Disposition of assets in revitalization areas

The purpose of this subsection is to require the Secretary to carry out a program under which eligible assets (as such term is defined in paragraph (2)) shall be made available for sale in a manner that promotes the revitalization, through expanded homeownership opportunities, of revitalization areas. Notwithstanding the authority under the last sentence of subsection (g), the Secretary shall dispose of all eligible assets under the program and shall establish the program in accordance with the requirements under this subsection.

For purposes of this subsection, the term “eligible asset” means any of the following categories of assets of the Secretary, unless the Secretary determines at any time that the asset property is economically or otherwise infeasible to rehabilitate or that the best use of the asset property is as open space (including park land):

(A) Properties Any property that— (i) is designed as a dwelling for occupancy by 1 to 4 families; (ii) is located in a revitalization area; (iii) was previously subject to a mortgage insured under the provisions of this chapter; and (iv) is owned by the Secretary pursuant to the payment of insurance benefits under this chapter.

(B) Mortgages Any mortgage that— (i) is an interest in a property that meets the requirements of clauses (i) and (ii) of subparagraph (A); (ii) was previously insured under the provisions of this chapter except for mortgages insured under or made pursuant to sections 1715z, 1715z–12, or 1715z–20 of this title; and (iii) is held by the Secretary pursuant to the payment of insurance benefits under this chapter. For purposes of this subsection, an asset under this subparagraph shall be considered to be located in a revitalization area, or in the asset control area of a preferred purchaser, if the property described in clause (i) is located in such area.

The Secretary shall designate areas as revitalization areas for purposes of this subsection. Before designation of an area as a revitalization area, the Secretary shall consult with affected units of general local government, States, and Indian tribes and interested nonprofit organizations. The Secretary may designate as revitalization areas only areas that meet one of the following requirements:

(A) Very-low income area The median household income for the area is less than 60 percent of the median household income for— (i) in the case of any area located within a metropolitan area, such metropolitan area; or (ii) in the case of any area not located within a metropolitan area, the State in which the area is located.

(B) High concentration of eligible assets A high rate of default or foreclosure for single family mortgages insured under this chapter has resulted, or may result, in the area— (i) having a disproportionately high concentration of eligible assets, in comparison with the concentration of such assets in surrounding areas; or (ii) being detrimentally impacted by eligible assets in the vicinity of the area.

(C) Low home ownership rate The rate for home ownership of single family homes in the area is substantially below the rate for homeownership in the metropolitan area.

The Secretary shall provide a preference, among prospective purchasers of eligible assets, for sale of such assets to any purchaser who—

(A) is— (i) the unit of general local government, State, or Indian tribe having jurisdiction with respect to the area in which are located the eligible assets to be sold; or (ii) a nonprofit organization;

(B) in making a purchase under the program under this subsection— (i) establishes an asset control area, which shall be an area that consists of part or all of a revitalization area; and (ii) purchases all assets of the Secretary in the category or categories of eligible assets set forth in the sale agreement required under paragraph (7) that, at any time during the period which shall be set forth in the sale agreement— (I) are or become eligible for purchase under this subsection; and (II) are located in the asset control area of the purchaser; and

(C) has the capacity to carry out the purchase of the category or categories of eligible assets set forth in the sale agreement under the program under this subsection and under the provisions of this paragraph.

(A) Preferred purchasers Under the program under this subsection, the Secretary may sell an eligible asset as provided in paragraph (4) to a preferred purchaser only pursuant to a binding agreement by the preferred purchaser that the eligible asset will be used in conjunction with a home ownership plan that provides as follows: (i) The plan has as its primary purpose the expansion of home ownership in, and the revitalization of, the asset control area, established pursuant to paragraph (4)(B)(i) by the purchaser, in which the eligible asset is located. (ii) Under the plan, the preferred purchaser has established, and agreed to meet, specific performance goals for increasing the rate of home ownership for eligible assets in the asset control area that are under the purchaser’s control. The plan shall provide that the Secretary may waive or modify such goals or deadlines only upon a determination by the Secretary that a good faith effort has been made in complying with the goals through the homeownership plan and that exceptional neighborhood conditions prevented attainment of the goal. (iii) Under the plan, the preferred purchaser has established rehabilitation standards that meet or exceed the standards for housing quality established under subparagraph (B)(iii) by the Secretary, and has agreed that each asset property for an eligible asset purchased will be rehabilitated in accordance with such standards.

(B) Non-preferred purchasers Under the program under this subsection, the Secretary may sell an eligible asset to a purchaser who is not a preferred purchaser only pursuant to a binding agreement by the purchaser that complies with the following requirements: (i) The purchaser has agreed to meet specific performance goals established by the Secretary for home ownership of the asset properties for the eligible assets purchased by the purchaser, except that the Secretary may, by including a provision in the sale agreement required under paragraph (7), provide for a lower rate of home ownership in sales involving exceptional circumstances. (ii) The purchaser has agreed that each asset property for an eligible asset purchased will be rehabilitated to comply with minimum standards for housing quality established by the Secretary for purposes of the program under this subsection.

(A) In general For the purpose of providing a public purpose discount for the bulk sales of eligible assets made under the program under this subsection by preferred purchasers, each eligible asset sold through the program under this subsection to a preferred purchaser shall be sold at a price that is discounted from the value of the asset, as based on the appraised value of the asset property (as such term is defined in paragraph (8)).

(B) Appraisals The Secretary shall require that each appraisal of an eligible asset under this paragraph is based upon— (i) the market value of the asset property in its “as is” physical condition, which shall take into consideration age and condition of major mechanical and structural systems; and (ii) the value of the property appraised for home ownership.

(C) Discounts The Secretary, in the sole discretion of the Secretary, shall establish the discount under this paragraph for an eligible asset. In determining the discount, the Secretary may consider the condition of the asset property, the extent of resources available to the preferred purchaser, the comprehensive revitalization plan undertaken by such purchaser, the financial safety and soundness of the Mutual Mortgage Insurance Fund, and any other circumstances the Secretary considers appropriate 3 3 So in original. There probably should be a period.

The Secretary may sell an eligible asset under this subsection only pursuant to a sale agreement entered into under this paragraph with the purchaser, which shall include the following provisions:

(A) Assets The sale agreement shall identify the category or categories of eligible assets to be purchased and, based on the purchaser’s capacity to manage and dispose of assets, the maximum number of assets owned by the Secretary at the time the sale agreement is executed that shall be sold to the purchaser.

(B) Revitalization area and asset control area The sale agreement shall identify— (i) the boundaries of the specific revitalization areas (or portions thereof) in which are located the eligible assets that are covered by the agreement; and (ii) in the case of a preferred purchaser, the asset control area established pursuant to paragraph (4)(B)(i) that is covered by the agreement.

(C) Financing The sale agreement shall identify the sources of financing for the purchase of the eligible assets.

(D) Binding agreements The sale agreement shall contain binding agreements by the purchaser sufficient to comply with— (i) in the case of a preferred purchaser, the requirements under paragraph (5)(A), which agreements shall provide that the eligible assets purchased will be used in conjunction with a home ownership plan meeting the requirements of such paragraph, and shall set forth the terms of the homeownership plan, including— (I) the goals of the plan for the eligible assets purchased and for the asset control area subject to the plan; (II) the revitalization areas (or portions thereof) in which the homeownership plan is operating or will operate; (III) the specific use or disposition of the eligible assets under the plan; and (IV) any activities to be conducted and services to be provided under the plan; or (ii) in the case of a purchaser who is not a preferred purchaser, the requirements under paragraph (5)(B).

(E) Purchase price and discount The sale agreement shall establish the purchase price of the eligible assets, which in the case of a preferred purchaser shall provide for a discount in accordance with paragraph (6).

(F) Housing quality The sale agreement shall provide for compliance of the eligible assets purchased with the rehabilitation standards established under paragraph (5)(A)(iii) or the minimum standards for housing quality established under paragraph (5)(B)(ii), as applicable, and shall specify such standards.

(G) Performance goals and sanctions The sale agreement shall set forth the specific performance goals applicable to the purchaser, in accordance with paragraph (5), shall set forth any sanctions for failure to meet such goals and deadlines, and shall require the purchaser to certify compliance with such goals.

(H) Period covered The sale agreement shall establish— (i) in the case of a preferred purchaser, the time period referred to in paragraph (4)(B)(ii); and (ii) in the case of a purchaser who is not a preferred purchaser, the time period for purchase of eligible assets that may be covered by the purchase.

(I) Other terms The agreement shall contain such other terms and conditions as may be necessary to require that eligible assets purchased under the agreement are used in accordance with the program under this subsection.

For purposes of this subsection, the following definitions shall apply:

(A) Asset control area The term “asset control area” means the area established by a preferred purchaser pursuant to paragraph (4)(B)(i).

(B) Asset property The term “asset property” means— (i) with respect to an eligible asset that is a property, such property; and (ii) with respect to an eligible asset that is a mortgage, the property that is subject to the mortgage.

(C) Eligible asset The term “eligible asset” means an asset described in paragraph (2).

(D) Nonprofit organization The term “nonprofit organization” means a private organization that— (i) is organized under State or local laws; (ii) has no part of its net earnings inuring to the benefit of any member, shareholder, founder, contributor, or individual; and (iii) complies with standards of financial responsibility that the Secretary may require.

(E) Preferred purchaser The term “preferred purchaser” means a purchaser described in paragraph (4).

(F) Unit of general local government The term “unit of general local government” means any city, town, township, county, parish, village, or other general purpose political subdivision of a State, and any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act on behalf of the jurisdiction with regard to the provisions of this subsection.

(G) State The term “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, the Northern Mariana Islands, or any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act on behalf of the State with regard to provisions of this subjection. 4 4 So in original. Probably should be “subsection.”

(H) Indian tribe The term “Indian tribe” has the same meaning as in section 1715z–13(i)(I) 5 5 So in original. Probably should be section “1715z–13(i)(1)”. of this title.