142 
‘‘(2) REQUIRED AMOUNT FOR HOMEOWNERSHIP 
ACTIVITIES.—Of the aggregate amount of affordable 
housing fund grant amounts provided in each year 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 activities 
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 allocate 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 
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143 
availability to and use by the grantee, as affordable 
housing fund grant amounts. 
‘‘(6) PROHIBITED USES.—The Director shall— 
‘‘(A) by regulation, set forth prohibited uses 
of affordable housing fund grant amounts, which 
shall include use for— 
‘‘(i) political activities; 
‘‘(ii) advocacy; 
‘‘(iii) lobbying, whether directly or 
through other parties; 
‘‘(iv) counseling services; 
‘‘(v) travel expenses; and 
‘‘(vi) preparing or providing advice on 
tax returns; 
‘‘(B) by regulation, provide that, except as 
provided in subparagraph (C), affordable hous-
ing fund grant amounts of a grantee may not be 
used for administrative, outreach, or other costs 
of— 
‘‘(i) the grantee; or 
‘‘(ii) any recipient of such grant 
amounts; and 
‘‘(C) by regulation, limit the amount of any 
affordable housing fund grant amounts of the 
grantee for a year that may be used for adminis-
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144 
trative costs of the grantee of carrying out the 
program required under this section to a per-
centage of such grant amounts of the grantee for 
such year, which may not exceed 10 percent. 
‘‘(7) PROHIBITION OF CONSIDERATION OF USE 
FOR MEETING HOUSING GOALS OR DUTY TO SERVE.— 
In determining compliance with the housing goals 
under this subpart and the duty to serve underserved 
markets under section 1335, the Director may not 
consider any affordable housing fund grant amounts 
used under this section for eligible activities under 
subsection (g). The Director shall give credit toward 
the achievement of such housing goals and such duty 
to serve underserved markets to purchases by the en-
terprises of mortgages for housing that receives fund-
ing from affordable housing fund grant amounts, but 
only to the extent that such purchases by the enter-
prises are funded other than with such grant 
amounts. 
‘‘(j) ACCOUNTABILITY OF RECIPIENTS AND GRANT-
EES.— 
‘‘(1) RECIPIENTS.— 
‘‘(A) TRACKING OF FUNDS.—The Director 
shall— 
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145 
‘‘(i) require each grantee to develop 
and maintain a system to ensure that each 
recipient of assistance from affordable hous-
ing fund grant amounts of the grantee uses 
such amounts in accordance with this sec-
tion, the regulations issued under this sec-
tion, and any requirements or conditions 
under which such amounts were provided; 
and— 
‘‘(ii) establish minimum requirements 
for agreements, between the grantee and re-
cipients, regarding assistance from the af-
fordable housing fund grant amounts of the 
grantee, which shall include— 
‘‘(I) appropriate continuing fi-
nancial and project reporting, record 
retention, and audit requirements for 
the duration of the grant to the recipi-
ent to ensure compliance with the limi-
tations and requirements of this section 
and the regulations under this section; 
and 
‘‘(II) any other requirements that 
the Director determines are necessary 
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146 
to ensure appropriate grant adminis-
tration and compliance. 
‘‘(B) MISUSE OF FUNDS.— 
‘‘(i) 
REIMBURSEMENT
REQUIRE-
MENT.—If any recipient of assistance from 
affordable housing fund grant amounts of a 
grantee is determined, in accordance with 
clause (ii), to have used any such amounts 
in a manner that is materially in violation 
of this section, the regulations issued under 
this section, or any requirements or condi-
tions under which such amounts were pro-
vided, the grantee shall require that, within 
12 months after the determination of such 
misuse, the recipient shall reimburse the 
grantee for such misused amounts and re-
turn to the grantee any amounts from the 
affordable housing fund grant amounts of 
the grantee that remain unused or uncom-
mitted for use. The remedies under this 
clause are in addition to any other remedies 
that may be available under law. 
‘‘(ii) DETERMINATION.—A determina-
tion is made in accordance with this clause 
if the determination is— 
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‘‘(I) made by the Director; or 
‘‘(II)(aa) made by the grantee; 
‘‘(bb) the grantee provides notifi-
cation of the determination to the Di-
rector for review, in the discretion of 
the Director, of the determination; and 
‘‘(cc) the Director does not subse-
quently reverse the determination. 
‘‘(2) GRANTEES.— 
‘‘(A) REPORT.— 
‘‘(i) IN GENERAL.—The Director shall 
require each grantee receiving affordable 
housing fund grant amounts for a year to 
submit a report, for such year, to the Direc-
tor that— 
‘‘(I) describes the activities funded 
under this section during such year 
with the affordable housing fund grant 
amounts of the grantee; and 
‘‘(II) the manner in which the 
grantee complied during such year 
with the allocation plan established 
pursuant to subsection (e) for the 
grantee. 
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148 
‘‘(ii) PUBLIC AVAILABILITY.—The Di-
rector shall make such reports pursuant to 
this subparagraph publicly available. 
‘‘(B) MISUSE OF FUNDS.—If the Director 
determines, after reasonable notice and oppor-
tunity for hearing, that a grantee has failed to 
comply substantially with any provision of this 
section and until the Director is satisfied that 
there is no longer any such failure to comply, the 
Director shall— 
‘‘(i) reduce the amount of assistance 
under this section to the grantee by an 
amount equal to the amount affordable 
housing fund grant amounts which were not 
used in accordance with this section; 
‘‘(ii) require the grantee to repay the 
Director an amount equal to the amount of 
the amount affordable housing fund grant 
amounts which were not used in accordance 
with this section; 
‘‘(iii) limit the availability of assist-
ance under this section to the grantee to ac-
tivities or recipients not affected by such 
failure to comply; or 
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149 
‘‘(iv) terminate any assistance under 
this section to the grantee. 
‘‘(k) CAPITAL REQUIREMENTS.—The utilization or 
commitment of amounts from the affordable housing fund 
shall not be subject to the risk-based capital requirements 
established pursuant to section 1361(a). 
‘‘(l) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) 
AFFORDABLE
HOUSING
FUND
GRANT 
AMOUNTS.—The term ‘affordable housing fund grant 
amounts’ means amounts from the affordable housing 
fund established under subsection (a) that are pro-
vided to a grantee pursuant to subsection (d)(3). 
‘‘(2) GRANTEE.—The term ‘grantee’ means— 
‘‘(A) with respect to 2007, the Louisiana 
Housing Finance Agency and the Mississippi 
Development Authority; and 
‘‘(B) with respect to the years referred to in 
subsection (b)(1), other than 2007, each State (as 
such term is defined in section 1303) and each 
federally recognized Indian tribe. 
‘‘(3) RECIPIENT.—The term ‘recipient’ means an 
entity meeting the requirements under subsection (h) 
that receives assistance from a grantee from affordable 
housing fund grant amounts of the grantee. 
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150 
‘‘(4) TOTAL MORTGAGE PORTFOLIO.—The term 
‘total mortgage portfolio’ means, with respect to a 
year, the sum, for all mortgages outstanding during 
that year in any form, including whole loans, mort-
gage-backed securities, participation certificates, or 
other structured securities backed by mortgages, of the 
dollar amount of the unpaid outstanding principal 
balances under such mortgages. Such term includes 
all such mortgages or securitized obligations, whether 
retained in portfolio, or sold in any form. The Direc-
tor is authorized to promulgate rules further defining 
such term as necessary to implement this section and 
to address market developments. 
‘‘(5) VERY-LOW INCOME FAMILY.—The term ‘very 
low-income family’ has the meaning given such term 
in section 1303, except that such term includes any 
family that resides in a rural area that has an in-
come that does not exceed the poverty line (as such 
term is defined in section 673(2) of the Omnibus 
Budget Reconciliation Act of 1981 (42 U.S.C. 
9902(2)), including any revision required by such sec-
tion) applicable to a family of the size involved. 
‘‘(m) REGULATIONS.— 
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151 
‘‘(1) IN GENERAL.—The Director, in consultation 
with the Secretary of Housing and Urban Develop-
ment, shall issue regulations to carry out this section. 
‘‘(2) REQUIRED
CONTENTS.—The regulations 
issued under this subsection shall include— 
‘‘(A) a requirement that the Director ensure 
that the program of each grantee for use of af-
fordable housing fund grant amounts of the 
grantee is audited not less than annually to en-
sure compliance with this section; 
‘‘(B) authority for the Director to audit, 
provide for an audit, or otherwise verify a grant-
ee’s activities, to ensure compliance with this sec-
tion; 
‘‘(C) requirements for a process for applica-
tion to, and selection by, each grantee for activi-
ties meeting the grantee’s priority housing needs 
to be funded with affordable housing fund grant 
amounts of the grantee, which shall provide for 
priority in funding to be based upon— 
‘‘(i) greatest impact; 
‘‘(ii) geographic diversity; 
‘‘(iii) ability to obligate amounts and 
undertake activities so funded in a timely 
manner; 
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‘‘(iv) in the case of rental housing 
projects under subsection (g)(1), the extent 
to which rents for units in the project fund-
ed are affordable, especially for extremely 
low-income families; 
‘‘(v) in the case of rental housing 
projects under subsection (g)(1), the extent 
of the duration for which such rents will re-
main affordable; 
‘‘(vi) the extent to which the applica-
tion makes use of other funding sources; and 
‘‘(vii) the merits of an applicant’s pro-
posed eligible activity; 
‘‘(D) requirements to ensure that amounts 
provided to a grantee from the affordable housing 
fund that are used for rental housing under sub-
section (g)(1) are used only for the benefit of ex-
tremely low- and very-low income families; 
‘‘(E) limitations on public infrastructure 
development activities that are eligible pursuant 
to subsection (g)(3) for funding with affordable 
housing fund grant amounts and requirements 
for the connection between such activities and 
housing activities funded under paragraph (1) or 
(2) of subsection (g); and 
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‘‘(F) requirements and standards for estab-
lishment, by grantees (including the grantees for 
2007 pursuant to subsection (l)(2)(A)), of per-
formance goals, benchmarks, and timetables for 
the production, preservation, and rehabilitation 
of affordable rental and homeownership housing 
with affordable housing fund grant amounts. 
‘‘(n) ENFORCEMENT OF REQUIREMENTS ON ENTER-
PRISE.—Compliance by the enterprises with the require-
ments under this section shall be enforceable under subpart 
C. Any reference in such subpart to this part or to an order, 
rule, or regulation under this part specifically includes this 
section and any order, rule, or regulation under this sec-
tion. 
‘‘(o) AFFORDABLE HOUSING TRUST FUND.—If, after 
the enactment of this Act, in any year, there is enacted any 
provision of Federal law establishing an affordable housing 
trust fund other than under this title for use only for grants 
to provide affordable rental housing and affordable home-
ownership opportunities, and the subsequent year is a year 
referred to in subsection (b)(1), the Director shall in such 
subsequent year and any remaining years referred to in 
subsection (b)(1) transfer to such affordable housing trust 
fund the aggregate amount allocated pursuant to subsection 
(b) in such year to the affordable housing fund under this 
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154 
section, less any amounts used pursuant to subsection 
(i)(1). For such subsequent and remaining years, the provi-
sions of subsections (c) and (d) shall not apply. Nothing 
in this subsection shall be construed to alter the terms and 
conditions of the affordable housing fund under this section 
or to extend the life of such fund.’’. 
(b) TIMELY ESTABLISHMENT OF AFFORDABLE HOUS-
ING NEEDS FORMULA.— 
(1) IN GENERAL.—The Secretary of Housing and 
Urban Development shall, not later than the effective 
date under section 185 of this Act, issue the regula-
tions establishing the affordable housing needs for-
mulas in accordance with the provisions of section 
1337(c)(2) of the Housing and Community Develop-
ment Act of 1992, as such section is amended by sub-
section (a) of this section. 
(2) EFFECTIVE DATE.—This subsection shall take 
effect on the date of the enactment of this Act. 
(c) REFCORP PAYMENTS.—Section 21B(f)(2) of the 
Federal Home Loan Bank Act (12 U.S.C. 1441b(f)(2)) is 
amended— 
(1) in subparagraph (E), by striking ‘‘and (D)’’ 
and inserting ‘‘(D), and (E)’’; 
(2) by redesignating subparagraph (E) as sub-
paragraph (F); and 
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(3) by inserting after subparagraph (D) the fol-
lowing new subparagraph: 
‘‘(E) PAYMENTS
BY
FANNIE
MAE
AND 
FREDDIE MAC.—To the extent that the amounts 
available pursuant to subparagraphs (A), (B), 
(C), and (D) are insufficient to cover the amount 
of interest payments, each enterprise (as such 
term is defined in section 1303 of the Housing 
and Community Development Act of 1992 (42 
U.S.C. 4502)) shall transfer to the Funding Cor-
poration in each calendar year the amounts allo-
cated for use under this subparagraph pursuant 
to section 1337(i)(1) of such Act.’’. 
(d) GAO REPORT.—The Comptroller General shall 
conduct a study to determine the effects that the affordable 
housing fund established under section 1337 of the Housing 
and Community Development Act of 1992, as added by the 
amendment made by subsection (a) of this section, will have 
on the availability and affordability of credit for home-
buyers, including the effects on such credit of the require-
ment under such section 1337(b) that the Federal National 
Mortgage Association and Federal Home Loan Mortgage 
Corporation make allocations of amounts to such fund 
based on the average total mortgage portfolios, and the ex-
tent to which the costs of such allocation requirement will 
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