H.R. 5818 would authorize the Secretary of Housing and Urban Development to make loans to States to acquire foreclosed housing and to make grants to States for related costs.
Detailed Summary
Neighborhood Stabilization Act of 2008 - (Sec. 3) Directs the Secretary of Housing and Urban Development (HUD) to make grants and loans to qualified states, metropolitan cities, and urban counties, in accordance with HUD-approved plans, to carry out eligible housing stimulus activities.
Requires such program to be administered through HUD's Office of Community Planning and Development (or any successor office responsible for administering the community development block grant program under the Housing and Community Development Act of 1974).
(Sec. 4) Specifies the contents of a grant or loan applicant's plan, which must be submitted for the Secretary's approval.
Requires a plan, among other things, to give priority emphasis and consideration to metropolitan areas, metropolitan cities, urban areas, rural areas, low- and moderate-income areas, census tracts and other areas having the greatest need.
(Sec. 5) Prescribes formulas for distribution of foreclosure grant amounts and foreclosure loan authority amounts to a qualified state, metropolitan city, or urban county (allocation recipient), based on ratios reflecting the number of foreclosures on mortgages for single family housing and subprime mortgage loans for such housing over 90 days delinquent which have occurred in the state during the most recently completed four calendar quarters for which such information is available.
Requires the Secretary to establish or select an index to account for differences between qualified states in the medium price of single family housing in such states.
(Sec. 6) Authorizes the use of such loans by the allocation recipient, a local government or its entity, or any other entity, as provided in the allocation recipient's HUD-approved plan.
States that, upon the Secretary's entering a binding commitment to make a loan for use in the recipient's area, the loan authority allocated to each recipient shall be decreased by the principal amount of such a loan, but be increased again by such amount upon repayment of the loan.
Requires such loans: (1) to bear no interest; (2) be non-recourse; (3) have a maturity of three years if a loan made to purchase (or finance the purchase of) qualified foreclosed housing for homeownership, and of five years if a loan to purchase (or finance the purchase of) such housing for rental property; (4) not provide for amortization of the principal obligation; and (5) require payment of the original principal obligation only.
Requires an allocation recipient to repay 90% or more under all previous loans before being eligible to reborrow. Authorizes the Secretary to waive such requirement upon allocation recipient request, if the borrower has demonstrated satisfactory progress in utilizing outstanding loans and sufficient capacity to utilize additional loan amounts effectively.
Sunsets this program for new loans after 48 months.
(Sec. 7) Authorizes the use of grant amounts for eligible housing stimulus activities by the allocation recipient, a local government or its entity, or a nonprofit organization.
(Sec. 8) Limits the use of such loans to homeownership housing, rental housing, and housing rehabilitation, subject to specified requirements.
Allows the use of such a loan for purchasing, or financing the purchase of, qualified foreclosed housing for resale as housing for homeownership to families having incomes of up to 140% of the median income for the area in which the housing is located.
Allows the use of such a loan also for rental, lease-purchase, or rent-to-own housing, but only for families whose incomes do not exceed 100% of the area median income. Prohibits rents from exceeding market rents for comparable dwelling units located in the area. Requires such rents to accord with any requirements of the Secretary intended to ensure that rents are established in a fair, objective, and arms-length manner.
Allows the use of such a loan also for rehabilitation of qualified foreclosed property as necessary to: (1) comply with applicable laws, codes, and other requirements relating to housing safety, quality, and habitability; or (2) make improvements to increase the housing's energy efficiency or its conservation, or to provide a renewable energy source (or sources) for it for the purpose of reselling it within three months at a price as close as possible to its acquisition price.
Limits the use of grants to: (1) property holding and operating costs; (2) property-related acquisition costs; (3) allocation recipient-related administrative costs; (4) certain state planning costs; (5) housing rehabilitation activities; and (6) demolition costs, but only if the Secretary determines that the neighborhood or other area in which the housing is located has a high incidence of vacant and abandoned housing (or other vacant and abandoned structures), and is experiencing a significant decline in population.
Prohibits the use of grant amounts to provide assistance of any kind (including grants, loans, and closing cost financing) for downpayments for any homebuyers of single family housing.<br>
Requires the Secretary, by regulation, to prohibit the use of such grants or loans for: (1) political activities; (2) advocacy; (3) direct or indirect lobbying; (4) counseling services; (5) travel expenses; or (6) preparing or providing advice on tax returns.
Requires the use of: (1) 50% of such grants to provide housing only for very low-income families (whose incomes do not exceed 50% of the median income in the area); and (2) 50% of such grants to provide housing only for extremely low-income families (whose income does not exceed 30% of such median income).
Authorizes the Secretary, with respect to families with extremely low incomes, to allow an eligibility ceiling greater than 30%, but less than 50%, in specified circumstances if the higher ceiling will not result in an overall loss of housing affordable to families whose income does not exceed 30% of the area median income.
Requires an allocation recipient that includes rural areas to use a portion of its grant or loan amount for eligible activities located in rural areas proportionate to the identified need for such activities there.
Requires a qualified state, or at its election, a qualified metropolitan city or qualified urban county, to record a lien in the Secretary's name on any qualified foreclosed housing purchased or financed with a loan under this Act.<br> <br> Declares that this Act may not be construed to prevent the resale of qualified foreclosed housing to a prior owner or occupant who meets income requirements.
Prohibits a loan or grant recipient from discriminating against a prospective tenant because the individual holds a voucher or certificate of eligibility under section 8 (public housing rental assistance) of the United States Housing Act of 1937.
Subjects the owner (and any successor in interest) to the lease and to the housing assistance payments contract for the occupied unit, in the case of any qualified foreclosed housing: (1) for which funds made available under this Act are used; and (2) in which a recipient of section 8 rental assistance resides at the time of acquisition or financing of such property.
Subjects any successor in interest in any foreclosed property (such as a subsequent purchaser) to: (1) the requirement of delivering a 90-day notice to vacate to any bona fide tenant; and (2) the tenant's rights.
Prohibits the use of such grant or loan amounts to demolish any public housing.
(Sec. 9) Prohibits the use of such grant or loan amounts for any qualified foreclosed housing unless binding agreements are entered into that ensure that the federal government, upon any sale or disposition of the property by the owner acquiring the housing pursuant to assistance under this Act, shall receive at least 20% or, in the case of a for-profit owner, 50% of the difference between the net proceeds from its sale or disposition and the cost of its acquisition, after deductions for certain expenditures.
(Sec. 10) Establishes deadlines by which an allocation recipient must obligate and spend grant and loan authority amounts.
(Sec. 11) Requires the servicer of a federally related mortgage loan to: (1) notify the local government in which the property securing the mortgage is located upon becoming responsible for a qualified foreclosed property; and (2) provide it with the name and 24-hour contact information of a representative authorized to negotiate purchases.
(Sec. 12) Sets forth reporting and contingent reimbursement requirements for allocation recipients.
(Sec. 14) Authorizes appropriations.
(Sec. 15) Declares that nothing in this Act shall affect the right to bear arms under the Second Amendment of the Constitution.
(Sec. 16) Makes illegal aliens ineligible for financial assistance under this Act.<br>
Status of the Legislation
Latest Major Action: 5/12/2008: Referred to Senate committee. Status: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Points in Favor
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Points Against
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Visitor Comments
Mia
May 5, 2008, 12:25pm (report abuse)No, No and h*ll No! Washington better listen. Taxpayers do not want this.
David
May 5, 2008, 2:41pm (report abuse)Against.
You should sleep in the bed you make... not in mine.
Paula LeCates
May 5, 2008, 3:07pm (report abuse)No, why should I pay for the greed of lenders and the selfishness of buyers!
Richard
May 5, 2008, 6:41pm (report abuse)I am not in favor of bailing out those who caused the problem, nor those whose greed drove them to try to roll property. But I am concerned for the low- and moderate-income home buyers who find themselves hammered on the same anvil. This sounds like a less expensive option than letting foreclosures deteriorate and paying for it later. At the same time helping cities maintain livability and providing guaranteed opportunity for the low- and moderate-income (working poor).
Angry Renter
May 8, 2008, 8:00pm (report abuse)More borrowing and spending! Join the protest against the housing bailout at AngryRenter.com !
Frank
May 8, 2008, 8:48pm (report abuse)What Mia, David and Paula do not "get" is that the problem is not limited to those (lenders & Borrowers) who got hammered. The repercussions of this bubble are vast and deep. The energy and food (commodities) rise in prices - the devaluation of our formerly "mighty" dollar, its value dropping as our borrowing rises in order to finance the war - consumer borrowing maxing out - the squeeze on the middle class, and the drop in property values. All of those factors have placed our entire economic future in uncertain and dangerous ground. You have forgotten what brought financial regulation into existence. The great Depression was brought forth by an unregulated market. We need to brush up on our history, lest we be doomed to repeat it.
Anne
May 9, 2008, 4:24am (report abuse)Against.
This is how our goverment reward the irresponsible. What are the goverment to do with the rest of us(guessing 90%+) that are faithfully paying our mortgage. Will all homeowners get a reduce mortgage too? What a joke.
Bill
May 9, 2008, 6:09am (report abuse)As a person that has been very responsible and taken no risk, If I can arrange to get all of us who save to go to Las Vegas and bet our life savings on Red, would the government bail us out as well? These are people who bought more then they could afford and those of us that saw this coming are going to lose out on oppurtunities to by property at very low prices. Lets pass a bill that removes all aid to the oil companies. That would help the people more!
TK
October 6, 2008, 7:42pm (report abuse)Wall Street has already been bailed out. This bill will now help communities on "Main Street". We need this because the foreclosure rate is hurting all of you. When your neighbor's house goes into foreclosure, the value of your house will decrease. Local governments need a way to absorb some of these foreclosed properties in order to protect the value in your home.