To authorize the Secretary of Housing and Urban Development to carry out pilot programs to insure low-downpayment mortgages to enable teachers and public safety officers to purchase homes in the jurisdictions they serve and to assist Federal, State, and local public safety officers purchasing homes in locally-designated at-risk areas.

July 28, 2005

Ms. HARRIS introduced the following bill; which was referred to the Committee on Financial Services

To authorize the Secretary of Housing and Urban Development to carry out pilot programs to insure low-downpayment mortgages to enable teachers and public safety officers to purchase homes in the jurisdictions they serve and to assist Federal, State, and local public safety officers purchasing homes in locally-designated at-risk areas.

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 `Housing Affordability for Teachers and Public Safety Officers Act of 2005'.

SEC. 2. PILOT PROGRAM FOR REDUCED FHA DOWNPAYMENT REQUIREMENTS FOR LOANS FOR TEACHERS AND PUBLIC SAFETY OFFICERS.

(a) In General- Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is amended by adding at the end the following new paragraph:

`(10) REDUCED DOWNPAYMENT REQUIREMENTS FOR TEACHERS AND PUBLIC SAFETY OFFICERS-

`(A) IN GENERAL- Notwithstanding paragraph (2), in the case of a mortgage described in subparagraph (B)--

`(i) the mortgage shall involve a principal obligation in an amount that does not exceed the sum of 99 percent of the appraised value of the property and the total amount of initial service charges, appraisal, inspection, and other fees (as the Secretary shall approve) paid in connection with the mortgage;

`(ii) no other provision of this subsection limiting the principal obligation of the mortgage based upon a percentage of the appraised value of the property subject to the mortgage shall apply; and

`(iii) the matter in paragraph (9) that precedes the first proviso shall not apply and the mortgage shall be executed by a mortgagor who shall have paid on account of the property at least 1 percent of the cost of acquisition (as determined by the Secretary) in cash or its equivalent.

`(B) MORTGAGES COVERED- A mortgage described in this subparagraph is a mortgage--

`(i) under which the mortgagor is an individual who--

`(I) is (aa) a teacher, or (bb) a public safety officer; and

`(II) has not, during the 12-month period ending upon the insurance of the mortgage, had any present ownership interest in a principal residence located in the jurisdiction described in clause (ii); and

`(ii) made for a property that is located within the jurisdiction of--

`(I) in the case of a mortgage of a mortgagor described in clause (i)(I)(aa), the local educational agency for the school in which the mortgagor is employed (or, in the case of a mortgagor employed in a private school, the local educational agency having jurisdiction for the area in which the private school is located); or

`(II) in the case of a mortgage of a mortgagor described in clause (i)(I)(bb), the jurisdiction served by the public law enforcement agency, firefighting agency, or rescue or ambulance agency that employs the mortgagor.

`(C) PROGRAM INTEGRITY- Notwithstanding any other provision of this paragraph and section 203(c)(3), the Secretary may suspend the applicability of this paragraph and such section for such period as the Secretary considers appropriate if the Secretary determines such suspension is necessary because of fraud or other issues regarding program integrity.

`(D) PILOT PROGRAM LIMITATIONS-

`(i) ANNUAL- In any fiscal year, the aggregate number of mortgages insured under this paragraph may not exceed 10 percent of the aggregate number of mortgages and loans insured by the Secretary under this title during the preceding fiscal year.

`(ii) TERM OF PROGRAM- The aggregate number or mortgages insured under this paragraph may not exceed 50,000.'.

(b) Deferral and Reduction of Up-Front Premium- Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)) is amended--

(1) in paragraph (2), in the matter preceding subparagraph (A), by striking `Notwithstanding' and inserting `Except as provided in paragraph (3) and notwithstanding'; and

(2) by adding at the end the following new paragraph:

`(3) DEFERRAL AND REDUCTION OF UP-FRONT PREMIUM- In the case of any mortgage described in subsection (b)(10)(B)--

`(A) paragraph (2)(A) of this subsection (relating to collection of up-front premium payments) shall not apply; and

`(B) if, at any time during the 5-year period beginning on the date of the insurance of the mortgage, the mortgagor ceases to be a teacher or public safety officer (as such terms are defined in section 201) or pays the principal obligation of the mortgage in full, the Secretary shall at such time collect a single premium payment in an amount equal to the amount of the single premium payment that, but for this paragraph, would have been required under paragraph (2)(A) of this subsection with respect to the mortgage, as reduced by 20 percent of such amount for each successive 12-month period completed during such 5-year period before such cessation or prepayment occurs.'.

(c) Definitions- Section 201 of the National Housing Act (12 U.S.C. 1707) is amended--

(1) in subsection (a), by redesignating clauses (1) and (2) as clauses (A) and (B), respectively;

(2) by redesignating subsections (a) through (f) as paragraphs (1) through (6), respectively;

(3) by realigning each such paragraph 2 ems from the left margin; and

(4) by adding at the end the following new paragraphs:

`(7) The term `public safety officer' has the meaning given such term in section 1204 of the Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 3796b).

`(8) The term `teacher' means an individual who is employed on a part- or full-time basis as a teacher, teacher assistant, or administrator in a public or private school that provides elementary or secondary education, as determined under State law, except that elementary education shall include pre-Kindergarten education, and except that secondary education shall not include any education beyond grade 12.

`(9) The term `local educational agency' has the meaning given such term in section 14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801).'.

(d) Regulations- Not later than 60 days after the date of the enactment of this Act, the Secretary shall issue regulations to implement the amendments made by this section.

SEC. 3. PILOT PROGRAM FOR PUBLIC SAFETY OFFICER HOME OWNERSHIP IN AT-RISK AREAS.

(a) Program Authority- The Secretary of Housing and Urban Development shall carry out a pilot program in accordance with this section to assist Federal, State, and local public safety officers purchasing homes in locally-designated at-risk areas.

(b) Eligibility- To be eligible for assistance under this section, a public safety officer shall agree, in writing, to use the residence purchased with such assistance as the primary residence of the public safety officer for not less than 3 years after the date of purchase.

(c) Mortgage Assistance- If a public safety officer purchases a home in locally-designated at-risk area and finances such purchase through a mortgage insured under title II of the National Housing Act (12 U.S.C. 1707 et seq.), notwithstanding any provision of section 203 or any other provision of the National Housing Act, the following shall apply:

(1) DOWNPAYMENT-

(A) IN GENERAL- There shall be no downpayment required if the purchase price of the property is not more than the reasonable value of the property, as determined by the Secretary.

(B) PURCHASE PRICE EXCEEDS VALUE- If the purchase price of the property exceeds the reasonable value of the property, as determined by the Secretary, the required downpayment shall be the difference between such reasonable value and the purchase price.

(2) CLOSING COSTS- The closing costs and origination fee for such mortgage may be included in the loan amount.

(3) INSURANCE PREMIUM PAYMENT- There shall be one insurance premium payment due on the mortgage. Such insurance premium payment--

(A) shall be equal to 1 percent of the loan amount;

(B) shall be due and considered earned by the Secretary at the time of the loan closing; and

(C) may be included in the loan amount and paid from the loan proceeds.

(d) Local Designation of at-Risk Areas-

(1) CRITERIA- Any unit of local government may request that the Secretary designate any area within the jurisdiction of that unit of local government as a locally-designated at-risk area for purposes of this section if the proposed area--

(A) has a crime rate that is significantly higher than the crime rate of the non-designated area that is within the jurisdiction of the unit of local government; and

(B) has a population that is not more than 25 percent of the total population of area within the jurisdiction of the unit of local government.

(2) DEADLINE FOR CONSIDERATION OF REQUEST- Not later than 60 days after receiving a request under paragraph (1), the Secretary shall approve or disapprove the request.

(e) Public Safety Officer- For purposes of this section, the term `public safety officer' has the meaning given such term in section 201 of the National Housing Act (12 U.S.C. 1707) (as amended by section 2(c) of this Act).

(f) Program Integrity- Notwithstanding any other provision of this section, the Secretary may suspend the applicability of this section for such period as the Secretary considers appropriate if the Secretary determines such suspension is necessary because of fraud or other issues regarding program integrity.

(g) Regulations- Not later than 60 days after the date of the enactment of this Act, the Secretary shall issue regulations to implement the provisions of this section.

(h) Sunset- The Secretary shall not approve any application for assistance under this section that is received by the Secretary after the expiration of the 3-year period beginning on the date that the Secretary first makes available assistance under the pilot program under this section.

END