Conservation Bank Act

(Reported to Senate from the Committee on Banking, Housing and Urban Affairs with amendment, S. Rept. 96-372)

Conservation Bank Act - Establishes a Conservation Bank to provide subsidies for below-market interest rate loans made to owners or builders of commercial and residential structures for the purchase and installation of energy conservation measures.

Declares that the Bank shall be in the Government National Mortgage Association (GNMA) and have succession until September 30, 1984. Directs the General Accounting Office to conduct periodic audits of the Bank.

Empowers the Secretary of Housing and Urban Development to fix and amend the levels of loan subsidies given by the Bank and the rate of interest paid by borrowers on loans assisted by the Bank. Prohibits the Secretary from setting such interest rates lower than six percentage points below the prevailing maximum interest rate on insured mortgages under the National Housing Act. Enumerates factors to be considered by the Secretary in setting subsidy levels and interest rates including prevailing interest rates, other Federal incentives for conservation, energy costs, and the level of subsidies needed to induce installation of energy conservation measures.

Directs the Bank, beginning in fiscal year 1980, to provide subsidies to financial institutions which extend below-market interest rate loans for the purchase and installation of energy conservation measures as defined in the National Energy Conservation Policy Act. Requires that the Bank provide such subsidies through lump-sum payments to a financial institution in an amount necessary to compensate the institution for the difference between the reduced interest rate and the market rate.

Permits the Bank to subsidize loans with graduated repayment schedules pursuant to regulations issued by the Secretary. Directs the Secretary to set the interest rates on graduated-payment loans so that their cost to the GNMA equals that of level payment loans.

Requires subsidies to be repaid if a borrower fails to meet the obligations under a loan.

Authorizes the payment of subsidies only if: (1) the term of the loan is not more than 15 years or less than five years with no penalty for prepayment at any time; (2) the amount of the loan does not exceed $5,000 per unit in the case of a one-to-four family structure, $2,500 per unit in the case of a residential structure with more than four dwelling units up to a maximum of $250,000 per loan, and $200,000 in the case of any commercial structure; (3) the security for the loan meets the requirements of the GNMA; and (4) the energy conservation measures financed with the loan will be purchased and installed after enactment of this Act except that consumers who borrowed to purchase and install energy conservation measures after September 13, 1979, may have their loans refinanced with assistance from the Bank.

Requires that 75 percent of the subsidy payments made in any year shall be for financing energy conservation measures in residential structures.

Establishes penalties for fraud and misrepresentation with respect to loans assisted under this Act.

Requires the Secretary of Housing and Urban Development to submit a report to the Congress on the Bank's activities including recommendations for other methods of disbursing funds for energy conservation if the Bank has been unable to expend the funds provided by this Act.

Directs the Secretary and the GNMA to promote the program established by this Act and to coordinate their efforts with the Department of Energy.

Authorizes the Secretary to issue rules to insure the quality of the conservation measures subsidized under this Act.

Directs the GNMA to implement the authority conferred upon it by the National Energy Conservation Policy Act to purchase loans to low- and moderate-income families for energy conserving improvements and to coordinate these purchases with the Conservation Bank.

Authorizes appropriations for fiscal years 1980-1984 to carry out the purposes of this Act.