SEC. 2. AMOUNTS RECEIVED FROM RELEASE OF FEDERAL 
NATIONAL 
MORTGAGE 
ASSOCIATION 
AND 
FEDERAL HOME LOAN MORTGAGE CORPORA-
TION. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, any amounts received by the Federal Govern-
ment as a result of the release of the Federal National 
Mortgage Association and the Federal Home Loan Mort-
gage Corporation shall be transferred to a trust fund to 
be used solely for the purpose described in section 3 for 
a period of 10 years after the date of such transfer. 
(b) DEFICIT REDUCTION.—On the date that is 10 
years after the transfer described in subsection (a), the 
capitalization loans described in section 3 shall be paid 
back by the States to the General Fund of the Treasury, 
dedicated for the sole purpose of deficit reduction. 
SEC. 3. REVOLVING LOAN FUND FOR MIDDLE-CLASS HOUS-
ING SUPPLY. 
(a) DEFINITIONS.—In this section: 
(1) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(2) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Colombia, and the 
territories of the United States. 
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(3) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ means a local government or non-profit organi-
zation that receives a loan from a State loan fund. 
(b) GENERAL AUTHORITY.— 
(1) LOANS TO STATES TO ESTABLISH STATE 
LOAN FUNDS.— 
(A) IN GENERAL.—The Secretary shall, to 
the extent that amounts are available under 
section 2 and the extent that States meet the 
requirements of this Act, enter into agreements 
with States to make capitalization loans, out of 
amounts received pursuant to section 2, to such 
States for the establishment of housing revolv-
ing loan funds for providing funding assistance 
to eligible entities to carry out eligible projects 
under this section to increase the supply of 
housing available for middle-class Americans, as 
determined by the Secretary. 
(B) AGREEMENTS.—Any agreement en-
tered into under this section shall require 
States to— 
(i) comply with the requirements of 
this section; and 
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(ii) use accounting, audit, and fiscal 
procedures conforming to generally accept-
ed accounting standards. 
(C) ESTABLISHMENT OF FUND.—To be el-
igible to receive a capitalization loan under this 
section, a State shall establish a housing revolv-
ing loan fund (referred to in this section as a 
‘‘State loan fund’’) and comply with the other 
requirements of this section. Each loan to a 
State under this section shall be deposited in 
the State loan fund established by the State, 
except as otherwise provided in this section. 
(D) EXTENDED PERIOD.—The loan to a 
State shall be available to the State for obliga-
tion during the fiscal year for which the funds 
are authorized and during the following fiscal 
year. 
(E) ALLOTMENT FORMULA.—Funds made 
available to carry out this section shall be allot-
ted to States that have entered into an agree-
ment pursuant to this section based on, as de-
termined by the Secretary— 
(i) the share of total need for an in-
creased supply of affordable housing for 
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families of different sizes between 80 and 
165 percent of the area median income; 
(ii) inadequate housing supply and 
substandard housing in the State; 
(iii) costs of producing housing in the 
State, including increased funds in States 
with a high cost of producing housing; and 
(iv) any other factors as determined 
by the Secretary. 
(2) USE OF FUNDS.— 
(A) IN
GENERAL.—Except as otherwise 
authorized by this section, amounts deposited in 
a State loan fund, including loan repayments 
and interest earned on such amounts, shall be 
used only for providing loans or loan guarantees 
to eligible entities, or as a source of reserve and 
security for leveraged loans, the proceeds of 
which are deposited in a State loan fund estab-
lished under paragraph (1). 
(B) ELIGIBLE USES.—Financial assistance 
provided to an eligible entity under this section 
may be used by such entity to— 
(i) support homeownership and rental 
housing affordability, as described in sub-
section (g), for middle-income persons and 
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families through the new construction or 
rehabilitation of housing; 
(ii) conduct related activities including 
real property acquisition, site improvement, 
conversion, demolition; 
(iii) provide for other expenses, in-
cluding financing costs and relocation ex-
penses of any displaced persons, families, 
businesses, or organizations; or 
(iv) provide for the payment of rea-
sonable administrative and planning costs. 
(C) INELIGIBLE
USES.—Funds provided 
under this section may not be used to— 
(i) modernize public housing; 
(ii) provide tenant-based assistance 
under section 8(o) of the United States 
Housing 
Act 
of 
1937 
(42 
U.S.C. 
1437f(o)); 
(iii) support ongoing operational costs 
of rental housing; 
(iv) pay back taxes or fees on prop-
erties that are or will be assisted under 
this section; and 
(v) provide non-Federal matching 
funds for any other Federal program. 
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(D) SALE OF BONDS.—Funds may also be 
used by a State as a source of revenue (re-
stricted solely to interest earnings of the appli-
cable State loan fund) or security for payment 
of the principal and interest on revenue or gen-
eral obligation bonds issued by the State to pro-
vide matching funds under subsection (d), if the 
proceeds of the sale of the bonds will be depos-
ited in the State loan fund. 
(3) LIMITATION.—No assistance under this sec-
tion shall be provided to an eligible entity that does 
not have the technical, managerial, and financial ca-
pability to ensure compliance with the requirements 
of this section. 
(c) FUND MANAGEMENT.—Each State loan fund 
under this section shall be established, maintained, and 
credited with repayments and interest. The fund corpus 
shall be available in perpetuity for providing financial as-
sistance under this section. To the extent amounts in the 
fund are not required for current obligation or expendi-
ture, such amounts shall be invested in interest bearing 
obligations. 
(d) STATE CONTRIBUTION.—Each agreement under 
subsection (b) shall require that the State deposit in the 
State loan fund from cash contributions from non-Federal 
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resources an amount equal to at least 20 percent of the 
total amount of the loan to be made to the State on or 
before the date on which the loan payment is made to the 
State. 
(e) TYPES
OF ASSISTANCE.—Except as otherwise 
limited by State law, the amounts deposited into a State 
loan fund under this section may be used only— 
(1) to make loans to eligible entities for the 
purposes described in subsection (b)(2), on the con-
dition that— 
(A) the interest rate for each loan is less 
than or equal to the market interest rate, in-
cluding an interest-free loan; 
(B) principal and interest payments on 
each loan will commence not later than 18 
months after completion of the project for 
which the loan was made; 
(C) each loan will be fully amortized not 
later than 30 years after the completion of the 
project, except that a State may provide an ex-
tended term for a loan, if the extended term— 
(i) terminates not later than the date 
that is 40 years after the date of project 
completion; and 
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(ii) does not exceed the expected de-
sign life of the project; 
(D) the recipient of each loan will establish 
a dedicated source of revenue (or, in the case 
of a privately owned system, demonstrate that 
there is adequate security) for the repayment of 
the loan; and 
(E) the State loan fund will be credited 
with all payments of principal and interest on 
each loan; 
(2) to buy or refinance the debt obligation of a 
municipality or an intermunicipal or interstate agen-
cy within the State at an interest rate that is less 
than or equal to the market interest rate in any case 
in which a debt obligation is incurred after the date 
this bill takes effect; 
(3) to guarantee, or purchase insurance for, a 
local obligation (all of the proceeds of which finance 
a project eligible for assistance under this section) if 
the guarantee or purchase would improve credit 
market access or reduce the interest rate applicable 
to the obligation; 
(4) as a source of revenue or security for the 
payment of principal and interest on revenue or gen-
eral obligation bonds issued by the State if the pro-
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ceeds of the sale of the bonds will be deposited into 
the State loan fund; and 
(5) to earn interest on the amounts deposited 
into the State loan fund. 
(f) ADMINISTRATION OF STATE LOAN FUNDS.— 
(1) COMBINED FINANCIAL ADMINISTRATION.— 
A State may (as a convenience and to avoid unnec-
essary administrative costs) combine, in accordance 
with State law, the financial administration of a 
State loan fund established under this section with 
the financial administration of any other revolving 
fund established by the State if otherwise not pro-
hibited by the law under which the State loan fund 
was established and if the Secretary determines 
that— 
(A) the loans under this section, together 
with loan repayments and interest, will be sepa-
rately accounted for and used solely for the 
purposes specified in subsection (b); and 
(B) the authority to establish assistance 
priorities and carry out oversight and related 
activities (other than financial administration) 
with respect to assistance remains with the 
State agency having primary responsibility for 
administration of the State program, after con-
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sultation with other appropriate State agencies 
(as determined by the State). 
(2) COST OF ADMINISTERING FUND.— 
(A) AUTHORIZATION.— 
(i) IN
GENERAL.—For each fiscal 
year, a State may use the amount de-
scribed in clause (ii)— 
(I) to cover the reasonable costs 
of administration of the programs 
under this section, including the re-
covery of reasonable costs expended to 
establish a State loan fund that are 
incurred after the date this section 
takes effect; and 
(II) to provide technical assist-
ance to eligible entities within the 
State. 
(ii) DESCRIPTION OF AMOUNT.—The 
amount referred to in clause (i) is an 
amount equal to the sum of— 
(I) the amount of any fees col-
lected by the State for use in accord-
ance with clause (i)(I), regardless of 
the source; and 
(II) the greatest of— 
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(aa) $400,000; 
(bb) 1⁄5 percent of the cur-
rent valuation of the fund; and 
(cc) an amount equal to 4 
percent of all loan awards to the 
fund under this section for the 
fiscal year. 
(B) ADDITIONAL USE OF FUNDS.—For fis-
cal year 2026 and each fiscal year thereafter, 
each State may use up to an additional 10 per-
cent of the funds allotted to the State under 
this section to administer or provide technical 
assistance to eligible entities. 
(C) TECHNICAL
ASSISTANCE.—An addi-
tional 2 percent of the funds annually allotted 
to each State under this section may be used by 
the State to provide technical assistance to eli-
gible entities serving 10,000 or fewer persons in 
the State. 
(3) GUIDANCE AND REGULATIONS.—The Sec-
retary shall publish guidance and promulgate regula-
tions as may be necessary to carry out the provisions 
of this section, including— 
(A) provisions to ensure that each State 
commits and expends funds allotted to the 
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State under this section as efficiently as pos-
sible in accordance with this section and appli-
cable State laws; 
(B) guidance to prevent waste, fraud, and 
abuse; and 
(C) guidance to ensure that the States, 
and eligible entities, use accounting, audit, and 
fiscal procedures that conform to generally ac-
cepted accounting standards. 
(4) STATE REPORT.—Each State administering 
a State loan fund and assistance program under this 
subsection shall publish and submit to the Secretary 
a report every 2 years on its activities under this 
section, including the findings of the most recent 
audit of the fund and the entire State allotment. 
The Secretary shall periodically audit all State loan 
funds established by, and all other amounts allotted 
to, the States pursuant to this section in accordance 
with procedures established by the Comptroller Gen-
eral. 
(g) QUALIFIED HOUSING.— 
(1) RENTAL HOUSING.— 
(A) IN GENERAL.—For not less than 15 
years after housing is assisted under this sec-
tion, housing that is for rental shall qualify as 
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affordable housing under this section only if the 
housing— 
(i) bears rents that— 
(I) are not greater than the exist-
ing fair market rent for comparable 
units in the area, as established by 
the Secretary; or 
(II) does not exceed 30 percent 
of 165 percent of the median income 
for the area and is not below 30 per-
cent of 80 percent of the median in-
come for the area, as determined by 
the Secretary, with adjustment for 
number of bedrooms in the unit, ex-
cept that the Secretary may establish 
higher or lower income parameters on 
the basis of the Secretary’s findings 
that such variations are necessary be-
cause of prevailing levels of construc-
tion costs or fair market rents, or un-
usually high or low family incomes; 
(ii) is occupied only by households 
with income at or lower than the area me-
dian income at which the rental price 
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would be 30 percent of the area median in-
come; and 
(iii) if newly constructed, meets the 
same energy efficiency standards promul-
gated by the Secretary pursuant to section 
109 of the Cranston-Gonzalez National Af-
fordable Housing Act (42 U.S.C. 12709). 
(B) 
ADJUSTMENT
OF
QUALIFYING 
RENT.—The Secretary may adjust the quali-
fying rent established for a project under sub-
paragraph (A), only if the Secretary finds that 
such adjustment is necessary to support the 
continued financial viability of the project and 
only by such amount as the Secretary deter-
mines is necessary to maintain continued finan-
cial viability of the project. 
(C) MIXED-INCOME
PROJECT.—Housing 
that accounts for less than 100 percent of the 
dwelling units in a project financed under this 
section shall qualify for loans under this section 
if such housing meets the criteria of this Act. 
(D) MIXED-USE PROJECT.—Housing in a 
project that is designed in part for uses other 
than residential use shall qualify for loans 
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under this section if such housing meets the cri-
teria of this Act. 
(E) WAIVER OF QUALIFYING RENT.—For 
the purpose of providing affordable housing, the 
Secretary may, upon the application of the 
project owner, waive the applicability of sub-
paragraph (A) with respect to a dwelling unit 
if— 
(i) the rent for the unit is not greater 
than the existing fair market rent for com-
parable units in the area, as established by 
the Secretary; and 
(ii) the Secretary determines that the 
waiver, together with waivers under this 
paragraph for other dwelling units in the 
project, will result in the use of amounts in 
an effective manner that will improve the 
provision of affordable housing for such 
families. 
(2) HOMEOWNERSHIP.—Housing that is for 
homeownership shall qualify as affordable housing 
under this section only if the housing— 
(A) with respect to housing with 5 or more 
units, includes— 
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(i) 50 percent of such housing units 
that are affordable for families whose in-
come is between 120 and 165 percent of 
the median income for the area, as deter-
mined by the Secretary; and 
(ii) 20 percent of such housing units 
that are affordable for families whose in-
come is under 80 percent of the median in-
come for the area, as determined by the 
Secretary; 
(B) with respect to housing with 1 to 4 
units, is affordable for families whose income is 
between 80 and 165 percent of the median in-
come for the area, as determined by the Sec-
retary; 
(C) is subject to resale restrictions, for 5 
years, that are established by the eligible entity 
and determined by the Secretary to be appro-
priate to— 
(i) allow for subsequent purchase of 
the property only by persons who meet the 
qualifications specified under subpara-
graphs (A) and (B), at a price which 
will— 
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(I) provide the owner with a fair 
return on investment, including any 
improvements, and 
(II) ensure that the housing will 
remain affordable to a reasonable 
range of middle-income homebuyers; 
or 
(ii) recapture the investment provided 
under this section in order to assist other 
persons in accordance with the require-
ments of this section, except where there 
are no net proceeds or where the net pro-
ceeds are insufficient to repay the full 
amount of the assistance; and 
(D) if newly constructed, meets the same 
energy efficiency standards promulgated by the 
Secretary pursuant to section 109 of the Cran-
ston-Gonzalez National Affordable Housing Act 
(42 U.S.C. 12709). 
(h) LABOR REQUIREMENTS.—An eligible entity that 
receives a loan under this section must comply with the 
following requirements with respect to urban areas with 
an average greater than 2,000 housing units per adjacent 
census block: 
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(1) APPRENTICESHIP REQUIREMENTS.—The re-
quirements described in this paragraph with respect 
to the construction of any housing unit are as fol-
lows: 
(A) LABOR HOURS.—Eligible entities shall 
ensure that, with respect to the construction of 
any housing unit, not less than 15 percent of 
the total labor hours of the construction, alter-
ation, or rehabilitation work (including such 
work performed by any contractor or subcon-
tractor) with respect to such unit shall, subject 
to subparagraph (B), be performed by qualified 
apprentices. 
(B) APPRENTICE
TO
JOURNEYWORKER 
RATIO.—The requirement under subparagraph 
(A) shall be subject to any applicable require-
ments for apprentice-to-journeyworker ratios of 
the Department of Labor or the applicable 
State apprenticeship agency. 
(C) PARTICIPATION.—Each eligible entity, 
contractor, or subcontractor who employs 4 or 
more individuals to perform construction, alter-
ation, or repair work with respect to the con-
struction of a housing unit shall employ 1 or 
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more qualified apprentices to perform such 
work. 
(D) EXCEPTION.— 
(i) IN
GENERAL.—An eligible entity 
shall not be treated as failing to satisfy the 
requirements of this paragraph if such eli-
gible entity— 
(I) satisfies the requirements de-
scribed in clause (ii); or 
(II) in the case of any failure by 
the eligible entity to satisfy the re-
quirement under subparagraphs (A) 
and (C) with respect to the construc-
tion, alteration, or rehabilitation work 
on any housing unit to which sub-
clause (I) does not apply, makes pay-
ment to the Secretary of a penalty in 
an amount equal to the product of— 
(aa) $50; multiplied by 
(bb) the total labor hours 
for which the requirement de-
scribed in such subparagraph was 
not satisfied with respect to the 
construction, alteration, or repair 
work on such housing unit. 
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(ii) GOOD FAITH EFFORT.—For pur-
poses of clause (i), an eligible entity shall 
be deemed to have satisfied the require-
ments under this paragraph with respect 
to a housing unit if such eligible entity has 
requested qualified apprentices from a reg-
istered apprenticeship program, and— 
(I) such request has been denied, 
provided that such denial is not the 
result of a refusal by the eligible enti-
ty or any contractors or subcontrac-
tors engaged in the performance of 
construction, 
alteration, 
or 
repair 
work with respect to such housing 
unit to comply with the established 
standards and requirements of the 
registered apprenticeship program; or 
(II) the registered apprenticeship 
program fails to respond to such re-
quest within 5 business days after the 
date on which such registered appren-
ticeship program received such re-
quest. 
(E) DEFINITIONS.—For purposes of this 
paragraph— 
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(i) LABOR HOURS.—The term ‘‘labor 
hours’’— 
(I) means the total number of 
hours devoted to the performance of 
construction, 
alteration, 
or 
repair 
work by any individual employed by 
the eligible entity or by any contractor 
or subcontractor; and 
(II) excludes any hours worked 
by— 
(aa) foremen; 
(bb) superintendents; 
(cc) owners; or 
(dd) persons employed in a 
bona fide executive, administra-
tive, 
or 
professional 
capacity 
(within the meaning of those 
terms in part 541 of title 29, 
Code of Federal Regulations). 
(ii) QUALIFIED
APPRENTICE.—The 
term ‘‘qualified apprentice’’ means an indi-
vidual who is employed by the eligible enti-
ty or by any contractor or subcontractor 
and who is participating in a registered ap-
prenticeship program. 
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(2) PREVAILING WAGE REQUIREMENTS.— 
(A) DAVIS-BACON.—All laborers and me-
chanics employed by contractors or subcontrac-
tors in the performance of construction, alter-
ation, or repair work on a project assisted in 
whole or in part by funding made available 
under this section shall be paid wages at rates 
not less than those prevailing on similar 
projects in the locality, as determined by the 
Secretary of Labor in accordance with sub-
chapter IV of chapter 31 of title 40, United 
States Code (commonly referred to as the 
‘‘Davis-Bacon Act’’). 
(B) AUTHORITY.—With respect to the 
labor standards specified in subparagraph (A), 
the Secretary of Labor shall have the authority 
and functions set forth in Reorganization Plan 
No. 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) 
and section 3145 of title 40, United States 
Code. 
(3) I–9 COMPLIANCE.—The eligible entity or 
any contractor or subcontractor in the construction 
of any housing unit shall complete documentation to 
establish that any laborers or mechanics employed 
by the eligible entity or any contractor or subcon-
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tractor is eligible to work in the United States, in 
accordance with part VIII of subchapter II of chap-
ter 12 of title 8, United States Code. 
(4) PROJECT LABOR AGREEMENTS.— 
(A) IN
GENERAL.—A contractor for a 
project carried out under this section that is a 
construction project shall be a party to a cov-
ered project labor agreement. 
(B) DEFINITIONS.—In this paragraph: 
(i) COVERED PROJECT LABOR AGREE-
MENT.—The term ‘‘covered project labor 
agreement’’ means a project labor agree-
ment that— 
(I) binds all contractors and sub-
contractors 
on 
the 
construction 
project through the inclusion of ap-
propriate specifications in all relevant 
solicitation provisions and contract 
documents; 
(II) allows all contractors and 
subcontractors to compete for con-
tracts and subcontracts without re-
gard to whether they are otherwise a 
party to a collective bargaining agree-
ment; 
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(III) contains guarantees against 
strikes, lockouts, and other similar job 
disruptions; 
(IV) sets forth effective, prompt, 
and mutually binding procedures for 
resolving labor disputes arising during 
the covered project labor agreement; 
and 
(V) provides other mechanisms 
for labor-management cooperation on 
matters of mutual interest and con-
cern, including productivity, quality of 
work, safety, and health. 
(ii) PROJECT
LABOR
AGREEMENT.— 
The term ‘‘project labor agreement’’ means 
a pre-hire collective bargaining agreement 
with one or more labor organizations that 
establishes the terms and conditions of em-
ployment for a specific construction project 
and is described in section 8(f) of the Na-
tional Labor Relations Act (29 U.S.C. 
158(f)). 
(5) RESPONSIBLE CONTRACTOR POLICY.—Any 
contractor or subcontractor for a project carried out 
with funds provided under this section shall— 
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(A) follow all applicable Federal, State, 
and local laws, including such laws related to 
required licenses, registrations, certifications, 
insurance, and other credentials; 
(B) within the previous 10 years, not have 
been convicted of any crime relating to the con-
tracting business of such contractor or subcon-
tractor; and 
(C) within the previous 8 years, not have— 
(i) been debarred or suspended by a 
Federal, State, or local government agency 
or authority; 
(ii) defaulted on a project; 
(iii) had any type of business, con-
tracting or trade license, registration, or 
other certification revoked or suspended; 
and 
(iv) been found in violation of any law 
applicable to the business of the contractor 
or subcontractor, including licensing, tax, 
wage and hour, prevailing wage, labor, em-
ployment, environmental, safety laws, or 
others, where the result of such violation 
was the payment of a fine, back pay dam-
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ages or any other type of penalty in the 
amount of $5,000 or more. 
(6) REGULATIONS AND GUIDANCE.—The Sec-
retary shall issue such regulations or other guidance 
as the Secretary determines necessary to carry out 
the purposes of this subsection, including regulations 
or other guidance which provides for requirements 
for recordkeeping or information reporting for pur-
poses of administering the requirements of this sub-
section. 
Æ 
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