H. R. 2158—67
‘‘(V) materially failing to maintain the property
according to housing quality standards after receipt
of notice and a reasonable opportunity to cure; or
‘‘(VI) committing any act or omission that would
warrant suspension or debarment by the Secretary;
and
‘‘(iv) the term ‘owner’ as used in this subparagraph,
in addition to it having the same meaning as in section
8(f) of the United States Housing Act of 1937, also means
an affiliate of the owner; the term ‘purchaser’ as used
in this subsection means any private person or entity,
including a cooperative, an agency of the Federal Govern-
ment, or a public housing agency, that, upon purchase
of the project, would have the legal right to lease or sub-
lease dwelling units in the project, and also means an
affiliate of the purchaser; the terms ‘affiliate of the owner’
and ‘affiliate of the purchaser’ means any person or entity
(including, but not limited to, a general partner or manag-
ing member, or an officer of either) that controls an owner
or purchaser, is controlled by an owner or purchaser, or
is under common control with the owner or purchaser;
the term ‘control’ means the direct or indirect power (under
contract, equity ownership, the right to vote or determine
a vote, or otherwise) to direct the financial, legal, beneficial
or other interests of the owner or purchaser; and
‘‘(D) if the project owner demonstrates to the satisfac-
tion of the Secretary—
‘‘(i) using information in a comprehensive needs
assessment, that capital grant assistance is needed
for rehabilitation of the project; and
‘‘(ii) that project income is not sufficient to support
such rehabilitation.
‘‘(3) ELIGIBLE PURPOSES.—The Secretary may make grants
to the owners of eligible projects for the purposes of—
‘‘(A) payment into project replacement reserves;
‘‘(B) debt service payments on non-Federal rehabilita-
tion loans; and
‘‘(C) payment of nonrecurring maintenance and capital
improvements, under such terms and conditions as are
determined by the Secretary.
‘‘(4) GRANT AGREEMENT.—
‘‘(A) IN GENERAL.—The Secretary shall provide in any
grant agreement under this subsection 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 Assisted Housing Reform and Affordability Act
of 1997, or any successor standards for the physical condi-
tions of projects, as are determined by the Secretary.
‘‘(B) AFFORDABILITY AND USE CLAUSES.—The Secretary
shall include in a grant agreement under this subsection
a requirement for the project owners to maintain such
affordability and use restrictions as the Secretary deter-
mines to be appropriate.
‘‘(C) OTHER TERMS.—The Secretary may include in a
grant agreement under this subsection such other terms
and conditions as the Secretary determines to be necessary.
‘‘(5) DELEGATION.—
H. R. 2158—68
‘‘(A) IN GENERAL.—In addition to the authorities set
forth in subsection (p), the Secretary may delegate to State
and local governments the responsibility for the administra-
tion of grants under this subsection. Any such government
may carry out such delegated responsibilities directly or
under contracts.
‘‘(B) ADMINISTRATION
COSTS.—In addition to other
eligible purposes, 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 carrying out this
subsection, the Secretary may make available amounts that
are unobligated amounts for contracts for interest reduction
payments—
‘‘(i) that were previously obligated for contracts
for interest reduction payments under this section until
the insured mortgage under this section was extin-
guished;
‘‘(ii) that become available as a result of the
outstanding principal balance of a mortgage having
been written down;
‘‘(iii) that are uncommitted balances within the
limitation on maximum payments that may have been,
before the date of enactment of the Multifamily
Assisted Housing Reform and Affordability Act of 1997,
permitted in any fiscal year; or
‘‘(iv) that become available from any other source.
‘‘(B) LIQUIDATION AUTHORITY.—The Secretary may liq-
uidate 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 reduc-
tion payments, the Secretary shall ensure that the rates
and amounts of outlays do not at any time exceed the
rates and amounts of outlays that would have been experi-
enced if the insured mortgage had not been extinguished
or the principal amount had not been written down, and
the interest 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. 532. GAO REPORT ON SECTION 8 RENTAL ASSISTANCE FOR MULTI-
FAMILY 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 housing projects for which project-based assistance
is provided under section 8 of the United States Housing Act
of 1937, but which are not subject to a mortgage insured
or held by the Secretary under the National Housing Act;
(2) how State and local housing finance agencies have
benefited financially from the rental assistance program under
section 8 of the United States Housing Act of 1937, including
H. R. 2158—69
any benefits from fees, bond financings, and mortgage
refinancings; and
(3) the extent and effectiveness of State and local housing
finance agencies oversight of the physical and financial manage-
ment and condition of multifamily housing projects for which
project-based assistance is provided under section 8 of the
United States Housing Act of 1937.
Subtitle C—Enforcement Provisions
SEC. 541. IMPLEMENTATION.
(a) ISSUANCE OF NECESSARY REGULATIONS.—Notwithstanding
section 7(o) of the Department of Housing and Urban Development
Act or part 10 of title 24, Code of Federal Regulations (as in
existence on the date of enactment of this Act), the Secretary
shall issue such regulations as the Secretary determines to be
necessary to implement this subtitle and the amendments made
by this subtitle in accordance with section 552 or 553 of title
5, United States Code, as determined by the Secretary.
(b) USE
OF EXISTING REGULATIONS.—In implementing any
provision of this subtitle, the Secretary may, in the discretion
of the Secretary, provide for the use of existing regulations to
the extent appropriate, without rulemaking.
SEC. 542. INCOME VERIFICATION.
(a) REINSTITUTION OF REQUIREMENTS REGARDING HUD ACCESS
TO CERTAIN INFORMATION OF STATE AGENCIES.—
(1) IN GENERAL.—Section 303(i) of the Social Security Act
is amended by striking paragraph (5).
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to any request for information made after
the date of the enactment of this Act.
(b) REPEAL OF TERMINATION REGARDING HOUSING ASSISTANCE
PROGRAMS.—Section 6103(l)(7)(D) of the Internal Revenue Code
of 1986 is amended by striking the last sentence.
Part 1—FHA Single Family and Multifamily
Housing
SEC. 551. 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 paragraph (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. 552. EXTENSION OF EQUITY SKIMMING TO OTHER SINGLE 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 possession of a multifam-
ily project or a 1- to 4-family residence that is security for a
H. R. 2158—70
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 mort-
gage 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, or
the mortgagor has failed to comply with the provisions of such
other form of regulatory control imposed by the Secretary, 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 subsection if it—
‘‘(1) is insured, acquired, or held by the Secretary 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-Gonzalez 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. 553. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS,
AND OTHER PARTICIPANTS IN FHA PROGRAMS.
(a) CHANGE TO SECTION TITLE.—Section 536 of the National
Housing Act (12 U.S.C. 1735f–14) is amended by striking the section
heading and the section designation and inserting the following:
‘‘SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS,
AND OTHER PARTICIPANTS IN FHA PROGRAMS.’’.
(b) EXPANSION OF PERSONS ELIGIBLE FOR PENALTY.—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 sentence 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 person or entity participating in either an insured
mortgage 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 estate involved, borrowers, closing
agents, title companies, real estate agents, mortgage brokers,
appraisers, loan correspondents and dealers, knowingly and
materially violates any applicable provision of subsection (b),
the Secretary may impose a civil money penalty on the mortga-
gee or lender, or such other person or entity, in accordance
with this section. The penalty under this paragraph shall be
in addition to any other available civil remedy or any available
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’’.