I 
116TH CONGRESS 
2D SESSION 
H. R. 7809 
To require the Secretary of the Treasury to establish a HOPE Preferred 
Equity Facility to guarantee certain financial investments of commercial 
borrowers affected by COVID–19, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 29, 2020 
Mr. TAYLOR (for himself, Mr. LAWSON of Florida, and Mr. BARR) introduced 
the following bill; which was referred to the Committee on Financial Services 
A BILL 
To require the Secretary of the Treasury to establish a 
HOPE Preferred Equity Facility to guarantee certain 
financial investments of commercial borrowers affected 
by COVID–19, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Helping Open Prop-
erties Endeavor Act of 2020’’ or the ‘‘HOPE Act of 
2020’’. 
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SEC. 2. HOPE PREFERRED EQUITY FACILITY. 
(a) ESTABLISHMENT.—The Secretary of the Treas-
ury shall establish a HOPE Preferred Equity Facility to 
provide financial assistance to borrowers of commercial 
mortgages in the form of a guarantee of a purchase by 
a financial institution of a preferred equity instrument 
issued by a borrower. The Secretary shall guarantee 100 
percent of any such purchase made under this section. 
(b) ELIGIBILITY OF BORROWERS.—A borrower is eli-
gible to receive financial assistance under this section if, 
as determined by the financial institution— 
(1) the borrower’s revenue during any consecu-
tive 3-month period between March 1, 2020, and 
February 28, 2021, from the property securing the 
commercial mortgage is at least 25 percent less than 
the revenue from such property during the same 
consecutive 3-month period in the previous year; 
(2) the borrower had not received written notice 
of monetary default on the commercial mortgage 
within the previous year and failed to cure such no-
tice as of March 1, 2020; 
(3) either— 
(A) the debt service coverage ratio with re-
spect to the commercial mortgage was at least 
1.3 times on an annual basis during 2019; or 
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(B) the debt service coverage ratio with re-
spect to the commercial mortgage was at least 
1.3 times on an annual basis during both 2017 
and 2018; 
(4) the property securing the commercial mort-
gage is not owner-occupied, except to manage the 
property or de minimis occupancy as otherwise pro-
vided by the Secretary; 
(5) the borrower or a parent company of the 
borrower has not acquired the subject property after 
March 1, 2020, through a foreclosure process; and 
(6) the borrower has not already received finan-
cial assistance under this section with respect to the 
applicable property securing the commercial mort-
gage. 
(c) REQUIREMENTS
ON PREFERRED EQUITY IN-
STRUMENTS.— 
(1) IN GENERAL.—With respect to a preferred 
equity instrument purchased by a financial institu-
tion from a borrower, the purchase of which is guar-
anteed under this section— 
(A) the instrument shall be subordinate to 
perfected loans and unsecured debt; 
(B) the amount paid for such instrument 
shall be in an amount, as determined by the fi-
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nancial institution, that does not exceed 10 per-
cent of the outstanding amount owed on the 
commercial mortgage; 
(C) the purchase amount of the instrument 
shall be made available by the financial institu-
tion to the borrower in an account that the bor-
rower may draw down, in amounts and at times 
to be determined by the borrower for any pur-
pose the borrower determines may help the 
property, during the 1-year period following the 
date such purchase is made; 
(D) the instrument shall be unsecured by 
the subject property securing the commercial 
mortgage; 
(E) the instrument shall provide no right 
of foreclosure and no approval rights; 
(F) the instrument shall, except as pro-
vided under paragraph (2), have an annual in-
terest rate of 3 percent calculated on a monthly 
basis on all amounts that have been drawn from 
the account described in subparagraph (B), of 
which 0.5 percent shall be transferred to the 
Secretary of the Treasury for purposes under 
subsection (g)(4); 
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(G) any portion of the instrument may be 
redeemed by the borrower at any time with the 
financial institution, without penalty; 
(H) the instrument shall require payments 
to first be due after the end of the 2-year pe-
riod beginning on the earlier of— 
(i) the date on which all funds in the 
account described under subparagraph (B) 
have been drawn down by the borrower; or 
(ii) the end of the 1-year period begin-
ning on the date the purchase is made; 
(I) the instrument shall fully amortize over 
the 7-year period beginning on the date pay-
ments are first due; 
(J) the instrument shall require immediate 
redemption if there is more than a 50 percent 
change in the ownership of the borrower, except 
via death, compared to the date on which the 
instrument is purchased; 
(K) the instrument shall be approved in 
advance by the Secretary; and 
(L) the proceeds from such purchase may 
be used for— 
(i) expenses of the parent company re-
lated to the administration of oversight of 
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such borrower, ownership or operation of 
such borrower, or to a subsidiary entity of 
the parent company for same or similar ex-
penses; 
(ii) the benefit and operation of the 
property securing the commercial mort-
gage; 
(iii) payments of the preferred equity 
interest, including payments for principal, 
interest, insurance, taxes, utilities, fees, op-
erating expenses, and payroll expenses; and 
(iv) lender-required reserves such as 
capital expenditure reserves. 
(2) FAILURE TO MAKE PAYMENTS.— 
(A) IN GENERAL.—If a borrower fails to 
make payments due on a preferred equity in-
strument, the purchase of which is guaranteed 
under this section— 
(i) during the first year in which pay-
ments are due, the interest rate on the in-
strument shall increase to 3.5 percent for 
the remainder of the loan, beginning at the 
end of the first year; 
(ii) during the second year in which 
payments are due, the interest rate on the 
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instrument shall increase to 4.5 percent for 
the remainder of the loan, beginning at the 
end of the second year; 
(iii) during the third year in which 
payments are due, the interest rate on the 
instrument shall increase to 5.5 percent for 
the remainder of the loan, beginning at the 
end of the third year; 
(iv) during the fourth year in which 
payments are due, the interest rate on the 
instrument shall increase to 6.5 percent for 
the remainder of the loan, beginning at the 
end of the fourth year; 
(v) during the fifth year in which pay-
ments are due, the interest rate on the in-
strument shall increase to 7.5 percent for 
the remainder of the loan, beginning at the 
end of the fifth year; 
(vi) during the sixth year in which 
payments are due, the interest rate on the 
instrument shall increase to 8.5 percent for 
the remainder of the loan, beginning at the 
end of the sixth year; 
(vii) during the seventh year in which 
payments are due, the interest rate on the 
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instrument shall increase to 9.5 percent for 
the remainder of the loan, beginning at the 
end of the seventh year; and 
(viii) after the last year in which pay-
ments are due under the amortization 
schedule, the interest rate on the instru-
ment shall increase to 13 percent perma-
nently, beginning at the end of such year. 
(B) CURE
PERIOD.—Before any interest 
rate increase required under subparagraph (A), 
the financial institution shall provide notice to 
the borrower within five calendar days. The 
borrower shall have a 30-day cure period before 
such increase takes effect, beginning on the 
date of such notice. 
(C) 
INCREASED
INTEREST
OWED
TO 
TREASURY.—With respect to any interest owed 
on a preferred equity instrument under sub-
paragraph (A) above 2.5 percent, such interest 
shall be owed to the Department of the Treas-
ury. 
(D) TREATMENT OF FINANCIAL INSTITU-
TION FAILURE TO ASSESS INTEREST.—If the fi-
nancial institution fails to assess interest re-
quired under this paragraph on the borrower, 
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or fails to notify the borrower of such required 
interest for a period of 3 months or more, the 
financial institution shall only be eligible to re-
ceive half of the service fee described under 
subsection (d)(1) for the period of such failure. 
(d) PAYMENTS TO FINANCIAL INSTITUTIONS.— 
(1) SERVICING FEE.—The Secretary shall pay 
each financial institution that purchases a preferred 
equity instrument, the purchase of which is guaran-
teed under this section, an annual servicing fee in an 
amount equal to 1 percent of the outstanding 
amount on such instrument, paid annually. 
(2) PAY FOR ORIGINATION.— 
(A) IN GENERAL.—The Secretary shall pay 
a financial institution described under para-
graph (1) at a rate, based on the covered 
amount, of— 
(i) 5 percent for a covered amount of 
not more than $350,000; 
(ii) 3 percent for a covered amount of 
more 
than 
$350,000 
and 
less 
than 
$2,000,000; and 
(iii) 1 percent for a covered amount of 
not less than $2,000,000. 
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(B) EXCEPTION
IN
CASES
OF
LOSS.—If 
the borrower defaults on 90 percent or more of 
the amount drawn down, the financial institu-
tion shall repay any reimbursement amount 
paid pursuant to subparagraph (A). 
(C) COVERED AMOUNT DEFINED.—In this 
paragraph, with respect to a preferred equity 
instrument, the term ‘‘covered amount’’ means 
the full amount made available to the borrower 
at the time the instrument is purchased, re-
gardless of whether the borrower has drawn 
down the entire amount. 
(e) PROTECTION
OF GOVERNMENT INTERESTS.— 
With respect to a borrower who issues a preferred equity 
instrument, the purchase of which is guaranteed under 
this section, until such time as the instrument is re-
deemed, the parent company of the borrower may not re-
move value from the borrower, including— 
(1) by paying any dividend; 
(2) with respect to any affiliated property of the 
borrower for which there is a manager, if the man-
ager and the borrower are related, by increasing any 
fee paid to the manager compared to the amount of 
such fee before such instrument is purchased; 
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(3) with respect to an affiliate of the owner 
property, by procuring the performance of services 
or selling goods that are not ordinary, necessary, 
and at market rates; or 
(4) by lending money to any owner of the bor-
rower or to any related person. 
(f) TREASURY AUTHORITY AND DUTIES.— 
(1) APPROVAL DEADLINE.—The Secretary shall 
approve or deny any preferred equity instrument 
submitted under this section to the Secretary within 
30 calendar days of such submission. 
(2) PURCHASE AND SALE AUTHORITY.—With 
respect to a preferred equity instrument, the pur-
chase of which is guaranteed under this section, the 
Secretary may, at the Secretary’s discretion— 
(A) purchase the preferred equity instru-
ment from the applicable financial institution 
any time after the end of 7-year period begin-
ning on the date payments are first due with 
respect to the instrument; 
(B) sell any preferred equity instrument 
purchased by the Secretary under subparagraph 
(A); and 
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