H. R. 2636
IN THE HOUSE OF REPRESENTATIVES
July 25, 2011
Mr. Gary G. Miller of California (for himself, Mr. Bachus, Mrs. McCarthy of New York, and Mr. Frank of Massachusetts) introduced the following bill; which was referred to the Committee on Financial Services
To authorize depository institutions, depository institution holding companies, Fannie Mae, and Freddie Mac to lease foreclosed property held by such entities for up to 5 years, and for other purposes.
This Act may be cited as the
Neighborhood Preservation Act of
The Congress finds as follows:
Depository institutions and affiliates of depository institutions currently may control and lease foreclosed property for a limited period of time often subject to safety and soundness considerations, under various Federal laws and the law of some States.
Authorizing such institutions, the GSEs, and affiliates to enter into a long-term lease with the occupant of the property or any other person would reduce the number of residential properties entering into the housing inventory, which in turn would help to stabilize home values and restore confidence in the housing markets.
Allowing depository institutions, the GSEs, and affiliates of such institutions to lease foreclosed property will allow the institution or affiliate to dispose of such property into a presumably more stable market at the end of the lease term which would reduce the loss the institution or affiliate may otherwise be required to recognize upon disposition of the property.
Providing a means for foreclosed property to remain occupied during the housing downturn will preserve the property itself as well as the aesthetic and economic values of neighboring homes and even whole neighborhoods.
Bank leasing of foreclosed properties
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding at the end the following new subsection:
Leasing of Foreclosed Property
Notwithstanding any provision of Federal or State law restricting the time during which a depository institution, or any affiliate of a depository institution, may hold or lease property, or any provision of Federal or State law prohibiting a depository institution, or any affiliate of a depository institution, from leasing property and subject to this subsection and regulations prescribed under this subsection, any depository institution, and any affiliate of a depository institution, may lease to any individual, including a lease with an option to purchase, for not to exceed 5 years an interest in residential property which—
was or is security for an extension of credit by such depository institution or affiliate; and
came under the ownership or control of the depository institution or affiliate through foreclosure, or a deed in lieu of foreclosure, on the extension of credit.
Safety and soundness regulations
The Federal banking agencies shall jointly prescribe regulations which—
establish criteria and minimum requirements for the leasing activity of any depository institution or affiliate of a depository institution, including minimum capital requirements, that the agency determines to be appropriate for the preservation of the safety and soundness of the institution or affiliate;
establish requirements or exceptions that the agency determines are appropriate under this subsection for any such institution or affiliate for any other purpose; and
provide for appropriate actions under section 38 with respect to any such lease if necessary to protect the capital or safety and soundness of the institution or affiliate or any other necessary enforcement action.
Length of lease
If any provision of any Federal or State law, including the Bank Holding Company Act of 1956, governing the permissible activities of depository institutions or affiliates of depository institutions permits a depository institution or any such affiliate to hold property as described in paragraph (1) for a period longer than 5 years, any lease under paragraph (1) may be extended to the extent permitted by such provision of law.
This section shall apply only with respect to leases entered into during the 3-year period beginning on the date of the enactment of the Neighborhood Preservation Act.
Intent of the Congress
It is the intent of the Congress that—
no permanent change in policy on leasing foreclosed property is being established with respect to depository institutions and depository institution holding companies; and
subsection (y) of section 18 of the Federal Deposit Insurance Act should not apply to leases entered into after the sunset date contained in such subsection.
Government sponsored enterprise leasing of foreclosed properties
For the purpose of mitigating losses to the taxpayer and stabilizing home prices, an enterprise may market for rental any real estate owned properties and assets of such enterprises and enter into lease agreements with lessees as the Federal Housing Finance Agency determines appropriate, prior to the sale of such properties and assets, except that any such lease agreement shall be no greater than 5 years. Authority to enter into leasing agreements pursuant to this subsection shall terminate 3 years after the date of the enactment of this Act.
The term enterprise means—
the Federal National Mortgage Association; and
the Federal Home Loan Mortgage Corporation.