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Title I — Making housing more affordable

S. 787 · 116th Congress · Mar 13, 2019 · Lineage

I Making housing more affordable

Sec. 101 Local housing innovation grants

(a)
Definitions— In this section:
(1)
Elementary school; secondary school— The terms elementary school and secondary school have the meanings given those terms in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801).
(2)
Eligible entity— The term eligible entity means—
(A)
a State;
(B)
a unit of general local government; or
(C)
a metropolitan area.
(3)
Institution of higher education— The term institution of higher education has the meaning given the term in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001).
(4)
Metropolitan area; State; unit of general local government— The terms metropolitan area, State, and unit of general local government have the meanings given those terms in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302).
(5)
Secretary— The term Secretary means the Secretary of Housing and Urban Development.
(b)
Establishment— Not later than 1 year after the date of enactment of this Act, the Secretary shall establish a program to make grants to eligible entities that—
(1)
reform local land use restrictions to bring down the costs of producing affordable housing; and
(2)
remove unnecessary barriers to building affordable units in their communities.
(c)
Eligible activities— An eligible entity receiving a grant under this section may use funds to—
(1)
carry out any of the activities described in section 105 of the Housing and Community Development Act of 1974 (42 U.S.C. 5305);
(2)
carry out any of the activities permitted under the program for national infrastructure investments (commonly known as the “Better Utilizing Investments to Leverage Development (BUILD) discretionary grant program”) authorized under title I of division L of the Consolidated Appropriations Act, 2018 (Public Law 115–141) or a subsequent appropriations Act; or
(3)
modernize, renovate, or repair facilities used by public elementary schools, public secondary schools, and public institutions of higher education, including modernization, renovation, and repairs that—
(A)
promote physical, sensory, and environmental accessibility; and
(B)
are consistent with a recognized green building rating system.
(d)
Application—
(1)
In general— An eligible entity desiring a grant under this section shall submit to the Secretary an application that demonstrates that the eligible entity has carried out, or is in the process of carrying out, initiatives that facilitate the expansion of the supply of well-located affordable housing.
(2)
Activities— Initiatives that meet the criteria described in paragraph (1)—
(A)
include—
(i)
establishing “by-right” development, which allows jurisdictions to administratively approve new developments that are consistent with their zoning code;
(ii)
revising or eliminating off-street parking requirements to reduce the cost of housing production;
(iii)
instituting measures that incentivize owners of vacant land to redevelop the space into affordable housing or other productive uses;
(iv)
revising minimum lot size requirements and bans or limits on multifamily construction to allow for denser and more affordable development;
(v)
instituting incentives to promote dense development, such as density bonuses;
(vi)
passing inclusionary zoning ordinances that require a portion of newly developed units to be reserved for low- and moderate-income renters or homebuyers;
(vii)
streamlining regulatory requirements and shortening processes, reforming zoning codes, or other initiatives that reduce barriers to housing supply elasticity and affordability;
(viii)
allowing accessory dwelling units;
(ix)
using local tax incentives to promote development of affordable housing; and
(x)
implementing measures that protect tenants from harassment and displacement, including access to counsel for tenants facing eviction, the prohibition of eviction except for just cause, and measures intended to prevent or mitigate sudden increases in rents, or repealing laws that prevent localities from implementing those measures; and
(B)
do not include activities that alter ordinances that govern wage and hour laws, family and medical leave laws, or protections for workers' health and safety, anti-discrimination, and right to organize.
(e)
Labor laws—
(1)
In general— All laborers and mechanics employed by contractors or subcontractors in the performance of construction work financed in whole or in part with a grant received under this section shall be paid wages at rates not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the “Davis-Bacon Act”).
(2)
Exception— Paragraph (1) shall not apply with respect to—
(A)
the rehabilitation of residential property if the property contains less than 8 units; or
(B)
construction carried out by employees of the eligible entity receiving the grant under this section.
(f)
Authorization of appropriations— There is authorized to be appropriated to carry out this section $2,000,000,000 for each of fiscal years 2020 through 2024.

Sec. 102 Investing in affordable housing infrastructure

(a)
Housing Trust Fund— Section 1338(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568(a)) is amended by adding at the end the following:

“(3) Authorization of appropriations—There is authorized to be appropriated to the Housing Trust Fund $44,500,000,000 for each of fiscal years 2020 through 2029.”

(b)
Capital Magnet Fund— Section 1339 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4569) is amended by adding at the end the following:

“(k) Authorization of appropriations—There is authorized to be appropriated to the Capital Magnet Fund $2,500,000,000 for each of fiscal years 2020 through 2029.”

(c)
Public housing capital fund— Section 9(c)(2)(B) of the United States Housing Act of 1937 (42 U.S.C. 1437g(c)(2)(B)) is amended to read as follows:

“(B) Capital fund—For allocations of assistance from the Capital Fund, $3,592,000,000 for fiscal year 2020.”

(d)
Indian housing block grant program— Section 108 of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4117) is amended—
(1)
by striking “such sums as may be necessary for each of fiscal years 2009 through 2013” and inserting “$2,500,000,000 for fiscal year 2020 and such sums as may be necessary for each of fiscal years 2021 through 2029”; and
(2)
by striking the second sentence.
(e)
Native Hawaiian housing block grant program— Section 824 of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4243) is amended by striking “such sums as may be necessary for each of fiscal years 2001, 2002, 2003, 2004, and 2005” and inserting “$8,000,000 for fiscal year 2020”.
(f)
Rural housing programs— Out of funds in the Treasury not otherwise appropriated, there is appropriated for fiscal year 2020—
(1)
to provide direct loans under section 502 of the Housing Act of 1949 (42 U.S.C. 1472), $140,000,000;
(2)
to provide assistance under section 514 of such Act (42 U.S.C. 1484), $28,000,000;
(3)
to provide assistance under section 515 of such Act (42 U.S.C. 1485), $180,000,000;
(4)
to provide assistance under section 516 of such Act (42 U.S.C. 1486), $100,000,000; and
(5)
to provide grants under section 523 of such Act (42 U.S.C. 1490c), $75,000,000.
(g)
Middle Class Housing Emergency Fund—
(1)
Definition— In this subsection, the term affordable rental housing unit means a unit for which monthly rent is 30 percent or less than the monthly area median income.
(2)
Establishment— The Secretary of Housing and Urban Development shall establish and manage a fund, to be known as the “Middle Class Housing Emergency Fund”, which shall be funded with any amounts as may be appropriated, transferred, or credited to the Fund under any provision law.
(3)
Grants— From amounts available in the fund established under paragraph (2), the Secretary of Housing and Urban Development shall award grants on a competitive basis to State housing finance agencies located in a State in which—
(A)
there is a shortage of affordable rental housing units available to individuals with an income that is at or below the area median income and median rents have risen on average over the preceding 3 years substantially faster than the area median income; or
(B)
there is a shortage of housing units available for sale that are affordable to individuals with an income that is at or below the area median income and median home prices have risen on average over the preceding 3 years substantially faster than the area median income.
(4)
Use of funds— Grants received under this subsection shall be used to fund—
(A)
the construction of rental housing units or units for purchase that are affordable to residents making less than 120 percent of the area median income; and
(B)
measures to prevent tenant displacement and harassment, including the provision of legal advice and representation for tenants facing eviction, enforcement of anti-harassment laws, emergency rental assistance, and other measures as specified by the Secretary of Housing and Urban Development.
(5)
Labor laws—
(A)
In general— All laborers and mechanics employed by contractors or subcontractors in the performance of construction work financed in whole or in part with a grant received under this subsection shall be paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code (commonly known as the “Davis-Bacon Act”).
(B)
Exception— Subparagraph (A) shall not apply with respect to—
(i)
the rehabilitation of residential property if the property contains less than 8 units; or
(ii)
construction carried out by employees of the eligible entity receiving the grant under this section.
(6)
Regulations— The Secretary of Housing and Urban Development shall promulgate regulations to carry out this subsection, including with respect to the metrics that the Secretary shall use to determine eligibility for a grant under this subsection.
(7)
Appropriations— Out of funds in the Treasury not otherwise appropriated, there is appropriated to the fund established under this subsection $4,000,000,000 for fiscal year 2020.

Sec. 103 Conditions for the sale of real estate-owned properties and non-performing loans

(a)
Findings— Congress finds that—
(1)
the Federal Housing Administration, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation provide critical homeownership opportunities that greatly benefit individuals, families and communities; and
(2)
it is the purpose of this section to—
(A)
preserve owner-occupied homes with mortgages insured by the Federal Housing Administration or purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation for continued use as owner-occupied homes; and
(B)
direct that, upon the sale of those properties or transfer of those mortgages, certain percentages of those properties are sold to low- and moderate-income homeowners.
(b)
Loans insured by the Federal Housing Administration— Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at the end the following:

“259. Sale of real estate-owned properties

“(a) In general—Not later than 1 year after the date of enactment of this section, the Secretary shall develop programs within the Federal Housing Administration to ensure that not less than 75 percent of the single-family residential properties that were acquired by the Federal Housing Administration through foreclosure or other transfer-related mortgages insured under this title on the properties are sold—

“(1) directly to an owner-occupant; or

“(2) to community partners that will—

“(A) rehabilitate or develop the property; and

“(B) sell the property to an owner-occupant.

“(b) Anti-Predatory feature—Unless the Secretary provides prior approval, the Secretary shall prohibit any purchaser of a real estate-owned property of the Federal Housing Administration from re-selling the property within 15 years of purchase using a land installment contract or through any other mechanism that does not transfer title to the buyer at the time of sale.

“260. Sale of non-performing loans

“(a) In general—Except as provided in this section, the Secretary may not sell or transfer any mortgage insured under this title that is secured by a single-family residential property (in this section referred to as a covered mortgage).

“(b) Conditions for sale or transfer

“(1) In general—The Secretary—

“(A) may sell or transfer a covered mortgage only if—

“(i) the capital level of the Fund is substantially below the capital ratio required under section 205(f)(4);

“(ii) the Secretary certifies that other reasonable measures are not available to restore the Fund to that capital ratio; and

“(iii) the Secretary complies with paragraph (2)(C), if applicable; and

“(B) shall sell or transfer only such covered mortgages as are necessary to assist in restoration of that capital ratio.

“(2) Requirements for the Secretary

“(A) In general—If the Secretary intends to sell or transfer a covered mortgage, the Secretary shall provide the current borrower and all owners of record of the property securing the covered mortgage, or require that the current borrower and owners of record be provided, a separate written notice of the intent to sell the covered mortgage that—

“(i) is mailed via certified and first class mail not less than 90 days before the date on which the loan is included in any proposed sale; and

“(ii) includes—

“(I) a description of the loss mitigation options of the Administration that are available to borrowers in financial distress and the obligation of servicers to consider borrowers in default for those options;

“(II) a description of the actions that the servicer of the loan has taken to review and implement those options for the borrower; and

“(III) a description of the procedures the borrower may use to contest with the Secretary the compliance by the servicer with that obligation.

“(B) Judicial review—The determination of the Secretary to authorize the sale of a mortgage insured under this title shall be reviewable under chapter 7 of title 5, United States Code, for abuse of discretion and arbitrary and capricious agency action.

“(C) Auctions—The Secretary may not sell any covered mortgage through any type of non-performing loan sale auction program until the Secretary issues rules, through the notice and comment rule making procedures under section 553 of title 5, United States Code, that address essential aspects of any non-performing loan sale program, including—

“(i) the method of selection of loans for sale;

“(ii) notice to borrowers prior to inclusion of the loan in a sale; and

“(iii) review of loss mitigation status prior to the sale, selection of eligible bidders, loss mitigation guidelines applicable to loan purchasers, and reporting requirements for purchasers.

“(3) Certification requirement for lenders and servicers

“(A) Certification—As a condition to payment of an insurance claim under this title in connection with any non-performing loan sale, the lender or servicer of the loan shall provide the Secretary and the borrower with written certification of the loss mitigation review contained in the FHA Single Family Housing Policy Handbook 4000.1, or any successor handbook.

“(B) False statements

“(i) In general—Any false statement provided in a certification described in subparagraph (A) shall be a basis for—

“(I) recovery by the Secretary of any amounts paid under the insurance claim and any other penalties and sanctions authorized under Federal law; and

“(II) a private right of action by the borrower against the lender and servicer, with remedies to include compensatory and punitive damages and an assessment of costs and attorney's fees.

“(ii) Transfers—Unless a bona fide purchaser has acquired title to the property as a primary residence—

“(I) a certification described in subparagraph (A) that contains a false statement shall be a basis for revoking the transfer of the property; and

“(II) the pre-sale lender and servicer of the property shall—

“(aa) resume servicing the loan as a loan insured under this title; and

“(bb) reimburse the Secretary for any insurance claim paid and all costs related to the sale of the property.

“(4) Requirements for purchasers

“(A) In general—Each purchaser of a covered mortgage shall offer the borrower on the covered mortgage—

“(i) appropriate loss mitigation options, including affordable and sustainable loan modifications; and

“(ii) the opportunity for a short sale or a deed in lieu of foreclosure.

“(B) Loss mitigation options—The specific formula, calculations, waterfall steps, and other terms for appropriate loss mitigation options described in subparagraph (A) shall be published by the Secretary, made available to the public, and included in a written notice given to borrowers before any acceleration or foreclosure is initiated after a loan sale.

“(5) Requirements for transferees—With respect to a transferee, including any subsequent transferee, of a covered mortgage that is sold under this title—

“(A) the transferee shall certify in writing to the Secretary that the transferee will comply with the provisions of this section in the marketing and transfer of any property received in the disposition of any transferred loan;

“(B) the transferee shall provide to the Secretary records documenting that the transfers of those properties are in compliance with this section; and

“(C) the failure of the Secretary or the transferee to comply with the requirements under this section for a loan in default shall be a defense to foreclosure, and a transferee shall not execute a foreclosure judgment or order of sale, or conduct a foreclosure sale, until the transferee has complied with all requirements under this section.

“(c) Limitations—With respect to covered mortgages that are sold under this title and foreclosed upon by the buyer, not less than 90 percent of the properties that are the subject of the covered mortgages in an auction shall be—

“(1) sold to owner-occupants;

“(2) operated or transferred to an entity that will operate the property as affordable rental housing for households below 80 percent of the area median income for a period of not less than 15 years; or

“(3) transferred or donated to a nonprofit agency that is certified by the Secretary and will redevelop the property for owner occupancy or affordable rental housing.

“(d) Prioritization of sales—The Secretary shall implement policies, procedures, and controls to—

“(1) identify and recruit community partners;

“(2) engage in consultations with community partners before the sale of a pool of covered mortgages under this title to determine whether that sale can be designed to meet the specific needs of the communities served by the community partners; and

“(3) prioritize the sale of pools of single-family mortgages to community partners by—

“(A) designing pools of covered mortgages for direct sale to a community partner, the price of which shall be set by the Secretary based on a pricing model that considers—

“(i) the current fair market value of the properties; and

“(ii) the potential impact of foreclosures on those properties to the value of other homes that secure mortgages insured under this title in the same census tract; or

“(B) in the case of an auction, if the winning bid is not from a community partner, permitting any community partner that bid during that same auction to have a final opportunity to enter a higher bid on the pool.”

(c)
Fannie Mae— Section 302 of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717) is amended by adding at the end the following:

“(d)

“(1) The corporation may not sell or transfer any mortgage that is secured by a single-family residential property (in this section referred to as a covered mortgage) under this section unless the requirements of this subsection are met.

“(2)

“(A) If the corporation intends to sell or transfer a covered mortgage, the corporation shall provide the current borrower and all owners of record of the property securing the covered mortgage, or require that the current borrower and owners of record be provided, a separate written notice of the intent to sell the covered mortgage that—

“(i) is mailed via certified and first class mail not less than 90 days before the date on which the loan is included in any proposed sale; and

“(ii) includes—

“(I) a description of the loss mitigation options of the corporation that are available to borrowers in financial distress and the obligation of servicers to consider borrowers in default for those options;

“(II) a description of the actions that the servicer of the loan has taken to review and implement those options for the borrower; and

“(III) a description of the procedures the borrower may use to contest with the corporation the compliance by the servicer with that obligation.

“(B) The determination of the corporation to authorize the sale of a mortgage under this section shall be reviewable under chapter 7 of title 5, United States Code, for abuse of discretion and arbitrary and capricious agency action.

“(C) The corporation may not sell any covered mortgage through any type of non-performing loan sale auction program until the corporation issues rules, through the notice and comment rule making procedures under section 553 of title 5, United States Code, that address essential aspects of any non-performing loan sale program, including—

“(i) the method of selection of loans for sale;

“(ii) notice to borrowers prior to inclusion of the loan in a sale; and

“(iii) review of loss mitigation status prior to the sale, selection of eligible bidders, loss mitigation guidelines applicable to loan purchasers, and reporting requirements for purchasers.

“(3)

“(A) Each purchaser of a covered mortgage shall offer the borrower on the covered mortgage—

“(i) appropriate loss mitigation options, including affordable and sustainable loan modifications; and

“(ii) the opportunity for a short sale or a deed in lieu of foreclosure.

“(B) The specific formula, calculations, waterfall steps, and other terms for appropriate loss mitigation options described in subparagraph (A) shall be published by the corporation, made available to the public, and included in a written notice given to borrowers before any acceleration or foreclosure is initiated after a loan sale.

“(4) With respect to a transferee, including any subsequent transferee, of a covered mortgage that is sold by the corporation under this section—

“(A) the transferee shall certify in writing to the corporation that the transferee will comply with the provisions of this subsection in the marketing and transfer of any property received in the disposition of any transferred loan;

“(B) the transferee shall provide to the corporation records documenting that the transfers of those properties are in compliance with this subsection; and

“(C) the failure of the corporation or the transferee to comply with the requirements under this subsection for a loan in default shall be a defense to foreclosure, and a transferee shall not execute a foreclosure judgment or order of sale, or conduct a foreclosure sale, until the transferee has complied with all requirements under this subsection.

“(5) With respect to covered mortgages that are sold by the corporation under this section and foreclosed upon by the buyer, not less than 90 percent of the properties that are the subject of the covered mortgages in an auction shall be—

“(A) sold to owner-occupants;

“(B) operated or transferred to an entity that will operate the property as affordable rental housing for households below 80 percent of the area median income for a period of not less than 15 years; or

“(C) transferred or donated to a nonprofit agency that is certified by the corporation and will redevelop the property for owner occupancy or affordable rental housing.

“(6) The corporation shall implement policies, procedures, and controls to—

“(A) identify and recruit community partners;

“(B) engage in consultations with community partners before the sale of a pool of covered mortgages under this section to determine whether that sale can be designed to meet the specific needs of the communities served by the community partners; and

“(C) prioritize the sale of pools of single-family mortgages to community partners by—

“(i) designing pools of covered mortgages for direct sale to a community partner, the price of which shall be set by the corporation based on a pricing model that considers—

“(I) the current fair market value of the properties; and

“(II) the potential impact of foreclosures on those properties to the value of other homes in the same census tract; or

“(III) in the case of an auction, if the winning bid is not from a community partner, permitting any community partner that bid during that same auction to have a final opportunity to enter a higher bid on the pool.”

(d)
Freddie Mac— Section 305 of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454) is amended by adding at the end the following:

“(e)

“(1) The Corporation may not sell or transfer any mortgage that is secured by a single-family residential property (in this section referred to as a covered mortgage) under this section unless the requirements of this subsection are met.

“(2)

“(A) If the Corporation intends to sell or transfer a covered mortgage, the Corporation shall provide the current borrower and all owners of record of the property securing the covered mortgage, or require that the current borrower and owners of record be provided, a separate written notice of the intent to sell the covered mortgage that—

“(i) is mailed via certified and first class mail not less than 90 days before the date on which the loan is included in any proposed sale; and

“(ii) includes—

“(I) a description of the loss mitigation options of the Corporation that are available to borrowers in financial distress and the obligation of servicers to consider borrowers in default for those options;

“(II) a description of the actions that the servicer of the loan has taken to review and implement those options for the borrower; and

“(III) a description of the procedures the borrower may use to contest with the Corporation the compliance by the servicer with that obligation.

“(B) The determination of the Corporation to authorize the sale of a mortgage under this section shall be reviewable under chapter 7 of title 5, United States Code, for abuse of discretion and arbitrary and capricious agency action.

“(C) The Corporation may not sell any covered mortgage through any type of non-performing loan sale auction program until the Corporation issues rules, through the notice and comment rule making procedures under section 553 of title 5, United States Code, that address essential aspects of any non-performing loan sale program, including—

“(i) the method of selection of loans for sale;

“(ii) notice to borrowers prior to inclusion of the loan in a sale; and

“(iii) review of loss mitigation status prior to the sale, selection of eligible bidders, loss mitigation guidelines applicable to loan purchasers, and reporting requirements for purchasers.

“(3)

“(A) Each purchaser of a covered mortgage shall offer the borrower on the covered mortgage—

“(i) appropriate loss mitigation options, including affordable and sustainable loan modifications; and

“(ii) the opportunity for a short sale or a deed in lieu of foreclosure.

“(B) The specific formula, calculations, waterfall steps, and other terms for appropriate loss mitigation options described in subparagraph (A) shall be published by the Corporation, made available to the public, and included in a written notice given to borrowers before any acceleration or foreclosure is initiated after a loan sale.

“(4) With respect to a transferee, including any subsequent transferee, of a covered mortgage that is sold by the Corporation under this section—

“(A) the transferee shall certify in writing to the Corporation that the transferee will comply with the provisions of this section in the marketing and transfer of any property received in the disposition of any transferred loan;

“(B) the transferee shall provide to the Corporation records documenting that the transfers of those properties are in compliance with this subsection; and

“(C) the failure of the Corporation or the transferee to comply with the requirements under this subsection for a loan in default shall be a defense to foreclosure, and a transferee shall not execute a foreclosure judgment or order of sale, or conduct a foreclosure sale, until the transferee has complied with all requirements under this subsection.

“(5) With respect to covered mortgages that are sold by the Corporation under this section and foreclosed upon by the buyer, not less than 90 percent of the properties that are the subject of the covered mortgages in an auction shall be—

“(A) sold to owner-occupants;

“(B) operated or transferred to an entity that will operate the property as affordable rental housing for households below 80 percent of the area median income for a period of not less than 15 years; or

“(C) transferred or donated to a nonprofit agency that is certified by the Corporation and will redevelop the property for owner occupancy or affordable rental housing.

“(6) The Corporation shall implement policies, procedures, and controls to—

“(A) identify and recruit community partners;

“(B) engage in consultations with community partners before the sale of a pool of covered mortgages under this section to determine whether that sale can be designed to meet the specific needs of the communities served by the community partners; and

“(C) prioritize the sale of pools of single-family mortgages to community partners by—

“(i) designing pools of covered mortgages for direct sale to a community partner, the price of which shall be set by the Corporation based on a pricing model that considers—

“(I) the current fair market value of the properties; and

“(II) the potential impact of foreclosures on those properties to the value of other homes in the same census tract; or

“(III) in the case of an auction, if the winning bid is not from a community partner, permitting any community partner that bid during that same auction to have a final opportunity to enter a higher bid on the pool.”