117
section is in effect pursuant to section 1331(a), determine 
whether each enterprise has complied with such goal and 
the additional requirements under subsection (a)(2). 
‘‘SEC. 1334. DISCRETIONARY ADJUSTMENT OF HOUSING 
GOALS. 
‘‘(a) AUTHORITY.—An enterprise may petition the 
Director in writing at any time during a year to reduce 
the level of any goal for such year established pursuant 
to this subpart. 
‘‘(b) STANDARD
FOR REDUCTION.—The Director 
may reduce the level for a goal pursuant to such a petition 
only if—
‘‘(1) market and economic conditions or the fi-
nancial condition of the enterprise require such ac-
tion; or 
‘‘(2) efforts to meet the goal would result in the 
constraint of liquidity, over-investment in certain 
market segments, or other consequences contrary to 
the intent of this subpart, or section 301(3) of the 
Federal National Mortgage Association Charter Act 
(12 U.S.C. 1716(3)) or section 301(3) of the Fed-
eral Home Loan Mortgage Corporation Act (12 
U.S.C. 1451 note), as applicable. 
‘‘(c) DETERMINATION.—The Director shall make a 
determination regarding any proposed reduction within 30
118
days of receipt of the petition regarding the reduction. The 
Director may extend such period for a single additional 
15-day period, but only if the Director requests additional 
information from the enterprise. A denial by the Director 
to reduce the level of any goal under this section may be 
appealed to the United States District Court for the Dis-
trict of Columbia or the United States district court in 
the jurisdiction in which the headquarters of an enterprise 
is located.’’. 
(b) CONFORMING AMENDMENTS.—The Housing and 
Community Development Act of 1992 is amended—
(1) in section 1335(a) (12 U.S.C. 4565(a)), in 
the matter preceding paragraph (1), by striking 
‘‘low- and moderate-income housing goal’’ and all 
that follows through ‘‘section 1334’’ and inserting 
‘‘housing goals established under this subpart’’; and 
(2) 
in 
section 
1336(a)(1) 
(12 
U.S.C. 
4566(a)(1)), by striking ‘‘sections 1332, 1333, and 
1334,’’ and inserting ‘‘this subpart’’. 
(c) DEFINITIONS.—Section 1303 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 4502), 
as amended by the preceding provisions of this Act, is fur-
ther amended—
119
(1) in paragraph (22) (relating to the definition 
of ‘‘very low-income’’), by striking ‘‘60 percent’’ each 
place such term appears and inserting ‘‘50 percent’’; 
(2) by redesignating paragraphs (19) through 
(22) as paragraphs (23) through (26), respectively; 
(3) by inserting after paragraph (18) the fol-
lowing new paragraph: 
‘‘(22) RURAL AREA.—The term ‘rural area’ has 
the meaning given such term in section 520 of the 
Housing Act of 1949 (42 U.S.C. 1490), except that 
such term includes micropolitan areas and tribal 
trust lands.’’. 
(4) by redesignating paragraphs (13) through 
(18) as paragraphs (16) through (21), respectively; 
(5) by inserting after paragraph (12) the fol-
lowing new paragraph: 
‘‘(15) LOW-INCOME AREA.—The term ‘low in-
come area’ means a census tract or block numbering 
area in which the median income does not exceed 80 
percent of the median income for the area in which 
such census tract or block numbering area is lo-
cated, and, for the purposes of section 1332(a)(2), 
shall include families having incomes not greater 
than 100 percent of the area median income who re-
side in minority census tracts.’’;
120
(6) by redesignating paragraphs (11) and (12) 
as paragraphs (13) and (14), respectively; 
(7) by inserting after paragraph (10) the fol-
lowing new paragraph: 
‘‘(12) EXTREMELY
LOW-INCOME.—The term 
‘extremely low-income’ means—
‘‘(A) in the case of owner-occupied units, 
income not in excess of 30 percent of the area 
median income; and 
‘‘(B) in the case of rental units, income 
not in excess of 30 percent of the area median 
income, with adjustments for smaller and larger 
families, as determined by the Secretary.’’; 
(8) by redesignating paragraphs (7) through 
(10) as paragraphs (8) through (11), respectively; 
and 
(9) by inserting after paragraph (6) the fol-
lowing new paragraph: 
‘‘(7) CONFORMING MORTGAGE.—The term ‘con-
forming mortgage’ means, with respect to an enter-
prise, a conventional mortgage having an original 
principal obligation that does not exceed the dollar 
limitation, in effect at the time of such origination, 
under, as applicable—
121
‘‘(A) section 302(b)(2) of the Federal Na-
tional Mortgage Association Charter Act; or 
‘‘(B) section 305(a)(2) of the Federal 
Home Loan Mortgage Corporation Act.’’. 
SEC. 138. DUTY TO SERVE UNDERSERVED MARKETS. 
(a) ESTABLISHMENT
AND EVALUATION
OF PER-
FORMANCE.—Section 1335 of the Housing and Commu-
nity Development Act of 1992 (12 U.S.C. 4565) is amend-
ed—
(1) in the section heading, by inserting ‘‘DUTY 
TO SERVE UNDERSERVED MARKETS AND’’ be-
fore ‘‘OTHER’’; 
(2) by striking subsection (b); 
(3) in subsection (a)—
(A) in the matter preceding paragraph (1), 
by inserting ‘‘and to carry out the duty under 
subsection (a) of this section’’ before ‘‘, each 
enterprise shall’’; 
(B) in paragraph (3), by inserting ‘‘and’’ 
after the semicolon at the end; 
(C) in paragraph (4), by striking ‘‘; and’’ 
and inserting a period; 
(D) by striking paragraph (5); and 
(E) by redesignating such subsection as 
subsection (b);
122
(4) by inserting before subsection (b) (as so re-
designated by paragraph (3)(E) of this subsection) 
the following new subsection: 
‘‘(a) DUTY TO SERVE UNDERSERVED MARKETS.—
‘‘(1) DUTY.—In accordance with the purpose of 
the enterprises under section 301(3) of the Federal 
National Mortgage Association Charter Act (12 
U.S.C. 1716) and section 301(b)(3) of the Federal 
Home Loan Mortgage Corporation Act (12 U.S.C. 
1451 note) to undertake activities relating to mort-
gages on housing for very low-, low-, and moderate-
income families involving a reasonable economic re-
turn that may be less than the return earned on 
other activities, each enterprise shall have the duty 
to increase the liquidity of mortgage investments 
and improve the distribution of investment capital 
available for mortgage financing for underserved 
markets. 
‘‘(2) UNDERSERVED
MARKETS.—To meet its 
duty under paragraph (1), each enterprise shall com-
ply with the following requirements with respect to 
the following underserved markets: 
‘‘(A) MANUFACTURED HOUSING.—The en-
terprise shall lead the industry in developing 
loan products and flexible underwriting guide-
123
lines to facilitate a secondary market for mort-
gages on manufactured homes for very low-, 
low-, and moderate-income families. 
‘‘(B) AFFORDABLE
HOUSING
PRESERVA-
TION.—The enterprise shall lead the industry in 
developing loan products and flexible under-
writing guidelines to facilitate a secondary mar-
ket to preserve housing affordable to very low-
, low-, and moderate-income families, including 
housing projects subsidized under—
‘‘(i) the project-based and tenant-
based rental assistance programs under 
section 8 of the United States Housing Act 
of 1937; 
‘‘(ii) the program under section 236 
of the National Housing Act; 
‘‘(iii) the below-market interest rate 
mortgage program under section 221(d)(4) 
of the National Housing Act; 
‘‘(iv) the supportive housing for the 
elderly program under section 202 of the 
Housing Act of 1959; 
‘‘(v) the supportive housing program 
for persons with disabilities under section
124
811 of the Cranston-Gonzalez National Af-
fordable Housing Act; 
‘‘(vi) the programs under title IV of 
the McKinney-Vento Homeless Assistance 
Act (42 U.S.C. 11361 et seq.), but only 
permanent supportive housing projects 
subsidized under such programs; and 
‘‘(vii) the rural rental housing pro-
gram under section 515 of the Housing 
Act of 1949. 
‘‘(C) RURAL
AND
OTHER
UNDERSERVED 
MARKETS.—The enterprise shall lead the indus-
try in developing loan products and flexible un-
derwriting guidelines to facilitate a secondary 
market for mortgages on housing for very low-
, low-, and moderate-income families in rural 
areas, and for mortgages for housing for any 
other underserved market for very low-, low-, 
and moderate-income families that the Sec-
retary identifies as lacking adequate credit 
through conventional lending sources. Such un-
derserved markets may be identified by bor-
rower type, market segment, or geographic 
area.’’; and
125
(5) by adding at the end the following new sub-
section: 
‘‘(c) EVALUATION
AND REPORTING
OF COMPLI-
ANCE.—
‘‘(1) IN GENERAL.—Not later than 6 months 
after the effective date under section 185 of the 
Federal Housing Finance Reform Act of 2007, the 
Director shall establish a manner for evaluating 
whether, and the extent to which, the enterprises 
have complied with the duty under subsection (a) to 
serve underserved markets and for rating the extent 
of such compliance. Using such method, the Director 
shall, for each year, evaluate such compliance and 
rate the performance of each enterprise as to extent 
of compliance. The Director shall include such eval-
uation and rating for each enterprise for a year in 
the report for that year submitted pursuant to sec-
tion 1319B(a). 
‘‘(2) SEPARATE EVALUATIONS.—In determining 
whether an enterprise has complied with the duty re-
ferred to in paragraph (1), the Director shall sepa-
rately evaluate whether the enterprise has complied 
with such duty with respect to each of the under-
served markets identified in subsection (a), taking 
into consideration—
126
‘‘(A) the development of loan products and 
more flexible underwriting guidelines; 
‘‘(B) the extent of outreach to qualified 
loan sellers in each of such underserved mar-
kets; and 
‘‘(C) the volume of loans purchased in each 
of such underserved markets. 
‘‘(3) MANUFACTURED
HOUSING
MARKET.—In 
determining whether an enterprise has complied with 
the duty under subparagraph (A) of subsection 
(a)(2), the Director may consider loans secured by 
both real and personal property.’’. 
(b) ENFORCEMENT.—Subsection (a) of section 1336 
of the Housing and Community Development Act of 1992 
(12 U.S.C. 4566(a)) is amended—
(1) in paragraph (1), by inserting ‘‘and with 
the duty under section 1335(a) of each enterprise 
with respect to underserved markets,’’ before ‘‘as 
provided in this section’’; and 
(2) by adding at the end of such subsection, as 
amended by the preceding provisions of this title, the 
following new paragraph: 
‘‘(4) ENFORCEMENT
OF
DUTY
TO
PROVIDE 
MORTGAGE CREDIT TO UNDERSERVED MARKETS.—
The duty under section 1335(a) of each enterprise
127
to serve underserved markets (as determined in ac-
cordance with section 1335(c)) shall be enforceable 
under this section to the same extent and under the 
same provisions that the housing goals established 
under this subpart are enforceable. Such duty shall 
not be enforceable under any other provision of this 
title (including subpart C of this part) other than 
this section or under any provision of the Federal 
National Mortgage Association Charter Act or the 
Federal Home Loan Mortgage Corporation Act.’’. 
SEC. 139. MONITORING AND ENFORCING COMPLIANCE 
WITH HOUSING GOALS. 
(a) ADDITIONAL
CREDIT
FOR
CERTAIN
MORT-
GAGES.—Section 1336(a) of the Housing and Community 
Development Act of 1992 (12 U.S.C. 4566(a)) is amend-
ed—
(1) in paragraph (2), by inserting ‘‘, except as 
provided in paragraph (4),’’ after ‘‘which’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(5) ADDITIONAL CREDIT.—The Director shall 
assign more than 125 percent credit toward achieve-
ment, under this section, of the housing goals for 
mortgage purchase activities of the enterprises that
128
comply with the requirements of such goals and sup-
port—
‘‘(A) housing that meets energy efficiency 
or other environmental standards that are es-
tablished by a Federal, State, or local govern-
mental authority with respect to the geographic 
area where the housing is located or are other-
wise widely recognized; or 
‘‘(B) housing that includes a licensed 
childcare center. 
The availability of additional credit under this para-
graph shall not be used to increase any housing 
goal, subgoal, or target established under this sub-
part.’’. 
(b) MONITORING
AND
ENFORCEMENT.—Section 
1336 of the Housing and Community Development Act 
of 1992 (12 U.S.C. 4566) is amended—
(1) in subsection (b)—
(A) in the subsection heading, by inserting 
‘‘PRELIMINARY’’ before ‘‘DETERMINATION’’; 
(B) by striking paragraph (1) and insert-
ing the following new paragraph: 
‘‘(1) NOTICE.—If the Director preliminarily de-
termines that an enterprise has failed, or that there 
is a substantial probability that an enterprise will
129
fail, to meet any housing goal established under this 
subpart, the Director shall provide written notice to 
the enterprise of such a preliminary determination, 
the reasons for such determination, and the informa-
tion on which the Director based the determina-
tion.’’; 
(C) in paragraph (2)—
(i) in subparagraph (A), by inserting 
‘‘finally’’ before ‘‘determining’’; 
(ii) by striking subparagraphs (B) and 
(C) and inserting the following new sub-
paragraph: 
‘‘(B) EXTENSION OR SHORTENING OF PE-
RIOD.—The Director may—
‘‘(i) extend the period under subpara-
graph (A) for good cause for not more 
than 30 additional days; and 
‘‘(ii) shorten the period under sub-
paragraph (A) for good cause.’’; and 
(iii) by redesignating subparagraph 
(D) as subparagraph (C); and 
(D) in paragraph (3)—
(i) in subparagraph (A), by striking 
‘‘determine’’ and inserting ‘‘issue a final 
determination of’’;
130
(ii) in subparagraph (B), by inserting 
‘‘final’’ before ‘‘determinations’’; and 
(iii) in subparagraph (C)—
(I) by striking ‘‘Committee on 
Banking, Finance and Urban Affairs’’ 
and inserting ‘‘Committee on Finan-
cial Services’’; and 
(II) by inserting ‘‘final’’ before 
‘‘determination’’ each place such term 
appears; and 
(2) in subsection (c)—
(A) by striking the subsection designation 
and heading and all that follows through the 
end of paragraph (1) and inserting the fol-
lowing: 
‘‘(c) CEASE
AND DESIST ORDERS, CIVIL MONEY 
PENALTIES, 
AND
REMEDIES
INCLUDING
HOUSING 
PLANS.—
‘‘(1) REQUIREMENT.—If the Director finds, 
pursuant to subsection (b), that there is a substan-
tial probability that an enterprise will fail, or has ac-
tually failed, to meet any housing goal under this 
subpart and that the achievement of the housing 
goal was or is feasible, the Director may require that 
the enterprise submit a housing plan under this sub-
131
section. If the Director makes such a finding and 
the enterprise refuses to submit such a plan, sub-
mits an unacceptable plan, fails to comply with the 
plan or the Director finds that the enterprise has 
failed to meet any housing goal under this subpart, 
in addition to requiring an enterprise to submit a 
housing plan, the Director may issue a cease and de-
sist order in accordance with section 1341, impose 
civil money penalties in accordance with section 
1345, or order other remedies as set forth in para-
graph (7) of this subsection.’’; 
(B) in paragraph (2)—
(i) by striking ‘‘CONTENTS.—Each 
housing plan’’ and inserting ‘‘HOUSING 
PLAN.—If the Director requires a housing 
plan under this section, such a plan’’; and 
(ii) in subparagraph (B), by inserting 
‘‘and changes in its operations’’ after ‘‘im-
provements’’; 
(C) in paragraph (3)—
(i) by inserting ‘‘comply with any re-
medial action or’’ before ‘‘submit a housing 
plan’’; and 
(ii) by striking ‘‘under subsection 
(b)(3) that a housing plan is required’’;
132
(D) in paragraph (4), by striking the first 
two sentences and inserting the following: ‘‘The 
Director shall review each submission by an en-
terprise, including a housing plan submitted 
under this subsection, and not later than 30 
days after submission, approve or disapprove 
the plan or other action. The Director may ex-
tend the period for approval or disapproval for 
a single additional 30-day period if the Director 
determines such extension necessary.’’; and 
(E) by adding at the end the following new 
paragraph: 
‘‘(7) ADDITIONAL REMEDIES FOR FAILURE TO 
MEET GOALS.—In addition to ordering a housing 
plan under this section, issuing cease and desist or-
ders under section 1341, and ordering civil money 
penalties under section 1345, the Director may seek 
other actions when an enterprise fails to meet a 
goal, and exercise appropriate enforcement authority 
available to the Director under this Act to prohibit 
the enterprise from initially offering any product (as 
such term is defined in section 1321(f)) or engaging 
in any new activities, services, undertakings, and of-
ferings and to order the enterprise to suspend prod-
133
ucts and activities, services, undertakings, and offer-
ings pending its achievement of the goal.’’. 
SEC. 140. AFFORDABLE HOUSING FUND. 
(a) IN GENERAL.—The Housing and Community De-
velopment Act of 1992 is amended by striking sections 
1337 and 1338 (12 U.S.C. 4562 note) and inserting the 
following new section: 
‘‘SEC. 1337. AFFORDABLE HOUSING FUND. 
‘‘(a) ESTABLISHMENT AND PURPOSE.—The Direc-
tor, in consultation with the Secretary of Housing and 
Urban Development, shall establish and manage an af-
fordable housing fund in accordance with this section, 
which shall be funded with amounts allocated by the enter-
prises under subsection (b). The purpose of the affordable 
housing fund shall be to provide formula grants to grant-
ees for use—
‘‘(1) to increase homeownership for extremely 
low-and very low-income families; 
‘‘(2) to increase investment in housing in low-
income areas, and areas designated as qualified cen-
sus tracts or an area of chronic economic distress 
pursuant to section 143(j) of the Internal Revenue 
Code of 1986 (26 U.S.C. 143(j));
134
‘‘(3) to increase and preserve the supply of 
rental and owner-occupied housing for extremely 
low- and very low-income families; 
‘‘(4) to increase investment in public infrastruc-
ture development in connection with housing assisted 
under this section; and 
‘‘(5) to leverage investments from other sources 
in affordable housing and in public infrastructure 
development in connection with housing assisted 
under this section. 
‘‘(b) ALLOCATION OF AMOUNTS BY ENTERPRISES.—
‘‘(1) IN GENERAL.—In accordance with regula-
tions issued by the Director under subsection (m) 
and subject to paragraph (2) of this subsection and 
subsection (i)(5), each enterprise shall allocate to the 
affordable housing fund established under subsection 
(a), in each of the years 2007 through 2011, an 
amount equal to 1.2 basis points for each dollar of 
the average total mortgage portfolio of the enter-
prise during the preceding year. 
‘‘(2) SUSPENSION
OF
CONTRIBUTIONS.—The 
Director shall temporarily suspend the allocation 
under paragraph (1) by an enterprise to the afford-
able housing fund upon a finding by the Director 
that such allocations—
135
‘‘(A) are contributing, or would contribute, 
to the financial instability of the enterprise; 
‘‘(B) are causing, or would cause, the en-
terprise to be classified as undercapitalized; or 
‘‘(C) are preventing, or would prevent, the 
enterprise from successfully completing a cap-
ital restoration plan under section 1369C. 
‘‘(3) 5-YEAR SUNSET AND REPORT.—
‘‘(A) SUNSET.—The enterprises shall not 
be required to make allocations to the afford-
able housing fund in 2012 or in any year there-
after. 
‘‘(B) REPORT
ON
PROGRAM
CONTINU-
ANCE.—Not later than June 30, 2011, the Di-
rector shall submit to the Committee on Finan-
cial Services of the House of Representatives 
and the Committee on Banking, Housing, and 
Urban Affairs of the Senate a report making 
recommendations on whether the program 
under this section, including the requirement 
for the enterprises to make allocations to the 
affordable housing fund, should be extended 
and on any modifications for the program. 
‘‘(4) PROHIBITION OF PASS-THROUGH OF COST 
OF ALLOCATIONS.—The Director shall, by regula-
136
tion, prohibit each enterprise from redirecting such 
costs, through increased charges or fees, or de-
creased premiums, or in any other manner, to the 
originators of mortgages purchased or securitized by 
the enterprise. 
‘‘(c) AFFORDABLE HOUSING NEEDS FORMULAS.—
‘‘(1) ALLOCATION FOR 2007.—
‘‘(A) 
ALLOCATION
PERCENTAGES
FOR 
LOUISIANA AND MISSISSIPPI.—For purposes of 
subsection (d)(1)(A), the allocation percentages 
for 2007 for the grantees under this section for 
such year shall be as follows: 
‘‘(i) The allocation percentage for the 
Louisiana Housing Finance Agency shall 
be 75 percent. 
‘‘(ii) The allocation percentage for the 
Mississippi Development Authority shall be 
25 percent. 
‘‘(B) USE
IN
DISASTER
AREAS.—Afford-
able housing grant amounts for 2007 shall be 
used only as provided in subsection (g) only for 
such eligible activities in areas that were sub-
ject to a declaration by the President of a 
major disaster or emergency under the Robert 
T. Stafford Disaster Relief and Emergency As-
137
sistance Act (42 U.S.C. 5121 et seq.) in con-
nection with Hurricane Katrina or Rita of 
2005. 
‘‘(2) 
ALLOCATION
FORMULA
FOR
OTHER 
YEARS.—The Secretary of Housing and Urban De-
velopment shall, by regulation, establish a formula to 
allocate, among the States (as such term is defined 
in section 1303) and federally recognized Indian 
tribes, the amounts provided by the enterprises in 
each year referred to subsection (b)(1), other than 
2007, to the affordable housing fund established 
under this section. The formula shall be based on 
the following factors, with respect to each State and 
tribe: 
‘‘(A) The ratio of the population of the 
State or federally recognized Indian tribe to the 
aggregate population of all the States and 
tribes. 
‘‘(B) The percentage of families in the 
State or federally recognized Indian tribe that 
pay more than 50 percent of their annual in-
come for housing costs. 
‘‘(C) The percentage of persons in the 
State or federally recognized Indian tribe that
138
are members of extremely low- or very low-in-
come families. 
‘‘(D) The cost of developing or carrying 
out rehabilitation of housing in the State or for 
the federally recognized Indian tribe. 
‘‘(E) The percentage of families in the 
State or federally recognized Indian tribe that 
live in substandard housing. 
‘‘(F) The percentage of housing stock in 
the State or for the federally recognized Indian 
tribe that is extremely old housing. 
‘‘(G) Any other factors that the Secretary 
determines to be appropriate. 
‘‘(3) FAILURE TO ESTABLISH.—If, in any year 
referred to in subsection (b)(1), other than 2007, 
the regulations establishing the formula required 
under paragraph (2) of this subsection have not 
been issued by the date that the Director determines 
the amounts described in subsection (d)(1) to be 
available for affordable housing fund grants in such 
year, for purposes of such year any amounts for a 
State (as such term is defined in section 1303 of 
this Act) that would otherwise be determined under 
subsection (d) by applying the formula established 
pursuant to paragraph (2) of this subsection shall be
139
determined instead by applying, for such State, the 
percentage that is equal to the percentage of the 
total amounts made available for such year for allo-
cation under subtitle A of title II of the Cranston-
Gonzalez National Affordable Housing Act (42 
U.S.C. 12741 et seq.) that are allocated in such 
year, pursuant to such subtitle, to such State (in-
cluding any insular area or unit of general local gov-
ernment, as such terms are defined in section 104 
of such Act (42 U.S.C. 12704), that is treated as a 
State under section 1303 of this Act) and to partici-
pating jurisdictions and other eligible entities within 
such State. 
‘‘(d) 
ALLOCATION
OF
FORMULA
AMOUNT; 
GRANTS.—
‘‘(1) FORMULA
AMOUNT.—For each year re-
ferred to in subsection (b)(1), the Director shall de-
termine the formula amount under this section for 
each grantee, which shall be the amount determined 
for such grantee—
‘‘(A) for 2007, by applying the allocation 
percentages under subparagraph (A) of sub-
section (c)(1) to the sum of the total amounts 
allocated by the enterprises to the affordable
140
housing fund for such year, less any amounts 
used pursuant to subsection (i)(1); and 
‘‘(B) for any other year referred to in sub-
section (b)(1) (other than 2007), by applying 
the formula established pursuant to paragraph 
(2) of subsection (c) to the sum of the total 
amounts allocated by the enterprises to the af-
fordable housing fund for such year and any re-
captured amounts available pursuant to sub-
section (i)(4), less any amounts used pursuant 
to subsection (i)(1). 
‘‘(2) NOTICE.—In each year referred to in sub-
section (b)(1), not later than 60 days after the date 
that the Director determines the amounts described 
in paragraph (1) to be available for affordable hous-
ing fund grants to grantees in such year, the Direc-
tor shall cause to be published in the Federal Reg-
ister a notice that such amounts shall be so avail-
able. 
‘‘(3) GRANT AMOUNT.—
‘‘(A) IN
GENERAL.—For each year re-
ferred to in subsection (b)(1), the Director shall 
make a grant from amounts in the affordable 
housing fund to each grantee in an amount that 
is, except as provided in subparagraph (B),
141
equal to the formula amount under this section 
for the grantee. A grantee may designate a 
State housing finance agency, housing and com-
munity development entity, tribally designated 
housing entity (as such term is defined in sec-
tion 4 of the Native American Housing Assist-
ance and Self-Determination Act of 1997 (25 
U.S.C. 4103)) or other qualified instrumentality 
of the grantee to receive such grant amounts. 
‘‘(B) REDUCTION FOR FAILURE TO OBTAIN 
RETURN OF MISUSED FUNDS.—If in any year a 
grantee fails to obtain reimbursement or return 
of the full amount required under subsection 
(j)(1)(B) to be reimbursed or returned to the 
grantee during such year—
‘‘(i) except as provided in clause (ii)—
‘‘(I) the amount of the grant for 
the grantee for the succeeding year, 
as determined pursuant to subpara-
graph (A), shall be reduced by the 
amount by which such amounts re-
quired to be reimbursed or returned 
exceed the amount actually reim-
bursed or returned; and
142
‘‘(II) the amount of the grant for 
the succeeding year for each other 
grantee whose grant is not reduced 
pursuant to subclause (I) shall be in-
creased by the amount determined by 
applying the formula established pur-
suant to subsection (c)(2) to the total 
amount of all reductions for all grant-
ees for such year pursuant to sub-
clause (I); or 
‘‘(ii) in any case in which such failure 
to obtain reimbursement or return occurs 
during a year immediately preceding a 
year in which grants under this subsection 
will not be made, the grantee shall pay to 
the Director for reallocation among the 
other grantees an amount equal to the 
amount of the reduction for the grantee 
that would otherwise apply under clause 
(i)(I). 
‘‘(e) GRANTEE ALLOCATION PLANS.—
‘‘(1) IN GENERAL.—For each year that a grant-
ee receives affordable housing fund grant amounts, 
the grantee shall establish an allocation plan in ac-
cordance with this subsection, which shall be a plan
143
for the distribution of such grant amounts of the 
grantee for such year that—
‘‘(A) is based on priority housing needs, as 
determined by the grantee in accordance with 
the regulations established under subsection 
(m)(2)(C); 
‘‘(B) complies with subsection (f); and 
‘‘(C) includes performance goals, bench-
marks, and timetables for the grantee for the 
production, preservation, and rehabilitation of 
affordable rental and homeownership housing 
with such grant amounts that comply with the 
requirements established by the Director pursu-
ant to subsection (m)(2)(F). 
‘‘(2) ESTABLISHMENT.—In establishing an allo-
cation plan, a grantee shall notify the public of the 
establishment of the plan, provide an opportunity for 
public comments regarding the plan, consider any 
public comments received, and make the completed 
plan available to the public. 
‘‘(3) CONTENTS.—An allocation plan of a 
grantee shall set forth the requirements for eligible 
recipients under subsection (h) to apply to the 
grantee to receive assistance from affordable housing
144
fund grant amounts, including a requirement that 
each such application include—
‘‘(A) a description of the eligible activities 
to be conducted using such assistance; and 
‘‘(B) a certification by the eligible recipient 
applying for such assistance that any housing 
units assisted with such assistance will comply 
with the requirements under this section. 
‘‘(f) SELECTION OF ACTIVITIES FUNDED USING AF-
FORDABLE HOUSING FUND GRANT AMOUNTS.—Afford-
able housing fund grant amounts of a grantee may be 
used, or committed for use, only for activities that—
‘‘(1) are eligible under subsection (g) for such 
use; 
‘‘(2) comply with the applicable allocation plan 
under subsection (e) of the grantee; and 
‘‘(3) are selected for funding by the grantee in 
accordance with the process and criteria for such se-
lection established pursuant to subsection (m)(2)(C). 
‘‘(g) ELIGIBLE
ACTIVITIES.—Affordable housing 
fund grant amounts of a grantee shall be eligible for use, 
or for commitment for use, only for assistance for—
‘‘(1) the production, preservation, and rehabili-
tation of rental housing, including housing under the 
programs identified in section 1335(a)(2)(B), except
145
that such grant amounts may be used for the benefit 
only of extremely low- and very low-income families; 
‘‘(2) the production, preservation, and rehabili-
tation of housing for homeownership, including such 
forms as downpayment assistance, closing cost as-
sistance, and assistance for interest-rate buy-downs, 
that—
‘‘(A) is available for purchase only for use 
as a principal residence by families that qualify 
both as—
‘‘(i) extremely low- and very-low in-
come families at the times described in 
subparagraphs (A) through (C) of section 
215(b)(2) of the Cranston-Gonzalez Na-
tional Affordable Housing Act (42 U.S.C. 
12745(b)(2)); and 
‘‘(ii) first-time homebuyers, as such 
term is defined in section 104 of the Cran-
ston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12704), except that any 
reference in such section to assistance 
under title II of such Act shall for pur-
poses of this section be considered to refer 
to assistance from affordable housing fund 
grant amounts;
146
‘‘(B) has an initial purchase price that 
meets the requirements of section 215(b)(1) of 
the Cranston-Gonzalez National Affordable 
Housing Act; 
‘‘(C) is subject to the same resale restric-
tions established under section 215(b)(3) of the 
Cranston-Gonzalez National Affordable Hous-
ing Act and applicable to the participating ju-
risdiction that is the State in which such hous-
ing is located; and 
‘‘(D) is made available for purchase only 
by, or in the case of assistance under this para-
graph, is made available only to, homebuyers 
who have, before purchase—
‘‘(i) completed a program of coun-
seling with respect to the responsibilities 
and financial management involved in 
homeownership that is approved by the Di-
rector; except that the Director may, at 
the request of a State, waive the require-
ments of this subparagraph with respect to 
a geographic area or areas within the State 
if: (I) the travel time or distance involved 
in providing counseling with respect to 
such area or areas, as otherwise required
147
under this subparagraph, on an in-person 
basis is excessive or the cost of such travel 
is prohibitive; and (II) the State provides 
alternative forms of counseling for such 
area or areas, which may include inter-
active telephone counseling, on-line coun-
seling, interactive video counseling, and 
interactive home study counseling and a 
program of financial literacy and education 
to promote an understanding of consumer, 
economic, and personal finance issues and 
concepts, including saving for retirement, 
managing credit, long-term care, and es-
tate planning and education on predatory 
lending, identity theft, and financial abuse 
schemes relating to homeownership that is 
approved by the Director, except that enti-
ties providing such counseling shall not 
discriminate against any particular form of 
housing; and 
‘‘(ii) demonstrated, in accordance with 
regulations as the Director shall issue set-
ting forth requirements for sufficient evi-
dence, that they are lawfully present in the 
United States; and
148
‘‘(3) public infrastructure development activities 
in connection with housing activities funded under 
paragraph (1) or (2). 
‘‘(h) ELIGIBLE
RECIPIENTS.—Affordable housing 
fund grant amounts of a grantee may be provided only 
to a recipient that is an organization, agency, or other en-
tity (including a for-profit entity, a nonprofit entity, and 
a faith-based organization) that—
‘‘(1) has demonstrated experience and capacity 
to conduct an eligible activity under (g), as evi-
denced by its ability to—
‘‘(A) own, construct or rehabilitate, man-
age, and operate an affordable multifamily rent-
al housing development; 
‘‘(B) design, construct or rehabilitate, and 
market affordable housing for homeownership; 
‘‘(C) provide forms of assistance, such as 
downpayments, closing costs, or interest-rate 
buy-downs, for purchasers; or 
‘‘(D) construct related public infrastruc-
ture development activities in connection with 
such housing activities; 
‘‘(2) demonstrates the ability and financial ca-
pacity to undertake, comply, and manage the eligible 
activity;
149
‘‘(3) demonstrates its familiarly with the re-
quirements of any other Federal, State or local 
housing program that will be used in conjunction 
with such grant amounts to ensure compliance with 
all applicable requirements and regulations of such 
programs; and 
‘‘(4) makes such assurances to the grantee as 
the Director shall, by regulation, require to ensure 
that the recipient will comply with the requirements 
of this section during the entire period that begins 
upon selection of the recipient to receive such grant 
amounts and ending upon the conclusion of all ac-
tivities under subsection (g) that are engaged in by 
the recipient and funded with such grant amounts. 
‘‘(i) LIMITATIONS ON USE.—
‘‘(1) REQUIRED
AMOUNT
FOR
REFCORP.—Of 
the aggregate amount allocated pursuant to sub-
section (b) in each year to the affordable housing 
fund, 25 percent shall be used as provided in section 
21B(f)(2)(E) of the Federal Home Loan Bank Act 
(12 U.S.C. 1441b(f)(2)(E)). 
‘‘(2) REQUIRED AMOUNT FOR HOMEOWNERSHIP 
ACTIVITIES.—Of the aggregate amount of affordable 
housing fund grant amounts provided in each year
150
to a grantee, not less than 10 percent shall be used 
for activities under paragraph (2) of subsection (g). 
‘‘(3) MAXIMUM
AMOUNT
FOR
PUBLIC
INFRA-
STRUCTURE DEVELOPMENT ACTIVITIES IN CONNEC-
TION WITH AFFORDABLE HOUSING ACTIVITIES.—Of 
the aggregate amount of affordable housing fund 
grant amounts provided in each year to a grantee, 
not more than 12.5 percent may be used for activi-
ties under paragraph (3) of subsection (g). 
‘‘(4) DEADLINE FOR COMMITMENT OR USE.—
Any affordable housing fund grant amounts of a 
grantee shall be used or committed for use within 
two years of the date of that such grant amounts 
are made available to the grantee. The Director shall 
recapture into the affordable housing fund any such 
amounts not so used or committed for use and allo-
cate such amounts under subsection (d)(1) in the 
first year after such recapture. 
‘‘(5) USE OF RETURNS.—The Director shall, by 
regulation provide that any return on a loan or other 
investment of any affordable housing fund grant 
amounts of a grantee shall be treated, for purposes 
of availability to and use by the grantee, as afford-
able housing fund grant amounts. 
‘‘(6) PROHIBITED USES.—The Director shall—