PENALTIES FOR EQUITY SKIMMING.

SEC. 416. PENALTIES FOR EQUITY SKIMMING. (a) Purchase of Dwelling Subject to Loan in Default.— Section 912 of the Housing and Urban Development Act of 1970 is amended— (1) in paragraph (1), by inserting “(including condominiums and cooperatives)” after “dwellings”; (2) in paragraph (2), by inserting after “due” the following: “, regardless of whether the purchaser is obligated on the loan , and (3) in the matter following paragraph (3)— (A) by striking “$5,000” and inserting “$250,000”; and 101 STAT. 1908 (B) by striking “three” and inserting “5”. (b) Use of Funds Derived From Property Subject to Loan in Default.— Title II of the National Housing Act is amended by adding at the end the following new section: “equity skimming penalty “Sec. 254. Whoever, as an owner, agent, or manager, or who is otherwise in custody, control, or possession of property that is security for a mortgage note that is insured, acquired, or held by the Secretary pursuant to section 203, 207, 213, 220, 221(d)(3), 221(d)(4), 223(f), 231, 232, 234, 236, 238(c), 241, 242, 244, 608, or 810, or title XI, or is made pursuant to section 202 of the Housing Act of 1959, willfully uses or authorizes the use of any part of the rents, assets, proceeds, income or other funds derived from property covered by such mortgage note during a period when the mortgage note is in default or the project is in a nonsurplus cash position as defined by the regulatory agreement covering such property, for any purpose other than to meet actual or necessary expenses that include expenses approved by the Secretary if such approval is required under the terms of the regulatory agreement, shall be fined not more than $250,000 or imprisoned not more than 5 years, or both.”. (c) Conforming Amendments.— Section 239 of the National Housing Act is amended— (1) by striking “insured” in the section heading; (2) by striking “(a)” after “Sec. 239.”; and (3) by striking subsection (b).