12 U.S.C. § 1701x — Assistance with respect to housing for low- and moderate-income families

(a) Information, advice, technical assistance, and counseling

(1) The Secretary may provide, or contract with public or private organizations to provide, information, advice, and technical assistance, including: (i) collecting, organizing, publishing, and distributing information about constructing, rehabilitating, and operating low- and moderate-income housing; (ii) advising public bodies and nonprofit or cooperative organizations about that work, including self-help and mutual-self-help programs; (iii) counseling tenants and homeowners about property maintenance, money management, and other suitable matters that improve housing and help them meet tenancy or homeownership duties; and (iv) helping communities, especially smaller ones, plan, develop, and administer Community Development Programs under title I of the Housing and Community Development Act of 1974.

(2) The Secretary (A) must provide the subsection (a)(1)(iii) services to homeowners assisted under § 235 of the National Housing Act; (B) must, after consulting the Secretary of Agriculture, provide them to first-time homebuyers with guaranteed loans under § 502(h) of the Housing Act of 1949; and (C) may provide them to other owners of one-family homes insured under title II of the National Housing Act or guaranteed or insured under title 38, chapter 37. The Secretary may provide these services directly or contract with, grant money to, or otherwise assist public or private organizations specially competent in counseling low- and moderate-income families.

(3) Congress may appropriate needed amounts without fiscal-year limitation. It specifically authorizes $6,025,000 for fiscal year 1993 and $6,278,050 for fiscal year 1994. Up to $500,000 of each year’s amount may support counseling and other activities connected with the demonstration under § 152 of the Housing and Community Development Act of 1992. Appropriated money remains available until spent.

(4) Homeownership and Rental Counseling Assistance

(A) The Secretary must make financial assistance available to HUD-approved housing counseling agencies and State housing finance agencies.

(B) The Secretary must set eligibility standards and guidelines for organizations, including government and nonprofit organizations, under subparagraph (D).

(C) Assistance must be distributed to encourage efficient and successful counseling, geographic diversity, and service to both urban and rural areas.

(D)(i) No money may go to (I) an organization convicted under federal law of an election-related violation involving federal office, or (II) an organization employing an “applicable individual.” (ii) “Applicable individual” means someone who (I) is (aa) permanently or temporarily employed by the organization, (bb) contracted or retained by it, or (cc) acting for it or with its express or apparent authority, and (II) has been convicted under federal law of an election-related violation involving federal office.

(E) In making assistance available, the Secretary must consider ways to simplify and improve grant application, review, approval, and award.

(F) Congress may appropriate $45,000,000 for each fiscal year 2009 through 2012 for (i) the HUD Office of Housing Counseling; (ii) the Housing Counseling Director’s duties under subsection (g)(2) through (5); and (iii) assistance under this paragraph for homeownership and rental counseling providers.

(b) Preconstruction loans

(1) The Secretary may make interest-free loans to nonprofit organizations or public housing agencies for necessary preconstruction planning and financing expenses for rehabilitating or constructing low- or moderate-income housing under § 235 of the National Housing Act or another federally assisted program. A loan may not exceed 80 percent of reasonable expected costs before financing is available, including preliminary market surveys and analyses, preliminary site engineering and architectural fees, site acquisition, application and mortgage-commitment fees, and construction-loan fees and discounts. The Secretary must require repayment when the project is completed or sooner under required terms and may cancel part or all of a loan if it cannot be recovered from the permanent financing.

(2) Before lending, the Secretary must find that the organization or agency meets prescribed financial responsibility and stability requirements.

(3) Congress may appropriate up to $7,500,000 for the fiscal year ending June 30, 1969, and up to $10,000,000 for the fiscal year ending June 30, 1970. Money remains available until spent. An amount authorized but not appropriated for one year may be appropriated in a later year.

(4) Appropriated money must go into the Low and Moderate Income Sponsor Fund. The Fund has no fiscal-year limit and is a revolving fund administered by the Secretary for this subsection. Loan repayments go into the Fund.

(c) Homeownership counseling organizations

(1) The Secretary may grant money (A) to experienced nonprofit homeownership-counseling organizations so they can counsel eligible homeowners and (B) to help establish such nonprofit organizations.

(2) (A) Applications must use the Secretary’s form and procedures. (B) Recipients may use the money only for counseling eligible homeowners. (C) Counseling must cover (i) financial management; (ii) community resources, including public assistance, mortgage assistance, home-repair assistance, utility assistance, food, and social services; and (iii) job training and placement.

(3) The Secretary must ensure counseling is available throughout the United States, prioritizing areas with high foreclosure or other appropriate homeowner-distress indicators, areas not adequately served, and areas with many § 203-insured mortgages whose principal obligations, including approved initial service, appraisal, inspection, and other fees, exceed 97 percent of appraised property value. The Secretary must also inform the public that counseling is available.

(4) A homeowner qualifies if (A) the loan is secured by the homeowner’s principal residence as the Secretary defines it; (B) the loan is not assisted under title V of the Housing Act of 1949; and (C) the homeowner is or is expected to be unable to make payments, cure a delinquency within a reasonable time, or resume full payments because income fell due to (i) involuntary loss or reduction of the homeowner’s employment, self-employment, or occupational income; (ii) a similar loss or reduction for someone contributing to household income; (iii) a major household-income reduction from divorce or death; or (iv) a major increase in basic expenses of the homeowner or an immediate family member, including spouse, child, or parent for whom substantial care or financial help is provided, because of (I) unexpected or major medical-cost increases, (II) divorce, (III) unexpected major property damage not covered by private or public insurance, or (IV) a large property-tax increase. The homeowner also qualifies under (D) if the Secretary finds annual income no greater than the Secretary’s low- or moderate-income limit.

(5)(A)(i) Except under subparagraph (C), a loan creditor or proposed creditor must give the notice in clause (ii) to (I) an eligible homeowner who misses an amount due under a home loan and (II) an applicant for a paragraph (4) mortgage. (ii) The notice must: (I) say whether counseling is available from the creditor; (II) for an eligible mortgage applicant, say counseling is required for § 203 insurance; (III) say counseling is available from Secretary-approved experienced nonprofits or give the toll-free number in (D)(i); (IV) use the Secretary’s plain-English statement, prepared with the Defense and Treasury Secretaries, explaining mortgage and foreclosure rights of servicemembers and their dependents under the Servicemembers Civil Relief Act, including the Military OneSource toll-free number; and (V) say mortgage software under subsection (g)(3) is available. (B) The notice must be given in a Secretary-approved way before 45 days after the missed payment. (C) It is not required if the homeowner pays the overdue amount before that 45-day period ends. (D) Subject to appropriations, the Secretary must contract with a private entity to (i) run a toll-free number giving eligible homeowners an annually updated list of Secretary-approved experienced nonprofits serving the property’s area; (ii) monitor creditor compliance with (A) and (B); and (iii) report compliance to the Secretary at least yearly. (E) The Secretary must report to Congress at least yearly on compliance and the monitoring entity’s effectiveness, including legislative recommendations to strengthen penalties for noncompliant creditors.

(6) For this subsection: (A) “Creditor” means a person^* or entity servicing a home loan for itself or another. (B) “Eligible homeowner” means a homeowner eligible under paragraph (4). (C) “Home loan” means a loan secured by a mortgage or lien on residential property. (D) “Homeowner” means a person obligated under a home loan. (E) “Residential property” means a one-family residence, including a one-family condominium unit, a cooperative membership interest and occupancy agreement, or a manufactured home and its lot. (7) The Secretary must issue needed regulations. (8) Congress may appropriate $7,000,000 for fiscal year 1993 and $7,294,000 for fiscal year 1994; $1,000,000 of each year’s amount must be available for paragraph (5)(D). Money remains available until spent.

(d) Prepurchase and foreclosure-prevention demonstration

(1) Its purposes are: (A) reducing defaults and foreclosures on FHA single-family-insurance mortgages; (B) encouraging responsible, careful use of those mortgages; (C) helping borrowers keep homes bought with them; and (D) encouraging housing opportunities connected with them.

(2) The Secretary must conduct a demonstration of coordinated prepurchase and foreclosure-prevention counseling for first-time buyers and homeowners to avoid defaults and foreclosures on those FHA-insured mortgages.

(3) The Secretary must grant qualified nonprofits under paragraph (4) money to provide prepurchase counseling to eligible buyers and foreclosure-prevention counseling to eligible homeowners in counseling target areas.

(4) Selection must consider the organization’s counseling experience and ability to provide community-based services under paragraphs (5) and (6) in a target area. An organization must apply with a proposal in the Secretary’s required form.

(5)(A) The Secretary must require an eligible buyer who plans to buy in a target area and has applied, as the Secretary determines, for a paragraph (9) qualified mortgage with a down payment below 10 percent of principal to receive counseling before signing the purchase contract. Counseling must cover financial management and homeownership duties; fair-housing law; the maximum affordable mortgage; and options and actions if delinquency or default occurs or may occur. (B) A buyer qualifies if the buyer applied for a qualified mortgage, is a first-time buyer, and the home is in a target area.

(6) The Secretary must make counseling available to an eligible homeowner who is at least 60 days delinquent on a qualified-mortgage payment for a home in a target area. It must cover options and actions for resolving delinquency or default.

(7) Scope of demonstration. (A) The Secretary must designate 3 counseling target areas under subparagraph (B), in at least 2 metropolitan areas. Counseling under the demonstration may cover only those areas. (B) Each target area must be a group of contiguous census tracts whose population exceeds 50,000; that together forms an identifiable neighborhood, area, borough, district, or region in a metropolitan area, even if it crosses a political subdivision; whose existing housing averages more than 20 years old; and where either (I) more than 5 percent of qualified mortgages were foreclosed in the preceding calendar year, or (II) qualified mortgages originated in that year exceeded 20 percent of all residential mortgages originated there. (C) At least one area must meet (B)(iv)(I) and at least one must meet (B)(iv)(II). (D) The Secretary may expand an area during the demonstration if counseling can be adequately provided and the purposes are advanced. An expansion may include only contiguous census-tract groups, which need not meet (B). (E) The Secretary must designate 3 control areas, one corresponding to each target area, in the same metropolitan area and meeting (B). Each must be similar in size, housing age, median income, and racial makeup, and must meet the same (B)(iv)(I) or (II) test as its corresponding target area.

(8) Evaluation. Each counseling organization must keep records for every counseled eligible buyer and homeowner and provide information the Secretary or Comptroller General requires.

(9) Definitions. (A) “Control area” means an area designated under paragraph (7)(E). (B) “Counseling target area” means an area designated under paragraph (7)(A). (C) “Creditor” means a person or entity servicing a loan secured by a qualified mortgage for itself or another. (D) “Displaced homemaker” means an adult who has not worked full-time, full-year in the workforce for several years but during those years mainly worked without pay caring for home and family, and is unemployed or underemployed and having difficulty obtaining or improving employment. (E) “Downpayment” means the part of the home’s purchase price required at or before purchase. (F) “Eligible homebuyer” means a buyer meeting paragraph (5)(B). (G) “Eligible homeowner” means a homeowner meeting paragraph (6)(D). (H) “First-time homebuyer” means a person who, and whose spouse, had no ownership in a principal residence during the 3 years before the purchase; a displaced homemaker who meets that rule except for owning with or living in a spouse’s residence; or a single parent who meets it except for owning with or living in a spouse’s residence while married. (I) “Home” includes any dwelling or unit eligible for a qualified mortgage, including a condominium unit, cooperative membership interest and occupancy agreement, or manufactured home and lot. (J) “Metropolitan area” means a standard metropolitan statistical area designated by the OMB Director^*. (K) “Qualified mortgage” means a mortgage on a one- to four-family home insured under title II of the National Housing Act. (L) “Secretary” means the HUD Secretary. (M) “Single parent” means an unmarried or legally separated person who (I) has custody or joint custody of one or more minor children or (II) is pregnant.

(10) The Secretary may issue needed regulations. (11) Congress may appropriate $365,000 for fiscal year 1993 and $380,330 for fiscal year 1994. (12) The demonstration ends at the end of fiscal year 1994.

(e) Certification. (1) An organization may not receive counseling assistance under (a)(1)(iii), (a)(2), (a)(4), (c), or (d), or under § 1701w, unless the organization or the people through whom it counsels have been certified by the Secretary as competent. (2) Regulations must establish testing and certification standards for counselors and organizations. Each counseling individual, and each individual through whom an organization counsels, must pass a written examination under subsection (f)(4) showing competence in: (A) money management; (B) property maintenance; (C) homeownership and tenancy duties; (D) fair-housing law; (E) housing affordability; and (F) avoiding and responding to rent and mortgage delinquency and avoiding eviction and mortgage default. (3) Counseling required under or connected with any HUD program may be provided only by certified organizations or counselors. (4) The Secretary must inform counseling providers about these requirements, standards, and subsection (f) training and certification programs. (5) The Secretary must encourage organizations that receive no assistance under this section to use certified providers or providers meeting these standards. (6) The Secretary may conduct periodic reviews and must conduct performance reviews of every organization receiving assistance under this section. A review must cover compliance with all program requirements and may consider the organization’s counselors’ combined performance under paragraph (7)(B). (7)(A) For this paragraph, “covered mortgage loan” means a loan secured by a first or subordinate lien on residential real property, including condominium and cooperative units, designed mainly for one-to-four-family occupancy, that is (i) FHA-insured under title II of the National Housing Act or (ii) guaranteed under § 1715z-13a or § 1715z-13b. (B) For each counselor employed by an organization receiving assistance for prepurchase counseling, the Secretary may compare the counselor’s performance with the default rate of all counseled borrowers on covered loans in comparable markets and consider other appropriate factors. (8) If that comparison shows a counselor lacks competence in subsection (e)(2) areas, and action will not significantly reduce counseling capacity in the service area, the Secretary may (A) require continuing education and successful probation; (B) require retesting if lack of competence continues; and (C) suspend certification after the counselor fails to show competence after at least 2 retesting opportunities.

(f) Training and certification

(1) To the extent Congress provides money under paragraph (7), the Secretary must contract with a suitable entity, which may be nonprofit, to train homeownership and rental counselors, administer the subsection (e)(2) examination, and certify successful individuals. (2) (A) An entity must have demonstrated counseling-training experience. (B) The Secretary must allow eligible entities to apply and must select based on ability to establish a national program quickly and no later than paragraph (6), minimize setup costs, and operate effectively and efficiently. (3) Training must prepare people to pass the certification examination. The Secretary, consulting the selected entity, must set the curriculum and standards. (4) The selected entity administers the examination and certifies successful examinees for the Secretary. The Secretary, consulting the entity, sets examination content and format. (5) With Secretary approval, the entity may charge reasonable training, examination, and certification fees sufficient to cover costs not paid under paragraph (7). (6) The entity must establish the program promptly and make national training and certification available within one year after selection. (7) Congress may appropriate $2,000,000 for fiscal year 1993 and $2,084,000 for 1994.

(g) Procedures and activities

(1)(A) The Secretary must establish, coordinate, and monitor HUD’s counseling procedures for homeownership and rental counseling connected with any HUD program, including requirements, standards, and performance measures. (B) “Homeownership counseling” means counseling about homeownership and residential mortgage loans. It includes counseling under: 42 U.S.C. § 5305(a)(20); the U.S. Housing Act of 1937, §§ 9(e), 8(y)(1)(D), 18(a)(4)(D), 23(c)(4), 32(e)(4), 33(d)(2)(B), 302(b)(6), 303(b)(7), and 304(c)(4); § 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000; 42 U.S.C. §§ 12773(b)(2), 12808(b), 12872(b)(6), 12873(b)(7), 12874(c)(4), 12892(b)(6), 12893(b)(6), and 11408(b)(1)(F)(iii); this section and 12 U.S.C. § 1701w and § 4110(d)(2)(G); §§ 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996; the listed parts of National Housing Act §§ 203, 237, and 255; § 502(h)(4)(B) of the Housing Act of 1949; and 12 U.S.C. §§ 1701z-7 and 1701z-16. The section lists the exact subsections and citations in the official text.

(C) “Rental housing counseling” means counseling about renting residential property. It may include future-homeownership advice and referrals to counseling providers, and includes counseling under 42 U.S.C. § 5305(a)(20); the U.S. Housing Act of 1937, §§ 9(e), 18(a)(4)(D), 23(c)(4), 32(e)(4), 33(d)(2)(B), and 302(b)(6); 42 U.S.C. §§ 12773(b)(2), 12872(b)(6), and 11408(b)(1)(F)(iii); §§ 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996; this section; and the section 8 rental-assistance program, 42 U.S.C. § 1437f.

(2) Consulting the Department of Housing and Urban Development Act advisory committee described in the supplied text, the Secretary must set standards for materials and forms organizations should use, including recipients under subsection (a)(4).

(3)(A) The Secretary must certify computer programs consumers can use to compare residential mortgage proposals. Certified systems must consider the consumer’s finances and home-maintenance costs, including insurance, taxes, and utilities; expected time in the home or loan-to-maturity time; and other appropriate factors for deciding about points, rate locks, adjustable or fixed rates, conventional or government-insured or guaranteed loans, and other application choices. If existing software is inadequate, the Secretary must arrange for private software companies to develop systems meeting specifications. (B) Software supplements, not replaces, counseling, and initially may be used only with certified counselors. (C) After an appropriate initial period, the Secretary must reasonably make certified systems widely available online and in public places, including libraries, senior centers, public housing sites, voucher-agency offices, and counseling centers. (D) This paragraph works only when advance appropriations are available.

(4)(A) The Director of Housing Counseling must conduct national public-service multimedia campaigns telling people facing foreclosure, considering subprime mortgages, elderly people, people facing language barriers, low-income people, minorities, and other potentially vulnerable consumers that they should obtain unbiased, reliable homeownership counseling before seeking or keeping a mortgage and that counseling is available, including through HUD programs. (B) Each campaign segment must publicize HUD’s toll-free number and website for finding a Secretary-certified agency in the person’s State that advises on buying, renting, defaults, foreclosures, credit^*, and reverse mortgages. (C) Congress may appropriate up to $3,000,000 for fiscal years 2009, 2010, and 2011 for these campaigns. (D)(i) Ten percent of amounts appropriated under (C) must fund education in high-foreclosure-density areas through direct mail about avoiding foreclosure-rescue scams, predatory mortgage agreements, for-profit foreclosure counseling, and HUD-approved local resources. (ii) The program must emphasize communities with high percentages of retirement communities or low-income minority communities. (iii) “High density of foreclosures” means a metropolitan statistical area among those with the highest foreclosure rates; “high percentage of retirement communities” means one among those with the highest percentage of residents age 65 or older; and “high percentage of low-income minority communities” means an area with an unusually high percentage of residents who are both minority and low-income, as the Director defines.

(5) The Secretary must advise and technically assist States, general-purpose local governments, and nonprofits in creating and operating consumer^*-education programs, including content and materials, about mortgages, refinancing, home-equity loans, home-repair loans, and, where regionally appropriate, requirements and costs for flood or other disaster-specific insurance.

(h) Definitions. (1) “Nonprofit organization” has the meaning in 42 U.S.C. § 12704(5), except that that provision’s subparagraph (D) does not apply here. (2) “State” includes every State, Puerto Rico, the District of Columbia, the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, and any other U.S. possession. (3) “Unit of general local government” means a city, county, parish, town, township, borough, village, or other general-purpose State political subdivision. (4) “HUD-approved counseling agency” means a private or public nonprofit organization exempt under 26 U.S.C. § 501(c) and certified by the Secretary to provide housing counseling. (5) “State housing finance agency” means a public body, agency, or instrumentality created by State statute to finance housing and related facilities throughout the State through land acquisition, construction, or rehabilitation.

(i) Accountability

(1) The Secretary must maintain a system ensuring that every recipient of “covered assistance” uses it according to this section, its regulations, and the conditions of the award. As a condition of receiving it, each recipient must agree to Secretary requirements, including periodic financial and grant-activity reports, record retention, and audits for the assistance period, plus any other needed administration and compliance requirements.

(2) If the Secretary finds material misuse, the organization or entity must within 12 months reimburse the misused money and return unused or uncommitted money. The organization or entity may never again apply for or receive covered assistance. These remedies add to other legal remedies.

(3) The Secretary may deny renewal if the organization or entity, or the individual providing its counseling, fails program requirements, based on the subsection (e)(6) performance review and Secretary regulations. The Secretary must give at least 60 days’ written notice, and may not finalize the decision before that period ends. If the organization or entity asks in writing during the notice period, it is entitled to an informal conference with the Deputy Assistant Secretary of Housing Counseling on the Secretary’s behalf. It may present specific factors beyond its control that caused noncompliance, such as poor lender or servicer coordination or communication with agencies or counselors.

(4) “Covered assistance” means any grant or other financial assistance under this section.

(j) Foreclosure-mitigation counseling

(1) “Covered mortgage loan” means a loan secured by a first or subordinate lien on residential real estate, including individual condominium or cooperative units, or by stock or membership in a cooperative housing corporation principally for one-to-four-family occupancy, that is (A) FHA-insured under title II of the National Housing Act; (B) guaranteed under 12 U.S.C. § 1715z-13a or § 1715z-13b; (C) made, guaranteed, or insured by Veterans Affairs; or (D) made, guaranteed, or insured by Agriculture.

(2) A borrower 30 or more days behind on a covered loan must be given an opportunity to participate in available housing counseling.

(3) If the requirements of National Housing Act §§ 202(a)(3) and 205(f) are met, the Mutual Mortgage Insurance Fund must pay the fair-market cost of counseling delinquent borrowers under paragraph (2) for FHA-covered loans under paragraph (1)(A), as authorized by § 203(r)(4).