[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2447 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 2447

   To reform the assisted multifamily rental housing programs of the 
  Department of Housing and Urban Development, protect the financial 
  interests of the Federal Government, maintain the affordability and 
   availability of low-income housing, enhance the effectiveness of 
   enforcement provisions relating to single family and multifamily 
   housing, and consolidate and reform the management of multifamily 
               housing programs, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 10, 1997

Mr. Lazio of New York introduced the following bill; which was referred 
           to the Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
   To reform the assisted multifamily rental housing programs of the 
  Department of Housing and Urban Development, protect the financial 
  interests of the Federal Government, maintain the affordability and 
   availability of low-income housing, enhance the effectiveness of 
   enforcement provisions relating to single family and multifamily 
   housing, and consolidate and reform the management of multifamily 
               housing programs, 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 AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Multifamily 
Housing Restructuring and Affordability Act of 1997''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

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

Sec. 101. Findings and purposes.
Sec. 102. Performance measures.
Sec. 103. Definitions.
                Subtitle A--Restructuring of Assistance

Sec. 111. Authority of participating administrative entities.
Sec. 112. Mortgage restructuring and rental assistance sufficiency 
                            plans.
Sec. 113. Section 8 renewals and affordability commitments by owners of 
                            projects.
Sec. 114. Exemptions from and prohibitions on restructuring.
Sec. 115. Restructuring tools.
Sec. 116. Management standards.
Sec. 117. Monitoring of compliance.
Sec. 118. Review.
Sec. 119. GAO audit and review.
Sec. 120. Treatment of FHA multifamily restructuring demonstrations.
Sec. 121. Technical and conforming amendments.
   Subtitle B--Office of Multifamily Housing Assistance Restructuring

Sec. 141. Establishment of Office of Multifamily Housing Assistance 
                            Restructuring.
Sec. 142. Director.
Sec. 143. Duty and authority of Director.
Sec. 144. Personnel.
Sec. 145. Funding.
Sec. 146. Limitation on subsequent employment.
Sec. 147. Audits by GAO.
Sec. 148. Regulations and orders.
Sec. 149. Termination.
      Subtitle C--Contracts Expiring After Termination of Program

Sec. 161. Tenant-based assistance.
                   TITLE II--Miscellaneous Provisions

Sec. 201. Rehabilitation grants for certain insured projects.
Sec. 202. Amendment to housing finance agency multifamily housing 
                            financing pilot program.
Sec. 203. Conversion of direct loan elderly projects to project rental 
                            assistance contracts.
Sec. 204. Rent limitation for non-FHA multifamily housing projects 
                            receiving section 8 project-based 
                            assistance.
Sec. 205. GAO report on section 8 rental assistance for multifamily 
                            housing projects.
                   TITLE III--ENFORCEMENT PROVISIONS

Sec. 301. Implementation.
         Subtitle A--FHA Single Family and Multifamily Housing

Sec. 311. Authorization to immediately suspend mortgagees.
Sec. 312. Extension of equity skimming to other single family and 
                            multifamily housing programs.
Sec. 313. Civil money penalties against mortgagees, lenders, and other 
                            participants in FHA programs.
                 Subtitle B--FHA Multifamily Provisions

Sec. 321. Civil money penalties against general partners, officers, 
                            directors, and certain managing agents of 
                            multifamily projects.
Sec. 322. Civil money penalties for noncompliance with section 8 HAP 
                            contracts.
Sec. 323. Extension of double damages remedy.
Sec. 324. 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 safe, 
        clean, and healthy housing that is affordable to low-income 
        families;
            (2) housing is an essential element in holding a job, 
        getting an education, and strengthening communities;
            (3) 23 years after the enactment of the section 8 rental 
        housing assistance payments program, a record number of 
        contracts for such assistance are expiring, including contracts 
        covering 1,800,000 dwelling units in 1998 and contracts 
        covering 2,700,000 units between 1999 and 2002;
            (4) if the contracts expiring in 1998 alone are not 
        renewed, 4,400,000 Americans--90 percent of whom are elderly 
        persons, persons with disabilities, and low-income families 
        with children--are at risk of losing their homes because of 
        sharp rent increases;
            (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) it is estimated that 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 
        project-based rental assistance contracts under section 8 of 
        the United States Housing Act of 1937 will increase from 
        approximately $1,200,000,000 in fiscal year 1998 to almost 
        $8,000,000,000 by fiscal year 2006;
            (7) absent new budget authority for the renewal of expiring 
        contracts for project-based assistance or restructuring of FHA-
        insured mortgages, 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 Fund;
            (8) more than 15 percent of federally assisted multifamily 
        housing projects are physically or financially distressed, 
        including a number that suffer from mismanagement; and
            (9) 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 to ensure proper oversight of the multifamily 
        housing restructuring process.
    (b) Purpose.--The purpose of this title is to promote and preserve 
safe, clean, and healthy housing that is affordable to low-income 
families while reducing the long-term costs to the Federal Government, 
thereby contributing to the supply of affordable housing, by--
            (1) reforming the design and operation of rental housing 
        assistance programs of the Department to promote greater 
        project operating and cost efficiencies and to end excessive 
        taxpayer subsidies;
            (2) promoting the use of vouchers and relationships between 
        landlords and tenants under the section 8 rental assistance 
        program that operate in a manner that more closely resembles 
        the private housing market;
            (3) protecting tenants and providing more choice for 
        tenants in a manner that creates hope and opportunity and 
        preserves communities;
            (4) facilitating mixed-income communities;
            (5) creating a new compact with owners of multifamily 
        rental housing under which the owners continue to provide safe, 
        clean, healthy, and affordable housing;
            (6) encouraging owners of eligible multifamily housing 
        projects to restructure their FHA-insured mortgages and 
        project-based rental assistance contracts in a manner that is 
        consistent with this title before the year in which the 
        contract expires;
            (7) increasing accountability and rewarding effective 
        management of affordable housing owners receiving project-based 
        section 8 rental assistance;
            (8) rehabilitating properties when necessary to maintain 
        safe, clean, and healthy living conditions;
            (9) achieving greater accountability with respect to 
        taxpayer funds by empowering the Federal Government to take 
        firmer, quicker, and more effective action to eliminate fraud 
        and abuse in Department of Housing and Urban Development 
        programs and to pursue owners who take inappropriate actions; 
        and
            (10) reforming, consolidating, and strengthening 
        enforcement of the Department's affordable housing programs.

SEC. 102. PERFORMANCE MEASURES.

    Consistent with the purposes and requirements of the Government 
Performance and Results Act of 1993, the program under this title and 
the implementation of the program by the Department of Housing and 
Urban Development shall comply with the following performance goals:
            (1) The eligible multifamily housing projects restructured 
        under this title shall be financially viable after the 
        restructuring.
            (2) The Department of Housing and Urban Development shall 
        receive a written commitment from the owner of each 
        restructured project that the project will be retained as a 
        valuable asset of the affordable housing stock to serve low-
        income families.
            (3) The process for restructuring shall protect--
                    (A) the financial interests of the taxpayers, 
                including the immediate costs to the Federal Government 
                recognized in restructuring the mortgage (by payment of 
                claim, refinancing, or otherwise) and the long-term 
                costs of Federal subsidies required for the project to 
                remain financially viable;
                    (B) the financial interests of project owners and 
                managers, because they are partners of the Federal 
                Government in meeting the affordable housing needs of 
                the Nation through the section 8 rental housing 
                assistance program; and
                    (C) the interests of tenants residing in the 
                multifamily housing projects at the time of the 
                restructuring for the housing.

SEC. 103. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Comparable properties.--The term ``comparable 
        properties'' means, with respect to an eligible multifamily 
        property, other properties that are--
                    (A) determined by a State-certified appraiser 
                pursuant to the Uniform Standards of Professional 
                Appraisal Practice to be--
                            (i) located in the same housing market area 
                        as the eligible multifamily housing project and 
                        similar to such project in neighborhood 
                        (including risk of crime), location, access, 
                        street appeal, age, property size, apartment 
                        mix, physical configuration, property and unit 
                        amenities, and utilities; or
                            (ii) if no such similar properties exist in 
                        the same housing market area as the eligible 
                        multifamily housing project, located in other 
                        housing market areas and similar to such 
                        project in the matters referred to in clause 
                        (i);
                    (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) Director.--The term ``Director'' means the Director of 
        the Office of Multifamily Housing Assistance Restructuring of 
        the Department of Housing and Urban Development.
            (3) Eligible multifamily housing project.--The term 
        ``eligible multifamily housing project'' means a property 
        consisting of more than 4 dwelling units--
                    (A) having rents which, on an average per unit 
                basis, exceed the rent of comparable properties, as 
                determined by the Director;
                    (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 loan management assistance 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) that is financed by a mortgage insured or held 
                by the Secretary under the National Housing Act.
            (4) 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.
            (5) Expiration date.--The term ``expiration date'' means 
        the date on which an expiring contract expires.
            (6) Fair market rent.--The term ``fair market rent'' means 
        the applicable fair market rental established under section 
        8(c) of the United States Housing Act of 1937 for the 
        appropriate size and type of dwelling unit.
            (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) Nonprofit organization.--The term ``nonprofit 
        organization'' means any private organization that--
                    (A) is organized under State or local laws;
                    (B) has no part of its net earnings inuring to the 
                benefit of any member, shareholder, founder, 
                contributor, or individual; and
                    (C) has a long-term record of service in providing 
                and financing good-quality and affordable housing for 
                low-income families through relationships with public 
                entities.
            (9) Office.--The term ``Office'' means the Office of 
        Multifamily Housing Assistance Restructuring of the Department 
        of Housing and Urban Development.
            (10) Participating administrative entity.--The term 
        ``participating administrative entity'' means a public agency, 
        including a State housing finance agency, local housing agency, 
        or private nonprofit or for-profit organization, or combination 
        thereof, which is selected under section 111(b) to act as a 
        participating administrative entity for purposes of this title.
            (11) Portfolio restructuring agreement.--The term 
        ``Portfolio restructuring agreement'' means the agreement 
        entered into between the Director and a participating 
        administrative entity, as provided under section 111.
            (12) Project-based assistance.--The term ``project-based 
        assistance'' means rental assistance under a program referred 
        to in paragraph (3)(B) that is attached to a multifamily 
        housing project.
            (13) Qualified mortgagee.--The term ``qualified mortgagee'' 
        means an entity that is approved by the Director, pursuant to 
        guidelines established by the Secretary, as capable of 
        servicing and originating mortgages for multifamily housing 
        projects insured under the National Housing Act and that--
                    (A) is not suspended or debarred by the Secretary;
                    (B) is not suspended or on probation imposed by the 
                Mortgagee Review Board;
                    (C) is not in default under any Government National 
                Mortgage Association obligation; and
                    (D) meets previous participation requirements 
                promulgated by the Director.
            (14) Renewal.--The term ``renewal'' means the replacement 
        of an expiring contract with a new contract under section 8 of 
        the United States Housing Act of 1937, consistent with the 
        requirements of this title.
            (15) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (16) State.--The term ``State'' has the same meaning as in 
        section 104 of the Cranston-Gonzalez National Affordable 
        Housing Act.
            (17) 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.
            (18) 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.
            (19) 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.

                Subtitle A--Restructuring of Assistance

SEC. 111. AUTHORITY OF PARTICIPATING ADMINISTRATIVE ENTITIES.

    (a) Portfolio Restructuring Agreements.--
            (1) In general.--The Director of the Office of Multifamily 
        Housing Assistance Restructuring shall enter into portfolio 
        restructuring agreements with participating administrative 
        entities for the implementation of mortgage restructuring and 
        rental assistance sufficiency plans under section 112 to 
        restructure FHA-insured multifamily housing mortgages, to--
                    (A) reduce the costs of expiring contracts;
                    (B) address financially and physically troubled 
                projects; and
                    (C) correct management and ownership deficiencies.
            (2) Contents.--Each portfolio restructuring agreement 
        entered into under this subsection shall--
                    (A) be a cooperative agreement between the Director 
                and a participating administrative entity to establish 
                the obligations and requirements between such parties;
                    (B) identify the particular geographic jurisdiction 
                or particular classification or classifications of 
                eligible multifamily housing projects for which the 
                participating administrative entity is authorized to 
                approve and implement mortgage restructuring and rental 
                assistance sufficiency plans under section 112;
                    (C) require the participating administrative entity 
                to review and certify to the accuracy and completeness 
                of the evaluation of rehabilitation needs required 
                under section 112(e)(4) for each eligible multifamily 
                housing project included in the portfolio restructuring 
                agreement, in accordance with the regulations of the 
                Director;
                    (D) identify the responsibilities of the 
                participating administrative entity and the Director in 
                approving and implementing a mortgage restructuring and 
                rental assistance sufficiency plan, including any 
                actions proposed to be taken under section 114 or 115;
                    (E) require, with respect to each eligible 
                multifamily housing project for which the participating 
                administrative entity has responsibility in approval 
                and implementation of a mortgage restructuring and 
                rental assistance sufficiency plan, that each such plan 
                be prepared in accordance with the requirements of 
                section 112; and
                    (F) include compensation for all reasonable 
                expenses incurred by the participating administrative 
                entity necessary to perform its duties under this 
                subtitle.
            (3) Terms.--The Director shall, by regulation, establish 
        terms and conditions of portfolio restructuring agreements 
        under this subsection. Each such agreement shall provide that 
        the Director may immediately terminate such an agreement with a 
        participating administrative entity if the Director determines 
        that the entity has failed to comply with the terms and 
        conditions of the agreement.
    (b) Selection of Participating Administrative Entities.--
            (1) In general.--Subject to paragraph (4), the Director 
        shall select entities described in paragraph (2) to act for 
        purposes of this subtitle as participating administrative 
        entities. The Director shall authorize each entity selected to 
        act as a participating administrative entity with respect to a 
        particular geographic jurisdiction or particular 
        classifications of eligible multifamily housing projects, or 
        both. The Director may assign more than one participating 
        administrative entity to any geographic jurisdiction or for any 
        classification of eligible multifamily housing project.
            (2) Eligible entities.--An entity described in this 
        paragraph is a public agency (including a State housing finance 
        agency and a local housing agency) or private nonprofit or for-
        profit organizations, or any combination thereof.
            (3) Selection criteria.--The Director shall select entities 
        described in paragraph (2) to act participating administrative 
        agencies based on the following criteria:
                    (A) The extent of the timeliness and efficiency of 
                the entity in restructuring a portfolio of loans.
                    (B) The cost effectiveness of the entity (relative 
                to other entities) in managing a multifamily housing 
                portfolio, while maintaining the public purpose of such 
                housing.
                    (C) The extent of demonstrated experience and 
                capacity of the entity in multifamily housing 
                restructuring and in multifamily housing asset 
                management.
                    (D) The extent of demonstrated expertise of the 
                entity in financing and managing affordable housing for 
                low-income families.
                    (E) The extent to which the entity has a history of 
                stable, financially sound, and responsible 
                administrative performance.
                    (F) The extent of demonstrated financial strength 
                of the entity, with respect to asset quality, capital 
                adequacy, and liquidity.
                    (G) The extent of demonstrated capacity of the 
                entity to work with residents of low-income housing and 
                communities.
                    (H) The extent to which the entity is otherwise 
                qualified, as determined by the Director, to carry out 
                the requirements of this subtitle, including capability 
                to perform the necessary underwriting and restructuring 
                activities under this subtitle.
            (4) Alternative administrators.--In the case of any 
        eligible multifamily housing project for which the Director 
        determines that no entity has been selected or is available or 
        qualified to be selected under this subsection to act as 
        participating administrative entity, the Director may, on a 
        project-by-project basis--
                    (A) select another entity described in paragraph 
                (2), using the criteria under paragraph (3) to act as 
                the participating administrative entity for such 
                project;
                    (B) assign a participating administrative entity 
                otherwise assigned to a geographic jurisdiction or 
                classification of eligible multifamily housing projects 
                that does not include such project to act as the 
                participating administrative entity for such project; 
                or
                    (C) act as the participating administrative entity 
                for such project.
    (c) Prohibition.--No private entity acting or serving as a 
participating administrative entity shall share, participate in, or 
otherwise benefit from any equity created, received, or restructured as 
a result of a portfolio restructuring agreement.
    (d) Liability.--A participating administrative entity or a 
qualified mortgagee shall not be liable for any losses arising from the 
development, underwriting, or implementation of any mortgage 
restructuring and rental sufficiency agreement unless such losses 
involved gross negligence or willful misconduct on the part of such 
entity or mortgagee.

SEC. 112. MORTGAGE RESTRUCTURING AND RENTAL ASSISTANCE SUFFICIENCY 
              PLANS.

    (a) Submission, Contents, and Approval.--
            (1) Procedures and requirements.--The Director shall 
        develop procedures and requirements for the submission, to the 
        appropriate participating administrative entity, of a mortgage 
        restructuring and rental assistance sufficiency plan for each 
        eligible multifamily housing project with an expiring contract.
            (2) Notice and timing.--The Director shall provide written 
        notice of expiration date for the expiring contract for an 
        eligible multifamily housing project to the owner and the 
        mortgagee of record for the project not less than 12 months 
        before the expiration date. The Director shall establish 
        deadlines for submission of mortgage restructuring and rental 
        assistance sufficiency plans for eligible multifamily housing 
        projects to the appropriate participating administrative 
        entity, which shall be a reasonable period after the notice of 
        such expiration is received.
            (3) Development.--Except as provided in paragraph (4), each 
        mortgage restructuring and rental assistance sufficiency plan 
        submitted under this subsection for an eligible multifamily 
        housing project shall be developed at the initiative of the 
        owner of the project, in conjunction with the qualified 
        mortgagee servicing the loan at such time, pursuant to 
        guidelines for mortgage restructuring established by the 
        Director. The qualified mortgagee--
                    (A) shall assist the owner in determining the 
                appropriate restructuring tools under section 115 to 
                include in the plan to ensure compliance with the 
                performance goals under 102, taking into consideration 
                the specific characteristics of the project and the 
                mortgage on the project and the type of rental 
                assistance that will be provided on behalf of tenants 
                in the project; and
                    (B) may underwrite the financing proposed in the 
                plan.
            (4) Alternative development.--In any case that the 
        mortgagee for a project is unable, for any reason, to 
        participate with the owner of the project in developing a 
        mortgage restructuring and rental assistance sufficiency plan 
        for the project, or the mortgagee is not a qualified mortgagee, 
        the participating administrative entity for the project, or a 
        qualified third party selected by such entity, shall fulfill 
        the responsibilities of the qualified mortgagee under paragraph 
        (3).
            (5) 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.
            (6) Approval.--
                    (A) In general.--The participating administrative 
                entity shall review and approve, reject, or seek 
                modifications to mortgage restructuring and rental 
                assistance sufficiency plans submitted under this 
                section in accordance with terms and conditions as the 
                Director shall provide.
                    (B) Prepayment.--If a plan for a project proposes 
                to pay the mortgage in full and the prepayment does not 
                violate any existing contracts, the participating 
                administrative entity may approve the plan 
                notwithstanding its preparation without the 
                participation of the qualified mortgagee or the lender.
                    (C) Required mortgage restructuring.--A 
                participating administrative entity may not approve a 
                mortgage restructuring and rental assistance 
                sufficiency plan for an eligible multifamily housing 
                project unless the plan provides for restructuring of 
                the mortgage for the project under paragraph (8) or (9) 
                of section 115(a).
                    (D) Director approval in cases of foreclosure or 
                sale.--In the case of any mortgage restructuring and 
                rental assistance sufficiency plan that involves--
                            (i) foreclosure of a mortgage on an 
                        eligible multifamily housing project, or
                            (ii) transfer of ownership of such a 
                        project as described in section 114(b)(5),
                the participating administrative entity may not approve 
                the plan without prior review and approval of the 
                Director.
    (b) Notification of Tenants.--The Director shall establish 
procedures for notifying tenants concerning the expiration dates of 
expiring contracts for any eligible multifamily housing project.
    (c) Temporary Extension of Contract Term.--Subject to agreement by 
a project owner, the Director may, for any eligible multifamily housing 
project, extend the term of any expiring contract or provide a section 
8 contract with rent levels set in accordance with subsection (h) for a 
period sufficient to facilitate the implementation of a mortgage 
restructuring and rental assistance sufficiency plan for the project, 
as determined by the Director.
    (d) Tenant Rent Protection.--If the owner of an eligible 
multifamily housing project with an expiring contract does not agree to 
extend the contract, not less than 6 months before terminating the 
contract, the following requirements shall apply:
            (1) Notice.--The project owner shall provide written notice 
        to the Director and the tenants of the project of the failure 
        to extend the contract.
            (2) Tenant-based assistance.--
                    (A) In general.--The Director shall, to the extent 
                amounts are made available in advance in appropriation 
                Acts, make tenant-based assistance available to tenants 
                residing in units in the project assisted under the 
                expiring contract upon the expiration date.
                    (B) Enhanced vouchers for elderly and disabled 
                tenants.--If tenant-based assistance is provided under 
                this subsection for any tenant of the project who is an 
                elderly family or a disabled family (as such terms are 
                defined in section 3(b) of the United States Housing 
                Act of 1937) who continues residence in the project and 
                the rent for the dwelling unit in which such tenant 
                resides exceeds the fair market rental or payment 
                standard for the area, as applicable, the amount of 
                tenant-based assistance provided on behalf of the 
                tenant shall be determined using a maximum monthly rent 
                or payment standard, as applicable, that 
                (notwithstanding sections 8(c)(1) and 8(o)(1) of the 
                United States Housing Act of 1937) is equal to the 
                amount of rent charged for the dwelling unit; but only 
                if the agency or entity administering the tenant-based 
                assistance determines that such rent charged is 
                reasonable in comparison with rents charged for 
                comparable unassisted housing units in the same market 
                area. If such tenant moves from the project and retains 
                the tenant-based assistance, the amount of assistance 
                provided on behalf of the tenant shall be determined 
                under existing laws and rules and the first sentence of 
                this subparagraph shall not apply.
    (e) Contents of Plans.--Each mortgage restructuring and rental 
assistance sufficiency plan for an eligible multifamily housing project 
shall--
            (1) provide for tenant-based assistance for project 
        residents in accordance with subsection (g) or restructure the 
        project-based assistance rents for the project in accordance 
        with subsection (h);
            (2) provide for any actions that are to be taken pursuant 
        to section 115 to restructure the mortgage and rental 
        assistance for the project;
            (3) require the owner or purchaser of the project to 
        evaluate the rehabilitation needs of the project, in accordance 
        with the regulations of the Director, and notify the 
        participating administrative entity of such needs;
            (4) require the owner or purchaser of the project to 
        provide or contract for competent management of the project;
            (5) require the owner or purchaser of the project to take 
        such actions as may be necessary to rehabilitate the project, 
        maintain adequate reserves for the project, and maintain the 
        project in decent and safe condition, in accordance with--
                    (A) local housing codes or codes adopted by public 
                housing agencies, in the case of any project that is 
                subject to such a code that--
                            (i) meets or exceeds housing quality 
                        standards established by the Secretary; and
                            (ii) does not severely restrict housing 
                        choice; or
                    (B) housing quality standards established by the 
                Secretary, in the case of any project not subject to a 
                housing code described in subparagraph (A);
            (6) require the owner or purchaser of the project to 
        maintain affordability and use restrictions, as the 
        participating administrative entity determines (in accordance 
        with guidelines established by the Director) to be appropriate 
        and consistent with any rent levels established under 
        subsection (h) and with the long-term physical and financial 
        viability character of the project as affordable housing; and
            (7) require the owner or purchaser of the project to meet 
        such other requirements as the Director determines to be 
        appropriate.
    (f) Tenant and Community Participation and Capacity Building.--
            (1) Procedures.--
                    (A) In general.--The Director shall establish 
                procedures to provide an opportunity for tenants of 
                each eligible multifamily housing project with an 
                expiring contract and other affected parties, including 
                local government and the community in which the project 
                is located, to comment on the restructuring process for 
                the project carried out under this subtitle.
            (2) Funding.--
                    (A) In general.--The Director 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 subtitle (including transfer of developments to 
                new owners) and for tenant services, from those amounts 
                made available under appropriations Acts for 
                implementing this subtitle.
                    (B) Allocation.--The Director may allocate any 
                funds made available under subparagraph (A) through 
                existing technical assistance programs 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 Congress, whether before or after 
                the introduction of any bill or resolution proposing 
                such legislation or appropriation.
    (g) Tenant-Based Assistance.--Except as provided in subsection (h), 
each mortgage restructuring and rental assistance sufficiency plan for 
an eligible multifamily housing project shall provide that tenant-based 
rental assistance under section 8(o) of the United States Housing Act 
of 1937 shall be provided, subject to the availability of amounts in 
appropriation Acts, to each assisted family (other than a family 
already receiving tenant-based assistance) residing in the project upon 
the expiration date of the expiring contract for the project or the 
date that the expiring contract is terminated pursuant to the plan, 
whichever occurs earlier.
    (h) Project-Based Assistance for Certain Projects.--
            (1) Projects with elderly or disabled populations, projects 
        in tight rental markets, and cooperative projects.--
                    (A) In general.--In the case of an eligible 
                multifamily housing project described in subparagraph 
                (B), a mortgage restructuring and rental assistance 
                sufficiency plan for the project shall provide for 
                renewal or extension of the expiring contract for the 
                project at rent levels established in accordance with 
                paragraph (3).
                    (B) Projects covered.--An eligible multifamily 
                housing project described in this subparagraph is such 
                a project--
                            (i) in which 90 percent or more of the 
                        dwelling units are occupied by elderly families 
                        or disabled families (as such terms are defined 
                        in section 3(b) of the United States Housing 
                        Act of 1937);
                            (ii) that is located in an area which the 
                        Director has determined, based on housing 
                        market indicators (such as exceptionally low 
                        vacancy rates or exceptionally high absorption 
                        rates), has a shortage of units suitable for 
                        families receiving tenant-based assistance; or
                            (iii) that is a property held by a 
                        nonprofit cooperative ownership housing 
                        corporation or nonprofit cooperative ownership 
                        housing trust, the permanent occupancy of the 
                        dwelling units of which is restricted to 
                        members of such corporation or to beneficiaries 
                        of such trust, and which members or 
                        beneficiaries are restricted to families 
                        eligible for rental assistance under section 8 
                        of the United States Housing Act of 1937.
            (2) Project-based assistance for portions of certain 
        projects.--
                    (A) In general.--In the case of an eligible 
                multifamily housing project described in subparagraph 
                (B), a mortgage restructuring and rental assistance 
                sufficiency plan for the project may provide for 
                renewal or extension of the expiring contract for the 
                project, at rent levels established in accordance with 
                paragraph (3), to cover only a portion of the dwelling 
                units in the project together with the provision of 
                tenant-based assistance under subsection (g) for the 
                remainder of families eligible under such subsection 
                for such assistance. Project-based and tenant-based 
                assistance pursuant to this paragraph shall be in 
                accordance with guidelines established by the Director 
                and may be provided only if the mortgage restructuring 
                and rental assistance sufficiency plan for the project 
                includes a transition plan (developed by the 
                appropriate participating administrative entity and 
                approved by the Director) providing for a transition 
                from project-based to tenant-based assistance.
                    (B) Projects covered.--An eligible multifamily 
                housing project is a project described in this 
                subparagraph only if the appropriate participating 
                administrative entity has determined, and the Director 
                has found such determination to be reasonable, that the 
                project complies with at least one of the following 
                requirements:
                            (i) The project can be made financially 
                        viable only by phasing in tenant-based 
                        assistance over a period not exceeding 5 years 
                        in duration and continuing project-based 
                        assistance for portions of the project not 
                        covered by tenant-based assistance during such 
                        period.
                            (ii) The project has, in the determination 
                        of the Director, a significant number of the 
                        residents who are elderly families or disabled 
                        families (as such terms are defined in section 
                        3(b) of the United States Housing Act of 1937) 
                        and requires project-based assistance for a 
                        period of a duration not exceeding 5 years to 
                        prevent excessive displacement of the elderly 
                        families.
            (3) Rent levels.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the rent levels established in accordance with 
                this paragraph for an eligible multifamily housing 
                project are adjusted rent levels that--
                            (i) are equivalent to rents derived from 
                        comparable properties, if--
                                    (I) the participating 
                                administrative entity makes the rent 
                                determination after the owner submits a 
                                mortgage restructuring and rental 
                                assistance sufficiency plan to the 
                                entity; and
                                    (II) the market rent determination 
                                is based on not less than 2 comparable 
                                properties; or
                            (ii) if rents for comparable properties 
                        cannot be determined, are equal to 90 percent 
                        of the fair market rents for the relevant 
                        market area, which, in the case of projects 
                        located in non-metropolitan areas, the 
                        participating administrative entity may 
                        determine to be the same as the fair market 
                        rents for the county in which the project is 
                        located or for the nearest metropolitan area, 
                        as appropriate for purposes of maintaining the 
                        financial viability of the project.
                    (B) Exceptions.--
                            (i) In general.--The rent levels 
                        established in accordance with this paragraph 
                        may be at levels that exceed the applicable 
                        levels determined under subparagraph (A), but 
                        shall in no event exceed 120 percent of the 
                        applicable fair market rent (which, in the case 
of projects located in non-metropolitan areas, the participating 
administrative entity may determine to be the same as the fair market 
rents for the county in which the project is located or for the nearest 
metropolitan area, as appropriate for purposes of maintaining the 
financial viability of the project), 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 
                                subparagraph (A); and
                                    (II) establishes the rents in 
                                accordance with the procedures under 
                                subparagraph (C).
                            (ii) Geographic limitation.--In any fiscal 
                        year, a participating administrative entity may 
                        approve exception rents on not more than 10 
                        percent of all dwelling units that are covered 
                        in that fiscal year by expiring contracts and 
                        restructured by the entity under the entity's 
                        portfolio restructuring agreement under section 
                        111 with the Director. The Director may waive 
                        the percentage limitation in the preceding 
                        sentence for a specific geographical area or 
                        for specific types of properties (including 
                        properties serving populations with special 
                        needs) upon a finding of special need for 
                        exception rents in such area or for such 
                        properties.
                    (C) Budget-based rent level procedures for 
                exception projects.--Rent levels that are determined in 
                accordance with the procedures under this paragraph 
                shall be established based 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--
                            (i) the debt service of the project;
                            (ii) the operating expenses of the project, 
                        as determined by the participating 
                        administrative entity, including contributions 
                        to adequate reserves, the costs of maintenance, 
                        and other eligible costs permitted under 
                        section 8 of the United States Housing Act of 
                        1937;
                            (iii) such annual rent adjustments as may 
                        be made necessary by future reasonable 
                        increases in operating costs, which shall be 
                        available only upon a showing by the owner of 
                        the project of such increased costs, in 
                        accordance with the operating cost adjustment 
                        factor established by the Secretary for 
                        purposes of the program under the Low-Income 
                        Housing Preservation and Resident Homeownership 
                        Act of 1990;
                            (iv) an adequate allowance for potential 
                        operating losses due to vacancies and failure 
                        to collect rents, as determined by the 
                        participating administrative entity under 
                        guidelines established by the Director;
                            (v) an allowance for a reasonable rate of 
                        return to the owner or purchaser of the project 
                        in accordance with guidelines governing such 
                        rates, which shall be established by the 
                        Director and may provide incentives for owners 
                        or purchasers to meet benchmarks of quality for 
                        management and housing quality; and
                            (vi) other expenses determined by the 
                        participating administrative entity to be 
                        necessary for the operation of the project.

SEC. 113. SECTION 8 RENEWALS AND AFFORDABILITY COMMITMENTS BY OWNERS OF 
              PROJECTS.

    (a) Section 8 Renewals of Restructured Projects.--Subject to the 
availability of amounts provided in advance in appropriations Acts, the 
Director shall enter into contracts with participating administrative 
entities pursuant to which the participating administrative entity 
shall offer to renew or extend an expiring contract covering units in 
an eligible multifamily housing project for which a mortgage 
restructuring and rental assistance sufficiency plan has been approved 
under section 112, and the owner of the project shall accept the offer, 
provided the initial renewal is in accordance with the terms and 
conditions specified in such plan for the project.
    (b) Long-Term Affordability Commitment.--After the initial renewal 
of an expiring contract pursuant to this section, the owner shall 
accept each offer made to renew the contract, for the remaining term of 
the existing mortgage and, if applicable, the remaining term of an 
existing second mortgage, if the offer to renew is on terms and 
conditions specified in the mortgage restructuring and rental 
assistance sufficiency plan.
    (c) Nondiscrimination Against Certificate Holders.--
            (1) In general.--Subject to paragraph (2), in the case of 
        any eligible multifamily housing project for which a mortgage 
        restructuring and rental assistance sufficiency plan has been 
        approved that provides for all project-based assistance for the 
        project to be converted to tenant-based assistance pursuant to 
        subsection (g) or (h)(2) of section 112, the owner may not 
        refuse to lease a reasonable number of units to holders of 
        certificates or vouchers under section 8 of the United States 
        Housing Act of 1937 because of the status of the prospective 
        tenants as certificate or voucher holders.
            (2) Applicability.--The participating administrative entity 
        shall establish reasonable time periods for applying the 
        requirement under paragraph (1), in accordance with guidelines 
        which shall be established by the Director and take into 
        consideration the total amount of the assistance described in 
        section 103(3) received by the project and the relative share 
        of the assistance compared to the total cost of financing, 
        developing, rehabilitating, or otherwise assisting the project.

SEC. 114. EXEMPTIONS FROM AND PROHIBITIONS ON RESTRUCTURING.

    (a) Exemptions From Restructuring and Renewal at Existing or 
Budget-Based Rents.--
            (1) Exemption.--Subject to subsection (b), with respect to 
        a multifamily housing project described in paragraph (2)--
                    (A) such a project shall not be subject to a 
                mortgage restructuring and rental assistance 
                sufficiency plan under this subtitle;
                    (B) the Director shall, subject to the availability 
                of amounts provided in advance in appropriation Acts, 
                renew the expiring contract for the project--
                            (i) except as provided in clause (ii), with 
                        rent levels at the lower of--
                                    (I) existing rents, subject to such 
                                annual rent adjustments as may be made 
                                necessary by future reasonable 
                                increases in operating costs, which 
                                shall be available upon a showing by 
                                the owner of the project of such 
                                increased costs, in accordance with the 
                                operating cost adjustment factor 
                                established by the Secretary for 
                                purposes of the program under the Low-
                                Income Housing Preservation and 
                                Resident Homeownership Act of 1990; or
                                    (II) the budget-based rent levels 
                                determined in accordance with the 
                                procedures under section 112(h)(3)(C); 
                                or
                            (ii) in the case of a project covered by 
                        paragraph (2)(A)(iii), the budget-based rent 
                        levels determined in accordance with the 
                        procedures under section 112(h)(3)(C); and
                    (C) for each fiscal year through fiscal year 2003, 
                the Director shall use 25 percent of any amounts in 
                residual receipt accounts for the project in such 
                fiscal year toward funding the cost for such fiscal 
                year of the contract renewed under subparagraph (B).
            (2) Exempt projects.--A multifamily housing project 
        described in this paragraph is a project that is covered, in 
        whole or in part, by an expiring contract for project-based 
        assistance under section 8 of the United States Housing Act of 
        1937 and that meets the requirements under one of the following 
        subparagraphs:
                    (A) Eligible multifamily housing projects.--The 
                project is an eligible multifamily housing project 
                and--
                            (i) was provided primary financing or 
                        mortgage insurance by a State government or a 
                        unit of general local government (or an agency 
                        or instrumentality of a State government or 
                        unit of general local government);
                            (ii) the participating administrative 
                        entity determines, under guidelines established 
                        by the Director, that significant savings to 
                        the Federal Government in section 8 assistance 
                        amounts would not result from restructuring the 
                        mortgage or rental assistance for the project 
                        under this subtitle; or
                            (iii) in the determination of the Director, 
                        restructuring of the mortgage or rental 
                        assistance for the project under this subtitle 
                        would not ensure the continued financial 
                        viability of the project and--
                                    (I) the project is limited to 
                                occupancy by elderly families or 
                                disabled families (as such terms are 
                                defined in section 3(b) of the United 
                                States Housing Act of 1937), or both, 
                                or is located in a rural area (as such 
                                term is defined in section 520 of the 
                                Housing Act of 1949); or
                                    (II) the Director determines that 
                                there is not available in area in which 
                                the project is located an adequate 
                                supply of habitable, affordable housing 
                                for very low-income families and other 
                                low-income families using tenant-based 
                                assistance.
                    (B) Noneligible multifamily housing projects.--The 
                project does not qualify as an eligible multifamily 
                housing project pursuant to section 103.
    (b) Prohibition on Restructuring for Projects With Owners 
Committing Violations and Projects in Poor Condition.--
            (1) In general.--The Director shall not consider any 
        mortgage restructuring and rental assistance sufficiency plan 
        or request for contract renewal for an eligible multifamily 
        housing project and shall not take actions under subsection (a) 
        for the project if the participating administrative entity 
        determines that--
                    (A) the owner or purchaser of the project has 
                engaged in material adverse financial or managerial 
                actions or omissions with regard to the project (or 
                with regard to other similar projects if the Director 
                determines that such actions or omissions constitute a 
                pattern of mismanagement that would warrant suspension 
                or debarment by the Secretary), including--
                            (i) materially violating any Federal, 
                        State, or local law or regulation with regard 
                        to the project or any other federally assisted 
                        project, after receipt of notice and an 
                        opportunity to cure;
                            (ii) materially breaching a contract for 
                        assistance under section 8 of the United States 
                        Housing Act of 1937, after receipt of notice 
                        and an opportunity to cure;
                            (iii) materially violating any applicable 
                        regulatory or other agreement with the 
                        Secretary, the Director, or a participating 
                        administrative entity, after receipt of notice 
                        and an opportunity to cure;
                            (iv) repeatedly and materially violating 
                        any Federal, State, or local law or regulation 
                        with regard to the project or any other 
                        federally assisted project;
                            (v) repeatedly and materially breaching a 
                        contract for assistance under section 8 of the 
                        United States Housing Act of 1937;
                            (vi) repeatedly and materially violating 
                        any applicable regulatory or other agreement 
                        with the Secretary, the Director, or a 
                        participating administrative entity;
                            (vii) repeatedly failing to make mortgage 
                        payments at times when project income was 
                        sufficient to maintain and operate the 
                        property;
                            (viii) materially failing to maintain the 
                        property according to housing quality standards 
                        after receipt of notice and a reasonable 
                        opportunity to cure; or
                            (ix) committing any actions or omissions 
                        that would warrant suspension or debarment by 
                        the Secretary;
                    (B) the owner or purchaser of the property 
                materially failed to follow the procedures and 
                requirements of this subtitle, after receipt of notice 
                and an opportunity to cure; or
                    (C) the poor condition of the project cannot be 
                remedied in a cost effective manner, as determined by 
                the participating administrative entity.
            (2) Opportunity to dispute findings.--
                    (A) 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 paragraph (1) of a mortgage 
                restructuring and rental assistance sufficiency plan 
                under section 112, the Director 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.
                    (B) Affirmation, modification, or reversal.--
                            (i) In general.--After providing an 
                        opportunity to dispute under subparagraph (A), 
                        the Director or the participating 
                        administrative entity may affirm, modify, or 
                        reverse any rejection under paragraph (1) or 
                        rejection of a mortgage restructuring and 
                        rental assistance sufficiency plan under 
                        section 112.
                            (ii) Reasons for decision.--The Director or 
                        the participating administrative entity, as 
                        applicable, shall identify the reasons for any 
                        final decision under this subparagraph.
                            (iii) Review process.--The Director shall 
                        establish an administrative review process to 
                        appeal any final decision under this 
                        subparagraph.
            (3) Final determination.--Any final determination under 
        this subsection shall not be subject to judicial review.
            (4) Displaced tenants.--Subject to the availability of 
        amounts provided in advance in appropriations Acts, any low-
        income tenant that, at the time of rejection of contract 
        renewal or mortgage restructuring under this subsection, is 
        residing in unit in a project that is assisted under the 
        expiring contract for the project shall be provided with 
        tenant-based assistance and reasonable moving expenses, as 
        determined by the Director.
            (5) Transfer of property.--
                    (A) Facilitation.--The Director shall establish 
                procedures to facilitate the voluntary sale or 
                transfer, as part of a mortgage restructuring and 
                rental assistance sufficiency plan, of eligible 
                multifamily housing projects disqualified from the 
                consideration of a mortgage restructuring and rental 
                assistance sufficiency plan under this section because 
                of any action by an owner or purchaser described in 
                subparagraph (A) or (B) of paragraph (1).
                    (B) Preference.--Such procedures shall give 
                preference to sale or transfer to tenant organizations 
                and tenant-endorsed community-based nonprofit and 
                public agency purchasers meeting such reasonable 
                qualifications as may be established by the Director.
                    (C) Approval of restructuring plan.--
                Notwithstanding paragraph (1), in the case of any 
                project--
                            (i) that is described in subparagraph (A),
                            (ii) that is covered, in whole or in part, 
                        by an expiring contract, and
                            (iii) for which the mortgage restructuring 
                        and rental assistance sufficiency plan provides 
                        for--
                                    (I) transfer of ownership of the 
                                project to a new owner who does not, as 
                                determined by the Director, have any 
                                identity of interest with the owner 
                                whose actions resulted in the 
                                disqualification, and
                                    (II) assignment of all rights, 
                                obligations, and interests of the 
                                previous owner under the expiring 
                                contract to the new owner,
                the Director shall consider, under the provisions of 
                this subtitle, the mortgage restructuring and rental 
                assistance sufficiency plan for the project and shall, 
                subject to the approval in advance of amounts in 
                appropriation Acts and in accordance with the 
                requirements under this subtitle, provide rental 
                assistance in connection with the approval under this 
                subtitle of the plan for the project.
    (c) Treatment of Residual Receipts for Certain Non-Restructured 
Projects.--In the case of any eligible multifamily housing project for 
which an expiring contract is not renewed because--
            (1) the project is subject to subsection (b)(1),
            (2) ownership of project is transferred and a mortgage 
        restructuring and rental assistance sufficiency plan for the 
        project cannot be approved under subsection (b)(5), or
            (3) the owner will prepay the mortgage in full pursuant to 
        section 112(a)(6)(B),
the Director shall recapture 90 percent of any amounts in residual 
receipt accounts for the project and such amounts shall be available 
for rehabilitation grants under section 236(s) of the National Housing 
Act.

SEC. 115. RESTRUCTURING TOOLS.

    (a) Restructuring Tools.--An approved mortgage restructuring and 
rental assistance sufficiency plan for an eligible multifamily housing 
project may include one or more of the following actions:
            (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 involves a mortgage that 
        will continue to be insured under the National Housing Act, the 
        refinancing shall be documented through amendment of the 
        existing insurance contract and not through a new insurance 
        contract.
            (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, except that--
                    (A) insurance, reinsurance, and other credit 
                enhancement pursuant to this paragraph shall be 
                available for an eligible multifamily housing project 
                only to the extent that the owner demonstrates that the 
                owner is unable to secure reasonably comparable 
                insurance, reinsurance, or credit enhancement from 
                other sources;
                    (B) any limitations on the number of units 
                available for mortgage insurance under section 542 
shall not apply to eligible multifamily housing projects; and
                    (C) 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.--Providing any additional State or 
        local mortgage credit enhancements and risk-sharing 
        arrangements 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 subtitle. 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. Subject to the availability of 
        amounts provided in advance in appropriations Acts for 
        administrative fees under section 8 of the United States 
        Housing Act of 1937, such fees shall be used to compensate 
        participating administrative entities for compliance monitoring 
        costs incurred under section 117.
            (6) Use of project accounts.--Applying any residual 
        receipts, replacement reserves, and amounts in any other 
        project accounts not required for project operations to 
        maintain the long-term affordability and physical condition of 
        the project or of other eligible multifamily housing projects. 
        The participating administrative entity may expedite the 
        acquisition of residual receipt, replacement reserves, and 
        other such amounts 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 
        rehabilitation needs of the project, subject to the following 
        provisions:
                    (A) Sources of assistance.--Rehabilitation 
                assistance under this paragraph may be paid from the 
                provision of grants from residual receipts, replacement 
                reserves, and amounts in any other project accounts not 
                required for project operations or, to the extent 
                provided in appropriations Acts, from budget authority 
                provided for increases in amounts for assistance 
                contracts under section 8 of the United States Housing 
                Act of 1937, from the rehabilitation grant program 
                established under section 236(s) of the National 
                Housing Act, or through the debt restructuring 
                transaction.
                    (B) Matching requirement.--
                            (i) Rehabilitation assistance under this 
                        paragraph may be provided for a project only if 
                        the owner of the project contributes an amount 
                        equal to not less than 25 percent of the amount 
                        of rehabilitation assistance received under 
                        this paragraph from the sources described in 
                        subparagraph (A) (excluding replacement 
                        reserves), except that such contribution 
                        requirement not apply to any project owned by a 
                        nonprofit cooperative ownership housing 
                        corporation or trust.
                            (ii) In the case of a project owned by a 
                        nonprofit organization, the amount required to 
                        be contributed under clause (i) by the owner 
                        may include--
                                    (I) the value of any donated 
                                material or building;
                                    (II) the proceeds from bond 
                                financing validly issued by a State or 
                                unit of general local government, 
                                agency, or instrumentality thereof, and 
                                repayable with revenues derived from 
                                projects assisted pursuant to this 
                                title, except that not more than 25 
                                percent of the amounts required to be 
                                contributed under clause (i) may result 
                                from this subclause; and
                                    (III) the cost or value of any 
                                donated goods or services (including 
                                supportive service provided, but not 
                                including the value of any time or 
                                services contributed by volunteers).
                    (C) Eligible use.--Rehabilitation assistance under 
                this paragraph shall be used only for restoring the 
                project to a nonluxury standard adequate for the rental 
                market intended upon the original approval of the 
                project-based assistance for the project.
            (8) Restructuring of mortgage into first and second 
        mortgages.--Restructuring mortgages to provide for the 
        following mortgages:
                    (A) First mortgage.--A structured first mortgage 
                having payments that can be covered by project income 
                with project rents at market rate levels or the levels 
                established in section 112(h), as applicable, which 
                shall bear interest at a rate not less than the 
                applicable Federal rate in effect on the date that the 
                first mortgage being restructured was originated.
                    (B) Second mortgage.--A second mortgage in an 
                amount 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 be subject to 
                the following requirements:
                            (i) The second mortgage shall bear interest 
                        at a rate not to exceed 1 percent annually.
                            (ii) Subject to clause (vii)(II), the 
                        second mortgage shall have a term that expires 
                        upon the termination of the first mortgage on 
                        the project.
                            (iii) During the period in which the first 
                        mortgage remains outstanding, payments of 
                        principal or interest on the second mortgage 
                        shall be required only if project income 
                        exceeds the amount necessary for all reasonable 
                        and necessary operating expenses (including 
                        deposits in a reserve for replacement), debt 
                        service on the first mortgage, a reasonable 
                        return on equity investment to the owner (as 
                        determined pursuant to guidelines established 
                        by the Director), and such other expenditures 
                        as may be approved by the Director.
                            (iv) The Director may authorize 
                        distribution to the owner of up to 25 percent 
                        of the excess project income described in 
                        clause (iii) to the project owner if the 
                        Director determines that the project owner 
                        meets benchmarks of quality for management and 
                        housing quality.
                            (v) The second mortgage shall initially be 
                        held by the Secretary as an obligation of the 
                        General Insurance Fund or the Special Risk 
                        Insurance Fund, as appropriate, but shall be 
                        assumable by any subsequent purchaser of any 
                        multifamily housing project, pursuant to 
                        guidelines established by the Director.
                            (vi) The Director may, under guidelines 
                        established by the Director, modify the terms 
                        or forgive all or part of the second mortgage 
                        upon acquisition by a tenant organization or 
                        tenant-endorsed community-based nonprofit or 
                        public agency.
                            (vii) The principal and accrued interest 
                        due under the second mortgage shall be subject 
                        to the following conditions:
                                    (I) Such principal and interest 
                                shall be immediately due and payable 
                                upon full payment of the first 
                                mortgage, unless the mortgage is 
                                assumed pursuant to clause (v) or the 
                                Director provides for payment of the 
                                second mortgage under subclause (II) of 
                                this clause.
                                    (II) The Director may permit the 
                                owner of the project to begin repayment 
                                of the second mortgage upon full 
                                payment of the first mortgage, in equal 
                                monthly installments of an amount equal 
                                to the monthly principal and interest 
                                payments formerly paid under the first 
                                mortgage. If the Director permits the 
                                owner to repay the mortgage as provided 
                                in this subclause, the second mortgage 
                                shall become the senior mortgage on the 
                                project upon full payment of the first 
                                mortgage.
                                    (III) Such principal and interest 
                                shall be immediately due and payable 
                                upon a finding by the Director that an 
                                owner has failed to materially comply 
                                with this subtitle or any requirements 
                                of the United States Housing Act of 
                                1937, as those requirements apply to 
                                the applicable project, after receipt 
                                of notice of such failure and a 
                                reasonable opportunity to cure such 
                                failure.
                            (viii) Any credit subsidy costs of 
                        providing a second mortgage shall be paid from 
                        the General Insurance Fund or the Special Risk 
                        Insurance Fund, as appropriate.
            (9) Simple restructuring of mortgages.--Restructuring 
        mortgages in the manner such that--
                    (A) the principal amount outstanding under the 
                mortgage is not reduced;
                    (B) the term of the mortgage is not extended or is 
                extended to a date that is--
                            (i) on or before the date occurring 30 
                        years after the date of the expiration of the 
                        original term of existing first mortgage; and
                            (ii) determined by the participating 
                        administrative entity to be consistent with the 
                        purposes of this Act; and
                    (C) the Director may authorize distribution to the 
                owner of up to 25 percent of any project income that 
                exceeds the amount described in paragraph (8)(B)(iii) 
                to the project owner if the Director determines that 
                the project owner meets benchmarks of quality for 
                management and housing quality.
    (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) in the matter preceding paragraph (1), 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 Housing 
        Restructuring and Affordability Act of 1997.
    ``(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 Director and Participating 
Administrative Entities.--The Director and any participating 
administrative entities may not participate in any equity agreement or 
profit-sharing agreement in conjunction with any eligible multifamily 
housing project.

SEC. 116. MANAGEMENT STANDARDS.

    Pursuant to guidelines established by the Director and consistent 
with industry standards, each participating administrative entity shall 
establish and implement management standards applicable to eligible 
multifamily housing projects that are subject to mortgage restructuring 
and rental assistance sufficiency plans administered by such entity, 
including requirements governing conflicts of interest between owners, 
managers, contractors with an identity of interest.

SEC. 117. MONITORING OF COMPLIANCE.

    (a) Compliance Agreements.--Pursuant to regulations issued by the 
Director 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 subtitle. Each agreement shall, at a minimum, 
provide for--
            (1) enforcement of the provisions of this subtitle; 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 
        that is administered by such entity.
            (2) Inspections.--Each review under this subsection shall 
        include on site inspection to determine compliance with housing 
        codes and other requirements as provided in this subtitle and 
        the portfolio restructuring agreements under section 101.
    (c) Audit--The Comptroller General of the United States, the 
Director, 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. 118. REVIEW.

    To ensure compliance with this subtitle, during the 5-year period 
beginning on the date of the enactment of this Act the Director shall 
conduct an annual review and report annually to Congress on actions 
taken under this subtitle and the status of eligible multifamily 
housing projects.

SEC. 119. GAO AUDIT AND REVIEW.

    (a) Initial Audit.--Not later than 18 months after the effective 
date of interim or final regulations promulgated under this subtitle, 
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 
        completion of the audit conducted under subsection (a), the 
        Comptroller General of the United States shall submit to 
        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. 120. TREATMENT OF FHA MULTIFAMILY RESTRUCTURING DEMONSTRATIONS.

    (a) Termination of 1997 Demonstration.--Section 212 of the 
Departments of Veterans Affairs and Housing and Urban Development, and 
Independent Agencies Appropriations Act, 1997 (42 U.S.C. 1437f note) is 
amended by striking subsection (k) and inserting the following new 
subsection:
    ``(k) Termination.--The demonstration program under this section 
shall terminate upon publication in the Federal Register of a finding 
by the Director of the Office of Multifamily Housing Assistance 
Restructuring of the Department of Housing and Urban Development that 
the program under the Multifamily Housing Restructuring and 
Affordability Act of 1997 has been implemented.''.
    (b) Continuation of Funding.--Section 212 of the Departments of 
Veterans Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations Act, 1997 (42 U.S.C. 1437f note) is amended--
            (1) in subsection (a)(1)(B), by striking ``through the end 
        of fiscal year 1997'' and inserting ``until the termination of 
        the demonstration program under this section pursuant to 
        subsection (k)''; and
            (2) in subsection (l)--
                    (A) by inserting ``(1)'' before ``$10,000,000'' and
                    (B) by striking ``September 30, 1998.'' and 
                inserting the following: ``the termination of the 
                demonstration program pursuant to subsection (k); and 
                (2) only to the extent that the other amounts referred 
                to in this subsection have been used, amounts in the 
                General Insurance Fund (established under section 519 
                of the National Housing Act) and the Special Risk 
                Insurance Fund (established under section 238(b) of 
                such Act) shall be available, until the termination of 
                the demonstration program pursuant to subsection (k), 
                to cover such costs with respect to multifamily 
                projects subject to mortgages that are obligations of 
                such Funds.''.
    (c) Savings Provision.--Nothing in this section shall be construed 
to affect any contract or commitment, or the authority of the Secretary 
to carry out any contract or commitment, entered into--
            (1) under section 212 of the Departments of Veterans 
        Affairs and Housing and Urban Development, and Independent 
        Agencies Appropriations Act, 1997, before the termination of 
        the demonstration program under such section pursuant to 
        subsection (k) of such section; or
            (2) under section 210 of the Departments of Veterans 
        Affairs and Housing and Urban Development, and Independent 
        Agencies Appropriations Act, 1996, before the date of the 
        enactment of the Act referred to in paragraph (1).

SEC. 121. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) 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 (acting through the Director of the Office of 
Multifamily Housing Assistance Restructuring), in connection with a 
mortgage restructuring under section 112 of the Multifamily Housing 
Restructuring and Affordability Act of 1997, may make a one time, 
nondefault partial payment of the claim under the mortgage insurance 
contract, which shall include a determination by the Secretary (through 
the Director) or the participating administrative entity, in accordance 
with such Act, of the market value of the project and a restructuring 
of the mortgage, under such terms and conditions as the Secretary 
(through the Director) may establish.''.
    (b) Reuse and Rescission of Certain Recaptured Budget Authority.--
Section 8(bb) of the United States Housing Act of 1937 (42 U.S.C. 
1437f(bb)) is amended to read as follows:
    ``(bb) Reuse and Rescission of Certain Recaptured Budget 
Authority.--If a project-based assistance contract for an eligible 
multifamily housing project subject to actions authorized under title I 
of the Multifamily Housing Restructuring and Affordability Act of 1997 
is terminated or amended as part of restructuring under section 112 of 
such Act, the Secretary shall recapture the budget authority not 
required for the terminated or amended contract and, without regard to 
section 218 of the Departments of Veterans Affairs and Housing and 
Urban Development, and Independent Agencies Appropriations Act of 1997, 
use such amounts as are necessary to provide housing assistance for the 
same number of families covered by such contract for the remaining term 
of such contract, under a contract providing for project-based or 
tenant-based assistance. The amount of budget authority saved as a 
result of the shift to project-based or tenant-based assistance shall 
be rescinded.''.

   Subtitle B--Office of Multifamily Housing Assistance Restructuring

SEC. 141. ESTABLISHMENT OF OFFICE OF MULTIFAMILY HOUSING ASSISTANCE 
              RESTRUCTURING.

    There is hereby established an office within the Department of 
Housing and Urban Development, which shall be known as the Office of 
Multifamily Housing Assistance Restructuring.

SEC. 142. DIRECTOR.

    (a) Appointment.--The Office shall be under the management of a 
Director, who shall be appointed not later than 30 days after the date 
of the enactment of this Act by the President, by and with the advice 
and consent of the Senate, from among individuals who are citizens of 
the United States, have a demonstrated understanding of financing and 
mortgage restructuring for affordable multifamily housing.
    (b) Term.--The Director shall be appointed for a term of 5 years.
    (c) Vacancy.--A vacancy in the position of Director shall be filled 
in the manner in which the original appointment was made under 
subsection (a).
    (d) Service After End of Term.--A Director may serve after the 
expiration of the term for which the Director was appointed until a 
successor Director has been appointed.
    (e) Deputy Director.--
            (1) In general.--The Office shall have a Deputy Director 
        who shall be appointed by the Director from among individuals 
        who are citizens of the United States, have a demonstrated 
        understanding of financing and mortgage restructuring for 
        affordable multifamily housing.
            (2) Functions.--The Deputy Director shall have such 
        functions, powers, and duties as the Director shall prescribe. 
        In the event of the death, resignation, sickness, or absence of 
        the Director, the Deputy Director shall serve as acting 
        Director until the return of the Director or the appointment of 
        a successor pursuant to subsection (c).

SEC. 143. DUTY AND AUTHORITY OF DIRECTOR.

    (a) Duty.--The duty of the Director shall be to administrate and 
monitor the program under subtitle A of mortgage and rental assistance 
restructuring for eligible multifamily housing projects.
    (b) Authority Exclusive of Secretary.--The Director is authorized, 
without the review or approval of the Secretary, to make such 
determinations, take such actions, issue such regulations, and perform 
such functions assigned to the Director under law as the Director 
determines necessary to carry out such functions, except as 
specifically provided in subsection (c).
    (c) Authority Subject to Approval of Director.--Determinations, 
actions, and functions carried out by the Director relating to the 
review and final approval of any mortgage restructuring and rental 
assistance sufficiency plan described in section 112(a)(6)(D) shall be 
subject to the review and approval of the Secretary.
    (d) Delegation of Authority.--The Director may delegate to officers 
and employees of the Office (but not to contractors, subcontractors, or 
consultants) any of the functions, powers, and duties of the Director, 
as the Director considers appropriate.
    (e) Independence in Providing Information to Congress.--The 
Director shall not be required to obtain the prior approval, comment, 
or review of any officer or agency of the United States before 
submitting to the Congress, or any committee or subcommittee thereof, 
any reports, recommendations, testimony, or comments if such 
submissions include a statement indicating that the views expressed 
therein are those of the Director and do not necessarily represent the 
views of the Secretary or the President.

SEC. 144. PERSONNEL.

    (a) Office Personnel.--The Director may appoint and fix the 
compensation of such officers and employees of the Office as the 
Director considers necessary to carry out the functions of the Director 
and the Office. Officers and employees may be paid without regard to 
the provisions of chapter 51 and subchapter III of chapter 53 of title 
5, United States Code, relating to classification and General Schedule 
pay rates.
    (b) Comparability of Compensation With Federal Banking Agencies.--
In fixing and directing compensation under subsection (a), the Director 
shall consult with, and maintain comparability with compensation of 
officers and employees of the Federal Deposit Insurance Corporation.
    (c) Personnel of Other Federal Agencies.--In carrying out the 
duties of the Office, the Director may use information, services, 
staff, and facilities of any executive agency, independent agency, or 
department on a reimbursable basis, with the consent of such agency or 
department.
    (d) Reimbursement of HUD.--The Director shall reimburse the 
Department of Housing and Urban Development for reasonable costs 
incurred by the Department that are directly related to the operations 
of the Office.
    (e) Outside Experts and Consultants.--The Director may procure 
temporary and intermittent services under section 3109(b) of title 5, 
United States Code.
    (f) Limitation.--
            (1) Prohibition of increase in personnel.--Notwithstanding 
        any other provision of law, in each fiscal year, the total 
        full-time-equivalent employment otherwise authorized in the 
        Department of Housing and Urban Development (excluding full-
        time-equivalent employment in the Office of Multifamily Housing 
        Assistance Restructuring) for such fiscal year shall be reduced 
        by one for each full-time-equivalent position in the Office in 
        such fiscal year.
            (2) Savings.--Notwithstanding any other provision of law, 
        in any fiscal year in which paragraph (1) results in reductions 
        in the full-time-equivalent employment in the Department, of 
        the amount made available in appropriation Acts for such fiscal 
        year for salaries and expenses of the Department, an amount 
        equal to the sum of the salaries and expenses for the number of 
        full-time-equivalent positions by which employment in the 
        Department is reduced under paragraph (1) in such fiscal year 
        shall not be available to the Secretary for salaries and 
        expenses and shall be covered into the General Fund of the 
        Treasury.
            (3) Monitoring.--The Director of the Office of Management 
        and Budget shall monitor employment levels in the Department of 
        Housing and Urban Development and take appropriate actions to 
        ensure compliance with the requirements under paragraphs (1) 
        and (2).

SEC. 145. FUNDING.

    (a) Authorization of Appropriations.--There is authorized to be 
appropriated to the Director for carrying out the responsibilities of 
the Director under this title and costs and expenses of the Office such 
sums as may be necessary from the General Insurance Fund and the 
Special Risk Insurance Fund for fiscal years 1998, 1999, 2000, 2001, 
20002, and 2003.
    (b) Budget and Financial Reports.--
            (1) Financial operating plans and forecasts.--Before the 
        beginning of each fiscal year, the Director shall submit a copy 
        of the financial operating plans and forecasts for the Office 
        to the Secretary and the Director of the Office of Management 
        and Budget.
            (2) Reports of operations.--As soon as practicable after 
        the end of each fiscal year and each quarter thereof, the 
        Director shall submit a copy of the report of the results of 
        the operations of the Office during such period to the 
        Secretary and the Director of the Office of Management and 
        Budget.
            (3) Inclusion in president's budget.--The annual plans, 
        forecasts, and reports required under this subsection shall be 
        included (A) in the Budget of the United States in the 
        appropriate form, and (B) in the congressional justifications 
        of the Department of Housing and Urban Development for each 
        fiscal year in a form determined by the Secretary.

SEC. 146. LIMITATION ON SUBSEQUENT EMPLOYMENT.

    Neither the Director nor any former officer or employee of the 
Office who, while employed by the Office, was compensated at a rate in 
excess of the lowest rate for a position classified higher than GS-15 
of the General Schedule under section 5107 of title 5, United States 
Code, may, during the 2-year period beginning on the date of separation 
from employment by the Office, accept compensation from any party 
having any financial interest in any mortgage restructuring and rental 
assistance sufficiency plan under subtitle A or comparable matter in 
which the Director or such officer or employee had direct participation 
or supervision.

SEC. 147. AUDITS BY GAO.

    The Comptroller General shall audit the operations of the Office in 
accordance with generally accepted Government auditing standards. All 
books, records, accounts, reports, files, and property belonging to, or 
used by, the Office shall be made available to the Comptroller General. 
Audits under this section shall be conducted annually for the first 2 
fiscal years following the date of the enactment of this Act and as 
appropriate thereafter.

SEC. 148. REGULATIONS AND ORDERS.

    (a) Interim Regulations.--Not later than the expiration of the 6-
month period beginning upon the appointment of the Director under 
section 142(a), the Director shall, by notice published in the Federal 
Register, issue interim regulations necessary to carry out the duties 
of the Director under this title. Such regulations shall take effect 
upon issuance.
    (b) Final Regulations.--
            (1) In general.--The Director shall issue final regulations 
        necessary to carry out the duties of the Director under this 
        title not later than the expiration of the 12-month period 
        beginning upon the appointment of the Director under section 
        142(a). Except as provided in paragraph (2), the final 
        regulations shall be issued after notice and opportunity for 
        public comment in accordance with the procedure under section 
        553 of title 5, United States Code, applicable to substantive 
        rules (notwithstanding subsections (a)(2), (b)(B), and (d)(3) 
        of such section). The Director may not publish any proposed 
        regulation for comment unless, not less than 15 days before it 
        is published for comment, the Director has submitted a copy of 
        the regulation, in the form it is intended to be proposed, to 
        the House of Representatives and the Senate.
            (2) Exception.--Any final regulations establishing 
        guidelines which are specifically required under this title to 
        be established by the Director shall not be subject to the 
        notice and comment procedure referred to in paragraph (1).

SEC. 149. TERMINATION.

    (a) Repeal.--Subtitle A is repealed effective October 1, 2003.
    (b) Exception.--Notwithstanding the repeal under subsection (a), 
the provisions of subtitle A (as in effect immediately before such 
repeal) shall apply with respect to projects and programs for which 
binding commitments have been entered into under this Act before 
October 1, 2003.
    (c) Termination of Director and Office.--The Office of Multifamily 
Housing Assistance Restructuring and the position of Director of such 
Office shall terminate upon September 30, 2003.
    (d) Transfer of Authority.--Effective upon the termination under 
subsection (c), any authority and responsibilities assigned by subtitle 
A to the Director that remain applicable after such date pursuant to 
subsection (b) are transferred to the Secretary.

      Subtitle C--Contracts Expiring After Termination of Program

SEC. 161. TENANT-BASED ASSISTANCE.

    (a) In General.--In the case of a multifamily housing project 
described in subsection (b), the Secretary shall, upon expiration of 
the contract referred to in subsection (b)(2), provide tenant-based 
rental assistance under section 8(o) of the United States Housing Act 
of 1937, subject to the availability of amounts in appropriation Acts, 
to each family residing in a unit in the project upon the expiration 
date of the expiring contract which unit was assisted under the 
contract.
    (b) Covered Projects.--A multifamily housing project described in 
this subsection is a project that--
            (1) has rents which, on an average per unit basis at the 
        time of the expiration of the contract referred to paragraph 
        (2), exceed the rent of comparable properties, as determined by 
        the Secretary; and
            (2) is subject to an expiring contract (as such term is 
        defined in section 103, notwithstanding section 149(a))--
                    (A) for which the expiration date is October 1, 
                2003 or thereafter; and
                    (B) that is not renewed by the Secretary.

                   TITLE II--Miscellaneous Provisions

SEC. 201. REHABILITATION GRANTS FOR CERTAIN INSURED PROJECTS.

    Section 236 of the National Housing Act (12 U.S.C. 1715z-1) is 
amended by adding at the end the following:
    ``(s) Rehabilitation Grants.--
            ``(1) In general.--The Director of the Office of 
        Multifamily Housing Assistance Restructuring of the Department 
        of Housing and Urban Development may make grants for the 
        capital costs of rehabilitation to owners of projects that meet 
        the eligibility and other criteria set forth in, and in 
        accordance with, this subsection.
            ``(2) Project eligibility.--A project may be eligible for 
        capital grant assistance under this subsection--
                    ``(A) if--
                            ``(i) the project was insured under any 
                        provision of title II of the National Housing 
                        Act;
                            ``(ii) the project was assisted under 
                        section 8 of the United States Housing Act of 
                        1937 on the date of enactment of the 
                        Multifamily Housing Restructuring and 
                        Affordability Act of 1997; and
                            ``(iii) the project mortgage was not held 
                        by a State agency as of the date of the 
                        enactment of the Multifamily Housing 
                        Restructuring and Affordability Act of 1997;
                    ``(B) if the project owner agrees to maintain the 
                housing quality standards that were in effect 
                immediately prior to the extinguishment of the mortgage 
                insurance;
                    ``(C) if the Director determines that the owner or 
                purchaser of the project has not engaged in material 
                adverse financial or managerial actions or omissions 
                with regard to this project (or with regard to other 
                similar projects if the Director determines that those 
actions or omissions constitute a pattern of mismanagement that would 
warrant suspension or debarment by the Secretary), including--
                            ``(i) materially violating any Federal, 
                        State, or local law or regulation with regard 
                        to this project or any other federally assisted 
                        project, after receipt of notice and an 
                        opportunity to cure;
                            ``(ii) materially breaching a contract for 
                        assistance under section 8 of the United States 
                        Housing Act of 1937, after receipt of notice 
                        and an opportunity to cure;
                            ``(iii) materially violating any applicable 
                        regulatory or other agreement with the 
                        Secretary, the Director, or a participating 
                        administrative entity, after receipt of notice 
                        and an opportunity to cure;
                            ``(iv) repeatedly failing to make mortgage 
                        payments at times when project income was 
                        sufficient to maintain and operate the 
                        property;
                            ``(v) materially failing to maintain the 
                        property according to housing quality standards 
                        after receipt of notice and a reasonable 
                        opportunity to cure; or
                            ``(vi) committing any act or omission that 
                        would warrant suspension or debarment by the 
                        Secretary; and
                    ``(D) if the project owner demonstrates to the 
                satisfaction of the Director--
                            ``(i) using information in a comprehensive 
                        needs assessment, that capital grant assistance 
                        is needed for rehabilitation of the project; 
                        and
                            ``(ii) that project income is not 
                        sufficient to support such rehabilitation.
            ``(3) Eligible purposes.--Grants under this subsection may 
        be used only for the purposes of--
                    ``(A) payment into project replacement reserves;
                    ``(B) providing a fair return on equity investment;
                    ``(C) debt service payments on non-Federal 
                rehabilitation loans; and
                    ``(D) payment of nonrecurring maintenance and 
                capital improvements, under such terms and conditions 
                as are determined by the Secretary.
            ``(4) Grant agreement.--
                    ``(A) In general.--The Director shall provide in 
                any grant agreement under this subsection that the 
                grant shall be terminated if the project fails to meet 
                housing quality standards, as applicable on the date of 
                enactment of the Multifamily Housing Restructuring and 
                Affordability Act of 1997, or any successor standards 
                for the physical conditions of projects, as are 
                determined by the Director.
                    ``(B) Affordability and use clauses.--The Director 
                shall include in a grant agreement under this 
                subsection a requirement for the project owners to 
                maintain such affordability and use restrictions as the 
                Director determines to be appropriate.
                    ``(C) Other terms.--The Director may include in a 
                grant agreement under this subsection such other terms 
                and conditions as the Secretary determines to be 
                necessary.
            ``(5) Delegation.--
                    ``(A) In general.--In addition to the authorities 
                set forth in subsection (p), the Director may delegate 
                to State and local governments the responsibility for 
                the administration of grants under this subsection. Any 
                such government may carry out such delegated 
                responsibilities directly or under contracts.
                    ``(B) Administration costs.--Notwithstanding 
                paragraph (3), amounts of grants under this subsection 
                may be made available for costs of administration under 
                subparagraph (A).
            ``(6) Funding.--
                    ``(A) In general.--For purposes of carrying out 
                this subsection, the Secretary may make available to 
                the Director amounts that are unobligated amounts for 
                contracts for interest reduction payments--
                            ``(i) that--
                                    ``(I) were previously obligated for 
                                contracts for interest reduction 
                                payments under this section until 
                                insurance under this section was 
                                extinguished;
                                    ``(II) become available as a result 
                                of the outstanding principal balance of 
                                a mortgage having been written down; or
                                    ``(III) are uncommitted balances 
                                within the limitation on maximum 
                                payments that may have been, before the 
                                date of enactment of the Multifamily 
                                Housing Restructuring and Affordability 
                                Act of 1997, permitted in any fiscal 
                                year;
                            ``(ii) that become available pursuant to 
                        section 114(c) of the Multifamily Housing 
                        Restructuring and Affordability Act of 1997; or
                            ``(iii) that become available from any 
                        other source.
                    ``(B) Liquidation authority.--The Director may 
                liquidate obligations entered into under this 
                subsection under section 1305(10) of title 31, United 
                States Code.
                    ``(C) Capital grants.--In making capital grants 
                under the terms of this subsection, using the amounts 
                that the Secretary has recaptured from contracts for 
                interest reduction payments, the Director shall ensure 
                that the rates and amounts of outlays do not at any one 
                time exceed the rates and amounts of outlays that would 
                have been experienced if the insurance had not been 
                extinguished or the principal amount had not been 
                written down, and the interest reduction payments that 
                the Secretary has recaptured had continued in 
                accordance with the terms in effect immediately prior 
                to such extinguishment or write-down.''.

SEC. 202. AMENDMENT TO HOUSING FINANCE AGENCY MULTIFAMILY HOUSING 
              FINANCING PILOT PROGRAM.

    Section 542(c)(2) of the Housing and Community Development Act of 
1992 (12 U.S.C. 1707 note) is amended by adding at the end the 
following new subparagraph:
                    ``(G) Mitigation of uncertainties.--An agreement 
                under subparagraph (A) may provide for the Secretary to 
                assume an appropriate share of the risk of a loans for 
                affordable multifamily housing in a manner that 
                mitigates uncertainties regarding actions of the 
                Federal Government (including the possible failure to 
                renew short-term subsidy contracts).''.

SEC. 203. CONVERSION OF DIRECT LOAN ELDERLY PROJECTS TO PROJECT RENTAL 
              ASSISTANCE CONTRACTS.

    (a) Conversion.--Subject to the agreement of the owner of a project 
assisted under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) 
(as in effect before the enactment of the Cranston-Gonzalez National 
Affordable Housing Act) and section 8 of the United States Housing Act 
of 1937, the Secretary may convert the financing of any such housing 
project to financing under section 202 of the Housing Act of 1959 (12 
U.S.C. 1701q) as amended by section 801 of the Cranston-Gonzalez 
National Affordable Housing Act.
    (b) Debt Forgiveness.--
            (1) In general.--Subject to paragraph (2), in converting 
        the financing of any housing project pursuant to subsection 
        (a), the Secretary shall cancel any indebtedness to the 
        Secretary relating to any remaining principal and interest 
        under any loan for the project made under section 202 of the 
        Housing Act of 1959 (as in effect before the enactment of the 
        Cranston-Gonzalez National Affordable Housing Act).
            (2) Budget act compliance.--The authority of the Secretary 
        to cancel indebtedness under paragraph (1) shall be effective 
        only to the extent or in such amounts as are or have been 
        provided in advance in appropriation Acts.
    (c) Cancellation of Section 8 Contracts.--In converting the 
financing of any housing project pursuant to subsection (a), the 
Secretary shall cancel any contract for rental assistance for the 
project under section 8 of the United States Housing Act of 1937. 
Amounts previously obligated for such contract that remain unexpended 
shall be used to provide rental assistance for the project, under a 
contract for project rental assistance under section 202(c)(2) of the 
Housing Act of 1959, which has the same duration as remainder of the 
section 8 contract canceled. Any remaining amounts shall be recaptured 
by the Secretary.
    (d) Waiver Authority.--The Secretary may waive the applicability of 
any provision of law or regulation necessary to carry out this section.

SEC. 204. RENT LIMITATION FOR NON-FHA MULTIFAMILY HOUSING PROJECTS 
              RECEIVING SECTION 8 PROJECT-BASED ASSISTANCE.

    (a) In General.--An owner of qualified housing may provide, with 
respect to such housing, that, notwithstanding section 3(a)(1) of the 
United States Housing Act of 1937, the rent paid by tenants of assisted 
dwelling units in such housing shall be the lower of the amount 
provided under such section 3(a)(1) or 60 percent of the fair market 
rental established pursuant to section 8(c)(1) of such Act for the area 
and size of dwelling unit occupied by the tenant. Upon the request of 
an owner, the Secretary may provide for rent limitations under this 
section for qualified housing that are higher or lower than 60 percent 
of the fair market rental on the basis of the Secretary's finding that 
such variations are necessary to carry out the provisions of this 
section and are consistent with the purposes of this section.
    (b) Qualified Housing.--For purposes of this section, the term 
``qualified housing'' means housing that complies with all of the 
following requirements:
            (1) Section 8 project-based assistance is provided for all 
        of the dwelling units in the housing, in an amount that is 
        equal to or greater than 120 percent of the applicable fair 
        market rental.
            (2) The housing is not subject to a mortgage that is 
        insured under the National Housing Act.
            (3) The housing consists of 600 dwelling units or more.
            (4) At the time the owner first limits rents pursuant to 
        subsection (a), not more than 15 percent of the tenants of the 
        housing have rents that exceed the maximum amount allowable 
        pursuant to the limitation under subsection (a).
    (c) Limitation Based on Tenants Incomes.--If, at any time, in a 
housing project for which section 8 project-based assistance is 
provided, more than 40 percent of the tenants would be paying a rent 
limited by 60 percent of the fair market rental, any rent limitation 
applicable under this section to such project shall not thereafter 
apply to any tenant not subject at such time to the rent limitation, 
until the percentage of tenants in the project eligible for such 
limited rent decreases to below 40 percent.
    (d) Inapplicability to Elderly-Only Projects.--The provisions of 
this section shall not apply with respect to any housing project that 
is designated for occupancy only by elderly families.

SEC. 205. GAO REPORT ON SECTION 8 RENTAL ASSISTANCE FOR MULTIFAMILY 
              HOUSING PROJECTS.

    Not later than the expiration of the 18-month period beginning on 
the date of the enactment of this Act, the Comptroller General of the 
United States shall submit a report to the Congress analyzing--
            (1) the financial and physical condition of multifamily 
        housing projects for which project-based assistance is provided 
        under section 8 of the United States Housing Act of 1937, but 
        which are not subject to a mortgage insured or held by the 
        Secretary under the National Housing Act;
            (2) the financial and physical condition of all eligible 
        multifamily housing projects that are not subject to mortgage 
        restructuring and rental assistance sufficiency plans under 
        title I of this Act because the projects meet the requirements 
        under section 114(a)(2) of this Act;
            (3) how State and local housing finance agencies have 
        benefited financially from the rental assistance program under 
        section 8 of the United States Housing Act of 1937, including 
        any benefits from fees, bond financings, and mortgage 
        refinancings; and
            (4) the extent and effectiveness of State and local housing 
        finance agencies oversight of the physical and financial 
        management and condition of multifamily housing projects for 
        which project-based assistance is provided under section 8 of 
        the United States Housing Act of 1937.

                   TITLE III--ENFORCEMENT PROVISIONS

SEC. 301. IMPLEMENTATION.

    (a) Issuance of Necessary Regulations.--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. 311. 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: ``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. 312. 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, 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. 313. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, AND OTHER 
              PARTICIPANTS IN FHA PROGRAMS.

    (a) Amendment to Section Heading.--Section 536 of the National 
Housing Act (12 U.S.C. 1735f-14) is amended by striking the section 
heading and all that follows through ``(a) In General.--'' and 
inserting the following:

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

    ``(a) In General.--''.
    (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, 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:
            ``(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.''; 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 Provisions

SEC. 321. 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 designation and 
                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, co-insured, 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 so designated 
                        by clause (i) of this subparagraph, by 
                        redesignating the subparagraphs (A) through (L) 
                        as clauses (i) through (xii), respectively;
                            (iii) by adding after clause (xii), as 
                        redesignated by clause (ii) of this 
                        subparagraph, the following:
                            ``(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:
            ``(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:
    ``(k) Identity of Interest Managing Agent.--In 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 1 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. 322. 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--
            (1) by redesignating the second section designated as 
        section 27 (as added by section 903(b) of the Personal 
        Responsibility and Work Opportunity Reconciliation Act of 1996 
        (Public Law 104-193 (110 Stat. 2348)) as section 28; and
            (2) by adding at the end the following:

``SEC. 29. 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.--In 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 1 year 
        after the date of enactment of this Act.

SEC. 323. 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. 324. 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>