[House Report 107-196]
[From the U.S. Government Publishing Office]




107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    107-196

======================================================================



 
OFFICE OF MULTIFAMILY HOUSING ASSISTANCE RESTRUCTURING EXTENSION ACT OF 
                                  2001

                                _______
                                

 September 5, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2589]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 2589) to amend the Multifamily Assisted Housing 
Reform and Affordability Act of 1997 to reauthorize the Office 
of Multifamily Housing Assistance Restructuring, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     5
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................    10
Advisory Committee Statement.....................................    10
Constitutional Authority Statement...............................    10
Applicability to Legislative Branch..............................    11
Section-by-Section Analysis of the Legislation...................    11
Changes in Existing Law Made by the Bill, as Reported............    11

                          Purpose and Summary

    H.R. 2589, the Office of Multifamily Housing Assistance 
Restructuring Extension Act of 2001, extends the Office of 
Multifamily Housing Assistance (OMHAR) for three years. The 
bill also requires the Program Director to report directly to 
the Federal Housing Commissioner and eliminates the need for 
Senate confirmation of the Director.

                  Background and Need for Legislation

    The Office of Multifamily Housing Assistance Restructuring 
(OMHAR) was established within the Department of Housing and 
Urban Development (HUD) by the Multifamily Assisted Housing 
Reform and Affordability Act of 1997 (Public Law 105-65) to 
administer the ``mark-to-market'' program for restructuring 
Federal Housing Administration (FHA)-insured mortgages for 
section 8 project based contracts. The mark-to-market program 
is aimed at preserving the affordability of low-income rental 
housing, while reducing the cost of rental assistance subsidies 
provided to low-income households.
    The mark-to-market program and OMHAR are both scheduled to 
terminate on September 30, 2001. At that time, without 
reauthorization, HUD would still be required to renew section 8 
contract rents at market levels. However, the tools established 
by the Act for restructuring mortgage loan debts would no 
longer be available. OMHAR's authority would be transferred to 
HUD's Secretary, disrupting program momentum and leaving HUD 
without the capacity and expertise it needs to administer the 
program effectively.
    H.R. 2589 simplifies issues of jurisdiction and 
coordination. Under current law, the Office of Housing and 
OMHAR have overlapping jurisdictions with both directors 
reporting to the HUD Secretary. H.R. 2589 would require the 
OMHAR Director to report to the Federal Housing Commissioner. 
This new arrangement will make it easier to coordinate OMHAR 
with the 18 Multifamily Hubs in the Office of Housing located 
around the country. Additionally, H.R. 2589 eliminates the need 
for Senate confirmation of the Director.
    Mark-to-Market Restructuring Program. Over 800,000 units in 
approximately 8,500 multifamily projects have been financed 
with mortgages insured by FHA and supported by project-based 
section 8 housing assistance payments contracts. The residents 
of housing units that receive project-based assistance are 
required to pay a portion of their income for rent (generally 
30 percent), while HUD pays the balance. Many of these 
properties' rents are higher than the market rents of 
comparable unassisted properties. A main cause of the higher 
rents is that the Government originally supported the 
development of these properties by establishing rents above 
market levels. The Government would then raise the rents 
regularly through the application of set formulas that, 
according to HUD, tended to be generous to encourage the 
production of new affordable housing.
    After a careful review of the insured multifamily portfolio 
of FHA, Congress realized that if substantial changes to the 
section 8 project-based program were not made, the renewals of 
expiring contracts for section 8 assistance would consume an 
increasingly larger portion of the discretionary budget of HUD 
in future years. In fact, HUD estimated that if no action were 
taken by 2007, the annual cost of renewing project-based 
section 8 contracts would rise to approximately $7 billion, or 
about one-third of HUD's total budget.
    In an effort to address this growing problem, Congress 
enacted the mark-to-market proposal in 1997. Specifically, the 
program provides the framework for HUD to restructure insured 
section 8 multifamily housing projects by lowering their rents 
to market levels when their current section 8 contracts expire 
and reducing mortgage debt if necessary for the properties to 
continue to have a positive cash flow. The rents are marked 
back down to market price, hence the phrase ``mark-to-market.'' 
Without this restructuring, rents for many of the 8,500 
properties in HUD's insured section 8 multifamily housing 
portfolio would continue to substantially exceed market levels. 
This would result in higher Federal subsidies under the section 
8 program.
    Office of Multifamily Assisted Housing Restructuring 
(OMHAR). Congress provided OMHAR the following restructuring 
tools: (1) reducing property debt levels by approving partial 
or full payments ofFHA insurance claims without an owner 
default; (2) approving exception rents in excess of local market rents 
in order to preserve affordable housing in specific markets; (3) 
exempting FHA mortgage insurance credit subsidy limitations and 
limitations on risk sharing commitments; and (4) using public and 
nonpublic participating administrative entities (PAEs) to complete 
restructuring actions. PAEs can be housing financing agencies (HFA), or 
non-profit or for-profit organizations.
    OMHAR was slow in getting started. It took almost two years 
to establish the program's infrastructure and for OMHAR to 
begin assigning a large volume of properties to the entities 
that would carry out restructuring actions. Some program 
participants criticized OMHAR's administration of the program 
asserting that cost cutting would often take precedent over 
long-term preservation goals. Moreover, critics argued that 
OMHAR's complex rules and rigid procedures discouraged 
participation and innovation by Housing Finance Agencies. 
Others describe poor communication and coordination between 
OMHAR and HUD. This has led some advocates to support 
transferring responsibility for administration of the program 
from OMHAR to other parts of HUD.
    GAO Recommendations and Review. The 1997 legislation 
directed the General Accounting Office (GAO) to review OMHAR's 
implementation of the mark-to-market program within 18 months 
of the effective date of final regulations, which were issued 
on May 22, 2000. In a July 2001 report (``Multifamily Housing: 
Issues Related to Mark-to-Market Program Reauthorization,'' 
Report to Congressional Committees, GAO-01-800, July 2001), GAO 
pointed out that OMHAR has taken action to address many of the 
criticisms raised by eliminating some elements of its review, 
streamlining the requirements in the operating procedure guide, 
and developing incentives to encourage owner participation in 
the program. In addition, GAO maintains that OMHAR's pace in 
implementing the program has been reasonable given the 
program's complexity and the number of tasks that needed to be 
accomplished.
    GAO also concluded that the mark-to-market program should 
be extended. HUD estimated that over 1,300 section 8 properties 
with rents above market have section 8 contracts that will 
expire after the program is scheduled to sunset. If rents for 
these properties must be marked down to market levels without 
provisions for mortgage restructuring, it is likely that many 
of the properties would default on their mortgages, resulting 
in large claims against FHA's insurance fund.
    Finally, GAO concludes that OMHAR's authority to administer 
the program should also be extended. The report maintains that 
transferring responsibility for administering the program from 
OMHAR to other parts of HUD, without dedicated mark-to-market 
staff, could disrupt program momentum and leave HUD without the 
capacity and expertise it needs to administer the program 
effectively. GAO saw no problem, however, with placing the 
office under HUD's Office of Housing ``so long as such action 
does not disrupt program momentum, diminish HUD's capacity for 
administering the program, or weaken program oversight.''
    GAO makes several other recommendations that could assist 
the program's performance and may warrant this Committee's 
consideration in the future. In that regard, a letter was sent 
by the Chairwoman of the Subcommittee on Housing and Community 
Opportunity to OMHAR Director Ira Peppercorn asking several 
questions relating to program administration. The Committee 
will carefully review the recommendations of HUD, OMHAR, and 
the GAO for purposes of evaluating additional changes that 
could be made in future legislation. Given the impending 
September 30th reauthorization deadline, however, H.R. 2589 
includes only changes specific to reauthorization and office 
structure.

                                Hearings

    No hearings were held on this legislation.

                        Committee Consideration

    On July 25, 2001, the Committee met in open session and 
ordered H.R. 2589 reported to the House, without amendment, 
with a favorable recommendation by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in conjunction with the consideration 
of this legislation. A motion by Mr. Oxley to report the bill 
to the House with a favorable recommendation was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The OMHAR will continue to pursue its current programs to 
(1) preserve affordability and availability of low-income 
housing, (2) reduce the costs of Federal housing assistance, 
(3) enhance HUD's administration of Federal housing assistance, 
(4) address financially and physically troubled projects, and 
(5) correct management and ownership deficiencies.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that this 
legislation would result in changes in budget authority, 
entitlement authority, or tax expenditures or revenues 
consistent with the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 23, 2001.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2589, the Office 
of Multifamily Housing Assistance Restructuring Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Chad 
Chirico and Susanne S. Mehlman.
            Sincerely,
                                                       Dan Crippen.
    Enclosure.

H.R. 2589--Office of Multifamily Housing Assistance Restructuring Act 
        of 2001

    Summary: H.R. 2589 would extend the Multifamily Assisted 
Housing Restructuring and Affordability Act of 1997 (MAHRA) for 
three years beyond its current expiration date of September 30, 
2001. That law authorizes the so-called mark-to-market approach 
for renewing Section 8 Housing Assistance Payment (HAP) 
contracts and for the restructuring of certain mortgages 
insured by the Federal Housing Administration (FHA). Under the 
mark-to-market approach, HAP contracts are renewed at market 
rents for FHA-insured projects that currently receive above-
market rents and, if necessary, the mortgages for those 
projects are written down to levels that could be supported by 
the lower rents.
    CBO estimates that enacting H.R. 2589 would prevent some 
projects from defaulting on FHA-insured mortgages and thus 
reduce direct spending by $307 million over the 2002-2006 
period. Because the bill would affect direct spending, pay-as-
you-go procedures would apply. We also estimate that 
implementing H.R. 2589 would reduce discretionary spending by 
$114 million over the 2002-2006 period, assuming that future 
appropriations are reduced to reflect the lower costs of 
Section 8 contracts.
    H.R. 2589 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
Reauthorization of the mark-to-market program would extend 
cooperative agreements between the Department of Housing and 
Urban Development (HUD) and participating state and local 
agencies, and any costs incurred by those agencies as part of 
the agreements would be voluntary.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2589 is shown in the following table. 
The costs of this legislation would fall within budget 
functions 370 (mortgage and housing credit) and 600 (income 
security). For this estimate, CBO assumes that the legislation 
will be enacted early in fiscal year 2002 and that the 
necessary amounts will be appropriated each fiscal year. Outlay 
estimates are based on historical spending patterns associated 
with the mark-to-market program.

                                    ESTIMATED BUDGETARY EFFECTS OF H.R. 2589
----------------------------------------------------------------------------------------------------------------
                                                                By fiscal year, in million of dollars--
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING

                                     FHA Multifamily Mortgage Insurance Fund

Spending Under Current Law:
    Estimated Budget Authority......................       645     2,550     1,801       847       163        34
    Estimated Outlays...............................       645     2,550     1,801       847       163        34
Proposed Changes:
    Estimated Budget Authority......................         0      -302         0         0         0         0
    Estimated Outlays...............................         0      -302         0         0         0         0
Proposed Spending Under H.R. 2589:
    Estimated Budget Authority......................       645     2,248     1,801       847       163        34
    Estimated Outlays...............................       645     2,248     1,801       847       163        34

                                               Section 8 Contracts

Spending Under Current Law:
    Estimated Budget Authority......................         0         0         0         0         0         0
    Estimated Outlays...............................     4,390     3,933     3,460     3,039     2,817     2,715
Proposed Changes:
    Estimated Budget Authority......................         0         0         0         0         0         0
    Estimated Outlays...............................         0        -1        -2        -2         0         0
Proposed Spending Under H.R. 2589:
    Estimated Budget Authority......................         0         0         0         0         0         0
    Estimated Outlays...............................     4,390     3,932     3,458     3,037     2,817     2,715

                                        Total Changes in Direct Spending

Estimated Budget Authority..........................         0      -302         0         0         0         0
Estimated Outlays...................................         0      -303        -2        -2         0         0

                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law:
    Estimated Authorization Level\1\................    12,105    16,165    17,110    17,761    18,271    18,753
    Estimated Outlays...............................    16,515    17,525    18,265    18,620    19,094    19,603
Proposed Changes:
    Administrative Expenses:
        Estimated Authorization Level...............         0        24        24        18         0         0
    Estimated Outlays...............................         0        23        24        28         1         0
    Section 8 Contracts:
        Estimated Authorization Level...............         0       -34       -65       -56       -25        -6
        Estimated Outlays...........................         0       -33       -63       -54       -24        -6
Proposed Spending Under H.R. 2589:
    Estimated Authorization Level...................    12,105    16,155    17,069    17,723    18,246    18,747
    Estimated Outlays...............................    16,515    17,515    18,226    18,584    19,071    19,597
----------------------------------------------------------------------------------------------------------------
\1\ The amount shown for 2001 is the amount appropriated for the housing certificate fund and administrative
  expenses in that year. The 2002-2006 levels are CBO baseline projections, assuming adjustments for anticipated
  inflation and the renewal of all units.

    Basis of estimate: CBO estimates that enacting H.R. 2589 
would reduce direct spending by a total of $307 million over 
the 2002-2006 period. Such savings would result principally 
from avoiding defaults on FHA-insured mortgages that are 
anticipated under current law. Those estimated FHA savings 
would be reflected in the budget on a present value basis as 
``loan modifications'' under the provisions of the Federal 
Credit Reform Act, which establishes present value accounting 
for federal loan programs.
    Subject to the availability of appropriations, CBO 
estimates that implementing H.R. 2589 would cost a total of $66 
million over the 2002-2006 period to support the continuation 
of the Office of Multifamily Housing Assistance Restructuring's 
(OMHAR's) mark-to-market activities under the three-year 
extension of MAHRA. CBO also estimates that implementing H.R. 
2589 would result in savings of $180 million over the next five 
years from the reduction of HAP contract rents to market 
levels, assuming that appropriations are reduced accordingly. 
Thus, CBO estimates that implementing this bill would reduce 
discretionary spending by $114 million over the 2002-2006 
period.

Background

    In 1997, MAHRA was enacted to address financial problems in 
the Section 8 program for affordable housing assistance. At 
that time, over 4,000 multifamily projects with FHA-insured 
mortgages were receiving project-based rent subsidies under 
Section 8 of the United States Housing Act of 1937. The 
majority of these projects had units with rents that exceeded 
those for comparable unassisted units. The original HAP 
contracts attached to these projects were written for periods 
typically ranging from 15 to 40 years--mostly expiring over the 
1998-2004 period. However, HUD no longer had the authority to 
review these contracts at more than 120 percent of the fair 
market rent except under certain circumstances. Consequently, 
few of these projects would have remained financially viable 
when their rental income was reduced to market rates. With 
reduced rents, such projects would have been expected to 
default on their mortgages, generating large losses to the FHA 
insurance fund and possibly displacing many tenants in these 
projects.
    The mark-to-market process usually involves reducing a 
project's rents to market levels and then either modifying or 
refinancing the existing mortgage at an amount that could be 
supported by the new market rents (this process is often 
referred to as ``full'' restructuring). Specifically, FHA 
prepays all or a portion of the owner's existing mortgage debt 
through a partial payment of claims (PPC) and then takes back a 
second mortgage, and in some cases a third mortgage, to recover 
some of the PPC. In some instances, though, only a property's 
rent is reduced to market levels; this type of restructuring 
(referred to as a ``lite'' restructuring) usually occurs when 
the project is physically and financially sound enough to 
operate at market-level rents with its existing mortgage. When 
MAHRA expires, HUD will still be required to renew HAP 
contracts at market levels, but the authority to restructure 
mortgage debt will no longer be available for projects that 
have yet to enter the mark-to-market program. Without that 
authority, many mortgages would enter into deficit after rents 
are reduced to market levels.

Direct spending

    CBO estimates that enacting H.R. 2589 will result in 
savings principally by avoiding defaults on FHA-insured 
multifamily mortgages that otherwise would occur under current 
law. We expect that a small amount of savings also would occur 
because rents will be reduced prior to HAP contract expiration 
for a small number of projects.
    Avoiding FHA Multifamily Defaults through Mark-to-Market. 
Based on information from OMHAR, CBO estimates that by the end 
of fiscal year 2001, about 1,730 projects will have undergone 
or will be in the process of undergoing some form of mark-to-
market restructuring. By extending the mark-to-market authority 
through 2004, CBO estimates that an additional 680 properties 
with FHA-insured mortgages would have their mortgage debt 
restructured. Because there is relatively little incentive for 
owners to begin the mark-to-market process prior to the 
expiration of their HAP contracts, we estimate that only about 
25 of the 680 projects will have their mortgage debt 
restructured prior to their HAP contract expiration date. 
Restructuring those projects will not only result in savings to 
FHA (by avoiding defaults), but also result in savings to 
existing HAP contracts (these savings are explained in the next 
section).
    Based on a review of financial information on over 4,000 
projects, including projects that have defaulted on FHA-insured 
mortgages as well as projects for which mortgage restructurings 
have been completed, CBO estimates that the cost of 
restructuring mortgage debt is less expensive than the cost of 
default by about $1 million per project, on average. Our 
analysis indicates that over several years defaulted projects 
cost the FHA insurance fund an average of $2 million per 
project, while restructured projects have cost the FHA 
insurance fund an average of $1 million each since the program 
began operations in 1999. Included in the costs of defaults are 
the payments covering the remaining balance on the mortgage 
(about $1.3 million per project), and the expenses of 
maintaining and preparing the property for sale (about $600,000 
per project). These estimates reflect the fact that two out of 
three projects that have defaulted since 1985 were eventually 
sold for $10 or less.
    The cost of restructuring mortgage debt includes the 
payment covering the remaining balance on the mortgage (an 
estimated 80 percent of the loan's unpaid balance or about $1 
million per project), the fees paid to the public or private 
organization that assists OMHAR with mark-to-market activities 
(about $50,000 per project), and the FHA subsidy cost 
associated with guaranteeing the new first mortgage ($30,000 
per project), less the present value of expected receipts from 
repayments on the second mortgage ($200,000 per project). 
Because properties that are projected to be restructured in the 
2002-2004 period have unpaid mortgage balances that are 
significantly higher than the historical average, CBO has 
adjusted the historical averages proportionately to estimate 
future savings.
    The additional restructuring that could occur under H.R. 
2589 would reduce the cost to the FHA insurance fund over the 
remaining life of the affected loan guarantees. If the mark-to-
market program ends--as under current law--CBO assumes, based 
on discussions with HUD and OMHAR, that about 60 percent of the 
680 projects whose mortgages have not yet been restructured 
would default. The remaining 40 percent are assumed to either 
be sustainable at market rents or would not have rents reduced 
to market in the near future. For these projects that are not 
expected to default, enacting this bill would result in 
restructuring costs only.
    Because enacting H.R. 2589 would change the expected cash 
flows associated with the FHA multifamily loan guarantee 
program, this legislation is considered to be a modification 
ofexisting federal loan guarantees. Under credit reform procedures, the 
costs of a loan modification are estimated on a net present value basis 
in the year in which the legislation is enacted. Assuming that the bill 
is enacted early in fiscal year 2002, CBO estimates savings of $302 
million in that year.
    Reduction in Rents for Units Subject to Mortgage 
Restructuring. CBO expects that under the bill, some projects 
would have their mortgages restructured prior to the expiration 
of their HAP contracts. This would result in savings from funds 
that have already been appropriated for housing assistance 
payments. Under the existing mark-to-market authority, only a 
small number of project owners had their mortgages restructured 
prior to the expiration of their HAP contracts. Because CBO 
anticipates similar behavior over the next three years, we 
estimate that about 25 of the 680 projects will have their 
rents reduced and mortgage debt restructured prior to their HAP 
contract expiration. CBO estimates that the average savings 
would amount to roughly $200,000 per project, resulting in a 
total estimated savings of $5 million over the next three 
years.

Spending subject to appropriation

    Office of Multifamily Housing Assistance Restructuring. CBO 
estimates that OMHAR would incur costs of $66 million over the 
2002-2006 period, subject to the availability of 
appropriations, to continue its mark-to-market activities for 
an additional three years. Such funding would cover costs 
associated with the salaries and expenses of OMHAR personnel 
and contractor support. CBO estimates that OMHAR would require 
appropriations of $24 million in each of fiscal years 2002 and 
2003. By fiscal year 2004, however, CBO predicts that the 
number of mortgage restructurings would begin to decline. 
Consequently, we estimate that OMHAR would require 
appropriations of only $18 million in fiscal year 2004.
    Section 8 Rental Assistance. CBO estimates that by 
extending MAHRA through 2004, the transition to market rents 
for projects with expiring HAP contracts would occur at a 
faster pace than expected under current law. CBO estimates that 
implementing the bill would result in discretionary savings of 
$33 million in 2002 and $180 million over the 2002-2006 period, 
assuming that appropriations are reduced to reflect the lower 
cost of the HAP contracts.
    Information provided by HUD indicates that those properties 
estimated to have above-market rents that were not assigned to 
OMHAR for restructuring over the last few years had their rents 
increased, on average, by the rate of inflation at their first 
HAP contract renewal. In contrast, those projects that were 
assigned to OMHAR for restructuring over the same time period 
had average rent reductions of 13 percent. CBO estimates that 
this trend in rent determination is an indication that OMHAR 
would reduce rents to market levels more rapidly than would be 
expected under current law.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. For the purposes of enforcing 
pay-as-you-go procedures, only the effects in the current year, 
the budget year, and the succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                      By fiscal year, in millions of dollars--
                                  ------------------------------------------------------------------------------
                                    2001    2002    2003   2004   2005   2006   2007   2008   2009   2010   2011
----------------------------------------------------------------------------------------------------------------
Changes in outlays...............      0     -303     -2     -2      0      0      0      0      0      0      0
Changes in receipts..............                                  Not applicable
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 2589 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. Reauthorization of the mark-to-market program 
would extend cooperative agreements between HUD and 
participating state and local agencies, and any costs incurred 
by those agencies as part of the agreements would be voluntary.
    Estimate prepared by: Federal Costs: Chad Chirico and 
Susanne S. Mehlman. Impact on State, Local, and Tribal 
Governments: Susan Sieg Tompkins. Impact on the Private Sector: 
Bruce Vavrichek.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States); Article 1, section 8, 
clause 3 (relating to the power to regulate interstate 
commerce); and Article I, section 8, clause 18 (relating to 
making all laws necessary and proper for carrying into 
execution powers vested by the Constitution in the government 
of the United States).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill, the 
``Office of Multifamily Housing Assistance Restructuring 
Extension Act of 2001.''

Section 2. Reauthorization of Office

    Legislation that authorizes The Office of Multifamily 
Housing Assistance Restructuring is set to expire on September 
30, 2001. This section strikes the date of September 30, 2001 
and inserts September 30, 2004.

Section 3. Director

    Currently, the Director of OMHAR is appointed by the 
President and confirmed by the Senate. This section amends the 
law to provide that the Director no longer must be confirmed by 
the Senate.
    This section also clarifies the duties of the Director. 
Current law ``authorizes'' the Director to implement the duties 
of OMHAR. This section makes it ``the sole duty and 
responsibility of the Director.'' This section also prohibits 
HUD from assigning duties to the Director of OMHAR other than 
that necessary to administer OMHAR.

Section 4. Oversight by Federal Housing Commissioner

    Current law requires the OMHAR Director to report to the 
Secretary of HUD. This section amends section 578 of the 
Multifamily Assisted Housing Reform and Affordability Act of 
1997, entitled ``Oversight by Federal Housing Commissioner.'' 
This new language amends the law to require the OMHAR Director 
to report to the Assistant Secretary of HUD who is the Federal 
Housing Commissioner.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

   MULTIFAMILY ASSISTED HOUSING REFORM AND AFFORDABILITY ACT OF 1997


TITLE V--HUD MULTIFAMILY HOUSING REFORM

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SEC. 510. SHORT TITLE.

  This title may be cited as the ``Multifamily Assisted Housing 
Reform and Affordability Act of 1997''.

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Subtitle D--Office of Multifamily Housing Assistance Restructuring

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SEC. 572. DIRECTOR.

  [(a) Appointment.--The Office shall be under the management 
of a Director, who shall be appointed by the President by and 
with the advice and consent of the Senate, from among 
individuals who are citizens of the United States and have a 
demonstrated understanding of financing and mortgage 
restructuring for affordable multifamily housing. Not later 
than 60 days after the date of the enactment of this Act, the 
President shall submit to the Senate a nomination for initial 
appointment to the position of Director.
  [(b) Vacancy.--A vacancy in the position of Director shall be 
filled in the manner in which the original appointment was made 
under subsection (a).]
  (a) Appointment.--The Office shall be under the management of 
a Director, who shall be appointed by the President from among 
individuals who are citizens of the United States and have a 
demonstrated understanding of financing and mortgage 
restructuring for affordable multifamily housing.
  (b) Vacancy.--A vacancy in the position of Director shall be 
filled by appointment in the manner provided under subsection 
(a). The President shall make such an appointment not later 
than 60 days after such position first becomes vacant.

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SEC. 573. DUTY AND AUTHORITY OF DIRECTOR.

  (a) * * *
  (b) Authority.--[The Director is authorized] The sole duty 
and responsibility of the Director shall be 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] 
this title as the Director determines necessary to carry out 
the program under subtitle A, subject to the review and 
approval of the Secretary. The Director shall semiannually 
submit a report to the [Secretary] Assistant Secretary of the 
Department of Housing and Urban Development who is the Federal 
Housing Commissioner regarding the activities, determinations, 
and actions of the Director. Neither the Secretary, nor the 
Assistant Secretary of the Department of Housing and Urban 
Development who is the Federal Housing Commissioner, nor any 
other officer of such Department may delegate or assign to the 
Director any duty or responsibility other than, or in addition 
to, the duty and responsibility of the Director established 
under this subsection.

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[SEC. 578. SUSPENSION OF PROGRAM BECAUSE OF FAILURE TO APPOINT 
                    DIRECTOR.

  [(a) In General.--If, upon the expiration of the 12-month 
period beginning on the date of the enactment of this Act, the 
initial appointment to the office of Director has not been 
made, the 
operation of the program under subtitle A shall immediately be 
suspended and such provisions shall not have any force or 
effect during the period that ends upon the making of such 
appointment.
  [(b) Interim applicability of demonstration program.--
Notwithstanding any other provision of law, during the period 
referred to in subsection (a), the Secretary shall carry out 
sections 211 and 212 of the Departments of Veterans Affairs and 
Housing and Urban Development, and Independent Agencies 
Appropriations Act, 1997. For purposes of applying such 
sections pursuant to the authority under this section, the term 
``expiring contract'' shall have the meaning given in such 
sections, except that such term shall also include any contract 
for project-based assistance under section 8 of the United 
States Housing Act of 1937 that expires during the period that 
the program is suspended under subsection (a).]

SEC. 578. OVERSIGHT BY FEDERAL HOUSING COMMISSIONER.

  All authority and responsibilities assigned under this 
subtitle to the Secretary shall be carried out through the 
Assistant Secretary of the Department of Housing and Urban 
Development who is the Federal Housing Commissioner.

SEC. 579. TERMINATION.

  (a) Repeal.--Subtitle A (except for section 524) and subtitle 
D (except for this section) are repealed effective October 1, 
[2001] 2004.
  (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, [2001] 2004.
  (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, 
2001] at the end of September 30, 2004.

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