411
‘‘(i) PAYMENT UNDER GUARANTEE.—
‘‘(1) NOTICE OF DEFAULT.—In the event of de-
fault by the borrower on a loan guaranteed under this
section, the holder of the guarantee certificate for the
loan shall provide written notice of the default to the
Secretary.
‘‘(2) 
FORECLOSURE.—After 
receiving 
notice
under paragraph (1) and providing written notice of
action under this paragraph to the Secretary, the
holder of the guarantee certificate for the loan may
initiate foreclosure proceedings for the loan in a court
of competent jurisdiction, in accordance with regula-
tions issued by the Secretary, to obtain possession of
the security property. After the court issues a final
order authorizing foreclosure on the property, the
holder of the certificate shall be entitled to payment
by the Secretary under the guarantee (in the amount
provided under subsection (b)) upon (A) conveyance
to the Secretary of title to the security property, (B)
submission to the Secretary of a claim for payment
under the guarantee, and (C) assignment to the Sec-
retary of all the claims of the holder of the guarantee
against the borrower or others arising out of the loan
transaction or foreclosure proceedings, except claims
released with the consent of the Secretary.
412
‘‘(3) ASSIGNMENT BY SECRETARY.—After receiv-
ing notice under paragraph (1), the Secretary may
accept assignment of the loan if the Secretary deter-
mines that the assignment is in the best interests of
the United States. Assignment of a loan under this
paragraph shall include conveyance to the Secretary
of title to the security property, assignment to the
Secretary of all rights and interests arising under the
loan, and assignment to the Secretary of all claims
against the borrower or others arising out of the loan
transaction. Upon assignment of a loan under this
paragraph, the holder of a guarantee certificate for
the loan shall be entitled to payment by the Secretary
under the guarantee (in the amount provided under
subsection (b)).
‘‘(4) 
REQUIREMENTS.—Before 
any 
payment
under a guarantee is made under paragraph (2) or
(3), the holder of the guarantee certificate shall ex-
haust all reasonable possibilities of collection on the
loan guaranteed. Upon payment, in whole or in part,
to the holder, the note or judgment evidencing the debt
shall be assigned to the United States and the holder
shall have no further claim against the borrower or
the United States. The Secretary shall then take such
413
action to collect as the Secretary determines appro-
priate.
‘‘(j) VIOLATION OF GUARANTEE REQUIREMENTS BY
LENDERS ISSUING GUARANTEES.—
‘‘(1) INDEMNIFICATION.—If the Secretary deter-
mines that a loan guaranteed by an eligible lender
pursuant to delegation of authority under subsection
(h) was not originated in accordance with the re-
quirements under this section and the Secretary pays
a claim under the guarantee for the loan, the Sec-
retary may require the eligible lender authorized
under subsection (h) to issue the guarantee certificate
for the loan—
‘‘(A) to indemnify the Secretary for the loss,
if the payment under the guarantee was made
within a reasonable period specified by the Sec-
retary; or
‘‘(B) to indemnify the Secretary for the loss
regardless of when payment under the guarantee
was made, if the Secretary determines that fraud
or misrepresentation was involved in connection
with the origination of the loan.
‘‘(2) TERMINATION
OF
AUTHORITY
TO
ISSUE
GUARANTEES.—The Secretary may cancel a delega-
tion of authority under subsection (h) to an eligible
414
lender if the Secretary determines that the lender has
violated the requirements and procedures for guaran-
teed loans under this section or for other good cause.
Any such cancellation shall be made by giving notice
to the eligible lender and shall take effect upon receipt
of the notice by the mortgagee or at a later date, as
the Secretary may provide. A decision by the Sec-
retary to cancel a delegation shall be final and con-
clusive and shall not be subject to judicial review.
‘‘(k) REFINANCING.—Any loan guaranteed under this
section may be refinanced and extended in accordance with
terms and conditions that the Secretary shall prescribe, but
in no event for an additional amount or term that exceeds
the limitations under subsection (f).
‘‘(l) NONASSUMPTION.—The borrower under a loan
that is guaranteed under this section and under which any
portion of the principal obligation or interest remains out-
standing may not be relieved of liability with respect to
the loan, notwithstanding the transfer of property for which
the loan was made.
‘‘(m) GEOGRAPHICAL TARGETING.—
‘‘(1) STUDY.—The Secretary shall provide for an
independent entity to conduct a study to determine
the extent to which borrowers in the United States
will utilize loan guarantees under this section, the
415
rural areas in the United States in which borrowers
can best utilize and most need loans guaranteed
under this section, and the rural areas in the United
States in which housing of the type eligible for a loan
guarantee under this section is most needed by low-
and moderate-income families. The Secretary shall re-
quire the independent entity conducting the study to
submit a report to the Secretary and to the Congress
describing the results of the study not later than the
expiration of the 90-day period beginning on the date
of the enactment of the Housing and Community De-
velopment Act of 1994.
‘‘(2) TARGETING.—In providing loan guarantees
under this section, the Secretary shall establish stand-
ards to target and give priority to rural areas in
which borrowers can best utilize and most need loans
guaranteed under this section, as determined by the
Secretary based on the results of the study under
paragraph (1) and any other information the Sec-
retary considers appropriate.
‘‘(n) 
INAPPLICABILITY
OF
CREDIT-ELSEWHERE
TEST.—Section 501(c) shall not apply to guarantees, or
loans guaranteed, under this section.
‘‘(o) TENANT PROTECTIONS.—The Secretary shall es-
tablish standards for the treatment of tenants of housing
416
developed using amounts from a loan guaranteed under this
section, which shall incorporate, to the extent applicable,
existing standards applicable to tenants of housing devel-
oped with loans made under section 515. Such standards
shall include standards for fair housing and equal oppor-
tunity, lease and grievance procedures, and tenant appeals
of adverse actions.
‘‘(p) HOUSING STANDARDS.—The standards estab-
lished under section 515(m) for housing and related facili-
ties assisted under section 515 shall apply to housing and
related facilities the development costs of which are financed
in whole or in part with a loan guaranteed under this sec-
tion.
‘‘(q) LIMITATION ON COMMITMENTS TO GUARANTEE
LOANS.—
‘‘(1) REQUIREMENT OF APPROPRIATIONS.—The
authority of the Secretary to enter into commitments
to guarantee loans under this section, and to guaran-
tee loans, shall be effective for any fiscal year only to
the extent or in such amounts as are or have been
provided in appropriations Acts for such fiscal year.
‘‘(2) LIMITATION ON PROJECTS AND OUTSTAND-
ING AGGREGATE PRINCIPAL AMOUNT.—Subject to the
limitation in paragraph (1), the Secretary may enter
into commitments to guarantee loans under this sec-
417
tion for not more than 25 housing projects in each of
fiscal years 1995 and 1996, having an aggregate out-
standing principal amount not exceeding $50,000,000
in each of such fiscal years.
‘‘(r) REPORT.—
‘‘(1) IN GENERAL.—The Secretary shall submit a
report to the Congress, not later than the expiration
of the 2-year period beginning on the date of the en-
actment of the Housing and Community Development
Act of 1994, describing the program under this section
for guaranteeing loans.
‘‘(2) CONTENTS.—The report shall—
‘‘(A) describe the types of borrowers provid-
ing housing with loans guaranteed under this
section, the areas served by the housing provided
and the geographical distribution of the housing,
the levels of income of the residents of the hous-
ing, the number of dwelling units provided, the
extent to which borrowers under such loans have
obtained other financial assistance for develop-
ment costs of housing provided with the loans,
and the extent to which borrowers under such
loans have used low-income housing tax credits
provided under section 42 of the Internal Reve-
434
(B) at least one project within a metropoli-
tan area in any State to receive a grant under
this subsection.
(2) SELECTION PROCESS.—The Secretary shall
select grantees under this subsection on a non-com-
petitive basis, through negotiation with the grantee.
(3) SELECTION CRITERIA.—In selecting projects
for grants under this subsection, the Secretary shall
consider—
(A) the extent of need in the colonia;
(B) the likely effectiveness of the proposed
approach in addressing identified needs;
(C) the extent to which funding for the
project is committed from sources other than
under this section;
(D) the need to consider a variety of solu-
tions to a variety of needs situations; and
(E) such other factors as the Secretary
deems appropriate to carry out the objectives of
this section.
(e) COMPETITIVE GRANTS.—
(1) PURPOSE.—Grants under this subsection
shall be made, in accordance with paragraph (2), to
the entities referred to in subsection (a) for the pur-
pose of assisting the community development and
435
housing needs of the residents of one or more colonias
in an area or region.
(2) RESERVATION OF FUNDS.—Of amounts allo-
cated under subsection (j)(2), the Secretary shall re-
serve a target amount for grants under this subsection
for use in colonias in each State. The Secretary shall
determine the amount be reserved based on such objec-
tive factors of need as the Secretary deems appro-
priate, which may include rates of poverty in, and
the population of, colonias. The Secretary shall reallo-
cate any amounts set-aside under this paragraph for
which the Secretary determines there will not be suffi-
cient approvable applications in a fiscal year.
(3) USE OF FUNDS.—Any amount not reserved
or reallocated under paragraph (2) may be used in
colonias in any State.
(4) APPLICATIONS.—Applications for grants
under this subsection shall be submitted at such time
and in accordance with such procedures, as the Sec-
retary shall prescribe. Applications shall contain the
following information, which the Secretary shall con-
sider in selecting projects for grants under this sub-
section:
(A) The extent of need in the colonia.