Transforming Student Debt to Home Equity Act of 2022
This bill requires the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency to jointly establish and implement a pilot demonstration program to provide, to eligible applicants with federal student loan debt, assistance in purchasing eligible properties. Specifically, the program may provide for (1) discounts on the appraised value of eligible properties, (2) flexibility in certain underwriting standards, (3) the development of new mortgage products specifically targeted to eligible applicants, and (4) other appropriate assistance. The program must provide for the development of a program that uses actuarial information to determine how the repayment of federal student loans may be integrated into a mortgage repayment schedule to allow eligible applicants to accumulate home equity.
An eligible property is a property (1) that is designed as a dwelling for occupancy by one to four families; (2) that is safe and habitable; (3) the occupancy of which will promote community revitalization; and (4) that is owned by HUD, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), a local land bank, the Department of Agriculture, or the Department of Veterans Affairs.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7368 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 7368
To direct the Secretary of Housing and Urban Development and the
Director of the Federal Housing Finance Agency to develop a program to
provide assistance to creditworthy borrowers with Federal student debt
in purchasing certain foreclosed homes owned by the Federal Government,
the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, and local land banks, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 1, 2022
Ms. Kaptur (for herself, Ms. Norton, and Mrs. Axne) introduced the
following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To direct the Secretary of Housing and Urban Development and the
Director of the Federal Housing Finance Agency to develop a program to
provide assistance to creditworthy borrowers with Federal student debt
in purchasing certain foreclosed homes owned by the Federal Government,
the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, and local land banks, and for other purposes.
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 ``Transforming Student Debt to Home
Equity Act of 2022''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) In the third quarter of 2021, over 15,185,000 homes
remain vacant in the United States.
(2) These extended vacancies depress neighborhood property
values and create a downward spiral in neighborhood stability
in already troubled communities.
(3) Meanwhile, due to climbing expenses of higher
education, the total Federal student debt owed equals
$1,750,000,000,000.
(4) More than 44,700,000 Americans have at least one
outstanding student loan.
(5) Student loan repayments are forcing millions of young
families to delay purchasing their first home, as they cannot
afford to save for a downpayment or qualify for a mortgage
while also paying off student debt.
(6) Data from the Federal Reserve shows that non-Hispanic
White households have a median net worth of $181,440, while
Black households have a median net worth of $20,730 and
Hispanic households have $36,180; providing innovative
financial products will allow the United States to reduce the
racial wealth gap and to ensure equitable access to housing and
economic mobility.
(7) The COVID-19 pandemic has exacerbated the racial wealth
gap by increasing unemployment within already disadvantaged
communities and further reducing access to homeownership and
increasing the burden of student debt.
(8) According to a report from the Joint Center for Housing
Studies of Harvard University, Black and Hispanic households
are more likely to have their household income decline and to
face hardship in paying rent and other monthly housing costs
due to the COVID-19 pandemic.
(9) It is imperative to create a demonstration program to
design financial pathways to, where possible, systematically
convert some student debt streams into equity streams through
negotiation of mortgages; otherwise housing purchases will
continue to be sluggish among first-time home buyers and
thousands more Americans will enter their midyears saddled with
student loan debt never having had the opportunity to
accumulate equity.
(10) It is in the interest of the Federal Government to use
the resources at its disposal, including both housing
properties held in trust and student debt obligations, to put
reverse pressure on these downward trends.
(11) By arranging financing that recalculates terms, debt-
to-income ratios, mortgage interest rates, and other factors,
short-term student debt could transition into longer-term home
ownership.
(12) The goal is to connect creditworthy Federal student
debt holders with housing properties for sale and held by the
Federal Government and local land banks.
(13) Over time, participants can help restore
neighborhoods, transform their debt to equity, and stabilize
secured property values locally and on the Federal ledger by
maintaining and investing in a home mortgage.
SEC. 3. PROGRAM TO EXPAND ACCESS TO MORTGAGES TO ELIGIBLE CREDITWORTHY
HOME BUYERS WITH FEDERAL STUDENT LOAN DEBT.
(a) Establishment.--From amounts appropriated pursuant to
subsection (g), the Secretary of Housing and Urban Development and the
Director of the Federal Housing Finance Agency shall establish and
carry out a pilot demonstration program to--
(1) provide assistance to eligible applicants in purchasing
eligible properties; and
(2) subsequently analyze the results of the provision of
such assistance.
(b) Consultation.--In establishing and carrying out the program
pursuant to subsection (a), the Secretary and the Director shall
consult with--
(1) the Director of the Consumer Financial Protection
Bureau;
(2) the Secretary of Agriculture;
(3) the Secretary of Veterans Affairs;
(4) the Secretary of Education; and
(5) the Secretary of the Treasury.
(c) Eligible Applicants.--To be eligible for the program
established pursuant to subsection (a), an applicant--
(1) shall have an outstanding balance of principal or
interest owing on a Federal loan made, insured, or guaranteed
under title IV of the Higher Education Act of 1965 (20 U.S.C.
1070 et seq.);
(2) shall have an area median income at or below 120
percent;
(3) may not be subject to a judgment secured through
litigation with respect to such a loan under title IV of the
Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), may not
be subject to an order for wage garnishment under section 488A
of such Act (20 U.S.C. 1095a), and at the time of application
for participation in the program under this section--
(A) such a loan shall be in repayment status as
determined under section 428(b)(7)(A) of such Act (20
U.S.C. 1078(b)(7)(A)); or
(B) such a loan shall be in a grace period
preceding repayment;
(4) may not have owned a home during the 3-year period
immediately before the applicant purchases an eligible property
with assistance provided under this section;
(5) shall complete a program of counseling with respect to
the responsibilities and financial management involved in
homeownership that is approved by the Secretary;
(6) shall be creditworthy, as determined by the Secretary
and the Director;
(7) shall agree to use an eligible property purchased with
assistance provided under this section as the applicant's
primary residence for not less than the 3-year period beginning
on the date of such purchase; and
(8) shall be employed and earning sufficient income to
repay a mortgage loan, as determined by the Secretary and the
Director for the purposes of this program.
(d) Types of Assistance.--
(1) In general.--A program established under this section
may provide for any one or more of the following options:
(A) A discount on the appraised value of an
eligible property.
(B) Flexibility in underwriting standards related
to the purchase of eligible properties for mortgages
insured under title II of the National Housing Act (12
U.S.C. 1707 et seq.) or owned or guaranteed by the
Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation.
(C) The development of new mortgage products
specifically targeted to eligible applicants.
(D) Downpayment and private mortgage assistance to
eligible applicants.
(E) Pre-purchase counseling including related
credit and financial coaching to eligible applicants.
(F) Provision of a low- or no-interest mortgage
rate.
(G) Any other assistance that the Secretary and
Director jointly deem appropriate.
(2) Repayment integration.--The Secretary shall establish a
program that will integrate repayment of loans described in
subsection (c)(1) into a mortgage repayment schedule to allow
an eligible applicant to accumulate equity in the eligible
property. The Secretary shall use actuarial data and risk
assessments to collateralize the mortgage provided through
Federal funds.
(3) Collaboration.--In providing assistance described under
paragraph (1), the Secretary and the Director may collaborate
with--
(A) community banks having less than
$10,000,000,000 in total assets;
(B) credit unions (as defined in section 101 of the
Federal Credit Union Act);
(C) local fair housing organizations; and
(D) local land banks.
(e) Geographical Diversity.--In selecting eligible applicants to
receive assistance under this section, the Secretary and the Director
shall, to the extent practicable, consider the location of the eligible
property to be purchased by the eligible applicant, including whether
the eligible property is located in a rural or urban area, to ensure
geographic diversity of such eligible properties.
(f) Reports.--
(1) Interim report.--Not later than 180 days after the date
of the enactment of this section, the Secretary and the
Director shall submit to Congress an interim report describing
the type of assistance the Secretary and the Director shall
provide under the program established under this section.
(2) Final report.--Not later than 3 years after the date of
the enactment of this section, the Secretary and the Director
shall submit to Congress a final report that--
(A) evaluates the impact of the program carried out
under this section and describes any findings;
(B) identifies other types of assistance the
Secretary and the Director may offer; and
(C) includes any recommendations the Secretary and
Director may have for improving the program.
(g) Definitions.--In this section:
(1) Director.--The term ``Director'' means the Director of
the Federal Housing Finance Agency.
(2) Secretary.--The term ``Secretary'' means the Secretary
of the Department of Housing and Urban Development.
(3) Eligible property.--The term ``eligible property''
means a property that is designed as a dwelling for occupancy
by 1 to 4 families--
(A) that is safe and habitable, as defined by the
Secretary and the Director;
(B) the occupancy of which, as determined by the
Secretary and the Director, will promote community
revitalization; and
(C) that--
(i) was previously subject to a mortgage
loan insured by the Federal Housing
Administration under title II of the National
Housing Act (12 U.S.C. 1707 et seq.) and is
owned by the Secretary pursuant to the payment
of insurance benefits under such Act;
(ii) is a real estate owned property of the
Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation;
(iii) is owned by a local land bank;
(iv) is owned by the Department of
Agriculture; or
(v) is owned by the Department of Veterans
Affairs.
(4) Local land bank.--The term ``local land bank'' means--
(A) a governmental or nongovernmental nonprofit
entity established, at least in part, to assemble,
temporarily manage, and dispose of vacant land for the
purpose of stabilizing neighborhoods and encouraging
re-use or redevelopment of urban property; or
(B) such other governmental or nongovernmental
entity as the Secretary and the Director may determine
appropriate.
(h) Authorization of Appropriations.--There are authorized to be
appropriated such sums as necessary to carry out this section for
fiscal years 2023, 2024, and 2025.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR H4119)
Referred to the House Committee on Financial Services.
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