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Summary of changes as incorporated in an amendment in the nature of a substitute to the introduced bill, H.R. 1776
[As ordered reported by the Subcommittee on Housing and Community Opportunity
On February 15, 2000]


  1. Increased levels: Increases authorization levels to President’s FY 2001 Budget levels. Change dates from introduced bill. See comparison chart attached.


  1. ARMS: Adds a Hybrid FHA ARMS provision that will raise the current ARM cap of 30 percent of total FHA mortgage business to 40 percent. It will also authorize FHA to insure ARMs that carry fixed interest rates for the first 3 to 10 years of their term.
  1. HECMs:

    Changes the existing HECMs provision to reflect report language from Title V of VA/HUD approps.
  • Allows for the refinancing of Home Equity Conversion Mortgages [HECMs] for elderly homeowners, and (a) reduces the single premium payment to credit the premium paid on the original loan [subject to actuarial study], (b) establishes a limit on origination fees that may be charged [which fees may be fully financed] and prohibits the charging of broker fees, (c) waives counseling requirements if the borrower has received counseling in the prior five years and the increase in the principal limit exceeds refinancing costs by an amount set by the Department, and (d) provides a disclosure under a refinanced mortgage of the total cost of refinancing and the principal limit increase.
  • Directs the Department to conduct an actuarial study within 180 days of the effect of reducing the refinancing premium collected under a refinancing and of the effect creating a single national loan limit for HECM reverse mortgages.

Requires HUD to waive the up-front mortgage insurance premium in cases where reverse mortgage proceeds are used for costs of a qualified long-term care insurance contract. (Rep. LaFalce)

  1. FHA Cooperatives (Coops): Adds Coops as eligible for HECMs.
  1. 203(k) Anti-Fraud Protections: Adds H.R. 3617, the "Consumers’ Home Improvement Protection Act," to establish stronger anti-fraud protections in HUD’s 203(k) home acquisition and rehabilitation program.
  • prohibit any identity of interest between a lender, consultant, contractor, non-profit agency, real estate agent, inspector or appraiser involved in a 203(k) loan;
  • establish stricter, uniform criteria for approving non-profits participating in the program;
  • require lenders to ensure the work has been completed to the borrowers’ satisfaction through interview before dispersing the final loan payment;
  • require consultants involved in 203(k) loans to be certified by HUD;
  • require in cases of owner/occupied participants with improvements over $25,000, that the borrower go through a certified or bonded general contractor, and
  • require HUD to report to Congress the potential impact of eliminating the non-profit component of the program (currently non-profits comprise three to four percent.


  1. Disabled Homeownership: Adds a pilot program to demonstrate the use of sec. 8 vouchers for the purchase of a home that will be owned by 1 or more members of the disabled family and will be occupied by that family. (HR 2860 Sponsor Rep. Green)


  1. Income eligibility Municipal Employees: Adjusts the provision to raise the income eligibility for the municipal employee sections from 115% area median income to 150% of median (Rep. Capuano)
  1. Entitlement Community: Current law requires all villages of a town to sign off on becoming an entitlement community for HUD purposes. Hempstead has 21 villages and due to differences among leaders of the villages over the years has never had a cooperation agreement. The result is that Hempstead's unincorporated villages have not received their proportional allocation of CDBG and Home monies. The provision will add Hempstead/Nassau County for CDBG eligibility. The change ensures that unincorporated areas get their fair share.
  1. Income Eligibility for HOME and CDBG Programs. It requires HUD to grant exceptions for at least ten jurisdictions of its income eligibility limits on the use of CDBG and HOME funds. Currently, HOME and CDBG grantees are capped at 80% of the national median income instead of being allowed to serve households with incomes of 80% of median of the local area. For those jurisdictions that HUD selects based on housing costs and average income, the relevant median income for purposes of the CDBG/HOME limits will be the local median, rather than the national median.
  1. Police Officer Homeownership: Adds a provision to assist law enforcement officers to purchase homes in locally designated high crime areas (H.R. 2931-sponsor Rep. Green). No downpayment is required, there is clear eligibility status for borrower (serving as police officer for at least 6 months). This provision is targeted for high-crime areas, but is loosely defined to give localities flexibility. It limits FHA mortgage insurance premium to 1%, which can be significant (also can be added to loan amount). Provision also ensures that localities do not designate entire cities as high-crime. This will not have a negligible impact on the FHA fund. The provision also gives officers more homeownership opportunities because it is not limited to HUD-owned properties.


  1. Income eligibility Municipal Employees: Adjusts the provision to raise the income eligibility for the municipal employee sections from 115% area median income to 150% of median (Rep. Capuano)


  1. Self Help Homeownership Opportunity Program (SHOP): The provision reauthorizes SHOP for 3 years. It also allows projects with 5 or more units to use their funds over a 3-year period and allows entities to advance themselves funds while waiting for the lengthy environmental process to go through.
  1. Housing Counseling and Coops: Makes Coop homeowners eligible for housing counseling funds.


  1. Manufactured Title: Temporarily deletes title from bill due to on-going negotiations.


  1. NAHASDA: Amends the Native American Housing and Self Determination Act of 1996:
  • Restricts Secretary’s authority to grant waiver of Indian housing plan requirements upon noncompliance due to circumstances beyond the control of the Indian tribe to a period of 90 days. Allows Secretary to waive requirement for a local cooperation agreement provided the recipient has made a good faith effort to comply and agrees to make payments in lieu of taxes to the jurisdiction.
  • Sets forth requirement for assistance to Indian families that are not low-income upon a showing of need. Eliminates separate Indian housing plan requirements for small Indian tribes.
  • Provides Secretary with authority to waive statutory requirements of environmental reviews upon a determination that failure to comply does not undermine goals of the National Environmental Policy Act, will not threaten the health or safety of the community, is the result of inadvertent error and can be corrected by the recipient of funding. The intent is to address problems resulting from procedural, rather than substantive, noncompliance.
  • Revises provisions regarding audits and reviews by the Secretary by: making applicable the requirements of the Single Audit Act to tribal housing entities, allowing these to be treated as a non-Federal entities; permitting the Secretary to conduct audits to determine whether the grant recipient: has carried out eligible activities in a timely manner; has met certification requirements; has an ongoing capacity to carry out eligible activities in a timely manner; and has complied with the proposed housing plan.
  • Prescribes formula allocation for Indian housing authorities operating fewer than 250 units by requiring the amount of assistance provided to these tribes to be based on an average of their allocations from the prior five (5) fiscal years (fiscal years 1992 through 1997).
  • Amends hearing requirements to allow the Secretary to take immediate remedial action if the Secretary determines that the recipient has failed to comply substantially with any material provision of NAHASDA resulting in continued federal expenditures not authorized by law.
  • Upon noncompliance with the law due to technical incapacity, requires a recipient to enter into a "performance agreement" with the Secretary before the Secretary can provide technical assistance.
  • For Section 8 vouchers currently being used by an Indian tribe, requires counting such vouchers under the NAHASDA block grant allocation formula to ensure that families currently participating in the Section 8 voucher program will continue to be funded.
  • Repeals requirement regarding the certification of compliance with subsidy layering requirements with respect to housing assisted with grant amounts provided under the Act.


  1. HUD-held time period: Add provision requiring that properties eligible are those which have been HUD-held for at least six months, and changes to definition of "cost-recovery basis" to incorporate appraised cost of property plus carrying costs.
  1. Delete Sec. 902: Technical Corrections to the Multifamily Assisted Housing Reform and Affordability Act of 1997 were already passed in the VA/HUD appropriations. bill


  1. Additional PMI Reforms: Adds new provision to clarify of cancellation and termination issues related to terms ambiguous in law such as a) good payment history definition, b) automatic termination and c) accrued obligation for premium payments. Also clarifies definitions of: a) refinanced; b) midpoint of the amortization period; d) original value; and e) principal residence.


  1. (Title X) Rural Housing: The Administration requests for technical and substantive rural housing language.
  • Increase amount of promissory note (instead of use of liens on property) amounts from $2,500 to $7,500. [Adjusted from late ‘70’s figure to account for home repairs, e.g. roofing, heating systems, windows, without going through formal loan process.]
  • Allow operating assistance to allow "mixed" migrant and seasonal farm labor housing complexes to qualify for this subsidy
  • Provide civil penalties for Sec. 515 accounting problems
  • Allow Native Americans to become eligible borrowers under the multifamily loan guarantee program, et. al.
  1. (Title XI) Grandfamilies: Allows HOME funds (in rental units otherwise not eligible for HOME funds) to be used for facilities with units with low-income families having a grandparent residing with a grandchild, with neither of the child's parents residing in the household. ( Rep. Capuano)
  • Technical amendments from USDA IG/RHS to strengthen enforcement and prosecute fraud and abuse.


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