Homeowner mitigation loan program

Section 203 of the Robert T. Stafford Disaster Assistance and Emergency Relief Act (42 U.S.C. 5133) is amended— (1)by redesignating subsection (m) as subsection (n); and (2)by inserting after subsection (l) the following:

(m)

Homeowner Mitigation Loan Program

(1)

Establishment

The Administrator of the Federal Emergency Management Agency shall establish a grant program to provide assistance to States to promote pre-disaster property mitigation measures within the jurisdiction of the States. (2)

Application

A State desiring a grant under this subsection shall submit an application as required pursuant to regulations promulgated by the Administrator under paragraph (7). (3)

Eligibility requirements

In order to be eligible to receive a grant under paragraph (1), a State shall have— (A)submitted a mitigation plan under section 322(c); (B)established a process for accepting and processing grant and loan applications from individual homeowners and business owners; (C)established a revolving loan fund into which any grant amounts received under this section shall be deposited; and (D)submitted a detailed plan for how terms and conditions for loans and grants authorized under paragraph (5) will be set. (4)

Funding formula

(A)

In general

The Administrator shall allocate grant amounts to eligible States under paragraph (1) according to a formula based on the following factors: (i)The extent and nature of the potential hazards to property in the State. (ii)The level and degree of risk of potential hazards or natural disasters confronted by the State. (iii)The number of properties at risk in the event that a hazard or natural disaster should occur in the State. (iv)The amount of prior property damages incurred by the State during any previous hazard or natural disaster. (v)Any available data on the future risk of occurrence of any hazard or natural disaster in a State. (B)

Baseline amount

Any formula developed by the Administrator under subparagraph (A) shall ensure that each eligible State shall receive, at a minimum, an amount equal to not less than $500,000. (C)

Matching requirement

To be eligible to receive any grant funds under this subsection, a State shall contribute matching non-Federal funds in an amount equal to not less than 10 percent of the total amount of the grant. (5)

Eligible activities

(A)

In general

A grant under this subsection may be used by a State to carry out grant and lending functions as authorized under this paragraph. (B)

Revolving loans and grants to homeowners and businesses

(i)

Authority of States

Each State is authorized to make from any revolving loan fund established pursuant to paragraph (3)(C) grants or loans from such fund to assist individual homeowners and businesses in undertaking pre-disaster property mitigation measures. (ii)

Determination of the State

No loans shall be provided under this paragraph unless a State determines that— (I)there is reasonable assurance of repayment of the loan; and (II)the amount of the loan, together with other funds available to the property owner, is adequate to ensure the purposes for which the loan is made. (iii)

Grant and loan requirements

(I)

Grants

A State may make grants for elevation and other pre-disaster property mitigation measures to homeowners with household incomes of less than 50 percent of area median income. (II)

Loans

A State may make— (aa)low-interest loans for elevation and other pre-disaster property mitigation measures to homeowners with household incomes of less than 120 percent of area median income; and (bb)loans for elevation and other pre-disaster property mitigation measures to homeowners with household incomes of greater than 120 percent of area median income or any other property owner, including business owners. (III)

Maximum grant and loan amounts

(aa)

In general

Each State shall establish maximum grant and loan amounts for elevation and other pre-disaster property mitigation measures under subclause (II). (bb)

Considerations

In establishing the grant and loan amounts under item (aa), each State shall consider the following: (AA)The degree to which such amounts will maximize mitigation efforts. (BB)The ability of such amounts to allow a homeowner to properly and effectively undertake mitigation activities. (IV)

Interest rate

For purposes of this paragraph, each State shall develop a sliding scale mechanism for determining the rate of interest to charge homeowners who apply for loans under this program based on their income level. (V)

No compounding

Interest on the outstanding principal balance of any loan under this paragraph shall not compound. (VI)

Balance due

(aa)

In general

The principal of any loan made under this paragraph, including any interest accrued on such principal, shall not be due and payable before the period set forth in subclause (VII)(bb) unless the real property securing such loan is sold or transferred. (bb)

Deposit of balance due

If the event described in item (aa) occurs, the principal of any loan made under this paragraph, including any interest accrued on such principal, shall immediately become due and payable to the State. (VII)

Repayment period

All loans made under this paragraph shall be repayable— (aa)on a monthly basis; and (bb)within a period of not more than 15 years. (VIII)

No penalty for prepayment

Any homeowner or other property owner who receives a loan under this section may repay the loan in full, without penalty, by lump sum or by installment payments, at any time prior to the loan becoming due and payable. (IX)

Credits

The interest on, and the proceeds from the collection or redemption of, any loan obligations held by the revolving loan fund of a State shall be credited to and form a part of such fund. (X)

Subordination permitted

Any loan made under this section will be subordinated to any refinancing of the first mortgage, any preexisting subordinate financing, any purchase money mortgage, or subordinated for any other reason, as determined by the State. (C)

Application process

(i)

In general

An individual homeowner or business desiring a loan or grant under this paragraph shall submit an application at such time, in such manner, and accompanied by such information as the State may reasonably require. (ii)

Required showing by homeowners

An individual homeowner desiring a loan or grant under this paragraph shall submit to the State proof that such homeowner has insured the property on which any funds awarded under this paragraph will be used to undertake pre-disaster property mitigation measures, including proving that such homeowner has flood insurance on such property if the pre-disaster mitigation measures to be undertaken are being done to lower the risk of loss from a flood. (iii)

State responsibility

Each State receiving a grant under this subsection shall establish a process wherein not later than 60 days after the receipt of an application for a loan or grant submitted by a homeowner or business under clause (i), the State issues a determination as to whether or not such application is approved. In making such determination, that State shall examine if the proposed mitigation project in the application satisfies the requirements of this paragraph, including whether— (I)the homeowner or business is located in an area at risk of hazard or natural disaster; (II)the mitigation project is an eligible activity for purposes of such loan or grant; and (III)the cost of the mitigation project is reasonable. (D)

Consultation with localities

Each State receiving a grant under this subsection shall develop a process by which such State will consult with local and municipal governments as to each project proposed to be funded by a loan or grant under this paragraph. (6)

Prohibition on use of funds for community-wide mitigation activities

None of the amounts made available under this subsection may be used for community-wide mitigation activities. (7)

Permissible designees

A State receiving a grant under this subsection may designate a State housing finance agency or any other State agency, office, or entity with experience in maintaining grant and loan programs to— (A)apply for a grant under this subsection; (B)receive and distribute grant funds awarded under this subsection in accordance with the requirements of this subsection; and (C)perform any other administrative duties related to the activities authorized by this subsection. (8)

Rulemaking

Not later than 6 months after the date of enactment of the Property Mitigation Assistance Act of 2009, the Administrator shall promulgate regulations implementing the provisions of this subsection. (9)

Report to congress

The Administrator shall, on annual basis, report to Congress on the activities authorized by this subsection. (10)

Definitions

As used in this subsection: (A)

Low-interest loan

The term low-interest loan means a loan that carries a simple annual percentage rate that shall be determined in the discretion of the State, but that shall, at minimum, be less than the prime rate of interest. (B)

Median income

The term median income means, with respect to an area, the unadjusted median family income for the area, as determined and published annually by the Secretary of Housing and Urban Development. (C)

Other pre-disaster property mitigation measures

The term other pre-disaster property mitigation measures includes— (i)activities such as the addition of storm shutters, hurricane clips, and safe rooms; (ii)small elevation projects, such as the elevation of an electrical or heating system; and (iii)any other activity the Administrator, State, or local government believes will mitigate the risks of future hazards and natural disasters. (D)

Prime rate of interest

The term prime rate of interest means the target Federal funds rate as determined by the Federal Open Markets Committee of the Federal Reserve System plus 300 basis points. (E)

Property mitigation measures related to elevation

The term property mitigation measures related to elevation means the elevation of a home. (11)

Authorization of Appropriations

There are authorized to be appropriated to carry out this subsection $200,000,000 for each of fiscal years 2010 through 2015.