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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5818 Introduced in House (IH)]

110th CONGRESS
  2d Session
                                H. R. 5818

  To authorize the Secretary of Housing and Urban Development to make 
  loans to States to acquire foreclosed housing and to make grants to 
                       States for related costs.

_______________________________________________________________________

                    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. Velazquez, 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

_______________________________________________________________________

                                 A BILL

 
  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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Neighborhood Stabilization Act of 
2008''.

SEC. 2. CONGRESSIONAL PURPOSES.

    The purposes of this Act are--
            (1) to establish a loan and grant program administered by 
        the Department of Housing and Urban Development to help States 
        purchase and rehabilitate owner-vacated, foreclosed homes with 
        the goal of stabilizing and occupying them as soon as possible, 
        either through resale or rental to qualified families;
            (2) to distribute these loans and grants to areas with the 
        highest foreclosure levels;
            (3) to provide incentives for States to use the funds to 
        stabilize as many properties as possible; and
            (4) to provide housing for low- and moderate-income 
        families, especially those that have lost homes to foreclosure.

SEC. 3. LOANS AND GRANTS TO STATES.

    The Secretary of Housing and Urban Development shall, subject to 
the availability of amounts under section 12, make grants under section 
5(a) to qualified States and make loans under section 6 in accordance 
with the approved plans of qualified States, for use to carry out 
eligible housing stimulus activities under section 7.

SEC. 4. QUALIFIED PLANS.

    (a) In General.--The Secretary may make a grant under this Act only 
to a State, and may allocate a loan authority amount under this Act 
only for a State, that has submitted to the Secretary a plan that meets 
the requirements under this section and has been approved under this 
section.
    (b) Contents.--A plan under this section for a State shall--
            (1) designate a State housing finance agency, or other 
        agency, department, or entity of the State, or any other 
        designee, as the State administrator to act on behalf of the 
        State for purposes of this Act;
            (2) describe the housing stimulus activities under section 
        7 to be carried out with assistance under this Act for the 
        State by the entities identified pursuant to paragraph (1) of 
        this subsection;
            (3) describe how such activities will help restore or 
        improve the viability of neighborhoods by providing for 
        purchase or occupancy of qualified foreclosed properties as 
        soon as practicable and in a manner that will facilitate 
        repayment of the loans provided under this Act for carrying out 
        such activities;
            (4) set forth the procedures that the State will use to 
        allocate grant and loan amounts and monitor for compliance with 
        the requirements of section 7;
            (5) provide that grant and loan amounts provided under this 
        Act for the State will be used only for eligible housing 
        stimulus activities under section 7 that are eligible under 
        such section for assistance with grant or loan amounts, as 
        applicable;
            (6) provide preference for activities that serve the lowest 
        income families, who otherwise meet the income requirements 
        under section 7, for the longest period and homeowners, who 
        otherwise meet such income requirements, whose mortgages have 
        been foreclosed;
            (7) describe any other preferences the State may establish, 
        such as housing for school teachers, veterans, workforce, or 
        homeless persons;
            (8) provide for obligation and outlay of grant amounts, and 
        for loan commitments and disbursement, in accordance with the 
        requirements under section 9; and
            (9) in the case of any grant or loan amounts, that will be 
        invested with the possibility of a return on investment, 
        provide for use of any return on such investment only for one 
        or more eligible housing stimulus activities under section 7.
    (c) Submission.--
            (1) In general.--The Secretary shall provide for States to 
        submit plans under this section to the Secretary and shall 
        establish requirements for the contents and form of such plans. 
        Except in the case of plan resubmitted pursuant to subsection 
        (d)(3), the Secretary may not accept or consider a plan unless 
        the plan is submitted to the Secretary before the expiration of 
        the 30-day period beginning upon the date of the enactment of 
        this Act.
            (2) Public approval.--A State may not submit a plan to the 
        Secretary unless the plan is approved by the governor of the 
        State after a public hearing on the plan held pursuant to 
        reasonable public notice.
    (d) Review and Approval.--
            (1) Timing.--The Secretary shall review, and approve or 
        disapprove, each plan submitted or resubmitted pursuant to 
        paragraph (3) in compliance with the requirements established 
        under this section before the expiration of the 15-day period 
        beginning upon the submission of the plan. If the Secretary 
        does not approve or disapprove a plan that is submitted or 
        resubmitted in accordance with the requirements under this 
        section before the expiration of such 15-day period and notify 
        the State of such approval or disapproval, the plan shall be 
        considered approved for purposes of this section.
            (2) Standard for disapproval.--The Secretary may disapprove 
        a plan only if the plan fails to comply with the requirements 
        of this Act.
            (3) Resubmission.--If the Secretary disapproves the plan of 
        a State, the Secretary shall submit to the State the reasons 
        for the disapproval, and the State may, during the 15-day 
        period that begins upon notification of such disapproval and 
        the reasons for such disapproval, submit to the Secretary a 
        revised plan for review and approval in accordance with this 
        subsection.

SEC. 5. ALLOCATION OF AMOUNTS.

    (a) Grants.--From the total amount made available under section 
12(a) for grants under this Act, the Secretary shall make a grant to 
each qualified State in the grant amount determined under subsection 
(c) of this section for the qualified State.
    (b) Loans.--From the aggregate amount of authority for the 
outstanding principal balance of loans made under this Act pursuant to 
section 12(b)(1), the Secretary shall allocate such authority for loans 
under this Act for each qualified State in the loan authority amount 
determined under subsection (c) of this section for the qualified 
State.
    (c) Grant Amounts and Loan Authority Amounts.--The grant amount or 
loan authority amount for a qualified State shall be the foreclosure 
grant share or foreclosure loan share, respectively, for the State 
determined under subsection (d), as such share is adjusted in 
accordance with an index established or selected by the Secretary to 
account for differences between qualified States in the median price of 
single family housing in such States.
    (d) Foreclosure Shares.--For purposes of this section:
            (1) Grant share.--The foreclosure grant share for a 
        qualified State shall be the amount that bears the same ratio 
        to the total amount made available under section 12(a) as the 
        number of foreclosures on mortgages for single family housing 
        occurring in such State during the most recently completed four 
        calendar quarters for which such information is available, as 
        determined by the Secretary, bears to the aggregate number of 
        such foreclosures occurring in all qualified States during such 
        calendar quarters.
            (2) Loan share.--The foreclosure loan share for a qualified 
        State shall be the amount that bears the same ratio to the 
        aggregate amount of the principal balance of loans that may be 
        outstanding at any time under this Act pursuant to section 
        12(b)(1) as the number of foreclosures on mortgages for single 
        family housing occurring in such State during the most recently 
        completed four calendar quarters for which such information is 
        available, as determined by the Secretary, bears to the 
        aggregate number of such foreclosures occurring in all 
        qualified States during such calendar quarters.
    (e) Distribution of Full Amount.--The Secretary shall establish the 
index referred to in subsection (c) and the grant and loan authority 
amounts for the qualified States in a manner that provides that--
            (1) the aggregate of the grant amounts for all qualified 
        States is equal to the total amount made available under 
        section 12(a); and
            (2) the aggregate of the loan authority amounts for all 
        qualified States is equal to the aggregate amount of authority 
        for the outstanding principal balance of all loans made under 
        this Act pursuant to section 12(b)(1).
    (f) Requirement To Allocate to Qualified Metropolitan Cities.--Of 
any grant amounts and loan authority amounts allocated pursuant to this 
section for a State, such State shall allocate for each qualified 
metropolitan city located in such State a portion of such grant amounts 
and such loan authority amounts that bears the same ratio to such grant 
amounts and loan authority amounts, respectively, allocated for the 
State as the number of foreclosures on mortgages for single family 
housing occurring in such qualified metropolitan city during the most 
recently completed four calendar quarters for which such information is 
available, as determined by the Secretary, bears to the aggregate 
number of such foreclosures occurring in the State during such calendar 
quarters. A State may adjust such allocation to account for differences 
between median single family housing prices in the State and in 
qualified metropolitan cities in the State.

SEC. 6. LOANS.

    (a) Requirement of Loan Authority Amount.--The Secretary may make a 
loan under this Act for use in a qualified State only to the extent and 
in such amounts that loan authority amounts for such State are 
available.
    (b) Revolving Availability of Loan Authority Amount.--The loan 
authority amount allocated for each qualified State shall--
            (1) upon the Secretary entering into a binding commitment 
        to make a loan under this Act for use in such State, be 
        decreased by the amount of the principal obligation of such 
        loan; and
            (2) upon the repayment to the Secretary by any borrower of 
        any principal amounts borrowed under a loan this Act for use in 
        such State, be increased by the amount of principal repaid.
    (c) Assisted Entities.--The loan authority amount of a qualified 
State may be used under section 7(a) to provide a loan for the purchase 
or finance the purchase of qualified foreclosed housing by--
            (1) the State;
            (2) a unit of local government or a local governmental 
        entity; or
            (3) a nonprofit organization.
    (d) Loan Terms.--Each loan provided under this Act from the loan 
authority amount of a qualified State shall--
            (1) bear no interest;
            (2) have a term to maturity of--
                    (A) 2 years, in the case of any loan made to 
                purchase or finance the purchase of qualified 
                foreclosed housing for use under section 7(a)(1) for 
                homeownership; and
                    (B) 5 years, in the case of any loan made to 
                purchase or finance the purchase of qualified 
                foreclosed housing for use under section 7(a)(2) for 
                rental;
            (3) not provide for amortization of the principal 
        obligation of the loan during such term;
            (4) require payment of the original principal obligation 
        under the loan only upon the expiration of the term of the 
        loan; and
            (5) have such other terms and conditions as the Secretary 
        may provide.
    (e) Procedure.--Upon a request, by a State administrator, for a 
loan under this Act from the loan authority amount of the qualified 
State for which such administrator acts, the Secretary shall enter into 
a loan agreement as the Secretary determines appropriate with the 
borrower under the loan and shall disburse the loan amount in 
accordance with such terms, subject only to the absence of sufficient 
loan authority amount for the State.
    (f) Eligibility for Repeat Lending.--A loan under this Act may be 
made to an entity that has previously borrowed amounts under a loan 
under this Act only if such entity has repaid 95 percent or more of the 
amounts due, including principal and interest, under all previous such 
loans.
    (g) Sunset.--The Secretary may not enter into any commitment to 
make a loan under this Act, or make any such loan, after the expiration 
of the 24-month period beginning on the date of the enactment of this 
Act.

SEC. 7. ELIGIBLE HOUSING STIMULUS ACTIVITIES.

    (a) Loan Amounts.--Amounts provided under a loan under this Act for 
a qualified State shall be used, in accordance with the approved plan 
of such State, only for the following activities:
            (1) Homeownership housing provision.--To purchase or 
        finance the purchase of qualified foreclosed housing for resale 
        as housing for homeownership to families having incomes that do 
        not exceed 140 percent of the median income for the area in 
        which the housing is located.
            (2) Rental housing provision.--To purchase or finance the 
        purchase of qualified foreclosed housing for use only as rental 
        housing, subject to the following requirements:
                    (A) Qualified tenants.--All dwelling units in the 
                housing purchased or financed using any loan amounts 
                shall be available for rental only by families whose 
                incomes do not exceed 100 percent of the median income 
                for the area in which the housing is located.
                    (B) Rents.--Rents for each dwelling unit in the 
                housing purchase or financed using any loan amounts 
                shall be established at amounts that do not exceed 
                market rents for comparable dwelling units located in 
                the area in which the housing is located and in 
                accordance with such requirements as the Secretary 
                shall establish to ensure that rents are established in 
                a fair, objective, and arms-length manner.
            (3) Housing rehabilitation.--To rehabilitate qualified 
        foreclosed housing acquired with assistance provided pursuant 
        to this subsection, to the extent necessary to comply with 
        applicable laws, codes, and other requirements relating to 
        housing safety, quality, and habitability, for the purpose of 
        reselling the housing, to the extent possible, during the 3-
        month period that begins upon completion of rehabilitation and 
        at a price that is as close as possible to the acquisition 
        price of the housing.
    (b) Grant Amounts.--Grant amounts provided under this Act to a 
qualified State shall be used, in accordance with the approved plan of 
such State, only for the following activities:
            (1) Operating and holding costs.--For costs of holding and 
        operating qualified foreclosed housing acquired pursuant to 
        subsection (a), including costs of management, taxes, handling, 
        insurance, and other related costs.
            (2) Costs relating to property acquisition.--For costs 
        relating to acquisition of qualified foreclosed housing 
        pursuant to subsection (a), including reasonable closing costs.
            (3) Administrative costs.--For administrative and planning 
        costs of the State in administering loan authority amounts and 
        grant amounts under this Act, except that the amount of grant 
        amounts provided under this Act to a State that may be used 
        under this paragraph shall not exceed the amount equal to 4 
        percent of the sum of the grants amounts provided to the State 
        pursuant to section 5(a) and the loan authority amount 
        allocated to the State pursuant to section 5(b).
    (c) Prohibited Uses.--The Secretary shall, by regulation, set forth 
prohibited uses of grant or loan amounts under this Act, which shall 
include use for--
            (1) political activities;
            (2) advocacy;
            (3) lobbying, whether directly or through other parties;
            (4) counseling services;
            (5) travel expenses; and
            (6) preparing or providing advice on tax returns.
    (d) Income Targeting Requirement.--
            (1) Very low-income families.--Not less than 50 percent of 
        the total grant amounts a State or qualified metropolitan city 
        makes available under this Act shall be used for activities 
        under subsection (b) in connection with providing housing for 
        families whose incomes do not exceed 50 percent of the median 
        income for the area in which the housing is located.
            (2) Extremely low-income families.--Not less than 50 
        percent of the total grant amounts a State or qualified 
        metropolitan city makes available under paragraph (1) shall be 
        used for activities under subsection (b) in connection with 
        providing housing for families whose incomes do not exceed 30 
        percent of the median income for the area in which the housing 
        is located.
            (3) Waiver.--The Secretary may waive the requirement under 
        paragraph (2) with respect to a State or qualified metropolitan 
        city if such State or city demonstrates to the satisfaction of 
        the Secretary that it has attempted to, but can not comply 
        with, such requirement.
    (e) Security.--The Secretary shall retain a lien on any qualified 
foreclosed housing purchased or financed with a loan under this section 
in the amount of the principal obligation under the loan and interest 
due under the loan.
    (f) Qualified Homeowners.--This Act may not be construed to prevent 
the resale of qualified foreclosed housing to a prior owner or occupant 
of such housing who meets the income requirements of this Act.
    (g) Voucher Nondiscrimination.--A recipient of amounts from a loan 
or grant under this Act may not refuse to lease a dwelling unit in 
housing assisted with any such loan or grant amounts to a holder of a 
voucher or certificate of eligibility under section 8 of the United 
States Housing Act of 1937 (42 U.S.C. 1437f) because of the status of 
the prospective tenant as such a holder.
    (h) Effect of Foreclosure on Preexisting Lease.--
            (1) In general.--In the case of any foreclosure on any 
        dwelling or residential real property acquired with any amounts 
        made available under this Act, any successor in interest in 
        such property pursuant to the foreclosure shall assume such 
        interest subject to--
                    (A) the provision, by the successor in interest, of 
                a notice to vacate to any bona fide tenant at least 90 
                days before the effective date of the notice to vacate; 
                and
                    (B) the rights of any bona fide tenant, as of the 
                date of such notice of foreclosure--
                            (i) under any bona fide lease entered into 
                        before the notice of foreclosure to occupy the 
                        premises until the end of the remaining term of 
                        the lease or the end of the 6-month period 
                        beginning on the date of the notice of 
                        foreclosure, whichever occurs first, subject to 
                        the receipt by the tenant of the 90-day notice 
                        under subparagraph (A); or
                            (ii) without a lease or with a lease 
                        terminable at will under State law, subject to 
                        the receipt by the tenant of the 90-day notice 
                        under subparagraph (A), except that nothing 
                        under this subparagraph shall affect the 
                        requirements for termination of any federally 
                        subsidized tenancy.
            (2) Bona fide lease or tenancy.--For purposes of this 
        section, a lease or tenancy shall be considered bona fide only 
        if--
                    (A) the mortgagor under the contract is not the 
                tenant;
                    (B) the lease or tenancy was the result of an arms-
                length transaction; or
                    (C) the lease or tenancy requires the receipt of 
                rent that is not substantially less than fair market 
                rent for the property.

SEC. 8. SHARED APPRECIATION AGREEMENT.

    Notwithstanding any other provision of this Act, no amounts from a 
loan or grant under this Act may be used under section 7 for any 
qualified foreclosed housing unless such binding agreements are entered 
into, in accordance with such requirements as the Secretary shall 
establish, that ensure that the Federal Government shall, upon any sale 
or disposition of the qualified foreclosed housing by the owner who 
acquires the housing pursuant to assistance under this Act, receive an 
amount equal to 20 percent of the difference between the net proceeds 
from such sale or disposition and the cost of such acquisition of the 
housing pursuant to assistance under this Act, after deductions for 
expenditures paid or incurred after the date of such acquisition that 
are properly chargeable to capital account (within the meaning of 
section 1016 of the Internal Revenue Code of 1986) with respect to such 
housing.

SEC. 9. SPENDING REQUIREMENTS.

    (a) In General.--Each qualified State that receives a grant under 
this Act or is allocated loan authority amounts under this Act pursuant 
to section 5(b) shall--
            (1) commence obligation of such grant amounts and 
        commitment of such loan authority amounts not later than the 
        expiration of the 45-day period that begins upon approval of 
        the approved plan of State;
            (2) obligate all such grant amounts and enter into 
        commitments for all such loan authority amounts not later than 
        the expiration of the 180-day period beginning upon such 
        approval; and
            (3) except as provided in subsection (b), outlay all such 
        grant amounts and disburse all such loan authority amounts not 
        later than the 12-month period that begins upon such approval.
This subsection shall not apply to loan authority amounts of a 
qualified State attributable, pursuant to section 6(b)(2), to repayment 
of principal amounts of loans under this Act.
    (b) Exception to Spending Requirement.--If a State in good faith 
makes a request, in the plan submitted to the Secretary pursuant to 
section 4 or otherwise after approval of such plan, for extension of 
the period referred to in paragraph (1), (2), or (3) of subsection (a) 
of this section, the Secretary may extend the period for not more than 
3 months.

SEC. 10. ACCOUNTABILITY.

    (a) Reporting.--Each qualified State that receives a grant or 
allocation of loan authority amount under this Act shall submit a 
report to the Secretary, not later than the expiration of the 12-month 
period beginning upon the approval of the qualified plan by the 
Secretary, regarding use of such amounts which shall contain such 
information as the Secretary shall require.
    (b) Misuse of Amounts.--If the Secretary determines that any 
amounts from a grant or loan under this Act for a qualified State has 
been used in a manner that is materially in violation of this Act, any 
regulations issued under this Act, or any requirements or conditions 
under which such amounts were provided, the Secretary shall require the 
State to reimburse the Treasury of the United States in the amount of 
any such misused funds.

SEC. 11. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Approved plan.--The term ``approved plan'' means a plan 
        of a State that has been approved pursuant to section 4.
            (2) Covered multifamily housing.--The term ``covered 
        multifamily housing'' means a residential structure that--
                    (A) consists of 20 or fewer dwelling units; and
                    (B) is predominantly vacant.
            (3) Loan authority amount.--The term ``loan authority 
        amount'' means, with respect to a qualified State, the amount 
        of loan authority available pursuant to section 12(b)(1) that 
        is allocated for the State pursuant to section 5(b), as such 
        amount may be increased or decreased pursuant to section 6(b).
            (4) Nonprofit organization.--The term ``nonprofit 
        organization'' has the meaning given such term in section 104 
        of the Cranston-Gonzalez National Affordable Housing Act (42 
        U.S.C. 12704).
            (5) Qualified foreclosed housing.--The term ``qualified 
        foreclosed housing'' means housing that--
                    (A)(i) is single family housing that is not 
                occupied or vacated by an owner, pursuant to 
                foreclosure or assignment of the mortgage on the 
                housing or forfeiture of the housing; or
                    (ii) is covered multifamily housing;
                    (B) is owned by a lender, mortgage company, 
                investor, financial institution, or other such entity, 
                or any government entity, pursuant to foreclosure or 
                assignment of the mortgage on the housing or forfeiture 
                of the housing; and
                    (C) has a purchase price--
                            (i) in the case of single family housing, 
                        that does not exceed 90 percent of the average 
                        purchase price for single family housing in the 
                        area in which the housing is located, as 
                        determined by the Secretary.
                            (ii) in the case of covered multifamily 
                        housing, that does not exceed the dollar amount 
                        limitation, for housing of the applicable size 
                        located in the area in which the housing is 
                        located, on the amount of a principal 
                        obligation of a mortgage eligible for insurance 
                        under section 207 of the National Housing Act 
                        (12 U.S.C. 1713), as in effect on the date of 
                        the enactment of this Act pursuant to such 
                        section 207(c)(3)(A) and section 206A of such 
                        Act (12 U.S.C. 1712a).
            (6) Qualified metropolitan city.--The term ``qualified 
        metropolitan city'' means an incorporated place that is among 
        the 25 most populous incorporated places in the United States, 
        as determined according to data from the most recent decennial 
        census that is published before the date of the enactment of 
        this Act.
            (7) Qualified state.--The term ``qualified State'' means a 
        State for which there is an approved plan.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (9) Single family housing.--The term ``single family 
        housing'' means a residential structure consisting of from one 
        to four dwelling units.
            (10) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, and other territory 
        or possession of the United States.
            (11) State administrator.--The term ``State administrator'' 
        means the entity of a qualified State that is designated, 
        pursuant to section 4(b)(1), in the approved plan of the State 
        to act for the State for purposes of this Act.

SEC. 12. FUNDING.

    (a) Grants.--There is authorized to be appropriated to the 
Secretary of the Treasury $7,500,000,000 for grants under this Act.
    (b) Direct Loans.--
            (1) Loan commitment authority limitation.--Subject only to 
        the availability of sufficient amounts for the costs (as such 
        term is defined in section 502 of the Federal Credit Reform Act 
        of 1990 (2 U.S.C. 661a)) of such loans and the absence of 
        qualified requests for loans, the Secretary shall enter into 
        commitments to make loans under this Act, and shall make such 
        loans, in an amount such that the aggregate outstanding 
        principal balance of such loans does not at any time exceed 
        $7,500,000,000.
            (2) Authorization of appropriations for costs.--There is 
        authorized to be appropriated such sums as may be necessary for 
        costs (as such term is defined in section 502 of the Federal 
        Credit Reform Act of 1990 (2 U.S.C. 661a)) of loans under this 
        Act.

SEC. 13. REGULATIONS AND IMPLEMENTATION.

    (a) Regulations.--The Secretary shall issue any regulations 
necessary to carry out this Act.
    (b) Implementation.--Pending the effectiveness of regulations 
issued pursuant to subsection (a), the Secretary shall take such action 
as may be necessary to implement this Act by notice, guidance, and 
interim rules.
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