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110th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 110-616
======================================================================
NEIGHBORHOOD STABILIZATION ACT OF 2008
_______
May 1, 2008.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Frank of Massachusetts, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 5818]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (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, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 11
Background and Need for Legislation.............................. 12
Hearings......................................................... 14
Committee Consideration.......................................... 15
Committee Votes.................................................. 15
Committee Oversight Findings..................................... 19
Performance Goals and Objectives................................. 19
New Budget Authority, Entitlement Authority, and Tax Expenditures 19
Committee Cost Estimate.......................................... 20
Congressional Budget Office Estimate............................. 20
Federal Mandates Statement....................................... 22
Advisory Committee Statement..................................... 22
Constitutional Authority Statement............................... 23
Applicability to Legislative Branch.............................. 23
Earmark Identification........................................... 23
Section-by-Section Analysis of the Legislation................... 23
Dissenting Views................................................. 30
AMENDMENT
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Neighborhood
Stabilization Act of 2008''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. Congressional purposes.
Sec. 3. Loans and grants to States.
Sec. 4. Qualified plans.
Sec. 5. Allocation of amounts.
Sec. 6. Loans.
Sec. 7. Grants.
Sec. 8. Eligible housing stimulus activities.
Sec. 9. Shared appreciation agreement.
Sec. 10. Spending requirements.
Sec. 11. Servicer contact.
Sec. 12. Accountability.
Sec. 13. Definitions.
Sec. 14. Funding.
Sec. 15. Regulations and implementation.
SEC. 2. CONGRESSIONAL PURPOSES.
The purposes of this Act are--
(1) to establish a loan and grant program administered by the
Department of Housing and Urban Development to help States,
metropolitan cities, and urban counties purchase and
rehabilitate 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 levels of foreclosure and delinquent subprime
mortgages;
(3) to provide incentives for States, metropolitan cities,
and urban counties 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 14, make grants under section
5(a) to qualified States and make loans under section 6 in accordance
with the approved plans of qualified States, for use to carry out
eligible housing stimulus activities under section 8.
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 authority amount under this Act
only for a State, that has submitted to the Secretary a plan that meets
the requirements under this section and has been approved under this
section. A State shall reallocate amounts under subsection (f) or (g)
of section 5 only to a qualified metropolitan city or qualified urban
county, respectively, that has submitted to the Secretary a plan that
meets the requirements under this section and has been approved under
this section.
(b) Contents.--A plan under this section for an allocation recipient
shall--
(1) designate a housing finance agency of the allocation
recipient, or other agency, department, or entity of the
allocation recipient, or any other designee, as the allocation
recipient administrator to act on behalf of the allocation
recipient for purposes of this Act;
(2) describe the housing stimulus activities under section 8
to be carried out with assistance under this Act for the
allocation recipient by the entity identified pursuant to
paragraph (1) of this subsection;
(3) prioritize the allocation of funds to low- and moderate-
income neighborhoods with high concentrations of foreclosures
and describe how such activities will help restore or improve
the viability of such neighborhoods by providing for purchase
or occupancy of qualified foreclosed properties as soon as
practicable and in a manner that will facilitate repayment of
the loans provided under this Act for carrying out such
activities;
(4) set forth the procedures that the allocation recipient
will use to allocate grant and loan amounts and monitor for
compliance with the requirements of section 8;
(5) provide that grant and loan amounts provided under this
Act for the allocation recipient will be used only for eligible
housing stimulus activities under section 8 that are eligible
under such section for assistance with grant or loan amounts,
as applicable;
(6) contain such assurances as the Secretary shall require
that the housing stimulus activities to be carried out with
assistance under this Act shall not result in a significant net
loss in rental housing in an area in which such activities are
undertaken;
(7) give priority emphasis and consideration to metropolitan
areas, metropolitan cities, urban areas, rural areas, low- and
moderate-income areas, census tracts and other areas having the
greatest need, including those--
(A) with the greatest percentage of home
foreclosures;
(B) with the highest percentage of homes financed by
subprime mortgage loans over 90 days delinquent; or
(C) identified by the State, qualified metropolitan
city, or unit of general local government as likely to
face a significant rise in the rate of home
foreclosures.
(8) provide preference for activities that serve the lowest
income families, who otherwise meet the income requirements
under section 8, for the longest period and homeowners, who
otherwise meet such income requirements, whose mortgages have
been foreclosed;
(9) provide preference for use of grant and loan amounts in
connection with acquisition of qualified foreclosed properties
that are acquired no earlier than 60 days after the owner of
the property described in section 13(7)(B) acquired such
ownership;
(10) describe any other preferences the allocation recipient
may establish, such as housing for first responders, for
veterans, for nurses serving underserved areas or homeless
persons, or for homeless persons in accordance with the 10-year
plan of the State to end homelessness, or providing housing for
public school teachers or workforce who are employed by the
city or locality in which the housing is located;
(11) provide for obligation and outlay of grant amounts, and
for loan commitments and disbursement, in accordance with the
requirements under section 10; and
(12) in the case of any grant or loan amounts that will be
invested with the possibility of a return on investment,
provide for use of any return on such investment only for one
or more eligible housing stimulus activities under section 8.
(c) Submission.--
(1) In general.--The Secretary shall provide for allocation
recipients to submit plans under this section to the Secretary
and shall establish requirements for the contents and form of
such plans. Except in the case of plan resubmitted pursuant to
subsection (d)(3), the Secretary may not accept or consider a
plan unless the plan is submitted to the Secretary before the
expiration of the 30-day period beginning upon the date of the
enactment of this Act.
(2) Public approval.--An allocation recipient may not submit
a plan to the Secretary unless the plan is approved by the
chief executive officer of the allocation recipient after a
public hearing on the plan held pursuant to reasonable public
notice.
(d) Review and Approval.--
(1) Timing.--The Secretary shall review, and approve or
disapprove, each plan submitted or resubmitted pursuant to
paragraph (3) in compliance with the requirements established
under this section before the expiration of the 30-day period
beginning upon the submission of the plan. If the Secretary
does not approve or disapprove a plan that is submitted or
resubmitted in accordance with the requirements under this
section before the expiration of such 30-day period and notify
the allocation recipient of such approval or disapproval, the
plan shall be considered approved for purposes of this section.
(2) Standard for disapproval.--The Secretary may disapprove a
plan only if the plan fails to comply with the requirements of
this Act.
(3) Resubmission.--If the Secretary disapproves the plan of
an allocation recipient, the Secretary shall submit to the
allocation recipient the reasons for the disapproval, and the
allocation recipient may, during the 15-day period that begins
upon notification of such disapproval and the reasons for such
disapproval, submit to the Secretary a revised plan for review
and approval in accordance with this subsection.
SEC. 5. ALLOCATION OF AMOUNTS.
(a) Grants.--From the total amount made available under section 14(a)
for grants under this Act, the Secretary shall make a grant to each
qualified State in the grant amount determined under subsection (c) of
this section for the qualified State.
(b) Loans.--From the aggregate amount of authority for the
outstanding principal balance of loans made under this Act pursuant to
section 14(b)(1), the Secretary shall allocate such authority for loans
under this Act for each qualified State in the loan authority amount
determined under subsection (c) of this section for the qualified
State.
(c) Grant Amounts and Loan Authority Amounts.--
(1) In general.--The grant amount or loan authority amount
for a qualified State shall be the foreclosure grant share or
foreclosure loan share, respectively, for the State determined
under subsection (d), as such share is adjusted in accordance
with an index established or selected by the Secretary to
account for differences between qualified States in the median
price of single family housing in such States.
(2) Limitation on adjustment.-- If such adjustment would
result in a grant amount or loan authority amount for any State
that exceeds 125 percent of the foreclosure grant share or
foreclosure loan share, respectively, for the State, the grant
amount or loan authority amount for the State shall be 125
percent of foreclosure grant share or foreclosure loan share,
respectively, for the State and the Secretary shall increase
the grant amounts or loan authority amounts for all other
States on a pro rata basis, except as provided in paragraph
(3), by the amount necessary to account for the aggregate of
any such decreases in grant amounts or loan authority amounts
for States to comply with the 125 percent limitation.
(3) Limitation on reallocation.--No increase in the grant
amount or loan authority amount for any State from amounts
reallocated pursuant to paragraph (2) shall result in the grant
amount or loan authority amount for any State exceeding 125
percent of the foreclosure grant share or foreclosure loan
share for the State, respectively.
(4) Priority preference for unused amounts.--States which
have their grant or loan amounts reduced under paragraph (2)
shall be granted a priority preference for any loans or grants
which may be reallocated under subsection (i) (relating to
reallocation of funds).
(d) Foreclosure Shares.--For purposes of this section:
(1) Grant share.--The foreclosure grant share for a qualified
State shall be the amount that bears the same ratio to the
total amount made available under section 14(a) as the number
of foreclosures on mortgages for single family housing and
subprime mortgage loans for single family housing that are over
90 days delinquent, occurring in such State during the most
recently completed four calendar quarters for which such
information is available, as determined by the Secretary, bears
to the aggregate number of such foreclosures and such
delinquent subprime mortgage loans occurring in all qualified
States during such calendar quarters.
(2) Loan share.--The foreclosure loan share for a qualified
State shall be the amount that bears the same ratio to the
aggregate amount of the principal balance of loans that may be
outstanding at any time under this Act pursuant to section
14(b)(1) as the number of foreclosures on mortgages for single
family housing and subprime mortgage loans for single family
housing that are over 90 days delinquent, occurring in such
State during the most recently completed four calendar quarters
for which such information is available, as determined by the
Secretary, bears to the aggregate number of such foreclosures
and such delinquent subprime mortgage loans occurring in all
qualified States during such calendar quarters.
(e) Distribution of Full Amount.--The Secretary shall establish the
index referred to in subsection (c) and the grant and loan authority
amounts for the qualified States in a manner that provides that--
(1) the aggregate of the grant amounts for all qualified
States is equal to the total amount made available under
section 14(a); and
(2) the aggregate of the loan authority amounts for all
qualified States is equal to the aggregate amount of authority
for the outstanding principal balance of all loans made under
this Act pursuant to section 14(b)(1).
(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
metropolitan 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 number of foreclosures on mortgages for single family
housing and subprime mortgage loans for single family housing that are
over 90 days delinquent, occurring in such qualified metropolitan city
during the most recently completed four calendar quarters for which
such information is available, as determined by the Secretary, bears to
the aggregate number of such foreclosures and such delinquent subprime
mortgage loans 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.
(g) Requirement To Allocate to Qualified Urban Counties.--Of any
grant amounts and loan authority amounts allocated pursuant to this
section for a State, such State shall allocate for each qualified urban
county 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 number of foreclosures on mortgages for single family housing and
subprime mortgage loans for single family housing that are over 90 days
delinquent, occurring in such qualified urban county during the most
recently completed four calendar quarters for which such information is
available, as determined by the Secretary, bears to the aggregate
number of such foreclosures and such delinquent subprime mortgage loans
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 urban counties in
the State.
(h) Allocation Exception.--If the aggregate grant and loan authority
amount to be allocated pursuant to subsection (f) or (g) to a qualified
metropolitan city or qualified urban county is less than $10,000,000, a
State may, but is not required to, allocate such grant and loan
authority amount to such qualified metropolitan city or qualified urban
county, and the allocation for such State shall be increased by the
grant and loan authority amount not allocated to such qualified
metropolitan city or qualified urban county.
(i) Reallocation of Unused Amounts.--The Secretary shall recapture
any grant amounts and loan authority amounts allocated to a State that
are not used in a timely fashion in accordance with section 10, as the
Secretary shall prescribe, and shall reallocate such amounts among all
other qualified States in accordance with the provisions of this Act
for allocation of grant amounts and loan authority amounts.
SEC. 6. LOANS.
(a) Requirement of Loan Authority Amount.--The Secretary may make a
loan under this Act for use in the area of an allocation recipient only
to the extent and in such amounts that loan authority amounts for such
allocation recipient are available.
(b) Revolving Availability of Loan Authority Amount.--The loan
authority amount allocated for each allocation recipient shall--
(1) upon the Secretary entering into a binding commitment to
make a loan under this Act for use in the area of such
allocation recipient, 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
the area of such allocation recipient, be increased by the
amount of principal repaid.
(c) Assisted Entities.--The loan authority amount of an allocation
recipient may be used for activities described in section 8(a)
undertaken by--
(1) the allocation recipient;
(2) a unit of local government or a local governmental
entity; or
(3) any other entity, as provided in the approved plan of the
allocation recipient under section 4.
(d) Loan Terms.--Each loan provided under this Act from the loan
authority amount of an allocation recipient shall--
(1) bear no interest;
(2) have a term to maturity of--
(A) 3 years, in the case of any loan made to purchase
or finance the purchase of qualified foreclosed housing
for use under section 8(a)(1) for homeownership; and
(B) 5 years, in the case of any loan made to purchase
or finance the purchase of qualified foreclosed housing
for use under section 8(a)(2) for rental;
(3) not provide for amortization of the principal obligation
of the loan during such term;
(4) be non-recourse;
(5) require payment of the original principal obligation
under the loan only upon the expiration of the term of the
loan; and
(6) have such other terms and conditions as the Secretary may
provide.
(e) Procedure.--A qualified State or, upon its election, a qualified
metropolitan city or qualified urban county shall--
(1) enter into a loan agreement on behalf of the Secretary on
terms established under this Act and any other terms such
State, qualified metropolitan city, or qualified urban county
determines appropriate;
(2) disburse the loan amount in accordance with such terms,
subject only to the absence of sufficient loan authority amount
for such State, such qualified metropolitan city, or such
qualified urban county;
(3) monitor such loans; and
(4) collect and transmit to the Secretary any loan
repayments.
(f) Eligibility for Repeat Lending.--A loan under this Act may be
made to an entity that has previously borrowed amounts under a loan
under this Act only if such entity has repaid 90 percent or more of the
amounts due under all previous such loans. The Secretary may waive such
requirement upon a request by an allocation recipient if the borrower
has demonstrated satisfactory progress in utilizing outstanding loans
and sufficient capacity to utilize additional loan amounts effectively.
(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 48-month period beginning on the date of the enactment of this Act.
SEC. 7. GRANTS.
The grant amount of an allocation recipient may be used under section
8(b) by the allocation recipient, a unit of local government or a local
governmental entity, or a nonprofit organization.
SEC. 8. ELIGIBLE HOUSING STIMULUS ACTIVITIES.
(a) Loan Amounts.--Amounts provided under a loan under this Act for
an allocation recipient shall be used, in accordance with the approved
plan of such allocation recipient, only for the following activities:
(1) Homeownership housing provision.--To purchase or finance
the purchase of qualified foreclosed housing for resale as
housing for homeownership to families having incomes that do
not exceed 140 percent of the median income for the area in
which the housing is located.
(2) Rental housing provision.--To purchase or finance the
purchase of qualified foreclosed housing for use as rental,
lease-purchase, or rent-to-own 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.
(B) Rents.--Rents for each dwelling unit in the
housing purchased 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, objective, and arms-length manner.
(3) Housing rehabilitation.--To rehabilitate qualified
foreclosed housing acquired with assistance 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, or to make
improvements to the housing to increase the energy efficiency
or conservation of the housing or provide a renewable energy
source or sources for the housing, 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 possible to the acquisition price of the
housing.
(b) Grant Amounts.--Grant amounts provided under this Act to an
allocation recipient shall be used, in accordance with the approved
plan of such allocation recipient, only for the following activities:
(1) Operating and holding costs.--For costs of holding and
operating qualified foreclosed housing acquired pursuant to
subsection (a), including costs of management, taxes, handling,
insurance, and other related costs.
(2) Costs relating to property acquisition.--For incidental
costs involved in acquiring qualified foreclosed housing
pursuant to subsection (a), including reasonable closing costs,
except that grant amounts may not be used to pay any portion of
the purchase price for the housing under section 13(7)(C).
(3) Administrative costs.--For costs of the allocation
recipient in administering loan authority amounts and grant
amounts under this Act, except that the amount of grant amounts
provided under this Act to an allocation recipient that may be
used under this paragraph shall not exceed the amount equal to
8 percent of the sum of the grant amounts provided to the
allocation recipient pursuant to subsection (a), (f), or (g) of
section 5, as applicable, and the loan authority amount
allocated to the allocation recipient pursuant to subsection
(b), (f), or (g) of section 5, as applicable.
(4) Planning costs.--For planning costs of the State in
connection with this Act, except that the amount of grant
amounts provided under this Act to an allocation recipient that
may be used under this paragraph shall not exceed the amount
equal to 2 percent of the sum of the grant amounts provided to
the allocation recipient pursuant to subsection (a), (f), or
(g) of section 5, as applicable, and the loan authority amount
allocated to the State pursuant to subsection (b), (f), or (g)
of section 5, as applicable.
(5) Housing rehabilitation.--For activities set forth in
subsection (a)(3), except that an allocation recipient shall
not use more than 20 percent of a grant amount allocation for
such activities.
(6) Demolition.--For costs of demolishing qualified
foreclosed housing that is deteriorated or unsafe, but amounts
may be used under this paragraph only if the Secretary
determines that the neighborhood or other area in which the
housing is located has a high incidence of vacant and abandoned
housing (or other vacant and abandoned structures) and is
experiencing a significant decline in population.
Notwithstanding any other provision of this subsection, grant amounts
provided under this Act may not be used to provide assistance of any
kind (including grants, loans, and closing cost financing) to provide
amounts for downpayments for any homebuyers of single family housing.
(c) Prohibited Uses.--The Secretary shall, by regulation, 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;
(5) travel expenses; and
(6) preparing or providing advice on tax returns.
(d) Income Targeting Requirement.--
(1) Very low-income families.--Not less than 50 percent of
the total grant amounts an allocation recipient makes available
under this Act shall be used for activities under subsection
(b) in connection with providing housing for families whose
incomes do not exceed 50 percent of the median income for the
area in which the housing is located.
(2) Extremely low-income families.--Not less than 50 percent
of the total grant amounts an allocation recipient makes
available under paragraph (1) shall be used for activities
under subsection (b) in connection with providing housing for
families whose incomes do not exceed 30 percent of the median
income for the area in which the housing is located.
(3) Waiver.--
(A) In general.--The Secretary may establish a
percentage for purposes of paragraph (2) that is less
than 50 percent if an allocation recipient certifies
that, in addition to any other requirements the
Secretary may establish--
(i) such allocation recipient has attempted
to use all other federally related resources
available to it in combination with the
resources available under this Act to meet the
requirements of paragraph (2); and
(ii) the failure to comply with paragraph (2)
will not result in an overall loss of housing
affordable to families whose incomes do not
exceed 30 percent of area median income in the
area of such allocation recipient.
(B) Consideration of housing needs.--In establishing
an alternative percentage for purposes of paragraph (2)
for an allocation recipient that meets the
certification requirements of subparagraph (A), the
Secretary shall take into consideration the housing
needs in the area of such allocation recipient of
families whose incomes do not exceed 30 percent of area
median income.
(e) Use for Rural Areas.--An allocation recipient receiving any grant
or loan amounts under this Act that includes any rural areas shall use
a portion of its grant and loan authority amount for eligible
activities located in rural areas that is proportionate to the
identified need for such activities in such rural areas.
(f) Security.--A qualified State, or at its election, a qualified
metropolitan city or qualified urban county, shall record a lien in the
name of the Secretary on any qualified foreclosed housing purchased or
financed with a loan under this section in the amount of the principal
obligation under the loan and interest due under the loan.
(g) 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.
(h) Voucher Nondiscrimination.--
(1) Prospective tenants.--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.
(2) Current tenants.--In the case of any qualified foreclosed
housing for which funds made available under the Act are used
and in which a recipient of assistance under section 8(o) of
the U.S. Housing Act of 1937 resides at the time of acquisition
or financing, the owner and any successor in interest shall be
subject to the lease and to the housing assistance payments
contract for the occupied unit. Vacating the property prior to
sale shall not constitute good cause for termination of the
tenancy unless the property is unmarketable while occupied or
unless the owner or subsequent purchaser desires the unit for
personal or family use. This paragraph shall not preempt any
State or local law that provides more protection for tenants.
(i) Effect of Foreclosure on Preexisting Lease.--
(1) In general.--In the case of any foreclosure on any
dwelling or residential real property acquired with any amounts
made available under this Act, any successor in interest in
such property pursuant to the foreclosure shall assume such
interest subject to--
(A) the provision, by the successor in interest, of a
notice to vacate to any bona fide tenant 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 occupy the
premises until the end of the remaining 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
terminable at will under State law, subject to
the receipt by the tenant of the 90-day notice
under subparagraph (A), except that nothing
under this subparagraph shall affect the
requirements for termination of any federally
subsidized tenancy.
(2) Bona fide lease or tenancy.--For purposes of this
subsection, a lease or tenancy shall be considered 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 receipt of rent
that is not substantially less than fair market rent
for the property.
(j) Prohibition of Demolition of Public Housing.--Notwithstanding any
other provision of this Act, amounts from a grant or loan under this
Act may not be used to demolish any public housing (as such term is
defined in section 3 of the United States Housing Act of 1937 (42
U.S.C. 1437a)).
SEC. 9. 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 8 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 acquisition that
are properly chargeable to capital account (within the meaning of
section 1016 of the Internal Revenue Code of 1986) with respect to such
housing. In the case of a for-profit owner, this section shall be
applied by substituting ``50 percent'' for ``20 percent''.
SEC. 10. SPENDING REQUIREMENTS.
(a) In General.--Each allocation recipient 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 120-day period that begins upon approval of the approved
plan of allocation recipient;
(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) of this section,
outlay all such grant amounts and disburse all such loan
authority amounts not later than the 24-month period that
begins upon such approval.
This subsection shall not apply to loan authority amounts of an
allocation recipient attributable, pursuant to section 6(b)(2), to
repayment of principal amounts of loans under this Act.
(b) Exception to Spending Requirement.--If an allocation recipient in
good faith makes a request, in the plan submitted to the Secretary
pursuant to section 4 or otherwise after 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 5 months.
SEC. 11. SERVICER CONTACT.
The servicer of a federally related mortgage loan (as such term is
defined in section 3 of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2602)) shall notify the unit of general local
government in which the property securing the mortgage is located upon
becoming responsible for a qualified foreclosed property and provide
such unit of general local government with the name and 24-hour contact
information of a representative authorized to negotiate purchases.
SEC. 12. ACCOUNTABILITY.
(a) Reporting.--Each allocation recipient 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, including information about the location and type of
assisted properties and the income of families purchasing or renting
housing assisted under this Act, as the Secretary shall require.
(b) Misuse of Amounts.--If the Secretary determines that any amounts
from a grant or loan under this Act for an allocation recipient or
other recipient of grant or loans funds has been used in a manner that
is 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 require the allocation recipient or other recipient
of grant or loans funds to reimburse the Treasury of the United States
in the amount of any such misused funds.
(c) Hold Harmless.--Notwithstanding subsection (b), a State shall not
be required to reimburse the Treasury of the United States for any
misused funds such State is required to allocate to a qualified
metropolitan city or qualified urban county under subsection (f) or (g)
of section 5, respectively.
SEC. 13. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Allocation recipient.--The term ``allocation recipient''
means--
(A) a qualified State;
(B) a qualified metropolitan city; and
(C) a qualified urban county.
(2) Allocation recipient administrator.--The term
``allocation recipient administrator'' means the entity that is
designated, pursuant to section 4(b)(1), in the approved plan
of the allocation recipient to act for the allocation recipient
for purposes of this Act.
(3) Approved plan.--The term ``approved plan'' means a plan
of an allocation recipient that has been approved pursuant to
section 4.
(4) Covered multifamily housing.--The term ``covered
multifamily housing'' means a residential structure that
consists of 64 or fewer dwelling units.
(5) Loan authority amount.--The term ``loan authority
amount'' means, with respect to an allocation recipient, the
amount of loan authority available pursuant to section 14(b)(1)
that is allocated for the allocation recipient pursuant to
subsection (b), (f), or (g) of section 5, as applicable, as
such amount may be increased or decreased pursuant to section
6(b).
(6) 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).
(7) Qualified foreclosed housing.--The term ``qualified
foreclosed housing'' means housing that--
(A)(i) is single family housing that is not occupied
by an owner, pursuant to foreclosure or assignment of
the mortgage on the housing or forfeiture of the
housing; or
(ii) is covered multifamily housing;
(B) is owned by a lender, mortgage company, investor,
financial institution, or other such entity, or any
government entity, pursuant to foreclosure or
assignment of the mortgage on the housing or forfeiture
of the housing; and
(C) has a purchase price--
(i) in the case of single family housing,
that does not exceed 110 percent of the average
purchase price for single family housing in the
area in which the housing is located, as
determined by the Secretary.
(ii) in the case of covered multifamily
housing, that does not exceed the dollar amount
limitation, for housing of the applicable size
located in the area in which the housing is
located, on the amount of a principal
obligation of a mortgage eligible for insurance
under section 207 of the National Housing Act
(12 U.S.C. 1713), as in effect on the date of
the enactment of this Act pursuant to such
section 207(c)(3)(A) and section 206A of such
Act (12 U.S.C. 1712a).
(8) Qualified metropolitan city.--The term ``qualified
metropolitan city'' means an incorporated place, for which
there is an improved plan, that--
(A) is among the 100 most populous incorporated
places in the United States, as determined according to
data from the most recent decennial census that is
published before the date of the enactment of this Act;
or
(B)(i) has a minimum population of 50,000, as
determined according to data from the most recent
decennial census that is published before the date of
the enactment of this Act; and
(ii) has a foreclosure rate that exceeds 125 percent
of the foreclosure rate for the entire State
(9) Qualified state.--The term ``qualified State'' means a
State for which there is an approved plan.
(10) Qualified urban county.--The term ``qualified urban
county'' means an urban county (as such term is defined in
section 102 of the Housing and Community Development Act of
1974 (42 U.S.C. 5302)), for which there is an approved plan,
that is among the 50 most populous urban counties in the United
States, as determined--
(A) according to data from the most recent decennial
census; and
(B) excluding the population of any qualified
metropolitan city within such urban county, unless such
metropolitan city has agreed to have its population
included with the population of the county for the
purposes of this Act.
(11) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(12) Single family housing.--The term ``single family
housing'' means a residential structure consisting of from one
to four dwelling units.
(13) State.--The term ``State'' means any State of the United
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of the Northern Mariana Islands, Guam,
the Virgin Islands, American Samoa, and other territory or
possession of the United States.
SEC. 14. 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 limitation.--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 absence 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 balance 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 Reform Act of 1990 (2 U.S.C. 661a)) of loans under this
Act.
SEC. 15. 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 Secretary shall take such action as may
be necessary to implement this Act by notice, guidance, and interim
rules.
PURPOSE AND SUMMARY
H.R. 5818, the Neighborhood Stabilization Act of 2008,
establishes a loan and grant program administered by the
Department of Housing and Urban Development to help States
purchase and rehabilitate owner-vacated, foreclosed homes. The
goal of the bill is to stabilize and occupy these properties as
soon as possible, either through resale or rental to qualified
low- and moderate-income families.
The bill, as reported, establishes a $15 billion HUD-
administered program of which $7.5 billion of the funds would
be for loans and the other $7.5 billion would be for grants.
Each State's loan and grant authority is based on the State's
percentage of nationwide foreclosures over the last four
calendar quarters and the number of subprime loans delinquent
over 90 days, adjusted to account for the State's relative
median home price, except that the median home price factor may
increase any state's share by no more than 25 percent. In the
event of a surplus, States at the limit will receive a
preference for any excess funds. States then allocate funds to
government entities or for profit and nonprofit organizations
for the purchase, rehabilitation, and resale of homeownership
housing and the purchase, rehabilitation, and operation of
rental housing. States are required to direct funds to
qualified metropolitan cities and urban counties within their
bounds. The bill requires a State to use a portion of the loan
and grant authority for eligible activities in rural areas
proportionate to the identified need in those areas.
Loans are non-recourse and zero-interest to finance
acquisition and rehabilitation costs. The federal government
would be paid back from resale or, in the case of rental
properties, refinance proceeds. Loans for homeownership
properties must be repaid within three years. For rental
properties, the maximum loan term is five years. In addition,
the federal government would receive a percentage of any
appreciation a property owner realizes at resale. Grant funds
may be used for property taxes and insurance during the pre-
occupancy phase, operating costs such as property management
fees, and State and grantee administrative and planning costs.
Grants may also cover incidental costs involved in acquiring
qualified foreclosed housing such as reasonable closing costs,
and rehabilitation costs.
Homes purchased for resale must be sold to families with
incomes that do not exceed 140 percent of local area median
income (AMI). Properties purchased for rental must serve
families having incomes at or below local AMI. Allocation
recipients are required to give a preference to activities
serving the lowest income families for the longest period and
homeowners whose mortgages have been foreclosed. Allocation
recipients may establish preferences for otherwise income-
eligible first responders, veterans, public school teachers,
workforce, and homeless persons. At least 50 percent of the
grant money must be targeted to house families at or below 50
percent of local AMI, and not less than half of this money must
target families at or below 30 percent of local AMI. Under
specified circumstances, HUD may establish an alternative
percentage of less than 50 percent to serve extremely low-
income families (those at or below 30 percent of local AMI.)
The bill would also explicitly prohibit discrimination against
voucher holders and provide eviction protections for tenants in
foreclosed properties acquired with funds made available under
the Act.
BACKGROUND AND NEED FOR LEGISLATION
A record number of American families are facing or are at
risk of foreclosure. According to data from the Mortgage
Bankers Association (MBA), the delinquency rate for mortgage
loans on single-family properties stood at 5.82 percent of all
loans outstanding in the fourth quarter of 2007, up almost 20
percent from one year ago. This is the highest total
delinquency rate in the MBA survey in over 20 years. Further,
this delinquency data does not take into account loans in the
foreclosure process. The percentage of loans in the foreclosure
process has risen over 70 percent in the last year and stands
at the highest level ever. As part of its response to the
housing crisis, the Committee held a two-day legislative
hearing entitled ``Using FHA for Housing Stabilization and
Homeownership Retention'', on April 9 and 10, 2008, In
testimony before the Committee at the April 9th hearing,
Chairman Sheila Bair of the Federal Deposit Insurance
Corporation (FDIC) also cited data from the MBA and observed
that over 20 percent of subprime adjustable rate mortgages
(ARMs) were seriously delinquent in the fourth quarter of 2007,
and over 14 percent of all subprime mortgages were seriously
delinquent.
According to Mark Zandi of Economy.com, 550,000 first
mortgage loans were in default as of the end of January 2008.
This pace would leave 2.2 million defaults this year and could
go as high as 3 million. In addition, Mr. Zandi also notes
nearly 8.8 million homeowners, or 10 percent of all homeowners,
are ``underwater.'' Similarly, Governor Randall Kroszner of the
Federal Reserve testified before the Committee on April 9, that
more than 1.5 million foreclosures were started during 2007, up
53 percent from the previous year, and the consensus
expectation is that the number of foreclosures in 2008 will
likely exceed the number in 2007.
Rising delinquency and foreclosure rates have reverberated
in the secondary market, decreasing the value of mortgage
backed securities and reducing the availability of credit.
Accordingly, lenders have tightened credit standards, making it
more difficult for delinquent borrowers to refinance. Chairman
Bair noted the sharp contraction in credit availability in her
April 9th testimony, stating that the total U.S. mortgage debt
originated in the fourth quarter of 2007 was $450 billion, down
38 percent from the fourth quarter of 2006, and that the total
issuance of subprime mortgage-backed securities fell by 89
percent in the fourth quarter of 2007 compared to the prior
year.
At the same time, because of falling home prices in many
parts of the country, many borrowers--even those current on
their mortgages--find themselves unable to refinance into more
affordable or fixed-rate products because their outstanding
mortgage loan balances exceed their homes' values. These
borrowers' inability to refinance before a rate reset may be
creating a downward cycle with increasing foreclosure rates,
which in turn further lowers local property values, further
eroding credit availability. In addition to lowering local home
values and tax revenues due to declining assessed valuations,
vacant foreclosed properties are a drain on local government
resources. These properties attract crime, vandalism, and arson
and contribute to the blight associated with abandoned
properties.
As mentioned above, on April 9 and 10, 2008, the Committee
held a two-day hearing on ``Using the FHA for Housing
Stabilization and Homeownership Retention.'' This hearing
examined a discussion draft of the Housing Stabilization and
Homeownership Retention Act distributed to the public on March
13, 2008. The second day of the hearings (April 10th) focused
on Title III of the discussion draft, which became the basis
for H.R. 5818. At the hearing, Maryland Governor Martin
O'Malley testified that, ``The proposed $[15] billion fund
administered by states to acquire, rehabilitate, and sell
foreclosed homes will provide a critical tool to curtail the
negative impacts foreclosures have on our neighborhoods and
communities.'' In addition, Doug Garver of the Ohio Housing
Finance Agency testified that the ``legislation's proposed
state loan and grant program would significantly strengthen and
expand state HFA [housing finance agency] initiatives.''
The Committee heard testimony from Mayors Thomas Menino and
Oscar Goodman expressing concern that the discussion draft of
the bill distributed all funding to States, rather than
enabling cities and other Community Development Block Grant-
eligible entities administer the funds. In response, H.R. 5818
as introduced requires States to automatically allocate funds
to any of the most populous 25 cities in the country that lie
within their bounds. During mark-up, such direct allocations
were expanded to include: (1) the 100 most populous cities; (2)
the 50 most populous counties; and (3) any city with a
population greater than 50,000 and a foreclosure rate 1.25
times the statewide average.
The Committee also received testimony on the impact of the
foreclosure crisis on low-income people. Doug Garver noted that
that foreclosed properties are especially concentrated in
lower-income neighborhoods, which were targeted by subprime
lenders. Mr. Garver emphasized the need to have vacant
properties quickly resold or put to some other productive use,
otherwise they destabilize often already fragile communities by
further depressing home values, discouraging investment, and
contributing to vagrancy and crime. Sheila Crowley, testifying
on behalf of the National Low Income Housing Coalition,
presented testimony about the large percentage of housing
counseling clients in crisis with incomes at or below 50
percent of the local area median income. The Committee also
understands that the housing problems of low-income homeowners
and renters due to foreclosures are increased by the well
established problem of a shortage of affordable housing. Given
both the immediate and long-standing housing crisis for low-
income people, several witnesses at the April 10th hearing
testified about the need to target foreclosed properties funds
to low-income families.
The Committee is also well aware that many middle-income
families and communities are seriously affected by the current
foreclosure crisis. Given this reality, the Committee received
recommendations for adopting legislation that includes broader
targeting than what usually applies to federal housing
programs, particularly in the homeownership area. In addition
to helping middle-income families, as Mr. Garver noted in his
testimony, broader income targeting for the funds to
rehabilitate foreclosed properties may also help to promote
economic integration.
The Committee received testimony on the need for
protections for tenants when the owners of their homes lose
their property to foreclosure. Although some states have
enacted tenant protection laws that give these tenants a
reasonable period of time to relocate, others have not. The
forms of protection recommended included, among other things,
providing tenants in the foreclosed property with adequate
notice if being required to vacate and requiring the new owner
to honor the terms of the existing lease, in both single family
and multi-family properties.
HEARINGS
The Committee on Financial Services held a two-day hearing
entitled ``Using FHA for Housing Stabilization and
Homeownership Retention'' on April 9 and 10, 2008. The
following witnesses testified on April 9th.
Panel One
The Honorable Sheila C. Bair, Chairman, Federal Deposit
Insurance Corporation
The Honorable John C. Dugan, Comptroller, Office of the
Comptroller of the Currency
The Honorable John M. Reich, Director, Office of Thrift
Supervision
The Honorable Randall Kroszner, Board Member, Board of
Governors of the Federal Reserve System
The Honorable Brian Montgomery, Assistant Secretary for
Housing--Federal Housing Commissioner, United States Department
of Housing and Urban Development
Panel Two
Mr. Brian Wesbury, Chief Economist, First Trust Advisors
L.P.
Dr. Alan S. Blinder, Ph.D., Gordon S. Rentschler Memorial
Professor of Economics and Public Affairs, Princeton University
Dr. Allen Sinai, Chief Global Economist, Strategist and
President, Decision Economics, Inc.
The following witnesses testified on April 10th:
Panel One
The Honorable Martin O'Malley, Governor, State of Maryland
The Honorable Adrian M. Fenty, Mayor, District of Columbia
The Honorable Thomas M. Menino, Mayor, City of Boston,
Massachusetts
The Honorable Oscar B. Goodman, Mayor, City of Las Vegas,
Nevada
Panel Two
Mr. Doug Garver, Executive Director, Ohio Housing Finance
Agency
Mr. David C. Lizarraga, Chairman, US Hispanic Chamber of
Commerce
Ms. Sheila Crowley, President, National Low Income Housing
Coalition
Mr. Hilary O. Shelton, Director, NAACP Washington Bureau
Mr. Victor Burrola, Director, Homeownership Network,
National Council of La Raza
COMMITTEE CONSIDERATION
The Committee on Financial Services met in open session on
April 23, 2008, and ordered H.R. 5818, the ``Neighborhood
Stabilization Act of 2008'', as amended, favorably reported by
a record vote of 38 yeas and 26 nays.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Frank to report the bill, as amended, to the
House with a favorable recommendation was agreed to by a record
vote of 38 yeas and 26 nays (Record vote FC-90). The names of
Members voting for and against follow:
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank....................... X ........ ........ Mr. Bachus......... ........ X ........
Mr. Kanjorski................... X ........ ........ Ms. Pryce (OH)..... X ........ ........
Ms. Waters...................... X ........ ........ Mr. Castle......... ........ X ........
Mrs. Maloney.................... X ........ ........ Mr. King (NY)...... ........ X ........
Mr. Gutierrez................... ....... ........ ........ Mr. Royce.......... ........ X ........
Ms. Velazquez................... ....... ........ ........ Mr. Lucas.......... ........ X ........
Mr. Watt........................ X ........ ........ Mr. Paul........... ........ X ........
Mr. Ackerman.................... X ........ ........ Mr. LaTourette..... X ........ ........
Mr. Sherman..................... X ........ ........ Mr. Manzullo....... ........ X ........
Mr. Meeks....................... X ........ ........ Mr. Jones.......... ........ X ........
Mr. Moore (KS).................. X ........ ........ Mrs. Biggert....... ........ X ........
Mr. Capuano..................... X ........ ........ Mr. Shays.......... X ........ ........
Mr. Hinojosa.................... X ........ ........ Mr. Miller (CA).... ........ X ........
Mr. Clay........................ X ........ ........ Mrs. Capito........ ........ X ........
Mrs. McCarthy................... X ........ ........ Mr. Feeney......... ........ ........ ........
Mr. Baca........................ X ........ ........ Mr. Hensarling..... ........ X ........
Mr. Lynch....................... X ........ ........ Mr. Garrett (NJ)... ........ X ........
Mr. Miller (NC)................. X ........ ........ Ms. Brown-Waite.... ........ ........ ........
Mr. Scott....................... X ........ ........ Mr. Barrett (SC)... ........ X ........
Mr. Green....................... X ........ ........ Mr. Gerlach........ ........ X ........
Mr. Cleaver..................... X ........ ........ Mr. Pearce......... ........ X ........
Ms. Bean........................ X ........ ........ Mr. Neugebauer..... ........ X ........
Ms. Moore (WI).................. X ........ ........ Mr. Price (GA)..... ........ X ........
Mr. Davis (TN).................. X ........ ........ Mr. Davis (KY)..... ........ X ........
Mr. Hodes....................... X ........ ........ Mr. McHenry........ ........ X ........
Mr. Ellison..................... X ........ ........ Mr. Campbell....... ........ ........ ........
Mr. Klein....................... X ........ ........ Mr. Putnam......... ........ ........ ........
Mr. Mahoney (FL)................ X ........ ........ Mrs. Bachmann...... ........ X ........
Mr. Wilson...................... X ........ ........ Mr. Roskam......... ........ X ........
Mr. Perlmutter.................. X ........ ........ Mr. Marchant....... ........ X ........
Mr. Murphy...................... X ........ ........ Mr. McCotter....... ........ X ........
Mr. Donnelly.................... X ........ ........ Mr. McCarthy....... ........ X ........
Mr. Wexler...................... X ........ ........ Mr. Heller......... ........ X ........
Mr. Marshall.................... X ........ ........
Mr. Boren....................... X ........ ........
Mr. Foster...................... X ........ ........
Mr. Carson...................... X ........ ........
----------------------------------------------------------------------------------------------------------------
The following amendments were disposed of by record votes.
The names of Members voting for and against follow:
An amendment by Mr. Price, No. 7, requiring offsets, was
NOT AGREED TO by a record vote of 26 yeas and 34 nays (FC-86):
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank....................... ....... X ........ Mr. Bachus......... X ........ ........
Mr. Kanjorski................... ....... X ........ Ms. Pryce (OH)..... ........ ........ ........
Ms. Waters...................... ....... X ........ Mr. Castle......... X ........ ........
Mrs. Maloney.................... ....... X ........ Mr. King (NY)...... X ........ ........
Mr. Gutierrez................... ....... X ........ Mr. Royce.......... X ........ ........
Ms. Velazquez................... ....... ........ ........ Mr. Lucas.......... X ........ ........
Mr. Watt........................ ....... X ........ Mr. Paul........... X ........ ........
Mr. Ackerman.................... ....... X ........ Mr. LaTourette..... ........ X ........
Mr. Sherman..................... ....... X ........ Mr. Manzullo....... X ........ ........
Mr. Meeks....................... ....... X ........ Mr. Jones.......... X ........ ........
Mr. Moore (KS).................. ....... ........ Mrs. Biggert....... X ........ ........
Mr. Capuano..................... ....... X ........ Mr. Shays.......... X ........ ........
Mr. Hinojosa.................... ....... X ........ Mr. Miller (CA).... X ........ ........
Mr. Clay........................ ....... X ........ Mrs. Capito........ X ........ ........
Mrs. McCarthy................... ....... X ........ Mr. Feeney......... ........ ........ ........
Mr. Baca........................ ....... X ........ Mr. Hensarling..... X ........ ........
Mr. Lynch....................... ....... X ........ Mr. Garrett (NJ)... X ........ ........
Mr. Miller (NC)................. ....... X ........ Ms. Brown-Waite.... ........ ........ ........
Mr. Scott....................... ....... X ........ Mr. Barrett (SC)... X ........ ........
Mr. Green....................... ....... X ........ Mr. Gerlach........ X ........ ........
Mr. Cleaver..................... ....... X ........ Mr. Pearce......... X ........ ........
Ms. Bean........................ ....... X ........ Mr. Neugebauer..... X ........ ........
Ms. Moore (WI).................. ....... X ........ Mr. Price (GA)..... X ........ ........
Mr. Davis (TN).................. ....... ........ ........ Mr. Davis (KY)..... X ........ ........
Mr. Hodes....................... ....... X ........ Mr. McHenry........ X ........ ........
Mr. Ellison..................... ....... ........ ........ Mr. Campbell....... ........ ........ ........
Mr. Klein....................... ....... X ........ Mr. Putnam......... ........ ........ ........
Mr. Mahoney (FL)................ ....... X ........ Mrs. Bachmann...... X ........ ........
Mr. Wilson...................... ....... X ........ Mr. Roskam......... ........ ........ ........
Mr. Perlmutter.................. ....... X ........ Mr. Marchant....... X ........ ........
Mr. Murphy...................... ....... X ........ Mr. McCotter....... X ........ ........
Mr. Donnelly.................... ....... X ........ Mr. McCarthy....... X ........ ........
Mr. Wexler...................... ....... X ........ Mr. Heller......... X ........ ........
Mr. Marshall.................... ....... X ........
Mr. Boren....................... ....... X ........
Mr. Foster...................... ....... X ........
Mr. Carson...................... ....... X ........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Hensarling, No. 8, regarding loans only
at the same cost, was NOT AGREED TO by a record vote of 25 yeas
and 37 nays (FC-87).
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank....................... ....... X ........ Mr. Bachus......... X ........ ........
Mr. Kanjorski................... ....... X ........ Ms. Pryce (OH)..... ........ X ........
Ms. Waters...................... ....... X ........ Mr. Castle......... ........ X ........
Mrs. Maloney.................... ....... X ........ Mr. King (NY)...... X ........ ........
Mr. Gutierrez................... ....... X ........ Mr. Royce.......... X ........ ........
Ms. Velazquez................... ....... ........ ........ Mr. Lucas.......... X ........ ........
Mr. Watt........................ ....... X ........ Mr. Paul........... X ........ ........
Mr. Ackerman.................... ....... X ........ Mr. LaTourette..... ........ X ........
Mr. Sherman..................... ....... X ........ Mr. Manzullo....... X ........ ........
Mr. Meeks....................... ....... X ........ Mr. Jones.......... X ........ ........
Mr. Moore (KS).................. ....... X ........ Mrs. Biggert....... X ........ ........
Mr. Capuano..................... ....... X ........ Mr. Shays.......... X ........ ........
Mr. Hinojosa.................... ....... X ........ Mr. Miller (CA).... X ........ ........
Mr. Clay........................ ....... X ........ Mrs. Capito........ X ........ ........
Mrs. McCarthy................... ....... X ........ Mr. Feeney......... ........ ........ ........
Mr. Baca........................ ....... X ........ Mr. Hensarling..... X ........ ........
Mr. Lynch....................... ....... X ........ Mr. Garrett (NJ)... X ........ ........
Mr. Miller (NC)................. ....... X ........ Ms. Brown-Waite.... ........ ........ ........
Mr. Scott....................... ....... X ........ Mr. Barrett (SC)... X ........ ........
Mr. Green....................... ....... X ........ Mr. Gerlach........ X ........ ........
Mr. Cleaver..................... ....... X ........ Mr. Pearce......... X ........ ........
Ms. Bean........................ ....... X ........ Mr. Neugebauer..... X ........ ........
Ms. Moore (WI).................. ....... X ........ Mr. Price (GA)..... X ........ ........
Mr. Davis (TN).................. ....... ........ ........ Mr. Davis (KY)..... X ........ ........
Mr. Hodes....................... ....... X ........ Mr. McHenry........ X ........ ........
Mr. Ellison..................... ....... ........ ........ Mr. Campbell....... ........ ........ ........
Mr. Klein....................... ....... X ........ Mr. Putnam......... ........ ........ ........
Mr. Mahoney (FL)................ ....... X ........ Mrs. Bachmann...... X ........ ........
Mr. Wilson...................... ....... X ........ Mr. Roskam......... ........ ........ ........
Mr. Perlmutter.................. ....... X ........ Mr. Marchant....... X ........ ........
Mr. Murphy...................... ....... X ........ Mr. McCotter....... X ........ ........
Mr. Donnelly.................... ....... X ........ Mr. McCarthy....... X ........ ........
Mr. Wexler...................... ....... X ........ Mr. Heller......... X ........ ........
Mr. Marshall.................... ....... X ........
Mr. Boren....................... ....... X ........
Mr. Foster...................... ....... X ........
Mr. Carson...................... ....... X ........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Hensarling, No. 9, requiring matching
State funds for grants, was NOT AGREED TO by a record vote of
28 yeas and 36 nays (FC-88).
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank....................... ....... X ........ Mr. Bachus......... X ........ ........
Mr. Kanjorski................... ....... X ........ Ms. Pryce (OH)..... X ........ ........
Ms. Waters...................... ....... X ........ Mr. Castle......... X ........ ........
Mrs. Maloney.................... ....... X ........ Mr. King (NY)...... X ........ ........
Mr. Gutierrez................... ....... X ........ Mr. Royce.......... X ........ ........
Ms. Velazquez................... ....... ........ ........ Mr. Lucas.......... X ........ ........
Mr. Watt........................ ....... X ........ Mr. Paul........... X ........ ........
Mr. Ackerman.................... ....... X ........ Mr. LaTourette..... ........ X ........
Mr. Sherman..................... ....... X ........ Mr. Manzullo....... X ........ ........
Mr. Meeks....................... ....... X ........ Mr. Jones.......... X ........ ........
Mr. Moore (KS).................. ....... X ........ Mrs. Biggert....... X ........ ........
Mr. Capuano..................... ....... X ........ Mr. Shays.......... X ........ ........
Mr. Hinojosa.................... ....... X ........ Mr. Miller (CA).... X ........ ........
Mr. Clay........................ ....... X ........ Mrs. Capito........ X ........ ........
Mrs. McCarthy................... ....... X ........ Mr. Feeney......... ........ ........ ........
Mr. Baca........................ ....... X ........ Mr. Hensarling..... X ........ ........
Mr. Lynch....................... ....... X ........ Mr. Garrett (NJ)... X ........ ........
Mr. Miller (NC)................. ....... X ........ Ms. Brown-Waite.... ........ ........ ........
Mr. Scott....................... ....... X ........ Mr. Barrett (SC)... X ........ ........
Mr. Green....................... ....... X ........ Mr. Gerlach........ X ........ ........
Mr. Cleaver..................... ....... X ........ Mr. Pearce......... X ........ ........
Ms. Bean........................ ....... X ........ Mr. Neugebauer..... X ........ ........
Ms. Moore (WI).................. ....... X ........ Mr. Price (GA)..... X ........ ........
Mr. Davis (TN).................. ....... X ........ Mr. Davis (KY)..... X ........ ........
Mr. Hodes....................... ....... X ........ Mr. McHenry........ X ........ ........
Mr. Ellison..................... ....... ........ ........ Mr. Campbell....... ........ ........ ........
Mr. Klein....................... ....... X ........ Mr. Putnam......... ........ ........ ........
Mr. Mahoney (FL)................ ....... X ........ Mrs. Bachmann...... X ........ ........
Mr. Wilson...................... ....... X ........ Mr. Roskam......... X ........ ........
Mr. Perlmutter.................. ....... X ........ Mr. Marchant....... X ........ ........
Mr. Murphy...................... ....... X ........ Mr. McCotter....... X ........ ........
Mr. Donnelly.................... ....... X ........ Mr. McCarthy....... X ........ ........
Mr. Wexler...................... ....... X ........ Mr. Heller......... X ........ ........
Mr. Marshall.................... ....... X ........
Mr. Boren....................... ....... X ........
Mr. Foster...................... ....... X ........
Mr. Carson...................... ....... X ........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. McHenry, No. 13, requiring qualified
foreclosed housing be resold at public auction, was NOT AGREED
TO by a record vote of 24 yeas and 40 nays (FC-89).
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank....................... ....... X ........ Mr. Bachus......... X ........ ........
Mr. Kanjorski................... ....... X ........ Ms. Pryce (OH)..... X ........ ........
Ms. Waters...................... ....... X ........ Mr. Castle......... ........ X ........
Mrs. Maloney.................... ....... X ........ Mr. King (NY)...... X ........ ........
Mr. Gutierrez................... ....... X ........ Mr. Royce.......... X ........ ........
Ms. Velazquez................... ....... ........ ........ Mr. Lucas.......... X ........ ........
Mr. Watt........................ ....... X ........ Mr. Paul........... X ........ ........
Mr. Ackerman.................... ....... X ........ Mr. LaTourette..... ........ X ........
Mr. Sherman..................... ....... X ........ Mr. Manzullo....... X ........ ........
Mr. Meeks....................... ....... X ........ Mr. Jones.......... X ........ ........
Mr. Moore (KS).................. ....... X ........ Mrs. Biggert....... X ........ ........
Mr. Capuano..................... ....... X ........ Mr. Shays.......... ........ X ........
Mr. Hinojosa.................... ....... X ........ Mr. Miller (CA).... X ........ ........
Mr. Clay........................ ....... X ........ Mrs. Capito........ X ........ ........
Mrs. McCarthy................... ....... X ........ Mr. Feeney......... ........ ........ ........
Mr. Baca........................ ....... X ........ Mr. Hensarling..... X ........ ........
Mr. Lynch....................... ....... X ........ Mr. Garrett (NJ)... X ........ ........
Mr. Miller (NC)................. ....... X ........ Ms. Brown-Waite)... ........ ........ ........
Mr. Scott....................... ....... X ........ Mr. Barrett (SC)... ........ ........ ........
Mr. Green....................... ....... X ........ Mr. Gerlach........ ........ X ........
Mr. Cleaver..................... ....... X ........ Mr. Pearce......... X ........ ........
Ms. Bean........................ ....... X ........ Mr. Neugebauer..... X ........ ........
Ms. Moore (WI).................. ....... X ........ Mr. Price (GA)..... X ........ ........
Mr. Davis (TN).................. ....... X ........ Mr. Davis (KY)..... X ........ ........
Mr. Hodes....................... ....... X ........ Mr. McHenry........ X ........ ........
Mr. Ellison..................... ....... X ........ Mr. Campbell....... ........ ........ ........
Mr. Klein....................... ....... X ........ Mr. Putnam......... ........ ........ ........
Mr. Mahoney (FL)................ ....... X ........ Mrs. Bachmann...... X ........ ........
Mr. Wilson...................... ....... X ........ Mr. Roskam......... X ........ ........
Mr. Perlmutter.................. ....... X ........ Mr. Marchant....... X ........ ........
Mr. Murphy...................... ....... X ........ Mr. McCotter....... X ........ ........
Mr. Donnelly.................... ....... X ........ Mr. McCarthy....... X ........ ........
Mr. Wexler...................... ....... X ........ Mr. Heller......... X ........ ........
Mr. Marshall.................... ....... X ........
Mr. Boren....................... ....... X ........
Mr. Foster...................... ....... X ........
Mr. Carson...................... ....... X ........
----------------------------------------------------------------------------------------------------------------
During the consideration of the bill, the following
amendments were also considered:
An amendment by Ms. Waters and Mr. Frank, No. 1, making
technical and substantive changes, was AGREED TO by voice vote.
An amendment by Mr. Miller of North Carolina, No. 2,
regarding qualified metropolitan cities, was AGREED TO by voice
vote.
An amendment by Mr. Perlmutter, No. 3, regarding energy
efficiency improvements, was AGREED TO by voice vote.
An amendment by Mr. Capuano, Mrs. McCarthy of New York, and
Mr. Carson, No. 4, instituting preferences for housing, was
AGREED TO by a voice vote.
An amendment by Mr. Wilson, No. 5, dealing with demolition
costs and prohibition of demolition of public housing with
funds or grants, was AGREED TO, as amended, by voice vote.
An amendment by Mr. Price, No. 5a, to amendment No. 5, was
divided: the first portion was AGREED TO by voice vote and the
second portion was WITHDRAWN.
An amendment by Mr. Wilson, Mr. LaTourette, and Ms. Pryce,
No. 6, establishing a formula for grant share or foreclosure
loan share, was AGREED TO by voice vote.
An amendment by Mr. Hensarling, No. 10, preventing the
misuse of funds, was AGREED TO by voice vote.
An amendment by Mr. Hensarling, No. 11, providing a
monetary penalty for misuse of funds, was AGREED TO, as
modified, by voice vote.
An amendment by Mr. Hensarling, No. 12, prohibiting the use
of grant amounts for downpayment assistance, was AGREED TO, by
voice vote.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.
PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 5818, the Neighborhood Stabilization Act of 2008,
establishes a loan and grant program administered by HUD to
help States purchase and rehabilitate owner-vacated, foreclosed
homes. The goal of the bill is to stabilize and occupy these
properties, as soon as possible, either through resale or
rental to qualified low- and moderate-income families. As
reported, H.R. 5818 establishes a $15 billion, HUD-administered
loan and grant program; requires States to allocate funds to
government entities or for profit and nonprofit organizations
for the purchase, rehabilitation, and resale of homeownership
housing and the purchase, rehabilitation, and operation of
rental housing; requires homes purchased for resale must be
sold to families with incomes that do not exceed 140 percent of
local area median income (AMI); requires properties purchased
for rental must serve families having incomes at or below local
AMI; and prohibits discrimination against voucher holders and
provides eviction protections for tenants in foreclosed
properties assisted with funds made available under this Act.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 1, 2008.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5818, the
Neighborhood Stabilization Act of 2008.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Daniel
Hoople, who can be reached at 226-2860.
Sincerely,
Peter R. Orszag.
Enclosure.
H.R. 5818--Neighborhood Stabilization Act of 2008
Summary: CBO estimates that implementing H.R. 5818 would
cost about $8.4 billion over the 2009-2013 period, assuming
appropriation of the authorized and necessary funds.
H.R. 5818 would authorize the Secretary of the Department
of Housing and Urban Development (HUD) to make zero-interest
loans to qualified states, counties, and cities to purchase and
rehabilitate certain foreclosed homes. Homes purchased under
this authority would be sold or rented to families with incomes
below a specified percentage of the region's median income.
Assuming appropriation of the necessary funds, CBO estimates
that implementing this program would cost about $1 billion over
the 2009-2013 period for the loan subsidy and associated
administrative costs.
The legislation also would authorize the appropriation of
$7.5 billion for the Secretaries of the Treasury and HUD to
award grants to qualified states, counties, and cities to cover
other costs related to purchasing and rehabilitating foreclosed
homes under the direct loan program. Funds would be used to
cover planning and administration, incidental costs of
acquiring, operating, and holding foreclosed properties, and
the costs of rehabilitating and demolishing properties. Based
on historical spending data and information from local
governments, CBO estimates that this provision would cost about
$7.3 billion over the 2009-2013 period. Enacting this
legislation would not affect direct spending or revenues.
H.R. 5818 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the federal government: The estimated
budgetary impact of H.R. 5818 is shown in the following table.
The costs of this legislation fall within budget function 450
(community and regional development).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------
2009 2010 2011 2012 2013
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Direct Loan Program:
Subsidy Costs:
Estimated Authorization Level.................... 900 0 0 145 0
Estimated Outlays................................ 505 360 35 80 60
Administrative Costs:
Estimated Authorization Level.................... 15 7 7 8 8
Estimated Outlays................................ 14 8 7 8 8
Grant Program:
Authorization Level.................................. 7,500 0 0 0 0
Estimated Outlays.................................... 675 1,725 2,250 1,725 940
Total Changes:
Estimated Authorization Level.................... 8,415 7 7 153 8
Estimated Outlays................................ 1,194 2,093 2,292 1,813 1,008
----------------------------------------------------------------------------------------------------------------
Basis of estimate: For this estimate, CBO assumes that the
legislation will be enacted before the end of calendar year
2008 and that the amounts specified and estimated to be
necessary will be appropriated in each year.
H.R. 5818 would authorize the Secretaries of the Treasury
and HUD to provide grants and direct loans to purchase and
rehabilitate certain foreclosed homes. Eligible recipients
would include states, urban counties, and metropolitan cities
(including any city with a minimum population of 50,000 that
has a foreclosure rate of more than 125 percent of the rate for
the state in which it is located). Grant assistance also would
be made available to nonprofit organizations. Funding from the
grant and loan programs would be allocated to those entities
based on the number of single- family homes that are in
foreclosure or were financed with a sub-prime mortgage that has
been delinquent for more than 90 days.
Direct Loan Program
H.R. 5818 would authorize the appropriation of such funds
as may be necessary for the Secretary of HUD to make zero-
interest loans to states, counties, and cities. Under the bill,
the volume of outstanding loans would be capped at $7.5 billion
and the authority to make new loans would expire four years
after enactment. Loan proceeds would be used by state or local
governments to purchase foreclosed homes. Those homes would be
made available by those governments for sale to individuals
with incomes below 140 percent of the area's median income, or
for rent to those with incomes below 100 percent of the area's
median income. Loan proceeds also could be used to rehabilitate
homes to comply with applicable building codes and to increase
energy efficiency. Federal loans used by state or local
governments to purchase homes for resale or rent would have
terms of three or five years, respectively. All loans made
under the bill would be nonrecourse (the federal government
could only seek recovery of the collateral in the event of a
default), bear no interest, and require principal payment only
upon the expiration of the loan term.
Based on the loan terms specified in the bill, CBO
estimates that the subsidy cost for the first cohort of loans
made under this legislation would total $900 million over the
2009-2013 period. That estimate includes a subsidy rate of
about 12 percent (most of which is attributable to the fact
that no interest would be charged on the loans) and assumes
that most of the loan authority made available under the bill
would be used.
Under the bill, HUD also would be authorized to make new
direct loans as the principal from the original cohort of loans
is repaid. Because the authority to make new loans would expire
after four years, new loan authority would be limited to
repayments made on the initial cohort of loans prior to the
expiration of the program. The Federal Credit Reform Act of
1990 requires that new loan obligations may only be made to the
extent that new budget authority is provided. As such, CBO
assumes that additional appropriations would be provided by the
Congress to cover the cost of those new loans. CBO estimates
that additional loans made under this revolving authority would
require appropriations of about $145 million in 2012, with
outlays of $140 million over the 2012-2013 period.
Grant Program
H.R. 5818 would authorize the appropriation of $7.5 billion
for the Secretaries of the Treasury and HUD to make grants to
states, counties, cities, and nonprofit organizations. Such
funding would be used for planning and administration,
incidental costs of acquiring foreclosed properties, costs of
operating and holding those properties (including local
property taxes and insurance), and rehabilitation and
demolition costs. Based on historical spending patterns of
community development and housing projects and information from
several local governments, CBO estimates that implementing this
provision would cost about $7.3 billion over the 2009-2013
period.
Intergovernmental and private-sector impact: H.R. 5818
contains no intergovernmental or private-sector mandates as
defined in UMRA. The bill would benefit state and local
governments by authorizing grants and loans for purchasing and
redeveloping foreclosed properties.
Estimate prepared by: Federal Costs: Daniel Hoople; Impact
on State, Local, and Tribal Governments: Lisa Ramirez-Branum;
Impact on the Private Sector: Keisuke Nakagawa.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
EARMARK IDENTIFICATION
H.R. 5818 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Sec. 1. Short title and table of contents
This Act may be cited as the ``Neighborhood Stabilization
Act of 2008''. The Table of Contents for this Act is as
follows: Sec. 1. Short title and table of contents; Sec. 2.
Congressional purposes; Sec. 3. Loans and grants to States;
Sec. 4. Qualified plans; Sec. 5. Allocation of amounts; Sec. 6.
Loans; Sec. 7. Grants; Sec. 8. Eligible housing stimulus
activities; Sec. 9. Shared appreciation agreement; Sec. 10.
Spending requirements; Sec. 11. Servicer contact; Sec. 12.
Accountability; Sec. 13. Definitions; Sec. 14. Funding; and
Sec. 15. Regulations and implementation.
Sec. 2. Congressional purposes
The purposes of this Act are to establish a HUD-
administered loan and grant program to help States,
metropolitan cities, and urban counties purchase and
rehabilitate owner-vacated, foreclosed homes with the goal of
stabilizing and occupying them as soon as possible, either
through resale or rental to qualified families; distribute
these loans and grants to areas with the highest foreclosure
and delinquent subprime mortgage levels; provide incentives for
States, metropolitan cities, and urban counties to use the
funds to stabilize as many properties as possible; and provide
housing for low- and moderate-income families, especially those
that have lost homes to foreclosure.
Sec. 3. Loans and grants to states
Provides that HUD will make loans and grants to States in
accordance with their approved plans for eligible housing
stimulus activities.
Sec. 4. Qualified plans
HUD may make a grant or allocate a loan amount to a State
that has submitted an approved plan that: (1) designates an
administrator; (2) describes the stimulus activities to be
carried out with the assistance; (3) prioritizes the allocation
of funds to low- and moderate-income with high concentrations
of foreclosures, describes how these activities will help
stabilize such neighborhoods rapidly, and describes how the
loan funds will be distributed to facilitate repayment; (4)
describes the procedures the State will use to allocate loan
and grant amounts and monitor compliance; (5) provides that
assistance will only be used for eligible activities; (6)
contains such assurances as HUD shall require that the
activities carried out under this Act will not result in a
significant net loss in rental housing in areas where such
activities are undertaken; (7) gives priority emphasis and
consideration to metropolitan areas, metropolitan cities, urban
areas, rural areas, low- and moderate-income areas, census
tracts, and other areas having the greatest need, including
those with the greatest percentage of home foreclosures, the
highest percentage of homes financed by subprime loans over 90
days delinquent, or identified as likely to face a significant
rise in the rate of home foreclosures; (8) provides preference
to activities serving the lowest income families for the
longest period and income-eligible homeowners whose mortgages
have been foreclosed; (9) provides preference for use of grant
and loan amounts in connection with the acquisition of
foreclosed properties that are acquired no earlier than 60 days
after the lender, mortgage company, investor, financial
institution, or other such entity, or any government entity
acquired ownership pursuant to foreclosure, assignment, or
forfeiture; (10) describes any other preferences, such as
housing for first responders, veterans, nurses serving
underserved areas, homeless persons in accordance with the 10-
year plan of the State to end homelessness, or public school
teachers or workforce who are employed by the city or locality
in which the housing is located; (11) provides for obligation
and outlay of grant amounts and commitment and disbursement of
loan amounts; and (12) provides for reinvestment of any returns
on invested grant or loan amounts into eligible housing
stimulus activities.
Plans must be approved by the chief executive office of the
allocation recipient after a public hearing and submitted to
HUD within 30 days of bill enactment. HUD must approve or
disapprove the plan within 30 days of receipt or it is deemed
approved, and an allocation recipient may submit a revised plan
within 30 days of receiving a disapproval notice.
Sec. 5. Allocation of amounts
For each qualified State, HUD must make grants and allocate
loan authority pursuant to a specified formula. Under the
formula, HUD is to make funds available in amounts that bear
the same ratio to the national grant and loan authority as the
number of foreclosures on mortgages of single-family housing
and subprime mortgage loans for single-family housing that are
over 90 days delinquent occurring in such State during the most
recent four calendar quarters bears to the number of such
foreclosures and delinquent subprime mortgage loans in all
qualified States during such calendar quarters, adjusted by a
HUD-established index to account for differences between
States' median home prices; except that the median home price
factor may increase any State's share by no more than 25
percent. In the event of a surplus, States at the limit will
receive a preference for any excess funds.
Requires a State to allocate to a qualified metropolitan
city or qualified urban county within its bounds for which
there is an approved plan grants and loan authority in an
amount that bears the same ratio to the State grant and loan
authority as the number of foreclosures on mortgages of single-
family housing and subprime mortgage loans for single-family
housing that are over 90 days delinquent occurring in such
State during the most recent four calendar quarters bears to
the number of such foreclosures and delinquent subprime
mortgage loans in all qualified States during such calendar
quarters. A State may adjust grant and loan allocations to a
qualified metropolitan city or qualified urban county to
account for differences between median single-family housing
prices in the State and in the metropolitan city or urban
county. However, if the combined allocation of the grant and
loan authority amount to a qualified metropolitan city or
qualified urban county would be less than $10 million, a State
may, but is not required to, allocate such grant and loan
authority amount to such metropolitan city or urban county, and
the allocation for such State is increased by the grant and
loan authority amount not allocated to the metropolitan city or
urban county.
HUD shall recapture any grant or loan authority amounts
allocated to a State that are not used in a timely fashion. HUD
shall reallocate such recaptured amounts among all qualified
States in accordance with the allocation provisions of this
Act.
Sec. 6. Loans
Requires that each allocation recipient's loan authority
amount shall be decreased by the principal obligation of the
loan upon entering into a binding commitment for use within the
allocation recipient's area. Upon loan repayment to HUD, an
allocation recipient's loan authority will increase by the
amount of loan principal repaid. An allocation recipient may
enter into a loan agreement on behalf of HUD with the State, a
unit of local government or local governmental entity, or any
other entity as provided in the approved plan. Loans are non-
recourse and non-amortizing, bear no interest, have a term of
maturity of three years for homeownership housing and five
years for rental housing, and require payment of original
principal only at the end of the loan term. An allocation
recipient shall disburse loan amounts, monitor such loans, and
collect and transmit to HUD loan repayments.
A loan may be made to an entity that previously borrowed
loan amounts if the entity repaid 90 percent of more of the
amounts due under all previous loans. HUD may waive this
requirement upon request by an allocation recipient if the
borrower has demonstrated satisfactory progress in using
outstanding loans and sufficient capacity to use additional
loan amounts effectively. HUD may not make any loans or enter
into any loan commitments after the expiration of a 48-month
period following bill enactment.
Sec. 7. Grants
The grant amounts may be used by an allocation recipient, a
unit of local government or a local government entity, or a
nonprofit organization.
Sec. 8. Eligible housing stimulus activities
Loan amounts may be used to purchase qualified foreclosed
housing for (1) resale as homeownership housing to families
having incomes at or below 140 percent of local area median
income (AMI) and (2) use as rental, lease-purchase, or rent-to-
own housing for families having incomes at or below 100 percent
of local AMI at rents that do not exceed comparable market
rents. Loan amounts may also be used to rehabilitate qualified
foreclosed housing to the extent necessary to comply with
applicable laws, codes, and other requirements related to
housing safety, quality, and habitability or to make
improvements to the housing to increase the energy efficiency
or conservation of the housing or provide a renewable energy
source or sources for the housing. Such rehabilitation should
be undertaken 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
possible to the acquisition price of the housing.
Grants may be used for (1) operating and holding costs,
including management costs, taxes, and insurance; (2)
incidental costs involved in property acquisition, including
reasonable closing costs; (3) administrative costs of an
allocation recipient in an amount not to exceed 8 percent of
the sum of the grant amounts provided to the allocation
recipient; (4) planning costs of an allocation recipient in
connection with this Act in an amount not to exceed 2 percent
of the sum of the grant amounts provided to the allocation
recipient; and (5) rehabilitation costs to the extent necessary
to comply with applicable laws, codes, and other requirements
related to housing safety, quality, and habitability or to make
improvements to the qualified foreclosed housing to increase
the energy efficiency or conservation of the housing or provide
a renewable energy source or sources for the housing. An
allocation recipient may not use more than 20 percent of its
grant amount allocation for qualified rehabilitation
activities.
Grants may not be used to provide down payment assistance
for homebuyers of single-family housing or to pay any portion
of the purchase price for qualified foreclosed housing. Grants
may be used for demolishing qualified foreclosed housing that
is deteriorated or unsafe. Grants may be used for this purpose
only if the Secretary determines that the neighborhood or other
area in which the housing is located has a high incidence of
vacant and abandoned housing and is experiencing a significant
decline in population. However, grant and loan amounts may not
be used to demolish any public housing.
Grant and loan amounts may not be used for political
activities, advocacy, lobbying, counseling services, travel
expenses, and preparing or providing advice on tax returns.
At least 50 percent of the grant money must be targeted to
house very low-income families (defined as those at or below 50
percent of local AMI). Not less than half of this money must
target extremely low-income families (defined as those at or
below 30 percent of local AMI). HUD may establish an
alternative percentage of less than 50 percent to serve
extremely low-income families, if an allocation recipient
certifies that (1) such allocation recipient has attempted to
use all other federally related resources available to it in
combination with the resources available under this Act to meet
this requirement and (2) the failure to comply with this
requirement will not result in an overall loss of affordable
housing to families whose incomes do not exceed 30 percent of
AMI in the allocation recipient's area. In establishing an
alternative percentage, HUD shall take into account the housing
needs of families whose incomes do not exceed 30 percent of AMI
in the allocation recipient's area.
A State must use a portion of its grant and loan authority
amount for eligible activities located in rural areas in the
State that is proportionate to the identified need for such
activities in these rural areas.
A State or, at its election, a qualified metropolitan city
or urban county, will record a lien in the name of the HUD
Secretary on any foreclosed housing purchased or financed with
funds provided by this bill in the amount of the principal
obligation under the loan and interest due under the loan.
Nothing in the bill prevents the resale of qualified
foreclosed housing to a prior owner or occupant of such housing
who meets the income requirements of the Act. The bill
prohibits a recipient of grant or loan amounts from refusing to
lease a dwelling unit to a section 8 voucher holder. It also
provides eviction protections for tenants in foreclosed
properties acquired with assistance under this Act, including
section 8 properties. Specifically, any successor in interest
in qualified foreclosed property assisted with funds provided
under this Act, shall assume such interest subject to (a) the
provision, by the successor in interest, of a notice to vacate
to any bona fide tenant 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 occupy the premises until the end of the
remaining 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; or (ii) without a lease or with a lease terminable
at will under State law, subject to the receipt by the tenant
of the 90-day notice, except that nothing under this
subparagraph shall affect the requirements for termination of
any federally subsidized tenancy. A lease or tenancy is bona
fide if the mortgagor under the contract is not the tenant, the
lease or tenancy was the result of an arms-length transaction,
or the lease or tenancy requires the receipt of rent that is
not substantially less than fair market rent for the property.
Sec. 9. Shared appreciation agreement
The federal government shall receive 20 percent of any
appreciation a property owner who receives assistance under
this Act realizes upon resale or disposition of a qualified
foreclosed property. The federal government shall receive 50
percent of any such appreciation if the owner is a for-profit
entity.
Sec. 10. Spending requirements
Requires an allocation recipient to (1) begin obligating
grant amounts and committing loan authority amounts within 120
days of qualified plan approval, (2) obligate all such grant
amounts and enter into loan commitments within 180 days of plan
approval, and (3) outlay all such grant amounts and disburse
all such loan authority amounts within 24 months of plan
approval. HUD may extend each of these periods for up to 5
months upon request by an allocation recipient.
Sec. 11. Servicer contact
Requires a servicer of a federally related mortgage to
notify the local government upon becoming responsible for a
foreclosed property and provide such local government with the
name and 24-hour contact information of a representative
authorized to negotiate purchases.
Sec. 12. Accountability
Requires an allocation recipient that receives a grant or
loan authority allocation to report to HUD within 12 months of
qualified plan approval on its use of this assistance. This
report must contain information about the location and type of
assisted properties and the income of families purchasing or
renting these properties.
HUD shall require a State or other recipient of grant or
loan funds to reimburse the Treasury for any misused funds.
However, a State shall not be required to reimburse the
Treasury for any misused funds that the State is required to
allocate to a qualified metropolitan city or qualified urban
county.
Sec. 13. Definitions
Establishes definitions for various terms, including:
``allocation recipient,'' ``allocation recipient
administrator,'' ``approved plan,'' ``covered multifamily
housing,'' ``loan authority amount,'' ``nonprofit
organization,'' ``qualified foreclosed housing,'' ``qualified
metropolitan city,'' ``qualified State,'' ``qualified urban
county,'' ``single family housing''.
Specifically, ``allocation recipient'' is a qualified
State, qualified metropolitan city, or qualified urban county.
``Covered multifamily housing'' is defined as a residential
structure that consists of 64 or fewer dwelling units.
``Qualified foreclosed housing'' is single family housing
that is not occupied by an owner, pursuant to foreclosure or
assignment of the mortgage on the housing or forfeiture of the
housing; or is covered multifamily housing. Such housing must
be owned by a lender, mortgage company, investor, financial
institution, or other such entity, or any government entity,
pursuant to foreclosure or assignment of the mortgage on the
housing or forfeiture of the housing. In the case of single
family housing, it must have a purchase price that does not
exceed 110 percent of the average purchase price for single
family housing in the area in which the housing is located. In
the case of covered multifamily housing, the purchase price
must not exceed the dollar amount limitation, for housing of
the applicable size located in the area in which the housing is
located, on the amount of a principal obligation of a mortgage
eligible for insurance under section 207 of the National
Housing Act.
``Qualified metropolitan city'' means a city that (1) is
among the 100 most populous incorporated places in the country,
as determined by data from the most recent decennial census
published before the date of the enactment of this bill or (2)
has (a) a minimum population of 50,000, as determined by data
from the most recent decennial census published before the date
of enactment of this bill and (b) a foreclosure rate that
exceeds 125 percent of the foreclosure rate of the entire
State.
``Qualified urban county'' means an urban county as the
term is defined in section 102 of the Housing and Community
Development Act of 1974 that is among the 50 most populous
urban counties in the country, according to the most recent
census data, excluding the population of any qualified
metropolitan city within such urban county, unless such
metropolitan city agrees to include its population within the
urban county for purposes of this Act.
The term ''State'' means any State of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, Guam, the Virgin
Islands, American Samoa, and other territory or possession of
the United States.
Sec. 14. Funding
Authorizes $7.5 billion for direct loans and $7.5 billion
for grants.
Sec. 15. Regulations and implementation
Requires HUD to issue any necessary regulations to carry
out this Act. HUD also has the authority to take such action as
may be necessary to implement this Act by notice, guidance, and
interim rules.
DISSENTING VIEWS
H.R. 5818, the Neighborhood Stabilization Act of 2008,
establishes a $15 billion Federal program to fund $7.5 billion
in loans and $7.5 billion in grants to states and localities to
purchase and rehabilitate foreclosed properties. While the
stated goal of the legislation is to stabilize housing markets
that are experiencing high levels of foreclosures, there is no
evidence that government intervention in the housing markets
and the economy of this kind will do anything to achieve that
objective, and we must accordingly oppose it.
For the first half of this decade, housing prices increased
at a rate that was clearly unsustainable when measured against
household incomes and other economic indicators. The market is
now in the midst of a significant correction, which is a
painful process for those watching the value of their homes
decline, but beneficial to those renters and other Americans
seeking affordable homeownership opportunities. Contrary to the
claims of its proponents, H.R. 5818 will do little to resolve
the root causes of the increase in foreclosures--an excess of
housing supply and the depreciation of over-inflated home
prices. In fact, for the reasons stated below, the legislation
could extend and further exacerbate the current housing
downturn and do more harm than good.
While we are committed to the goal of stabilizing
communities and addressing the problems associated with the
rising number of foreclosures, we do not believe that H.R. 5818
is the right solution to those problems. If enacted, H.R. 5818
would represent a costly bailout for the lenders, servicers and
real estate speculators who made risky bets on the housing
market and will now be able to offload their foreclosed
properties onto the government. Such an approach subsidizes bad
investments and contributes to moral hazard by signaling to
future market participants that their downside risks will be
assumed by the government if their investments sour.
Moreover, rather than reducing the number of foreclosures,
H.R. 5818 may actually incentivize lenders to foreclose rather
than attempt workouts with struggling homeowners. In a letter
from Roy A. Bernardi, the Deputy Secretary of the Department of
Housing and Urban Development, the Bush Administration
highlighted this concern and went on to note that ``an increase
in foreclosures [resulting from these incentives] could well
prolong the time it would take for the housing market to
recover. This new program [established by the legislation]
would also be slow to expend money, and thus its effects on the
market would be delayed and spread out over time.''
H.R. 5818 also includes overly broad income-targeting
provisions that would allow state and local entities to sell
properties to individuals who make up to 140 percent of area
median income. This represents a government subsidy for
families and individuals whose need for federal assistance is
questionable. In addition, nothing in the bill prevents the
resale of foreclosed properties to a prior owner. Allowing
homeowners to repurchase from the government the same homes
that they could not afford in the first place would only
exacerbate foreclosures and delay a neighborhood's economic
recovery.
H.R. 5818 contemplates the expenditure of $15 billion to
fund the loans and grants authorized by the legislation,
without indicating where the money will come from to pay for
this massive expansion of the Federal Government's role in the
housing market. During Committee consideration of the bill,
Republican Members offered a series of amendments designed to
mitigate these costs, but all were defeated on largely party-
line votes, including an amendment by Mr. Price requiring that
the legislation comply with pay-go requirements; an amendment
by Mr. Hensarling to convert the entire $15 billion to loans
rather being split equally between grants and loans; and
another amendment by Mr. Hensarling requiring that states
provide a dollar-for-dollar match for all funds that they
receive under the bill in the form of grants.
We intend to continue pushing for much-needed improvements
to H.R. 5818 as it moves to the House floor, and, absent such
improvements, will continue to oppose it.
Spencer Bachus.
Donald Manzullo.
Frank D. Lucas.
Shelley Moore Capito.
Stevan Pearce.
Jeb Hensarling.
Jim Gerlach.
Randy Neugebauer.
Kevin McCarthy.
Michele Bachmann.
Tom Feeney.
Judy Biggert.
Adam H. Putnam.
Ginny Brown-Waite.
Ed Royce.
Walter B. Jones.
K. Marchant.
Geoff Davis.
Scott Garrett.
Ron Paul.
Tom Price.
Dean Heller.
J. Gresham Barrett.
Peter King.
Patrick T. McHenry.
John Campbell.
Peter J. Roskam.
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