I
104TH CONGRESS
2D SESSION
H. R. 3743
To establish a single authority under title IV of the National Housing Act
for rental and cooperative housing with five or more units and for
health care facilities through consolidation of multifamily programs, au-
thorization of risk sharing programs with private and public entities,
and increased flexibility for FHA to establish program operations; to
make changes to the multifamily housing programs designed for the
elderly and persons with disabilities; to extend certain provisions of
existing law; and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 27, 1996
Mr. LAZIO of New York (by request) introduced the following bill; which was
referred to the Committee on Banking and Financial Services
A BILL
To establish a single authority under title IV of the National
Housing Act for rental and cooperative housing with
five or more units and for health care facilities through
consolidation of multifamily programs, authorization of
risk sharing programs with private and public entities,
and increased flexibility for FHA to establish program
operations; to make changes to the multifamily housing
programs designed for the elderly and persons with dis-
abilities; to extend certain provisions of existing law;
and for other purposes.
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discretion, provide for the use of existing rules to the ex-
tent appropriate, without the need for further rulemaking.
TITLE I—FHA MULTIFAMILY HOUSING
SEC. 10. BASIC AUTHORITY.
The National Housing Act is amended by inserting
the following new title after title III:
‘‘TITLE IV—CREDIT ENHANCEMENT FOR
MULTIFAMILY 
HOUSING 
PROJECTS
AND HEALTH CARE FACILITIES
‘‘SEC. 401. PURPOSES.
‘‘The purposes of this title are to—
‘‘(1) expand the opportunities for rental hous-
ing and health care facilities through the provision
of credit enhancement and related activities;
‘‘(2) address the unmet housing credit needs of
American families and communities;
‘‘(3) address the unmet health care facility
credit needs of communities;
‘‘(4) supplement and expand private sector ac-
tivity by better serving underserved markets, testing
new products, and filling gaps in the provision and
delivery of mortgage credit;
‘‘(5) deliver housing credit enhancement and
provide other services in a non-discriminatory man-
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ner, and carry out activities under this title in a
manner that affirmatively furthers fair housing;
‘‘(6) promote liquidity and provide stability to
the housing finance market by continuing to provide
credit enhancement on a sound basis during times of
regional and national economic downturn;
‘‘(7) engage is research, development, and test-
ing of new products designed in expand housing and
health care facility credit;
‘‘(8) collect, generate, and make available infor-
mation relevant to the provision of housing and
health care facility credit to American families and
communities; and
‘‘(9) increase the capacity of localities, States,
and for-profit and nonprofit entities to expand ac-
cess to decent housing and health care facilities and
to deliver housing credit to American families and
communities.
‘‘SEC. 402. DEFINITIONS.
‘‘As used in this title:
‘‘(1) The term ‘credit enhancement’ means to
enhance and make commitments to enhance credit,
including commitments to lend, insure and reinsure
(including insuring and reinsuring pools of mort-
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gages), make advances, incur liabilities, pool loans,
and risk-share.
‘‘(2) The term ‘first mortgage’ means such
classes of first liens as are commonly given to secure
advances (including, but not limited to, advances
during construction) on, or the unpaid purchase
price of, real estate under the laws of the State in
which the real estate is located, together with the
credit instrument or instruments, if any, secured
thereby, and may be in the form of trust mortgages
or mortgage indentures or deeds of trust securing
notes, bonds, or other credit instruments.
‘‘(3) The term ‘health care facility’ means—
‘‘(A) a facility of integrated health care de-
livery system designed and operated to provide
medical, convalescent, skilled nursing, rehabili-
tation, custodial, personal care services, or any
combination thereof; and
‘‘(B) a project designed, in whole or in
part, to provide a continuum of care, as deter-
mined by the Secretary;
that meets standards acceptable to the Secretary, in-
cluding standards governing licensure or State or
local approval and regulation of the mortgagor.
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‘‘(4) The term ‘mortgage’ means a first mort-
gage on real estate in fee simple, or on the interest
of either the lessor or lessee under a lease with a
term at least 20 years longer than the stated matu-
rity of the mortgage indebtedness, and upon which
there is located or will be constructed a multifamily
housing project or a health care facility.
‘‘(5) The term ‘mortgagee’ means the original
lender under a mortgage, and its successors and as-
signs, the includes the holders of credit instruments
issued under a trust mortgage or deed of trust pur-
suant to which such holders act by and through a
trustee therein named.
‘‘(6) The term ‘mortgagor’ means the original
borrower under a mortgage and its successors and
assigns, which mortgagor shall be regulated by the
Secretary or other entity under this section as re-
quired by the Secretary.
‘‘(7) The term ‘multifamily housing project’
means a rental or cooperative housing project com-
prised of five or more dwelling units, including—
‘‘(A) projects designed for single room oc-
cupancy; and
‘‘(B) projects designed, in whole or in part,
for occupancy—
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‘‘(i) by elderly persons who are 62
years of age or older; or
‘‘(ii) by persons with disabilities;
that meet standards acceptable to the Secretary, in-
cluding standards governing regulation of the mort-
gagor and eligibility for occupancy. Occupancy of
projects under this paragraph shall be under a writ-
ten lease for a period of at least 30 days, except that
in the case of projects designed for single room occu-
pancy, the Secretary may establish shorter rental pe-
riods for individual projects.
‘‘(8) The term ‘qualified housing finance agen-
cy’ means any State or local housing finance agency
that—
‘‘(A) carries the designation of ‘top tier’ or
its equivalent, as evaluated by Standard and
Poors or any other nationally recognized rating
agency;
‘‘(B) receives a rating of ‘A’ or better for
its general obligation bonds from a nationally
recognized rating agency; or
‘‘(C) otherwise demonstrates its capacity
as a sound and experienced agency, based on
factors such as its experience in financing mul-
tifamily housing projects or health care facili-
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ties (as appropriate), fund balances, administra-
tive capabilities, investment policy, internal con-
trols and financial management, portfolio qual-
ity, and State or local support.
‘‘(9) The term ‘qualified participating entity’
means the Federal Housing Finance Board, the
Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, a qualified fi-
nancial institution, and other State or local mort-
gage insurance companies or bank lending consortia.
‘‘(10) The term ‘refinancing’ includes the refi-
nancing of any multifamily housing project or health
care facility mortgage. To the extent such mortgage
refinancings for transactions originally insured
under this title are not in excess of the principal
amount of the original mortgage loan and such other
limitations as may be imposed by the Secretary,
such refinancings shall be subject to the provisions
of section 223(a)(7).
‘‘(11) The term ‘reinsurance agreement’ means
a contractual obligation under which the Secretary,
in exchange for appropriate compensation, agrees to
assume a specified portion of the risk of loss that a
lender or other party has previously assumed with
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respect to a mortgage on a multifamily housing
project or health care facility.
‘‘(12) The term ‘State’ includes the several
States and Puerto Rico, the District of Columbia,
Guam, the Northern Mariana Islands, American
Samoa, and the Virgin Islands.
‘‘SEC. 403. DIRECT MORTGAGE INSURANCE PROGRAM.
‘‘(a) BASIC AUTHORITY.—
‘‘(1) FIRST MORTGAGES.—The Secretary may
insure first mortgages under this section (including
advances on such mortgages during construction)
which are secured by multifamily housing projects or
health care facilities owned by mortgagors approved
by the Secretary under terms and conditions accept-
able to the Secretary, and may engage in other types
of credit enhancement involving approved mortga-
gees.
‘‘(2) SECOND
MORTGAGES.—The Secretary is
authorized to insure mortgages in a secondary posi-
tion to a mortgage previously insured under this
Act, where such mortgage is necessary, as defined by
the Secretary, to better protect the interests of the
mortgagee or the Secretary, under terms and condi-
tions approved by the Secretary.
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‘‘(b) DELEGATION.—The Secretary may permit an
approved mortgagee to carry out (under a delegation or
otherwise, and with or without compensation, but subject
to audit, exception, or review requirements) such credit
approval, appraisal, inspection, issuance of commitments,
approval of insurance of advances, cost certification, en-
dorsement of the mortgage note, servicing, property dis-
position, or other credit enhancement functions as the Sec-
retary shall approve as consistent with the purpose of this
title. All appraisals of property for mortgage insurance
under this section shall be completed by a Certified Gen-
eral Appraiser in accordance with the Uniform Standards
of Professional Appraisal Practice.
‘‘SEC. 404. QUALIFIED PARTICIPATING ENTITY RISK-SHAR-
ING PROGRAM.
‘‘(a) BASIC AUTHORITY.—The Secretary may enter
into contractual arrangements (including reinsurance and
risk-sharing agreements) with qualified participating enti-
ties to provide credit enhancement for first mortgage loans
for affordable multifamily housing projects and health
care facilities and other credit enhancement through a sys-
tem of risk-sharing agreements with such entities.
‘‘(b) AUTHORITY OF SECRETARY.—The Secretary,
upon request of a qualified participating entity, is author-
ized to permit the qualified participating entity to insure
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or reinsure (and make commitments to insure or reinsure)
under this section any first mortgage, advance, thereon,
or pool of first mortgages otherwise eligible under this sec-
tion, pursuant to a risk-sharing agreement providing that
the qualified participating entity will carry out (under a
delegation or otherwise, and with or without compensa-
tion, but subject to audit, exception, or review require-
ments) such credit approval, appraisal, inspection, issu-
ance of commitments, approval of insurance of advances,
cost certification, endorsement of the mortgage note, serv-
icing, property disposition, or other functions as the Sec-
retary shall approve as consistent with the purpose of this
section. All appraisals of property for security property for
a loan financed under this section shall be completed by
a Certified General Appraiser in accordance with the Uni-
form Standards of Professional Appraisal Practice.
‘‘(c) PROGRAM REQUIREMENTS.—
‘‘(1) ELIGIBILITY STANDARDS.—The Secretary
shall establish and enforce standards for eligibility of
qualified participating entities under this section, as
the Secretary determines to be appropriate.
‘‘(2) MORTGAGE
INSURANCE
AND
REINSUR-
ANCE.—Agreements under this section may provide
for—
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‘‘(A) mortgage insurance through the Sec-
retary of first mortgage loans for affordable
multifamily housing projects and health care fa-
cilities originated by or through, or purchased
by, qualified participating entities; and
‘‘(B) reinsurance, including reinsurance of
pools of loans, on affordable multifamily hous-
ing projects and health care facilities.
In entering into risk-sharing agreements under this
section covering first mortgages, the Secretary may
give preference to first mortgages that are not al-
ready in the portfolios of qualified participating enti-
ties.
‘‘(3) RISK APPORTIONMENT.—Agreements en-
tered into under this section between the Secretary
and a qualified participating entity shall specify the
percentage of loss that each of the parties to the
agreement will assume in the event of default of the
insured or reinsured affordable multifamily housing
project or health care facility first mortgage. Such
agreements shall specify that the qualified partici-
pating entity and the Secretary shall share any loss
in accordance with the risk-sharing agreement.
‘‘(4) REIMBURSEMENT CAPACITY.—Agreements
entered into under this section between the Sec-
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retary and a qualified participating entity shall pro-
vide evidence acceptable to the Secretary of the ca-
pacity of such entity to fulfill any reimbursement ob-
ligations made pursuant to this section. Evidence of
such capacity may include—
‘‘(A) a pledge of the full faith and credit
of a qualified participating entity to fulfill any
obligations entered into by the entity;
‘‘(B) reserves pledged or otherwise re-
stricted by the qualified participating entity in
an amount equal to an agreed upon percentage
of the loss assumed by the entity under para-
graph (3);
‘‘(C) funds pledged through a State or
local guarantee fund; or
‘‘(D) any other form of evidence mutually
agreed upon by the Secretary and the qualified
participating entity.
‘‘(5) UNDERWRITING STANDARDS.—
‘‘(A) USE
OF
ENTITY’S
UNDERWRITING
STANDARDS.—Except as provided by subpara-
graph (B), the Secretary may permit any quali-
fied participating entity to use its own under-
writing standards and loan terms and condi-
tions for purposes of underwriting first mort-
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gage loans to be insured under this section,
without further review by the Secretary: Pro-
vided, That the qualified participating entity
shall certify that it has complied with all appli-
cable statutes and requirements of the Sec-
retary.
‘‘(B) FEDERAL
UNDERWRITING
STAND-
ARDS.—The Secretary may impose additional or
different underwriting criteria and loan terms
and conditions for contractual agreements for
risk-sharing where the Secretary retains more
than 50 percent of the risk of loss. Any other
financing permitted on security property for a
loan financed under this section shall be ex-
pressly subordinate to the first mortgage cover-
ing the security property.
‘‘(d) RISK-SHARING ALTERNATIVES.—
‘‘(1) DEVELOPMENT OF ALTERNATIVES.—The
Secretary may develop a variety of risk-sharing al-
ternatives, including arrangements under which the
Secretary assumes an appropriate share of the risk
related to long-term first mortgage loans on newly
constructed or acquired multifamily rental housing
projects and health care facilities, first mortgage
refinancings, bridge financing for construction under
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a first mortgage loan, and other forms of multifam-
ily housing project and health care facility first
mortgage lending and other credit enhancement that
the Secretary deems appropriate to carry out the
purposes of this section.
‘‘(2) NATURE OF ALTERNATIVES.—Alternatives
under paragraph (1) shall be designed—
‘‘(A) to ensure that other parties bear a
share of the risk, in percentage amount and in
position of exposure, that is sufficient to create
strong market-oriented incentives for other par-
ticipating parties to maintain sound underwrit-
ing and loan management practices;
‘‘(B) to develop credit mechanisms, includ-
ing sound underwriting criteria, processing
methods, and credit enhancements, through
which the Secretary can assist in increasing
multifamily housing project and health care fa-
cility first mortgage lending as needed to meet
the expected need in the United States;
‘‘(C) to provide a more adequate supply of
first mortgage credit for sound multifamily
rental housing and health care facility projects
in underserved urban and rural markets;
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the gross rent for rent-restricted residential units, as de-
termined under section 42(g) of the Internal Revenue
Code of 1986.
‘‘SEC. 405. HOUSING FINANCE AGENCY PROGRAM.
‘‘(a) BASIC AUTHORITY.—The Secretary may enter
into contractual arrangements (including risk-sharing
agreements with partnerships) with qualified housing fi-
nance agencies (including entities established by States
that provide mortgage insurance) to provide Federal credit
enhancement for first mortgage loans for affordable multi-
family housing projects and health care facilities through
a system of risk-sharing agreements with such agencies.
‘‘(b) AUTHORITY
OF
THE SECRETARY.—The Sec-
retary, upon request of a qualified housing finance agency,
may insure on a risk-sharing basis, and make commit-
ments to insure on a risk-sharing basis, under this section
any first mortgage, or advance thereon, pursuant to a
risk-sharing agreement providing that the qualified hous-
ing finance agency will carry out (under a delegation or
otherwise and with or without compensation, but subject
to audit, exception or review requirements) such credit ap-
proval, appraisal, inspection, issuance of commitments,
approval of insurance of advances, cost certification, en-
dorsement of the mortgage, servicing, property disposition,
or other functions as the Secretary shall approve as con-
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sistent with the purpose of this section. All appraisals of
property for first mortgage insurance under this section
shall be completed by a Certified General Appraiser in ac-
cordance with the Uniform standards of Professional Ap-
praisal Practice.
‘‘(c) MORTGAGE INSURANCE PREMIUMS.—The Sec-
retary shall establish a schedule of insurance premium
payments for first mortgages insured under this section
based on the percentage of loss the Secretary may assume.
Such schedule shall reflect a greater portion of the pre-
mium inuring to qualified housing finance agencies that
assume a greater share of the risk apportioned according
to subsection (d)(2).
‘‘(d) PROGRAM REQUIREMENTS.—
‘‘(1) 
MORTGAGE
INSURANCE.—Agreements
under subsection (a) shall provide for full first mort-
gage insurance through the Secretary of the loans
for affordable multifamily housing projects and
health care facilities originated by or through quali-
fied housing finance agencies and for reimbursement
to the Secretary by such agencies for all or a portion
of the losses incurred on the first mortgage loans in-
sured.
‘‘(2) RISK APPORTIONMENT.—Agreements en-
tered into under this section between the Secretary
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and a qualified housing finance agency shall specify
the percentage of loss that each of the parties to the
agreement will assume in the event of default of the
insured first mortgage on the affordable multifamily
project or health care facility. Such agreements shall
specify that the qualified housing finance agency and
the Secretary shall share any loss in accordance with
the risk-sharing agreement.
‘‘(3) REIMBURSEMENT CAPACITY.—Agreements
entered into under this section between the Sec-
retary and a qualified housing finance agency shall
provide evidence of the capacity of such agency to
fulfill any reimbursement obligations made pursuant
to this section. Evidence of such capacity may in-
clude—
‘‘(A) a pledge of the full faith and credit
of a qualified State or local agency to fulfill any
obligations entered into by the qualified housing
finance agency;
‘‘(B) reserves pledged or otherwise re-
stricted by the qualified housing finance agency
in an amount equal to an agreed upon percent-
age of the loss assumed by the housing finance
agency under paragraph (2);
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‘‘(C) funds pledged through a State or
local guarantee fund; or
‘‘(D) any other form of evidence mutually
agreed upon by the Secretary and the qualified
housing finance agency.
‘‘(e) UNDERWRITING STANDARDS.—
‘‘(1) USE
OF
HFA
UNDERWRITING
STAND-
ARDS.—The Secretary may permit a qualified hous-
ing finance agency to use its own underwriting
standards and loan terms and conditions for pur-
poses of underwriting first mortgage loans to be in-
sured under this section without further review by
the Secretary: Provided, That the qualified housing
agency certifies that it has complied with all applica-
ble statutes and requirements of the Secretary.
‘‘(2) USE OF FEDERAL UNDERWRITING STAND-
ARDS.—The Secretary may impose additional or dif-
ferent underwriting criteria and loan terms and con-
ditions for contractual agreements where the Sec-
retary retains more than 50 percent of the risk of
loss.
‘‘(f) IDENTITY OF INTEREST.—Notwithstanding any
other provision of law, the Secretary may not apply iden-
tity of interest provisions to agreements entered into with
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qualified State housing finance agencies under this sec-
tion.
‘‘(g) QUALIFICATION AS AFFORDABLE HOUSING.—
Multifamily housing projects securing loans insured under
this section shall qualify as affordable only if the housing
is occupied by families, elderly persons, or persons with
disabilities, and bears rents not greater than the gross
rent for rent-restricted residential projects, as determined
under section 42(g) of the Internal Revenue Code of 1986.
‘‘SEC. 406. PREMIUMS AND FEES.
‘‘The Secretary shall establish and collect such pre-
miums and fees under this title as the Secretary deter-
mines appropriate to compensate for the risks assumed
and related administrative costs of providing insurance,
reinsurance, or other credit enhancement under this title.
‘‘SEC. 407. CONTRACT OF MORTGAGE INSURANCE.
‘‘(a) IN GENERAL.—All contracts of mortgage insur-
ance under this title shall—
‘‘(1) be evidenced by the endorsement of the
mortgage note for insurance or reinsurance, and
shall be incontestable when held by an approved
mortgagee to the extent provided in section 203(e);
and
‘‘(2) be subject to, and obligations of, the Gen-
eral Insurance Fund established under section 519.
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‘‘(b) UNIFORM CLAIMS SETTLEMENT.—
‘‘(1) IN GENERAL.—The Secretary shall have
the discretion to establish uniform systems and to
settle claims for benefits under the contract of mort-
gage insurance thereunder in any manner consistent
with, and not exceeding, the current statutory au-
thority of sections 207 (g) through (j), 520, and
541.
‘‘(2) PARTIAL PAYMENT OF CLAIMS.—For par-
tial payments of claims under this title pursuant to
section 541, the Secretary may require a mortga-
gee—
‘‘(A) to accept a partial payment of claim
for all such claims; and
‘‘(B) to accept a partial payment of insur-
ance benefits in order to avert a claim where
such claim is inevitable, regardless of whether a
monetary default has occurred.
‘‘SEC. 408. DEFAULT AND CLAIMS UNDER CONTRACT OF
MORTGAGE INSURANCE.
‘‘(a) IN GENERAL.—If a mortgagor fails to make any
payment due, or provided to be paid by the terms of a
mortgage insured, under this section, such failure shall be
a default under the mortgage. If the default continues for
a period of 30 days, the mortgagee shall be entitled to
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receive the benefits of the insurance provided by the Sec-
retary under this section.
‘‘(b) CLAIMS REQUIREMENTS.—
‘‘(1) IN GENERAL.—The Secretary shall issue
requirements under subsection (a). These require-
ments may be changed from time to time to accom-
modate advances in technology, including those re-
lated to electronic transfers and filings. The require-
ments shall establish procedures under which the
mortgagee shall be required to assign, transfer, and
deliver to the Secretary—
‘‘(A) the mortgage so in default and all
rights and interests arising thereunder;
‘‘(B) all claims of the mortgagee against
the mortgagor or others, arising out of the
mortgage transactions;
‘‘(C) all policies of title or other insurance
or surety bonds or other guaranties and any
and all claims thereunder;
‘‘(D) any balance of the mortgage loan not
advanced to the mortgagor;
‘‘(E) any cash, property, or other assets
(such as receivables) held by the mortgagee, or
to which the mortgagee is entitled to hold or re-
ceive for the account of the mortgagor or as ex-
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cess proceeds arising out of the mortgage or
underlying bond transaction and which have not
been applied in reduction of the principal
amount of the mortgage indebtedness; and
‘‘(F) all records, documents, books, papers,
and accounts relating to the mortgage trans-
action.
‘‘(2) OPTIONAL PROCEDURE.—If a mortgagor
defaults under a mortgage insured under section
403, the Secretary may permit the mortgagee to ex-
ercise the option, pursuant to procedures established
by the Secretary, of foreclosing upon the security
property and obtaining title, or obtaining title
through deed-in-lieu of foreclosure, or otherwise, and
conveying title to the Secretary. A mortgagee exer-
cising the option under this paragraph shall comply
with the requirements of paragraph (1), except sub-
paragraphs (A) and (D).
‘‘(c) TERMINATION OF MIP OBLIGATION.—After re-
ceipt of an application for insurance benefits under this
title, the Secretary is authorized to terminate the obliga-
tion of the mortgagee to pay mortgage insurance premium
charges.
‘‘(d) AMOUNT OF CLAIM.—The total amount of any
payout under an insurance claim under this title may not
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exceed the amount which the mortgagee would have re-
ceived if the mortgage indebtedness and any other fiscal
obligations under the mortgage had been fully satisfied on
the date of the assignment of the claim or the conveyance
of title, plus interest and necessary expenses incurred by
the mortgagee in connection with the claim and preserva-
tion of the project, if applicable, as determined by the Sec-
retary, and in accordance with any contract involving risk-
sharing.
‘‘(e) ACQUISITION OF POSSESSION OR TITLE.—The
Secretary may, through foreclosure or otherwise, acquire
possession of, or title to, any property covered by a mort-
gage assigned to the Secretary under this title.
‘‘(f) POWERS OF SECRETARY.—
‘‘(1) WITH RESPECT TO PROPERTY.—Notwith-
standing any other provisions of law relating to the
acquisition, handling, or disposal of real and other
property by the United States, the Secretary, in the
Secretary’s discretion and for the protection of the
General Insurance Fund, may—
‘‘(A) pay out of such Fund any expenses
or charges in connection with the preservation
of any security property under this title;
‘‘(B) deal with, complete, reconstruct, rent,
renovate, modernize, insure, make contracts for
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the management of any property acquired
under this title;
‘‘(C) establish suitable agencies for the
management or lease of any property acquired
under this title; and
‘‘(D) sell or lease any real or personal
property (including mortgages) acquired under
this title.
‘‘(2) WITH
RESPECT
TO
MORTGAGES.—Not-
withstanding any other provision of law, the Sec-
retary may pursue to final collection, by way of com-
promise or otherwise, obligations under mortgages
assigned under this title and all claims in connection
with any other transactions, under this title.
‘‘SEC. 409. ADJUSTED PREMIUM CHARGE UPON PREPAY-
MENT.
‘‘If the principal obligation of any mortgage accepted
for insurance or reinsurance under this title is paid in full
before the maturity date, the Secretary may require the
mortgagee to pay an adjusted premium charge in such
amount as the Secretary determines to be equitable, but
not in excess of the aggregate amount of the premium
charges that the mortgagee would otherwise have been re-
quired to pay if the mortgage had continued to be insured
until such maturity date.
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‘‘SEC. 410. ENVIRONMENTAL REVIEW.
‘‘(a) IN GENERAL.—In order to assure that the poli-
cies of the National Environmental Policy Act of 1969 and
other provisions of law which further the purposes of such
Act (as specified in regulations issued by the Secretary)
are most effectively implemented in connection with credit
enhancement under this title, and to assure to the public
undiminished protection of the environment, the Secretary
may, under such regulations, in lieu of the environmental
protection procedures otherwise applicable, provide for
agreements to endorse for insurance mortgages under this
title upon the request of the mortgagee, qualified entity,
or qualified housing finance agency, if the State or unit
of general local government, as designated by the Sec-
retary in accordance with regulations, assumes all of the
responsibilities for environmental review, decision making,
and action pursuant to such Act, and such other provi-
sions of law as the regulations of the Secretary may speci-
fy, that would otherwise apply to the Secretary with re-
spect to the insurance of mortgages on particular prop-
erties. For purposes of this subsection, the terms ‘unit of
general local government’ and ‘State’ have the same mean-
ings as in section 102(a) of the Housing and Community
Development Act of 1974.
‘‘(b) IMPLEMENTATION.—The Secretary shall issue
regulations to carry out this section only after consultation
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with the Council on Environmental Quality. Such regula-
tions shall, among other matters, provide—
‘‘(1) for the monitoring of the performance of
environmental reviews under this subparagraph;
‘‘(2) subject to the discretion of the Secretary,
for the provision or facilitation of training for such
performance; and
‘‘(3) subject to the discretion of the Secretary,
for the suspension or termination by the Secretary
of the State or unit of general local government’s re-
sponsibilities under subsection (a).
‘‘(c) SAVINGS.—The Secretary’s duty under sub-
section (b) shall not be construed to limit any responsibil-
ity assumed by a State or unit of general local government
with respect to any particular property under subsection
(a).
‘‘(d) PROCEDURE.—The Secretary shall approve a
mortgage for the provision of mortgage insurance subject
to the procedures authorized by this section only if, not
less than 30 days before such approval, before any ap-
proval, commitment, or endorsement of mortgage insur-
ance on the property by or on behalf of the Secretary, and
before any agreement by a qualified entity or a qualified
housing finance agency to provide financing under a risk-
sharing agreement with respect to the property, the mort-
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gagee or the qualified participating entity or the qualified
housing finance agency submits to the Secretary a request
for such approval, accompanied by a certification of the
State or unit of general local government that meets the
requirements of subsection (e). The Secretary’s approval
of any such certification shall be deemed to satisfy the
Secretary’s responsibilities under the National Environ-
mental Policy Act of 1969 and such other provisions of
law as the regulations of the Secretary specify insofar as
those responsibilities relate to the provision of mortgage
insurance on the property that is covered by such certifi-
cation.
‘‘(e) CERTIFICATION.—A certification under the pro-
cedures authorized by this subsection shall—
‘‘(1) be in a form acceptable to the Secretary;
‘‘(2) be executed by the chief executive officer
or other officer of the State or unit of general local
government who qualifies under regulations of the
Secretary;
‘‘(3) specify that the State or unit of general
local government under this section has fully carried
out its responsibilities as described under subsection
(a); and
‘‘(4) specify that the certifying officer consents
to assume the status of a responsible Federal official
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under the National Environmental Policy Act of
1969 and under each provision of law specified in
regulations issued by the Secretary insofar as the
provisions of such Act or such other provisions of
law apply pursuant to subsection (a), and is author-
ized and consents on behalf of the State or unit of
general local government and himself or herself to
accept the jurisdiction of the Federal courts for the
purpose of enforcement of the responsibilities as
such an official.
‘‘(f) APPROVAL BY STATES.—If a unit of general
local government carries out the responsibilities described
in subsection (a), the Secretary may permit the State to
perform those actions of the Secretary described in sub-
section (a) and the performance of such actions by the
State, where permitted by the Secretary, shall be deemed
to satisfy the Secretary’s responsibilities referred to in the
second sentence of clause (ii).
‘‘SEC. 411. LEAD-BASED PAINT POISONING PREVENTION.
‘‘In carrying out the requirements of section 302 of
the Lead-Based Paint Poisoning Prevention Act, the Sec-
retary may provide in regulations for the assumption of
all or part of the Secretary’s duties under such Act by
a State or unit of general local government for purposes
of this title.
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‘‘SEC. 412. SUBSIDY LAYERING.
‘‘Section 102 of the Department of Housing and
Urban Development Reform Act of 1989 shall not apply
to any type of insurance, reinsurance, or other credit en-
hancement under this title.
‘‘SEC. 413. LABOR STANDARDS AND COST CERTIFICATION.
‘‘This title shall be subject to the labor standards set
forth in section 212 and the cost certification standards
set forth in section 227.
‘‘SEC. 414. DISCLOSURE OF RECORDS.
‘‘Mortgagees under section 403, qualified participat-
ing entities under section 404, and qualified housing fi-
nance agencies under section 405 shall make available to
the Secretary or the Secretary’s designee, at the Sec-
retary’s request, such financial and other records as the
Secretary deems necessary for purposes of review and
monitoring under this title.’’.
SEC. 11. LABOR STANDARDS AMENDMENT.
Section 212(a) of the National Housing Act is
amended—
(1) by striking ‘‘or section 210’’ in the first
sentence; and
(2) by inserting after the first sentence the fol-
lowing new sentence: ‘‘The provisions of this section
shall also apply to the insurance of any mortgage
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under title IV, except that the provisions of this sec-
tion shall not apply to—
‘‘(1) the insurance of any mortgage that would
have been eligible for insurance under regulations of
the Secretary implementing section 223(f) of this
Act, as that section and those regulations existed
immediately before the enactment of the FHA Multi-
family Housing Reform Act of 1996; and
‘‘(2) work performed by any individual who—
‘‘(A) volunteers—
‘‘(i) to perform a service for civic,
charitable, or humanitarian reasons, with-
out promise, expectation, or receipt of com-
pensation for services rendered, but solely
for the personal purpose or pleasure of the
individual; and
‘‘(ii) to provide such services freely
and without pressure or coercion, direct or
implied, from any employer; and
‘‘(B) is not otherwise employed at any time
in the construction work.’’.
SEC. 12. IMPLEMENTATION.
(a) EFFECTIVE DATE.—The provisions of, and the
amendments made by, this part shall become effective
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upon implementation by the Secretary in accordance with
this section.
(b) ADMINISTRATIVE IMPLEMENTATION.—Except as
otherwise specifically provided by title IV of the National
Housing Act (as added by section 10), the Secretary shall
take any administrative actions necessary to implement
the provisions of, and the amendments made by, this part.
The Secretary shall complete the initial implementation of
such provisions and amendments within 180 days of the
date of enactment of this Act.
(c) TERMINATION OF INSURING AUTHORITY.—
(1) IN GENERAL.—Effective on the date of im-
plementation of this part, the Secretary may not ac-
cept applications or issue firm commitments under
any authority of title II of the National Housing Act
providing for the insurance of mortgages covering
multifamily rental housing or health care facilities
(as determined by the Secretary).
(2) EXCEPTIONS.—Paragraph (1) shall not
apply to—
(A) 
refinancings 
pursuant 
to 
section
223(a)(7) of the National Housing Act;
(B) extension of firm commitments entered
into before such date of implementation, but
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only if the Secretary determines there is good
cause for an extension; or
(C) outstanding applications not having re-
ceived a firm commitment if unusual equitable
considerations are present.
TITLE II—HOUSING FOR SPECIAL
POPULATIONS
SEC. 20. TERM OF RENTAL ASSISTANCE CONTRACTS FOR
SUPPORTIVE HOUSING FOR THE ELDERLY
AND SUPPORTIVE HOUSING FOR PERSONS
WITH DISABILITIES.
(a) SUPPORTIVE HOUSING FOR THE ELDERLY.—The
first sentence of section 202(d)(2) of the Housing Act of
1959 is amended by striking ‘‘240’’ and inserting ‘‘60’’.
(b) SUPPORTIVE HOUSING FOR PERSONS WITH DIS-
ABILITIES.—The first sentence of section 811(e)(2) of the
Cranston-Gonzalez National Affordable Housing Act is
amended by striking ‘‘240’’ and inserting ‘‘60’’.
SEC. 21. TENANT-BASED ASSISTANCE FOR PERSONS WITH
DISABILITIES.
(a) ELIGIBLE ENTITIES.—Section 811(d)(4) of the
Cranston-Gonzalez National Affordable Housing Act is
amended—
(1) by striking the first sentence and inserting
the following: ‘‘Tenant-based rental assistance pro-
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vided under subsection (b)(1) may be provided
through private nonprofit organizations and public
housing agencies. A public housing agency shall be
eligible to apply under this section only for the pur-
poses of providing such assistance.’’; and
(2) by striking the last sentence.
(b) DEFINITION OF PRIVATE NONPROFIT ORGANIZA-
TION.—Section 811(k)(6)(A) of such Act is amended to
read as follows:
‘‘(A) that has received tax-exempt status
under paragraph (3) or (4) of section 501(c) of
the Internal Revenue Code of 1986;’’.
(c) FUNDING SET-ASIDE.—Section 811(l)(1) of such
Act is amended to read as follows:
‘‘(1) ALLOCATION
OF
FUNDS
FOR
TENANT-
BASED ASSISTANCE.—Of any amount made available
for assistance under this section in any fiscal year,
the Secretary may use up to 25 percent for tenant-
based assistance under subsection (b)(1).’’.
SEC. 22. ENVIRONMENTAL PROTECTION.
(a) SUPPORTIVE HOUSING FOR THE ELDERLY.—Sec-
tion 202 of the Housing Act of 1959 is amended by adding
at the end the following new subsection:
‘‘(k) ENVIRONMENTAL PROTECTION.—
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‘‘(1) PURPOSE.—The purpose of this subsection
is to authorize a procedure for the assumption of en-
vironmental review responsibilities of the Secretary
by States and units of general local government in
connection with capital advances provided under this
section. This procedure shall be designed to en-
sure—
‘‘(A) that the policies of the National Envi-
ronmental Policy Act of 1969 and other provi-
sions of law which further the purposes of such
Act (as specified by the Secretary) are most ef-
fectively implemented in connection with the
provision of such assistance; and
‘‘(B) undiminished protection of the envi-
ronment to the public.
‘‘(2) BASIC AUTHORITY.—The Secretary may,
in lieu of the environmental protection procedures
otherwise applicable and in accordance with the pro-
visions of this subsection, provide for the release of
funds for particular projects or activities upon the
request of a recipient of the assistance, if the State
or unit of general local government, as designated by
the Secretary, assumes all of the responsibilities for
environmental review, decisionmaking, and action
pursuant to the Act and the other provisions of law
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referred to in paragraph (1) that would otherwise
apply to the Secretary in connection with the provi-
sion of capital grant assistance to such projects or
activities.
‘‘(3) PROCEDURE.—The Secretary shall ap-
prove the release of funds for projects or activities
subject to the procedures authorized by this sub-
section only if the recipient submits to the Secretary
a request for such release—
‘‘(A) not less than 15 days before such re-
lease, except that this paragraph shall not apply
in the case of a project or activity proposed in
an area covered by a declaration by the Presi-
dent of a major disaster or emergency under
the Robert T. Stafford Disaster Relief and
Emergency Assistance Act; and
‘‘(B) before any commitment of funds or
other assistance for such projects (other than
for environmental studies and such other pur-
poses as the Secretary shall specify, consistent
with the Act and the other provisions of law re-
ferred to in paragraph (1)).
The request for release shall be accompanied by a
certification by the State or unit of general local
government which meets the requirements of para-
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of the Act or the other provisions of law
apply pursuant to paragraph (1); and
‘‘(ii) is authorized and consents on be-
half of the State or unit of general local
government himself or herself to accept the
jurisdiction of the Federal courts for the
purpose of enforcement of the responsibil-
ities as such an official.
‘‘(5) APPROVAL BY STATES.—If a unit of gen-
eral local government carries out the responsibilities
described in paragraph (4), the Secretary may per-
mit the State to perform those actions of the Sec-
retary described in paragraph (3). The performance
of such actions by the State shall be deemed to sat-
isfy the Secretary’s responsibilities referred to in the
last sentence of paragraph (3).
‘‘(6) IMPLEMENTATION.—
‘‘(A) The Secretary shall implement this
subsection after consultation with the Council
on Environmental Quality. The implementation
shall include provision—
‘‘(i) for monitoring of the performance
of environmental reviews under this sub-
section;
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‘‘(ii) in the discretion of the Secretary,
for the provision or facilitation of training
for such performance;
‘‘(iii) in the discretion of the Sec-
retary, for suspension or termination by
the Secretary of the assumption under
paragraph (1); and
‘‘(iv) in the discretion of the Sec-
retary, for the imposition of appropriate
sanctions for failure to comply with re-
sponsibilities assumed under this sub-
section, including the denial, withdrawal,
reduction, or abatement of assistance.
‘‘(B) The Secretary’s duty under subpara-
graph (A) shall not be construed to limit or re-
duce any responsibility assumed by a State or
unit of general local government with respect to
any particular project under this subsection.’’.
(b) SUPPORTIVE HOUSING FOR PERSONS WITH DIS-
ABILITIES.—Section 811 of the Cranston-Gonzalez Na-
tional Affordable Housing Act is amended by adding at
the end the following new subsection:
‘‘(n) ENVIRONMENTAL PROTECTION.—
‘‘(1) PURPOSE.—The purpose of this subsection
is to authorize a procedure for the assumption of en-
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vironmental review responsibilities of the Secretary
by States and units of general local government in
connection with assistance provided under subsection
(b)(2). This procedure shall be designed to ensure—
‘‘(A) that the policies of the National Envi-
ronmental Policy Act of 1969 and other provi-
sions of law which further the purposes of such
Act (as specified by the Secretary) are most ef-
fectively implemented in connection with the
provision of such assistance; and
‘‘(B) undiminished protection of the envi-
ronment to the public.
‘‘(2) BASIC AUTHORITY.—The Secretary may,
in lieu of the environmental protection procedures
otherwise applicable and in accordance with the pro-
visions of this subsection, provide for the release of
funds for particular projects or activities upon the
request of a recipient of the assistance, if the State
or unit of general local government, as designated by
the Secretary, assumes all of the responsibilities for
environmental review, decisionmaking, and action
pursuant to the Act and the other provisions of law
referred to in paragraph (1) that would otherwise
apply to the Secretary in connection with the provi-
sion of assistance to such projects or activities.
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‘‘(3) PROCEDURE.—The Secretary shall approve
the release of funds for projects or activities subject
to the procedures authorized by this subsection only
if the recipient submits to the Secretary a request
for such release—
‘‘(A) not less than 15 days before such re-
lease, except that this paragraph shall not apply
in the case of a project or activity proposed in
an area covered by a declaration by the Presi-
dent of a major disaster or emergency under
the Robert T. Stafford Disaster Relief and
Emergency Assistance Act; and
‘‘(B) before any commitment of funds or
other assistance for such projects (other than
for environmental studies and such other pur-
poses as the Secretary shall specify, consistent
with the Act and the other provisions of law re-
ferred to in paragraph (1)).
The request for release shall be accompanied by a
certification by the State or unit of general local
government which meets the requirements of para-
graph (5). The Secretary’s approval of any such cer-
tification shall be deemed to satisfy the Secretary’s
responsibilities under the Act and the other provi-
sions of law referred to in paragraph (1), insofar as
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those responsibilities relate to the provision of assist-
ance for projects to be carried out pursuant thereto
which are covered by the certification.
‘‘(4) CERTIFICATION.—A certification under the
procedures authorized by this subsection shall—
‘‘(A) be in a form acceptable to the Sec-
retary;
‘‘(B) be executed by the chief executive of-
ficer or other officer of the State or unit of gen-
eral local government who qualifies as the cer-
tifying officer as determined by the Secretary;
‘‘(C) specify that the State or unit of gen-
eral local government has fully carried out its
responsibilities, as described in paragraph (2);
and
‘‘(D) specify that the certifying officer—
‘‘(i) consents to assume the status of
a responsible Federal official under the Act
and the other provisions of law referred to
in paragraph (1), insofar as the provisions
of the Act or the other provisions of law
apply pursuant to paragraph (1); and
‘‘(ii) is authorized and consents on be-
half of the State or unit of general local
government himself or herself to accept the