I 
110TH CONGRESS 
2D SESSION 
H. R. 5818 
To authorize the Secretary of Housing and Urban Development to make 
loans to States to acquire foreclosed housing and to make grants to 
States for related costs. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 16, 2008 
Ms. WATERS (for herself, Mr. FRANK of Massachusetts, Mrs. MALONEY of 
New York, Mr. WATT, Mr. MAHONEY of Florida, Ms. VELA´ZQUEZ, Mr. 
AL GREEN of Texas, Mr. GUTIERREZ, Mr. LYNCH, Mr. CARSON, Mr. 
ELLISON, and Mr. CLAY) introduced the following bill; which was referred 
to the Committee on Financial Services 
A BILL 
To authorize the Secretary of Housing and Urban Develop-
ment to make loans to States to acquire foreclosed hous-
ing and to make grants to States for related costs. 
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 ‘‘Neighborhood Sta-
bilization Act of 2008’’. 
SEC. 2. CONGRESSIONAL PURPOSES. 
The purposes of this Act are— 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(1) to establish a loan and grant program ad-
ministered by the Department of Housing and 
Urban Development to help States purchase and re-
habilitate owner-vacated, foreclosed homes with the 
goal of stabilizing and occupying them as soon as 
possible, either through resale or rental to qualified 
families; 
(2) to distribute these loans and grants to areas 
with the highest foreclosure levels; 
(3) to provide incentives for States to use the 
funds to stabilize as many properties as possible; 
and 
(4) to provide housing for low- and moderate- 
income families, especially those that have lost 
homes to foreclosure. 
SEC. 3. LOANS AND GRANTS TO STATES. 
The Secretary of Housing and Urban Development 
shall, subject to the availability of amounts under section 
12, make grants under section 5(a) to qualified States and 
make loans under section 6 in accordance with the ap-
proved plans of qualified States, for use to carry out eligi-
ble housing stimulus activities under section 7. 
SEC. 4. QUALIFIED PLANS. 
(a) IN GENERAL.—The Secretary may make a grant 
under this Act only to a State, and may allocate a loan 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
authority amount under this Act only for a State, that 
has submitted to the Secretary a plan that meets the re-
quirements under this section and has been approved 
under this section. 
(b) CONTENTS.—A plan under this section for a 
State shall— 
(1) designate a State housing finance agency, 
or other agency, department, or entity of the State, 
or any other designee, as the State administrator to 
act on behalf of the State for purposes of this Act; 
(2) describe the housing stimulus activities 
under section 7 to be carried out with assistance 
under this Act for the State by the entities identified 
pursuant to paragraph (1) of this subsection; 
(3) describe how such activities will help restore 
or improve the viability of neighborhoods by pro-
viding for purchase or occupancy of qualified fore-
closed properties as soon as practicable and in a 
manner that will facilitate repayment of the loans 
provided under this Act for carrying out such activi-
ties; 
(4) set forth the procedures that the State will 
use to allocate grant and loan amounts and monitor 
for compliance with the requirements of section 7; 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(f) REQUIREMENT TO ALLOCATE
TO QUALIFIED 
METROPOLITAN CITIES.—Of any grant amounts and loan 
authority amounts allocated pursuant to this section for 
a State, such State shall allocate for each qualified metro-
politan city located in such State a portion of such grant 
amounts and such loan authority amounts that bears the 
same ratio to such grant amounts and loan authority 
amounts, respectively, allocated for the State as the num-
ber of foreclosures on mortgages for single family housing 
occurring in such qualified metropolitan city during the 
most recently completed four calendar quarters for which 
such information is available, as determined by the Sec-
retary, bears to the aggregate number of such foreclosures 
occurring in the State during such calendar quarters. A 
State may adjust such allocation to account for differences 
between median single family housing prices in the State 
and in qualified metropolitan cities in the State. 
SEC. 6. LOANS. 
(a) REQUIREMENT OF LOAN AUTHORITY AMOUNT.— 
The Secretary may make a loan under this Act for use 
in a qualified State only to the extent and in such amounts 
that loan authority amounts for such State are available. 
(b) REVOLVING AVAILABILITY OF LOAN AUTHORITY 
AMOUNT.—The loan authority amount allocated for each 
qualified State shall— 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(1) upon the Secretary entering into a binding 
commitment to make a loan under this Act for use 
in such State, be decreased by the amount of the 
principal obligation of such loan; and 
(2) upon the repayment to the Secretary by any 
borrower of any principal amounts borrowed under 
a loan this Act for use in such State, be increased 
by the amount of principal repaid. 
(c) ASSISTED ENTITIES.—The loan authority amount 
of a qualified State may be used under section 7(a) to 
provide a loan for the purchase or finance the purchase 
of qualified foreclosed housing by— 
(1) the State; 
(2) a unit of local government or a local govern-
mental entity; or 
(3) a nonprofit organization. 
(d) LOAN TERMS.—Each loan provided under this 
Act from the loan authority amount of a qualified State 
shall— 
(1) bear no interest; 
(2) have a term to maturity of— 
(A) 2 years, in the case of any loan made 
to purchase or finance the purchase of qualified 
foreclosed housing for use under section 7(a)(1) 
for homeownership; and 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(B) 5 years, in the case of any loan made 
to purchase or finance the purchase of qualified 
foreclosed housing for use under section 7(a)(2) 
for rental; 
(3) not provide for amortization of the principal 
obligation of the loan during such term; 
(4) require payment of the original principal ob-
ligation under the loan only upon the expiration of 
the term of the loan; and 
(5) have such other terms and conditions as the 
Secretary may provide. 
(e) PROCEDURE.—Upon a request, by a State admin-
istrator, for a loan under this Act from the loan authority 
amount of the qualified State for which such adminis-
trator acts, the Secretary shall enter into a loan agreement 
as the Secretary determines appropriate with the borrower 
under the loan and shall disburse the loan amount in ac-
cordance with such terms, subject only to the absence of 
sufficient loan authority amount for the State. 
(f) ELIGIBILITY
FOR REPEAT LENDING.—A loan 
under this Act may be made to an entity that has pre-
viously borrowed amounts under a loan under this Act 
only if such entity has repaid 95 percent or more of the 
amounts due, including principal and interest, under all 
previous such loans. 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(g) SUNSET.—The Secretary may not enter into any 
commitment to make a loan under this Act, or make any 
such loan, after the expiration of the 24-month period be-
ginning on the date of the enactment of this Act. 
SEC. 7. ELIGIBLE HOUSING STIMULUS ACTIVITIES. 
(a) LOAN AMOUNTS.—Amounts provided under a 
loan under this Act for a qualified State shall be used, 
in accordance with the approved plan of such State, only 
for the following activities: 
(1) HOMEOWNERSHIP
HOUSING
PROVISION.— 
To purchase or finance the purchase of qualified 
foreclosed housing for resale as housing for home-
ownership to families having incomes that do not ex-
ceed 140 percent of the median income for the area 
in which the housing is located. 
(2) RENTAL
HOUSING
PROVISION.—To pur-
chase or finance the purchase of qualified foreclosed 
housing for use only as rental housing, subject to 
the following requirements: 
(A) QUALIFIED
TENANTS.—All dwelling 
units in the housing purchased or financed 
using any loan amounts shall be available for 
rental only by families whose incomes do not 
exceed 100 percent of the median income for 
the area in which the housing is located. 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(B) RENTS.—Rents for each dwelling unit 
in the housing purchase or financed using any 
loan amounts shall be established at amounts 
that do not exceed market rents for comparable 
dwelling units located in the area in which the 
housing is located and in accordance with such 
requirements as the Secretary shall establish to 
ensure that rents are established in a fair, ob-
jective, and arms-length manner. 
(3) HOUSING
REHABILITATION.—To rehabili-
tate qualified foreclosed housing acquired with as-
sistance provided pursuant to this subsection, to the 
extent necessary to comply with applicable laws, 
codes, and other requirements relating to housing 
safety, quality, and habitability, for the purpose of 
reselling the housing, to the extent possible, during 
the 3-month period that begins upon completion of 
rehabilitation and at a price that is as close as pos-
sible to the acquisition price of the housing. 
(b) GRANT AMOUNTS.—Grant amounts provided 
under this Act to a qualified State shall be used, in accord-
ance with the approved plan of such State, only for the 
following activities: 
(1) OPERATING
AND
HOLDING
COSTS.—For 
costs of holding and operating qualified foreclosed 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
housing acquired pursuant to subsection (a), includ-
ing costs of management, taxes, handling, insurance, 
and other related costs. 
(2) COSTS RELATING TO PROPERTY ACQUISI-
TION.—For costs relating to acquisition of qualified 
foreclosed housing pursuant to subsection (a), in-
cluding reasonable closing costs. 
(3) ADMINISTRATIVE COSTS.—For administra-
tive and planning costs of the State in administering 
loan authority amounts and grant amounts under 
this Act, except that the amount of grant amounts 
provided under this Act to a State that may be used 
under this paragraph shall not exceed the amount 
equal to 4 percent of the sum of the grants amounts 
provided to the State pursuant to section 5(a) and 
the loan authority amount allocated to the State 
pursuant to section 5(b). 
(c) PROHIBITED USES.—The Secretary shall, by reg-
ulation, set forth prohibited uses of grant or loan amounts 
under this Act, which shall include use for— 
(1) political activities; 
(2) advocacy; 
(3) lobbying, whether directly or through other 
parties; 
(4) counseling services; 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
that it has attempted to, but can not comply with, 
such requirement. 
(e) SECURITY.—The Secretary shall retain a lien on 
any qualified foreclosed housing purchased or financed 
with a loan under this section in the amount of the prin-
cipal obligation under the loan and interest due under the 
loan. 
(f) QUALIFIED HOMEOWNERS.—This Act may not be 
construed to prevent the resale of qualified foreclosed 
housing to a prior owner or occupant of such housing who 
meets the income requirements of this Act. 
(g) VOUCHER NONDISCRIMINATION.—A recipient of 
amounts from a loan or grant under this Act may not 
refuse to lease a dwelling unit in housing assisted with 
any such loan or grant amounts to a holder of a voucher 
or certificate of eligibility under section 8 of the United 
States Housing Act of 1937 (42 U.S.C. 1437f) because 
of the status of the prospective tenant as such a holder. 
(h) EFFECT
OF FORECLOSURE
ON PREEXISTING 
LEASE.— 
(1) IN
GENERAL.—In the case of any fore-
closure on any dwelling or residential real property 
acquired with any amounts made available under 
this Act, any successor in interest in such property 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
pursuant to the foreclosure shall assume such inter-
est subject to— 
(A) the provision, by the successor in inter-
est, of a notice to vacate to any bona fide ten-
ant at least 90 days before the effective date of 
the notice to vacate; and 
(B) the rights of any bona fide tenant, as 
of the date of such notice of foreclosure— 
(i) under any bona fide lease entered 
into before the notice of foreclosure to oc-
cupy the premises until the end of the re-
maining term of the lease or the end of the 
6-month period beginning on the date of 
the notice of foreclosure, whichever occurs 
first, subject to the receipt by the tenant 
of the 90-day notice under subparagraph 
(A); or 
(ii) without a lease or with a lease ter-
minable at will under State law, subject to 
the receipt by the tenant of the 90-day no-
tice under subparagraph (A), except that 
nothing under this subparagraph shall af-
fect the requirements for termination of 
any federally subsidized tenancy. 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(2) BONA FIDE LEASE OR TENANCY.—For pur-
poses of this section, a lease or tenancy shall be con-
sidered bona fide only if— 
(A) the mortgagor under the contract is 
not the tenant; 
(B) the lease or tenancy was the result of 
an arms-length transaction; or 
(C) the lease or tenancy requires the re-
ceipt of rent that is not substantially less than 
fair market rent for the property. 
SEC. 8. SHARED APPRECIATION AGREEMENT. 
Notwithstanding any other provision of this Act, no 
amounts from a loan or grant under this Act may be used 
under section 7 for any qualified foreclosed housing unless 
such binding agreements are entered into, in accordance 
with such requirements as the Secretary shall establish, 
that ensure that the Federal Government shall, upon any 
sale or disposition of the qualified foreclosed housing by 
the owner who acquires the housing pursuant to assistance 
under this Act, receive an amount equal to 20 percent of 
the difference between the net proceeds from such sale or 
disposition and the cost of such acquisition of the housing 
pursuant to assistance under this Act, after deductions for 
expenditures paid or incurred after the date of such acqui-
sition that are properly chargeable to capital account 
VerDate Aug 31 2005 
00:48 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(within the meaning of section 1016 of the Internal Rev-
enue Code of 1986) with respect to such housing. 
SEC. 9. SPENDING REQUIREMENTS. 
(a) IN GENERAL.—Each qualified State that receives 
a grant under this Act or is allocated loan authority 
amounts under this Act pursuant to section 5(b) shall— 
(1) commence obligation of such grant amounts 
and commitment of such loan authority amounts not 
later than the expiration of the 45-day period that 
begins upon approval of the approved plan of State; 
(2) obligate all such grant amounts and enter 
into commitments for all such loan authority 
amounts not later than the expiration of the 180-day 
period beginning upon such approval; and 
(3) except as provided in subsection (b), outlay 
all such grant amounts and disburse all such loan 
authority amounts not later than the 12-month pe-
riod that begins upon such approval. 
This subsection shall not apply to loan authority amounts 
of a qualified State attributable, pursuant to section 
6(b)(2), to repayment of principal amounts of loans under 
this Act. 
(b) EXCEPTION TO SPENDING REQUIREMENT.—If a 
State in good faith makes a request, in the plan submitted 
to the Secretary pursuant to section 4 or otherwise after 
VerDate Aug 31 2005 
01:51 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
approval of such plan, for extension of the period referred 
to in paragraph (1), (2), or (3) of subsection (a) of this 
section, the Secretary may extend the period for not more 
than 3 months. 
SEC. 10. ACCOUNTABILITY. 
(a) REPORTING.—Each qualified State that receives 
a grant or allocation of loan authority amount under this 
Act shall submit a report to the Secretary, not later than 
the expiration of the 12-month period beginning upon the 
approval of the qualified plan by the Secretary, regarding 
use of such amounts which shall contain such information 
as the Secretary shall require. 
(b) MISUSE OF AMOUNTS.—If the Secretary deter-
mines that any amounts from a grant or loan under this 
Act for a qualified State has been used in a manner that 
is materially in violation of this Act, any regulations issued 
under this Act, or any requirements or conditions under 
which such amounts were provided, the Secretary shall re-
quire the State to reimburse the Treasury of the United 
States in the amount of any such misused funds. 
SEC. 11. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
VerDate Aug 31 2005 
01:51 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(1) APPROVED
PLAN.—The term ‘‘approved 
plan’’ means a plan of a State that has been ap-
proved pursuant to section 4. 
(2) COVERED
MULTIFAMILY
HOUSING.—The 
term ‘‘covered multifamily housing’’ means a resi-
dential structure that— 
(A) consists of 20 or fewer dwelling units; 
and 
(B) is predominantly vacant. 
(3) LOAN
AUTHORITY
AMOUNT.—The term 
‘‘loan authority amount’’ means, with respect to a 
qualified State, the amount of loan authority avail-
able pursuant to section 12(b)(1) that is allocated 
for the State pursuant to section 5(b), as such 
amount may be increased or decreased pursuant to 
section 6(b). 
(4) NONPROFIT
ORGANIZATION.—The term 
‘‘nonprofit organization’’ has the meaning given 
such term in section 104 of the Cranston-Gonzalez 
National Affordable Housing Act (42 U.S.C. 
12704). 
(5) QUALIFIED
FORECLOSED
HOUSING.—The 
term ‘‘qualified foreclosed housing’’ means housing 
that— 
VerDate Aug 31 2005 
01:51 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
Act pursuant to such section 207(c)(3)(A) 
and section 206A of such Act (12 U.S.C. 
1712a). 
(6) QUALIFIED
METROPOLITAN
CITY.—The 
term ‘‘qualified metropolitan city’’ means an incor-
porated place that is among the 25 most populous 
incorporated places in the United States, as deter-
mined according to data from the most recent decen-
nial census that is published before the date of the 
enactment of this Act. 
(7) QUALIFIED
STATE.—The term ‘‘qualified 
State’’ means a State for which there is an approved 
plan. 
(8) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(9) SINGLE FAMILY HOUSING.—The term ‘‘sin-
gle family housing’’ means a residential structure 
consisting of from one to four dwelling units. 
(10) STATE.—The term ‘‘State’’ means any 
State of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, the Common-
wealth of the Northern Mariana Islands, Guam, the 
Virgin Islands, American Samoa, and other territory 
or possession of the United States. 
VerDate Aug 31 2005 
01:51 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
(11) STATE ADMINISTRATOR.—The term ‘‘State 
administrator’’ means the entity of a qualified State 
that is designated, pursuant to section 4(b)(1), in 
the approved plan of the State to act for the State 
for purposes of this Act. 
SEC. 12. FUNDING. 
(a) GRANTS.—There is authorized to be appropriated 
to the Secretary of the Treasury $7,500,000,000 for 
grants under this Act. 
(b) DIRECT LOANS.— 
(1) LOAN
COMMITMENT
AUTHORITY
LIMITA-
TION.—Subject only to the availability of sufficient 
amounts for the costs (as such term is defined in 
section 502 of the Federal Credit Reform Act of 
1990 (2 U.S.C. 661a)) of such loans and the ab-
sence of qualified requests for loans, the Secretary 
shall enter into commitments to make loans under 
this Act, and shall make such loans, in an amount 
such that the aggregate outstanding principal bal-
ance of such loans does not at any time exceed 
$7,500,000,000. 
(2) AUTHORIZATION OF APPROPRIATIONS FOR 
COSTS.—There is authorized to be appropriated such 
sums as may be necessary for costs (as such term 
is defined in section 502 of the Federal Credit Re-
VerDate Aug 31 2005 
01:51 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS
form Act of 1990 (2 U.S.C. 661a)) of loans under 
this Act. 
SEC. 13. REGULATIONS AND IMPLEMENTATION. 
(a) REGULATIONS.—The Secretary shall issue any 
regulations necessary to carry out this Act. 
(b) IMPLEMENTATION.—Pending the effectiveness of 
regulations issued pursuant to subsection (a), the Sec-
retary shall take such action as may be necessary to imple-
ment this Act by notice, guidance, and interim rules. 
Æ 
VerDate Aug 31 2005 
01:51 Apr 17, 2008
Jkt 069200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6301
E:\BILLS\H5818.IH
H5818
smartinez on PROD1PC64 with BILLS