110TH CONGRESS 

2D SESSION H. R. 5818 

AN ACT 

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. 

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 AND TABLE OF CONTENTS. 

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

3 ‘‘Neighborhood Stabilization Act of 2008’’. 

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

5 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Congressional purposes. 

Sec. 3. Loans and grants to States, metropolitan cities, and urban counties. 

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. Protection of right to bear arms. 

Sec. 16. Ineligiblity of illegal aliens for assistance. 

Sec. 17. Regulations and implementation. 

6 SEC. 2. CONGRESSIONAL PURPOSES. 

7 The purposes of this Act are— 

8 (1) to establish a loan and grant program ad9 ministered by the Department of Housing and 

10 Urban Development to help States, metropolitan cit11 ies, and urban counties preserve the equity and en12 sure the safety of the neighbors of homes made va13 cant by the predatory lending and foreclosure crises, 

14 to prevent and reduce the incidence of such vacan15 cies through various means, including purchasing 

16 and rehabilitating owner-vacated, foreclosed homes 

17 with the goal of stabilizing and occupying them as 
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1 soon as possible, either through resale or rental to 

2 qualified families; 

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

4 with the highest levels of foreclosure and delinquent 

5 subprime mortgages, and largest increases in the 

6 rate of vacant and abandoned single family homes; 

7 (3) to provide incentives for States, metropoli8 tan cities, and urban counties to use the funds to 

9 stabilize as many properties as possible; and 

10 (4) to provide housing for low- and moderate11 income families, especially those that have lost 

12 homes to foreclosure. 

13 SEC. 3. LOANS AND GRANTS TO STATES, METROPOLITAN 

14 CITIES, AND URBAN COUNTIES. 

15 The Secretary of Housing and Urban Development 

16 shall, subject to the availability of amounts under section 

17 14, make grants under section 5(a) to qualified States and 

18 under subsections (f) and (g) of section 5 to qualified met19 ropolitan cities and qualified urban counties, respectively, 

20 and make loans under section 6 in accordance with the 

21 approved plans of qualified States, qualified metropolitan 

22 cities, and qualified urban counties, for use to carry out 

23 eligible housing stimulus activities under section 8. The 

24 program under this Act shall be administered through the 

25 Office of Community Planning and Development of the 
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1 Department of Housing and Urban Development or any 

2 successor office responsible for administering the commu3 nity development block grant program under title I of the 

4 Housing and Community Development Act of 1974 (42 

5 U.S.C. 5301 et seq.). 

6 SEC. 4. QUALIFIED PLANS. 

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

8 under this Act only to a State, metropolitan city, or urban 

9 county, and may allocate a loan authority amount under 

10 this Act only for a State, metropolitan city, or urban coun11 ty, that has submitted to the Secretary a plan that meets 

12 the requirements under this section and has been approved 

13 under this section. 

14 (b) CONTENTS.—A plan under this section for an al15 location recipient shall— 

16 (1) designate a housing finance agency of the 

17 allocation recipient, or other agency, department, or 

18 entity of the allocation recipient, or any other des19 ignee, as the allocation recipient administrator to act 

20 on behalf of the allocation recipient for purposes of 

21 this Act; 

22 (2) describe the housing stimulus activities 

23 under section 8 to be carried out with assistance 

24 under this Act for the allocation recipient by the en-
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1 tity identified pursuant to paragraph (1) of this sub2 section; 

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

4 moderate-income neighborhoods with high concentra5 tions of vacancies, according to the number of cen6 sus tracts, as determined by the Secretary, to have 

7 large increases in the rate of vacancy during the 

8 past eight quarters and significant levels of loans de9 termined to be at risk of foreclosure, and describe 

10 how such activities will help restore or improve the 

11 viability of such neighborhoods by providing for pur12 chase or occupancy of qualified foreclosed properties 

13 as soon as practicable and in a manner that will fa14 cilitate repayment of the loans provided under this 

15 Act for carrying out such activities; 

16 (4) set forth the procedures that the allocation 

17 recipient will use to allocate grant and loan amounts 

18 and monitor for compliance with the requirements of 

19 section 8; 

20 (5) provide that grant and loan amounts pro21 vided under this Act for the allocation recipient will 

22 be used only for eligible housing stimulus activities 

23 under section 8 that are eligible under such section 

24 for assistance with grant or loan amounts, as appli25 cable; 
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1 (6) contain such assurances as the Secretary 

2 shall require that the housing stimulus activities to 

3 be carried out with assistance under this Act shall 

4 not result in a significant net loss in rental housing 

5 in an area in which such activities are undertaken; 

6 (7) give priority emphasis and consideration to 

7 metropolitan areas, metropolitan cities, urban areas, 

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

9 tracts and other areas having the greatest need, in10 cluding those— 

11 (A) with the greatest percentage of home 

12 foreclosures; 

13 (B) with the highest percentage of homes 

14 financed by subprime mortgage loans over 90 

15 days delinquent; or 

16 (C) identified by the State, qualified met17 ropolitan city, or unit of general local govern18 ment as likely to face a significant rise in the 

19 rate of home foreclosures; 

20 (8) notwithstanding any other preferences es21 tablished or authorized under this subsection, pro22 vide first priority, in use of amounts from grants or 

23 loans under this Act for rehabilitating housing, for 

24 providing housing for veterans, members of the 

25 Armed Forces on active duty, members of the Na-
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1 tional Guard or Armed Forces reserves, school 

2 teachers, and emergency responders; 

3 (9) provide preference for activities that serve 

4 the lowest income families, who otherwise meet the 

5 income requirements under section 8, for the longest 

6 period and homeowners, who otherwise meet such in7 come requirements, whose mortgages have been fore8 closed; 

9 (10) provide preference for use of grant and 

10 loan amounts in connection with acquisition of quali11 fied foreclosed properties that are acquired no ear12 lier than 60 days after the owner of the property de13 scribed in section 13(7)(B) acquired such ownership; 

14 (11) describe any other preferences the alloca15 tion recipient may establish, such as housing for 

16 first responders, for veterans, for nurses serving un17 derserved areas or homeless persons, or for homeless 

18 persons in accordance with the 10-year plan of the 

19 State to end homelessness, or providing housing for 

20 public school teachers or workforce who are em21 ployed by the city or locality in which the housing 

22 is located; 

23 (12) provide for obligation and outlay of grant 

24 amounts, and for loan commitments and disburse-
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1 ment, in accordance with the requirements under 

2 section 10; and 

3 (13) in the case of any grant or loan amounts 

4 that will be invested with the possibility of a return 

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

6 investment only for one or more eligible housing 

7 stimulus activities under section 8. 

8 (c) SUBMISSION.— 

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

10 for allocation recipients to submit plans under this 

11 section to the Secretary and shall establish require12 ments for the contents and form of such plans. Ex13 cept in the case of plan resubmitted pursuant to 

14 subsection (d)(3), the Secretary may not accept or 

15 consider a plan unless the plan is submitted to the 

16 Secretary before the expiration of the 30-day period 

17 beginning upon the date of the enactment of this 

18 Act. 

19 (2) PUBLIC APPROVAL.—An allocation recipient 

20 may not submit a plan to the Secretary unless the 

21 plan is approved by the chief executive officer of the 

22 allocation recipient after a public hearing on the 

23 plan held pursuant to reasonable public notice. 

24 (d) REVIEW AND APPROVAL.— 
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1 (1) TIMING.—The Secretary shall review, and 

2 approve or disapprove, each plan submitted or resub3 mitted pursuant to paragraph (3) in compliance with 

4 the requirements established under this section be5 fore the expiration of the 30-day period beginning 

6 upon the submission of the plan. If the Secretary 

7 does not approve or disapprove a plan that is sub8 mitted or resubmitted in accordance with the re9 quirements under this section before the expiration 

10 of such 30-day period and notify the allocation re11 cipient of such approval or disapproval, the plan 

12 shall be considered approved for purposes of this 

13 section. 

14 (2) STANDARD FOR DISAPPROVAL.—The Sec15 retary may disapprove a plan only if the plan fails 

16 to comply with the requirements of this Act. 

17 (3) RESUBMISSION.—If the Secretary dis18 approves the plan of an allocation recipient, the Sec19 retary shall submit to the allocation recipient the 

20 reasons for the disapproval, and the allocation re21 cipient may, during the 15-day period that begins 

22 upon notification of such disapproval and the rea23 sons for such disapproval, submit to the Secretary a 

24 revised plan for review and approval in accordance 

25 with this subsection. 
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1 SEC. 5. ALLOCATION OF AMOUNTS. 

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

3 under section 14(a) for grants under this Act, the Sec4 retary shall make a grant to each qualified State in the 

5 grant amount determined under subsection (c) of this sec6 tion for the qualified State. 

7 (b) LOANS.—From the aggregate amount of author8 ity for the outstanding principal balance of loans made 

9 under this Act pursuant to section 14(b)(1), the Secretary 

10 shall allocate such authority for loans under this Act for 

11 each qualified State in the loan authority amount deter12 mined under subsection (c) of this section for the qualified 

13 State. 

14 (c) GRANT AMOUNTS AND LOAN AUTHORITY

15 AMOUNTS.— 

16 (1) IN GENERAL.—The grant amount or loan 

17 authority amount for a qualified State shall be the 

18 foreclosure grant share or foreclosure loan share, re19 spectively, for the State determined under subsection 

20 (d), as such share is adjusted in accordance with an 

21 index established or selected by the Secretary to ac22 count for differences between qualified States in the 

23 median price of single family housing in such States. 

24 (2) LIMITATION ON ADJUSTMENT.—If such ad25 justment would result in a grant amount or loan au26 thority amount for any State that exceeds 125 per-
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1 cent of the foreclosure grant share or foreclosure 

2 loan share, respectively, for the State, the grant 

3 amount or loan authority amount for the State shall 

4 be 125 percent of foreclosure grant share or fore5 closure loan share, respectively, for the State and 

6 the Secretary shall increase the grant amounts or 

7 loan authority amounts for all other States on a pro 

8 rata basis, except as provided in paragraph (3), by 

9 the amount necessary to account for the aggregate 

10 of any such decreases in grant amounts or loan au11 thority amounts for States to comply with the 125 

12 percent limitation. 

13 (3) LIMITATION ON REALLOCATION.—No in14 crease in the grant amount or loan authority amount 

15 for any State from amounts reallocated pursuant to 

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

17 loan authority amount for any State exceeding 125 

18 percent of the foreclosure grant share or foreclosure 

19 loan share for the State, respectively. 

20 (4) PRIORITY PREFERENCE FOR UNUSED

21 AMOUNTS.—States which have their grant or loan 

22 amounts reduced under paragraph (2) shall be 

23 granted a priority preference for any loans or grants 

24 which may be reallocated under subsection (i) (relat25 ing to reallocation of funds). 
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1 (d) FORECLOSURE SHARES.—For purposes of this 

2 section: 

3 (1) GRANT SHARE.—The foreclosure grant 

4 share for a qualified State shall be the amount that 

5 bears the same ratio to the total amount made avail6 able under section 14(a) as the number of fore7 closures on mortgages for single family housing and 

8 subprime mortgage loans for single family housing 

9 that are over 90 days delinquent, occurring in such 

10 State during the most recently completed four cal11 endar quarters for which such information is avail12 able, as determined by the Secretary, bears to the 

13 aggregate number of such foreclosures and such de14 linquent subprime mortgage loans occurring in all 

15 qualified States during such calendar quarters. 

16 (2) LOAN SHARE.—The foreclosure loan share 

17 for a qualified State shall be the amount that bears 

18 the same ratio to the aggregate amount of the prin19 cipal balance of loans that may be outstanding at 

20 any time under this Act pursuant to section 14(b)(1) 

21 as the number of foreclosures on mortgages for sin22 gle family housing and subprime mortgage loans for 

23 single family housing that are over 90 days delin24 quent, occurring in such State during the most re25 cently completed four calendar quarters for which 
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1 such information is available, as determined by the 

2 Secretary, bears to the aggregate number of such 

3 foreclosures and such delinquent subprime mortgage 

4 loans occurring in all qualified States during such 

5 calendar quarters. 

6 (e) DISTRIBUTION OF FULL AMOUNT.—The Sec7 retary shall establish the index referred to in subsection 

8 (c) and the grant and loan authority amounts for the 

9 qualified States in a manner that provides that— 

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

11 qualified States is equal to the total amount made 

12 available under section 14(a); and 

13 (2) the aggregate of the loan authority amounts 

14 for all qualified States is equal to the aggregate 

15 amount of authority for the outstanding principal 

16 balance of all loans made under this Act pursuant 

17 to section 14(b)(1). 

18 (f) REQUIREMENT TO ALLOCATE TO QUALIFIED

19 METROPOLITAN CITIES.—Of any grant amounts and loan 

20 authority amounts allocated pursuant to this section for 

21 a State, the Secretary shall allocate for each qualified met22 ropolitan city located in such State a portion of such grant 

23 amounts and such loan authority amounts that bears the 

24 same ratio to such grant amounts and loan authority 

25 amounts, respectively, allocated for the State as the num-
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1 ber of foreclosures on mortgages for single family housing 

2 and subprime mortgage loans for single family housing 

3 that are over 90 days delinquent, occurring in such quali4 fied metropolitan city during the most recently completed 

5 four calendar quarters for which such information is avail6 able, as determined by the Secretary, bears to the aggre7 gate number of such foreclosures and such delinquent 

8 subprime mortgage loans occurring in the State during 

9 such calendar quarters. The Secretary shall adjust such 

10 allocation to account for differences between median single 

11 family housing prices in the State and in qualified metro12 politan cities in the State. 

13 (g) REQUIREMENT TO ALLOCATE TO QUALIFIED

14 URBAN COUNTIES.—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 urban 

17 county 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 num21 ber of foreclosures on mortgages for single family housing 

22 and subprime mortgage loans for single family housing 

23 that are over 90 days delinquent, occurring in such quali24 fied urban county during the most recently completed four 

25 calendar quarters for which such information is available, 
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1 as determined by the Secretary, bears to the aggregate 

2 number of such foreclosures and such delinquent subprime 

3 mortgage loans occurring in the State during such cal4 endar quarters. The Secretary shall adjust such allocation 

5 to account for differences between median single family 

6 housing prices in the State and in qualified urban counties 

7 in the State. 

8 (h) ALLOCATION EXCEPTION.—If the aggregate 

9 grant and loan authority amount to be allocated pursuant 

10 to subsection (f) or (g) to a qualified metropolitan city 

11 or qualified urban county is less than $10,000,000, the 

12 Secretary may, but is not required to, allocate such grant 

13 and loan authority amount to such qualified metropolitan 

14 city or qualified urban county, and the allocation for such 

15 State shall be increased by the grant and loan authority 

16 amount not allocated to such qualified metropolitan city 

17 or qualified urban county. 

18 (i) REALLOCATION OF UNUSED AMOUNTS.—The 

19 Secretary shall recapture any grant amounts and loan au20 thority amounts allocated to a State that are not used in 

21 a timely fashion in accordance with section 10, as the Sec22 retary shall prescribe, and shall reallocate such amounts 

23 among all other qualified States in accordance with the 

24 provisions of this Act for allocation of grant amounts and 

25 loan authority amounts. 
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1 SEC. 6. LOANS. 

2 (a) REQUIREMENT OF LOAN AUTHORITY AMOUNT.— 

3 The Secretary may make a loan under this Act for use 

4 in the area of an allocation recipient only to the extent 

5 and in such amounts that loan authority amounts for such 

6 allocation recipient are available. 

7 (b) REVOLVING AVAILABILITY OF LOAN AUTHORITY

8 AMOUNT.—The loan authority amount allocated for each 

9 allocation recipient shall— 

10 (1) upon the Secretary entering into a binding 

11 commitment to make a loan under this Act for use 

12 in the area of such allocation recipient, be decreased 

13 by the amount of the principal obligation of such 

14 loan; and 

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

16 borrower of any principal amounts borrowed under 

17 a loan this Act for use in the area of such allocation 

18 recipient, be increased by the amount of principal re19 paid. 

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

21 of an allocation recipient may be used for activities de22 scribed in section 8(a) undertaken by— 

23 (1) the allocation recipient; 

24 (2) a unit of local government or a local govern25 mental entity; or 
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1 (3) any other entity, as provided in the ap2 proved plan of the allocation recipient under section 

3 4. 

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

5 Act from the loan authority amount of an allocation recipi6 ent shall— 

7 (1) bear no interest; 

8 (2) have a term to maturity of— 

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

10 to purchase or finance the purchase of qualified 

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

12 for homeownership; and 

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

14 to purchase or finance the purchase of qualified 

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

16 for rental; 

17 (3) not provide for amortization of the principal 

18 obligation of the loan during such term; 

19 (4) be non-recourse; 

20 (5) require payment of the original principal ob21 ligation under the loan only upon the expiration of 

22 the term of the loan; and 

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

24 Secretary may provide. 
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1 (e) PROCEDURE.—A qualified State, a qualified met2 ropolitan city, and a qualified urban county shall— 

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

4 Secretary on terms established under this Act and 

5 any other terms such State, qualified metropolitan 

6 city, or qualified urban county determines appro7 priate; 

8 (2) disburse the loan amount in accordance 

9 with such terms, subject only to the absence of suffi10 cient loan authority amount for such State, such 

11 qualified metropolitan city, or such qualified urban 

12 county; 

13 (3) monitor such loans; and 

14 (4) collect and transmit to the Secretary any 

15 loan repayments. 

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

17 under this Act may be made to an entity that has pre18 viously borrowed amounts under a loan under this Act 

19 only if such entity has repaid 90 percent or more of the 

20 amounts due under all previous such loans. The Secretary 

21 may waive such requirement upon a request by an alloca22 tion recipient if the borrower has demonstrated satisfac23 tory progress in utilizing outstanding loans and sufficient 

24 capacity to utilize additional loan amounts effectively. 
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1 (g) SUNSET.—The Secretary may not enter into any 

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

3 such loan, after the expiration of the 48-month period be4 ginning on the date of the enactment of this Act. 

5 SEC. 7. GRANTS. 

6 The grant amount of an allocation recipient may be 

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

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

9 nonprofit organization. 

10 SEC. 8. ELIGIBLE HOUSING STIMULUS ACTIVITIES. 

11 (a) LOAN AMOUNTS.—Amounts provided under a 

12 loan under this Act for an allocation recipient shall be 

13 used, in accordance with the approved plan of such alloca14 tion recipient, only for the following activities: 

15 (1) HOMEOWNERSHIP HOUSING PROVISION.— 

16 To purchase or finance the purchase of qualified 

17 foreclosed housing for resale as housing for home18 ownership to families having incomes that do not ex19 ceed 140 percent of the median income for the area 

20 in which the housing is located. 

21 (2) RENTAL HOUSING PROVISION.—To pur22 chase or finance the purchase of qualified foreclosed 

23 housing for use as rental, lease-purchase, or rent-to24 own housing, subject to the following requirements: 
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1 (A) QUALIFIED TENANTS.—All dwelling 

2 units in the housing purchased or financed 

3 using any loan amounts shall be available for 

4 rental only by families whose incomes do not 

5 exceed 100 percent of the median income for 

6 the area in which the housing is located. 

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

8 in the housing purchased or financed using any 

9 loan amounts shall be established at amounts 

10 that do not exceed market rents for comparable 

11 dwelling units located in the area in which the 

12 housing is located and in accordance with such 

13 requirements as the Secretary shall establish to 

14 ensure that rents are established in a fair, ob15 jective, and arms-length manner. 

16 (3) HOUSING REHABILITATION.—To rehabili17 tate qualified foreclosed housing acquired with as18 sistance provided pursuant to this subsection, to the 

19 extent necessary to comply with applicable laws, 

20 codes, and other requirements relating to housing 

21 safety, quality, and habitability, or to make improve22 ments to the housing to increase the energy effi23 ciency or conservation of the housing or provide a 

24 renewable energy source or sources for the housing, 

25 for the purpose of reselling the housing, to the ex-
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1 tent possible, during the 3-month period that begins 

2 upon completion of rehabilitation and at a price that 

3 is as close as possible to the acquisition price of the 

4 housing. 

5 (b) GRANT AMOUNTS.—Grant amounts provided 

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

7 accordance with the approved plan of such allocation re8 cipient, only for the following activities: 

9 (1) OPERATING AND HOLDING COSTS.—For 

10 costs of holding and operating qualified foreclosed 

11 housing acquired pursuant to subsection (a), includ12 ing expenses incurred operating housing assisted 

13 under this Act with respect to the administration, 

14 maintenance, repair, security, utilities, fuel, fur15 nishings, equipment, management, taxes, handling, 

16 insurance, and other related costs. 

17 (2) COSTS RELATING TO PROPERTY ACQUISI18 TION.—For incidental costs involved in acquiring 

19 qualified foreclosed housing pursuant to subsection 

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

21 grant amounts may not be used to pay any portion 

22 of the purchase price for the housing under section 

23 13(7)(C). 

24 (3) ADMINISTRATIVE COSTS.—For costs of the 

25 allocation recipient in administering loan authority 
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1 amounts and grant amounts under this Act, except 

2 that the amount of grant amounts provided under 

3 this Act to an allocation recipient that may be used 

4 under this paragraph shall not exceed the amount 

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

6 provided to the allocation recipient pursuant to sub7 section (a), (f), or (g) of section 5, as applicable, and 

8 the loan authority amount allocated to the allocation 

9 recipient pursuant to subsection (b), (f), or (g) of 

10 section 5, as applicable. 

11 (4) PLANNING COSTS.—For planning costs of 

12 the State in connection with this Act, except that 

13 the amount of grant amounts provided under this 

14 Act to an allocation recipient that may be used 

15 under this paragraph shall not exceed the amount 

16 equal to 2 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 State 

20 pursuant to subsection (b), (f), or (g) of section 5, 

21 as applicable. 

22 (5) HOUSING REHABILITATION.—For activities 

23 set forth in subsection (a)(3), except that an alloca24 tion recipient shall not use more than 20 percent of 

25 a grant amount allocation for such activities. 
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1 (6) DEMOLITION.—For costs of demolishing 

2 qualified foreclosed housing that is deteriorated or 

3 unsafe, but amounts may be used under this para4 graph only if the Secretary determines that the 

5 neighborhood or other area in which the housing is 

6 located has a high incidence of vacant and aban7 doned housing (or other vacant and abandoned 

8 structures) and is experiencing a significant decline 

9 in population. 

10 Notwithstanding any other provision of this subsection, 

11 grant amounts provided under this Act may not be used 

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

13 and closing cost financing) to provide amounts for 

14 downpayments for any homebuyers of single family hous15 ing. 

16 (c) PROHIBITED USES.—The Secretary shall, by reg17 ulation, set forth prohibited uses of grant or loan amounts 

18 under this Act, which shall include use for— 

19 (1) political activities; 

20 (2) advocacy; 

21 (3) lobbying, whether directly or through other 

22 parties; 

23 (4) counseling services; 

24 (5) travel expenses; and 
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1 (6) preparing or providing advice on tax re2 turns. 

3 (d) INCOME TARGETING REQUIREMENT.— 

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

5 than 50 percent of the total grant amounts an allo6 cation recipient makes available under this Act shall 

7 be used for activities under subsection (b) in connec8 tion with providing housing for families whose in9 comes do not exceed 50 percent of the median in10 come for the area in which the housing is located. 

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

12 less than 50 percent of the total grant amounts an 

13 allocation recipient makes available under paragraph 

14 (1) shall be used for activities under subsection (b) 

15 in connection with providing housing for families 

16 whose incomes do not exceed 30 percent of the me17 dian income for the area in which the housing is lo18 cated. 

19 (3) WAIVER.— 

20 (A) IN GENERAL.—The Secretary may es21 tablish a percentage for purposes of paragraph 

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

23 recipient certifies that, in addition to any other 

24 requirements the Secretary may establish— 
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1 (i) such allocation recipient has at2 tempted to use all other federally related 

3 resources available to it in combination 

4 with the resources available under this Act 

5 to meet the requirements of paragraph (2); 

6 and 

7 (ii) the failure to comply with para8 graph (2) will not result in an overall loss 

9 of housing affordable to families whose in10 comes do not exceed 30 percent of area 

11 median income in the area of such alloca12 tion recipient. 

13 (B) CONSIDERATION OF HOUSING

14 NEEDS.—In establishing an alternative percent15 age for purposes of paragraph (2) for an alloca16 tion recipient that meets the certification re17 quirements of subparagraph (A), the Secretary 

18 shall take into consideration the housing needs 

19 in the area of such allocation recipient of fami20 lies whose incomes do not exceed 30 percent of 

21 area median income. 

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

23 receiving any grant or loan amounts under this Act that 

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

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

2 for such activities in such rural areas. 

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

4 a qualified metropolitan city or qualified urban county, 

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

6 qualified foreclosed housing purchased or financed with a 

7 loan under this section in the amount of the principal obli8 gation under the loan and interest due under the loan. 

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

10 construed to prevent the resale of qualified foreclosed 

11 housing to a prior owner or occupant of such housing who 

12 meets the income requirements of this Act. 

13 (h) VOUCHER NONDISCRIMINATION.— 

14 (1) PROSPECTIVE TENANTS.—A recipient of 

15 amounts from a loan or grant under this Act may 

16 not refuse to lease a dwelling unit in housing as17 sisted with any such loan or grant amounts to a 

18 holder of a voucher or certificate of eligibility under 

19 section 8 of the United States Housing Act of 1937 

20 (42 U.S.C. 1437f) because of the status of the pro21 spective tenant as such a holder. 

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

23 qualified foreclosed housing for which funds made 

24 available under the Act are used and in which a re25 cipient of assistance under section 8(o) of the U.S. 
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1 Housing Act of 1937 resides at the time of acquisi2 tion or financing, the owner and any successor in in3 terest shall be subject to the lease and to the hous4 ing assistance payments contract for the occupied 

5 unit. Vacating the property prior to sale shall not 

6 constitute good cause for termination of the tenancy 

7 unless the property is unmarketable while occupied 

8 or unless the owner or subsequent purchaser desires 

9 the unit for personal or family use. This paragraph 

10 shall not preempt any State or local law that pro11 vides more protection for tenants. 

12 (i) EFFECT OF FORECLOSURE ON PREEXISTING

13 LEASE.— 

14 (1) IN GENERAL.—In the case of any fore15 closure on any dwelling or residential real property 

16 acquired with any amounts made available under 

17 this Act, any successor in interest in such property 

18 pursuant to the foreclosure shall assume such inter19 est subject to— 

20 (A) the provision, by the successor in inter21 est, of a notice to vacate to any bona fide ten22 ant at least 90 days before the effective date of 

23 the notice to vacate; and 

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

25 of the date of such notice of foreclosure— 
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1 (i) under any bona fide lease entered 

2 into before the notice of foreclosure to oc3 cupy the premises until the end of the re4 maining term of the lease or the end of the 

5 6-month period beginning on the date of 

6 the notice of foreclosure, whichever occurs 

7 first, subject to the receipt by the tenant 

8 of the 90-day notice under subparagraph 

9 (A); or 

10 (ii) without a lease or with a lease ter11 minable at will under State law, subject to 

12 the receipt by the tenant of the 90-day no13 tice under subparagraph (A), except that 

14 nothing under this subparagraph shall af15 fect the requirements for termination of 

16 any federally subsidized tenancy. 

17 (2) BONA FIDE LEASE OR TENANCY.—For pur18 poses of this subsection, a lease or tenancy shall be 

19 considered bona fide only if— 

20 (A) the mortgagor under the contract is 

21 not the tenant; 

22 (B) the lease or tenancy was the result of 

23 an arms-length transaction; or 
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1 (C) the lease or tenancy requires the re2 ceipt of rent that is not substantially less than 

3 fair market rent for the property. 

4 (j) PROHIBITION OF DEMOLITION OF PUBLIC HOUS5 ING.—Notwithstanding any other provision of this Act, 

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

7 used to demolish any public housing (as such term is de8 fined in section 3 of the United States Housing Act of 

9 1937 (42 U.S.C. 1437a)). 

10 SEC. 9. SHARED APPRECIATION AGREEMENT. 

11 Notwithstanding any other provision of this Act, no 

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

13 under section 8 for any qualified foreclosed housing unless 

14 such binding agreements are entered into, in accordance 

15 with such requirements as the Secretary shall establish, 

16 that ensure that the Federal Government shall, upon any 

17 sale or disposition of the qualified foreclosed housing by 

18 the owner who acquires the housing pursuant to assistance 

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

20 the difference between the net proceeds from such sale or 

21 disposition and the cost of such acquisition of the housing 

22 pursuant to assistance under this Act, after deductions for 

23 expenditures paid or incurred after the date of such acqui24 sition that are properly chargeable to capital account 

25 (within the meaning of section 1016 of the Internal Rev-
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1 enue Code of 1986) with respect to such housing. In the 

2 case of a for-profit owner, this section shall be applied by 

3 substituting ‘‘50 percent’’ for ‘‘20 percent’’. 

4 SEC. 10. SPENDING REQUIREMENTS. 

5 (a) IN GENERAL.—Each allocation recipient that re6 ceives a grant under this Act or is allocated loan authority 

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

8 (1) commence obligation of such grant amounts 

9 and commitment of such loan authority amounts not 

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

11 begins upon approval of the approved plan of alloca12 tion recipient; 

13 (2) obligate all such grant amounts and enter 

14 into commitments for all such loan authority 

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

16 period beginning upon such approval; and 

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

18 section, outlay all such grant amounts and disburse 

19 all such loan authority amounts not later than the 

20 24-month period that begins upon such approval. 

21 This subsection shall not apply to loan authority amounts 

22 of an allocation recipient attributable, pursuant to section 

23 6(b)(2), to repayment of principal amounts of loans under 

24 this Act. 
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1 (b) EXCEPTION TO SPENDING REQUIREMENT.—If an 

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

3 plan submitted to the Secretary pursuant to section 4 or 

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

5 period referred to in paragraph (1), (2), or (3) of sub6 section (a) of this section, the Secretary may extend the 

7 period for not more than 5 months. 

8 SEC. 11. SERVICER CONTACT. 

9 The servicer of a federally related mortgage loan (as 

10 such term is defined in section 3 of the Real Estate Settle11 ment Procedures Act of 1974 (12 U.S.C. 2602)) shall no12 tify the unit of general local government in which the 

13 property securing the mortgage is located upon becoming 

14 responsible for a qualified foreclosed property and provide 

15 such unit of general local government with the name and 

16 24-hour contact information of a representative authorized 

17 to negotiate purchases. 

18 SEC. 12. ACCOUNTABILITY. 

19 (a) REPORTING.—Each allocation recipient that re20 ceives a grant or allocation of loan authority amount 

21 under this Act shall submit a report to the Secretary, not 

22 later than the expiration of the 12-month period beginning 

23 upon the approval of the qualified plan by the Secretary, 

24 regarding use of such amounts which shall contain such 

25 information, including information about the location and 
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1 type of assisted properties and the income of families pur2 chasing or renting housing assisted under this Act, as the 

3 Secretary shall require. 

4 (b) MISUSE OF AMOUNTS.—If the Secretary deter5 mines that any amounts from a grant or loan under this 

6 Act for an allocation recipient or other recipient of grant 

7 or loans funds has been used in a manner that is in viola8 tion of this Act, any regulations issued under this Act, 

9 or any requirements or conditions under which such 

10 amounts were provided, the Secretary shall require the al11 location recipient or other recipient of grant or loans funds 

12 to reimburse the Treasury of the United States in the 

13 amount of any such misused funds. 

14 (c) HOLD HARMLESS.—Notwithstanding subsection 

15 (b), a State shall not be required to reimburse the Treas16 ury of the United States for any misused funds such State 

17 is required to allocate to a qualified metropolitan city or 

18 qualified urban county under subsection (f) or (g) of sec19 tion 5, respectively. 

20 SEC. 13. DEFINITIONS. 

21 For purposes of this Act, the following definitions 

22 shall apply: 

23 (1) ALLOCATION RECIPIENT.—The term ‘‘allo24 cation recipient’’ means— 

25 (A) a qualified State; 
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1 (B) a qualified metropolitan city; and 

2 (C) a qualified urban county. 

3 (2) ALLOCATION RECIPIENT ADMINISTRATOR.— 

4 The term ‘‘allocation recipient administrator’’ means 

5 the entity that is designated, pursuant to section 

6 4(b)(1), in the approved plan of the allocation recipi7 ent to act for the allocation recipient for purposes of 

8 this Act. 

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

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

11 has been approved pursuant to section 4. 

12 (4) COVERED MULTIFAMILY HOUSING.—The 

13 term ‘‘covered multifamily housing’’ means a resi14 dential structure that consists of 64 or fewer dwell15 ing units. 

16 (5) LOAN AUTHORITY AMOUNT.—The term 

17 ‘‘loan authority amount’’ means, with respect to an 

18 allocation recipient, the amount of loan authority 

19 available pursuant to section 14(b)(1) that is allo20 cated for the allocation recipient pursuant to sub21 section (b), (f), or (g) of section 5, as applicable, as 

22 such amount may be increased or decreased pursu23 ant to section 6(b). 

24 (6) NONPROFIT ORGANIZATION.—The term 

25 ‘‘nonprofit organization’’ has the meaning given 
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1 such term in section 104 of the Cranston-Gonzalez 

2 National Affordable Housing Act (42 U.S.C. 

3 12704). 

4 (7) QUALIFIED FORECLOSED HOUSING.—The 

5 term ‘‘qualified foreclosed housing’’ means housing 

6 that— 

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

8 occupied by an owner, pursuant to foreclosure 

9 or assignment of the mortgage on the housing 

10 or forfeiture of the housing; or 

11 (ii) is covered multifamily housing; 

12 (B) is owned by a lender, mortgage com13 pany, investor, financial institution, or other 

14 such entity, or any government entity, pursuant 

15 to foreclosure or assignment of the mortgage on 

16 the housing or forfeiture of the housing; and 

17 (C) has a purchase price— 

18 (i) in the case of single family hous19 ing, that does not exceed the lesser of— 

20 (I) 110 percent of the average 

21 purchase price for single family hous22 ing in the area in which the housing 

23 is located, as determined by the Sec24 retary; or 
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1 (II) the current appraised value 

2 of the property; 

3 except that in the case of any such housing 

4 that has an appraised value that is less 

5 than 110 percent of the average purchase 

6 price for single family housing in the area 

7 in which the housing is located, an alloca8 tion recipient may appeal such appraisal to 

9 the Secretary and the Secretary may deter10 mine that the average purchase price shall 

11 operate as the cap on the purchase price; 

12 and 

13 (ii) in the case of covered multifamily 

14 housing, that does not exceed the dollar 

15 amount limitation, for housing of the ap16 plicable size located in the area in which 

17 the housing is located, on the amount of a 

18 principal obligation of a mortgage eligible 

19 for insurance under section 207 of the Na20 tional Housing Act (12 U.S.C. 1713), as in 

21 effect on the date of the enactment of this 

22 Act pursuant to such section 207(c)(3)(A) 

23 and section 206A of such Act (12 U.S.C. 

24 1712a). 
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1 (8) QUALIFIED METROPOLITAN CITY.—The 

2 term ‘‘qualified metropolitan city’’ means an incor3 porated place, for which there is an improved plan, 

4 that— 

5 (A) is among the 100 most populous incor6 porated places in the United States, as deter7 mined according to data from the most recent 

8 decennial census that is published before the 

9 date of the enactment of this Act; or 

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

11 50,000, as determined according to data from 

12 the most recent decennial census that is pub13 lished before the date of the enactment of this 

14 Act; and 

15 (ii) has a foreclosure rate that exceeds 125 

16 percent of the foreclosure rate for the entire 

17 State. 

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

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

20 plan. 

21 (10) QUALIFIED URBAN COUNTY.—The term 

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

23 such term is defined in section 102 of the Housing 

24 and Community Development Act of 1974 (42 

25 U.S.C. 5302)), for which there is an approved plan, 
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1 that is among the 50 most populous urban counties 

2 in the United States, as determined— 

3 (A) according to data from the most recent 

4 decennial census; and 

5 (B) excluding the population of any quali6 fied metropolitan city within such urban county, 

7 unless such metropolitan city has agreed to 

8 have its population included with the population 

9 of the county for the purposes of this Act. 

10 (11) SECRETARY.—The term ‘‘Secretary’’ 

11 means the Secretary of Housing and Urban Develop12 ment. 

13 (12) SINGLE FAMILY HOUSING.—The term 

14 ‘‘single family housing’’ means a residential struc15 ture consisting of from one to four dwelling units. 

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

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

18 the Commonwealth of Puerto Rico, the Common19 wealth of the Northern Mariana Islands, Guam, the 

20 Virgin Islands, American Samoa, and other territory 

21 or possession of the United States. 

22 SEC. 14. FUNDING. 

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

24 to the Secretary of the Treasury $7,500,000,000 for 

25 grants under this Act. 
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1 (b) DIRECT LOANS.— 

2 (1) LOAN COMMITMENT AUTHORITY LIMITA3 TION.—Subject only to the availability of sufficient 

4 amounts for the costs (as such term is defined in 

5 section 502 of the Federal Credit Reform Act of 

6 1990 (2 U.S.C. 661a)) of such loans and the ab7 sence of qualified requests for loans, the Secretary 

8 shall enter into commitments to make loans under 

9 this Act, and shall make such loans, in an amount 

10 such that the aggregate outstanding principal bal11 ance of such loans does not at any time exceed 

12 $7,500,000,000. 

13 (2) AUTHORIZATION OF APPROPRIATIONS FOR

14 COSTS.—There is authorized to be appropriated such 

15 sums as may be necessary for costs (as such term 

16 is defined in section 502 of the Federal Credit Re17 form Act of 1990 (2 U.S.C. 661a)) of loans under 

18 this Act. 

19 SEC. 15. PROTECTION OF RIGHT TO BEAR ARMS. 

20 Nothing in this Act shall affect the right to bear arms 

21 under the Second Amendment to the Constitution of the 

22 United States. 
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1 SEC. 16. INELIGIBLITY OF ILLEGAL ALIENS FOR ASSIST2 ANCE. 

3 Aliens who are not lawfully present in the United 

4 States shall be ineligible for financial assistance under this 

5 Act, as provided and defined by section 214 of the Hous6 ing and Community Development Act of 1980 (42 U.S.C. 

7 1436a). Nothing in this Act shall be construed to alter 

8 the restrictions or definitions in such section 214. 

9 SEC. 17. REGULATIONS AND IMPLEMENTATION. 

10 (a) REGULATIONS.—The Secretary shall issue any 

11 regulations necessary to carry out this Act. 

12 (b) IMPLEMENTATION.—Pending the effectiveness of 

13 regulations issued pursuant to subsection (a), the Sec14 retary shall take such action as may be necessary to imple15 ment this Act by notice, guidance, and interim rules. 

Passed the House of Representatives May 8, 2008. 

Attest: 

Clerk. 
110TH CONGRESS 

2D SESSION H. R. 5818 

AN ACT 

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