Consumers' Home Improvement Protection Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumers' Home Improvement 
Protection Act''.

SEC. 2. PREVENTING FRAUD IN REHABILITATION LOAN PROGRAM.

    Section 203(k) of the National Housing Act (12 U.S.C. 1709(k)) is 
amended by adding at the end the following new paragraph:
    ``(7) Prevention of fraud.--To prevent fraud under the program for 
loan insurance authorized under this subsection, the Secretary shall, 
by regulation, take the following actions:
            ``(A) Prohibition of identity of interest.--The Secretary 
        shall prohibit any identity-of-interest, as such term is 
        defined by the Secretary, between any of the following parties 
        involved in a loan insured under this subsection: the borrower 
        (including, in the case of a borrower that is a nonprofit 
        organization, any member of the board of directors or the staff 
        of the organization), the lender, any consultant, any real 
        estate agent, any property inspector, and any appraiser.
            ``(B) Nonprofit participation.--The Secretary shall 
        establish minimum standards for a nonprofit organization to 
        participate in the program, which shall include--
                    ``(i) requiring such an organization to disclose to 
                the Secretary its taxpayer identification number and 
                evidence sufficient to indicate that the organization 
                is an organization described in section 501(c) of the 
                Internal Revenue Code of 1986 that is exempt from 
                taxation under subtitle A of such Code;
                    ``(ii) requiring that the board of directors of 
                such an organization be comprised only of individuals 
                who do not receive any compensation or other thing of 
                value by reason of their service on the board and who 
                have no personal financial interest in the 
                rehabilitation project of the organization that is 
                financed with the loan insured under this subsection;
                    ``(iii) requiring such an organization to submit to 
                the Secretary financial statements of the organization 
                for the most recent 2 years, which have been prepared 
                by a party that is unaffiliated with the organization;
                    ``(iv) limiting to 10 the number of loans that are 
                insured under this subsection, made to any single such 
                organization, and, at any one time, have an outstanding 
                balance of principal or interest, except that the 
                Secretary may increase such numerical limitation on a 
                case-by-case basis for good cause shown;
                    ``(v) requiring such an organization to post a 
                completion insurance bond in such amount as the 
                Secretary determines appropriate as a condition of 
                obtaining insurance under this subsection; and
                    ``(vi) requiring such an organization to have been 
                certified by the Secretary as meeting the requirements 
                under this subsection and otherwise eligible to 
                participate in the program not more than 2 years before 
                obtaining a loan insured under this section.
            ``(C) Completion of work.--The Secretary shall prohibit any 
        lender making a loan insured under this subsection from 
        disbursing the final payment of loan proceeds unless the lender 
        has received affirmation, from the borrower under the loan, 
        both in writing and pursuant to an interview in person or over 
        the telephone, that the rehabilitation activities financed by 
        the loan have been satisfactorily completed.
            ``(D) Consultant certification.--The Secretary shall 
        require that any consultant, as such term is defined by the 
        Secretary, that is involved in a home inspection, site visit, 
        or preparation of bids with respect to any loan insured under 
        this section shall have been certified by the Secretary as 
        adequately trained and competent to provide such service not 
        more than 2 years before conducting any such activity. The 
        Secretary shall establish a training and certification process 
        to carry out this subparagraph.
            ``(E) Contractor qualification.--The Secretary shall 
        require, in the case of any loan that is insured under this 
        subsection and involves rehabilitation with a value of $25,000 
        or more, that the contractor or other person performing or 
        supervising the rehabilitation activities financed by the loan 
        shall--
                    ``(i) be certified by a nationally recognized 
                organization as meeting industry standards for 
                financial soundness, quality of workmanship, training, 
                and continuing education;
                    ``(ii) be licensed to conduct such activities by 
                the State or unit of general local government in which 
                the rehabilitation activities are being completed; or
                    ``(iii) be bonded in such amount as the Secretary 
                shall require.''.

SEC. 3. REPORT ON ACTIVITY OF NONPROFIT ORGANIZATIONS UNDER 
              REHABILITATION LOAN PROGRAM.

    Not later than 60 days after the date of the enactment of this Act, 
the Secretary of Housing and Urban Development shall submit a report to 
the Congress regarding the participation of nonprofit organizations 
under the rehabilitation loan program under section 203(k) of the 
National Housing Act (12 U.S.C. 1709(k)). The report shall--
            (1) determine and describe the extent of participation in 
        the program by such organizations;
            (2) analyze the impact, on such organizations and the 
        program, of prohibiting such organizations from participating 
        in the program; and
            (3) identify other opportunities for such organizations to 
        acquire financing or credit enhancement for rehabilitation 
        activities.

SEC. 4. REGULATIONS.

    The Secretary of Housing and Urban Development shall issue final 
regulations and any other administrative orders or notices necessary to 
carry out the provisions of this Act and the amendments made by this 
Act not later than 120 days after the date of the enactment of this 
Act.

Summary: Directs the Secretary report on nonprofit organization program participation.