IB 

Union Calendar No. 383 

110TH CONGRESS 

2D SESSION H. R. 5818 

[Report No. 110–616] 

To authorize the Secretary of Housing and Urban Development to make 

loans to States to acquire foreclosed housing and to make grants to 

States for related costs. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 16, 2008 

Ms. WATERS (for herself, Mr. FRANK of Massachusetts, Mrs. MALONEY of 

New York, Mr. WATT, Mr. MAHONEY of Florida, Ms. VELA ́ZQUEZ, Mr. 

AL GREEN of Texas, Mr. GUTIERREZ, Mr. LYNCH, Mr. CARSON, Mr. 

ELLISON, and Mr. CLAY) introduced the following bill; which was referred 

to the Committee on Financial Services 

MAY 1, 2008 

Additional sponsors: Ms. CLARKE, Ms. MOORE of Wisconsin, Mr. WILSON of 

Ohio, Ms. TSONGAS, Mr. SHERMAN, Mr. MORAN of Virginia, Mr. HIGGINS, Mr. MCGOVERN, Mr. SIRES, Ms. BERKLEY, Mr. CAPUANO, Mr. 

PASTOR, Mr. MEEK of Florida, Mr. COHEN, Ms. LEE, and Ms. MCCOLLUM of Minnesota 

MAY 1, 2008 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on April 16, 2008] 

A BILL 

To authorize the Secretary of Housing and Urban DevelopVerDate Aug 31 2005 23:00 May 01, 2008 Jkt 069200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H5818.RH H5818

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ment to make loans to States to acquire foreclosed housing and to make grants to States for related costs. 

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Neighborhood Stabilization Act of 2008’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Congressional purposes. 

Sec. 3. Loans and grants to States. 

Sec. 4. Qualified plans. 

Sec. 5. Allocation of amounts. 

Sec. 6. Loans. 

Sec. 7. Grants. 

Sec. 8. Eligible housing stimulus activities. 

Sec. 9. Shared appreciation agreement. 

Sec. 10. Spending requirements. 

Sec. 11. Servicer contact. 

Sec. 12. Accountability. 

Sec. 13. Definitions. 

Sec. 14. Funding. 

Sec. 15. Regulations and implementation. 

8 SEC. 2. CONGRESSIONAL PURPOSES. 

9 The purposes of this Act are— 

10 (1) to establish a loan and grant program ad11 ministered by the Department of Housing and Urban 

12 Development to help States, metropolitan cities, and 

13 urban counties purchase and rehabilitate owner-va14 cated, foreclosed homes with the goal of stabilizing 

15 and occupying them as soon as possible, either 

16 through resale or rental to qualified families; 


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1 (2) to distribute these loans and grants to areas 

2 with the highest levels of foreclosure and delinquent 

3 subprime mortgages; 

4 (3) to provide incentives for States, metropolitan 

5 cities, and urban counties to use the funds to stabilize 

6 as many properties as possible; and 

7 (4) to provide housing for low- and moderate-in8 come families, especially those that have lost homes to 

9 foreclosure. 

10 SEC. 3. LOANS AND GRANTS TO STATES. 

11 The Secretary of Housing and Urban Development 

12 shall, subject to the availability of amounts under section 

13 14, make grants under section 5(a) to qualified States and 

14 make loans under section 6 in accordance with the approved 

15 plans of qualified States, for use to carry out eligible hous16 ing stimulus activities under section 8. 

17 SEC. 4. QUALIFIED PLANS. 

18 (a) IN GENERAL.—The Secretary may make a grant 

19 under this Act only to a State, and may allocate a loan 

20 authority amount under this Act only for a State, that has 

21 submitted to the Secretary a plan that meets the require22 ments under this section and has been approved under this 

23 section. A State shall reallocate amounts under subsection 

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

25 or qualified urban county, respectively, that has submitted 


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1 to the Secretary a plan that meets the requirements under 

2 this section and has been approved under this section. 

3 (b) CONTENTS.—A plan under this section for an allo4 cation recipient shall— 

5 (1) designate a housing finance agency of the al6 location recipient, or other agency, department, or en7 tity of the allocation recipient, or any other designee, 

8 as the allocation recipient administrator to act on be9 half of the allocation recipient for purposes of this 

10 Act; 

11 (2) describe the housing stimulus activities under 

12 section 8 to be carried out with assistance under this 

13 Act for the allocation recipient by the entity identi14 fied pursuant to paragraph (1) of this subsection; 

15 (3) prioritize the allocation of funds to low- and 

16 moderate-income neighborhoods with high concentra17 tions of foreclosures and describe how such activities 

18 will help restore or improve the viability of such 

19 neighborhoods by providing for purchase or occu20 pancy of qualified foreclosed properties as soon as 

21 practicable and in a manner that will facilitate re22 payment of the loans provided under this Act for car23 rying out such activities; 

24 (4) set forth the procedures that the allocation re25 cipient will use to allocate grant and loan amounts 


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1 and monitor for compliance with the requirements of 

2 section 8; 

3 (5) provide that grant and loan amounts pro4 vided under this Act for the allocation recipient will 

5 be used only for eligible housing stimulus activities 

6 under section 8 that are eligible under such section 

7 for assistance with grant or loan amounts, as appli8 cable; 

9 (6) contain such assurances as the Secretary 

10 shall require that the housing stimulus activities to be 

11 carried out with assistance under this Act shall not 

12 result in a significant net loss in rental housing in 

13 an area in which such activities are undertaken; 

14 (7) give priority emphasis and consideration to 

15 metropolitan areas, metropolitan cities, urban areas, 

16 rural areas, low- and moderate-income areas, census 

17 tracts and other areas having the greatest need, in18 cluding those— 

19 (A) with the greatest percentage of home 

20 foreclosures; 

21 (B) with the highest percentage of homes fi22 nanced by subprime mortgage loans over 90 days 

23 delinquent; or 

24 (C) identified by the State, qualified metro25 politan city, or unit of general local government 


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1 as likely to face a significant rise in the rate of 

2 home foreclosures. 

3 (8) provide preference for activities that serve the 

4 lowest income families, who otherwise meet the income 

5 requirements under section 8, for the longest period 

6 and homeowners, who otherwise meet such income re7 quirements, whose mortgages have been foreclosed; 

8 (9) provide preference for use of grant and loan 

9 amounts in connection with acquisition of qualified 

10 foreclosed properties that are acquired no earlier than 

11 60 days after the owner of the property described in 

12 section 13(7)(B) acquired such ownership; 

13 (10) describe any other preferences the allocation 

14 recipient may establish, such as housing for first re15 sponders, for veterans, for nurses serving underserved 

16 areas or homeless persons, or for homeless persons in 

17 accordance with the 10-year plan of the State to end 

18 homelessness, or providing housing for public school 

19 teachers or workforce who are employed by the city or 

20 locality in which the housing is located; 

21 (11) provide for obligation and outlay of grant 

22 amounts, and for loan commitments and disburse23 ment, in accordance with the requirements under sec24 tion 10; and 


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1 (12) in the case of any grant or loan amounts 

2 that will be invested with the possibility of a return 

3 on investment, provide for use of any return on such 

4 investment only for one or more eligible housing stim5 ulus activities under section 8. 

6 (c) SUBMISSION.— 

7 (1) IN GENERAL.—The Secretary shall provide 

8 for allocation recipients to submit plans under this 

9 section to the Secretary and shall establish require10 ments for the contents and form of such plans. Except 

11 in the case of plan resubmitted pursuant to subsection 

12 (d)(3), the Secretary may not accept or consider a 

13 plan unless the plan is submitted to the Secretary be14 fore the expiration of the 30-day period beginning 

15 upon the date of the enactment of this Act. 

16 (2) PUBLIC APPROVAL.—An allocation recipient 

17 may not submit a plan to the Secretary unless the 

18 plan is approved by the chief executive officer of the 

19 allocation recipient after a public hearing on the plan 

20 held pursuant to reasonable public notice. 

21 (d) REVIEW AND APPROVAL.— 

22 (1) TIMING.—The Secretary shall review, and 

23 approve or disapprove, each plan submitted or resub24 mitted pursuant to paragraph (3) in compliance with 

25 the requirements established under this section before 


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1 the expiration of the 30-day period beginning upon 

2 the submission of the plan. If the Secretary does not 

3 approve or disapprove a plan that is submitted or re4 submitted in accordance with the requirements under 

5 this section before the expiration of such 30-day pe6 riod and notify the allocation recipient of such ap7 proval or disapproval, the plan shall be considered 

8 approved for purposes of this section. 

9 (2) STANDARD FOR DISAPPROVAL.—The Sec10 retary may disapprove a plan only if the plan fails 

11 to comply with the requirements of this Act. 

12 (3) RESUBMISSION.—If the Secretary dis13 approves the plan of an allocation recipient, the Sec14 retary shall submit to the allocation recipient the rea15 sons for the disapproval, and the allocation recipient 

16 may, during the 15-day period that begins upon noti17 fication of such disapproval and the reasons for such 

18 disapproval, submit to the Secretary a revised plan 

19 for review and approval in accordance with this sub20 section. 

21 SEC. 5. ALLOCATION OF AMOUNTS. 

22 (a) GRANTS.—From the total amount made available 

23 under section 14(a) for grants under this Act, the Secretary 

24 shall make a grant to each qualified State in the grant 


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1 amount determined under subsection (c) of this section for 

2 the qualified State. 

3 (b) LOANS.—From the aggregate amount of authority 

4 for the outstanding principal balance of loans made under 

5 this Act pursuant to section 14(b)(1), the Secretary shall 

6 allocate such authority for loans under this Act for each 

7 qualified State in the loan authority amount determined 

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

9 (c) GRANT AMOUNTS AND LOAN AUTHORITY

10 AMOUNTS.— 

11 (1) IN GENERAL.—The grant amount or loan au12 thority amount for a qualified State shall be the fore13 closure grant share or foreclosure loan share, respec14 tively, for the State determined under subsection (d), 

15 as such share is adjusted in accordance with an index 

16 established or selected by the Secretary to account for 

17 differences between qualified States in the median 

18 price of single family housing in such States. 

19 (2) LIMITATION ON ADJUSTMENT.—If such ad20 justment would result in a grant amount or loan au21 thority amount for any State that exceeds 125 percent 

22 of the foreclosure grant share or foreclosure loan 

23 share, respectively, for the State, the grant amount or 

24 loan authority amount for the State shall be 125 per25 cent of foreclosure grant share or foreclosure loan 


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1 share, respectively, for the State and the Secretary 

2 shall increase the grant amounts or loan authority 

3 amounts for all other States on a pro rata basis, ex4 cept as provided in paragraph (3), by the amount 

5 necessary to account for the aggregate of any such de6 creases in grant amounts or loan authority amounts 

7 for States to comply with the 125 percent limitation. 

8 (3) LIMITATION ON REALLOCATION.—No increase 

9 in the grant amount or loan authority amount for 

10 any State from amounts reallocated pursuant to 

11 paragraph (2) shall result in the grant amount or 

12 loan authority amount for any State exceeding 125 

13 percent of the foreclosure grant share or foreclosure 

14 loan share for the State, respectively. 

15 (4) PRIORITY PREFERENCE FOR UNUSED

16 AMOUNTS.—States which have their grant or loan 

17 amounts reduced under paragraph (2) shall be grant18 ed a priority preference for any loans or grants which 

19 may be reallocated under subsection (i) (relating to 

20 reallocation of funds). 

21 (d) FORECLOSURE SHARES.—For purposes of this sec22 tion: 

23 (1) GRANT SHARE.—The foreclosure grant share 

24 for a qualified State shall be the amount that bears 

25 the same ratio to the total amount made available 


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1 under section 14(a) as the number of foreclosures on 

2 mortgages for single family housing and subprime 

3 mortgage loans for single family housing that are over 

4 90 days delinquent, occurring in such State during 

5 the most recently completed four calendar quarters for 

6 which such information is available, as determined by 

7 the Secretary, bears to the aggregate number of such 

8 foreclosures and such delinquent subprime mortgage 

9 loans occurring in all qualified States during such 

10 calendar quarters. 

11 (2) LOAN SHARE.—The foreclosure loan share for 

12 a qualified State shall be the amount that bears the 

13 same ratio to the aggregate amount of the principal 

14 balance of loans that may be outstanding at any time 

15 under this Act pursuant to section 14(b)(1) as the 

16 number of foreclosures on mortgages for single family 

17 housing and subprime mortgage loans for single fam18 ily housing that are over 90 days delinquent, occur19 ring in such State during the most recently completed 

20 four calendar quarters for which such information is 

21 available, as determined by the Secretary, bears to the 

22 aggregate number of such foreclosures and such delin23 quent subprime mortgage loans occurring in all 

24 qualified States during such calendar quarters. 


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1 (e) DISTRIBUTION OF FULL AMOUNT.—The Secretary 

2 shall establish the index referred to in subsection (c) and 

3 the grant and loan authority amounts for the qualified 

4 States in a manner that provides that— 

5 (1) the aggregate of the grant amounts for all 

6 qualified States is equal to the total amount made 

7 available under section 14(a); and 

8 (2) the aggregate of the loan authority amounts 

9 for all qualified States is equal to the aggregate 

10 amount of authority for the outstanding principal 

11 balance of all loans made under this Act pursuant to 

12 section 14(b)(1). 

13 (f) REQUIREMENT TO ALLOCATE TO QUALIFIED MET14 ROPOLITAN CITIES.—Of any grant amounts and loan au15 thority amounts allocated pursuant to this section for a 

16 State, such State shall allocate for each qualified metropoli17 tan city located in such State a portion of such grant 

18 amounts and such loan authority amounts that bears the 

19 same ratio to such grant amounts and loan authority 

20 amounts, respectively, allocated for the State as the number 

21 of foreclosures on mortgages for single family housing and 

22 subprime mortgage loans for single family housing that are 

23 over 90 days delinquent, occurring in such qualified metro24 politan city during the most recently completed four cal25 endar quarters for which such information is available, as 


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1 determined by the Secretary, bears to the aggregate number 

2 of such foreclosures and such delinquent subprime mortgage 

3 loans occurring in the State during such calendar quarters. 

4 A State may adjust such allocation to account for dif5 ferences between median single family housing prices in the 

6 State and in qualified metropolitan cities in the State. 

7 (g) REQUIREMENT TO ALLOCATE TO QUALIFIED

8 URBAN COUNTIES.—Of any grant amounts and loan au9 thority amounts allocated pursuant to this section for a 

10 State, such State shall allocate for each qualified urban 

11 county located in such State a portion of such grant 

12 amounts and such loan authority amounts that bears the 

13 same ratio to such grant amounts and loan authority 

14 amounts, respectively, allocated for the State as the number 

15 of foreclosures on mortgages for single family housing and 

16 subprime mortgage loans for single family housing that are 

17 over 90 days delinquent, occurring in such qualified urban 

18 county during the most recently completed four calendar 

19 quarters for which such information is available, as deter20 mined by the Secretary, bears to the aggregate number of 

21 such foreclosures and such delinquent subprime mortgage 

22 loans occurring in the State during such calendar quarters. 

23 A State may adjust such allocation to account for dif24 ferences between median single family housing prices in the 

25 State and in qualified urban counties in the State. 


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1 (h) ALLOCATION EXCEPTION.—If the aggregate grant 

2 and loan authority amount to be allocated pursuant to sub3 section (f) or (g) to a qualified metropolitan city or quali4 fied urban county is less than $10,000,000, a State may, 

5 but is not required to, allocate such grant and loan author6 ity amount to such qualified metropolitan city or qualified 

7 urban county, and the allocation for such State shall be in8 creased by the grant and loan authority amount not allo9 cated to such qualified metropolitan city or qualified urban 

10 county. 

11 (i) REALLOCATION OF UNUSED AMOUNTS.—The Sec12 retary shall recapture any grant amounts and loan author13 ity amounts allocated to a State that are not used in a 

14 timely fashion in accordance with section 10, as the Sec15 retary shall prescribe, and shall reallocate such amounts 

16 among all other qualified States in accordance with the pro17 visions of this Act for allocation of grant amounts and loan 

18 authority amounts. 

19 SEC. 6. LOANS. 

20 (a) REQUIREMENT OF LOAN AUTHORITY AMOUNT.— 

21 The Secretary may make a loan under this Act for use in 

22 the area of an allocation recipient only to the extent and 

23 in such amounts that loan authority amounts for such allo24 cation recipient are available. 


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1 (b) REVOLVING AVAILABILITY OF LOAN AUTHORITY

2 AMOUNT.—The loan authority amount allocated for each 

3 allocation recipient shall— 

4 (1) upon the Secretary entering into a binding 

5 commitment to make a loan under this Act for use in 

6 the area of such allocation recipient, be decreased by 

7 the amount of the principal obligation of such loan; 

8 and 

9 (2) upon the repayment to the Secretary by any 

10 borrower of any principal amounts borrowed under a 

11 loan this Act for use in the area of such allocation re12 cipient, be increased by the amount of principal re13 paid. 

14 (c) ASSISTED ENTITIES.—The loan authority amount 

15 of an allocation recipient may be used for activities de16 scribed in section 8(a) undertaken by— 

17 (1) the allocation recipient; 

18 (2) a unit of local government or a local govern19 mental entity; or 

20 (3) any other entity, as provided in the approved 

21 plan of the allocation recipient under section 4. 

22 (d) LOAN TERMS.—Each loan provided under this Act 

23 from the loan authority amount of an allocation recipient 

24 shall— 

25 (1) bear no interest; 


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1 (2) have a term to maturity of— 

2 (A) 3 years, in the case of any loan made 

3 to purchase or finance the purchase of qualified 

4 foreclosed housing for use under section 8(a)(1) 

5 for homeownership; and 

6 (B) 5 years, in the case of any loan made 

7 to purchase or finance the purchase of qualified 

8 foreclosed housing for use under section 8(a)(2) 

9 for rental; 

10 (3) not provide for amortization of the principal 

11 obligation of the loan during such term; 

12 (4) be non-recourse; 

13 (5) require payment of the original principal ob14 ligation under the loan only upon the expiration of 

15 the term of the loan; and 

16 (6) have such other terms and conditions as the 

17 Secretary may provide. 

18 (e) PROCEDURE.—A qualified State or, upon its elec19 tion, a qualified metropolitan city or qualified urban coun20 ty shall— 

21 (1) enter into a loan agreement on behalf of the 

22 Secretary on terms established under this Act and 

23 any other terms such State, qualified metropolitan 

24 city, or qualified urban county determines appro25 priate; 


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1 (2) disburse the loan amount in accordance with 

2 such terms, subject only to the absence of sufficient 

3 loan authority amount for such State, such qualified 

4 metropolitan city, or such qualified urban county; 

5 (3) monitor such loans; and 

6 (4) collect and transmit to the Secretary any 

7 loan repayments. 

8 (f) ELIGIBILITY FOR REPEAT LENDING.—A loan 

9 under this Act may be made to an entity that has pre10 viously borrowed amounts under a loan under this Act only 

11 if such entity has repaid 90 percent or more of the amounts 

12 due under all previous such loans. The Secretary may waive 

13 such requirement upon a request by an allocation recipient 

14 if the borrower has demonstrated satisfactory progress in 

15 utilizing outstanding loans and sufficient capacity to uti16 lize additional loan amounts effectively. 

17 (g) SUNSET.—The Secretary may not enter into any 

18 commitment to make a loan under this Act, or make any 

19 such loan, after the expiration of the 48-month period begin20 ning on the date of the enactment of this Act. 

21 SEC. 7. GRANTS. 

22 The grant amount of an allocation recipient may be 

23 used under section 8(b) by the allocation recipient, a unit 

24 of local government or a local governmental entity, or a 

25 nonprofit organization. 


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1 SEC. 8. ELIGIBLE HOUSING STIMULUS ACTIVITIES. 

2 (a) LOAN AMOUNTS.—Amounts provided under a loan 

3 under this Act for an allocation recipient shall be used, in 

4 accordance with the approved plan of such allocation re5 cipient, only for the following activities: 

6 (1) HOMEOWNERSHIP HOUSING PROVISION.—To 

7 purchase or finance the purchase of qualified fore8 closed housing for resale as housing for homeowner9 ship to families having incomes that do not exceed 

10 140 percent of the median income for the area in 

11 which the housing is located. 

12 (2) RENTAL HOUSING PROVISION.—To purchase 

13 or finance the purchase of qualified foreclosed housing 

14 for use as rental, lease-purchase, or rent-to-own hous15 ing, subject to the following requirements: 

16 (A) QUALIFIED TENANTS.—All dwelling 

17 units in the housing purchased or financed using 

18 any loan amounts shall be available for rental 

19 only by families whose incomes do not exceed 

20 100 percent of the median income for the area in 

21 which the housing is located. 

22 (B) RENTS.—Rents for each dwelling unit 

23 in the housing purchased or financed using any 

24 loan amounts shall be established at amounts 

25 that do not exceed market rents for comparable 

26 dwelling units located in the area in which the 


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1 housing is located and in accordance with such 

2 requirements as the Secretary shall establish to 

3 ensure that rents are established in a fair, objec4 tive, and arms-length manner. 

5 (3) HOUSING REHABILITATION.—To rehabilitate 

6 qualified foreclosed housing acquired with assistance 

7 provided pursuant to this subsection, to the extent 

8 necessary to comply with applicable laws, codes, and 

9 other requirements relating to housing safety, quality, 

10 and habitability, or to make improvements to the 

11 housing to increase the energy efficiency or conserva12 tion of the housing or provide a renewable energy 

13 source or sources for the housing, for the purpose of 

14 reselling the housing, to the extent possible, during the 

15 3-month period that begins upon completion of reha16 bilitation and at a price that is as close as possible 

17 to the acquisition price of the housing. 

18 (b) GRANT AMOUNTS.—Grant amounts provided 

19 under this Act to an allocation recipient shall be used, in 

20 accordance with the approved plan of such allocation re21 cipient, only for the following activities: 

22 (1) OPERATING AND HOLDING COSTS.—For costs 

23 of holding and operating qualified foreclosed housing 

24 acquired pursuant to subsection (a), including costs of 


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1 management, taxes, handling, insurance, and other 

2 related costs. 

3 (2) COSTS RELATING TO PROPERTY ACQUISI4 TION.—For incidental costs involved in acquiring 

5 qualified foreclosed housing pursuant to subsection 

6 (a), including reasonable closing costs, except that 

7 grant amounts may not be used to pay any portion 

8 of the purchase price for the housing under section 

9 13(7)(C). 

10 (3) ADMINISTRATIVE COSTS.—For costs of the al11 location recipient in administering loan authority 

12 amounts and grant amounts under this Act, except 

13 that the amount of grant amounts provided under 

14 this Act to an allocation recipient that may be used 

15 under this paragraph shall not exceed the amount 

16 equal to 8 percent of the sum of the grant amounts 

17 provided to the allocation recipient pursuant to sub18 section (a), (f), or (g) of section 5, as applicable, and 

19 the loan authority amount allocated to the allocation 

20 recipient pursuant to subsection (b), (f), or (g) of sec21 tion 5, as applicable. 

22 (4) PLANNING COSTS.—For planning costs of the 

23 State in connection with this Act, except that the 

24 amount of grant amounts provided under this Act to 

25 an allocation recipient that may be used under this 


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1 paragraph shall not exceed the amount equal to 2 per2 cent of the sum of the grant amounts provided to the 

3 allocation recipient pursuant to subsection (a), (f), or 

4 (g) of section 5, as applicable, and the loan authority 

5 amount allocated to the State pursuant to subsection 

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

7 (5) HOUSING REHABILITATION.—For activities 

8 set forth in subsection (a)(3), except that an alloca9 tion recipient shall not use more than 20 percent of 

10 a grant amount allocation for such activities. 

11 (6) DEMOLITION.—For costs of demolishing 

12 qualified foreclosed housing that is deteriorated or un13 safe, but amounts may be used under this paragraph 

14 only if the Secretary determines that the neighborhood 

15 or other area in which the housing is located has a 

16 high incidence of vacant and abandoned housing (or 

17 other vacant and abandoned structures) and is expe18 riencing a significant decline in population. 

19 Notwithstanding any other provision of this subsection, 

20 grant amounts provided under this Act may not be used 

21 to provide assistance of any kind (including grants, loans, 

22 and closing cost financing) to provide amounts for 

23 downpayments for any homebuyers of single family hous24 ing. 


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1 (c) PROHIBITED USES.—The Secretary shall, by regu2 lation, set forth prohibited uses of grant or loan amounts 

3 under this Act, which shall include use for— 

4 (1) political activities; 

5 (2) advocacy; 

6 (3) lobbying, whether directly or through other 

7 parties; 

8 (4) counseling services; 

9 (5) travel expenses; and 

10 (6) preparing or providing advice on tax re11 turns. 

12 (d) INCOME TARGETING REQUIREMENT.— 

13 (1) VERY LOW-INCOME FAMILIES.—Not less than 

14 50 percent of the total grant amounts an allocation 

15 recipient makes available under this Act shall be used 

16 for activities under subsection (b) in connection with 

17 providing housing for families whose incomes do not 

18 exceed 50 percent of the median income for the area 

19 in which the housing is located. 

20 (2) EXTREMELY LOW-INCOME FAMILIES.—Not 

21 less than 50 percent of the total grant amounts an al22 location recipient makes available under paragraph 

23 (1) shall be used for activities under subsection (b) in 

24 connection with providing housing for families whose 


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1 incomes do not exceed 30 percent of the median in2 come for the area in which the housing is located. 

3 (3) WAIVER.— 

4 (A) IN GENERAL.—The Secretary may es5 tablish a percentage for purposes of paragraph 

6 (2) that is less than 50 percent if an allocation 

7 recipient certifies that, in addition to any other 

8 requirements the Secretary may establish— 

9 (i) such allocation recipient has at10 tempted to use all other federally related re11 sources available to it in combination with 

12 the resources available under this Act to 

13 meet the requirements of paragraph (2); 

14 and 

15 (ii) the failure to comply with para16 graph (2) will not result in an overall loss 

17 of housing affordable to families whose in18 comes do not exceed 30 percent of area me19 dian income in the area of such allocation 

20 recipient. 

21 (B) CONSIDERATION OF HOUSING NEEDS.— 

22 In establishing an alternative percentage for 

23 purposes of paragraph (2) for an allocation re24 cipient that meets the certification requirements 

25 of subparagraph (A), the Secretary shall take 


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1 into consideration the housing needs in the area 

2 of such allocation recipient of families whose in3 comes do not exceed 30 percent of area median 

4 income. 

5 (e) USE FOR RURAL AREAS.—An allocation recipient 

6 receiving any grant or loan amounts under this Act that 

7 includes any rural areas shall use a portion of its grant 

8 and loan authority amount for eligible activities located in 

9 rural areas that is proportionate to the identified need for 

10 such activities in such rural areas. 

11 (f) SECURITY.—A qualified State, or at its election, 

12 a qualified metropolitan city or qualified urban county, 

13 shall record a lien in the name of the Secretary on any 

14 qualified foreclosed housing purchased or financed with a 

15 loan under this section in the amount of the principal obli16 gation under the loan and interest due under the loan. 

17 (g) QUALIFIED HOMEOWNERS.—This Act may not be 

18 construed to prevent the resale of qualified foreclosed hous19 ing to a prior owner or occupant of such housing who meets 

20 the income requirements of this Act. 

21 (h) VOUCHER NONDISCRIMINATION.— 

22 (1) PROSPECTIVE TENANTS.—A recipient of 

23 amounts from a loan or grant under this Act may not 

24 refuse to lease a dwelling unit in housing assisted 

25 with any such loan or grant amounts to a holder of 


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1 a voucher or certificate of eligibility under section 8 

2 of the United States Housing Act of 1937 (42 U.S.C. 

3 1437f) because of the status of the prospective tenant 

4 as such a holder. 

5 (2) CURRENT TENANTS.—In the case of any 

6 qualified foreclosed housing for which funds made 

7 available under the Act are used and in which a re8 cipient of assistance under section 8(o) of the U.S. 

9 Housing Act of 1937 resides at the time of acquisition 

10 or financing, the owner and any successor in interest 

11 shall be subject to the lease and to the housing assist12 ance payments contract for the occupied unit. 

13 Vacating the property prior to sale shall not con14 stitute good cause for termination of the tenancy un15 less the property is unmarketable while occupied or 

16 unless the owner or subsequent purchaser desires the 

17 unit for personal or family use. This paragraph shall 

18 not preempt any State or local law that provides 

19 more protection for tenants. 

20 (i) EFFECT OF FORECLOSURE ON PREEXISTING

21 LEASE.— 

22 (1) IN GENERAL.—In the case of any foreclosure 

23 on any dwelling or residential real property acquired 

24 with any amounts made available under this Act, 

25 any successor in interest in such property pursuant 


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1 to the foreclosure shall assume such interest subject 

2 to— 

3 (A) the provision, by the successor in inter4 est, of a notice to vacate to any bona fide tenant 

5 at least 90 days before the effective date of the 

6 notice to vacate; and 

7 (B) the rights of any bona fide tenant, as 

8 of the date of such notice of foreclosure— 

9 (i) under any bona fide lease entered 

10 into before the notice of foreclosure to oc11 cupy the premises until the end of the re12 maining term of the lease or the end of the 

13 6-month period beginning on the date of the 

14 notice of foreclosure, whichever occurs first, 

15 subject to the receipt by the tenant of the 

16 90-day notice under subparagraph (A); or 

17 (ii) without a lease or with a lease ter18 minable at will under State law, subject to 

19 the receipt by the tenant of the 90-day no20 tice under subparagraph (A), except that 

21 nothing under this subparagraph shall af22 fect the requirements for termination of any 

23 federally subsidized tenancy. 


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1 (2) BONA FIDE LEASE OR TENANCY.—For pur2 poses of this subsection, a lease or tenancy shall be 

3 considered bona fide only if— 

4 (A) the mortgagor under the contract is not 

5 the tenant; 

6 (B) the lease or tenancy was the result of an 

7 arms-length transaction; or 

8 (C) the lease or tenancy requires the receipt 

9 of rent that is not substantially less than fair 

10 market rent for the property. 

11 (j) PROHIBITION OF DEMOLITION OF PUBLIC HOUS12 ING.—Notwithstanding any other provision of this Act, 

13 amounts from a grant or loan under this Act may not be 

14 used to demolish any public housing (as such term is de15 fined in section 3 of the United States Housing Act of 1937 

16 (42 U.S.C. 1437a)). 

17 SEC. 9. SHARED APPRECIATION AGREEMENT. 

18 Notwithstanding any other provision of this Act, no 

19 amounts from a loan or grant under this Act may be used 

20 under section 8 for any qualified foreclosed housing unless 

21 such binding agreements are entered into, in accordance 

22 with such requirements as the Secretary shall establish, that 

23 ensure that the Federal Government shall, upon any sale 

24 or disposition of the qualified foreclosed housing by the 

25 owner who acquires the housing pursuant to assistance 


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1 under this Act, receive an amount equal to 20 percent of 

2 the difference between the net proceeds from such sale or 

3 disposition and the cost of such acquisition of the housing 

4 pursuant to assistance under this Act, after deductions for 

5 expenditures paid or incurred after the date of such acquisi6 tion that are properly chargeable to capital account (within 

7 the meaning of section 1016 of the Internal Revenue Code 

8 of 1986) with respect to such housing. In the case of a for9 profit owner, this section shall be applied by substituting 

10 ‘‘50 percent’’ for ‘‘20 percent’’. 

11 SEC. 10. SPENDING REQUIREMENTS. 

12 (a) IN GENERAL.—Each allocation recipient that re13 ceives a grant under this Act or is allocated loan authority 

14 amounts under this Act pursuant to section 5(b) shall— 

15 (1) commence obligation of such grant amounts 

16 and commitment of such loan authority amounts not 

17 later than the expiration of the 120-day period that 

18 begins upon approval of the approved plan of alloca19 tion recipient; 

20 (2) obligate all such grant amounts and enter 

21 into commitments for all such loan authority 

22 amounts not later than the expiration of the 180-day 

23 period beginning upon such approval; and 

24 (3) except as provided in subsection (b) of this 

25 section, outlay all such grant amounts and disburse 


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1 all such loan authority amounts not later than the 

2 24-month period that begins upon such approval. 

3 This subsection shall not apply to loan authority amounts 

4 of an allocation recipient attributable, pursuant to section 

5 6(b)(2), to repayment of principal amounts of loans under 

6 this Act. 

7 (b) EXCEPTION TO SPENDING REQUIREMENT.—If an 

8 allocation recipient in good faith makes a request, in the 

9 plan submitted to the Secretary pursuant to section 4 or 

10 otherwise after approval of such plan, for extension of the 

11 period referred to in paragraph (1), (2), or (3) of subsection 

12 (a) of this section, the Secretary may extend the period for 

13 not more than 5 months. 

14 SEC. 11. SERVICER CONTACT. 

15 The servicer of a federally related mortgage loan (as 

16 such term is defined in section 3 of the Real Estate Settle17 ment Procedures Act of 1974 (12 U.S.C. 2602)) shall notify 

18 the unit of general local government in which the property 

19 securing the mortgage is located upon becoming responsible 

20 for a qualified foreclosed property and provide such unit 

21 of general local government with the name and 24-hour con22 tact information of a representative authorized to negotiate 

23 purchases. 


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1 SEC. 12. ACCOUNTABILITY. 

2 (a) REPORTING.—Each allocation recipient that re3 ceives a grant or allocation of loan authority amount under 

4 this Act shall submit a report to the Secretary, not later 

5 than the expiration of the 12-month period beginning upon 

6 the approval of the qualified plan by the Secretary, regard7 ing use of such amounts which shall contain such informa8 tion, including information about the location and type of 

9 assisted properties and the income of families purchasing 

10 or renting housing assisted under this Act, as the Secretary 

11 shall require. 

12 (b) MISUSE OF AMOUNTS.—If the Secretary deter13 mines that any amounts from a grant or loan under this 

14 Act for an allocation recipient or other recipient of grant 

15 or loans funds has been used in a manner that is in viola16 tion of this Act, any regulations issued under this Act, or 

17 any requirements or conditions under which such amounts 

18 were provided, the Secretary shall require the allocation re19 cipient or other recipient of grant or loans funds to reim20 burse the Treasury of the United States in the amount of 

21 any such misused funds. 

22 (c) HOLD HARMLESS.—Notwithstanding subsection 

23 (b), a State shall not be required to reimburse the Treasury 

24 of the United States for any misused funds such State is 

25 required to allocate to a qualified metropolitan city or 


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1 qualified urban county under subsection (f) or (g) of section 

2 5, respectively. 

3 SEC. 13. DEFINITIONS. 

4 For purposes of this Act, the following definitions shall 

5 apply: 

6 (1) ALLOCATION RECIPIENT.—The term ‘‘alloca7 tion recipient’’ means— 

8 (A) a qualified State; 

9 (B) a qualified metropolitan city; and 

10 (C) a qualified urban county. 

11 (2) ALLOCATION RECIPIENT ADMINISTRATOR.— 

12 The term ‘‘allocation recipient administrator’’ means 

13 the entity that is designated, pursuant to section 

14 4(b)(1), in the approved plan of the allocation recipi15 ent to act for the allocation recipient for purposes of 

16 this Act. 

17 (3) APPROVED PLAN.—The term ‘‘approved 

18 plan’’ means a plan of an allocation recipient that 

19 has been approved pursuant to section 4. 

20 (4) COVERED MULTIFAMILY HOUSING.—The term 

21 ‘‘covered multifamily housing’’ means a residential 

22 structure that consists of 64 or fewer dwelling units. 

23 (5) LOAN AUTHORITY AMOUNT.—The term ‘‘loan 

24 authority amount’’ means, with respect to an alloca25 tion recipient, the amount of loan authority available 


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1 pursuant to section 14(b)(1) that is allocated for the 

2 allocation recipient pursuant to subsection (b), (f), or 

3 (g) of section 5, as applicable, as such amount may 

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

5 (6) NONPROFIT ORGANIZATION.—The term ‘‘non6 profit organization’’ has the meaning given such term 

7 in section 104 of the Cranston-Gonzalez National Af8 fordable Housing Act (42 U.S.C. 12704). 

9 (7) QUALIFIED FORECLOSED HOUSING.—The 

10 term ‘‘qualified foreclosed housing’’ means housing 

11 that— 

12 (A)(i) is single family housing that is not 

13 occupied by an owner, pursuant to foreclosure or 

14 assignment of the mortgage on the housing or 

15 forfeiture of the housing; or 

16 (ii) is covered multifamily housing; 

17 (B) is owned by a lender, mortgage com18 pany, investor, financial institution, or other 

19 such entity, or any government entity, pursuant 

20 to foreclosure or assignment of the mortgage on 

21 the housing or forfeiture of the housing; and 

22 (C) has a purchase price— 

23 (i) in the case of single family housing, 

24 that does not exceed 110 percent of the aver25 age purchase price for single family housing 


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1 in the area in which the housing is located, 

2 as determined by the Secretary. 

3 (ii) in the case of covered multifamily 

4 housing, that does not exceed the dollar 

5 amount limitation, for housing of the appli6 cable size located in the area in which the 

7 housing is located, on the amount of a prin8 cipal obligation of a mortgage eligible for 

9 insurance under section 207 of the National 

10 Housing Act (12 U.S.C. 1713), as in effect 

11 on the date of the enactment of this Act pur12 suant to such section 207(c)(3)(A) and sec13 tion 206A of such Act (12 U.S.C. 1712a). 

14 (8) QUALIFIED METROPOLITAN CITY.—The term 

15 ‘‘qualified metropolitan city’’ means an incorporated 

16 place, for which there is an improved plan, that— 

17 (A) is among the 100 most populous incor18 porated places in the United States, as deter19 mined according to data from the most recent de20 cennial census that is published before the date 

21 of the enactment of this Act; or 

22 (B)(i) has a minimum population of 

23 50,000, as determined according to data from the 

24 most recent decennial census that is published 

25 before the date of the enactment of this Act; and 


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1 (ii) has a foreclosure rate that exceeds 125 

2 percent of the foreclosure rate for the entire State 

3 (9) QUALIFIED STATE.—The term ‘‘qualified 

4 State’’ means a State for which there is an approved 

5 plan. 

6 (10) QUALIFIED URBAN COUNTY.—The term 

7 ‘‘qualified urban county’’ means an urban county (as 

8 such term is defined in section 102 of the Housing 

9 and Community Development Act of 1974 (42 U.S.C. 

10 5302)), for which there is an approved plan, that is 

11 among the 50 most populous urban counties in the 

12 United States, as determined— 

13 (A) according to data from the most recent 

14 decennial census; and 

15 (B) excluding the population of any quali16 fied metropolitan city within such urban county, 

17 unless such metropolitan city has agreed to have 

18 its population included with the population of 

19 the county for the purposes of this Act. 

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

21 the Secretary of Housing and Urban Development. 

22 (12) SINGLE FAMILY HOUSING.—The term ‘‘sin23 gle family housing’’ means a residential structure 

24 consisting of from one to four dwelling units. 


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1 (13) STATE.—The term ‘‘State’’ means any 

2 State of the United States, the District of Columbia, 

3 the Commonwealth of Puerto Rico, the Commonwealth 

4 of the Northern Mariana Islands, Guam, the Virgin 

5 Islands, American Samoa, and other territory or pos6 session of the United States. 

7 SEC. 14. FUNDING. 

8 (a) GRANTS.—There is authorized to be appropriated 

9 to the Secretary of the Treasury $7,500,000,000 for grants 

10 under this Act. 

11 (b) DIRECT LOANS.— 

12 (1) LOAN COMMITMENT AUTHORITY LIMITA13 TION.—Subject only to the availability of sufficient 

14 amounts for the costs (as such term is defined in sec15 tion 502 of the Federal Credit Reform Act of 1990 (2 

16 U.S.C. 661a)) of such loans and the absence of quali17 fied requests for loans, the Secretary shall enter into 

18 commitments to make loans under this Act, and shall 

19 make such loans, in an amount such that the aggre20 gate outstanding principal balance of such loans does 

21 not at any time exceed $7,500,000,000. 

22 (2) AUTHORIZATION OF APPROPRIATIONS FOR

23 COSTS.—There is authorized to be appropriated such 

24 sums as may be necessary for costs (as such term is 


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1 defined in section 502 of the Federal Credit Reform 

2 Act of 1990 (2 U.S.C. 661a)) of loans under this Act. 

3 SEC. 15. REGULATIONS AND IMPLEMENTATION. 

4 (a) REGULATIONS.—The Secretary shall issue any reg5 ulations necessary to carry out this Act. 

6 (b) IMPLEMENTATION.—Pending the effectiveness of 

7 regulations issued pursuant to subsection (a), the Secretary 

8 shall take such action as may be necessary to implement 

9 this Act by notice, guidance, and interim rules. 


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Union Calendar No. 383 

110TH CONGRESS 

2D SESSION H. R. 5818 

[Report No. 110

–616] 

A BILL 

To authorize the Secretary of Housing and Urban 

for related costs. foreclosed housing and to make grants to States Development to make loans to States to acquire 

MAY 1, 2008 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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