[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 2042 Introduced in Senate (IS)]







104th CONGRESS
  2d Session
                                S. 2042

   To reform the multifamily rental assisted housing programs of the 
Federal Government, maintain the affordability and availability of low-
                income housing, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 2, 1996

    Mr. Mack (for himself, Mr. Bond, Mr. D'Amato, and Mr. Bennett) 
introduced the following bill; which was read twice and referred to the 
            Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To reform the multifamily rental assisted housing programs of the 
Federal Government, maintain the affordability and availability of low-
                income housing, 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 ``Multifamily 
Assisted Housing Reform and Affordability Act of 1996''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
     TITLE I--FHA-INSURED MULTIFAMILY HOUSING MORTGAGE AND HOUSING 
                        ASSISTANCE RESTRUCTURING

Sec. 101. Findings and purposes.
Sec. 102. Definitions.
Sec. 103. Authority of participating administrative entities.
Sec. 104. Mortgage restructuring and rental assistance sufficiency 
                            plan.
Sec. 105. Section 8 renewals and long-term affordability commitment by 
                            owner of project.
Sec. 106. Prohibition on restructuring.
Sec. 107. Restructuring tools.
Sec. 108. Shared savings incentive.
Sec. 109. Management standards.
Sec. 110. Monitoring of compliance.
Sec. 111. Review.
Sec. 112. GAO audit and review.
Sec. 113. Regulations.
Sec. 114. Technical and conforming amendments.
Sec. 115. Termination of authority.
                    TITLE II--ENFORCEMENT PROVISIONS

Sec. 201. Implementation.
         Subtitle A--FHA Single Family and Multifamily Housing

Sec. 211. Authorization to immediately suspend mortgagees.
Sec. 212. Extension of equity skimming to other single family and 
                            multifamily housing programs.
Sec. 213. Civil money penalties against mortgagees, lenders, and other 
                            participants in FHA programs.
                      Subtitle B--FHA Multifamily

Sec. 220. Civil money penalties against general partners, officers, 
                            directors, and certain managing agents of 
                            multifamily projects.
Sec. 221. Civil money penalties for noncompliance with section 8 HAP 
                            contracts.
Sec. 222. Extension of double damages remedy.
Sec. 223. Obstruction of Federal audits.

     TITLE I--FHA-INSURED MULTIFAMILY HOUSING MORTGAGE AND HOUSING 
                        ASSISTANCE RESTRUCTURING

SEC. 101. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) there exists throughout the Nation a need for decent, 
        safe, and affordable housing;
            (2) as of the date of enactment of this Act, it is 
        estimated that--
                    (A) the insured multifamily housing portfolio of 
                the Federal Housing Administration consists of 14,000 
                rental properties, with an aggregate unpaid principal 
                mortgage balance of $38,000,000,000; and
                    (B) approximately 10,000 of these properties 
                contain housing units that are assisted with project-
                based rental assistance under section 8 of the United 
                States Housing Act of 1937;
            (3) FHA-insured multifamily rental properties are a major 
        Federal investment, providing affordable rental housing to an 
        estimated 2,000,000 low- and very low-income families;
            (4) approximately 1,600,000 of these families live in 
        dwelling units that are assisted with project-based rental 
        assistance under section 8 of the United States Housing Act of 
        1937;
            (5) a substantial number of housing units receiving 
        project-based assistance have rents that are higher than the 
rents of comparable, unassisted rental units in the same housing rental 
market;
            (6) many of the contracts for project-based assistance will 
        expire during the several years following the date of enactment 
        of this Act;
            (7) it is estimated that--
                    (A) if no changes in the terms and conditions of 
                the contracts for project-based assistance are made 
                before fiscal year 2000, the cost of renewing all 
                expiring rental assistance contracts under section 8 of 
                the United States Housing Act of 1937 for both project-
                based and tenant-based rental assistance will increase 
                from approximately $4,000,000,000 in fiscal year 1997 
                to over $17,000,000,000 by fiscal year 2000 and some 
                $23,000,000,000 in fiscal year 2006;
                    (B) of those renewal amounts, the cost of renewing 
                project-based assistance will increase from 
                $1,200,000,000 in fiscal year 1997 to almost 
                $8,000,000,000 by fiscal year 2006; and
                    (C) without changes in the manner in which project-
                based rental assistance is provided, renewals of 
                expiring contracts for project-based rental assistance 
                will require an increasingly larger portion of the 
                discretionary budget authority of the Department of 
                Housing and Urban Development in each subsequent fiscal 
                year for the foreseeable future;
            (8) absent new budget authority for the renewal of expiring 
        rental contracts for project-based assistance, many of the FHA-
        insured multifamily housing projects that are assisted with 
        project-based assistance will likely default on their FHA-
        insured mortgage payments, resulting in substantial claims to 
        the FHA General Insurance Fund and Special Risk Insurance 
        Funds;
            (9) more than 15 percent of federally assisted multifamily 
        housing projects are physically or financially distressed, 
        including a number which suffer from mismanagement;
            (10) due to Federal budget constraints, the downsizing of 
        the Department of Housing and Urban Development, and diminished 
        administrative capacity, the Department lacks the ability to 
        ensure the continued economic and physical well-being of the 
        stock of federally insured and assisted multifamily housing 
        projects; and
            (11) the economic, physical, and management problems facing 
        the stock of federally insured and assisted multifamily housing 
        projects will be best served by reforms that--
                    (A) reduce the cost of Federal rental assistance, 
                including project-based assistance, to these projects 
                by reducing the debt service and operating costs of 
                these projects while retaining the low-income 
                affordability and availability of this housing;
                    (B) address physical and economic distress of this 
                housing and the failure of some project managers and 
                owners of projects to comply with management and 
                ownership rules and requirements; and
                    (C) transfer and share many of the loan and 
                contract administration functions and responsibilities 
                of the Secretary with capable State, local, and other 
                entities.
    (b) Purposes.--The purposes of this title are--
            (1) to preserve low-income rental housing affordability and 
        availability while reducing the long-term costs of project-
        based assistance;
            (2) to reform the design and operation of Federal rental 
        housing assistance programs, administered by the Secretary, to 
        promote greater multifamily housing project operating and cost 
        efficiencies;
            (3) to encourage owners of eligible multifamily housing 
        projects to restructure their FHA-insured mortgages and 
        project-based assistance contracts in a manner which is 
        consistent with this title before the year in which the 
        contract expires;
            (4) to streamline and improve federally insured and 
        assisted multifamily housing project oversight and 
        administration;
            (5) to resolve the problems affecting financially and 
        physically troubled federally insured and assisted multifamily 
        housing projects through cooperation with residents, owners, 
        State and local governments, and other interested entities and 
        individuals; and
            (6) to grant additional enforcement tools to use against 
        those who violate agreements and program requirements, in order 
        to ensure that the public interest is safeguarded and that 
        Federal multifamily housing programs serve their intended 
        purposes.

SEC. 102. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Comparable properties.--The term ``comparable 
        properties'' means properties that are--
                    (A) similar to the eligible multifamily housing 
                project in neighborhood (including risk of crime), 
                location, access, street appeal, age, property size, 
                apartment mix, physical configuration, property 
                amenities, inapartment rental amenities, and utilities;
                    (B) unregulated by contractual encumbrances or 
                local rent-control laws; and
                    (C) occupied predominantly by renters who receive 
                no rent supplements or rental assistance.
            (2) Eligible multifamily housing project.--The term 
        ``eligible multifamily housing project'' means a property 
        consisting of more than 4 dwelling units--
                    (A) with rents which, on an average per unit or per 
                room basis, exceed the fair market rent of the same 
                market area, as determined by the Secretary;
                    (B) that is covered in whole or in part by a 
                contract for project-based assistance under--
                            (i) the new construction and substantial 
                        rehabilitation program under section 8(b)(2) of 
                        the United States Housing Act of 1937 (as in 
                        effect before October 1, 1983);
                            (ii) the property disposition program under 
                        section 8(b) of the United States Housing Act 
                        of 1937;
                            (iii) the moderate rehabilitation program 
                        under section 8(e)(2) of the United States 
                        Housing Act of 1937;
                            (iv) the project-based certificate program 
                        under section 8 of the United States Housing 
                        Act of 1937;
                            (v) section 23 of the United States Housing 
                        Act of 1937 (as in effect before January 1, 
                        1975);
                            (vi) the rent supplement program under 
                        section 101 of the Housing and Urban 
                        Development Act of 1965; or
                            (vii) section 8 of the United States 
                        Housing Act of 1937, following conversion from 
                        assistance under section 101 of the Housing and 
                        Urban Development Act of 1965; and
                    (C) financed by a mortgage insured under the 
                National Housing Act.
            (3) Expiring contract.--The term ``expiring contract'' 
        means a project-based assistance contract attached to an 
        eligible multifamily housing project which, under the terms of 
        the contract, will expire.
            (4) Expiration date.--The term ``expiration date'' means 
        the date on which an expiring contract expires.
            (5) Fair market rent.--The term ``fair market rent'' means 
        the fair market rental established under section 8(c) of the 
        United States Housing Act of 1937.
            (6) Knowing or knowingly.--The term ``knowing'' or 
        ``knowingly'' means having actual knowledge of or acting with 
        deliberate ignorance or reckless disregard.
            (7) Low-income families.--The term ``low-income families'' 
        has the same meaning as provided under section 3(b)(2) of the 
        United States Housing Act of 1937.
            (8) Multifamily housing management agreement.--The term 
        ``multifamily housing management agreement'' means the 
        agreement entered into between the Secretary and a 
        participating administrative entity, as provided under section 
        103 of the title.
            (9) Participating administrative entity.--The term 
        ``participating administrative entity'' means a public agency, 
        including a State housing finance agency or local housing 
        agency, which meets the requirements under section 103(b).
            (10) Project-based assistance.--The term ``project-based 
        assistance'' means rental assistance under section 8 of the 
        United States Housing Act of 1937 that is attached to a 
        multifamily housing project.
            (11) Renewal.--The term ``renewal'' means the replacement 
        of an expiring Federal rental contract with a new contract 
        under section 8 of the United States Housing Act of 1937, 
        consistent with the requirements of this title.
            (12) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (13) State.--The term ``State'' has the same meaning as in 
        section 104 of the Cranston-Gonzalez National Affordable 
        Housing Act.
            (14) Tenant-based assistance.--The term ``tenant-based 
        assistance'' has the same meaning as in section 8(f) of the 
        United States Housing Act of 1937.
            (15) Unit of general local government.--The term ``unit of 
        general local government'' has the same meaning as in section 
        104 of the Cranston-Gonzalez National Affordable Housing Act.
            (16) Very low-income family.--The term ``very low-income 
        family'' has the same meaning as in section 3(b) of the United 
        States Housing Act of 1937.

SEC. 103. AUTHORITY OF PARTICIPATING ADMINISTRATIVE ENTITIES.

    (a) Participating Administrative Entities.--
            (1) In general.--The Secretary shall enter into multifamily 
        housing management agreements with participating administrative 
        entities for the implementation of mortgage restructuring and 
        rental assistance sufficiency plans to restructure FHA-insured 
        multifamily housing mortgages, in order to--
                    (A) reduce the costs of current and expiring 
                contracts for assistance under section 8 of the United 
                States Housing Act of 1937;
                    (B) address financially and physically troubled 
                projects; and
                    (C) correct management and ownership deficiencies.
            (2) Multifamily housing management agreements.--Each 
        multifamily housing management agreement entered into under 
        this subsection shall--
                    (A) be a cooperative agreement to establish the 
                obligations and requirements between the Secretary and 
                the participating administrative entity;
                    (B) identify the eligible multifamily housing 
                projects or groups of projects for which the 
                participating administrative entity is responsible for 
                assisting in developing and implementing approved 
                mortgage workout and rental assistance sufficiency 
                plans under section 104;
                    (C) require the participating administrative entity 
                to review and certify to the accuracy and completeness 
                of a comprehensive needs assessment submitted by the 
                owner of an eligible multifamily housing project, in 
                accordance with the information and data requirements 
                of section 403 of the Housing and Community Development 
                Act of 1992, including such other data, information, 
                and requirements as the Secretary may require to be 
                included as part of the comprehensive needs assessment;
                    (D) identify the responsibilities of both the 
                participating administrative entity and the Secretary 
                in implementing a mortgage restructuring and rental 
                assistance sufficiency plan, including any actions 
                proposed to be taken under section 106 or 107;
                    (E) require each mortgage restructuring and rental 
                assistance sufficiency plan prepared in accordance with 
                the requirements of section 104 for each eligible 
                multifamily housing project;
                    (F) indemnify the participating administrative 
                entity against lawsuits and penalties for actions taken 
                pursuant to the agreement, excluding actions involving 
                gross negligence or willful misconduct; and
                    (G) include compensation for all reasonable 
                expenses incurred by the participating administrative 
                entity necessary to perform its duties under this Act, 
                including such incentives as may be authorized under 
                section 108.
    (b) Selection of Participating Administrative Entity.--
            (1) Selection criteria.--The Secretary shall select a 
        participating administrative entity based on the following 
        criteria--
                    (A) is located in the State or local jurisdiction 
                in which the eligible multifamily housing project or 
                projects are located;
                    (B) has demonstrated expertise in the development 
                or management of low-income affordable rental housing;
                    (C) has a history of stable, financially sound, and 
                responsible administrative performance;
                    (D) has demonstrated financial strength in terms of 
                asset quality, capital adequacy, and liquidity; and
                    (E) is otherwise qualified, as determined by the 
                Secretary, to carry out the requirements of this title.
            (2) Selection of mortgage risk-sharing entities.--Any State 
        housing finance agency or local housing agency which is 
        designated as a qualified participating entity under section 
        542 of the Housing and Community Development Act of 1992 shall 
        automatically qualify as a participating administrative entity 
        under this section.
            (3) Alternative administrators.--With respect to any 
        eligible multifamily housing project that is located in a State 
        or local jurisdiction in which the Secretary determines that a 
        participating administrative entity is not located, is 
        unavailable, or does not qualify, the Secretary shall either--
                    (A) carry out the requirements of this title with 
                respect to that eligible multifamily housing project; 
                or
                    (B) contract with other qualified entities that 
                meet the requirements of subsection (b), with the 
                exception of subsection (b)(1)(A), the authority to 
                carry out all or a portion of the requirements of this 
                title with respect to that eligible multifamily housing 
                project.
            (4) Preference for state housing finance agencies as 
        participating administrative entities.--For each State in which 
        eligible multifamily housing projects are located, the 
        Secretary shall give preference to the housing finance agency 
        of that State or, if a State housing finance agency is 
        unqualified or has declined to participate, a local housing 
        agency to act as the participating administrative entity for 
        that State or for the jurisdiction in which the agency located.
            (5) State portfolio requirements.--
                    (A) In general.--If the housing finance agency of a 
                State is selected as the participating administrative 
                entity, that agency shall be responsible for all 
                eligible multifamily housing projects in that State, 
                except that a local housing agency selected as a 
                participating administrative entity shall be 
                responsible for all eligible multifamily housing 
                projects in the jurisdiction of the agency.
                    (B) Delegation.--A participating administrative 
                entity may delegate or transfer responsibilities and 
                functions under this title to one or more interested 
                and qualified public entities.
                    (C) Waiver.--A State housing finance agency or 
                local housing agency may request a waiver from the 
                Secretary from the requirements of this paragraph for 
                good cause.

SEC. 104. MORTGAGE RESTRUCTURING AND RENTAL ASSISTANCE SUFFICIENCY 
              PLAN.

    (a) In General.--
            (1) Development of procedures and requirements.--The 
        Secretary shall develop procedures and requirements for the 
        submission of a mortgage restructuring and rental assistance 
        sufficiency plan for each eligible multifamily housing project 
        with an expiring contract.
            (2) Terms and conditions.--Each mortgage restructuring and 
        rental assistance sufficiency plan submitted under this 
        subsection shall be developed at the initiative of an owner of 
        an eligible multifamily housing project with a participating 
        administrative entity, under such terms and conditions as the 
        Secretary shall require.
            (3) Consolidation.--Mortgage restructuring and rental 
        assistance sufficiency plans submitted under this subsection 
        may be consolidated as part of an overall strategy for more 
        than one property.
    (b) Notice Requirements.--
            (1) Establishment.--
                    (A) In general.--The Secretary shall establish 
                notice procedures and hearing requirements for tenants 
                and owners concerning the dates for the expiration of 
                project-based assistance contracts for any eligible 
                multifamily housing project.
                    (B) 12-month notice.--Under the hearing 
                requirements established under this paragraph, the 
                owner shall provide 12 months notice in writing before 
                the expiration of the initial project-based assistance 
contract to tenants of any eligible multifamily housing project.
            (2) Extension of contract term.--Subject to agreement by a 
        project owner, the Secretary may extend the term of any 
        expiring contract or provide a section 8 contract with rent 
        levels set in accordance with subsection (f)(2) for a period 
        sufficient to facilitate the implementation of a mortgage 
        restructuring and rental assistance sufficiency plan, as 
        determined by the Secretary.
    (c) Tenant Rent Protection.--If the owner of a project with an 
expiring Federal rental assistance contract does not agree to extend 
the contract, the Secretary shall make tenant-based assistance 
available to tenants residing in units assisted under the expiring 
contract at the time of expiration.
    (d) Mortgage Restructuring and Rental Assistance Sufficiency 
Plan.--Each mortgage restructuring and rental assistance sufficiency 
plan shall--
            (1) except as otherwise provided, restructure the project-
        based assistance rents for the eligible multifamily housing 
        property in a manner consistent with subsection (e);
            (2) require the owner or purchaser of an eligible 
        multifamily mortgage housing project with an expiring contract 
        to submit to the participating administrative entity a 
        comprehensive housing needs assessment, in accordance with the 
        information and data requirements of section 403 of the Housing 
        and Community Development Act of 1992, including such other 
        data, information, and requirements as the Secretary may 
        require to be included as part of the comprehensive needs 
        assessment;
            (3) require the owner or purchaser of the project to 
        provide or contract for competent management of the project;
            (4) require the owner or purchaser of the project to take 
        such actions as may be necessary to rehabilitate, maintain 
        adequate reserves, and to maintain the project in decent and 
        safe condition, based on housing quality standards established 
        by--
                    (A) the Secretary; or
                    (B) local housing codes or codes adopted by public 
                housing agencies that--
                            (i) meet or exceed housing quality 
                        standards established by the Secretary; and
                            (ii) do not severely restrict housing 
                        choice;
            (5) require the owner or purchaser of the project to 
        maintain affordability and use restrictions for 20 years, as 
        the participating administrative entity determines to be 
        appropriate, which restrictions shall be consistent with the 
        long-term physical and financial viability character of the 
        project as affordable housing;
            (6) meet subsidy layering requirements under guidelines 
        established by the Secretary; and
            (7) require the owner or purchaser of the project to meet 
        such other requirements as the Secretary determines to be 
        appropriate.
    (e) Tenant and Community Participation and Capacity Building.--
            (1) Procedures.--
                    (A) In general.--The Secretary shall establish 
                procedures to provide an opportunity for tenants of the 
                project and other affected parties, including local 
                government and the community in which the project is 
                located, to participate effectively in the 
                restructuring process established by this title.
                    (B) Criteria.--These procedures shall include--
                            (i) the rights to timely and adequate 
                        written notice of the proposed decisions of the 
                        owner or the Secretary or participating 
                        administrative entity;
                            (ii) timely access to all relevant 
                        information (except for information determined 
                        to be proprietary under standards established 
                        by the Secretary);
                            (iii) an adequate period to analyze this 
                        information and provide comments to the 
                        Secretary or participating administrative 
                        entity (which comments shall be taken into 
                        consideration by the Administrator); and
                            (iv) if requested, a meeting with a 
                        representative of the Administrator and other 
                        affected parties.
            (2) Procedures required.--The procedures established under 
        paragraph (1) shall permit tenant, local government, and 
        community participation in at least the following decisions or 
        plans specified in this title:
                    (A) The Multifamily Housing Management Agreement.
                    (B) Any proposed expiration of the section 8 
                contract.
                    (C) The project's eligibility for restructuring 
                pursuant to section 106 and the mortgage restructuring 
                and rental assistance sufficiency plan pursuant to 
                section 104.
                    (D) Physical inspections.
                    (E) Capital needs and management assessments, 
                whether before or after restructuring.
                    (F) Any proposed transfer of the project.
            (3) Funding.--
                    (A) In general.--The Secretary may provide not more 
                than $10,000,000 annually in funding to tenant groups, 
                nonprofit organizations, and public entities for 
                building the capacity of tenant organizations, for 
                technical assistance in furthering any of the purposes 
                of this title (including transfer of developments to 
                new owners) and for tenant services, from those amounts 
                made available under appropriations Acts for 
                implementing this title.
                    (B) Allocation.--The Secretary may allocate any 
                funds made available under subparagraph (A) through 
                existing technical assistance programs and procedures 
                developed pursuant to any other Federal law, including 
                the Low-Income Housing Preservation and Resident 
                Homeownership Act of 1990 and the Multifamily Property 
                Disposition Reform Act of 1994.
                    (C) Prohibition.--None of the funds made available 
                under subparagraph (A) may be used directly or 
                indirectly to pay for any personal service, 
                advertisement, telegram, telephone, letter, printed or 
                written matter, or other device, intended or designed 
                to influence in any manner a Member of Congress, to 
                favor or oppose, by vote or otherwise, any legislation 
                or appropriation by the Congress, whether before or 
                after the introduction of any bill or resolution 
                proposing such legislation or appropriation.
    (f) Rent Levels.--
            (1) In general.--Except as provided in paragraph (2), each 
        mortgage restructuring and rental assistance sufficiency plan 
        pursuant to the terms, conditions, and requirements of this 
        title shall establish for units assisted with project-based 
        assistance in eligible multifamily housing projects adjusted 
        rent levels that--
                    (A) are equivalent to rents derived from comparable 
                properties, if--
                            (i) the participating administrative entity 
                        makes the rent determination not later than 60 
                        days after the owner submits a mortgage 
                        restructuring and rental assistance sufficiency 
                        plan; and
                            (ii) the market rent determination is based 
                        on not less than 2 comparable properties; or
                    (B) if those rents cannot be determined, are equal 
                to 90 percent of the fair market rents for the relevant 
                market area.
            (2) Exceptions.--
                    (A) In general.--A contract under this section may 
                include rent levels that exceed the rent level 
                described in paragraph (1) at rent levels that do not 
                exceed 120 percent of the local fair market rent if the 
                participating administrative entity--
                            (i) determines, that the housing needs of 
                        the tenants and the community cannot be 
                        adequately addressed through implementation of 
                        the rent limitation required to be established 
                        through a mortgage restructuring and rental 
                        assistance sufficiency plan under paragraph 
                        (1); and
                            (ii) follows the procedures under paragraph 
                        (3).
                    (B) Exception rents.--In any fiscal year, a 
                participating administrative entity may approve 
                exception rents on not more than 20 percent of all 
                units in the geographic jurisdiction of the entity with 
                expiring contracts in that fiscal year, except that the 
                Secretary may waive this ceiling upon a finding of 
                special need in the geographic area served by the 
                participating administrative entity.
            (3) Rent levels for exception projects.--For purposes of 
        this section, a project eligible for an exception rent shall 
        receive a rent calculation on the actual and projected costs of 
        operating the project, at a level that provides income 
        sufficient to support a budget-based rent that consists of--
                    (A) the debt service of the project;
                    (B) the operating expenses of the project, as 
                determined by the participating administrative entity, 
                including--
                            (i) contributions to adequate reserves;
                            (ii) the costs of maintenance and necessary 
                        rehabilitation; and
                            (iii) other eligible costs permitted under 
                        section 8 of the United States Housing Act of 
                        1937;
                    (C) an adequate allowance for potential operating 
                losses due to vacancies and failure to collect rents, 
                as determined by the participating administrative 
                entity;
                    (D) an allowance for a reasonable rate of return to 
                the owner or purchaser of the project, as determined by 
                the participating administrative entity, which shall 
                not exceed 7 percent of the return on equity; and
                    (E) other expenses determined by the participating 
                administrative entity to be necessary for the operation 
                of the project.
    (g) Exemptions From Restructuring.--Subject to section 106, the 
Secretary shall renew project-based assistance contracts at existing 
rents if--
            (1) the project was financed through obligations such that 
        the implementation of a mortgage restructuring and rental 
        assistance plan under this section is inconsistent with 
        applicable law or agreements governing such financing;
            (2) in the determination of the Secretary or the 
        participating administrative entity, the refinancing would not 
        result in significant savings to the Secretary; or
            (3) the project has an expiring contract under section 8 of 
        the United States Housing Act of 1937 but does not qualify as 
        an eligible multifamily project pursuant to section 102(6) of 
        this title.

SEC. 105. SECTION 8 RENEWALS AND LONG-TERM AFFORDABILITY COMMITMENT BY 
              OWNER OF PROJECT.

    (a) Section 8 Renewals of Restructured Projects.--Subject to the 
availability of amounts provided in advance in appropriations Acts, the 
Secretary shall enter into contracts with participating administrative 
entities pursuant to which the participating administrative entity 
shall offer to renew or extend an expiring section 8 contract on an 
eligible multifamily project, and the owner of the project shall accept 
the offer, provided the initial renewal is in accordance with the terms 
and conditions specified in the mortgage restructuring and rental 
sufficiency plan.
    (b) Required Commitment.--After the initial renewal of a section 8 
contract pursuant to this section, the owner shall accept each offer 
made pursuant to subsection (a) to renew the contract, for a period of 
20 years from the date of the initial renewal, if the offer to renew is 
on terms and conditions specified in the mortgage restoration and 
rental sufficiency plan.

SEC. 106. PROHIBITION ON RESTRUCTURING.

    (a) Prohibition on Restructuring.--The Secretary shall not consider 
any mortgage restructuring and rental assistance sufficiency plan or 
request for contract renewal if the participating administrative entity 
determines that--
            (1) the owner or purchaser of the project has engaged in 
        material adverse financial or managerial actions or omissions 
        with regard to this project (or with regard to other similar 
        projects if the Secretary determines that those actions or 
        omissions constitute a pattern of mismanagement that would 
        warrant suspension or debarment by the Secretary), including--
                    (A) knowingly and materially violating any Federal, 
                State, or local law or regulation with regard to this 
                project or any other federally assisted project;
                    (B) knowingly and materially breaching a contract 
                for assistance under section 8 of the United States 
                Housing Act of 1937;
                    (C) knowingly and materially violating any 
                applicable regulatory or other agreement with the 
                Secretary or a participating administrative entity;
                    (D) repeatedly failing to make mortgage payments at 
                times when project income was sufficient to maintain 
                and operate the property;
                    (E) materially failing to maintain the property 
                according to housing quality standards after receipt of 
                notice and a reasonable opportunity to cure; or
                    (F) committing any actions or omissions that would 
                warrant suspension or debarment by the Secretary;
            (2) the owner or purchaser of the property materially 
        failed to follow the procedures and requirements of this title, 
        after receipt of notice and an opportunity to cure; or
            (3) the poor condition of the project cannot be remedied in 
        a cost effective manner, as determined by the participating 
        administrative entity.
    (b) Opportunity To Dispute Findings.--
            (1) In general.--During the 30-day period beginning on the 
        date on which the owner or purchaser of an eligible multifamily 
        housing project receives notice of a rejection under subsection 
        (a) or of a mortgage restructuring and rental assistance 
        sufficiency plan under section 104, the Secretary or 
        participating administrative entity shall provide that owner or 
        purchaser with an opportunity to dispute the basis for the 
        rejection and an opportunity to cure.
            (2) Affirmation, modification, or reversal.--
                    (A) In general.--After providing an opportunity to 
                dispute under paragraph (1), the Secretary or the 
                participating administrative entity may affirm, modify, 
                or reverse any rejection under subsection (a) or 
                rejection of a mortgage restructuring and rental 
                assistance sufficiency plan under section 104.
                    (B) Reasons for decision.--The Secretary or the 
                participating administrative entity, as applicable, 
                shall identify the reasons for any final decision under 
                this paragraph.
                    (C) Review process.--The Secretary shall establish 
                an administrative review process to appeal any final 
                decision under this paragraph.
    (c) Final Determination.--Any final determination under this 
section shall not be subject to judicial review.
    (d) Displaced Tenants.--Subject to the availability of amounts 
provided in advance in appropriations Acts, for any low-income tenant 
that is residing in a project or receiving assistance under section 8 
of the United States Housing Act of 1937 at the time of rejection under 
this section, that tenant shall be provided with tenant-based 
assistance and reasonable moving expenses, as determined by the 
Secretary.
    (e) Transfer of Property.--For properties disqualified from the 
consideration of a mortgage restructuring and rental assistance 
sufficiency plan under this section because of actions by an owner or 
purchaser in accordance with paragraph (1) or (2) of subsection (a), 
the Secretary shall establish procedures to facilitate the voluntary 
sale or transfer of a property as part of a mortgage restructuring and 
rental assistance sufficiency plan, with a preference for tenant 
organizations and tenant-endorsed community-based nonprofit and public 
agency purchasers meeting such reasonable qualifications as may be 
established by the Secretary.

SEC. 107. RESTRUCTURING TOOLS.

    (a) Restructuring Tools.--For purposes of this title, and to the 
extent these actions are consistent with this section, an approved 
mortgage restructuring and assistance sufficiency plan may include one 
or more of the following:
            (1) Full or partial payment of claim.--Making a full 
        payment of claim or partial payment of claim under section 
        541(b) of the National Housing Act.
            (2) Refinancing of debt.--Refinancing of all or part of the 
        debt on a project, if the refinancing would result in 
        significant subsidy savings under section 8 of the United 
        States Housing Act of 1937.
            (3) Mortgage insurance.--Providing FHA multifamily mortgage 
        insurance, reinsurance or other credit enhancement 
        alternatives, including multifamily risk-sharing mortgage 
        programs, as provided under section 542 of the Housing and 
        Community Development Act of 1992. Any limitations on the 
        number of units available for mortgage insurance under section 
        542 shall not apply to eligible multifamily housing projects. 
        Any credit subsidy costs of providing mortgage insurance shall 
        be paid from the General Insurance Fund and the Special Risk 
        Insurance Fund.
            (4) Credit enhancement.--Any additional State or local 
        mortgage credit enhancements and risk-sharing arrangements may 
        be established with State or local housing finance agencies, 
        the Federal Housing Finance Board, the Federal National 
        Mortgage Association, and the Federal Home Loan Mortgage 
        Corporation, to a modified first mortgage.
            (5) Compensation of third parties.--Entering into 
        agreements, incurring costs, or making payments, as may be 
        reasonably necessary, to compensate the participation of 
        participating administrative entities and other parties in 
        undertaking actions authorized by this title. Upon request, 
        participating administrative entities shall be considered to be 
        contract administrators under section 8 of the United States 
        Housing Act of 1937 for purposes of any contracts entered into 
        as part of an approved mortgage restructuring and rental 
        assistance sufficiency plan.
            (6) Residual receipts.--Applying any acquired residual 
        receipts to maintain the long-term affordability and physical 
        condition of the property. The participating administrative 
        entity may expedite the acquisition of residual receipts by 
        entering into agreements with owners of housing covered by 
an expiring contract to provide an owner with a share of the receipts, 
not to exceed 10 percent.
            (7) Rehabilitation needs.--Assisting in addressing the 
        necessary rehabilitation needs of the project, except that 
        assistance under this paragraph shall not exceed the equivalent 
        of $5,000 per unit for those units covered with project-based 
        assistance. Rehabilitation may be paid from the provision of 
        grants from residual receipts or, as provided in appropriations 
        Acts, from budget authority provided for increases in the 
        budget authority for assistance contracts under section 8 of 
        the United States Housing Act of 1937, or through the debt 
        restructuring transaction. Each owner that receives 
        rehabilitation assistance shall contribute not less than 25 
        percent of the amount of rehabilitation assistance received.
            (8) Mortgage restructuring.--Restructuring mortgages to 
        provide a structured first mortgage to cover rents at levels 
        that are established in section 104(f) and a second mortgage 
        equal to the difference between the restructured first mortgage 
        and the mortgage balance of the eligible multifamily housing 
        project at the time of restructuring. The second mortgage shall 
        bear interest at a rate not to exceed the applicable Federal 
        rate for a term not to exceed 40 years. If the first mortgage 
        remains outstanding, payments of interest and principal on the 
        second mortgage shall be made from all excess project income 
        only after the payment of all reasonable and necessary 
        operating expenses (including deposits in a reserve for 
        replacement), debt service on the first mortgage, and such 
        other expenditures as may be approved by the Secretary. Except 
        as required by the preceding sentence, during the period in 
        which the first mortgage remains outstanding, no payments of 
        interest or principal shall be required on the second mortgage. 
        The second mortgage shall be assumable by any subsequent 
        purchaser of any multifamily housing project, pursuant to 
        guidelines established by the Secretary. The principal and 
        accrued interest due under the second mortgage shall be fully 
        payable upon disposition of the property, unless the mortgage 
        is assumed under the preceding sentence. The owner shall begin 
        repayment of the second mortgage upon full payment of the first 
        mortgage in equal monthly installments in an amount equal to 
        the monthly principal and interest payments formerly paid under 
        the first mortgage. The principal and interest of a second 
        mortgage shall be immediately due and payable upon a finding by 
        the Secretary that an owner has failed to materially comply 
        with this title or any requirements of the United States 
        Housing Act of 1937 as those requirements apply to the 
        applicable project. Any credit subsidy costs of providing a 
        second mortgage shall be paid from the General Insurance Fund 
        and the Special Risk Insurance Fund.
    (b) Role of FNMA and FHLMC.--Section 1335 of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4565) 
is amended--
            (1) in paragraph (3), by striking ``and'' at the end;
            (2) paragraph (4), by striking the period at the end and 
        inserting ``; and'';
            (3) by striking ``To meet'' and inserting the following:
    ``(a) In General.--To meet''; and
            (4) by adding at the end the following:
            ``(5) assist in maintaining the affordability of assisted 
        units in eligible multifamily housing projects with expiring 
        contracts, as defined under the Multifamily Assisted Housing 
        Reform and Affordability Act of 1996.
    ``(b) Affordable Housing Goals.--Actions taken under subsection 
(a)(5) shall constitute part of the contribution of each entity in 
meeting their affordable housing goals under sections 1332, 1333, and 
1334 for any fiscal year, as determined by the Secretary.''.
    (c) Prohibition on Equity Sharing by the Secretary.--The Secretary 
is prohibited from participating in any equity agreement or profit-
sharing agreement in conjunction with any eligible multifamily housing 
project.

SEC. 108. SHARED SAVINGS INCENTIVE.

    (a) In General.--At the time a participating administrative entity 
is designated, the Secretary shall negotiate an incentive agreement 
with the participating administrative entity, which agreement may 
provide such entity with a share of savings from any restructured 
mortgage and reduced subsidies resulting from actions under section 
107. The Secretary shall negotiate with participating administrative 
entities a savings incentive formula that provides for periodic 
payments over a 5-year period, which is allocated as incentives to 
participating administrative entities and to project owners.
    (b) Use of savings.--Notwithstanding any other provision of law, 
the incentive agreement under subsection (a) shall require any savings 
provided to a participating administrative entity under that agreement 
to be used only for providing decent, safe, and affordable housing for 
very low-income families and persons with a priority for eligible 
multifamily housing projects; and

SEC. 109. MANAGEMENT STANDARDS.

    Each participating administrative entity shall establish and 
implement management standards, including requirements governing 
conflicts of interest between owners, managers, contractors with an 
identity of interest, pursuant to guidelines established by the 
Secretary and consistent with industry standards.

SEC. 110. MONITORING OF COMPLIANCE.

    (a) Compliance Agreements.--Pursuant to regulations issued by the 
Secretary after public notice and comment, each participating 
administrative entity, through binding contractual agreements with 
owners and otherwise, shall ensure long-term compliance with the 
provisions of this title. Each agreements shall, at a minimum, provide 
for--
            (1) enforcement of the provisions of this title; and
            (2) remedies for the breach of those provisions.
    (b) Periodic Monitoring.--
            (1) In general.--Not less than annually, each participating 
        administrative entity shall review the status of all 
        multifamily housing projects for which a mortgage restructuring 
        and rental assistance sufficiency plan has been implemented.
            (2) Inspections.--Each review under this subsection shall 
        include onsite inspection to determine compliance with housing 
        codes and other requirements as provided in this title and the 
        multifamily housing management agreements.
    (c) Audit by the Secretary.--The Comptroller General of the United 
States, the Secretary, and the Inspector General of the Department of 
Housing and Urban Development may conduct an audit at any time of any 
multifamily housing project for which a mortgage restructuring and 
rental assistance sufficiency plan has been implemented.

SEC. 111. REVIEW.

    (a) Annual Review.--In order to ensure compliance with this title, 
the Secretary shall conduct an annual review and report to the Congress 
on actions taken under this title and the status of eligible 
multifamily housing projects.
    (b) Subsidy Layering Review.--The participating administrative 
entity shall certify, pursuant to guidelines issued by the Secretary, 
that the requirements of section 102(d) of the Department of Housing 
and Urban Development Reform Act of 1989 are satisfied so that the 
combination of assistance provided in connection with a property for 
which a mortgage is to be restructured shall not be any greater than is 
necessary to provide affordable housing.

SEC. 112. GAO AUDIT AND REVIEW.

    (a) Initial Audit.--Not later than 18 months after the effective 
date of interim or final regulations promulgated under this title, the 
Comptroller General of the United States shall conduct an audit to 
evaluate a representative sample of all eligible multifamily housing 
projects and the implementation of all mortgage restructuring and 
rental assistance sufficiency plans.
    (b) Report.--
            (1) In general.--Not later than 18 months after the audit 
        conducted under subsection (a), the Comptroller General of the 
        United States shall submit to the Congress a report on the 
        status of all eligible multifamily housing projects and the 
        implementation of all mortgage restructuring and rental 
        assistance sufficiency plans.
            (2) Contents.--The report submitted under paragraph (1) 
        shall include--
                    (A) a description of the initial audit conducted 
                under subsection (a); and
                    (B) recommendations for any legislative action to 
                increase the financial savings to the Federal 
                Government of the restructuring of eligible multifamily 
                housing projects balanced with the continued 
                availability of the maximum number of affordable low-
                income housing units.

SEC. 113. REGULATIONS.

    (a) Rulemaking and Implementation.--The Secretary shall issue 
interim regulations necessary to implement this title not later than 
the expiration of the 6-month period beginning on the date of enactment 
of this Act. Not later than 1 year after the date of enactment of this 
Act, in accordance with the negotiated rulemaking procedures set forth 
in subchapter III of chapter 5 of title 5, United States Code, the 
Secretary shall implement final regulations implementing this title.
    (b) Repeal of FHA Multifamily Housing Demonstration Authority.--
            (1) In general.--Beginning upon the expiration of the 6-
        month period beginning on the date of enactment of this Act, 
        the Secretary may not exercise any authority or take any action 
        under section 210 of the Balanced Budget Down Payment Act, II.
            (2) Unused budget authority.--Any unused budget authority 
        under section 210(f) of the Balanced Budget Down Payment Act, 
        II, shall be available for taking actions under the 
        requirements established through regulations issued under 
        subsection (a).

SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Calculation of Limit on Project-Based Assistance.--Section 8(d) 
of the United States Housing Act of 1937 (42 U.S.C. 1437f(d)) is 
amended by adding at the end the following new paragraph:
            ``(5) Calculation of limit.--Any contract entered into 
        under section 104 of the Multifamily Assisted Housing Reform 
        and Affordability Act of 1996 shall be excluded in computing 
        the limit on project-based assistance under this subsection.''.
    (b) Partial Payment of Claims on Multifamily Housing Projects.--
Section 541 of the National Housing Act (12 U.S.C. 1735f-19) is 
amended--
            (1) in subsection (a), in the subsection heading, by 
        striking ``Authority'' and inserting ``Defaulted Mortgages'';
            (2) by redesignating subsection (b) as subsection (c); and
            (3) by inserting after subsection (a) the following new 
        subsection:
    ``(b) Existing Mortgages.--Notwithstanding any other provision of 
law, the Secretary, in connection with a mortgage restructuring under 
section 104 of the Multifamily Assisted Housing Reform and 
Affordability Act of 1996, may make a one time, nondefault partial 
payment of the claim under the mortgage insurance contract, which shall 
include a determination by the Secretary or the participating 
administrative entity, in accordance with the Multifamily Assisted 
Housing Reform and Affordability Act of 1996, of the market value of 
the project and a restructuring of the mortgage, under such terms and 
conditions as the Secretary may establish.''.

SEC. 115. TERMINATION OF AUTHORITY.

    (a) In General.--Except as provided in subsection (b), this title 
is repealed effective October 1, 2001.
    (b) Exception.--The repeal under this section does not apply with 
respect to projects and programs for which binding commitments have 
been entered into before October 1, 2001.

                    TITLE II--ENFORCEMENT PROVISIONS

SEC. 201. IMPLEMENTATION.

    (a) Issuance of Necessary Regulations.--Notwithstanding section 
7(o) of the Department of Housing and Urban Development Act or part 10 
of title 24, Code of Federal Regulations (as in existence on the date 
of enactment of this Act), the Secretary shall issue such regulations 
as the Secretary determines to be necessary to implement this title and 
the amendments made by this title in accordance with section 552 or 553 
of title 5, United States Code, as determined by the Secretary.
    (b) Use of Existing Regulations.--In implementing any provision of 
this title, the Secretary may, in the discretion of the Secretary, 
provide for the use of existing regulations to the extent appropriate, 
without rulemaking.

         Subtitle A--FHA Single Family and Multifamily Housing

SEC. 211. AUTHORIZATION TO IMMEDIATELY SUSPEND MORTGAGEES.

    Section 202(c)(3)(C) of the National Housing Act (12 U.S.C. 
1708(c)(3)(C)) is amended by inserting after the first sentence the 
following new sentence: ``Notwithstanding paragraph (4)(A), a 
suspension shall be effective upon issuance by the Board if the Board 
determines that there exists adequate evidence that immediate action is 
required to protect the financial interests of the Department or the 
public.''.

SEC. 212. EXTENSION OF EQUITY SKIMMING TO OTHER SINGLE FAMILY AND 
              MULTIFAMILY HOUSING PROGRAMS.

    Section 254 of the National Housing Act (12 U.S.C. 1715z-19) is 
amended to read as follows:

``SEC. 254. EQUITY SKIMMING PENALTY.

    ``(a) In General.--Whoever, as an owner, agent, or manager, or who 
is otherwise in custody, control, or possession of a multifamily 
project or a 1- to 4-family residence that is security for a mortgage 
note that is described in subsection (b), willfully uses or authorizes 
the use of any part of the rents, assets, proceeds, income, or other 
funds derived from property covered by that mortgage note for any 
purpose other than to meet reasonable and necessary expenses that 
include expenses approved by the Secretary if such approval is 
required, in a period during which the mortgage note is in default or 
the project is in a nonsurplus cash position, as defined by the 
regulatory agreement covering the property, or the mortgagor has failed 
to comply with the provisions of such other form of regulatory control 
imposed by the Secretary, shall be fined not more than $500,000, 
imprisoned not more than 5 years, or both.
    ``(b) Mortgage Notes Described.--For purposes of subsection (a), a 
mortgage note is described in this subsection if it--
            ``(1) is insured, acquired, or held by the Secretary 
        pursuant to this Act;
            ``(2) is made pursuant to section 202 of the Housing Act of 
        1959 (including property still subject to section 202 program 
        requirements that existed before the date of enactment of the 
        Cranston-Gonzalez National Affordable Housing Act); or
            ``(3) is insured or held pursuant to section 542 of the 
        Housing and Community Development Act of 1992, but is not 
        reinsured under section 542 of the Housing and Community 
        Development Act of 1992.''.

SEC. 213. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, AND OTHER 
              PARTICIPANTS IN FHA PROGRAMS.

    (a) Change to Section Title.--Section 536 of the National Housing 
Act (12 U.S.C. 1735f-14) is amended by striking the section heading and 
the section designation and inserting the following:

``SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, AND 
              OTHER PARTICIPANTS IN FHA PROGRAMS.''.

    (b) Expansion of Persons Eligible for Penalty.--Section 536(a) of 
the National Housing Act (12 U.S.C. 1735f-14(a)) is amended--
            (1) in paragraph (1), by striking the first sentence and 
        inserting the following: ``If a mortgagee approved under the 
        Act, a lender holding a contract of insurance under title I of 
        this Act, or a principal, officer, or employee of such 
        mortgagee or lender, or other person or entity participating in 
        either an insured mortgage or title I loan transaction under 
        this Act or providing assistance to the borrower in connection 
        with any such loan, including sellers of the real estate 
        involved, borrowers, closing agents, title companies, real 
        estate agents, mortgage brokers, appraisers, loan 
        correspondents and dealers, knowingly and materially violates 
        any applicable provision of subsection (b), the Secretary may 
        impose a civil money penalty on the mortgagee or lender, or 
        such other person or entity, in accordance with this section. 
        The penalty under this paragraph shall be in addition to any 
        other available civil remedy or any available criminal penalty, 
        and may be imposed whether or not the Secretary imposes other 
        administrative sanctions.''; and
            (2) in paragraph (2)--
                    (A) in the first sentence, by inserting ``or such 
                other person or entity'' after ``lender''; and
                    (B) in the second sentence, by striking 
                ``provision'' and inserting ``the provisions''.
    (c) Additional Violations for Mortgagees, Lenders, and Other 
Participants in FHA Programs.--Section 536(b) of the National Housing 
Act (12 U.S.C. 1735f-14(b)) is amended--
            (1) by redesignating paragraph (2) as paragraph (3);
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) The Secretary may impose a civil money penalty under 
        subsection (a) for any knowing and material violation by a 
        principal, officer, or employee of a mortgagee or lender, or 
        other participants in either an insured mortgage or title I 
        loan transaction under this Act or provision of assistance to 
        the borrower in connection with any such loan, including 
        sellers of the real estate involved, borrowers, closing agents, 
        title companies, real estate agents, mortgage brokers, 
        appraisers, loan correspondents, and dealers for--
                    ``(A) submission to the Secretary of information 
                that was false, in connection with any mortgage insured 
                under this Act, or any loan that is covered by a 
                contract of insurance under title I of this Act;
                    ``(B) falsely certifying to the Secretary or 
                submitting to the Secretary a false certification by 
                another person or entity; or
                    ``(C) failure by a loan correspondent or dealer to 
                submit to the Secretary information which is required 
                by regulations or directives in connection with any 
                loan that is covered by a contract of insurance under 
                title I of this Act.''; and
            (3) in paragraph (3), as redesignated, by striking ``or 
        paragraph (1)(F)'' and inserting ``or (F), or paragraph (2)(A), 
        (B), or (C)''.
    (d) Conforming and Technical Amendments.--Section 536 of the 
National Housing Act (12 U.S.C. 1735f-14) is amended--
            (1) in subsection (c)(1)(B), by inserting after ``lender'' 
        the following: ``or such other person or entity'';
            (2) in subsection (d)(1)--
                    (A) by inserting ``or such other person or entity'' 
                after ``lender''; and
                    (B) by striking ``part 25'' and inserting ``parts 
                24 and 25''; and
            (3) in subsection (e), by inserting ``or such other person 
        or entity'' after ``lender'' each place that term appears.

                      Subtitle B--FHA Multifamily

SEC. 220. CIVIL MONEY PENALTIES AGAINST GENERAL PARTNERS, OFFICERS, 
              DIRECTORS, AND CERTAIN MANAGING AGENTS OF MULTIFAMILY 
              PROJECTS.

    (a) Civil Money Penalties Against Multifamily Mortgagors.--Section 
537 of the National Housing Act (12 U.S.C. 1735f-15) is amended--
            (1) in subsection (b)(1), by striking ``on that mortgagor'' 
        and inserting the following: ``on that mortgagor, on a general 
        partner of a partnership mortgagor, or on any officer or 
        director of a corporate mortgagor'';
            (2) in subsection (c)--
                    (A) by striking the subsection heading and 
                inserting the following:
    ``(c) Other Violations.--''; and
                    (B) in paragraph (1)--
                            (i) by striking ``Violations.--The 
                        Secretary may'' and all that follows through 
                        the colon and inserting the following:
                    ``(A) Liable parties.--The Secretary may also 
                impose a civil money penalty under this section on--
                            ``(i) any mortgagor of a property that 
                        includes five or more living units and that has 
                        a mortgage insured, coinsured, or held pursuant 
                        to this Act;
                            ``(ii) any general partner of a partnership 
                        mortgagor of such property;
                            ``(iii) any officer or director of a 
                        corporate mortgagor;
                            ``(iv) any agent employed to manage the 
                        property that has an identity of interest with 
                        the mortgagor, with the general partner of a 
                        partnership mortgagor, or with any officer or 
                        director of a corporate mortgagor of such 
                        property; or
                            ``(v) any member of a limited liability 
                        company that is the mortgagor of such property 
                        or is the general partner of a limited 
                        partnership mortgagor or is a partner of a 
                        general partnership mortgagor.
                    ``(B) Violations.--A penalty may be imposed under 
                this section upon any liable party under subparagraph 
                (A) that knowingly and materially takes any of the 
                following actions:'';
                            (ii) in subparagraph (B), as designated by 
                        clause (i), by redesignating the subparagraph 
                        designations (A) through (L) as clauses (i) 
                        through (xii), respectively;
                            (iii) by adding after clause (xii), as 
                        redesignated by clause (ii), the following new 
                        clauses:
                            ``(xiii) Failure to maintain the premises, 
                        accommodations, any living unit in the project, 
                        and the grounds and equipment appurtenant 
                        thereto in good repair and condition in 
                        accordance with regulations and requirements of 
                        the Secretary, except that nothing in this 
                        clause shall have the effect of altering the 
                        provisions of an existing regulatory agreement 
                        or federally insured mortgage on the property.
                            ``(xiv) Failure, by a mortgagor, a general 
                        partner of a partnership mortgagor, or an 
                        officer or director of a corporate mortgagor, 
                        to provide management for the project that is 
                        acceptable to the Secretary pursuant to 
                        regulations and requirements of the 
                        Secretary.''; and
                            (iv) in the last sentence, by deleting ``of 
                        such agreement'' and inserting ``of this 
                        subsection'';
            (3) in subsection (d)--
                    (A) in paragraph (1)(B), by inserting after 
                ``mortgagor'' the following: ``, general partner of a 
                partnership mortgagor, officer or director of a 
                corporate mortgagor, or identity of interest agent 
                employed to manage the property''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(5) Payment of penalty.--No payment of a civil money 
        penalty levied under this section shall be payable out of 
        project income.'';
            (4) in subsection (e)(1), by deleting ``a mortgagor'' and 
        inserting ``an entity or person'';
            (5) in subsection (f), by inserting after ``mortgagor'' 
        each place such term appears the following: ``, general partner 
        of a partnership mortgagor, officer or director of a corporate 
        mortgagor, or identity of interest agent employed to manage the 
        property'';
            (6) by striking the heading of subsection (f) and inserting 
        the following: ``Civil Money Penalties Against Multifamily 
        Mortgagors, General Partners of Partnership Mortgagors, 
        Officers and Directors of Corporate Mortgagors, and Certain 
        Managing Agents''; and
            (7) by adding at the end the following new subsection:
    ``(k) Identity of Interest Managing Agent.--For purposes of this 
section, the terms `agent employed to manage the property that has an 
identity of interest' and `identity of interest agent' mean an entity--
            ``(1) that has management responsibility for a project;
            ``(2) in which the ownership entity, including its general 
        partner or partners (if applicable) and its officers or 
        directors (if applicable), has an ownership interest; and
            ``(3) over which the ownership entity exerts effective 
        control.''.
    (b) Implementation.--
            (1) Public comment.--The Secretary shall implement the 
        amendments made by this section by regulation issued after 
        notice and opportunity for public comment. The notice shall 
        seek comments primarily as to the definitions of the terms 
        ``ownership interest in'' and ``effective control'', as those 
        terms are used in the definition of the terms ``agent employed 
to manage the property that has an identity of interest'' and 
``identity of interest agent''.
            (2) Timing.--A proposed rule implementing the amendments 
        made by this section shall be published not later than one year 
        after the date of enactment of this Act.
    (c) Applicability of Amendments.--The amendments made by subsection 
(a) shall apply only with respect to--
            (1) violations that occur on or after the effective date of 
        the final regulations implementing the amendments made by this 
        section; and
            (2) in the case of a continuing violation (as determined by 
        the Secretary of Housing and Urban Development), any portion of 
        a violation that occurs on or after that date.

SEC. 221. CIVIL MONEY PENALTIES FOR NONCOMPLIANCE WITH SECTION 8 HAP 
              CONTRACTS.

    (a) Basic Authority.--Title I of the United States Housing Act of 
1937 is amended by adding at the end the following new section:

``SEC. 27. CIVIL MONEY PENALTIES AGAINST SECTION 8 OWNERS.

    ``(a) In General.--
            ``(1) Effect on other remedies.--The penalties set forth in 
        this section shall be in addition to any other available civil 
        remedy or any available criminal penalty, and may be imposed 
        regardless of whether the Secretary imposes other 
        administrative sanctions.
            ``(2) Failure of secretary.--The Secretary may not impose 
        penalties under this section for a violation, if a material 
        cause of the violation is the failure of the Secretary, an 
        agent of the Secretary, or a public housing agency to comply 
        with an existing agreement.
    ``(b) Violations of Housing Assistance Payment Contracts for Which 
Penalty May Be Imposed.--
            ``(1) Liable parties.--The Secretary may impose a civil 
        money penalty under this section on--
                    ``(A) any owner of a property receiving project-
                based assistance under section 8;
                    ``(B) any general partner of a partnership owner of 
                that property; and
                    ``(C) any agent employed to manage the property 
                that has an identity of interest with the owner or the 
                general partner of a partnership owner of the property.
            ``(2) Violations.--A penalty may be imposed under this 
        section for a knowing and material breach of a housing 
        assistance payments contract, including the following--
                    ``(A) failure to provide decent, safe, and sanitary 
                housing pursuant to section 8; or
                    ``(B) knowing or willful submission of false, 
                fictitious, or fraudulent statements or requests for 
                housing assistance payments to the Secretary or to any 
                department or agency of the United States.
            ``(3) Amount of penalty.--The amount of a penalty imposed 
        for a violation under this subsection, as determined by the 
        Secretary, may not exceed $25,000 per violation.
    ``(c) Agency Procedures.--
            ``(1) Establishment.--The Secretary shall issue regulations 
        establishing standards and procedures governing the imposition 
        of civil money penalties under subsection (b). These standards 
        and procedures--
                    ``(A) shall provide for the Secretary or other 
                department official to make the determination to impose 
                the penalty;
                    ``(B) shall provide for the imposition of a penalty 
                only after the liable party has received notice and the 
                opportunity for a hearing on the record; and
                    ``(C) may provide for review by the Secretary of 
                any determination or order, or interlocutory ruling, 
                arising from a hearing and judicial review, as provided 
                under subsection (d).
            ``(2) Final orders.--
                    ``(A) In general.--If a hearing is not requested 
                before the expiration of the 15-day period beginning on 
                the date on which the notice of opportunity for hearing 
                is received, the imposition of a penalty under 
                subsection (b) shall constitute a final and 
                unappealable determination.
                    ``(B) Effect of review.--If the Secretary reviews 
                the determination or order, the Secretary may affirm, 
                modify, or reverse that determination or order.
                    ``(C) Failure to review.--If the Secretary does not 
                review that determination or order before the 
                expiration of the 90-day period beginning on the date 
                on which the determination or order is issued, the 
                determination or order shall be final.
            ``(3) Factors in determining amount of penalty.--In 
        determining the amount of a penalty under subsection (b), the 
        Secretary shall take into consideration--
                    ``(A) the gravity of the offense;
                    ``(B) any history of prior offenses by the violator 
                (including offenses occurring before the enactment of 
                this section);
                    ``(C) the ability of the violator to pay the 
                penalty;
                    ``(D) any injury to tenants;
                    ``(E) any injury to the public;
                    ``(F) any benefits received by the violator as a 
                result of the violation;
                    ``(G) deterrence of future violations; and
                    ``(H) such other factors as the Secretary may 
                establish by regulation.
            ``(4) Payment of penalty.--No payment of a civil money 
        penalty levied under this section shall be payable out of 
        project income.
    ``(d) Judicial Review of Agency Determination.--Judicial review of 
determinations made under this section shall be carried out in 
accordance with section 537(e) of the National Housing Act.
    ``(e) Remedies for Noncompliance.--
            ``(1) Judicial intervention.--
                    ``(A) In general.--If a person or entity fails to 
                comply with the determination or order of the Secretary 
                imposing a civil money penalty under subsection (b), 
                after the determination or order is no longer subject 
                to review as provided by subsections (c) and (d), the 
                Secretary may request the Attorney General of the 
                United States to bring an action in an appropriate 
                United States district court to obtain a monetary 
                judgment against that person or entity and such other 
                relief as may be available.
                    ``(B) Fees and expenses.--Any monetary judgment 
                awarded in an action brought under this paragraph may, 
                in the discretion of the court, include the attorney's 
                fees and other expenses incurred by the United States 
                in connection with the action.
            ``(2) Nonreviewability of determination or order.--In an 
        action under this subsection, the validity and appropriateness 
        of the determination or order of the Secretary imposing the 
penalty shall not be subject to review.
    ``(f) Settlement by Secretary.--The Secretary may compromise, 
modify, or remit any civil money penalty which may be, or has been, 
imposed under this section.
    ``(g) Deposit of Penalties.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, if the mortgage covering the property receiving assistance 
        under section 8 is insured or formerly insured by the 
        Secretary, the Secretary shall apply all civil money penalties 
        collected under this section to the appropriate insurance fund 
        or funds established under this Act, as determined by the 
        Secretary.
            ``(2) Exception.--Notwithstanding any other provision of 
        law, if the mortgage covering the property receiving assistance 
        under section 8 is neither insured nor formerly insured by the 
        Secretary, the Secretary shall make all civil money penalties 
        collected under this section available for use by the 
        appropriate office within the Department for administrative 
        costs related to enforcement of the requirements of the various 
        programs administered by the Secretary.
    ``(h) Definitions.--For the purposes of this section--
            ``(1) the term `agent employed to manage the property that 
        has an identity of interest' means an entity--
                    ``(A) that has management responsibility for a 
                project;
                    ``(B) in which the ownership entity, including its 
                general partner or partners (if applicable), has an 
                ownership interest; and
                    ``(C) over which such ownership entity exerts 
                effective control; and
            ``(2) the term `knowing' means having actual knowledge of 
        or acting with deliberate ignorance of or reckless disregard 
        for the prohibitions under this section.''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply only with respect to--
            (1) violations that occur on or after the effective date of 
        final regulations implementing the amendments made by this 
        section; and
            (2) in the case of a continuing violation (as determined by 
        the Secretary of Housing and Urban Development), any portion of 
        a violation that occurs on or after such date.
    (c) Implementation.--
            (1) Regulations.--
                    (A) In general.--The Secretary shall implement the 
                amendments made by this section by regulation issued 
                after notice and opportunity for public comment.
                    (B) Comments sought.--The notice under subparagraph 
                (A) shall seek comments as to the definitions of the 
                terms ``ownership interest in'' and ``effective 
                control'', as such terms are used in the definition of 
                the term ``agent employed to manage such property that 
                has an identity of interest''.
            (2) Timing.--A proposed rule implementing the amendments 
        made by this section shall be published not later than one year 
        after the date of enactment of this Act.

SEC. 222. EXTENSION OF DOUBLE DAMAGES REMEDY.

    Section 421 of the Housing and Community Development Act of 1987 
(12 U.S.C. 1715z-4a) is amended--
            (1) in subsection (a)(1)--
                    (A) in the first sentence, by striking ``Act; or 
                (B)'' and inserting the following: ``Act; (B) a 
                regulatory agreement that applies to a multifamily 
                project whose mortgage is insured or held by the 
Secretary under section 202 of the Housing Act of 1959 (including 
property subject to section 202 of such Act as it existed before 
enactment of the Cranston-Gonzalez National Affordable Housing Act of 
1990); (C) a regulatory agreement or such other form of regulatory 
control as may be imposed by the Secretary that applies to mortgages 
insured or held by the Secretary under section 542 of the Housing and 
Community Development Act of 1992, but not reinsured under section 542 
of the Housing and Community Development Act of 1992; or (D)''; and
                    (B) in the second sentence, by inserting after 
                ``agreement'' the following: ``, or such other form of 
                regulatory control as may be imposed by the 
                Secretary,'';
            (2) in subsection (a)(2), by inserting after ``Act,'' the 
        following: ``under section 202 of the Housing Act of 1959 
        (including section 202 of such Act as it existed before 
        enactment of the Cranston-Gonzalez National Affordable Housing 
        Act of 1990) and under section 542 of the Housing and Community 
        Development Act of 1992,'';
            (3) in subsection (b), by inserting after ``agreement'' the 
        following: ``, or such other form of regulatory control as may 
        be imposed by the Secretary,'';
            (4) in subsection (c)--
                    (A) in the first sentence, by inserting after 
                ``agreement'' the following: ``, or such other form of 
                regulatory control as may be imposed by the 
                Secretary,''; and
                    (B) in the second sentence, by inserting before the 
                period the following: ``or under the Housing Act of 
                1959, as appropriate''; and
            (5) in subsection (d), by inserting after ``agreement'' the 
        following: ``, or such other form of regulatory control as may 
        be imposed by the Secretary,''.

SEC. 223. OBSTRUCTION OF FEDERAL AUDITS.

    Section 1516(a) of title 18, United States Code, is amended by 
inserting after ``under a contract or subcontract,'' the following: 
``or relating to any property that is security for a mortgage note that 
is insured, guaranteed, acquired, or held by the Secretary of Housing 
and Urban Development pursuant to any Act administered by the 
Secretary,''.
                                 <all>