SEC-577 -- HOUSING COUNSELING. (a) Counseling Services.-The first sentence of section 106(a)(3) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended by striking "except that" and all that follows and inserting the following: "except that for such purposes there are authorized to be appropriated $3,600,000 for fiscal year 1991 and $3,700,000 for fiscal year 1992.". (b) Emergency Homeownership Counseling.- (1) Authorization of appropriations.-The first sentence of section 106(c)(8) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(c)(8)) is amended to read as follows: "There is authorized to be appropriated to carry out this section $6,700,000 for fiscal year 1991 and $7,000,000 for fiscal year 1992, of which amounts $2,000,000 shall be available in each such fiscal year to carry out paragraph (5)(D).". (2) Extension of program.-Section 106(c)(9) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(c)(9)) is amended by striking "September 30, 1990" and inserting "September 30, 1992". (3) Notification of availability of homeownership counseling.-Section 106(c)(5) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)) is amended to read as follows: "(5) Notification of availability of homeownership counseling.- "(A) In general.-Except as provided in subparagraph (C), if any eligible homeowner fails to pay any amount by the date the amount is due under a home loan, the creditor of the loan shall notify the homeowner of the availability of any homeownership counseling offered by the creditor and, as a supplement to counseling provided by the creditor, shall notify the homeowner of 1 of the following: "(i) The availability of homeownership counseling provided by nonprofit organizations approved by the Secretary and experienced in the provision of homeownership counseling. "(ii) The toll-free telephone number described in subparagraph (D)(i). "(B) Deadline for notification.-The notification required in subparagraph (A) shall be made- "(i) in a manner approved by the Secretary; and "(ii) before the expiration of the 45-day period beginning on the date on which the failure referred to in such subparagraph occurs. "(C) Exceptions.-Notification under subparagraph (A) shall not be required with respect to any loan- "(i) insured or guaranteed under chapter 37 of title 38, United States Code; or "(ii) for which the eligible homeowner pays the amount overdue before the expiration of the 45-day period under subparagraph (B)(ii). "(D) Administration and compliance.-The Secretary shall, to the extent of amounts approved in appropriation Acts, enter into an agreement with an appropriate private entity under which the entity will- "(i) operate a toll-free telephone number through which any eligible homeowner can obtain a list of nonprofit organizations that- "(I) are approved by the Secretary and experienced in the provision of homeownership counseling; and "(II) serve the area in which the residential property of the homeowner is located; "(ii) monitor the compliance of creditors with the requirements of subparagraphs (A) and (B); and "(iii) report to the Secretary not less than annually regarding the extent of compliance of creditors with the requirements of subparagraphs (A) and (B). "(E) Report.-The Secretary shall submit a report to the Congress not less than annually regarding the extent of compliance of creditors with the requirements of subparagraphs (A) and (B) and the effectiveness of the entity monitoring such compliance. The Secretary shall also include in the report any recommendations for legislative action to increase the authority of the Secretary to penalize creditors who do not comply with such requirements.". (c) Prepurchase and Foreclosure-Prevention Counseling Demonstration.-Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the following new subsection: "(d) Prepurchase and Foreclosure-Prevention Counseling Demonstration.- "(1) Purposes.-The purpose of this subsection is- "(A) to reduce defaults and foreclosures on mortgage loans insured under the Federal Housing Administration single family mortgage insurance program; "(B) to encourage responsible and prudent use of such federally insured home mortgages; "(C) to assist homeowners with such federally insured mortgages to retain the homes they have purchased pursuant to such mortgages; and "(D) to encourage the availability and expansion of housing opportunities in connection with such federally insured home mortgages. "(2) Authority.-The Secretary of Housing and Urban Development shall carry out a program to demonstrate the effectiveness of providing coordinated prepurchase counseling and foreclosure-prevention counseling to first-time homebuyers and homeowners in avoiding defaults and foreclosures on mortgages insured under the Federal Housing Administration single family home mortgage insurance program. "(3) Grants.-Under the demonstration program under this subsection, the Secretary shall make grants to qualified nonprofit organizations under paragraph (4) to enable the organizations to provide prepurchase counseling services to eligible homebuyers and foreclosure-prevention counseling services to eligible homeowners, in counseling target areas. "(4) Qualified nonprofit organizations.-The Secretary shall select nonprofit organizations to receive assistance under the demonstration program under this subsection based on the experience and ability of the organizations in providing homeownership counseling and their ability to provide community-based prepurchase and foreclosure-prevention counseling under paragraphs (5) and (6) in a counseling target area. To be eligible for selection under this paragraph, a nonprofit organization shall submit an application containing a proposal for providing counseling services in the form and manner required by the Secretary. "(5) Prepurchase counseling.- "(A) Mandatory participation.-Under the demonstration program, the Secretary shall require any eligible homebuyer who intends to purchase a home located in a counseling target area and who has applied for (as determined by the Secretary) a qualified mortgage (as such term is defined in paragraph (10)(K)) on such home that involves a downpayment of less than 10 percent of the principal obligation of the mortgage, to receive counseling prior to signing of a contract to purchase the home. The counseling shall include counseling with respect to- "(i) financial management and the responsibilities involved in homeownership; "(ii) fair housing laws and requirements; "(iii) the maximum mortgage amount that the homebuyer can afford; and "(iv) options, programs, and actions available to the homebuyer in the event of actual or potential delinquency or default. "(B) Eligibility for counseling.-A homebuyer shall be eligible for prepurchase counseling under this paragraph if- "(i) the homebuyer has applied for a qualified mortgage; "(ii) the homebuyer is a first-time homebuyer; and "(iii) the home to be purchased under the qualified mortgage is located in a counseling target area. "(6) Foreclosure-prevention counseling.- "(A) Availability.-Under the demonstration program, the Secretary shall make counseling available for eligible homeowners who are 60 or more days delinquent with respect to a payment under a qualified mortgage on a home located within a counseling target area. The counseling shall include counseling with respect to options, programs, and actions available to the homeowner for resolving the delinquency or default. "(B) Notification of delinquency.-Under the demonstration program, the Secretary shall require the creditor of any eligible homeowner who is delinquent (as described in subparagraph (A)) to send written notice by registered or certified mail within 5 days (excluding Saturdays, Sundays, and legal public holidays) after the occurrence of such delinquency- "(i) notifying the homeowner of the delinquency and the name, address, and phone number of the counseling organization for the counseling target area; and "(ii) notifying any counseling organization for the counseling target area of the delinquency and the name, address, and phone number of the delinquent homeowner. "(C) Coordination with emergency homeownership counseling program.-The Secretary may coordinate the provision of assistance under subsection (c) with the demonstration program under this subsection. "(D) Eligibility for counseling.-A homeowner shall be eligible for foreclosure-prevention counseling under this paragraph if- "(i) the home owned by the homeowner is subject to a qualified mortgage; and "(ii) such home is located in a counseling target area. "(7) Scope of demonstration program.- "(A) Designation of counseling target areas.-The Secretary shall designate 3 counseling target areas (as provided in subparagraph (B)), which shall be located in not less than 2 separate metropolitan areas. The Secretary shall provide for counseling under the demonstration program under this subsection with respect to only such counseling target areas. "(B) Counseling target areas.-Each counseling target area shall consist of a group of contiguous census tracts- "(i) the population of which is greater than 50,000; "(ii) which together constitute an identifiable neighborhood, area, borough, district, or region within a metropolitan area (except that this clause may not be construed to exclude a group of census tracts containing areas not wholly contained within a single town, city, or other political subdivision of a State); "(iii) in which the average age of existing housing is greater than 20 years; and "(iv) for which (I) the percentage of qualified mortgages on homes within the area that are foreclosed exceeds 5 percent for the calendar year preceding the year in which the area is selected as a counseling target area, or (II) the number of qualified mortgages originated on homes in such area in the calendar year preceding the calendar year in which the area is selected as a counseling target area exceeds 20 percent of the total number of mortgages originated on residences in the area during such year. "(C) Mortgage characteristics.-In designating counseling target areas under subparagraph (A), the Secretary shall designate at least 1 such area that meets the requirements of subparagraph (B)(iv)(I) and at least 1 such area that meets the requirements of subparagraph (B)(iv)(II). "(D) Expansion of target areas.-The Secretary may expand any counseling target area during the term of the demonstration program, if the Secretary determines that counseling can be adequately provided within such expanded area and the purposes of this subsection will be furthered by such expansion. Any such expansion shall include only groups of census tracts that are contiguous to the counseling target area expanded and such census tract groups shall not be subject to the provisions of subparagraph (B). "(E) Designation of control areas.-For purposes of determining the effectiveness of counseling under the demonstration program, the Secretary shall designate 3 control areas, each of which shall correspond to 1 of the counseling target areas designated under subparagraph (A). Each control area shall be located in the metropolitan area in which the corresponding counseling target area is located, shall meet the requirements of subparagraph (B), and shall be similar to such area with respect to size, age of housing stock, median income, and racial makeup of the population. Each control area shall also comply with the requirements of subclause (I) or (II) of subparagraph (B)(iv), according to the subclause with which the corresponding counseling target area complies. "(8) Evaluation.-Each organization providing counseling under the demonstration program under this subsection shall maintain records with respect to each eligible homebuyer and eligible homeowner counseled and shall provide information with respect to such counseling as the Secretary or the Comptroller General (for purposes of the study and report under paragraph (9)) may require. "(9) GAO study and report.- "(A) Study.-During the 12-month period ending on the termination date under paragraph (13), the Comptroller General of the United States shall conduct a study to assess the effectiveness of the demonstration program and counseling under the program. The study shall include- "(i) a comparison of the default and foreclosure rates for each counseling target area and other areas, including each corresponding control area; "(ii) a survey of eligible homebuyers and eligible homeowners counseled under the program; and "(iii) identification of factors preventing participation in the program for single family home mortgage insurance under the National Housing Act and contributing to default and foreclosure under such program. "(B) Report.-The Comptroller General shall submit to the Committees on Banking, Finance and Urban Affairs and Veterans' Affairs of the House of Representatives, the Committees on Banking, Housing, and Urban Affairs and Veterans' Affairs of the Senate, the Secretary of Housing and Urban Development, and the Secretary of Veterans Affairs, not later than the termination date under paragraph (13), a report regarding the study under subparagraph (A). The report shall include- "(i) information describing the results of the activities under clauses (i) through (iii) of such subparagraph; "(ii) an assessment of the effectiveness of the counseling under the program in preventing default and foreclosure, based on comparison between counseling target areas and control areas; and "(iii) a recommendation of whether a permanent counseling program involving prepurchase counseling or foreclosure-prevention counseling would be effective in reducing defaults and foreclosures on qualified mortgages. "(10) Definitions.-For purposes of this subsection: "(A) The term `control area' means an area designated by the Secretary under paragraph (7)(E). "(B) The term `counseling target area' means an area designated by the Secretary under paragraph (7)(A). "(C) The term `creditor' means a person or entity that is servicing a loan secured by a qualified mortgage on behalf of itself or another person or entity. "(D) The term `displaced homemaker' means an individual who- "(i) is an adult; "(ii) has not worked full-time, full-year in the labor force for a number of years, but has during such years, worked primarily without remuneration to care for the home and family; and "(iii) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment. "(E) The term `downpayment' means the amount of purchase price of home required to be paid at or before the time of purchase. "(F) The term `eligible homebuyer' means a homebuyer that meets the requirements under paragraph (5)(B). "(G) The term `eligible homeowner' means a homeowner that meets the requirements under paragraph (6)(D). "(H) The term `first-time homebuyer' means an individual who- "(i) (and whose spouse) has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the home pursuant to which counseling is provided under this subsection; "(ii) is a displaced homemaker who, except for owning a residence with his or her spouse or residing in a residence owned by the spouse, meets the requirements of clause (i); or "(iii) is a single parent who, except for owning a residence with his or her spouse or residing in a residence owned by the spouse while married, meets the requirements of clause (i). "(I) The term `home' includes any dwelling or dwelling unit eligible for a qualified mortgage, and includes a unit in a condominium project, a membership interest and occupancy agreement in a cooperative housing project, and a manufactured home and the lot on which the home is situated. "(J) The term `metropolitan area' means a standard metropolitan statistical area as designated by the Director of the Office of Management and Budget. "(K) The term `qualified mortgage' means a mortgage on a 1- to 4-family home that is insured under title II of the National Housing Act. "(L) The term `Secretary' means the Secretary of Housing and Urban Development. "(M) The term `single parent' means an individual who- "(i) is unmarried or legally separated from a spouse; and "(ii)(I) has 1 or more minor children for whom the individual has custody or joint custody; or "(II) is pregnant. "(11) Regulations.-The Secretary may issue any regulations necessary to carry out this subsection. "(12) Authorization of appropriations.-There are authorized to be appropriated to carry out this subsection $350,000 for fiscal year 1991 and $365,000 for fiscal year 1992. "(13) Termination.-The demonstration program under this subsection shall terminate at the end of fiscal year 1994.".