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Washington, DC - Summary
The bill would establish a $15 billion, HUD-administered loan and grant program for the purchase and rehabilitation of owner-vacated, foreclosed homes with the goal of stabilizing and occupying them as soon as possible. $7.5 billion of the funds would be for loans, and the other $7.5 billion would be for grants.
Each State’s loan and grant authority would be based on the State’s percentage of nationwide foreclosures over the last four calendar quarters, adjusted to account for the State’s relative median home price. States could allocate funds to government entities (e.g., housing authorities) and nonprofits for the purchase, rehabilitation, and resale of homeownership housing and the purchase, rehabilitation, and operation of rental housing. A State would be required to direct funds to a city within its bounds if that city is one of the 25 most populous in the nation according to a formula based on the city’s share of total State foreclosures and relative home prices.
Loans would be non-recourse, zero-interest loans to finance acquisition and rehabilitation costs. The federal government would be paid back from resale or, in the case of rental properties, refinance proceeds. Loans for homeownership properties must be repaid within two years. For rental properties, the maximum loan term is five years. In addition, the federal government would receive 20 percent of any appreciation a property owner realizes at resale.
Grant funds could be used toward property taxes and insurance during the pre-occupancy phase; operating costs such as property management fees, property taxes, and insurance during the period a property is rented; property acquisition costs; and State and grantee administrative costs. Grants could also cover closing costs.
Homes purchased for resale must be sold to families having incomes that do not exceed 140 percent of area median income (AMI). Properties purchased for rental must serve families having incomes at or below AMI. However, States would be required to give preference to activities serving the lowest income families for the longest period and homeowners whose mortgages have been foreclosed. The bill would also give States the explicit authority to provide preferences for otherwise income-eligible veterans, teachers, workforce, and homeless persons.
At least 50 percent of the grant money must be targeted to house families at or below 50 percent of AMI, and not less than half of this money must target families at or below 30 percent of AMI. The bill would also explicitly prohibit discrimination against voucher holders and provide eviction protections for tenants in foreclosed properties.
Click Here To View H.R. 5818
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