H. R. 2158—42
Sec. 514. Mortgage restructuring and rental assistance sufficiency plan.
Sec. 515. Section 8 renewals and long-term affordability commitment by owner of
project.
Sec. 516. Prohibition on restructuring.
Sec. 517. Restructuring tools.
Sec. 518. Management standards.
Sec. 519. Monitoring of compliance.
Sec. 520. Reports to Congress.
Sec. 521. GAO audit and review.
Sec. 522. Regulations.
Sec. 523. Technical and conforming amendments.
Sec. 524. Section 8 contract renewals.
SUBTITLE B—MISCELLANEOUS PROVISIONS
Sec. 531. Rehabilitation grants for certain insured projects.
Sec. 532. GAO report on section 8 rental assistance for multifamily housing
projects.
SUBTITLE C—ENFORCEMENT PROVISIONS
Sec. 541. Implementation.
Sec. 542. Income verification.
PART 1—FHA SINGLE FAMILY AND MULTIFAMILY HOUSING
Sec. 551. Authorization to immediately suspend mortgagees.
Sec. 552. Extension of equity skimming to other single family and multifamily
housing programs.
Sec. 553. Civil money penalties against mortgagees, lenders, and other participants
in FHA programs.
PART 2—FHA MULTIFAMILY PROVISIONS
Sec. 561. Civil money penalties against general partners, officers, directors, and
certain managing agents of multifamily projects.
Sec. 562. Civil money penalties for noncompliance with section 8 HAP contracts.
Sec. 563. Extension of double damages remedy.
Sec. 564. Obstruction of Federal audits.
SUBTITLE D—OFFICE OF MULTIFAMILY HOUSING ASSISTANCE RESTRUCTURING
Sec. 571. Establishment of Office of Multifamily Housing Assistance Restructuring.
Sec. 572. Director.
Sec. 573. Duty and authority of Director.
Sec. 574. Personnel.
Sec. 575. Budget and financial reports.
Sec. 576. Limitation on subsequent employment.
Sec. 577. Audits by GAO.
Sec. 578. Suspension of program because of failure to appoint Director.
Sec. 579. Termination.
SEC. 510. SHORT TITLE.
This title may be cited as the ‘‘Multifamily Assisted Housing
Reform and Affordability Act of 1997’’.
Subtitle A—FHA-Insured Multifamily Housing
Mortgage and Housing Assistance Restructuring
SEC. 511. FINDINGS AND PURPOSES.
(a) FINDINGS.—Congress finds that—
(1) there exists throughout the Nation a need for decent,
safe, and affordable housing;
(2) as of the date of enactment of this Act, it is estimated
that—
(A) the insured multifamily housing portfolio of the
Federal Housing Administration consists of 14,000 rental
properties, with an aggregate unpaid principal mortgage
balance of $38,000,000,000; and
(B) approximately 10,000 of these properties contain
housing units that are assisted with project-based rental
H. R. 2158—43
assistance under section 8 of the United States Housing
Act of 1937;
(3) FHA-insured multifamily rental properties are a major
Federal investment, providing affordable rental housing to an
estimated 2,000,000 low- and very low-income families;
(4) approximately 1,600,000 of these families live in dwell-
ing units that are assisted with project-based rental assistance
under section 8 of the United States Housing Act of 1937;
(5) a substantial number of housing units receiving project-
based assistance have rents that are higher than the rents
of comparable, unassisted rental units in the same housing
rental market;
(6) many of the contracts for project-based assistance will
expire during the several years following the date of enactment
of this Act;
(7) it is estimated that—
(A) if no changes in the terms and conditions of the
contracts for project-based assistance are made before fiscal
year 2000, the cost of renewing all expiring rental assist-
ance contracts under section 8 of the United States Housing
Act of 1937 for both project-based and tenant-based rental
assistance will increase from approximately $3,600,000,000
in fiscal year 1997 to over $14,300,000,000 by fiscal year
2000 and some $22,400,000,000 in fiscal year 2006;
(B) of those renewal amounts, the cost of renewing
project-based assistance will increase from $1,200,000,000
in fiscal year 1997 to almost $7,400,000,000 by fiscal year
2006; and
(C) without changes in the manner in which project-
based rental assistance is provided, renewals of expiring
contracts for project-based rental assistance will require
an increasingly larger portion of the discretionary budget
authority of the Department of Housing and Urban Devel-
opment in each subsequent fiscal year for the foreseeable
future;
(8) absent new budget authority for the renewal of expiring
rental contracts for project-based assistance, many of the FHA-
insured multifamily housing projects that are assisted with
project-based assistance are likely to default on their FHA-
insured mortgage payments, resulting in substantial claims
to the FHA General Insurance Fund and Special Risk Insurance
Fund;
(9) more than 15 percent of federally assisted multifamily
housing projects are physically or financially distressed, includ-
ing a number which suffer from mismanagement;
(10) due to Federal budget constraints, the downsizing
of the Department of Housing and Urban Development, and
diminished administrative capacity, the Department lacks the
ability to ensure the continued economic and physical well-
being of the stock of federally insured and assisted multifamily
housing projects;
(11) the economic, physical, and management problems
facing the stock of federally insured and assisted multifamily
housing projects will be best served by reforms that—
(A) reduce the cost of Federal rental assistance, includ-
ing project-based assistance, to these projects by reducing
the debt service and operating costs of these projects while
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retaining the low-income affordability and availability of
this housing;
(B) address physical and economic distress of this hous-
ing and the failure of some project managers and owners
of projects to comply with management and ownership
rules and requirements; and
(C) transfer and share many of the loan and contract
administration functions and responsibilities of the Sec-
retary to and with capable State, local, and other entities;
and
(12) the authority and duties of the Secretary, not including
the control by the Secretary of applicable accounts in the Treas-
ury of the United States, may be delegated to State, local
or other entities at the discretion of the Secretary, to the
extent the Secretary determines, and for the purpose of carrying
out this Act, so that the Secretary has the discretion to be
relieved of processing and approving any document or action
required by these reforms.
(b) PURPOSES.—Consistent with the purposes and requirements
of the Government Performance and Results Act of 1993, the pur-
poses of this subtitle are—
(1) to preserve low-income rental housing affordability and
availability while reducing the long-term costs of project-based
assistance;
(2) to reform the design and operation of Federal rental
housing assistance programs, administered by the Secretary,
to promote greater multifamily housing project operating and
cost efficiencies;
(3) to encourage owners of eligible multifamily housing
projects to restructure their FHA-insured mortgages and
project-based assistance contracts in a manner that is consist-
ent with this subtitle before the year in which the contract
expires;
(4) to reduce the cost of insurance claims under the
National Housing Act related to mortgages insured by the
Secretary and used to finance eligible multifamily housing
projects;
(5) to streamline and improve federally insured and
assisted multifamily housing project oversight and administra-
tion;
(6) to resolve the problems affecting financially and
physically troubled federally insured and assisted multifamily
housing projects through cooperation with residents, owners,
State and local governments, and other interested entities and
individuals;
(7) to protect the interest of project owners and managers,
because they are partners of the Federal Government in meet-
ing the affordable housing needs of the Nation through the
section 8 rental housing assistance program;
(8) to protect the interest of tenants residing in the multi-
family housing projects at the time of the restructuring for
the housing; and
(9) to grant additional enforcement tools to use against
those who violate agreements and program requirements, in
order to ensure that the public interest is safeguarded and
that Federal multifamily housing programs serve their intended
purposes.
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SEC. 512. DEFINITIONS.
In this subtitle:
(1) COMPARABLE PROPERTIES.—The term ‘‘comparable prop-
erties’’ means properties in the same market areas, where
practicable, that—
(A) are similar to the eligible multifamily housing
project as to neighborhood (including risk of crime), type
of location, access, street appeal, age, property size, apart-
ment mix, physical configuration, property and unit amen-
ities, utilities, and other relevant characteristics; and
(B) are not receiving project-based assistance.
(2) ELIGIBLE MULTIFAMILY HOUSING PROJECT.—The term
‘‘eligible multifamily housing project’’ means a property consist-
ing of more than 4 dwelling units—
(A) with rents that, on an average per unit or per
room basis, exceed the rent of comparable properties in
the same market area, determined in accordance with
guidelines established by the Secretary;
(B) that is covered in whole or in part by a contract
for project-based assistance under—
(i) the new construction or substantial rehabilita-
tion program under section 8(b)(2) of the United States
Housing Act of 1937 (as in effect before October 1,
1983);
(ii) the property disposition program under section
8(b) of the United States Housing Act of 1937;
(iii) the moderate rehabilitation program under
section 8(e)(2) of the United States Housing Act of
1937;
(iv) the loan management assistance program
under section 8 of the United States Housing Act of
1937;
(v) section 23 of the United States Housing Act
of 1937 (as in effect before January 1, 1975);
(vi) the rent supplement program under section
101 of the Housing and Urban Development Act of
1965; or
(vii) section 8 of the United States Housing Act
of 1937, following conversion from assistance under
section 101 of the Housing and Urban Development
Act of 1965; and
(C) financed by a mortgage insured or held by the
Secretary under the National Housing Act.
(3) EXPIRING
CONTRACT.—The term ‘‘expiring contract’’
means a project-based assistance contract attached to an
eligible multifamily housing project which, under the terms
of the contract, will expire.
(4) EXPIRATION DATE.—The term ‘‘expiration date’’ means
the date on which an expiring contract expires.
(5) FAIR MARKET RENT.—The term ‘‘fair market rent’’ means
the fair market rental established under section 8(c) of the
United States Housing Act of 1937.
(6) LOW-INCOME FAMILIES.—The term ‘‘low-income families’’
has the same meaning as provided under section 3(b)(2) of
the United States Housing Act of 1937.
(7) MORTGAGE
RESTRUCTURING
AND
RENTAL
ASSISTANCE
SUFFICIENCY
PLAN.—The term ‘‘mortgage restructuring and