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108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-546
======================================================================


 
              HELPING HANDS FOR HOMEOWNERSHIP ACT OF 2004

                                _______
                                

 June 16, 2004.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4363]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 4363) to facilitate self-help housing homeownership 
opportunities, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Performance Goals and Objectives.................................     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Section-by-Section Analysis of the Legislation...................     6
Changes in Existing Law Made by the Bill, as Reported............     7

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Helping Hands for Homeownership Act of 
2004''.

SEC. 2. ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS.

  Paragraph (1) of section 11(b) of the Housing Opportunity Program 
Extension Act of 1996 (42 U.S.C. 12805 note) is amended by striking 
``dwelling'' and inserting ``dwellings''.

SEC. 3. DESIGNATION OF DOUG BEREUTER SECTION 502 SINGLE FAMILY HOUSING 
                    LOAN GUARANTEE PROGRAM.

  (a) Congressional Findings.--The Congress finds that--
          (1) the Cranston-Gonzalez National Affordable Housing Act, 
        enacted November 28, 1990, established the section 502 single 
        family housing loan guarantee program of the Rural Housing 
        Service of the United States Department of Agriculture;
          (2) Congressman Doug Bereuter of Nebraska was the legislative 
        author of the single family housing loan guarantee program;
          (3) 316,625 single family loans have been guaranteed under 
        the program since its implementation in 1991;
          (4) the program facilitates home ownership for low- to 
        moderate-income borrowers in rural areas and nonmetropolitan 
        communities who are unable to obtain conventional home mortgage 
        financing; and
          (5) in 2003, the average income of a borrower with a loan 
        guaranteed under the section 502 guarantee program was $34,124.
  (b) Designation.--Subsection (h) of section 502 of the Housing Act of 
1949 (42 U.S.C. 1472(h)) is amended--
          (1) by redesignating paragraphs (1) through (13) as 
        paragraphs (2) through (14), respectively;
          (2) by inserting before paragraph (2) (as so redesignated) 
        the following new paragraph:
          ``(1) Short title.--This subsection may be cited as the `Doug 
        Bereuter Section 502 Single Family Housing Loan Guarantee 
        Act'.''; and
          (3) by striking the subsection designation and heading and 
        inserting the following:
  ``(h) Doug Bereuter Section 502 Single Family Housing Loan Guarantee 
Program.--''.
  (c) Conforming Amendments.--Subsection (h) of section 502 of the 
Housing Act of 1949 (42 U.S.C. 1472(h)), as amended by section 2 of 
this Act, is further amended--
          (1) in paragraph (5)(A), by striking ``paragraph (12)(A)'' 
        and inserting ``paragraph (13)''; and
          (2) in paragraph (14)--
                  (A) in subparagraph (A), by striking ``General'' and 
                inserting ``general''; and
                  (B) in subparagraph (E)--
                          (i) by striking ``paragraph (1) and 
                        paragraphs (2), (5), (6)(A), (7), and (9)'' and 
                        inserting ``paragraph (2) and paragraphs (3), 
                        (6), (7)(A), (8), and (10)''; and
                          (ii) by striking ``paragraphs (1) through 
                        (12)'' and inserting ``paragraphs (2) through 
                        (13)''.

                          Purpose and Summary

    H.R. 4363, the Helping Hands for Homeownership Act of 2004, 
will make a technical correction to the Housing Opportunity 
Program Extension Act of 1996. This technical correction will 
allow families who receive homes from groups such as Habitat 
for Humanity (Habitat) and the Housing Assistance Council (HAC) 
to fulfill the ``sweat equity'' requirement for receiving Self-
Help Homeownership Opportunity Program (SHOP) funds not only by 
helping to build their own homes, but also by helping to build 
other self-help homes in the community. H.R. 4363 will achieve 
this technical change by striking the word ``dwelling'' and 
replacing it with ``dwellings'' at paragraph (1) of section 
11(b) of the Housing Opportunity Program Extension Act of 1996 
(42 U.S.C. 12805 note). In addition, the legislation re-
designates subsection (h) of section 502 of the National 
Housing Act of 1949 (42 U.S.C. 1472(h)) as the ``Doug Bereuter 
Section 502 Single Family Housing Loan Guarantee Act.''

                  Background and Need for Legislation

    This legislation contains provisions affecting the Habitat 
for Humanity program and the Section 502 Single Family Housing 
Loan Guarantee Program.

SHOP provision

    In 1996, Congress created the Self-Help Homeownership 
Opportunity Program, which provides competitive grants for 
organizations such as Habitat for Humanity and the Housing 
Assistance Council to help with land and infrastructure 
expenses, which are some of the largest obstacles to home 
building. SHOP funds are crucial in helping organizations such 
as these to acquire sites for affordable home and community 
building. In order to receive SHOP funds, the recipients of 
homes from groups such as Habitat and HAC must contribute a 
certain amount of physical labor to the home-building process, 
also known as ``sweat equity.'' In the FY 2004 (and soon to be 
FY 2005) Notice of Funds Available for SHOP, HUD for the first 
time interpreted the law to preclude the families who receive 
these homes from fulfilling their ``sweat equity'' requirements 
by working on program homes other than their own.
    This new interpretation is not what Congress intended when 
it created SHOP and it causes serious problems for self-help 
housing organizations all over the country. For example, 
Habitat requires most of its home recipients to contribute 300 
to 500 hours of ``sweat equity,'' an amount far in excess of 
the Federal government requirements for receipt of SHOP funds. 
However, Habitat allows its home recipients to obtain these 
hours by working on Habitat homes for others in the community, 
as well as their own home. This model is a crucial part of 
Habitat's ``community building'' mission.
    Families receiving self-help homes receive much more than a 
dwelling. These families are part of a community experience 
involving local volunteers and other homeowners. Withholding 
SHOP funds from these families and self-help housing groups is 
contrary to the mission and purpose of the SHOP program. H.R. 
4363 will correct a technical flaw and restore the original 
intent of the SHOP program.
    Because of HUD's new interpretation of the SHOP program 
legislation that focused on the exact meaning of the word 
``dwelling'' versus ``dwellings,'' the Committee believes that 
it should clarify the original Congressional intent of the 
statute. However, the Committee specifically intends that this 
clarification should not be interpreted so as to preclude the 
Administration from imposing any type of regulatory 
requirements on non-profit providers or their program 
participants. The Committee's is concerned that too much 
flexibility in the program could lead to fraud and abuse. In 
its 8 years of existence, the SHOP program appears to be 
operating smoothly without any perception of opportunities for 
fraud or abuse, which can be attributed to HUD'sdiligent 
oversight of the program. H.R. 4363 corrects a technical flaw in the 
SHOP program legislation and does not restrict HUD's regulatory 
authority.

Section 502 provision

    The Cranston-Gonzalez National Affordable Housing Act, 
enacted on November 28, 1990, established the section 502 
single family housing loan guarantee program of the Rural 
Housing Service of the United States Department of Agriculture. 
Mr. Bereuter was the legislative author of the section 502 
program. Since its implementation, the program has guaranteed 
316,625 single-family home loans for low- to moderate-income 
borrowers in rural and non-metropolitan communities. This 
legislation recognizes Congressman Bereuter as the legislative 
author of the single family housing loan guarantee program and 
renames the program in his honor as Mr. Bereuter will be 
retiring at the end of August, 2004.

                                Hearings

    No hearings were held on this legislation.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 3, 2004, and ordered H.R. 4363 reported to the House with 
a favorable recommendation, with an amendment.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken with in conjunction with the 
consideration of this legislation. A motion by Mr. Oxley to 
report the bill to the House with a favorable recommendation 
was agreed to by a voice vote.
    The following amendment was considered:

          An amendment by Mr. Oxley, No. 1, designating of the 
        Doug Bereuter Section 502 Single Family Housing Loan 
        Guarantee Program, was agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The Secretary of Housing and Urban Development will 
interpret the provisions of the SHOP program so as to permit 
the fulfillment of ``sweat equity'' requirements through work 
conducted on multiple dwellings.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that this 
legislation would result in no new budget authority, 
entitlement authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 14, 2004.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Chairman: The Congressional Budget Office has prepared 
the enclosed cost estimate for H.R. 4363, the Helping Hands for 
Homeownership Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Chad Chirico.
            Sincerely,
                                         Elizabeth Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

H.R. 4363--Helping Hands for Homeownership Act of 2004

    H.R. 4363 would amend the Housing Opportunity Program 
Extension Act of 1996 to allow Self-Help Homeownership 
Opportunity grant recipients to contribute sweat equity to 
multiple dwellings rather than just their own. The bill also 
would rename a Rural Housing Service loan guarantee program 
after Congressman Doug Bereuter.
    CBO estimates that implementing H.R. 4363 would have no 
significant effect on the budget and would not affect direct 
spending or revenues.
    H.R. 4363 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Chad Chirico. 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill, the 
``Helping Hands for Homeownership Act of 2004.''

Section 2. Assistance for self-help housing providers

    This section changes one word in paragraph (1) of section 
11(b) of the Housing Opportunity Program Extension Act of 1996 
(42 U.S.C. 12805 note) to allow recipients of self-help housing 
to fulfill their ``sweat equity'' requirement for SHOP funds by 
contributing physical labor not only to the building of their 
own home, but also to the building of homes for other self-help 
housing recipients.
    In administering this program, the Committee believes that 
HUD should continue to set reasonable parameters to ensure that 
legitimate national and regional organizations have the 
capacity to implement SHOP in their communities. While neither 
this report nor the 1996 Committee report on the original 
legislation defines ``sweat equity,'' the Committee believes 
that HUD should develop a reasonable definition that is 
flexible enough to incorporate the Habitat for Humanity model 
of building a community of homes through the labor of the 
potential homeowners and community volunteers.
    For example, one such definition could contemplate that 
each potential homeowner is provided training for a particular 
homebuilding task (e.g., hanging drywall), which training is 
then committed to not only the specific homeowner's intended 
dwelling but also to the collection of other homes built under 
the same program in the community. The Committee believes that 
this type of approach enhances a community as well as provides 
skills training to program participants. The original intent of 
the SHOP legislation was not to define ``sweat equity'' in such 
a way as to preclude program participants from contributing 
actual labor to the development and building of program homes 
in the community other than their own. The Committee believes 
that HUD can strike the balance between the various SHOP models 
and this Congressional intent.

Section 3. Designation of Doug Bereuter Section 502 Single Family 
        Housing Loan Guarantee Program

    This section makes findings related to the single family 
housing loan guarantee program and re-designates subsection (h) 
of section 502 of the National Housing Act of 1949 (42 U.S.C. 
1472(h)) as the ``Doug Bereuter Section 502 Single Family 
Housing Loan Guarantee Act.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

  SECTION 11 OF THE HOUSING OPPORTUNITY PROGRAM EXTENSION ACT OF 1996


SEC. 11. ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS.

  (a) * * *
  (b) Goals and Accountability.--In making grants under this 
section, the Secretary shall take such actions as may be 
necessary to ensure that--
          (1) assistance provided under this section is used to 
        facilitate and encourage innovative homeownership 
        opportunities through the provision of self-help 
        housing, under which the homeowner contributes a 
        significant amount of sweat equity toward the 
        construction of the new [dwelling] dwellings;

           *       *       *       *       *       *       *

                              ----------                              


                 SECTION 502 OF THE HOUSING ACT OF 1949


           loans for housing and buildings on adequate farms

      Sec. 502. (a)(1) * * *

           *       *       *       *       *       *       *

  [(h) Guaranteed Loans.--]
  (h) Doug Bereuter Section 502 Single Family Housing Loan 
Guarantee Program.--
          (1) Short title.--This subsection may be cited as the 
        ``Doug Bereuter Section 502 Single Family Housing Loan 
        Guarantee Act''.
          [(1)] (2) Authority.--The Secretary shall, to the 
        extent provided in appropriation Acts, provide 
        guaranteed loans in accordance with this section, 
        section 517(d), and the last sentence of section 
        521(a)(1)(A), except as modified by the provisions of 
        this subsection. Loans shall be guaranteed under this 
        subsection in an amount equal to 90 percent of the 
        loan.
          [(2)] (3) Eligible borrowers.--Loans guaranteed 
        pursuant to this subsection shall be made only to 
        borrowers who are low or moderate income families or 
        persons, whose incomes do not exceed 115 percent of the 
        median income of the area, as determined by the 
        Secretary.
          [(3)] (4) Eligible housing.--Loans may be guaranteed 
        pursuant to this subsection only if the loan is used to 
        acquire or construct a single-family residence that 
        is--
                  (A) * * *

           *       *       *       *       *       *       *

          [(4)] (5) Priority and counseling for first-time 
        homebuyers.--
                  (A) In providing guaranteed loans under this 
                subsection, the Secretary shall give priority 
                to first-time homebuyers (as defined in 
                [paragraph (12)(A)] paragraph (13)).

           *       *       *       *       *       *       *

          [(5)] (6) Eligible lenders.--Guaranteed loans 
        pursuant to this subsection may be made only by lenders 
        approved by and meeting qualifications established by 
        the Secretary.
          [(6)] (7) Loan terms.--Loans guaranteed pursuant to 
        this subsection shall--
                  (A) * * *

           *       *       *       *       *       *       *

          [(7)] (8) Guarantee fee.--With respect to a 
        guaranteed loan under this subsection, the Secretary 
        may collect from the lender at the time of issuance of 
        the guarantee a fee equal to not more than 1 percent of 
        the principal obligation of the loan.
          [(8)] (9) Refinancing.--Any guaranteed loan under 
        this subsection may be refinanced and extended in 
        accordance with terms and conditions that the Secretary 
        shall prescribe, but in no event for an additional 
        amount or term which exceeds the limitations under this 
        subsection.
          [(9)] (10) Nonassumption.--Notwithstanding the 
        transfer of property for which a guaranteed loan under 
        this subsection was made, the borrower of a guaranteed 
        loan under this subsection may not be relieved of 
        liability with respect to the loan.
          [(10)] (11) Geographical targeting.--In providing 
        guaranteed loans under this subsection, the Secretary 
        shall establish standards to target and give priority 
        to areas that have a demonstrated need for additional 
        sources of mortgage financing for low and moderate 
        income families.
          [(11)] (12) Allocation.--The Secretary shall provide 
        that, in each fiscal year, guaranteed loans under this 
        subsection shall be allocated among the States on the 
        basis of the need of eligible borrowers in each State 
        for such loans in comparison with the need of eligible 
        borrowers for such loans among all States.
          [(12)] (13) Definitions.--For purposes of this 
        subsection:
                  (A) * * *

           *       *       *       *       *       *       *

          [(13)] (14) Guarantees for refinancing loans.--
                  (A) In [General] general.--Upon the request 
                of the borrower, the Secretary shall, to the 
                extent provided in appropriation Acts and 
                subject to subparagraph (F), guarantee a loan 
                that is made to refinance an existing loan that 
                is made under this section or guaranteed under 
                this subsection, and that the Secretary 
                determines complies with the requirements of 
                this paragraph.
                  (B) * * *

           *       *       *       *       *       *       *

                  (E) Other requirements.--The provisions of 
                the last sentence of [paragraph (1) and 
                paragraphs (2), (5), (6)(A), (7), and (9)] 
                paragraph (2) and paragraphs (3), (6), (7)(A), 
                (8), and (10) shall apply to loans guaranteed 
                under this paragraph, and no other provisions 
                of [paragraphs (1) through (12)] paragraphs (2) 
                through (13) shall apply to such loans.

           *       *       *       *       *       *       *