Disposition of HUD-Owned Single Family Assets in Revitalization Areas.—

SEC. 602. Disposition of HUD-Owned Single Family Assets in Revitalization Areas.— Section 204 of the National Housing Act (12 U.S.C. 1710) is amended— (1) by redesignating subsection (h) as subsection (i); and (2) by inserting after subsection (g) the following new sub-section: “(h) Disposition of Assets in Revitalization Areas.— “(1) In general.— The purpose of this subsection is to require the Secretary to carry out a program under which eligible assets (as such term is defined in paragraph (2)) shall be made available for sale in a manner that promotes the revitalization, through expanded homeownership opportunities, of revitalization areas. Notwithstanding the authority under the last sentence of subsection (g), the Secretary shall dispose of all eligible assets under the program and shall establish the program in accordance with the requirements under this subsection. “(2) Eligible assets.— For purposes of this subsection, the term ‘eligible asset’ means any of the following assets of the Secretary: “(A) Properties.— Any property that— 112 STAT. 2675 “(i) is designed as a dwelling for occupancy by 1 to 4 families; “(ii) is located in a revitalization area; “(iii) was previously subject to a mortgage insured under the provisions of this Act; and “(iv) is owned by the Secretary pursuant to the payment of insurance benefits under this Act. “(B) Mortgages.— Any mortgage that— “(i) is an interest in a property that meets the requirements of clauses (i) and (ii) of subparagraph (A); “(ii) was previously insured under the provisions of this Act; and “(iii) is held by the Secretary pursuant to the payment of insurance benefits under this Act. For purposes of this subsection, an asset under this subparagraph shall be considered to be located in a revitalization area, or in the asset control area of a preferred purchaser, if the property described in clause (i) is located in such area. “(C) Future interests.— Any contingent future interest of the Secretary in an asset described in subparagraph (A) or (B). “(3) Revitalization areas.— The Secretary shall designate areas as revitalization areas for purposes of this subsection. Before designation of an area as a revitalization area, the Secretary shall consult with affected units of general local government and interested nonprofit organizations. The Secretary may designate as revitalization areas only areas that meet one of the following requirements: “(A) Very-low income area.— The median household income for the area is less than 60 percent of the median household income for— “(i) in the case of any area located within a metropolitan area, such metropolitan area; or “(ii) in the case of any area not located within a metropolitan area, the State in which the area is located. “(B) High concentration of eligible assets.— A high rate of default or foreclosure for single family mortgages insured under the National Housing Act has resulted, or may result, in the area— “(i) having a disproportionately high concentration of eligible assets, in comparison with the concentration of such assets in surrounding areas; or “(ii) being detrimentally impacted by eligible assets in the vicinity of the area. “(C) Low home ownership rate.— The rate for home ownership of single family homes in the area is substantially below the rate for homeownership in the metropolitan area. “(4) Preference for sale to preferred purchasers.— The Secretary shall provide a preference, among prospective purchasers of eligible assets, for sale of such assets to any purchaser who— “(A) is— 112 STAT. 2676 “(i) the unit of general local government having jurisdiction with respect to the area in which are located the eligible assets to be sold; or “(ii) a nonprofit organization; “(B) in making a purchase under the program under this subsection— “(i) establishes an asset control area, which shall be an area that consists of part or all of a revitalization area; and “(ii) purchases all interests of the Secretary in all assets of the Secretary that, at any time during the period which shall be set forth in the sale agreement required under paragraph (7)— “(I) are or become eligible assets; and “(II) are located in the asset control area of the purchaser; and “(C) has the capacity to carry out the purchase of eligible assets under the program under this subsection and under the provisions of this paragraph. “(5) Agreements Required for Purchase.— “(A) Preferred purchasers.— Under the program under this subsection, the Secretary may sell an eligible asset as provided in paragraph (4) to a preferred purchaser only pursuant to a binding agreement by the preferred purchaser that the eligible asset will be used in conjunction with a home ownership plan that provides as follows: “(i) The plan has as its primary purpose the expansion of home ownership in, and the revitalization of, the asset control area, established pursuant to paragraph (4)(B)(i) by the purchaser, in which the eligible asset is located. “(ii) Under the plan, the preferred purchaser has established, and agreed to meet, specific performance goals for increasing the rate of home ownership for eligible assets in the asset control area that are under the purchaser’s control. The plan shall provide that the Secretary may waive or modify such goals or deadlines only upon a determination by the Secretary that a good faith effort has been made in complying with the goals through the homeownership plan and that exceptional neighborhood conditions prevented attainment of the goal. “(iii) Under the plan, the preferred purchaser has established rehabilitation standards that meet or exceed the standards for housing quality established under subparagraph (B)(iii) by the Secretary, and has agreed that each asset property for an eligible asset purchased will be rehabilitated in accordance with such standards. “(B) Non-preferred purchasers.— Under the program under this subsection, the Secretary may sell an eligible asset to a purchaser who is not a preferred purchaser only pursuant to a binding agreement by the purchaser that complies with the following requirements: “(i) The purchaser has agreed to meet specific performance goals established by the Secretary for home ownership of the asset properties for the eligible 112 STAT. 2677assets purchased by the purchaser, except that the Secretary may, by including a provision in the sale agreement required under paragraph (7), provide for a lower rate of home ownership in sales involving exceptional circumstances. “(ii) The purchaser has agreed that each asset property for an eligible asset purchased will be rehabilitated to comply with minimum standards for housing quality established by the Secretary for purposes of the program under this subsection. “(6) Discount for preferred purchasers.— “(A) In general.— For the purpose of providing a public purpose discount for the bulk sales of eligible assets made under the program under this subsection by preferred purchasers, each eligible asset sold through the program under this subsection to a preferred purchaser shall be sold at a price that is discounted from the value of the asset, as based on the appraised value of the asset property (as such term is defined in paragraph (8)). “(B) Appraisals.— The Secretary shall require that each appraisal of an eligible asset under this paragraph is based upon— “(i) the market value of the asset property in its ‘as is’ physical condition, which shall take into consideration age and condition of major mechanical and structural systems; and “(ii) the value of the property appraised for home ownership. “(C) Discount classes.— The Secretary, in the sole discretion of the Secretary, shall establish the discount under this paragraph for an eligible asset, which shall be in one of the following amounts: “(i) Standard discount.— In the case only of eligible assets with asset properties that, at the time of sale under this subsection, do not meet the standards for housing quality established pursuant to paragraph (5)(B)(ii), an amount that— “(I) is appropriate to provide reasonable resources for the improvement such assets; and “(II) takes into consideration the financial safety and soundness of the Mutual Mortgage Insurance Fund. “(ii) Deep discount.—In the case only of eligible assets described in clause (i) for which the Secretary determines a deep discount is appropriate, an amount that exceeds the amount of a standard discount under clause (i). In making a determination whether a deep discount is appropriate, the Secretary may consider the condition of the asset property, the extent of resources available to the preferred purchaser, the comprehensive revitalization plan undertaken by such purchaser, or any other circumstances the Secretary considers appropriate. “(iii) Minimal discount.—In the case only of eligible assets with asset properties that, at the time of sale under this subsection, meet or substantially meet the standards for housing quality established 112 STAT. 2678pursuant to paragraph (5)(B)(ii), an amount that is less than the amount of a standard discount under clause (i) of this subparagraph and is sufficient to provide assistance to the preferred purchaser in meeting costs associated with compliance with the program requirements under this subsection. “(D) Determination of discount class.— The Secretary shall, in the sole discretion of the Secretary, establish a method for determining which discount under clause (i) or (ii) subparagraph (C) shall be provided for an eligible asset that is described in such clause (i) and sold to a preferred purchaser. The method may result in the assignment of discounts on any basis consistent with subparagraph (C) that the Secretary considers appropriate to carry out the purposes of this subsection. “(7) Sale agreement.— The Secretary may sell an eligible asset under this subsection only pursuant to a sale agreement entered into under this paragraph with the purchaser, which shall include the following provisions: “(A) Assets.— The sale agreement shall identify the eligible assets to be purchased and the interests sold. “(B) Revitalization area and asset control area.— The sale agreement shall identify— “(i) the boundaries of the specific revitalization areas (or portions thereof) in which are located the eligible assets that are covered by the agreement; and “(ii) in the case of a preferred purchaser, the asset control area established pursuant to paragraph (4)(B)(i) that is covered by the agreement. “(C) Financing.— The sale agreement shall identify the sources of financing for the purchase of the eligible assets. “(D) Binding agreements.— The sale agreement shall contain binding agreements by the purchaser sufficient to comply with— “(i) in the case of a preferred purchaser, the requirements under paragraph (5)(A), which agreements shall provide that the eligible assets purchased will be used in conjunction with a home ownership plan meeting the requirements of such paragraph, and shall set forth the terms of the homeownership plan, including— “(I) the goals of the plan for the eligible assets purchased and for the asset control area subject to the plan; “(II) the revitalization areas (or portions thereof) in which the homeownership plan is operating or will operate; “(III) the specific use or disposition of the eligible assets under the plan; and “(IV) any activities to be conducted and services to be provided under the plan; or “(ii) in the case of a purchaser who is not a preferred purchaser, the requirements under paragraph (5)(B). “(E) Purchase price and discount.— The sale agreement shall establish the purchase price of the eligible 112 STAT. 2679assets, which in the case of a preferred purchaser shall provide for a discount in accordance with paragraph (6). “(F) Housing quality.— The sale agreement shall provide for compliance of the eligible assets purchased with the rehabilitation standards established under paragraph (5)(A)(iii) or the minimum standards for housing quality established under paragraph (5)(B)(ii), as applicable, and shall specify such standards. “(G) Performance goals and sanctions.— The sale agreement shall set forth the specific performance goals applicable to the purchaser, in accordance with paragraph (5), shall set forth any sanctions for failure to meet such goals and deadlines, and shall require the purchaser to certify compliance with such goals. “(H) Period covered.— The sale agreement shall establish— “(i) in the case of a preferred purchaser, the time period referred to in paragraph (4)(B)(ii); and “(ii) in the case of a purchaser who is not a preferred purchaser, the time period for purchase of eligible assets that may be covered by the purchase. “(I) Other terms.— The agreement shall contain such other terms and conditions as may be necessary to require that eligible assets purchased under the agreement are used in accordance with the program under this subsection. “(8) Definitions.— For purposes of this subsection, the following definitions shall apply: “(A) Asset control area.— The term ‘asset control area’ means the area established by a preferred purchaser pursuant to paragraph (4)(B)(i). “(B) Asset property.— The term ‘asset property’ means— “(i) with respect to an eligible asset that is a property, such property; and “(ii) with respect to an eligible asset that is a mortgage, the property that is subject to the mortgage. “(C) Eligible asset.— The term ‘eligible asset’ means an asset described in paragraph (2). “(D) Nonprofit organization.— The term ‘nonprofit organization’ means a private organization that— “(i) is organized under State or local laws; “(ii) has no part of its net earnings inuring to the benefit of any member, shareholder, founder, contributor, or individual; and “(iii) complies with standards of financial responsibility that the Secretary may require. “(E) Preferred purchaser.— The term ‘preferred purchaser’ means a purchaser described in paragraph (4). “(F) Unit of general local government.— The term ‘unit of general local government’ means any city, town, township, county, parish, village, or other general purpose political subdivision of a State. 112 STAT. 2680 “(9) Secretary’s discretion.— The Secretary shall have the authority to implement and administer the program under this subsection in such manner as the Secretary may determine. The Secretary may, in the sole discretion of the Secretary, enter into contracts to provide for the proper administration of the program with such public or nonprofit entities as the Secretary determines are qualified. “(10) Regulations.— The Secretary shall issue regulations to implement the program under this subsection through rule-making in accordance with the procedures established under section 553 of title 5, United States Code, regarding substantive rules. Such regulations shall take effect not later than the expiration of the 2-year period beginning on the date of the enactment of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act 1999.”.