[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3617 Introduced in House (IH)]
106th CONGRESS
2d Session
H. R. 3617
To prevent fraud under the FHA rehabilitation loan program under
section 203(k) of the National Housing Act.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 10, 2000
Mr. Lazio (for himself, Mr. Leach, Mr. Walsh, and Mr. English)
introduced the following bill; which was referred to the Committee on
Banking and Financial Services
_______________________________________________________________________
A BILL
To prevent fraud under the FHA rehabilitation loan program under
section 203(k) of the National Housing Act.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Consumers' Home Improvement
Protection Act''.
SEC. 2. PREVENTING FRAUD IN REHABILITATION LOAN PROGRAM.
Section 203(k) of the National Housing Act (12 U.S.C. 1709(k)) is
amended by adding at the end the following new paragraph:
``(7) Prevention of fraud.--To prevent fraud under the program for
loan insurance authorized under this subsection, the Secretary shall,
by regulation, take the following actions:
``(A) Prohibition of identity of interest.--The Secretary
shall prohibit any identity-of-interest, as such term is
defined by the Secretary, between any of the following parties
involved in a loan insured under this subsection: the borrower
(including, in the case of a borrower that is a nonprofit
organization, any member of the board of directors or the staff
of the organization), the lender, any consultant, any real
estate agent, any property inspector, and any appraiser.
``(B) Nonprofit participation.--The Secretary shall
establish minimum standards for a nonprofit organization to
participate in the program, which shall include--
``(i) requiring such an organization to disclose to
the Secretary its taxpayer identification number and
evidence sufficient to indicate that the organization
is an organization described in section 501(c) of the
Internal Revenue Code of 1986 that is exempt from
taxation under subtitle A of such Code;
``(ii) requiring that the board of directors of
such an organization be comprised only of individuals
who do not receive any compensation or other thing of
value by reason of their service on the board and who
have no personal financial interest in the
rehabilitation project of the organization that is
financed with the loan insured under this subsection;
``(iii) requiring such an organization to submit to
the Secretary financial statements of the organization
for the most recent 2 years, which have been prepared
by a party that is unaffiliated with the organization;
``(iv) limiting to 10 the number of loans that are
insured under this subsection, made to any single such
organization, and, at any one time, have an outstanding
balance of principal or interest, except that the
Secretary may increase such numerical limitation on a
case-by-case basis for good cause shown;
``(v) requiring such an organization to post a
completion insurance bond in such amount as the
Secretary determines appropriate as a condition of
obtaining insurance under this subsection; and
``(vi) requiring such an organization to have been
certified by the Secretary as meeting the requirements
under this subsection and otherwise eligible to
participate in the program not more than 2 years before
obtaining a loan insured under this section.
``(C) Completion of work.--The Secretary shall prohibit any
lender making a loan insured under this subsection from
disbursing the final payment of loan proceeds unless the lender
has received affirmation, from the borrower under the loan,
both in writing and pursuant to an interview in person or over
the telephone, that the rehabilitation activities financed by
the loan have been satisfactorily completed.
``(D) Consultant certification.--The Secretary shall
require that any consultant, as such term is defined by the
Secretary, that is involved in a home inspection, site visit,
or preparation of bids with respect to any loan insured under
this section shall have been certified by the Secretary as
adequately trained and competent to provide such service not
more than 2 years before conducting any such activity. The
Secretary shall establish a training and certification process
to carry out this subparagraph.
``(E) Contractor qualification.--The Secretary shall
require, in the case of any loan that is insured under this
subsection and involves rehabilitation with a value of $25,000
or more, that the contractor or other person performing or
supervising the rehabilitation activities financed by the loan
shall--
``(i) be certified by a nationally recognized
organization as meeting industry standards for
financial soundness, quality of workmanship, training,
and continuing education;
``(ii) be licensed to conduct such activities by
the State or unit of general local government in which
the rehabilitation activities are being completed; or
``(iii) be bonded in such amount as the Secretary
shall require.''.
SEC. 3. REPORT ON ACTIVITY OF NONPROFIT ORGANIZATIONS UNDER
REHABILITATION LOAN PROGRAM.
Not later than 60 days after the date of the enactment of this Act,
the Secretary of Housing and Urban Development shall submit a report to
the Congress regarding the participation of nonprofit organizations
under the rehabilitation loan program under section 203(k) of the
National Housing Act (12 U.S.C. 1709(k)). The report shall--
(1) determine and describe the extent of participation in
the program by such organizations;
(2) analyze the impact, on such organizations and the
program, of prohibiting such organizations from participating
in the program; and
(3) identify other opportunities for such organizations to
acquire financing or credit enhancement for rehabilitation
activities.
SEC. 4. REGULATIONS.
The Secretary of Housing and Urban Development shall issue final
regulations and any other administrative orders or notices necessary to
carry out the provisions of this Act and the amendments made by this
Act not later than 120 days after the date of the enactment of this
Act.
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