HR 5487 - Affordable Homeownership Preservation Fund Act of 2008

HR 5487

110th CONGRESS
2d Session

H. R. 5487

To establish the Affordable Homeownership Preservation Fund of the Neighborhood Reinvestment Corporation.

IN THE HOUSE OF REPRESENTATIVES

February 25, 2008

Ms. LORETTA SANCHEZ of California (for herself and Ms. CLARKE) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To establish the Affordable Homeownership Preservation Fund of the Neighborhood Reinvestment Corporation.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Affordable Homeownership Preservation Fund Act of 2008'.

SEC. 2. FINDINGS AND PURPOSES.

(a) Findings- The Congress finds that--

(1) many communities in the United States are facing a loss of affordable housing options arising in part from unethical lending practices and the resulting tightening of credit to low- and moderate-income families;

(2) the restoration and maintenance of the economies of these communities will require support to preserve affordable workforce housing;

(3) non-governmental business interests are facing increasing difficulties expanding operations due to the limited workforce available in regions with low inventories of affordable housing; and

(4) community development organizations and affordable housing trust funds have proven their ability to identify and respond to community needs for equity investments, loans, and educational services.

(b) Purpose- The purpose of this Act is to establish an Affordable Homeownership Preservation Fund of the Neighborhood Reinvestment Corporation that will protect the interests of low- and moderate-income homebuyers and ensure that non-governmental interests continue to have affordable housing for their workforces.

SEC. 3. AFFORDABLE HOMEOWNERSHIP PRESERVATION FUND.

The Neighborhood Reinvestment Corporation Act is amended--

(1) in section 606(b)(5) (42 U.S.C. 8105(b)(5)), by striking `section 608(d))' and inserting `section 609(d)';

(2) by redesignating sections 607 and 608 (12 U.S.C. 8106, 8107) as sections 608 and 609, respectively; and

(3) by inserting after section 606 (12 U.S.C. 8105) the following new section:

`SEC. 607. AFFORDABLE HOMEOWNERSHIP PRESERVATION FUND.

`(a) Establishment- There is established a fund of the corporation to be known as the Affordable Homeownership Preservation Fund (in this section referred to as the `Fund'), which shall be administered by the corporation.

`(b) Use- To the extent that amounts are made available pursuant to subsection (l), the corporation, doing business as NeighborWorks America, shall provide financial assistance from the Fund through grants to community development organizations for use for eligible activities under subsection (d) to enhance the availability of affordable housing.

`(c) Eligible Community Development Organizations- Grants from the Fund may be made only to community development organizations that operate affordable housing trust funds that are affiliated with the NeighborWorks America network established by the corporation.

`(d) Eligible Activities-

`(1) IN GENERAL- Amounts from a grant from the Fund for an eligible community development organization may be used only for activities to improve and enhance the availability of affordable housing that--

`(A) are carried out in accordance with the comprehensive strategic plan for the organization submitted under subsection (f)(2)(B);

`(B) are consistent with existing economic, community, and housing development plans adopted by or applicable to the area or targeted population served by the organization; and

`(C) may include--

`(i) assisting distressed homeowners with small low-interest or no-interest loans;

`(ii) making mortgage loans to first-time homebuyers;

`(iii) purchasing, rehabilitating, and selling foreclosed properties for owner-occupancy; and

`(iv) such other activities as the corporation considers appropriate.

`(2) CAPACITY BUILDING- Notwithstanding paragraph (1), a grantee may use not more than 10 percent of the amounts of any grant from the Fund and of any matching amounts provided in accordance with subsection (e) for costs of hiring and training personnel to carry out performance goals and the mortgage foreclosure mitigation counseling required by the item relating to `Neighborhood Reinvestment Corporation' in title III of the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2008 (Division K of Public Law 110-161).

`(e) Matching Requirements-

`(1) IN GENERAL- A grant under this section for an eligible community development organization may not be made in an amount that exceeds the amount that the organization declares to the corporation have been or will be contributed from sources other than the Federal Government for use for eligible activities described in the application of the organization. Such matching funds shall be at least comparable in form and value to the assistance provided from the Fund for the organization.

`(2) REQUIREMENT OF FIRM COMMITMENT OF MATCHING AMOUNTS- The corporation may not provide any grant amounts for an eligible community development organization before the organization has secured firm commitments for the matching funds required by paragraph (1).

`(3) EXCEPTION- In the case of an applicant that the corporation determines is subject to severe constraints on available sources of matching funds, the corporation may permit the applicant to comply with the matching requirements of paragraph (1) by--

`(A) reducing the amount required to be matched by such applicant by not more than 50 percent;

`(B) for not more than 60 percent of the amount required to be matched by such applicant, allowing such applicant to use amounts made available pursuant to--

`(i) section 106 of the Housing and Community Development Act of 1974 (42 U.S.C. 5306);

`(ii) section 623(c)(1) of the Community Economic Development Act of 1981 (42 U.S.C. 9812(c)); or

`(iii) section 310B(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(c)); or

`(C) permitting such applicant to provide matching funds in a form to be determined at the discretion of the corporation if such applicant--

`(i) has total assets of less than $100,000;

`(ii) serves nonmetropolitan areas; and

`(iii) is requesting a grant under this section of not more than $25,000.

`(4) LIMITATION- Not more than 25 percent of the total amount disbursed in any fiscal year from the Fund may be matched as provided in paragraph (3).

`(f) Applications for Assistance-

`(1) FORM AND PROCEDURES- To be eligible to receive assistance from the Fund, an eligible community development organization shall submit to the corporation an application meeting the requirements under this subsection, in such form and in accordance with such procedures as the corporation shall establish.

`(2) MINIMUM REQUIREMENTS- The corporation shall require each application--

`(A) to establish that the applicant is, or by the time a grant under this section is made to the organization will be, an eligible community development organization;

`(B) to include a comprehensive strategic plan for the organization that contains--

`(i) a plan of not less than 5 years in duration that demonstrates that the applicant will use amounts from a grant from the Fund only for eligible activities under subsection (d);

`(ii) an analysis of the needs of the area or targeted population that the applicant serves and a strategy for how the applicant will attempt to meet such needs;

`(iii) a plan that coordinates use of assistance from the Fund with existing Federal, State, local, and tribal government assistance programs, and private sector financial services;

`(iv) an explanation of how the proposed eligible activities to be carried out using amounts from the grant from the Fund comply with the requirement under subsection (d)(1)(B); and

`(v) a description of how the applicant will coordinate with community organizations and financial institutions that will provide equity investments, loans, secondary markets, or other services to investment areas or targeted populations;

`(C) to include a detailed description of how the applicant will comply with the matching requirement under subsection (e) and the likely sources of funds for such compliance;

`(D) in the case of an applicant that has previously received assistance from the Fund, to demonstrate that the applicant--

`(i) has substantially met its performance goals established pursuant to subsection (h)(2)(B) and otherwise carried out its responsibilities under the assistance agreement for such assistance; and

`(ii) will expand its operations into a new service area or to serve a new targeted population, offer more services, or increase the volume of its business;

`(E) in the case of an applicant with a prior history of serving investment areas or targeted populations, to demonstrate that the applicant--

`(i) has a record of success in serving service areas or targeted populations; and

`(ii) will expand its operations into a new service area or to serve a new targeted population, offer more services, or increase the volume of its current business; and

`(F) to include such other information as the corporation considers appropriate.

`(3) PREAPPLICATION OUTREACH PROGRAM- The corporation may operate an outreach program to identify and provide information to potential applicants for assistance under this section.

`(g) Selection Criteria- The corporation shall establish criteria for selection of applications for grants under this section, which shall include--

`(1) the likelihood of success of the applicant in meeting the goals of its comprehensive strategic plan submitted under subsection (f)(2)(B);

`(2) the experience and background of the proposed team that will manage the grant;

`(3) the extent of need for affordable housing for the service area or targeted populations to be served under the grant;

`(4) the extent to which the applicant will concentrate its activities on serving its service area or targeted populations;

`(5) the amount for which firm commitments have been made for contributions to be used to meet or exceed the matching amount required under subsection (e) and the likely success of the plan for securing any balance of the amounts required under such subsection;

`(6) whether the applicant is located in a community that has experienced a sudden and significant loss in homeownership as a result of an increase in mortgage foreclosures;

`(7) in the case of an applicant having a prior history with the corporation, the extent of success of the applicant in serving the service areas or targeted populations involved; and

`(8) any other factors (such as the extent to which the applicant has strong ties to the community that it will serve) that the corporation considers appropriate.

`(h) Grant Terms and Conditions-

`(1) SOUNDNESS OF ORGANIZATIONS- The corporation shall--

`(A) ensure, to the maximum extent practicable, that each community development organization that receives a grant under this section is financially and managerially sound and maintains appropriate internal controls; and

`(B) require each community development organization that receives a grant under this section to submit to the corporation, not less than once during each 18-month period, a statement of financial condition audited by an independent certified public accountant as part of the report required by subsection (j)(1)(E).

`(2) ASSISTANCE AGREEMENT-

`(A) IN GENERAL- No grant amounts may be provided under this section to an eligible community development corporation before the corporation enters into an agreement with the organization that requires the organization to comply with performance goals established pursuant to subparagraph (B) and with all other terms and conditions of assistance received under this section.

`(B) PERFORMANCE GOALS- For each community development organization receiving assistance under this section, performance goals relating to the use of such assistance shall be established by negotiation between the corporation and the organization. Such goals shall be based upon the strategic plan of the organization submitted pursuant to subsection (f)(2)(b). Such goals may be modified by consent of both parties, or as provided in subparagraph (C).

`(C) SANCTIONS- The agreement required under subparagraph (A) for each eligible community development corporation shall provide that, in the event of fraud, mismanagement, noncompliance with this section, or noncompliance with the terms of the agreement, the corporation may, in the discretion of the corporation, take one or more of the following actions:

`(i) Revoke approval of the application of the organization.

`(ii) Terminate or reduce future assistance under this section for the organization.

`(iii) Require repayment of assistance provided under this section to the organization.

`(iv) Require changes to the performance goals established pursuant to subparagraph (B) for the organization.

`(v) Bar the organization from reapplying for assistance from the Fund.

`(vi) Require changes to the strategic plan of the organization submitted pursuant to subsection (f)(2)(B).

`(vii) Take such other actions as the corporation considers appropriate.

`(i) Encouragement of Private Entities- The corporation may facilitate the organization of corporations in which the Federal Government has no ownership interest that will complement the activities of the corporation in carrying out the purpose of this section. The purpose of any such entity shall be to assist community development organizations in a manner that is complementary to the activities of the corporation under this section. Any such entity shall be managed exclusively by persons not employed by the Federal Government or any agency or instrumentality thereof.

`(j) Recordkeeping, Reports, and Audits-

`(1) RECORDKEEPING-

`(A) IN GENERAL- Each community development organization receiving assistance from the Fund shall keep such records, for such periods as may be prescribed, as may be necessary to disclose the manner in which any assistance under this section is used and to demonstrate compliance with the requirements of this section.

`(B) USER PROFILE INFORMATION- The corporation shall require each community development organization receiving assistance under this section to compile and maintain data on the gender, race, ethnicity, national origin, and other pertinent information concerning individuals that utilize the services of the organization to ensure that targeted populations and low-income residents of investment areas are adequately served.

`(C) ACCESS TO RECORDS- The corporation shall have access on demand, for the purpose of determining compliance with this section, to any records of a community development organization that receives assistance from the Fund.

`(D) REVIEW- Not less than annually, the corporation shall review the progress of each community development organization receiving assistance under this section in carrying out its strategic plan, meeting its performance goals, and satisfying the terms and conditions of its assistance agreement.

`(E) ANNUAL REPORTS-

`(i) REQUIREMENT- The corporation shall require each community development organization receiving assistance under this section to submit to the corporation, in such form and manner as the corporation shall require, an annual report regarding its activities, its financial condition, and its success in meeting performance goals, in satisfying the terms and conditions of its assistance agreement, and in complying with other requirements of this section.

`(ii) AVAILABILITY- After deleting or redacting any material as appropriate to protect privacy or proprietary interests, the corporation shall make such reports available for public inspection.

`(2) ANNUAL REPORT BY CORPORATION- The corporation shall conduct an annual evaluation of the activities of the Fund and the community development organizations assisted under this section, and shall include in the annual report submitted pursuant to section 608(a) a report of its findings, together with financial statements audited in accordance with paragraph (4).

`(3) OPTIONAL STUDIES- The corporation may conduct such studies as the corporation considers necessary to further the purpose of this section and to facilitate investment in distressed communities. The findings of any studies conducted pursuant to this paragraph shall be included in the report required by paragraph (2).

`(4) EXAMINATION AND AUDIT- The financial statements of the Fund for each fiscal year shall be audited by the Comptroller General of the United States under the authority provided in section 608(c).

`(k) Definitions- For purposes of this section, the following definitions shall apply:

`(1) COMMUNITY DEVELOPMENT ORGANIZATION- The term `community development organization' means a private, nonprofit organization that--

`(A) serves a specific area experiencing a limited supply of affordable housing relative to the needs of the local workforce, as determined by the corporation, or a targeted low- or moderate-income population;

`(B) maintains, through significant representation on the organization's board of directors or other governing body, accountability to the specific targeted area or population served by the organization; and

`(C) whose primary purpose includes the provision of low-income housing or community economic development projects that primarily benefit low-income individuals or communities.

`(2) ELIGIBLE COMMUNITY DEVELOPMENT ORGANIZATION- The term `eligible community development organization' means a community development organization that meets the requirements of subsection (c).

`(3) NONPROFIT ORGANIZATION- The term `nonprofit organization' means an organization (including a State or locally chartered organization) that--

`(A) is organized under State or local laws;

`(B) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; and

`(C) complies with standards of financial accountability acceptable to the corporation.

`(l) Authorization of Appropriations- In addition to any amounts authorized to be appropriated under section 609(a) or appropriated pursuant to such section, there are authorized to be appropriated to the Neighborhood Reinvestment Corporation such sums as may be necessary for assistance under this section.'.

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