USE OF FHA LOANS WITH HOUSING TAX CREDITS.

SEC. 2834. USE OF FHA LOANS WITH HOUSING TAX CREDITS.(a) Subsidy Layering Requirements.—Subsection (d) of section 102 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545(d)) is amended—(1) in the first sentence, by inserting after “assistance within the jurisdiction of the Department” the following: “, as such term is defined in subsection (m), except that for purposes of this subsection such term shall not include any mortgage insurance provided pursuant to title II of the National Housing Act (12 U.S.C. 1707 et seq.)”; and(2) in the second sentence, by inserting “such” before “assistance”.(b) Cost Certification.—Section 227 of National Housing Act (12 U.S.C. 1715r) is amended—(1) in the matter preceding paragraph (a) (relating to a definition of “new or rehabilitated multifamily housing”)—(A) in the first sentence—(i) by striking “Notwithstanding” and inserting “Except as provided in subsection (b) and notwithstanding”; and(ii) by redesignating clauses (a) and (b) as clauses (A) and (B), respectively; and(B) by striking “As used in this section—”;(2) in paragraph (c) (relating to a definition of “actual cost”)—(A) in clause (i), by redesignating clauses (1) and (2) as clauses (I) and (II), respectively; and(B) in clause (ii), by redesignating clauses (1) and (2) as clauses (I) and (II), respectively;(3) by redesignating paragraphs (a), (b), and (c) as paragraphs (1), (2), and (3), respectively;(4) by inserting before paragraph (1) (as so redesignated by paragraph (3) of this subsection) the following:“(b) Exemption for Certain Projects Assisted With Low-Income Housing Tax Credit.—In the case of any mortgage insured under any provision of this title that is executed in connection with the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which equity provided through any low-income housing tax credit pursuant to section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42), if the Secretary determines at the time of issuance of the firm commitment for 122 STAT. 2870 insurance that the ratio of the loan proceeds to the actual cost of the project is less than 80 percent, subsection (a) of this section shall not apply.“(c) Definitions.—For purposes of this section, the following definitions shall apply:”; and(5) by inserting “(a) Requirement.—” after “227.”.(c) Other Provisions Regarding Treatment of Mortgages Covering Tax Credit Projects.—Title II of the National Housing Act is amended by inserting after section 227 (12 U.S.C. 1715r) the following new section:“SEC. 228. TREATMENT OF MORTGAGES COVERING TAX CREDIT PROJECTS.“(a) Definition.—For purposes of this section, the term ‘insured mortgage covering a tax credit project’ means a mortgage insured under any provision of this title that is executed in connection with the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which equity provided through any low-income housing tax credit pursuant to section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42).“(b) Acceptance of Letters of Credit.—In the case of an insured mortgage covering a tax credit project, the Secretary may not require the escrowing of equity provided by the sale of any low-income housing tax credits for the project pursuant to section 42 of the Internal Revenue Code of 1986, or any other form of security, such as a letter of credit.“(c) Asset Management Requirements.—In the case of an insured mortgage covering a tax credit project for which project the applicable tax credit allocating agency is causing to be performed periodic inspections in compliance with the requirements of section 42 of the Internal Revenue Code of 1986, such project shall be exempt from requirements imposed by the Secretary regarding periodic inspections of the property by the mortgagee. To the extent that other compliance monitoring is being performed with respect to such a project by such an allocating agency pursuant to such section 42, the Secretary shall, to the extent that the Secretary determines such monitoring is sufficient to ensure compliance with any requirements established by the Secretary, accept such agency’s evidence of compliance for purposes of determining compliance with the Secretary’s requirements.“(d) Streamlined Processing Pilot Program.—“(1) In general.—The Secretary shall establish a pilot program to demonstrate the effectiveness of streamlining the review process, which shall include all applications for mortgage insurance under any provision of this title for mortgages executed in connection with the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for which equity provided through any low-income housing tax credit pursuant to section 42 of the Internal Revenue Code of 1986. The Secretary shall issue instructions for implementing the pilot program under this subsection not later than the expiration of the 180-day period beginning upon the date of the enactment of the Housing Tax Credit Coordination Act of 2008.“(2) Requirements.—Such pilot program shall provide for—122 STAT. 2871“(A) the Secretary to appoint designated underwriters, who shall be responsible for reviewing such mortgage insurance applications and making determinations regarding the eligibility of such applications for such mortgage insurance in lieu of the processing functions regarding such applications that are otherwise performed by other employees of the Department of Housing and Urban Development;“(B) submission of applications for such mortgage insurance by mortgagees who have previously been expressly approved by the Secretary; and“(C) determinations regarding the eligibility of such applications for such mortgage insurance to be made by the chief underwriter pursuant to requirements prescribed by the Secretary, which shall include requiring submission of reports regarding applications of proposed mortgagees by third-party entities expressly approved by the chief underwriter.” .