[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1260 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1260
To reform rural housing programs, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 2, 2025
Ms. Smith (for herself, Mr. Rounds, Mr. Daines, Mr. Fetterman, Mr.
Crapo, Mr. Warner, Mr. Cramer, Mr. Warnock, Mrs. Shaheen, and Mr.
Moran) introduced the following bill; which was read twice and referred
to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To reform rural housing programs, 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Rural Housing
Service Reform Act of 2025''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--STREAMLINING AND UPDATES
Sec. 101. Application of multifamily mortgage foreclosure procedures to
multifamily mortgages held by the Secretary
of Agriculture and preservation of the
rental assistance contract upon
foreclosure.
Sec. 102. Study on rural housing loans for housing for low- and
moderate-income families.
Sec. 103. Authorization of appropriations for staffing and IT upgrades.
Sec. 104. Funding for technical improvements.
TITLE II--RURAL HOUSING PRESERVATION AND REVITALIZATION
Sec. 201. Permanent establishment of housing preservation and
revitalization program.
Sec. 202. Rental assistance contract authority.
TITLE III--NATIVE CDFI RELENDING
Sec. 301. Native CDFI relending program.
TITLE IV--SECTION 504 LOANS AND GRANTS
Sec. 401. Modifications to loans and grants for minor improvements to
farm housing and buildings; income
eligibility.
TITLE V--RURAL COMMUNITY DEVELOPMENT INITIATIVE GRANTS
Sec. 501. Rural community development initiative.
TITLE VI--REPORTS
Sec. 601. Annual report on rural housing programs.
Sec. 602. GAO report on Rural Housing Service technology.
TITLE VII--RURAL HOUSING VOUCHER PROGRAM
Sec. 701. Adjustment to rural development voucher amount.
Sec. 702. Eligibility for rural housing vouchers.
Sec. 703. Amount of voucher assistance.
TITLE VIII--TRANSFERS TO NONPROFIT ORGANIZATIONS
Sec. 801. Transfer of multifamily rural housing projects.
TITLE IX--SECTION 502 LOANS AND GUARANTEES
Sec. 901. Extension of loan term.
Sec. 902. Release of liability for section 502 guaranteed borrower upon
assumption of original loan by new
borrower.
Sec. 903. Department of Agriculture loan restrictions.
TITLE X--ACCESSORY DWELLING UNITS
Sec. 1001. Loan guarantees.
TITLE XI--TIME FRAME FOR COMPLETING APPLICATION REVIEW
Sec. 1101. Application review.
TITLE I--STREAMLINING AND UPDATES
SEC. 101. APPLICATION OF MULTIFAMILY MORTGAGE FORECLOSURE PROCEDURES TO
MULTIFAMILY MORTGAGES HELD BY THE SECRETARY OF
AGRICULTURE AND PRESERVATION OF THE RENTAL ASSISTANCE
CONTRACT UPON FORECLOSURE.
(a) Multifamily Mortgage Procedures.--Section 363(2) of the
Multifamily Mortgage Foreclosure Act of 1981 (12 U.S.C. 3702(2)) is
amended--
(1) in subparagraph (D), by striking ``and'' at the end;
(2) in subparagraph (E), by striking the period at the end
and inserting ``; or''; and
(3) by adding at the end the following:
``(F) section 514, 515, or 538 of the Housing Act
of 1949 (42 U.S.C. 1484, 1485, 1490p).''.
(b) Preservation of Contract.--Section 521(d) of the Housing Act of
1949 (42 U.S.C. 1490a(d)) is amended by adding at the end the
following:
``(3) Notwithstanding any other provision of law in managing and
disposing of any multifamily property that is owned or has a mortgage
held by the Secretary, and during the process of foreclosure on any
property with a contract for rental assistance under this section--
``(A) the Secretary shall maintain any rental assistance
payments that are attached to any dwelling units in the
property; and
``(B) the rental assistance contract may be used to provide
further assistance to existing projects under 514, 515, or
516.''.
SEC. 102. STUDY ON RURAL HOUSING LOANS FOR HOUSING FOR LOW- AND
MODERATE-INCOME FAMILIES.
Not later than 6 months after the date of enactment of this Act,
the Secretary of Agriculture shall conduct a study and submit to
Congress a publicly available report on the loan program under section
521 of the Housing Act of 1949 (42 U.S.C. 1490a), including--
(1) the total amount provided by the Secretary in subsidies
under such section 521 to borrowers with loans made pursuant to
section 502 of such Act (42 U.S.C. 1472);
(2) how much of the subsidies described in paragraph (1)
are being recaptured; and
(3) the amount of time and costs associated with
recapturing those subsidies.
SEC. 103. AUTHORIZATION OF APPROPRIATIONS FOR STAFFING AND IT UPGRADES.
There is authorized to be appropriated to the Secretary of
Agriculture for each of fiscal years 2026 through 2030 such sums as may
be necessary for increased staffing needs and information technology
upgrades to support all Rural Housing Service programs.
SEC. 104. FUNDING FOR TECHNICAL IMPROVEMENTS.
(a) Authorization of Appropriations.--There is authorized to be
appropriated to the Secretary of Agriculture such sums as may be
necessary for fiscal year 2026 for improvements to the technology of
the Rural Housing Service of the Department of Agriculture used to
process and manage housing loans.
(b) Availability.--Amounts appropriated pursuant to subsection (a)
shall remain available until the date that is 5 years after the date of
the appropriation.
(c) Timeline.--The Secretary of Agriculture shall make the
improvements described in subsection (a) during the 5-year period
beginning on the date on which amounts are appropriated under
subsection (a).
TITLE II--RURAL HOUSING PRESERVATION AND REVITALIZATION
SEC. 201. PERMANENT ESTABLISHMENT OF HOUSING PRESERVATION AND
REVITALIZATION PROGRAM.
Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) is
amended by adding at the end the following:
``SEC. 545. HOUSING PRESERVATION AND REVITALIZATION PROGRAM.
``(a) Establishment.--The Secretary shall carry out a program under
this section for the preservation and revitalization of multifamily
rental housing projects financed under section 514, 515, or 516.
``(b) Notice of Maturing Loans.--
``(1) To owners.--On an annual basis, the Secretary shall
provide written notice to each owner of a property financed
under section 514, 515, or 516 that will mature within the 4-
year period beginning upon the provision of the notice, setting
forth the options and financial incentives that are available
to facilitate the extension of the loan term or the option to
decouple a rental assistance contract pursuant to subsection
(f).
``(2) To tenants.--
``(A) In general.--On an annual basis, for each
property financed under section 514, 515, or 516, not
later than the date that is 2 years before the date
that the loan will mature, the Secretary shall provide
written notice to each household residing in the
property that informs them of--
``(i) the date of the loan maturity;
``(ii) the possible actions that may happen
with respect to the property upon that
maturity; and
``(iii) how to protect their right to
reside in federally assisted housing, or how to
secure housing voucher, after that maturity.
``(B) Language.--Notice under this paragraph shall
be provided in plain English and shall be translated to
other languages in the case of any property located in
an area in which a significant number of residents
speak such other languages.
``(c) Loan Restructuring.--Under the program under this section, in
any circumstance in which the Secretary proposes a restructuring to an
owner or an owner proposes a restructuring to the Secretary, the
Secretary may restructure such existing housing loans, as the Secretary
considers appropriate, for the purpose of ensuring that those projects
have sufficient resources to preserve the projects to provide safe and
affordable housing for low-income residents and farm laborers, by--
``(1) reducing or eliminating interest;
``(2) deferring loan payments;
``(3) subordinating, reducing, or reamortizing loan debt;
``(4) providing other financial assistance, including
advances, payments, and incentives (including the ability of
owners to obtain reasonable returns on investment) required by
the Secretary; and
``(5) permanently removing a portion of the housing units
from income restrictions when sustained vacancies have
occurred.
``(d) Renewal of Rental Assistance.--
``(1) In general.--When the Secretary proposes to
restructure a loan or agrees to the proposal of an owner to
restructure a loan pursuant to subsection (c), the Secretary
shall offer to renew the rental assistance contract under
section 521(a)(2) for a term that is the shorter of 20 years
and the term of the restructured loan, subject to annual
appropriations, provided that the owner agrees to bring the
property up to such standards that will ensure maintenance of
the property as decent, safe, and sanitary housing for the full
term of the rental assistance contract.
``(2) Additional rental assistance.--With respect to a
project described in paragraph (1), if rental assistance is not
available for all households in the project for which the loan
is being restructured pursuant to subsection (c), the Secretary
may extend such additional rental assistance to unassisted
households at that project as is necessary to make the project
safe and affordable to low-income households.
``(e) Restrictive Use Agreements.--
``(1) Requirement.--As part of the preservation and
revitalization agreement for a project, the Secretary shall
obtain a restrictive use agreement that is recorded and
obligates the owner to operate the project in accordance with
this title.
``(2) Term.--
``(A) No extension of rental assistance contract.--
Except when the Secretary enters into a 20-year
extension of the rental assistance contract for a
project, the term of the restrictive use agreement for
the project shall be consistent with the term of the
restructured loan for the project.
``(B) Extension of rental assistance contract.--If
the Secretary enters into a 20-year extension of the
rental assistance contract for a project, the term of
the restrictive use agreement for the project shall be
for the longer of--
``(i) 20 years; or
``(ii) the remaining term of the loan for
that project.
``(C) Termination.--The Secretary may terminate the
20-year use restrictive use agreement for a project
before the end of the term of the agreement if the 20-
year rental assistance contract for the project with
the owner is terminated at any time for reasons outside
the control of the owner.
``(f) Decoupling of Rental Assistance.--
``(1) Renewal of rental assistance contract.--If the
Secretary determines that a loan maturing during the 4-year
period beginning upon the provision of the notice required
under subsection (b)(1) for a project cannot reasonably be
restructured in accordance with subsection (c) because it is
not financially feasible or the owner does not agree with the
proposed restructuring, and the project was operating with
rental assistance under section 521 and the recipient is a
borrower under section 514 or 515, the Secretary may renew the
rental assistance contract, notwithstanding any requirement
under section 521 that the recipient be a current borrower
under section 514 or 515, for a term of 20 years, subject to
annual appropriations.
``(2) Additional rental assistance.--With respect to a
project described in paragraph (1), if rental assistance is not
available for all households in the project for which the loan
is being restructured pursuant to subsection (c), the Secretary
may extend such additional rental assistance to unassisted
households at that project as is necessary to make the project
safe and affordable to low-income households.
``(3) Rents.--
``(A) In general.--Any agreement to extend the term
of the rental assistance contract under section 521 for
a project shall obligate the owner to continue to
maintain the project as decent, safe, and sanitary
housing and to operate the development as affordable
housing in a manner that meets the goals of this title.
``(B) Rent amounts.--Subject to subparagraph (C),
in setting rents, the Secretary--
``(i) shall determine the maximum initial
rent based on current fair market rents
established under section 8 of the United
States Housing Act of 1937 (42 U.S.C. 1437f);
and
``(ii) may annually adjust the rent
determined under clause (i) by the operating
cost adjustment factor as provided under
section 524 of the Multifamily Assisted Housing
Reform and Affordability Act of 1997 (42 U.S.C.
1437f note).
``(C) Higher rent.--
``(i) In general.--Subparagraph (B) shall
not apply if the Secretary determines that the
budget-based needs of a project require a
higher rent than the rent described in
subparagraph (B).
``(ii) Rent.--If the Secretary makes a
positive determination under clause (i), the
Secretary may approve a budget-based rent level
for the project.
``(4) Conditions for approval.--
``(A) Plan.--Before the approval of a rental
assistance contract authorized under this section, the
Secretary shall require, through an annual notice in
the Federal Register, the owner to submit to the
Secretary a plan that identifies financing sources and
a timetable for renovations and improvements determined
to be necessary by the Secretary to maintain and
preserve the project.
``(B) Automatic approval.--If a plan submitted
under subparagraph (A) is not acted upon by the
Secretary within 30 days of the submission, the rental
assistance contract is automatically approved for not
more than a 1-year period.
``(g) Multifamily Housing Transfer Technical Assistance.--Under the
program under this section, the Secretary may provide grants to
qualified nonprofit organizations and public housing agencies to
provide technical assistance, including financial and legal services,
to borrowers under loans under this title for multifamily housing to
facilitate the acquisition or preservation of such multifamily housing
properties in areas where the Secretary determines there is a risk of
loss of affordable housing.
``(h) Administrative Expenses.--Of any amounts made available for
the program under this section for any fiscal year, the Secretary may
use not more than $1,000,000 for administrative expenses for carrying
out such program.
``(i) Authorization of Appropriations.--There is authorized to be
appropriated for the program under this section $200,000,000 for each
of fiscal years 2026 through 2030.
``(j) Rulemaking.--
``(1) In general.--Not later than 180 days after the date
of enactment of the Rural Housing Service Reform Act of 2025,
the Secretary shall--
``(A) publish an advance notice of proposed
rulemaking; and
``(B) consult with appropriate stakeholders.
``(2) Interim final rule.--Not later than 1 year after the
date of enactment of the Rural Housing Service Reform Act of
2025, the Secretary shall publish an interim final rule to
carry out this section.''.
SEC. 202. RENTAL ASSISTANCE CONTRACT AUTHORITY.
Section 521(d) of the Housing Act of 1949 (42 U.S.C. 1490a(d)), as
amended by section 101(b), is amended--
(1) in paragraph (1)--
(A) by redesignating subparagraphs (B) and (C) as
subparagraphs (C) and (D), respectively;
(B) by inserting after subparagraph (A) the
following:
``(B) upon request of an owner of a project financed under
section 514 or 515, the Secretary is authorized to enter into
renewal of such agreements for a period of 20 years or the term
of the loan, whichever is shorter, subject to amounts made
available in appropriations Acts;'';
(C) in subparagraph (C), as so redesignated, by
striking ``subparagraph (A)'' and inserting
``subparagraphs (A) and (B)''; and
(D) in subparagraph (D), as so redesignated, by
striking ``subparagraphs (A) and (B)'' and inserting
``subparagraphs (A), (B), and (C)'';
(2) in paragraph (2), by striking ``shall'' and inserting
``may''; and
(3)