This legislation aims to combat squatting by imposing financial penalties on local governments that are deemed to permit the practice. It defines "squatting" as unlawfully entering a property and residing there for a specified number of consecutive days without the owner's permission or a rental agreement, asserting that such actions should not confer tenant status. The bill mandates that the Secretary of Housing and Urban Development prohibit the allocation of Community Development Block Grant (CDBG) funds to units of general local government that permit squatting or grant special tenancy rights to squatters. These local governments can take corrective actions to regain eligibility, and the Secretary must publicly list non-compliant jurisdictions. Additionally, the bill prohibits various forms of Federal mortgage support for residential loans secured by properties in municipalities ineligible for CDBG funds due to squatting. This includes insurance or guarantees from agencies like HUD, VA, and USDA, as well as purchases or securitization by Fannie Mae and Freddie Mac, with covered agencies required to develop implementing regulations.