[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2189 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 2189

    To amend the Solid Waste Disposal Act to assist homeowners with 
properties contaminated by leaking underground storage tanks in moving 
 from such properties on a temporary or permanent basis by authorizing 
 the Secretary of Housing and Urban Development to guarantee loans to 
                            such homeowners.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 21, 2003

Mr. Kanjorski introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committee on 
Energy and Commerce, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
    To amend the Solid Waste Disposal Act to assist homeowners with 
properties contaminated by leaking underground storage tanks in moving 
 from such properties on a temporary or permanent basis by authorizing 
 the Secretary of Housing and Urban Development to guarantee loans to 
                            such homeowners.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Emergency Home Financing Assistance 
Act''.

SEC. 2. GUARANTEED LOAN PROGRAM.

    (a) Amendment.--Subtitle I of the Solid Waste Disposal Act (42 
U.S.C. 6991 et seq.) is amended by adding at the end the following new 
section:

     ``hud loan guarantees for owners of homes affected by leaking 
                       underground storage tanks

    ``Sec. 9011. (a) Program Authority.--
            ``(1) In general.--In accordance with the provisions of 
        this section, the Secretary of Housing and Urban Development 
        (in this section referred to as the `Secretary') may guarantee, 
        and make commitments to guarantee, loans made to homeowners 
        whose properties have been contaminated, and reduced in value, 
        by leaking underground storage tanks to assist such homeowners 
        to obtain other temporary or permanent residences or to obtain 
        the equity in the property for any other purpose.
            ``(2) Administration by special master.--The Secretary 
        shall administer the loan guarantee program under this section 
        through a Special Master, who shall be appointed by the 
        Secretary. The Special Master shall carry out all functions of 
        the Secretary under this section, including the promulgation of 
        any substantive and procedural rules for the administration of 
        the program.
    ``(b) Eligible Loans.--To be eligible to be guaranteed under this 
section, a loan shall meet the following requirements:
            ``(1) Use.--The proceeds of the loan may be used only for 
        the purpose of--
                    ``(A) acquiring, by purchase or lease, a property 
                consisting of one to four dwelling units, which shall 
                be occupied as the principal residence of the borrower; 
                or
                    ``(B) obtaining the equity in the property for any 
                other purpose, to the extent provided under paragraph 
                (5)(C).
            ``(2) Borrower.--The loan shall be made to a borrower who 
        is the owner of a qualified property under subsection (c).
            ``(3) Lender.--The loan shall be made by a lender approved 
        by and meeting qualifications established by the Secretary. The 
        following lenders are deemed to be approved under this 
        paragraph:
                    ``(A) Any mortgagee approved by the Secretary of 
                Housing and Urban Development for participation in the 
                single family mortgage insurance program under title II 
                of the National Housing Act.
                    ``(B) Any lender whose housing loans under chapter 
                37 of title 38, United States Code, are automatically 
                guaranteed pursuant to section 1802(d) of such title.
                    ``(C) Any lender approved by the Secretary of 
                Agriculture to make guaranteed loans for single family 
                housing under the Housing Act of 1949.
                    ``(D) Any other lender that is supervised, 
                approved, regulated, or insured by any agency of the 
                Federal Government.
            ``(4) Security.--The loan shall be secured by the qualified 
        property of the borrower.
            ``(5) Terms.--The loan shall--
                    ``(A) be made for a term not exceeding 30 years;
                    ``(B) bear interest (exclusive of the guarantee fee 
                under subsection (e)(3) and service charges, if any) at 
                a rate agreed upon by the borrower and the lender and 
                determined by the Secretary to be reasonable, which may 
                not exceed the rate generally charged in the area (as 
                determined by the Secretary) for home mortgage loans 
                not guaranteed or insured by any agency or 
                instrumentality of the Federal Government; and
                    ``(C) involve a principal obligation not 
                exceeding--
                            ``(i) the dollar amount limitation 
                        determined under section 305(a)(2) of the 
                        Federal Home Loan Mortgage Corporation Act for 
                        a single-family residence (as such limitation 
                        is adjusted annually);
                            ``(ii) the amount approved by the Secretary 
                        under this section; or
                            ``(iii) 100 percent of the pre-release fair 
                        market value of the qualified property owned by 
                        the borrower, as determined by the Secretary.
    ``(c) Qualified Property.--For purposes of this section, a 
qualified property is a one- to four-family residence that--
            ``(1) is located on real property on any part of which is 
        within an area that is affected by a release from an 
underground storage tank, as determined by the Secretary;
            ``(2) immediately before the making of the loan guaranteed 
        under this section, is the principal residence of the borrower 
        under the loan (unless the borrower has temporarily relocated 
        to avoid the consequences of the release referred to in 
        paragraph (1));
            ``(3) is determined by the Secretary to be covered by an 
        agreement entered into under subsection (d); and
            ``(4) is determined by the Secretary to be eligible for a 
        loan guaranteed under this section.
    ``(d) Agreements With Local Housing Agencies To Maintain Unoccupied 
Properties and Take Title.--An agreement under this subsection is a 
legally binding agreement entered into between the Secretary and a 
public housing agency (as such term is defined in section 3(b) of the 
United States Housing Act of 1937 (42 U.S.C. 1437a(b)) or other entity 
selected by the Secretary that provides that--
            ``(1) in the case of a loan guaranteed under this section 
        under which the borrower maintains the borrower's interest in a 
        qualified property located within the jurisdiction of the 
        public housing agency or other such entity, the public housing 
        agency or other entity shall take any actions necessary to 
        physically maintain the qualified property during the 
period that such property remains unoccupied by the borrower;
            ``(2) in the case of a loan guaranteed under this section 
        under which the borrower does not retain the borrower's 
        interest in a qualified property located within the 
        jurisdiction of the public housing agency or other such entity, 
        the public housing agency or other entity shall take title to 
        the qualified property and shall take any actions necessary to 
        physically maintain the qualified property during any period 
        that the property remains unoccupied; and
            ``(3) in the event that the Secretary obtains title to a 
        qualified property located within the jurisdiction of the 
        public housing agency or other such entity, pursuant to a 
        default on a loan guaranteed under this section, the public 
        housing agency or other entity shall take title to the 
        qualified property from the Secretary and shall take any 
        actions necessary to physically maintain the qualified property 
        during any period that the property remains unoccupied.
Nothing in this subsection may be construed to prevent a public housing 
agency or other entity selected by the Secretary, that enters into an 
agreement under this subsection, from entering into an agreement with 
another entity to carry out any portion of the responsibilities of the 
public housing agency or entity selected by the Secretary under the 
agreement under this subsection.
    ``(e) Guarantee.--
            ``(1) Limitation.--The Secretary may not guarantee, or make 
        a commitment to guarantee, any loan under this section in an 
        amount exceeding 90 percent of the principal amount of the 
        loan.
            ``(2) Private guarantee or insurance.--To be eligible for a 
        guarantee under this section, any portion of a loan that is not 
        guaranteed by the Secretary shall be covered by a guarantee or 
        mortgage insurance provided by a State or local agency or a 
        private mortgage insurer.
            ``(3) Fee.--The Secretary shall fix and collect a guarantee 
        fee for the guarantee of loans under this section, which shall 
        be a percentage of the principal amount of the loan guaranteed 
        under this section that does not exceed the percentage 
        allowable under section 438(c)(2) of the Higher Education Act 
        of 1965 (20 U.S.C. 1087-1(c)(2)) to be charged as an 
        origination fee under such section. The fee shall be paid by 
        the lender at time of issuance of the guarantee and shall be 
        adequate, in the determination of the Secretary, to cover 
        expenses and probable losses. The Secretary shall deposit any 
        fees collected under this subsection in the loan guarantee fund 
        established under subsection (i) of this section.
            ``(4) Liability.--The liability under a guarantee provided 
        under this section shall decrease or increase on a pro rata 
        basis according to any decrease or increase in the amount of 
        the unpaid obligation under the provisions of the loan 
        agreement.
    ``(f) Certificate of Guarantee.--
            ``(1) Approval process.--Before the Secretary approves any 
        loan for guarantee under this section, the lender shall submit 
        the application for the loan to the Secretary for examination. 
        If the Secretary approves the loan for guarantee, the Secretary 
        shall issue a certificate under this paragraph as evidence of 
        the guarantee.
            ``(2) Standard for approval.--The Secretary may approve a 
        loan for guarantee under this section and issue a certificate 
        under this paragraph only if the Secretary determines there is 
        a reasonable prospect of repayment of the loan.
            ``(3) Effect.--A certificate of guarantee issued under this 
        paragraph by the Secretary shall be conclusive evidence of the 
        eligibility of the loan for guarantee under the provisions of 
        this section and the amount of such guarantee. Such evidence 
        shall be incontestable in the hands of the bearer and the full 
        faith and credit of the United States is pledged to the payment 
        of all amounts agreed to be paid by the Secretary as security 
        for such obligations.
            ``(4) Fraud and misrepresentation.--This subsection may not 
        be construed to preclude the Secretary from establishing 
        defenses against the original lender based on fraud or material 
        misrepresentation or to bar the Secretary from establishing by 
        regulations in effect on the date of issuance or disbursement, 
        whichever is earlier, partial defenses to the amount payable on 
        the guarantee.
    ``(g) Transfer and Assumption.--Notwithstanding any other provision 
of law, any loan guaranteed under this section, including the security 
given for the loan, may be sold or assigned by the lender to any 
financial institution subject to examination and supervision by an 
agency of the Federal Government or of any State or the District of 
Columbia.
    ``(h) Payment Under Guarantee.--
            ``(1) Notification of default.--In the event of default by 
        the borrower on a loan guaranteed under this section, the 
        holder of the guarantee certificate shall provide written 
        notice of the default to the Secretary.
            ``(2) Payment options.--Upon providing such notice, the 
        holder of the guarantee certificate shall be entitled to 
        payment under the guarantee (subject to the provisions of this 
        section) and may proceed to obtain payment in one of the 
        following manners:
                    ``(A) Foreclosure.--The holder of the certificate 
                may initiate foreclosure proceedings (after providing 
                written notice of such action to the Secretary) and 
                upon a final order by the court authorizing foreclosure 
                and submission to the Secretary of a claim for payment 
                under the guarantee, the Secretary shall pay to the 
                holder of the certificate the pro rata portion of the 
                amount guaranteed (as determined pursuant to subsection 
                (e)) plus reasonable fees and expenses as approved by 
                the Secretary. The Secretary shall be subrogated to the 
                rights of the holder of the guarantee and the lender 
                holder shall assign the obligation and security to the 
                Secretary.
                    ``(B) No foreclosure.--Without seeking foreclosure 
                (or in any case in which a foreclosure proceeding 
                initiated under subparagraph (A) continues for a period 
in excess of 1 year), the holder of the guarantee may submit to the 
Secretary a request to assign the obligation and security interest to 
the Secretary in return for payment of the claim under the guarantee. 
The Secretary may accept assignment of the loan if the Secretary 
determines that the assignment is in the best interests of the United 
States. Upon assignment, the Secretary shall pay to the holder of the 
guarantee the pro rata portion of the amount guaranteed (as determined 
under subsection (e)). The Secretary shall be subrogated to the rights 
of the holder of the guarantee and the holder shall assign the 
obligation and security to the Secretary.
            ``(3) Requirements for payment.--Before any payment under a 
        guarantee is made under paragraph (2), the holder of the 
        guarantee shall exhaust all reasonable possibilities of 
        collection. Upon payment, in whole or in part, to the holder, 
        the note or judgment evidencing the debt shall be assigned to 
        the United States and the holder shall have no further claim 
        against the borrower or the United States. The Secretary shall 
        then take such action to collect as the Secretary determines 
        appropriate.
    ``(i) Loan Forgiveness.--
            ``(1) Mandatory.--With respect to any loan guaranteed under 
        this section:
                    ``(A) Prolonged cleanup.--If the period that began 
                upon identification of the release from the underground 
                storage tank that affected the qualified property and 
                ended upon termination of environmental cleanup 
                relating to such release was eight or more years, the 
                Secretary shall take action under this subsection to 
                forgive a portion of the borrower's obligation under 
                the loan equal to the lesser of--
                            ``(i) the difference between the pre-
                        release fair market value of the qualified 
                        property and the fair market value of such 
                        property at the time of such forgiveness; and
                            ``(ii) the outstanding amount of principal 
                        and interest owed under the loan by the 
                        borrower.
                    ``(B) Sustained decrease in property value.--
                            ``(i) In general.--If, during any period 
                        described in clause (ii), the fair market value 
                        of the qualified property has decreased from 
                        the pre-release fair market value by at least 
                        the amount described in such clause, and such 
                        decrease is directly attributable to the 
                        release from the underground storage tank that 
                        affected the property, the Secretary shall take 
                        action under this subsection to forgive a 
                        portion of the borrower's obligation under the 
                        loan equal to the lesser of the amounts under 
                        clauses (i) and (ii) of subparagraph (A).
                            ``(ii) Required amount of decrease.--The 
                        periods and decreases in value referred to in 
                        clause (i) are--
                                    ``(I) 50 percent during the 1-year 
                                period beginning upon identification of 
                                the release that affected the property;
                                    ``(II) 45 percent during the 2-year 
                                period beginning upon such 
                                identification;
                                    ``(III) 40 percent during the 3-
                                year period beginning upon such 
                                identification;
                                    ``(IV) 35 percent during the 4-year 
                                period beginning upon such 
                                identification;
                                    ``(V) 30 percent during the 5-year 
                                period beginning upon such 
                                identification;
                                    ``(VI) 25 percent during the 6-year 
                                period beginning upon such 
                                identification; and
                                    ``(VII) 20 percent during the 7-
                                year period beginning upon such 
                                identification.
                    ``(C) Health effects.--If the Secretary determines 
                that a State or Federal health study has indicated that 
                there is a level of chronic or terminal illness that 
                (i) is directly related to exposure to the petroleum or 
                other chemicals released from an underground storage 
                tank in a release that affected the qualified property, 
                and (ii) is significantly higher than the level of such 
                illness among the general population, the Secretary 
                shall take action under this subsection to forgive a 
                portion of the borrower's obligation under the loan 
                equal to the lesser of--
                            ``(i) the pre-release fair market value of 
                        the qualified property; and
                            ``(ii) the outstanding amount of principal 
                        and interest owed by the borrower.
                In issuing regulations defining `significantly higher' 
                for purposes of this subparagraph, the Secretary shall 
                consult with the Administrator and the Secretary of 
                Health and Human Services.
            ``(2) Discretionary.--If, upon written application to the 
        Secretary, the Secretary determines that the borrower under a 
        loan guaranteed under this section is unable to continue 
        payments under the loan due to the nature and extent of the 
        release affecting the qualified property, financial hardship, 
        demonstrated adverse health effects, or any other factor that 
        the Secretary determines indicates that loan forgiveness under 
        this section is appropriate, the Secretary may take action 
        under this subsection to forgive all or part of the borrower's 
        obligation under the loan.
            ``(3) Assignment.--Upon a determination pursuant to 
        paragraph (1) or (2), the Secretary shall require the holder of 
        the guarantee to assign the obligation and security interest to 
        the Secretary in return for payment of the claim under the 
        guarantee equal to the pro rata portion of the amount 
        guaranteed (as determined under subsection (e)). The Secretary 
        shall be subrogated to the rights of the holder of the 
        guarantee.
            ``(4) Forgiveness.--Pursuant to assignment under paragraph 
        (3), the Secretary shall cancel a portion of the borrower's 
        obligation, which shall be--
                    ``(A) in the case of assignment pursuant to a 
                determination under paragraph (1), the portion required 
                under paragraph (1); or
                    ``(B) in the case of assignment pursuant to a 
                determination under paragraph (2), such portion as the 
                Secretary considers appropriate.
    ``(j) Loan Guarantee Fund.--
            ``(1) Establishment.--There is established in the Treasury 
        of the United States a loan guarantee fund for the purpose of 
        providing loan guarantees under this section.
            ``(2) Credits.--The guarantee fund shall be credited with--
                    ``(A) any amounts, claims, notes, mortgages, and 
                contracts acquired by the Secretary under this section, 
                and any collections and proceeds therefrom;
                    ``(B) any amounts appropriated under paragraph (7);
                    ``(C) any guarantee fees collected under subsection 
                (e)(3); and
                    ``(D) any interest or earnings on amounts invested 
                under paragraph (4).
            ``(3) Use.--Amounts in the guarantee fund shall be 
        available, to the extent provided in appropriation Acts, for--
                    ``(A) fulfilling any obligations of the Secretary 
                with respect to loans guaranteed under this section, 
                including the costs (as such term is defined in section 
                502 of the Congressional Budget Act of 1974) of such 
                loans;
                    ``(B) paying taxes, insurance, prior liens, 
                expenses necessary to make fiscal adjustment in 
                connection with the application and transmittal of 
                collections, and other expenses and advances to protect 
                the Secretary for loans which are guaranteed under this 
                section or held by the Secretary;
                    ``(C) acquiring such security property at 
                foreclosure sales or otherwise; and
                    ``(D) paying administrative expenses in connection 
                with this section.
            ``(4) Investment.--Any amounts in the guarantee fund that 
        the Secretary determines are in excess of amounts currently 
        required to carry out this section may be invested in 
        obligations of the United States.
            ``(5) Limitation on commitments to guarantee loans and 
        mortgages.--
                    ``(A) Requirement of appropriations.--The authority 
                of the Secretary to enter into commitments to guarantee 
                loans under this section shall be effective for any 
                fiscal year to the extent or in such amounts as are or 
                have been provided in appropriation Acts, without 
                regard to the fiscal year for which such amounts were 
                appropriated.
                    ``(B) Limitations on costs of guarantees.--The 
                authority of the Secretary to enter into commitments to 
                guarantee loans under this section shall be effective 
                for any fiscal year only to the extent that amounts in 
                the guarantee fund are or have been made available in 
                appropriation Acts to cover the costs (as such term is 
                defined in section 502 of the Congressional Budget Act 
                of 1974) of such loan guarantees for such fiscal year. 
                Any amounts appropriated pursuant to this subparagraph 
                shall remain available until expended.
                    ``(C) Limitation on outstanding aggregate principal 
                amount.--Subject to the limitations in subparagraphs 
                (A) and (B), the Secretary may enter into commitments 
                to guarantee loans under this section in each fiscal 
                year with an aggregate outstanding principal amount not 
                exceeding such amount as may be provided in 
                appropriation Acts for such fiscal year.
            ``(6) Liabilities.--All liabilities and obligations of the 
        assets credited to the guarantee fund under paragraph (2)(A) 
        shall be liabilities and obligations of the guarantee fund.
            ``(7) Authorization of appropriations.--There are 
        authorized to be appropriated to the guarantee fund such sums 
        as may be necessary to carry out this section.''.
    (b) Table of Contents Amendment.--The table of contents for 
subtitle I of the Solid Waste Disposal Act is amended by adding at the 
end the following new item:

``Sec. 9011. HUD loan guarantees for owners of homes affected by 
                            leaking underground storage tanks.''.
    (c) Regulations.--Not later than one year after the date of the 
enactment of this Act, the Secretary of Housing and Urban Development 
shall issue any regulations necessary to carry out this Act, which 
shall include regulations setting forth guidelines for loan forgiveness 
pursuant to section 9011(i)(2) of the Solid Waste Disposal Act (as 
added by the amendment made by subsection (a) of this section).
                                 <all>