¿ (a) The personnel employed in connection with, and the assets, liabilities, contracts, property, records,

and unexpended balances of appropriations, authorizations, allocations, or other funds held, used, arising from, or available or to be

made available in connection with, the functions, powers, and duties transferred by section 5 of this Act are hereby transferred with

such functions, powers, and duties, respectively.

ø(b) [Repealed.]¿

(c) The Secretary is authorized, subject to the civil service and

classification laws, to select, appoint, employ, and fix the compensation of such officers and employees, including attorneys as

shall be necessary to carry out the provisions of this Act and to prescribe their authority and duties: Provided, That any other provisions of law to the contrary notwithstanding, the Secretary may fix

the compensation for not more than six positions in the Department at the annual rate applicable to positions in level V of the

Federal Executive Salary Schedule provided by the Federal Executive Salary Act of 1964.

(d) The Secretary may delegate any of his functions, powers,

and duties to such officers and employees of the Department as he

may designate, may authorize such successive redelegations of such

functions, powers, and duties as he may deem desirable, and may

make such rules and regulations as may be necessary to carry out

his functions, powers, and duties. The second proviso of section

101(c) of the Housing Act of 1949 is hereby repealed.

(e) The Secretary may obtain services as authorized by section

15 of the Act of August 2, 1946, at rates for individuals not to exceed the per diem equivalent to the highest rate for grade GS–18

of the General Schedule under section 5332 of title 5, United States

Code. The Secretary is authorized to enter into contracts with private companies for the provision of such managerial support to the

Federal Housing Administration as the Secretary determines to be

appropriate, including but not limited to the management of insurance risk and the improvement of the delivery of mortgage insurance.

(f) The Secretary is authorized to establish a working capital

fund, to be available without fiscal year limitation, for expenses

necessary for the maintenance and operation of such common administrative services as he shall find to be desirable in the interest

of economy and efficiency in the Department, including such services as a central supply service for stationery and other supplies

and equipment for which adequate stocks may be maintained to

meet in whole or in part the requirements of the Department and

its agencies; central messenger, mail, telephone, and other communications services; office space; central services for document reproduction and for graphics and visual aids; and a central library service. In addition to amounts appropriated to provide capital for said

fund, which appropriations are hereby authorized, the fund shall be

capitalized by transfer to it of such stocks of supplies and equip-
1541 Sec. 7 DEPARTMENT OF HUD ACT

ment on hand or on order as the Secretary shall direct. Such funds

shall be reimbursed from available funds of agencies and offices in

the Department for which services are performed at rates which

will return in full all expenses of operation, including reserves for

accrued annual leave and for depreciation of equipment.

(g) The Secretary shall cause a seal of office to be made for the

Department of such device as he shall approve, and judicial notice

shall be taken of such seal.

(h) Except as such authority is otherwise expressly provided in

any other Act administered by the Secretary, such financial transactions of the Secretary as the making of loans or grants (and

vouchers approved by the Secretary in connection with such financial transactions) shall be final and conclusive upon all officers of

the Government. Funds made available to the Secretary pursuant

to any provision of law for such financial transactions shall be deposited in a checking account or accounts with the Treasurer of the

United States. Such funds and any receipts and assets obtained or

held by the Secretary in connection with such financial transactions shall be available, in such amounts as may from year to

year be authorized by the Congress, for the administrative expenses of the Secretary in connection with such financial transactions. Notwithstanding the provisions of any other law, the Secretary may, with the approval of the Comptroller General, consolidate into one or more accounts for banking and checking purposes

all cash obtained or held in connection with such financial transactions, including amounts appropriated, from whatever source derived.

(i) Except as such authority is otherwise expressly provided in

any other Act administered by the Secretary, the Secretary is authorized to—

(1) foreclose on any property or commence any action to

protect or enforce any right conferred upon him by any law,

contract, or other agreement, and bid for and purchase at any

foreclosure or any other sale any property in connection with

which he has made a loan or grant. In the event of any such

acquisition, the Secretary may, notwithstanding any other provision of law relating to the acquisition, handling, or disposal

of real property by the United States, complete, administer, remodel and convert, dispose of lease, and otherwise deal with,

such property: Provided, That any such acquisition of real

property shall not deprive any State or political subdivision

thereof of its civil or criminal jurisdiction in and over such

property or impair the civil rights under the State or local laws

of the inhabitants on such property: Provided further, That section 3709 of the Revised Statutes shall not apply to any contract for services or supplies on account of any property so acquired or owned if the amount of such contract does not exceed

$2,500;

(2) enter into agreements to pay annual sums in lieu of

taxes to any State or local taxing authority with respect to any

real property so acquired or owned;

(3) sell or exchange at public or private sale, or lease, real

or personal property, and sell or exchange any securities or obligations, upon such terms as he may fix;
Sec. 7 DEPARTMENT OF HUD ACT 1542

(4) obtain insurance against loss in connection with property and other assets held;

(5) consent to the modification, with respect to the rate of

interest, time of payment of any installment of principal or interest, security, or any other term of any contract or agreement

to which he is a party or which has been transferred to him;

and

(6) include in any contract or instrument such other covenants, conditions, or provisions as he may deem necessary, including any provisions relating to the authority or requirements under paragraph (5).

(j) Notwithstanding any other provision of law the Secretary is

authorized to establish fees and charges, chargeable against program beneficiaries and project participants, which shall be adequate to cover over the long run, costs of inspection, project review

and financing service, audit by Federal or federally authorized

auditors, and other beneficial rights, privileges, licenses, and services. Such fees and charges heretofore or hereafter collected shall

be considered nonadministrative and shall remain available for operating expenses of the Department in providing similar services

on a consolidated basis.

(k)(1) The Secretary is authorized to accept and utilize voluntary and uncompensated services and accept, hold, administer,

and utilize gifts and bequests of property, both real and personal,

for the purpose of aiding or facilitating the work of the Department. Gifts and bequests of money and the proceeds from sales of

other property received as gifts or bequest shall be deposited in the

Treasury in a separate fund and shall be disbursed upon order of

the Secretary. Property accepted pursuant to this paragraph, and

the proceeds thereof, shall be used as nearly as possible in accordance with the terms of the gift or bequest.

(2) For the purpose of Federal income, estate, and gift taxes,

property accepted under paragraph (1) shall be considered as a gift

or bequest to or for use of the United States.

(3) Upon the request of the Secretary, the Secretary of the

Treasury may invest and reinvest in securities of the United States

or in securities guaranteed as to principal and interest by the

United States any moneys contained in the fund provided for in

paragraph (1). Income accruing from such securities and from any

other property held by the Secretary pursuant to paragraph (1)

shall be deposited to the credit of the fund and shall be disbursed

upon order of the Secretary.

(l) The Secretary is authorized to appoint, without regard to

the civil service laws, such advisory committees as shall be appropriate for the purpose of consultation with and advice to the Department in performance of its functions. Members of such committees, other than those regularly employed by the Federal Government, while attending meetings of such committees or otherwise

serving at the request of the Secretary, may be paid compensation

at rates not exceeding those authorized for individuals under subsection (e) of this section, and while so serving away from their

homes or regular places of business, may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by

section 5703 of title 5, United States Code, for persons in the Government service employed intermittently.
1543 Sec. 7 DEPARTMENT OF HUD ACT

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services. 2Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in this part, provides that certain provisions of law requiring submittal to Congress of an annual, semiannual, or other regular periodic report shall cease to be

effective on May 15, 2000. This paragraph is covered by such provision. However, section 1102

of the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569,

set forth post in this part, provides that such section 3003(a)(1) shall not apply to the report

required to be submitted under this paragraph.

(m) Whenever he shall determine that, because of location, or

other considerations, any rental housing project assisted under title

II of the National Housing Act or title I of the Housing and Urban

Development Act of 1965 could ordinarily be expected substantially

to serve the family housing needs of lower income military personnel serving on active duty, the Secretary is authorized to provide for or approve such preference or priority of occupancy of such

project by such military personnel as he shall determine is appropriate to assure that the project will serve their needs on a continuing basis notwithstanding the frequency with which individual

members of such personnel may be transferred or reassigned to

new duty stations.

(n) Notwithstanding any other provision of law, the Secretary

is authorized by contract or otherwise to establish, equip, and operate a day care center facility or facilities, or to assist in establishing, equipping, and operating interagency day care facilities for

the purpose of serving children who are members of households of

employees of the Department. The Secretary is authorized to establish or provide for the establishment of appropriate fees and

charges to be chargeable against the Department of Housing and

Urban Development employees or others who are beneficiaries of

services provided by any such day care center. In addition, limited

start-up costs may be provided by the Secretary in an amount limited to 3 per centum of the first year’s operating budget, but not

to exceed $3,500.

(o)(1) Notwithstanding any other provision of law, the Secretary shall transmit to the Committee on Banking, Housing, and

Urban Affairs of the Senate and the Committee on Banking, Finance and Urban Affairs of the House of Representatives 1 an agenda of all rules or regulations which are under development or review by the Department. Such an agenda shall be transmitted to

such Committees within 30 days of the date of enactment of this

subsection and at least semiannually thereafter. 2

(2)(A) Any rule or regulation which is on any agenda submitted

under paragraph (1) may not be published for comment prior to or

during the 15-calendar day period beginning on the day after the

date on which such agenda was transmitted. If within such period,

either Committee notifies the Secretary in writing that it intends

to review any rule or regulation or portion thereof which appears

on the agenda, the Secretary shall submit to both Committees a

copy of any such rule or regulation, in the form it is intended to

be proposed, at least 15 calendar days prior to its being published

for comment in the Federal Register.
Sec. 7 DEPARTMENT OF HUD ACT 1544

(B) Any rule or regulation which has not been published for

comment before the date of enactment of this subsection and which

does not appear on an agenda submitted under paragraph (1) shall

be submitted to both such Committees at least 15 calendar days

prior to its being published for comment.

(3) No rule or regulation may become effective until after the

expiration of the 30-calendar day period beginning on the day after

the day on which such rule or regulation is published as final. Any

regulation implementing any provision of the Department of Housing and Urban Development Reform Act of 1989 that authorizes

the imposition of a civil money penalty may not become effective

until after the expiration of a public comment period of not less

than 60 days.

(4) The provisions of paragraphs (2) and (3) may be waived

upon the written request of the Secretary, if agreed to by the

Chairmen and Ranking Minority Members of both Committees.

ø(5) [Repealed.]¿

ø(6) [Repealed.]¿

(7) The Secretary shall include with each rule or regulation required to be transmitted to the Committees under this subsection

a detailed summary of all changes required by the Office of Management and Budget that prohibit, modify, postpone, or disapprove

such rule or regulation in whole or part.

(p) A plan for the reorganization of any regional, area, insuring, or other field office of the Department of Housing and Urban

Development may take effect only upon the expiration of 90 days

after publication in the Federal Register of a cost-benefit analysis

of the effects of the plan on each office involved. Such cost-benefit

analysis shall include, but not be limited to—

(1) an estimate of cost savings supported by the background information detailing the source and substantiating the

amount of the savings;

(2) an estimate of the additional cost which will result

from the reorganization;

(3) a study of the impact on the local economy; and

(4) an estimate of the effect of the reorganization on the

availability, accessibility, and quality of services provided for

recipients of those services.

Where any of the above factors cannot be quantified, the Secretary

shall provide a statement on the nature and extent of those factors

in the cost-benefit analysis.

(q)(1) Any waiver of regulations of the Department shall be in

writing and shall specify the grounds for approving the waiver.

(2) The Secretary may delegate authority to approve a waiver

of a regulation only to an individual of Assistant Secretary rank or

equivalent rank, who is authorized to issue the regulation to be

waived.

(3) The Secretary shall notify the public of all waivers of regulations approved by the Department. The notification shall be included in a notice in the Federal Register published not less than

quarterly. Each notification shall cover the period beginning on the

day after the last date covered by the prior notification, and shall—

(A) identify the project, activity, or undertaking involved;

(B) describe the nature of the requirement that has been

waived and specify the provision involved;
1545 Sec. 7 DEPARTMENT OF HUD ACT

1Section 501(a) of the Native American Housing Assistance and Self-Determination Act of

1996 (P.L. 104–330; 110 Stat. 4041) repealed title II of the United States Housing Act of 1937. 2Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

(C) specify the name and title of the official who granted

the waiver request;

(D) include a brief description of the grounds for approval

of the waiver; and

(E) state how more information about the waiver and a

copy of the request and the approval may be obtained.

(4) Any waiver of a provision of a handbook of the Department

shall—

(A) be in writing;

(B) specify the grounds for approving the waiver; and

(C) be maintained in indexed form and made available for

public inspection for not less than the 3-year period beginning

on the date of the waiver.

(r)(1) For the programs listed in paragraph (2), amounts appropriated under this subsection shall be available to the Secretary for

evaluating and monitoring of all such programs (including all aspects of the public housing and section 202 programs) and collecting and maintaining data for such purposes. The Secretary

shall expend amounts made available under this subsection in accordance with the need and complexity of evaluating and monitoring each such program and collecting and maintaining data for

such purposes.

(2) The programs subject to this subsection shall be the programs authorized under—

(A) titles I and II 1 of the United States Housing Act of

1937;

(B) section 202 of the Housing Act of 1959;

(C) section 106 of the Housing and Urban Development

Act of 1968;

(D) the Fair Housing Act;

(E) title I and section 810 of the Housing and Community

Development Act of 1974;

(F) section 201 of the Housing and Community Development Amendments of 1978;

(G) the Congregate Housing Services Act of 1978;

(H) section 222 of the Housing and Urban-Rural Recovery

Act of 1983;

(I) section 561 of the Housing and Community Development Act of 1987;

(J) title IV of the Stewart B. McKinney Homeless Assistance Act 2; and

(K) titles II, III, and IV and section 811 of the CranstonGonzalez National Affordable Housing Act.

(3) In conducting evaluations and monitoring pursuant to the

authority under this subsection, and collecting and maintaining

data pursuant to the authority under this subsection, the Secretary

shall determine any need for additional staff and funding relating

to evaluating and monitoring the programs under paragraph (2)

and collecting and maintaining data for such purposes.
Sec. 8 DEPARTMENT OF HUD ACT 1546

1Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in this part, provides that certain provisions of law requiring submittal to Congress of an annual, semiannual, or other regular periodic report shall cease to be

effective on May 15, 2000. This section is covered by such provision. However, section 1102 of

the American Homeownership and Economic Opportunity Act of 2000, Public Law 106–569, set

forth post in this part, provides that such section 3003(a)(1) shall not apply to the report required to be submitted under this section.

See, also, sections 802 and 817 of the Housing Act of 1954 and section 166 of the Housing

and Community Development Act of 1987, which are set forth, post, this part.

(4)(A) The Secretary may provide for evaluation and monitoring under this subsection and collecting and maintaining data

for such purposes directly or by grants, contracts, or interagency

agreements. Not more than 50 percent of the amounts made available under paragraph (1) may be used for grants, contracts, or

interagency agreements.

(B) Any amounts not used for grants, contracts, or interagency

agreements under subparagraph (A) shall be used in a manner that

increases and strengthens the ability of the Department to monitor

and evaluate the programs under paragraph (2) and to collect and

maintain data for such purposes through officers and employees of

the Department.

(5) There are authorized to be appropriated to carry out this

subsection such sums as may be necessary for fiscal year 1993 and

fiscal year 1994. Such amounts shall remain available until expended.

(s)(1) Notwithstanding any other provision of law, there is authorized to be appropriated for salaries and expenses to carry out

the purposes of this section $988,000,000 for fiscal year 1993 and

$1,029,496,000 for fiscal year 1994.

(2) Of the amounts authorized to be appropriated by this sec- tion, $96,000,000 shall be available for each of the fiscal years 1993

and 1994, which amounts shall be used to provide staff in regional,

field, or zone offices of the Department of Housing and Urban Development to review, process, approve, and service applications for

mortgage insurance under title II of the National Housing Act for

housing consisting of 5 or more dwelling units.

(3) Of the amounts authorized to be appropriated to carry out this section, not less than $5,000,000 of such amount shall be available for each fiscal year exclusively for the purposes of providing

ongoing training and capacity building for Department personnel.

ANNUAL REPORT

SEC. 8. 1 ø42 U.S.C. 3536¿ The Secretary shall, as soon as practicable after the end of each calendar year, make a report to the

President for submission to the Congress on the activities of the

Department during the preceding calendar year. The report required under this section shall include the reports required under

paragraphs (2) and (6) of section 808(e) of the Civil Rights Act of

1968, the reports required under subsections (a) and (b) of section

1061 of the Housing and Community Development Act of 1992, the

report required under section 802 of the Housing Act of 1954, and

the report required under section 4(e)(2) of this Act.

SAVINGS PROVISIONS

SEC. 9. ø42 U.S.C. 3531 note¿ (a) No cause of action by or

against any agency whose functions are transferred by this Act, or
1547 Sec. 11 DEPARTMENT OF HUD ACT

1The date of enactment was September 9, 1965.

by or against any officer of any agency in his official capacity, shall

abate by reason of this enactment. Such causes of action may be

asserted by or against the United States or such official of the Department as may be appropriate.

(b) No suit, action, or other proceeding commenced by or

against any agency whose functions are transferred by this Act, or

by or against any officer of any such agency in his official capacity,

shall abate by reason of the enactment of this Act. A court may at

any time during the pendency of the litigation, on its own motion

or that of any party, order that the same may be maintained by

or against the United States or such official of the Department as

may be appropriate.

(c) Except as may be otherwise expressly provided in this Act,

all powers and authorities conferred by this Act shall be cumulative and additional to and not in derogation of any powers and

authorities otherwise existing. All rules, regulations, orders, authorizations, delegations, or other actions duly issued, made, or

taken by or pursuant to applicable law, prior to the effective date

of this Act, by any agency, officer, or office pertaining to any functions, powers, and duties transferred by this Act shall continue in

full force and effect after the effective date of this Act until modified or rescinded by the Secretary or such other officer or office of

the Department as, in accordance with applicable law, may be appropriate. With respect to any function, power, or duty transferred

by or under this Act and exercised hereafter, reference in another

Federal law to the Housing and Home Finance Agency or to any

officer, office, or agency therein, except the Federal National Mortgage Association and its officers, shall be deemed to mean the Secretary. The positions and agencies heretofore established by law in

connection with the functions, powers, and duties transferred

under section 5(a) of this Act shall lapse.

SEPARABILITY

SEC. 10. ø42 U.S.C. 3537¿ Notwithstanding any other evidence

of the intent of Congress, it is hereby declared to be the intent of

Congress that if any provision of this Act, or the application thereof

to any persons or circumstances, shall be adjudged by any court of

competent jurisdication to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Act or its application to other persons and circumstances, but shall be confined in

its operation to the provision of this Act, or the application thereof

to the persons and circumstances, directly involved in the controversy in which such judgment shall have been rendered.

EFFECTIVE DATE AND INTERIM APPOINTMENTS

SEC. 11. ø42 U.S.C. 3531 note¿ (a) The provisions of this Act

shall take effect upon the expiration of the first period of sixty calendar days following the date on which this Act is approved by the

President,1 or on such earlier date as the President shall specify by

Executive order published in the Federal Register, except that any

of the officers provided for in sections 3(a), 4(a) and 4(b) of this Act
Sec. 12 DEPARTMENT OF HUD ACT 1548

may be nominated and appointed, as provided in such sections, at

any time after the date this Act is approved by the President.

(b) In the event that one or more officers required by this Act

to be appointed, by and with the advice and consent of the Senate,

shall not have entered upon office on the effective date of this Act,

the President may designate any person who was an officer of the

Housing and Home Finance Agency immediately prior to said effective date to act in such office until the office is filled as provided

in this Act or until the expiration of the first period of sixty days

following said effective date, whichever shall first occur. While so

acting such persons shall receive compensation at the rates provided by this Act for the respective offices in which they act.

PROHIBITION OF ADVANCE DISCLOSURE OF FUNDING DECISIONS

SEC. 12. ø42 U.S.C. 3537a¿ (a) PROHIBITED ACTIONS.—During

any selection process, no officer or employee of the Department of

Housing and Urban Development shall knowingly disclose any covered selection information regarding such selection, directly or indirectly, to any person other than a person authorized by the Secretary to receive such information.

(b) ADMINISTRATIVE REMEDIES.—If the Secretary receives or

obtains information providing a reasonable basis to believe that a

violation of subsection (a) has occurred, the Secretary shall—

(1) in the case of a selection that has not been made, determine whether to terminate the selection process or take other

appropriate actions; and

(2) in the case of a selection that has been made, determine whether to—

(A) void or rescind the selection, subject to review and

determination on the record after opportunity for a hearing;

(B) impose sanctions upon the violating applicant selected, subject to review and determination on the record

after opportunity for a hearing;

(C) permit the violating applicant selected to continue

to participate in the program; or

(D) take any other actions that the Secretary considers

appropriate.

(c) CIVIL MONEY PENALTIES.—

(1) IN GENERAL.—Whenever any employee of the Department knowingly and materially violates the prohibition in subsection (a), the Secretary may impose a civil money penalty on

the employee in accordance with the provisions of this subsection. This penalty shall be in addition to any other available

civil remedy or any available criminal penalty and may be imposed whether or not the Secretary takes other disciplinary actions.

(2) AMOUNT.—The amount of the penalty, as determined

by the Secretary, may not exceed $10,000 for each violation.

(3) AGENCY PROCEDURES.—

(A) ESTABLISHMENT.—The Secretary shall establish

standards and procedures governing the imposition of civil

money penalties under this subsection. The standards and

procedures—
1549 Sec. 12 DEPARTMENT OF HUD ACT

(i) shall provide for the Secretary or other official

of the Department to make the determination to impose a penalty or to use an administrative entity to

make the determination;

(ii) shall provide for the imposition of a penalty

only after the employee has been given an opportunity

for a hearing on the record; and

(iii) may provide for review of any determination

or order, or interlocutory ruling, arising from a hearing.

(B) FINAL ORDERS.—If no hearing is requested within

15 days of receipt of the notice of opportunity for hearing,

the imposition of the penalty shall constitute a final and

unappealable order. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If the Secretary does

not review the determination or order within 90 days of

the issuance of the determination or order, the determination or order shall be final.

(C) FACTORS IN DETERMINING AMOUNT OF PENALTY.— In determining the amount of a penalty under paragraph

(2), consideration shall be given to such factors as the

gravity of the offense, any history of prior disclosures of information on pending funding decisions made after the

date of enactment of this section, ability to pay the penalty, injury to the public, benefits received, deterrence of

future violations, and such other factors as the Secretary

may determine in regulations to be appropriate.

(D) REVIEWABILITY OF IMPOSITION OF A PENALTY.—The

Secretary’s determination or order imposing a penalty

under paragraph (1) shall not be subject to review, except

as provided in paragraph (4).

(4) JUDICIAL REVIEW OF AGENCY DETERMINATION.—

(A) IN GENERAL.—After exhausting all administrative

remedies established by the Secretary under paragraph

(3)(A), an employee against whom the Secretary has imposed a civil money penalty under paragraph (1) may obtain a review of the penalty and such ancillary issues

(such as any administrative sanctions under 24 C.F.R. part

25) as may be addressed in the notice of determination to

impose a penalty under paragraph (3)(A)(i) in the appropriate court of appeals of the United States, by filing in

such court, within 20 days after the entry of such order or

determination, a written petition praying that the Secretary’s order or determination be modified or be set aside

in whole or in part.

(B) OBJECTIONS NOT RAISED IN HEARING.—The court

shall not consider any objection that was not raised in the

hearing conducted pursuant to paragraph (3)(A) unless a

demonstration is made of extraordinary circumstances

causing the failure to raise the objection. If any party demonstrates to the satisfaction of the court that additional

evidence not presented at such hearing is material and

that there were reasonable grounds for the failure to

present such evidence at the hearing, the court shall re-
Sec. 12 DEPARTMENT OF HUD ACT 1550

mand the matter to the Secretary for consideration of such

additional evidence.

(C) SCOPE OF REVIEW.—The decisions, findings, and

determinations of the Secretary shall be reviewed pursuant to section 706 of title 5, United States Code.

(D) ORDER TO PAY PENALTY.—Notwithstanding any

other provision of law, in any such review, the court shall

have the power to order payment of the penalty imposed

by the Secretary.

(5) ACTION TO COLLECT PENALTY.—If any employee fails to

comply with the Secretary’s determination or order imposing a

civil money penalty under paragraph (1), after the determination or order is no longer subject to review as provided by paragraphs (3)(A) and (4), the Secretary may request the Attorney

General of the United States to bring an action in an appropriate United States district court to obtain a monetary judgment against the employee and such other relief as may be

available. The monetary judgment may, in the court’s discretion, include the attorneys’ fees and other expenses incurred by

the United States in connection with the action. In an action

under this subsection, the validity and appropriateness of the

Secretary’s determination or order imposing the penalty shall

not be subject to review.

(6) SETTLEMENT BY SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may

be, or has been, imposed under this subsection.

(7) DEPOSIT OF PENALTIES.—The Secretary shall deposit all

civil money penalties collected under this subsection into miscellaneous receipts of the Treasury.

(d) CRIMINAL PENALTIES.—Whoever willfully violates subsection (a) by making a disclosure prohibited by subsection (a) to

any applicant, or any officer, employee, representative, agent, or

consultant of any applicant, shall be imprisoned not more than 5

years, or fined in accordance with title 18, United States Code, or

both.

(e) DEFINITIONS.—For purposes of this section:

(1) APPLICANT.—The term ‘‘applicant’’ means any applicant

or candidate that is being considered for receiving assistance.

(2) ASSISTANCE.—The term ‘‘assistance’’ means any grant,

loan, subsidy, guarantee, or other financial assistance under a

program administered by the Secretary that provides by statute, regulation, or otherwise for the competitive distribution of

such assistance. The term does not include any mortgage insurance provided under a program administered by the Secretary.

(3) COVERED SELECTION INFORMATION.—The term ‘‘covered

selection information’’ means—

(A) any information that is contained in any application or request for assistance, or any information regarding the decision of the Secretary to make available assistance or other information that is determined by the Secretary to be information that is not generally available to

the public (not including program requirements and timing

of the decision to make assistance available); and
1551 Sec. 14 DEPARTMENT OF HUD ACT

(B) any information that is required by statute, regulation, or order to be confidential.

(4) KNOWINGLY.—The term ‘‘knowingly’’ means having actual knowledge of or acting with deliberate ignorance of or

reckless disregard for the prohibitions under this section.

(5) SELECTION.—The term ‘‘selection’’ means the determination of which applicants for assistance are to receive assistance under the program.

(6) SELECTION PROCESS.—The term ‘‘selection process’’

means the period with respect to a selection for assistance that

begins with the development, preparation, and issuance of a

solicitation or request for applications for the assistance and

concludes with the selection of recipients of assistance, and includes the evaluation of applications.

(f) REGULATIONS.—The Secretary shall issue such regulations

as the Secretary deems appropriate to implement this section.

(g) APPLICABILITY.—This section shall apply only with respect

to violations that occur on or after the date of the enactment of the

Department of Housing and Urban Development Reform Act of

1989.

øREGISTRATION OF CONSULTANTS¿

øSEC. 13. [Repealed.]¿

PROHIBITION OF LUMP-SUM PAYMENTS

SEC. 14. ø42 U.S.C. 3537c¿ In providing relocation assistance

in connection with any program administered by the Department

of Housing and Urban Development, the Secretary may not make

lump-sum payments to any displaced residential tenant, except

where necessary to cover—

(1) moving expenses;

(2) a downpayment on the purchase of a replacement residence, including a condominium unit or membership in a cooperative housing association; or

(3) any incidental expenses related to paragraph (1) or (2).
1552

HUD ACCOUNTABILITY AND APPLICANT DISCLOSURES

EXCERPT FROM DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT REFORM ACT OF 1989

[Public Law 101–235; 103 Stat. 1987; 42 U.S.C. 3545]

SEC. 102. ø42 U.S.C. 3545¿ HUD ACCOUNTABILITY.

(a) NOTICE REGARDING ASSISTANCE.—

(1) PUBLICATION OF NOTICE OF AVAILABILITY.—The Secretary shall publish in the Federal Register notice of the availability of any assistance under any program or discretionary

fund administered by the Secretary.

(2) PUBLICATION OF APPLICATION PROCEDURES.—The Secretary shall publish in the Federal Register a description of the

form and procedures by which application for the assistance

may be made, and any deadlines relating to the award or allocation of the assistance. Such description shall be designed to

help eligible applicants to apply for such assistance.

(3) PUBLICATION OF SELECTION CRITERIA.—Not less than 30

days before any deadline by which applications or requests for

assistance under any program or discretionary fund administered by the Secretary must be submitted, the Secretary shall

publish in the Federal Register the criteria by which selection

for the assistance will be made. Subject to section 213 of the

Housing and Community Development Act of 1974, such criteria shall include any objective measures of housing need,

project merit, or efficient use of resources that the Secretary

determines are appropriate and consistent with the statute

under which the assistance is made available.

(4) DOCUMENTATION OF DECISIONS.—

(A) The Secretary shall award or allocate assistance

only in response to a written application in a form approved in advance by the Secretary, except where other

award or allocation procedures are specified in statute.

(B) The Secretary shall ensure that documentation

and other information regarding each application for assistance is sufficient to indicate the basis on which any

award or allocation was made or denied. The preceding

sentence shall apply to—

(i) any application for an award or allocation of assistance made by the Secretary to a State, unit of general local government, or other recipient of assistance,

and

(ii) any application for a subsequent award or allocation of such assistance by such State, unit of general

local government or other recipient.

(C)(i) The Secretary shall notify the public of all funding decisions made by the Department. The Secretary shall
1553 Sec. 102 ACCOUNTABILITY AND APPLICANT DISCLOSURES

require any State or unit of general local government to

notify the public of the award or allocation of such funding

to subsequent recipients. The notification shall include the

following elements for each funding decision:

(I) the name and address of each funding recipient;

(II) the name or other means of identifying the

project, activity, or undertaking for each funding recipient;

(III) the dollar amount of the funding for each

project, activity, or undertaking;

(IV) the citation to the statutory, regulatory, or

other criteria under which the funding decision was

made; and

(V) such additional information as the Secretary

deems appropriate for a clear and full understanding

of the funding decision.

(ii) The notification referred to in clause (i) of this subsection shall be published as a Notice in the Federal Register at least quarterly.

(iii) For purposes of this subparagraph, the term

‘‘funding decision’’ means the decision of the Secretary to

make available grants, loans, or any other form of financial assistance to an individual or to an entity, including

(but not limited to) a State or local government or agency

thereof (including a public housing agency), an Indian

tribe, or a nonprofit organization, under any program administered by the Department that provides, by statute,

regulation, or otherwise, for the competitive distribution of

financial assistance.

(D) The Secretary shall publish a notice in the Federal

Register at least annually informing the public of the allocation of assistance under section 213(d)(1)(A) of the Housing and Community Development Act of 1974.

(E) The Secretary shall ensure that each application

and all related documentation and other information referred to in subparagraph (B), including each letter of support, is readily available for public inspection for a period

of not less than 5 years, beginning not less than 30 days

following the date on which the award or allocation is

made.

(5) EMERGENCY EXCEPTION.—The Secretary may waive the

requirements of paragraphs (1), (2), and (3) if the Secretary determines that the waiver is required for appropriate response

to an emergency. Not less than 30 days after providing a waiver under the preceding sentence, the Secretary shall publish in

the Federal Register the Secretary’s reasons for so doing.

(b) DISCLOSURES BY APPLICANTS.—The Secretary shall require

the disclosure of information with respect to any application for assistance within the jurisdiction of the Department for a project application submitted to the Secretary or to any State or unit of general local government by any applicant who has received or, in the

determination of the Secretary, can reasonably be expected to receive assistance within the jurisdiction of the Department in excess
Sec. 102 ACCOUNTABILITY AND APPLICANT DISCLOSURES 1554

1See section 911 of the Housing and Community Development Act of 1992, Pub. L. 102–550,

which is set forth, post, this part.

of $200,000 in the aggregate during any fiscal year or such lower

amount as the Secretary may establish by regulation. Such information shall include the following:

(1) OTHER GOVERNMENT ASSISTANCE.—Information regarding any related assistance from the Federal Government, a

State, or a unit of general local government, or any agency or

instrumentality thereof, that is expected to be made available

with respect to the project or activities for which the applicant

is seeking assistance. Such related assistance shall include but

not be limited to any loan, grant, guarantee, insurance, payment, rebate, subsidy, credit, tax benefit, or any other form of

direct or indirect assistance.

(2) INTERESTED PARTIES.—The name and pecuniary interest of any person who has a pecuniary interest in the project

or activities for which the applicant is seeking assistance. Persons with a pecuniary interest in the project or activity shall

include but not be limited to any developers, contractors, and

consultants involved in the application for assistance or the

planning, development, or implementation of the project or activity. For purposes of this paragraph, residency of an individual in housing for which assistance is being sought shall

not, by itself, be considered a pecuniary interest.

(3) EXPECTED SOURCES AND USES.—A report satisfactory to

the Secretary of the expected sources and uses of funds that

are to be made available for the project or activity.

(c) UPDATING OF DISCLOSURE.—During the period when an application is pending or assistance is being provided, the applicant

shall update the disclosure required under the previous subsection

within 30 days of any substantial change.

(d) LIMITATION OF ASSISTANCE.—The Secretary shall certify

that assistance within the jurisdiction of the Department to any

housing project shall not be more than is necessary to provide affordable housing after taking account of assistance described in

subsection (b)(1). The Secretary shall adjust the amount of assistance awarded or allocated to an applicant to compensate in whole

or in part, as the Secretary determines to be appropriate, for any

changes reported under subsection (c). 1

(e) ADMINISTRATIVE REMEDIES.—If the Secretary receives or obtains information providing a reasonable basis to believe that a violation of subsection (b) or (c) has occurred, the Secretary shall—

(1) in the case of a selection that has not been made, determine whether to terminate the selection process or take other

appropriate actions; and

(2) in the case of a selection that has been made, determine whether to—

(A) void or rescind the selection, subject to review and

determination on the record after opportunity for a hearing;

(B) impose sanctions upon the violator, including debarment, subject to review and determination on the

record after opportunity for a hearing;
1555 Sec. 102 ACCOUNTABILITY AND APPLICANT DISCLOSURES

(C) recapture any funds that have been disbursed;

(D) permit the violating applicant selected to continue

to participate in the program; or

(E) take any other actions that the Secretary considers

appropriate.

The Secretary shall publish in the Federal Register a descriptive

statement of each determination made and action taken under this

subsection.

(f) CIVIL MONEY PENALTIES.— (1) IN GENERAL.—Whenever any person knowingly and materially violates any provision of subsection (b) or (c), the Secretary may impose a civil money penalty on that person in accordance with the provisions of this section. This penalty shall

be in addition to any other available civil remedy or any available criminal penalty, and may be imposed whether or not the

Secretary imposes other administrative sanctions.

(2) AMOUNT OF PENALTY.—The amount of the penalty, as determined by the Secretary, may not exceed $10,000 for each

violation.

(g) AGENCY PROCEDURES.—(1) The Secretary shall establish

standards and procedures governing the imposition of civil money

penalties under subsection (f). These standards and procedures—

(A) shall provide for the Secretary to make the determination to impose the penalty or to use an administrative entity

to make the determination;

(B) shall provide for the imposition of a penalty only after

the person has been given an opportunity for a hearing on the

record; and

(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from a hearing.

If no hearing is requested within 15 days of receipt of the notice

of opportunity for hearing, the imposition of the penalty shall constitute a final and unappealable determination. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If the Secretary does

not review the determination or order, the determination or order

shall be final.

(2) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (f), consideration

shall be given to such factors as the gravity of the offense, ability

to pay the penalty, injury to the public, benefits received, deterrence of future violations, and such other factors as the Secretary

may determine in regulations to be appropriate.

(3) REVIEWABILITY OF IMPOSITION OF A PENALTY.—The Secretary’s determination or order imposing a penalty under subsection (f) shall not be subject to review, except as provided in subsection (h).

(h) JUDICIAL REVIEW OF AGENCY DETERMINATION.—

(1) IN GENERAL.—After exhausting all administrative remedies established by the Secretary under subsection (g)(1), a

person against whom the Secretary has imposed a civil money

penalty under subsection (f) may obtain a review of the penalty

and such ancillary issues as may be addressed in the notice of
Sec. 102 ACCOUNTABILITY AND APPLICANT DISCLOSURES 1556

determination to impose a penalty under subsection (g)(1)(A) in

the appropriate court of appeals of the United States, by filing

in such court, within 20 days after the entry of such order or

determination, a written petition praying that the order or determination of the Secretary be modified or be set aside in

whole or in part.

(2) OBJECTIONS NOT RAISED IN HEARING.—The court shall

not consider any objection that was not raised in the hearing

conducted pursuant to subsection (g)(1) unless a demonstration

is made of extraordinary circumstances causing the failure to

raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence not presented at the

hearing is material and that there were reasonable grounds for

the failure to present such evidence at the hearing, the court

shall remand the matter to the Secretary for consideration of

such additional evidence.

(3) SCOPE OF REVIEW.—The decisions, findings, and determinations of the Secretary shall be reviewed pursuant to section 706 of title 5, United States Code.

(4) ORDER TO PAY PENALTY.—Notwithstanding any other

provision of law, in any such review, the court shall have the

power to order payment of the penalty imposed by the Secretary.

(i) ACTION TO COLLECT THE PENALTY.—If any person fails to

comply with the determination or order of the Secretary imposing

a civil money penalty under subsection (f), after the determination

or order is no longer subject to review as provided by subsections

(g)(1) and (h), the Secretary may request the Attorney General of

the United States to bring an action in an appropriate United

States district court to obtain a monetary judgment against the

person and such other relief as may be available. The monetary

judgment may, in the court’s discretion, include the attorneys’ fees

and other expenses incurred by the United States in connection

with the action. In an action under this subsection, the validity and

appropriateness of the Secretary’s determination or order imposing

the penalty shall not be subject to review.

(j) SETTLEMENT BY THE SECRETARY.—The Secretary may compromise, modify, or remit any civil money penalty which may be,

or has been, imposed under this section.

(k) REGULATIONS.—The Secretary shall issue such regulations

as the Secretary deems appropriate to implement this section.

(l) DEPOSIT OF PENALTIES.—The Secretary shall deposit all civil

money penalties collected under this section into miscellaneous receipts of the Treasury.

(m) DEFINITIONS.—For the purpose of this section—

(1) The term ‘‘Department’’ means the Department of

Housing and Urban Development.

(2) The term ‘‘Secretary’’ means the Secretary of Housing

and Urban Development.

(3) The term ‘‘person’’ means an individual (including a

consultant, lobbyist, or lawyer), corporation, company, association, authority, firm, partnership, society, State, local government, or any other organization or group of people.
1557 Sec. 102 ACCOUNTABILITY AND APPLICANT DISCLOSURES

(4) The term ‘‘assistance within the jurisdiction of the Department’’ includes any contract, grant, loan, cooperative

agreement, or other form of assistance, including the insurance

or guarantee of a loan, mortgage, or pool of mortgages.

(5) The term ‘‘knowingly’’ means having actual knowledge

of or acting with deliberate ignorance of or reckless disregard

for the prohibitions under this section.

(n) EFFECTIVE DATE.—This section shall take effect on the date

specified in regulations implementing this section that are issued

by the Secretary after notice and public comment.
1558

1Probably intended to refer to the Department of Housing and Urban Development Reform

Act of 1989, approved December 15, 1989, which is set forth ante, this part.

SUBSIDY LAYERING REVIEW

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3875; 42 U.S.C. 3545 note]

SEC. 911. ø42 U.S.C. 3545 note¿ SUBSIDY LAYERING REVIEW.

(a) CERTIFICATION OF SUBSIDY LAYERING COMPLIANCE.—The

requirements of section 102(d) of the Department of Housing and

Urban Development Reform Act of 1989 may be satisfied in connection with a project receiving assistance under a program that is

within the jurisdiction of the Department of Housing and Urban

Development and under section 42 of the Internal Revenue Code of

1986 by a certification by a housing credit agency to the Secretary,

submitted in accordance with guidelines established by the Secretary, that the combination of assistance within the jurisdiction of

the Secretary and other government assistance provided in connection with a property for which assistance is to be provided within

the jurisdiction of the Department of Housing and Urban Development and under section 42 of the Internal Revenue Code of 1986

shall not be any greater than is necessary to provide affordable

housing.

(b) IN PARTICULAR.—The guidelines established pursuant to

subsection (a) shall—

(1) require that the amount of equity capital contributed

by investors to a project partnership is not less than the

amount generally contributed by investors in current market

conditions, as determined by the housing credit agency; and

(2) require that project costs, including developer fees, are

within a reasonable range, taking into account project size,

project characteristics, project location and project risk factors,

as determined by the housing credit agency.

(c) REVOCATION BY SECRETARY.—If the Secretary determines

that a housing credit agency has failed to comply with the guidelines established under subsection (a), the Secretary—

(1) may inform the housing credit agency that the agency

may no longer submit certification of subsidy layering compliance under this section; and

(2) shall carry out section 102(d) of the Department of

Housing and Urban Development Reform Act of 1989 relating

to affected projects allocated a low-income housing tax credit

pursuant to section 42 of the Internal Revenue Code of 1986.

(d) APPLICABILITY.—Section 102(d) of the Department of Housing and Urban Development Reform Act of 1989 1 (42 U.S.C.

3545(d)) shall apply only to projects for which an application for as-
1559 Sec. 911 SUBSIDY LAYING REVIEW

sistance or insurance was filed after the date of enactment of the

Housing and Urban Development Reform Act.
1560

ENVIRONMENTAL REVIEW REQUIREMENTS FOR HUD

SPECIAL PROJECTS

EXCERPT FROM MULTIFAMILY HOUSING PROPERTY DISPOSITION

REFORM ACT OF 1994

[Public Law 103–233; 108 Stat. 372; 42 U.S.C. 3547]

SEC. 305. ENVIRONMENTAL REVIEW PROVISIONS.

* * * * * * *

(c) ø42 U.S.C. 3547¿ SPECIAL PROJECTS.— (1) IN GENERAL.— (A) RELEASE OF FUNDS.—In order to assure that the

policies of the National Environmental Policy Act of 1969

and other provisions of law which further the purposes of

such Act (as specified in regulations issued by the Secretary) are most effectively implemented in connection

with the expenditure of funds for special projects appropriated under an appropriations Act for the Department of

Housing and Urban Development, such as special projects

under the head ‘‘Annual Contributions for Assisted Housing’’ in title II of the Departments of Veterans Affairs and

Housing and Urban Development, and Independent Agencies Appropriations Act, 1993, and to assure to the public

undiminished protection of the environment, the Secretary

of Housing and Urban Development may, under such regulations, in lieu of the environmental protection procedures

otherwise applicable, provide for the release of funds for

particular special projects upon the request of recipients of

special projects assistance, if the State or unit of general

local government, as designated by the Secretary in accordance with regulations, assumes all of the responsibilities for environmental review, decisionmaking, and action

pursuant to such Act, and such other provisions of law as

the regulations of the Secretary specify, that would otherwise apply to the Secretary were the Secretary to undertake such special projects as Federal projects.

(B) IMPLEMENTATION.—The Secretary shall issue regulations to carry out this subsection only after consultation

with the Council on Environmental Quality. Such regulations shall—

(i) provide for monitoring of the performance of

environmental reviews under this subsection;

(ii) in the discretion of the Secretary, provide for

the provision or facilitation of training for such performance; and

(iii) subject to the discretion of the Secretary, provide for suspension or termination by the Secretary of

the assumption under subparagraph (A).
1561 Sec. 305 ENVIRONMENTAL REVIEW REQUIREMENTS

(C) RESPONSIBILITIES OF STATE OR UNIT OF GENERAL

LOCAL GOVERNMENT.—The Secretary’s duty under subparagraph (B) shall not be construed to limit any responsibility

assumed by a State or unit of general local government

with respect to any particular release of funds under subparagraph (A).

(2) PROCEDURE.—The Secretary shall approve the release

of funds for projects subject to the procedures authorized by

this subsection only if, not less than 15 days prior to such approval and prior to any commitment of funds to such projects,

the recipient submits to the Secretary a request for such release, accompanied by a certification of the State or unit of

general local government which meets the requirements of

paragraph (3). The Secretary’s approval of any such certification shall be deemed to satisfy the Secretary’s responsibilities under the National Environmental Policy Act of 1969 and

such other provisions of law as the regulations of the Secretary

specify insofar as those responsibilities relate to the releases of

funds for special projects to be carried out pursuant thereto

which are covered by such certification.

(3) CERTIFICATION.—A certification under the procedures

authorized by this subsection shall—

(A) be in a form acceptable to the Secretary;

(B) be executed by the chief executive officer or other

officer of the State or unit of general local government who

qualifies under regulations of the Secretary;

(C) specify that the State or unit of general local government under this subsection has fully carried out its responsibilities as described under paragraph (1); and

(D) specify that the certifying officer—

(i) consents to assume the status of a responsible

Federal official under the National Environmental Policy Act of 1969 and each provision of law specified in

regulations issued by the Secretary insofar as the provisions of such Act or other such provision of law

apply pursuant to paragraph (1); and

(ii) is authorized and consents on behalf of the

State or unit of general local government and himself

or herself to accept the jurisdiction of the Federal

courts for the purpose of enforcement of the responsibilities as such an official.

(4) APPROVAL BY STATES.—In cases in which a unit of general local government carries out the responsibilities described

in paragraph (1), the Secretary may permit the State to perform those actions of the Secretary described in paragraph (2)

and the performance of such actions by the State, where permitted by the Secretary, shall be deemed to satisfy the Secretary’s responsibilities referred to in the second sentence of

paragraph (2).
1562

1Subsection (b) of this section is set forth, ante, in part X of this compilation.

PERFORMANCE GOALS FOR HUD

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3884; 42 U.S.C. 3536]

SEC. 925. PERFORMANCE GOALS.

(a) ø42 U.S.C. 3536¿ PERFORMANCE GOALS FOR THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.—

(1) IN GENERAL.—The Secretary of the Department of

Housing and Urban Development (hereafter in this Act referred to as the ‘‘Secretary’’) may establish performance goals

for the major programs of the Department of Housing and

Urban Development in order to measure progress towards

meeting the objectives of national housing policy.

(2) FORM OF GOALS.—The performance goals referred to in

paragraph (1) shall be expressed in terms sufficient to measure

progress.

(3) REPORT.—The Secretary shall include in the Secretary’s

annual report to the Congress a description of the progress

made in attaining the performance goals for each program, citing the results achieved in each program for the previous year.

(4) FAILURE TO MEET GOALS.—If a performance standard or

goal has not been met, the description under paragraph (3)

shall include an explanation of why the goal was not met, propose plans for achieving the performance goal, and recommend

any legislative or regulatory changes necessary for achievement of the goal.

(b) PERFORMANCE GOALS FOR THE FARMERS HOME ADMINISTRATION.— 1 * * *.
1563

RESEARCH AND DEVELOPMENT PROGRAMS

EXCERPTS FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1970

[Public Law 91–609; 84 Stat. 1784; 12 U.S.C. 1701z–1 et seq.]

TITLE V—RESEARCH AND TECHNOLOGY

RESEARCH AND DEMONSTRATIONS

SEC. 501. ø12 U.S.C. 1701z–1¿ The Secretary of Housing and

Urban Development is authorized and directed to undertake such

programs of research, studies, testing, and demonstration relating

to the mission and programs of the Department as he determines

to be necessary and appropriate. There is authorized to be appropriated to carry out this title $35,000,000 for fiscal year 1993 and

$36,470,000 for fiscal year 1994.

GENERAL PROVISIONS

SEC. 502. ø12 U.S.C. 1701z–2¿ (a) The Secretary shall require,

to the greatest extent feasible, the employment of new and improved technologies, methods, and materials in housing construction, rehabilitation, and maintenance under programs administered

by him with a view to reducing costs, and shall encourage and promote the acceptance and application of such advanced technology,

methods, and materials by all segments of the housing industry,

communities, industries engaged in urban development activities,

and the general public. To the extent feasible, in connection with

the construction, major rehabilitation, or maintenance of any housing assisted under section 501, the Secretary shall assure that

there is no restraint by contract, building code, zoning ordinance,

or practice against the employment of new or improved technologies, techniques, materials, and methods or of preassembled

products which may reduce the cost or improve the quality of such

construction, rehabilitation, and maintenance, and therefore stimulate expanded production of housing, except where such restraint

is necessary to insure safe and healthful working and living conditions.

(b) To encourage large-scale experimentation in the use of new

technologies, methods, and materials, with a view toward the ultimate mass production of housing and related facilities, the Secretary shall wherever feasible conduct programs under section 501

in which qualified organizations, public and private, will submit

plans for development and production of housing and related facilities using such new advances on Federal land which has been

made available or acquired by the Secretary for the purpose of this

subsection or on other land where (1) local building regulations

permit such experimental construction, or (2) necessary variances

from building regulations can be granted. The Secretary may uti-
Sec. 502 RESEARCH AND DEVELOPMENT PROGRAMS 1564

lize the funds and authority available to him under the provisions

of section 501 to assist in the implementation of plans which he approves.

(c) Notwithstanding any other provision of law, the Secretary

is authorized, in connection with projects under this title, to acquire, use and dispose of any land and other property required for

the project as he deems necessary. Notwithstanding the provisions

of the Federal Property and Administrative Services Act of 1949,

any land which is excess property within the meaning of such Act

and which is determined by the Secretary to be suitable in furtherance of the purposes of subsection (b) may be transferred to the

Secretary upon his request.

(d) In order to effectively carry out his activities under section

501, the Secretary is authorized to provide such advice and technical assistance as may be required and to pay for the cost of writing and publishing reports on activities and undertakings financed

under section 501, as well as reports on similar activities and undertakings, not so financed, which are of significant value in furthering the purposes of that section. He may disseminate (without

regard to the provisions of section 3204 of title 39, United States

Code, or section 4154 of such title with respect to any period before

the effective date of such section 3204 as provided in section 15(a)

of the Postal Reorganization Act) any reports, data, or information

acquired or held under this title, including related data and information otherwise available to the Secretary through the operation

of the programs and activities of the Department of Housing and

Urban Development, in such form as he determines to be most useful to departments, establishments, and agencies of Federal, State,

and local governments, to industry, and to the general public.

(e) The Secretary is authorized to carry out the functions authorized in section 501 either directly or, without regard to section

3709 of the Revised Statutes, by contract or by grant. Advance and

progress payments may be made under such contracts or grants

without regard to the provisions of subsections (a) and (b) of section

3324 of title 31, United States Code, and such contracts or grants

may be made for work to continue for not more than four years

from the date thereof.

(f) In carrying out activities under section 501, the Secretary

shall utilize to the fullest extent feasible the available facilities of

other Federal departments and agencies, and shall consult with,

and make recommendations to such departments and agencies. The

Secretary may enter into working agreements with such departments and agencies and contract or make grants on their behalf or

have such departments and agencies contract or make grants on

his behalf and such departments and agencies are hereby authorized to execute such contracts and grants. The Secretary is

authorizied to make or accept reimbursement for the cost of such

activities. The Secretary is further authorized to undertake activities under this title under cooperative agreements with industry

and labor, agencies of State or local governments, educational institutions, and other organizations. He may enter into contracts with

and receive funds from such agencies, institutions, and organizations, and may exercise any of the other powers vested in him by

section 502(c) of the Housing Act of 1948.
1565 Sec. 504 RESEARCH AND DEVELOPMENT PROGRAMS

(g) The Secretary is authorized to request and receive such information or data as he deems appropriate from private individuals

and organizations, and from public agencies. Any such information

or data shall be used only for the purposes for which it is supplied,

and no publication shall be made by the Secretary whereby the information or data furnished by any particular person or establishment can be identified, except with the consent of such person or

establishment.

REPEAL OF EXISTING RESEARCH AUTHORITIES

SEC. 503. Effective July 1, 1971, the following provisions of law

are repealed; except that such repeal shall not affect contracts,

commitments, reservations, or other obligations entered into pursuant to such provisions prior to that date:

(1) title III of the Housing Act of 1948;

(2) section 314 of the Housing Act of 1954;

(3) section 602 of the Housing Act of 1956;

(4) section 207 of the Housing Act of 1961;

(5) section 301 of the Housing and Urban Development Act

of 1965;

(6) sections 1010 and 1011 of the Demonstration Cities and

Metropolitan Development Act of 1966; and

(7) section 1714(b) of the Housing and Urban Development

Act of 1968.

HOUSING ALLOWANCES

SEC. 504. ø12 U.S.C. 1701z–3¿ (a) The Secretary is authorized

to undertake on an experimental basis programs to demonstrate

the feasibility of providing housing allowances payments to assist

families in meeting rental or homeownership expenses.

(b)(1) No housing allowance payments shall be made after July

1, 1985. After January 1, 1975, the Secretary shall not enter into

contracts under the United States Housing Act of 1937 to carry out

the purposes of this section. The Secretary may contract with public or private agencies for the performance of administrative functions in connection with the programs authorized by this section.

(2) Notwithstanding the provisions of paragraph (1), the Secretary shall, to the extent approved in appropriation Acts, extend

the annual contributions contracts for the experimental housing allowance supply program through September 30, 1989, on the same

terms and conditions as the orginal contracts, for the sole purpose

of providing assistance for homeowners participating in such program on June 1, 1983. In extending such contracts, the Secretary

may, to the extent approved in appropriation Acts, use authority

available under section 5(c) of the United States Housing Act of

1937.

(c) The Secretary shall report to the Congress on his findings

pursuant to this section not later than eighteen months after the

enactment of the Housing and Community Development Act of

1974.
Sec. 505 RESEARCH AND DEVELOPMENT PROGRAMS 1566

DEMONSTRATION WITH RESPECT TO ABANDONED PROPERTIES

SEC. 505. ø12 U.S.C. 1701z–4¿ (a) In carrying out activities

under section 501, the Secretary may undertake programs to demonstrate the most feasible means of providing assistance to localities in which a substantial number of structures are abandoned or

are threatened with abandonment for the purpose of arresting the

process of housing abandonment in its incipiency or in restoring viability to blighted areas in which abandonment is pervasive. For

this purpose, the Secretary is authorized to make grants, subject

to the limitations of this section, to assist local public bodies in

planning and implementing demonstration projects for prompt and

effective action in alleviating and preventing such abandonment in

designated demonstration areas.

(b) In administering this section, the Secretary shall give preference to those demonstration projects which in his judgement can

reasonably be expected to arrest the process of abandonment in the

demonstration area within a period of two years and which provide

for innovative approaches to combating the problem of housing

abandonment. Such projects may include, but shall not be limited

to (1) acquisition by negotiated purchase, lease, receivership, tax

lien proceedings, or other means authorized by law and satisfactory

to the Secretary, of real property within the demonstration area or

areas which is abandoned, deteriorated, or in violation of applicable

code standards; (2) the repair of streets, sidewalks, parks, playgrounds, publicly owned utilities, public buildings to meet needs

consistent with the revitalization and continued use of the area; (3)

the demolition of structures determined to be structurally unsound

or unfit for human habitation or which contribute adversely to the

physical or social environment of the locality involved; (4) the establishment of recreational or community facilities including public

playgrounds; (5) the improvement of garbage and trash collection,

street cleaning and other essential services necessary to the revitalization and maintenance of the area; (6) the rehabilitation of privately and publicly owned real property by the locality; and (7) the

establishment and operation of locally controlled, nonprofit housing

management corporations and municipal repair programs.

(c) Subject to such conditions as the Secretary may prescribe,

real property held as part of a project assisted under this section

may be made available to (1) a limited dividend corporation, nonprofit corporation, or association, cooperative or public body or

agency, or other approved purchaser or lessee, or (2) a purchaser

who would be eligible for a mortgage insured under section

221(d)(3) or (d)(4), section 221(h)(1), section 235(i) or (i)(1), or section 236 of the National Housing Act, for purchase or lease at fair

market value for use by such purchaser or lessee, as, or in the provision of, new or rehabilitated housing for occupancy by families or

individuals of low or moderate income.

(d) Grants under this section shall be in amounts which do not

exceed 90 per centum of the net project cost as determined by the

Secretary. There are authorized to be appropriated for demonstration grants under this section not to exceed $20,000,000 for the fiscal year ending June 30, 1971. Any amounts appropriated shall remain available until expended and any amount authorized but not
1567 Sec. 507 RESEARCH AND DEVELOPMENT PROGRAMS

1 Comma so in law.

appropriated may be appropriated for any succeeding fiscal year

commencing prior to July 1, 1972, Not more than one-third of the

aggregate amount of grants made in any fiscal year under this section shall be made with respect to projects undertaken by one locality.

(e) The provisions of sections 106, 114, and 115, 1 of Title I of

the Housing Act of 1949, and section 312 of the Housing Act of

1964, may apply to projects assisted under this Act as if such

projects were being carried out in urban renewal areas as part of

urban renewal projects within the meaning of section 110 of the

Housing Act of 1949.

SOLAR ENERGY

SEC. 506. ø12 U.S.C. 1701z–5¿ (a) In carrying out activities

under section 501, the Secretary may, after consultation with the

National Science Foundation, undertake demonstrations to determine the economic and technical feasibility of utilizing solar energy

for heating or cooling residential housing (including demonstration

of new housing design or structure involving the use of solar energy). Demonstrations carried out under this section should involve

both single family and multifamily housing located in areas having

distinguishable climatic characteristics in urban as well as rural

environments. To carry out the purpose of this section the Secretary is authorized—

(1) to enter into contracts with, to make grants to, and to

provide other types of assistance to individuals and entities

with special competence and knowledge to contribute to the

planning, design, development, and operation of such housing;

(2) to utilize the contract, loan, or mortgage insurance authority of any federally assisted housing program in the actual

planning, development, and occupancy of such housing; and

(3) to set aside any development, construction, design, or

occupancy requirements for the purpose of any demonstration

under this section if he determines that such requirements inhibit such demonstration.

(b) The Secretary shall include in any demonstration under

this section an evaluation of the demonstration to cover the full

experience involved in all stages of the demonstration.

ADDITIONAL RESEARCH AUTHORITY

SEC. 507. ø12 U.S.C. 1701z–6¿ (a) In carrying out activities

under section 501, the Secretary may undertake special demonstrations to determine the housing design, the housing structure, and

the housing-related facilities, and amenities most effective or appropriate to meet the needs of groups with special housing needs

including the elderly, the handicapped, the displaced, single individuals, broken families, and large households. For this purpose,

the Secretary is authorized to enter into contracts with, to make

grants to, and to provide other types of assistance to individuals

and entities with special competence and knowledge to contribute
Sec. 508 RESEARCH AND DEVELOPMENT PROGRAMS 1568

to the planning, development, design, and management of such

housing.

(b) In carrying out his functions under this section, the Secretary shall give preferential attention to demonstrations which in

his judgment involve areas of housing user needs most neglected

in past and current research and demonstration efforts.

(c) The Secretary is authorized to undertake demonstrations

involving the actual planning, development, and occupancy of housing utilizing the contract and loan authority of any federally assisted housing program. He is also authorized to set aside any development, construction, design, and occupancy requirements, for

the purposes of these demonstrations, if in his judgment they inhibit the testing of housing designed to meet the special housing

needs.

(d) In carrying out this section, the Secretary shall include, as

part of any demonstration, an evaluation of the demonstration to

cover the full experience involved in planning, development, and occupancy.

(e) In addition to any other contract or loan authority which

the Secretary may utilize under subsection (c), not more than

$10,000,000 from amounts approved in appropriation Acts shall be

available for research under this section.

COUNSELING TO MORTGAGORS

SEC. 508. ø12 U.S.C. 1701z–7¿ (a) In carrying out activities

under section 501, the Secretary is directed to undertake programs

of studies and demonstrations within at least three standard metropolitan statistical areas to determine to the extent of need for

and cost effectiveness of providing pre-purchase, default and delinquency counseling and related services to owners and purchasers

of single-family dwellings insured or to be insured under the unsubsidized mortgage insurance programs of the National Housing

Act.

(b) Within one year from enactment of this section, the Secretary shall submit an interim report to the Congress with respect

to the progress made under such studies and demonstrations, including an estimate as to the date when a final report on the results of such demonstrations will be made available to the Congress.

* * * * * * *

CONVERSIONS

SEC. 510. ø12 U.S.C. 1701z–9¿ In carrying out activities under

section 501, the Secretary is authorized to conduct demonstrations

to determine the feasibility of expanding homeownership opportunities in urban areas and encouraging the creation and maintenance of decent, safe, and sanitary housing in such areas by utilizing techniques including, but not limited to, the conversion of

multifamily housing properties to condominium or cooperative ownership by individuals and families.
1569 Sec. 512 RESEARCH AND DEVELOPMENT PROGRAMS

REHABILITATION GUIDELINES

SEC. 511. ø12 U.S.C. 1701z–10¿ (a)(1) The Secretary shall develop model rehabilitation guidelines for the voluntary adoption by

States and communities to be used in conjunction with existing

building codes by State and local officials in the inspection and approval of rehabilitated properties.

(2) Such guidelines shall be developed in consultation with the

National Institute of Building Sciences, appropriate national organizations of agencies and officials of State and local governments,

representatives of the building industry, and consumer groups, and

other interested parties.

(3) The Secretary shall publish such guidelines for public comment not later than one year after the date of enactment of this

section, and promulgate them no later than eighteen months after

such date of enactment.

(4) The Secretary may furnish technical assistance to State

and local governments to facilitate the use and implementation of

such guidelines.

(b) The Secretary shall report to Congress not later than thirty-six months after the date of enactment of this section regarding

(1) actions taken by State and local governments to adopt guidelines or their equivalents, and (2) recommendations for further action.

BIENNIAL SURVEY OF ECONOMY AND HOUSING MARKET CONDITIONS

SEC. 512. ø12 U.S.C. 1701z–10a¿ The Secretary shall, not less

than biennially, survey national, regional, and local economic and

housing market conditions in a manner that provides data comparable to the data collected in such survey conducted in 1981.
1570

ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

EXCERPT FROM HOUSING ACT OF 1948

[Public Law 901, 80th Cong.; 62 Stat. 1283; 12 U.S.C. 1701c and 42 U.S.C.

1404a]

TITLE V—ADMINISTRATIVE AND MISCELLANEOUS

PROVISIONS

ADMINISTRATIVE PROVISIONS

* * * * * * *

SEC. 502. In carrying out their respective functions, powers,

and duties—

(a) ø12 U.S.C. 1701c(a)¿ The Secretary of Housing and Urban

Development may appoint such officers and employees as he may

find necessary, which appointments shall be subject to the civil

service laws and chapter 51 and subchapter III of chapter 53 of

title 5, United States Code. The Secretary may make such expenditures as may be necessary to carry out his functions, powers, and

duties, and there are hereby authorized to be appropriated to the

Secretary, out of any moneys in the Treasury not otherwise appropriated, such sums as may be necessary to carry out such functions, powers, and duties and for administrative expenses in connection therewith. The Secretary, without in any way relieving

himself from final responsibility, may delegate any of his functions

and powers to such officers, agents, or employees as he may designate, may authorize such successive redelegations of such functions and powers, as he may deem desirable, and may make such

rules and regulations as may be necessary to carry out his functions, powers, and duties.

(b) ø42 U.S.C. 1404a¿ The Secretary of Housing and Urban Development may sue and be sued only with respect to its functions

under the United States Housing Act of 1937, as amended, and

title II of Public Law 671, Seventy-sixth Congress, approved June

28, 1940, as amended. Funds made available for carrying out the

functions, powers, and duties of the Secretary of Housing and

Urban Development (including appropriations therefor, which are

hereby authorized) shall be available in such amounts as may from

year to year be authorized by the Congress, for the administrative

expenses of the Secretary of Housing and Urban Development. Notwithstanding any other provisions of law except provisions of law

hereafter enacted expressly in limitation hereof, the Secretary of

Housing and Urban Development, or any State, or local public

agency administering a low-rent housing project assisted pursuant

to the United States Housing Act of 1937 or title II of Public Law

671, Seventy-sixth Congress, approved June 28, 1940, shall continue to have the right to maintain an action or proceeding to re-
1571 Sec. 502 ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

cover possession of any housing accommodations operated by it

where such action is authorized by the statute or regulations under

which such housing accommodations are administered, and, in determining net income for the purposes of tenant eligibility with respect to low-rent housing projects assisted pursuant to said Acts,

the Secretary of Housing and Urban Development is authorized,

where it finds such action equitable and in the public interest, to

exclude amounts or portions thereof paid by the United States Government for disability or death occurring in connection with military service.

(c) ø12 U.S.C. 1701c¿ The Secretary of Housing and Urban Development and the Director of the Office of Thrift Supervision, respectively, may, in addition to and not in derogation of any powers

and authorities conferred elsewhere in this Act—

(1) with the consent of the agency or organization concerned, accept and utilize equipment, facilities, or the services

of employees of any Federal, State, or local public agency or instrumentality, educational institution, or nonprofit agency or

organization and, in connection with the utilization of such

services, may make payments for transportation while away

from their homes or regular places of business and per diem

in lieu of subsistence en route and at place of such service, in

accordance with the provisions of section 5703 of title 5, United

States Code;

(2) utilize, contract with, and act through, without regard

to section 3709 of the Revised Statutes, any Federal, State, or

local public agency or instrumentality, educational institution

or nonprofit agency or organization with the consent of the

agency or organization concerned, and any funds available to

said officers for carrying out their respective functions, powers,

and duties shall be available to reimburse or pay any such

agency or organization; and, whenever in the judgment of any

such officer necessary, he may make advance, progress, or

other payments with respect to such contracts without regard

to the provisions of subsections (a) and (b) of section 3324 of

title 31, United States Code; and

(3) make expenditures for all necessary expenses, including preparation, mounting, shipping, and installation of exhibits; purchase and exchange of technical apparatus; and such

other expenses as may, from time to time, be found necessary

in carrying out their respective functions, powers, and duties:

Provided, That funds made available for administrative expenses in carrying out the functions, powers, and duties imposed upon the Secretary of Housing and Urban Development

and the Federal Home Loan Bank Board, respectively, by or

pursuant to law may at their option be consolidated into single

administrative expense fund accounts of such officer or agency

for expenditure by them, respectively, in accordance with the

provisions hereof.

(d) ø12 U.S.C. 1701c(d)¿ The Secretary of Housing and Urban

Development may utilize funds made available to him for salaries

and expenses for payment in advance for dues or fees for library

memberships in organizations (or for membership of the individual

librarians in organizations which will not accept library member-
Sec. 502 ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS 1572

ship) whose publications are available to members only, or to members at a price lower than to the general public, and for payment

in advance for publications available only upon that basis or available at a reduced price on prepublication order.
1573

SPECIAL ASSISTANT COMMISSIONER FOR

COOPERATIVE HOUSING

EXCERPT FROM HOUSING AMENDMENTS OF 1955

[Public Law 345, 84th Cong.; 69 Stat. 636; 12 U.S.C. 1715e note]

SEC. 102. * * *

* * * * * * *

(h) ø12 U.S.C. 1715e note¿ In the performance of, and with respect to, the functions powers, and duties vested in him by section

213 of the National Housing Act, section 221(d)(3), section 235, section 236, section 241, section 243, section 246, and section 203(n)

of the National Housing Act, and section 101 of the Housing and

Urban Development Act of 1965 or section 8 of the United States

Housing Act of 1937 (insofar as the provisions of such sections relate to cooperative housing), the Secretary of Housing and Urban

Development, notwithstanding the provisions of any other law,

shall appoint a Special Assistant for Cooperative Housing, and provide the Special Assistant with adequate staff, whose sole responsibility will be to expedite operations under such sections and to

eliminate obstacles to the full utilization of such sections under the

direction and supervision of the Commissioner and Assistant Secretary for Housing Management. The person so appointed shall be

fully sympathetic with the purposes of such sections.
1574

1See also section 8 of the Department of Housing and Urban Development Act, which is set

forth, ante, this part.

Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–

66, which is set forth post in this part of this compilation, provides that certain provisions of

law requiring submittal to Congress of an annual, semiannual, or other regular periodic report

shall cease to be effective on May 15, 2000. This section is covered by such provision. However,

section 1102 of the American Homeownership and Economic Opportunity Act of 2000, Public

Law 106–569, which is set forth post in this part of this compilation, provides that such section

3003(a)(1) shall not apply to the report required to be submitted under this section.

HUD ANNUAL REPORT

EXCERPTS FROM HOUSING ACT OF 1954

[Public Law 560, 83d Congress; 68 Stat. 642; 12 U.S.C. 1701o et seq.]

ANNUAL REPORT OF SECRETARY

SEC. 802.1 ø12 U.S.C. 1701o¿ (a) The Secretary of Housing and

Urban Development shall, as soon as practicable during each calendar year, make a report to the President for submission to the

Congress on all operations and programs (including but not limited

to the insurance, urban renewal, public housing, and rent supplement programs) under the jurisdiction of the Department of Housing and Urban Development during the previous calendar year.

Such report shall contain recommendations for strengthening or

improving such programs, or, when necessary to implement more

effectively Congressional policies and purposes, for establishing

new or alternative programs.

* * * * * * *

REPORT TO CONGRESS OF INFORMATION ON HOUSING

SEC. 817. ø12 U.S.C. 1701p¿ The annual report made by the

Secretary of Housing and Urban Development to the President for

submission to the Congress on all operations provided for by section 802 hereof shall contain pertinent information with respect to

all projects for which any loan, contribution, or grant has been

made by the Department of Housing and Urban Development, including the amount of loans, contributions and grants contracted

for.
1575

ANNUAL REPORT ON CHARACTERISTICS OF FAMILIES

IN HUD-ASSISTED HOUSING

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1864; 42 U.S.C. 3536 note]

SEC. 166. ø42 U.S.C. 3536 note¿ ANNUAL REPORT ON CHARACTERISTICS

OF FAMILIES IN ASSISTED HOUSING.

(a) IN GENERAL.—The Secretary of Housing and Urban Development shall include in the annual report under section 8 of the

Housing and Urban Development Act descriptions of the characteristics of families assisted under each of the following programs of

assistance: public housing, section 8 of the United States Housing

Act of 1937 (other than subsection (o) of such section), section 8(o)

of the United States Housing Act of 1937, and section 202 of the

Housing Act of 1959.

(b) SPECIFIC REQUIREMENTS.—The descriptions required in

subsection (a) shall include information with respect to—

(1) family size, including the number of children;

(2) amount and sources of family income;

(3) the age, race, and sex of family members; and

(4) whether the head of the family (or the spouse of such

person) is a member of the armed forces.

(c) COLLECTION AND MAINTENANCE OF DATA.—The Secretary

shall collect and maintain data necessary to carry out the purposes

of this section and shall coordinate such efforts, to the greatest extent possible, with activities and responsibilities under section 8 of

the Department of Housing and Urban Development Act.
1576

SEMIANNUAL REPORT ON CONTRACTS

EXCERPT FROM 1997 EMERGENCY SUPPLEMENTAL APPROPRIATIONS

ACT FOR RECOVERY FROM NATURAL DISASTERS, AND FOR OVERSEAS PEACEKEEPING EFFORTS, INCLUDING THOSE IN BOSNIA

[Public Law 105–18; 111 Stat. 201; 42 U.S.C. 3548]

SEC. 10001. ø42 U.S.C. 3548¿ The Secretary shall submit semiannually to the Committees on Appropriations a list of all contracts

and task orders issued under such contracts in excess of $250,000

which were entered into during the prior 6-month period by the

Secretary, the Government National Mortgage Association, and the

Office of Federal Housing Enterprise Oversight (or by any officer

of the Department of Housing and Urban Development, the Government National Mortgage Association, or the Office of Federal

Housing Enterprise Oversight acting in his or her capacity to represent the Secretary or these entities). Each listing shall identify

the parties to the contract, the term and amount of the contract,

and the subject matter and responsibilities of the parties to the

contract.
1577

1December 21, 1995.

ELIMINATION OF REPORTING REQUIREMENTS

EXCERPT FROM FEDERAL REPORTS ELIMINATION AND SUNSET ACT

OF 1995

[Public Law 104–66; 109 Stat. 733; 31 U.S.C. 1113 note]

SEC. 3003. ø31 U.S.C. 1113 note¿ TERMINATION OF REPORTING REQUIREMENTS.

(a) TERMINATION.—

(1) IN GENERAL.—Subject to the provisions of paragraph (2)

of this subsection and subsection (d), each provision of law requiring the submittal to Congress (or any committee of the

Congress) of any annual, semiannual, or other regular periodic

report specified on the list described under subsection (c) shall

cease to be effective, with respect to that requirement, May 15,

2000.

(2) EXCEPTION.—The provisions of paragraph (1) shall not

apply to any report required under—

(A) the Inspector General Act of 1978 (5 U.S.C. App.);

or

(B) the Chief Financial Officers Act of 1990 (Public

Law 101–576), including provisions enacted by the amendments made by that Act.

(b) IDENTIFICATION OF WASTEFUL REPORTS.—The President

shall include in the first annual budget submitted pursuant to section 1105 of title 31, United States Code, after the date of enactment of this Act 1 a list of reports that the President has determined are unnecessary or wasteful and the reasons for such determination.

(c) LIST OF REPORTS.—The list referred to under subsection (a)

is the list prepared by the Clerk of the House of Representatives

for the first session of the One Hundred Third Congress under

clause 2 of rule III of the Rules of the House of Representatives

(House Document No. 103–7).

(d) SPECIFIC REPORTS EXEMPTED.—Subsection (a)(1) shall not

apply to any report required under—

* * * * * * *
Sec. 1101 REPORTS ELIMINATION 1578

EXCERPT FROM AMERICAN HOMEOWNERSHIP AND ECONOMIC

OPPORTUNITY ACT OF 2000

[Public Law 106–569; 114 Stat. 3029; 31 U.S.C. 1113 note]

TITLE XI—BANKING AND HOUSING

AGENCY REPORTS

SEC. 1101. SHORT TITLE.

This title may be cited as the ‘‘Federal Reporting Act of 2000’’.

SEC. 1102. ø31 U.S.C. 1113 note¿ PRESERVATION OF CERTAIN REPORTING REQUIREMENTS.

Section 3003(a)(1) of the Federal Reports Elimination and Sunset Act of 1995 (31 U.S.C. 1113 note) shall not apply to any report

required to be submitted under any of the following provisions of

law:

(1) Section 3 of the Employment Act of 1946 (15 U.S.C.

1022).

(2) Section 309 of the Defense Production Act of 1950 (50

U.S.C. App. 2099).

(3) Section 603 of the Public Works and Economic Development Act of 1965 (42 U.S.C. 3213).

(4) Section 7(o)(1) of the Department of Housing and

Urban Development Act (42 U.S.C. 3535(o)(1)).

(5) Section 540(c) of the National Housing Act (12 U.S.C.

1735f–18(c)).

(6) Paragraphs (2) and (6) of section 808(e) of the Civil

Rights Act of 1968 (42 U.S.C. 3608(e)).

(7) Section 1061 of the Housing and Community Development Act of 1992 (42 U.S.C. 4856).

(8) Section 203(v) of the National Housing Act (12 U.S.C.

1709(v)), as added by section 504 of the Housing and Community Development Act of 1992 (Public Law 102–550; 106 Stat.

3780).

(9) Section 802 of the Housing Act of 1954 (12 U.S.C.

1701o).

(10) Section 8 of the Department of Housing and Urban

Development Act (42 U.S.C. 3536).

(11) Section 1320 of the National Flood Insurance Act of

1968 (42 U.S.C. 4027).

(12) Section 4(e)(2) of the Department of Housing and

Urban Development Act (42 U.S.C. 3533(e)(2)).

(13) Section 205(g) of the National Housing Act (12 U.S.C.

1711(g)).

(14) Section 701(c)(1) of the International Financial Institutions Act (22 U.S.C. 262d(c)(1)).

(15) Paragraphs (1) and (2) of section 5302(c) of title 31,

United States Code.

(16) Section 18(f )(7) of the Federal Trade Commission Act

(15 U.S.C. 57a(f )(7)).

(17) Section 333 of the Revised Statutes of the United

States (12 U.S.C. 14).
1579 Sec. 1104 REPORTS ELIMINATION

(18) Section 3(g) of the Home Owners’ Loan Act (12 U.S.C.

1462a(g)).

(19) Section 304 of the Appalachian Regional Development

Act of 1965 (40 U.S.C. App. 304).

(20) Sections 2(b)(1)(A), 8(a), 8(c), 10(g)(1), and 11(c) of the

Export-Import Bank Act of 1945 (12 U.S.C. 635(b)(1)(A),

635g(a), 635g(c), 635i–3(g), and 635i–5(c)).

(21) Section 17(a) of the Federal Deposit Insurance Act (12

U.S.C. 1827(a)).

(22) Section 13 of the Federal Financing Bank Act of 1973

(12 U.S.C. 2292).

(23) Section 2B(d) of the Federal Home Loan Bank Act (12

U.S.C. 1422b(d)).

(24) Section 1002(b) of the Financial Institutions Reform,

Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811 note).

(25) Section 8 of the Fair Credit and Charge Card Disclosure Act of 1988 (15 U.S.C. 1637 note).

(26) Section 136(b)(4)(B) of the Truth in Lending Act (15

U.S.C. 1646(b)(4)(B)).

(27) Section 707 of the Equal Credit Opportunity Act (15

U.S.C. 1691f ).

(28) Section 114 of the Truth in Lending Act (15 U.S.C.

1613).

(29) The seventh undesignated paragraph of section 10 of

the Federal Reserve Act (12 U.S.C. 247).

(30) The tenth undesignated paragraph of section 10 of the

Federal Reserve Act (12 U.S.C. 247a).

(31) Section 815 of the Fair Debt Collection Practices Act

(15 U.S.C. 1692m).

(32) Section 102(d) of the Federal Credit Union Act (12

U.S.C. 1752a(d)).

(33) Section 21B(i) of the Federal Home Loan Bank Act (12

U.S.C. 1441b(i)).

(34) Section 607(a) of the Housing and Community Development Amendments of 1978 (42 U.S.C. 8106(a)).

(35) Section 708(l) of the Defense Production Act of 1950

(50 U.S.C. App. 2158(l)).

(36) Section 2546 of the Comprehensive Thrift and Bank

Fraud Prosecution and Taxpayer Recovery Act of 1990 (28

U.S.C. 522 note).

(37) Section 202(b)(8) of the National Housing Act (12

U.S.C. 1708(b)(8)).

SEC. 1103. COORDINATION OF REPORTING REQUIREMENTS.

* * * * * * *

SEC. 1104. ELIMINATION OF CERTAIN REPORTING REQUIREMENTS.

* * * * * * *
1580

IMPROVED ARCHITECTURAL DESIGN

EXCERPT FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 90–448; 82 Stat. 477; 12 U.S.C. 1701v]

IMPROVED ARCHITECTURAL DESIGN IN GOVERNMENT HOUSING

PROGRAMS

SEC. 4. ø12 U.S.C. 1701v¿ The Congress finds that Federal

aids to housing have not contributed fully to improvement in architectural standards. This objective has been contemplated in Federal housing legislation since the establishment of mortgage insurance through the Federal Housing Administration.

The Congress commends the Department of Housing and

Urban Development for its recent efforts to improve architectural

standards through competitive design awards and in other ways

but at the same time recognizes that this important objective requires high priority if Federal aid is to make its full communitywide contribution toward improving our urban environment.

The Congress further finds that even within the necessary

budget limitations on housing for low and moderate income families architectural design could be improved not only to make the

housing more attractive, but to make it better suited to the needs

of occupants.

The Congress declares that in the administration of housing

programs which assist in the provision of housing for low and moderate income families, emphasis should be given to encouraging

good design as an essential component of such housing and to developing housing which will be of such quality as to reflect its important relationship to the architectural standards of the neighborhood and community in which it is situated, consistent with prudent budgeting.
1581

PAPERWORK REDUCTION

EXCERPTS FROM HOUSING AND COMMUNITY DEVELOPMENT

AMENDMENTS OF 1978

[Public Law 95–557; 92 Stat. 2126; 42 U.S.C. 3541]

PAPERWORK REDUCTION

SEC. 905. ø42 U.S.C. 3541¿ (a) The Congress finds and

declares—

(1) that various departments, agencies, and instrumentalities of the Federal Government with responsibilities involving

housing and housing finance programs, require, approve, use

or otherwise employ a variety of different forms as residential

mortgages (or deeds of trust or similar security instruments) as

notes secured by those mortgages, and for applications, appraisals and other purposes, and that such duplication of forms

constitute a paperwork burden that adds to the costs imposed

on the Nation’s homeowners and home buyers;

(2) that unnecessary paperwork impairs the effectiveness

of Federal housing and housing finance programs;

(3) that both single-family and multi-family programs are

affected; and

(4) that simplification of paperwork imposed by Federal

housing and housing finance programs would contribute to

achieving the Nation’s housing goals by reducing housing costs.

(b)(1) Not later than October 1, 1980, the Secretary of Housing

and Urban Development, the Secretary of Agriculture, and the Secretary of Veterans Affairs shall, consistent with provisions of law

governing the conduct of housing programs, employ in their respective programs—

(A) uniform single-family and multi-family note and mortgage form;

(B) a uniform application form for mortgage approval and

commitment for mortgage insurance;

(C) a uniform form for computation of the monthly net effective income of applicants;

(D) a uniform property appraisal form;

(E) a uniform settlement statement which shall satisfy the

requirements of the Real Estate Settlement Procedures Act of

1974; and

(F) such other consolidated or simplified forms particularly

those which solicit identical or nearly identical information

from the same persons in the conduct of two or more such programs, the consolidation or simplification of which the Secretaries of Housing and Urban Development and Agriculture and

the Secretary of Veterans Affairs mutually agree would con-
Sec. 905 PAPERWORK REDUCTION 1582

tribute to a reduction in the paperwork and regulatory burden

of such programs.

(2) The Secretary of Housing and Urban Development, the Secretary of Agriculture, and the Secretary of Veterans Affairs shall,

consistent with provisions of law governing their respective programs, provide by regulation for the elimination of forms which solicit information which is already available for other available

sources through indexing or other means of identifying such forms.

(3) Each agency referred to in subsection (b) may employ riders, addenda, or similar forms of modification agreements to adapt

such uniform forms to its respective programs and policies, consistent with the goals of minimizing the use and extent of such

modification agreements and maximizing the suitability of such

forms for the use of all participants, public and private.

(c) The Director of the Office of Management and Budget shall

coordinate and monitor the development and implementation by

Federal departments and agencies of the efforts required by subsection (b) and shall report to the Congress on such development

and implementation and with respect to any provisions of law

which unnecessarily prevent such departments and agencies from

carrying out the provisions of this section as part of each report required under Public Law 93–556. Such report shall include an estimate of the reduction of the level of paperwork burden hours of the

affected agencies as allocated by the Office of Management and

Budget.
1583

RECORDS AND AUDITS REQUIRED IN CONNECTION

WITH LOANS, ADVANCES, GRANTS, OR CONTRIBUTIONS (BYRD AMENDMENT)

EXCERPT FROM HOUSING ACT OF 1954

[Public Law 560, 83d Congress; 68 Stat. 647; 42 U.S.C. 1434]

RECORDS

SEC. 814. ø42 U.S.C. 1434¿ Every contract between the Department of Housing and Urban Development and any person or

local body (including any corporation or public or private agency or

body) for a loan, advance, grant, or contribution under the United

States Housing Act of 1937, as amended, the Housing Act of 1949,

as amended, or any other Act shall provide that such person or

local body shall keep such records as the Department of Housing

and Urban Development shall from time to time prescribe, including records which permit a speedy and effective audit and will fully

disclose the amount and disposition by such person or local body

of the proceeds of the loan, advance, grant, or contribution, or any

supplement thereto, the capital cost of any construction project for

which any such loan, advance, grant, or contribution is made, and

the amount of any private or other non-Federal funds used or

grants-in-aid made for or in connection with any such project. No

mortgage covering new or rehabilitated multifamily housing (as defined in section 227 of the National Housing Act, as amended) shall

be insured unless the mortgagor certifies that he will keep such

records as are prescribed by the Secretary of Housing and Urban

Development at the time of the certification and that they will be

kept in such form as to permit a speedy and effective audit. The

Department of Housing and Urban Development and the Comptroller General of the United States shall have access to and the

right to examine and audit such records. This section shall become

effective on the first day after the first full calendar month following the date of approval of the Housing Act of 1961.
1584

FRAUD AND FALSE STATEMENTS

EXCERPTS FROM TITLE 18, UNITED STATES CODE

§ 1001. Statements or entries generally

(a) Except as otherwise provided in this section, whoever, in

any matter within the jurisdiction of the executive, legislative, or

judicial branch of the Government of the United States, knowingly

and willfully—

(1) falsifies, conceals, or covers up by any trick, scheme, or

device a material fact;

(2) makes any materially false, fictitious, or fraudulent

statement or representation; or

(3) makes or uses any false writing or document knowing

the same to contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title or imprisoned not more than 5 years,

or both.

(b) Subsection (a) does not apply to a party to a judicial proceeding, or that party’s counsel, for statements, representations,

writings or documents submitted by such party or counsel to a

judge or magistrate in that proceeding.

(c) With respect to any matter within the jurisdiction of the

legislative branch, subsection (a) shall apply only to—

(1) administrative matters, including a claim for payment,

a matter related to the procurement of property or services,

personnel or employment practices, or support services, or a

document required by law, rule, or regulation to be submitted

to the Congress or any office or officer within the legislative

branch; or

(2) any investigation or review, conducted pursuant to the

authority of any committee, subcommittee, commission or office

of the Congress, consistent with applicable rules of the House

or Senate.

* * * * * * *

§ 1010. Department of Housing and Urban Development and

Federal Housing Administration transactions

Whoever, for the purpose of obtaining any loan or advance of

credit from any person, partnership, association, or corporation

with the intent that such loan or advance of credit shall be offered

to or accepted by the Department of Housing and Urban Development for insurance, or for the purpose of obtaining any extension

or renewal of any loan, advance of credit, or mortgage insured by

such department, or the acceptance, release, or substitution of any

security on such a loan, advance of credit, or for the purpose of influencing in any way the action of such Department, makes,
1585 Sec. 1012 FRAUD AND FALSE STATEMENTS

passes, utters, or publishes any statement, knowing the same to be

false, or alters, forges, or counterfeits any instrument, paper, or

document, or utters, publishes, or passes as true any instrument,

paper, or document, knowing it to have been altered, forged, or

counterfeited, or willfully overvalues any security, asset, or income,

shall be fined under this title or imprisoned not more than two

years, or both.

* * * * * * *

§ 1012. Department of Housing and Urban Development

transactions

Whoever, with intent to defraud, makes any false entry in any

book of the Department of Housing and Urban Development or

makes any false report or statement to or for such Department; or

Whoever receives any compensation, rebate, or reward, with

intent to defraud such Department or with intent unlawfully to defeat its purposes; or

Whoever induces or influences such Department to purchase or

acquire any property or to enter into any contract and willfully

fails to disclose any interest which he has in such property or in

the property to which such contract relates, or any special benefit

which he expects to receive as a result of such contract—

Shall be fined under this title or imprisoned not more than one

year, or both.
1586

OBSTRUCTION OF JUSTICE

EXCERPT FROM TITLE 18, UNITED STATES CODE

[Public Law 100–690; 102 Stat. 4406]

§ 1516. Obstruction of Federal audit

(a) Whoever, with intent to deceive or defraud the United

States, endeavors to influence, obstruct, or impede a Federal auditor in the performance of official duties relating to a person, entity,

or program receiving in excess of $100,000, directly or indirectly,

from the United States in any 1 year period under a contract or

subcontract, grant, or cooperative agreement, or relating to any

property that is security for a mortgage note that is insured, guaranteed, acquired, or held by the Secretary of Housing and Urban

Development pursuant to any Act administered by the Secretary,

or relating to any property that is security for a loan that is made

or guaranteed under title V of the Housing Act of 1949, shall be

fined under this title, or imprisoned not more than 5 years, or both.

(b) For purposes of this section—

(1) the term ‘‘Federal auditor’’ means any person employed

on a full- or part-time or contractual basis to perform an audit

or a quality assurance inspection for or on behalf of the United

States; and

(2) the term ‘‘in any 1 year period’’ has the meaning given

to the term ‘‘in any one-year period’’ in section 666.
1587

INTERNATIONAL HOUSING AND URBAN DEVELOPMENT

EXCERPT FROM HOUSING ACT OF 1957

[Public Law 85–104, 85th Congress; 71 Stat. 305; 12 U.S.C. 1701d–4]

EXCHANGE OF DATA

SEC. 604. ø12 U.S.C. 1701d–4¿ (a) The Secretary of Housing

and Urban Development may exchange data relating to housing

and urban planning and development with other nations and assemble such data from other nations, through participation in

international conferences and other means, where such exchange or

assembly is deemed by him to be beneficial in carrying out his responsibilities under the Department of Housing and Urban Development Act or other legislation. In carrying out his responsibilities

under this subsection the Secretary may—

(1) pay the expenses of participation in activities conducted

under authority of this section including, but not limited to,

the compensation, travel expenses, and per diem in lieu of subsistence of persons serving in an advisory capacity while away

from their homes or regular places of business in connection

with attendance at international meetings and conferences or

other travel for the purpose of exchange or assembly of data

relating to housing and urban planning and development; but

such travel expenses shall not exceed those authorized for regular officers and employees traveling in connection with said

activities; and

(2) accept from international organizations, foreign countries, and private nonprofit foundations, funds, services, facilities, materials, and other donations to be utilized jointly in carrying out activities under this section.

(b) International programs and activities carried out by the

Secretary under the authority provided in subsection (a) shall be

subject to the approval of the Secretary of State for the purpose of

assuring that such authority shall be exercised in a manner

consistent with the foreign policy of the United States.
1588

ECONOMIC OPPORTUNITIES FOR LOW-INCOME

PERSONS

EXCERPT FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 102–550; 106 Stat. 3878; 12 U.S.C. 1701u]

SEC. 3. ø12 U.S.C. 1701u¿ ECONOMIC OPPORTUNITIES FOR LOW- AND

VERY LOW-INCOME PERSONS.

(a) FINDINGS.—The Congress finds that—

(1) Federal housing and community development programs

provide State and local governments and other recipients of

Federal financial assistance with substantial funds for projects

and activities that produce significant employment and other

economic opportunities;

(2) low- and very low-income persons, especially recipients

of government assistance for housing, often have restricted access to employment and other economic opportunities;

(3) the employment and other economic opportunities generated by projects and activities that receive Federal housing

and community development assistance offer an effective

means of empowering low- and very low-income persons, particularly persons who are recipients of government assistance

for housing; and

(4) prior Federal efforts to direct employment and other

economic opportunities generated by Federal housing and community development programs to low- and very low-income

persons have not been fully effective and should be intensified.

(b) POLICY.—It is the policy of the Congress and the purpose

of this section to ensure that the employment and other economic

opportunities generated by Federal financial assistance for housing

and community development programs shall, to the greatest extent

feasible, be directed toward low- and very low-income persons, particularly those who are recipients of government assistance for

housing.

(c) EMPLOYMENT.—

(1) PUBLIC AND INDIAN HOUSING PROGRAM.—

(A) IN GENERAL.—The Secretary shall require that

public and Indian housing agencies, and their contractors

and subcontractors, make their best efforts, consistent

with existing Federal, State, and local laws and regulations, to give to low- and very low-income persons the

training and employment opportunities generated by development assistance provided pursuant to section 5 of the

United States Housing Act of 1937, operating assistance

provided pursuant to section 9 of that Act, and modernization grants provided pursuant to section 14 of that Act.
1589 Sec. 3 ECONOMIC OPPORTUNITIES

(B) PRIORITY.—The efforts required under subparagraph (A) shall be directed in the following order of priority:

(i) To residents of the housing developments for

which the assistance is expended.

(ii) To residents of other developments managed

by the public or Indian housing agency that is expending the assistance.

(iii) To participants in Youthbuild programs receiving assistance under subtitle D of title IV of the

Cranston-Gonzalez National Affordable Housing Act.

(iv) To other low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is expended.

(2) OTHER PROGRAMS.— (A) IN GENERAL.—In other programs that provide

housing and community development assistance, the Secretary shall ensure that, to the greatest extent feasible,

and consistent with existing Federal, State, and local laws

and regulations, opportunities for training and employment arising in connection with a housing rehabilitation

(including reduction and abatement of lead-based paint

hazards), housing construction, or other public construction project are given to low- and very low-income persons

residing within the metropolitan area (or nonmetropolitan

county) in which the project is located.

(B) PRIORITY.—Where feasible, priority should be

given to low- and very low-income persons residing within

the service area of the project or the neighborhood in

which the project is located and to participants in

Youthbuild programs receiving assistance under subtitle D

of title IV of the Cranston-Gonzalez National Affordable

Housing Act.

(d) CONTRACTING.—

(1) PUBLIC AND INDIAN HOUSING PROGRAM.—

(A) IN GENERAL.—The Secretary shall require that

public and Indian housing agencies, and their contractors

and subcontractors, make their best efforts, consistent

with existing Federal, State, and local laws and regulations, to award contracts for work to be performed in connection with development assistance provided pursuant to

section 5 of the United States Housing Act of 1937, operating assistance provided pursuant to section 9 of that Act,

and modernization grants provided pursuant to section 14

of that Act, to business concerns that provide economic opportunities for low- and very low-income persons.

(B) PRIORITY.—The efforts required under subparagraph (A) shall be directed in the following order of priority:

(i) To business concerns that provide economic opportunities for residents of the housing development

for which the assistance is provided.

(ii) To business concerns that provide economic opportunities for residents of other housing develop-
Sec. 3 ECONOMIC OPPORTUNITIES 1590

ments operated by the public and Indian housing

agency that is providing the assistance.

(iii) To Youthbuild programs receiving assistance

under subtitle D of title IV of the Cranston-Gonzalez

National Affordable Housing Act.

(iv) To business concerns that provide economic

opportunities for low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is provided.

(2) OTHER PROGRAMS.—

(A) IN GENERAL.—In providing housing and community development assistance pursuant to other programs,

the Secretary shall ensure that, to the greatest extent feasible, and consistent with existing Federal, State, and local

laws and regulations, contracts awarded for work to be

performed in connection with a housing rehabilitation (including reduction and abatement of lead-based paint hazards), housing construction, or other public construction

project are given to business concerns that provide economic opportunities for low- and very low-income persons

residing within the metropolitan area (or nonmetropolitan

county) in which the assistance is expended.

(B) PRIORITY.—Where feasible, priority should be

given to business concerns which provide economic opportunities for low- and very low-income persons residing

within the service area of the project or the neighborhood

in which the project is located and to Youthbuild programs

receiving assistance under subtitle D of title IV of the

Cranston-Gonzalez National Affordable Housing Act.

(e) DEFINITIONS.—For the purposes of this section the following

definitions shall apply:

(1) LOW- AND VERY LOW-INCOME PERSONS.—The terms

‘‘low-income persons’’ and ‘‘very low-income persons’’ have the

same meanings given the terms ‘‘low-income families’’ and

‘‘very low-income families’’, respectively, in section 3(b)(2) of

the United States Housing Act of 1937.

(2) BUSINESS CONCERN THAT PROVIDES ECONOMIC OPPORTUNITIES.—The term ‘‘a business concern that provides economic

opportunities’’ means a business concern that—

(A) provides economic opportunities for a class of persons that has a majority controlling interest in the

business;

(B) employs a substantial number of such persons; or

(C) meets such other criteria as the Secretary may establish.

(f) COORDINATION WITH OTHER FEDERAL AGENCIES.—The Secretary shall consult with the Secretary of Labor, the Secretary of

Health and Human Services, the Secretary of Commerce, the Administrator of the Small Business Administration, and such other

Federal agencies as the Secretary determines are necessary to

carry out this section.

(g) REGULATIONS.—Not later than 180 days after the date of

enactment of the National Affordable Housing Act Amendments of
1591 Sec. 3 ECONOMIC OPPORTUNITIES

1Probably intended to refer to the Housing and Community Development Act of 1992, Pub.

L. 102–550, approved October 28, 1992.

1992, 1 the Secretary shall promulgate regulations to implement

this section.
1592

NOTICE AND COMMENT FOR DEMONSTRATION

PROGRAMS

EXCERPT FROM HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

[Public Law 98–181; 97 Stat. 1237; 42 U.S.C. 3542]

PUBLIC NOTICE AND COMMENT REGARDING DEPARTMENT

DEMONSTRATION PROGRAMS

SEC. 470. ø42 U.S.C. 3542¿ (a) No demonstration program not

expressly authorized in law may be commenced by the Secretary of

Housing and Urban Development until (1) a description of such

demonstration program is published in the Federal Register, which

description may be included in a notice of funding availability; and

(2) there expires a period of sixty calendar days following the date

of such publication, during which period the Secretary shall fully

consider any public comments submitted with respect to such demonstration program.

(b) Nothing in this section may be considered to authorize the

conducting of any demonstration program by the Secretary of

Housing and Urban Development.
1593

PREVENTING FRAUD AND ABUSE

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1864; 42 U.S.C. 3543]

SEC. 165. ø42 U.S.C. 3543¿ PREVENTING FRAUD AND ABUSE IN DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PROGRAMS.

(a) DISCLOSURE OF SOCIAL SECURITY ACCOUNT NUMBER.—As a

condition of initial or continuing eligibility for participation in any

program of the Department of Housing and Urban Development involving loans, grants, interest or rental assistance of any kind, or

mortgage or loan insurance, and to ensure that the level of benefits

provided under such programs is proper, the Secretary of Housing

and Urban Development may require that an applicant or participant (including members of the household of an applicant or participant) disclose his or her social security account number or employer identification number to the Secretary.

(b) DEFINITIONS.—For purposes of this section, the terms ‘‘applicant’’ and ‘‘participant’’ shall have such meanings as the Secretary of Housing and Urban Development by regulation shall prescribe. Such terms shall not include persons whose involvement is

only in their official capacity, such as State or local government officials or officers of lending institutions.

EXCERPT FROM STEWART B. McKINNEY HOMELESS ASSISTANCE

AMENDMENTS ACT OF 1988

[Public Law 100–628; 102 Stat. 3259; 42 U.S.C. 3544]

SEC. 904. ø42 U.S.C. 3544¿ PREVENTING FRAUD AND ABUSE IN HOUSING AND URBAN DEVELOPMENT PROGRAMS.

(a) DEFINITIONS.—As used in this section:

(1) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

(2) APPLICANT; PARTICIPANT.—The terms ‘‘applicant’’ and

‘‘participant’’ shall have such meanings as the Secretary by

regulation shall prescribe, except that such terms shall include

members of an applicant’s or participant’s household, and such

terms shall not include persons whose involvement is only in

their official capacity, such as State or local government officials and officers of lending institutions.

(3) PUBLIC HOUSING AGENCY.—The term ‘‘public housing

agency’’ means any agency described in section 3(b)(6) of the

United States Housing Act of 1937.

(4) PROGRAM OF THE DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT.—The term ‘‘program of the Department of

Housing and Urban Development’’ includes Indian housing
Sec. 904 PREVENTING FRAUD AND ABUSE 1594

1Section 501(a) of the Native American Housing Assistance and Self-Determination Act of

1996 (P.L. 104–330; 110 Stat. 4041) repealed title II of the United States Housing Act of 1937.

programs assisted under title II of the United States Housing

Act of 1937 1.

(b) APPLICANT AND PARTICIPANT CONSENT.—As a condition of

initial or continuing eligibility for participation in any program of

the Department of Housing and Urban Development involving initial and periodic review of an applicant’s or participant’s income,

and to assure that the level of benefits provided under the program

is correct, the Secretary may require that an applicant or

participant—

(1) sign a consent form approved by the Secretary authorizing the Secretary, the public housing agency, or the owner responsible for determining eligibility for or level of benefits to

request current or previous employers to verify salary and

wage information pertinent to the applicant’s or participant’s

eligibility or level of benefits;

(2) sign a consent form approved by the Secretary authorizing the Secretary or the public housing agency responsible for

determining eligibility or level of benefits to request a State

agency charged with the administration of the State unemployment law to release wage information with respect to such applicant or participant or information regarding whether such

applicant or participant is receiving, has received, or has made

application for, unemployment compensation, and the amount

of any such compensation being received (or to be received) by

such applicant or participant;

(3) sign a consent form approved by the Secretary authorizing the Secretary to request the Commissioner of Social Security and the Secretary of the Treasury to release information

pursuant to section 6103(l)(7)(D)(ix) of the Internal Revenue

Code of 1986 with respect to such applicant or participant for

the sole purpose of the Secretary verifying income information

pertinent to the applicant’s or participant’s eligibility or level

of benefits; and

(4) only in the case of an applicant or participant that is

a member of a family described in section 3(f )(2) of the United

States Housing Act of 1937 (42 U.S.C. 1437a(f )(2)), sign an

agreement under which the applicant or participant agrees to

provide to the appropriate public housing agency, or the owner

responsible for determining the participant’s eligibility or level

of benefits, the information required under section 3(f )(1) of

such Act for the sole purpose of verifying income information

pertinent to the applicant’s or participant’s eligibility or level

of benefits, and comply with such agreement.

Except as provided in this subsection, this consent form shall not

be used to request taxpayer return information protected by section

6103 of the Internal Revenue Code of 1986.

(c) ACCESS TO RECORDS.—

(1) AMENDMENTS TO SOCIAL SECURITY ACT.—(A) Section

303 of the Social Security Act (42 U.S.C. 503) is amended by

adding at the end the following new subsection:
1595 Sec. 904 PREVENTING FRAUD AND ABUSE

1 As of December 31, 2000, the only subsequent amendment to this subsection of section 303

of the Social Security Act was an amendment striking paragraph (5). 2Section 542(a)(1) of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1998 (Public Law 105–65; 111 Stat. 1412)

repealed this paragraph effective October 27, 1997, and such repeal applies to any requests for

information made after the repeal.

‘‘(i) 1(1) The State agency charged with the administration of

the State law—

‘‘(A) shall disclose, upon request and on a reimbursable

basis, only to officers and employees of the Department of

Housing and Urban Development and to representatives of a

public housing agency, any of the following information contained in the records of such State agency with respect to individuals applying for or participating in any housing assistance

program administered by the Department who have signed an

appropriate consent form approved by the Secretary of Housing

and Urban Development—

‘‘(i) wage information, and

‘‘(ii) whether an individual is receiving, has received,

or has made application for, unemployment compensation,

and the amount of any such compensation being received

(or to be received) by such individual, and

‘‘(B) shall establish such safeguards as are necessary (as

determined by the Secretary of Labor in regulations) to ensure

that information disclosed under subparagraph (A) is used only

for purposes of determining an individual’s eligibility for benefits, or the amount of benefits, under a housing assistance program of the Department of Housing and Urban Development.

‘‘(2) The Secretary of Labor shall prescribe regulations governing how often and in what form information may be disclosed

under paragraph (1)(A).

‘‘(3) Whenever the Secretary of Labor, after reasonable notice

and opportunity for hearing to the State agency charged with the

administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until he or she is satisfied that

there is no longer any such failure. Until the Secretary of Labor is

so satisfied, he or she shall make no future certification to the Secretary of the Treasury with respect to such State.

‘‘(4) For purposes of this subsection, the term ‘public housing

agency’ means any agency described in section 3(b)(6) of the United

States Housing Act of 1937.

‘‘(5) 2 The provisions of this subsection shall cease to be effective beginning on October 1, 1994.’’.

(B) Section 304(a)(2) of the Social Security Act (42 U.S.C.

504(a)(2)) is amended by striking ‘‘(e), or (h)’’ and inserting ‘‘(e),

(h), or (i)’’.

(2) APPLICANT AND PARTICIPANT PROTECTIONS.—(A) In

order to protect applicants for, and recipients of, benefits under

the programs of the Department of Housing and Urban Development from the improper use of information obtained pursuant to the requirements of section 303(i) of the Social Security

Act from the State agency charged with the administration of
Sec. 904 PREVENTING FRAUD AND ABUSE 1596

the State unemployment compensation law, pursuant to section 3(d)(1) of the United States Housing Act of 1937 from the

applicant or participant, or pursuant to section 6103(l)(7)(D)(ix)

of the Internal Revenue Code of 1986 from the Commissioner

of Social Security or the Secretary of the Treasury, officers and

employees of the Department of Housing and Urban Development and (in the case of information obtained pursuant to such

section 303(i) or 3(d)(1)) representatives of public housing

agencies may only use such information—

(i) to verify an applicant’s or participant’s eligibility

for or level of benefits; or

(ii) in the case of an owner or public housing agency

responsible for determining eligibility for or level of benefits, to inform such owner or public housing agency that an

applicant’s or participant’s eligibility for or level of benefits

is uncertain and to request such owner or public housing

agency to verify such applicant’s or participant’s income information.

(B) No Federal, State, or local agency, or public housing

agency, or owner responsible for determining eligibility for or

level of benefits receiving such information may terminate,

deny, suspend, or reduce any benefits of an applicant or participant until such agency or owner has taken appropriate steps

to independently verify information relating to—

(i) the amount of the wages, other earnings or income,

or unemployment compensation involved,

(ii) whether such applicant or participant actually has

(or had) access to such wages, other earnings or income, or

benefits for his or her own use, and

(iii) the period or periods when, or with respect to

which, the applicant or participant actually received such

wages, other earnings or income, or benefits.

(C) Such applicant or participant shall be informed by the

agency or owner of the findings made by the agency or owner

on the basis of such verified information, and shall be given an

opportunity to contest such findings, in the same manner as

applies to other information and findings relating to eligibility

factors under the program.

(3) PENALTY.—(A) Any person who knowingly and willfully

requests or obtains any information concerning an applicant or

participant pursuant to the authority contained in section

303(i) of the Social Security Act, section 3(d)(1) of the United

States Housing Act of 1937, or section 6103(l)(7)(D)(ix) of the

Internal Revenue Code of 1986 without consent or agreement,

as applicable, pursuant to subsection (b) of this section or

under false pretenses, or any person who knowingly and willfully discloses any such information in any manner to any individual not entitled under any law to receive it, shall be guilty

of a misdemeanor and fined not more than $5,000. The term

‘‘person’’ as used in this paragraph shall include an officer or

employee of the Department of Housing and Urban Development, an officer or employee of any public housing agency, and

any owner responsible for determining eligibility for or level of

benefits (or employee thereof).
1597 Sec. 904 PREVENTING FRAUD AND ABUSE

(B) Any applicant or participant affected by (i) a negligent

or knowing disclosure of information referred to in this section,

section 303(i) of the Social Security Act, section 3(d)(1) of the

United States Housing Act of 1937, or section 6103(l)(7)(D)(ix)

of the Internal Revenue Code of 1986 about such person by an

officer or employee of any public housing agency or owner (or

employee thereof), which disclosure is not authorized by this

section, such section 303(i), such section 3(d)(1), such section

6103(l)(7)(D)(ix), or any regulation implementing this section,

such section 303(i), such section 3(d)(1), or such section

6103(l)(7)(D)(ix), or for which consent, pursuant to subsection

(b) of this section, has not been granted, or (ii) any other negligent or knowing action that is inconsistent with this section,

such section 303(i), such section 3(d)(1), such section

6103(l)(7)(D)(ix), or any such implementing regulation may

bring a civil action for damages and such other relief as may

be appropriate against any officer or employee of any public

housing agency or owner (or employee thereof) responsible for

any such unauthorized action. The district court of the United

States in the district in which the affected applicant or participant resides, in which such unauthorized action occurred, or in

which the applicant or participant alleged to be responsible for

any such unauthorized action resides, shall have jurisdiction in

such matters. Appropriate relief that may be ordered by such

district courts shall include reasonable attorney’s fees and

other litigation costs.

(d) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as provided in paragraphs (2) and

(3), the provisions of this section shall take effect on September

30, 1989.

(2) OPTIONAL EARLY IMPLEMENTATION.—At the initiative of

a State or an agency of the State, and with the approval of the

Secretary of Labor, the amendments made by subsection (c)(1)

may be made effective in such State on any date before September 30, 1989, which is more than 90 days after the date of

the enactment of this section.

(3) REQUIREMENTS FOR STATE AGENCIES.—In the case of

any State the legislature of which has not been in session for

at least 30 calendar days (whether or not consecutive) between

the date of the enactment of this Act and September 30, 1989,

the amendments made by subsection (c)(1) shall take effect 30

calendar days after the first day on which such legislature is

in session on or after September 30, 1989.

(e) CONDITIONS OF RELEASE OF INFORMATION BY THIRD PARTIES.—An applicant or participant under any program of the Department of Housing and Urban Development may not be required

or requested to consent to the release of information by third parties as a condition of initial or continuing eligibility for participation in the program unless—
Sec. 904 PREVENTING FRAUD AND ABUSE 1598

1So in law.

2Section 903 of the Housing and Community Development Act of 1992, Pub. L. 102–550, approved October 28, 1992, added subsection (e). Subsection (b) of such section provides for the

development of a new release form meeting the requirements of section 904 of the Stewart B.

McKinney Homeless Assistance Amendments Act of 1988.

(1) the request for consent is made, and the information

secured is maintained, in accordance with this section, 1 section

552a of title 5, United States Code; and

(2) the consent that is requested is appropriately limited,

with respect to time and information relevant and necessary to

meet the requirements of this section. 2
1599

USE OF AMERICAN MATERIALS AND PRODUCTS

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1950; 12 U.S.C. 1735e–1]

SEC. 571. ø12 U.S.C. 1735e–1¿ USE OF AMERICAN MATERIALS AND PRODUCTS.

In the administration of housing assistance programs, the Secretary of Housing and Urban Development shall encourage the use

of materials and products mined and produced in the United

States.

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3883; 42 U.S.C. 3546]

SEC. 920. ø42 U.S.C. 3546¿ USE OF DOMESTIC PRODUCTS.

(a) PROHIBITION AGAINST FRAUDULENT USE OF ‘‘MADE IN

AMERICA’’ LABELS.—A person shall not intentionally affix a label

bearing the inscription of ‘‘Made in America’’, or any inscription

with that meaning, to any product sold in or shipped to the United

States, if that product is not a domestic product.

(b) REPORT.—The Secretary of Housing and Urban Development and the Secretary of Agriculture shall each submit, before

January 1, 1994, a report to the Congress on procurements of products that are not domestic products.

(c) DEFINITIONS.—For the purposes of this section, the term

‘‘domestic product’’ means a product—

(1) that is manufactured or produced in the United States;

and

(2) at least 50 percent of the cost of the articles, materials,

or supplies of which are mined, produced, or manufactured in

the United States.
1600

1Section 5(a) of the Department of Housing and Urban Development Act, Pub. L. 89–174, approved Sept. 9, 1965, which is set forth, ante, this part, transferred to the Secretary of Housing

and Urban Development all functions, powers, and duties of the Housing and Home Finance

Agency.

REVOLVING FUND FOR LIQUIDATING PROGRAMS

EXCERPT FROM INDEPENDENT OFFICES APPROPRIATION ACT, 1955

[Public Law 83–428; 68 Stat. 295; 12 U.S.C. 1701g–5]

Office of the Administrator, revolving fund (liquidating programs): There is established as of June 30, 1954, a revolving fund,

and the Administrator 1 is authorized to credit said fund with all

moneys hereafter obtained or now held by him or by any constituent agency of the Housing and Home Finance Agency 1 by any

other official thereof, and to account under said fund for all assets

and liabilities, in connection with (1) community facilities provided

or assisted under title II of the Lanham Act, as amended (42

U.S.C. 1531–1534), or under title III of the Defense Housing and

Community Facilities and Services Act of 1951, as amended (42

U.S.C. 1592–1592n); (2) loans or advances made pursuant to title

V of the War Mobilization and Reconversion Act of 1944 (58 Stat.

791), or the Act of October 13, 1949 (40 U.S.C. 451–458); (3) functions transferred under Reorganization Plan No. 23 of 1950 (5

U.S.C. 133z–15, note), or authorized under sections 102, 102a,

102b, and 102c of the Housing Act of 1948, as amended (12 U.S.C.

1701g–1701g–3); (4) notes or other obligations purchased pursuant

to the Alaska Housing Act, as amended (48 U.S.C. 484 (a)); (5) subsistence homesteads and greentowns (Acts of June 29, 1936, 49

Stat. 2035, and May 19, 1949, 63 Stat. 68); (6) public war housing

under title I of the Lanham Act, as amended (42 U.S.C. 1521–

1524), and defense housing under title III of the Defense Housing

and Community Facilities and Services Act of 1951, as amended

(42 U.S.C. 1592–1592n); and (7) veterans’ re-use housing under

title V of the Lanham Act, as amended (42 U.S.C. 1571–1575): Provided, That said fund shall be available for all necessary expenses

(including administrative expenses) in connection with the liquidation of the programs carried out pursuant to the foregoing provisions of law, including operation, maintenance, improvement, or

disposition of facilities, and for disbursements pursuant to outstanding commitments against moneys herein authorized to be

credited to said fund, repayment of obligations to the Treasury, and

refinancing and refunding operations on existing loans: Provided

further, That any amount in said fund which is determined to be

in excess of requirements for the purposes hereof shall be declared

and paid as liquidating dividends to the Treasury not less often

than annually: Provided further, That during the current fiscal

year not to exceed $3,940,000 shall be available for administrative

expenses (including not to exceed $265,000 for travel) for the fore-
1601 REVOLVING FUND FOR LIQUIDATING PROGRAMS

1The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1992, Pub. L. 102–139, 105 Stat. 752, provides as follows:

‘‘Notwithstanding section 289(c) of the Cranston-Gonzalez National Affordable Housing Act

(Public Law 101-625), the assets and liabilities of the revolving fund established by section 312

of the Housing Act of 1964, as amended (42 U.S.C. 1452b), and any collections, including repayments or recaptured amounts, of such fund shall be transferred to and merged with the Revolving Fund (liquidating programs), established pursuant to title II of the Independent Offices Appropriation Act, 1955, as amended (12 U.S.C 1701g-5), effective October 1, 1991.’’.

Section 289(c) of the Cranston-Gonzalez National Affordable Housing Act provides for disposition of repayments in connection with the program under section 312 of the Housing Act of 1964

and is set forth in part IV of this compilation.

going purposes, but this amount shall be exclusive of costs of services performed on a contract or fee basis in connection with termination of contracts and legal services on a contract or fee basis and

of payment for services and facilities of the Federal Reserve banks

or any member thereof, any servicer approved by the Federal National Mortgage Association, the Federal home-loan banks, and any

insured bank within the meaning of the Act of August 23, 1935, as

amended, creating the Federal Deposit Insurance Corporation (12

U.S.C. 264) which has been designated by the Secretary of the

Treasury as a depository of public money of the United States: Provided further, That after the effective date of this Act no additional

notes or obligations shall be purchased from funds appropriated

pursuant to the Alaska Housing Act, as amended (48 U.S.C. 484

(d)), except for the furtherance or refinancing of an existing loan:

Provided further, That except for extensions, or refinancing, of existing obligations the authority to issue obligations to the Secretary

of the Treasury under section 1 (4) of Reorganization Plan No. 23

of 1950 (5 U.S.C. 1332–15, note), shall terminate on June 30, 1954:

Provided further, That all expenses, not otherwise specifically limited in this Act, in connection with the programs administered pursuant to the foregoing provisions of law shall not exceed

$20,000,000. 1
1602

PUBLIC NOTICE AND COMMENT RULEMAKING

EXCERPT FROM DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1998

[Public Law 105–65; 111 Stat. 1365]

SEC. 208. REQUIREMENT FOR HUD TO MAINTAIN PUBLIC NOTICE AND COMMENT RULEMAKING.—Notwithstanding any other provision of law, for fiscal year 1998 and for all fiscal years thereafter,

the Secretary of Housing and Urban Development shall maintain

all current requirements under part 10 of the Department of Housing and Urban Development regulations (24 CFR part 10) with respect to the Department’s policies and procedures for the promulgation and issuance of rules, including the use of public participation

in the rulemaking process.
1603

HUD HEADQUARTERS BUILDING

PUBLIC LAW 106–162

[Public Law 106–162; 113 Stat. 1777]

SECTION 1. DESIGNATION OF ROBERT C. WEAVER FEDERAL BUILDING.

In honor of the first Secretary of Housing and Urban Development, the headquarters building of the Department of Housing and

Urban Development located at 451 Seventh Street, SW., in Washington, District of Columbia, shall be known and designated as the

‘‘Robert C. Weaver Federal Building’’.

SEC. 2. REFERENCES.

Any reference in a law, map, regulation, document, paper, or

other record of the United States to the building referred to in section 1 shall be deemed to be a reference to the ‘‘Robert C. Weaver

Federal Building’’.

1605

1Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) provides that, for purposes

of such Act, the ‘‘term ‘Federal Home Loan Bank’ or ‘Bank’ means a bank established under

the authority of the Federal Home Loan Bank Act.’’.

PART XIII—OTHER RELATED PROVISIONS OF

LAW

FEDERAL HOME LOAN BANKS COMMUNITY

INVESTMENT AND AFFORDABLE HOUSING PROGRAMS

EXCERPT FROM FEDERAL HOME LOAN BANK ACT

[Public Law 101–73; 103 Stat. 183; 12 U.S.C. 1430]

ADVANCES TO MEMBERS

SEC. 10. (a)***

* * * * * * *

(i) ø12 U.S.C. 1430¿ COMMUNITY INVESTMENT PROGRAM.—

(1) IN GENERAL.—Each Bank 1 shall establish a program to

provide funding for members to undertake community-oriented

mortgage lending. Each Bank shall designate a community investment officer to implement community lending and affordable housing advance programs of the Banks under this subsection and subsection (j) and provide technical assistance and

outreach to promote such programs. Advances under this program shall be priced at the cost of consolidated Federal Home

Loan Bank obligations of comparable maturities, taking into

account reasonable administrative costs.

(2) COMMUNITY-ORIENTED MORTGAGE LENDING.—For purposes of this subsection, the term ‘‘community-oriented mortgage lending’’ means providing loans—

(A) to finance home purchases by families whose income does not exceed 115 percent of the median income for

the area,

(B) to finance purchase or rehabilitation of housing for

occupancy by families whose income does not exceed 115

percent of median income for the area,

(C) to finance commercial and economic development

activities that benefit low- and moderate-income families

or activities that are located in low- and moderate-income

neighborhoods, and

(D) to finance projects that further a combination of

the purposes described in subparagraphs (A) through (C).

(j) AFFORDABLE HOUSING PROGRAM.—
Sec. 10 FHLB AFFORDABLE HOUSING PROGRAM 1606

1Section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422) provides that, for purposes

of such Act, the ‘‘term ‘Board’ means the Federal Housing Finance Board established under section 2A’’. 2So in law. In subparagraphs (A) through (C) the first letter of the first word probably should

be capitalized and subparagraphs (A) and (B) should probably end with a period. 3So in law. The comma probably should be a semicolon.

(1) IN GENERAL.—Pursuant to regulations promulgated by

the Board, 1 each Bank shall establish an Affordable Housing

Program to subsidize the interest rate on advances to members

engaged in lending for long term, low- and moderate-income,

owner-occupied and affordable rental housing at subsidized interest rates.

(2) STANDARDS.—The Board’s regulations shall permit

Bank members to use subsidized advances received from the

Banks to—

(A) finance homeownership by families with incomes

at or below 80 percent of the median income for the area;

or

(B) finance the purchase, construction, or rehabilitation of rental housing, at least 20 percent of the units of

which will be occupied by and affordable for very low-income households for the remaining useful life of such housing or the mortgage term.

(3) PRIORITIES FOR MAKING ADVANCES.—In using advances

authorized under paragraph (1), each Bank member shall give

priority to qualified projects such as the following:

(A) purchase 2 of homes by families whose income is 80

percent or less of the median income for the area, 3

(B) purchase 2 or rehabilitation of housing owned or

held by the United States Government or any agency or

instrumentality of the United States; and

(C) purchase 2 or rehabilitation of housing sponsored

by any nonprofit organization, any State or political subdivision of any State, any local housing authority or State

housing finance agency.

(4) REPORT.—Each member receiving advances under this

program shall report annually to the Bank making such advances concerning the member’s use of advances received

under this program.

(5) CONTRIBUTION TO PROGRAM.—Each Bank shall annually contribute the percentage of its annual net earnings prescribed in the following subparagraphs to support subsidized

advances through the Affordable Housing Program:

(A) In 1990, 1991, 1992, and 1993, 5 percent of the

preceding year’s net income, or such prorated sums as may

be required to assure that the aggregate contribution of all

the Banks shall not be less than $50,000,000 for each such

year.

(B) In 1994, 6 percent of the preceding year’s net income, or such prorated sum as may be required to assure

that the aggregate contribution of the Banks shall not be

less than $75,000,000 for such year.

(C) In 1995, and subsequent years, 10 percent of the

preceding year’s net income, or such prorated sums as may

be required to assure that the aggregate contribution of
1607 Sec. 10 FHLB AFFORDABLE HOUSING PROGRAM

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

the Banks shall not be less than $100,000,000 for each

such year.

(6) GROUNDS FOR SUSPENDING CONTRIBUTIONS.—

(A) IN GENERAL.—If a Bank finds that the payments

required under this paragraph are contributing to the financial instability of such Bank, it may apply to the Federal Housing Finance Board for a temporary suspension of

such payments.

(B) FINANCIAL INSTABILITY.—In determining the financial instability of a Bank, the Federal Housing Finance

Board shall consider such factors as (i) whether the Bank’s

earnings are severely depressed, (ii) whether there has

been a substantial decline in membership capital, and (iii)

whether there has been a substantial reduction in advances outstanding.

(C) REVIEW.—The Board shall review the application

and any supporting financial data and issue a written decision approving or disapproving such application. The

Board’s decision shall be accompanied by specific findings

and reasons for its action.

(D) MONITORING SUSPENSION.—If the Board grants a

suspension, it shall specify the period of time such suspension shall remain in effect and shall continue to monitor

the Bank’s financial condition during such suspension.

(E) LIMITATIONS ON GROUNDS FOR SUSPENSION.—The

Board shall not suspend payments to the Affordable Housing Program if the Bank’s reduction in earnings is a result

of (i) a change in the terms for advances to members which

is not justified by market conditions, (ii) inordinate operating and administrative expenses, or (iii) mismanagement.

(F) The Federal Housing Finance Board shall notify

the Committee on Banking, Finance and Urban Affairs of

the House of Representatives 1 and the Committee on

Banking, Housing, and Urban Affairs of the Senate not

less than 60 days before such suspension takes effect. Such

suspension shall become effective unless a joint resolution

is enacted disapproving such suspension.

(7) FAILURE TO USE AMOUNTS FOR AFFORDABLE HOUSING.—

If any Bank fails to utilize or commit the full amount provided

in this subsection in any year, 90 percent of the amount that

has not been utilized or committed in that year shall be deposited by the Bank in an Affordable Housing Reserve Fund administered by the Board. The 10 percent of the unutilized and

uncommitted amount retained by a Bank should be fully utilized or committed by that Bank during the following year and

any remaining portion must be deposited in the Affordable

Housing Reserve Fund. Under regulations established by the
Sec. 10 FHLB AFFORDABLE HOUSING PROGRAM 1608

Board, funds from the Affordable Housing Reserve Fund may

be made available to any Bank to meet additional affordable

housing needs in such Bank’s district pursuant to this section.

(8) NET EARNINGS.—The net earnings of any Federal Home

Loan Bank shall be determined for purposes of this

paragraph—

(A) after reduction for any payment required under

section 21 or 21B of this Act; and

(B) before declaring any dividend under section 16.

(9) REGULATIONS.—The Federal Housing Finance Board

shall promulgate regulations to implement this subsection.

Such regulations shall, at a minimum—

(A) specify activities eligible to receive subsidized

advances from the Banks under this program;

(B) specify priorities for the use of such advances;

(C) ensure that advances made under this program

will be used only to assist projects for which adequate

long-term monitoring is available to guarantee that affordability standards and other requirements of this subsection

are satisfied;

(D) ensure that a preponderance of assistance provided under this subsection is ultimately received by lowand moderate-income households;

(E) ensure that subsidies provided by Banks to member institutions under this program are passed on to the

ultimate borrower;

(F) establish uniform standards for subsidized advances under this program and subsidized lending by

member institutions supported by such advances, including maximum subsidy and risk limitations for different

categories of loans made under this subsection; and

(G) coordinate activities under this subsection with

other Federal or federally-subsidized affordable housing

activities to the maximum extent possible.

(10) OTHER PROGRAMS.—No provision of this subsection or

subsection (i) shall preclude any Bank from establishing additional community investment cash advance programs or

contributing additional sums to the Affordable Housing Reserve Fund.

(11) ADVISORY COUNCIL.—Each Bank shall appoint an Advisory Council of 7 to 15 persons drawn from community and

nonprofit organizations actively involved in providing or promoting low- and moderate-income housing in its district. The

Advisory Council shall meet with representatives of the board

of directors of the Bank quarterly to advise the Bank on lowand moderate-income housing programs and needs in the district and on the utilization of the advances for these purposes.

Each Advisory Council established under this paragraph shall

submit to the Board at least annually its analysis of the lowincome housing activity of the Bank by which it is appointed.

(12) REPORTS TO CONGRESS.—

(A) The Board shall monitor and report annually to

the Congress and the Advisory Council for each Bank the

support of low-income housing and community develop-
1609 Sec. 10 FHLB COMMUNITY INVESTMENT PROGRAM

ment by the Banks and the utilization of advances for

these purposes.

(B) The analyses submitted by the Advisory Councils

to the Board under paragraph (11) shall be included as

part of the report required by this paragraph.

(C) The Comptroller General of the United States

shall audit and evaluate the Affordable Housing Program

established by this subsection after such program has been

operating for 2 years. The Comptroller General shall report to Congress on the conclusions of the audit and recommend improvements or modifications to the program.

(13) DEFINITIONS.—For purposes of this subsection—

(A) LOW- OR MODERATE-INCOME HOUSEHOLD.—The

term ‘‘low- or moderate-income household’’ means any

household which has an income of 80 percent or less of the

area median.

(B) VERY LOW-INCOME HOUSEHOLD.—The term ‘‘very

low-income household’’ means any household that has an

income of 50 percent or less of the area median.

(C) LOW- OR MODERATE-INCOME NEIGHBORHOOD.—The

term ‘‘low- or moderate-income neighborhood’’ means any

neighborhood in which 51 percent or more of the households are low- or moderate-income households.

(D) AFFORDABLE FOR VERY-LOW INCOME HOUSE- HOLDS.—For purposes of paragraph (2)(B) the term ‘‘affordable for very-low income households’’ means that rents

charged to tenants for units made available for occupancy

by low-income families shall not exceed 30 percent of the

adjusted income of a family whose income equals 50 percent of the income for the area (as determined by the Secretary of Housing and Urban Development) with adjustment for family size.

(C) The Comptroller General of the United States

shall audit and evaluate the Affordable Housing Program

established by this subsection after such program has been

operating for 2 years. The Comptroller General shall report to Congress on the conclusions of the audit and recommend improvements or modifications to the program.

(13) DEFINITIONS.—For purposes of this subsection—

(A) LOW- OR MODERATE-INCOME HOUSEHOLD.—The

term ‘‘low- or moderate-income household’’ means any

household which has an income of 80 percent or less of the

area median.

(B) VERY LOW-INCOME HOUSEHOLD.—The term ‘‘very

low-income household’’ means any household that has an

income of 50 percent or less of the area median.

(C) LOW- OR MODERATE-INCOME NEIGHBORHOOD.—The

term ‘‘low- or moderate-income neighborhood’’ means any

neighborhood in which 51 percent or more of the households are low- or moderate-income households.

(D) AFFORDABLE FOR VERY-LOW INCOME HOUSEHOLDS.—For purposes of paragraph (2)(B) the term ‘‘affordable for very-low income households’’ means that rents

charged to tenants for units made available for occupancy

by low-income families shall not exceed 30 percent of the
Sec. 10 FHLB COMMUNITY INVESTMENT PROGRAM 1610

adjusted income of a family whose income equals 50 percent of the income for the area (as determined by the Secretary of Housing and Urban Development) with adjustment for family size.
1611

FEDERAL DEPOSIT INSURANCE CORPORATION

AFFORDABLE HOUSING PROGRAM

EXCERPT FROM FEDERAL DEPOSIT INSURANCE ACT

[Public Law 102–242; 105 Stat. 2317; 12 U.S.C. 1831q]

SEC. 40. ø12 U.S.C. 1831q¿ FDIC AFFORDABLE HOUSING PROGRAM.

(a) PURPOSE.—The purpose of this section is to provide homeownership and rental housing opportunities for very low-income,

low-income, and moderate-income families.

(b) FUNDING AND LIMITATIONS OF PROGRAM.—

(1) DURATION OF PROGRAM.—The provisions of this section

shall be effective, subject to the provisions of paragraph (2),

only during the 3-year period beginning upon the commencement of the first fiscal year for which amounts are provided

pursuant to paragraph (2)(A).

(2) ANNUAL FISCAL LIMITATIONS.—

(A) IN GENERAL.—In each fiscal year during the 3-year

period referred to in paragraph (1), the provisions of this

section shall apply only—

(i) to such extent or in such amounts as are provided in appropriations Acts for any losses resulting

during the fiscal year from the sale of properties under

this section, except that such amounts for losses may

not exceed $30,000,000 in any fiscal year; and

(ii) to the extent that amounts are provided in appropriations Acts pursuant to subparagraph (C) for

any other costs relating to the program under this section.

(B) DEFINITION OF LOSSES.—For purposes of this paragraph, the amount of losses resulting from the sale of

properties under this section during any fiscal year shall

be the amount equal to the sum of any affordable housing

discounts reasonably anticipated to accrue during the fiscal year.

(C) AUTHORIZATION OF APPROPRIATIONS.—There are

authorized to be appropriated, for each fiscal year during

the 3-year period referred to in paragraph (1), such sums

as may be necessary for any costs of the program under

this section other than losses resulting from the sale of

properties under this section.

(D) OTHER DEFINITIONS.—For purposes of this paragraph:

(i) AFFORDABLE HOUSING DISCOUNT.—The term

‘‘affordable housing discount’’ means, with respect to

any eligible residential or eligible condominium property transferred under this section by the Corporation,

the difference (if any) between the realizable disposi-
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1612

tion value of the property and the actual sale price of

the property under this section.

(ii) REALIZABLE DISPOSITION VALUE.—The term

‘‘realizable disposition value’’ means the estimated sale

price that the Corporation reasonably would be able to

obtain upon the sale of a property by the Corporation

under the provisions of this Act, not including this section, and any other applicable laws. Not later than the

expiration of the 120-day period beginning upon the

commencement of the first fiscal year for which

amounts are provided pursuant to paragraph (2)(A),

the Corporation shall establish, and publish in the

Federal Register, procedures for determining the realizable disposition value of a property transferred

under this section, which shall take into consideration

such factors as the Corporation considers appropriate,

including the actual sale prices of properties disposed

of by the Resolution Trust Corporation under section

21A(c) of the Federal Home Loan Bank Act, the prices

of other properties sold under similar programs, and

the appraised value of the property transferred under

this section. Until such procedures are established, the

Corporation may consider the realizable disposition

value of any eligible residential or condominium property to be equal to the appraised value of the property.

(3) EXISTING CONTRACTS.—The provisions of this section

shall not apply to any eligible residential property or any eligible condominium property that is subject to an agreement entered into by the Corporation before the commencement of the

first fiscal year for which amounts are provided pursuant to

paragraph (2)(A) that provides for any other disposition of the

property.

(c) RULES GOVERNING DISPOSITION OF ELIGIBLE SINGLE FAMILY

PROPERTIES.—

(1) NOTICE TO CLEARINGHOUSES.—Within a reasonable period of time after acquiring title to an eligible single family

property, the Corporation shall provide written notice to clearinghouses. Such notice shall contain basic information about

the property, including but not limited to location, condition,

and information relating to the estimated fair market value of

the property. Each clearinghouse shall make such information

available, upon request, to other public agencies, other nonprofit organizations, and qualifying households. The Corporation shall allow public agencies, nonprofit organizations, and

qualifying households reasonable access to eligible single family property for purposes of inspection.

(2) OFFERS TO SELL TO NONPROFIT ORGANIZATIONS, PUBLIC

AGENCIES, AND QUALIFYING HOUSEHOLDS.—During the 180-day

period beginning on the date on which the Corporation makes

an eligible single family property available for sale, the Corporation shall offer to sell the property to—

(A) qualifying households (including qualifying households with members who are veterans); or
1613 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

(B) public agencies or nonprofit organizations that

agree to (i) make the property available for occupancy by

and maintain it as affordable for low-income families (including low-income families with members who are veterans) for the remaining useful life of such property, or (ii)

make the property available for purchase by any such family who, except as provided in paragraph (4), agrees to occupy the property as a principal residence for at least 12

months and certifies in writing that the family intends to

occupy the property for at least 12 months.

The restrictions described in clause (i) of subparagraph (B)

shall be contained in the deed or other recorded instrument. If,

upon the expiration of such 180-day period, no qualifying

household, public agency, or nonprofit organization has made

a bona fide offer to purchase the property, the Corporation may

offer to sell the property to any purchaser. The Corporation

shall actively market eligible single family properties for sale

to low-income families and to low-income families with members who are veterans.

(3) RECAPTURE OF PROFITS FROM RESALE.—Except as provided in paragraph (4), if any eligible single family property

sold (A) to a qualifying household, or (B) to a low-income family pursuant to paragraph (2)(B)(ii), subsection (j)(3)(A), or subsection (k)(2), is resold by the qualifying household or low-income family during the 1-year period beginning upon initial acquisition by the household or low-income family, the Corporation shall recapture 75 percent of the amount of any proceeds

from the resale that exceed the sum of (i) the original sale

price for the acquisition of the property by the qualifying

household or low-income family, (ii) the costs of any improvements to the property made after the date of the acquisition,

and (iii) any closing costs in connection with the acquisition.

(4) EXCEPTIONS TO RECAPTURE REQUIREMENT.—

(A) RELOCATION.—The Corporation may in its discretion waive the applicability (i) to any qualifying household

of the requirement under paragraph (3) and the requirements relating to residency of a qualifying household

under subparagraphs (B) and (C) of subsection (p)(12), and

(ii) to any low-income family of the requirement under

paragraph (3) and the residency requirements under paragraph (2)(B)(ii). The Corporation may grant any such waiver only for good cause shown, including any necessary relocation of the qualifying household or low-income family.

(B) OTHER RECAPTURE PROVISIONS.—The requirement

under paragraph (3) shall not apply to any eligible single

family property for which, upon resale by the qualifying

household or low-income family during the 1-year period

beginning upon initial acquisition by the household or family, a portion of the sale proceeds or any subsidy provided

in connection with the acquisition of the property by the

household or family is required to be recaptured or repaid

under any other Federal, State, or local law (including section 143(m) of the Internal Revenue Code of 1986) or regulation or under any sale agreement.
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1614

(5) EXCEPTION TO AVOID DISPLACEMENT OF EXISTING RESI- DENTS.—Notwithstanding the first sentence of paragraph (2),

during the 180-day period following the date on which the Corporation makes an eligible single family property available for

sale, the Corporation may sell the property to the household

residing in the property, but only if (A) such household was residing in the property at the time notice regarding the property

was provided to clearinghouses under paragraph (1), (B) such

sale is necessary to avoid the displacement of, and unnecessary

hardship to, the resident household, (C) the resident household

intends to occupy the property as a principal residence for at

least 12 months, and (D) the resident household certifies in

writing that the household intends to occupy the property for

at least 12 months.

(d) RULES GOVERNING DISPOSITION OF ELIGIBLE MULTIFAMILY

HOUSING PROPERTIES.— (1) NOTICE TO CLEARINGHOUSES.—Within a reasonable period of time after acquiring title to an eligible multifamily

housing property, the Corporation shall provide written notice

to clearinghouses. Such notice shall contain basic information

about the property, including but not limited to location, number of units (identified by number of bedrooms), and information relating to the estimated fair market value of the property. Each clearinghouse shall make such information available, upon request, to qualifying multifamily purchasers. The

Corporation shall allow qualifying multifamily purchasers reasonable access to eligible multifamily housing properties for

purposes of inspection.

(2) EXPRESSION OF SERIOUS INTEREST.—Qualifying multifamily purchasers may give written notice of serious interest in

a property during a period ending 90 days after the time the

Corporation provides notice under paragraph (1). The notice of

serious interest shall be in such form and include such information as the Corporation may prescribe.

(3) NOTICE OF READINESS FOR SALE.—Upon the expiration

of the period referred to in paragraph (2) for a property, the

Corporation shall provide written notice to any qualifying multifamily purchaser that has expressed serious interest in the

property. Such notice shall specify the minimum terms and

conditions for sale of the property.

(4) OFFERS BY QUALIFYING MULTIFAMILY PURCHASERS.—A

qualifying multifamily purchaser receiving notice in accordance

with paragraph (3) shall have 45 days (from the date notice is

received) to make a bona fide offer to purchase the property.

The Corporation shall accept an offer that complies with the

terms and conditions established by the Corporation. If, before

the expiration of such 45-day period, any offer to purchase a

property initially accepted by the Corporation is subsequently

rejected or fails (for any reason), the Corporation shall accept

another offer to purchase the property made during such period that complies with the terms and conditions established

by the Corporation (if such another offer is made). The preceding sentence may not be construed to require a qualifying

multifamily purchaser whose offer is accepted during the 45-
1615 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

day period to purchase the property before the expiration of

the period.

(5) EXTENSION OF RESTRICTED OFFER PERIODS.—The Corporation may provide notice to clearinghouses regarding, and

offer for sale under the provisions of paragraphs (1) through

(4), any eligible multifamily housing property—

(A) in which no qualifying multifamily purchaser has

expressed serious interest during the period referred to in

paragraph (2), or

(B) for which no qualifying multifamily purchaser has

made a bona fide offer before the expiration of the period

referred to in paragraph (4),

except that the Corporation may, in the discretion of the Corporation, alter the duration of the periods referred to in paragraphs (2) and (4) in offering any property for sale under this

paragraph.

(6) SALE OF MULTIFAMILY PROPERTIES TO OTHER PUR- CHASERS.—

(A) TIMING.—If, upon the expiration of the period referred to in paragraph (2), no qualifying multifamily purchaser has expressed serious interest in a property, the

Corporation may offer to sell the property, individually or

in combination with other properties, to any purchaser.

(B) LIMITATION ON COMBINATION SALES.—The Corporation may not sell in combination with other properties any

property for which a qualifying multifamily purchaser has

expressed serious interest in purchasing individually.

(C) EXPIRATION OF OFFER PERIOD.—If, upon the expiration of the period referred to in paragraph (4), no qualifying multifamily purchaser has made an offer to purchase

a property, the Corporation may offer to sell the property,

individually or in combination with other properties, to

any purchaser.

(7) LOW-INCOME OCCUPANCY REQUIREMENTS.—

(A) SINGLE PROPERTY PURCHASES.—With respect to

any purchase of a single eligible multifamily housing property by a qualifying multifamily purchaser under paragraph (4) or (5)—

(i) not less than 35 percent of all dwelling units

purchased shall be made available for occupancy by

and maintained as affordable for low-income and very

low-income families during the remaining useful life of

the property in which the units are located; provided

that

(ii) not less than 20 percent of all dwelling units

purchased shall be made available for occupancy by

and maintained as affordable for very low-income families during the remaining useful life of the property

in which the units are located.

(B) AGGREGATION REQUIREMENTS FOR MULTIPROPERTY

PURCHASES.—With respect to any purchase under paragraph (4) or (5) by a qualifying multifamily purchaser involving more than one eligible multifamily housing property as a part of the same negotiation, with respect to
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1616

which the purchaser intends to aggregate the low-income

occupancy required under this paragraph over the total

number of units so purchased—

(i) not less than 40 percent of the aggregate number of all dwelling units purchased shall be made

available for occupancy by and maintained as affordable for low-income and very low-income families during the remaining useful life of the building or structure in which the units are located; provided that

(ii) not less than 20 percent of the aggregate number of all dwelling units purchased shall be made

available for occupancy by and maintained as affordable for very low-income families during the remaining

useful life of the building or structure in which the

units are located; and further provided that

(iii) not less than 10 percent of the dwelling units

in each separate property purchased shall be made

available for occupancy by and maintained as affordable for low-income families during the remaining useful life of the property in which the units are located.

The requirements of this paragraph shall be contained in the

deed or other recorded instrument.

(8) EXEMPTIONS.— (A) CONTINUED OCCUPANCY OF CURRENT RESIDENTS.—

No purchaser of an eligible multifamily property may terminate the occupancy of any person residing in the property on the date of purchase for purposes of meeting the

low-income occupancy requirement applicable to the property under paragraph (7). The purchaser shall be considered to be in compliance with this subsection if each newly

vacant dwelling unit is reserved for low-income occupancy

until the low-income occupancy requirement is met.

(B) FINANCIAL INFEASIBILITY.—The Secretary or the

State housing finance agency for the State in which an eligible multifamily housing property is located may temporarily reduce the low-income occupancy requirements

under paragraph (7) applicable to the property, if the

Secretary or such agency determines that an owner’s compliance with such requirements is no longer financially

feasible. The owner of the property shall make a good-faith

effort to return low-income occupancy to the level required

under paragraph (7), and the Secretary or the State housing finance agency, as appropriate, shall review the reduction annually to determine whether financial infeasibility

continues to exist.

(e) RENT LIMITATIONS.—

(1) IN GENERAL.—With respect to properties under paragraph (2), rents charged to tenants for units made available for

occupancy by very low-income families shall not exceed 30 percent of the adjusted income of a family whose income equals

50 percent of the median income for the area, as determined

by the Secretary, with adjustment for family size. Rents

charged to tenants for units made available for occupancy by

low-income families other than very low-income families shall
1617 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

not exceed 30 percent of the adjusted income of a family whose

income equals 65 percent of the median income for the area,

as determined by the Secretary, with adjustment for family

size.

(2) APPLICABILITY.—The rent limitations under this subsection shall apply to any eligible single family property sold

pursuant to subsection (c)(2)(B)(i) and to any eligible multifamily housing property sold pursuant to subsection (d).

(f) PREFERENCES FOR SALES.— (1) IN GENERAL.—In selling any eligible multifamily housing property or combinations of eligible residential properties,

the Corporation shall give preference, among substantially

similar offers, to the offer that would reserve the highest percentage of dwelling units for occupancy or purchase by very

low-income and low-income families and would retain such affordability for the longest term.

(2) MULTIPROPERTY PURCHASES.—The Corporation shall

give preference, among substantially similar offers made under

paragraph (4) or (5) of subsection (d) to purchase more than

one eligible multifamily housing property as a part of the same

negotiation, to offers made by purchasers who agree to maintain low-income occupancy in each separate property purchased in compliance with the levels required for properties

under subsection (d)(7)(A).

(3) DEFINITION OF SUBSTANTIALLY SIMILAR OFFERS.—For

purposes of this subsection, a given offer to purchase eligible

multifamily housing property or combinations of such properties shall be considered to be substantially similar to another

offer if the purchase price under such given offer is not less

than 85 percent of the purchase price under the other offer.

(g) FINANCING SALES.—

(1) ASSISTANCE BY CORPORATION.—

(A) SALE PRICE.—The Corporation shall establish a

market value for each eligible multifamily housing property. The Corporation shall sell eligible multifamily housing property at the net realizable market value, except

that the Corporation may agree to sell eligible multifamily

housing property at a price below the net realizable market value to the extent necessary to facilitate an expedited

sale of such property and enable a public agency or nonprofit organization to comply with the low-income occupancy requirements applicable to such property under subsection (d)(7). The Corporation may sell eligible single family property or eligible condominium property to qualifying

households, nonprofit organizations, and public agencies

without regard to any minimum sale price.

(B) PURCHASE LOAN.—The Corporation may provide a

loan at market interest rates to any purchaser of eligible

residential property for all or a portion of the purchase

price, which loan shall be secured by a first or second

mortgage on the property. The Corporation may provide

the loan at below market interest rates to the extent necessary to facilitate an expedited sale of eligible residential

property and permit (i) a low-income family to purchase an
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1618

1Public Law 106-400, enacted on October 30, 2000, renamed the Stewart B. McKinney Homeless Assistance Act as the McKinney-Vento Homeless Assistance Act. Section 2 of such Act provides that ‘‘[a]ny reference in any law, regulation, document, paper, or other record of the

United States to the Stewart B. McKinney Homeless Assistance Act shall be deemed to be a

reference to the ‘McKinney-Vento Homeless Assistance Act’ ’’.

eligible single family property under subsection (c), or (ii)

a public agency or nonprofit organization to comply with

the low-income occupancy requirements applicable to the

purchase of an eligible residential property under subsection (c) or (d). The Corporation shall provide loans

under this subparagraph in a form permitting sale or

transfer of the loan to a subsequent holder. In providing

financing for combinations of eligible multifamily housing

properties under this section, the Corporation may hold a

participating share, including a subordinate participation.

The Corporation shall periodically provide, to a wide range

of minority- and women-owned businesses engaged in providing affordable housing and to nonprofit organizations,

more than 50 percent of the control of which is held by 1

or more minority individuals, that are engaged in providing affordable housing, information that is sufficient to

inform such businesses and organizations of the availability and terms of financing under this subparagraph;

such information may be provided directly, by notices published in periodicals and other publications that regularly

provide information to such businesses or organizations,

and through persons and organizations that regularly provide information or services to such businesses or organizations. For purposes of this subparagraph, the terms

‘‘women-owned business’’ and ‘‘minority-owned business’’

have the meanings given such terms in section 21A(r) of

the Federal Home Loan Bank Act, and the term ‘‘minority’’

has the meaning given such term in section 1204(c)(3) of

the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

(2) ASSISTANCE BY HUD.—The Secretary shall take such action as may be necessary to expedite the processing of applications for assistance under section 202 of the Housing Act of

1959, the United States Housing Act of 1937, title IV of the

Stewart B. McKinney Homeless Assistance Act 1, and the National Housing Act, to enable any organization or individual to

purchase eligible residential property.

(3) ASSISTANCE BY FMHA.—The Secretary of Agriculture

shall take such action as may be necessary to expedite the

processing of applications for assistance under title V of the

Housing Act of 1949 to enable any organization or individual

to purchase eligible residential property.

(4) EXCEPTION TO DISPOSITION RULES.—Notwithstanding

the requirements under paragraphs (1), (2), (3), (4), (6), and (8)

of subsection (d), the Corporation may provide for the disposition of eligible multifamily housing properties as necessary to

facilitate purchase of such properties for use in connection with

section 202 of the Housing Act of 1959.
1619 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

(5) BULK ACQUISITIONS UNDER HOME INVESTMENT PARTNER- SHIPS ACT.—

(A) PURCHASE PRICE.—In providing for bulk acquisition of eligible single family properties by participating jurisdictions for inclusion in affordable housing activities

under title II of the Cranston-Gonzalez National Affordable Housing Act, the Corporation shall agree to an

amount to be paid for acquisition of such properties. The

acquisition price shall include discounts for bulk purchase

and for holding of the property such that the acquisition

price for each property shall not exceed the fair market

value of the property, as valued individually.

(B) EXEMPTIONS.—To the extent necessary to facilitate

sale of properties under this paragraph, the requirements

of subsections (c) and (f) and of paragraph (1) of this subsection shall not apply to such transactions and properties

involved in such transactions.

(C) INVENTORIES.—To facilitate acquisitions by such

participating jurisdictions, the Corporation shall provide

the participating jurisdictions with inventories of eligible

single family properties not less than 4 times each year.

(h) COORDINATION WITH OTHER PROGRAMS.— (1) USE OF SECONDARY MARKET AGENCIES.—In the disposition of eligible residential properties, the Corporation (in consultation with the Secretary) shall explore opportunities to

work with secondary market entities to provide housing for

low- and moderate-income families.

(2) CREDIT ENHANCEMENT.—

(A) IN GENERAL.—With respect to such properties, the

Secretary may, consistent with statutory authorities, work

through the Federal Housing Administration, the Government National Mortgage Association, the Federal National

Mortgage Association, the Federal Home Loan Mortgage

Corporation, and other secondary market entities to develop risk-sharing structures, mortgage insurance, and

other credit enhancements to assist in the provision of

property ownership, rental, and cooperative housing opportunities for low- and moderate-income families.

(B) CERTAIN TAX-EXEMPT BONDS.—The Corporation

may provide credit enhancements with respect to tax-exempt bonds issued on behalf of nonprofit organizations

pursuant to section 103, and subpart A of part IV of subchapter A of chapter 1, of the Internal Revenue Code of

1986, with respect to the disposition of eligible residential

properties for the purposes described in subparagraph (A).

(3) NATIONAL AFFORDABLE HOUSING ACT.—The Corporation

shall coordinate the disposition of eligible residential property

under this section with appropriate programs and provisions

of, and amendments made by, the Cranston-Gonzalez National

Affordable Housing Act, including titles II and IV of such Act.

(i) EXEMPTION FOR CERTAIN TRANSACTIONS WITH INSURED DEPOSITORY INSTITUTIONS.—The provisions of this section shall not

apply with respect to any eligible residential property after the

date the Corporation enters into a contract to sell such property to
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1620

an insured depository institution (as defined in section 3), including

any sale in connection with a transfer of all or substantially all of

the assets of a closed insured depository institution (including such

property) to another insured depository institution.

(j) TRANSFER OF CERTAIN ELIGIBLE RESIDENTIAL PROPERTIES

TO STATE HOUSING AGENCIES FOR DISPOSITION.—Notwithstanding

subsections (c), (d), (f), and (g), the Corporation may transfer eligible residential properties to the State housing finance agency or

any other State housing agency for the State in which the property

is located, or to any local housing agency in whose jurisdiction the

property is located. Transfers of eligible residential properties

under this subsection may be conducted by direct sale, consignment

sale, or any other method the Corporation considers appropriate

and shall be subject to the following requirements:

(1) INDIVIDUAL OR BULK TRANSFER.—The Corporation may

transfer such properties individually or in bulk, as agreed to

by the Corporation and the State housing finance agency or

State or local housing agency.

(2) ACQUISITION PRICE.—The acquisition price paid by the

State housing finance agency or State or local housing agency

to the Corporation for properties transferred under this subsection shall be an amount agreed to by the Corporation and

the transferee agency.

(3) LOW-INCOME USE.—Any State housing finance agency

or State or local housing agency acquiring properties under

this subsection shall offer to sell or transfer the properties only

as follows:

(A) ELIGIBLE SINGLE FAMILY PROPERTIES.—For eligible

single family properties—

(i) to purchasers described under subparagraphs

(A) and (B) of subsection (c)(2);

(ii) if the purchaser is a purchaser described

under subsection (c)(2)(B)(i), subject to the rent limitations under subsection (e)(1);

(iii) subject to the requirement in the second sentence of subsection (c)(2); and

(iv) subject to recapture by the Corporation of excess proceeds from resale of the properties under paragraphs (3) and (4) of subsection (c).

(B) ELIGIBLE MULTIFAMILY HOUSING PROPERTIES.—For

eligible multifamily housing properties—

(i) to qualifying multifamily purchasers;

(ii) subject to the low-income occupancy requirements under subsection (d)(7);

(iii) subject to the provisions of subsection (d)(8);

(iv) subject to a preference, among financially acceptable offers, to the offer that would reserve the

highest percentage of dwelling units for occupancy or

purchase by very low- and low-income families and

would retain such affordability for the longest term;

and

(v) subject to the rent limitations under subsection

(e)(1).
1621 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

(4) AFFORDABILITY.—The State housing finance agency or

State or local housing agency shall endeavor to make the properties transferred under this subsection more affordable to lowincome families based upon the extent to which the acquisition

price of a property under paragraph (2) is less than the market

value of the property.

(k) EXCEPTION FOR SALES TO NONPROFIT ORGANIZATIONS AND

PUBLIC AGENCIES.— (1) SUSPENSION OF OFFER PERIODS.—With respect to any

eligible residential property, the Corporation may (in the discretion of the Corporation) suspend any of the requirements of

paragraphs (1) and (2) of subsection (c) and paragraphs (1)

through (4) of subsection (d), as applicable, but only to the extent that for the duration of the suspension the Corporation

negotiates the sale of the property to a nonprofit organization

or public agency. If the property is not sold pursuant to such

negotiations, the requirements of any provisions suspended

shall apply upon the termination of the suspension. Any time

period referred to in such subsections shall toll for the duration

of any suspension under this paragraph.

(2) USE RESTRICTIONS.— (A) ELIGIBLE SINGLE FAMILY PROPERTY.—Any eligible

single family property sold under this subsection shall be

(i) made available for occupancy by and maintained as affordable for low-income families for the remaining useful

life of the property, or made available for purchase by such

families, (ii) subject to the rent limitations under subsection (e)(1), (iii) subject to the requirements relating to

residency of a qualifying household under subsection

(p)(12) and to residency of a low-income family under subsection (c)(2)(B), and (iv) subject to recapture by the Corporation of excess proceeds from resale of the property

under paragraphs (3) and (4) of subsection (c).

(B) ELIGIBLE MULTIFAMILY HOUSING PROPERTY.—Any

eligible multifamily housing property sold under this subsection shall comply with the low-income occupancy requirements under subsection (d)(7) and shall be subject to

the rent limitations under subsection (e)(1).

(l) RULES GOVERNING DISPOSITION OF ELIGIBLE CONDOMINIUM

PROPERTY.—

(1) NOTICE TO CLEARINGHOUSES.—Within a reasonable period of time after acquiring title to an eligible condominium

property, the Corporation shall provide written notice to clearinghouses. Such notice shall contain basic information about

the property. Each clearinghouse shall make such information

available, upon request, to purchasers described in subparagraphs (A) through (D) of paragraph (2). The Corporation shall

allow such purchasers reasonable access to an eligible condominium property for purposes of inspection.

(2) OFFERS TO SELL.—For the 180-day period following the

date on which the Corporation makes an eligible condominium

property available for sale, the Corporation may offer to sell

the property, at the discretion of the Corporation, to 1 or more

of the following purchasers:
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1622

(A) Qualifying households.

(B) Nonprofit organizations.

(C) Public agencies.

(D) For-profit entities.

(3) LOW-INCOME OCCUPANCY REQUIREMENTS.— (A) IN GENERAL.—Except as provided in subparagraph

(B), any nonprofit organization, public agency, or for-profit

entity that purchases an eligible condominium property

shall (i) make the property available for occupancy by and

maintain it as affordable for low-income families for the remaining useful life of the property, or (ii) make the property available for purchase by any such family who, except

as provided in paragraph (5), agrees to occupy the property

as a principal residence for at least 12 months and certifies in writing that the family intends to occupy the property for at least 12 months. The restriction described in

clause (i) of the preceding sentence shall be contained in

the deed or other recorded instrument.

(B) MULTIPLE-UNIT PURCHASES.—If any nonprofit organization, public agency, or for-profit entity purchases more

than 1 eligible condominium property as a part of the

same negotiation or purchase, the Corporation may (in the

discretion of the Corporation) waive the requirement under

subparagraph (A) and provide instead that not less than

35 percent of all eligible condominium properties purchased shall be (i) made available for occupancy by and

maintained as affordable for low-income families for the

remaining useful life of the property, or (ii) made available

for purchase by any such family who, except as provided

in paragraph (5), agrees to occupy the property as a principal residence for at least 12 months and certifies in writing that the family intends to occupy the property for at

least 12 months. The restriction described in clause (i) of

the preceding sentence shall be contained in the deed or

other recorded instrument.

(C) SALE TO OTHER PURCHASERS.—If, upon the expiration of the 180-day period referred to in paragraph (2), no

purchaser described in subparagraphs (A) through (D) of

paragraph (2) has made a bona fide offer to purchase the

property, the Corporation may offer to sell the property to

any other purchaser.

(4) RECAPTURE OF PROFITS FROM RESALE.—Except as provided in paragraph (5), if any eligible condominium property

sold (A) to a qualifying household, or (B) to a low-income family pursuant to paragraph (3)(A)(ii) or (3)(B)(ii), is resold by the

qualifying household or low-income family during the 1-year

period beginning upon initial acquisition by the household or

family, the Corporation shall recapture 75 percent of the

amount of any proceeds from the resale that exceed the sum

of (i) the original sale price for the acquisition of the property

by the qualifying household or low-income family, (ii) the costs

of any improvements to the property made after the date of the

acquisition, and (iii) any closing costs in connection with the

acquisition.
1623 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

(5) EXCEPTION TO RECAPTURE REQUIREMENT.—The Corporation (or its successor) may in its discretion waive the applicability to any qualifying household or low-income family of the

requirement under paragraph (4) and the requirements relating to residency of a qualifying household or low-income family

(under subsection (p)(12) and paragraph (3) of this subsection,

respectively). The Corporation may grant any such a waiver

only for good cause shown, including any necessary relocation

of the qualifying household or low-income family.

(6) LIMITATIONS ON MULTIPLE UNIT PURCHASES.—The Corporation may not sell or offer to sell as part of the same negotiation or purchase any eligible condominium properties that

are not located in the same condominium project (as such term

is defined in section 604 of the Housing and Community Development Act of 1980). The preceding sentence may not be construed to require all eligible condominium properties offered or

sold as part of the same negotiation or purchase to be located

in the same structure.

(7) RENT LIMITATIONS.—Rents charged to tenants of eligible condominium properties made available for occupancy by

very low-income families shall not exceed 30 percent of the adjusted income of a family whose income equals 50 percent of

the median income for the area, as determined by the Secretary, with adjustment for family size. Rents charged to tenants of eligible condominium properties made available for occupancy by low-income families other than very low-income

families shall not exceed 30 percent of the adjusted income of

a family whose income equals 65 percent of the median income

for the area, as determined by the Secretary, with adjustment

for family size.

(m) LIABILITY PROVISIONS.—

(1) IN GENERAL.—The provisions of this section, or any failure by the Corporation to comply with such provisions, may

not be used by any person to attack or defeat any title to property after it is conveyed by the Corporation.

(2) LOW-INCOME OCCUPANCY.—The low-income occupancy

requirements under subsections (c), (d), (j)(3), (k)(2), and (l)(3)

shall be judicially enforceable against purchasers of property

under this section and their successors in interest by affected

very low- and low-income families, State housing finance agencies, and any agency, corporation, or authority of the United

States. The parties specified in the preceding sentence shall be

entitled to reasonable attorney fees upon prevailing in any

such judicial action.

(3) CLEARINGHOUSES.—A clearinghouse shall not be subject

to suit for its failure to comply with the requirements of this

section.

(4) CORPORATION.—The Corporation shall not be liable to

any depositor, creditor, or shareholder of any insured depository institution for which the Corporation has been appointed

receiver or conservator, or of any subsidiary corporation of a

depository institution under receivership or conservatorship, or

any claimant against such institution or subsidiary, because
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1624

1The date of enactment was December 17, 1993.

the disposition of assets of the institution or the subsidiary

under this section affects the amount of return from the assets.

(n) UNIFIED AFFORDABLE HOUSING PROGRAMS.—

(1) IN GENERAL.—Not later than 4 months after the date

of enactment of the Resolution Trust Corporation Completion

Act, 1 the Corporation shall enter into an agreement, as described in paragraph (3), with the Resolution Trust Corporation that sets out a plan for the orderly unification of the Corporation’s activities, authorities, and responsibilities under this

section with the authorities, activities, and responsibilities of

the Resolution Trust Corporation pursuant to section 21A(c) of

the Federal Home Loan Bank Act in a manner that best

achieves an effective and comprehensive affordable housing

program management structure. The agreement shall be entered into after consultation with the Affordable Housing Advisory Board under section 14(b) of the Resolution Trust Corporation Completion Act.

(2) AUTHORITY AND IMPLEMENTATION.—The Corporation

shall have the authority to carry out the provisions of the

agreement entered into pursuant to paragraph (1) and shall

implement such agreement as soon as practicable but in no

event later than 8 months after the date of enactment of the

Resolution Trust Corporation Completion Act. 1

(3) TERMS OF AGREEMENT.—The agreement required under

paragraph (1) shall provide a plan for—

(A) a program unifying all activities and responsibilities of the Corporation and the Resolution Trust Corporation, and the design of the unified program shall take into

consideration the substantial experience of the Resolution

Trust Corporation regarding—

(i) seller financing;

(ii) technical assistance;

(iii) marketing skills and relationships with public

and nonprofit entities; and

(iv) staff resources;

(B) the elimination of duplicative and unnecessary administrative costs and resources;

(C) the management structure of the unified program;

(D) a timetable for the unification; and

(E) a methodology to determine the extent to which

the provisions of this section shall be effective, in accordance with the limitations under subsection (b)(2).

(4) TRANSFER TO FDIC.—Beginning not later than October

1, 1995, the Corporation shall carry out any remaining authority and responsibilities of the Resolution Trust Corporation, as

set forth in section 21A(c) of the Federal Home Loan Bank Act.

(o) REPORT.—To the extent applicable, in the annual report

submitted by the Secretary to the Congress under section 8 of the

Department of Housing and Urban Development Act, the Secretary

shall include a detailed description of any activities under this section, including recommendations for any additional authority the
1625 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

Secretary considers necessary to implement the provisions of this

section.

(p) DEFINITIONS.—For purposes of this section:

(1) ADJUSTED INCOME AND INCOME.—The terms ‘‘adjusted

income’’ and ‘‘income’’ shall have the meaning given such terms

in section 3(b) of the United States Housing Act of 1937.

(2) CLEARINGHOUSE.—The term ‘‘clearinghouse’’ means—

(A) the State housing finance agency for the State in

which an eligible residential property or eligible condominium property is located;

(B) the Office of Community Investment (or other comparable division) within the Federal Housing Finance

Board; and

(C) any national nonprofit organizations (including

any nonprofit entity established by the corporation established under title IX of the Housing and Community Development Act of 1968) that the Corporation determines

has the capacity to act as a clearinghouse for information.

(3) CORPORATION.—The term ‘‘Corporation’’ means the

Federal Deposit Insurance Corporation acting in its corporate

capacity or its capacity as receiver.

(4) ELIGIBLE CONDOMINIUM PROPERTY.—The term ‘‘eligible

condominium property’’ means a condominium unit, as such

term is defined in section 604 of the Housing and Community

Development Act of 1980—

(A) to which such Corporation acquires title in its corporate capacity, its capacity as conservator, or its capacity

as receiver (including in its capacity as the sole owner of

a subsidiary corporation of a depository institution under

conservatorship or receivership, which subsidiary has as

its principal business the ownership of real property); and

(B) that has an appraised value that does not exceed

the amount provided in section 203(b)(2)(A) of the National

Housing Act except that such amount shall not exceed

$101,250 in the case of a 1-family residence, $114,000 in

the case of a 2-family residence, $138,000 in the case of a

3-family residence, and $160,000 in the case of a 4-family

residence.

(5) ELIGIBLE MULTIFAMILY HOUSING PROPERTY.—The term

‘‘eligible multifamily housing property’’ means a property consisting of more than 4 dwelling units—

(A) to which the Corporation acquires title in its corporate capacity, its capacity as conservator, or its capacity

as receiver (including in its capacity as the sole owner of

a subsidiary corporation of a depository institution under

conservatorship or receivership, which subsidiary has as

its principal business the ownership of real property); and

(B) that has an appraised value that does not exceed

the applicable dollar amount specified in section

221(d)(3)(ii) of the National Housing Act for elevator-type

structures, as such dollar amount is increased under such

section for geographical areas or on a project-by-project

basis (except that any such increase on a project-by-project
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1626

basis shall be made pursuant to a determination by the

Corporation that such increase is necessary).

(6) ELIGIBLE RESIDENTIAL PROPERTY.—The term ‘‘eligible

residential property’’ includes eligible single family properties

and eligible multifamily housing properties.

(7) ELIGIBLE SINGLE FAMILY PROPERTY.—The term ‘‘eligible

single family property’’ means a 1- to 4-family residence (including a manufactured home)—

(A) to which the Corporation acquires title in its corporate capacity, its capacity as conservator, or its capacity

as receiver (including in its capacity as the sole owner of

a subsidiary corporation of a depository institution under

conservatorship or receivership, which subsidiary has as

its principal business the ownership of real property); and

(B) that has an appraised value that does not exceed

the amount provided in section 203(b)(2)(A) of the National

Housing Act except that such amount shall not exceed

$101,250 in the case of a 1-family residence, $114,000 in

the case of a 2-family residence, $138,000 in the case of a

3-family residence, and $160,000 in the case of a 4-family

residence.

(8) LOW-INCOME FAMILIES.—The term ‘‘low-income families’’ means families and individuals whose incomes do not exceed 80 percent of the median income of the area involved, as

determined by the Secretary, with adjustment for family size.

(9) NET REALIZABLE MARKET VALUE.—The term ‘‘net realizable market value’’ means a price below the market value that

takes into account (A) any reductions in holding costs resulting

from the expedited sale of a property, including foregone real

estate taxes, insurance, maintenance costs, security costs, and

loss of use of funds, and (B) the avoidance, if applicable, of fees

paid to real estate brokers, auctioneers, or other individuals or

organizations involved in the sale of property owned by the

Corporation.

(10) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ means a private organization (including a limited equity cooperative)—

(A) no part of the earnings of which inures to the benefit of any member, shareholder, founder, contributor, or

individual; and

(B) that is approved by the Corporation as to financial

responsibility.

(11) PUBLIC AGENCY.—The term ‘‘public agency’’ means

any Federal, State, local, or other governmental entity, and includes any public housing agency.

(12) QUALIFYING HOUSEHOLD.—The term ‘‘qualifying

household’’ means a household—

(A) who intends to occupy eligible single family property as a principal residence;

(B) who agrees to occupy the property as a principal

residence for at least 12 months;

(C) who certifies in writing that the household intends

to occupy the property as a principal residence for at least

12 months; and
1627 Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM

(D) whose income does not exceed 115 percent of the

median income for the area, as determined by the Secretary, with adjustment for family size.

(13) QUALIFYING MULTIFAMILY PURCHASER.—The term

‘‘qualifying multifamily purchaser’’ means—

(A) a public agency;

(B) a nonprofit organization; or

(C) a for-profit entity, which makes a commitment (for

itself or any related entity) to comply with the low-income

occupancy requirements under subsection (d)(7) for any eligible multifamily housing property for which an offer to

purchase is made during or after the periods specified

under subsection (d).

(14) Secretary.—The term ‘‘Secretary’’ means the Secretary

of Housing and Urban Development.

(15) STATE HOUSING FINANCE AGENCY.—The term ‘‘State

housing finance agency’’ means the public agency, authority,

corporation, or other instrumentality of a State that has the

authority to provide residential mortgage loan financing

throughout the State.

(16) VERY LOW-INCOME FAMILIES.—The term ‘‘very low-income families’’ means families and individuals whose incomes

do not exceed 50 percent of the median income of the area involved, as determined by the Secretary, with adjustment for

family size.

(q) NOTICE TO CLEARINGHOUSES REGARDING INELIGIBLE PROPERTIES.—

(1) IN GENERAL.—Within a reasonable period of time after

acquiring title to an ineligible residential property, the Corporation shall, to the extent practicable, provide written notice

to clearinghouses.

(2) CONTENT.—For ineligible single family properties, such

notice shall contain the same information about such properties that the notice required under subsection (c)(1) contains

with respect to eligible single family properties. For ineligible

multifamily housing properties, such notice shall contain the

same information about such properties that the notice required under subsection (d)(1) contains with respect to eligible

multifamily housing properties. For ineligible condominium

properties, such notice shall contain the same information

about such properties that the notice required under subsection (l)(1) contains with respect to eligible condominium

properties.

(3) AVAILABILITY.—The clearinghouses shall make such information available, upon request, to other public agencies,

other nonprofit organizations, qualifying households, qualifying

multifamily purchasers, and other purchasers, as appropriate.

(4) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply:

(A) INELIGIBLE CONDOMINIUM PROPERTY.—The term

‘‘ineligible condominium property’’ means any eligible condominium property to which the provisions of this section

do not apply as a result of the limitations under subsection

(b)(2)(A).
Sec. 40 FDIC AFFORDABLE HOUSING PROGRAM 1628

(B) INELIGIBLE MULTIFAMILY HOUSING PROPERTY.—The

term ‘‘ineligible multifamily housing property’’ means any

eligible multifamily housing property to which the provisions of this section do not apply as a result of the limitations under subsection (b)(2)(A).

(C) INELIGIBLE SINGLE FAMILY PROPERTY.—The term

‘‘ineligible single family property’’ means any eligible single family property to which the provisions of this section

do not apply as a result of the limitations under subsection

(b)(2)(A).

(D) INELIGIBLE RESIDENTIAL PROPERTY.—The term ‘‘ineligible residential property’’ includes ineligible single family properties, ineligible multifamily housing properties,

and ineligible condominium properties.

* * * * * * *
1629

NATIONAL INSTITUTE OF BUILDING SCIENCES

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1974

[Public Law 93–383; 88 Stat. 729; 12 U.S.C. 1701j–2]

NATIONAL INSTITUTE OF BUILDING SCIENCES

SEC. 809. ø12 U.S.C. 1701j–2¿ (a)(1) The Congress finds (A)

that the lack of an authoritative national source to make findings

and to advise both the public and private sectors of the economy

with respect to the use of building science and technology in

achieving nationally acceptable standards and other technical provision for use in Federal, State, and local housing and building regulations is an obstacle to efforts by and imposes severe burdens

upon all those who procure, design, construct, use, operate, maintain, and retire physical facilities, and frequently results in the

failure to take full advantage of new and useful developments in

technology which could improve our living environment; (B) that

the establishment of model buildings codes or of a single national

building code will not completely resolve the problem because of

the difficulty at all levels of government in updating their housing

and building regulations to reflect new developments in technology,

as well as the irregularities and inconsistencies which arise in applying such requirements to particular localities or special local

conditions; (C) that the lack of uniform housing and building regulatory provisions increases the costs of construction and thereby reduces the amount of housing and other community facilities which

can be provided; and (D) that the existence of a single authoritative

nationally recognized institution to provide for the evaluation of

new technology could facilitate introduction of such innovations

and their acceptance at the Federal, State, and local levels.

(2) The Congress further finds, however, that while an authoritative source of technical findings is needed, various private organizations and institutions, private industry, labor, and Federal and

other governmental agencies and entities are presently engaged in

building research, technology development, testing, and evaluation,

standards and model code development and promulgation, and information dissemination. These existing activities should be encouraged and these capabilities effectively utilized wherever possible and appropriate to the purposes of this section.

(3) The Congress declares that an authoritative nongovernmental instrument needs to be created to address the problems and

issues described in paragraph (1), that the creation of such an instrument should be initiated by the Government, with the advice

and assistance of the National Academy of Sciences-National Academy of Engineering-National Research Council (hereinafter referred to as the ‘‘Academies-Research Council’’) and of the various
Sec. 809 NATIONAL INSTITUTE OF BUILDING SCIENCES 1630

sectors of the building community, including labor and management, technical experts in building science and technology, and the

various levels of government.

(b)(1) There is authorized to be established, for the purposes

described in subsection (a)(3), an appropriate nonprofit, nongovernmental instrument to be known as the National Institute of Building Sciences (hereinafter referred to as the ‘‘Institute’’), which shall

not be an agency or establishment of the United States Government. The Institute shall be subject to the provisions of this section

and, to the extent consistent with this section, to a charter of the

Congress if such a charter is requested and issued or to the District

of Columbia Nonprofit Corporation Act if that is deemed preferable.

(2) The Academies-Research Council, along with other agencies

and organizations which are knowledgeable in the field of building

technology, shall advise and assist in (A) the establishment of the

Institute; (B) the development of an organizational framework to

encourage and provide for the maximum feasible participation of

public and private scientific, technical, and financial organizations,

institutions, and agencies now engaged in activities, pertinent to

the development, promulgation, and maintenance of performance

criteria, standards, and other technical provisions for building

codes and other regulations, and (C) the promulgation of appropriate organizational rules and procedures including those for the

selection and operation of a technical staff, such rules and procedures to be based upon the primary object of promoting the public

interest and insuring that the widest possible variety of interests

and experience essential to the functions of the Institute are represented in the Institute’s operations. Recommendations of the

Academies-Research Council shall be based upon consultations

with and recommendations from various private organizations and

institutions, labor, private industry, and governmental agencies entities operating in the field, and the Consultative Council as provided for under subsection (c)(8).

(3) Nothing in this section shall be construed as expressing the

intent of the Congress that the Academies-Research Council itself

be required to assume any function or operation vested in the Institute by or under this section.

(c)(1) The Institute shall have a Board of Directors (hereinafter

referred to as the ‘‘Board’’) consisting of not less than fifteen nor

more than twenty-one members, appointed by the President of the

United States by and with the advice and consent of the Senate.

The Board shall be representative of the various segments of the

building community, of the various regions of the country, and of

the consumers who are or would be affected by actions taken in the

exercise of the functions and responsibilities of the Institute, and

shall include (A) representatives of the construction industry, including representatives of construction labor organizations, product

manufacturers, and builders, housing management experts, and experts in building standards, codes, and fire safety, and (B) members representative of the public interest in such numbers as may

be necessary to assure that a majority of the members of the Board

represent the public interest and that there is adequate consideration by the Institute of consumer interests in the exercise of its

functions and responsibilities. Those representing the public inter-
1631 Sec. 809 NATIONAL INSTITUTE OF BUILDING SCIENCES

est on the Board shall include architects, professional engineers, officials of Federal, State, and local agencies, and representatives of

consumer organizations. Such members of the Board shall hold no

financial interest or membership in, nor be employed by, or receive

other compensation from, any company, association, or other group

associated with the manufacture, distribution, installation, or

maintenance of specialized building products, equipment, systems,

subsystems, or other construction materials and techniques for

which there are available substitutes.

(2) The members of the initial Board shall serve as

incorporators and shall take whatever actions are necessary to establish the Institute as provided for under subsection (b)(1).

(3) The term of office of each member of the initial and succeeding Boards shall be three years; except that (A) any member

appointed to fill a vacancy occurring prior to the expiration of the

term for which his predecessor was appointed shall be appointed

for the remainder of such term; and (B) the terms of office of members first taking office shall begin on the date of incorporation and

shall expire, as designated at the time of their appointment, onethird at the end of one year, one-third at the end of two years, and

one-third at the end of three years. No member shall be eligible to

serve in excess of three consecutive terms of three years each. Notwithstanding the preceding provisions of this subsection, a member

whose term has expired may serve until his successor has qualified.

(4) Any vacancy in the initial and succeeding Boards shall not

affect its power, but shall be filled in the manner in which the

original appointments were made, or, after the first five years of

operation, as provided for by the organizational rules and procedures of the Institute; except that, notwithstanding any such rules

and procedures as may be adopted by the Institute, the President

of the United States, by and with the advice and consent of the

Senate, shall appoint, as representative of the public interest, two

of the members of the Board of Directors selected each year for

terms commencing in that year.

(5) The President shall designate one of the members appointed to the initial Board as Chairman; thereafter, the members

of the initial and succeeding Boards shall annually elect one of

their number as Chairman. The Members of the Board shall also

elect one or more of their Members as Vice Chairman. Terms of the

Chairman and Vice Chairman shall be for one year and no individual shall serve as Chairman or Vice Chairman for more than

two consecutive terms.

(6) The members of the initial or succeeding Boards shall not,

by reason of such membership, be deemed to be employees of the

United States Government. They shall, while attending meetings of

the Board or while engaged in duties related to such meetings or

in other activities of the Board pursuant to this section, be entitled

to receive compensation at the rate of $100 per day including traveltime, and while away from their homes or regular places of business they may be allowed travel expenses, including per diem in

lieu of subsistence, equal to that authorized under section 5703 of

title 5, United States Code, for persons in the Government service

employed intermittently.
Sec. 809 NATIONAL INSTITUTE OF BUILDING SCIENCES 1632

(7) The Institute shall have a president and such other executive officers and employees as may be appointed by the Board at

rates of compensation fixed by the Board. No such executive officer

or employee may receive any salary or other compensation from

any source other than the Institute during the period of his employment by the Institute.

(8) The Institute shall establish, with the advice and assistance

of the Academies-Research Council and other agencies and organizations which are knowledgeable in the field of building technology,

a Consultative Council, membership in which shall be available to

representatives of all appropriate private trade, professional, and

labor organizations, private and public standards, code, and testing

bodies, public regulatory agencies, and consumer groups, so as to

insure a direct line of communication between such groups and the

Institute and a vehicle for representative hearings on matters before the Institute.

(d)(1) The Institute shall have no power to issue any shares of

stock, or to declare or pay any dividends.

(2) No part of the income, or assets of the Institute shall inure

to the benefit of any director, officer, employee, or other individual

except as salary or reasonable compensation for services.

(3) The Institute shall not contribute to or otherwise support

any political party or candidate for elective public office.

(e)(1) The Institute shall exercise its functions and responsibilities in four general areas, relating to building regulations, as follows:

(A) Development, promulgation, and maintenance of nationally recognized performance criteria, standards, and other

technical provisions for maintenance of life, safety, health, and

public welfare suitable for adoption by building regulations jurisdictions and agencies, including test methods and other

evaluative techniques relating to building systems, subsystems,

components, products, and materials with due regard for consumer problems.

(B) Evaluation and prequalification of existing and new

building technology in accordance with subparagraph (A).

(C) Conduct of needed investigations in direct support of

subparagraphs (A) and (B).

(D) Assembly, storage, and dissemination of technical data

and other information directly related to subparagraphs (A),

(B), and (C).

(2) The Institute in exercising its functions and responsibilities

described in paragraph (1) shall assign and delegate, to the maximum extent possible, responsibility for conducting each of the

needed activities described in paragraph (1) to one or more of the

private organizations, institutions, agencies, and Federal and other

governmental entities with a capacity to exercise or contribute to

the exercise of such responsibility, monitor the performance

achieved through assignment and delegation and, when deemed

necessary, reassign and delegate such responsibility.

(3) The Institute in exercising its functions and responsibilities

under paragraphs (1) and (2) shall (A) give particular attention to

the development of methods for encouraging all sectors of the economy to cooperate with the Institute and to accept and use its tech-
1633 Sec. 809 NATIONAL INSTITUTE OF BUILDING SCIENCES

nical findings, and to accept and use the nationally recognized performance criteria, standards, and other technical provisions developed for use in Federal, State, and local building codes and other

regulations which result from the program of the Institute; (B) seek

to assure that its actions are coordinated with related requirements

which are imposed in connection with community and environmental development generally; and (C) consult with the Department of Justice and other agencies of government to the extent necessary to insure that the national interest is protected and promoted in the exercise of its functions and responsibilities.

(f)(1) The Institute is authorized to accept contracts and grants

from Federal, State, and local governmental agencies and other entities, and grants and donations from private organizations, institutions, and individuals.

(2) The Institute may, in accordance with rates and schedules

established with guidance as provided under subsection (b)(2), establish fees and other charges for services provided by the Institute

or under its authorization.

(3) Amounts received by the Institute under this section shall

be in addition to any amounts which may be appropriated to provide its initial operating capital under subsection (h).

(g)(1) Every department, agency, and establishment of the Federal Government, in carrying out any building or construction, or

any building- or construction-related programs, which involves direct expenditures, and in developing technical requirements for any

such building or construction, shall be encouraged to accept the

technical findings of the Institute, or any nationally recognized performance criteria, standards, and other technical provisions for

building regulations brought about by the Institute, which may be

applicable.

(2) All projects and programs involving Federal assistance in

the form of loans, grants, guarantees, insurance, or technical aid,

or in any other form, shall be encouraged to accept, use, and comply with any of the technical findings of the Institute or any nationally recognized performance criteria, standards, and other technical provisions for building codes and other regulations brought

about by the Institute, which may be applicable to the purposes for

which the assistance is to be used.

(3) Every department, agency, and establishment of the Federal Government having responsibility for building or construction,

or for building- or construction-related programs, is authorized and

encouraged to request authorization and appropriations for grants

to the Institute for its general support, and is authorized to contract with and accept contracts from the Institute for specific services where deemed appropriate by the responsible Federal official

involved.

(4) The Institute shall establish and carry on a specific and

continuing program of cooperation with the States and their political subdivisions designed to encourage their acceptance of its technical findings and of nationally recognized performance criteria,

standards, and other technical provisions for building regulations

brought about by the Institute. Such program shall include (A) efforts to encourage any changes in existing State and local law to

utilize or embody such findings and regulatory provisions; and (B)
Sec. 809 NATIONAL INSTITUTE OF BUILDING SCIENCES 1634

assistance to States in the development of inservice training programs for building officials, and in the establishment of fully

staffed and qualified State technical agencies to advise local officials on questions of technical interpretation.

(h) ADVANCED BUILDING TECHNOLOGY PROGRAM.— (1) ESTABLISHMENT OF ADVANCED BUILDING TECHNOLOGY

COUNCIL.—There is established within the Institute, the Advanced Building Technology Council (hereafter referred to as

the ‘‘Council’’).

(2) PURPOSES.—The Council shall carry out an Advanced

Building Technology Program for the purposes of—

(A) identifying, selecting, and evaluating existing and

new building technologies, including energy cost savings

technologies, that conform to recognized performance criteria and meet applicable test standards for maintenance

of life, safety, health, and public welfare when used in occupied buildings;

(B) to the extent necessary, developing criteria for the

use of such technology;

(C) conducting economic analyses of proposed new

technologies when produced and installed in buildings at

volumes associated with comparable conventional technologies;

(D) in cooperation with the appropriate Federal agencies, advising building designers, installers, subcontractors, contractors and supervisory officials on the appropriate design and use of new building technology incorporated in federally owned or operated buildings;

(E) in cooperation with the appropriate Federal agencies, monitoring and evaluating the performance of new

building technologies for at least 1 year after installation

and building occupancy; and

(F) disseminating resulting data to affected parties

through automated information management systems.

(3) COUNCIL MEMBERSHIP.—The Council shall be comprised

of not less than 6 and not more than 11 members selected by

the Secretary of Housing and Urban Development from among

representatives of the various segments of the nationwide

building community that have extensive experience in building

industries, including, but not limited to—

(A) product manufacturers;

(B) experts in the fields of health, fire hazards, and

safety; and

(C) independent representatives of the public interest

such as architects, professional engineers, and representatives of consumer organizations,

except that serving members of the National Institute of Building

Sciences Advisory Council shall not be eligible to serve simultaneously on the Council.

(4) FEDERAL PARTICIPATION.—

(A) IN GENERAL.—Any agency of the Federal Government involved in any building or construction may participate in the Advanced Building Technology Program with

the Council to develop and implement programs to incor-
1635 Sec. 809 NATIONAL INSTITUTE OF BUILDING SCIENCES

porate one or more of the recommended new technologies

in a new or existing building within the agency.

(B) REQUIRED ASSURANCES.—Upon agreement between

a participating Federal agency and the Council, with respect to the selection of the appropriate technology and the

schedule of necessary work, the Council shall—

(i) provide the Federal agency with a 5-year guarantee from the technology manufacturer that—

(I) all necessary corrections to the technology

will be made in the design, installation, and maintenance of the technology;

(II) all malfunctions will be repaired without

delay; and

(III) the technology manufacturer will be responsible for removal of the technology in the

event of its failure to perform as required;

(ii) provide the Federal agency and its officials responsible for constructing or renovating buildings utilizing the new technology, as well as the designers, installers, subcontractors, and contractors responsible

for the design, construction, or renovation of the buildings utilizing such technology with the technical information necessary to ensure its most appropriate use,

(iii) in cooperation with the Federal agency, monitor and evaluate the performance of the new technology, and

(iv) prepare reports to be made available to public

agencies at all levels of government, the industry, and

the public on the performance of the new technology.

(5) REPORT TO THE INSTITUTE.—The Council shall submit

to the Institute annually a description of its activities under

the Advanced Building Technology Program for inclusion in

the Institute’s annual report to the Congress under subsection

(j).

(i) There is authorized to be appropriated to the Institute not

to exceed $5,000,000 for the fiscal year 1975, and $5,000,000 for

the fiscal year 1976, and $5,000,000 for each of the fiscal years

1977 and 1978, and any amounts not appropriated in fiscal years

1977 and 1978 may be appropriated in any fiscal year through

1984 (with not more than $500,000 to be appropriated for each of

the fiscal years 1982, 1983, and 1984 and with each appropriation

to be available until expended), to provide the Institute with initial

capital adequate for the exercise of its functions and responsibilities during such years; and thereafter the Institute shall be financially self-sustaining through the means described in subsection (f).

In addition to the amounts authorized to be appropriated under the

first sentence of this section, there are authorized to be appropriated to the Institute to carry out the provisions of this section

not to exceed $512,000 for fiscal year 1991 and $534,000 for fiscal

year 1992. Any amount appropriated under the preceding sentence

shall be made available for expenditure or obligation by the Institute only to the extent of an equal amount received by the Institute

after the effective date of this sentence from persons or entities

other than the Federal Government.
Sec. 809 NATIONAL INSTITUTE OF BUILDING SCIENCES 1636

(j) The Institute shall submit an annual report for the preceding fiscal year to the President for transmittal to the Congress

within sixty days of its receipt. The report shall include a comprehensive and detailed report of the Institute’s operations, activities, financial condition, and accomplishments under this section

and may include such recommendations as the Institute deems appropriate.
1637

NATIONAL HOUSING PARTNERSHIPS

EXCERPTS FROM HOUSING AND URBAN DEVELOPMENT ACT OF 1968

[Public Law 90–448; 82 Stat. 547; 42 U.S.C. 3931 et seq.]

TITLE IX—NATIONAL HOUSING PARTNERSHIPS

STATEMENT OF PURPOSE

SEC. 901. ø42 U.S.C. 3931¿ The Congress finds that the volume of housing being produced for families and individuals of low

or moderate income must be increased to meet the national goal of

a decent home and a suitable living environment for every American family, and declare that it is the policy of the United States

to encourage the widest possible participation by private enterprise

in the provision of housing for low or moderate income families.

The Congress has therefore determined that one or more private

organizations should be created to encourage maximum participation by private investors in programs and projects to provide low

and moderate income housing.

CREATION OF CORPORATIONS

SEC. 902. ø42 U.S.C. 3932¿ (a) There is hereby authorized to

be created a private corporation for profit (hereinafter in this title

referred to as the ‘‘corporation’’). The corporation will not be an

agency or establishment of the United States Government. The corporation shall be subject to the provisions of this title and, to the

extent consistent with this title, to the District of Columbia Business Corporation Act (D.C. Code, sec. 29–901 et seq.).

(b) Whenever the President finds it in the national interest to

do so, he may cause the creation of an additional corporation or additional corporations to carry out the purposes of this title. All the

provisions of this title shall thereupon become applicable to each

such corporation, and to the limited partnership formed by it pursuant to section 907.

(c) Nothing in this title shall be construed to preclude private

persons from creating other corporations and organizing other partnerships, joint ventures, or associations for the purposes set forth

in this title as the purposes of the corporation and the partnership

described in section 907.

PROCESS OF ORGANIZATION

SEC. 903. ø42 U.S.C. 3933¿ (a) The President of the United

States shall appoint, by and with the advice and consent of the

Senate, incorporators of the corporation, one of whom shall be designated by the President to serve as chairman. The incorporators

shall serve as the initial board of directors until the first annual
Sec. 904 NATIONAL HOUSING PARTNERSHIPS 1638

meeting of stockholders or until their successors are elected and

have qualified.

(b) The incorporators shall take whatever actions are necessary

or appropriate to establish the corporation, including the filing of

articles of incorporation as approved by the President.

(c) The incorporators shall arrange for an initial offering of

shares of stock in the corporation and of interests in the partnership described in section 907 of this title. If the incorporators deem

it advisable in order to carry out the purposes of this title, the initial offering may be made upon terms which require the purchase

of other securities of the corporation or of interests in such partnership.

DIRECTORS

SEC. 904. ø42 U.S.C. 3934¿ The corporation shall have a board

of directors (hereinafter in this section referred to as the ‘‘board’’),

consisting of fifteen members. Three members of the board shall be

appointed by the President of the United States, by and with the

advice and consent of the Senate, effective on the date on which the

other members are elected, and for terms of three years or until

their successors have been appointed and have qualified, except

that the first three members of the board so appointed shall continue in office for terms of one, two, and three years, respectively,

and any member so appointed to fill a vacancy shall be appointed

only for the unexpired term of the director whom he succeeds.

Twelve members of the board shall be elected by the stockholders.

FINANCING THE CORPORATION

SEC. 905. ø42 U.S.C. 3935¿ The corporation shall have the

power to create and issue the number of shares stated in its articles of incorporation. Such shares may be divided into one or more

classes, any or all of which classes may consist of shares with par

value or shares without par value, with such designations, preferences, voting powers, and special or relative rights and such limitations, restrictions, or qualifications thereof as shall be stated in

the articles of incorporation. The articles of incorporation may limit

or deny the voting power of the shares of any class.

PURPOSES AND POWERS OF THE CORPORATION

SEC. 906. ø42 U.S.C. 3936¿ (a) In order to achieve the objectives and carry out the purposes of this title, the corporation is authorized to—

(1) plan, initiate, and carry out, pursuant to Federal programs or otherwise, the building, rehabilitation, acquisition,

and financing of housing and related facilities primarily for the

benefit of families and individuals of low or moderate income;

(2) buy, own, manage, lease, or otherwise acquire or dispose of property in connection with the developments, projects,

or undertakings referred to in paragraph (1);

(3) provide such funds as may be necessary to accomplish

the developments, projects, or undertakings referred to in

paragraph (1); and
1639 Sec. 906 NATIONAL HOUSING PARTNERSHIPS

1The date of enactment was October 17, 1984.

(4) for the purpose of generating income to support the

building or rehabilitation of housing primarily for the benefit

of families and individuals of low or moderate income (A) design, develop, manufacture and sell products and services for

use in the construction, sale, or financing of housing, and (B)

design and develop commercial, industrial, or retail facilities,

that are not directly related to housing, except that the development and preservation of housing for families and individuals of low or moderate income shall be the primary activity

of the corporation.

(b) Included in the activities authorized to the corporation for

the accomplishment of the purposes indicated in subsection (a) of

this section are, among others not specifically named—

(1) to enter into partnerships, limited partnerships, joint

ventures, and other associations with individuals, corporations,

and private and governmental agencies, organizations, and institutions;

(2) to act as manager or general partner of any such partnership, venture, or association;

(3) to conduct or contract for research and studies related

to the development, demonstration, and evaluation of improved

techniques and methods of constructing, rehabilitating, and

maintaining housing;

(4) to provide technical assistance to nonprofit corporations, limited dividend corporations, and others with respect to

the planning, financing, construction, rehabilitation, maintenance, and management of housing for low and moderate income families and individuals;

(5) to make loans or grants including grants of interests in

housing and related facilities, to nonprofit corporations, limited

dividend corporations, and others, in carrying out its activities

under subsection (a) of this section; and

(6) to hire or accept the voluntary services of consultants,

experts, advisory boards, and panels to aid the corporation in

carrying out the purposes of this title.

(c) To carry out the foregoing purposes and engage in the foregoing activities, the corporation shall have the usual powers conferred upon a stock corporation by the District of Columbia Business Corporation Act.

(d) Nothing in this title shall have the effect of waiving or otherwise affecting the applicability of the provisions of the DavisBacon Act (40 U.S.C. 267a—276a–5), or any other law requiring

compliance with labor standards, in the case of any construction to

which such provisions would otherwise apply.

(e) The combined outstanding equity commitment of the corporation and the partnership with respect to activities undertaken

under subsection (a)(4) may not exceed (1) 7 percent of their total

combined equity commitment outstanding during the first 12-

month period following the date of enactment of this subsection;1

(2) 14 percent of their total combined equity commitment outstanding during the second 12-month period following the date of
Sec. 907 NATIONAL HOUSING PARTNERSHIPS 1640

enactment of this subsection; or (3) 20 percent of their total combined equity commitment outstanding at any time thereafter.

NATIONAL HOUSING PARTNERSHIP

SEC. 907. ø42 U.S.C. 3937¿ (a) The corporation is authorized

to arrange for the formation, as a separate organization, of a limited partnership (hereinafter in this title referred to as the ‘‘partnership’’) under the District of Columbia Uniform Limited Partnership Act (D.C. Code, sec. 41–401 et seq.) for the purpose of engaging in any of the activities authorized for the corporation under section 906 of this title, and to enter into a partnership agreement

governing the affairs of such limited partnership.

(b) The partnership shall be subject to the provisions, to the

extent consistent with this title, of (1) the District of Columbia Uniform Limited Partnership Act and (2) those provisions of the District of Columbia Uniform Partnership Act (D.C. Code, sec. 41–301

et seq.) made applicable by section 6(2) of that Act (D.C. Code, sec.

41–305(2)). Notwithstanding any inconsistency between the provisions of such Acts, or of any other law, and the provisions of this

section, the partnership organized pursuant to this section shall be

deemed to have the legal status of a limited partnership.

(c) The partnership is authorized to enter into partnerships,

limited partnerships, or joint ventures organized under applicable

State or local law for the purpose of engaging in low and moderate

income housing developments, projects, or undertakings in particular localities.

(d) The corporation shall be the general partner in the partnership. The capital of the partnership and the contributions of the

partners shall be in such amounts and at such times as are set

forth in or pursuant to the partnership agreement.

(e) The partnership agreement shall include provisions designed to assure that (1) the partnership shall participate in low

and moderate income housing developments, projects, or undertakings in a manner designed to encourage the participation therein of local interests, and (2) in any such development, project, or

undertaking the partnership shall not subscribe to more than 25

per centum (including equity investments made in services or property) of the aggregate initial equity investment unless, in the judgment of the corporation as general partner, the balance of the required equity investment is not readily obtainable from other responsible investors residing or doing business in the local community.

(f) The partnership agreement may without limitation (1) permit each of the stockholders of the corporation to become a member

of the partnership as a limited partner, (2) authorize the inclusion

of other limited partners in addition to the stockholders of the corporation, (3) provide that the assignee of the partnership interest

of a limited partner of the partnership who is also a stockholder

of the corporation may not become a substituted limited partner

unless he also acquires the assignor’s stock of the corporation, and

(4) include provisions requiring that the corporation as a general

partner approve the substitution or addition of a member of the

partnership.
1641 Sec. 909 NATIONAL HOUSING PARTNERSHIPS

(g) A corporation which is a limited partner in the partnership

shall not become liable as a general partner by reason of the fact

that (1) such corporation is a holder of shares of voting stock of the

corporation constituting not more than 5 per centum of the total

number of outstanding shares of such stock and exercises any of

the rights (including voting rights) of a holder of such shares, and/

or (2) a person who is an officer or director of such corporation (or

of another corporation which controls or is subject to the control of

or is under common control with, such corporation) is a director of

the corporation and performs the duties of that office. The interest

of a limited partner in the partnership shall not be treated as a

stock interest in the corporation, notwithstanding that such interest of a limited partner may be proportionate to his stock interest

in the corporation.

(h) The certificate of the partnership and any amendment

thereof required by the District of Columbia Uniform Limited Partnership Act shall be executed and acknowldged by the corporation

as member and by each other member of the partnership or his attorney-in-fact duly authorized by power of attorney in writing. The

corporation may execute and acknowledge the certificate and any

amendment thereof as attorney-in-fact for any member, member to

be substituted or added, or assigning member, by whom the certificate or amendment is required to be executed and acknowledged

and who has appointed the corporation as such attorney.

REPORT TO CONGRESS AND RECORDS

SEC. 908. ø42 U.S.C. 3938¿ (a)(1) The corporation shall submit

an annual report to the President for transmittal to the Congress

within six months after the end of its fiscal year. The report shall

include a comprehensive and detailed report of the operations, activities, and financial condition of the corporation and the partnership under this title.

(2) The report shall contain a description of the activities undertaken under section 906(a)(4), and shall specify, as a percentage

of equity and in dollars, the extent of the corporation’s and the

partnership’s investment in housing for the benefit of families and

individuals of low or moderate income, the extent of the corporation’s and the partnership’s investment in other housing, and the

extent of the corporation’s and the partnership’s activities which

are undertaken under section 906(a)(4).

(b) The accounts of the corporation and of the partnership shall

be audited annually in accordance with generally accepted auditing

standards by independent certified public accountants or independent licensed public accountants certified or licensed by a regulatory authority of a State or other political subdivision of the

United States.

ANTITRUST LAWS

SEC. 909. ø42 U.S.C. 3939¿ Nothing contained herein shall affect the applicability of the Federal antitrust laws to the activities

of the corporation and the partnership created under this title and

of the persons participating therein or in partnerships, limited

partnership, or joint ventures with either of them.
Sec. 910 NATIONAL HOUSING PARTNERSHIPS 1642

RIGHT TO REPEAL, ALTER, OR AMEND

SEC. 910. ø42 U.S.C. 3940¿ The right to repeal, alter, or amend

this title at any time is expressly reserved.

* * * * * * *

STATE REGULATION

SEC. 912. ø42 U.S.C. 3941¿ Nothing contained in this title

shall preclude a State or other local jurisdiction from imposing, in

accordance with the laws of such State or other local jurisdiction,

any valid nondiscriminatory tax, obligation, or regulation on the

partnership as a taxable and/or legal entity, but no limited partner

of the partnership not otherwise subject to taxation or regulation

by or judicial process of a State or other local jurisdiction shall be

subject to taxation or regulation by or subject to or denied access

to judicial process of such State or other local jurisdiction, or be so

subject or denied access to any greater extent, because of activities

of the corporation or partnership within such State or local jurisdiction.
1643

CONDOMINIUM AND COOPERATIVE CONVERSION

PROTECTION AND ABUSE RELIEF

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1980

[Public Law 96–399; 94 Stat. 1672; 15 U.S.C. 3601 et seq.]

TITLE VI—CONDOMINIUM AND COOPERATIVE

CONVERSION PROTECTION AND ABUSE RELIEF

SHORT TITLE

SEC. 601. ø15 U.S.C. 3601 note¿ This title may be cited as the

‘‘Condominium and Cooperative Abuse Relief Act of 1980’’.

FINDINGS AND PURPOSE

SEC. 602. ø15 U.S.C. 3601¿ (a) The Congress finds and declares that—

(1) there is a shortage of adequate and affordable housing

throughout the Nation, especially for low- and moderate-income and elderly and handicapped persons;

(2) the number of conversions of rental housing to condominiums and cooperatives is accelerating, which in some

communities may restrict the shelter options of low- and moderate-income and elderly and handicapped persons;

(3) certain long-term leasing arrangements for recreation

and other condominium- or cooperative-related facilities which

have been used in the formation of cooperative and condominium projects may be unconscionable; in certain situations

State governments are unable to provide appropriate relief; as

a result of these leases, economic and social hardships may

have been imposed upon cooperative and condominium owners,

which may threaten the continued use and acceptability of

these forms of ownership and interfere with the interstate sale

of cooperatives and condominiums; appropriate relief from

these abuses requires Federal action; and

(4) there is a Federal involvement with the cooperative

and condominium housing markets through the operation of

Federal tax, housing, and community development laws,

through the operation of federally chartered and insured financial institutions, and through other Federal activities; that the

creation of many condominiums and cooperatives is undertaken by entities operating on an interstate basis.

(b) The purposes of this title are to seek to minimize the adverse impacts of condominium and cooperative conversions particularly on the housing opportunities of low- and moderate-income and

elderly and handicapped persons, to assure fair and equitable principles are followed in the establishment of condominium and coop-
Sec. 603 CONDOMINIUM AND COOPERATIVE CONVERSIONS 1644

erative opportunities, and to provide appropriate relief where longterm leases of recreation and other cooperative- and condominiumrelated facilities are determined to be unconscionable.

CONVERSION LENDING

SEC. 603. ø15 U.S.C. 3602¿ It is the sense of the Congress that

lending by federally insured lending institutions for the conversion

of rental housing to condominiums and cooperative housing should

be discouraged where there are adverse impacts on housing opportunities of the low- and moderate-income and elderly and handicapped tenants involved.

DEFINITIONS

SEC. 604. ø15 U.S.C. 3603¿ For the purpose of this title—

(1) ‘‘affiliate of a developer’’ means any person who controls, is controlled by, or is under common control with a developer. A person ‘‘controls’’ a developer if the person (A) is a general partner, officer, director, or employer of the developer, (B)

directly or indirectly or acting in concert with one or more

other persons, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing,

more than 20 per centum of the voting interests of the developer, (C) controls in any manner the election of a majority of

the directors of the developer, or (D) has contributed more than

20 per centum of the capital of the developer. A person ‘‘is controlled by’’ a developer if the developer (i) is a general partner,

officer, director or employer of the person, (ii) directly or indirectly or acting in concert with one or more other persons, or

through one or more subsidiaries, owns, controls, holds with

power to vote, or holds proxies representing, more than 20 per

centum of the voting interests of the person, (iii) controls in

any manner the election of a majority of the directors, or (iv)

has contributed more than 20 per centum of the capital of the

person;

(2) ‘‘automatic rent increase clause’’ means a provision in

a lease permitting periodic increases in the fee under the lease

which is effective automatically or at the sole option of the lessor, and which provides that the fee shall increase at the rate

of an economic, commodity, or consumer price index or at a

percentage rate such that the actual increases in the rental

payment over the lease term cannot be established with specificity at the time the lease is entered into;

(3) ‘‘common elements’’ means all portions of the cooperative or condominium project, other than the units designated

for separate ownership or for exclusive possession or use;

(4) ‘‘condominium association’’ means the organization,

whose membership consists exclusively of all the unit owners

in the condominium project, which is, or will be, responsible for

the operation, administration, and management of the condominium project;

(5) ‘‘condominium project’’ means real estate (A) which has

five or more residential condominium units, in each residential

structure, and the remaining portions of the real estate are
1645 Sec. 604 CONDOMINIUM AND COOPERATIVE CONVERSIONS

designated for common ownership solely by the owners of those

units, each owner having an undivided interest in the common

elements, and (B) where such units are or have been offered

for sale or sold, directly or indirectly, through the use of any

means or instruments of transportation or communication of

interstate commerce, or the mails;

(6) ‘‘condominium unit’’ means a portion of a condominium

project designated for separate ownership;

(7) ‘‘conversion project’’ means a project, which has five or

more residential units, which was used primarily for residential rental purposes immediately prior to being converted to a

condominium or cooperative project;

(8) ‘‘convey or conveyance’’ means (A) a transfer to a purchaser of legal title in a unit at settlement, other than as security for an obligation, or (B) the acquisition by a purchaser of

a leasehold interest for more than five years;

(9) ‘‘cooperative association’’ means an organization that

owns the record interest in the residential cooperative property

or a leasehold of the residential property of a cooperative

project and that is responsible for the operation of the cooperative project;

(10) ‘‘cooperative project’’ means real estate (A) which has

five or more residential cooperative units, in each residential

structure, subject to separate use and possession by one or

more individual cooperative unit owners whose interest in such

units and in the undivided assets of the cooperative association

which are appurtenant to the unit are evidenced by a membership or share interest in a cooperative association and a lease

or other muniment of title or possession granted by the cooperative association as the owner of all the cooperative property,

and (B) an interest in which is or has been offered for sale or

lease or sold, or leased directly or indirectly, through use of

any means or instruments of transportation or communication

in interstate commerce or of the mails;

(11) ‘‘cooperative property’’ means the real estate and personal property subject to cooperative ownership and all other

property owned by the cooperative association;

(12) ‘‘cooperative unit’’ means a part of the cooperative

property which is subject to exclusive use and possession by a

cooperative unit owner. A unit may be improvements, land, or

land and improvements together, as specified in the cooperative documents;

(13) ‘‘cooperative unit owner’’ means the person having a

membership or share interest in the cooperative association

and holding a lease, or other muniment of title or possession,

of a cooperative unit that is granted by the cooperative association as the owner of the cooperative property;

(14) ‘‘developer’’ means (A) any person who offers to sell or

sells his interest in a cooperative or condominium unit not previously conveyed, or (B) any successor of such person who offers to sell or sells his interest in units in a cooperative or condominium project and who has the authority to exercise special

developer control in the project including the right to: add, convert, or withdraw real estate from the cooperative or condo-
Sec. 604 CONDOMINIUM AND COOPERATIVE CONVERSIONS 1646

minium project, and maintain sales offices, management offices

and rental units; exercise easements through common elements for the purpose of making improvements within the cooperative or condominium; or exercise control of the owners’ association;

(15) ‘‘interstate commerce’’ means trade, traffic, transportation, communication, or exchange among the States, or between any foreign country and a State, or any transaction

which affects such trade, traffic, transportation, communication, or exchange;

(16) ‘‘lease’’ includes any agreement or arrangement containing a condominium or cooperative unit owner’s obligation,

individually, collectively, or through an association to make

payments for a leasehold interest or for other rights to use or

possess real estate, or personal property (which rights may include the right to receive services with respect to such real estate or personal property), except a lease does not include

mortgages or other such agreements for the purchase of real

estate;

(17) ‘‘person’’ means a natural person, corporation, partnership, association, trust or other entity, or any combination

thereof;

(18) ‘‘purchaser’’ means any person, other than a developer, who by means of a voluntary transfer acquires a legal or

equitable interest in a unit, other than (A) a leasehold interest

(including renewal options) of less than five years, or (B) as security for an obligation;

(19) ‘‘real estate’’ means any leasehold or other estate or

interest in, over or under land, including structures, fixtures,

and other improvements and interests which by custom, usage,

or law pass with a conveyance of land though not described in

the contract of sale or instrument of conveyance. ‘‘Real estate’’

includes parcels with or without upper or lower boundaries,

and spaces that may be filled with air or water;

(20) ‘‘residential’’ means used as a dwelling;

(21) ‘‘sale’’, ‘‘sale of a cooperative unit’’ or ‘‘sale of a condominium unit’’ means any obligation or arrangement for consideration for conveyance to a purchaser of a cooperative or condominium unit, excluding options or reservations not binding on

the purchaser;

(22) ‘‘special developer control’’ means any right arising

under State law, cooperative or condominium instruments, the

association’s bylaws, charter of articles of association or incorporation, or power of attorney or similar agreement, through

which the developer may control or direct the unit owners’ association or its executive board. A developer’s right to exercise

the voting share allocated to any condominium or cooperative

unit which he owns is not deemed a right of special developer

control if the voting share allocated to that condominium or cooperative unit is the same voting share as would be allocated

to the same condominium or cooperative unit were that unit

owned by any other unit owner at that time;
1647 Sec. 607 CONDOMINIUM AND COOPERATIVE CONVERSIONS

(23) ‘‘State’’ includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories

and possessions of the United States; and

(24) ‘‘tenants’ organization’’ means a bona fide organization

of tenants who represent a majority of the occupied rental

units in a rental housing project.

EXEMPTIONS

SEC. 605. ø15 U.S.C. 3604¿ The provisions of this title shall

not apply to—

(1) a cooperative or condominium unit sold or offered for

sale by the Federal Government, by any State or local government, by any corporate instrumentality of the United States,

or by any agency thereof;

(2) a cooperative or condominium project in which all units

are restricted to nonresidential purposes or uses; or

(3) any lease or portion thereof—

(A) which establishes any leasehold or other estate or

interest in, over or under land on or in which one or more

residential condominium or cooperative units are located,

the termination of which will terminate the condominium

or cooperative project, or reduce the number of units in

such project, or

(B) which establishes a leasehold interest in, or other

rights to use, possess, or gain access to, a condominium or

cooperative unit.

CONDOMINIUM AND COOPERATIVE CONVERSIONS

SEC. 606. ø15 U.S.C. 3605¿ It is the sense of the Congress

that, when multifamily rental housing projects are converted to

condominium or cooperative use, tenants in those projects are entitled to adequate notice of the pending conversion and to receive the

first opportunity to purchase units in the converted projects and

that State and local governments which have not already provided

for such notice and opportunity for purchase should move toward

that end. The Congress believes it is the responsibility of State and

local governments to provide for such notice and opportunity to

purchase in a prompt manner. The Congress has decided not to intervene and therefore leaves this responsibility to State and local

governments to be carried out.

FEDERAL HOUSING ADMINISTRATION INSURANCE

SEC. 607. ø15 U.S.C. 3606¿ Where an application for mortgage

or loan insurance in connection with a conversion or purchase of

a rental housing project being undertaken by a tenants’ organization is submitted, the Secretary of Housing and Urban Development shall expedite the processing of the application in every way

and shall make a final decision on such application at the earliest

practicable time.
Sec. 608 CONDOMINIUM AND COOPERATIVE CONVERSIONS 1648

OPTIONAL TERMINATION OF SELF-DEALING CONTRACTS

SEC. 608. ø15 U.S.C. 3607¿ (a) Any contract or portion thereof

which is entered into after the effective date of this title, and

which—

(1) provides for operation, maintenance, or management of

a condominium or cooperative association in a conversion

project, or of property serving the condominium or cooperative

unit owners in such project;

(2) is between such unit owners or such association and

the developer or an affiliate of the developer;

(3) was entered into while such association was controlled

by the developer through special developer control or because

the developer held a majority of the votes in such association;

and

(4) is for a period of more than three years, including any

automatic renewal provisions which are exercisable at the sole

option of the developer or an affiliate of the developer,

may be terminated without penalty by such unit owners or such association.

(b) Any termination under this section may occur only during

the two-year period beginning on the date on which—

(1) special developer control over the association is terminated; or

(2) the developer owns 25 per centum or less of the units

in the conversion project,

whichever occurs first.

(c) A termination under this section shall be by a vote of owners of not less than two-thirds of the units other than the units

owned by the developer or an affiliate of the developer.

(d) Following the unit owners’ vote, the termination shall be effective ninety days after hand delivering notice or mailing notice by

prepaid United States mail to the parties to the contract.

CIVIL ACTION; UNCONSCIONABLE LEASES

SEC. 609. ø15 U.S.C. 3608¿ (a) Cooperative and condominium

unit owners through the unit owners’ association may bring an action seeking a judicial determination that a lease or leases, or portions thereof, were unconscionable at the time they were made. An

action may be brought under this section if each such lease has all

of the following characteristics:

(1) it was made in connection with a cooperative or condominium project;

(2) it was entered into while the cooperative or condominium owners’ association was controlled by the developer either through special developer control or because the developer

held a majority of the votes in the owners’ association;

(3) it had to be accepted or ratified by purchasers or

through the unit owners’ association as a condition of purchase

of a unit in the cooperative or condominium project;

(4) it is for a period of more than twenty-one years or is

for a period of less than twenty-one years but contains automatic renewal provisions for a period of more than twenty-one

years;
1649 Sec. 609 CONDOMINIUM AND COOPERATIVE CONVERSIONS

(5) it contains an automatic rent increase clause; and

(6) it was entered into prior to June 4, 1975.

Such action must be authorized by the cooperative or condominium

unit owners through a vote of not less than two-thirds of the owners of the units other than units owned by the developer or an affiliate of the developer, and may be brought by the cooperative or

condominium unit owners through the units owners’ association.

Prior to instituting such action, the cooperative or condominium

unit owners must, through a vote of not less than two-thirds of the

owners of the units other than units owned by the developer or an

affiliate of the developer, agree to enter into negotiation with the

lessor and must seek through such negotiation to eliminate or modify any lease terms that are alleged to be unconscionable; if an

agreement is not reached in ninety days from the date on which

the authorizing vote was taken, the unit owners may authorize an

action after following the procedure specified in the preceding sentence.

(b) A rebuttable presumption of unconscionability exists if it is

established that, in addition to the characteristics set forth in subsection (a) of this section, the lease—

(1) creates a lien subjecting any unit to foreclosure for failure to make payments;

(2) contains provisions requiring either the cooperative or

condominium unit owners or the cooperative or condominium

association as lessees to assume all or substantially all obligations and liabilities associated with the maintenance, management and use of the leased property, in addition to the obligation to make lease payments;

(3) contains an automatic rent increase clause without establishing a specific maximum lease payment; and

(4) requires an annual rental which exceeds 25 per centum

of the appraised value of the leased property as improved: Provided, That, for purposes of this paragraph ‘‘annual rental’’

means the amount due during the first twelve months of the

lease for all units, regardless of whether such units were occupied or sold during that period, and ‘‘appraised value’’ means

the appraised value placed upon the leased property the first

tax year after the sale of a unit in the condominium or after

the sale of a membership or share interest in the cooperative

association to a party who is not an affiliate of the developer.

Once the rebuttable presumption is established, the court, in making its finding, shall consider the lease or portion of the lease to

be unconscionable unless proven otherwise by a preponderance of

the evidence to the contrary.

(c) Whenever it is claimed, or appears to the court, that a lease

or any portion thereof is, or may have been, unconscionable at the

time it was made, the parties shall be afforded a reasonable opportunity to present evidence at least as to—

(1) the commercial setting of the negotiations;

(2) whether a party has knowingly taken advantage of the

inability of the other party reasonably to protect his interests;

(3) the effect and purpose of the lease or portion thereof,

including its relationship to other contracts between the asso-
Sec. 610 CONDOMINIUM AND COOPERATIVE CONVERSIONS 1650

ciation, the unit owners and the developer or an affiliate of the

developer; and

(4) the disparity between the amount charged under the

lease and the value of the real estate subject to the lease measured by the price at which similar real estate was readily obtainable in similar transactions.

(d) Upon finding that any lease, or portion thereof, is unconscionable, the court shall exercise its authority to grant remedial

relief as necessary to avoid an unconscionable result, taking into

consideration the economic value of the lease. Such relief may include, but shall not be limited to rescission, reformation, restitution, the award of damages and reasonable attorney fees and court

costs. A defendant may recover reasonable attorneys’ fees if the

court determines that the cause of action filed by the plaintiff is

frivolous, malicious, or lacking in substantial merit.

(e) Nothing in this section may be construed to authorize the

bringing of an action by cooperative and condominium unit owners’

association, seeking a judicial determination that a lease or leases,

or portions thereof, are unconscionable, where such unit owners or

a unit owners’ association representing them has, after the termination of special developer control, reached an agreement with a

holder of such lease or leases which either—

(1) sets forth the terms and conditions under which such

lease or leases is or shall be purchased by such unit owners or

associations; or

(2) reforms any cause in the lease which contained an

automatic rent increase clause, unless such agreement was entered into when the leaseholder or his affiliate held a majority

of the votes in the owners’ association.

PROHIBITIONS

SEC. 610. ø15 U.S.C. 3609¿ Any provision in any lease or contract requiring unit owners or the owners’ association, in any conversion project involving a contract meeting the requirements of

section 608 of this title or in any project involving a lease meeting

the requirements of section 609 of this title, to reimburse, regardless of outcome, the developer, his successor, or affiliate of the developer for attorneys’ fees or money judgments, in a suit between

unit owners or the owners’ association and the developer arising

under the lease or agreement, is against public policy and void.

STATE AND LOCAL JURISDICTION

SEC. 611. ø15 U.S.C. 3610¿ Nothing in this title may be construed to prevent or limit the authority of any State or local government to enact and enforce any law, ordinance, or code with regard to any condomin- ium, cooperative, or conversion project, if

such law, ordinance, or code does not abridge, deny, or contravene

any standard for consumer protection established under this title.

Notwithstanding the preceding sentence, the provisions of this

title, except for the application of section 609 and the prohibition

included in section 610 as it relates to a lease with respect to which

a cause of action may be established under section 609, shall not

apply in the case of any State or local government which has the
1651 Sec. 614 CONDOMINIUM AND COOPERATIVE CONVERSIONS

authority to enact and enforce such a law, ordinance, or code, if,

during the three-year period following the date of enactment of this

title, such State or local government enacts a law, ordinance, or

code, or amendments thereto, stating in substance that such provisions of this title shall not apply in that State or local government

jurisdiction.

ADDITIONAL REMEDIES

SEC. 612. ø15 U.S.C. 3611¿ (a) Unless otherwise limited as in

section 608 or 609 of this title, any person aggrieved by a violation

of this title may sue at law or in equity.

(b) In any action authorized by this section for a violation of

section 608 or 610 were actual damages have been suffered, such

damages may be awarded or such other relief granted as deemed

fair, just, and equitable.

(c) Every person who becomes liable to make any payment

under this section may recover contributions from any person who,

if sued separately, would have been liable to make the same payment.

(d) The amounts recoverable under this section may include interest paid, reasonable attorneys’ fees, independent engineer and

appraisers’ fees, and court costs. A defendant may recover reasonable attorneys’ fees if the court determines that the cause of action

filed by the plaintiff is frivolous, malicious, or lacking in substantial merit.

JURISDICTION

SEC. 613. ø15 U.S.C. 3612¿ The district courts of the United

States, the United States courts of any territory, and the United

States District Court for the District of Columbia shall have jurisdiction under this title and, concurrent with State courts, of actions

at law or in equity brought under this title without regard to the

amount in controv- ersy. Any such action may be brought in the

district wherein the defendant is found or is an inhabitant or

transacts business, or in the district where the sale took place, and

process in such cases may be served in other districts of which the

defendant is an inhabitant or wherever the defendant may be

found. No case arising under this title and brought in any State

court of competent jurisdiction shall be removed to any court of the

United States, except where any officer or employee of the United

States in his official capacity is a party.

LIMITATION OF ACTIONS

SEC. 614. ø15 U.S.C. 3613¿ No action shall be maintained to

enforce any right or liability created by this title unless brought

within six years after such cause of action, accrued, except that an

action pursuant to section 609 must be brought within four years

after the date of enactment of this title.
Sec. 615 CONDOMINIUM AND COOPERATIVE CONVERSIONS 1652

1The date of enactment was October 8, 1980.

CONTRARY STIPULATIONS VOID

SEC. 615. ø15 U.S.C. 3614¿ Any condition, stipulation, or provision binding any person to waive compliance with any provisions

of this title shall be void.

ADDITIONAL REMEDIES

SEC. 616. ø15 U.S.C. 3615¿ The rights and remedies provided

by this title shall be in addition to any and all other rights and

remedies that may exist under Federal or State law.

SEPARABILITY

SEC. 617. ø15 U.S.C. 3616¿ If any provisions of this title or the

application thereof to any person or circumstance is held invalid,

the remainder of this title shall not be affected thereby.

EFFECTIVE DATE

SEC. 618. ø15 U.S.C. 3601 note¿ The provisions of this title

shall become effective upon enactment,1 except that section 609,

and the prohibition included in section 610 as it relates to a lease

with respect to which a cause of action may be established under

section 609, shall become effective one year after enactment.
1653

WAGE RATE REQUIREMENTS FOR LABORERS AND

MECHANICS

EXCERPT FROM TITLE 40, UNITED STATES CODE

[Public Law 107–217; 1166 Stat. 1115]

* * * * * * *

SUBTITLE II—PUBLIC BUILDINGS AND WORKS

* * * * * * *

PART A—GENERAL

CHAPTER 31—GENERAL

* * * * * * *

SUBCHAPTER IV—WAGE RATE REQUIREMENTS

§ 3141. Definitions

In this subchapter, the following definitions apply:

(1) FEDERAL GOVERNMENT.—The term ‘‘Federal Government’’ has the same meaning that the term ‘‘United States’’

had in the Act of March 3, 1931 (ch. 411, 46 Stat. 1494 (known

as the Davis-Bacon Act).

(2) WAGES, SCALE OF WAGES, WAGE RATES, MINIMUM

WAGES, AND PREVAILING WAGES.—The terms ‘‘wages’’, ‘‘scale of

wages’’, ‘‘wage rates’’, ‘‘minimum wages’’, and ‘‘prevailing

wages’’ include—

(A) the basic hourly rate of pay; and

(B) for medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any

of the forgoing, for unemployment benefits, life insurance,

disability and sickness insurance, or accident insurance,

for vacation and holiday pay, for defraying the costs of apprenticeship or other similar programs, or for other bona

fide fringe benefits, but only where the contractor or subcontractor is not required by other federal, state, or local

law to provide any of those benefits, the amount of—

(i) the rate of contribution irrevocably made by a

contractor or subcontractor to a trustee or to a third

person under a fund, plan, or program; and

(ii) the rate of costs to the contractor or subcontractor that may be reasonably anticipated in providing benefits to laborers and mechanics pursuant to
Sec. 3142 WAGE RATE REQUIREMENTS FOR LABORERS AND MECHANICS 1654

an enforceable commitment to carry out a financially

responsible plan or program which was communicated

in writing to the laborers and mechanics affected.

§ 3142. Rate of wages for laborers and mechanics

(a) APPLICATION.—The advertised specifications for every contract in excess of $2,000, to which the Federal Government or the

District of Columbia is a party, for construction, alteration, or repair, including painting and decorating, of public buildings and

public works of the Government or the District of Columbia that

are located in a State or the District of Columbia and which requires or involves the employment of mechanics or laborers shall

contain a provision stating the minimum wages to be paid various

classes of laborers and mechanics.

(b) BASED ON PREVAILING WAGE.—The minimum wages shall

be based on the wages the Secretary of Labor determines to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the

civil subdivision of the State in which the work is to be performed,

or in the District of Columbia if the work is to be performed there.

(c) STIPULATIONS REQUIRED IN CONTRACT.—Every contract

based upon the specifications referred to in subsection (a) must

contain stipulations that—

(1) the contractor or subcontractor shall pay all mechanics

and laborers employed directly on the site of the work, unconditionally and at least once a week, and without subsequent

deduction or rebate on any account, the full amounts accrued

at time of payment, computed at wage rates not less than

those stated in the advertised specifications, regardless of any

contractual relationship which may be alleged to exist between

the contractor or subcontractor and the laborers and mechanics;

(2) the contractor will post the scale of wages to be paid

in a prominent and easily accessible place at the site of the

work; and

(3) there may be withheld from the contractor so much of

accrued payments as the contracting officer considers necessary to pay to laborers and mechanics employed by the contractor or any subcontractor on the work the difference between the rates of wages required by the contract to be paid

laborers and mechanics on the work and the rates of wages received by the laborers and mechanics and not refunded to the

contractor or subcontractors or their agents.

(d) DISCHARGE OF OBLIGATION.—The obligation of a contractor

or subcontractor to make payment in accordance with the prevailing wage determinations of the Secretary of Labor, under this

subchapter and other laws incorporating this subchapter by reference, may be discharged by making payments in cash, by making

contributions described in section 3141(2)(B)(i) of this title, by assuming an enforceable commitment to bear the costs of a plan or

program referred to in section 3141(2)(B)(ii) of this title, or by any

combination of payment, contribution, and assumption, where the

aggregate of the payments, contributions, and costs is not less than
1655 Sec. 3144 WAGE RATE REQUIREMENTS FOR LABORERS AND MECHANICS

the basic hourly rate of pay plus the amount referred to in section

3141(2)(B).

(e) OVERTIME PAY.—In determining the overtime pay to which

a laborer or mechanic is entitled under any federal law, the regular

or basic hourly rate of pay (or other alternative rate on which premium rate of overtime compensation is computed) of the laborer or

mechanic is deemed to be the rate computed under section

3141(2)(A) of this title, except that where the amount of payments,

contributions, or costs incurred with respect to the laborer or mechanic exceeds the applicable prevailing wage, the regular or basic

hourly rate of pay (or other alternative rate) is the amount of payments, contributions, or costs actually incurred with respect to the

laborer or mechanic minus the greater of the amount of contributions or costs of the types described in section 3141(2)(B) of this

title actually incurred with respect to the laborer or mechanic or

the amount determined under section 3141(2)(B) but not actually

paid.

§ 3143. Termination of work on failure to pay agreed wages

Every contract within the scope of this subchapter shall contain a provision that if the contracting officer finds that any laborer

or mechanic employed by the contractor or any subcontractor directly on the site of the work covered by the contract has been or

is being paid a rate of wages less than the rate of wages required

by the contract to be paid, the Federal Government by written notice to the contractor may terminate the contractor’s right to proceed with the work or the part of the work as to which there has

been a failure to pay the required wages. The Government may

have the work completed, by contract or otherwise, and the contractor and the contractor’s sureties shall be liable to the Government for any excess costs the Government incurs.

§ 3144. Authority of Comptroller General to pay wages and

list contractors violating contracts

(a) PAYMENT OF WAGES.—

(1) IN GENERAL.—The Comptroller General shall pay directly to laborers and mechanics from any accrued payments

withheld under the terms of a contract any wages found to be

due laborers and mechanics under this subchapter.

(2) RIGHT OF ACTION.—If the accrued payments withheld

under the terms of the contract are insufficient to reimburse

all the laborers and mechanics who have not been paid the

wages required under this subchapter, the laborers and mechanics have the same right to bring a civil action and intervene against the contractor and the contractor’s sureties as is

conferred by law on persons furnishing labor or materials. In

those proceedings it is not a defense that the laborers and mechanics accepted or agreed to accept less than the required

rate of wages or voluntarily made refunds.

(b) LIST OF CONTRACTORS VIOLATING CONTRACTS.—

(1) IN GENERAL.—The Comptroller General shall distribute

to all departments of the Federal Government a list of the

names of persons whom the Comptroller General has found to
Sec. 3145 WAGE RATE REQUIREMENTS FOR LABORERS AND MECHANICS 1656

have disregarded their obligations to employees and subcontractors.

(2) RESTRICTION ON AWARDING CONTRACTS.—No contract

shall be awarded to persons appearing on the list or to any

firm, corporation, partnership, or association in which the persons have an interest until three years have elapsed from the

date of publication of the list.

§ 3145. Regulations governing contractors and subcontractors

(a) IN GENERAL.—The Secretary of Labor shall prescribe reasonable regulations for contractors and subcontractors engaged in

constructing, carrying out, completing, or repairing public buildings, public works, or buildings or works that at least partly are

financed by a loan or grant from the Federal Government. The regulations shall include a provision that each contractor and subcontractor each week must furnish a statement on the wages paid

each employee during the prior week.

(b) APPLICATION.—Section 1001 of title 18 applies to the statements.

§ 3146. Effect on other federal laws

This subchapter does not supersede or impair any authority

otherwise granted by federal law to provide for the establishment

of specific wage rates.

§ 3147. Suspension of this subchapter during a national

emergency

The President may suspend the provisions of this subchapter

during a national emergency.

§ 3148. Application of this subchapter to certain contracts

This subchapter applies to a contract authorized by law that

is made without regard to section 3709 of the Revised Statutes (41

U.S.C. 5), or on a cost-plus-a-fixed-fee basis or otherwise without

advertising for proposals, if this subchapter otherwise would apply

to the contract.

SUBCHAPTER V—VOLUNTEER SERVICES

§ 3161. Purpose

It is the purpose of this subchapter to promote and provide opportunities for individuals who wish to volunteer their services to

state or local governments, public agencies, or nonprofit charitable

organizations in the construction, repair, or alteration (including

painting and decorating) of public buildings and public works that

at least partly are financed with federal financial assistance authorized under certain federal programs and that otherwise might

not be possible without the use of volunteers.

§ 3162. Waiver for individuals who perform volunteer services

(a) CRITERIA FOR RECEIVING WAIVER.—The requirement that

certain laborers and mechanics be paid in accordance with the
1657 Sec. 3162 WAGE RATE REQUIREMENTS FOR LABORERS AND MECHANICS

wage-setting provisions of subchapter IV of this chapter as set

forth in the Indian Self-Determination and Education Assistance

Act (25 U.S.C. 450 et seq.), the Indian Health Care Improvement

Act (25 U.S.C. 1601 et seq.), and the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) does not apply to

an individual—

(1) who volunteers to perform a service directly to a state

or local government, a public agency, or a public or private

nonprofit recipient of federal assistance—

(A) for civic, charitable, or humanitarian reasons;

(B) only for the personal purpose or pleasure of the individual;

(C) without promise, expectation, or receipt of compensation for services rendered, except as provided in subsection (b); and

(D) freely and without pressure or coercion, direct or

implied, from any employer;

(2) whose contribution of service is not for the direct or indirect benefit of any contractor otherwise performing or seeking to perform work on the same project for which the individual is volunteering;

(3) who is not employed by and does not provide services

to a contractor or subcontractor at any time on the federally

assisted or insured project for which the individual is volunteering; and

(4) who otherwise is not employed by the same public

agency or recipient of federal assistance to perform the same

type of services as those for which the individual proposes to

volunteer.

(b) PAYMENTS.—

(1) IN ACCORDANCE WITH REGULATIONS.—Volunteers described in subsection (a) who are performing services directly

to a state or local government or public agency may receive

payments of expenses, reasonable benefits, or a nominal fee

only in accordance with regulations the Secretary of Labor prescribes. Volunteers who are performing services directly to a

public or private nonprofit entity may not receive those payments.

(2) CRITERIA AND CONTENT OF REGULATIONS.—In prescribing the regulations, the Secretary shall consider criteria

such as the total amount of payments made (relating to expenses, benefits, or fees) in the context of the economic realities. The regulations shall include provisions that provide

that—

(A) a payment for an expense may be received by a

volunteer for items such as uniform allowances, protective

gear and clothing, reimbursement for approximate out-ofpocket expenses, or the cost or expense of meals and transportation;

(B) a reasonable benefit may include the inclusion of

a volunteer in a group insurance plan (such as a liability,

health, life, disability, or worker’s compensation plan) or

pension plan, or the awarding of a length of service award;

and
Sec. 3162 WAGE RATE REQUIREMENTS FOR LABORERS AND MECHANICS 1658

(C) a nominal fee may not be used as a substitute for

compensation and may not be connected to productivity.

(3) NOMINAL FEE.—The Secretary shall decide what constitutes a nominal fee for purposes of paragraph (2)(C). The decision shall be based on the context of the economic realities

of the situation involved.

(c) ECONOMIC REALITY.—In determining whether an expense,

benefit, or fee described in subsection (b) may be paid to volunteers

in the context of the economic realities of the particular situation,

the Secretary may not permit any expense, benefit, or fee that has

the effect of undermining labor standards by creating downward

pressure on prevailing wages in the local construction industry.

* * * * * * *
1659

1Such section authorized transfer of surplus real property to the Secretary of Housing and

Urban Development or the Secretary of Agriculture for sale or lease. 2 November 30, 1983.

TRANSFER OF SURPLUS REAL PROPERTY

EXCERPT FROM HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983

[Public Law 98–181; 97 Stat. 1153, 1175; 40 U.S.C. 484b note]

REPEALERS

SEC. 126. ø40 U.S.C. 484b note¿ (a)(1) Section 414 of the Housing and Urban Development Act of 19691 hereby is repealed.

(2) Notwithstanding paragraph (1), the Secretary of Housing

and Urban Development and the Secretary of Agriculture may dispose of Federal surplus real property pursuant to the terms of section 414 of such Act if, prior to the date of the enactment of this

Act 2, either Secretary had requested the Administrator of General

Services to transfer such property for such disposition.

(3) Notwithstanding paragraph (1), section 414(b) of such Act

shall continue to apply, where applicable, to all property transferred by either Secretary pursuant to section 414 of such Act, including properties transferred pursuant to paragraph (2).
1660

LIMITATION ON WITHHOLDING OR CONDITIONING OF

ASSISTANCE

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1974

[Public Law 93–383; 88 Stat. 633; 42 U.S.C. 5301 note]

LIMITATION ON WITHHOLDING OR CONDITIONING OF ASSISTANCE

SEC. 817. ø42 U.S.C. 5301 note¿ Assistance provided for in this

Act, the National Housing Act, the United States Housing Act of

1937, the Housing Act of 1949, the Demonstration Cities and Metropolitan Development Act of 1966, the Housing and Urban Development Acts of 1965, 1968, 1969, and 1970, and section 17 of the

United States Housing Act of 1937 shall not be withheld or made

subject to conditions or preference by reason of the tax-exempt status of bonds or other obligations issued or to be issued to provide

financing for use in connection with such assistance, except where

otherwise expressly provided or authorized by law.
1661

FAIR HOUSING INITIATIVES PROGRAM

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1942; 42 U.S.C. 3616a]

SEC. 561. ø42 U.S.C. 3616a¿ FAIR HOUSING INITIATIVES PROGRAM.

(a) IN GENERAL.—The Secretary of Housing and Urban Development (in this section referred to as the ‘‘Secretary’’) may make

grants to, or (to the extent of amounts provided in appropriation

Acts) enter into contracts or cooperative agreements with, State or

local governments or their agencies, public or private nonprofit organizations or institutions, or other public or private entities that

are formulating or carry out programs to prevent or eliminate discriminatory housing practices, to develop, implement, carry out, or

coordinate—

(1) programs or activities designed to obtain enforcement

of the rights granted by title VIII of the Act of April 11, 1968

(commonly referred to as the Civil Rights Act of 1968), or by

State or local laws that provide rights and remedies for alleged

discriminatory housing practices that are substantially equivalent to the rights and remedies provided in such title VIII,

through such appropriate judicial or administrative proceedings (including informal methods of conference, conciliation, and persuasion) as are available therefore; and

(2) education and outreach programs designed to inform

the public concerning rights and obligations under the laws referred to in paragraph (1).

(b) PRIVATE ENFORCEMENT INITIATIVES.—

(1) IN GENERAL.—The Secretary shall use funds made

available under this subsection to conduct, through contracts

with private nonprofit fair housing enforcement organizations,

investigations of violations of the rights granted under title

VIII of the Civil Rights Act of 1968, and such enforcement activities as appropriate to remedy such violations. The Secretary

may enter into multiyear contracts and take such other action

as is appropriate to enhance the effectiveness of such investigations and enforcement activities.

(2) ACTIVITIES.—The Secretary shall use funds made available under this subsection to conduct, through contracts with

private nonprofit fair housing enforcement organizations, a

range of investigative and enforcement activities designed to—

(A) carry out testing and other investigative activities

in accordance with subsection (b)(1), including building the

capacity for housing investigative activities in unserved or

underserved areas;

(B) discover and remedy discrimination in the public

and private real estate markets and real estate-related
Sec. 561 FAIR HOUSING INITIATIVES PROGRAM 1662

transactions, including, but not limited to, the making or

purchasing of loans or the provision of other financial assistance sales and rentals of housing and housing advertising;

(C) carry out special projects, including the development of prototypes to respond to new or sophisticated

forms of discrimination against persons protected under

title VIII of the Civil Rights Act of 1968;

(D) provide technical assistance to local fair housing

organizations, and assist in the formation and development of new fair housing organizations; and

(E) provide funds for the costs and expenses of litigation, including expert witness fees.

(c) FUNDING OF FAIR HOUSING ORGANIZATIONS.— (1) IN GENERAL.—The Secretary shall use funds made

available under this section to enter into contracts or cooperative agreements with qualified fair housing enforcement organizations, other private nonprofit fair housing enforcement organizations, and nonprofit groups organizing to build their capacity to provide fair housing enforcement, for the purpose of

supporting the continued development or implementation of

initiatives which enforce the rights granted under title VIII of

the Civil Rights Act of 1968, as amended. Contracts or cooperative agreements may not provide more than 50 percent of the

operating budget of the recipient organization for any one year.

(2) CAPACITY ENHANCEMENT.—The Secretary shall use

funds made available under this section to help establish, organize, and build the capacity of fair housing enforcement organizations, particularly in those areas of the country which are

currently underserved by fair housing enforcement organizations as well as those areas where large concentrations of protected classes exist. For purposes of meeting the objectives of

this paragraph, the Secretary may enter into contracts or cooperative agreements with qualified fair housing enforcement organizations. The Secretary shall establish annual goals which

reflect the national need for private fair housing enforcement

organizations.

(d) EDUCATION AND OUTREACH.—

(1) IN GENERAL.—The Secretary, through contracts with

one or more qualified fair housing enforcement organizations,

other fair housing enforcement organizations, and other nonprofit organizations representing groups of persons protected

under title VIII of the Civil Rights Act of 1968, shall establish

a national education and outreach program. The national program shall be designed to provide a centralized, coordinated effort for the development and dissemination of fair housing

media products, including—

(A) public service announcements, both audio and

video;

(B) television, radio and print advertisements;

(C) posters; and

(D) pamphlets and brochures.

The Secretary shall designate a portion of the amounts provided in subsection (g)(4) for a national program specifically for
1663 Sec. 561 FAIR HOUSING INITIATIVES PROGRAM

1So in law. Probably intended to refer to the Fair Housing Amendments Act of 1988.

2Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

activities related to the annual national fair housing month.

The Secretary shall encourage cooperation with real estate industry organizations in the national education and outreach

program. The Secretary shall also encourage the dissemination

of educational information and technical assistance to support

compliance with the housing adaptability and accessibility

guidelines contained in the Fair Housing Act Amendments of

1988. 1

(2) REGIONAL AND LOCAL PROGRAMS.—The Secretary,

through contracts with fair housing enforcement organizations,

other nonprofit organizations representing groups of persons

protected under title VIII of the Civil Rights Act of 1968, State

and local agencies certified by the Secretary under section

810(f) of the Fair Housing Act, or other public or private entities that are formulating or carrying out programs to prevent

or eliminate discriminatory housing practices, shall establish

or support education and outreach programs at the regional

and local levels.

(3) COMMUNITY-BASED PROGRAMS.—The Secretary shall

provide funding to fair housing organizations and other nonprofit organizations representing groups of persons protected

under title VIII of the Civil Rights Act of 1968, or other public

or private entities that are formulating or carrying out programs to prevent or eliminate discriminatory housing practices, to support community-based education and outreach activities, including school, church, and community presentations, conferences, and other educational activities.

(e) PROGRAM ADMINISTRATION.—

(1) Not less than 30 days before providing a grant or entering into any contract or cooperative agreement to carry out activities authorized by this section, the Secretary shall submit

notification of such proposed grant, contract, or cooperative

agreement (including a description of the geographical distribution of such contracts) to the Committee on Banking,

Housing, and Urban Affairs of the Senate and the Committee

on Banking, Finance and Urban Affairs of the House of Representatives 2.

ø(2) [Repealed.]¿

(f) REGULATIONS.—

(1) The Secretary shall issue such regulations as may be

necessary to carry out the provisions of this section.

(2) The Secretray shall, for use during the demonstration

authorized in this section, establish guidelines for testing activities funded under the private enforcement initiative of the

fair housing initiatives program. The purpose of such guidelines shall be to ensure that investigations in support of fair
Sec. 561 FAIR HOUSING INITIATIVES PROGRAM 1664

1Section 1(a) of Public Law 104–14, 109 Stat. 186, provides, in part, that ‘‘any reference in

any provision of law enacted before January 4, 1995, to . . . the Committee on Banking, Finance and Urban Affairs of the House of Representatives shall be treated as referring to the

Committee on Banking and Financial Services of the House of Representatives’’. However, H.

Res. 5, 107th Congress, agreed to on January 3, 2001, abolished the Committee on Banking and

Financial Services and established the Committee on Financial Services, which has jurisdiction

over many of the areas previously under the jurisdiction of the Committee on Banking and Financial Services.

housing enforcement efforts described in subsection (a)(1) shall

develop credible and objective evidence of discriminatory housing practices. Such guidelines shall apply only to activities

funded under this section, shall not be construed to limit or

otherwise restrict the use of facts secured through testing not

funded under this section in any legal proceeding under Federal fair housing laws, and shall not be used to restrict individuals or entities, including those participating in the fair housing initiatives program, from pursuing any right or remedy

guaranteed by Federal law. Not later than 6 months after the

end of the demonstration period authorized in this section, the

Secretary shall submit to Congress the evaluation of the Secretary of the effectiveness of such guidelines in achieving the

purposes of this section.

(3) Such regulations shall include provisions governing applications for assistance under this section, and shall require

each such application to contain—

(A) a description of the assisted activities proposed to

be undertaken by the applicant, together with the estimated costs and schedule for completion of such activities;

(B) a description of the experience of the applicant in

formulating or carrying out programs to prevent or eliminate discriminatory housing practices;

(C) available information, including studies made by

or available to the applicant, indicating the nature and extent of discriminatory housing practices occurring in the

general location where the applicant proposes to conduct

its assisted activities, and the relationship of such activities to such practices:

(D) an estimate of such other public or private resources as may be available to assist the proposed activities;

(E) a description of proposed procedures to be used by

the applicant for monitoring conduct and evaluating results of the proposed activities; and

(F) any additional information required by the Secretary.

(4) Regulations issued under this subsection shall not become effective prior to the expiration of 90 days after the Secretary transmits such regulations, in the form such regulations

are intended to be published, to the Committee on Banking,

Housing, and Urban Affairs of the Senate and the Committee

on Banking, Finance and Urban Affairs of the House of Representatives 1.

(5) The Secretary shall not obligate or expend any amount

under this section before the effective date of the regulations

required under this subsection.
1665 Sec. 561 FAIR HOUSING INITIATIVES PROGRAM

(g) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated to carry out the provisions of this section,

$21,000,000 for fiscal year 1993 and $26,000,000 for fiscal year

1994, of which—

(1) not less than $3,820,000 for fiscal year 1993 and $8,500,000 for fiscal year 1994 shall be for private enforcement

initiatives authorized under subsection (b), divided equally between activities specified under subsection (b)(1) and those

specified under subsection (b)(2); (2) not less than $2,230,000 for fiscal year 1993 and $8,500,000 for fiscal year 1994 shall be for qualified fair housing enforcement organizations authorized under subsection

(c)(1);(3) not less than $2,010,000 for fiscal year 1993 and $4,000,000 for fiscal year 1994 shall be for the creation of new

fair housing enforcement organizations authorized under subsection (c)(2); and (4) not less than $2,540,000 for fiscal year 1993 and $5,000,000 for fiscal year 1994 shall be for education and outreach programs authorized under subsection (d), to be divided

equally between activities specified under subsection (d)(1) and

those specified under subsections (d)(2) and (d)(3). Any amount

appropriated under this section shall remain available until expended.

(h) QUALIFIED FAIR HOUSING ENFORCEMENT ORGANIZATION.—

(1) The term ‘‘qualified fair housing enforcement organization’’

means any organization that—

(A) is organized as a private, tax-exempt, nonprofit, charitable organization;

(B) has at least 2 years experience in complaint intake,

complaint investigation, testing for fair housing violations and

enforcement of meritorious claims; and

(C) is engaged in all the activities listed in paragraph

(1)(B) at the time of application for assistance under this

section.

An organization which is not solely engaged in fair housing enforcement activities may qualify as a qualified fair housing enforcement organization, provided that the organization is actively engaged in each of the activities listed in subparagraph (B).

(2) The term ‘‘fair housing enforcement organization’’ means

any organization that—

(A) meets the requirements specified in paragraph (1)(A);

(B) is currently engaged in the activities specified in paragraph (1)(B);

(C) upon the receipt of funds under this section will become engaged in all of the activities specified in paragraph

(1)(B); and

(D) for purposes of funding under subsection (b), has at

least 1 year of experience in the activities specified in paragraph (1)(B).

(i) PROHIBITION ON USE OF FUNDS.—None of the funds authorized under this section may be used by the Secretary for purposes

of settling claims, satisfying judgments or fulfilling court orders in

any litigation action involving either the Department or housing
Sec. 561 FAIR HOUSING INITIATIVES PROGRAM 1666

providers funded by the Department. None of the funds authorized

under this section may be used by the Department for administrative costs.

(j) REPORTING REQUIREMENTS.—Not later than 180 days after

the close of each fiscal year in which assistance under this section

is furnished, the Secretary shall prepare and submit to the Congress a comprehensive report which shall contain—

(1) a description of the progress made in accomplishing the

objectives of this section;

(2) a summary of all the private enforcement activities carried out under this section and the use of such funds during

the preceding fiscal year;

(3) a list of all fair housing enforcement organizations

funded under this section during the preceding fiscal year,

identified on a State-by-State basis;

(4) a summary of all education and outreach activities

funded under this section and the use of such funds during the

preceding fiscal year; and

(5) any findings, conclusions, or recommendations of the

Secretary as a result of the funded activities.
1667

1The date of enactment was October 21, 1998.

TREATMENT OF OCCUPANCY STANDARDS

EXCERPT FROM QUALITY HOUSING AND WORK RESPONSIBILITY ACT

OF 1998

[Public Law 105–276; 112 Stat. 2651; 42 U.S.C. 3608 note]

SEC. 589. ø42 U.S.C. 3608 note¿ TREATMENT OF OCCUPANCY STANDARDS.

(a) ESTABLISHMENT OF POLICY.—Not later than 60 days after

the date of the enactment of this Act 1, the Secretary of Housing

and Urban Development shall publish a notice in the Federal Register for effect that takes effect upon publication and provides that

the specific and unmodified standards provided in the March 20,

1991, Memorandum from the General Counsel of the Department

of Housing and Urban Development to all Regional Counsel shall

be the policy of the Department of Housing and Urban Development with respect to complaints of discrimination under the Fair

Housing Act (42 U.S.C. 3601 et seq.) on the basis of familial status

which involve an occupancy standard established by a housing provider.

(b) PROHIBITION OF NATIONAL STANDARD.—The Secretary of

Housing and Urban Development shall not directly or indirectly establish a national occupancy standard.
1668

MEDIAN AREA INCOME

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1987

[Public Law 100–242; 101 Stat. 1948; 42 U.S.C. 1437a note]

SEC. 567. ø42 U.S.C. 1437a note¿ MEDIAN AREA INCOME.

For purposes of calculating the median income for any area

that is not within a metropolitan statistical area (as established by

the Office of Management and Budget) for programs under title I

of the Housing and Community Development Act of 1974, the

United States Housing Act of 1937, the National Housing Act, or

title V of the Housing Act of 1949, the Secretary of Housing and

Urban Development or the Secretary of Agriculture (as appropriate) shall use whichever of the following is higher:

(1) the median income of the county in which the area is

located; or

(2) the median income of the entire nonmetropolitan area

of the State.
1669

SOLAR ASSISTANCE FINANCING ENTITY

EXCERPT FROM HOUSING AND COMMUNITY DEVELOPMENT ACT OF

1992

[Public Law 102–550; 106 Stat. 3875; 42 U.S.C. 5511a]

SEC. 912. ø42 U.S.C. 5511a¿ SOLAR ASSISTANCE FINANCING ENTITY.

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development shall establish within the Department of Housing and

Urban Development the Solar Assistance Financing Entity (in this

section referred to as the ‘‘Entity’’).

(b) PURPOSE.—The purpose of the Entity shall be to assist in

financing solar and renewable energy capital investments and

projects for eligible buildings under subsection (c).

(c) ELIGIBLE BUILDINGS.—The Entity may provide assistance

under this section only for the following buildings:

(1) SINGLE FAMILY HOUSING.—Any building consisting of 1

to 4 dwelling units that has a system for heating or cooling,

or both.

(2) MULTIFAMILY HOUSING.—Any building consisting of

more than 4 dwelling units that has a system for heating or

cooling, or both.

(3) COMMERCIAL BUILDINGS.—Any building used primarily

to carry on a business (including any nonprofit business) that

is not used primarily for the manufacture or production of raw

materials, products, or agricultural commodities.

(4) SCHOOLS, HOSPITALS, AND AGRICULTURAL BUILDINGS.—

Any school, any hospital, and any building used exclusively in

connection with the harvesting, storage, or drying of agricultural commodities.

(5) OTHER BUILDINGS.—Any other building of a type that

the Entity considers appropriate.

(d) FINANCING OPTIONS.—Assistance provided under this section by the Entity may be provided only for programs for financing

solar and renewable energy capital investments and projects, which

may include programs for making loans, making grants, reducing

the principal obligations of loans, prepayment of interest on loans,

purchase and sale of loans and advances of credit, providing loan

guarantees, providing loan downpayment assistance, and providing

rebates and other incentives for the purchase and installation of

solar and renewable energy measures.

(e) AUTHORITY TO LEVERAGE OTHER FUNDS.—The Entity may

encourage or require programs receiving assistance under this section to supplement the assistance received under this section with

amounts from other public and private sources, and, in making assistance under this section available, may give preference to programs that leverage amounts from such other sources.
Sec. 912 SOLAR ASSISTANCE FINANCING ENTITY 1670

1The date of enactment was October 28, 1992.

(f) PROVISION OF ASSISTANCE.—The Entity shall provide assistance under this section through State agencies responsible for developing State energy conservation plans pursuant to section 362

of the Energy Policy and Conservation Act, or any other entity or

agency authorized to specifically carry out the purposes of this section.

(g) REGULATIONS.—Not later than the expiration of the 12-

month period beginning on the date of the enactment of this Act 1,

the Secretary of Housing and Urban Development, in consultation

with the Secretary of Energy, shall issue any regulations necessary

to carry out this section, which shall ensure maximum flexibility in

utilizing amounts made available under this section.

(h) AUTHORIZATION OF APPROPRIATIONS.—There are authorized

to be appropriated to carry out this section $10,000,000 for fiscal

year 1993 and $10,420,000 for fiscal year 1994. Such sums are to

be available until expended.

(i) REPEALS.—

(1) SOLAR ENERGY AND ENERGY CONSERVATION BANK ACT.—

Subtitle A of title V of the Energy Security Act (12 U.S.C. 3601

et seq.) is repealed.

(2) FEDERAL NATIONAL MORTGAGE ASSOCIATION CHARTER

ACT.—Sections 315 and 316 of the Federal National Mortgage

Association Charter Act (12 U.S.C. 1723g, 1723h) are repealed.
1671

GUARANTEES FOR CHURCH ARSON RECOVERY LOANS

EXCERPT FROM CHURCH ARSON PREVENTION ACT OF 1996

[Public Law 104–155; 110 Stat. 1393]

SEC. 4. LOAN GUARANTEE RECOVERY FUND.

(a) IN GENERAL.—

(1) IN GENERAL.—Using amounts described in paragraph

(2), the Secretary of Housing and Urban Development (referred

to as the ‘‘Secretary’’) shall make guaranteed loans to financial

institutions in connection with loans made by such institutions

to assist organizations described in section 501(c)(3) of the Internal Revenue Code of 1986 that have been damaged as a result of acts of arson or terrorism in accordance with such procedures as the Secretary shall establish by regulation.

(2) USE OF CREDIT SUBSIDY.—Notwithstanding any other

provision of law, for the cost of loan guarantees under this section, the Secretary may use not more than $5,000,000 of the

amounts made available for fiscal year 1996 for the credit subsidy provided under the General Insurance Fund and the Special Risk Insurance Fund.

(b) TREATMENT OF COSTS.—The costs of guaranteed loans

under this section, including the cost of modifying loans, shall be

as defined in section 502 of the Congressional Budget Act of 1974.

(c) LIMIT ON LOAN PRINCIPAL.—Funds made available under

this section shall be available to subsidize total loan principal, any

part of which is to be guaranteed, not to exceed $10,000,000.

(d) TERMS AND CONDITIONS.—The Secretary shall—

(1) establish such terms and conditions as the Secretary

considers to be appropriate to provide loan guarantees under

this section, consistent with section 503 of the Credit Reform

Act; and

(2) include in the terms and conditions a requirement that

the decision to provide a loan guarantee to a financial institution and the amount of the guarantee does not in any way depend on the purpose, function, or identity of the organization

to which the financial institution has made, or intends to

make, a loan.

1673

1Paragraph heading so in law.

PART XIV—APPROPRIATIONS

PERMANENT APPROPRIATIONS

EXCERPT FROM TITLE 31, UNITED STATES CODE

§ 1305. Miscellaneous permanent appropriations

Necessary amounts are appropriated for the following:

(1) to pay the proceeds of the personal estate of a United

States citizen dying abroad to the legal representative of the

deceased on proper demand and proof.

(2) to pay interest on the public debt under laws authorizing payment.

(3) to pay proceeds from derelict and salvage cases adjudged by the courts of the United States to salvors.

(4) to make payments required under contracts made

under section 108 of the Housing and Community Development

Act of 1974 (42 U.S.C. 5308) for the payment of interest on obligations guaranteed by the Secretary of Housing and Urban

Development under section 108.

(5) to make payments required under contracts made

under section 103(b) of the Housing Act of 1949 (42 U.S.C.

1453(b)) for projects or programs for which amounts had been

committed before January 1, 1975, and for which amounts

have not been appropriated.

(6) to pay the interest on the fund derived from the bequest of James Smithson, for the construction of buildings and

expenses of the Smithsonian Institution, at the rates determined under section 5590 of the Revised Statutes (20 U.S.C.

54).

ANNUAL CONTRIBUTIONS FOR ASSISTED HOUSING 1

(7) to make payments required under contracts made

under section 5 of the United States Housing Act of 1937, as

amended (42 U.S.C. 1437c).

COLLEGE HOUSING GRANTS 1

(8) to make payments required under contracts made

under title IV of the Housing Act of 1950, as amended (12

U.S.C. 1749 et seq.).
Sec. 1305 PERMANENT APPROPRIATIONS 1674

1Paragraph heading so in law.

RENT SUPPLEMENT PROGRAM 1

(9) to make payments required under contracts under section 101 of the Housing and Urban Development Act of 1965,

as amended (12 U.S.C. 1701s).

HOMEOWNERSHIP AND RENTAL HOUSING ASSISTANCE1

(10) to make payments required under contracts under sections 235 and 236, respectively, of the National Housing Act,

as amended (12 U.S.C. 1715z, 1715z–1).
1675

LIST OF HOUSING APPROPRIATIONS FOR FISCAL YEARS

1996–2003

[Through end of 107th Congress]

Fiscal Year 1996:

(1) Continuing Appropriations for Fiscal Year 1996, Pub. L.

104–31, 109 Stat. 278 (9–30–95).

(2) Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1996, Pub. L.

104–37, 109 Stat. 300 (10–21–95).

(3) Further Continuing Appropriations, Fiscal Year 1996, Pub.

L. 104–54, 109 Stat. 540 (11–19–95).

(4) Further Continuing Appropriations, Fiscal Year 1996, Pub.

L. 104–56, 109 Stat. 548 (11–20–95).

(5) Further Continuing Appropriations, Fiscal Year 1996, Pub.

L. 104–94, 110 Stat. 25 (1–6–96).

(6) The Balanced Budget Downpayment Act, I, Pub. L. 104–99,

110 Stat. 26 (1–26–96).

(7) Further Continuing Appropriations, Fiscal Year 1996, Pub.

L. 104–116, 110 Stat. 826 (3–15–96).

(8) Further Continuing Appropriations, Fiscal Year 1996, Pub.

L. 104–118, 110 Stat. 829 (3–22–96).

(9) Further Continuing Appropriations, Fiscal Year 1996, Pub.

L. 104–122, 110 Stat. 876 (3–29–96).

(10) Further Continuing Appropriations, Fiscal Year 1996,

Pub. L. 104–131, 110 Stat. 1213 (4–24–96).

(11) Omnibus Consolidated Rescissions and Appropriations Act

of 1996, Pub. L. 104–134, 110 Stat. 1321 (4–26–96).

Fiscal Year 1997:

(1) Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1997, Pub. L.

104–180, 110 Stat. 1569 (8–6–96).

(2) Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 1997,

Pub. L. 104–204, 110 Stat. 2874 (9–26–96).

(3) 1997 Emergency Supplemental Appropriations Act for Recovery from Natural Disasters, and for Overseas Peacekeeping Efforts, Including Those in Bosnia, Pub. L. 105–18, 111 Stat. 158 (6–

12–97).

Fiscal Year 1998:

(1) Continuing Appropriations for Fiscal Year 1998, Pub. L.

105–46, 111 Stat. 1153 (9–30–97).

(2) Further Continuing Appropriations for Fiscal Year 1998,

Pub. L. 105–64, 111 Stat. 1343 (10–23–97).
HOUSING APPROPRIATIONS, FISCAL YEARS 1996–2003 1676

(3) Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 1998,

Pub. L. 105–65, 111 Stat. 1344 (10–27–97).

(4) Further Continuing Appropriations for Fiscal Year 1998,

Pub. L. 105–68, 111 Stat. 1453 (11–7–97).

(5) Further Continuing Appropriations for Fiscal Year 1998,

Pub. L. 105–69, 111 Stat. 1454 (11–9–97).

(6) Further Continuing Appropriations for Fiscal Year 1998,

Pub. L. 105–71, 111 Stat. 1455 (11–10–97).

(7) Further Continuing Appropriations for Fiscal Year 1998,

Pub. L. 105–84, 111 Stat. 1628 (11–14–97).

(8) Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1998, Pub. L.

105–86, 111 Stat. 2079 (11–18–97).

(9) 1998 Supplemental Appropriations and Rescissions Act,

Pub. L. 105–174, 112 Stat. 58 (5–1–98).

Fiscal Year 1999:

(1) Continuing Appropriations for Fiscal Year 1999, Pub. L.

105–240, 112 Stat. 1566 (9–25–98).

(2) Further Continuing Appropriations for Fiscal Year 1999,

Pub. L. 105–249, 112 Stat. 1868 (10–9–98).

(3) Further Continuing Appropriations for Fiscal Year 1999,

Pub. L. 105–254, 112 Stat. 1888 (10–12–98).

(4) Further Continuing Appropriations for Fiscal Year 1999,

Pub. L. 105–257, 112 Stat. 1901 (10–14–98).

(5) Further Continuing Appropriations for Fiscal Year 1999,

Pub. L. 105–260, 112 Stat. 1919 (10–16–98).

(6) Further Continuing Appropriations for Fiscal Year 1999,

Pub. L. 105–273, 112 Stat. 2418 (10–20–98).

(7) Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 1999,

Pub. L. 105–276, 112 Stat. 2461 (10–21–98).

(8) Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. 105–277, 112 Stat. 2681 (10–21–98).

(9) 1999 Emergency Supplemental Appropriations Act, Pub. L.

106–31, 113 Stat. 57 (5–21–99).

Fiscal Year 2000:

(1) Continuing Appropriations for Fiscal Year 2000, Pub. L.

106–62, 113 Stat. 505 (9–30–99).

(2) Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 2000,

Pub. L. 106–74, 113 Stat. 1047 (10–20–99).

(3) Further Continuing Appropriations for Fiscal Year 2000,

Pub. L. 106–75, 113 Stat. 1125 (10–21–99).

(4) Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2000, Pub. L.

106–78, 113 Stat. 1135 (10–22–99).

(5) Further Continuing Appropriations for Fiscal Year 2000,

Pub. L. 106–85, 113 Stat. 1297 (10–29–99).

(6) Further Continuing Appropriations for Fiscal Year 2000,

Pub. L. 106–88, 113 Stat. 1304 (11–5–99).
1677 HOUSING APPROPRIATIONS, FISCAL YEARS 1996–2003

(7) Further Continuing Appropriations for Fiscal Year 2000,

Pub. L. 106–94, 113 Stat. 1311 (11–10–99).

(8) Further Continuing Appropriations for Fiscal Year 2000,

Pub. L. 106–105, 113 Stat.1484 (11–18–99).

(9) Further Continuing Appropriations for Fiscal Year 2000,

Pub. L. 106–106, 113 Stat. 1485 (11–19–99).

(10) Consolidated Appropriations for Fiscal Year 2000, Pub. L.

106–113, 113 Stat. 1501 (11–19–99).

(11) Emergency Supplemental Act, 2000, Pub. L. 106–246, 114

Stat. 511 (7–13–00).

Fiscal Year 2001:

(1) Continuing Appropriations for Fiscal Year 2001, Pub. L.

106–275, 114 Stat. 808 (9–29–00).

(2) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–282, 114 Stat. 866 (10–6–00).

(3) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–306, 114 Stat. 1073 (10–13–00).

(4) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–344, 114 Stat. 1318 (10–20–00).

(5) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–358, 114 Stat. 1397 (10–26–00).

(6) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–359, 114 Stat. 1398 (10–26–00).

(7) Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 2001,

Pub. L. 106–377, 114 Stat. 1441 (10–27–00).

(8) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–381, 114 Stat. 1450 (10–27–00).

(9) Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001, Pub. L.

106–387, 114 Stat. 1549 (10–28–00).

(10) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–388, 114 Stat. 1550 (10–28–00).

(11) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–389, 114 Stat. 1551 (10–29–00).

(12) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–401, 114 Stat. 1676 (10–30–00).

(13) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–403, 114 Stat. 1741 (11–1–00).

(14) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–416, 114 Stat. 1811 (11–1–00).

(15) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–426, 114 Stat. 1897 (11–3–00).

(16) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–427, 114 Stat. 1898 (11–4–00).

(17) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–428, 114 Stat. 1899 (11–4–00).

(18) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–520, 114 Stat. 2436 (11–15–00).

(19) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–537, 114 Stat. 2562 (12–5–00).

(20) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–539, 114 Stat. 2570 (12–7–00).
HOUSING APPROPRIATIONS, FISCAL YEARS 1996–2003 1678

(21) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–540, 114 Stat. 2571 (12–8–00).

(22) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–542, 114 Stat. 2713 (12–11–00).

(23) Further Continuing Appropriations for Fiscal Year 2001,

Pub. L. 106–543, 114 Stat. 2714 (12–15–00).

(24) Consolidated Appropriations Act, 2001, Pub. L. 106–554,

114 Stat. 2763 (12–21–00).

(25) Supplemental Appropriations Act, 2001, Pub. L. 107–20,

115 Stat. 155 (7–24–01).

Fiscal Year 2002:

(1) Continuing Appropriations for Fiscal Year 2002, Pub. L.

107–44, 115 Stat. 253 (9–28–01).

(2) Further Continuing Appropriations for Fiscal Year 2002,

Pub. L. 107–48, 115 Stat. 261 (10–12–01).

(3) Further Continuing Appropriations for Fiscal Year 2002,

Pub. L. 107–53, 115 Stat. 269 (10–22–01).

(4) Further Continuing Appropriations for Fiscal Year 2002,

Pub. L. 107–58, 115 Stat. 406 (10–31–01).

(5) Further Continuing Appropriations for Fiscal Year 2002,

Pub. L. 107–70, 115 Stat. 596 (11–17–01).

(6) Departments of Veterans Affairs and Housing and Urban

Development, and Independent Agencies Appropriations Act, 2002,

Pub. L. 107–73, 115 Stat. 651 (11–26–01).

(7) Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2002, Pub. L.

107–76, 115 Stat. 704 (11–28–01).

(8) Further Continuing Appropriations for Fiscal Year 2002,

Pub. L. 107–79, 115 Stat. 809 (12–7–01).

(9) Further Continuing Appropriations for Fiscal Year 2002,

Pub. L. 107–83, 115 Stat. 822 (12–15–01).

(10) Further Continuing Appropriations for Fiscal Year 2002,

Pub. L. 107–97, 115 Stat. 960 (12–21–01).

(11) Department of Defense and Emergency Supplemental Appropriations for Recovery from and Respnse to Terrorist Attacks on

the United States Act, 2002, Pub. L. 107–117, 115 Stat. 2230 (1–

10–02).

(12) 2002 Supplemental Appropriations Act for Further Recovery From and Response To Terrorist Attacks on the United States,

Pub. L. 107–206, 116 Stat. 820 (8–2–02).

Fiscal Year 2003:

(1) Continuing Appropriations for Fiscal Year 2003, Pub. L.

107–229, 116 Stat. 1465 (9–30–02).

(2) Further Continuing Appropriations for Fiscal Year 2003,

Pub. L. 107–235, 116 Stat. 1482 (10–4–02).

(3) Further Continuing Appropriations for Fiscal Year 2003,

Pub. L. 107–240, 116 Stat. 1492 (10–11–02).

(4) Further Continuing Appropriations for Fiscal Year 2003,

Pub. L. 107–244, 116 Stat. 1503 (10–18–02).

(5) Further Continuing Appropriations for Fiscal Year 2003,

Pub. L. 107–294, 116 Stat. 2062 (11–23–02).
1679

PART XV—MISCELLANEOUS

LIST OF RELATED LAWS AND UNITED STATES CODE CITATIONS

Administrative Procedures:

Freedom of Information ............................................................ 5 U.S.C. 552

Privacy of Records ..................................................................... 5 U.S.C. 552a

Rulemaking and Adjudications ................................................ 5 U.S.C. 553

Negotiated Rulemaking ............................................................. 5 U.S.C. 561

Alternative Dispute Resolution ................................................ 5 U.S.C. 571

Judicial Review .......................................................................... 5 U.S.C. 701

Executive Reorganization ......................................................... 5 U.S.C. 901

Civil Service ............................................................................... 5 U.S.C. 1101

Inspector General Act of 1978 .................................................. 5 U.S.C. app.

Federal Advisory Committees .................................................. 5 U.S.C. app.

Consumer Credit Protection:

Truth in Lending Act ................................................................ 15 U.S.C. 1601

Fair Credit Reporting Act ......................................................... 15 U.S.C. 1681

Equal Credit Opportunity Act .................................................. 15 U.S.C. 1691

Fair Debt Collection Practices Act ........................................... 15 U.S.C. 1692

Electronic Funds Transfer Act ................................................. 15 U.S.C. 1693

Contractor Bonds .............................................................................. 40 U.S.C. 270a

Crimes and Criminal Procedure:

False, Fictitious or Fraudulent Claims .................................... 18 U.S.C. 287

Public Money, Propery or Records ........................................... 18 U.S.C. 641

Lending, Credit and Insurance Institutions ............................ 18 U.S.C. 657

Theft or Bribery in Programs Receiving Federal Funds ........ 18 U.S.C. 666

Crime Insurance ............................................................................... 12 U.S.C.

1749bbb

Disaster Relief ................................................................................... 42 U.S.C. 5121

Environmental Programs:

Indoor Radon Abatement .......................................................... 15 U.S.C. 2661

Endangered Species Act ............................................................ 16 U.S.C. 1531

Coastal Barrier Resources Act .................................................. 16 U.S.C. 3501

Water Resources Council .......................................................... 42 U.S.C. 1962a

NEPA .......................................................................................... 42 U.S.C. 4321

Equal Opportunity:

Architectural Barriers Compliance Board ............................... 29 U.S.C. 792

Nondiscrimination under Federal Grants (section 504 of Rehabilitation Act of 1973)29 U.S.C. 794

Nondiscrimination in Federally Assisted Programs (Title VI

of Civil Rights Act of 1964)

42 U.S.C. 2000d

Americans with disabilities ...................................................... 42 U.S.C. 12101

Fair Housing, Title VIII, CRA of 1968 ............................................ 42 U.S.C. 3601

Handicapped—Accessibility to Buildings ................................ 42 U.S.C. 4151

False Claims Act ............................................................................... 42 U.S.C. 3729

Federal Budget:

Congressional Budget Office ..................................................... 2 U.S.C. 601

Congressional Budget Process .................................................. 2 U.S.C. 621

Unfunded Mandates .................................................................. 2 U.S.C. 658

Credit Reform ............................................................................ 2 U.S.C. 661

Enforcement of Budget Agreement .......................................... 2 U.S.C. 665

Impoundment Control ............................................................... 2 U.S.C. 681

Deficit Control and Sequestration ............................................ 2 U.S.C. 900

Financial Institutions:

Federal Home Loan Bank Act .................................................. 12 U.S.C. 1421

Federal Housing Finance Board ............................................... 12 U.S.C. 1422a

Resolution Trust Corporation ................................................... 12 U.S.C. 1441a

Home Owners’ Loan Act ........................................................... 12 U.S.C. 1461

Due on Sale Clauses .................................................................. 12 U.S.C. 1701j–

3
1680

LIST OF RELATED LAWS AND UNITED STATES CODE CITATIONS—

Continued

Mortgage Usury Laws ............................................................... 12 U.S.C. 1735f–

7 note

Federal Credit Union Act .......................................................... 12 U.S.C. 1751

Federal Deposit Insurance Act ................................................. 12 U.S.C. 1811

Federal Financing Bank Act ..................................................... 12 U.S.C. 2281

Alternative Mortgage Transactions ......................................... 12 U.S.C. 3801

Community Development Financial Institutions .................... 12 U.S.C. 4701

Insurance activities ................................................................... 12 U.S.C. 6711

Privacy ........................................................................................ 15 U.S.C. 6801

Flood Insurance ................................................................................ 42 U.S.C. 4001

Flood Disaster Protection ................................................................. 42 U.S.C. 4106

Historic Preservation:

Assistance by the Secretary of the Interior ............................. 16 U.S.C. 470

Grants to National Trust .......................................................... 16 U.S.C. 470b–1

Historic and Architectural Preservation .................................. 16 U.S.C. 469

Homeless Assistance:

Shelter at Military Installations .............................................. 10 U.S.C. 2546

Defense Base Closure ................................................................ 10 U.S.C. 2687

note

Job Corps Centers ..................................................................... 29 U.S.C. 1703a

Housing Assistance for Homeless Veterans ............................ 38 U.S.C. 3735

Primary Health and Substance Abuse Services ...................... 42 U.S.C. 256

Health Services for Public Housing Residents ........................ 42 U.S.C. 256a

Transition from Homelessness of Mentally Ill ........................ 42 U.S.C. 290cc–

21

Preventive Services for Children .............................................. 42 U.S.C. 5118

Runaway and Homeless Youth ................................................. 42 U.S.C. 5701

Education ................................................................................... 42 U.S.C. 11421

Job Training ............................................................................... 42 U.S.C. 11441

Emergency Community Services .............................................. 42 U.S.C. 11461

Family Support Centers ............................................................ 42 U.S.C. 11481

Immigration and Nationality ........................................................... 8 U.S.C. 1101

Money and Finance:

General Accounting Office ........................................................ 31 U.S.C. 701

Budget and Appropriations ....................................................... 31 U.S.C. 1101

Program Fraud Civil Remedies ................................................ 31 U.S.C. 3801

Grant and Cooperative Agreements ......................................... 31 U.S.C. 6301

Intergovernmental Assistance .................................................. 31 U.S.C. 6501

Joint Funding Simplification .................................................... 31 U.S.C. 7101

Single Audits .............................................................................. 31 U.S.C. 7501

Government Corporations ......................................................... 31 U.S.C. 9101

Real Estate Appraisal ....................................................................... 12 U.S.C. 3331

Relocation Assistance ....................................................................... 42 U.S.C. 4601

Small Business Assistance ............................................................... 15 U.S.C. 631

Taxation:

Low-Income Housing Tax Credit .............................................. 26 U.S.C. 42

Rehabilitation Tax Credit ......................................................... 26 U.S.C. 47

Industrial Development Bonds ................................................. 26 U.S.C. 103(b)

Exempt Facility Bonds .............................................................. 26 U.S.C. 142

Mortgage Revenue Bonds ......................................................... 26 U.S.C. 143

FNMA Net Operating Losses ................................................... 26 U.S.C.

172(b)(1)(H)

Real Estate Investment Trusts ................................................ 26 U.S.C. 856

Real Estate Mortgage Investment Conduits ........................... 26 U.S.C. 860a

Empowerment Zones, Enterprise Communities, Rural Investment Areas.26 U.S.C. 1391

Renewal Communities ............................................................... 26 U.S.C. 1400E

Temporary Assistance for Needy Families ..................................... 42 U.S.C. 601

Terrorism Insurance ......................................................................... 15 U.S.C. 6701

note

Veterans Housing ............................................................................. 38 U.S.C. 3701
1681

LIST OF HOUSING RELATED LEGISLATION APPROVED OR ENACTED

1995–2002

[Through end of 107th Congress]

104th Congress (1995-1996):

(1) Emergency Supplemental Appropriations for Additional Disaster Assistance, for

Antiterrorism Initiatives, for Assistance in the Recovery From the Tragedy That

Occurred at Oklahoma City, and Rescissions Act, 1995, Pub. L. 104–19 (7-27-

95).

(2) Continuing Appropriations for Fiscal Year 1996, Pub. L. 104–31 (9-30-95).

(3) Agriculture, Rural Development, Food and Drug Administration, and Related

Agencies Appropriations Act, 1996, Pub. L. 104–37 (10-21-95).

(4) Further Continuing Appropriations, Fiscal Year 1996, Pub. L. 104–54 (11-19-95).

(5) Further Continuing Appropriations, Fiscal Year 1996, Pub. L. 104–56 (11-20-95).

(6) Lobbying Disclosure Act of 1995, Pub. L. 104–65 § 11 (12-19-95).

(7) Federal Reports Elimination and Sunset Act of 1995, Pub. L. 104–66, subtitle

G of title I, subtitle P of title II, and § 3003 (12-21-95).

(8) Further Continuing Appropriations, Fiscal Year 1996, Pub. L. 104–94 (1-6-96).

(9) The Balanced Budget Downpayment Act, I, Pub. L. 104–99 § 201(b), title IV (1-

26-96). [HUD appropriations, housing program amendments]

(10) Farm Credit System Reform Act of 1996, Pub. L. 104–105, title I (2-10-96).

[FAMC amendments]

(11) Extension of Authority for Certain Veterans’ Affairs Programs and Activities,

Pub. L. 104–110 (2-13-96).

(12) Further Continuing Appropriations, Fiscal Year 1996, Pub. L. 104–116 (3-15-

96).

(13) Further Continuing Appropriations, Fiscal Year 1996, Pub. L. 104–118 (3-22-

96).

(14) Housing Opportunity Program Extension Act of 1996, Pub. L. 104–120 (3-28-

96).

(15) Further Continuing Appropriations, Fiscal Year 1996, Pub. L. 104–122 (3-29-

96).

(16) Line Item Veto Act, Pub. L. 104–130 (4-9-96).

(17) Further Continuing Appropriations, Fiscal Year 1996, Pub. L. 104–131 (4-24-

96).

(18) Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L.

104–134, title II of section 101(e) (4-26-96). [FY96 HUD appropriations]

(19) Corrections to Public Law 104–134, Pub. L. 104–140 (5-2-96).

(20) Church Arson Prevention Act, Pub. L. 104–155 (7-3-96).

(21) Agriculture, Rural Development, Food and Drug Administration, and Related

Agencies Appropriations Act, 1997, Pub. L. 104–180 (8-6-96).

(22) Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub.

L. 104–193, title IV and § 903 (8-22-96). [restricting public benefits for aliens

& fuguitive felons]

(23) Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1997, Pub. L. 104–204 (9-26-96).

(24) Omnibus Consolidated Appropriations Act, 1997, Pub. L. 104–208, division A

and division C (9-30-96). [amendments to RESPA, TILA, HMDA, ECOA, and

Fair Housing Act, illegal immigration reform]

(25) False Statements Accountability Act of 1996, Pub. L. 104–292 (10-11-96).

(26) General Accounting Office Act of 1996, Pub. L. 104–316 (10-19-96). [audits &

reports]

(27) Native American Housing Assistance and Self-Determination Act of 1996, Pub.

L. 104–330 (10-26-96).

105th Congress (1997-1998):

(1) 1997 Emergency Supplemental Appropriations Act for Recovery from Natural

Disasters, and for Overseas Peacekeeping Efforts, Including Those in Bosnia,

Pub. L. 105–18 (6-12-97).
HOUSING RELATED LEGISLATION 1682

(2) Balanced Budget Act of 1997, Pub. L. 105–33, title II & § 5565 (8-5-97).

(3) Taxpayer Relief Act of 1997, Pub. L. 105–34, subtitle F of title IX (8-5-97). [empowerment zones, enterprise communities, and community development financial institutions]

(4) Continuing Appropriations for Fiscal Year 1998, Pub. L. 105–46 (9-30-97).

(5) Transfer of surplus property for assistance and housing for low-income families,

Pub. L. 105–50 (10-6-97).

(5) Further Continuing Appropriations for Fiscal Year 1998, Pub. L. 105–64 (10-23-

97).

(6) Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1998, Pub. L. 105–65 (10-27-97).

(7) Further Continuing Appropriations for Fiscal Year 1998, Pub. L. 105–68 (11-7-

97).

(8) Further Continuing Appropriations for Fiscal Year 1998, Pub. L. 105–69 (11-9-

97).

(9) Further Continuing Appropriations for Fiscal Year 1998, Pub. L. 105–71 (11-10-

97).

(10) Further Continuing Appropriations for Fiscal Year 1998, Pub. L. 105–84 (11-

14-97).

(11) Agriculture, Rural Development, Food and Drug Administration, and Related

Agencies Appropriations Act, 1998, Pub. L. 105–86 (11-18-97).

(12) United States Fire Administration Authorization Act for Fiscal Years 1998 and

1999, Pub. L. 105–108, § 3 (11-20-97). [fire safety systems in federally assisted

housing]

(13) Amendments to Uniform Relocation Assistance and Real Property Acquisition

Policies Act of 1970, Pub. L. 105–117 (11-21-97).

(14) 1998 Supplemental Appropriations and Rescissions Act, Pub. L. 105–174 (5-1-

98).

(15) Homeowners Protection Act of 1998, Pub. L. 105–216 (7-29-98).

(16) Continuing Appropriations for Fiscal Year 1999, Pub. L. 105–240 (9-25-98).

(17) Further Continuing Appropriations for Fiscal Year 1999, Pub. L. 105–249 (10-

9-98).

(18) Further Continuing Appropriations for Fiscal Year 1999, Pub. L. 105–254 (10-

12-98).

(19) Technical Corrections to Laws Relating to Native Americans, Pub. L. 105–256,

§ 13(b) (10-14-98). [Native American housing]

(20) Further Continuing Appropriations for Fiscal Year 1999, Pub. L. 105–257 (10-

14-98).

(21) Further Continuing Appropriations for Fiscal Year 1999, Pub. L. 105–260 (10-

16-98).

(22) Further Continuing Appropriations for Fiscal Year 1999, Pub. L. 105–273 (10-

20-98).

(23) Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1999, Pub. L. 105–276, titles II and

V (10-21-98). [HUD appropriations, Quality Housing and Work Responsibility

Act of 1998]

(24) Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999,

Pub. L. 105–277, § § 101(a) & 121–125 of division A, chapter 7 of title IV of division B (10-21-98). [Agriculture appropriations and miscellaneous housing provisions, CDBG disaster relief]

(25) Federal Reports Elimination Act of 1998, Pub. L. 105–362, § § 101 & 701 (11-

10-98).

(26) Energy Conservation Reauthorization Act of 1998, Pub. L. 105–388, § 3 (11-10-

98). [weatherization & conservation programs]

106th Congress (1999-2000):

(1) Y2K Act, Pub. L. 106–37 (7–20–99).

(2) 1999 Emergency Supplemental Appropriations Act, Pub. L. 106–31, chapter 1 of

title I, chapter 10 of title III, title IV (5–21–99). [emergency Agriculture appropriations, supplemental HUD appropriations, rescissions & offsets]

(3) Continuing Appropriations for Fiscal Year 2000, Pub. L. 106–62, 113 Stat. 505

(9–30–99).

(4) Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 2000, Pub. L. 106–74 (10–20–99).

(5) Further Continuing Appropriations for Fiscal Year 2000, Pub. L. 106–75 (10–21–

99).

(6) Agriculture, Rural Development, Food and Drug Administration, and Related

Agencies Appropriations Act, 2000, Pub. L. 106–78 (10–22–99).
1683 HOUSING RELATED LEGISLATION

(7) Further Continuing Appropriations for Fiscal Year 2000, Pub. L. 106–85 (10–29–

99).

(8) Further Continuing Appropriations for Fiscal Year 2000, Pub. L. 106–88 (11–5–

99).

(9) Further Continuing Appropriations for Fiscal Year 2000, Pub. L. 106–94 (11–10–

99).

(10) Gramm-Leach-Bliley Act, Pub. L. 106–102, title VI (11–12–99). [Federal Home

Loan Bank system modernization]

(11) Further Continuing Appropriations for Fiscal Year 2000, Pub. L. 106–105 (11–

18–99).

(12) Further Continuing Appropriations for Fiscal Year 2000, Pub. L. 106–106 (11–

19–99).

(13) Consolidated Appropriations for Fiscal Year 2000, Pub. L. 106–113, § 175 (11–

19–99). [extension of FHA multifamily mortgage credit demonstrations &

amendments to public and assisted housing drug elimination program]

(14) Designation of HUD headquarters building as Robert C. Weaver Federal Building, Pub. L. 106–162 (12–9–99).

(15) Electronic Signatures in Global and National Commerce Act, Pub. L. 106–229

(6–30–00).

(16) Emergency Supplemental Act, 2000, Pub. L. 106–246, § § 2801–4 (7–13–00). [enhanced voucher program correction, HUD appropriations technical corrections,

rescissions]

(17) Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–275 (9–29–00).

(18) FHA Downpayment Simplification Extension Act of 2000, Pub. L. 106–281 (10–

6–00).

(19) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–282, 114

Stat. 866 (10–6–00).

(20) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–306 (10–

13–00).

(21) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–344 (10–

20–00).

(22) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–358 (10–

26–00).

(23) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–359 (10–

26–00).

(24) Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 2001, Pub. L. 106–377 (10–27–00).

(25) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–381 (10–

27–00).

(26) Agriculture, Rural Development, Food and Drug Administration, and Related

Agencies Appropriations Act, 2001, Pub. L. 106–387 (10–28–00).

(27) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–388 (10–

28–00).

(28) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–389 (10–

29–00).

(29) Renaming of Stewart B. McKinney Homeless Assistance Act as McKinneyVento Homeless Assistance Act, Pub. L. 106–400 (10–30–00).

(30) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–401 (10–

30–00).

(31) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–403 (11–

1–00).

(32) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–416 (11–

1–00).

(33) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–426 (11–

3–00).

(34) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–427 (11–

4–00).

(35) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–428 (11–

4–00).

(36) Amendments to Organic Act of Guam, Pub. L. 106–504 (11–13–00). [exception

to restriction on use of assisted housing by aliens]

(37) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–520 (11–

15–00).

(38) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–537 (12–

5–00).

(39) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–539 (12–

7–00).
HOUSING RELATED LEGISLATION 1684

(40) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–540 (12–

8–00).

(41) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–542 (12–

11–00).

(42) Further Continuing Appropriations for Fiscal Year 2001, Pub. L. 106–543 (12–

15–00).

(43) Consolidated Appropriations Act, 2001, Pub. L. 106–554, paragraphs (4) and (7)

of § 1(a) (enacting by reference H.R. 5666 and HR 5662, 106th Congress, as introduced in the House) (12–21–00). [HUD appropriations, Millennial Housing

Commission, FHLMC housing goals, study of FHLB system risks, tax incentives

for renewal communities, empowerment zone incentives, low-income housing

tax credit, transfer of HUD assets, risk sharing demonstration]

(44) Omnibus Indian Advancement Act, Pub. L. 106–568, titles II & X (12–27–00).

[Native Hawaiian housing assistance & Native American homeownership]

(45) American Homeownership and Economic Opportunity Act of 2000, Pub. L. 106–

569 (12–27–00).

107th Congress (2001-2002):

(1) Availability of manufactured housing fees, Pub. L. 107–18 (7–5–01).

(2) Supplemental Appropriations Act, 2001, Pub. L. 107–20 (7–24–01).

(3) Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–44 (9–28–01).

(4) Further Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–48 (10–12–

01).

(5) Further Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–53 (10–22–

01).

(6) Further Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–58 (10–31–

01).

(7) Further Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–70 (11–17–

01).

(8) Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 2002, Pub. L. 107–73 (11–26–01).

(9) Agriculture, Rural Development, Food and Drug Administration, and Related

Agencies Appropriations Act, 2002, Pub. L. 107–76 (11–28–01).

(10) Further Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–79 (12–

7–01).

(11) Further Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–83 (12–

15–01).

(12) Homeless Veterans Comprehensive Assistance Act of 2001, Pub. L. 107–95 (12–

21–01).

(13) Further Continuing Appropriations for Fiscal Year 2002, Pub. L. 107–97 (12–

21–01).

(14) National Defense Authorization Act for Fiscal Year 2002, Pub. L. 107–107,

§ § 2821(b), 3006–7 (12–28–01). [use for homeless of closed defense bases]

(15) No Child Left Behind Act of 2001, Pub. L. 107–110, § § 1031–4 (1–8–02). [education for homeless children and youths]

(16) Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2002, Pub. L. 107–116, title VI (1–10–02).

[Mark-to-Market Extension Act of 2001, housing program amendments]

(17) Department of Defense and Emergency Supplemental Appropriations for Recovery from and Respnse to Terrorist Attacks on the United States Act, 2002, Pub.

L. 107–117, chapter 13 of division B (1–10–02). [transfers to HUD from emergency response fund]

(18) Treatment of Jacksonville, Florida, Homeless Assistance Grants, Pub. L. 107–

151, (3–13–02).

(19) 2002 Supplemental Appropriations Act for Further Recovery From and Response To Terrorist Attacks on the United States, Pub. L. 107–206, chapter 13

of title I (8–2–02). [supplemental appropriations for HUD]

(20) Codification of Title 40, United States Code, Pub. L. 107–217, § § 1, 6(b) (8–21–

02). [codification of Davis-Bacon wage requirements, non-Federal public works,

Appalachian Housing Fund]

(21) Continuing Appropriations for Fiscal Year 2003, Pub. L. 107–229 (9–30–02).

(22) Further Continuing Appropriations for Fiscal Year 2003, Pub. L. 107–235 (10–

4–02).

(23) Further Continuing Appropriations for Fiscal Year 2003, Pub. L. 107–240 (10–

11–02).

(24) Further Continuing Appropriations for Fiscal Year 2003, Pub. L. 107–244 (10–

18–02).
1685 HOUSING RELATED LEGISLATION

(25) Military Construction Appropriation Act, 2003, Pub. L. 107–249, § § 120 & 131

(10–23–02). [base closure and realignment]

(26) 21st Century Department of Justice Appropriations Act, Pub. L. 107–273,

§ 205(c) (11–2–02). [amendments to provisions regarding obstruction of Federal

audits]

(27) Native American Housing Assistance and Self-Determination Reauthorization

Act of 2002, Pub. L. 107–292 (11–13–02).

(28) Further Continuing Appropriations for Fiscal Year 2003, Pub. L. 107–294 (11–

23–02).

(29) Terrorism Risk Insurance Act of 2002, Pub. L. 107–297 (11–26–02).

(30) Paul and Shiela Wellstone Center for Community Building Act, Pub. L. 107–

316 (12–2–02).

(31) FHA Downpayment Simplification Act of 2002, Pub. L. 107–326 (12–4–02).

(32) Veterans Benefits Act of 2002, Pub. L. 107–330, § § 303, 305, 307, 308(f) (12–

6–02). [hybrid ARM guarantee demonstration, extension of Soldiers’ and Sailors’

Civil Relief Act of 1940 protections, loan assumption fee]
1686

LIST OF NONRECURRING REPORTS RELATING TO HOUSING

REQUIRED BY LAWS ENACTED 1994–2002

[Through end of 107th Congress]

Goals 2000: Educate America Act, Pub. L. 103–227, 108 Stat. 279

(3–31–94):

Report by entity selected by Secretary on effectiveness of midnight basketball programs. Due 2 years after grant is made to entity. [§ 520(l)(11) of Cranston-Gonzalez National Affordable Housing

Act, as added by § 1052(3)]

Multifamily Housing Property Disposition Reform Act of 1994, Pub.

L. 103–233, 108 Stat. 342 (4–11–94):

(1) Report by Comptroller General on adequacy of FHA loan

loss reserves in General and Special Risk Insurance Funds. Due

April 1, 1995. [§ 103(e)]

(2) Report by Comptroller General on actuarial soundness of

FHA mortgage insurance programs under General Insurance Fund

for nursing home, hospital, and retirement service centers. Due

April 1, 1995. [§ 103(f)]

Housing Opportunity Program Extension Act of 1996, Pub. L. 104–

120, 110 Stat. 834 (3–28–96):

Report by Secretary of Housing and Urban Development on

grants for Habitat for Humanity and other self-help housing providers. Due 90 days after close-out of all grants. [§ 11(n)]

Omnibus Consolidated Rescissions and Appropriations Act of 1996,

Pub. L. 104–134, 110 Stat. 1321 (4–26–96):

Report by Secretary of Housing and Urban Development evaluating Moving to Work demonstration programs. Due 180 days after

end of third year of demonstration. [§ 101(e) [§ 204(h)(2)]]

Omnibus Consolidated Appropriations Act, 1997, Pub. L. 104–208,

110 Stat. 3009 (9–30–96):

(1) Report by Board of Governors of Federal Reserve System

and Secretary of Housing and Urban Development on legislative

action to simplify and unify the disclosure requirements under the

Real Estate Settlement Procedures Act of 1974 and the Truth in

Lending Act. Due upon finding that such action is necessary.

[§ 2101(c) of title II of division A (Economic Growth and Regulatory

Paperwork Reduction Act of 1996)]

(2) Report by Comptroller General on extent to which meanstested public benefits are paid or provided to aliens who are not

qualified aliens. [§ 509 of division C (Illegal Immigration Reform

and Immigrant Responsibility Act of 1996)]
1687 NONRECURRING REPORTS

Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, Pub.

L. 104–204, 110 Stat. 2874 (9–26–96):

Reports by Secretary of Housing and Urban Development on

FHA multifamily demonstration authority. Interim reports due

every 3 months. Final report due 6 months after end of demonstration program. [§ 212(m)]

1997 Emergency Supplemental Appropriations Act for Recovery

from Natural Disasters, and for Overseas Peacekeeping Efforts,

Including Those in Bosnia, Pub. L. 105–18, 111 Stat. 158 (6-

12-97):

Reports by Secretary of Housing and Urban Development and

Director of the Federal Emergency Management Agency on buyouts

in communities affected by flooding in upper Midwest and other

diasters in fiscal year 1997, using amounts available until September 30, 2000. Due quarterly. [111 Stat. 199]

Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1998, Pub.

L. 105–65, 111 Stat. 1344 (10-27-97):

(1) Report by Comptroller General on status of eligible multifamily housing projects and implementation of mortgage restructuring and rental assistance sufficiency plans. Due 18 months after

audit under section 521(a). [§ 521(b)]

(2) Report by Comptroller General on section 8 rental assistance for multifamily housing projects. Due 18 months after enactment. [§ 532]

Homeowners Protection Act of 1998, Pub. L. 105–216, 112 Stat. 897

(7-29-98):

Report by the Comptroller General on high-risk residential

mortgages and residential mortgage transactions that are exempt

from provisions regarding borrower cancellation and automatic termination of mortgage insurance. Due 2 years after enactment.

[§ 3(f)(4)]

Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999, Pub.

L. 105–276, 112 Stat. 2461 (10-21-98):

(1) Report by Secretary of Housing and Urban Development

summarizing all technical assistance provided under the housing

opportunities for persons with AIDS program during fiscal year

1999. Due 30 days after end of fiscal year 1999. [112 Stat. 2475]

(2) Listing in Federal Register by Secretary of Housing and

Urban Development of all rules, regulations, orders, handbooks, notices, and related requirements pertaining to the public housing

and section 8 tenant-based assistance programs that are made obsolete by enactment of Quality Housing and Work Responsibility

Act of 1998. To be published not later than October 1, 1999.

[§ 503(d)]

(3) Report by Comptroller General on compliance by public

housing agencies with their public housing agency plans. Due 2
NONRECURRING REPORTS 1688

years after date that PHA plans are first required under section 5A

of United States Housing Act of 1937. [§ 511(c)(2)]

(4) Report by Secretary of Housing and Urban Development

evaluating and assessing activities of public housing resident organizations funded by grants. Due 3 years after enactment.

[§ 538(b)(2)]

(5) Report by Secretary of Housing and Urban Development

evaluating section 8 manufactured housing demonstration program. Due March 31, 2002. [§ 557(c)]

(6) Interim report by Secretary of Housing and Urban Development on the status of the home rule flexible grant demonstration

program and the progress participating jurisdictions under the program. Due 60 days after end of second year of demonstration.

[§ 408(d)(2) of United States Housing Act of 1937, as added by

§ 561]

(7) Final report by Secretary of Housing and Urban Development evaluating effectiveness of the home rule flexible grant demonstration program. Due 6 months after termination of demonstration. [§ 410(b) of United States Housing Act of 1937, as added by

§ 561]

(8) Interim report by entity conducting study of alternative

methods for evaluating PHA’s on the conducting of the study. Due

6 months after execution of contract for conducting study.

[§ 563(f)(1)]

(9) Final report by entity conducting study of alternative methods for evaluating PHA’s on results of the study. Due 12 months

after execution of contract for conducting study. [§ 563(f)(2)]

(10) Report by Comptroller General on results of study of housing assistance program costs. Due 12 months after enactment.

[§ 585(e)]

(11) Report by Secretary of Housing and Urban Development

describing system to distribute funding to grantees under Public

and Assisted Housing Drug Elimination Act of 1990. Due 18

months after enactment. [§ 5127(b) of Public and Assisted Housing

Drug Elimination Act of 1990, as added by § 586(g)]

(12) Report by Secretary of Housing and Urban Development

on review of security contracts awarded by grantees under Public

and Assisted Housing Drug Elimination Act of 1990. Due 180 days

after enactment. [§ 587(b)]

(13) Report by Secretary of Housing and Urban Development

on vacant and substandard single family and multifamily housing

owned by the Department. Due 12 months after enactment.

[§ 591(a)]

Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2000, Pub.

L. 106–74, 113 Stat. 1047 (10-20-99):

(1) Report by Millennial Housing Commission stating findings

and conclusions of Commission regarding study on importance of

housing, increasing private sector role in providing affordable housing, and coordination of HUD programs. Due March 1, 2002.

[§ 206(f)]

(2) Report by Secretary of Housing and Urban Development of

quantitative results of study of budgetary impact of debt forgive-
1689 NONRECURRING REPORTS

ness for loans for elderly housing under section 202 of Housing Act

of 1959. Due 3 months after enactment. [§ 521(b)]

(3) Report by Secretary of Housing and Urban Development on

effects of various sized supportive housing projects for persons with

disabilities and for the elderly. Due 3 months after enactment.

[§ 524(b)]

(4) Report by Commission on Affordable Housing and Health

Care Facility Needs in the 21st Century on findings and conclusions of Commission regarding study on housing, supportive services, and health care needs for elderly persons. Due December 31,

2001. [§ 525(f)]

Consolidated Appropriations Act, 2001, Pub. L. 106–554, 114 Stat.

2763 (12–21–00).

Report by Comptroller General on study of capital structure of

Federal Home Loan Bank system and risks of direct acquisition of

mortgages by system. Due 6 months after enactment. [§ 1001 of Division B of H.R. 5666, 106th Congress, as introduced in the House

(as enacted by reference by § 1(a)(4))]

Omnibus Indian Advancement Act, Pub. L. 106–568, 114 Stat. 2868

(12-27-00):

Report by Lands Title Report Commission on results of study

of the system of the Bureau of Indian Affairs of the Department

of the Interior for maintaining land ownership records and title

documents and issuing certified title status reports relating to Indian trust lands. Due 1 year after initial meeting of Commission.

[§ 1001(e)]

American Homeownership and Economic Opportunity Act of 2000,

Pub. L. 106–569, 114 Stat. 2944 (12-27-00):

Report by Secretary of Housing and Urban Development on results of actuarially based study of the effects of establishing a single maximum mortgage amount limitation for mortgages insured

under section 255 of the National Housing Act. Due 180 days after

enactment. [§ 201(d)]

Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2002, Pub.

L. 107–73, 115 Stat. 673 (11-26-01):

Plan by Office of Federal Housing Enterprise Oversight for

staffing of Office. Due January 30, 2002.

2002 Supplemental Appropriations Act for Further Recovery From

and Response To Terrorist Attacks on the United States, Pub.

L. 107–206, 116 Stat. 897 (8-2-02):

Report every 90 days by Secretary of Housing and Urban Development on status of any multifamily housing project, hospital,

or nursing home that has been in default for more than 60 days.

Initial report due on September 16, 2002. [§ 1304]
NONRECURRING REPORTS 1690

Native American Housing Assistance and Self-Determination Reauthorization Act of 2002, Pub. L. 107–292, 116 Stat. 2056 (11–

13–02)

(1) Report by Secretary of Housing and Urban Development on

study of feasibility of demonstration project allowing use of funds

made available pursuant to Act for carrying out community development demonstration projects. Due 1 year after enactment.

[§ 202(7) of the Native American Housing Assistance and Self-Determination Act of 1996, as added by § 8]

(2) Report by Secretary of Housing and Urban Development on

study of feasibility of demonstration project allowing Indian tribes

and tribal organizations to receive assistance in a manner that

maximizes tribal authority and decision-making in the design and

implementation of Federal housing and related activity funding.

Due 1 year after enactment. [§ 202(8) of the Native American

Housing Assistance and Self-Determination Act of 1996, as added

by § 8]

(3) Report by Secretary of Housing and Urban Development on

black mold infestation of Native American housing. Due 180 days

after enactment. [§ 9]
1691

LIST OF ACRONYMS AND ABBREVIATED

REFERENCES

[Special Terms and References Used in Connection with Housing and Community Development Activities Under

Laws Contained in This Compilation]

ACC .......................... Annual contributions contract.

AHS .......................... Annual housing survey.

AHEOA ..................... American Homeownership and Economic

Opportunity Act of 2000.

APA ........................... Administrative Procedure Act (5 U.S.C. 551

et seq.).

ARM .......................... Adjustable rate mortgage.

BIF ............................ Bank Insurance Fund.

BMIR ........................ Below-market interest rate.

Budget Act ............... Congressional Budget and Impoundment

Control Act of 1974.

Budget Res ............... Concurrent resolution on the budget.

CBO .......................... Congressional Budget Office.

CD ............................. Community development.

CDC .......................... Community development corporation.

CDBG ....................... Community development block grant.

CDC .......................... Community development corporation.

CDFI ......................... Community development financial institution.

CHoDO ..................... Community housing development organization.

CFR ........................... Code of Federal Regulations.

CHAS ........................ Comprehensive housing affordability strategy.

CHAP ........................ Comprehensive homeless assistance plan.

CHSP ........................ Congregate housing services program.

CMO ......................... Collateralized mortgage obligation.

Continuing Res ........ Joint resolution continuing appropriations

for the next fiscal year.

CPI ............................ Consumer Price Index.

CRA .......................... Community Reinvestment Act.

Cranston-Gonzalez .. Cranston-Gonzalez National Affordable

Housing Act.

Demo/Dispo .............. Public housing demolition and disposition

(governed by section 18 of the United

States Housing Act of 1937).

DOE .......................... Department of Energy.

ECHo ........................ Elder cottage housing units.

EDA .......................... Economic Development Administration.
ACRONYMS AND ABBREVIATED REFERENCES 1692

EDI ........................... Economic development initiative (§ 108(q) of

Housing and Community Development

Act of 1974).

EIS ............................ Environmental impact statement.

ELIHPA .................... Emergency Low Income Housing Preservation Act of 1987.

ESG ........................... Emergency shelter grant.

FAMC ....................... Federal Agricultural Mortgage Corporation

(Farmer Mac).

Fannie Mae .............. Federal National Mortgage Association.

Farmer Mac ............. Federal Agricultural Mortgage Corporation.

FDIC ......................... Federal Deposit Insurance Corporation.

FEMA ....................... Federal Emergency Management Agency.

FFB ........................... Federal Financing Bank.

FHA .......................... Federal Housing Administration.

FHFB ........................ Federal Housing Finance Board.

FHLBB ..................... Federal Home Loan Bank Board (abolished).

FHLMC .................... Federal Home Loan Mortgage Corporation

(Freddie Mac).

FIRREA .................... Financial Institutions Reform, Recovery,

and Enforcement Act of 1989.

Flex Sub ................... Flexible subsidy program (§ 201 of Housing

and Community Development Amendments of 1978).

FmHA ....................... Farmers Home Administration.

FMR .......................... Fair market rent.

FNMA ....................... Federal National Mortgage Association

(Fannie Mae).

FR ............................. Federal Register.

Freddie Mac ............. Federal Home Loan Mortgage Corporation.

FSLIC ....................... Federal Savings and Loan Insurance Corporation (abolished).

GAO .......................... General Accounting Office.

GEM ......................... Growing equity mortgage.

GIF ............................ General Insurance Fund.

Ginnie Mae ............... Government National Mortgage Association.

GNMA ....................... Government National Mortgage Association

(Ginnie Mae).

GPM .......................... Graduated payment mortgage.

GSE ........................... Government-sponsored enterprise.

HAP .......................... Housing assistance plan.

HECM ....................... Home equity conversion mortgage.

HFA .......................... Housing finance agency.

HHS .......................... Department of Health and Human Services.

HMDA ...................... Home Mortgage Disclosure Act of 1975.

HoDAG ..................... Housing development grant program.

HOME ...................... HOME Investment Partnerships Act.

HOPE ....................... Homeownership and opportunity for people

everywhere.

HOPE I ..................... HOPE for Public and Indian Housing

Homeownership.

HOPE II ................... HOPE for Homeownership of Multifamily

Units.
1693 ACRONYMS AND ABBREVIATED REFERENCES

HOPE III .................. HOPE for Homeownership of Single Family

Homes.

HOPE VI .................. Urban revitalization demonstration program (URD).

HUD .......................... Department of Housing and Urban Development.

HURRA ..................... Housing and Urban-Rural Recovery Act of

1983.

ICDBG ...................... Indian community development block grant

program.

IG .............................. Inspector General.

IHA ........................... Indian housing authority.

IRS ............................ Internal Revenue Service.

LIHPRHA ................. Low-Income Housing Preservation and

Resident Homeownership Act of 1990.

LIHTC ...................... Low-income housing tax credit.

MAHRA .................... Multifamily Assisted Housing Reform and

Affordability Act of 1997.

MBS .......................... Mortgage-backed securities.

McKinney-Vento Act McKinney-Vento Homeless Assistance Act.

MIP ........................... Mortgage insurance premium.

MMIF ........................ Mutual Mortgage Insurance Fund.

Mod Rehab ............... Moderate rehabilitation.

MPS .......................... Minimum property standards.

MSA .......................... Metropolitan statistical area.

NAHA ....................... Cranston-Gonzalez National Affordable

Housing Act.

NAHASDA ............... Native American Housing Assistance and

Self-Determination Act of 1996.

Neg-Reg .................... Negotiated rulemaking.

NHP .......................... National Housing Partnership.

NIBS ......................... National Institute of Building Sciences.

NIMBY ..................... ‘‘Not in my back yard’’.

NMHCSSA ............... National Manufactured Housing Construction and Safety Standards Act of 1974.

NOFA ........................ Notice of funding availability.

OFHEO ..................... Office of Federal Housing Enterprise Oversight, HUD.

OMB ......................... Office of Management and Budget.

OMHAR .................... Office of Multifamily Housing Assistance

Restructuring, HUD.

OTS ........................... Office of Thrift Supervision.

PAM .......................... Pledged account mortgage.

PC ............................. Participation certificate (a type of mortgage

backed security).

PFS ........................... Performance funding system.

PHA .......................... Public housing agency.

PILOT ....................... Payment in lieu of taxes.

PLAM ....................... Price-level adjusted mortgage.

PMI ........................... Private mortgage insurance.

PMSA ........................ Primary metropolitan statistical area.

PUD .......................... Planned unit development.

QHWRA .................... Quality Housing and Work Responsibility

Act of 1998.

RAM .......................... Reverse annuity mortgage.
ACRONYMS AND ABBREVIATED REFERENCES 1694

RAP ........................... Rental assistance payments.

REIT ......................... Real estate investment trust.

REMIC ...................... Real estate mortgage investment conduit.

RESPA ...................... Real Estate Settlement Procedures Act of

1974.

RFC ........................... Resolution Funding Corporation (abolished).

RTC ........................... Resolution Trust Corporation (abolished).

SAIF .......................... Savings Association Insurance Fund.

SAM .......................... Shared appreciation mortgage.

SAMA ....................... Site and market analysis.

SHOP ........................ Self-help housing opportunities.

SRIF .......................... Special Risk Insurance Fund.

SRO ........................... Single room occupancy housing.

Sub Rehab ................ Substantial rehabilitation.

TANF ........................ Temporary assistance for needy families.

TDHE ....................... Tribally designated housing entity.

TMAP ....................... Temporary mortgage assistance payments.

UDAG ....................... Urban development action grant.

URD .......................... Urban revitalization demonstration program.

USC .......................... United States Code.

VA ............................. Department of Veterans Affairs.
1695

LIST OF ABBREVIATED STATUTORY

CITATIONS

Sec. 3 ........................ Housing and Urban Development Act of

1968 (economic opportunities).

Sec. 5 ........................ United States Housing Act of 1937 (funding

for public housing and section 8 housing).

Sec. 5A ...................... United States Housing Act of 1937 (public

housing agency plans).

Sec. 7 ........................ United States Housing Act of 1937 (designated public housing projects).

Sec. 7(o) .................... Department of Housing and Urban Development Act (legislative review of HUD

rules and regulations).

Sec. 8 ........................ United States Housing Act of 1937 (rental

housing assistance for low-income families).

Sec. 9 ........................ United States Housing Act of 1937 (public

housing capital and operating funds).

Sec. 12 ...................... United States Housing Act of 1937 (community service and family self-sufficiency requirements).

Sec. 14 ...................... United States Housing Act of 1937 (repealed—public housing modernization assistance).

Sec. 16 ...................... United States Housing Act of 1937 (income

targeting requirements).

Sec. 17 ...................... United States Housing Act of 1937 (repealed—rental rehabilitation and development (HoDAG)).

Sec. 18 ...................... United States Housing Act of 1937 (demolition and disposition of public housing).

Sec. 20 ...................... United States Housing Act of 1937 (public

housing resident management).

Sec. 21 ...................... United States Housing Act of 1937 (public

housing homeownership and management opportunities).

Sec. 22 ...................... United States Housing Act of 1937 (authority to convert public housing to vouchers).

Sec. 23 ...................... United States Housing Act of 1937 (family

self-sufficiency program).

Sec. 24 ...................... United States Housing Act of 1937 (demolition, site revitalization, replacement, and

tenant-based assistance for public housing).

Sec. 25 ...................... United States Housing Act of 1937 (transfer

of public housing management).
ABBREVIATED STATUTORY CITATIONS 1696

Sec. 26 ...................... United States Housing Act of 1937 (environmental review).

Sec. 32 ...................... United States Housing Act of 1937 (public

housing resident homeownership programs).

Sec. 33 ...................... United States Housing Act of 1937 (required conversion of distressed public

housing to tenant-based assistance).

Sec. 34 ...................... United States Housing Act of 1937 (public

housing resident services).

Sec. 35 ...................... United States Housing Act of 1937 (mixed

finance public housing).

Sec. 42 ...................... Internal Revenue Code of 1986 (low-income

housing tax credit).

Sec. 101 .................... Housing and Urban Development Act of

1965 (rent supplements).

Sec. 104 .................... Housing and Community Development Act

of 1974 (CDBG applications and review).

Sec. 105 .................... Housing and Community Development Act

of 1974 (CDBG eligible activities).

Sec. 106 .................... Housing and Urban Development Act of

1968 (housing counseling).

Housing and Community Development Act

of 1974 (CDBG allocation and distribution of funds).

Sec. 107 .................... Housing and Community Development Act

of 1974 (CD special purpose grants fund).

Sec. 108 .................... Housing and Community Development Act

of 1974 (CD loan guarantees).

Sec. 119 .................... Housing and Community Development Act

of 1974 (UDAG).

Sec. 184 .................... Housing and Community Development Act

of 1992 (Indian housing loan guarantees).

Sec. 201 .................... Housing and Community Development

Amendments of 1978 (troubled projects/

flexible subsidy).

Sec. 202 .................... Housing Act of 1959 (elderly and handicapped housing).

National Housing Act (single-family mortgage insurance).

Sec. 203 .................... Housing and Community Development

Amendments of 1978 (management and

preservation of HUD-owned projects).

National Housing Act (single-family mortgage insurance).

Sec. 203(e) ................ National Housing Act (mortgage insurance

eligibility and insurance contract

incontestibility).

Sec. 203(k) ................ National Housing Act (rehabilitation loan

mortgage insurance).

Sec. 207 .................... National Housing Act (multifamily mortgage insurance).
1697 ABBREVIATED STATUTORY CITATIONS

Sec. 213 .................... Housing and Community Development Act

of 1974 (allocation of funds for assisted

housing).

National Housing Act (cooperative housing

mortgage insurance).

Sec. 214 .................... Housing and Community Development Act

of 1980 (use of assisted housing by

aliens).

Sec. 221 .................... National Housing Act (multifamily mortgage insurance).

Sec. 221(d)(3) ............ National Housing Act (BMIR rental housing mortgage insurance).

Sec. 221(d)(4) ............ National Housing Act (low-income multifamily housing mortgage insurance).

Sec. 221(g)(4) ............ National Housing Act (multifamily mortgage ‘‘put’’ option).

Sec. 223(a)(7) ............ National Housing Act (mortgage insurance

for refinancing).

Sec. 223(d) ................ National Housing Act (insurance for operating loss loans).

Sec. 223(f) ................. National Housing Act (mortgage insurance

for multifamily refinancing and health

care refinancing).

Sec. 231 .................... National Housing Act (mortgage insurance

for elderly and handicapped rental housing).

Sec. 232 .................... National Housing Act (mortgage insurance

for nursing homes, intermediate care facilities, board and care homes and assisted living facilities).

Sec. 234 .................... National Housing Act (mortgage insurance

for condominiums).

Sec. 235 .................... National Housing Act (home mortgage interest reduction payments).

Sec. 236 .................... National Housing Act (rental and cooperative housing interest reduction payments).

Sec. 241 .................... National Housing Act (multifamily housing

supplemental loans).

Sec. 242 .................... National Housing Act (mortgage insurance

for hospitals).

Sec. 302(b)(2) ............ Federal National Mortgage Association

Charter Act (FNMA authority to deal in

conventional mortgages).

Sec. 305(a)(2) ............ Federal Home Loan Mortgage Corporation

Act (FHLMC authority to deal in conventional mortgages).

Sec. 312 .................... Housing Act of 1964 (repealed—rehabilitation loans).

Sec. 502 .................... Housing Act of 1949 (rural housing loans

and loan guarantees).

Sec. 513 .................... Housing Act of 1949 (rural housing authorization amounts).

Sec. 515 .................... Housing Act of 1949 (elderly and handicapped rural housing).
ABBREVIATED STATUTORY CITATIONS 1698

Sec. 521 .................... Housing Act of 1949 (rural housing loan interest credits and RAP).

Sec. 533 .................... Housing Act of 1949 (housing preservation

grants).

Sec. 542 .................... Housing and Community Development Act

of 1992 (multifamily housing mortgage

credit demonstrations).

Sec. 811 .................... Cranston-Gonzalez National Affordable

Housing Act (supportive housing for persons with disabilities).

Title I ........................ Housing and Community Development Act

of 1974 (CDBG and UDAG).

Housing Act of 1949 (urban renewal).

National Housing Act (FHA property improvement and manufactured housing

loan insurance).

Title II ...................... National Housing Act (FHA mortgage insurance).

Title V ....................... Housing Act of 1949 (rural housing).

Title VI ..................... Native American Housing Assistance and

Self-Determination Act of 1949 (guarantees for financing for tribal housing activities).
1699

TABLE OF UNITED STATES CODE CITATIONS TO HOUSING LAWS

Title Section Subject

7 USC ......... 1927a ............................. FmHA Interest Rate Limitation

8 USC ......... 1601–1646 ..................... Restrictions on Welfare and Public Benefits for Aliens

12 USC ....... 1430 ............................... Federal Home Loan Banks Affordable Housing

1441a ............................. Resolution Trust Corporation

1451–1459 ..................... FHLMC

1515z–13a ..................... Indian Housing Loan Guarantees

1701–1715z–20 ............. HUD Research & Reports

Supportive Housing for Elderly

Families

Rent Supplements

Housing Counseling

HUD Multifamily Property Disposition

Mortgage Insurance (Titles I &

II)

1716–1723i .................... FNMA & GNMA

1731a–1750g ................. Mortgage Insurance

Military Mortgage Insurance

Property Insurance

1831q ............................. FDIC Affordable Housing Program

2279aa–2279bb–6 ......... FAMC

2294a ............................. PHA Obligations Purchase

2601–2617 ..................... RESPA

2701–2712 ..................... Emergency Mortgage Relief

2801–2810 ..................... Home Mortgage Disclosure

2901–2907 ..................... Community Reinvestment

3701–3717 ..................... Multifamily Mortgage Foreclosure

3751–3768 ..................... Single Family Mortgage Foreclosure

3806 ............................... Adjustable Rate Mortgage Caps

4101–4147 ..................... Low-Income Housing Preservation

4501–4641 ..................... GSE Safety and Soundness

4901–4910 ..................... Private Mortgage Insurance Termination

15 USC ....... 1701–1720 ..................... Interstate Land Sales

2227 ............................... Federally Assisted Buildings Fire

Safety

2261 note ....................... Recommended Radon Policy

3601–3616 ..................... Condo & Coop Abuse Relief
1700

TABLE OF UNITED STATES CODE CITATIONS TO HOUSING LAWS—Continued

Title Section Subject

18 USC ....... 1010, 1012 ..................... Fraud Against HUD

1516 ............................... Obstruction of Audits

25 USC ....... 4101–4213 ..................... Native American Housing Assistance

4221–4243 ..................... Native Hawaiian Housing Assistance

40 USC ....... 550(f) ............................. Disposal of Surplus Property for

Low-Income Housing Use

14503 ............................. Appalachian Housing Funds

42 USC ....... 1401–1440 ..................... Public and Low Income Housing

1441–1469c ................... Urban Renewal

1471–1490r ................... Rural Housing

1501–1594f .................... Defense Housing

3301–3374 ..................... Demonstration Cities

3531–3548 ..................... Dept. of HUD

3601–3631 ..................... Fair Housing

3931–3941 ..................... Nat. Housing Partnerships

4501–4527 ..................... National Urban Policy

New Communities

4801–4856 ..................... Lead-Based Paint

5301–5321 ..................... Community Development

5401–5426 ..................... Manufactured Home Standards

5511a ............................. Solar Assistance Financing Entity

6801–6892 ..................... Energy Conservation & Weatherization

7704a ............................. Seismic Property Standards

8001–8011 ..................... Congregate Hsng Services

8013 ............................... Disabled Housing

8101–8146 ..................... Neighborhood Reinvestment Livable Cities

8231 ............................... Assisted Housing Energy Conservation

11301–11489 ................. Homeless Assistance

11501–11505 ................. Enterprise Zones

11901–11925 ................. Anti-Drug Abuse

12701–12711 ................. Housing Goals, Strategy, & Regulatory Barriers

12712 ............................. Energy Efficiency Plan

12713 ............................. First-Time Homebuyer Eligibility

12721–12840 ................. Affordable Housing Investment

(HOME)

12851–12859 ................. National Homeownership Trust

12870–12898 ................. Multifamily & Single Family

Homeownership (HOPE)

12898a ........................... Enterprise Zone Homeownership

Opportunity Grants

12899–12899i ................ HOPE for Youth

12901–12912 ................. AIDS Housing
1701

TABLE OF UNITED STATES CODE CITATIONS TO HOUSING LAWS—Continued

Title Section Subject

13601–13643 ................. Federally Assisted Housing Occupancy Standards & Preferences

13661–13664 ................. Safety & Security in Assisted

Housing
1702

INDEX OF UNITED STATES CODE CITATIONS

Title Section Page

7 U.S.C. ............................. 1926 note .................................... 1398

7 U.S.C. ............................. 1927a ........................................... 1395

8 U.S.C. ............................. 1255a ........................................... 632

8 U.S.C. ............................. 1601 ............................................. 605

8 U.S.C. ............................. 1611-4 ......................................... 606

8 U.S.C. ............................. 1621-5 ......................................... 616

8 U.S.C. ............................. 1641-6 ......................................... 619

10 U.S.C. ........................... 2687 note .................................... 797

10 U.S.C. ........................... 2687 note .................................... 813

12 U.S.C. ........................... 1430 ............................................. 1605

12 U.S.C. ........................... 1451-59 ....................................... 1199

12 U.S.C. ........................... 1451 note .................................... 1199

12 U.S.C. ........................... 1451 note .................................... 1276

12 U.S.C. ........................... 1701-1706d ................................. 901

12 U.S.C. ........................... 1701c ........................................... 1570

12 U.S.C. ........................... 1701d–4 ....................................... 1587

12 U.S.C. ........................... 1701g–5 ....................................... 1600

12 U.S.C. ........................... 1701j–1 ........................................ 1105

12 U.S.C. ........................... 1701j–2 ........................................ 1629

12 U.S.C. ........................... 1701k .......................................... 1104

12 U.S.C. ........................... 1701l ........................................... 1104

12 U.S.C. ........................... 1701l–1 ....................................... 1107

12 U.S.C. ........................... 1701o ........................................... 1574

12 U.S.C. ........................... 1701p ........................................... 1574

12 U.S.C. ........................... 1701p–1 ....................................... 1122

12 U.S.C. ........................... 1701q ........................................... 363

12 U.S.C. ........................... 1701q note .................................. 378

12 U.S.C. ........................... 1701q note .................................. 389

12 U.S.C. ........................... 1701q note .................................. 390

12 U.S.C. ........................... 1701q note .................................. 551

12 U.S.C. ........................... 1701q–1 ....................................... 371

12 U.S.C. ........................... 1701r–1 ....................................... 418

12 U.S.C. ........................... 1701s ........................................... 485

12 U.S.C. ........................... 1701t ........................................... 2

12 U.S.C. ........................... 1701u .......................................... 1588

12 U.S.C. ........................... 1701v ........................................... 1580

12 U.S.C. ........................... 1701w .......................................... 583

12 U.S.C. ........................... 1701x ........................................... 583

12 U.S.C. ........................... 1701z–1-1701z–10a .................... 1563

12 U.S.C. ........................... 1701z–1 note .............................. 70

12 U.S.C. ........................... 1701z–11 ..................................... 568

12 U.S.C. ........................... 1701z–12 ..................................... 582

12 U.S.C. ........................... 1701z–13 ..................................... 635

12 U.S.C. ........................... 1701z–15 ..................................... 1111

12 U.S.C. ........................... 1707-1715z–21 ............................ 912

12 U.S.C. ........................... 1707 note .................................... 1152

12 U.S.C. ........................... 1707 note .................................... 1160

12 U.S.C. ........................... 1709 note .................................... 1114

12 U.S.C. ........................... 1709–2 ......................................... 1107

12 U.S.C. ........................... 1710 note .................................... 1436

12 U.S.C. ........................... 1713 note .................................... 1113

12 U.S.C. ........................... 1715e note .................................. 1573

12 U.S.C. ........................... 1715z ........................................... 719

12 U.S.C. ........................... 1715z–1 ....................................... 490

12 U.S.C. ........................... 1715z–1 note .............................. 1110

12 U.S.C. ........................... 1715z–1a ..................................... 504
1703 INDEX OF UNITED STATES CODE CITATIONS

Title Section Page

12 U.S.C. ........................... 1715z–1a note ............................ 513

12 U.S.C. ........................... 1715z–1a note ............................ 517

12 U.S.C. ........................... 1715z–1a note ............................ 1165

12 U.S.C. ........................... 1715z–1b ..................................... 519

12 U.S.C. ........................... 1715z–1c ..................................... 1112

12 U.S.C. ........................... 1715z–4a ..................................... 1108

12 U.S.C. ........................... 1715z–11a ................................... 564

12 U.S.C. ........................... 1715z–13a ................................... 881

12 U.S.C. ........................... 1715z–13b ................................... 888

12 U.S.C. ........................... 1716-1723i .................................. 1167

12 U.S.C. ........................... 1716 note .................................... 1191

12 U.S.C. ........................... 1716b ........................................... 1196

12 U.S.C. ........................... 1716b note .................................. 1196

12 U.S.C. ........................... 1721 note .................................... 1103

12 U.S.C. ........................... 1721 note .................................... 1195

12 U.S.C. ........................... 1723a note .................................. 1198

12 U.S.C. ........................... 1731a-1735f–20 .......................... 1061

12 U.S.C. ........................... 1735e–1 ....................................... 1599

12 U.S.C. ........................... 1748-1748h–3 ............................. 1088

12 U.S.C. ........................... 1749aaa-1749aaa–5 ................... 1098

12 U.S.C. ........................... 1831q ........................................... 1611

12 U.S.C. ........................... 2279aa ......................................... 1277

12 U.S.C. ........................... 2279aa–1-2279aa–14 ................. 1279

12 U.S.C. ........................... 2279bb-2279bb–7 ....................... 1297

12 U.S.C. ........................... 2279cc ......................................... 1305

12 U.S.C. ........................... 2294a ........................................... 354

12 U.S.C. ........................... 2601-17 ....................................... 1418

12 U.S.C. ........................... 2601 note .................................... 1418

12 U.S.C. ........................... 2601 note .................................... 1434

12 U.S.C. ........................... 2601 note .................................... 1435

12 U.S.C. ........................... 2701-12 ....................................... 1115

12 U.S.C. ........................... 2701 note .................................... 1115

12 U.S.C. ........................... 2801-10 ....................................... 1494

12 U.S.C. ........................... 2801 note .................................... 1494

12 U.S.C. ........................... 2901-8 ......................................... 1505

12 U.S.C. ........................... 2901 note .................................... 1505

12 U.S.C. ........................... 3701-17 ....................................... 1137

12 U.S.C. ........................... 3701 note .................................... 1137

12 U.S.C. ........................... 3751–3768 ................................... 1123

12 U.S.C. ........................... 3751 note .................................... 1123

12 U.S.C. ........................... 3806 ............................................. 1512

12 U.S.C. ........................... 4101-24 ....................................... 638

12 U.S.C. ........................... 4101 note .................................... 638

12 U.S.C. ........................... 4101 note .................................... 668

12 U.S.C. ........................... 4101 note .................................... 674

12 U.S.C. ........................... 4101 note .................................... 676

12 U.S.C. ........................... 4101 note .................................... 678

12 U.S.C. ........................... 4125 ............................................. 676

12 U.S.C. ........................... 4141-7 ......................................... 669

12 U.S.C. ........................... 4501-3 ......................................... 1217

12 U.S.C. ........................... 4501 note .................................... 1217

12 U.S.C. ........................... 4511-26 ....................................... 1221

12 U.S.C. ........................... 4541-89 ....................................... 1230

12 U.S.C. ........................... 4601-3 ......................................... 1249

12 U.S.C. ........................... 4611-23 ....................................... 1252

12 U.S.C. ........................... 4631-41 ....................................... 1267

12 U.S.C. ........................... 4901-4910 ................................... 1521

12 U.S.C. ........................... 4901 note .................................... 1521

12 U.S.C. ........................... 4901 note .................................... 1534

15 U.S.C. ........................... 1701-20 ....................................... 1399

15 U.S.C. ........................... 1701 note .................................... 1399

15 U.S.C. ........................... 1701 note .................................... 1417

15 U.S.C. ........................... 2227 ............................................. 1516

15 U.S.C. ........................... 2661 note .................................... 1513

15 U.S.C. ........................... 3601-16 ....................................... 1643

15 U.S.C. ........................... 3601 note .................................... 1643
INDEX OF UNITED STATES CODE CITATIONS 1704

Title Section Page

15 U.S.C. ........................... 3601 note .................................... 1652

18 U.S.C. ........................... 1001 ............................................. 1584

18 U.S.C. ........................... 1010 ............................................. 1584

18 U.S.C. ........................... 1012 ............................................. 1585

18 U.S.C. ........................... 1516 ............................................. 1586

25 U.S.C. ........................... 4043 note .................................... 898

25 U.S.C. ........................... 4101-3 ......................................... 820

25 U.S.C. ........................... 4101 note .................................... 819

25 U.S.C. ........................... 4104 ............................................. 880

25 U.S.C. ........................... 4111-7 ......................................... 826

25 U.S.C. ........................... 4131-40 ....................................... 836

25 U.S.C. ........................... 4151-2 ......................................... 843

25 U.S.C. ........................... 4161-8 ......................................... 845

25 U.S.C. ........................... 4181-3 ......................................... 851

25 U.S.C. ........................... 4191-5 ......................................... 853

25 U.S.C. ........................... 4191 note .................................... 855

25 U.S.C. ........................... 4211-2 ......................................... 856

25 U.S.C. ........................... 4211 note .................................... 856

25 U.S.C. ........................... 4221–43 ....................................... 856

31 U.S.C. ........................... 1113 note .................................... 1577

31 U.S.C. ........................... 1305 ............................................. 1672

40 U.S.C. ........................... 550 ............................................... 686

40 U.S.C. ........................... 484b note .................................... 1659

40 U.S.C. ........................... 3141-62 ....................................... 1653

42 U.S.C. ........................... 1382 note .................................... 601

42 U.S.C. ........................... 1404a ........................................... 1570

42 U.S.C. ........................... 1434 ............................................. 1583

42 U.S.C. ........................... 1435 ............................................. 352

42 U.S.C. ........................... 1436a ........................................... 625

42 U.S.C. ........................... 1436b ........................................... 604

42 U.S.C. ........................... 1436c ........................................... 355

42 U.S.C. ........................... 1436d ........................................... 362

42 U.S.C. ........................... 1437d note .................................. 523

42 U.S.C. ........................... 1437-1437z–7 .............................. 116

42 U.S.C. ........................... 1437 note .................................... 287

42 U.S.C. ........................... 1437 note .................................... 116

42 U.S.C. ........................... 1437 note .................................... 359

42 U.S.C. ........................... 1437 note .................................... 360

42 U.S.C. ........................... 1437 note .................................... 361

42 U.S.C. ........................... 1437a note .................................. 357

42 U.S.C. ........................... 1437a note .................................. 599

42 U.S.C. ........................... 1437a note .................................. 602

42 U.S.C. ........................... 1437a note .................................. 1668

42 U.S.C. ........................... 1437c note ................................... 343

42 U.S.C. ........................... 1437d note .................................. 523

42 U.S.C. ........................... 1437f note ................................... 7

42 U.S.C. ........................... 1437f note ................................... 289

42 U.S.C. ........................... 1437f note ................................... 293

42 U.S.C. ........................... 1437f note ................................... 297

42 U.S.C. ........................... 1437f note ................................... 299

42 U.S.C. ........................... 1437f note ................................... 300

42 U.S.C. ........................... 1437f note ................................... 339

42 U.S.C. ........................... 1437f note ................................... 342

42 U.S.C. ........................... 1437f note ................................... 344

42 U.S.C. ........................... 1437f note ................................... 346

42 U.S.C. ........................... 1437f note ................................... 349

42 U.S.C. ........................... 1437f note ................................... 351

42 U.S.C. ........................... 1437f note ................................... 353

42 U.S.C. ........................... 1437f note ................................... 897

42 U.S.C. ........................... 1437f–15 note ............................. 334

42 U.S.C. ........................... 1437z–1 note .............................. 335

42 U.S.C. ........................... 1437aaa-1437aaa–8 ................... 266

42 U.S.C. ........................... 1437aaa note .............................. 696

42 U.S.C. ........................... 1437bbb-1437bbb–9 ................... 278

42 U.S.C. ........................... 1437bbb note .............................. 286

42 U.S.C. ........................... 1439 ............................................. 111
1705 INDEX OF UNITED STATES CODE CITATIONS

Title Section Page

42 U.S.C. ........................... 1440 ............................................. 595

42 U.S.C. ........................... 1441 ............................................. 1

42 U.S.C. ........................... 1441a-c ........................................ 3

42 U.S.C. ........................... 1452c ........................................... 72

42 U.S.C. ........................... 1471-1490s .................................. 1309

42 U.S.C. ........................... 1471 note .................................... 1393

42 U.S.C. ........................... 1474a ........................................... 1394

42 U.S.C. ........................... 1479 note .................................... 1396

42 U.S.C. ........................... 3531 ............................................. 2

42 U.S.C. ........................... 3531-3537c .................................. 1535

42 U.S.C. ........................... 3531 note .................................... 1535

42 U.S.C. ........................... 3531 note .................................... 1547

42 U.S.C. ........................... 3536 ............................................. 1562

42 U.S.C. ........................... 1536 note .................................... 1575

42 U.S.C. ........................... 3541 ............................................. 1581

42 U.S.C. ........................... 3542 ............................................. 1592

42 U.S.C. ........................... 3543 ............................................. 1593

42 U.S.C. ........................... 3544 ............................................. 1593

42 U.S.C. ........................... 3545 ............................................. 1552

42 U.S.C. ........................... 3545 note .................................... 1558

42 U.S.C. ........................... 3546 ............................................. 1599

42 U.S.C. ........................... 3547 ............................................. 1560

42 U.S.C. ........................... 3548 ............................................. 1576

42 U.S.C. ........................... 3608 note .................................... 1667

42 U.S.C. ........................... 3608a ........................................... 1397

42 U.S.C. ........................... 3616a ........................................... 1661

42 U.S.C. ........................... 3931-41 ....................................... 1637

42 U.S.C. ........................... 4501-3 ......................................... 81

42 U.S.C. ........................... 4801 note .................................... 1468

42 U.S.C. ........................... 4821-2 ......................................... 1468

42 U.S.C. ........................... 4831 ............................................. 1474

42 U.S.C. ........................... 4841-6 ......................................... 1474

42 U.S.C. ........................... 4851-6 ......................................... 1477

42 U.S.C. ........................... 4851 note .................................... 1477

42 U.S.C. ........................... 5301-21 ....................................... 9

42 U.S.C. ........................... 5301 note .................................... 5

42 U.S.C. ........................... 5301 note .................................... 1660

42 U.S.C. ........................... 5304 note .................................... 67

42 U.S.C. ........................... 5305 note .................................... 69

42 U.S.C. ........................... 5305 note .................................... 94

42 U.S.C. ........................... 5306 note .................................... 65

42 U.S.C. ........................... 5307 note .................................... 90

42 U.S.C. ........................... 5318a ........................................... 85

42 U.S.C. ........................... 5318 note .................................... 89

42 U.S.C. ........................... 5401-26 ....................................... 1437

42 U.S.C. ........................... 5401 note .................................... 1437

42 U.S.C. ........................... 5401 note .................................... 1467

42 U.S.C. ........................... 5511a ........................................... 1669

42 U.S.C. ........................... 7704a ........................................... 1515

42 U.S.C. ........................... 8011 ............................................. 402

42 U.S.C. ........................... 8013 ............................................. 392

42 U.S.C. ........................... 8101-7 ......................................... 74

42 U.S.C. ........................... 8231 ............................................. 636

42 U.S.C. ........................... 9816 note .................................... 109

42 U.S.C. ........................... 11301-4 ....................................... 742

42 U.S.C. ........................... 11301 note .................................. 739

42 U.S.C. ........................... 11311-20 ..................................... 744

42 U.S.C. ........................... 11331-52 ..................................... 749

42 U.S.C. ........................... 11361 ........................................... 754

42 U.S.C. ........................... 11371-8 ....................................... 754

42 U.S.C. ........................... 11371 note .................................. 852

42 U.S.C. ........................... 11381-9 ....................................... 760

42 U.S.C. ........................... 11391-9 ....................................... 768

42 U.S.C. ........................... 11401-2 ....................................... 775

42 U.S.C. ........................... 11403-11407b ............................. 778

42 U.S.C. ........................... 11408-11408a ............................. 785
INDEX OF UNITED STATES CODE CITATIONS 1706

Title Section Page

42 U.S.C. ........................... 11411-12 ..................................... 791

42 U.S.C. ........................... 11501-5 ....................................... 101

42 U.S.C. ........................... 11901-8 ....................................... 524

42 U.S.C. ........................... 11901 note .................................. 523

42 U.S.C. ........................... 11901 note .................................. 529

42 U.S.C. ........................... 11921-5 ....................................... 529

42 U.S.C. ........................... 12701-3 ....................................... 6

42 U.S.C. ........................... 12701 note .................................. 444

42 U.S.C. ........................... 12701 note .................................. 697

42 U.S.C. ........................... 12704-11 ..................................... 433

42 U.S.C. ........................... 12705a-12705d ........................... 560

42 U.S.C. ........................... 12705a note ................................ 560

42 U.S.C. ........................... 12712 ........................................... 637

42 U.S.C. ........................... 12712 note .................................. 1149

42 U.S.C. ........................... 12713 ........................................... 738

42 U.S.C. ........................... 12721-5 ....................................... 445

42 U.S.C. ........................... 12741-56 ..................................... 447

42 U.S.C. ........................... 12747 note .................................. 852

42 U.S.C. ........................... 12771-4 ....................................... 467

42 U.S.C. ........................... 12781-5 ....................................... 472

42 U.S.C. ........................... 12801-10 ..................................... 474

42 U.S.C. ........................... 12805 note .................................. 681

42 U.S.C. ........................... 12821 ........................................... 479

42 U.S.C. ........................... 12831-40 ..................................... 480

42 U.S.C. ........................... 12851-9 ....................................... 689

42 U.S.C. ........................... 12851 note .................................. 689

42 U.S.C. ........................... 12870-80 ..................................... 696

42 U.S.C. ........................... 12891-8 ....................................... 709

42 U.S.C. ........................... 12898a ......................................... 735

42 U.S.C. ........................... 12899-12899i .............................. 531

42 U.S.C. ........................... 12899h–l note ............................. 852

42 U.S.C. ........................... 12901-12 ..................................... 420

42 U.S.C. ........................... 13601-4 ....................................... 543

42 U.S.C. ........................... 13611-20 ..................................... 546

42 U.S.C. ........................... 13631-2 ....................................... 548

42 U.S.C. ........................... 13641-3 ....................................... 552

42 U.S.C. ........................... 13661-4 ....................................... 556
1707

INDEX OF FEDERAL HOUSING AND RELATED

LAWS

Page

AIDS Housing Opportunity Act .............................................................................. 420

American Homeownership and Economic Opportunity Act of 2000:

§302 .................................................................................................................... 346

§303 .................................................................................................................... 344

§503(f)(1) ............................................................................................................ 844fn

§501 .................................................................................................................... 898

§512 .................................................................................................................... 856fn

§811 .................................................................................................................... 390

§821 .................................................................................................................... 371fn

§823 .................................................................................................................... 417

§841 .................................................................................................................... 400fn

§851(c)(1) ........................................................................................................... 365fn

§861(b) ............................................................................................................... 494fn

Title XI .............................................................................................................. 1578

Anti-Drug Abuse Act of 1988, title V, subtitle C .................................................. 521

Appropriation laws:

1997 Emergency Supplemental Appropriations Act for Recovery from

Natural Disasters, and for Overseas Peacekeeping Efforts, Including

Those in Bosnia, §10001 ............................................................................... 1576

2002 Supplemental Appropriations Act for Further Recovery From and

Response To Terrorist Attacks on the United States, §1303 .......... 941fn, 947fn

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1992, § 743(b) .................................... 1322fn

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001: ...................................................

§739............................................................................................................ 1323fn

§751............................................................................................................ 1321fn

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001, § 736 .......................................... 1398

Department of Agriculture and Related Agencies Appropriation Act, 1969,

89 Stat. 651 ................................................................................................... 1394

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1990:

103 Stat. 853............................................................................................. 1471fn

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1992:

105 Stat. 752 ................................................................................... 26fn, 1601fn

105 Stat. 753 ..............................................................................................1538fn

105 Stat. 757............................................................................................... 148fn

105 Stat. 758 .............................................................................................. 355

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1993:

106 Stat. 1591 ............................................................................................ 115fn

106 Stat. 1593........................................................................................... 1539fn

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1995:

108 Stat. 2314........................................................................................... 1181fn

108 Stat. 2315............................................................................................. 167fn

108 Stat. 2315........................................................................................... 1182fn

108 Stat. 2316............................................................................................. 195fn

108 Stat. 2316...................................................................... 652fn, 653fn, 665fn

108 Stat. 2316 ............................................................................................ 1123

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1996:

110 Stat. 2887 ............................................................................................ 32fn

§204 ............................................................................................................ 293
Page

1708

Appropriation laws—Continued

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1996—Continued

§215............................................................................................................ 1537fn

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1997:

110 Stat. 2883 ............................................................................................ 678

110 Stat. 2887 ............................................................................................ 32fn

§202 ............................................................................................................ 297

§204 ............................................................................................................ 564

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1998:

§208 ............................................................................................................ 1602

Title V ........................................................................................................ 300

§542(a)(1)................................................................................................... 1595fn

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 1999:

112 Stat. 2478 ............................................................................................ 69

112 Stat. 2484 ............................................................................................ 69

§202(a) ....................................................................................................... 1206fn

§202(b) ....................................................................................................... 1222fn

§226 ............................................................................................................ 359

§601(b).............................................................................................. 935fn, 950fn

Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act, 2002:

115 Stat. 6600 ............................................................................................ 203fn

§207(a)(2)(A) ............................................................................................... 924fn

§227(a) ........................................................................................................ 528fn

§535(a)(5) .................................................................................................... 502fn

Emergency Supplemental Appropriations Act of 1994, 108 Stat.

12............................................................................................ 927fn, 929fn, 1021fn

Independent Offices Appropriation Act, 1955, 68 Stat. 295 ......................... 1600

Miscellaneous Appropriations Act, 2001, §1002............................................ 1241fn

Omnibus Consolidated and Emergency Supplemental Appropriations Act,

1999, §122 of Division A ................................................................ 1206fn, 1222fn

Omnibus Consolidated Appropriations Act, 1997, §2101 of Division A ....... 1435

Rural Development, Agriculture and Related Agencies Appropriations

Act, 1988, §632 of §101(k) ............................................................................ 1396

Supplemental Appropriations Act, 1985, 99 Stat. 296 .................................. 1395

Treasury, Postal Service, and General Government Appropriations Act,

1997, §2......................................................................................................... 1202fn

Balanced Budget Downpayment Act, I:

§402(d)(4) ........................................................................................................... 289

§405 .................................................................................................................... 299

§407(c)............................................................................................................... 1009fn

Base Closure Community Redevelopment and Homeless Assistance Act of

1994, §2(e) ............................................................................................................. 813

Church Arson Prevention Act of 1996, §4 .............................................................. 1671

Community Investment Corporation Demonstration Act .................................... 94

Community Outreach Partnership Act of 1992 ..................................................... 90

Community Reinvestment Act of 1977 .................................................................. 1505

Community Renewal Tax Relief Act of 2000:

§ 142 ................................................................................................................... 942fn

§ 143(3)(C)(i) ..................................................................................................... 1048fn

Competitive Equality Banking Act of 1987, §1204 ............................................... 1512

Condominium and Cooperative Abuse Relief Act of 1980 .................................... 1643

Cranston-Gonzalez National Affordable Housing Act:

Title I ................................................................................................................. 433

§§101-103 ........................................................................................................... 6

Title II ............................................................................................................... 444

§289(a) ........................................................................................... 72fn, 173fn, 219fn

Title III, subtitle A ........................................................................................... 689

§328 .................................................................................................................... 1113

§§401-402 ........................................................................................................... 696

Title IV, subtitle B ............................................................................................ 697

Title IV, subtitle C ............................................................................................ 709

Title IV, subtitle D ........................................................................................... 531

§550(b) ............................................................................................................... 342
Page

1709

Cranston-Gonzalez National Affordable Housing Act—Continued

§555 .................................................................................................................... 289

§573(e) ............................................................................................................... 124fn

Title VI .............................................................................................................. 674

§801 .................................................................................................................... 378

§802 .................................................................................................................... 402

§811 .................................................................................................................... 392

Title VIII, subtitle D ........................................................................................ 420

§901(c) ................................................................................................................ 43fn

§909 .................................................................................................................... 26fn

§916 .................................................................................................................... 65

§931 .................................................................................................................... 343

§932 .................................................................................................................... 343

§945 .................................................................................................................... 637

§947 .................................................................................................................... 1515

§956 .................................................................................................................... 738

§959 .................................................................................................................... 880

§962 .................................................................................................................... 897

Defense Base Closure and Realignment Act of 1990, §2905 ................................ 797

Department of Housing and Urban Development Act:

Entire text ......................................................................................................... 1535

§2 ........................................................................................................................ 2

§5(a) .................................................................................................................. 1600fn

Department of Housing and Urban Development Reform Act of 1989:

§102 .................................................................................................................... 1552

§125(c)(2) ........................................................................................................... 722fn

§133(b),(c) ......................................................................................................... 1098fn

§701 .................................................................................................................... 72

Title VIII ........................................................................................................... 339

Department of Veterans Affairs Physician and Dentist Recruitment and Retention Act of 1991, §402(d)(2) ............................................................................ 921

Drug-Free Public Housing Act of 1988 .................................................................. 529

Economic Growth and Regulatory Paperwork Reduction Act of 1996,

§2704(c),(d)(13)(B).................................................................................. 1076fn, 1192fn

Emergency Home Finance Act of 1970:

Title III .............................................................................................................. 1199

§701 .................................................................................................................... 1436

Emergency Homeowners’ Relief Act ....................................................................... 1115

Emergency Housing Act of 1975, title I ................................................................. 1115

Energy Policy Act of 1992:

§ 104(c) .............................................................................................................. 1440fn

§ 106 ................................................................................................................... 1149

Farm Credit Act of 1971, title VIII ........................................................................ 1277

Farm Credit System Reform Act of 1996, §105(1) ............................................... 1284fn

Federal Deposit Insurance Act, § 40 ....................................................................... 1611

Federal Employees Pay Comparability Act of 1990, §112(b)............................... 1537fn

Federal Fire Prevention and Control Act of 1974, § 31 ........................................ 1516

Federal Home Loan Bank Act:

§10(i),(j) .............................................................................................................. 1605

Federal Home Loan Mortgage Corporation Act .................................................... 1199

Federal Housing Enterprises Financial Safety and Soundness Act of 1992 ....... 1217

Federal National Mortgage Association Charter Act ............................................ 1167

Federal Reports Elimination and Sunset Act of 1995, §3003 .............................. 1577

FHA Downpayment Simplification Act of 2002, §5(b)(1)(B) ................................. 954fn

HOME Investment Partnerships Act ..................................................................... 444

Home Mortgage Disclosure Act of 1975 ................................................................. 1494

Homeowners Protection Act of 1998 ...................................................................... 1521

Homeownership and Opportunity Through HOPE Act ........................................ 696

Housing Act of 1948, §502 ...................................................................................... 1570

Housing Act of 1949:

§2 ........................................................................................................................ 1

Title V ................................................................................................................ 1309

Housing Act of 1950, §§505 & 508 ......................................................................... 1104

Housing Act of 1954:

§801 .................................................................................................................... 1105

§802 .................................................................................................................... 1574

§814 .................................................................................................................... 1583

§816 .................................................................................................................... 352
Page

1710

Housing Act of 1954—Continued

§817 .................................................................................................................... 1574

Housing Act of 1957:

§104 .................................................................................................................... 998fn

§604 .................................................................................................................... 1587

Housing Act of 1959:

§202-202b .......................................................................................................... 363

§202 (prior to 10-1-91) ...................................................................................... 379

§306(b) .................................................................................................... 1179fn, 1195

Housing Amendments of 1955, §102(h) ................................................................. 1573

Housing and Community Development Act of 1974:

Title I ................................................................................................................. 9

§210(g) ............................................................................................................... 389

§213 .................................................................................................................... 111

Title VI .............................................................................................................. 1437

§802 .................................................................................................................... 595

§809 .................................................................................................................... 1629

§817 .................................................................................................................... 1660

§819 .................................................................................................................... 1107

Housing and Community Development Act of 1977, title VIII ............................ 1505

Housing and Community Development Act of 1980:

§206(b)(2) ........................................................................................................... 722fn

§214 .................................................................................................................... 625

§216 .................................................................................................................... 604

§330 .................................................................................................................... 1198

§339(a)(2).......................................................................................................... 1170fn

§339(b) .............................................................................................................. 1170fn

Title VI .............................................................................................................. 1643

Housing and Community Development Act of 1987:

§2 ........................................................................................................................ 5

§152 .................................................................................................................... 219fn

§162(d) ............................................................................................................... 389

§165 .................................................................................................................... 1593

§166 .................................................................................................................... 1575

Title II ............................................................................................................... 638

§401(d) ............................................................................................................... 719fn

§421 .................................................................................................................... 1108

§424 .................................................................................................................... 1111

§425 .................................................................................................................... 1112

§561 .................................................................................................................... 1661

§562............................................................................................................ 1397, 1668

§567 .................................................................................................................... 1668

§571 .................................................................................................................... 1599

Title VII ............................................................................................................. 101

Housing and Community Development Act of 1992:

§ 103(a)(3)................................................................................................ 124fn, 150fn

§ 113(d) .............................................................................................................. 155fn

§ 113(e)(1)(C) ..................................................................................................... 147fn

§ 154 ................................................................................................................... 115fn

§ 181(g)(1)(B) ..................................................................................................... 268fn

§ 184-184A ......................................................................................................... 881

§ 186 ................................................................................................................... 735

§ 202(c)...................................................................................................... 457fn,460fn

Title IV .............................................................................................................. 513

§ 405(a)(1) .......................................................................................................... 505fn

§ 406 ................................................................................................................... 505

§ 516(d) .............................................................................................................. 987fn

Title V, subtitle C ............................................................................................. 1152

§ 602(c) ............................................................................................................... 365fn

§ 602(g) ............................................................................................................... 371fn

§ 606(j)(11)(E)(ii) ............................................................................................... 430fn

§ 622(c) ............................................................................................................... 127fn

§ 623(a)(3)(A) ..................................................................................................... 393fn

§ 623(a)(6) .......................................................................................................... 395fn

Title VI, subtitles C-F ...................................................................................... 543

§ 851 ................................................................................................................... 90

§ 852 ................................................................................................................... 67

§ 853 ................................................................................................................... 94
Page

1711

Housing and Community Development Act of 1992—Continued

§ 903(b) ............................................................................................................... 1598

§ 911 ................................................................................................................... 1558

§ 912 ................................................................................................................... 1669

§ 920 ................................................................................................................... 1599

§ 921(2)(B) .......................................................................................................... 83fn

§ 925 ........................................................................................................... 1393, 1562

Title X ................................................................................................................ 1477

§1012(k)(1)(A) .................................................................................................... 904fn

Title XII ............................................................................................................. 560

Title XIII ........................................................................................................... 1217

§ 1407 ................................................................................................................. 816

Housing and Community Development Amendments of 1978:

§201 .................................................................................................................... 504

§202 .................................................................................................................... 519

§203 .................................................................................................................... 568

§204 .................................................................................................................... 582

§209 .................................................................................................................... 635

Title VI .............................................................................................................. 74

§905 .................................................................................................................... 1581

Housing and Community Development Amendments of 1981, title III:

§326(d) ............................................................................................................... 353

§329E ................................................................................................................. 354

Title III, subtitle A, part 6 ............................................................................... 1137

Housing and Community Development Technical Amendments Act of 1984,

§105(b)(2).............................................................................................................. 1320fn

Housing and Urban Development Act of 1965, §101 ............................................ 485

Housing and Urban Development Act of 1968:

§2 ........................................................................................................................ 2

§3 ........................................................................................................................ 1588

§4 ........................................................................................................................ 1580

§101(c)(4)................................................................................................. 727fn, 992fn

§101(e) ............................................................................................................... 583

§106 .................................................................................................................... 583

§201(c),(d) ................................................................................................. 496fn, 1110

Title VIII ........................................................................................................... 1196

Title IX .............................................................................................................. 1637

Title XIV ............................................................................................................ 1399

Title XVI ............................................................................................................ 3

Housing and Urban Development Act of 1970:

Title V ................................................................................................................ 1563

Title VII ............................................................................................................. 81

§ 912 ................................................................................................................... 1107

Housing and Urban-Rural Recovery Act of 1983:

§123 .................................................................................................................... 85

§126 .................................................................................................................... 1659

§206(d) ............................................................................................................... 599

§209 .................................................................................................................... 287

§227 .................................................................................................................... 418

§431(c)............................................................................................................... 1022fn

§446(f) ............................................................................ 954fn, 974fn, 984fn, 1013fn

§469 .................................................................................................................... 1122

§470 .................................................................................................................... 1592

Housing Authorization Act of 1976, §2(h) ............................................................. 601

Housing Opportunity Program Extension Act of 1996, §11 ................................. 681

HUD Demonstration Act of 1993:

§ 4 ....................................................................................................................... 109

§ 6 ....................................................................................................................... 349

Immigration Act of 1990, §301(d)-(g) ..................................................................... 632fn

Immigration and Nationality Act, §245A(h) .......................................................... 632

Interstate Land Sales Full Disclosure Act ............................................................ 1399

John Heinz Neighborhood Development Act ......................................................... 85

Lead-Based Paint Poisoning Prevention Act ......................................................... 1468

Low-Income Housing Preservation and Resident Homeownership Act of 1990 . 638

McKinney-Vento Homeless Assistance Act:

Title I ................................................................................................................. 739

Title II ............................................................................................................... 744

Title III .............................................................................................................. 749
Page

1712

McKinney-Vento Homeless Assistance Act—Continued

Title IV .............................................................................................................. 754

Title V ................................................................................................................ 791

Military Construction Authorization Act for Fiscal Year 1996, 110 Stat. 560 ... 800fn

Multifamily Assisted Housing Reform and Affordability Act of 1997 ................. 301

Multifamily Housing Finance Improvement Act ................................................... 1152

Multifamily Housing Property Disposition Reform Act of 1994:

§ 103(d).............................................................................................................. 1001fn

§ 103(h) .............................................................................................................. 1165

§ 305(c) ............................................................................................................... 1560

Multifamily Mortgage Foreclosure Act of 1981 ..................................................... 1137

National Energy Conservation Policy Act, §251(b) ............................................... 636

National Homeownership Trust Act ...................................................................... 689

National Housing Act:

Title I ................................................................................................................. 901

Title II ............................................................................................................... 912

§235 .................................................................................................................... 719

§236 .................................................................................................................... 490

Title III .............................................................................................................. 1167

Title V ................................................................................................................ 1061

Title VIII ........................................................................................................... 1088

Title XI .............................................................................................................. 1098

National Manufactured Housing Construction and Safety Standards Act of

1974 ....................................................................................................................... 1437

National Urban Policy and New Community Development Act of 1970 ............. 81

Native American Housing Assistance and Self-Determination Act of 1996:

Entire text ......................................................................................................... 819

§5(2)(A) .............................................................................................................. 832fn

§506(a)(3)(C) ...................................................................................................... 756

Neighborhood Reinvestment Corporation Act ....................................................... 74

Omnibus Budget Reconciliation Act of 1981, title III, subtitle A:

§326(d) ............................................................................................................... 353

§329E ................................................................................................................. 354

Part 6 ................................................................................................................. 1137

Omnibus Budget Reconciliation Act of 1993, §3005 ............................................. 1114

Omnibus Indian Advancement Act:

§1003(g)(1) ......................................................................................................... 844fn

§1001(g) ............................................................................................................. 900fn

Personal Responsibility and Work Opportunity Reconciliation Act of 1996,

Title IV .................................................................................................................. 605

Public and Assisted Housing Drug Elimination Act of 1990 ............................... 523

Public Law 94–200, title III .................................................................................... 1494

Public Law 99–289, §3 ............................................................................................ 1103

Public Law 99–591 (Public Law 99-590), §101(g) ................................................. 11fn

Public Law 103–286 ................................................................................................ 602

Public Law 106–162 ................................................................................................ 1603

Public Law 106–377:

114 Stat. 1441A–25 .......................................................................................... 915fn

114 Stat. 1441A–35.......................................................................................... 1156fn

Public Law 106–504, §3(b) ...................................................................................... 625

Public Law 107–18, §1............................................................................................ 1464fn

Quality Housing and Work Responsibility Act of 1998

§501(a) ............................................................................................................... 7fn

§502 .................................................................................................................... 7

§514(c)(2) ........................................................................................................... 290fn

§514(d) ............................................................................................................... 488fn

§517 .................................................................................................................... 360

§518(a)(2)(C) ...................................................................................................... 277fn

§519 .................................................................................................................... 357

§519(e),(f),(g) ........................................................................................... 196fn, 213fn

§522(b)(2) ........................................................................................................... 113fn

§537(b),(c) .......................................................................................................... 258fn

§538(b) ............................................................................................................... 262fn

§555(b),(c) .......................................................................................................... 344

§558 .................................................................................................................... 291

§565(c) ................................................................................................................ 174fn

Title V, subtitle F ............................................................................................. 555

§575(c)(1)(A)(ii) ................................................................................................. 158fn
Page

1713

Quality Housing and Work Responsibility Act of 1998—Continued

§581 .................................................................................................................... 361

§589 .................................................................................................................... 1667

§590 ........................................................................................................... 17fn, 434fn

§599C(e)(2)(A)(iii)............................................................................................. 1315fn

§599G ................................................................................................................. 70

§599H(b),(m) ...................................................................................................... 362

Real Estate Settlement Procedures Act of 1974 .................................................... 1418

Removal of Regulatory Barriers to Affordable Housing Act of 1992 ................... 560

Residential Lead-Based Paint Hazard Reduction Act of 1992 ............................. 1477

Revised Statutes of the United States, §5153 of title LXLL ............................... 1202fn

Single Family Mortgage Foreclosure Act of 1994 ................................................. 1123

Social Security Act, §303(i) ..................................................................................... 1595

Stewart B. McKinney Homeless Assistance Amendments Act of 1988:

§904 .................................................................................................................... 1593

§1004(b) ............................................................................................................. 169fn

§1012 .................................................................................................................. 351

§1091 .................................................................................................................. 1513

Title 18, United States Code:

§1001 .................................................................................................................. 1584

§1010 .................................................................................................................. 1585

§1012 .................................................................................................................. 1585

§1516 .................................................................................................................. 1586

Title 31, United States Code, §1305 ....................................................................... 1672

Title 40, United States Code:

§550 .................................................................................................................... 686

Chapter 31, subchapters IV & V ..................................................................... 1653

United States Housing Act of 1937:

Title I ................................................................................................................. 116

§8 (prior to 11-83) ............................................................................................. 287

§ 8(e)(2) (prior to 10-1-91) ................................................................................. 775fn

Title III .............................................................................................................. 266

Title IV .............................................................................................................. 278
1714

1This table lists the provisions of the National Housing Act under which mortgage insurance

is currently authorized in law, without regard to whether the authority is now being utilized

(or ever was utilized). Individual subsections are indicated in cases in which mortgages insured

under the section may be obligations of more than one insurance fund.

In addition to mortgages under the sections listed, there are or may be outstanding mortgages

insured under the following expired provisions of the National Housing Act: Section 8 (single

family), section 603 (single family), and section 803 (multifamily).

Certain provisions of the National Housing Act do not provide independent authority to insure

mortgages but permit insurance under other sections subject to additional limitations. Except

as otherwise noted below, the mortgages insured pursuant to such provisions are obligations of

the fund corresponding to the underlying insurance authority. Such provisions are as follows:

Sections 223, 225, 238(c), 244, 245, 247, 248, 251, 252, and 253. Multifamily operating loss loans

insured pursuant to section 223(d) are insured under the same section as the original multifamily mortgage. All mortgages insured pursuant to sections 223(e) and 238(c) are obligations

of the Special Risk Insurance Fund. 2Mortgage insurance for single family homes for which assistance is provided under section

8(y) of the United States Housing Act of 1937 is an obligation of the General Insurance Fund,

as specifically provided in section 203(v) of the National Housing Act. 3Some project mortgages insured under section 213 prior to the creation of the CMHIF may

continue to be obligations of the GIF pursuant to section 213(m). Section 213 unit mortgages

are considered by HUD to be obligations of the GIF, although section 213(e) incorporates various

provisions of section 204 without substituting references to the GIF in lieu of references to the

MMIF. 4Multifamily supplemental loans insured under section 241 are obligations of the General Insurance Fund, except that section 241 specifically provides that loans for projects covered by

Cooperative Management Housing Insurance Fund mortgages are obligations of CMHIF and

loans for projects covered by section 236 mortgages are obligations of the SRIF.

NATIONAL HOUSING ACT MORTGAGE INSURANCE FUNDS AND

PROGRAMS COVERED 1

Single Family Home Ownership

Mutual Mortgage Insurance Fund [§ 202]

Section 203 (except subsections (k), (n), (o), (p), and (q))

General Insurance Fund [§ 519]

Section 2

Section 203 (k), (n), (v) 2

Section 213 3

Section 220

Section 221

Section 222

Section 233(a)(1)

Section 234

Section 240

Section 255

Section 611

Section 809

Section 810

Section 903

Special Risk Insurance Fund {§ 238(b)]

Section 203 (o), (p), (q)

Section 223(e)

Section 233(a)(2)

Section 235

Section 237

Section 243

Multifamily Project Mortgage Insurance

General Insurance Fund [§ 519]

Section 207

Section 213 3

Section 220

Section 221

Section 231

Section 232

Section 233(a)(1)

Section 234

Section 241 4

Section 242

Section 608

Section 609

Section 810

Section 908

Title XI

Special Risk Insurance Fund [§ 238(b)]

Section 223(e)

Section 233(a)(2)

Section 235(j)

Section 236

Cooperative Management Housing Insurance Fund [§ 213(k)]

Section 213 3