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‘‘(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 of this Act.’’;
and
(3) in paragraph (3), as redesignated by para-
graph (1) of this subsection, by striking ‘‘or para-
graph (1)(F)’’ and inserting ‘‘or (F), or paragraph
(2) (A), (B), or (C)’’.
(d) CONFORMING AND TECHNICAL AMENDMENTS.—
Section 536 of such Act is further amended as follows:
(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 after ‘‘lender’’ the follow-
ing: ‘‘or such other person or entity’’; and
(B) by striking ‘‘part 25’’ and inserting
‘‘parts 24 and 25’’; and
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(3) in subsection (e), by inserting after ‘‘lend-
er’’ each time it appears the following: ‘‘or such
other person or entity’’.
Subtitle B—Multifamily Housing
SEC. 220. 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 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 heading and inserting
the following: ‘‘(c) OTHER VIOLATIONS.—’’;
(B) in paragraph (1)—
(i) by striking ‘‘VIOLATIONS.—The
Secretary may’’ and all that follows
through the colon and inserting the follow-
ing:
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‘‘(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, coinsured, 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
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under subparagraph (A) that knowingly and
materially takes any of the following actions:’’;
(ii) in subparagraph (B), as des-
ignated by clause (i), by redesignating the
subparagraph designations (A) through
(L) as clauses (i) through (xii), respec-
tively;
(iii) by adding after clause (xii), as re-
designated by clause (ii), the following new
clauses:
‘‘(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
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pursuant to regulations and requirements
of the Secretary.
‘‘(xv) Failure to provide access to the
books, records, and accounts related to the
operations of the mortgaged property and
of the project.’’; 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 new
paragraph:
‘‘(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-
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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,
GENERAL PARTNERS OF PARTNERSHIP MORT-
GAGORS, OFFICERS AND DIRECTORS OF COR-
PORATE MORTGAGORS, AND CERTAIN MANAG-
ING AGENTS’’; and
(7) by adding at the end the following new sub-
section:
‘‘(k) IDENTITY OF INTEREST MANAGING AGENT.—
For purposes of 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 such ownership entity exerts ef-
fective control.’’.
(b) IMPLEMENTATION.—
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(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 such terms
are used in the definition of the terms ‘‘agent em-
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 one 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 such date.
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SEC. 221. 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 by adding at the end
the following new section:
‘‘SEC. 28. CIVIL MONEY PENALTIES AGAINST SECTION 8
OWNERS.
‘‘(a) IN GENERAL.—The penalties set forth in this
section shall be in addition to any other available civil rem-
edy or any available criminal penalty, and may be imposed
regardless of whether the Secretary imposes other admin-
istrative sanctions. The Secretary may not impose pen-
alties under this section for a violation, if a material cause
of the violation is the failure of the Secretary, an agent
of the Secretary, or a public housing agency to comply
with an existing agreement.
‘‘(b) VIOLATIONS
OF HOUSING ASSISTANCE PAY-
MENT CONTRACTS FOR WHICH PENALTY MAY BE IM-
POSED.—
‘‘(1) LIABLE PARTIES.—The Secretary may im-
pose a civil money penalty under this section on—
‘‘(A) any owner of a property receiving
project-based assistance under section 8;
‘‘(B) any general partner of a partnership
owner of such property; and
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‘‘(C) any agent employed to manage such
property that has an identity of interest with
the owner or the general partner of a partner-
ship owner of the property.
‘‘(2) VIOLATIONS.—A penalty may be imposed
under this section for a knowing and material
breach of a housing assistance payments contract,
including the following—
‘‘(A) failure to provide decent, safe, and
sanitary housing pursuant to section 8; or
‘‘(B) knowing or willful submission of
false, fictitious, or fraudulent statements or re-
quests for housing assistance payments to the
Secretary or to any department or agency of
the United States.
‘‘(3) AMOUNT OF PENALTY.—The amount of a
penalty imposed for a violation under this sub-
section, as determined by the Secretary, may not ex-
ceed $25,000 per violation.
‘‘(c) AGENCY PROCEDURES.—
‘‘(1) ESTABLISHMENT.—The Secretary shall
issue regulations establishing standards and proce-
dures governing the imposition of civil money pen-
alties under subsection (b). These standards and
procedures—
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‘‘(A) shall provide for the Secretary or
other department official to make the deter-
mination to impose the penalty;
‘‘(B) shall provide for the imposition of a
penalty only after the liable party has received
notice and the opportunity for a hearing on the
record; and
‘‘(C) may provide for review by the Sec-
retary of any determination or order, or inter-
locutory ruling, arising from a hearing, and ju-
dicial review, as provided under subsection (d).
‘‘(2) FINAL ORDERS.—If a hearing is not re-
quested before the expiration of the 15-day period
beginning on the date on which the notice of oppor-
tunity for hearing is received, the imposition of a
penalty under subsection (b) shall constitute a final
and unappealable determination. If the Secretary re-
views the determination or order, the Secretary may
affirm, modify, or reverse that determination or
order. If the Secretary does not review that deter-
mination or order before the expiration of the 90-
day period beginning on the date on which the deter-
mination or order is issued, the determination or
order shall be final.
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‘‘(3) FACTORS IN DETERMINING AMOUNT OF
PENALTY.—In determining the amount of a penalty
under subsection (b), the Secretary shall take into
consideration—
‘‘(A) the gravity of the offense;
‘‘(B) any history of prior offenses by the
violator (including offenses occurring before the
enactment of this section);
‘‘(C) the ability of the violator to pay the
penalty;
‘‘(D) any injury to tenants;
‘‘(E) any injury to the public;
‘‘(F) any benefits received by the violator
as a result of the violation;
‘‘(G) deterrence of future violations; and
‘‘(H) such other factors as the Secretary
may establish by regulation.
‘‘(4) PAYMENT OF PENALTY.—No payment of a
civil money penalty levied under this section shall be
payable out of project income.
‘‘(d) JUDICIAL REVIEW
OF AGENCY DETERMINA-
TION.—Judicial review of determinations made under this
section shall be carried out in accordance with section
537(e) of the National Housing Act.
‘‘(e) REMEDIES FOR NON-COMPLIANCE.—
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‘‘(1) JUDICIAL INTERVENTION.—If a person or
entity fails to comply with the Secretary’s deter-
mination or order imposing a civil money penalty
under subsection (b), after the determination or
order is no longer subject to review as provided by
subsections (c) and (d), the Secretary may request
the Attorney General of the United States to bring
an action in an appropriate United States district
court to obtain a monetary judgment against that
person or entity and such other relief as may be
available. The monetary judgment may, in the
court’s discretion, include the attorney’s fees and
other expenses incurred by the United States in con-
nection with the action.
‘‘(2) NONREVIEWABILITY
OF
DETERMINATION
OR ORDER.—In an action under this subsection, the
validity and appropriateness of the Secretary’s deter-
mination or order imposing the penalty shall not be
subject to review.
‘‘(f) SETTLEMENT BY SECRETARY.—The Secretary
may compromise, modify, or remit any civil money penalty
which may be, or has been, imposed under this section.
‘‘(g) DEPOSIT OF PENALTIES.—
‘‘(1) Notwithstanding any other provision of
law, where the mortgage covering the property re-
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ceiving section 8 assistance is insured or formerly in-
sured by the Secretary, the Secretary shall apply all
civil money penalties collected under this section to
the appropriate insurance fund or funds established
under this Act, as determined by the Secretary.
‘‘(2) Notwithstanding any other provision of
law, where the mortgage covering the property re-
ceiving section 8 assistance is neither insured nor
formerly insured by the Secretary, the Secretary
shall make all civil money penalties collected under
this section available for use by the appropriate of-
fice within the Department for administrative costs
related to enforcement of the requirements of the
various programs administered by the Secretary.
‘‘(h) DEFINITIONS.—For the purposes of this sec-
tion—
‘‘(1) the term ‘agent employed to manage such
property that has an identity of interest’ means an
entity—
‘‘(A) that has management responsibility
for a project;
‘‘(B) in which the ownership entity, includ-
ing its general partner or partners (if applica-
ble), has an ownership interest; and
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‘‘(C) over which such ownership entity ex-
erts effective control; and
‘‘(2) the term ‘knowing’ means having actual
knowledge of or acting with deliberate ignorance of
or reckless disregard for the prohibitions under this
section.’’.
(b) APPLICABILITY.—The amendments made by sub-
section (a) shall apply only with respect to—
(1) violations that occur on or after the effec-
tive date of 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 such date.
(c) IMPLEMENTATION.—
(1) REGULATIONS.—The Secretary shall imple-
ment the amendments made by this section by regu-
lation issued after notice and opportunity for public
comment. The notice shall seek comments as to the
definitions of the terms ‘‘ownership interest in’’ and
‘‘effective control’’, as such terms are used in the
definition of the term ‘‘agent employed to manage
such property that has an identity of interest’’.
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(2) TIMING.—A proposed rule implementing the
amendments made by this section shall be published
not later than one year from the date of enactment
of this Act.
SEC. 222. EXTENSION OF DOUBLE DAMAGES REMEDY.
Section 421 of the Housing and Community Develop-
ment Act of 1987 is amended—
(1) in subsection (a)(1)—
(A) in the first sentence, by striking ‘‘Act;
or (B)’’ and inserting the following: ‘‘Act; (B)
a regulatory agreement that applies to a multi-
family project whose mortgage is insured or
held by the Secretary under section 202 of the
Housing Act of 1959 (including property sub-
ject to section 202 of such Act as it existed be-
fore enactment of the Cranston-Gonzalez Na-
tional Affordable Housing Act of 1990); (C) a
regulatory agreement or such other form of reg-
ulatory control as may be imposed by the Sec-
retary that applies to mortgages insured or held
by the Secretary under section 542 of the
Housing and Community Development Act of
1992, but not reinsured under section 542 of
the Housing and Community Development Act
of 1992; or (D)’’; and
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(B) in the second sentence, by inserting
after ‘‘agreement’’ the following: ‘‘, or such
other form of regulatory control as may be im-
posed by the Secretary,’’;
(2) by redesignating subsection (a)(2) as sub-
section (a)(3);
(3) by inserting after subsection (a)(1) the fol-
lowing new paragraph:
‘‘(2) The Secretary may request the Attorney
General to bring an action in a United States dis-
trict court to recover management fees refunded to
any person in return for awarding a management
contract to a management agent in connection with
the operation of a multifamily project whose mort-
gage is insured or held by the Secretary under title
II of the National Housing Act, section 202 of the
Housing Act of 1959 (including property subject to
section 202 of such Act as it existed before enact-
ment of the Cranston-Gonzalez National Affordable
Housing Act of 1990) or under section 542 of the
Housing and Community Development Act of 1992.
Any payment by the management agent or an affili-
ate of the management agent to any person shall
be presumed to be a refund in return for awarding
a management contract.’’;
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(4) in subsection (a)(3), as redesignated by
paragraph (2), by inserting after ‘‘Act,’’ the follow-
ing: ‘‘under section 202 of the Housing Act of 1959
(including section 202 of such Act as it existed be-
fore enactment of the Cranston-Gonzalez National
Affordable Housing Act of 1990) and under section
542 of the Housing and Community Development
Act of 1992,’’;
(5) in subsection (b), by inserting after ‘‘agree-
ment’’ the following: ‘‘, or such other form of regu-
latory control as may be imposed by the Secretary,’’;
(6) in subsection (c)—
(A) in the first sentence, by striking ‘‘or
any applicable regulation,’’ and inserting the
following: ‘‘, or such other form of regulatory
control as may be imposed by the Secretary, or
any applicable regulation, or double the value of
the management fees refunded to any person in
return for awarding a management contract to
a management agent,’’; and
(B) in the second sentence, by inserting
before the period the following: ‘‘or, in the case
of any project for which the mortgage is in-
sured or held by the Secretary under section
202 of the Housing Act of 1959 (including
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property subject to section 202 of such Act as
it existed before enactment of the Cranston-
Gonzalez National Affordable Housing Act of
1990), to the project or to the Department for
use by the appropriate office within the Depart-
ment for administrative costs related to enforce-
ment of the requirements of the various pro-
grams administered by the Secretary, as appro-
priate’’; and
(7) by revising subsection (d) to read as follows:
‘‘(d) TIME LIMITATION.—Notwithstanding any other
statute of limitations, the Secretary may request the At-
torney General to bring an action under this section at
any time up to and including 6 years after the latest date
that the Secretary discovers (1) any use of projects assets
and income in violation of the regulatory agreement, or
such other form of regulatory control as may be imposed
by the Secretary, or any applicable regulation, or (2) any
refund of management fees to any person in return for
awarding a management contract to a management
agent.’’.
SEC. 223. OBSTRUCTION OF FEDERAL AUDITS.
Section 1516(a) of title 18, United States Code, is
amended by inserting after ‘‘under a contract or sub-
contract,’’ the following: ‘‘or relating to any property that
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Government National Mortgage Association
with the United States Treasury.’’.
SEC. 225. EXTENSION OF ACCESS TO RECORDS TO PRE-
VENT FRAUD AND ABUSE.
Section 303(i)(5) of the Social Security Act is hereby
repealed.
SEC. 226. CONDITIONS FOR RENEWAL OR EXTENSION OF
HAP CONTRACTS.
The Secretary of Housing and Urban Development
may require that an expiring assistance contract for
project-based assistance under section 8 of the United
States Housing Act of 1937 shall not be renewed or ex-
tended unless the owner executes an agreement to comply
with additional conditions prescribed by HUD, or executes
a new section 8 assistance contract in the form prescribed
by HUD.
Subtitle C—FHA Single Family
Housing
SEC. 230. TERMINATION OF MORTGAGEE ORIGINATION AP-
PROVAL.
Section 533 of the National Housing Act is amended
by adding at the end the following new subsections:
‘‘(c) TERMINATION
OF MORTGAGEE ORIGINATION
APPROVAL.—Notwithstanding section 202(c) of this Act
and in addition to the sanctions available under subsection
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(b) of this section, the Secretary may terminate the ap-
proval of a mortgagee to originate mortgages if the mort-
gagee is determined to present an unacceptable risk to the
insurance funds, on the basis of a comparison between the
indicators of portfolio risk, including rates of delin-
quencies, defaults, and claims, on insured mortgages by
the mortgagee, and the comparable indicators applicable
to other approved mortgagees making insured mortgage
loans in the area.
‘‘(d) DEFINITION
OF MORTGAGEE.—For the pur-
poses of this section, the term ‘mortgagee’ means—
‘‘(1) a mortgagee approved to participate in the
single family mortgage insurance programs under
this Act;
‘‘(2) a lender or loan correspondent approved
under title I of this Act; or
‘‘(3) a branch office or subsidiary of the mort-
gagee, lender, or loan correspondent.’’.
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TITLE III—EXEMPTION OF HUD
AND 
USDA 
MULTIFAMILY
LOAN 
FORECLOSURES 
AND
RELATED ACTIONS FROM THE
BANKRUPTCY STAY
SEC. 301. AUTHORITY TO APPOINT RECEIVER OR TAKE
OTHER ACTION NOT STAYED UNDER SECTION
362(b)(8).
Section 105(b) of title 11 of the United States Code
is amended to read as follows:
‘‘(b) Notwithstanding subsection (a) of this section,
a court may not—
‘‘(1) appoint a receiver in a case under this
title; or
‘‘(2) issue any order, process, or judgment that
operates as a stay of any of the acts excepted from
automatic stay pursuant to section 362(b)(8).’’.
SEC. 302. AUTHORITY TO FORECLOSE OR TAKE OTHER AC-
TION NOTWITHSTANDING THE AUTOMATIC
STAY.
Section 362(b)(8) of title 11 of the United States
Code is amended to read as follows:
‘‘(8)(A) under subsection (a) of this section, of
any act by the Secretary of Housing and Urban De-
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velopment or the Secretary of Agriculture included
under subparagraph (B) relating to property that—
‘‘(i) includes five or more living units and
that is subject to a lien insured or held by the
Secretary of Housing and Urban Development,
including a lien held in the name of the United
States of America acting by and through the
Secretary of Housing and Urban Development;
‘‘(ii) includes five or more living units and
that is subject to a lien insured or held by the
Secretary of Agriculture pursuant to title V of
the Housing Act of 1949;
‘‘(iii) is subject to a lien insured or held by
the Secretary of Housing and Urban Develop-
ment pursuant to title X of the National Hous-
ing Act, as it existed immediately before the ef-
fective date of the Department of Housing and
Urban Development Reform Act of 1989;
‘‘(iv) is a hospital or nursing home and
that is subject to a lien insured or held by the
Secretary of Housing and Urban Development;
‘‘(v) is a project for the elderly or persons
with disabilities subject to a lien held by the
Secretary of Housing and Urban Development
under section 202 of the Housing Act of 1959
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or section 811 of the Cranston-Gonzalez Na-
tional Affordable Housing Act; or
‘‘(vi) is subject to a lien under section 312
of the Housing Act of 1964, as it existed imme-
diately before October 1, 1991, except a lien on
property or combinations of property with up
to, and including, four living units, which prop-
erty has no commercial space.
‘‘(B) The acts of the Secretary of Housing
and Urban Development or the Secretary of
Agriculture referred to in subparagraph (A) in-
clude—
‘‘(i) the commencement, continuation,
or completion of any act or proceeding by
either Secretary for obtaining and applying
cash collateral; for obtaining possession
pursuant to contract with the debtor or
otherwise; for appointment of a receiver;
for foreclosure of a mortgage or other lien;
or for sale and conveyance of title to real
or personal property; or
‘‘(ii) any other act to protect the fi-
nancial position or interest of either Sec-
retary, which act is authorized under any
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applicable contract, regulatory agreement,
regulation, or statute.’’.
TITLE 
IV—FHA 
MULTIFAMILY
HOUSING 
CONSOLIDATION
AND REFORM
SEC. 401. SHORT TITLE.
This title may be cited as the ‘‘FHA Multifamily
Housing Reform Act of 1997’’.
SEC. 402. IMPLEMENTATION.
(a) ISSUANCE OF NECESSARY REGULATIONS.—Not-
withstanding 42 U.S.C. 3535(o) or 24 CFR part 10, the
Secretary shall issue such regulations as may be necessary
to implement any provision of this Act, and any amend-
ment made by this Act, in accordance with section 552
or 553 of title 5, United States Code, as determined by
the Secretary.
(b) USE OF EXISTING RULES.—In implementing any
provision of this Act, the Secretary may, in the Secretary’s
discretion, provide for the use of existing rules to the ex-
tent appropriate, without the need for further rulemaking.
Subtitle A—FHA Multifamily
Housing
SEC. 410. BASIC AUTHORITY.
The National Housing Act is amended by inserting
the following new title after title III:
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‘‘TITLE 
IV—CREDIT 
ENHANCE-
MENT 
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-
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;
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‘‘(7) engage in research, development, and test-
ing of new products designed to 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-
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
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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 or 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 meet standards acceptable to the Secretary, in-
cluding standards governing licensure or State or
local approval and regulation of the mortgagor.
‘‘(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.
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‘‘(5) The term ‘mortgagee’ means the original
lender under a mortgage, and its successors and as-
signs, and 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—
‘‘(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-
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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-
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
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Home Loan Mortgage Corporation, a qualified fi-
nancial institutions, 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
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.—
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‘‘(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.
‘‘(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
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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
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,
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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) ELIGIBLITY 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—
‘‘(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
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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-
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 en-
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tity in an amount equal to an agreed upon
percentage of the loss assumed by the en-
tity under paragraph (3);
‘‘(C) funds pledged through a State or
local guarantee fund; or
‘‘(D) any other form of evidence mu-
tually 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-
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
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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
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
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‘‘(e) NON-FEDERAL PARTICIPATION.—The Secretary
shall carry out this section, to the maximum extent prac-
ticable, with the participation of well-established residen-
tial mortgage originators, financial institutions that invest
in multifamily housing project and health care facility
mortgages multifamily housing project and health care fa-
cility sponsors, and such other private sector experts in
multifamily housing project and health care facility financ-
ing as the Secretary determines to be appropriate.
‘‘(f) QUALIFICATION AS AFFORDABLE HOUSING.—
Multifamily housing projects securing loans insured or re-
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 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-
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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, issurance 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-
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-
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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
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-
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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);
‘‘(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-
HR 1433 IH2S
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
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-
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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.
‘‘(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—
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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.
‘‘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.