SEC. 121. TECHNICAL AND CONFORMING AMENDMENTS.
(a) PARTIAL PAYMENT OF CLAIMS ON MULTIFAMILY
HOUSING PROJECTS.—Section 541 of the National Hous-
ing Act (12 U.S.C. 1735f–19) is amended—
(1) in subsection (a), in the subsection heading,
by striking ‘‘AUTHORITY’’ and inserting ‘‘DE-
FAULTED MORTGAGES’’;
(2) by redesignating subsection (b) as sub-
section (c); and
(3) by inserting after subsection (a) the follow-
ing new subsection:
‘‘(b) EXISTING MORTGAGES.—Notwithstanding any
other provision of law, the Secretary (acting through the
Director of the Office of Multifamily Housing Assistance
Restructuring), in connection with a mortgage restructur-
ing under section 112 of the Multifamily Housing Restruc-
turing and Affordability Act of 1997, may make a one
time, nondefault partial payment of the claim under the
mortgage insurance contract, which shall include a deter-
mination by the Secretary (through the Director) or the
participating administrative entity, in accordance with
such Act, of the market value of the project and a restruc-
turing of the mortgage, under such terms and conditions
as the Secretary (through the Director) may establish.’’.
(b) REUSE AND RESCISSION OF CERTAIN RECAP-
TURED BUDGET AUTHORITY.—Section 8(bb) of the Unit-
ed States Housing Act of 1937 (42 U.S.C. 1437f(bb)) is
amended to read as follows:
‘‘(bb) REUSE AND RESCISSION OF CERTAIN RECAP-
TURED BUDGET AUTHORITY.—If a project-based assist-
ance contract for an eligible multifamily housing project
subject to actions authorized under title I of the Multifam-
ily Housing Restructuring and Affordability Act of 1997
is terminated or amended as part of restructuring under
section 112 of such Act, the Secretary shall recapture the
budget authority not required for the terminated or
amended contract and, without regard to section 218 of
the Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies Appro-
priations Act of 1997, use such amounts as are necessary
to provide housing assistance for the same number of fam-
ilies 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 as a result of the shift to project-based
or tenant-based assistance shall be rescinded.’’.
Subtitle B—Office of Multifamily
Housing Assistance Restructuring
SEC. 141. ESTABLISHMENT OF OFFICE OF MULTIFAMILY
HOUSING ASSISTANCE RESTRUCTURING.
There is hereby established an office within the De-
partment of Housing and Urban Development, which shall
be known as the Office of Multifamily Housing Assistance
Restructuring.
SEC. 142. DIRECTOR.
(a) APPOINTMENT.—The Office shall be under the
management of a Director, who shall be appointed not
later than 30 days after the date of the enactment of this
Act by the President, by and with the advice and consent
of the Senate, from among individuals who are citizens
of the United States, have a demonstrated understanding
of financing and mortgage restructuring for affordable
multifamily housing.
(b) TERM.—The Director shall be appointed for a
term of 5 years.
(c) VACANCY.—A vacancy in the position of Director
shall be filled in the manner in which the original appoint-
ment was made under subsection (a).
(d) SERVICE AFTER END OF TERM.—A Director
may serve after the expiration of the term for which the
Director was appointed until a successor Director has
been appointed.
(e) DEPUTY DIRECTOR.—
(1) IN GENERAL.—The Office shall have a Dep-
uty Director who shall be appointed by the Director
from among individuals who are citizens of the Unit-
ed States, have a demonstrated understanding of fi-
nancing and mortgage restructuring for affordable
multifamily housing.
(2) FUNCTIONS.—The Deputy Director shall
have such functions, powers, and duties as the Di-
rector shall prescribe. In the event of the death, res-
ignation, sickness, or absence of the Director, the
Deputy Director shall serve as acting Director until
the return of the Director or the appointment of a
successor pursuant to subsection (c).
SEC. 143. DUTY AND AUTHORITY OF DIRECTOR.
(a) DUTY.—The duty of the Director shall be to ad-
ministrate and monitor the program under subtitle A of
mortgage and rental assistance restructuring for eligible
multifamily housing projects.
(b) AUTHORITY EXCLUSIVE OF SECRETARY.—The
Director is authorized, without the review or approval of
the Secretary, to make such determinations, take such ac-
tions, issue such regulations, and perform such functions
assigned to the Director under law as the Director deter-
mines necessary to carry out such functions, except as spe-
cifically provided in subsection (c).
(c) AUTHORITY SUBJECT TO APPROVAL OF DIREC-
TOR.—Determinations, actions, and functions carried out
by the Director relating to the review and final approval
of any mortgage restructuring and rental assistance suffi-
ciency plan described in section 112(a)(6)(D) shall be sub-
ject to the review and approval of the Secretary.
(d) DELEGATION
OF AUTHORITY.—The Director
may delegate to officers and employees of the Office (but
not to contractors, subcontractors, or consultants) any of
the functions, powers, and duties of the Director, as the
Director considers appropriate.
(e) INDEPENDENCE IN PROVIDING INFORMATION TO
CONGRESS.—The Director shall not be required to obtain
the prior approval, comment, or review of any officer or
agency of the United States before submitting to the Con-
gress, or any committee or subcommittee thereof, any re-
ports, recommendations, testimony, or comments if such
submissions include a statement indicating that the views
expressed therein are those of the Director and do not nec-
essarily represent the views of the Secretary or the Presi-
dent.
SEC. 144. PERSONNEL.
(a) OFFICE PERSONNEL.—The Director may appoint
and fix the compensation of such officers and employees
of the Office as the Director considers necessary to carry
out the functions of the Director and the Office. Officers
and employees may be paid without regard to the provi-
sions of chapter 51 and subchapter III of chapter 53 of
title 5, United States Code, relating to classification and
General Schedule pay rates.
(b) COMPARABILITY OF COMPENSATION WITH FED-
ERAL BANKING AGENCIES.—In fixing and directing com-
pensation under subsection (a), the Director shall consult
with, and maintain comparability with compensation of of-
ficers and employees of the Federal Deposit Insurance
Corporation.
(c) PERSONNEL OF OTHER FEDERAL AGENCIES.—
In carrying out the duties of the Office, the Director may
use information, services, staff, and facilities of any execu-
tive agency, independent agency, or department on a reim-
bursable basis, with the consent of such agency or depart-
ment.
(d) REIMBURSEMENT OF HUD.—The Director shall
reimburse the Department of Housing and Urban Devel-
opment for reasonable costs incurred by the Department
that are directly related to the operations of the Office.
(e) OUTSIDE EXPERTS
AND CONSULTANTS.—The
Director may procure temporary and intermittent services
under section 3109(b) of title 5, United States Code.
(f) LIMITATION.—
(1) PROHIBITION
OF
INCREASE
IN
PERSON-
NEL.—Notwithstanding any other provision of law,
in each fiscal year, the total full-time-equivalent em-
ployment otherwise authorized in the Department of
Housing and Urban Development (excluding full-
time-equivalent employment in the Office of Multi-
family Housing Assistance Restructuring) for such
fiscal year shall be reduced by one for each full-time-
equivalent position in the Office in such fiscal year.
(2) SAVINGS.—Notwithstanding any other pro-
vision of law, in any fiscal year in which paragraph
(1) results in reductions in the full-time-equivalent
employment in the Department, of the amount made
available in appropriation Acts for such fiscal year
for salaries and expenses of the Department, an
amount equal to the sum of the salaries and ex-
penses for the number of full-time-equivalent posi-
tions by which employment in the Department is re-
duced under paragraph (1) in such fiscal year shall
not be available to the Secretary for salaries and ex-
penses and shall be covered into the General Fund
of the Treasury.
(3) MONITORING.—The Director of the Office
of Management and Budget shall monitor employ-
ment levels in the Department of Housing and
Urban Development and take appropriate actions to
ensure compliance with the requirements under
paragraphs (1) and (2).
SEC. 145. FUNDING.
(a) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated to the Director for carrying
out the responsibilities of the Director under this title and
costs and expenses of the Office such sums as may be nec-
essary from the General Insurance Fund and the Special
Risk Insurance Fund for fiscal years 1998, 1999, 2000,
2001, 20002, and 2003.
(b) BUDGET AND FINANCIAL REPORTS.—
(1) FINANCIAL OPERATING PLANS AND FORE-
CASTS.—Before the beginning of each fiscal year,
the Director shall submit a copy of the financial op-
erating plans and forecasts for the Office to the Sec-
retary and the Director of the Office of Management
and Budget.
(2) REPORTS
OF
OPERATIONS.—As soon as
practicable after the end of each fiscal year and each
quarter thereof, the Director shall submit a copy of
the report of the results of the operations of the Of-
fice during such period to the Secretary and the Di-
rector of the Office of Management and Budget.
(3) INCLUSION IN PRESIDENT’S BUDGET.—The
annual plans, forecasts, and reports required under
this subsection shall be included (A) in the Budget
of the United States in the appropriate form, and
(B) in the congressional justifications of the Depart-
ment of Housing and Urban Development for each
fiscal year in a form determined by the Secretary.
SEC. 146. LIMITATION ON SUBSEQUENT EMPLOYMENT.
Neither the Director nor any former officer or em-
ployee of the Office who, while employed by the Office,
was compensated at a rate in excess of the lowest rate
for a position classified higher than GS–15 of the General
Schedule under section 5107 of title 5, United States
Code, may, during the 2-year period beginning on the date
of separation from employment by the Office, accept com-
pensation from any party having any financial interest in
any mortgage restructuring and rental assistance suffi-
ciency plan under subtitle A or comparable matter in
which the Director or such officer or employee had direct
participation or supervision.
SEC. 147. AUDITS BY GAO.
The Comptroller General shall audit the operations
of the Office in accordance with generally accepted Gov-
ernment auditing standards. All books, records, accounts,
reports, files, and property belonging to, or used by, the
Office shall be made available to the Comptroller General.
Audits under this section shall be conducted annually for
the first 2 fiscal years following the date of the enactment
of this Act and as appropriate thereafter.
SEC. 148. REGULATIONS AND ORDERS.
(a) INTERIM REGULATIONS.—Not later than the ex-
piration of the 6-month period beginning upon the ap-
pointment of the Director under section 142(a), the Direc-
tor shall, by notice published in the Federal Register, issue
interim regulations necessary to carry out the duties of
the Director under this title. Such regulations shall take
effect upon issuance.
(b) FINAL REGULATIONS.—
(1) IN
GENERAL.—The Director shall issue
final regulations necessary to carry out the duties of
the Director under this title not later than the expi-
ration of the 12-month period beginning upon the
appointment of the Director under section 142(a).
Except as provided in paragraph (2), the final regu-
lations shall be issued after notice and opportunity
for public comment in accordance with the procedure
under section 553 of title 5, United States Code, ap-
plicable to substantive rules (notwithstanding sub-
sections (a)(2), (b)(B), and (d)(3) of such section).
The Director may not publish any proposed regula-
tion for comment unless, not less than 15 days be-
fore it is published for comment, the Director has
submitted a copy of the regulation, in the form it is
intended to be proposed, to the House of Represent-
atives and the Senate.
(2) EXCEPTION.—Any final regulations estab-
lishing guidelines which are specifically required
under this title to be established by the Director
shall not be subject to the notice and comment pro-
cedure referred to in paragraph (1).
SEC. 149. TERMINATION.
(a) REPEAL.—Subtitle A is repealed effective October
1, 2003.
(b) EXCEPTION.—Notwithstanding the repeal under
subsection (a), the provisions of subtitle A (as in effect
immediately before such repeal) shall apply with respect
to projects and programs for which binding commitments
have been entered into under this Act before October 1,
2003.
(c) TERMINATION OF DIRECTOR AND OFFICE.—The
Office of Multifamily Housing Assistance Restructuring
and the position of Director of such Office shall terminate
upon September 30, 2003.
(d) TRANSFER OF AUTHORITY.—Effective upon the
termination under subsection (c), any authority and re-
sponsibilities assigned by subtitle A to the Director that
remain applicable after such date pursuant to subsection
(b) are transferred to the Secretary.
Subtitle C—Contracts Expiring
After Termination of Program
SEC. 161. TENANT-BASED ASSISTANCE.
(a) IN GENERAL.—In the case of a multifamily hous-
ing project described in subsection (b), the Secretary shall,
upon expiration of the contract referred to in subsection
(b)(2), provide tenant-based rental assistance under sec-
tion 8(o) of the United States Housing Act of 1937, sub-
ject to the availability of amounts in appropriation Acts,
to each family residing in a unit in the project upon the
expiration date of the expiring contract which unit was
assisted under the contract.
(b) COVERED PROJECTS.—A multifamily housing
project described in this subsection is a project that—
(1) has rents which, on an average per unit
basis at the time of the expiration of the contract re-
ferred to paragraph (2), exceed the rent of com-
parable properties, as determined by the Secretary;
and
(2) is subject to an expiring contract (as such
term is defined in section 103, notwithstanding sec-
tion 149(a))—
(A) for which the expiration date is Octo-
ber 1, 2003 or thereafter; and
(B) that is not renewed by the Secretary.
TITLE II—Miscellaneous
Provisions
SEC. 201. REHABILITATION GRANTS FOR CERTAIN IN-
SURED PROJECTS.
Section 236 of the National Housing Act (12 U.S.C.
1715z–1) is amended by adding at the end the following:
‘‘(s) REHABILITATION GRANTS.—
‘‘(1) IN GENERAL.—The Director of the Office
of Multifamily Housing Assistance Restructuring of
the Department of Housing and Urban Development
may make grants for the capital costs of rehabilita-
tion to owners of projects that meet the eligibility
and other criteria set forth in, and in accordance
with, this subsection.
‘‘(2) PROJECT ELIGIBILITY.—A project may be
eligible for capital grant assistance under this sub-
section—
‘‘(A) if—
‘‘(i) the project was insured under any
provision of title II of the National Hous-
ing Act;
‘‘(ii) the project was assisted under
section 8 of the United States Housing Act
of 1937 on the date of enactment of the
Multifamily Housing Restructuring and
Affordability Act of 1997; and
‘‘(iii) the project mortgage was not
held by a State agency as of the date of
the enactment of the Multifamily Housing
Restructuring and Affordability Act of
1997;
‘‘(B) if the project owner agrees to main-
tain the housing quality standards that were in
effect immediately prior to the extinguishment
of the mortgage insurance;
‘‘(C) if the Director determines that the
owner or purchaser of the project has not en-
gaged in material adverse financial or manage-
rial actions or omissions with regard to this
project (or with regard to other similar projects
if the Director determines that those actions or
omissions constitute a pattern of mismanage-
ment that would warrant suspension or debar-
ment by the Secretary), including—
‘‘(i) materially violating any Federal,
State, or local law or regulation with re-
gard to this project or any other federally
assisted project, after receipt of notice and
an opportunity to cure;
‘‘(ii) materially breaching a contract
for assistance under section 8 of the Unit-
ed States Housing Act of 1937, after re-
ceipt of notice and an opportunity to cure;
‘‘(iii) materially violating any applica-
ble regulatory or other agreement with the
Secretary, the Director, or a participating
administrative entity, after receipt of no-
tice and an opportunity to cure;
‘‘(iv) repeatedly failing to make mort-
gage payments at times when project in-
come was sufficient to maintain and oper-
ate the property;
‘‘(v) materially failing to maintain the
property according to housing quality
standards after receipt of notice and a rea-
sonable opportunity to cure; or
‘‘(vi) committing any act or omission
that would warrant suspension or debar-
ment by the Secretary; and
‘‘(D) if the project owner demonstrates to
the satisfaction of the Director—
‘‘(i) using information in a com-
prehensive needs assessment, that capital
grant assistance is needed for rehabilita-
tion of the project; and
‘‘(ii) that project income is not suffi-
cient to support such rehabilitation.
‘‘(3) ELIGIBLE PURPOSES.—Grants under this
subsection may be used only for the purposes of—
‘‘(A) payment into project replacement re-
serves;
‘‘(B) providing a fair return on equity in-
vestment;
‘‘(C) debt service payments on non-Federal
rehabilitation loans; and
‘‘(D) payment of nonrecurring mainte-
nance and capital improvements, under such
terms and conditions as are determined by the
Secretary.
‘‘(4) GRANT AGREEMENT.—
‘‘(A) IN
GENERAL.—The Director shall
provide in any grant agreement under this sub-
section that the grant shall be terminated if the
project fails to meet housing quality standards,
as applicable on the date of enactment of the
Multifamily Housing Restructuring and Afford-
ability Act of 1997, or any successor standards
for the physical conditions of projects, as are
determined by the Director.
‘‘(B) 
AFFORDABILITY
AND
USE
CLAUSES.—The Director shall include in a
grant agreement under this subsection a re-
quirement for the project owners to maintain
such affordability and use restrictions as the
Director determines to be appropriate.
‘‘(C) OTHER TERMS.—The Director may
include in a grant agreement under this sub-
section such other terms and conditions as the
Secretary determines to be necessary.
‘‘(5) DELEGATION.—
‘‘(A) IN GENERAL.—In addition to the au-
thorities set forth in subsection (p), the Direc-
tor may delegate to State and local govern-
ments the responsibility for the administration
of grants under this subsection. Any such gov-
ernment may carry out such delegated respon-
sibilities directly or under contracts.
‘‘(B) ADMINISTRATION
COSTS.—Notwith-
standing paragraph (3), amounts of grants
under this subsection may be made available for
costs of administration under subparagraph
(A).
‘‘(6) FUNDING.—
‘‘(A) IN GENERAL.—For purposes of carry-
ing out this subsection, the Secretary may make
available to the Director amounts that are un-
obligated amounts for contracts for interest re-
duction payments—
‘‘(i) that—
‘‘(I) were previously obligated for
contracts for interest reduction pay-
ments under this section until insur-
ance under this section was extin-
guished;
‘‘(II) become available as a result
of the outstanding principal balance of
a mortgage having been written down;
or
‘‘(III) are uncommitted balances
within the limitation on maximum
payments that may have been, before
the date of enactment of the Multi-
family Housing Restructuring and Af-
fordability Act of 1997, permitted in
any fiscal year;
‘‘(ii) that become available pursuant
to section 114(c) of the Multifamily Hous-
ing Restructuring and Affordability Act of
1997; or
‘‘(iii) that become available from any
other source.
‘‘(B) LIQUIDATION AUTHORITY.—The Di-
rector may liquidate obligations entered into
under this subsection under section 1305(10) of
title 31, United States Code.
‘‘(C) CAPITAL GRANTS.—In making capital
grants under the terms of this subsection, using
the amounts that the Secretary has recaptured
from contracts for interest reduction payments,
the Director shall ensure that the rates and
amounts of outlays do not at any one time ex-
ceed the rates and amounts of outlays that
would have been experienced if the insurance
had not been extinguished or the principal
amount had not been written down, and the in-
terest reduction payments that the Secretary
has recaptured had continued in accordance
with the terms in effect immediately prior to
such extinguishment or write-down.’’.
SEC. 202. AMENDMENT TO HOUSING FINANCE AGENCY
MULTIFAMILY HOUSING FINANCING PILOT
PROGRAM.
Section 542(c)(2) of the Housing and Community
Development Act of 1992 (12 U.S.C. 1707 note) is
amended by adding at the end the following new subpara-
graph:
‘‘(G) MITIGATION
OF
UNCERTAINTIES.—
An agreement under subparagraph (A) may
provide for the Secretary to assume an appro-
priate share of the risk of a loans for affordable
multifamily housing in a manner that mitigates
uncertainties regarding actions of the Federal
Government (including the possible failure to
renew short-term subsidy contracts).’’.
SEC. 
203. 
CONVERSION 
OF 
DIRECT 
LOAN 
ELDERLY
PROJECTS TO PROJECT RENTAL ASSISTANCE
CONTRACTS.
(a) CONVERSION.—Subject to the agreement of the
owner of a project assisted under section 202 of the Hous-
ing Act of 1959 (12 U.S.C. 1701q) (as in effect before
the enactment of the Cranston-Gonzalez National Afford-
able Housing Act) and section 8 of the United States
Housing Act of 1937, the Secretary may convert the fi-
nancing of any such housing project to financing under
section 202 of the Housing Act of 1959 (12 U.S.C. 1701q)
as amended by section 801 of the Cranston-Gonzalez Na-
tional Affordable Housing Act.
(b) DEBT FORGIVENESS.—
(1) IN GENERAL.—Subject to paragraph (2), in
converting the financing of any housing project pur-
suant to subsection (a), the Secretary shall cancel
any indebtedness to the Secretary relating to any re-
maining principal and interest under any loan for
the project made under section 202 of the Housing
Act of 1959 (as in effect before the enactment of the
Cranston-Gonzalez National Affordable Housing
Act).
(2) BUDGET ACT COMPLIANCE.—The authority
of the Secretary to cancel indebtedness under para-
graph (1) shall be effective only to the extent or in
such amounts as are or have been provided in ad-
vance in appropriation Acts.
(c) CANCELLATION OF SECTION 8 CONTRACTS.—In
converting the financing of any housing project pursuant
to subsection (a), the Secretary shall cancel any contract
for rental assistance for the project under section 8 of the
United States Housing Act of 1937. Amounts previously
obligated for such contract that remain unexpended shall
be used to provide rental assistance for the project, under
a contract for project rental assistance under section
202(c)(2) of the Housing Act of 1959, which has the same
duration as remainder of the section 8 contract canceled.
Any remaining amounts shall be recaptured by the Sec-
retary.
(d) WAIVER AUTHORITY.—The Secretary may waive
the applicability of any provision of law or regulation nec-
essary to carry out this section.
SEC. 204. RENT LIMITATION FOR NON-FHA MULTIFAMILY
HOUSING PROJECTS RECEIVING SECTION 8
PROJECT-BASED ASSISTANCE.
(a) IN GENERAL.—An owner of qualified housing
may provide, with respect to such housing, that, notwith-
standing section 3(a)(1) of the United States Housing Act
of 1937, the rent paid by tenants of assisted dwelling units
in such housing shall be the lower of the amount provided
under such section 3(a)(1) or 60 percent of the fair mar-
ket rental established pursuant to section 8(c)(1) of such
Act for the area and size of dwelling unit occupied by the
tenant. Upon the request of an owner, the Secretary may
provide for rent limitations under this section for qualified
housing that are higher or lower than 60 percent of the
fair market rental on the basis of the Secretary’s finding
that such variations are necessary to carry out the provi-
sions of this section and are consistent with the purposes
of this section.
(b) QUALIFIED HOUSING.—For purposes of this sec-
tion, the term ‘‘qualified housing’’ means housing that
complies with all of the following requirements:
(1) Section 8 project-based assistance is pro-
vided for all of the dwelling units in the housing, in
an amount that is equal to or greater than 120 per-
cent of the applicable fair market rental.
(2) The housing is not subject to a mortgage
that is insured under the National Housing Act.
(3) The housing consists of 600 dwelling units
or more.
(4) At the time the owner first limits rents pur-
suant to subsection (a), not more than 15 percent of
the tenants of the housing have rents that exceed
the maximum amount allowable pursuant to the lim-
itation under subsection (a).
(c) LIMITATION BASED ON TENANTS INCOMES.—If,
at any time, in a housing project for which section 8
project-based assistance is provided, more than 40 percent
of the tenants would be paying a rent limited by 60 per-
cent of the fair market rental, any rent limitation applica-
ble under this section to such project shall not thereafter
apply to any tenant not subject at such time to the rent
limitation, until the percentage of tenants in the project
eligible for such limited rent decreases to below 40 per-
cent.
(d) 
INAPPLICABILITY
TO
ELDERLY-ONLY
PROJECTS.—The provisions of this section shall not apply
with respect to any housing project that is designated for
occupancy only by elderly families.
SEC. 205. GAO REPORT ON SECTION 8 RENTAL ASSISTANCE
FOR MULTIFAMILY HOUSING PROJECTS.
Not later than the expiration of the 18-month period
beginning on the date of the enactment of this Act, the
Comptroller General of the United States shall submit a
report to the Congress analyzing—
(1) the financial and physical condition of mul-
tifamily housing projects for which project-based as-
sistance is provided under section 8 of the United
States Housing Act of 1937, but which are not sub-
ject to a mortgage insured or held by the Secretary
under the National Housing Act;
(2) the financial and physical condition of all el-
igible multifamily housing projects that are not sub-
ject to mortgage restructuring and rental assistance
sufficiency plans under title I of this Act because the
projects meet the requirements under section
114(a)(2) of this Act;
(3) how State and local housing finance agen-
cies have benefited financially from the rental assist-
ance program under section 8 of the United States
Housing Act of 1937, including any benefits from
fees, bond financings, and mortgage refinancings;
and
(4) the extent and effectiveness of State and
local housing finance agencies oversight of the phys-
ical and financial management and condition of mul-
tifamily housing projects for which project-based as-
sistance is provided under section 8 of the United
States Housing Act of 1937.
TITLE III—ENFORCEMENT
PROVISIONS
SEC. 301. IMPLEMENTATION.
(a) ISSUANCE OF NECESSARY REGULATIONS.—The
Secretary shall issue such regulations as the Secretary de-
termines to be necessary to implement this title and the
amendments made by this title in accordance with section
552 or 553 of title 5, United States Code, as determined
by the Secretary.
(b) USE
OF EXISTING REGULATIONS.—In imple-
menting any provision of this title, the Secretary may, in
the discretion of the Secretary, provide for the use of exist-
ing regulations to the extent appropriate, without rule-
making.
Subtitle A—FHA Single Family and
Multifamily Housing
SEC. 311. AUTHORIZATION TO IMMEDIATELY SUSPEND
MORTGAGEES.
Section 202(c)(3)(C) of the National Housing Act
(12 U.S.C. 1708(c)(3)(C)) is amended by inserting after
the first sentence the following: ‘‘Notwithstanding para-
graph (4)(A), a suspension shall be effective upon issuance
by the Board if the Board determines that there exists
adequate evidence that immediate action is required to
protect the financial interests of the Department or the
public.’’.
SEC. 312. EXTENSION OF EQUITY SKIMMING TO OTHER SIN-
GLE FAMILY AND MULTIFAMILY HOUSING
PROGRAMS.
Section 254 of the National Housing Act (12 U.S.C.
1715z–19) is amended to read as follows:
‘‘SEC. 254. EQUITY SKIMMING PENALTY.
‘‘(a) IN GENERAL.—Whoever, as an owner, agent, or
manager, or who is otherwise in custody, control, or pos-
session of a multifamily project or a 1- to 4-family resi-
dence that is security for a mortgage note that is described
in subsection (b), willfully uses or authorizes the use of
any part of the rents, assets, proceeds, income, or other
funds derived from property covered by that mortgage
note for any purpose other than to meet reasonable and
necessary expenses that include expenses approved by the
Secretary if such approval is required, in a period during
which the mortgage note is in default or the project is
in a nonsurplus cash position, as defined by the regulatory
agreement covering the property, shall be fined not more
than $500,000, imprisoned not more than 5 years, or
both.
‘‘(b) MORTGAGE NOTES DESCRIBED.—For purposes
of subsection (a), a mortgage note is described in this sub-
section if it—
‘‘(1) is insured, acquired, or held by the Sec-
retary pursuant to this Act;
‘‘(2) is made pursuant to section 202 of the
Housing Act of 1959 (including property still subject
to section 202 program requirements that existed
before the date of enactment of the Cranston-Gon-
zalez National Affordable Housing Act); or
‘‘(3) 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.’’.
SEC. 313. CIVIL MONEY PENALTIES AGAINST MORTGAGEES,
LENDERS, AND OTHER PARTICIPANTS IN FHA
PROGRAMS.
(a) AMENDMENT TO SECTION HEADING.—Section
536 of the National Housing Act (12 U.S.C. 1735f–14)
is amended by striking the section heading and all that
follows through ‘‘(a) IN GENERAL.—’’ and inserting the
following:
‘‘SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGA-
GEES, LENDERS, AND OTHER PARTICIPANTS
IN FHA PROGRAMS.
‘‘(a) IN GENERAL.—’’.
(b) EXPANSION OF PERSONS ELIGIBLE FOR PEN-
ALTY.—Section 536(a) of the National Housing Act (12
U.S.C. 1735f–14(a)) is amended—
(1) in paragraph (1), by striking the first sen-
tence and inserting the following: ‘‘If a mortgagee
approved under the Act, a lender holding a contract
of insurance under title I, or a principal, officer, or
employee of such mortgagee or lender, or other per-
son or entity participating in either an insured mort-
gage or title I loan transaction under this Act or
providing assistance to the borrower in connection
with any such loan, including sellers of the real es-
tate involved, borrowers, closing agents, title compa-
nies, real estate agents, mortgage brokers, apprais-
ers, loan correspondents and dealers, knowingly and
materially violates any applicable provision of sub-
section (b), the Secretary may impose a civil money
penalty on the mortgagee or lender, or such other
person or entity, in accordance with this section.
The penalty under this paragraph shall be in addi-
tion to any other available civil remedy or any avail-
able criminal penalty, and may be imposed whether
or not the Secretary imposes other administrative
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’’.
(c) ADDITIONAL VIOLATIONS
FOR MORTGAGEES,
LENDERS, AND OTHER PARTICIPANTS
IN FHA PRO-
GRAMS.—Section 536(b) of the National Housing Act (12
U.S.C. 1735f–14(b)) is amended—
(1) by redesignating paragraph (2) as para-
graph (3);
(2) by inserting after paragraph (1) the follow-
ing:
‘‘(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—
‘‘(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;
‘‘(B) falsely certifying to the Secretary or
submitting to the Secretary a false certification
by another person or entity; or
‘‘(C) failure by a loan correspondent or
dealer to submit to the Secretary information
which is required by regulations or directives in
connection with any loan that is covered by a
contract of insurance under title I.’’; and
(3) in paragraph (3), as redesignated, by strik-
ing ‘‘or paragraph (1)(F)’’ and inserting ‘‘or (F), or
paragraph (2) (A), (B), or (C)’’.
(d) CONFORMING AND TECHNICAL AMENDMENTS.—
Section 536 of the National Housing Act (12 U.S.C.
1735f–14) is amended—
(1) in subsection (c)(1)(B), by inserting after
‘‘lender’’ the following: ‘‘or such other person or en-
tity’’;
(2) in subsection (d)(1)—
(A) by inserting ‘‘or such other person or
entity’’ after ‘‘lender’’; and
(B) by striking ‘‘part 25’’ and inserting
‘‘parts 24 and 25’’; and
(3) in subsection (e), by inserting ‘‘or such
other person or entity’’ after ‘‘lender’’ each place
that term appears.
Subtitle B—FHA Multifamily
Provisions
SEC. 321. CIVIL MONEY PENALTIES AGAINST GENERAL
PARTNERS, OFFICERS, DIRECTORS, AND CER-
TAIN MANAGING AGENTS OF MULTIFAMILY
PROJECTS.
(a) CIVIL MONEY PENALTIES AGAINST MULTIFAM-
ILY MORTGAGORS.—Section 537 of the National Housing
Act (12 U.S.C. 1735f–15) is amended—
(1) in subsection (b)(1), by striking ‘‘on that
mortgagor’’ and inserting the following: ‘‘on that
mortgagor, on a general partner of a partnership
mortgagor, or on any officer or director of a cor-
porate mortgagor’’;
(2) in subsection (c)—
(A) by striking the subsection designation
and heading and inserting the following:
‘‘(c) OTHER VIOLATIONS.—’’; and
(B) in paragraph (1)—
(i) by striking ‘‘VIOLATIONS.—The
Secretary may’’ and all that follows
through the colon and inserting the follow-
ing:
100
‘‘(A) LIABLE
PARTIES.—The Secretary
may also impose a civil money penalty under
this section on—
‘‘(i) any mortgagor of a property that
includes five or more living units and that
has a mortgage insured, co-insured, or held
pursuant to this Act;
‘‘(ii) any general partner of a partner-
ship mortgagor of such property;
‘‘(iii) any officer or director of a cor-
porate mortgagor;
‘‘(iv) any agent employed to manage
the property that has an identity of inter-
est with the mortgagor, with the general
partner of a partnership mortgagor, or
with any officer or director of a corporate
mortgagor of such property; or
‘‘(v) any member of a limited liability
company that is the mortgagor of such
property or is the general partner of a lim-
ited partnership mortgagor or is a partner
of a general partnership mortgagor.
‘‘(B) VIOLATIONS.—A penalty may be im-
posed under this section upon any liable party
101
under subparagraph (A) that knowingly and
materially takes any of the following actions:’’;
(ii) in subparagraph (B), as so des-
ignated by clause (i) of this subparagraph,
by redesignating the subparagraphs (A)
through (L) as clauses (i) through (xii), re-
spectively;
(iii) by adding after clause (xii), as re-
designated by clause (ii) of this subpara-
graph, the following:
‘‘(xiii) Failure to maintain the prem-
ises, accommodations, any living unit in
the project, and the grounds and equip-
ment appurtenant thereto in good repair
and condition in accordance with regula-
tions and requirements of the Secretary,
except that nothing in this clause shall
have the effect of altering the provisions of
an existing regulatory agreement or feder-
ally insured mortgage on the property.
‘‘(xiv) Failure, by a mortgagor, a gen-
eral partner of a partnership mortgagor, or
an officer or director of a corporate mort-
gagor, to provide management for the
project that is acceptable to the Secretary
102
pursuant to regulations and requirements
of the Secretary.’’; and
(iv) in the last sentence, by deleting
‘‘of such agreement’’ and inserting ‘‘of this
subsection’’;
(3) in subsection (d)—
(A) in paragraph (1)(B), by inserting after
‘‘mortgagor’’ the following: ‘‘, general partner
of a partnership mortgagor, officer or director
of a corporate mortgagor, or identity of interest
agent employed to manage the property’’; and
(B) by adding at the end the following:
‘‘(5) PAYMENT OF PENALTY.—No payment of a
civil money penalty levied under this section shall be
payable out of project income.’’;
(4) in subsection (e)(1), by deleting ‘‘a mortga-
gor’’ and inserting ‘‘an entity or person’’;
(5) in subsection (f), by inserting after ‘‘mort-
gagor’’ each place such term appears the following:
‘‘, general partner of a partnership mortgagor, offi-
cer or director of a corporate mortgagor, or identity
of interest agent employed to manage the property’’;
(6) by striking the heading of subsection (f)
and inserting the following: ‘‘CIVIL MONEY PEN-
ALTIES AGAINST MULTIFAMILY MORTGAGORS, GEN-
103
ERAL PARTNERS
OF PARTNERSHIP MORTGAGORS,
OFFICERS AND DIRECTORS OF CORPORATE MORT-
GAGORS, AND CERTAIN MANAGING AGENTS’’; and
(7) by adding at the end the following:
‘‘(k) IDENTITY OF INTEREST MANAGING AGENT.—
In this section, the terms ‘agent employed to manage the
property that has an identity of interest’ and ‘identity of
interest agent’ mean an entity—
‘‘(1) that has management responsibility for a
project;
‘‘(2) in which the ownership entity, including its
general partner or partners (if applicable) and its of-
ficers or directors (if applicable), has an ownership
interest; and
‘‘(3) over which the ownership entity exerts ef-
fective control.’’.
(b) IMPLEMENTATION.—
(1) PUBLIC
COMMENT.—The Secretary shall
implement the amendments made by this section by
regulation issued after notice and opportunity for
public comment. The notice shall seek comments pri-
marily as to the definitions of the terms ‘‘ownership
interest in’’ and ‘‘effective control’’, as those terms
are used in the definition of the terms ‘‘agent em-
104
ployed to manage the property that has an identity
of interest’’ and ‘‘identity of interest agent’’.
(2) TIMING.—A proposed rule implementing the
amendments made by this section shall be published
not later than 1 year after the date of enactment of
this Act.
(c) APPLICABILITY OF AMENDMENTS.—The amend-
ments made by subsection (a) shall apply only with respect
to—
(1) violations that occur on or after the effec-
tive date of the final regulations implementing the
amendments made by this section; and
(2) in the case of a continuing violation (as de-
termined by the Secretary of Housing and Urban
Development), any portion of a violation that occurs
on or after that date.
SEC. 322. CIVIL MONEY PENALTIES FOR NONCOMPLIANCE
WITH SECTION 8 HAP CONTRACTS.
(a) BASIC AUTHORITY.—Title I of the United States
Housing Act of 1937 is amended—
(1) by redesignating the second section des-
ignated as section 27 (as added by section 903(b) of
the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (Public Law 104–193
(110 Stat. 2348)) as section 28; and