A bill to amend the United States Housing Act of 1937.

Amends the United States Housing Act of 1937 to authorize the Secretary of Housing and Urban Development, pursuant to applications submitted by State or local governments, to provide second mortgage loans or other assistance to owners of multifamily rental housing projects to assist in financing the construction or rehabilitation of such projects. States that such a loan shall not be amortized, but shall be repayable with simple interest after 30 years. Sets forth conditions for making such a loan for a project, including the owner's agreement to pass on to the tenants the savings resulting from the reduction in debt service payments. Declares that the first mortgage on such a project may be Federally insured under the National Housing Act.

Directs the Secretary to consider the population and market conditions of an area when allocating such assistance in order to provide adequate assistance in areas in short supply of rental housing. Prohibits the Secretary from providing such assistance to a local government which has not demonstrated satisfactory progress in meeting its assisted housing needs.

Declares that no State or local rent control law shall apply to an assisted project during the period of the second mortgage loan. Directs the Secretary to approve rents charged for units of assisted projects.

Requires the Secretary to report to Congress on the design and workability of the program established by this Act as a housing development incentive. Authorizes appropriations.

Prohibits the Secretary from expending appropriated funds to issue or refinance public housing agency securities to or through the Federal Financing Bank.