I
108TH CONGRESS
1ST SESSION
H. R. 2189
To amend the Solid Waste Disposal Act to assist homeowners with properties
contaminated by leaking underground storage tanks in moving from
such properties on a temporary or permanent basis by authorizing the
Secretary of Housing and Urban Development to guarantee loans to
such homeowners.
IN THE HOUSE OF REPRESENTATIVES
MAY 21, 2003
Mr. KANJORSKI introduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on Energy
and Commerce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To amend the Solid Waste Disposal Act to assist homeowners
with properties contaminated by leaking underground
storage tanks in moving from such properties on a tem-
porary or permanent basis by authorizing the Secretary
of Housing and Urban Development to guarantee loans
to such homeowners.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Emergency Home Fi-
nancing Assistance Act’’.
SEC. 2. GUARANTEED LOAN PROGRAM.
(a) AMENDMENT.—Subtitle I of the Solid Waste Dis-
posal Act (42 U.S.C. 6991 et seq.) is amended by adding
at the end the following new section:
‘‘HUD LOAN GUARANTEES FOR OWNERS OF HOMES
AFFECTED BY LEAKING UNDERGROUND STORAGE TANKS
‘‘SEC. 9011. (a) PROGRAM AUTHORITY.—
‘‘(1) IN GENERAL.—In accordance with the pro-
visions of this section, the Secretary of Housing and
Urban Development (in this section referred to as
the ‘Secretary’) may guarantee, and make commit-
ments to guarantee, loans made to homeowners
whose properties have been contaminated, and re-
duced in value, by leaking underground storage
tanks to assist such homeowners to obtain other
temporary or permanent residences or to obtain the
equity in the property for any other purpose.
‘‘(2) ADMINISTRATION BY SPECIAL MASTER.—
The Secretary shall administer the loan guarantee
program under this section through a Special Mas-
ter, who shall be appointed by the Secretary. The
Special Master shall carry out all functions of the
Secretary under this section, including the promul-
gation of any substantive and procedural rules for
the administration of the program.
‘‘(b) ELIGIBLE LOANS.—To be eligible to be guaran-
teed under this section, a loan shall meet the following
requirements:
‘‘(1) USE.—The proceeds of the loan may be
used only for the purpose of—
‘‘(A) acquiring, by purchase or lease, a
property consisting of one to four dwelling
units, which shall be occupied as the principal
residence of the borrower; or
‘‘(B) obtaining the equity in the property
for any other purpose, to the extent provided
under paragraph (5)(C).
‘‘(2) BORROWER.—The loan shall be made to a
borrower who is the owner of a qualified property
under subsection (c).
‘‘(3) LENDER.—The loan shall be made by a
lender approved by and meeting qualifications estab-
lished by the Secretary. The following lenders are
deemed to be approved under this paragraph:
‘‘(A) Any mortgagee approved by the Sec-
retary of Housing and Urban Development for
participation in the single family mortgage in-
surance program under title II of the National
Housing Act.
‘‘(B) Any lender whose housing loans
under chapter 37 of title 38, United States
Code, are automatically guaranteed pursuant to
section 1802(d) of such title.
‘‘(C) Any lender approved by the Secretary
of Agriculture to make guaranteed loans for
single family housing under the Housing Act of
1949.
‘‘(D) Any other lender that is supervised,
approved, regulated, or insured by any agency
of the Federal Government.
‘‘(4) SECURITY.—The loan shall be secured by
the qualified property of the borrower.
‘‘(5) TERMS.—The loan shall—
‘‘(A) be made for a term not exceeding 30
years;
‘‘(B) bear interest (exclusive of the guar-
antee fee under subsection (e)(3) and service
charges, if any) at a rate agreed upon by the
borrower and the lender and determined by the
Secretary to be reasonable, which may not ex-
ceed the rate generally charged in the area (as
determined by the Secretary) for home mort-
gage loans not guaranteed or insured by any
agency or instrumentality of the Federal Gov-
ernment; and
‘‘(C) involve a principal obligation not
exceeding—
‘‘(i) the dollar amount limitation de-
termined under section 305(a)(2) of the
Federal Home Loan Mortgage Corporation
Act for a single-family residence (as such
limitation is adjusted annually);
‘‘(ii) the amount approved by the Sec-
retary under this section; or
‘‘(iii) 100 percent of the pre-release
fair market value of the qualified property
owned by the borrower, as determined by
the Secretary.
‘‘(c) QUALIFIED PROPERTY.—For purposes of this
section, a qualified property is a one- to four-family resi-
dence that—
‘‘(1) is located on real property on any part of
which is within an area that is affected by a release
from an underground storage tank, as determined
by the Secretary;
‘‘(2) immediately before the making of the loan
guaranteed under this section, is the principal resi-
dence of the borrower under the loan (unless the
borrower has temporarily relocated to avoid the con-
sequences of the release referred to in paragraph
(1));
‘‘(3) is determined by the Secretary to be cov-
ered by an agreement entered into under subsection
(d); and
‘‘(4) is determined by the Secretary to be eligi-
ble for a loan guaranteed under this section.
‘‘(d) AGREEMENTS WITH LOCAL HOUSING AGEN-
CIES TO MAINTAIN UNOCCUPIED PROPERTIES AND TAKE
TITLE.—An agreement under this subsection is a legally
binding agreement entered into between the Secretary and
a public housing agency (as such term is defined in section
3(b) of the United States Housing Act of 1937 (42 U.S.C.
1437a(b)) or other entity selected by the Secretary that
provides that—
‘‘(1) in the case of a loan guaranteed under this
section under which the borrower maintains the bor-
rower’s interest in a qualified property located with-
in the jurisdiction of the public housing agency or
other such entity, the public housing agency or other
entity shall take any actions necessary to physically
maintain the qualified property during the period
that such property remains unoccupied by the bor-
rower;
‘‘(2) in the case of a loan guaranteed under this
section under which the borrower does not retain the
borrower’s interest in a qualified property located
within the jurisdiction of the public housing agency
or other such entity, the public housing agency or
other entity shall take title to the qualified property
and shall take any actions necessary to physically
maintain the qualified property during any period
that the property remains unoccupied; and
‘‘(3) in the event that the Secretary obtains
title to a qualified property located within the juris-
diction of the public housing agency or other such
entity, pursuant to a default on a loan guaranteed
under this section, the public housing agency or
other entity shall take title to the qualified property
from the Secretary and shall take any actions nec-
essary to physically maintain the qualified property
during any period that the property remains unoccu-
pied.
Nothing in this subsection may be construed to prevent
a public housing agency or other entity selected by the
Secretary, that enters into an agreement under this sub-
section, from entering into an agreement with another en-
tity to carry out any portion of the responsibilities of the
public housing agency or entity selected by the Secretary
under the agreement under this subsection.
‘‘(e) GUARANTEE.—
‘‘(1) LIMITATION.—The Secretary may not
guarantee, or make a commitment to guarantee, any
loan under this section in an amount exceeding 90
percent of the principal amount of the loan.
‘‘(2) PRIVATE GUARANTEE OR INSURANCE.—To
be eligible for a guarantee under this section, any
portion of a loan that is not guaranteed by the Sec-
retary shall be covered by a guarantee or mortgage
insurance provided by a State or local agency or a
private mortgage insurer.
‘‘(3) FEE.—The Secretary shall fix and collect
a guarantee fee for the guarantee of loans under this
section, which shall be a percentage of the principal
amount of the loan guaranteed under this section
that does not exceed the percentage allowable under
section 438(c)(2) of the Higher Education Act of
1965 (20 U.S.C. 1087–1(c)(2)) to be charged as an
origination fee under such section. The fee shall be
paid by the lender at time of issuance of the guar-
antee and shall be adequate, in the determination of
the Secretary, to cover expenses and probable losses.
The Secretary shall deposit any fees collected under
this subsection in the loan guarantee fund estab-
lished under subsection (i) of this section.
‘‘(4) LIABILITY.—The liability under a guar-
antee provided under this section shall decrease or
increase on a pro rata basis according to any de-
crease or increase in the amount of the unpaid obli-
gation under the provisions of the loan agreement.
‘‘(f) CERTIFICATE OF GUARANTEE.—
‘‘(1) APPROVAL
PROCESS.—Before the Sec-
retary approves any loan for guarantee under this
section, the lender shall submit the application for
the loan to the Secretary for examination. If the
Secretary approves the loan for guarantee, the Sec-
retary shall issue a certificate under this paragraph
as evidence of the guarantee.
‘‘(2) STANDARD
FOR
APPROVAL.—The Sec-
retary may approve a loan for guarantee under this
section and issue a certificate under this paragraph
only if the Secretary determines there is a reason-
able prospect of repayment of the loan.
‘‘(3) EFFECT.—A certificate of guarantee
issued under this paragraph by the Secretary shall
be conclusive evidence of the eligibility of the loan
for guarantee under the provisions of this section
and the amount of such guarantee. Such evidence
shall be incontestable in the hands of the bearer and
the full faith and credit of the United States is
pledged to the payment of all amounts agreed to be
paid by the Secretary as security for such obliga-
tions.
‘‘(4) FRAUD AND MISREPRESENTATION.—This
subsection may not be construed to preclude the
Secretary from establishing defenses against the
original lender based on fraud or material misrepre-
sentation or to bar the Secretary from establishing
by regulations in effect on the date of issuance or
disbursement, whichever is earlier, partial defenses
to the amount payable on the guarantee.
‘‘(g) 
TRANSFER
AND
ASSUMPTION.—Notwith-
standing any other provision of law, any loan guaranteed
under this section, including the security given for the
loan, may be sold or assigned by the lender to any finan-
cial institution subject to examination and supervision by
an agency of the Federal Government or of any State or
the District of Columbia.
‘‘(h) PAYMENT UNDER GUARANTEE.—
‘‘(1) NOTIFICATION OF DEFAULT.—In the event
of default by the borrower on a loan guaranteed
under this section, the holder of the guarantee cer-
tificate shall provide written notice of the default to
the Secretary.
‘‘(2) PAYMENT OPTIONS.—Upon providing such
notice, the holder of the guarantee certificate shall
be entitled to payment under the guarantee (subject
to the provisions of this section) and may proceed to
obtain payment in one of the following manners:
‘‘(A) FORECLOSURE.—The holder of the
certificate may initiate foreclosure proceedings
(after providing written notice of such action to
the Secretary) and upon a final order by the
court authorizing foreclosure and submission to
the Secretary of a claim for payment under the
guarantee, the Secretary shall pay to the holder
of the certificate the pro rata portion of the
amount guaranteed (as determined pursuant to
subsection (e)) plus reasonable fees and ex-
penses as approved by the Secretary. The Sec-
retary shall be subrogated to the rights of the
holder of the guarantee and the lender holder
shall assign the obligation and security to the
Secretary.
‘‘(B) NO FORECLOSURE.—Without seeking
foreclosure (or in any case in which a fore-
closure proceeding initiated under subparagraph
(A) continues for a period in excess of 1 year),
the holder of the guarantee may submit to the
Secretary a request to assign the obligation and
security interest to the Secretary in return for
payment of the claim under the guarantee. The
Secretary may accept assignment of the loan if
the Secretary determines that the assignment is
in the best interests of the United States. Upon
assignment, the Secretary shall pay to the hold-
er of the guarantee the pro rata portion of the
amount guaranteed (as determined under sub-
section (e)). The Secretary shall be subrogated
to the rights of the holder of the guarantee and
the holder shall assign the obligation and secu-
rity to the Secretary.
‘‘(3) REQUIREMENTS
FOR
PAYMENT.—Before
any payment under a guarantee is made under para-
graph (2), the holder of the guarantee shall exhaust
all reasonable possibilities of collection. Upon pay-
ment, in whole or in part, to the holder, the note or
judgment evidencing the debt shall be assigned to
the United States and the holder shall have no fur-
ther claim against the borrower or the United
States. The Secretary shall then take such action to
collect as the Secretary determines appropriate.
‘‘(i) LOAN FORGIVENESS.—
‘‘(1) MANDATORY.—With respect to any loan
guaranteed under this section:
‘‘(A) PROLONGED CLEANUP.—If the period
that began upon identification of the release
from the underground storage tank that af-
fected the qualified property and ended upon
termination of environmental cleanup relating
to such release was eight or more years, the
Secretary shall take action under this sub-
section to forgive a portion of the borrower’s
obligation under the loan equal to the lesser
of—
‘‘(i) the difference between the pre-re-
lease fair market value of the qualified
property and the fair market value of such
property at the time of such forgiveness;
and
‘‘(ii) the outstanding amount of prin-
cipal and interest owed under the loan by
the borrower.
‘‘(B) SUSTAINED DECREASE IN PROPERTY
VALUE.—
‘‘(i) IN GENERAL.—If, during any pe-
riod described in clause (ii), the fair mar-
ket value of the qualified property has de-
creased from the pre-release fair market
value by at least the amount described in
such clause, and such decrease is directly
attributable to the release from the under-
ground storage tank that affected the
property, the Secretary shall take action
under this subsection to forgive a portion
of the borrower’s obligation under the loan
equal to the lesser of the amounts under
clauses (i) and (ii) of subparagraph (A).
‘‘(ii) REQUIRED
AMOUNT
OF
DE-
CREASE.—The periods and decreases in
value referred to in clause (i) are—
‘‘(I) 50 percent during the 1-year
period beginning upon identification
of the release that affected the prop-
erty;
‘‘(II) 45 percent during the 2-
year period beginning upon such iden-
tification;
‘‘(III) 40 percent during the 3-
year period beginning upon such iden-
tification;
‘‘(IV) 35 percent during the 4-
year period beginning upon such iden-
tification;
‘‘(V) 30 percent during the 5-
year period beginning upon such iden-
tification;
‘‘(VI) 25 percent during the 6-
year period beginning upon such iden-
tification; and
‘‘(VII) 20 percent during the 7-
year period beginning upon such iden-
tification.
‘‘(C) HEALTH EFFECTS.—If the Secretary
determines that a State or Federal health study
has indicated that there is a level of chronic or
terminal illness that (i) is directly related to ex-
posure to the petroleum or other chemicals re-
leased from an underground storage tank in a
release that affected the qualified property, and
(ii) is significantly higher than the level of such
illness among the general population, the Sec-
retary shall take action under this subsection to
forgive a portion of the borrower’s obligation
under the loan equal to the lesser of—
‘‘(i) the pre-release fair market value
of the qualified property; and
‘‘(ii) the outstanding amount of prin-
cipal and interest owed by the borrower.
In issuing regulations defining ‘significantly
higher’ for purposes of this subparagraph, the
Secretary shall consult with the Administrator
and the Secretary of Health and Human Serv-
ices.
‘‘(2) DISCRETIONARY.—If, upon written appli-
cation to the Secretary, the Secretary determines
that the borrower under a loan guaranteed under
this section is unable to continue payments under
the loan due to the nature and extent of the release
affecting the qualified property, financial hardship,
demonstrated adverse health effects, or any other
factor that the Secretary determines indicates that
loan forgiveness under this section is appropriate,
the Secretary may take action under this subsection
to forgive all or part of the borrower’s obligation
under the loan.
‘‘(3) ASSIGNMENT.—Upon a determination pur-
suant to paragraph (1) or (2), the Secretary shall
require the holder of the guarantee to assign the ob-
ligation and security interest to the Secretary in re-
turn for payment of the claim under the guarantee
equal to the pro rata portion of the amount guaran-
teed (as determined under subsection (e)). The Sec-
retary shall be subrogated to the rights of the holder
of the guarantee.
‘‘(4) FORGIVENESS.—Pursuant to assignment
under paragraph (3), the Secretary shall cancel a
portion of the borrower’s obligation, which shall
be—
‘‘(A) in the case of assignment pursuant to
a determination under paragraph (1), the por-
tion required under paragraph (1); or
‘‘(B) in the case of assignment pursuant to
a determination under paragraph (2), such por-
tion as the Secretary considers appropriate.
‘‘(j) LOAN GUARANTEE FUND.—
‘‘(1) ESTABLISHMENT.—There is established in
the Treasury of the United States a loan guarantee
fund for the purpose of providing loan guarantees
under this section.
‘‘(2) CREDITS.—The guarantee fund shall be
credited with—
‘‘(A) any amounts, claims, notes, mort-
gages, and contracts acquired by the Secretary
under this section, and any collections and pro-
ceeds therefrom;
‘‘(B) any amounts appropriated under
paragraph (7);
‘‘(C) any guarantee fees collected under
subsection (e)(3); and
‘‘(D) any interest or earnings on amounts
invested under paragraph (4).
‘‘(3) USE.—Amounts in the guarantee fund
shall be available, to the extent provided in appro-
priation Acts, for—
‘‘(A) fulfilling any obligations of the Sec-
retary with respect to loans guaranteed under
this section, including the costs (as such term
is defined in section 502 of the Congressional
Budget Act of 1974) of such loans;
‘‘(B) paying taxes, insurance, prior liens,
expenses necessary to make fiscal adjustment in
connection with the application and transmittal
of collections, and other expenses and advances
to protect the Secretary for loans which are
guaranteed under this section or held by the
Secretary;
‘‘(C) acquiring such security property at
foreclosure sales or otherwise; and