I 

116TH CONGRESS 

1ST SESSION H. R. 3511 

To direct the Secretary of the Department of Housing and Urban Development and the Director of the Federal Housing Finance Agency to develop 

a program to provide assistance to creditworthy borrowers with Federal 

student debt in purchasing certain foreclosed homes owned by the Federal Government, the Federal National Mortgage Association, the Federal 

Home Loan Mortgage Corporation, and local land banks, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 26, 2019 

Ms. KAPTUR (for herself, Mr. CLAY, Mrs. AXNE, and Ms. JAYAPAL) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To direct the Secretary of the Department of Housing and 

Urban Development and the Director of the Federal 

Housing Finance Agency to develop a program to provide 

assistance to creditworthy borrowers with Federal student debt in purchasing certain foreclosed homes owned 

by the Federal Government, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and local land banks, and for other purposes. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Transforming Student 

3 Debt to Home Equity Act of 2019’’. 

4 SEC. 2. FINDINGS. 

5 Congress finds the following: 

6 (1) In the first quarter of 2019, over 

7 16,800,000 homes remain vacant in the United 

8 States. 

9 (2) These extended vacancies depress neighbor10 hood property values and create a downward spiral 

11 in neighborhood stability in already troubled commu12 nities. 

13 (3) Meanwhile, due to climbing expenses of 

14 higher education, the total Federal student debt 

15 owed equals $1,560,000,000,000. 

16 (4) More than 44,700,000 Americans have at 

17 least one outstanding student loan, up dramatically 

18 from 37,000,000 Americans just 7 years ago. 

19 (5) Student loan repayments are forcing mil20 lions of young families out of purchasing their first 

21 home, as they cannot afford to save for a down pay22 ment or qualify for a mortgage. 

23 (6) Data from the United States Census Bu24 reau shows that non-Hispanic White households 

25 have an average net worth of $130,800, while Black 

26 households have an average net worth of $9,590 and 


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1 Hispanic households have $17,530; providing inno2 vative financial products will allow the United States 

3 to close the racial wealth gap and to ensure equi4 table access to housing and economic mobility. 

5 (7) According to a report from Pew Research 

6 Center, the median income of African-American 

7 households decreased by 53 percent between 2008 

8 and 2013. In the same time period, the income gap 

9 between White households and African-American 

10 households widened; increasing from 13 times great11 er to 17 times greater. 

12 (8) It is imperative to create a demonstration 

13 program to design financial pathways to, where pos14 sible, to systematically convert some student debt 

15 streams into equity streams through negotiation of 

16 mortgages; otherwise housing purchases will con17 tinue to be sluggish among first time home-buyers 

18 and thousands more Americans will enter their mid19 years saddled with student loan debt never having 

20 had the opportunity to accumulate equity. 

21 (9) It is in the interest of the Federal Govern22 ment to use the resources at its disposal, including 

23 both housing properties held in trust and student 

24 debt obligations, to put reverse pressure on these 

25 downward trends. 


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1 (10) By arranging financing that recalculates 

2 terms, debt-to-income ratios, mortgage interest 

3 rates, and other factors, short-term student debt 

4 could transition into longer term home ownership. 

5 (11) The goal is to connect creditworthy Fed6 eral student debt holders with housing properties for 

7 sale and held by the Federal Government and local 

8 land banks. 

9 (12) Over time, participants can help restore 

10 neighborhoods, transform their debt to equity, and 

11 stabilize secured property values locally and on the 

12 Federal ledger by maintaining and investing in a 

13 home mortgage. 

14 SEC. 3. PROGRAM TO EXPAND ACCESS TO MORTGAGES TO 

15 ELIGIBLE CREDITWORTHY HOMEBUYERS 

16 WITH FEDERAL STUDENT LOAN DEBT. 

17 (a) ESTABLISHMENT.—From amounts appropriated 

18 pursuant to subsection (g), the Secretary of the Depart19 ment of Housing and Urban Development and the Direc20 tor of the Federal Housing Finance Agency shall establish 

21 and carry out a pilot demonstration program to— 

22 (1) provide assistance to eligible applicants in 

23 purchasing eligible properties; and 

24 (2) subsequently analyze the results of the pro25 vision of such assistance. 


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1 (b) CONSULTATION.—In establishing and carrying 

2 out the program pursuant to subsection (a), the Secretary 

3 of the Department of Housing and Urban Development 

4 and the Director of the Federal Housing Finance Agency 

5 shall consult with— 

6 (1) the Director of the Consumer Financial 

7 Protection Bureau; 

8 (2) the Secretary of Agriculture; 

9 (3) the Secretary of Veteran Affairs; 

10 (4) the Secretary of Education; and 

11 (5) the Secretary of the Treasury. 

12 (c) ELIGIBLE APPLICANTS.—To be eligible for the 

13 program established pursuant to subsection (a), an appli14 cant— 

15 (1) shall have an outstanding balance of prin16 cipal or interest owing on a Federal loan made, in17 sured, or guaranteed under title IV of the Higher 

18 Education Act of 1965 (20 U.S.C. 1070 et seq.); 

19 (2) may not be subject to a judgment secured 

20 through litigation with respect to such a loan under 

21 title IV of the Higher Education Act of 1965 (20 

22 U.S.C. 1070 et seq.), may not be subject to an order 

23 for wage garnishment under section 488A of such 

24 Act (20 U.S.C. 1095a), and at the time of applicaVerDate Sep 11 2014 03:02 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3511.IH H3511

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1 tion for participation in the program under this sec2 tion— 

3 (A) such a loan shall be in repayment sta4 tus as determined under section 428(b)(7)(A) 

5 of such Act (20 U.S.C. 1078(b)(7)(A)); or 

6 (B) such a loan shall be in a grace period 

7 preceding repayment; 

8 (3) may not have owned a home during the 3- 

9 year period immediately before the applicant pur10 chases an eligible property with assistance provided 

11 under this section; 

12 (4) shall complete a program of counseling with 

13 respect to the responsibilities and financial manage14 ment involved in homeownership that is approved by 

15 the Secretary; 

16 (5) shall be creditworthy, as determined by the 

17 Secretary and the Director; 

18 (6) shall agree to use an eligible property pur19 chased with assistance provided under this section as 

20 the applicant’s primary residence for not less than 

21 the 3-year period beginning on the date of such pur22 chase; and 

23 (7) shall be employed and earning sufficient in24 come to repay a mortgage loan, as determined by 


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1 the Secretary and the Director for the purposes of 

2 this program. 

3 (d) TYPES OF ASSISTANCE.— 

4 (1) IN GENERAL.—A program established under 

5 this section may provide for any one or more of the 

6 following options: 

7 (A) A discount on the appraised value of 

8 an eligible property. 

9 (B) Flexibility in underwriting standards 

10 related to the purchase of eligible properties for 

11 mortgages insured under title II of the National 

12 Housing Act (12 U.S.C. 1707 et seq.) or owned 

13 or guaranteed by the Federal National Mort14 gage Association or the Federal Home Loan 

15 Mortgage Corporation. 

16 (C) The development of new mortgage 

17 products specifically targeted to eligible appli18 cants. 

19 (D) Any other assistance that the Sec20 retary and Director jointly deem appropriate. 

21 (2) REPAYMENT INTEGRATION.—A program es22 tablished under this section shall provide for the de23 velopment of a program that will use actuarial infor24 mation to determine how the repayment of loans de25 scribed in subsection (c)(1) may be integrated into 


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1 a mortgage repayment schedule to allow an eligible 

2 applicant to accumulate equity in the eligible prop3 erty, including by reason of meeting the eligible ap4 plicant’s obligations under such student loan. 

5 (3) COLLABORATION.—In providing assistance 

6 described under paragraph (1), the Secretary and 

7 the Director may collaborate with— 

8 (A) community banks having less than 

9 $10,000,000,000 in total assets; 

10 (B) credit unions (as defined in section 

11 101 of the Federal Credit Union Act); 

12 (C) and local fair housing organizations; 

13 and 

14 (D) local land banks. 

15 (e) GEOGRAPHICAL DIVERSITY.—In selecting eligible 

16 applicants to receive assistance under this section, the Sec17 retary and the Director shall, to the extent practicable, 

18 consider the location of the eligible property to be pur19 chased by the eligible applicant, including whether the eli20 gible property is located in a rural or urban area, to ensure 

21 geographic diversity of such eligible properties. 

22 (f) REPORTS.— 

23 (1) INTERIM REPORT.—Not later than 90 days 

24 after the date of the enactment of this section, the 

25 Secretary and the Director shall submit to Congress 


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1 an interim report describing the type of assistance 

2 the Secretary and the Director shall provide under 

3 the program established under this section. 

4 (2) FINAL REPORT.—Not later than 3 years 

5 after the date of the enactment of this section, the 

6 Secretary and the Director shall submit to Congress 

7 a final report that— 

8 (A) evaluates the impact of the program 

9 carried out under this section and describes any 

10 findings; 

11 (B) identifies other types of assistance the 

12 Secretary and the Director may offer; and 

13 (C) includes any recommendations the Sec14 retary and Director may have for improving the 

15 program. 

16 (g) DEFINITIONS.—In this section: 

17 (1) DIRECTOR.—The term ‘‘Director’’ means 

18 the Director of the Federal Housing Finance Agen19 cy. 

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

21 the Secretary of the Department of Housing and 

22 Urban Development. 

23 (3) ELIGIBLE PROPERTY.—The term ‘‘eligible 

24 property’’ means a property that is designed as a 

25 dwelling for occupancy by 1 to 4 families— 


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1 (A) that is safe and habitable, as defined 

2 by the Secretary and the Director; 

3 (B) for which, as determined by the Sec4 retary and the Director, the occupancy of which 

5 will promote community revitalization; and 

6 (C) that— 

7 (i) was previously subject to a mort8 gage loan insured by the Federal Housing 

9 Administration under title II of the Na10 tional Housing Act (12 U.S.C. 1707 et 

11 seq.) and is owned by the Secretary pursu12 ant to the payment of insurance benefits 

13 under such Act; 

14 (ii) is a real estate owned property of 

15 the Federal National Mortgage Association 

16 or the Federal Home Loan Mortgage Cor17 poration; or 

18 (iii) is owned by a local land bank. 

19 (4) LOCAL LAND BANK.—The term ‘‘local land 

20 bank’’ means— 

21 (A) a governmental or nongovernmental 

22 nonprofit entity established, at least in part, to 

23 assemble, temporarily manage, and dispose of 

24 vacant land for the purpose of stabilizing neighVerDate Sep 11 2014 03:02 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3511.IH H3511

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1 borhoods and encouraging re-use or redevelop2 ment of urban property; or 

3 (B) such other governmental or nongovern4 mental entity as the Secretary and the Director 

5 may determine appropriate. 

6 (h) AUTHORIZATION OF APPROPRIATIONS.—There 

7 are authorized to be appropriated such sums as necessary 

8 to carry out this section for fiscal years 2021, 2022, and 

9 2023. 

Æ 


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