Allows such loans to be used by a state, a unit of local government or its entity, or a nonprofit organization.

Limits the use of such loans to: (1) purchasing or financing the purchase of qualified foreclosed housing for resale as housing for homeownership to families having incomes of up to 140% of the median income for the area in which the housing is located; (2) rental of such housing only by families whose incomes do not exceed 100% of such median income in the area; and (3) rehabilitation of such property for the purpose of reselling it within three months at a price as close as possible to its acquisition price.

Limits the use of grants to: (1) property holding and operating costs; (2) property-related acquisition costs; and (3) state-related administrative and planning costs.

Requires the Secretary, by regulation, to prohibit the use of such grants or loans for: (1) political activities; (2) advocacy; (3) lobbying, whether directly or through other parties; (4) counseling services; (5) travel expenses; and (6) preparing or providing advice on tax returns.

Requires the use of such grants to provide housing only for families with: (1) very low-income; and (2) extremely low-income.

Prohibits a loan or grant recipient from discriminating against a prospective tenant because the individual holds a voucher or certificate of eligibility under section 8 (public housing rental assistance) of the United States Housing Act of 1937.

Conditions the use of such loans or grants on a shared appreciation agreement between the federal government and the owner of such housing regarding the federal share of proceeds from its sale or disposition.

Directs the Secretary to require a state to reimburse the Treasury for amounts of any misused funds.

(Sec. 4) Requires a state to reallocate funds appropriated under this Act only to a qualified metropolitan city or qualified urban county that also has a HUD-approved plan.

Specifies the contents of such a plan, submitted for the Secretary's approval by the qualified state, metropolitan city, or urban county (allocation recipient).

(Sec. 5) Prescribes formulas for distribution of foreclosure grant amounts and loan authority amounts to an allocation recipient, based on ratios reflecting the number of foreclosures on mortgages for single family housing and subprime mortgage loans for such housing over 90 days delinquent which have occurred in the state during the most recently completed four calendar quarters for which such information is available.

Requires the Secretary to establish or select an index to account for differences between qualified states in the medium price of single family housing in such states.

(Sec. 6) Authorizes the use of such loans by the allocation recipient, a unit of local government or its entity, or any other entity, as provided in the allocation recipient's HUD-approved plan.

States that, upon the Secretary's entering a binding commitment to make a loan for use in the recipient's area, the loan authority allocated to each recipient shall be decreased by the principal amount of such a loan, but be increased again by such amount upon repayment of the loan.

Requires such loans: (1) to bear no interest; (2) be non-recourse; (3) have a maturity of three years in the case of any loan made to purchase (or finance the purchase of) qualified foreclosed housing for homeownership, and of five years in the case of any loan made to purchase (or finance the purchase of) such housing for rental property; (4) not provide for amortization of the principal obligation; and (5) require payment of the original principal obligation only, upon expiration of the loan term.

Requires an allocation recipient to repay 90% or more under all previous loans before being eligible to reborrow. Authorizes the Secretary to waive such requirement upon allocation recipient request if the borrower has demonstrated satisfactory progress in utilizing outstanding loans and sufficient capacity to utilize additional loan amounts effectively.

Sunsets this program for new loans after 48 months.

(Sec. 7) Authorizes the use of such grant amounts for eligible housing stimulus activities by the allocation recipient, a unit of local government or its entity, or a nonprofit organization.

(Sec. 8) Limits the use of such loans to homeownership housing, rental housing, and housing rehabilitation, subject to specified requirements.

Allows the use of such a loan for purchasing, or financing the purchase of, qualified foreclosed housing for resale as housing for homeownership to families having incomes of up to 140% of the median income for the area in which the housing is located.

Allows the use of such a loan also for rental, lease-purchase, or rent-to-own housing, but only for families whose incomes do not exceed 100% of the area median income. Prohibits rents from exceeding market rents for comparable dwelling units located in the area. Requires such rents to accord with any requirements of the Secretary intended to ensure that rents are established in a fair, objective, and arms-length manner.

Allows the use of such a loan also for rehabilitation of qualified foreclosed property as necessary to: (1) comply with applicable laws, codes, and other requirements relating to housing safety, quality, and habitability; or (2) make improvements to increase the housing's energy efficiency or its conservation, or to provide a renewable energy source (or sources) for it for the purpose of reselling it within three months at a price as close as possible to its acquisition price.

Limits the use of grants to: (1) property holding and operating costs; (2) property-related acquisition costs; (3) allocation recipient-related administrative and planning costs; (4) certain state planning costs; (5) housing rehabilitation activities; and (6) demolition costs, but only if the Secretary determines that the neighborhood or other area in which the housing is located has a high incidence of vacant and abandoned housing (or other vacant and abandoned structures), and is experiencing a significant decline in population.

Prohibits the use of grant amounts to provide assistance of any kind (including grants, loans, and closing cost financing) for downpayments for any homebuyers of single family housing.

Requires the Secretary, by regulation, to prohibit the use of such grants or loans for: (1) political activities; (2) advocacy; (3) direct or indirect lobbying; (4) counseling services; (5) travel expenses; or (6) preparing or providing advice on tax returns.

Requires the use of: (1) 50% of such grants to provide housing only for very low-income families (whose incomes do not exceed 50% of the median income in the area); and (2) 50% of such grants to provide housing only for extremely low-income families (whose income does not exceed 30% of such median income).

Authorizes the Secretary, with respect to families with extremely low incomes, to allow an eligibility ceiling greater than 30%, but less than 50%, in specified circumstances if the higher ceiling will not result in an overall loss of housing affordable to families whose income does not exceed 30% of the area median income.

Requires an allocation recipient that includes rural areas to use a portion of its grant or loan amount for eligible activities located in rural areas proportionate to the identified need for such activities there.

Requires a qualified state, or at its election, a qualified metropolitan city or qualified urban county, to record a lien in the Secretary's name on any qualified foreclosed housing purchased or financed with a loan under this Act.

Declares that this Act may not be construed to prevent the resale of qualified foreclosed housing to a prior owner or occupant who meets income requirements.

Prohibits a loan or grant recipient from discriminating against a prospective tenant because the individual holds a voucher or certificate of eligibility under section 8 (public housing rental assistance) of the United States Housing Act of 1937.

Subjects the owner (and any successor in interest) to the lease and to the housing assistance payments contract for the occupied unit, in the case of any qualified foreclosed housing: (1) for which funds made available under this Act are used; and (2) in which a recipient of section 8 rental assistance resides at the time of acquisition or financing of such property.

Subjects any successor in interest in any foreclosed property (such as a subsequent purchaser) to: (1) the requirement of delivering a 90-day notice to vacate to any bona fide tenant; and (2) the tenant's rights.

Prohibits the use of such grant or loan amounts to demolish any public housing.

(Sec. 9) Prohibits the use of such grant or loan amounts for any qualified foreclosed housing unless binding agreements are entered into that ensure that the federal government, upon any sale or disposition of the property by the owner acquiring the housing pursuant to assistance under this Act, shall receive at least 20% or, in the case of a for-profit owner, 50% of the difference between the net proceeds from its sale or disposition and the cost of its acquisition, after deductions for certain expenditures.

(Sec. 10) Establishes deadlines by which an allocation recipient must obligate and spend grant and loan authority amounts.

(Sec. 11) Requires the servicer of a federally related mortgage loan to: (1) notify the local government in which the property securing the mortgage is located upon becoming responsible for a qualified foreclosed property; and (2) provide it with the name and 24-hour contact information of a representative authorized to negotiate purchases.

(Sec. 12) Sets forth reporting and contingent reimbursement requirements for allocation recipients.

(Sec. 14) Authorizes appropriations.

Requires such program to be administered through HUD's Office of Community Planning and Development (or any successor office responsible for administering the community development block grant program under the Housing and Community Development Act of 1974).

(Sec. 4) Specifies the contents of a grant or loan applicant's plan, which must be submitted for the Secretary's approval.

Requires a plan, among other things, to give priority emphasis and consideration to metropolitan areas, metropolitan cities, urban areas, rural areas, low- and moderate-income areas, census tracts and other areas having the greatest need.

(Sec. 5) Prescribes formulas for distribution of foreclosure grant amounts and foreclosure loan authority amounts to a qualified state, metropolitan city, or urban county (allocation recipient), based on ratios reflecting the number of foreclosures on mortgages for single family housing and subprime mortgage loans for such housing over 90 days delinquent which have occurred in the state during the most recently completed four calendar quarters for which such information is available.

Requires the Secretary to establish or select an index to account for differences between qualified states in the medium price of single family housing in such states.

(Sec. 6) Authorizes the use of such loans by the allocation recipient, a local government or its entity, or any other entity, as provided in the allocation recipient's HUD-approved plan.

States that, upon the Secretary's entering a binding commitment to make a loan for use in the recipient's area, the loan authority allocated to each recipient shall be decreased by the principal amount of such a loan, but be increased again by such amount upon repayment of the loan.

Requires such loans: (1) to bear no interest; (2) be non-recourse; (3) have a maturity of three years if a loan made to purchase (or finance the purchase of) qualified foreclosed housing for homeownership, and of five years if a loan to purchase (or finance the purchase of) such housing for rental property; (4) not provide for amortization of the principal obligation; and (5) require payment of the original principal obligation only.

Requires an allocation recipient to repay 90% or more under all previous loans before being eligible to reborrow. Authorizes the Secretary to waive such requirement upon allocation recipient request, if the borrower has demonstrated satisfactory progress in utilizing outstanding loans and sufficient capacity to utilize additional loan amounts effectively.

Sunsets this program for new loans after 48 months.

(Sec. 7) Authorizes the use of grant amounts for eligible housing stimulus activities by the allocation recipient, a local government or its entity, or a nonprofit organization.

(Sec. 8) Limits the use of such loans to homeownership housing, rental housing, and housing rehabilitation, subject to specified requirements.

Allows the use of such a loan for purchasing, or financing the purchase of, qualified foreclosed housing for resale as housing for homeownership to families having incomes of up to 140% of the median income for the area in which the housing is located.

Allows the use of such a loan also for rental, lease-purchase, or rent-to-own housing, but only for families whose incomes do not exceed 100% of the area median income. Prohibits rents from exceeding market rents for comparable dwelling units located in the area. Requires such rents to accord with any requirements of the Secretary intended to ensure that rents are established in a fair, objective, and arms-length manner.

Allows the use of such a loan also for rehabilitation of qualified foreclosed property as necessary to: (1) comply with applicable laws, codes, and other requirements relating to housing safety, quality, and habitability; or (2) make improvements to increase the housing's energy efficiency or its conservation, or to provide a renewable energy source (or sources) for it for the purpose of reselling it within three months at a price as close as possible to its acquisition price.

Limits the use of grants to: (1) property holding and operating costs; (2) property-related acquisition costs; (3) allocation recipient-related administrative costs; (4) certain state planning costs; (5) housing rehabilitation activities; and (6) demolition costs, but only if the Secretary determines that the neighborhood or other area in which the housing is located has a high incidence of vacant and abandoned housing (or other vacant and abandoned structures), and is experiencing a significant decline in population.

Prohibits the use of grant amounts to provide assistance of any kind (including grants, loans, and closing cost financing) for downpayments for any homebuyers of single family housing.

Requires the Secretary, by regulation, to prohibit the use of such grants or loans for: (1) political activities; (2) advocacy; (3) direct or indirect lobbying; (4) counseling services; (5) travel expenses; or (6) preparing or providing advice on tax returns.

Requires the use of: (1) 50% of such grants to provide housing only for very low-income families (whose incomes do not exceed 50% of the median income in the area); and (2) 50% of such grants to provide housing only for extremely low-income families (whose income does not exceed 30% of such median income).

Authorizes the Secretary, with respect to families with extremely low incomes, to allow an eligibility ceiling greater than 30%, but less than 50%, in specified circumstances if the higher ceiling will not result in an overall loss of housing affordable to families whose income does not exceed 30% of the area median income.

Requires an allocation recipient that includes rural areas to use a portion of its grant or loan amount for eligible activities located in rural areas proportionate to the identified need for such activities there.

Requires a qualified state, or at its election, a qualified metropolitan city or qualified urban county, to record a lien in the Secretary's name on any qualified foreclosed housing purchased or financed with a loan under this Act.

Declares that this Act may not be construed to prevent the resale of qualified foreclosed housing to a prior owner or occupant who meets income requirements.

Prohibits a loan or grant recipient from discriminating against a prospective tenant because the individual holds a voucher or certificate of eligibility under section 8 (public housing rental assistance) of the United States Housing Act of 1937.

Subjects the owner (and any successor in interest) to the lease and to the housing assistance payments contract for the occupied unit, in the case of any qualified foreclosed housing: (1) for which funds made available under this Act are used; and (2) in which a recipient of section 8 rental assistance resides at the time of acquisition or financing of such property.

Subjects any successor in interest in any foreclosed property (such as a subsequent purchaser) to: (1) the requirement of delivering a 90-day notice to vacate to any bona fide tenant; and (2) the tenant's rights.

Prohibits the use of such grant or loan amounts to demolish any public housing.

(Sec. 9) Prohibits the use of such grant or loan amounts for any qualified foreclosed housing unless binding agreements are entered into that ensure that the federal government, upon any sale or disposition of the property by the owner acquiring the housing pursuant to assistance under this Act, shall receive at least 20% or, in the case of a for-profit owner, 50% of the difference between the net proceeds from its sale or disposition and the cost of its acquisition, after deductions for certain expenditures.

(Sec. 10) Establishes deadlines by which an allocation recipient must obligate and spend grant and loan authority amounts.

(Sec. 11) Requires the servicer of a federally related mortgage loan to: (1) notify the local government in which the property securing the mortgage is located upon becoming responsible for a qualified foreclosed property; and (2) provide it with the name and 24-hour contact information of a representative authorized to negotiate purchases.

(Sec. 12) Sets forth reporting and contingent reimbursement requirements for allocation recipients.

(Sec. 14) Authorizes appropriations.

(Sec. 15) Declares that nothing in this Act shall affect the right to bear arms under the Second Amendment of the Constitution.

(Sec. 16) Makes illegal aliens ineligible for financial assistance under this Act.