Sec. 207. Establishment of home loan guarantee program
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Subtitle A of title II of the Cranston-Gonzalez National Affordable Housing Act ( 42 U.S.C. 12741 et seq. ) is amended by adding at the end the following: The Secretary may, under such terms and conditions as the Secretary may prescribe, guarantee and make commitments to guarantee, only to such extent or in such amounts as provided in appropriation Acts, the notes or obligations issued by participating jurisdictions for the purposes of financing the development or preservation of affordable rental and homeownership housing through the acquisition, new construction, reconstruction, or moderate or substantial rehabilitation of affordable housing.
When in support of the activities described in paragraph (1), the expenses for which the Secretary may guarantee and make commitments to guarantee notes or obligations under that paragraph include real property acquisition, site improvement, conversion, demolition, and other expenses, including financing costs and relocation expenses of any displaced person, family, or business. A guarantee under this section may be used to assist a participating jurisdiction in obtaining financing only if the participating jurisdiction— has made efforts to obtain such financing without the use of the guarantee, as determined by the Secretary; and cannot complete such financing consistent with the timely execution of the project plans without the guarantee, as determined by the Secretary.
Notes or other obligations guaranteed under this section shall be in such form and denominations, have such maturities, and be subject to such conditions as may be prescribed by regulations issued by the Secretary. The Secretary may not deny a guarantee under this section on the basis of the proposed repayment period for the note or other obligation unless— the period is more than 20 years; or the Secretary determines that the period causes the guarantee to constitute an unacceptable financial risk.
Notwithstanding any other provision of law and subject only to the absence of qualified applicants or proposed activities and to the authority provided in this section, to the extent approved or provided in appropriation Acts, the Secretary shall enter into commitments to guarantee notes and obligations under this section with an aggregate principal amount of not more than— $2,000,000,000 for fiscal year 2023; and for each subsequent fiscal year, an amount that is increased for inflation as determined by the Secretary.
The Secretary may not make a guarantee or commitment to guarantee with respect to any note or other obligation if— the total outstanding notes or obligations of the issuer guaranteed under this section would thereby exceed an amount equal to 5 times the most recent allocation for the issuer under this title; or the Secretary determines that the guarantee constitutes an unacceptable risk. Notwithstanding any other provision of this Act, a participating jurisdiction allocated funds under this Act may use the funds (including program income derived therefrom) for the payment of principal and interest due (including such servicing, underwriting, or other costs as may be specified in regulations of the Secretary), and any associated fee to be paid in accordance with subsection (j), on a note or other obligation guaranteed under this section.
To assure the repayment of a note or other obligation guaranteed under this section and related charges incurred under this section, and as a condition of receiving such a guarantee, the Secretary shall require the issuer of the note or other obligation to— enter into a contract, in a form acceptable to the Secretary, for repayment of the note or other obligation; pledge as security the proceeds of any grant for which the issuer may become eligible under this Act; and furnish, at the discretion of the Secretary, such other security as may be determined appropriate by the Secretary in making the guarantee, including increments in local tax receipts generated by the activities assisted under this Act or proceeds from the sale of land or rehabilitated property.
The Secretary may, notwithstanding any other provision of this Act, apply the proceeds of a grant pledged by a participating jurisdiction under subsection (e)(2) to any repayment due the United States as a result of the guarantee under this section of a note or other obligation issued by the participating jurisdiction. The full faith and credit of the United States is pledged to the payment of a note or other obligation guaranteed under this section. A guarantee made by the Secretary under this section shall be conclusive evidence of the eligibility of the obligation for the guarantee with respect to principal and interest.
The validity of a guarantee made by the Secretary under this section shall be incontestable in the hands of a holder of the guaranteed obligation. A guarantee made under this section shall guarantee repayment of 100 percent of the unpaid principal and interest due on the notes or other obligations guaranteed. The total amount of outstanding obligations guaranteed on a cumulative basis by the Secretary under this section may not at any time exceed the greater of— $4,500,000,000; or such higher amount as may be authorized to be appropriated to carry out this section for a fiscal year.
The Secretary shall monitor the use of guarantees under this section by participating jurisdictions. If the Secretary finds under subparagraph
(A)that 50 percent of the aggregate guarantee authority under paragraph
(1)has been committed, the Secretary may— provide that a unit of general local government that receives a grant under section 211 may not receive more than $35,000,000 in guarantees under this section; or submit to Congress a request for the enactment of legislation increasing the amount of the aggregate guarantee authority. The Federal Financing Bank may not purchase a note or other obligation guaranteed under this section. The Secretary shall collect fees from borrowers to result in a credit subsidy cost of zero for guaranteeing notes or other obligations under this section. The Secretary may, upon such terms and conditions as the Secretary considers appropriate, guarantee the timely payment of the principal of and interest on such trust certificates or other obligations as may be— offered by the Secretary or by any other offeror approved for purposes of this subsection by the Secretary; and based on and backed by a trust or pool composed of notes or other obligations guaranteed or eligible for guarantee by the Secretary under this section. To the same extent as provided in subsection (g), the full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guarantee made by the Secretary under this subsection. If the Secretary pays a claim under a guarantee made under this section, the Secretary shall be subrogated for all the rights of the holder of the guaranteed certificate or obligation with respect to the certificate or obligation. No State or local law, and no Federal law, shall preclude or limit the exercise by the Secretary of— the power to contract with respect to public offerings and other sales of notes, trust certificates, and other obligations guaranteed under this section upon such terms and conditions as the Secretary determines appropriate; the right to enforce any contract described in subparagraph
(A)by any means determined appropriate by the Secretary; or any ownership rights of the Secretary, as applicable, in notes, certificates, or other obligations guaranteed under this section, or constituting the trust or pool against which trust certificates, or other obligations guaranteed under this section, are offered. .
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Sec. 207
Establishment of home loan guarantee program
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