,i #aafth ,,congress #b;d ,session ,h4 ,r4 #ghji ,,in ,,the ,,house ,,of ,,representatives ,july #bi1 #bjbj,mr4 ,taylor 7for himself1 ,mr4 ,lawson of ,florida1 and ,mr4 ,barr7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to require the ,secretary of the ,treasury to establish a ,,hope ,preferred ,equity ,facility to guarantee certain financial investments of commercial borrowers affected by ,,covid-#ai1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,helping ,open ,properties ,endeavor ,act of #bjbj or the ,,hope ,act of #bjbj4 #b4 ,,hope ,preferred ,equity ,facility 7a7 ,establishment ,the ,secretary of the ,treasury shall establish a ,,hope ,preferred ,equity ,facility to provide financial assistance to borrowers of commercial mortgages in the form of a guarantee of a purchase by a financial institution of a preferred equity instrument issued by a borrower4 ,the ,secretary shall guarantee #ajj percent of any such purchase made under this section4 7b7 ,eligibility of borrowers ,a borrower is eligible to receive financial assistance under this section if1 as determined by the financial institution-- 7#a7 the borrower's revenue during any consecutive #c-month period between ,march #a1 #bjbj1 and ,february #bh1 #bjba1 from the property securing the commercial mortgage is at least #be percent less than the revenue from such property during the same consecutive #c-month period in the previous year2 7#b7 the borrower had not received written notice of monetary default on the commercial mortgage within the previous year and failed to cure such notice as of ,march #a1 #bjbj2 7#c7 either-- 7,a7 the debt service coverage ratio with respect to the commercial mortgage was at least #a4c times on an annual basis during #bjai2 or 7,b7 the debt service coverage ratio with respect to the commercial mortgage was at least #a4c times on an annual basis during both #bjag and #bjah2 7#d7 the property securing the commercial mortgage is not owner-occupied1 except to manage the property or de minimis occupancy as otherwise provided by the ,secretary2 7#e7 the borrower or a parent company of the borrower has not acquired the subject property after ,march #a1 #bjbj1 through a foreclosure process2 and 7#f7 the borrower has not already received financial assistance under this section with respect to the applicable property securing the commercial mortgage4 7c7 ,requirements on preferred equity instruments 7#a7 ,in general ,with respect to a preferred equity instrument purchased by a financial institution from a borrower1 the purchase of which is guaranteed under this section-- 7,a7 the instrument shall be subordinate to perfected loans and unsecured debt2 7,b7 the amount paid for such instrument shall be in an amount1 as determined by the financial institution1 that does not exceed #aj percent of the outstanding amount owed on the commercial mortgage2 7,c7 the purchase amount of the instrument shall be made available by the financial institution to the borrower in an account that the borrower may draw down1 in amounts and at times to be determined by the borrower for any purpose the borrower determines may help the property1 during the #a-year period following the date such purchase is made2 7,d7 the instrument shall be unsecured by the subject property securing the commercial mortgage2 7,e7 the instrument shall provide no right of foreclosure and no approval rights2 7,f7 the instrument shall1 except as provided under paragraph 7#b71 have an annual interest rate of #c percent calculated on a monthly basis on all amounts that have been drawn from the account described in subparagraph 7,b71 of which #j4e percent shall be transferred to the ,secretary of the ,treasury for purposes under subsection 7g77#d72 7,g7 any portion of the instrument may be redeemed by the borrower at any time with the financial institution1 without penalty2 7,h7 the instrument shall require payments to first be due after the end of the #b-year period beginning on the earlier of-- 7i7 the date on which all funds in the account described under subparagraph 7,b7 have been drawn down by the borrower2 or 7ii7 the end of the #a-year period beginning on the date the purchase is made2 7,i7 the instrument shall fully amortize over the #g-year period beginning on the date payments are first due2 7,j7 the instrument shall require immediate redemption if there is more than a #ej percent change in the ownership of the borrower1 except via death1 compared to the date on which the instrument is purchased2 7,k7 the instrument shall be approved in advance by the ,secretary2 and 7,l7 the proceeds from such purchase may be used for-- 7i7 expenses of the parent company related to the administration of oversight of such borrower1 ownership or operation of such borrower1 or to a subsidiary entity of the parent company for same or similar expenses2 7ii7 the benefit and operation of the property securing the commercial mortgage2 7iii7 payments of the preferred equity interest1 including payments for principal1 interest1 insurance1 taxes1 utilities1 fees1 operating expenses1 and payroll expenses2 and 7iv7 lender-required reserves such as capital expenditure reserves4 7#b7 ,failure to make payments 7,a7 ,in general ,if a borrower fails to make payments due on a preferred equity instrument1 the purchase of which is guaranteed under this section-- 7i7 during the first year in which payments are due1 the interest rate on the instrument shall increase to #c4e percent for the remainder of the loan1 beginning at the end of the first year2 7ii7 during the second year in which payments are due1 the interest rate on the instrument shall increase to #d4e percent for the remainder of the loan1 beginning at the end of the second year2 7iii7 during the third year in which payments are due1 the interest rate on the instrument shall increase to #e4e percent for the remainder of the loan1 beginning at the end of the third year2 7iv7 during the fourth year in which payments are due1 the interest rate on the instrument shall increase to #f4e percent for the remainder of the loan1 beginning at the end of the fourth year2 7v7 during the fifth year in which payments are due1 the interest rate on the instrument shall increase to #g4e percent for the remainder of the loan1 beginning at the end of the fifth year2 7vi7 during the sixth year in which payments are due1 the interest rate on the instrument shall increase to #h4e percent for the remainder of the loan1 beginning at the end of the sixth year2 7vii7 during the seventh year in which payments are due1 the interest rate on the instrument shall increase to #i4e percent for the remainder of the loan1 beginning at the end of the seventh year2 and 7viii7 after the last year in which payments are due under the amortization schedule1 the interest rate on the instrument shall increase to #ac percent permanently1 beginning at the end of such year4 7,b7 ,cure period ,before any interest rate increase required under subparagraph 7,a71 the financial institution shall provide notice to the borrower within five calendar days4 ,the borrower shall have a #cj-;day cure period before such increase takes effect1 beginning on the date of such notice4 7,c7 ,increased interest owed to ,treasury ,with respect to any interest owed on a preferred equity instrument under subparagraph 7,a7 above #b4e percent1 such interest shall be owed to the ,department of the ,treasury4 7,d7 ,treatment of financial institution failure to assess interest ,if the financial institution fails to assess interest required under this paragraph on the borrower1 or fails to notify the borrower of such required interest for a period of #c months or more1 the financial institution shall only be eligible to receive half of the service fee described under subsection 7d77#a7 for the period of such failure4 7d7 ,payments to financial institutions 7#a7 ,servicing fee ,the ,secretary shall pay each financial institution that purchases a preferred equity instrument1 the purchase of which is guaranteed under this section1 an annual servicing fee in an amount equal to #a percent of the outstanding amount on such instrument1 paid annually4 7#b7 ,pay for origination 7,a7 ,in general ,the ,secretary shall pay a financial institution described under paragraph 7#a7 at a rate1 based on the covered amount1 of-- 7i7 #e percent for a covered amount of not more than #cej1jjj2 7ii7 #c percent for a covered amount of more than #cej1jjj and less than #b1jjj1jjj2 and 7iii7 #a percent for a covered amount of not less than #b1jjj1jjj4 7,b7 ,exception in cases of loss ,if the borrower defaults on #ij percent or more of the amount drawn down1 the financial institution shall repay any reimbursement amount paid pursuant to subparagraph 7,a74 7,c7 ,covered amount defined ,in this paragraph1 with respect to a preferred equity instrument1 the term covered amount means the full amount made available to the borrower at the time the instrument is purchased1 regardless of whether the borrower has drawn down the entire amount4 7e7 ,protection of ,government interests ,with respect to a borrower who issues a preferred equity instrument1 the purchase of which is guaranteed under this section1 until such time as the instrument is redeemed1 the parent company of the borrower may not remove value from the borrower1 including-- 7#a7 by paying any dividend2 7#b7 with respect to any affiliated property of the borrower for which there is a manager1 if the manager and the borrower are related1 by increasing any fee paid to the manager compared to the amount of such fee before such instrument is purchased2 7#c7 with respect to an affiliate of the owner property1 by procuring the performance of services or selling goods that are not ordinary1 necessary1 and at market rates2 or 7#d7 by lending money to any owner of the borrower or to any related person4 7f7 ,treasury authority and duties 7#a7 ,approval deadline ,the ,secretary shall approve or deny any preferred equity instrument submitted under this section to the ,secretary within #cj calendar days of such submission4 7#b7 ,purchase and sale authority ,with respect to a preferred equity instrument1 the purchase of which is guaranteed under this section1 the ,secretary may1 at the ,secretary's discretion-- 7,a7 purchase the preferred equity instrument from the applicable financial institution any time after the end of #g-year period beginning on the date payments are first due with respect to the instrument2 7,b7 sell any preferred equity instrument purchased by the ,secretary under subparagraph 7,a72 and 7,c7 contract with a private servicer to service any preferred equity instrument purchased by the ,secretary under subparagraph 7,a74 7#c7 ,transfer of notes and papers ,when the preferred equity instrument is redeemed by the ,secretary1 a digital copy of all notes and papers shall be provided to the ,secretary upon request of the ,secretary4 ,upon request of the ,secretary1 an original document shall be provided4 7#d7 ,administrative costs ,the ,secretary shall use amounts described under subsection 7c77#a77;,e7 for administrative costs of carrying out this section4 7#e7 ,rulemaking ,not later than #cj days after the date of the enactment of this ,act1 the ,secretary shall issue such rules or guidance as the ,secretary determines necessary to carry out this section4 7g7 ,financial institution requirements and authorities 7#a7 ,deadline for making funds available ,a financial institution submitting a preferred equity instrument to the ,secretary under this section shall1 if the ,secretary approves such instrument1 make funds available to the borrower in connection with such instrument not later than #ad calendar days after such approval4 7#b7 ,sale of instrument to ,treasury ,a financial institution may sell a preferred equity instrument to the ,secretary after the end of the #aj-year period beginning on the date on which the financial institution purchased the instrument at par plus interest less origination fees4 7#c7 ,foreclosure ,in the event of a foreclosure on the subject property securing a commercial mortgage relating to a preferred equity instrument1 a financial institution shall sell the preferred equity instrument to the ,secretary within #ij days after the date of foreclosure at par plus interest and origination fees4 7#d7 ,additional collateral ,a financial institution may require additional collateral from a borrower1 including personal recourse1 corporate recourse1 a first lien on another encumbered property1 or a claim on business assets4 ,the financial institution may not receive a lien on the subject property4 7h7 ,other requirements 7#a7 ,public reporting ,a borrower that receives financial assistance under this ,act shall issue a public statement announcing such receipt immediately after such receipt4 ,the ,secretary periodically shall make publicly available a list of such borrowers1 along with the amount each such borrower received4 7#b7 ,indemnification ,a preferred equity instrument issued under this section shall require that an approved guarantor 7as determined by the financial institution7 provide a guarantee to the financial institution and to the ,secretary that provides for indemnification of such financial institution if the borrower1 a parent company of the borrower1 or any affiliate of the borrower1 with respect to the property securing the commercial mortgage1 does the following3 7,a7 ,commits fraud1 or misappropriates or misapplies any amounts received from the purchase of such instrument4 7,b7 ,fails to apply such amounts in accordance with the requirements of subsection 7c77#a77,k74 7,c7 ,fails to comply with the requirements of subsection 7f74 7,d7 ,intentionally wastes the property4 7#c7 ,additional fee ,a financial institution may charge additional fees to a borrower from which the financial institution purchases a preferred equity instrument4 7i7 ,treatment of instruments by regulators ,for purposes of calculating any capital requirement1 the appropriate ,federal banking agencies shall treat preferred equity instruments1 the purchase of which are guaranteed under this section1 in the same manner as loans guaranteed under the ,paycheck ,protection ,program under section #g7;a77#cf7 of the ,small ,business ,act4 7j7 ,limitation on financial assistance going to entities controlled by senior members of the ,executive ,branch or ,members of ,congress 7#a7 ,prohibition ,a covered entity may not receive financial assistance under this section4 7#b7 ,definition ,in this subsection1 the term covered entity has the meaning given that term under section #djai7;a7 of the ,,cares ,act 7#ae ,u4,s4,c4 #ijed7;a774 7k7 ,funding ,the ,secretary shall1 without further appropriation1 use amounts made available under section #djjc7;b77#d7 of the ,,cares ,act 7#ae ,u4,s4,c4 #ijdb7;b77#d77 to carry out this section4 7l7 ,definitions ,in this section3 7#a7 ,appropriate ,federal banking agency ,the term appropriate ,federal banking agency-- 7,a7 has the meaning given that term under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac72 and 7,b7 means the ,national ,credit ,union ,administration1 in the case of an insured credit union 7as defined under section #aja of the ,federal ,credit ,union ,act 7#ab ,u4,s4,c4 #ageb774 7#b7 ,borrower ,the term borrower means a borrower of a commercial mortgage loan4 7#c7 ,commercial mortgage ,the term commercial mortgage means a mortgage loan secured by an interest in real property owned for rental income4 7#d7 ,financial institution ,the term financial institution means-- 7,a7 a person authorized to make and approve loans under section #g7;a77#cf7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcf7;a77#cf77 or section #aaji of the ,,cares ,act 7,public ,law #aaf-acf72 7,b7 a national banking association2 and 7,c7 such other persons as the ,secretary determines appropriate4 7#e7 ,parent company ,the term parent company means any entity that has control over a borrower4 7#f7 ,secretary ,the term ,secretary means the ,secretary of the ,treasury4