H. R. 4194—213
foreclosure or acquisition of the property by other means
the Secretary may include in the amount of insurance
benefits an amount equal to any unpaid mortgage interest;
or
‘‘(B) provide for a modification of the terms of the mortgage
for the purpose of recasting, over the remaining term of the
mortgage or over such longer period pursuant to guidelines
as may be prescribed by the Secretary, the total unpaid amount
then due, with the modification to become effective currently
or to become effective upon the termination of an agreed-upon
extension of the period for curing the default; and the principal
amount of the mortgage, as modified, shall be considered the
‘original principal obligation of the mortgage’ for purposes of
paragraph (5).
‘‘(7) TERMINATION OF PREMIUM OBLIGATION.—The obligation
of the mortgagee to pay the premium charges for insurance
shall cease upon fulfillment of the appropriate requirements
under which the Secretary may pay insurance benefits, as
described in paragraph (1). The Secretary may also terminate
the mortgagee’s obligation to pay mortgage insurance premiums
upon receipt of an application filed by the mortgagee for insur-
ance benefits under paragraph (1), or in the event the contract
of insurance is terminated pursuant to section 229.
‘‘(8) EFFECT ON PAYMENT OF INSURANCE BENEFITS UNDER
SECTION 230.—Nothing in this section shall limit the authority
of the Secretary to pay insurance benefits under section 230.
‘‘(9) TREATMENT OF MORTGAGE ASSIGNMENT PROGRAM.—Not-
withstanding any other provision of law, or the Amended Stipu-
lation entered as a consent decree on November 8, 1979, in
Ferrell v. Cuomo, No. 73 C 334 (N.D. Ill.), or any other order
intended to require the Secretary to operate the program of
mortgage assignment and forbearance that was operated by
the Secretary pursuant to the Amended Stipulation and under
the authority of section 230, prior to its amendment by section
407(b) of The Balanced Budget Downpayment Act, I (Public
Law 104–99; 110 Stat. 45), no mortgage assigned under this
section may be included in any mortgage foreclosure avoidance
program that is the same or substantially equivalent to such
a program of mortgage assignment and forbearance.’’.
(b) EFFECTIVE DATE.—The Secretary shall publish a notice in
the Federal Register stating the effective date of the terms and
conditions prescribed by the Secretary under section 204(a)(1) of
the National Housing Act, as amended by subsection (a) of this
section. Subsections (a) and (k) of section 204 of the National
Housing Act, as in effect immediately before such effective date,
shall continue to apply to any mortgage insured under section
203 of the National Housing Act before such effective date, except
that the Secretary may, at the request of the mortgagee, pay insur-
ance benefits as provided in subparagraphs (A) and (D) of section
204(a)(1) of such Act to calculate insurance benefits in accordance
with section 204(a)(5) of such Act.
(c) REPEAL OF REDUNDANT PROVISION.—Subsection (k) of sec-
tion 204 of the National Housing Act (12 U.S.C. 1710(k)) is hereby
repealed.
(d) AUTHORITY TO SELL.—Section 204(g) of the National Hous-
ing Act (12 U.S.C. 1710(g)) is amended by adding at the end
H. R. 4194—214
the following new sentence: ‘‘The Secretary may sell real and per-
sonal property acquired by the Secretary pursuant to the provisions
of this Act on such terms and conditions as the Secretary may
prescribe.’’.
(e) AUTHORITY TO INSURE MORTGAGE.—Section 223(c) of the
National Housing Act (12 U.S.C. 1715n(c)) is amended—
(1) by striking ‘‘him’’ each place it appears and inserting
‘‘the Secretary’’; and
(2) by inserting before ‘‘of any property acquired’’, the fol-
lowing: ‘‘, including a sale through another entity acting under
authority of the fourth sentence of section 204(g),’’.
(f ) LOSS MITIGATION.—Section 230 of the National Housing
Act is amended—
(1) by redesignating subsections (a) through (e) as (b)
through (f ); and
(2) by inserting a new subsection (a) as follows:
‘‘(a) Upon default of any mortgage insured under this title,
mortgagees shall engage in loss mitigation actions for the purpose
of providing an alternative to foreclosure (including but not limited
to actions such as special forbearance, loss modification, and deeds
in lieu of foreclosure, but not including assignment of mortgages
to the Secretary under section 204(a)(1)(A)) as provided in regula-
tions by the Secretary.’’.
(g) PENALTY.—Section 536(a) of the National Housing Act is
amended by inserting at the end of paragraph (2) the following:
‘‘In the case of the mortgagee’s failure to engage in loss mitiga-
tion activities, as provided in section 536(b)(1)(I), the penalty shall
be in the amount of three times the amount of any insurance
benefits claimed by the mortgagee with respect to any mortgage
for which the mortgagee failed to engage in such loss mitigation
actions.’’.
(h) VIOLATION.—Section 536(b)(1) of the National Housing Act
is amended by inserting after subparagraph (h) the following:
‘‘(I) Failure to engage in loss mitigation actions as provided
in section 230(a) of this Act.’’.
SEC. 602. DISPOSITION OF HUD-OWNED SINGLE FAMILY ASSETS
IN REVITALIZATION AREAS.—Section 204 of the National Housing
Act (12 U.S.C. 1710) is amended—
(1) by redesignating subsection (h) as subsection (i); and
(2) by inserting after subsection (g) the following new sub-
section:
‘‘(h) DISPOSITION OF ASSETS IN REVITALIZATION AREAS.—
‘‘(1) IN
GENERAL.—The purpose of this subsection is to
require the Secretary to carry out a program under which
eligible assets (as such term is defined in paragraph (2)) shall
be made available for sale in a manner that promotes the
revitalization, through expanded homeownership opportunities,
of revitalization areas. Notwithstanding the authority under
the last sentence of subsection (g), the Secretary shall dispose
of all eligible assets under the program and shall establish
the program in accordance with the requirements under this
subsection.
‘‘(2) ELIGIBLE ASSETS.—For purposes of this subsection, the
term ‘eligible asset’ means any of the following assets of the
Secretary:
‘‘(A) PROPERTIES.—Any property that—
H. R. 4194—215
‘‘(i) is designed as a dwelling for occupancy by
1 to 4 families;
‘‘(ii) is located in a revitalization area;
‘‘(iii) was previously subject to a mortgage insured
under the provisions of this Act; and
‘‘(iv) is owned by the Secretary pursuant to the
payment of insurance benefits under this Act.
‘‘(B) MORTGAGES.—Any mortgage that—
‘‘(i) is an interest in a property that meets the
requirements of clauses (i) and (ii) of subparagraph
(A);
‘‘(ii) was previously insured under the provisions
of this Act; and
‘‘(iii) is held by the Secretary pursuant to the pay-
ment of insurance benefits under this Act.
For purposes of this subsection, an asset under this
subparagraph shall be considered to be located in a revital-
ization area, or in the asset control area of a preferred
purchaser, if the property described in clause (i) is located
in such area.
‘‘(C) 
FUTURE
INTERESTS.—Any 
contingent 
future
interest of the Secretary in an asset described in subpara-
graph (A) or (B).
‘‘(3) REVITALIZATION AREAS.—The Secretary shall designate
areas as revitalization areas for purposes of this subsection.
Before designation of an area as a revitalization area, the
Secretary shall consult with affected units of general local
government and interested nonprofit organizations. The Sec-
retary may designate as revitalization areas only areas that
meet one of the following requirements:
‘‘(A) VERY-LOW INCOME AREA.—The median household
income for the area is less than 60 percent of the median
household income for—
‘‘(i) in the case of any area located within a metro-
politan area, such metropolitan area; or
‘‘(ii) in the case of any area not located within
a metropolitan area, the State in which the area is
located.
‘‘(B) HIGH
CONCENTRATION
OF
ELIGIBLE
ASSETS.—A
high rate of default or foreclosure for single family mort-
gages insured under the National Housing Act has resulted,
or may result, in the area—
‘‘(i) having a disproportionately high concentration
of eligible assets, in comparison with the concentration
of such assets in surrounding areas; or
‘‘(ii) being detrimentally impacted by eligible assets
in the vicinity of the area.
‘‘(C) LOW HOME OWNERSHIP RATE.—The rate for home
ownership of single family homes in the area is substan-
tially below the rate for homeownership in the metropolitan
area.
‘‘(4) PREFERENCE FOR SALE TO PREFERRED PURCHASERS.—
The Secretary shall provide a preference, among prospective
purchasers of eligible assets, for sale of such assets to any
purchaser who—
‘‘(A) is—
H. R. 4194—216
‘‘(i) the unit of general local government having
jurisdiction with respect to the area in which are
located the eligible assets to be sold; or
‘‘(ii) a nonprofit organization;
‘‘(B) in making a purchase under the program under
this subsection—
‘‘(i) establishes an asset control area, which shall
be an area that consists of part or all of a revitalization
area; and
‘‘(ii) purchases all interests of the Secretary in
all assets of the Secretary that, at any time during
the period which shall be set forth in the sale agree-
ment required under paragraph (7)—
‘‘(I) are or become eligible assets; and
‘‘(II) are located in the asset control area of
the purchaser; and
‘‘(C) has the capacity to carry out the purchase of
eligible assets under the program under this subsection
and under the provisions of this paragraph.
‘‘(5) AGREEMENTS REQUIRED FOR PURCHASE.—
‘‘(A) PREFERRED
PURCHASERS.—Under the program
under this subsection, the Secretary may sell an eligible
asset as provided in paragraph (4) to a preferred purchaser
only pursuant to a binding agreement by the preferred
purchaser that the eligible asset will be used in conjunction
with a home ownership plan that provides as follows:
‘‘(i) The plan has as its primary purpose the expan-
sion of home ownership in, and the revitalization of,
the asset control area, established pursuant to para-
graph (4)(B)(i) by the purchaser, in which the eligible
asset is located.
‘‘(ii) Under the plan, the preferred purchaser has
established, and agreed to meet, specific performance
goals for increasing the rate of home ownership for
eligible assets in the asset control area that are under
the purchaser’s control. The plan shall provide that
the Secretary may waive or modify such goals or dead-
lines only upon a determination by the Secretary that
a good faith effort has been made in complying with
the goals through the homeownership plan and that
exceptional neighborhood conditions prevented attain-
ment of the goal.
‘‘(iii) Under the plan, the preferred purchaser has
established rehabilitation standards that meet or
exceed the standards for housing quality established
under subparagraph (B)(iii) by the Secretary, and has
agreed that each asset property for an eligible asset
purchased will be rehabilitated in accordance with such
standards.
‘‘(B) NON-PREFERRED
PURCHASERS.—Under the pro-
gram under this subsection, the Secretary may sell an
eligible asset to a purchaser who is not a preferred pur-
chaser only pursuant to a binding agreement by the pur-
chaser that complies with the following requirements:
‘‘(i) The purchaser has agreed to meet specific
performance goals established by the Secretary for
home ownership of the asset properties for the eligible
H. R. 4194—217
assets purchased by the purchaser, except that the
Secretary may, by including a provision in the sale
agreement required under paragraph (7), provide for
a lower rate of home ownership in sales involving
exceptional circumstances.
‘‘(ii) The purchaser has agreed that each asset
property for an eligible asset purchased will be
rehabilitated to comply with minimum standards for
housing quality established by the Secretary for pur-
poses of the program under this subsection.
‘‘(6) DISCOUNT FOR PREFERRED PURCHASERS.—
‘‘(A) IN GENERAL.—For the purpose of providing a pub-
lic purpose discount for the bulk sales of eligible assets
made under the program under this subsection by preferred
purchasers, each eligible asset sold through the program
under this subsection to a preferred purchaser shall be
sold at a price that is discounted from the value of the
asset, as based on the appraised value of the asset property
(as such term is defined in paragraph (8)).
‘‘(B) APPRAISALS.—The Secretary shall require that
each appraisal of an eligible asset under this paragraph
is based upon—
‘‘(i) the market value of the asset property in its
‘as is’ physical condition, which shall take into consider-
ation age and condition of major mechanical and struc-
tural systems; and
‘‘(ii) the value of the property appraised for home
ownership.
‘‘(C) DISCOUNT CLASSES.—The Secretary, in the sole
discretion of the Secretary, shall establish the discount
under this paragraph for an eligible asset, which shall
be in one of the following amounts:
‘‘(i) STANDARD
DISCOUNT.—In the case only of
eligible assets with asset properties that, at the time
of sale under this subsection, do not meet the standards
for housing quality established pursuant to paragraph
(5)(B)(ii), an amount that—
‘‘(I) is appropriate to provide reasonable
resources for the improvement such assets; and
‘‘(II) takes into consideration the financial
safety and soundness of the Mutual Mortgage
Insurance Fund.
‘‘(ii) DEEP DISCOUNT.—In the case only of eligible
assets described in clause (i) for which the Secretary
determines a deep discount is appropriate, an amount
that exceeds the amount of a standard discount under
clause (i). In making a determination whether a deep
discount is appropriate, the Secretary may consider
the condition of the asset property, the extent of
resources available to the preferred purchaser, the com-
prehensive revitalization plan undertaken by such pur-
chaser, or any other circumstances the Secretary
considers appropriate.
‘‘(iii) MINIMAL
DISCOUNT.—In the case only of
eligible assets with asset properties that, at the time
of sale under this subsection, meet or substantially
meet the standards for housing quality established
H. R. 4194—219
assets, which in the case of a preferred purchaser shall
provide for a discount in accordance with paragraph (6).
‘‘(F) HOUSING QUALITY.—The sale agreement shall pro-
vide for compliance of the eligible assets purchased with
the rehabilitation standards established under paragraph
(5)(A)(iii) or the minimum standards for housing quality
established under paragraph (5)(B)(ii), as applicable, and
shall specify such standards.
‘‘(G) PERFORMANCE GOALS AND SANCTIONS.—The sale
agreement shall set forth the specific performance goals
applicable to the purchaser, in accordance with paragraph
(5), shall set forth any sanctions for failure to meet such
goals and deadlines, and shall require the purchaser to
certify compliance with such goals.
‘‘(H) PERIOD
COVERED.—The sale agreement shall
establish—
‘‘(i) in the case of a preferred purchaser, the time
period referred to in paragraph (4)(B)(ii); and
‘‘(ii) in the case of a purchaser who is not a pre-
ferred purchaser, the time period for purchase of
eligible assets that may be covered by the purchase.
‘‘(I) OTHER TERMS.—The agreement shall contain such
other terms and conditions as may be necessary to require
that eligible assets purchased under the agreement are
used in accordance with the program under this subsection.
‘‘(8) DEFINITIONS.—For purposes of this subsection, the fol-
lowing definitions shall apply:
‘‘(A) ASSET CONTROL AREA.—The term ‘asset control
area’ means the area established by a preferred purchaser
pursuant to paragraph (4)(B)(i).
‘‘(B) ASSET
PROPERTY.—The term ‘asset property’
means—
‘‘(i) with respect to an eligible asset that is a prop-
erty, such property; and
‘‘(ii) with respect to an eligible asset that is a
mortgage, the property that is subject to the mortgage.
‘‘(C) ELIGIBLE ASSET.—The term ‘eligible asset’ means
an asset described in paragraph (2).
‘‘(D) NONPROFIT ORGANIZATION.—The term ‘nonprofit
organization’ means a private organization that—
‘‘(i) is organized under State or local laws;
‘‘(ii) has no part of its net earnings inuring to
the benefit of any member, shareholder, founder,
contributor, or individual; and
‘‘(iii) complies with standards of financial respon-
sibility that the Secretary may require.
‘‘(E) PREFERRED PURCHASER.—The term ‘preferred pur-
chaser’ means a purchaser described in paragraph (4).
‘‘(F) UNIT OF GENERAL LOCAL GOVERNMENT.—The term
‘unit of general local government’ means any city, town,
township, county, parish, village, or other general purpose
political subdivision of a State.
H. R. 4194—220
‘‘(9) SECRETARY’S DISCRETION.—The Secretary shall have
the authority to implement and administer the program under
this subsection in such manner as the Secretary may determine.
The Secretary may, in the sole discretion of the Secretary,
enter into contracts to provide for the proper administration
of the program with such public or nonprofit entities as the
Secretary determines are qualified.
‘‘(10) REGULATIONS.—The Secretary shall issue regulations
to implement the program under this subsection through rule-
making in accordance with the procedures established under
section 553 of title 5, United States Code, regarding substantive
rules. Such regulations shall take effect not later than the
expiration of the 2-year period beginning on the date of the
enactment of the Departments of Veterans Affairs and Housing
and Urban Development, and Independent Agencies Appropria-
tions Act, 1999.’’.
Titles I, II, III, IV, and VI of this Act may be cited as the
‘‘Departments of Veterans Affairs and Housing and Urban Develop-
ment, and Independent Agencies Appropriations Act, 1999’’.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.