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105TH CONGRESS
1ST SESSION
H. R. 1433
To protect the financial interests of the Federal Government through debt
restructuring and subsidy reduction in connection with multifamily hous-
ing; to enhance the effectiveness of enforcement provisions relating to
single family and multifamily housing (including amendments to the
bankruptcy code); to consolidate and reform the management of multi-
family housing programs; and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 24, 1997
Mr. LAZIO of New York (for himself and Mr. KENNEDY of Massachusetts)
(both by request), introduced the following bill; which was referred to the
Committee on Banking and Financial Services, and in addition to the
Committees on Ways and Means and the Judiciary, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee con-
cerned
A BILL
To protect the financial interests of the Federal Government
through debt restructuring and subsidy reduction in con-
nection with multifamily housing; to enhance the effec-
tiveness of enforcement provisions relating to single fam-
ily and multifamily housing (including amendments to
the bankruptcy code); to consolidate and reform the man-
agement of multifamily housing programs; and for other
purposes.
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Housing 2020: Multifamily Management Reform Act’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
TITLE I—MULTIFAMILY RESTRUCTURING
Sec. 101. Short title.
Subtitle A—Housing Provisions
Sec. 110. FHA multifamily restructuring.
Sec. 111. Section 8 contract renewals.
Sec. 112. Reuse and rescission of certain recaptured budget authority.
Subtitle B—Extension of Time for Payment of Tax Attributable to FHA
Portfolio Restructuring
Sec. 120. Extension of time for payment of tax attributable to FHA multifam-
ily restructuring.
TITLE II—HOUSING ENFORCEMENT
Sec. 201. Short title.
Sec. 202. Implementation.
Subtitle A—Single Family and Multifamily Housing
Sec. 210. MRB exemption from automatic stay provisions of Bankruptcy Code.
Sec. 211. Authorize MRB to immediately suspend mortgagees.
Sec. 212. Extension of equity skimming to other single family and multifamily
housing programs.
Sec. 213. Inclusion of criminal equity skimming as a money laundering offense.
Sec. 214. Effect of criminal equity skimming on mortgage insurance.
Sec. 215. Civil money penalties against mortgagees, lenders, and other partici-
pants in FHA programs.
Subtitle B—Multifamily Housing
Sec. 220. Civil money penalties against general partners, officers, directors, and
certain managing agents of multifamily projects.
Sec. 221. Civil money penalties for noncompliance with section 8 HAP con-
tracts.
Sec. 222. Extension of double damages remedy.
Sec. 223. Obstruction of federal audits.
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Sec. 224. Disposition of amounts recovered under the Program Fraud Civil
Remedies Act.
Sec. 225. Extension of access to records to prevent fraud and abuse.
Sec. 226. Conditions for renewal or extension of HAP contracts.
Subtitle C—FHA Single Family Housing
Sec. 230. Termination of mortgagee origination approval.
TITLE III—EXEMPTION OF HUD AND USDA MULTIFAMILY LOAN
FORECLOSURES AND RELATED ACTIONS FROM THE BANK-
RUPTCY STAY
Sec. 301. Authority to appoint receiver or take other action not stayed under
section 362(b)(8).
Sec. 302. Authority to foreclose or take other action notwithstanding the auto-
matic stay.
TITLE IV—FHA MULTIFAMILY HOUSING CONSOLIDATION AND
REFORM
Sec. 401. Short title.
Sec. 402. Implementation.
Subtitle A—FHA Multifamily Housing
Sec. 410. Basic authority.
Sec. 411. Labor standards amendment.
Sec. 412. Implementation.
Subtitle B—Extensions of Existing Authority and Other Provisions
Sec. 420. Extension of the section 221(g)(4) auction provisions.
Sec. 421. Extension of transferring excess receipts to the flexible subsidy pro-
gram.
Sec. 422. Discretionary authority to regulate rents for specific multifamily
property.
Sec. 423. Expansion of partial payment of claims authority to cover health care
facilities.
Sec. 424. Environmental protection under section 202 and section 811 pro-
grams.
Sec. 425. Assignment of regulatory agreements in connection with sale of mort-
gages held by HUD.
TITLE V—REHABILITATION GRANTS
Sec. 501. Capital grants for section 236 and other formerly insured projects.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) we have a shared national interest in creat-
ing safe, decent, and affordable housing because, for
all Americans, housing is an essential building block
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toward holding a job, getting an education, and
strengthening our communities;
(2) millions of Americans—including elderly
citizens, persons with disabilities, and low-income
families with children—have critical housing needs
that must be met in order to maintain stable, vi-
brant communities;
(3) the American people recognized this need
23 years ago when Congress and the Administration
enacted the section 8 Housing Assistance Payments
program, which millions of Americans have used as
a stepping stone toward greater stability, independ-
ence, and self-sufficiency;
(4) some 20 years after enactment, a record
number of section 8 contracts are expiring, including
1.8 million units in 1998, and 2.7 million units be-
tween 1998 and 2002;
(5) if we do not renew these contracts, 4.4 mil-
lion Americans in 1998 alone—90 percent of whom
are elderly residents, persons with disabilities, and
low-income families with children—are at risk of los-
ing their homes, because of sharp rent increases;
(6) because of the shortage of affordable hous-
ing, we cannot afford to let any of our Nation’s af-
fordable housing units become unavailable;
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(7) this challenge occurs at a time of shrinking
Federal resources, and we have an undeniable re-
sponsibility both to balance the Federal budget and
to maximize every taxpayer dollar spent;
(8) we must renew section 8 contracts in a way
that lowers excessive subsidies, protects families,
preserves neighborhoods, and ensures safe, decent,
and affordable housing until the year 2020 and be-
yond;
(9) we must also renew section 8 contracts in
a way that prevents a massive default on FHA-in-
sured mortgages;
(10) at the same time, we must ensure that
owners meet their obligations to both tenants and
the Federal Government by maintaining safe, de-
cent, and affordable living conditions;
(11) under a framework enacted by Congress,
HUD has begun major reforms to address these
problems and has begun a major overhaul of its or-
ganization, streamlining operations, improving man-
agement, building stronger partnerships with State
and local agencies, and improving its ability to take
enforcement actions where necessary to assure that
its programs serve their intended purposes;
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(12) these efforts at reform are limited by a
system of outdated rules and excessive government
regulation that hampers our ability to propose inno-
vative solutions, solve problems, and hold bad own-
ers accountable; and
(13) for America to meet its housing commit-
ments, legislation is now needed to help avert a sec-
tion 8 renewal crisis, strip away outdated rules, pro-
vide necessary enforcement tools, and empower
HUD and public housing agencies to meet the needs
of America’s families.
(b) PURPOSE.—It is the purpose of this Act—
(1) to extend affordable housing for elderly resi-
dents, persons with disabilities, and low-income fam-
ilies with children until the year 2020 and beyond;
(2) to reaffirm America’s historic commitment
to safe, decent, and affordable housing and to re-
move the obstacles to meeting that goal;
(3) to protect tenants and preserve communities
while sharply lowering costs to the American tax-
payer;
(4) to continue the complete overhaul of HUD
management;
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(5) to end excessive taxpayer subsidies of the
section 8 program and bring section 8 rents in line
with fair market value;
(6) to take the steps necessary to prevent the
default of insured section 8 properties;
(7) to create a new compact with owners of
multifamily housing in which they continue to pro-
vide safe, decent, and affordable housing in ex-
change for tax incentives that will help them prevent
default;
(8) to streamline and simplify HUD rental
housing operations by cutting excessive regulation
and consolidating FHA multifamily insurance pro-
grams into one simple, understandable, user-friendly
system;
(9) to provide more choice for tenants in a way
that creates more hope and opportunity;
(10) to achieve greater accountability of tax-
payer funds by empowering the Federal government
to take firmer, quicker, and more effective action to
crack down on fraud and abuse in HUD programs
and to pursue bad owners;
(11) to rehabilitate properties when necessary
in order to maintain safe, clean living conditions
while incurring no additional cost to taxpayers;
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(12) through these comprehensive measures, to
reform, consolidate, and strengthen enforcement of
HUD’s affordable housing programs; and
(13) to ensure safe, decent, and affordable
housing opportunities for American families well into
the next century.
TITLE I—MULTIFAMILY
RESTRUCTURING
SEC. 101. SHORT TITLE.
This subtitle may be cited as the ‘‘Housing Oppor-
tunity Act of 1997’’.
Subtitle A—Housing Provisions
SEC. 110. FHA MULTIFAMILY RESTRUCTURING.
(a) PURPOSE AND GOALS.—
(1) PURPOSE.—The purpose of the program
under this section is to permit the Secretary to pro-
tect the financial interests of the Federal govern-
ment through debt restructuring and subsidy reduc-
tion in connection with multifamily housing projects
described in subsection (c). The restructuring may
include recasting an existing mortgage insured under
the National Housing Act or execution of a new
mortgage, and the recast or new mortgage may be
insured under the National Housing Act or may be
uninsured.
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(2) GOALS.—The Secretary shall carry out the
purpose of this program, to the extent practicable,
in a manner that takes into account local housing
market conditions and addresses the goals set forth
below. In addressing the goals, the Secretary shall
have discretion to balance competing goals, as such
goals may relate to an individual project. The goals
of this program are to—
(A) maintain existing affordable housing
stock in a decent, safe, and sanitary condition;
(B) minimize adverse impacts on tenants
and neighborhoods;
(C) support fair housing strategies; and
(D) encourage responsible ownership and
management of property.
(b) NOTICE
TO LOCAL GOVERNMENT
AND TEN-
ANTS.—In carrying out this section, the Secretary shall
develop procedures to provide appropriate and timely no-
tice to the unit of general local government where the
project is located, to the tenants of the project, and to
the holder of the insured mortgage of participation by the
owner in restructuring and subsidy reduction under this
section.
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(c) PROJECT ELIGIBILITY.—This section applies to
any multifamily housing project with a mortgage insured
by the Secretary under the National Housing Act, if—
(1) the multifamily housing project is covered
in whole or in part by a project-based assistance
contract under—
(A) the new construction or substantial re-
habilitation program under section 8(b)(2) of
the United States Housing Act of 1937 (as in
effect before October 1, 1983);
(B) the property disposition program
under section 8(b) of that Act;
(C) the loan management set-aside pro-
gram under section 8(b) of that Act;
(D) the project-based certificate program
under section 8(d)(2) of that Act;
(E) section 23 of the United States Hous-
ing Act of 1937 Act (as in effect before Janu-
ary 1, 1975);
(F) the preservation program under the
Emergency Low Income Housing Preservation
Act of 1987 or the Low-Income Housing Pres-
ervation and Resident Homeownership Act of
1990;
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(G) the rent supplement program under
section 101 of the Housing and Urban Develop-
ment Act of 1965;
(H) section 8 of the United States Hous-
ing Act of 1937, following conversion from as-
sistance under section 101 of the Housing and
Urban Development Act of 1965; or
(I) section 236(f)(2) of the National Hous-
ing Act;
(2) the Secretary determines that the owner of
the multifamily housing project has not engaged in
material adverse financial or managerial actions or
omissions with regard to the project; and with re-
gard to other projects, is not engaged in such ac-
tions or omissions that would constitute a pattern of
mismanagement that would warrant suspension or
debarment by the Secretary; and
(3) the rents for the project exceed, as deter-
mined by the Secretary, market rents for the market
area in which the project is located.
(d) DESIGNEE; CONDITIONS; AUTHORIZED
AC-
TIONS.—
(1) DESIGNEE.—In carrying out this program,
the Secretary may designate State housing finance
agencies, housing agencies, nonprofit organizations,
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and other entities (including, but not limited to,
legal, accounting, and investment firms) (separately
or in conjunction with each other) that the Secretary
determines to be qualified to carry out specified ac-
tivities under this section. The Secretary, by delega-
tion, contract, cooperative agreement, or otherwise,
may enter into relationships with one or more des-
ignees, which provide for the assumption by the des-
ignee of some or all of the functions, obligations, re-
sponsibilities, and benefits of the Secretary author-
ized by subsections (d)(3)(A) and (d)(3)(B) and sub-
section (e).
(2) CONDITIONS.—The Secretary or designee
may take actions under paragraph (3) to make the
multifamily housing project financially viable at
market rents. The Secretary or designee may take
these actions when the Secretary or designee deter-
mines that the actions are economically prudent and
feasible.
(3) AUTHORIZED ACTIONS.—(A) The Secretary
or the designee may take the actions described in
subparagraph (B), subject to obtaining necessary
consent to ensure that contract rights are not abro-
gated, including consent by (i) the Government Na-
tional Mortgage Association if it owns a mortgage
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insured by the Secretary, (ii) an issuer under the
mortgage-backed securities program of the Associa-
tion, subject to the responsibilities of the issuer to
its security holders and the Association under that
program, and (iii) the parties to any contractual
agreement which the Secretary proposes to modify
or discontinue.
(B) Notwithstanding any other law, the Sec-
retary or designee may—
(i) fully or partially pay a claim for mort-
gage insurance (which may be made whether or
not the mortgage is in default and, in the case
of partial payment of a claim, may include re-
quiring a recasting of any provisions of the
mortgage (such as changing the term, interest,
or amortization) in order to accord consistency
with then-current market conditions);
(ii) remove or modify (or agree to do so)
mortgage, regulatory, use agreement, or other
restrictions with respect to a project;
(iii) purchase reinsurance or otherwise
transfer economic interests in insurance con-
tracts or premiums;
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(iv) take appropriate action to induce par-
ticipation of owners, lenders, servicers, third
parties, and other entities;
(v) provide for restructuring of the mort-
gage (which may include reduction of the out-
standing mortgage amount and prepayment of
principal to the mortgagee, if appropriate);
(vi) make payment from the appropriate
insurance fund under the National Housing Act
for activities under this subtitle, which may in-
clude payments for repairs and rehabilitation;
and
(vii) take other actions to enable the
project to be financially viable at market rents.
(C) In addition to the actions described in sub-
paragraph (B), the Secretary may provide for the re-
newal of section 8 contracts in accordance with sec-
tion 405(a) of The Balanced Budget Downpayment
Act, I.
(e) RENTAL ASSISTANCE.—
(1)(A) Except as provided in paragraph (2), in
connection with the termination of any assistance
contract described in subsection (c)(1), the Secretary
or a designee shall provide tenant-based assistance
under section 8 to—
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(i) each assisted family (other than a fam-
ily already receiving tenant-based assistance)
residing in the project at the time the assist-
ance under subsection (c) terminates; and
(ii) each very-low-income family whose rent
would increase due to restructuring or subsidy
reduction under this section and whose in-
creased rent would exceed 30 percent of the ad-
justed income of the family as determined
under section 3(a)(1) of the United States
Housing Act of 1937.
(B) Notwithstanding section 8(c)(1) and section
8(o)(1) of the United States Housing Act of 1937,
in the case of families described in subparagraph (A)
that reside in a project covered by one or more ac-
tions under this section where the reasonable rent
(which rent shall include any amount allowed for
utilities and shall not exceed comparable market
rents for the relevant housing market area) exceeds
the fair market rent limitation or the payment
standard, as applicable, the amount of assistance for
the family shall be determined based on such reason-
able rent. Accordingly, for the certificate program
under section 8(b), the maximum monthly rent
under the contract (plus any amount allowed for
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utilities) shall be such reasonable rent for the unit;
and for the voucher program under section 8(o), the
payment standard shall be deemed to be such rea-
sonable rent for the unit.
(2) Notwithstanding paragraph (1) and the re-
quirements of section 8(d)(2), the Secretary or des-
ignee, in the sole discretion of the Secretary or des-
ignee, may provide for project-based assistance, at
rents not exceeding market rents—
(A) for projects located in areas where the
Secretary or designee determines, based on
housing market indicators, such as exceptionally
low vacancy rates or lower or exceptionally high
absorption rates, that it is difficult for families
receiving tenant-based assistance to find suit-
able units; and
(B) for projects with 90 percent or more
occupancy by elderly families, disabled families,
or a combination of such families.
(f) NONDISCRIMINATION
AGAINST
CERTIFICATE
HOLDERS.—In the case of multifamily rental housing
under this section that is receiving, or (except for insur-
ance referred to in paragraph (4)) has received within two
years before the effective date of this section, the benefit
of Federal assistance from an agency of the United States,
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the owner shall not refuse to lease a reasonable number
of units to holders of certificates or vouchers under section
8 because of the status of the prospective tenants as cer-
tificate or voucher holders. The Secretary shall establish
reasonable time periods for applying the requirement of
this subsection, taking into account the total amount of
the assistance and the relative share of the assistance com-
pared to the total cost of financing, developing, rehabilitat-
ing, or otherwise assisting a project. Federal assistance
for purposes of this subsection shall mean—
(1) project-based assistance under the United
States Housing Act of 1937;
(2) assistance under title I of the Housing and
Community Development Act of 1974;
(3) assistance under title II of the Cranston-
Gonzalez National Affordable Housing Act;
(4) mortgage insurance under the National
Housing Act;
(5) low-income housing tax credits under sec-
tion 42 of the Internal Revenue Code of 1986;
(6) assistance under title IV of the Stewart B.
McKinney Homeless Assistance Act;
(7) asssistance under this section; and
(8) assistance under any other programs des-
ignated by the Secretary.
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(g) PARTICIPATION BY TENANT ORGANIZATIONS AND
NONPROFIT ORGANIZATIONS.—The Secretary shall estab-
lish procedures to facilitate the voluntary sale or trandfer
of multifamily housing projects under this section to, and
management or other participation by, tenant organiza-
tions and community-based nonprofit and public agency
purchasers meeting such reasonable qualifications as may
be established by the Secretary.
(h) DEFINITIONS.—For purposes of this section—
(1) DISABLED
FAMILY.—The term ‘‘disabled
family’’ means an individual or family that qualifies
as a disabled family under section 3(b)(3)(B) of the
United States Housing Act of 1937.
(2) ELDERLY FAMILY.—The term ‘‘elderly fam-
ily’’ means an individual or family that qualifies as
an elderly family under section 3(b)(3)(B) of the
United States Housing Act of 1937.
(3) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Housing and Urban Development.
(4) SECTION 8.—The term ‘‘section 8’’ means
section 8 of the United States Housing Act of 1937
and references to subsections of section 8 mean sub-
sections of section 8 of that Act.
(5) VERY-LOW-INCOME
FAMILY.—The term
‘‘very-low-income family’’ means a very-low-income
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family as defined in section 3(b)(2) of the United
States Housing Act of 1937.
(i) EFFECT ON OTHER AUTHORITY.—This section
does not limit the Secretary’s authority under other provi-
sions of law.
SEC. 111. SECTION 8 CONTRACT RENEWALS.
Section 405(a) of The Balanced Budget Downpay-
ment Act, I is amended by inserting at the end the follow-
ing: ‘‘Notwithstanding the preceding sentence, upon the
expiration of a contract with rent levels that exceed the
Section 8 Existing Fair Market Rents, the Secretary may
renew the contract as described in paragraphs (1), (2),
and (3).
‘‘(1) If the Secretary determines that—
‘‘(A) the primary financing or mortgage in-
surance for the multifamily housing project that
is covered by that expiring contract was pro-
vided by a unit of State government (or an
agency or instrumentality of a unit of State
government) and the financing does not involve
mortgage insurance under the National Hous-
ing Act;
‘‘(B) the project is a project financed
under section 202 of the Housing Act of 1959
or section 515 of the Housing Act of 1949; or
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‘‘(C) the project is subject to actions au-
thorized by section 110 of the Housing Oppor-
tunity Act of 1997 and would not be financially
viable at market rents even if all debt service
obligations of the mortgagor were removed or
deferred,
the Secretary, at the request of the owner and, in
the case of a project under subparagraph (A), the
unit of State government (or its agency or instru-
mentality), shall, for an otherwise eligible project,
provide project-based assistance under section 8, in
accordance with terms and conditions prescribed by
the Secretary, at rent levels that are equal to those
under the expiring contract as of the date on which
the contract expires.
‘‘(2) If the project is not covered by paragraph
(1), but is subject to actions authorized by section
110 of the Housing Opportunity Act of 1997, the
Secretary, at the request of the owner, may provide
project-based or tenant-based assistance under sec-
tion 8, in accordance with terms and conditions pre-
scribed by the Secretary, at rent levels that do not
exceed market rents. The following categories of
projects are examples of projects eligible for renewal
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with project-based assistance under this para-
graph—
‘‘(A) projects located in areas where the
Secretary or designee determine, based on hous-
ing market indicators, such as exceptionally low
vacancy rates or exceptionally high absorption
rates, that it is difficult for families receiving
tenant-based assistance to find suitable units;
and
‘‘(B) projects that have 90 percent or more
occupancy by elderly families, disabled families,
or a combination of such families.
‘‘(3) For any project subject to actions author-
ized by section 110 of the Housing Opportunity Act
of 1997, the Secretary, at the request of the owner,
may provide project-based assistance under section
8, in accordance with terms and conditions pre-
scribed by the Secretary. If the Secretary determines
to provide project-based assistance under this para-
graph, the rents shall not exceed rents approved by
the Secretary, based on an analysis of a budget for
the project, which, in any case, may not exceed rent
levels equal to those under the expiring contract as
of the date on which the contract expires. The Sec-
retary may only approve rents under this paragraph
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for projects with an aggregate number of units that
is no more than 10 percent of the units in all
projects subject to actions authorized by section 110
of the Housing Opportunity Act of 1997, minus the
number of units in projects described in paragraph
(1)(C), paragraph (2)(A), or paragraph (2)(B).’’.
SEC. 112. REUSE AND RESCISSION OF CERTAIN RECAP-
TURED BUDGET AUTHORITY.
Section 8(bb) of the United States Housing Act of
1937 is amended to read as follows:
‘‘(bb) REUSE AND RESCISSION OF CERTAIN RECAP-
TURED BUDGET AUTHORITY.—If a project-based assist-
ance contract for a project subject to actions authorized
by section 110 of the Housing Opportunity Act of 1997
is terminated or amended as part of restructuring under
section 110, the Secretary shall recapture the budget au-
thority not required for the terminated or amended con-
tract and, without regard to section 218 of the Depart-
ments of Veterans Affairs and Housing and Urban Devel-
opment, and Independent Agencies Appropriations Act,
1997, use such amounts as are necessary to provide hous-
ing assistance for the same number of families covered by
such contract for the remaining term of such contract,
under a contract providing for project-based or tenant-
based assistance. The amount of budget authority saved
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as a result of the shift to project-based or tenant-based
assistance shall be rescinded.’’.
Subtitle B—Extension of Time for
Payment of Tax Attributable to
FHA Multifamily Restructuring
SEC. 120. EXTENSION OF TIME FOR PAYMENT OF TAX AT-
TRIBUTABLE 
TO 
FHA 
MULTIFAMILY 
RE-
STRUCTURING.
Subchapter 62B of subtitle F of the Internal Revenue
Code of 1986 is amended by adding at the end the follow-
ing new section:
‘‘SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF TAX AT-
TRIBUTABLE TO FHA PORTFOLIO RESTRUC-
TURING.
‘‘(a) IN GENERAL.—
‘‘(1) DEBT
REDUCTION.—In the case of a
qualified reduction of the unpaid principal balance of
indebtedness secured by qualified section 8 housing,
the taxpayer may elect to defer the tax attributable
to the qualified reduction.
‘‘(2) GAIN FROM SALE.—In the case of a quali-
fied sale of qualified section 8 housing, the taxpayer
may elect to defer the tax attributable to the quali-
fied sale.
‘‘(b) AMOUNT OF DEFERRED TAX.—
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‘‘(1) IN GENERAL.—The tax attributable to a
qualified reduction or a qualified sale is the excess,
if any, of—
‘‘(i) the amount of the taxpayer’s tax
under section 1 or section 11 for the taxable
year (without regard to section 172(a), section
1212(a), or section 1212(b)); over
‘‘(ii) the amount of the taxpayer’s tax
under section 1 or section 11 for the taxable
year (without regard to section 172(a), section
1212(a), or section 1212(b)) determined with-
out regard to the income under section
61(a)(12) attributable to a qualified reduction
or the gain under section 1001 attributable to
a qualified sale.
‘‘(2) TAX ATTRIBUTES.—Any tax attributes uti-
lized in determining the amount of tax under para-
graph (b)(1)(i) shall be considered utilized for all
purposes of this Title.
‘‘(c) DEFERRAL PERIOD.—
‘‘(1) QUALIFIED REDUCTION.—Except as pro-
vided in subsection (d), the tax deferred pursuant to
paragraph (a)(1) shall be payable in equal annual
installments in accordance with the following table:
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Percentage of qualified re-
duction
Year of payment
Over 30 percent—less than 34
percent.
HAP contract year.
34 percent—less than 36 percent
HAP contract year + 1 year.
36 percent—less than 38 percent
HAP contract year + 2 years.
38 percent—less than 40 percent
HAP contract year + 3 years.
40 percent—less than 42 percent
HAP contract year + 4 years.
42 percent—less than 44 percent
HAP contract year + 5 years.
44 percent—less than 46 percent
HAP contract year + 6 years.
46 percent—less than 48 percent
HAP contract year + 7 years.
48 percent—less than 50 percent
HAP contract year + 8 years.
50 percent—less than 75 percent
HAP contract year + 9 years.
‘‘(2) QUALIFIED SALE.—Except as provided in
subsection (d), the tax deferred pursuant to para-
graph (a)(2) shall be payable in seven equal annual
installments beginning with the HAP contract year.
‘‘(d) ACCELERATION OF DEFERRED TAX.—Any re-
maining tax deferred under subsection (a) shall be payable
for the taxable year of the taxpayer in which any of the
following occurs—
‘‘(1) The sale or exchange of the qualified sec-
tion 8 housing property;
‘‘(2) The sale or exchange of all or a portion of
the taxpayer’s interest in a partnership or S cor-
poration that holds (or held) the qualified section 8
property (but only to the extent of the portion of the
interest sold or exchanged);
‘‘(3) The gift of all or a portion of the tax-
payer’s interest in a partnership or S corporation
that holds (or held) the qualified section 8 property
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(but only to the extent of the portion of the interest
transferred);
‘‘(4) The death of the taxpayer;
‘‘(5) A refinancing of the mortgage on the
qualified section 8 housing that is in excess of the
refinanced debt, unless the excess refinancing pro-
ceeds are used to improve the qualified section 8
housing;
‘‘(6) The failure of the qualified section 8 hous-
ing to meet the qualification as a qualified low-in-
come 
housing 
project 
as 
defined 
in 
section
42(g)(1)(B) and section 42(g)(2–8); or
‘‘(7) Any event specified in regulations pre-
scribed by the Secretary.
‘‘(e) TIME OF PAYMENT.—The due date for the pay-
ment of the installment of the tax deferred pursuant to
subsection (a) or accelerated pursuant to subsection (d)
shall be the due date (without extensions) for the tax-
payer’s return for the applicable year. For purposes of sec-
tion 6601, in the case of an election under subsection (a),
the date prescribed for payment of the installment of the
tax deferred shall be the date specified in this subsection
(e).
‘‘(f) ELECTION.—Any election under subsection (a)
shall be made not later than the time prescribed by section
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6072 for the filing of the return of tax imposed by section
1 or section 11 (including extensions thereof) for the tax-
able year in which the qualified reduction or qualified sale
occurred and shall be made in such manner as the Sec-
retary shall by regulations prescribe.
‘‘(g) DEFINITIONS.—
‘‘(1) 
QUALIFIED
REDUCTION.—The 
term
‘‘qualified reduction’’ means a reduction of more
than 30 percent but less than 75 percent of the un-
paid principal balance of indebtedness secured by
qualified section 8 housing that occurs as a result of
a payment by the Federal Housing Administration
of a claim under Title II of the National Housing
Act (as described in section 2(d) of the Housing Op-
portunity Act of 1997), provided that the reduction
occurs prior to December 31, 2000, or the date that
is 60 days prior to the first expiration of a HAP
contract with respect to the qualified section 8 hous-
ing, whichever occurs first.
‘‘(2) QUALIFIED
SALE.—The term ‘qualified
sale’ means a sale or exchange of qualified section
8 housing to an organization described in section
501(c)(3) and section 2(g) of the Housing Oppor-
tunity Act of 1997, provided that the sale occurs
prior to December 31, 2000, or the date that is 60
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days prior to the first expiration of a HAP contract
with respect to the qualified section 8 housing,
whichever occurs first.
‘‘(3) QUALIFIED
SECTION
HOUSING.—The
term ‘qualified section 8 housing’ means any multi-
family housing described in section 2(c) of the Hous-
ing Opportunity Act of 1997.
‘‘(4) UNPAID PRINCIPAL BALANCE.—The term
‘unpaid principal balance’ means unpaid principal
plus accrued and unpaid interest as of the date of
introduction of the FHA Multifamily Housing Re-
form, Consolidation, and Enforcement Act of 1997,
except that all accrued and unpaid interest shall be
considered in determining the percentage of the
qualified reduction for purposes of subsection (c)(1).
‘‘(5) HAP CONTRACT.—The term ‘HAP con-
tract’ means a contract between the owner of quali-
fied section 8 housing and the Department of Hous-
ing and Urban Development by which assistance
payments are made to the owner in accordance with
the provisions described in section 2(d) of the Hous-
ing Opportunity Act of 1997.
‘‘(6) HAP CONTRACT YEAR.—The term ‘HAP
contract year’ means the year in which the first
HAP contract with respect to the qualified section 8
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housing at the time of the qualified reduction would
have expired.
‘‘(h) EFFECTIVE DATE.—This section shall be effec-
tive upon enactment.’’.
TITLE II—HOUSING
ENFORCEMENT
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Housing Enforcement
Act of 1997’’.
SEC. 202. IMPLEMENTATION.
‘‘(a) ISSUANCE OF NECESSARY REGULATIONS.—Not-
withstanding 42 U.S.C. 3535(o) or 24 CFR part 10, the
Secretary shall issue such regulations as may be necessary
to implement any provision of this Act, and any amend-
ment made by this Act, in accordance with section 552
or 553 of title 5, United States Code, as determined by
the Secretary.
‘‘(b) USE OF EXISTING RULES.—In implementing
any provision of this Act, the Secretary may, in the Sec-
retary’s discretion, provide for the use of existing rules
to the extent appropriate, without the need for further
rulemaking.
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Subtitle A—Single Family and
Multifamily Housing
SEC. 210. MRB EXEMPTION FROM AUTOMATIC STAY PROVI-
SIONS OF BANKRUPTCY CODE.
Section 202(c)(3) of the National Housing Act is
amended by inserting at the end the following:
‘‘(F) EXEMPTION FROM BANKRUPTCY STAY.—The
stay provisions of title 11 of the United States Code shall
not preclude or limit the exercise by the Board of its right
to take an administrative action against a mortgagee as
provided in this paragraph.’’.
SEC. 211. AUTHORIZE MRB TO IMMEDIATELY SUSPEND
MORTGAGEES.
Section 202(c)(3)(C) of the National Housing Act is
amended by inserting after the first sentence the following
new sentence: ‘‘Notwithstanding paragraph (4)(A), a sus-
pension shall be effective upon issuance by the Board if
there exists adequate evidence in the determination of the
Board that immediate action is required to protect the fi-
nancial interests of the Department or the public.’’.
SEC. 212. EXTENSION OF EQUITY SKIMMING TO OTHER SIN-
GLE FAMILY AND MULTIFAMILY HOUSING
PROGRAMS.
Section 254 of the National Housing Act is amended
to read as follows:
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‘‘EQUITY SKIMMING PENALTY
‘‘Whoever, as an owner, agent, or manager, or who
is otherwise in custody, control, or possession of a multi-
family project or a 1- to 4-family residence that is security
for a mortgage note that is insured, acquired, or held by
the Secretary pursuant to the National Housing Act, or
is made pursuant to section 202 of the Housing Act of
1959 (including property still subject to section 202 pro-
gram requirements that existed before the date of enact-
ment of the Cranston-Gonzalez National Affordable Hous-
ing Act), or is insured or held pursuant to section 542
of the Housing and Community Development Act of 1992,
but is not reinsured under section 542 of the Housing and
Community Development Act of 1992, or is guaranteed,
insured, or made by the Secretary of Veterans Affairs pur-
suant to chapter 37 of title 38, United States Code, will-
fully uses or authorizes the use of any part of the rents,
assets, proceeds, income, or other funds derived from
property covered by such mortgage note for any purpose
other than to meet reasonable and necessary expenses that
include expenses approved by the Secretary if such ap-
proval is required, during a period when the mortgage note
is in default or the project is in a nonsurplus cash position
as defined by the regulatory agreement covering such
property, or the mortgagor has failed to comply with the
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provisions of such other form of regulatory control im-
posed by the Secretary, shall be fined not more than
$500,000 or imprisoned not more than 5 years, or both.’’.
SEC. 213. INCLUSION OF CRIMINAL EQUITY SKIMMING AS A
MONEY LAUNDERING OFFENSE.
Section 1956(c)(7)(D) of title 18, United States
Code, is amended by inserting ‘‘section 254 of the Na-
tional Housing Act (relating to equity skimming),’’ before
‘‘or any felony violation of the Foreign Corrupt Practices
Act’’.
SEC. 214. EFFECT OF CRIMINAL EQUITY SKIMMING ON
MORTGAGE INSURANCE.
Section 254 of the National Housing Act, as amended
by section 212, is further amended—
(1) by striking ‘‘Whoever’’ and inserting the fol-
lowing:
‘‘(a) IN GENERAL.—Whoever’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) ADDITIONAL EFFECT OF VIOLATION.—If an
owner, agent, manager, or other person who is otherwise
in custody, control, or possession of any property de-
scribed in subsection (a) is convicted of a violation of that
subsection, the Secretary may recover from such owner,
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agent, manager, or other person an amount equal to the
sum of—
‘‘(1) any amount of insurance claim paid to the
mortgagee by the Secretary with respect to the
mortgage loan for such property; and
‘‘(2) any loss incurred by the Secretary in con-
nection with such property.
If the Secretary determines that the violation contributed
to a claim or incurred loss, any recovery under this sub-
section shall be in addition to any fine, imprisonment, or
other penalty imposed under subsection (a).’’.
SEC. 215. CIVIL MONEY PENALTIES AGAINST MORTGAGEES,
LENDERS, AND OTHER PARTICIPANTS IN FHA
PROGRAMS.
(a) CHANGE TO SECTION TITLE.—The title of sec-
tion 536 of the National Housing Act is amended to read
as follows: ‘‘CIVIL
MONEY
PENALTIES
AGAINST
MORTGAGEES, LENDERS, AND
OTHER
PARTICI-
PANTS IN FHA PROGRAMS’’.
(b) EXPANSION OF PERSONS ELIGIBLE FOR PEN-
ALTY.—Section 536(a) of the National Housing Act is
amended—
(1) in paragraph (1), by revising the first sen-
tence to read as follows: ‘‘Whenever a mortgagee ap-
proved under the Act, a lender holding a contract of
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insurance under title I of this Act, or a principal, of-
ficer or employee of such mortgagee or lender, or
other person or entity participating in either an in-
sured mortgage or title I loan transaction under this
Act or providing assistance to the borrower in con-
nection with any such loan, including sellers of the
real estate involved, borrowers, closing agents, title
companies, real estate agents, mortgage brokers, ap-
praisers, loan correspondents and dealers, knowingly
and materially violates any of the applicable provi-
sions of subsection (b), the Secretary may impose a
civil money penalty on the mortgagee or lender, or
such other person or entity, in accordance with the
provisions of this section. The penalty shall be in ad-
dition to any other available civil remedy or any
available criminal penalty, and may be imposed
whether or not the Secretary imposes other adminis-
trative sanctions.’’; and
(2) in paragraph (2)—
(A) in the first sentence, by inserting ‘‘or
such other person or entity’’ after ‘‘lender’’; and
(B) in the second sentence, by striking
‘‘provision’’ and inserting ‘‘the provisions’’.
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(c) ADDITIONAL VIOLATIONS
FOR MORTGAGEES,
LENDERS, AND OTHER PARTICIPANTS
IN FHA PRO-
GRAMS.—Section 536(b) of such Act is amended—
(1) by redesignating paragraph (2) as para-
graph (3);
(2) by inserting after paragraph (1) the follow-
ing new paragraph:
‘‘(2) The Secretary may impose a civil money
penalty under subsection (a) for any knowing and
material violation by a principal, officer or employee
of a mortgagee or lender, or other participants in ei-
ther an insured mortgage or title I loan transaction
under this Act or provision of assistance to the bor-
rower in connection with any such loan, including
sellers of the real estate involved, borrowers, closing
agents, title companies, real estate agents, mortgage
brokers, appraisers, loan correspondents, and dealers
for the following—
‘‘(A) submission to the Secretary of infor-
mation that was false, in connection with any
mortgage insured under this Act, or any loan
that is covered by a contract of insurance under
title I of this Act;