S 2391
110th CONGRESS
1st Session
S. 2391
To provide for affordable housing relief, and for other purposes.
IN THE SENATE OF THE UNITED STATES
November 16, 2007
Mr. REED introduced the following bill; which was read twice and referred
to the Committee on Banking, Housing, and Urban Affairs
A BILL
To provide for affordable housing relief, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Government Sponsored
Enterprise Mission Improvement Act' or the `GSE Mission Improvement
Act'.
(b) Table of Contents- The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Annual housing report regarding enterprises.
Sec. 3. Public use database.
Sec. 4. Revision of housing goals.
Sec. 5. Duty to serve underserved markets.
Sec. 6. Monitoring and enforcing compliance with housing goals.
Sec. 7. Affordable housing programs.
SEC. 2. ANNUAL HOUSING REPORT REGARDING ENTERPRISES.
(a) Repeal- Section 1324 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4544) is hereby repealed.
(b) Annual Housing Report- The Housing and Community Development Act
of 1992 is amended by inserting after section 1323 the following:
`SEC. 1324. ANNUAL HOUSING REPORT REGARDING ENTERPRISES.
`(a) In General- After reviewing and analyzing the reports submitted
under section 309(n) of the Federal National Mortgage Association Charter
Act and section 307(f) of the Federal Home Loan Mortgage Corporation
Act, the Secretary shall submit a report, not later than October 30
of each year, to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of
Representatives, on the activities of each enterprise.
`(b) Contents- The report required under subsection (a) shall--
`(A) the extent to and manner in which--
`(i) each enterprise is achieving the annual housing goals established
under subpart B;
`(ii) each enterprise is complying with its duty to serve underserved
markets, as established under section 1335;
`(iii) each enterprise is complying with section 1337; and
`(iv) each enterprise is achieving the purposes of the enterprise
established by law; and
`(B) the actions that each enterprise could undertake to promote
and expand the purposes of the enterprise;
`(2) aggregate and analyze relevant data on income to assess the compliance
of each enterprise with the housing goals established under subpart
B;
`(3) aggregate and analyze data on income, race, and gender by census
tract and other relevant classifications, and compare such data with
larger demographic, housing, and economic trends;
`(4) identify the extent to which each enterprise is involved in mortgage
purchases and secondary market activities involving subprime loans;
and
`(5) compare the characteristics of subprime loans purchased and securitized
by each enterprise to other loans purchased and securitized by each
enterprise.
`(c) Data Collection and Reporting-
`(1) IN GENERAL- To assist the Secretary in analyzing the matters
described in subsection (b), the Secretary shall conduct, on a monthly
basis, a survey of mortgage markets in accordance with this subsection.
`(2) DATA POINTS- Each monthly survey conducted by the Secretary under
paragraph (1) shall collect data on--
`(A) the characteristics of individual mortgages that are eligible
for purchase by the enterprises and the characteristics of individual
mortgages that are not eligible for purchase by the enterprises
including, in both cases, information concerning--
`(i) the price of the house that secures the mortgage;
`(ii) the loan-to-value ratio of the mortgage, which shall reflect
any secondary liens on the relevant property;
`(iii) the terms of the mortgage;
`(iv) the creditworthiness of the borrower or borrowers; and
`(v) whether the mortgage, in the case of a conforming mortgage,
was purchased by an enterprise;
`(B) the characteristics of individual subprime mortgages that are
eligible for purchase by the enterprises and the characteristics
of borrowers under such mortgages, including the credit worthiness
of such borrowers and determination whether such borrowers would
qualify for prime lending; and
`(C) such other matters as the Secretary determines to be appropriate.
`(3) PUBLIC AVAILABILITY- The Secretary shall make any data collected
by the Secretary in connection with the conduct of a monthly survey
available to the public in a timely manner, provided that the Secretary
may modify the data released to the public to ensure that the data--
`(A) is not released in an identifiable form; and
`(B) is not otherwise obtainable from other publicly available data
sets.
`(4) DEFINITION- For purposes of this subsection, the term `identifiable
form' means any representation of information that permits the identity
of a borrower to which the information relates to be reasonably inferred
by either direct or indirect means.'.
SEC. 3. PUBLIC USE DATABASE.
Section 1323 of the Housing and Community Development Act of 1992 (42
U.S.C. 4543) is amended--
(A) by striking `(a) In General- The Secretary' and inserting the
following:
`(1) IN GENERAL- The Secretary'; and
(B) by adding at the end the following new paragraph:
`(2) CENSUS TRACT LEVEL REPORTING- Such data shall include the data
elements required to be reported under the Home Mortgage Disclosure
Act of 1975, at the census tract level.';
(2) in subsection (b)(2), by inserting before the period at the end
the following: `or with subsection (a)(2)'; and
(3) by adding at the end the following new subsection:
`(d) Timing- Data submitted under this section by an enterprise in connection
with a provision referred to in subsection (a) shall be made publicly
available in accordance with this section not later than September 30
of the year following the year to which the data relates.'.
SEC. 4. REVISION OF HOUSING GOALS.
(a) Repeal- Sections 1331 through 1334 of the Housing and Community
Development Act of 1992 (12 U.S.C. 4561 through 4564) are hereby repealed.
(b) Housing Goal- The Housing and Community Development Act of 1992
is amended by inserting before section 1335 the following:
`SEC. 1331. ESTABLISHMENT OF HOUSING GOALS.
`(a) In General- The Secretary shall, by regulation, establish effective
for the first calendar year that begins after the date of enactment
of the Government Sponsored Enterprise Mission Improvement Act, and
each year thereafter, annual housing goals, as described in sections
1332, 1333, and 1334, with respect to the mortgage purchases by the
enterprises.
`(b) Special Counting Requirements-
`(1) IN GENERAL- The Secretary shall determine whether an enterprise
shall receive full, partial, or no credit for a transaction toward
achievement of any of the housing goals established pursuant to this
section or sections 1332 through 1334.
`(2) CONSIDERATIONS- In making any determination under paragraph (1),
the Secretary shall consider whether a transaction or activity of
an enterprise is substantially equivalent to a mortgage purchase and
either (A) creates a new market, or (B) adds liquidity to an existing
market, provided however that the terms and conditions of such mortgage
purchase is neither determined to be unacceptable, nor contrary to
good lending practices, and otherwise promotes sustainable homeownership
and further, that such mortgage purchase actually fulfills the purposes
of the enterprise and is in accordance with the chartering Act of
such enterprise.
`(c) Eliminating Interest Rate Disparities-
`(1) IN GENERAL- In establishing and implementing the housing goals
under this subpart, the Secretary shall require the enterprises to
disclose appropriate information to allow the Secretary to assess
if there are any disparities in interest rates charged on mortgages
to borrowers who are minorities, as compared with borrowers of similar
creditworthiness who are not minorities, as evidenced in reports pursuant
to the Home Mortgage Disclosure Act of 1975.
`(2) REPORT TO CONGRESS AND REMEDY REQUIRED ON DISPARITIES- Upon a
finding by the Secretary that a pattern of disparities in interest
rates exists pursuant to the information provided by an enterprise
under paragraph (1), the Secretary shall--
`(A) forward to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House
of Representatives a report detailing the disparities; and
`(B) require the enterprise to take such actions as the Secretary
deems appropriate pursuant to this Act, to remedy such identified
interest rate disparities.
`(3) IDENTITY OF INDIVIDUALS NOT DISCLOSED- In carrying out this subsection,
the Secretary shall ensure that no personally identifiable financial
information that would enable an individual borrower to be reasonably
identified shall be made public.
`(d) Timing- The Secretary shall establish an annual deadline for the
establishment of housing goals described in subsection (a), taking into
consideration the need for the enterprises to reasonably and sufficiently
plan their operations and activities in advance, including operations
and activities necessary to meet such goals.
`SEC. 1331A. DISCRETIONARY ADJUSTMENT OF HOUSING GOALS.
`(a) Authority- An enterprise may petition the Secretary in writing
at any time during a year to reduce the level of any goal for such year
established pursuant to this subpart.
`(b) Standard for Reduction- The Secretary may reduce the level for
a goal pursuant to such a petition only if--
`(1) market and economic conditions or the financial condition of
the enterprise require such action; or
`(2) efforts to meet the goal would result in the constraint of liquidity,
over investment in certain market segments, or other consequences
contrary to the intent of this subpart, section 301(3) of the Federal
National Mortgage Association Charter Act (12 U.S.C. 1716(3)), or
section 301(3) of the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1451 note), as applicable.
`(1) 30-day PERIOD- The Secretary shall make a determination regarding
any proposed reduction within 30 days of receipt of the petition regarding
the reduction.
`(2) EXTENSION- The Secretary may extend the period described in paragraph
(1) for a single additional 15-day period, but only if the Secretary
requests additional information from the enterprise.
`SEC. 1332. SINGLE-FAMILY HOUSING GOALS.
`(a) Establishment of Goals-
`(1) IN GENERAL- The Secretary shall establish annual goals for the
purchase by each enterprise of conventional, conforming, single-family,
owner-occupied, purchase money mortgages financing housing for each
of the following:
`(A) Low-income families.
`(B) Families that reside in low-income areas.
`(C) Very low-income families.
`(2) GOALS AS PERCENTAGE OF TOTAL PURCHASE MONEY MORTGAGE PURCHASES-
The goals established under paragraph (1) shall be established as
a percentage of the total number of single-family dwelling units financed
by single-family purchase money mortgages of the enterprise.
`(b) Determination of Compliance-
`(1) IN GENERAL- The Secretary shall determine, for each year that
the housing goals under this section are in effect pursuant to section
1331(a), whether each enterprise has complied with the single-family
housing goals established under this section for such year.
`(2) COMPLIANCE REQUIREMENTS- An enterprise shall be considered to
be in compliance with a goal described under subsection (a) for a
year, only if, for each of the types of families described in subsection
(a), the percentage of the number of conventional, conforming, single-family,
owner-occupied, purchase money mortgages purchased by each enterprise
in such year that serve such families, meets or exceeds the target
established under subsection (c) for the year for such type of family.
`(1) IN GENERAL- The Secretary shall establish annual targets for
each goal described in subsection (a).
`(2) CONSIDERATIONS- In establishing annual targets under paragraph
(1), the Secretary shall consider--
`(A) national housing needs;
`(B) economic, housing, and demographic conditions;
`(C) the performance and effort of the enterprises toward achieving
the housing goals under this section in previous years;
`(D) the ability of the enterprise to lead the industry in making
credit available;
`(E) recent information submitted in compliance with the Home Mortgage
Disclosure Act of 1975 and such other mortgage data as may be available
for non metropolitan areas regarding conventional, conforming, single-family,
owner-occupied, purchase money mortgages originated and purchased;
`(F) the size of the purchase money conventional mortgage market
serving each of the types of families described in subsection (a),
relative to the size of the overall purchase money mortgage market;
and
`(G) the need to maintain the sound financial condition of the enterprises.
`(d) Notice of Determination and Enterprise Comment-
`(1) NOTICE- Within 30 days of making a determination under subsection
(b) regarding compliance of an enterprise for a year with the housing
goals established under this section and before any public disclosure
thereof, the Secretary shall provide notice of the determination to
the enterprise, which shall include an analysis and comparison, by
the Secretary, of the performance of the enterprise for the year and
the targets for the year under subsection (c).
`(2) COMMENT PERIOD- The Secretary shall provide each enterprise an
opportunity to comment on the determination during the 30-day period
beginning upon receipt by the enterprise of the notice.
`(e) Use of Borrower Income- In monitoring the performance of each enterprise
pursuant to the housing goals under this section and evaluating such
performance (for purposes of section 1336), the Secretary shall consider
a mortgagor's income to be the income of the mortgagor at the time of
origination of the mortgage.
`SEC. 1333. SINGLE-FAMILY HOUSING REFINANCE GOALS.
`(a) Prepayment of Existing Loans-
`(1) IN GENERAL- The Secretary shall establish annual goals for the
purchase by each enterprise of mortgages on conventional, conforming,
single-family, owner-occupied housing given to pay off or prepay an
existing loan served by the same property for each of the following:
`(A) Low-income families.
`(B) Families that reside in low-income areas.
`(C) Very low-income families.
`(2) GOALS AS PERCENTAGE OF TOTAL REFINANCING MORTGAGE PURCHASES-
The goals described under paragraph (1) shall be established as a
percentage of the total number of single-family dwelling units refinanced
by mortgage purchases of each enterprise.
`(b) Determination of Compliance-
`(1) IN GENERAL- The Secretary shall determine, for each year that
the housing goals under this section are in effect pursuant to section
1331(a), whether each enterprise has complied with the single-family
housing refinance goals established under this section for such year.
`(2) COMPLIANCE- An enterprise shall be considered to be in compliance
with the goals of this section for a year, only if, for each of the
types of families described in subsection (a), the percentage of the
number of conventional, conforming, single-family, owner-occupied
refinancing mortgages purchased by each enterprise in such year that
serve such families, meets or exceeds the target for the year for
such type of family that is established under subsection (c).
`(1) IN GENERAL- The Secretary shall establish annual targets for
each goal described in subsection (a).
`(2) CONSIDERATIONS- In establishing annual targets under paragraph
(1), the Secretary shall consider--
`(A) national housing needs;
`(B) economic, housing, and demographic conditions;
`(C) the performance and effort of the enterprises toward achieving
the housing goals under this section in previous years;
`(D) the ability of the enterprise to lead the industry in making
credit available;
`(E) recent information submitted in compliance with the Home Mortgage
Disclosure Act of 1975 and such other mortgage data as may be available
for non metropolitan areas regarding mortgages on conventional,
conforming, single-family, owner-occupied, refinanced mortgages
originated and purchased;
`(F) the size of the refinance conventional mortgage market serving
each of the types of families described in subsection (a) relative
to the size of the overall refinance conventional mortgage market;
and
`(G) the need to maintain the sound financial condition of the enterprises.
`(d) Notice of Determination and Enterprise Comment-
`(1) NOTICE- Within 30 days of making a determination under subsection
(b) regarding compliance of an enterprise for a year with the housing
goals established under this section and before any public disclosure
thereof, the Secretary shall provide notice of the determination to
the enterprise, which shall include an analysis and comparison, by
the Secretary, of the performance of the enterprise for the year and
the targets for the year under subsection (c).
`(2) COMMENT PERIOD- The Secretary shall provide each enterprise an
opportunity to comment on the determination during the 30-day period
beginning upon receipt by the enterprise of the notice.
`(e) Use of Borrower Income- In monitoring the performance of each enterprise
pursuant to the housing goals under this section and evaluating such
performance (for purposes of section 1336), the Secretary shall consider
a mortgagor's income to be the income of the mortgagor at the time of
origination of the mortgage.
`SEC. 1334. MULTIFAMILY SPECIAL AFFORDABLE HOUSING GOAL.
`(1) IN GENERAL- The Secretary shall establish, by regulation, by
unit or dollar volume, as determined by the Secretary, an annual goal
for the purchase by each enterprise of:
`(A) Mortgages that finance dwelling units affordable to very low-income
families.
`(B) Mortgages that finance dwelling units assisted by the low-income
housing tax credit under section 42 of the Internal Revenue Code
of 1986.
`(2) ADDITIONAL REQUIREMENTS FOR SMALLER PROJECTS- The Secretary shall
establish additional requirements for the purchase by each enterprise
of mortgages described in paragraph (1) for multifamily housing projects
of a smaller or limited size, which may be based on the number of
dwelling units in the project or the amount of the mortgage, or both,
and shall include multifamily housing projects of 5 to 50 units (as
adjusted by the Secretary), or with mortgages of up to $5,000,000
(as adjusted by the Secretary).
`(3) FACTORS- In establishing the goal under this section relating
to mortgages on multifamily housing for an enterprise, the Secretary
shall consider--
`(A) national multifamily mortgage credit needs;
`(B) the performance and effort of the enterprise in making mortgage
credit available for multifamily housing in previous years;
`(C) the size of the multifamily mortgage market;
`(D) the most recent information available for the Residential Survey
published by the Census Bureau, and such other data as may be available
regarding multifamily mortgages;
`(E) the ability of the enterprise to lead the industry in expanding
mortgage credit availability at favorable terms, especially for
underserved markets, such as for--
`(i) small multifamily projects;
`(ii) multifamily properties in need of preservation and rehabilitation;
and
`(iii) multifamily properties located in rural areas; and
`(F) the need to maintain the sound financial condition of the enterprise.
`(b) Units Financed by Housing Finance Agency Bonds- The Secretary may
give credit toward the achievement of the multifamily special affordable
housing goal under this section (for purposes of section 1336) to dwelling
units in multifamily housing that otherwise qualify under such goal
and that is financed by tax-exempt or taxable bonds issued by a State
or local housing finance agency, but only if--
`(1) such bonds are secured by a guarantee of the enterprise; or
`(2) are not investment grade and are purchased by the enterprise.
`(c) Use of Tenant Income or Rent-
`(1) IN GENERAL- The Secretary shall monitor the performance of each
enterprise in meeting the goals established under this section and
shall evaluate such performance (for purposes of section 1336) based
on--
`(A) if such data is available, the income of the prospective or
actual tenants of the property; or
`(B) if such data is not available, the rent levels affordable to
low-income and very low-income families.
`(2) RENT LEVEL- A rent level shall be considered to be affordable
for purposes of this subsection for an income category referred to
in this subsection if it does not exceed 30 percent of the maximum
income level of such income category, with appropriate adjustments
for unit size as measured by the number of bedrooms.
`(d) Determination of Compliance-
`(1) IN GENERAL- The Secretary shall, for each year that the housing
goal under this section is in effect pursuant to section 1331(a),
determine whether each enterprise has complied with such goal and
the additional requirements under subsection (a)(2).
`(2) COMPLIANCE- An enterprise shall be considered to be in compliance
with the goal of this section for a year only if for each of the properties
described in subsection (a), the percentage of the number of multifamily
mortgages purchased by each enterprise in such year, that serve such
families, meets or exceeds the goals for the year for such type of
properties that are established under subsection (a).
`(e) Consideration of Units in Single-Family Rental Housing- In establishing
any goal under this section, the Secretary may take into consideration
the number of housing units financed by any mortgage on single-family
rental housing purchased by an enterprise.'.
(c) Conforming Amendments- The Housing and Community Development Act
of 1992 is amended--
(1) in section 1335(a) (12 U.S.C. 4565(a)), in the matter preceding
paragraph (1), by striking `low- and moderate-income housing goal'
and all that follows through `section 1334' and inserting `housing
goals established under this subpart';
(2) in section 1336 (12 U.S.C. 4566)--
(A) in section (a)(1), by striking `sections 1332, 1333, and 1334,'
and inserting `this subpart'; and
(B) in subsection (b)(1), by striking `section 1332, 1333, or 1334,'
and inserting `this subpart'.
(d) Definitions- Section 1303 of the Housing and Community Development
Act of 1992 (12 U.S.C. 4502) is amended--
(1) in paragraph (19), by striking `60 percent' each place such term
appears and inserting `50 percent'; and
(2) by adding at the end the following:
`(20) CONFORMING MORTGAGE- The term `conforming mortgage' means, with
respect to an enterprise, a conventional mortgage having an original
principal obligation that does not exceed the dollar limitation, in
effect at the time of such origination, under--
`(A) section 302(b)(2) of the Federal National Mortgage Association
Charter Act; or
`(B) section 305(a)(2) of the Federal Home Loan Mortgage Corporation
Act.
`(21) LOW-INCOME AREA- The term `low-income area' means a census tract
or block numbering area in which the median income does not exceed
80 percent of the median income for the area in which such census
tract or block numbering area is located, and, for the purposes of
section 1332(a)(2), shall include families having incomes not greater
than 100 percent of the area median income who reside in minority
census tracts.
`(A) IN GENERAL- The term `very low-income' means--
`(i) in the case of owner-occupied units, income in excess of
30 percent but not greater than 50 percent of the area median
income; and
`(ii) in the case of rental units, income in excess of 30 percent
but not greater than 50 percent of the area median income, with
adjustments for smaller and larger families, as determined by
the Secretary.
`(B) RULE OF CONSTRUCTION FOR PURPOSES OF HOUSING GOALS- Notwithstanding
subparagraph (A), for purposes of any housing goal established under
sections 1331 through 1334, the term `very low-income' means--
`(i) in the case of owner-occupied units, families having incomes
not greater than 50 percent of the area median income;
`(ii) in the case of rental units, families having incomes not
greater than 50 percent of the area median income, with adjustments
for smaller and larger families, as determined by the Secretary.
`(23) EXTREMELY LOW-INCOME- The term `extremely low-income' means--
`(A) in the case of owner-occupied units, income not in excess of
30 percent of the area median income; and
`(B) in the case of rental units, income not in excess of 30 percent
of the area median income, with adjustments for smaller and larger
families, as determined by the Secretary.
`(24) SHORTAGE OF STANDARD RENTAL UNITS BOTH AFFORDABLE AND AVAILABLE
TO EXTREMELY LOW-INCOME RENTER HOUSEHOLDS-
`(A) IN GENERAL- The term `shortage of standard rental units both
affordable and available to extremely low-income renter households'
means the gap between--
`(i) the number of units with complete plumbing and kitchen facilities
with a rent that is 30 percent or less of 30 percent of the adjusted
area median income as determined by the Secretary that are occupied
by extremely low-income renter households or are vacant for rent;
and
`(ii) the number of extremely low-income renter households.
`(B) RULE OF CONSTRUCTION- If the number of units described in subparagraph
(A)(i) exceeds the number of extremely low-income households as
described in subparagraph (A)(ii), there is no shortage.
`(25) SHORTAGE OF STANDARD RENTAL UNITS BOTH AFFORDABLE AND AVAILABLE
TO VERY LOW-INCOME RENTER HOUSEHOLDS-
`(A) IN GENERAL- The term `shortage of standard rental units both
affordable and available to very low-income renter households' means
the gap between--
`(i) the number of units with complete plumbing and kitchen facilities
with a rent that is 30 percent or less of 50 percent of the adjusted
area median income as determined by the Secretary that are occupied
by either extremely low- or very low-income renter households
or are vacant for rent; and
`(ii) the number of extremely low- and very low-income renter
households.
`(B) RULE OF CONSTRUCTION- If the number of units described in subparagraph
(A)(i) exceeds the number of extremely low- and very low-income
households as described in subparagraph (A)(ii), there is no shortage.'.
SEC. 5. DUTY TO SERVE UNDERSERVED MARKETS.
(a) Establishment and Evaluation of Performance- Section 1335 of the
Housing and Community Development Act of 1992 (12 U.S.C. 4565) is amended--
(1) in the section heading, by inserting `duty to serve underserved
markets and' before `other';
(2) by striking subsection (b);
(A) in the matter preceding paragraph (1), by inserting `and to
carry out the duty under subsection (a) of this section,' before
`, each enterprise shall';
(B) in paragraph (3), by inserting `and' after the semicolon at
the end;
(C) in paragraph (4), by striking `; and' and inserting a period;
(D) by striking paragraph (5); and
(E) by redesignating such subsection as subsection (b);
(4) by inserting before subsection (b) (as redesignated by paragraph
(3)(E) of this subsection) the following new subsection:
`(a) Duty To Serve Underserved Markets-
`(1) DUTY- In accordance with the purpose of the enterprises under
section 301(3) of the Federal National Mortgage Association Charter
Act (12 U.S.C. 1716) and section 301(b)(3) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1451 note) to undertake activities
relating to mortgages on housing for very low-, low-, and moderate-income
families involving a reasonable economic return that may be less than
the return earned on other activities, each enterprise shall have
the duty to purchase or securitize mortgage investments and improve
the distribution of investment capital available for mortgage financing
for underserved markets.
`(2) UNDERSERVED MARKETS- To meet its duty under paragraph (1), each
enterprise shall comply with the following requirements with respect
to the following underserved markets:
`(A) MANUFACTURED HOUSING- The enterprise shall lead the industry
in developing loan products and flexible underwriting guidelines
to facilitate a secondary market for mortgages on manufactured homes
for very low-, low-, and moderate-income families.
`(B) AFFORDABLE HOUSING PRESERVATION- The enterprise shall lead
the industry in developing loan products and flexible underwriting
guidelines to facilitate a secondary market to preserve housing
affordable to extremely low-, very low-, and low-income families,
including housing projects subsidized under--
`(i) the project-based and tenant-based rental assistance programs
under section 8 of the United States Housing Act of 1937;
`(ii) the program under section 236 of the National Housing Act;
`(iii) the below-market interest rate mortgage program under section
221(d)(4) of the National Housing Act;
`(iv) the supportive housing for the elderly program under section
202 of the Housing Act of 1959;
`(v) the supportive housing program for persons with disabilities
under section 811 of the Cranston-Gonzalez National Affordable
Housing Act; and
`(vi) the rural rental housing program under section 515 of the
Housing Act of 1949.
`(C) SUBPRIME BORROWERS- The enterprises shall lead the industry
in making mortgage credit available to low- and moderate-income
families with credit impairment, and shall develop underwriting
guidelines that preclude the purchase of loans with unacceptable
terms and conditions, or which are contrary to good lending practices
or to sustainable homeownership, including--
`(i) mandatory arbitration provisions;
`(ii) single premium credit insurance financed into the mortgages;
`(iii) unreasonable prepayment penalties and up front fees;
`(iv) introductory rates that expire in less than 10 years; and
`(v) any other such loans with unacceptable terms and conditions,
or which are contrary to good lending practices or to sustainable
homeownership.
`(D) COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS- The enterprises
shall--
`(i) lead the industry in developing loan products and flexible
underwriting guidelines to facilitate a secondary market for mortgages
on unconventional affordable housing loans made or purchased by
Treasury certified community development financial institutions
and other nonprofit housing lenders; and
`(ii) utilize credit facilities, capital and loss reserves, credit
enhancements, securitization, and other methods to facilitate
a secondary market for mortgages on unconventional affordable
housing loans made or purchased by community development financial
institutions certified by the Secretary of the Treasury, as determined
by the Secretary and consistent with the Federal National Mortgage
Association Charter Act, the Federal Home Loan Mortgage Corporation
Act, and the provisions of this Act.
`(E) COMMUNITY REINVESTMENT ACT CONSIDERATIONS- The enterprise shall
take affirmative steps to assist depository institutions to meet
their obligations under the Community Reinvestment Act, which shall
include developing appropriate underwriting standards, business
practices, repurchase requirements, pricing, fees, and procedures.
`(F) RURAL AND OTHER UNDERSERVED MARKETS-
`(i) IN GENERAL- The enterprises shall lead the industry in developing
loan products and flexible underwriting guidelines to facilitate
a secondary market for mortgages on housing for very low-, low-,
and moderate-income families in rural areas, and for mortgages
for housing for any other underserved market for very low-, low-,
and moderate-income families that the Secretary identifies as
lacking adequate credit through conventional lending sources.
`(ii) IDENTIFICATION OF UNDERSERVED MARKETS- Underserved markets
may be identified for purposes of this paragraph by borrower type,
market segment, or geographic area.
`(G) OTHER UNDERSERVED MARKETS- The Secretary may, by rule, determine
other underserved markets that the enterprises shall be required
to lead the market in facilitating the availability of investment
capital for mortgage financing for such markets.'; and
(5) by adding at the end the following new subsection:
`(c) Evaluation and Reporting of Compliance-
`(1) EVALUATING COMPLIANCE-
`(A) IN GENERAL- Not later than 6 months after the date of enactment
of the Government Sponsored Enterprise Mission Improvement Act,
the Secretary shall establish through notice and comment rulemaking,
a manner for evaluating whether, and the extent to which, the enterprises
have complied with the duty under subsection (a) to serve underserved
markets, and for rating the extent of such compliance.
`(B) RATING COMPLIANCE- Using the evaluation method established
under subparagraph (A), the Secretary shall, for each year, evaluate
such compliance and rate the performance of each enterprise as to
the extent of compliance.
`(C) EVALUATIONS AND RATINGS INCLUDED IN ANNUAL REPORT OF THE SECRETARY-
The Secretary shall include such evaluation and rating for each
enterprise for a year in the report for that year submitted pursuant
to section 1319B(a).
`(2) SEPARATE EVALUATIONS- In determining whether an enterprise has
complied with the duty referred to in paragraph (1), the Secretary
shall separately evaluate whether the enterprise has complied with
such duty with respect to each of the underserved markets identified
in subsection (a), taking into consideration--
`(A) the development of loan products and more flexible underwriting
guidelines;
`(B) the volume of loans purchased in each of such underserved markets;
and
`(C) such other factors as the Secretary may determine.'.
(b) Enforcement- Section 1336(a) of the Housing and Community Development
Act of 1992 (12 U.S.C. 4566(a)) is amended--
(1) in paragraph (1), by inserting `and with the duty under section
1335(a) of each enterprise with respect to underserved markets' before
`, as provided in this section,'; and
(2) by adding at the end the following new paragraph:
`(4) ENFORCEMENT OF DUTY TO PROVIDE MORTGAGE CREDIT TO UNDERSERVED
MARKETS-
`(A) IN GENERAL- The duty under section 1335(a) of each enterprise
to serve underserved markets (as determined in accordance with section
1335(c)) shall be enforceable under this section to the same extent
and under the same provisions that the housing goals established
under sections 1332, 1333, and 1334 are enforceable.
`(B) LIMITATION- The duty under section 1335(a) shall not be enforceable
under any other provision of this title (including subpart C of
this part) other than this section or under any provision of the
Federal National Mortgage Association Charter Act or the Federal
Home Loan Mortgage Corporation Act.'.
SEC. 6. MONITORING AND ENFORCING COMPLIANCE WITH HOUSING GOALS.
Section 1336 of the Housing and Community Development Act of 1992 (12
U.S.C. 4566) is amended--
(A) in the subsection heading, by inserting `Preliminary' before
`Determination';
(B) by striking paragraph (1) and inserting the following new paragraph:
`(1) NOTICE- If the Secretary preliminarily determines that an enterprise
has failed, or that there is a substantial probability that an enterprise
will fail to meet any housing goal established under this subpart,
the Secretary shall provide written notice to the enterprise of such
a preliminary determination, the reasons for such determination, and
the information on which the Secretary based the determination.';
(i) in subparagraph (A), by inserting `finally' before `determining';
(ii) by striking subparagraphs (B) and (C) and inserting the following
new subparagraph:
`(B) EXTENSION OR SHORTENING OF PERIOD- The Secretary may--
`(i) extend the period under subparagraph (A) for good cause for
not more than 30 additional days; and
`(ii) shorten the period under subparagraph (A) for good cause.';
and
(iii) by redesignating subparagraph (D) as subparagraph (C); and
(i) in subparagraph (A), by striking `determine' and inserting
`issue a final determination of';
(ii) in subparagraph (B), by inserting `final' before `determinations';
and
(iii) in subparagraph (C)--
(I) by striking `Committee on Banking, Finance and Urban Affairs'
and inserting `Committee on Financial Services'; and
(II) by inserting `final' before `determination' each place
such term appears; and
(A) by striking the subsection designation and heading and all that
follows through the end of paragraph (1) and inserting the following:
`(c) Cease-and-Desist Orders, Civil Money Penalties, and Remedies Including
Housing Plans-
`(A) HOUSING PLAN- If the Secretary finds, pursuant to subsection
(b), that there is a substantial probability that an enterprise
will fail, or has actually failed to meet any housing goal under
this subpart and that the achievement of the housing goal was or
is feasible, the Secretary may require that the enterprise submit
a housing plan under this subsection.
`(B) REFUSAL TO SUBMIT HOUSING PLAN- If the Secretary makes such
a finding and the enterprise refuses to submit such a plan, submits
an unacceptable plan, fails to comply with the plan or the Secretary
finds that the enterprise has failed to meet any housing goal under
this subpart, in addition to requiring an enterprise to submit a
housing plan, the Secretary may--
`(i) issue a cease-and-desist order in accordance with section
1341;
`(ii) impose civil money penalties in accordance with section
1345; or
`(iii) order other remedies as set forth in paragraph (7) of this
subsection.';
(i) by striking `CONTENTS- Each housing plan' and inserting `HOUSING
PLAN- If the Secretary requires a housing plan under this section,
such a plan'; and
(ii) in subparagraph (B), by inserting `and changes in its operations'
after `improvements';
(i) by inserting `comply with any remedial action or' before `submit
a housing plan'; and
(ii) by striking `under subsection (b)(3) that a housing plan
is required';
(D) in paragraph (4), by striking the first 2 sentences and inserting
the following:
`(A) REVIEW- The Secretary shall review each submission by an enterprise,
including a housing plan submitted under this subsection, and not
later than 30 days after submission, approve or disapprove the plan
or other action.
`(B) EXTENSION OF TIME- The Secretary may extend the period for
approval or disapproval for a single additional 30-day period if
the Secretary determines such extension necessary.
(E) by adding at the end the following new paragraph:
`(7) ADDITIONAL REMEDIES FOR FAILURE TO MEET GOALS- In addition to
ordering a housing plan under this section, issuing cease-and-desist
orders under section 1341, and ordering civil money penalties under
section 1345, the Secretary may--
`(A) seek other actions when an enterprise fails to meet a goal;
and
`(B) exercise appropriate enforcement authority available to the
Secretary under this Act.'.
SEC. 7. AFFORDABLE HOUSING PROGRAMS.
(a) Repeal- Sections 1337 of the Housing and Community Development Act
of 1992 (12 U.S.C. 4562 note) is hereby repealed.
(b) Annual Housing Report- The Housing and Community Development Act
of 1992 is amended by inserting after section 1336 the following:
`SEC. 1337. AFFORDABLE HOUSING ALLOCATIONS.
`(a) Set Aside and Allocation of Amounts by Enterprises- Subject to
subsection (b), in each fiscal year--
`(1) the Federal Home Loan Mortgage Corporation shall--
`(A) set aside an amount equal to 4.2 basis points for each dollar
of unpaid principal balance of its total new business purchases;
and
`(B) allocate or otherwise transfer--
`(i) 65 percent of such amounts to the Secretary of Housing and
Urban Development to fund the affordable housing block grant program
established under section 1338; and
`(ii) 35 percent of such amounts to fund the Capital Magnet Fund
established pursuant to section 1339; and
`(2) the Federal National Mortgage Association shall--
`(A) set aside an amount equal to 4.2 basis points for each dollar
of unpaid principal balance of its total new business purchases;
and
`(B) allocate or otherwise transfer--
`(i) 65 percent of such amounts to the Secretary of Housing and
Urban Development to fund the affordable housing block grant program
established under section 1338; and
`(ii) 35 percent of such amounts to fund the Capital Magnet Fund
established pursuant to section 1339.
`(b) Suspension of Contributions- The Secretary shall temporarily suspend
allocations under subsection (a) by an enterprise upon a finding by
the Secretary that such allocations--
`(1) are contributing, or would contribute, to the financial instability
of the enterprise;
`(2) are causing, or would cause, the enterprise to be classified
as undercapitalized; or
`(3) are preventing, or would prevent, the enterprise from successfully
completing a capital restoration plan under section 1369C.
`(c) Prohibition of Pass-Through of Cost of Allocations- The Secretary
shall, by regulation, prohibit each enterprise from redirecting the
costs of any allocation required under this section, through increased
charges or fees, or decreased premiums, or in any other manner, to the
originators of mortgages purchased or securitized by the enterprise.
`(d) Enforcement of Requirements on Enterprise- Compliance by the enterprises
with the requirements under this section shall be enforceable under
subpart C. Any reference in such subpart to this part or to an order,
rule, or regulation under this part specifically includes this section
and any order, rule, or regulation under this section.
`SEC. 1338. AFFORDABLE HOUSING BLOCK GRANT PROGRAM.
`(a) Establishment and Purpose- The Secretary of Housing and Urban Development
shall establish and manage an affordable housing block grant program,
which shall be funded with amounts allocated by the enterprises under
section 1337. The purpose of the block grant program under this section
is to provide grants to States for use--
`(1) to increase and preserve the supply of rental housing for extremely
low- and very low-income families, including homeless families; and
`(2) to increase homeownership for extremely low- and very low-income
families.
`(b) Affordable Housing Block Grant Allocations for Homeownership Preservation
in Fiscal Year 2008-
`(1) ASSISTANCE FOR HOMEOWNERS FACING FORECLOSURE-
`(A) IN GENERAL- To help address the subprime mortgage crisis, in
fiscal year 2008, 100 percent of the amounts allocated for grants
under this section shall be used to make grants to States to--
`(i) facilitate loan modification and refinance options for low-
and moderate-income borrowers facing foreclosure; and
`(ii) expeditiously make available to low- and moderate-income
homebuyers, properties that have been foreclosed upon.
`(B) DISTRIBUTION- The amounts allocated to help address the subprime
mortgage crisis under subparagraph (A) shall be distributed according
to a formula established by the Secretary.
`(2) PERMISSIBLE DESIGNEES- A State receiving grant amounts under
this subsection may designate a State housing finance agency, housing
and community development entity, tribally designated housing entity
(as such term is defined in section 4 of the Native American Housing
Assistance and Self-Determination Act of 1997 (25 U.S.C. 4103)), or
any other qualified instrumentality of the State to receive such grant
amounts.
`(3) DEVELOPMENT OF DISTRIBUTION FORMULA- Not later than 3 months
after the date of enactment of the Government Sponsored Enterprise
Mission Improvement Act, the Secretary shall develop the distribution
formula required under paragraph (1)(B). Such formula shall be based
on the following factors:
`(A) The population of the State based on the most recent estimate
of the resident population of such State as determined by the Bureau
of the Census.
`(B) The 90-day delinquency rate of the State.
`(C) The ratio of foreclosures to owner-occupied households within
the State.
`(A) LOANS TO HOMEOWNERS TO PRESERVE HOMEOWNERSHIP-
`(i) IN GENERAL- A State or State designated entity shall use
any grant amounts made available under this subsection to--
`(I) support the refinancing of loans of eligible homeowners,
only if such loans have a loan-to-value ratio of not greater
than 100 percent of current appraised value of the home on which
such loan was taken;
`(II) reduce the outstanding loan balances of eligible homeowners,
but only if the lender, servicer, investor, or other appropriate
entity reduces such balance by the amount necessary to bring
the combined loan value (including first and second mortgages)
at or below 100 percent of the appraised value of the home;
and
`(III) pay off any outstanding amounts owed by eligible homeowners
for taxes and insurance.
`(ii) PROGRAM REQUIREMENTS FOR ELIGIBLE HOMEOWNERS-
`(I) DEVELOPMENT BY STATES- Each State or State designated entity
that is a recipient of a grant amount under this subsection
shall develop program requirements for eligible homeowners seeking
a loan under this subparagraph.
`(II) REQUIRED CONTENT- The program requirements required to
be developed under this clause shall, at a minimum, include
the following:
`(aa) The annual income of the homeowner is no greater than
the annual income established by the Secretary as being of low- or moderate-income.
`(bb) That any loan under this paragraph may be provided for
up to a 4-family owner-occupied residence, including 1-family units
in a condominium project or a membership interest and occupancy agreement
in a cooperative housing project, that is used, or is to be used, as
the principal residence of the applicant seeking such grant or loan.
`(cc) The homeowner has a loan with unsustainable loan terms,
as determined by a State housing finance agency or other designated
State agency. For purposes of this item, the term `unsustainable loan
terms' includes such activities as the lack of escrow of taxes and insurance,
the inclusion of prepayment penalties, and the lack of the ability of
the homeowner to pay at the fully indexed interest rate because the
debt-to-income ratio on such home loan is greater than 45 percent.
`(iii) LOAN REQUIREMENTS- In order for a State or State designated
entity to use the amounts made available under this subsection
to assist eligible homeowners, a loan under this subparagraph--
`(aa) have a fixed interest rate;
`(bb) be affordable, so that the maximum debt-to-income ratio
of such loan is not greater than 45 percent;
`(cc) require mandatory escrow of taxes and insurance;
`(dd) have no prepayment penalties;
`(ee) have no mandatory arbitration clauses; and
`(ff) if the loan-to-value ratio of the original mortgage
loan is greater than 100 percent, require the lender to reduce such
balance by the amount necessary to bring the loan value at or below
100 percent of the appraised value of the home;
`(II) shall not be due and payable unless--
`(aa) the real property securing such loan is sold, transferred,
or refinanced; or
`(bb) the last surviving homeowner of such real property dies;
`(III) shall not exceed 10 percent of the principal balance;
and
`(IV) may be subordinated.
`(iv) EXISTING LOAN FUNDS- Any State or State designated entity
with a previously existing fund established to make loans to assist
homeowners in satisfying any amounts past due on their home loan
may use funds appropriated for purposes of this subparagraph for
that existing loan fund, even if the eligibility, application,
program, or use requirements for that loan program differ from
the eligibility, application, program, and use requirements of
this subparagraph, unless such use is expressly determined by
the Secretary to be inappropriate.
`(v) NO FORECLOSURE IF NOTICE OF APPLICATION FOR HOME PRESERVATION
LOAN- A mortgagee shall not initiate a foreclosure--
`(I) upon receipt of a written confirmation from the State or
other State designated entity that the homeowner has applied
for a home preservation loan under this subparagraph; and
`(II) for the 2-month period after receipt of such written confirmation
or until the mortgagee is informed, in writing, that the homeowner
is not eligible for a home preservation loan, whichever occurs
first.
`(B) LOANS TO NONPROFIT DEVELOPERS FOR THE REHABILITATION AND SALE
OF FORECLOSED PROPERTIES TO LOW- AND MODERATE-INCOME HOMEBUYERS-
`(i) IN GENERAL- A State or State designated entity may use up
to 20 percent of the grant amounts made available under this subsection
for homeownership preservation to provide loans to nonprofit affordable
housing developers for the purposes of assisting low- and moderate-income
homebuyers to purchase properties that are in the process of being
foreclosed upon or have been acquired by the mortgage holder through
the foreclosure process.
`(ii) PROGRAM REQUIREMENTS FOR NONPROFIT AFFORDABLE HOUSING DEVELOPERS-
`(I) IN GENERAL- Each State or State designated entity that
is a recipient of a grant under this subsection shall, if they
choose to use part of their grant award to make loans under
this subparagraph, develop program requirements for nonprofit
affordable housing developers for the purposes of assisting
low- and moderate-income homebuyers to purchase properties that
are in the process of being foreclosed upon or have been acquired
by the mortgage holder through the foreclosure process.
`(II) REQUIRED CONTENT- The program requirements developed under
subclause (I) shall, at a minimum, include the following:
`(aa) That any loan under this clause may be provided for
up to a 4-family owner-occupied residence, including 1-family units
in a condominium project or a membership interest and occupancy agreement
in a cooperative housing project, that is used, or is to be used, as
the principal residence of a low- or moderate-income homebuyer.
`(bb) The annual income of the low- or moderate-income homebuyer
is not greater than the annual income established by the Secretary as
being of low- or moderate-income.
`(cc) The property is in foreclosure or has been acquired
by the mortgage holder through the foreclosure process, the property
has been appraised, and the sales price of the property does not exceed
100 percent of the appraised value of the property.
`(iii) LOAN REQUIREMENTS- In order for a State or State designated
entity to use the amounts made available under this subsection,
a loan under this subparagraph--
`(aa) downpayment and closing costs;
`(bb) financing the difference between the sales price of
a home and the mortgage for which the low- or moderate-income homebuyer
qualifies; and
`(cc) repairs of a home not to exceed 10 percent of the appraised
value of the home;
`(II) shall carry a zero percent interest rate;
`(III) shall not be due and payable by the low- or moderate-income
homebuyer unless--
`(aa) the real property securing such loan is sold, transferred,
or refinanced; or
`(bb) the last surviving homeowner of such real property dies;
and
`(IV) may be subordinated.
`(iv) EXISTING LOAN FUNDS- Any State or State designated entity
with a previously existing fund established to make loans for
the purposes of this subparagraph may use funds appropriated for
purposes of this subparagraph for that existing loan fund, even
if the eligibility, application, program, or use requirements
for that loan program differ from the eligibility, application,
program, and use requirements of this subparagraph, unless such
use is expressly determined by the Secretary to be inappropriate.
`(c) Allocation for Affordable Housing Block Grants in 2009 and Subsequent
Years-
`(1) IN GENERAL- Except as provided in subsection (b), during each
fiscal year the Secretary of Housing and Urban Development shall distribute
the amounts allocated for the affordable housing block grant program
under this section to provide affordable housing as described in this
subsection.
`(2) PERMISSIBLE DESIGNEES- A State receiving grant amounts under
this subsection may designate a State housing finance agency, housing
and community development entity, tribally designated housing entity
(as such term is defined in section 4 of the Native American Housing
Assistance and Self-Determination Act of 1997 (25 U.S.C. 4103)), or
any other qualified instrumentality of the State to receive such grant
amounts.
`(3) DISTRIBUTION TO STATES BY NEEDS-BASED FORMULA-
`(A) IN GENERAL- The Secretary of Housing and Urban Development
shall, by regulation, establish a formula within 12 months of the
date of enactment of the Government Sponsored Enterprise Mission
Improvement Act, to distribute amounts made available under this
subsection to each State to provide affordable housing to extremely
low- and very low-income households.
`(B) BASIS FOR FORMULA- The formula required under subparagraph
(A) shall include the following:
`(i) The ratio of the shortage of standard rental units both affordable
and available to extremely low-income renter households in the
State to the aggregate shortage of standard rental units both
affordable and available to extremely low-income renter households
in all the States.
`(ii) The ratio of the shortage of standard rental units both
affordable and available to very low-income renter households
in the State to the aggregate shortage of standard rental units
both affordable and available to very low-income renter households
in all the States.
`(iii) The ratio of extremely-low income renter households in
the State living with either (I) incomplete kitchen or plumbing
facilities, (II) more than 1 person per room, or (III) paying
more than 50 percent of income for housing costs, to the aggregate
number of extremely low-income renter households living with either
(IV) incomplete kitchen or plumbing facilities, (V) more than
1 person per room, or (VI) paying more than 50 percent of income
for housing costs in all the States.
`(iv) The ratio of very low-income renter households in the State
paying more than 50 percent of income on rent relative to the
aggregate number of very low-income renter households paying more
than 50 percent of income on rent in all the States.
`(v) The resulting sum calculated from the factors described in
clauses (i) through (iv) shall be multiplied by the relative cost
of construction in the State. For purposes of this subclause,
the term `cost of construction'--
`(I) means the cost of construction or building rehabilitation
in the State relative to the national cost of construction or
building rehabilitation; and
`(II) shall be calculated such that values higher than 1.0 indicate
that the State's construction costs are higher than the national
average, a value of 1.0 indicates that the State's construction
costs are exactly the same as the national average, and values
lower than 1.0 indicate that the State's cost of construction
are lower than the national average.
`(C) PRIORITY- The formula required under subparagraph (A) shall
give priority emphasis and consideration to the factor described
in subparagraph (B)(i).
`(4) ALLOCATION OF GRANT AMOUNTS-
`(A) NOTICE- Not later than 60 days after the date that the Secretary
of Housing and Urban Development determines the formula amounts
described in paragraph (3), the Secretary shall caused to be published
in the Federal Register a notice that such amounts shall be so available.
`(B) GRANT AMOUNT- In each fiscal year other than fiscal year 2008,
the Secretary of Housing and Urban Development shall make a block
grant to each State in an amount that is equal to the formula amount
determined under paragraph (3) for that State.
`(C) MINIMUM STATE ALLOCATIONS- If the formula amount determined
under paragraph (3) for a fiscal year would allocate less than $3,000,000
to any State, the allocation for such State shall be $3,000,000,
and the increase shall be deducted pro rata from the allocations
made to all other States.
`(5) ALLOCATION PLANS REQUIRED-
`(A) IN GENERAL- For each year that a State or State designated
entity receives an affordable housing block grant under this subsection,
the State or State designated entity shall establish an allocation
plan. Such plan shall--
`(i) set forth a plan for the distribution of grant amounts received
by the State or State designated entity for such year;
`(ii) be based on priority housing needs, as determined by the
State or State designated entity in accordance with the regulations
established under subsection (g)(2)(C);
`(iii) comply with paragraph (6); and
`(iv) include performance goals that comply with the requirements
established by the Secretary pursuant to subsection (g)(2).
`(B) ESTABLISHMENT- In establishing an allocation plan under this
paragraph, a State or State designated entity shall--
`(i) notify the public of the establishment of the plan;
`(ii) provide an opportunity for public comments regarding the
plan;
`(iii) consider any public comments received regarding the plan;
and
`(iv) make the completed plan available to the public.
`(C) CONTENTS- An allocation plan of a State or State designated
entity under this paragraph shall set forth the requirements for
eligible recipients under paragraph (8) to apply for such grant
amounts, including a requirement that each such application include--
`(i) a description of the eligible activities to be conducted
using such assistance; and
`(ii) a certification by the eligible recipient applying for such
assistance that any housing units assisted with such assistance
will comply with the requirements under this section.
`(6) SELECTION OF ACTIVITIES FUNDED USING AFFORDABLE HOUSING FUND
GRANT AMOUNTS- Grant amounts received by a State or State designated
entity under this subsection may be used, or committed for use, only
for activities that--
`(A) are eligible under paragraph (7) for such use;
`(B) comply with the applicable allocation plan of the State or
State designated entity under paragraph (5); and
`(C) are selected for funding by the State or State designated entity
in accordance with the process and criteria for such selection established
pursuant to subsection (g)(2)(C).
`(7) ELIGIBLE ACTIVITIES- Grant amounts allocated to a State or State
designated entity under this subsection shall be eligible for use,
or for commitment for use, only for assistance for--
`(A) the production, preservation, and rehabilitation of rental
housing, including housing under the programs identified in section
1335(a)(2)(B) and for operating costs, except that such grant amounts
may be used for the benefit only of extremely low- and very low-income
families; and
`(B) the production, preservation, and rehabilitation of housing
for homeownership, including such forms as downpayment assistance,
closing cost assistance, and assistance for interest rate buy-downs,
that--
`(i) is available for purchase only for use as a principal residence
by families that qualify both as--
`(I) extremely low- and very low-income families at the times
described in subparagraphs (A) through (C) of section 215(b)(2)
of the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. 12745(b)(2)); and
`(II) first-time homebuyers, as such term is defined in section
104 of the Cranston-Gonzalez National Affordable Housing Act
(42 U.S.C. 12704), except that any reference in such section
to assistance under title II of such Act shall for purposes
of this subsection be considered to refer to assistance from
affordable housing fund grant amounts;
`(ii) has an initial purchase price that meets the requirements
of section 215(b)(1) of the Cranston-Gonzalez National Affordable
Housing Act;
`(iii) is subject to the same resale restrictions established
under section 215(b)(3) of the Cranston-Gonzalez National Affordable
Housing Act and applicable to the participating jurisdiction that
is the State in which such housing is located; and
`(iv) is made available for purchase only by, or in the case of
assistance under this subsection, is made available only to homebuyers
who have, before purchase completed a program of counseling with
respect to the responsibilities and financial management involved
in homeownership that is approved by the Secretary;
`(8) ELIGIBLE RECIPIENTS- Grant amounts allocated to a State or State
designated entity under this subsection may be provided only to a
recipient that is an organization, agency, or other entity (including
a for-profit entity or a nonprofit entity) that--
`(A) has demonstrated experience and capacity to conduct an eligible
activity under paragraph (7), as evidenced by its ability to--
`(i) own, construct or rehabilitate, manage, and operate an affordable
multifamily rental housing development;
`(ii) design, construct or rehabilitate, and market affordable
housing for homeownership; or
`(iii) provide forms of assistance, such as downpayments, closing
costs, or interest rate buy-downs for purchasers;
`(B) demonstrates the ability and financial capacity to undertake,
comply, and manage the eligible activity;
`(C) demonstrates its familiarity with the requirements of any other
Federal, State, or local housing program that will be used in conjunction
with such grant amounts to ensure compliance with all applicable
requirements and regulations of such programs; and
`(D) makes such assurances to the State or State designated entity
as the Secretary shall, by regulation, require to ensure that the
recipient will comply with the requirements of this subsection during
the entire period that begins upon selection of the recipient to
receive such grant amounts and ending upon the conclusion of all
activities under paragraph (8) that are engaged in by the recipient
and funded with such grant amounts.
`(A) REQUIRED AMOUNT FOR HOMEOWNERSHIP ACTIVITIES- Of the aggregate
amount allocated to a State or State designated entity under this
subsection not more than 10 percent shall be used for activities
under subparagraph (B) of paragraph (7).
