[DOCID: f:hr217.110]
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110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-217
======================================================================
EXPANDING AMERICAN HOMEOWNERSHIP ACT OF 2007
_______
June 28, 2007.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Frank of Massachusetts, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 1852]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 1852) to modernize and update the National
Housing Act and enable the Federal Housing Administration to
use risk-based pricing to more effectively reach underserved
borrowers, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 18
Background and Need for Legislation.............................. 18
Hearings......................................................... 24
Committee Consideration.......................................... 25
Committee Votes.................................................. 25
Committee Oversight Findings..................................... 32
Performance Goals and Objectives................................. 33
New Budget Authority, Entitlement Authority, and Tax Expenditures 33
Committee Cost Estimate.......................................... 33
Congressional Budget Office Estimate............................. 33
Federal Mandates Statement....................................... 43
Advisory Committee Statement..................................... 43
Constitutional Authority Statement............................... 43
Applicability to Legislative Branch.............................. 43
Earmark Identification........................................... 43
Section-by-Section Analysis of the Legislation................... 44
Changes in Existing Law Made by the Bill, as Reported............ 50
Additional Views................................................. 92
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Expanding American
Homeownership Act of 2007''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Maximum principal loan obligation.
Sec. 4. Extension of mortgage term.
Sec. 5. Downpayment simplification.
Sec. 6. Mortgage insurance premiums for zero- and lower-downpayment
borrowers.
Sec. 7. Mortgage insurance premiums for standard and higher-risk
borrowers.
Sec. 8. Risk-based mortgage insurance premiums.
Sec. 9. Payment incentives.
Sec. 10. Borrower protections for higher risk mortgages.
Sec. 11. Annual reports on new programs and loss mitigation.
Sec. 12. Insurance for single family homes with licensed child care
facilities.
Sec. 13. Rehabilitation loans.
Sec. 14. Discretionary action.
Sec. 15. Insurance of condominiums and manufactured housing.
Sec. 16. Mutual Mortgage Insurance Fund.
Sec. 17. Hawaiian home lands and Indian reservations.
Sec. 18. Conforming and technical amendments.
Sec. 19. Home equity conversion mortgages.
Sec. 20. Participation of mortgage brokers and correspondent lenders.
Sec. 21. Conforming loan limit in disaster areas.
Sec. 22. Failure to pay amounts from escrow accounts for single family
mortgages.
Sec. 23. Acceptable identification for FHA mortgagors.
Sec. 24. Pilot program for automated process for borrowers without
sufficient credit history.
Sec. 25. Sense of Congress regarding technology for financial systems.
Sec. 26. Multifamily housing mortgage limits in high cost areas.
Sec. 27. Valuation of multifamily properties in noncompetitive sales by
HUD to States and localities.
Sec. 28. Clarification of disposition of certain properties.
Sec. 29. Use of FHA savings for costs of mortgage insurance, housing
counseling, FHA technologies, procedures, and processes, and for
affordable housing grant fund, and study.
Sec. 30. Limitation on mortgage insurance premium increases.
Sec. 31. Savings provision.
Sec. 32. Implementation.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds that--
(1) one of the primary missions of the Federal Housing
Administration (FHA) single family mortgage insurance program
is to reach borrowers who are underserved, or not served, by
the existing conventional mortgage marketplace;
(2) the FHA program has a long history of innovation, which
includes pioneering the 30-year self-amortizing mortgage and a
safe-to-seniors reverse mortgage product, both of which were
once thought too risky to private lenders;
(3) the FHA single family mortgage insurance program
traditionally has been a major provider of mortgage insurance
for home purchases;
(4) the FHA mortgage insurance premium structure, as well as
FHA's product offerings, should be revised to reflect FHA's
enhanced ability to determine risk at the loan level and to
allow FHA to better respond to changes in the mortgage market;
(5) during past recessions, including the oil-patch downturns
in the mid-1980s, FHA remained a viable credit enhancer and was
therefore instrumental in preventing a more catastrophic
collapse in housing markets and a greater loss of homeowner
equity; and
(6) as housing price appreciation slows and interest rates
rise, many homeowners and prospective homebuyers will need the
less-expensive, safer financing alternative that FHA mortgage
insurance provides.
(b) Purposes.--The purposes of this Act are--
(1) to provide flexibility to FHA to allow for the insurance
of housing loans for low- and moderate-income homebuyers during
all economic cycles in the mortgage market;
(2) to modernize the FHA single family mortgage insurance
program by making it more reflective of enhancements to loan-
level risk assessments and changes to the mortgage market; and
(3) to adjust the loan limits for the single family mortgage
insurance program to reflect rising house prices and the
increased costs associated with new construction.
SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION.
Section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2))
is amended by striking subparagraph (A) and inserting the following new
subparagraph:
``(A) not to exceed the lesser of--
``(i) in the case of a 1-family residence,
the median 1-family house price in the area, as
determined by the Secretary; and in the case of
a 2-, 3-, or 4-family residence, the percentage
of such median price that bears the same ratio
to such median price as the dollar amount
limitation in effect under section 305(a)(2) of
the Federal Home Loan Mortgage Corporation Act
(12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-
family residence, respectively, bears to the
dollar amount limitation in effect under such
section for a 1-family residence; or
``(ii) the dollar amount limitation
determined under such section 305(a)(2) for a
residence of the applicable size;
except that the dollar amount limitation in effect for
any area under this subparagraph may not be less than
the greater of (I) the dollar amount limitation in
effect under this section for the area on October 21,
1998, or (II) 65 percent of the dollar limitation
determined under such section 305(a)(2) for a residence
of the applicable size; and''.
SEC. 4. EXTENSION OF MORTGAGE TERM.
Paragraph (3) of section 203(b) of the National Housing Act (12
U.S.C. 1709(b)(3)) is amended--
(1) by striking ``thirty-five years'' and inserting ``forty
years''; and
(2) by striking ``(or thirty years if such mortgage is not
approved for insurance prior to construction)''.
SEC. 5. DOWNPAYMENT SIMPLIFICATION.
Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is
amended--
(1) in paragraph (2)--
(A) by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) not to exceed an amount equal to the sum of--
``(i) the amount of the mortgage premium paid
at the time the mortgage is insured; and
``(ii)(I) except as provided in subclause
(II), 97.75 percent of the appraised value of
the property; or
``(II) in the case only of a mortgage
described in subsection (c)(3), the appraised
value of the property, plus any initial service
charges, appraisal, inspection, and other fees
in connection with the mortgage as approved by
the Secretary.'';
(B) in the matter after and below subparagraph (B),
by striking the second sentence (relating to a
definition of ``average closing cost'') and all that
follows through ``title 38, United States Code.''; and
(C) by striking the last undesignated paragraph
(relating to counseling with respect to the
responsibilities and financial management involved in
homeownership); and
(2) in paragraph (9), by striking the paragraph designation
and all that follows through ``Provided further, That for'' and
inserting the following:
``(9) Except in the case of a mortgage described in
subsection (c)(3), be executed by a mortgagor who shall have
paid on account of the property, in cash or its equivalent, at
least 3 percent of the Secretary's estimate of the cost of
acquisition (excluding the mortgage insurance premium paid at
the time the mortgage is insured). For''.
SEC. 6. MORTGAGE INSURANCE PREMIUMS FOR ZERO- AND LOWER-DOWNPAYMENT
BORROWERS.
Section 203(c) of the National Housing Act (12 U.S.C. 1709(c) is
amended by adding at the end the following new paragraph:
``(3) Zero- and Lower-Downpayment Borrowers.--
``(A) Applicability.--This paragraph shall apply to any
mortgage that--
``(i) is secured by a 1- to 4-family dwelling;
``(ii)(I) is an obligation of the Mutual Mortgage
Insurance Fund or of the General Insurance Fund
pursuant to subsection (v) of this section; or
``(II) is insured under subsection (k) of this
section or section 234(c);
``(iii) is executed by a mortgagor who is a first-
time homebuyer; and
``(iv)(I) involves a principal obligation that does
not comply with subclause (I) of subsection
(b)(2)(B)(ii) (relating to loan-to-value ratio); or
``(II) is executed by a mortgagor who has not paid on
account of the property, in cash or its equivalent, at
least 3 percent of the Secretary's estimate of the cost
of acquisition (excluding the mortgage insurance
premium paid at the time the mortgage is insured).
``(B) Up-front premiums.--The amount of any single premium
payment collected at the time of insurance may not exceed 3.0
percent of the amount of the original insured principal
obligation of the mortgage.
``(C) Annual premiums.--Except as provided in subparagraph
(D), the amount of any annual premium payment collected may not
exceed 0.75 percent of the remaining insured principal
obligation of the mortgage.
``(D) Annual redetermination of premium rate.--The Secretary
shall redetermine the rates of premiums not less than once
every 12 months.''.
SEC. 7. MORTGAGE INSURANCE PREMIUMS FOR STANDARD AND HIGHER-RISK
BORROWERS.
Paragraph (2) of section 203(c) of the National Housing Act (12
U.S.C. 1709(c)(2)) is amended--
(1) by striking the matter that precedes subparagraph (A) and
inserting the following:
``(2) Standard-Risk Mortgages.--In the case of any mortgage that is
secured by a 1- to 4-family dwelling, is an obligation of the Mutual
Mortgage Insurance Fund or of the General Insurance Fund pursuant to
subsection (v) of this section or is insured under subsection (k) of
this section or section 234(c), for which the mortgagor has paid on
account of the property, in cash or its equivalent, at least 3 percent
of the Secretary's estimate of the cost of acquisition (excluding the
mortgage insurance premium paid at the time the mortgage is insured),
and that involves a principal obligation that complies with subclause
(I) of subsection (b)(2)(B)(ii), the following requirements shall
apply:''; and
(2) by adding at the end the following new subparagraph:
``(C) Higher-risk borrowers.--The Secretary shall establish
underwriting standards that provide for insurance under this
section of mortgages described in the matter in this paragraph
preceding subparagraph (A) for which the mortgagor has a credit
score equivalent to a FICO score of less than 560, and may
insure, and make commitments to insure, such mortgages. Such
underwriting standards shall include establishing and
collecting premium payments that comply with the requirements
of this paragraph, except that notwithstanding subparagraph
(A), the single premium payment collected at the time of
insurance may be established in an amount that does not exceed
3.0 percent of the amount of the original insured principal
obligation of the mortgage.''.
SEC. 8. RISK-BASED MORTGAGE INSURANCE PREMIUMS.
Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)), as
amended by the preceding provisions of this Act, is further amended by
adding at the end the following new paragraphs:
``(4) Flexible Risk-Based Premiums.--In the case of a mortgage
referred to in paragraph (2)(C) or (3)(A) for which the loan
application is received by the mortgagee on or after October 1, 2007:
``(A) In general.--The Secretary may establish a mortgage
insurance premium structure involving a single premium payment
collected prior to the insurance of the mortgage or annual
payments (which may be collected on a periodic basis), or both,
subject to the requirements of subparagraph (B) and paragraph
(5). Under such structure, the rate of premiums for such a
mortgage may vary according to the credit risk associated with
the mortgage and the rate of any annual premium for such a
mortgage may vary during the mortgage term as long as the basis
for determining the variable rate is established before the
execution of the mortgage. The Secretary may change a premium
structure established under this subclause but only to the
extent that such change is not applied to any mortgage already
executed.
``(B) Establishment and alteration of premium structure.--A
premium structure shall be established or changed under
subparagraph (A) only by providing notice to mortgagees and to
the Congress, at least 30 days before the premium structure is
established or changed.
``(C) Annual report regarding premiums.--The Secretary shall
submit a report to the Congress annually setting forth the rate
structures and rates established and altered pursuant to this
paragraph during the preceding 12-month period and describing
how such rates were determined.
``(5) Considerations for Premium Structure.--When establishing
premiums for mortgages referred to in paragraph (2)(C), establishing
premiums pursuant to paragraph (3), establishing a premium structure
under paragraph (4), and when changing such a premium structure, the
Secretary shall consider the following:
``(A) The effect of the proposed premiums or structure on the
Secretary's ability to meet the operational goals of the Mutual
Mortgage Insurance Fund as provided in section 202(a).
``(B) Underwriting variables.
``(C) The extent to which new pricing under the proposed
premiums or structure has potential for acceptance in the
private market.
``(D) The administrative capability of the Secretary to
administer the proposed premiums or structure.
``(E) The effect of the proposed premiums or structure on the
Secretary's ability to maintain the availability of mortgage
credit and provide stability to mortgage markets.
``(6) Authority to Base Premium Prices on Product Risk.--
``(A) Authority.--In establishing premium rates under
paragraphs (2), (3), and (4), the Secretary may provide for
variations in such rates according to the credit risk
associated with the type of mortgage product that is being
insured under this title, which may include providing that
premium rates differ between fixed-rate mortgages and
adjustable-rate mortgages insured pursuant to section 251,
between mortgages insured pursuant to section 203(b) and
mortgages for condominiums insured pursuant to section 234, and
between such other products as the Secretary considers
appropriate.
``(B) Limitation.--Subparagraph (A) may not be construed to
authorize the Secretary to establish, for any mortgage product,
any mortgage insurance premium rate that does not comply with
the requirements and limitations under paragraphs (2) through
(5).''.
SEC. 9. PAYMENT INCENTIVES.
Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)), as
amended by the preceding provisions of this Act, is further amended by
adding at the end the following new paragraph:
``(7) Payment Incentives.--
``(A) Authority.--With respect to mortgages referred to in
paragraph (2)(C) or (3):
``(i) Discretionary 3-year payment incentive.--The
Secretary may provide, in the discretion of the
Secretary, that the payment incentive under
subparagraph (B) shall apply upon the expiration of the
3-year period beginning upon the time of insurance of
such a mortgage.
``(ii) Mandatory 5-year payment incentive.--The
Secretary shall provide that the payment incentive
under subparagraph (B) applies upon the expiration of
the 5-year period beginning upon the time of insurance
of such a mortgage.
``(B) Payment incentive.--In the case of any mortgage to
which the payment incentive under this subparagraph applies,
if, during the period referred to in clause (i) or (ii) of
subparagraph (A), as applicable, all mortgage insurance
premiums for such mortgage have been paid on a timely basis,
upon the expiration of such period the Secretary shall--
``(i) reduce the amount of the annual premium
payments otherwise due thereafter under such mortgage--
``(I) in the case of a mortgage referred to
in paragraph (3), to an amount that does not
exceed the amount of the maximum annual premium
allowable under paragraph (2)(B); and
``(II) in the case of a mortgage referred to
in paragraph (2)(C), to an amount that does not
exceed the amount of the annual premium payable
at the time of insurance of the mortgage on a
mortgage of the same product type having the
same terms, but for which the mortgagor has a
credit score equivalent to a FICO score of 560
or more; and
``(ii) in the case only of a mortgage referred to in
paragraph (2)(C), refund to the mortgagor, upon payment
in full of the obligation of the mortgage, any amount
by which the single premium payment for such mortgage
collected at the time of insurance exceeded the amount
of the single premium payment chargeable under
paragraph (2)(A) at the time of insurance for a
mortgage of the same product type having the same
terms, but for which the mortgagor has a credit score
equivalent to a FICO score of 560 or more.''.
SEC. 10. BORROWER PROTECTIONS FOR HIGHER RISK MORTGAGES.
Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is
amended by adding at the end the following new paragraph:
``(10) Borrower protections for certain mortgages.--Except as
otherwise specifically provided in this paragraph, in the case
of any mortgage referred to in paragraph (2)(C) or (3) of
subsection (c), the following requirements shall apply:
``(A) Disclosures.--
``(i) Required disclosures.--In addition to
any disclosures that are otherwise required by
law or by the Secretary for single family
mortgages, the mortgagee shall disclose to the
mortgagor the following information:
``(I) At application.--At the time of
application for the loan involved in
the mortgage--
``(aa) a list of counseling
agencies approved by the
Secretary in the area of the
applicant; and
``(bb) if the mortgagor is
not provided counseling in
accordance with subparagraph
(B), the information required
under subclauses (I), (II), and
(III) of subparagraph (B)(iii)
to be provided to the
mortgagor.
``(II) At execution.--At the time of
entering into the mortgage--
``(aa) the terms of the
mandatory 5-year payment
incentive required under
subsection (c)(7)(A)(ii); and
``(bb) a statement that the
mortgagor has a right under
contract to loss mitigation.
``(III) Other information.--Any other
additional information that the
Secretary determines is appropriate to
ensure that the mortgagor has received
timely and accurate information about
the program under paragraph (2)(C) or
(3) of subsection (c), as applicable.
``(ii) Penalties for failure to provide
required disclosures.--The Secretary may
establish and impose appropriate penalties for
failure of a mortgagee to provide any
disclosure required under clause (i).
``(iii) No private right of action.--This
subparagraph shall not create any private right
of action on behalf of the mortgagor.
``(B) Counseling.--
``(i) Allowable requirement.--The Secretary
may, in the discretion of the Secretary,
require that the mortgagor shall have received
counseling that complies with the requirements
of this subparagraph.
``(ii) Terms of counseling.--Counseling under
this subparagraph shall be provided--
``(I) prior to application for the
loan involved in the mortgage;
``(II) by a third party (other than
the mortgagee) who is approved by the
Secretary, with respect to the
responsibilities and financial
management involved in homeownership;
``(III) on an individual basis to the
mortgagor by a representative of the
approved third-party counseling entity;
and
``(IV) in person, to the maximum
extent possible.
``(iii) Topics.--In the case only of a
mortgage referred to in subsection (c)(3),
counseling under this subparagraph shall
include providing to, and discussing with, the
mortgagor--
``(I) information regarding
homeownership options other than a
mortgage that is subject to this
paragraph, other zero- or low-
downpayment mortgage options that are
or may become available to the
mortgagor, the financial implications
of entering into a mortgage (including
a mortgage subject to this paragraph),
and any other information that the
Secretary may require;
``(II) a written disclosure that sets
forth the amount and the percentage by
which a property with a mortgage that
is subject to this paragraph must
appreciate for the mortgagor to recover
the principal amount of the mortgage,
the costs financed under the mortgage,
and the estimated costs involved in
selling the property, if the mortgagor
were to sell the property on each of
the second, fifth, and tenth
anniversaries of the mortgage; and
``(III) a written disclosure, as the
Secretary shall require, that specifies
the effective cost to a mortgagor of
borrowing the amount by which the
maximum amount that could be borrowed
under a mortgage that is referred to in
subsection (c)(3) exceeds the maximum
amount that could be borrowed under a
mortgage insured under this subsection
that is not a mortgage referred to in
such subsection, based on average
closing costs with respect to such
amount, as determined by the Secretary;
such cost shall be expressed as an
annual interest rate over the first 5
years of a mortgage; the disclosure
required under this subclause may be
provided in conjunction with the notice
required under subsection (f).
``(iv) 2- and 3-family residences.--In the
case of a mortgage involving a 2- or 3-family
residence, counseling under this subparagraph
shall include (in addition to the information
required under clause (iii)) information
regarding real estate property management.
``(C) Notice of foreclosure prevention counseling
availability.--
``(i) Written agreement.--To be eligible for
insurance under this subsection, the mortgagee
shall provide the mortgagor, at the time of the
execution of the mortgage, a written agreement
which shall be signed by the mortgagor and
under which the mortgagee shall provide notice
described in clause (ii) to a housing
counseling entity that has agreed to provide
the notice and counseling required under clause
(iii) and is approved by the Secretary.
``(ii) Notice to counseling agency.--The
notice described in this clause, with respect
to a mortgage, is notice, provided at the
earliest time practicable after the mortgagor
becomes 60 days delinquent with respect to any
payment due under the mortgage, that the
mortgagor is so delinquent and of how to
contact the mortgagor. Such notice may only be
provided once with respect to each delinquency
period for a mortgage.
``(iii) Notice to mortgagor.--Upon notice
from a mortgagee that a mortgagor is 60 days
delinquent with respect to payments due under
the mortgage, the housing counseling entity
shall at the earliest time practicable notify
the mortgagor of such delinquency, that the
entity makes available foreclosure prevention
counseling that may assist the mortgagor in
resolving the delinquency, and of how to
contact the entity to arrange for such
counseling.
``(iv) Ability to cure.--Failure to provide
the written agreement required under clause (i)
may be corrected by sending such agreement to
the mortgagor not later than the earliest time
practicable after the mortgagor first becomes
60 days delinquent with respect to payments due
under the mortgage. Insurance provided under
this subsection may not be terminated and
penalties for such failure may not be
prospectively or retroactively imposed if such
failure is corrected in accordance with this
clause.
``(v) Penalties for failure to provide
agreement.--The Secretary may establish and
impose appropriate penalties for failure of a
mortgagee to provide the written agreement
required under clause (i).
``(vi) Limitation on liability of
mortgagee.--A mortgagee shall not incur any
liability or penalties for any failure of a
housing counseling entity to provide notice
under clause (iii).
``(vii) No private right of action.--This
subparagraph shall not create any private right
of action on behalf of the mortgagor.
``(viii) Delinquency period.--For purposes of
this subparagraph, the term `delinquency
period' means, with respect to a mortgage, a
period that begins upon the mortgagor becoming
delinquent with respect to payments due under
the mortgage and ends upon the first subsequent
occurrence of such payments under the mortgage
becoming current or the property subject to the
mortgage being foreclosed or otherwise disposed
of.''.
SEC. 11. ANNUAL REPORTS ON NEW PROGRAMS AND LOSS MITIGATION.
Section 540(b)(2) of the National Housing Act (12 U.S.C. 1735f-
18(b)(2)) is amended, by adding at the end the following new
subparagraphs:
``(C) The rates of default and foreclosure for the
applicable collection period for mortgages insured
pursuant to the programs for mortgage insurance under
paragraphs (2)(C) and (3) of section 203(c).
``(D) Actions taken by the Secretary during the
applicable collection period with respect to loss
mitigation on mortgages insured pursuant to section
203.''.
SEC. 12. INSURANCE FOR SINGLE FAMILY HOMES WITH LICENSED CHILD CARE
FACILITIES.
(a) Definition of Child Care Facility.--Section 201 of the National
Housing Act (12 U.S.C. 1707) is amended by adding at the end the
following new subsection:
``(g) The term `child care facility' means a facility that--
``(A) has as its purpose the care of children who are less
than 12 years of age; and
``(B) is licensed or regulated by the State in which it is
located (or, if there is no State law providing for such
licensing and regulation by the State, by the municipality or
other political subdivision in which the facility is located).
Such term does not include facilities for school-age children primarily
for use during normal school hours.''.
(b) Increase in Maximum Mortgage Amount Limitation.--Paragraph (2) of
section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(2)), as
amended by the preceding provisions of this Act, is further amended by
adding at end the following new undesignated paragraph:
``Notwithstanding any other provision of this paragraph, the
amount that may be insured under this section may be increased
by up to 25 percent if such increase is necessary to account
for the increased cost of the residence due to an increased
need of space in the residence for locating and operating a
child care facility (as such term is defined in section 201)
within the residence, but only if a valid license or
certificate of compliance with regulations described in section
201(g)(2) has been issued for such facility as of the date of
the execution of the mortgage, and only if such increase in the
amount insured is proportional to the amount of space of such
residence that will be used for such facility.''.
SEC. 13. REHABILITATION LOANS.
Subsection (k) of section 203 of the National Housing Act (12 U.S.C.
1709(k)) is amended--
(1) in paragraph (1), by striking ``on'' and all that follows
through ``1978''; and
(2) in paragraph (5)--
(A) by striking ``General Insurance Fund'' the first
place it appears and inserting ``Mutual Mortgage
Insurance Fund''; and
(B) in the second sentence, by striking the comma and
all that follows through ``General Insurance Fund''.
SEC. 14. DISCRETIONARY ACTION.
The National Housing Act is amended--
(1) in subsection (e) of section 202 (12 U.S.C. 1708(e))--
(A) in paragraph (3)(B), by striking ``section 202(e)
of the National Housing Act'' and inserting ``this
subsection''; and
(B) by redesignating such subsection as subsection
(f);
(2) by striking paragraph (4) of section 203(s) (12 U.S.C.
1709(s)(4)) and inserting the following new paragraph:
``(4) the Secretary of Agriculture;''; and
(3) by transferring subsection (s) of section 203 (as amended
by paragraph (2) of this section) to section 202, inserting
such subsection after subsection (d) of section 202, and
redesignating such subsection as subsection (e).
SEC. 15. INSURANCE OF CONDOMINIUMS AND MANUFACTURED HOUSING.
(a) In General.--Section 234 of the National Housing Act (12 U.S.C.
1715y) is amended--
(1) in subsection (c)--
(A) in the first sentence--
(i) by striking ``and'' before ``(2)''; and
(ii) by inserting before the period at the
end the following: ``, and (3) the project has
a blanket mortgage insured by the Secretary
under subsection (d)''; and
(B) in clause (B) of the third sentence, by striking
``thirty-five years'' and inserting ``forty years'';
and
(2) in subsection (g), by striking ``, except that'' and all
that follows and inserting a period.
(b) Definition of Mortgage.--Section 201(a) of the National Housing
Act (12 U.S.C. 1707(a)) is amended--
(1) before ``a first mortgage'' insert ``(A)'';
(2) by striking ``or on a leasehold (1)'' and inserting ``(B)
a first mortgage on a leasehold on real estate (i)'';
(3) by striking ``or (2)'' and inserting ``, or (ii)''; and
(4) by inserting before the semicolon the following: ``, or
(C) a first mortgage given to secure the unpaid purchase price
of a fee interest in, or long-term leasehold interest in, real
estate consisting of a one-family unit in a multifamily
project, including a project in which the dwelling units are
attached, or are manufactured housing units, semi-detached, or
detached, and an undivided interest in the common areas and
facilities which serve the project''.
(c) Definition of Real Estate.-- Section 201 of the National Housing
Act (12 U.S.C. 1707), as amended by the preceding provisions of this
Act, is further amended by adding at the end the following new
subsection:
``(h) The term `real estate' means land and all natural resources and
structures permanently affixed to the land, including residential
buildings and stationary manufactured housing. The Secretary may not
require, for treatment of any land or other property as real estate for
purposes of this title, that such land or property be treated as real
estate for purposes of State taxation.''.
SEC. 16. MUTUAL MORTGAGE INSURANCE FUND.
(a) In General.--Subsection (a) of section 202 of the National
Housing Act (12 U.S.C. 1708(a)) is amended to read as follows:
``(a) Mutual Mortgage Insurance Fund.--
``(1) Establishment.--Subject to the provisions of the
Federal Credit Reform Act of 1990, there is hereby created a
Mutual Mortgage Insurance Fund (in this title referred to as
the `Fund'), which shall be used by the Secretary to carry out
the provisions of this title with respect to mortgages insured
under section 203. The Secretary may enter into commitments to
guarantee, and may guarantee, such insured mortgages.
``(2) Limit on loan guarantees.--The authority of the
Secretary to enter into commitments to guarantee such insured
mortgages shall be effective for any fiscal year only to the
extent that the aggregate original principal loan amount under
such mortgages, any part of which is guaranteed, does not
exceed the amount specified in appropriations Acts for such
fiscal year.
``(3) Fiduciary responsibility.--The Secretary has a
responsibility to ensure that the Mutual Mortgage Insurance
Fund remains financially sound.
``(4) Annual independent actuarial study.--The Secretary
shall provide for an independent actuarial study of the Fund to
be conducted annually, which shall analyze the financial
position of the Fund. The Secretary shall submit a report
annually to the Congress describing the results of such study
and assessing the financial status of the Fund. The report
shall recommend adjustments to underwriting standards, program
participation, or premiums, if necessary, to ensure that the
Fund remains financially sound.
``(5) Quarterly reports.--During each fiscal year, the
Secretary shall submit a report to the Congress for each
quarter, which shall specify for mortgages that are obligations
of the Fund--
``(A) the cumulative volume of loan guarantee
commitments that have been made during such fiscal year
through the end of the quarter for which the report is
submitted;
``(B) the types of loans insured, categorized by
risk;
``(C) any significant changes between actual and
projected claim and prepayment activity;
``(D) projected versus actual loss rates; and
``(E) updated projections of the annual subsidy rates
to ensure that increases in risk to the Fund are
identified and mitigated by adjustments to underwriting
standards, program participation, or premiums, and the
financial soundness of the Fund is maintained.
The first quarterly report under this paragraph shall be
submitted on the last day of the first quarter of fiscal year
2008, or upon the expiration of the 90-day period beginning on
the date of the enactment of the Expanding American
Homeownership Act of 2007, whichever is later.
``(6) Adjustment of premiums.--If, pursuant to the
independent actuarial study of the Fund required under
paragraph (5), the Secretary determines that the Fund is not
meeting the operational goals established under paragraph (8)
or there is a substantial probability that the Fund will not
maintain its established target subsidy rate, the Secretary may
either make programmatic adjustments under section 203 as
necessary to reduce the risk to the Fund, or make appropriate
premium adjustments.
``(7) Operational goals.--The operational goals for the Fund
are--
``(A) to charge borrowers under loans that are
obligations of the Fund an appropriate premium for the
risk that such loans pose to the Fund;
``(B) to minimize the default risk to the Fund and to
homeowners;
``(C) to curtail the impact of adverse selection on
the Fund; and
``(D) to meet the housing needs of the borrowers that
the single family mortgage insurance program under this
title is designed to serve.''.
(b) Obligations of Fund.--The National Housing Act is amended as
follows:
(1) Homeownership voucher program mortgages.--In section
203(v) (12 U.S.C. 1709(v))--
(A) by striking ``Notwithstanding section 202 of this
title, the'' and inserting ``The''; and
(B) by striking ``General Insurance Fund'' the first
place such term appears and all that follows and
inserting ``Mutual Mortgage Insurance Fund.''.
(2) Home equity conversion mortgages.--Section 255(i)(2)(A)
of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is
amended by striking ``General Insurance Fund'' and inserting
``Mutual Mortgage Insurance Fund''.
(c) Conforming Amendments.--The National Housing Act is amended--
(1) in section 205 (12 U.S.C. 1711), by striking subsections
(g) and (h); and
(2) in section 519(e) (12 U.S.C. 1735c(e)), by striking
``203(b)'' and all that follows through ``203(i)'' and
inserting ``203, except as determined by the Secretary''.
SEC. 17. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.
(a) Hawaiian Home Lands.--Section 247(c) of the National Housing Act
(12 U.S.C. 1715z-12) is amended--
(1) by striking ``General Insurance Fund established in
section 519'' and inserting ``Mutual Mortgage Insurance Fund'';
and
(2) in the second sentence, by striking ``(1) all
references'' and all that follows through ``and (2)''.
(b) Indian Reservations.--Section 248(f) of the National Housing Act
(12 U.S.C. 1715z-13) is amended--
(1) by striking ``General Insurance Fund'' the first place it
appears and all that follows through ``519'' and inserting
``Mutual Mortgage Insurance Fund''; and
(2) in the second sentence, by striking ``(1) all
references'' and all that follows through ``and (2)''.
SEC. 18. CONFORMING AND TECHNICAL AMENDMENTS.
(a) Repeals.--The following provisions of the National Housing Act
are repealed:
(1) Subsection (i) of section 203 (12 U.S.C. 1709(i)).
(2) Subsection (o) of section 203 (12 U.S.C. 1709(o)).
(3) Subsection (p) of section 203 (12 U.S.C. 1709(p)).
(4) Subsection (q) of section 203 (12 U.S.C. 1709(q)).
(5) Section 222 (12 U.S.C. 1715m).
(6) Section 237 (12 U.S.C. 1715z-2).
(7) Section 245 (12 U.S.C. 1715z-10).
(b) Definition of Area.--Section 203(u)(2)(A) of the National Housing
Act (12 U.S.C. 1709(u)(2)(A)) is amended by striking ``shall'' and all
that follows and inserting ``means a metropolitan statistical area as
established by the Office of Management and Budget;''.
(c) Definition of State.--Section 201(d) of the National Housing Act
(12 U.S.C. 1707(d)) is amended by striking ``the Trust Territory of the
Pacific Islands'' and inserting ``the Commonwealth of the Northern
Mariana Islands''.
SEC. 19. HOME EQUITY CONVERSION MORTGAGES.
(a) In General.--Section 255 of the National Housing Act (12 U.S.C.
1715z-20) is amended--
(1) in subsection (b)(2), insert `` `real estate', '' after
`` `mortgagor','';
(2) in subsection (g)--
(A) by striking the first sentence; and
(B) by striking ``established under section
203(b)(2)'' and all that follows through ``located''
and inserting ``limitation established under section
305(a)(2) of the Federal Home Loan Mortgage Corporation
Act for a 1-family residence'';
(3) in subsection (i)(1)(C), by striking ``limitations'' and
inserting ``limitation''; and
(4) by adding at the end the following new subsection:
``(o) Authority To Insure Home Purchase Mortgage.--
``(1) In general.--Notwithstanding any other provision in
this section, the Secretary may insure, upon application by a
mortgagee, a home equity conversion mortgage upon such terms
and conditions as the Secretary may prescribe, when the primary
purpose of the home equity conversion mortgage is to enable an
elderly mortgagor to purchase a 1- to 4-family dwelling in
which the mortgagor will occupy or occupies one of the units.
``(2) Limitation on principal obligation.--A home equity
conversion mortgage insured pursuant to paragraph (1) shall
involve a principal obligation that does not exceed the dollar
amount limitation determined under section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act for a residence of
the applicable size.''.
(b) Mortgages for Cooperatives.--Subsection (b) of section 255 of the
National Housing Act (12 U.S.C. 1715z-20(b)) is amended--
(1) in paragraph (4)--
(A) by inserting ``a first or subordinate mortgage or
lien'' before ``on all stock'';
(B) by inserting ``unit'' after ``dwelling''; and
(C) by inserting ``a first mortgage or first lien''
before ``on a leasehold''; and
(2) in paragraph (5), by inserting ``a first or subordinate
lien on'' before ``all stock''.
(c) Limitation on Origination Fees.--Section 255 of the National
Housing Act (12 U.S.C. 1715z--20), as amended by the preceding
provisions of this section, is further amended--
(1) by redesignating subsections (k), (l), and (m) as
subsections (l), (m), and (n), respectively; and
(2) by inserting after subsection (j) the following new
subsection:
``(k) Limitation on Origination Fees.--The Secretary shall establish
limits on the origination fee that may be charged to a mortgagor under
a mortgage insured under this section, which limitations shall--
``(1) equal two percent of the original principal limit of
the mortgage;
``(2) be subject to a minimum allowable amount;
``(3) provide that the origination fee may be fully financed
with the mortgage; and
``(4) include any fees paid to correspondent mortgagees
approved by the Secretary or to mortgage brokers.''.
(d) Study Regarding Mortgage Insurance Premiums.--The Secretary of
Housing and Urban Development shall conduct a study regarding mortgage
insurance premiums charged under the program under section 255 of the
National Housing Act (12 U.S.C. 1715z-20) for insurance of home equity
conversion mortgages to analyze and determine the effects of reducing
the amounts of such premiums from the amounts charged as of the date of
the enactment of this Act on (1) costs to mortgagors, and (2) the
financial soundness of the program. Not later than the expiration of
the 12-month period beginning on the date of the enactment of this Act,
the Secretary shall submit a report to the Congress setting forth the
results and conclusions of the study.
SEC. 20. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS.
(a) In General.--
(1) Definitions.--
(A) In general.--Section 201 of the National Housing
Act (12 U.S.C. 1707), as amended by the preceding
provisions of this Act, is further amended--
(i) by striking ``As used in section 203 of
this title--'' and inserting ``As used in this
title and for purposes of participation in
insurance programs under this title, except as
specifically provided otherwise, the following
definitions shall apply:'';
(ii) by striking subsection (b) and inserting
the following:
``(2) The term `mortgagee' means any of the following
entities, and its successors and assigns, to the extent such
entity is approved by the Secretary:
``(A) Qualification by audit and net worth.--A
lender, or mortgage broker, or correspondent lender,
who--
``(i) makes, underwrites, and services
mortgages;
``(ii) submits to the Secretary such
financial audits performed in accordance with
the standards for financial audits of the
Government Auditing Standards issued by the
Comptroller General of the United States;
``(iii) meet the minimum net worth
requirement that the Secretary shall establish;
and
``(iv) complies with such other requirements
as the Secretary may establish.
``(B) Qualification of correspondent lenders by
surety bond.--Except as provided in subparagraph (D), a
correspondent lender who--
``(i) closes a mortgage in its name but does
not underwrite or service the mortgage;
``(ii) posts a surety bond, in lieu of any
requirement to provide audited financial
statements or meet a minimum net worth
requirement, in--
``(I) a form satisfactory to the
Secretary; and
``(II) an amount of $75,000, as such
amount is adjusted annually by the
Secretary (as determined under
regulations of the Secretary) by the
change for such year in the Consumer
Price Index for All Urban Consumers
published monthly by the Bureau of
Labor Statistics of the Department of
Labor; and
``(iii) complies with such other requirements
as the Secretary may establish.
``(C) Qualification of brokers by surety bond.--
Except as provided in subparagraph (D), a mortgage
broker who--
``(i) closes the mortgage in the name of the
lender and does not make, underwrite, or
service the mortgage;
``(ii) is licensed, under the laws of the
State in which the property that is subject to
the mortgage is located, to act as a mortgage
broker in such State;
``(iii) posts a surety bond in accordance
with the requirements of subparagraph (B)(ii);
and
``(iv) complies with such other requirements
as the Secretary may establish.
``(D) Conditions for continued applicability.--(i)
Subparagraphs (B) and (C) shall continue to apply after
the expiration of the 5-year period beginning on the
date of the enactment of the Expanding American
Homeownership Act of 2007 only if, after the expiration
of the 4-year period beginning upon such date of
enactment and taking into consideration the report
submitted in accordance with section 19(b) of such Act,
the Secretary--
``(I) makes a determination that such
subparagraphs provide protection to mortgage
insurance funds for mortgages insured under
this title that are comparable to the
protection provided by the requirements for
mortgagees under this title as in effect
immediately before the enactment of such Act;
and
``(II) publishes in the Federal Register a
notice of such determination and an order
extending the applicability of such
subparagraphs.
``(ii) If, taking into consideration such report, the
Secretary makes a determination after the expiration of
such 4-year period that subparagraphs (B) and (C) do
not provide protection as referred to in clause (i) of
this subparagraph, the Secretary may, by order
published in the Federal Register, provide for the
participation, after the expiration of the 5-year
period referred to in clause (i), of correspondent
lenders and mortgage brokers as mortgagees in the
insurance programs under this title in accordance with
subparagraphs (B) and (C) as modified by the Secretary
as the Secretary considers appropriate to provide such
protection.
``(E) Additional mortgage broker requirements.--
``(i) In addition to the requirements under
subparagraphs (A) and (C) and to duties imposed
under other statutes or common law, to be
eligible as a mortgagee under this section, a
broker shall--
``(I) safeguard and account for any
money handled for the borrower;
``(II) follow reasonable and lawful
instructions from the borrower; and
``(III) act with reasonable skill,
care, and diligence.
``(ii) For purposes of this subparagraph, a
loan correspondent shall be considered to be a
mortgage broker.
``(iii) The duties and standards of care
created in this subparagraph shall not be
waived or modified.
``(iv) Any broker found by the Secretary to
have violated the requirements of this
subparagraph may not originate mortgage loans
insured under this title.
``(3) The term `mortgagor' includes the original borrower
under a mortgage and the successors and assigns of the original
borrower.''; and
(iii) by redesignating subsections (a), (c),
(d), (e), (f), (g), and (h) as paragraphs (1),
(4), (5), (6), (7), (8), and (9), respectively,
and indenting such paragraphs two ems so as to
align the left margins of such paragraphs with
the left margins of paragraphs (2) and (3) (as
added by clause (ii) of this subparagraph).
(B) Mortgagee review.--Section 202(c)(7) of the
National Housing Act (12 U.S.C. 1708(c)(7)) is
amended--
(i) in subparagraph (A), by inserting ``, as
defined in section 201,'' after ``mortgagee'';
(ii) by striking subparagraph (B); and
(iii) by redesignating subparagraphs (C) and
(D) as subparagraphs (B) and (C), respectively.
(C) Multifamily rental housing insurance.--Section
207(a)(2) of the National Housing Act (12 U.S.C.
1713(a)(2)) is amended by striking ``means the original
lender under a mortgage, and its successors and
assigns, and'' and inserting ``has the meaning given
such term in section 201, except that such term also''.
(D) War housing insurance.--Section 601(b) of the
National Housing Act (12 U.S.C. 1736(b)) is amended by
striking ``includes the original lender under a
mortgage, and his successors and assigns approved by
the Secretary'' and inserting ``has the meaning given
such term in section 201''.
(E) Armed services housing mortgage insurance.--
Section 801(b) of the National Housing Act (12 U.S.C.
1748(b)) is amended by striking ``includes the original
lender under a mortgage, and his successors and assigns
approved by the Secretary'' and inserting ``has the
meaning given such term in section 201''.
(F) Group practice facilities mortgage insurance.--
Section 1106(8) of the National Housing Act (12 U.S.C.
1749aaa-5(8)) is amended by striking ``means the
original lender under a mortgage, and his or its
successors and assigns, and'' and inserting ``has the
meaning given such term in section 201, except that
such term also''.
(2) Eligibility for insurance.--
(A) Title i.--Paragraph (1) of section 8(b) of the
National Housing Act (12 U.S.C. 1706c(b)(1)) is
amended--
(i) by striking ``, and be held by,''; and
(ii) by striking ``as responsible and able to
service the mortgage properly''.
(B) Single family housing mortgage insurance.--
Paragraph (1) of section 203(b) of the National Housing
Act (12 U.S.C. 1709(b)(1)) is amended--
(i) by striking ``, and be held by,''; and
(ii) by striking ``as responsible and able to
service the mortgage properly''.
(C) Section 221 mortgage insurance.--Paragraph (1) of
section 221(d) of the National Housing Act (12 U.S.C.
1715l(d)(1)) is amended--
(i) by striking ``and be held by''; and
(ii) by striking ``as responsible and able to
service the mortgage properly''.
(D) Home equity conversion mortgage insurance.--
Paragraph (1) of section 255(d) of the National Housing
Act (12 U.S.C. 1715z-20(d)(1)) is amended by striking
``as responsible and able to service the mortgage
properly''.
(E) War housing mortgage insurance.--Paragraph (1) of
section 603(b) of the National Housing Act (12 U.S.C.
1738(b)(1)) is amended--
(i) by striking ``, and be held by,''; and
(ii) by striking ``as responsible and able to
service the mortgage properly''.
(F) War housing mortgage insurance for large-scale
housing projects.--Paragraph (1) of section 611(b) of
the National Housing Act (12 U.S.C. 1746(b)(1)) is
amended--
(i) by striking ``and be held by''; and
(ii) by striking ``as responsible and able to
service the mortgage properly''.
(G) Group practice facility mortgage insurance.--
Section 1101(b)(2) of the National Housing Act (12
U.S.C. 1749aaa(b)(2)) is amended--
(i) by striking ``and held by''; and
(ii) by striking ``as responsible and able to
service the mortgage properly''.
(H) National defense housing insurance.--Paragraph
(1) of section 903(b) of the National Housing Act (12
U.S.C. 1750b(b)(1)) is amended--
(i) by striking ``, and be held by,''; and
(ii) by striking ``as responsible and able to
service the mortgage properly''.
(I) Contingent repeal.--Unless there is published in
the Federal Register, before the expiration of the 5-
year period beginning on the date of the enactment of
this Act, an order under clause (i) or (ii) of section
201(2)(D) of the National Housing Act (12 U.S.C.
1707(2)(D)), as added by paragraph (1)(A)(2) of this
subsection, upon the expiration of such period the
provisions of such Act amended by this paragraph are
amended to read as such provisions would be in effect
upon such expiration if this Act had not been enacted
(taking into consideration any amendments, after such
date of enactment, to such provisions other than under
this Act).
(b) GAO Study and Report.--
(1) Study.--The Comptroller General of the United States
shall conduct a study, upon the expiration of the 42-month
period beginning on the date of the enactment of this Act,
regarding the effect of the amendments made by subsection (a),
which shall analyze and determine--
(A) the extent to which such amendments have resulted
in increased participation, by mortgage brokers and
correspondent lenders, in the mortgage insurance
programs under the National Housing Act, as measured by
the number and amounts of such insured mortgages,
disaggregated by the States in which the properties
subject to such mortgages are located;
(B) with respect to mortgages insured under such Act,
a comparison in the numbers and rate of defaults,
foreclosures, and mortgage insurance claims on such
mortgages originated by mortgage brokers and
correspondent lenders authorized to participate in the
programs under such Act pursuant to the amendments made
by subsection (a) to such numbers and rates on such
mortgages originated by lenders who would be authorized
to participate in such programs notwithstanding such
amendments;
(C) any impact of such amendments on the costs to the
Secretary of Housing and Urban Development of
administering the mortgage insurance programs under
such title; and
(D) the extent and effectiveness of the supervision
and enforcement, by the Secretary, of the additional
authority provided under the amendments made by
subsection (a).
(2) Report.--Not later than the expiration of 4-year period
beginning on the date of the enactment of this Act, the
Comptroller General shall submit a report to the Congress and
the Secretary of Housing and Urban Development setting forth
the results and conclusions of the study conducted pursuant to
paragraph (1).
SEC. 21. CONFORMING LOAN LIMIT IN DISASTER AREAS.
Section 203(h) of the National Housing Act (12 U.S.C. 1709) is
amended--
(1) by inserting after ``property'' the following: ``plus any
initial service charges, appraisal, inspection and other fees
in connection with the mortgage as approved by the
Secretary,'';
(2) by striking the second sentence (as added by chapter 7 of
the Emergency Supplemental Appropriations Act of 1994 (Public
Law 103-211; 108 Stat. 12)); and
(3) by adding at the end the following new sentence: ``In any
case in which the single family residence to be insured under
this subsection is within a jurisdiction in which the President
has declared a major disaster to have occurred, the Secretary
is authorized, for a temporary period not to exceed 36 months
from the date of such Presidential declaration, to enter into
agreements to insure a mortgage which involves a principal
obligation of up to 100 percent of the dollar limitation
determined under section 305(a)(2) of the Federal Home Loan
Mortgage Corporation Act for a single family residence, and not
in excess of 100 percent of the appraised value of the property
plus any initial service charges, appraisal, inspection and
other fees in connection with the mortgage as approved by the
Secretary.''.
SEC. 22. FAILURE TO PAY AMOUNTS FROM ESCROW ACCOUNTS FOR SINGLE FAMILY
MORTGAGES.
(a) Penalties.--Section 536 of the National Housing Act (12 U.S.C.
1735f-14) is amended--
(1) in subsection (a)(1), by inserting ``servicers (including
escrow account servicers),'' after ``appraisers,'';
(2) in subsection (b)(1)--
(A) in the matter preceding subparagraph (A), by
inserting ``or other participant referred to in
subsection (a),'' after ``lender,'' ; and
(B) by inserting at the end the following new
subparagraphs:
``(K) In the case of a mortgage for a 1- to 4-family
residence insured under title II that requires the
mortgagor to make payments to the mortgagee or other
servicer of the mortgage for deposit into an escrow
account for the purpose of assuring payment of taxes,
insurance premiums, and other charges with respect to
the property, failure on the part of the servicer to
make any such payment from the escrow account by the
deadline to avoid a penalty with respect to such
payment provided for in the mortgage, unless the
servicer was not provided notice of such deadline.
``(L) In the case of any failure to make any payment
as described in subparagraph (K), submitting any
information to a consumer reporting agency (as such
term is defined in section 603(f) of the Fair Credit
Reporting Act (15 U.S.C. 1681a(f))) regarding such
failure that is adverse to the credit rating or
interest of the mortgagor.''; and
(3) in subsection (c)(3), by adding at the end the following:
``In the case of any failure to make a payment described in
subsection (b)(1)(K) for which the servicer fails to reimburse
the mortgagor (A) before the expiration of the 60-day period
beginning on the deadline to avoid a penalty with respect to
such payment, in the sum of the amount not paid from the escrow
account by such deadline and the amount of any penalties
accruing to the mortgagor that are attributable to such
failure, or (B) in the amount of any attorneys fees incurred by
the mortgagor and attributable to such failure, the Secretary
shall increase the amount of the penalty under subsection (a)
for any such failure to reimburse, unless the Secretary
determines there are mitigating circumstances.''.
(b) Prohibition on Submission of Information by HUD.--Title II of the
National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at
the end the following new section:
``SEC. 257. PROHIBITION REGARDING FAILURE ON PART OF SERVICER TO MAKE
ESCROW PAYMENTS.
``In the case of any failure to make any payment as described in
section 536(b)(1)(K), the Secretary may not submit any information to a
consumer reporting agency (as such term is defined in section 603(f) of
the Fair Credit Reporting Act (15 U.S.C. 1681a(f))) regarding such
failure that is adverse to the credit rating or interest of the
mortgagor.''.
SEC. 23. ACCEPTABLE IDENTIFICATION FOR FHA MORTGAGORS.
(a) In General.--Title II of the National Housing Act is amended by
inserting after section 209 (12 U.S.C. 1715) the following new section:
``SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION.
``The Secretary may not insure a mortgage under any provision of this
title unless the mortgagor under the mortgage provides personal
identification in one of the following forms:
``(1) Social security card with photo identification card or
real id act identification.--
``(A) A social security card accompanied by a photo
identification card issued by the Federal Government or
a State Government; or
``(B) A driver's license or identification card
issued by a State in the case of a State that is in
compliance with title II of the REAL ID Act of 2005
(title II of division B of Public Law 109-13; 49 U.S.C.
30301 note).
``(2) Passport.--A passport issued by the United States or a
foreign government.
``(3) USCIS photo identification card.--A photo
identification card issued by the Secretary of Homeland
Security (acting through the Director of the United States
Citizenship and Immigration Services).''.
(b) Effective Date.--The requirements of section 210 of the National
Housing Act (as added by subsection (a) of this section) shall take
effect six months after the date of the enactment of this Act.
SEC. 24. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT
SUFFICIENT CREDIT HISTORY.
(a) Establishment.--Title II of the National Housing Act (12 U.S.C.
1707 et seq.), as amended by the preceding provisions of this Act, is
further amended by adding at the end the following new section:
``SEC. 258. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT
SUFFICIENT CREDIT HISTORY.
``(a) Establishment.--The Secretary shall carry out a pilot program
to establish, and make available to mortgagees, an automated process
for providing alternative credit rating information for mortgagors and
prospective mortgagors under mortgages on 1- to 4-family residences to
be insured under this title who have insufficient credit histories for
determining their creditworthiness. Such alternative credit rating
information may include rent, utilities, and insurance payment
histories, and such other information as the Secretary considers
appropriate.
``(b) Scope.--The Secretary may carry out the pilot program under
this section on a limited basis or scope, and may consider limiting the
program--
``(1) to first-time homebuyers; or
``(2) metropolitan statistical areas significantly impacted
by subprime lending.
``(c) Limitation.--In any fiscal year, the aggregate number of
mortgages insured pursuant to the automated process established under
this section may not exceed 5 percent of the aggregate number of
mortgages for 1- to 4-family residences insured by the Secretary under
this title during the preceding fiscal year.
``(d) Sunset.--After the expiration of the 5-year period beginning on
the date of the enactment of the Expanding American Homeownership Act
of 2007, the Secretary may not enter into any new commitment to insure
any mortgage, or newly insure any mortgage, pursuant to the automated
process established under this section.''.
(b) GAO Report.--Not later than the expiration of the two-year period
beginning on the date of the enactment of this Act, the Comptroller
General of the United States shall submit to the Congress a report
identifying the number of additional mortgagors served using the
automated process established pursuant to section 258 of the National
Housing Act (as added by the amendment made by subsection (a) of this
section) and the impact of such process and the insurance of mortgages
pursuant to such process on the safety and soundness of the insurance
funds under the National Housing Act of which such mortgages are
obligations.
SEC. 25. SENSE OF CONGRESS REGARDING TECHNOLOGY FOR FINANCIAL SYSTEMS.
(a) Congressional Findings.--The Congress finds the following:
(1) The Government Accountability Office has cited the FHA
single family housing mortgage insurance program as a ``high-
risk'' program, with a primary reason being non-integrated and
out-dated financial management systems.
(2) The ``Audit of the Federal Housing Administration's
Financial Statements for Fiscal Years 2004 and 2003'',
conducted by the Inspector General of the Department of Housing
and Urban Development reported as a material weakness that
``HUD/FHA's automated data processing [ADP] system environment
must be enhanced to more effectively support FHA's business and
budget processes''.
(3) Existing technology systems for the FHA program have not
been updated to meet the latest standards of the Mortgage
Industry Standards Maintenance Organization and have numerous
deficiencies that lenders have outlined.
(4) Improvements to technology used in the FHA program will--
(A) allow the FHA program to improve the management
of the FHA portfolio, garner greater efficiencies in
its operations, and lower costs across the program;
(B) result in efficiencies and lower costs for
lenders participating in the program, allowing them to
better use the FHA products in extending homeownership
opportunities to higher credit risk or lower-income
families, in a sound manner.
(5) The Mutual Mortgage Insurance Fund operates without cost
to the taxpayers and generates revenues for the Federal
Government.
(b) Sense of Congress.--It is the sense of the Congress that--
(1) the Secretary of Housing and Urban Development should use
a portion of the funds received from premiums paid for FHA
single family housing mortgage insurance that are in excess of
the amounts paid out in claims to substantially increase the
funding for technology used in such FHA program;
(2) the goal of this investment should be to bring the
technology used in such FHA program to the level and
sophistication of the technology used in the conventional
mortgage lending market, or to exceed such level; and
(3) the Secretary of Housing and Urban Development should
report to the Congress not later than 180 days after the date
of the enactment of this Act regarding the progress the
Department is making toward such goal and if progress is not
sufficient, the resources needed to make greater progress.
SEC. 26. MULTIFAMILY HOUSING MORTGAGE LIMITS IN HIGH COST AREAS.
The National Housing Act is amended--
(1) in sections 207(c)(3), 213(b)(2)(B)(i),
221(d)(3)(ii)(II), 221(d)(4)(ii)(II), 231(c)(2)(B), and
234(e)(3)(B) (12 U.S.C. 1713(c)(3), 1715e(b)(2)(B)(i),
1715l(d)(3)(ii)(II), 1715l(d)(4)(ii)(II), 1715v(c)(2)(B), and
1715y(e)(3)(B))--
(A) by striking ``140 percent'' each place such term
appears and inserting ``170 percent''; and
(B) by striking ``170 percent in high cost areas''
each place such term appears and inserting ``215
percent in high cost areas''; and
(2) in section 220(d)(3)(B)(iii)(III) (12 U.S.C.
1715k(d)(3)(B)(iii)(III)) by striking ``206A'' and all that
follows through ``project-by-project basis'' and inserting the
following: ``206A of this Act) by not to exceed 170 percent in
any geographical area where the Secretary finds that cost
levels so require and by not to exceed 170 percent, or 215
percent in high cost areas, where the Secretary determines it
necessary on a project-by-project basis''.
SEC. 27. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE SALES BY
HUD TO STATES AND LOCALITIES.
Subtitle A of title II of the Deficit Reduction Act of 2005 (Public
Law 109-171; 120 Stat. 7) is amended by adding at the end the following
new section:
``SEC. 2004. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE
SALES BY HUD TO STATES AND LOCALITIES.
``Notwithstanding any other provision of law and with respect to any
fiscal year, in determining the market value of any multifamily real
property or multifamily loan for any noncompetitive sale to a State or
local government entity, the Secretary shall consider, but not be
limited to, industry standard appraisal practices, including the cost
of repairs needed to bring the property at least to minimum State and
local code standards and of maintaining the existing affordability
restrictions imposed by the Secretary on the multifamily real property
or multifamily loan.''.
SEC. 28. CLARIFICATION OF DISPOSITION OF CERTAIN PROPERTIES.
Notwithstanding any other provision of law, subtitle A of title II of
the Deficit Reduction Act of 2005 (12 U.S.C. 1701z-11 note) and the
amendments made by such title shall not apply to any transaction
regarding a multifamily real property for which--
(1) the Secretary of Housing and Urban Development has
received, before the date of the enactment of such Act, written
expressions of interest in purchasing the property from both a
city government and the housing commission of such city;
(2) after such receipt, the Secretary acquires title to the
property at a foreclosure sale; and
(3) such city government and housing commission have resolved
a previous disagreement with respect to the disposition of the
property.
SEC. 29. USE OF FHA SAVINGS FOR COSTS OF MORTGAGE INSURANCE, HOUSING
COUNSELING, FHA TECHNOLOGIES, PROCEDURES, AND
PROCESSES, AND FOR AFFORDABLE HOUSING GRANT FUND,
AND STUDY.
(a) In General.--Subject to subsection (c), there is authorized to be
appropriated for each fiscal year an amount equal to the net increase
for such fiscal year in, except as provided in subsection (b), the
negative credit subsidy for the mortgage insurance programs under title
II of the National Housing Act resulting from this Act and the
amendments made by this Act, for the following purposes in the
following amounts:
(1) Single family housing mortgage insurance.--For each
fiscal year, for costs (as such term is defined in section 502
of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of
mortgage insurance provided pursuant to section 203(b) of the
National Housing Act (12 U.S.C. 1709(b)), the additional amount
(not including any costs of such mortgage insurance resulting
from this Act or the amendments made by this Act), if any,
necessary to ensure that the credit subsidy cost of such
mortgage insurance for such fiscal year is $0.
(2) Housing counseling.--For each of fiscal years 2008
through 2012, the amount needed to increase funding, for the
housing counseling program under section 106 of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x), in connection
with homebuyers and homeowners with mortgages insured under
title II of the National Housing Act, from the amount
appropriated for the preceding fiscal year to $100,000,000.
(3) Mortgage insurance technology, procedures, processes,
program performance, and salaries.--For each of fiscal years
2008 through 2012, $25,000,000 for increasing funding for the
purpose of improving technology, procedures, processes, and
program performance, and salaries in connection with the
mortgage insurance programs under title II of the National
Housing Act.
(4) Affordable housing fund.--For each fiscal year, for an
affordable housing fund available for use only for grants to
provide affordable rental housing and affordable homeownership
opportunities for low-income families, the amount remaining
under this section after amounts are made available for such
fiscal year in accordance with paragraphs (1), (2), and (3).
(b) Exclusion of Earnings From the Single Family Mortgage Insurance
Program.--With respect to a fiscal year, the negative credit subsidy
determined under subsection (a) shall not include the negative credit
subsidy cost for such fiscal year, if any, for mortgage insurance
provided pursuant to section 203(b) of the National Housing Act.
(c) Certification.--Subsection (a) shall not be effective for a
fiscal year unless the Secretary of Housing and Urban Development has,
by rule making in accordance with section 553 of title 5, United States
Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such
section), made a determination that premiums being, or to be, charged
during such fiscal year for mortgage insurance under title II of the
National Housing Act are established at the minimum amount sufficient
to comply with the requirements of section 205(f) of such Act (relating
to required capital ratio for the Mutual Mortgage Insurance Fund) and
ensure the safety and soundness of the other mortgage insurance funds
under such Act, and any negative credit subsidy for such fiscal year
resulting from such mortgage insurance programs adequately ensures the
efficient delivery and availability of such programs.
(d) Study and Report.--The Secretary of Housing and Urban Development
shall conduct a study to obtain recommendations from participants in
the private residential mortgage lending business and the secondary
market for such mortgages on how best to update and upgrade procedures,
processes, and technologies for the mortgage insurance programs under
title II of the National Housing Act so that the policies and
procedures for originating, insuring, and servicing of such mortgages
conform with those customarily used by secondary market purchasers of
residential mortgage loans. Not later than the expiration of the 12-
month period beginning on the date of the enactment of this Act, the
Secretary shall submit a report to the Congress describing the progress
made and to be made toward updating and upgrading such procedures,
processes, and technology, and providing appropriate staffing for such
mortgage insurance programs.
SEC. 30. LIMITATION ON MORTGAGE INSURANCE PREMIUM INCREASES.
Notwithstanding any other provision of law, including any provision
of this Act and any amendment made by this Act--
(1) the premiums charged for mortgage insurance under any
program under the National Housing Act may not be increased
above the premium amounts in effect under such program on
October 1, 2006, unless the Secretary of Housing and Urban
Development determines that, absent such increase, insurance of
additional mortgages under such program would, under the
Federal Credit Reform Act of 1990, require the appropriation of
new budget authority to cover the costs (as such term is
defined in section 502 of the Federal Credit Reform Act of 1990
(2 U.S.C. 661a) of such insurance; and
(2) a premium increase pursuant to paragraph (1) may be made
only by rule making in accordance with the procedures under
section 553 of title 5, United States Code (notwithstanding
subsections (a)(2), (b)(B), and (d)(3) of such section).
SEC. 31. SAVINGS PROVISION.
Any mortgage insured under title II of the National Housing Act
before the date of enactment of this title shall continue to be
governed by the laws, regulations, orders, and terms and conditions to
which it was subject on the day before the date of the enactment of
this Act.
SEC. 32. IMPLEMENTATION.
Except as provided in section 23(b), the Secretary of Housing and
Urban Development shall by notice establish any additional requirements
that may be necessary to immediately carry out the provisions of this
Act. The notice shall take effect upon issuance.
Purpose and Summary
H.R. 1852, the ``Expanding American Homeownership Act of
2007,'' contains a number of provisions designed to expand the
use and improve the efficiency of Federal Housing
Administration (FHA) insured loan programs. A major focus of
the bill is to modernize the FHA Title II single family loan
program, through provisions to raise loan limits in high cost
areas, to authorize zero downpayment loans, to permit risk-
based pricing, and to direct HUD to modify underwriting
guidelines in order to serve higher credit risk borrowers.
These changes are augmented by disclosure requirements to
ensure that borrowers make informed mortgage choices and
consumer protections for higher risk borrowers and borrowers
with reduced down payments.
The bill also makes changes to other FHA loan programs,
including FHA reverse mortgage loans, multifamily housing
loans, and Section 234 condominium loans. Finally, the bill
authorizes use of increased taxpayer profits (negative credit
subsidies) resulting from the bill for housing counseling, for
FHA information technology, and for affordable housing grant
purposes.
Background and Need for Legislation
MODERNIZING THE FHA SINGLE FAMILY LOAN PROGRAM
The FHA was established in the 1930s to provide a reliable
source of affordable long-term amortizing mortgage loans to
enable families to become first time homebuyers. Since then,
FHA has provided home financing for millions of Americans. It
has done so by offering mortgage loans at affordable rates and
fees to homebuyers who did not qualify for the most competitive
mortgage rates and terms offered by private sector lenders. FHA
has also been at the forefront of standardizing financial
products, especially for low and moderate income and
underserved borrowers. FHA has historically maintained its
presence in turbulent mortgage markets and in geographic areas
experiencing housing downturns, serving as a source of
stability at precisely the time when private sector lenders
have pulled back or exited such difficult markets.
The hearing on H.R. 1852 raised a number of mortgage
issues, including predatory lending practices, risky loan
products such as teaser rate loans, and the high rates and
costs associated with subprime loans. The hearing cited these
types of factors not just as a problem, but also as an
opportunity for FHA to reassert its traditional role of meeting
unmet mortgage market needs.
The distinction was drawn between predatory loan practices
and subprime lending. Subprime lending can perform the
important task of providing affordable mortgage credit to
borrowers with less than perfect credit histories, but who are
still creditworthy. Predatory lending occurs when lenders take
advantage of the lack of loan opportunities for subprime
borrowers to impose excessive rates and fees, prepayment
penalties, and reset terms that can result in exorbitant
interest rate increases. Witnesses testified that FHA could
serve subprime borrowers at more attractive rates and terms
than might otherwise be available in the market, while
maintaining underwriting standards and fees sufficient to
maintain FHA's financial health.
As recently as the year 2000, the FHA single family loan
program was insuring loans for almost a million families a year
and generating profits [``negative credit subsidy''] of over $2
billion a year. Unfortunately, over the last several years, FHA
loan volume has fallen significantly. The FHA Commissioner, in
his testimony on this bill, identified a number of statutory
impediments that have contributed to FHA's declining role in
the single family mortgage market. H.R. 1852 makes a number of
changes designed to address these impediments, with the goal of
increasing FHA participation by private sector loan originators
and of increasing loan opportunities for underserved but
creditworthy borrowers that would otherwise be shut out of
mortgage markets, pay higher rates or be the victims of
predatory loan practices.
Loan Limits. The bill raises FHA loan limits to expand the
availability of FHA loans. By statute, an FHA single family
loan cannot exceed the lower of 95 percent of the local area
median home price or 87 percent of the national GSE conforming
loan limit. In 2007, this means that no FHA loan may exceed
$362,790. As a result, FHA is of little or no practical value
in higher cost areas where median home prices exceed this
limit. The bill would address this limitation by raising the
maximum FHA loan limit up to the GSE conforming loan limit
(currently $417,000). The bill also makes changes designed to
make the program more useful in more moderately priced areas.
It raises the local component of the two-part maximum loan
limit calculation from 95 percent of the local median home
price up to 100 percent of such price, and it raises the
current FHA loan floor of 48 percent of the GSE conforming loan
limit up to 65 percent of such limit.
The bill provides for a more rational process for setting
loan limits on FHA single family loans for 2-, 3-, and 4-unit
properties. Currently such limits are set by statute at 107,
130, and 150 percent, respectively, of the 1-unit limit in each
local area. The bill revises this method to instead calculate
such limits by applying the same ratio that 2-, 3-, and 4-unit
GSE conforming loan limits bear to the conforming 1-unit limit.
The bill additionally permits an increase in FHA single family
loan limits of up to 25 percent higher than the customary loan
limit for any home which includes space used for a licensed
child care facility, subject to the requirement that such
increase must be proportional to the amount of space that will
be used for the facility. The bill also gives HUD authority to
increase FHA single family loan limits up to 100 percent of the
appraised value plus closing costs and up to the nationwide GSE
conforming loan limit for a period of up to 36 months in
Presidentially-declared disaster areas.
Down Payment Requirements. The bill simplifies and reduces
down payment requirements. By statute, the maximum FHA loan-to-
value (LTV) calculation is a complicated one, varying based on
factors that include the size of the loan and whether the loan
is located in a state with high closing costs. The bill would
greatly simplify this basic calculation, while maintaining
comparable overall levels, by establishing a maximum loan to
value of 97.75 percent of the home price, plus the upfront FHA
premium. The bill also retains the current statutory
requirement that each borrower must make at least a 3 percent
down payment in cash.
To better reflect private sector loan practices, the bill
also authorizes FHA to reduce down payment requirements,
including the authority to offer zero down payment loans. It
does so by identifying a separate class of loans for borrowers
that do not comply with either the basic LTV or the cash down
payment requirement. To cover the increased risk of such lower
down payment loans, the maximum upfront FHA premium HUD can
charge for such loans is increased from 2.25 percent to 3
percent, and the maximum annual premium that can be charged for
such borrowers is raised from .55 to .75 percent. To avoid
unfairly imposing fee burdens on borrowers that ultimately meet
their loan obligations, the bill includes a ``Payment
Incentives'' provision. This provision requires HUD to reduce
annual premiums for borrowers that make 5 years of on-time
payments down to the existing statutory maximum of .55 percent
in subsequent years. HUD is also authorized to reduce such
premiums for borrowers that make three years of on-time
payments.
Maximum Loan Term. The bill increases the maximum
amortization term for FHA single family loans from 35 years to
40 years. This would permit a slight reduction in a borrower's
monthly payment.
Higher Risk Borrowers. The bill directs HUD to underwrite
loans for Higher Risk borrowers than it currently serves,
defining this category as borrowers with a FICO-equivalent
score of 560 or below. To cover the increased risk of such
loans, FHA may charge upfront premiums of up to 3 percent. The
bill also includes Payment Incentive annual loan fee reductions
for Higher Risk borrowers that make on-time payments, as well
as a refund at the time of loan repayment of the higher upfront
premium that was charged because the borrower was classified as
a Higher Risk borrower.
To further expand FHA loan opportunities, the bill requires
HUD to carry out a pilot program to establish an automated
process to provide alternative credit rating information for
borrowers with insufficient credit histories to determine their
creditworthiness. The number of such loans is capped at 5
percent of the number of FHA loans insured in the preceding
year, and this pilot sunsets after five years.
Risk-based Pricing. To provide for more accurate pricing of
FHA loans in conjunction with these higher levels of authorized
FHA premiums, the bill authorizes ``risk-based pricing.''
Historically, FHA has charged the same level of premiums for
all its borrowers, resulting in cross-subsidization between
higher and lower credit risk borrowers. Authority for risk-
based pricing is designed to more accurately align fees paid
with the loan risk borne by the FHA. It is also designed to
retain potential lower risk borrowers who might otherwise forgo
FHA loans because the fees are not competitive. However, the
bill retains some degree of cross-subsidization, through
reasonable fee caps and Payment Incentive provisions. Finally,
the bill authorizes risk-based pricing based on the type of
loan product. This would permit, for example, higher premiums
on riskier Adjustable Rate Mortgages [ARMs] than on fixed rate
mortgages.
Consumer Protections. To address the increased risks
associated with these program changes, the bill includes a
number of protections for Higher Risk borrowers and borrowers
with zero and lower down payment loans. HUD is given authority
to require pre-purchase counseling for such borrowers. If HUD
establishes such a requirement, it is intended that it would be
established only for riskier classes of borrowers, based on a
determination that such a requirement is essential either to
mitigate against the risk of such loans, or to ensure that such
class of borrower is fully prepared for the risks of buying a
home. In addition, FHA mortgage loan originators are required
to provide to zero and lower down payment and Higher Risk
borrowers a list of local HUD-approved counseling agencies at
the time of loan application. And, such borrowers who become 60
days delinquent on their FHA loan must be given notice by a
housing counseling entity of the availability of foreclosure
prevention counseling.
The bill also requires a number of written disclosures,
provided either through counseling or at the time of loan
application. Such disclosures must include identification of
other mortgage loan options, the additional costs associated
with lower down payment loans, and the appreciation needed to
pay off zero and lower down payment loans, taking into account
real estate sales costs. Borrowers must also be given
disclosures at loan closing of their Payment Incentive and loss
mitigation rights.
To track the impact of the bill on the financial soundness
of the FHA program, H.R. 1852 requires HUD to report annually
on the rates of default and foreclosure of zero and lower down
payment and Higher Risk borrowers. HUD is also required to
report on loss mitigation actions it has taken.
FHA MULTI-FAMILY LOANS
Four years ago, Congress raised the maximum loan limit for
FHA-insured multi-family loans in high cost areas, but did not
provide the increase needed to fully cover construction costs
in the nation's highest cost housing markets. The bill would
complete this effort, by raising the maximum loan limit in high
cost areas from 140 percent of the basic loan limit to 170
percent of such limit, and by raising the maximum loan limit on
a case-by-case basis from 170 percent of the basic loan limit
to 215 percent of such limit.
In addition, the bill would clarify implementation of the
2005 Reconciliation Act provision that prohibits discount loan
sales and upfront grants to localities of foreclosed FHA-
insured multifamily properties. The bill states that HUD must
take into account, consistent with normal appraisal practices,
the cost of rehabilitation and maintaining affordability
restrictions in establishing the market price to be offered to
localities under their statutory first right of refusal to
purchase such properties. The bill would also clarify the
provision in the 2005 Act grandfathering existing purchase
proposals from the prohibition against discount sales. The bill
states that this grandfather status would apply to transactions
in which HUD received an expression of interest from both a
local city and housing authority prior to enactment of the 2005
Act, provided that a disagreement between such two entities was
subsequently resolved.
FHA REVERSE MORTGAGE LOANS
The bill would permanently eliminate the statutory volume
cap on the total number of FHA Home Equity Conversion Mortgage
loans [HECMs, also known as reverse mortgage loans] which HUD
can insure. Without a removal of this cap, the program could
otherwise be forced to be shut down.
The bill also decouples FHA reverse mortgage loan limits
from the general FHA loan limit calculation which caps limits
at the local median home price. Instead, the bill establishes a
unified maximum reverse mortgage loan limit equal to the GSE
conforming loan limit. This change is made to reflect the fact
that reverse mortgage loans are not used to buy a home or
refinance a loan, but rather to pay other costs which are not
generally tied to home prices (e.g., health care costs). The
bill would also set a cap on the maximum loan fee that an FHA
reverse mortgage loan originator can charge, setting such cap
at 2 percent of the ``original principal limit'' of the
mortgage. Finally, the bill requires HUD to conduct a study to
analyze the effects of reducing FHA reverse mortgage premiums
on both the cost to borrowers and the financial soundness of
the program.
USE OF FHA SAVINGS FOR COUNSELING, TECHNOLOGY IMPROVEMENTS, AND
AFFORDABLE HOUSING GRANT FUND PURPOSES
Over the last five years, FHA has produced over $10 billion
in profits to federal taxpayers, as calculated by CBO's
determination of negative credit subsidies for all the FHA loan
programs. The practice has been to simply return these funds to
the Federal treasury.
The bill would instead authorize a reinvestment of such
profits into both the FHA specifically, and into housing more
generally. The bill would calculate the net negative credit
subsidies over each of the next five years that are created by
the bill's provisions, and would authorize appropriations of
such amounts for certain specified purposes. First, funds would
be authorized for any credit subsidy appropriation that might
be needed to keep the basic FHA single family 203(b) loan
program in the black that year (i.e., avoid any credit subsidy
appropriation that might be needed). Secondly, $58 million a
year would be authorized to bring funding for housing
counseling up from the current level of $42 million to $100
million a year. Third, $25 million would be authorized each
year for FHA information technology, procedures, and processes.
Finally, an authorization is provided for all net negative
credit subsidies that remain after such deductions for use as
an affordable housing fund, for grants to provide affordable
rental housing and homeownership opportunities for low income
families. As a further condition no funds may be used in any
year for such purpose unless HUD, by rule, makes a
determination that FHA premiums being charged that year are
sufficient to comply with the Section 205(f) MMIF capital ratio
requirement and are also sufficient to ensure the safety and
soundness of the other FHA mortgage insurance funds. Moreover,
no negative credit subsidies from the Section 203(b) single
family loan program may be used for affordable housing fund
purposes.
HUD is required to conduct a study on how best to update
and upgrade FHA procedures, processes, and technologies. The
bill also includes a Sense of Congress stating that HUD should
use a portion of the funds FHA receives from premiums in excess
of what it pays out in claims to upgrade FHA's current
technology. FHA is also encouraged to submit a report to
Congress detailing the progress it is making towards this goal
and any resources it may need to make greater progress.
OTHER PROVISIONS
The bill includes a number of provisions designed to
enhance pro- gram flexibility, increase mortgage originator
participation in FHA loans, limit unnecessary FHA premiums, and
protect the financial soundness of FHA.
The bill revises the definition of condominium mortgages
which may be insured, to provide that condominiums may be in
the form of manufactured housing units. The bill also modifies
the definition of real estate to permit manufactured homes
sited on land under a long term lease to be financed under
Title II, even if they are not taxed as real property. The
purpose is to permit such FHA loans in states that do not tax
such homes as real estate, and therefore do not meet the
current HUD definition of real estate for the purpose of
insuring FHA Title II loans.
The bill also includes a provision to encourage increased
participation of mortgage brokers and correspondent lenders in
FHA. The current FHA net worth and annual audit requirement is
commonly cited as a barrier to increased participation in FHA
by mortgage brokers and loan correspondents. The bill gives
such entities the option of posting a $75,000 surety bond in
lieu of the existing net worth and annual audit requirements.
Such authority would expire after five years, unless HUD
extends the provision pursuant to a determination that it
provides comparable protections or modifies it to provide for
comparable protection. The bill also requires GAO to conduct a
study and report to Congress within 4 years on the effect of
provision.
The bill also imposes additional requirements for mortgage
brokers participating in FHA loans. Among other things,
mortgage brokers are required to safeguard and account for any
money handled for the borrower, to follow reasonable and lawful
instructions from the borrower, and to act with reasonable
skill, care, and diligence. Any mortgage broker found by HUD to
have violated these provisions may not originate any FHA-
insured loans.
The bill includes a provision to bar unnecessary fee hikes
in FHA programs. Specifically, it prohibits HUD from increasing
any FHA premiums above the level in effect at the beginning of
FY 2007 unless HUD determines that such an increase is
necessary to avoid a credit subsidy appropriation. This
provision is designed to ensure that FHA fees are used solely
to cover the risk associated with the loan, and not to
supplement general fund revenues.
The bill requires FHA mortgage servicers that establish
escrow accounts to make required payments by any deadline
required to avoid a penalty, unless such servicer was not
provided notice of such deadline. HUD is authorized to increase
the amount of penalty for servicers that fail to reimburse
borrowers per this requirement. The bill also prohibits
submission of information by HUD or servicers that is adverse
to the credit rating or interest of the borrower, if such
information is based on the servicer's failure to make a
payment by any deadline.
The bill makes a number of changes to provisions of the
Credit Reform Act of 1990 which are designed to insure that the
Mutual Mortgage Insurance Fund (MMIF) remains financially
sound. These include transferring a number of FHA programs into
the MMIF, including Section 234 condominium loans, Section
203(k) purchase-rehabilitation loans, reverse mortgage loans,
Section 247 loans insured on Hawaiian Home Lands, and Section
248 loans in Indian Reservations.
The bill also prohibits HUD from insuring any FHA loan
unless the borrower provides personal identification, which may
include a Social Security card along with a photo ID issued by
the Federal or a state government, a drivers license or ID card
issued by a state in accordance with the REAL ID Act of 2005, a
passport, and a USCIS photo identification card.
Hearings
The Subcommittee on Housing and Community Opportunity held
a hearing on April 19, 2007 entitled ``The Expanding American
Homeownership Act of 2007: H.R. 1852 and Related FHA
Modernization Issues.'' The following witnesses testified:
Panel One:
The Honorable Brian D. Montgomery, Assistant
Secretary for Housing-Federal Housing Commissioner,
U.S. Department of Housing and Urban Development
Panel Two:
<bullet> Ms. Iona Harrison, GRI, National Association
of Realtors
<bullet> Mr. Lautaro ``Lot'' Diaz, Vice President,
Community Development, National Council of La Raza
<bullet> Mr. John M. Robbins, CMB, Chairman, Mortgage
Bankers Association
<bullet> Mr. Ed Smith, Jr., Chairman, CAMB Government
Affairs Committee, Chief Executive Officer, Plaza
Financial Group, California Association of Mortgage
Brokers
<bullet> Mr. William P. Killmer, National Association
of Home Builders, Group Executive Vice President for
Advocacy
Committee Consideration
The Committee on Financial Services met in open session on
May 2, 2007, and on May 3, 2007, ordered H.R. 1852, the
Expanding American Homeownership Act of 2007, as amended,
favorably reported to the House by a record vote of 45 yeas and
19 nays.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Frank to report the bill, as amended, to the
House with a favorable recommendation was agreed to by a record
vote of 45 yeas and 19 nays (Record vote FC-46). The names of
Members voting for and against follow:
RECORD VOTE NO. FC-46
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... X ........ ......... Mr. Bachus....... ........ X .........
Mr. Kanjorski.................. X ........ ......... Mr. Baker........ ........ X .........
Ms. Waters..................... X ........ ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... X ........ ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. X ........ ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. X ........ ......... Mr. Royce........ ........ X .........
Mr. Watt....................... X ........ ......... Mr. Lucas........ ........ X .........
Mr. Ackerman................... ........ ........ ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... X ........ ......... Mr. Gillmor...... X ........ .........
Mr. Sherman.................... X ........ ......... Mr. LaTourette... X ........ .........
Mr. Meeks...................... X ........ ......... Mr. Manzullo..... ........ X .........
Mr. Moore (KS)................. X ........ ......... Mr. Jones........ ........ ........ .........
Mr. Capuano.................... X ........ ......... Mrs. Biggert..... ........ X .........
Mr. Hinojosa................... X ........ ......... Mr. Shays........ X ........ .........
Mr. Clay....................... X ........ ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. X ........ ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... X ........ ......... Mr. Feeney....... ........ X .........
Mr. Lynch...................... X ........ ......... Mr. Hensarling... ........ X .........
Mr. Miller (NC)................ X ........ ......... Mr. Garrett (NJ). ........ X .........
Mr. Scott...................... X ........ ......... Ms. Brown-Waite ........ X .........
(FL).
Mr. Green...................... X ........ ......... Mr. Barrett (SC). ........ X .........
Mr. Cleaver.................... X ........ ......... Mr. Gerlach...... X ........ .........
Ms. Bean....................... X ........ ......... Mr. Pearce....... ........ ........ .........
Ms. Moore (WI)................. X ........ ......... Mr. Neugebauer... ........ X .........
Mr. Davis (TN)................. X ........ ......... Mr. Price (GA)... ........ X .........
Mr. Sires...................... X ........ ......... Mr. Davis (KY)... ........ X .........
Mr. Hodes...................... X ........ ......... Mr. McHenry...... ........ ........ .........
Mr. Ellison.................... X ........ ......... Mr. Campbell..... ........ X .........
Mr. Klein...................... X ........ ......... Mr. Putnam....... ........ X .........
Mr. Mahoney (FL)............... X ........ ......... Mrs. Bachmann.... ........ X .........
Mr. Wilson..................... X ........ ......... Mr. Roskam....... ........ X .........
Mr. Perlmutter................. X ........ ......... Mr. Marchant..... ........ X .........
Mr. Murphy..................... X ........ .........
Mr. Donnelly................... X ........ .........
Mr. Wexler..................... X ........ .........
Mr. Marshall................... X ........ .........
Mr. Boren...................... X ........ .........
----------------------------------------------------------------------------------------------------------------
The following amendments were disposed of by record votes. The
names of Members voting for and against follow:
An amendment by Mr. Garrett, No. 9, regarding temporary
reinstatement of downpayment and premium requirements in event
of increased defaults, was not agreed to by a record vote of 29
yeas and 34 nays (Record vote FC-38):
RECORD VOTE NO. FC-38
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ ........ ......... Mr. Baker........ X ........ .........
Ms. Waters..................... ........ X ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Royce........ X ........ .........
Mr. Watt....................... ........ X ......... Mr. Lucas........ X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... ........ X ......... Mr. Gillmor...... X ........ .........
Mr. Sherman.................... ........ X ......... Mr. LaTourette... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Moore (KS)................. ........ X ......... Mr. Jones........ X ........ .........
Mr. Capuano.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Shays........ X ........ .........
Mr. Clay....................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Feeney....... ........ ........ .........
Mr. Lynch...................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Scott...................... ........ X ......... Ms. Brown-Waite X ........ .........
(FL).
Mr. Green...................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mr. Cleaver.................... ........ ........ ......... Mr. Gerlach...... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Pearce....... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Davis (TN)................. ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Sires...................... ........ X ......... Mr. Davis (KY)... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McHenry...... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Campbell..... ........ ........ .........
Mr. Klein...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Mahoney (FL)............... ........ X ......... Mrs. Bachmann.... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Roskam....... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Marchant..... X ........ .........
Mr. Murphy..................... ........ X .........
Mr. Donnelly................... ........ X .........
Mr. Wexler..................... ........ X .........
Mr. Marshall................... ........ X .........
Mr. Boren...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Frank, No. 15, regarding use of FHA
savings for costs of mortgage insurance, housing counseling,
and affordable housing grant fund, was agreed to by a record
vote of 37 yeas and 15 nays (Record vote FC-39):
RECORD VOTE NO. FC-39
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... X ........ ......... Mr. Bachus....... ........ X .........
Mr. Kanjorski.................. X ........ ......... Mr. Baker........ X ........ .........
Ms. Waters..................... ........ ........ ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... X ........ ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. ........ ........ ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. X ........ ......... Mr. Royce........ ........ X .........
Mr. Watt....................... X ........ ......... Mr. Lucas........ ........ X .........
Mr. Ackerman................... ........ ........ ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... X ........ ......... Mr. Gillmor...... ........ ........ .........
Mr. Sherman.................... X ........ ......... Mr. LaTourette... X ........ .........
Mr. Meeks...................... X ........ ......... Mr. Manzullo..... ........ ........ .........
Mr. Moore (KS)................. X ........ ......... Mr. Jones........ ........ ........ .........
Mr. Capuano.................... X ........ ......... Mrs. Biggert..... ........ X .........
Mr. Hinojosa................... ........ ........ ......... Mr. Shays........ ........ ........ .........
Mr. Clay....................... X ........ ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. X ........ ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... ........ ........ ......... Mr. Feeney....... ........ X .........
Mr. Lynch...................... X ........ ......... Mr. Hensarling... ........ X .........
Mr. Miller (NC)................ X ........ ......... Mr. Garrett (NJ). ........ X .........
Mr. Scott...................... X ........ ......... Ms. Brown-Waite ........ X .........
(FL).
Mr. Green...................... X ........ ......... Mr. Barrett (SC). ........ X .........
Mr. Cleaver.................... X ........ ......... Mr. Gerlach...... ........ X .........
Ms. Bean....................... X ........ ......... Mr. Pearce....... ........ ........ .........
Ms. Moore (WI)................. X ........ ......... Mr. Neugebauer... ........ ........ .........
Mr. Davis (TN)................. X ........ ......... Mr. Price (GA)... ........ X .........
Mr. Sires...................... X ........ ......... Mr. Davis (KY)... ........ X .........
Mr. Hodes...................... X ........ ......... Mr. McHenry...... ........ ........ .........
Mr. Ellison.................... ........ ........ ......... Mr. Campbell..... ........ X .........
Mr. Klein...................... X ........ ......... Mr. Putnam....... ........ ........ .........
Mr. Mahoney (FL)............... X ........ ......... Mrs. Bachmann.... ........ X .........
Mr. Wilson..................... X ........ ......... Mr. Roskam....... ........ X .........
Mr. Perlmutter................. X ........ ......... Mr. Marchant..... ........ ........ .........
Mr. Murphy..................... ........ ........ .........
Mr. Donnelly................... X ........ .........
Mr. Wexler..................... X ........ .........
Mr. Marshall................... X ........ .........
Mr. Boren...................... X ........ .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mrs. Biggert, No. 16, regarding use of FHA
savings for Title II single family mortgage insurance programs,
was not agreed to by a record vote of 22 yeas and 38 nays
(Record vote FC-40):
RECORD VOTE NO. FC-40
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Baker........ X ........ .........
Ms. Waters..................... ........ X ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Royce........ X ........ .........
Mr. Watt....................... ........ X ......... Mr. Lucas........ X ........ .........
Mr. Ackerman................... ........ ........ ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... ........ X ......... Mr. Gillmor...... ........ ........ .........
Mr. Sherman.................... ........ X ......... Mr. LaTourette... ........ X .........
Mr. Meeks...................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Moore (KS)................. ........ X ......... Mr. Jones........ ........ ........ .........
Mr. Capuano.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Shays........ ........ X .........
Mr. Clay....................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Feeney....... ........ ........ .........
Mr. Lynch...................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Scott...................... ........ X ......... Ms. Brown-Waite X ........ .........
(FL).
Mr. Green...................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mr. Cleaver.................... ........ X ......... Mr. Gerlach...... ........ X .........
Ms. Bean....................... ........ X ......... Mr. Pearce....... ........ ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Davis (TN)................. ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Sires...................... ........ X ......... Mr. Davis (KY)... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McHenry...... ........ ........ .........
Mr. Ellison.................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Klein...................... ........ X ......... Mr. Putnam....... ........ ........ .........
Mr. Mahoney (FL)............... ........ X ......... Mrs. Bachmann.... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Roskam....... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Marchant..... ........ ........ .........
Mr. Murphy..................... ........ ........ .........
Mr. Donnelly................... ........ X .........
Mr. Wexler..................... ........ X .........
Mr. Marshall................... ........ X .........
Mr. Boren...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Bachus, No. 17, limiting housing fund
increases, was not agreed to by a record vote of 26 yeas and 36
nays (Record vote FC-41):
RECORD VOTE NO. FC-41
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Baker........ X ........ .........
Ms. Waters..................... ........ X ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Royce........ X ........ .........
Mr. Watt....................... ........ X ......... Mr. Lucas........ X ........ .........
Mr. Ackerman................... ........ ........ ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... ........ X ......... Mr. Gillmor...... ........ ........ .........
Mr. Sherman.................... ........ X ......... Mr. LaTourette... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Moore (KS)................. ........ X ......... Mr. Jones........ ........ ........ .........
Mr. Capuano.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Shays........ ........ ........ .........
Mr. Clay....................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Feeney....... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Scott...................... ........ X ......... Ms. Brown-Waite X ........ .........
(FL).
Mr. Green...................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mr. Cleaver.................... ........ X ......... Mr. Gerlach...... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Pearce....... ........ ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Davis (TN)................. ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Sires...................... ........ X ......... Mr. Davis (KY)... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McHenry...... ........ ........ .........
Mr. Ellison.................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Klein...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Mahoney (FL)............... ........ X ......... Mrs. Bachmann.... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Roskam....... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Marchant..... X ........ .........
Mr. Murphy..................... ........ X .........
Mr. Donnelly................... ........ X .........
Mr. Wexler..................... ........ X .........
Mr. Marshall................... ........ X .........
Mr. Boren...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Price (GA), No. 21, requiring offsets,
was not agreed to by a record vote of 27 yeas and 37 nays
(Record vote FC-42):
RECORD VOTE NO. FC-42
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Baker........ X ........ .........
Ms. Waters..................... ........ X ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Royce........ X ........ .........
Mr. Watt....................... ........ X ......... Mr. Lucas........ X ........ .........
Mr. Ackerman................... ........ ........ ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... ........ X ......... Mr. Gillmor...... X ........ .........
Mr. Sherman.................... ........ X ......... Mr. LaTourette... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Moore (KS)................. ........ X ......... Mr. Jones........ ........ ........ .........
Mr. Capuano.................... ........ X ......... Mrs. Biggert..... ........ X .........
Mr. Hinojosa................... ........ X ......... Mr. Shays........ X ........ .........
Mr. Clay....................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Feeney....... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Scott...................... ........ X ......... Ms. Brown-Waite X ........ .........
(FL).
Mr. Green...................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mr. Cleaver.................... ........ X ......... Mr. Gerlach...... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Pearce....... ........ ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Davis (TN)................. ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Sires...................... ........ X ......... Mr. Davis (KY)... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McHenry...... ........ ........ .........
Mr. Ellison.................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Klein...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Mahoney (FL)............... ........ X ......... Mrs. Bachmann.... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Roskam....... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Marchant..... X ........ .........
Mr. Murphy..................... ........ X .........
Mr. Donnelly................... ........ X .........
Mr. Wexler..................... ........ X .........
Mr. Marshall................... ........ X .........
Mr. Boren...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Price (GA), No. 22, regarding
protection of senior citizen homeowners, was not agreed to by a
record vote of 28 yeas and 36 nays (Record note FC-43):
RECORD VOTE NO. FC-43
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank.................... ......... X ......... Mr. Bachus..... X ......... .........
Mr. Kanjorski................ ......... X ......... Mr. Baker...... X ......... .........
Ms. Waters................... ......... X ......... Ms. Pryce (OH). X ......... .........
Mrs. Maloney................. ......... X ......... Mr. Castle..... X ......... .........
Mr. Gutierrez................ ......... X ......... Mr. King (NY).. X ......... .........
Ms. Velazquez................ ......... X ......... Mr. Royce...... X ......... .........
Mr. Watt..................... ......... X ......... Mr. Lucas...... X ......... .........
Mr. Ackerman................. ......... ......... ......... Mr. Paul....... ......... ......... .........
Ms. Carson................... ......... X ......... Mr. Gillmor.... X ......... .........
Mr. Sherman.................. ......... X ......... Mr. LaTourette. X ......... .........
Mr. Meeks.................... ......... X ......... Mr. Manzullo... X ......... .........
Mr. Moore (KS)............... ......... X ......... Mr. Jones...... ......... ......... .........
Mr. Capuano.................. ......... X ......... Mrs. Biggert... X ......... .........
Mr. Hinojosa................. ......... X ......... Mr. Shays...... X ......... .........
Mr. Clay..................... ......... X ......... Mr. Miller (CA) X ......... .........
Mrs. McCarthy................ ......... X ......... Mrs. Capito.... X ......... .........
Mr. Baca..................... ......... X ......... Mr. Feeney..... X ......... .........
Mr. Lynch.................... ......... X ......... Mr. Hensarling. X ......... .........
Mr. Miller (NC).............. ......... X ......... Mr. Garrett X ......... .........
(NJ).
Mr. Scott.................... ......... X ......... Ms. Brown-Waite X ......... .........
(FL).
Mr. Green.................... ......... X ......... Mr. Barrett X ......... .........
(SC).
Mr. Cleaver.................. ......... X ......... Mr. Gerlach.... X ......... .........
Ms. Bean..................... ......... X ......... Mr. Pearce..... ......... ......... .........
Ms. Moore (WI)............... ......... X ......... Mr. Neugebauer. X ......... .........
Mr. Davis (TN)............... ......... X ......... Mr. Price (GA). X ......... .........
Mr. Sires.................... ......... X ......... Mr. Davis (KY). X ......... .........
Mr. Hodes.................... ......... X ......... Mr. McHenry.... ......... ......... .........
Mr. Ellison.................. ......... X ......... Mr. Campbell... X ......... .........
Mr. Klein.................... ......... X ......... Mr. Putnam..... X ......... .........
Mr. Mahoney (FL)............. ......... X ......... Mrs. Bachmann.. X ......... .........
Mr. Wilson................... ......... X ......... Mr. Roskam..... X ......... .........
Mr. Perlmutter............... ......... X ......... Mr. Marchant... X ......... .........
Mr. Murphy................... ......... X .........
Mr. Donnelly................. ......... X .........
Mr. Wexler................... ......... X .........
Mr. Marshall................. ......... X .........
Mr. Boren.................... ......... X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Garrett, No. 23, regarding suspension
of contributions, was not agreed to by a record vote of 28 yeas
and 36 nays (Record vote FC-44):
RECORD VOTE NO. FC-44
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Baker........ X ........ .........
Ms. Waters..................... ........ X ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Royce........ X ........ .........
Mr. Watt....................... ........ X ......... Mr. Lucas........ X ........ .........
Mr. Ackerman................... ........ ........ ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... ........ X ......... Mr. Gillmor...... X ........ .........
Mr. Sherman.................... ........ X ......... Mr. LaTourette... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Moore (KS)................. ........ X ......... Mr. Jones........ ........ ........ .........
Mr. Capuano.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Shays........ X ........ .........
Mr. Clay....................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Feeney....... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Scott...................... ........ X ......... Ms. Brown-Waite X ........ .........
(FL).
Mr. Green...................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mr. Cleaver.................... ........ X ......... Mr. Gerlach...... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Pearce....... ........ ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Davis (TN)................. ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Sires...................... ........ X ......... Mr. Davis (KY)... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McHenry...... ........ ........ .........
Mr. Ellison.................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Klein...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Mahoney (FL)............... ........ X ......... Mrs. Bachmann.... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Roskam....... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Marchant..... X ........ .........
Mr. Murphy..................... ........ X .........
Mr. Donnelly................... ........ X .........
Mr. Wexler..................... ........ X .........
Mr. Marshall................... ........ X .........
Mr. Boren...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
An amendment by Mr. Biggert, No. 24, an amendment in the
na- ture of a substitute, was not agreed to by a record vote of
28 yeas and 36 nays (Record vote FC-45):
RECORD VOTE NO. FC-45
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Baker........ X ........ .........
Ms. Waters..................... ........ X ......... Ms. Pryce (OH)... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Castle....... X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. King (NY).... X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Royce........ X ........ .........
Mr. Watt....................... ........ X ......... Mr. Lucas........ X ........ .........
Mr. Ackerman................... ........ ........ ......... Mr. Paul......... ........ ........ .........
Ms. Carson..................... ........ X ......... Mr. Gillmor...... X ........ .........
Mr. Sherman.................... ........ X ......... Mr. LaTourette... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Moore (KS)................. ........ X ......... Mr. Jones........ ........ ........ .........
Mr. Capuano.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Shays........ X ........ .........
Mr. Clay....................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mrs. McCarthy.................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Feeney....... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Scott...................... ........ X ......... Ms. Brown-Waite X ........ .........
(FL).
Mr. Green...................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mr. Cleaver.................... ........ X ......... Mr. Gerlach...... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Pearce....... ........ ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Davis (TN)................. ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Sires...................... ........ X ......... Mr. Davis (KY)... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McHenry...... ........ ........ .........
Mr. Ellison.................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Klein...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Mahoney (FL)............... ........ X ......... Mrs. Bachmann.... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Roskam....... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Marchant..... X ........ .........
Mr. Murphy..................... ........ X .........
Mr. Donnelly................... ........ X .........
Mr. Wexler..................... ........ X .........
Mr. Marshall................... ........ X .........
Mr. Boren...................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The following other amendments were also considered by the
Committee:
An amendment by Mr. Hodes, No. 1, regarding failure to pay
amounts from escrow accounts for single family mortgages, was
agreed to by a voice vote.
An amendment by Mr. Donnelly, No. 2, adding manufactured
housing, was agreed to by a voice vote.
An amendment by Mr. Donnelly, No. 3, adding the definition
of real estate, was agreed to by a voice vote.
An amendment by Mrs. McCarthy, No. 4, requiring a mandatory
notice, was agreed to by a voice vote.
An amendment by Mr. Frank, No. 5, adding participation of
mortgage brokers and correspondent lenders, was agreed to, as
amended, by a voice vote.
An amendment by Mr. Green to the amendment offered by Mr.
Frank, No. 5a, adding additional mortgage brokers and
correspondent lenders, was agreed to, as modified by unanimous
consent, by a voice vote.
An amendment by Ms. Waters to the amendment offered by Mr.
Frank, No. 5b, inserting mortgage bankers, was agreed to by a
voice vote.
An amendment by Mrs. Maloney, No. 6, providing insurance
for single family homes with licensed day care facilities, was
agreed to by a voice vote.
An amendment by Mr. Moore of Kansas, No. 7, limiting
mortgage insurance premiums was agreed to by a voice vote.
An amendment by Mr. Frank, No. 8, clarifying disposition of
certain properties, was agreed to by a voice vote.
An amendment by Mr. Marshall, No. 10, putting a limitation
on origination fees, was agreed to by a voice vote.
An amendment by Mrs. Capito, No. 11, requiring acceptable
forms of identification for FHA mortgagors, was agreed to by a
voice vote.
An amendment by Mr. Green, No. 12, establishing a pilot
program for automated process for borrowers without sufficient
credit history, was agreed to by a voice vote.
An amendment by Mrs. Biggert, No. 13, requiring
notification and availability to mortgagor, was not agreed to
by a voice vote.
An amendment by Mr. McHenry, No. 14, requiring mortgage
disclosures, was offered and withdrawn.
An amendment by Ms. Waters, No. 18, expanding underwriting
standards, was agreed to by a voice vote.
An amendment by Mr. Miller of California, No. 19, regarding
certification requirements, was agreed to by a voice vote.
An amendment by Mr. Neugebauer, No. 20, the question was
divided: The first part, dealing with authorization of
appropriations, was not agreed to by a voice vote. The second
part, authorizing a HUD study and report, was agreed to by a
voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 1852 contains a number of provisions designed to
expand the use and improve the efficiency of Federal Housing
Administration (FHA) insured loan programs. A major focus of
the bill is to modernize the FHA Title II single family loan
program, through provisions to raise loan limits in high cost
areas, to authorize zero down payment loans, to permit risk-
based pricing, and to direct HUD to modify underwriting
guidelines in order to serve higher credit risk borrowers.
These changes are augmented by disclosure requirements to
ensure that borrowers make informed mortgage choices and
consumer protections for higher risk borrowers and borrowers
with reduced down payments.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
June 11, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1852, the
Expanding American Homeownership Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susanne S.
Mehlman.
Sincerely,
Peter R. Orszag.
Enclosure.
H.R. 1852--Expanding American Homeownership Act of 2007
Summary: H.R. 1852 would amend the National Housing Act to
authorize the Federal Housing Administration (FHA) to implement
a new pricing structure for the mortgage guarantees it offers.
This legislation also would remove the statutory limitation on
the number of reverse mortgages that FHA can insure and would
make other changes to the Home Equity Conversion Mortgage
(HECM) program. In addition, this legislation would authorize
the appropriation of funds to provide certain borrowers with
financial counseling and to establish a new affordable housing
fund.
Enacting H.R. 1852 would increase direct spending by
allowing the Department of Housing and Urban Development (HUD)
to sell certain properties at below-market prices without an
appropriation of funds to offset any forgone sales proceeds.
That provision would modify the cost of some previous and
outstanding loan guarantees. As a result, CBO estimates that
enacting H.R. 1852 would increase direct spending by $16
million in 2007.
CBO also estimates that implementing H.R. 1852 would result
in a net increase in offsetting collections (a credit against
discretionary spending) of $313 million in 2008 and $628
million over the 2008-2012 period, assuming that appropriation
laws necessary to implement the FHA programs and the Mortgage-
Backed Securities (MBS) program of the Government National
Mortgage Association (GNMA) are enacted.
H.R. 1852 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1852 is shown in the following table.
The cost of this legislation falls within budget functions 370
(mortgage and housing credit) and 600 (income security).
TABLE 1. ESTIMATED BUDGETARY IMPACT OF H.R. 1852
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2007 2008 2009 2010 2011 2012
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Discounted Multifamily Sale
Estimated Budget Authority............................ 2 0 0 0 0 0
Estimated Outlays..................................... 2 0 0 0 0 0
Noncompetitive Multifamily Sales
Estimated Budget Authority............................ 14 0 0 0 0 0
Estimated Outlays..................................... 14 0 0 0 0 0
Total Changes
Estimated Budget Authority............................ 16 0 0 0 0 0
Estimated Outlays..................................... 16 0 0 0 0 0
SPENDING SUBJECT TO APPROPRIATION
Net FHA and GNMA Spending, and Spending for Housing
Counseling Under Current Law \1\
Estimated Authorization Level......................... -900 -402 -425 -425 -425 -425
Estimated Outlays..................................... -900 -365 -419 -425 -425 -425
Total Changes
Estimated Authorization Level..................... 0 -12 -16 -17 -22 -28
Estimated Outlays................................. 0 -313 -139 -36 -65 -75
Net Spending Under H.R. 1852
Estimated Authorization Level......................... -900 -414 -441 -442 -447 -453
Estimated Outlays..................................... -900 -678 -558 -461 -490 -500
----------------------------------------------------------------------------------------------------------------
\1\ The figures for 2007 are CBO's current estimates of budget authority and outlays for FHA's multifamily and
single-family programs, the HECM program, HUD's housing counseling program, and for GNMA's MBS program under
the enacted appropriation levels for this year. The 2008-2012 levels are CBO's baseline estimates of the net
offsetting collections that would be generated by those programs, assuming that appropriation laws necessary
to implement FHA and GNMA programs are enacted.
Note: GNMA = Government National Mortgage Association; HECM = Home Equity Conversion Mortgage; MBS = Mortgage-
Backed Securities; HUD = Department of Housing and Urban Development; FHA = Federal Housing Administration.
Basis of Estimate: For this estimate, CBO assumes that H.R.
1852 will be enacted before the end of fiscal year 2007, that
the amounts necessary to implement the bill will be
appropriated for each year, and that appropriation laws
necessary to implement the FHA and GNMA programs will be
enacted each year.
Changes in direct spending
Prior to the enactment of the Deficit Reduction Act (DRA)
of 2005, HUD often sold foreclosed multifamily properties to
state and local governments as part of its right of first
refusal program (that is, a noncompetitive program in which HUD
negotiated directly with the buyer). Frequently, state and
local governments purchased those properties for nominal
amounts, such as $1. The DRA bars HUD from taking into account
the cost of rehabilitating the foreclosed property and the
expense of maintaining existing affordability restrictions on
the property (for example, limiting the amount of rent paid by
tenants) when setting the price for a noncompetitive property
sale. As a result, noncompetitive sales no longer occur.
Potential buyers (including state and local governments) have
concluded that the price HUD sets for a noncompetitive sale
exceeds the amount that bidders would offer in a competitive
auction. DRA authorizes HUD to sell foreclosed properties at
lower prices only if funds have been appropriated to offset the
forgone sales proceeds through 2010. Since the enactment of DRA
in 2006, no such appropriations have been provided.
Both sections 27 and 28 would result in below-market sales
in certain circumstances without further appropriation action.
Enacting those sections would increase direct spending because
the cash flows associated with some previous and existing loan
guarantees would be modified. The cost of a loan modification
is estimated on a net-present-value basis and recorded in the
year in which the legislation is enacted. CBO estimates that
enacting the two sections would result in a cost of $16 million
in 2007, as discussed below.
Valuation of Multifamily Properties in Noncompetitive Sales
by HUD to States and Localities. Section 27 would require HUD
to adjust for the cost of rehabilitating and maintaining
existing affordability restrictions when appraising foreclosed
properties for the purpose of calculating the price for sales
to states and localities. CBO expects that this legislation
would allow noncompetitive sales to become an attractive
alternative to competitive auctions for some state and local
governments. Consequently, we estimate that the volume of
noncompetitive sales of foreclosed properties would return to
levels that existed prior to the enactment of the DRA--about 10
property sales each year.
Based on information from HUD, CBO estimates that the price
paid in noncompetitive sales prior to enactment of DRA averaged
$1.3 million less than the price paid in competitive sales for
similar properties. Based on information from HUD, we do not
expect that HUD would return to its pre-DRA practice of
negotiating sales prices for nominal amounts. However, CBO
estimates that it is likely that the sales price in half of the
negotiated sales that would occur under H.R. 1852 would be less
than the price that would be received in an auction.
Consequently, we estimate that, on average, the government
would forgo receipts of about $5 million per year--$l million
each for about five properties per year that would be sold in
noncompetitive sales over the 2008-2010 period.
Because enacting this provision would change the expected
cash flows associated with the multifamily insurance program,
this loss of sales proceeds (which are recoveries on defaulted
loans) would be considered a modification of existing federal
loan guarantees. Under credit reform procedures, the costs of
such modifications are estimated on a net-present-value basis
and recorded in the year in which the legislation is enacted.
Assuming the bill is enacted late in fiscal year 2007, CBO
estimates that enacting this provision would result in an
increase in direct spending of $14 million in 2007. (Such
estimated costs would be recorded in 2008 if the bill is
enacted after September 30, 2007.)
Clarification of Disposition of Certain Properties. Section
28 would, under certain circumstances, exempt properties from
the sale requirements specified in the DRA. Based on
information from HUD, CBO estimates that this provision would
affect the sale of one property located in Michigan by allowing
its sale to the city government at a price below market value.
CBO estimates that the market value of the property is about $2
million, and that, under current law, it will be sold at a
competitive auction; under this provision, the property could
instead be sold to the city government for a nominal amount.
Because this section would result in a change to the cash flows
associated with the original loan guarantee, this loss of
receipts would be considered a loan modification. As a result,
CBO estimates that enacting this section would increase direct
spending by about $2 million in 2007.
Spending subject to appropriation
CBO estimates that implementing H.R. 1852 would result in
an increase in offsetting collections of $313 million in 2008
and $628 million over the 2008-2012 period, assuming enactment
of appropriation laws necessary to implement the FHA and GNMA
programs. The estimated additional offsetting collections would
stem from the authority in H.R. 1852 to expand FHA's HECM loan
program and to raise the loan limits for FHA's multifamily
program. The latter change also would result in more offsetting
collections for GNMA. Additional discretionary costs associated
with limiting a planned increase in mortgage insurance fees,
providing payment incentives to certain FHA borrowers, and
authorizing the appropriation of funds for housing counseling
and for a new affordable housing fund would be netted against
those new offsetting collections.
CBO expects that other provisions of the bill would have no
significant budgetary impact over the next 5 years. The major
provisions of the bill are discussed below. Table 2 details the
components of estimated spending subject to appropriation under
H.R. 1852.
Amendments to the HECM Loan Insurance Program. HECM loans
are considered to be ``reverse mortgages'' because they enable
homeowners who are at least 62 years of age to withdraw some of
the equity in their homes in the form of monthly payments, in a
lump sum, or through a line of credit. Under current law, FHA
is permitted to guarantee up to a cumulative total of 275,000
such loans, although this limitation has been waived through
fiscal year 2007. This cap has already been reached this year;
consequently, the program will be inactive beginning in 2008
unless the cap is amended.
Loan size is tied to loan limits that vary by geographic
region, and such loans cannot be used to purchase another home.
In addition, the origination fee charged by lenders is
calculated as a percentage of the home's value.
Enacting this legislation would remove the statutory
limitation on the number of loans that could be guaranteed, set
a single nationwide limit on the dollar amount of a HECM loan
that would be tied to the conforming loan amount, limit the
origination fee to 2 percent of the loan amount (subject to a
minimum allowable amount), and allow borrowers to use HECM
loans to purchase a new home. (Conforming loans have terms and
conditions that follow the guidelines set forth by the
Government Sponsored Enterprises (GSEs); the conforming loan
amount is $417,000.)
Implementation of the HECM program, like all of FHA's
insurance programs, is contingent on the enactment of
appropriation laws that provide annual loan commitment
authority. Thus, the estimated budgetary impact of this
proposal is considered to be discretionary, and it is tied to
the demand for HECM loans and the estimated subsidy cost of the
loan guarantees.
Because, under credit reform procedures, guarantees of HECM
loans are estimated to have negative subsidies (that is, they
earn money for the government), CBO estimates that implementing
those amendments would increase offsetting collections by about
$2.1 billion over the 2008-2012 period.
TABLE 2. ESTIMATED EFFECTS OF H.R. 1852 ON SPENDING SUBJECT TO APPROPRIATION
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2007 2008 2009 2010 2011 2012
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Net FHA and GNMA Spending, and Spending for Housing
Counseling Under Current Law \1\
Estimated Authorization Level......................... -900 -402 -425 -425 -425 -425
Estimated Outlays..................................... -900 -365 -419 -425 -425 -425
Proposed Changes
Amendments to HECM Loan Program
Estimated Authorization Level..................... 0 -370 -385 -410 -445 -480
Estimated Outlays................................. 0 -370 -385 -410 -445 -480
Higher Loan Limits for Multifamily Program
Estimated Authorization Level..................... 0 -19 -19 -19 -19 -19
Estimated Outlays................................. 0 -19 -19 -19 -19 -19
Additional GNMA Offsetting Collections
Estimated Authorization Level..................... 0 -12 -17 -19 -26 -34
Estimated Outlays................................. 0 -12 -17 -19 -26 -34
Limit on Premium Increases for Mortgage Insurance
Estimated Authorization Level..................... 0 20 43 43 43 43
Estimated Outlays................................. 0 20 43 43 43 43
Cost of Payment Incentives
Estimated Authorization Level..................... 0 16 16 16 16 16
Estimated Outlays................................. 0 16 16 16 16 16
Housing Counseling Program
Estimated Authorization Level..................... 0 58 58 58 58 58
Estimated Outlays................................. 0 6 49 58 58 58
FHA Technology Support Costs
Authorization Level............................... 0 25 25 25 25 25
Estimated Outlays................................. 0 19 25 25 25 25
Affordable Housing Fund
Estimated Authorization Level..................... 0 270 262 287 322 357
Estimated Outlays................................. 0 27 148 268 279 310
Total Changes
Estimated Authorization Level................. 0 -12 -16 -17 -22 -28
Estimated Outlays............................. 0 -313 -139 -36 -65 -75
Net Spending Under H.R. 1852
Estimated Authorization Level..................... -900 -414 -441 -442 -447 -453
Estimated Outlays................................. -900 -678 -558 -461 -490 -500
----------------------------------------------------------------------------------------------------------------
\1\ The figures for 2007 are CBO's current estimates of budget authority and outlays for FHA's multifamily and
single-family programs, the HECM program, HUD's housing counseling program, and for GNMA's MBS program under
the enacted appropriation levels for this year. The 2008-2012 levels are CBO's baseline estimates of the net
offsetting collections that would be generated by those programs, assuming that appropriation laws necessary
to implement FHA and GNMA programs are enacted.
Note: GNMA = Government National Mortgage Association; HECM = Home Equity Conversion Mortgage; MBS = Mortgage-
Backed Securities; HUD = Department of Housing and Urban Development; FHA = Federal Housing Administration.
Demand for HECM Loans. According to the National Reverse
Mortgage Lenders Association (NRMLA) and other industry
experts, the HECM program has risen in popularity in recent
years. As more consumers are becoming aware ofthe product, more
households are becoming eligible for the program (currently
over 17 million households have owners who are age 65 or older,
according to census data), and more seniors view the product as
an alternative approach to financing home-improvement projects,
medical costs, and other needs. In addition, sources in the
mortgage industry have observed an increasing demand among
seniors for new housing within senior communities. The number
of HECM loans insured by FHA more than doubled from 2003 to
2006 (18,000 loans were insured in 2003, compared with 76,000
loans in 2006). Furthermore, based on the number of HECM loans
insured as of April 2006, that volume could reach over 100,000
loans by the end of fiscal year 2007.
Based on information from FHA, NRMLA, and other industry
experts, CBO estimates that setting a single nationwide loan
limit and permitting borrowers to use HECM loans to purchase a
new home would result in a product that would be more
attractive to borrowers and more easily marketed by lenders,
resulting in increased demand for HECM loans. On the other
hand, the limit on the origination fee could result in a
program that is less profitable for certain lenders, causing
some to end or limit their participation in the program. A
lower origination fee, however, could increase the program's
attractiveness to some borrowers, assuming lenders do not
increase interest rates significantly to compensate for lower
origination fees.
Currently, the market for FHA's HECM loans appears to be
very robust, and under this bill, FHA would probably insure
more than 100,000 loans annually over the next several years.
Also, GNMA's recent decision to begin securitizing HECM loans
could result in increased activity by lenders, as investors in
the secondary mortgage market begin to invest in mortgage-
backed securities that include this product. Whether the number
of guarantees could exceed 100,000 loans on a continued basis
each year would depend on FHA's ability to administer and
manage the program in an efficient manner and on the market's
response to this bill, especially the change in the origination
fee. Based on information from FHA, CBO estimates that the
agency could insure about 110,000 loans (with a face value of
about $27 billion) in 2008. In subsequent years, we estimate
that demand would increase at the estimated rates for
appreciation in housing prices--about 2 percent to 4 percent a
year.
Subsidy Cost. Under current law, FHA guarantees of HECM
loans are estimated to result in net offsetting collections to
the federal government because guarantee fees for those
mortgages are currently estimated to more than offset the costs
of expected defaults. For 2008, the Administration's subsidy
estimate for HECM guarantees is -1.9 percent. Under the
expanded program authorized by H.R. 1852, CBO estimates that
the subsidy rate for the HECM loans would be -1.35 percent.
This reduction from the estimated rate for 2008 is due to the
increased risk FHA would experience under the proposed
nationwide loan limitation. With larger loan sizes, the
``equity cushion'' (that is the difference between the home's
value and the potential cost of a claim payment) would
decrease, leading to potentially more costly claims for FHA.
This estimated subsidy rate of -1.35 percent assumes that
the HECM loan program would not be subject to the risk-based
pricing structure authorized by the bill and described below.
CBO assumes that FHA would continue to charge fixed, up-front,
and annual fees for all HECM borrowers, regardless of any
specific evaluation of their individual risk of default. CBO
estimates that implementing this legislation would result in
additional offsetting collections of $370 million in 2008 and
$2.1 billion over the 2008-2012 period, contingent on enactment
of appropriation bills that would establish the authority to
make HECM loan guarantees by specifying annual loan commitment
levels.
Estimated Impact on Demand for Multifamily Loan Guarantees.
GNMA is responsible for guaranteeing securities backed by pools
of mortgages that are insured by the federal government. In
exchange for a fee charged to lenders or issuers of the
securities, GNMA guarantees the timely payments of scheduled
principal and interest due on the pooled mortgages that back
those securities. Because, under credit reform procedures, the
value of the fees collected by GNMA is estimated to exceed the
cost of loan defaults in each year, the Administration
estimates that the GNMA MBS program will have a subsidy rate of
-0.21 percent in 2008, resulting in the net collection of
receipts to the federal government.
Currently GNMA does not securitize HECM loans; according to
GNMA, however, securitization of those loans will begin in 2008
if the program has authority to operate beyond 2007. Under the
bill, CBO estimates that in 2008 about 5 percent of the HECM
loans would be included in GNMA's MBS program. We estimate that
in subsequent years, 10 percent to 20 percent of the HECM loans
would be securitized by GNMA. Thus, CBO estimates that those
proposed changes to the HECM program would result in additional
offsetting collections to GNMA, totaling about $40 million over
the 2008-2012 period, assuming appropriation action to
establish a dollar limitation for the GNMA securities program.
Higher Loan Limits for the Multifamily Program. Under the
National Housing Act, FHA is authorized to insure private loans
used to finance certain multifamily homes, subject to loan
limitations specified in appropriation acts. Section 26 would
increase the current limit on the value of individual loans
that FHA can guarantee in certain high-cost areas of the
country under 12 of its 20 multifamily loan guarantee programs.
(High-cost housing markets are designated by FHA and include
such cities as Boston, San Francisco, and Los Angeles.)
The maximum amount of a loan that FHA can guarantee for
multifamily housing depends on the base loan levels established
by FHA, which vary by type and size of housing within a
project. For example, the base loan limit for each unit of a
building with two-bedroom apartments without elevators is
roughly $54,000. Currently, in regions designated by FHA as
high-cost areas, the base loan limit can be increased by up to
170 percent. Thus, in a high-cost region, the loan limit for
each unit in a building with two-bedroom apartments without
elevators can be as high as $146,000 (that is, 270 percent of
the base limit). Under H.R. 1852, FHA could increase the base
loan limit by up to 215 percent in high-cost areas. (In this
example, the loan limit for that two-bedroom apartment could be
as high as $170,000.)
Estimated Impact on Demand for Multifamily Loan Guarantees.
The Federal Credit Reform Act of 1990 requires an appropriation
of the subsidy costs and administrative costs associated with
loan guarantees and direct loans. The subsidy cost is the
estimated long-term cost to the government of a loan guarantee
or a direct loan, calculated on a net-present-value basis,
excluding administrative costs. Under current law, FHA's
guarantees of multifamily loans are estimated to result in net
offsetting collections (that is, negative outlays) because the
Administration estimates that guarantee fees collected on those
mortgages will more than offset the costs of expected defaults,
calculated on a present-value basis. For 2008, CBO estimates
that the weighted average subsidy cost for the multifamily
programs subject to the loan limit increases under this
legislation is -1.9 percent. This estimate takes into account
the prohibition on increases in certain premium fees in section
30 of this legislation. In addition, CBO estimates that, under
current law, FHA will insure $4 billion to $5 billion in
multifamily loans in 2008.
If FHA made more loan guarantees as a result of the higher
cap on the value of loans in high-cost areas, the agency would
record additional offsetting collections (which would be a
reduction in discretionary spending). According to industry
experts, the current loan limits constrain new construction and
rehabilitation of multifamily housing. Based on information
from FHA field offices and realtors in certain high-cost areas,
CBO expects that, under H.R. 1852, FHA would insure an
additional 35 to 45 loans a year for multifamily projects with
a total face value of about $1 billion. We expect that the
subsidy rate for those loans over the 2008-2012 period would be
similar to the program's estimated rate of -1.9 percent for
2008 under H.R. 1852. Thus, CBO estimates that those additional
loan guarantees would increase offsetting collections to FHA
(and thus reduce outlays) by about $19 million annually over
the 2008-2012 period.
Effects on GNMA's Subsidy Costs. Because most FHA
multifamily loan guarantees are included in GNMA's MBS program,
CBO estimates that raising the loan limit would result in
additional GNMA collections of about $2 million a year over the
2008-2012 period. Those savings would affect discretionary
spending because, like FHA, GNMA requires appropriation action
to establish the total amount of its guarantees.
Raising Loan Limits for the Single-Family Program. Section
3 would raise FHA's loan limit--the dollar amount of a mortgage
that FHA can insure--for its single-family program from 87
percent of the conforming loan amount to 100 percent of the
conforming loan limit in certain geographic regions where the
cost of housing is very high. Effectively, this would be a
change from insuring loans of $362,790 today to insuring loans
of up to $417,000 in certain parts of the country. In less
expensive markets, the limit would be raised from 48 percent to
65 percent of the conforming loan limit, or a change from loan
guarantees of up to $200,160 to loan guarantees of up to
$271,050 under the bill.
CBO estimates that implementing this provision would
increase loan volume by about 8 percent a year--about $4
billion annually in additional loan guarantees--over the next
five years. This increase would stem mostly from increasing the
limit in the less expensive housing markets. Despite this
estimated increase in loan volume, CBO estimates that no
additional offsetting collections would be realized because we
expect the subsidy rate for the single-family program to be
zero over the next five years. However, because most FHA
single-family loan guarantees are included in GNMA's MBS
program, CBO estimates that raising the loan limit would result
in additional offsetting collections to GNMA of about $45
million over the 2008-2012 period. As mentioned earlier, GNMA
requires appropriation action to establish its dollar
limitation for the securities program, so those savings would
be offsets to discretionary spending.
Limit on Increases in Fees for Mortgage Insurance.
Currently, FHA has the authority to adjust fees for its
mortgage insurance programs through administrative action.
Section 30 would prohibit FHA from increasing fees unless the
increase is required to maintain the estimated credit subsidy
for the program at zero, but not less than zero. According to
the Administration, annual fees for new loan guarantees for the
apartment development and refinance programs will increase by
about 16 basis points beginning in 2008. CBO estimates that
those fee increases would affect about $2.6 billion in loan
guarantees in 2008 and over $3 billion in loan guarantees
annually in subsequent years. Furthermore, we estimate that
those fee increases would increase offsetting collections for
this program by $192 million over the 2008-2012 period. Thus,
prohibiting those fee increases would result in a loss of $192
million in discretionary offsetting collections over the next
five years.
Cost of Payment Incentives. Section 9 would authorize HUD
to provide certain payment incentives to borrowers after three
years of timely premium payments; after five years of timely
premium payments, FHA would be required to provide payment
incentives. Borrowers who have taken out zero down payment
loans or who are considered to be a higher risk of default
would be eligible for some of those incentives, which include
reductions in annual premiums and refunds of up-front premiums
upon payment of the full mortgage. CBO estimates that the
borrowers of about $7 billion in FHA-guaranteed mortgages made
annually would eventually be eligible for certain payment
incentives. Furthermore, we estimate that those payment
incentives would increase the subsidy rate for the affected
loan guarantees by an average of 0.23 percent. Under the
Federal Credit Reform Act of 1990, such costs require the
appropriation of funds. CBO estimates that appropriations of
about $16 million would be required annually over the 2008-2012
period. Section 29, which is discussed below, would authorize
appropriations for any credit subsidy required for the single-
family loan guarantee program.
Additional Authorizations of Appropriations. Section 29 of
this legislation would authorize the appropriation of funds for
various purposes in amounts that equal the net increase in
negative credit subsidy for the FHA programs resulting from
this legislation. Such appropriations would be used to provide
credit subsidies for the single-family loan guarantee program
(to the extent needed), funding for the housing counseling
program, funding to support the improvement of FHA's
technologies and processes, and funding for an affordable
housing fund, which would provide grants to support affordable
rental housing and affordable homeownership opportunities for
low-income families. Those funds are not authorized to be
appropriated each year unless HUD, by rule, determines that FHA
premiums being charged that year are sufficient to comply with
the Mutual Mortgage Insurance Fund's (MMIFs) capital ratio
requirement and are also sufficient to ensure the safety and
soundness of other FHA mortgage insurance funds.
Based on the amounts CBO estimates for the provisions
affecting the HECM and multifamily programs, we estimate that
about $2 billion would be authorized to be appropriated over
the 2008-2012 period. We further estimate that, over the next
five years, implementing these provisions would cost about $80
million for the credit subsidies associated with the payment
incentives, $229 million for the housing counseling program,
$119 million for FHA program support, and $1 billion for the
affordable housing fund.
Risk-based Pricing and Flexible Downpayment Requirements.
Currently, FHA's single-family loan guarantee program has a
flat premium structure under which all borrowers pay the same
up-front and annual fees, regardless of the borrower's
individual risk of default. According to the FHA, the up-front
fee in 2008 is expected to increase from 1.5 percent to 1.66
percent and the annual fee will rise from 0.5 percent to 0.55
percent. Furthermore, the Administration estimates that those
fee increases will result in a subsidy rate of zero for the
single-family program for 2008.
Under this legislation, FHA would have the authority to
match the fees it charges with the borrowers' risk of default
or the risk associated with a particular loan product, and to
offer guarantees for loans with little or no down payment. For
certain borrowers and types of loan products, the up-front fee
could be as high as 3 percent and the annual fee could be as
high as 0.75 percent. CBO estimates that implementing this
risk-based pricing proposal would result in a weighted subsidy
rate that is about zero. Because the subsidy rate for 2008 is
estimated to be zero under current law, CBO expects that FHA
would charge rates under H.R. 1852 that would produce a similar
result.
Intergovernmental and private-sector impact: H.R. 1852
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal costs: Susanne S. Mehlman;
impact on state, local, and tribal governments: Teri Gullo;
impact on the private sector: Paige Piper/Bach.
Estimate spproved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
man- dates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
In compliance with clause 9 of rule XXI, the Committee is
in re- ceipt of the following correspondence: Regarding section
28, the City of Ypsilanti, Michigan, submitted by Mr. Dingell:
Congress of the United States,
House of Representatives,
Washington, DC, June 15, 2007.
Hon. Barney Frank,
Chairman, House Committee on Financial Services,
Washington, DC.
Hon. Spencer Bachus,
Ranking Member, House Committee on Financial Services,
Washington, DC.
Dear Gentlemen: I am requesting the legislative language
found in Section 28 of H.R. 1852 for the City of Ypsilanti,
Michigan in fiscal year 2008. The entity that would benefit
from this provision is the City of Ypsilanti, located at City
Hall, One South Huron Street, Ypsilanti, MI 48197. The
provision would allow HUD to sell the Parkview Apartments,
located at 596 S. Hamilton Street, Ypsilanti, Michigan 48197,
at a below market rate. I certified that neither I nor my
spouse has any financial interested in this project.
Sincerely,
John D. Dingell,
Member of Congress.
Section-by-Section Analysis of the Legislation
Section 1. Short title and table of contents
Includes a table of contents and the short title of the
bill, which is the ``Expanding American Homeownership Act of
2007.''
Section 2. Findings and purposes
Includes the findings and purposes of the Act.
Section 3. Maximum principal loan obligation
Increases FHA Section 203(b)(2) single family mortgage loan
limits. Under current law, the maximum insurable mortgage loan
amount for a Single Family residence is the lesser of (a) 95
percent of the local median home price, or (b) 87 percent of
the nationwide GSE conforming loan limit--except that
notwithstanding the local median home price determination,
there is a national loan floor equal to 48 percent of the
nationwide GSE conforming loan limit. This section raises the
loan limit to the lesser of: (a) 100 percent of the local
median home price, or (b) the nationwide GSE conforming loan
limit. It also raises the nationwide loan floor from 48 percent
to 65 percent of the GSE conforming limit. In 2007, the
nationwide GSE conforming loan limit is $417,000.
Under current law, FHA loan limits for 2-, 3- and 4-unit
mortgages are statutorily set as 107 percent, 130 percent, and
150 percent of the FHA single family 1-unit median home price,
respectively. This section changes this calculation, so that
the ratio of loan limits for 2-, 3-, and 4-unit mortgages to
the FHA 1-unit mortgage limit is conformed to the same ratios
that the GSE conforming loan limits for 2-, 3-, and 4-unit
mortgages bear to the GSE conforming 1-unit loan limit.
Section 4. Extension of mortgage term
Extends the maximum loan term on FHA single family loans
from 35 to 40 years.
Section 5. Down payment simplification
The current loan-to-value (LTV) limit for an FHA single
family loan is generally 97.75 percent of a home's appraised
value, plus the upfront FHA premium--except that there are
separate LTV limits for loans of lower amounts and for loans in
states that do not have high closing costs. This section
simplifies the FHA single family statutory LTV limits to permit
loans up to 97.75 percent of appraised value, plus the upfront
FHA mortgage premium. It also creates new statutory authority
to waive this limit for ``zero- and lower-down payment
borrowers,'' as are defined in Section 6.
Also retains the current statutory 3 percent cash down
payment requirement--except for ``zero- and lower-down payment
borrowers,'' as are identified in Section 6.
Section 6. Mortgage insurance premiums for zero and lower down payment
borrowers
Defines ``zero- and lower down payment borrowers'' as
first-time homebuyers who do not comply with either the 97.75
percent LTV limit or the 3 percent cash down requirement,
referenced in Section 5.
FHA is authorized to charge upfront premiums for such
borrowers in an amount up to 3 percent, and annual premiums for
such borrowers up to .75 percent of the loan balance.
Section 7. Higher risk borrowers
Creates a definition of a ``Standard Risk'' borrower as a
borrower with a 560 or higher equivalent FICO score that
complies with LTV and 3 percent down payment requirements. Also
defines a ``Higher Risk'' borrower as one with a FICO
equivalent score below 560. Directs HUD to underwrite loans for
Higher Risk borrowers. Raises the existing statutory upfront
cap for Higher Risk borrowers from 2.25 percent to 3 percent,
but retains the .55 percent annual premium cap for such
borrowers.
Section 8. Risk-based premiums
Authorizes risk-based premiums for Zero and Lower Down
borrowers'' and ``Higher Risk'' borrowers (as defined in
Sections 6 and 7). Establishes procedures for HUD to establish
and change premiums, including a list of factors to be
considered in establishing such premiums. Also authorizes risk-
based pricing based on product type--such as fixed rate vs.
ARM, and Section 203(b) vs. Section 234 condominium loans.
Section 9. Payment incentives
Requires HUD to provide ``Payment Incentives'' for
borrowers that make on-time payments for at least the first 5
years of the loan. For zero down borrowers, such Payment
Incentives would result in a reduction of annual premiums after
such period down to statutory maximum of .55 percent. For
higher risk borrowers, Payment Incentives would result in a
reduction of annual payments after such period down to the
level that would have been charged had they not been higher
risk, plus a refund equal to the difference between the higher
upfront premium such borrowers paid and the premium paid by
Standard Risk Borrowers. HUD is also authorized to offer these
Payment Incentives to borrowers after a period of 3 years of
on-time payments.
Section 10. Borrower protections for higher risk mortgages
Authorizes HUD to require pre-purchase counseling for zero
and lower down payment borrowers and higher risk borrowers.
Requires the mortgagee to provide the borrower at loan
application a list of HUD-approved housing counseling agencies
in the area. In addition, borrowers who become 60-days
delinquent on their loan must be given notice by a housing
counseling entity of the availability of foreclosure prevention
counseling.
Requires borrowers applying for zero down and lower down
payment loans to be provided written disclosures, either
through counseling or at loan application, regarding other
mortgage loan options, the additional costs associated with
lower down payment loans and the appreciation needed to pay off
the loan, including selling costs. Also at closing, borrowers
are to be given disclosures of their payment incentive rights
and rights to loss mitigation.
Section 11. Annual reports on new programs and loss mitigation
Requires HUD to report annually on the rates of default and
foreclosure of zero and lower down payment and higher risk
borrowers, as well as actions HUD has taken with respect to
loss mitigation.
Section 12. Insurance for single family homes with licensed child care
facilities
Permits an increase in FHA single family loan limits of up
to 25 percent higher than the customary loan limit for any home
which includes space used for a licensed child care facility.
Such increase must be proportional to the amount of space that
will be used for the child care facility.
Section 13. Rehabilitation loans
Deletes obsolete language in existing section 203(k)(1) FHA
rehabilitation loans. Also makes the Section 203(k) program an
obligation of the Mutual Mortgage Insurance Fund (MMIF),
instead of its current status as an obligation of the General
Insurance Fund.
Section 14. Discretionary action
Moves existing language contained in section 203(s) of the
National Housing Act, dealing with notification requirements
about actions taken by the Secretary to suspend or revoke the
approval of a mortgagee to participate in FHA programs, to
section 202 of the National Housing Act, which contains the
basic authority of the Mortgagee Review Board.
Section 15. Insurance of condominiums and manufactured housing
Establishes a new limitation on the existing Section 234(c)
condominium program, to limit such loans in the future to take
out financing for multifamily blanket mortgages on FHA insured
section 234(d) condominium projects. Contains a conforming
amendment to Section 234(c) of the National Housing Act to
permit 40 year mortgages. Amends section 201(a) of the National
Housing Act to add a definition of condominium mortgage to the
definition section, consistent with the intent to insure
condominium mortgages under section 203 of the National Housing
Act, and to provide that condominiums may be in the form of
manufactured housing units. Modifies the definition of real
estate to permit manufactured homes to be financed, even though
they are not taxed as real property.
Section 16. Mutual mortgage insurance fund
Clarifies that the MMIF is subject to the provisions of the
Credit Reform Act of 1990, and the use of `guarantee' and
`commitment to guarantee' reflects that purpose. Directs HUD to
ensure that the MMIF remains financially sound. Also requires
HUD to provide an independent actuarial report to Congress
annually on the financial status of the Fund, and requires HUD
to submit a quarterly report on the financial status and
soundness of the Fund. Grants HUD the authority to change
premiums or underwriting standards if the Fund is at risk in
accordance with other sections of this bill.
Establishes operational goals for the Fund, which include
charging appropriate premiums commensurate with the borrower's
risk, minimizing the default risk to the Fund and to
homeowners, curtailing the impact of adverse selection on the
Fund, and meeting the housing needs of the borrowers that this
bill is designed to serve.
Makes insured mortgages that are used in conjunction with
the Homeownership Voucher program obligations of the MMIF and
makes reverse mortgages insured under section 255 of the
National Housing Act obligations of the MMIF.
Section 17. Hawaiian home land and Indian reservations
Makes single family mortgages insured on Hawaiian Home
Lands under section 247 of the National Housing Act and single
family mortgages insured on Indian Reservations under section
248 of the National Housing Act obligations of the MMIF.
Section 18. Conforming and technical amendments
Repeals certain obsolete or little used programs and makes
two other technical and conforming amendments. The programs
repealed include:
* Section 203(i) mortgage insurance for outlying
areas.
* Sections 203(o), (p) and (q) relating to certain
mortgage insurance on Indian lands.
* Section 222 mortgage insurance for servicemen. The
program is not operational and the benefits of mortgage
insurance are otherwise available under section 203.
* Section 237 special mortgage insurance for low
income families.
* Section 245 graduated payment mortgage program.
Section 19. Home equity conversion mortgages
Eliminates the current mortgage volume cap on FHA reverse
mortgages [also know as Home Equity Conversion (HECM)
mortgages]. Also provides for a uniform nationwide mortgage
loan cap on FHA reverse mortgage loans, equal to the GSE
conforming loan limit [thus eliminating the local median home
price determination otherwise used for Section 203(b) loans].
Requires HUD to establish limits on the origination fee that
may be charged for a reverse mortgage loan, which shall equal 2
percent of the original principal limit of the mortgage, be
subject to a minimum allowable amount, and provide that the
origination fee may be financed by the mortgage. Permits FHA
reverse mortgage loans to be used in cooperative units.
Requires HUD to conduct a study, to analyze the effects of
reducing premiums on both the cost to the borrowers and the
financial soundness of the program.
Section 20. Participation of mortgage brokers and correspondent lenders
Gives mortgage brokers and correspondent lenders the option
of posting a $75,000 surety bond in lieu of the existing net
worth and annual audit requirements for participation in the
FHA single family loan program. Requires GAO to conduct a study
and report to Congress within 4 years of the date of enactment
on the effect of this change, with respect to extent of
increased participation, comparison of defaults, foreclosures,
and insurance claims, and HUD supervision of the provision.
This option is repealed after five years unless HUD either
extends it based on a determination that such alternative
treatment provides comparable protection to the existing audit
and net worth requirements or modifies it pursuant to a
determination published in the Federal Register as HUD
considers appropriate to provide for such comparable
protection.
Imposes additional requirements for mortgage brokers and
correspondent lenders participating in FHA loans, including
requiring them to safeguard and account for any money handled
for the borrower, to follow reasonable and lawful instructions
from the borrower, and to act with reasonable skill, care, and
diligence.
Section 21. Conforming loan limit in disaster areas
Gives HUD the authority to increase FHA single family loan
limits up to 100 percent of the appraised value plus closing
costs and up to the nationwide GSE conforming loan limit for a
period of up to 36 months in Presidentially-declared disaster
areas.
Section 22. Failure to pay amounts from escrow accounts for single
family mortgages
Requires FHA mortgage servicers that establish escrow
accounts to make required payments by any deadline required to
avoid a penalty, unless such servicer was not provided notice
of such deadline. Authorizes HUD to increase the amount of
penalty for servicers that fail to reimburse borrowers,
including for attorneys fees incurred by the borrower, within
60 days of the failure to make a payment by a deadline. Also
prohibits submission of information by HUD or servicers that is
adverse to the credit rating or interest of the borrower, which
is based on the servicer's failure to make a payment by any
deadline.
Section 23. Acceptable identification for FHA mortgagors
Prohibits HUD from insuring any FHA loan unless the
borrower provides personal identification. Permissible forms of
identification include a Social Security card along with a
photo ID issued by the Federal or a state government, a drivers
license or ID care issued by a state in accordance with the
REAL ID Act of 2005, a passport, and a USCIS photo
identification card.
Section 24. Pilot program for automated process for borrowers without a
sufficient credit history
Requires HUD to carry out a pilot program to establish an
automated process for providing alternative credit rating
information for borrowers who have insufficient credit
histories for determining their creditworthiness. HUD may not
insure a number of mortgages under this pilot which exceeds 5
percent of the aggregate number of FHA insured mortgages in the
preceding year. Within 2 years of the bill's enactment, GAO is
required to send Congress a report identifying the number of
additional borrowers under this pilot and the impact of the
pilot on safety and soundness. This pilot sunsets after 5 years
of the bill's enactment.
Section 25. Sense of Congress regarding technology for financial
systems
Sense of Congress stating that HUD should use a portion of
the funds FHA receives from premiums in excess of what it pays
out in claims to upgrade FHA's current technology. FHA is also
encouraged to submit a report to Congress detailing the
progress it is making towards this goal and any resources it
may need to make greater progress.
Section 26. Multifamily housing mortgage limits in high cost areas
Increases maximum FHA multifamily loan limits in high cost
areas from 140 percent of the basic loan limit to 170 percent
and raises such maximum loan limits on a case by case basis
from 170 percent of the basic limit to 215 percent of such
limit.
Section 27. Valuation of multifamily properties in noncompetitive sales
by HUD to State and localities
Requires HUD to take into account the cost of
rehabilitation and maintaining existing affordability
restrictions when appraising FHA foreclosed multifamily loan
properties for the purposes of calculating the sale price under
states' and localities' first right of refusal to purchase such
properties.
Section 28. Clarification of disposition of certain properties
Clarifies grandfather provisions relating to continued
eligibility for discounted sales under the first right of
refusal of foreclosed FHA multifamily properties with respect
to the 2005 Deficit Reduction Act which eliminated such
discounted sales--by permitting transitions for which HUD
received an expression of interest in purchasing a property
from both a city government and housing commission of the city,
and for which such city government and housing commission have
resolved a previous disagreement with respect to disposition of
the property.
Section 29. Use of FHA savings for costs of mortgage insurance, housing
counseling, and affordable housing grant fund
Authorizes appropriations, in the amount equal to the net
increase in negative credit subsidy created by the bill's
provisions, for use as an affordable housing fund, for grants
to provide affordable rental housing and homeownership
opportunities for low income families--after first deducting
all of the following: (1) the amount, if any, needed to avoid a
credit subsidy appropriation for the FHA 203(b) single family
loan program in that year, (2) the amount needed to increase
nationwide funding for housing counseling grants from the
current level of $42 million to $100 million a year for each of
the next five years, and (3) $25 million each of the next five
years to increase funding for improving FHA technology,
procedures, processes, and program performance, and salaries.
No funds may be expended under this section in any year unless
HUD, by rule, makes a determination that FHA premiums being
charged that year are sufficient to comply with the Section
205(f) MMIF capital ratio requirement and are also sufficient
to ensure the safety and soundness of the other FHA mortgage
insurance funds. No negative credit subsidies from the Section
203(b) single family loan program may be used to fund
expenditures under this section. HUD shall conduct a study on
how best to update and upgrade FHA procedures, processes, and
technologies.
Section 30. Limitation on mortgage insurance premium increases
Prohibits HUD from increasing any FHA premiums above the
level in effect at the beginning of FY 2007 unless the HUD
Secretary determines that, absent such increase, a program
would require a credit subsidy appropriation.
Section 31. Savings provision
Provides that any mortgage insured before the bill's date
of enactment shall continue to be governed by laws,
regulations, orders, and terms and conditions that existed
prior to the bill's enactment.
Section 32. Implementation
Requires HUD to establish by notice any additional
requirements necessary to carry out the provisions of this
bill, which notice shall take immediate effect.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
NATIONAL HOUSING ACT
* * * * * * *
TITLE I--HOUSING RENOVATION AND MODERNIZATION
* * * * * * *
insurance of mortgages
Sec. 8. (a) * * *
(b) To be eligible for insurance under this section, a
mortgage shall--
(1) have been made to[, and be held by,] a mortgagee
approved by the Secretary [as responsible and able to
service the mortgage properly];
* * * * * * *
TITLE II--MORTGAGE INSURANCE
definitions
Sec. 201. [As used in section 203 of this title--] As used
in this title and for purposes of participation in insurance
programs under this title, except as specifically provided
otherwise, the following definitions shall apply:
[(a)] (1) The term ``mortgage'' means (A) a first
mortgage on real estate, in fee simple, [or on a
leasehold (1)] (B) a first mortgage on a leasehold on
real estate (i) under a lease for not less than ninety-
nine years which is renewable [or (2)], or (ii) under a
lease having a period of not less than ten years to run
beyond the maturity date of the mortgage, or (C) a
first mortgage given to secure the unpaid purchase
price of a fee interest in, or long-term leasehold
interest in, real estate consisting of a one-family
unit in a multifamily project, including a project in
which the dwelling units are attached, or are
manufactured housing units, semi-detached, or detached,
and an undivided interest in the common areas and
facilities which serve the project; and the term
``first mortgage'' means such classes of first liens as
are commonly given to secure advances on, or the unpaid
purchase price of, real estate, under the laws of the
State in which the real estate is located, together
with the credit instrument, if any, secured thereby.
[(b) The term ``mortgagee'' includes the original lender
under a mortgage, and his successors and assigns approved by
the Secretary; and the term ``mortgagor'' includes the original
borrower under a mortgage and his successors and assigns.]
(2) The term ``mortgagee'' means any of the following
entities, and its successors and assigns, to the extent
such entity is approved by the Secretary:
(A) Qualification by audit and net worth.--A
lender, or mortgage broker, or correspondent
lender, who--
(i) makes, underwrites, and services
mortgages;
(ii) submits to the Secretary such
financial audits performed in
accordance with the standards for
financial audits of the Government
Auditing Standards issued by the
Comptroller General of the United
States;
(iii) meet the minimum net worth
requirement that the Secretary shall
establish; and
(iv) complies with such other
requirements as the Secretary may
establish.
(B) Qualification of correspondent lenders by
surety bond.--Except as provided in
subparagraph (D), a correspondent lender who--
(i) closes a mortgage in its name but
does not underwrite or service the
mortgage;
(ii) posts a surety bond, in lieu of
any requirement to provide audited
financial statements or meet a minimum
net worth requirement, in--
(I) a form satisfactory to
the Secretary; and
(II) an amount of $75,000, as
such amount is adjusted
annually by the Secretary (as
determined under regulations of
the Secretary) by the change
for such year in the Consumer
Price Index for All Urban
Consumers published monthly by
the Bureau of Labor Statistics
of the Department of Labor; and
(iii) complies with such other
requirements as the Secretary may
establish.
(C) Qualification of brokers by surety
bond.--Except as provided in subparagraph (D),
a mortgage broker who--
(i) closes the mortgage in the name
of the lender and does not make,
underwrite, or service the mortgage;
(ii) is licensed, under the laws of
the State in which the property that is
subject to the mortgage is located, to
act as a mortgage broker in such State;
(iii) posts a surety bond in
accordance with the requirements of
subparagraph (B)(ii); and
(iv) complies with such other
requirements as the Secretary may
establish.
(D) Conditions for continued applicability.--
(i) Subparagraphs (B) and (C) shall continue to
apply after the expiration of the 5-year period
beginning on the date of the enactment of the
Expanding American Homeownership Act of 2007
only if, after the expiration of the 4-year
period beginning upon such date of enactment
and taking into consideration the report
submitted in accordance with section 19(b) of
such Act, the Secretary--
(I) makes a determination that such
subparagraphs provide protection to
mortgage insurance funds for mortgages
insured under this title that are
comparable to the protection provided
by the requirements for mortgagees
under this title as in effect
immediately before the enactment of
such Act; and
(II) publishes in the Federal
Register a notice of suchdetermination
and an order extending the
applicability of such subparagraphs.
(ii) If, taking into consideration such
report, the Secretary makes a determination
after the expiration of such 4-year period that
subparagraphs (B) and (C) do not provide
protection as referred to in clause (i) of this
subparagraph, the Secretary may, by order
published in the Federal Register, provide for
the participation, after the expiration of the
5-year period referred to in clause (i), of
correspondent lenders and mortgage brokers as
mortgagees in the insurance programs under this
title in accordance with subparagraphs (B) and
(C) as modified by the Secretary as the
Secretary considers appropriate to provide such
protection.
(E) Additional mortgage broker
requirements.--
(i) In addition to the requirements
under subparagraphs (A) and (C) and to
duties imposed under other statutes or
common law, to be eligible as a
mortgagee under this section, a broker
shall--
(I) safeguard and account for
any money handled for the
borrower;
(II) follow reasonable and
lawful instructions from the
borrower; and
(III) act with reasonable
skill, care, and diligence.
(ii) For purposes of this
subparagraph, a loan correspondent
shall be considered to be a mortgage
broker.
(iii) The duties and standards of
care created in this subparagraph shall
not be waived or modified.
(iv) Any broker found by the
Secretary to have violated the
requirements of this subparagraph may
not originate mortgage loans insured
under this title.
(3) The term ``mortgagor'' includes the original
borrower under a mortgage and the successors and
assigns of the original borrower.
[(c)] (4) The term ``maturity date'' means the date
on which the mortgage indebtedness would be
extinguished if paid in accordance with periodic
payments provided for in the mortgage.
[(d)] (5) The term ``State'' includes the several
States and Puerto Rico, the District of Columbia, Guam,
[the Trust Territory of the Pacific Islands] the
Commonwealth of the Northern Mariana Islands, American
Samoa, and the Virgin Islands.
[(e)] (6) The term ``family member'' means, with
respect to a mortgagor under such section, a child,
parent, or grandparent of the mortgagor (or the
mortgagor's spouse). In determining whether any of the
relationships referred to in the preceding sentence
exist, a legally adopted son or daughter of an
individual (and a child who is a member of an
individual's household, if placed with such individual
by an authorized placement agency for legal adoption by
such individual), and a foster child of an individual,
shall be treated as a child of such individual by
blood.
[(f)] (7) The term ``child'' means, with respect to a
mortgagor under such section, a son, stepson, daughter,
or stepdaughter of such mortgagor.
(8) The term ``child care facility'' means a facility
that--
(A) has as its purpose the care of children
who are less than 12 years of age; and
(B) is licensed or regulated by the State in
which it is located (or, if there is no State
law providing for such licensing and regulation
by the State, by the municipality or other
political subdivision in which the facility is
located).
Such term does not include facilities for school-age
children primarily for use during normal school hours.
(9) The term ``real estate'' means land and all
natural resources and structures permanently affixed to
the land, including residential buildings and
stationary manufactured housing. The Secretary may not
require, for treatment of any land or other property as
real estate for purposes of this title, that such land
or property be treated as real estate for purposes of
State taxation.
FEDERAL HOUSING ADMINISTRATION OPERATIONS
Sec. 202. [(a) Mutual Mortgage Insurance Fund.--There is
hereby created a Mutual Mortgage Insurance Fund (hereinafter
referred to as the ``Fund''), which shall be used by the
Secretary as a revolving fund for carrying out the provisions
of this title with respect to mortgages insured under section
203 as hereinafter provided, and there shall be allocated
immediately to such Fund the sum of $10,000,000 out of funds
made available to the Secretary for the purposes of this
title.]
(a) Mutual Mortgage Insurance Fund.--
(1) Establishment.--Subject to the provisions of the
Federal Credit Reform Act of 1990, there is hereby
created a Mutual Mortgage Insurance Fund (in this title
referred to as the ``Fund''), which shall be used by
the Secretary to carry out the provisions of this title
with respect to mortgages insured under section 203.
The Secretary may enter into commitments to guarantee,
and may guarantee, such insured mortgages.
(2) Limit on loan guarantees.--The authority of the
Secretary to enter into commitments to guarantee such
insured mortgages shall be effective for any fiscal
year only to the extent that the aggregate original
principal loan amount under such mortgages, any part of
which is guaranteed, does not exceed the amount
specified in appropriations Acts for such fiscal year.
(3) Fiduciary responsibility.--The Secretary has a
responsibility to ensure that the Mutual Mortgage
Insurance Fund remains financially sound.
(4) Annual independent actuarial study.--The
Secretary shall provide for an independent actuarial
study of the Fund to be conducted annually, which shall
analyze the financial position of the Fund. The
Secretary shall submit a report annually to the
Congress describing the results of such study and
assessing the financial status of the Fund. The report
shall recommend adjustments to underwriting standards,
program participation, or premiums, if necessary, to
ensure that the Fund remains financially sound.
(5) Quarterly reports.--During each fiscal year, the
Secretary shall submit a report to the Congress for
each quarter, which shall specify for mortgages that
are obligations of the Fund--
(A) the cumulative volume of loan guarantee
commitments that have been made during such
fiscal year through the end of the quarter for
which the report is submitted;
(B) the types of loans insured, categorized
by risk;
(C) any significant changes between actual
and projected claim and prepayment activity;
(D) projected versus actual loss rates; and
(E) updated projections of the annual subsidy
rates to ensure that increases in risk to the
Fund are identified and mitigated by
adjustments to underwriting standards, program
participation, or premiums, and the financial
soundness of the Fund is maintained.
The first quarterly report under this paragraph shall
be submitted on the last day of the first quarter of
fiscal year 2008, or upon the expiration of the 90-day
period beginning on the date of the enactment of the
Expanding American Homeownership Act of 2007, whichever
is later.
(6) Adjustment of premiums.--If, pursuant to the
independent actuarial study of the Fund required under
paragraph (5), the Secretary determines that the Fund
is not meeting the operational goals established under
paragraph (8) or there is a substantial probability
that the Fund will not maintain its established target
subsidy rate, the Secretary may either make
programmatic adjustments under section 203 as necessary
to reduce the risk to the Fund, or make appropriate
premium adjustments.
(7) Operational goals.--The operational goals for the
Fund are--
(A) to charge borrowers under loans that are
obligations of the Fund an appropriate premium
for the risk that such loans pose to the Fund;
(B) to minimize the default risk to the Fund
and to homeowners;
(C) to curtail the impact of adverse
selection on the Fund; and
(D) to meet the housing needs of the
borrowers that the single family mortgage
insurance program under this title is designed
to serve.
* * * * * * *
(c) Mortgagee Review Board.--
(1) * * *
* * * * * * *
(7) Definition of ``mortgagee''.--For purposes of
this subsection, the term ``mortgagee'' means--
(A) a mortgagee, as defined in section 201,
approved under this Act;
[(B) a lender or a loan correspondent
approved under title I of this Act;]
[(C)] (B) a branch office or subsidiary of
the mortgagee, lender, or loan correspondent;
or
[(D)] (C) a director, officer, employee,
agent, or other person participating in the
conduct of the affairs of the mortgagee,
lender, or loan correspondent.
* * * * * * *
[(s)] (e) Whenever the Secretary has taken any
discretionary action to suspend or revoke the approval of any
mortgagee to participate in any mortgage insurance program
under this title, the Secretary shall provide prompt notice of
the action and a statement of the reasons for the action to--
(1) * * *
* * * * * * *
[(4) the Administrator of the Farmers Home
Administration;]
(4) the Secretary of Agriculture;
* * * * * * *
[(e)] (f) Appraisal Standards.--(1) * * *
* * * * * * *
(3) Direct Endorsement Program.--
(A) * * *
(B) Any appraisal conducted pursuant to subparagraph
(A) shall be conducted by an individual who complies
with the qualifications or standards for appraisers
established by the Secretary pursuant to [section
202(e) of the National Housing Act] this subsection.
* * * * * * *
insurance of mortgages
Sec. 203. (a) * * *
(b) To be eligible for insurance under this section a
mortgage shall comply with the following:
(1) Have been made to[, and be held by,] a mortgagee
approved by the Secretary [as responsible and able to
service the mortgage properly].
(2) Involve a principal obligation (including such
initial service charges, appraisal, inspection, and
other fees as the Secretary shall approve) in an
amount--
[(A) not to exceed the lesser of--
[(i) in the case of a 1-family
residence, 95 percent of the median 1-
family house price in the area, as
determined by the Secretary; in the
case of a 2-family residence, 107
percent of such median price; in the
case of a 3-family residence, 130
percent of such median price; or in the
case of a 4-family residence, 150
percent of such median price; or
[(ii) 87 percent of the dollar amount
limitation determined under section
305(a)(2) of the Federal Home Loan
Mortgage Corporation Act for a
residence of the applicable size;
except that the dollar amount
limitation in effect for any area under
this subparagraph may not be less than
the greater of the dollar amount
limitation in effect under this section
for the area on the date of the
enactment of the Departments of
Veterans Affairs and Housing and Urban
Development, and Independent Agencies
Appropriations Act for Fiscal Year 1999
or 48 percent of the dollar limitation
determined under section 305(a)(2) of
the Federal Home Loan Mortgage
Corporation Act for a residence of the
applicable size; and
[(B) not to exceed an amount equal to the sum
of--
[(i) the amount of the mortgage
insurance premium paid at the time the
mortgage is insured; and
[(ii) in the case of--
[(I) a mortgage for a
property with an appraised
value equal to or less than
$50,000, 98.75 percent of the
appraised value of the
property;
[(II) a mortgage for a
property with an appraised
value in excess of $50,000 but
not in excess of $125,000,
97.65 percent of the appraised
value of the property;
[(III) a mortgage for a
property with an appraised
value in excess of $125,000,
97.15 percent of the appraised
value of the property; or
[(IV) notwithstanding
subclauses (II) and (III), a
mortgage for a property with an
appraised value in excess of
$50,000 that is located in an
area of the State for which the
average closing cost exceeds
2.10 percent of the average,
for the State, of the sale
price of properties located in
the State for which mortgages
have been executed, 97.75
percent of the appraised value
of the property.]
(A) not to exceed the lesser of--
(i) in the case of a 1-family
residence, the median 1-family house
price in the area, as determined by the
Secretary; and in the case of a 2-, 3-,
or 4-family residence, the percentage
of such median price that bears the
same ratio to such median price as the
dollar amount limitation in effect
under section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-
family residence, respectively, bears
to the dollar amount limitation in
effect under such section for a 1-
family residence; or
(ii) the dollar amount limitation
determined under such section 305(a)(2)
for a residence of the applicable size;
except that the dollar amount limitation in
effect for any area under this subparagraph may
not be less than the greater of (I) the dollar
amount limitation in effect under this section
for the area on October 21, 1998, or (II) 65
percent of the dollar limitation determined
under such section 305(a)(2) for a residence of
the applicable size; and
(B) not to exceed an amount equal to the sum
of--
(i) the amount of the mortgage
premium paid at the time the mortgage
is insured; and
(ii)(I) except as provided in
subclause (II), 97.75 percent of the
appraised value of the property; or
(II) in the case only of a mortgage
described in subsection (c)(3), the
appraised value of the property, plus
any initial service charges, appraisal,
inspection, and other fees in
connection with the mortgage as
approved by the Secretary.
For purposes of the preceding sentence, the term
``area'' means a metropolitan statistical area as
established by the Office of Management and Budget; and
the median 1-family house price for an area shall be
equal to the median 1-family house price of the county
within the area that has the highest such median price.
[For purposes of this paragraph, the term ``average
closing cost'' means, with respect to a State, the
average, for mortgages executed for properties that are
located within the State, of the total amounts (as
determined by the Secretary) of initial service
charges, appraisal, inspection, and other fees (as the
Secretary shall approve) that are paid in connection
with such mortgages. Notwithstanding any other
provision of this section, in any case where the
dwelling is not approved for mortgage insurance prior
to the beginning of construction, such mortgage shall
not exceed 90 per centum of the entire appraised value
of the property as of the date the mortgage is accepted
for insurance, unless (i) the dwelling was completed
more than one year prior to the application for
mortgage insurance, or (ii) the dwelling was approved
for guaranty, insurance, or a direct loan under chapter
37 of title 38, United States Code, prior to the
beginning of construction, or (iii) the dwelling is
covered by a consumer protection or warranty plan
acceptable to the Secretary and satisfies all
requirements which would have been applicable if such
dwelling had been approved for mortgage insurance prior
to the beginning of construction. As used herein, the
term ``veteran'' means any person who served on active
duty in the armed forces of the United States for a
period of not less than 90 days (or as certified by the
Secretary of Defense as having performed extra-
hazardous service), and who was discharged or released
therefrom under conditions other than dishonorable,
except that persons enlisting in the armed forces after
September 7, 1980, or entering active duty after
October 16, 1981, shall have their eligibility
determined in accordance with section 3103A(d) of title
38, United States Code.]
* * * * * * *
[Notwithstanding any other provision of this
paragraph, the Secretary may not insure, or enter into
a commitment to insure, a mortgage under this section
that is executed by a first-time homebuyer and that
involves a principal obligation (including such initial
service charges, appraisal, inspection, and other fees
as the Secretary shall approve) in excess of 97 percent
of the appraised value of the property unless the
mortgagor has completed a program of counseling with
respect to the responsibilities and financial
management involved in homeownership that is approved
by the Secretary; except that the Secretary may, in the
discretion of the Secretary, waive the applicability of
this requirement.]
Notwithstanding any other provision of this
paragraph, the amount that may be insured under this
section may be increased by up to 25 percent if such
increase is necessary to account for the increased cost
of the residence due to an increased need of space in
the residence for locating and operating a child care
facility (as such term is defined in section 201)
within the residence, but only if a valid license or
certificate of compliance with regulations described in
section 201(g)(2) has been issued for such facility as
of the date of the execution of the mortgage, and only
if such increase in the amount insured is proportional
to the amount of space of such residence that will be
used for such facility.
(3) Have a maturity satisfactory to the Secretary,
but not to exceed, in any event, [thirty-five years (or
thirty years if such mortgage is not approved for
insurance prior to construction)] forty years from the
date of the beginning of amortization of the mortgage.
* * * * * * *
[(9) Be executed by a mortgagor who shall have paid
on account of the property (except with respect to a
mortgage executed by a mortgagor who is a veteran) at
least 3 per centum, or such larger amount as the
Secretary may determine, of the Secretary's estimate of
the cost of acquisition (excluding the mortgage
insurance premium paid at the time the mortgage is
insured) in cash or its equivalent: Provided, That with
respect to a mortgage executed by a mortgagor who is
sixty years of age or older as of the date the mortgage
is endorsed for insurance or with respect to a mortgage
meeting the requirements of subsection (i) of this
section, or with respect to a mortgage covering a
single-family home being purchased under the low-income
housing demonstration project assisted pursuant to
section 207 of the Housing Act of 1961, or with respect
to a mortgage covering a housing unit in connection
with a homeownership program under the Homeownership
and Opportunity Through HOPE Act, the mortgagor's
payment required by this subsection may be paid by a
corporation or person other than the mortgagor under
such terms and conditions as the Secretary may
prescribe: Provided further, That for]
(9) Except in the case of a mortgage described in
subsection (c)(3), be executed by a mortgagor who shall
have paid on account of the property, in cash or its
equivalent, at least 3 percent of the Secretary's
estimate of the cost of acquisition (excluding the
mortgage insurance premium paid at the time the
mortgage is insured). For purposes of this paragraph,
the Secretary shall consider as cash or its equivalent
any amounts borrowed from a family member (as such term
is defined in section 201), subject only to the
requirements that, in any case in which the repayment
of such borrowed amounts is secured by a lien against
the property, such lien shall be subordinate to the
mortgage and the sum of the principal obligation of the
mortgage and the obligation secured by such lien may
not exceed 100 percent of the appraised value of the
property plus any initial service charges, appraisal,
inspection, and other fees in connection with the
mortgage.
(10) Borrower protections for certain mortgages.--
Except as otherwise specifically provided in this
paragraph, in the case of any mortgage referred to in
paragraph (2)(C) or (3) of subsection (c), the
following requirements shall apply:
(A) Disclosures.--
(i) Required disclosures.--In
addition to any disclosures that are
otherwise required by law or by the
Secretary for single family mortgages,
the mortgagee shall disclose to the
mortgagor the following information:
(I) At application.--At the
time of application for the
loan involved in the mortgage--
(aa) a list of
counseling agencies
approved by the
Secretary in the area
of the applicant; and
(bb) if the mortgagor
is not provided
counseling in
accordance with
subparagraph (B), the
information required
under subclauses (I),
(II), and (III) of
subparagraph (B)(iii)
to be provided to the
mortgagor.
(II) At execution.--At the
time of entering into the
mortgage--
(aa) the terms of the
mandatory 5-year
payment incentive
required under
subsection
(c)(7)(A)(ii); and
(bb) a statement that
the mortgagor has a
right under contract to
loss mitigation.
(III) Other information.--Any
other additional information
that the Secretary determines
is appropriate to ensure that
the mortgagor has received
timely and accurate information
about the program under
paragraph (2)(C) or (3) of
subsection (c), as applicable.
(ii) Penalties for failure to provide
required disclosures.--The Secretary
may establish and impose appropriate
penalties for failure of a mortgagee to
provide any disclosure required under
clause (i).
(iii) No private right of action.--
This subparagraph shall not create any
private right of action on behalf of
the mortgagor.
(B) Counseling.--
(i) Allowable requirement.--The
Secretary may, in the discretion of the
Secretary, require that the mortgagor
shall have received counseling that
complies with the requirements of this
subparagraph.
(ii) Terms of counseling.--Counseling
under this subparagraph shall be
provided--
(I) prior to application for
the loan involved in the
mortgage;
(II) by a third party (other
than the mortgagee) who is
approved by the Secretary, with
respect to the responsibilities
and financial management
involved in homeownership;
(III) on an individual basis
to the mortgagor by a
representative of the approved
third-party counseling entity;
and
(IV) in person, to the
maximum extent possible.
(iii) Topics.--In the case only of a
mortgage referred to in subsection
(c)(3), counseling under this
subparagraph shall include providing
to, and discussing with, the
mortgagor--
(I) information regarding
homeownership options other
than a mortgage that is subject
to this paragraph, other zero-
or low-downpayment mortgage
options that are or may become
available to the mortgagor, the
financial implications of
entering into a mortgage
(including a mortgage subject
to this paragraph), and any
other information that the
Secretary may require;
(II) a written disclosure
that sets forth the amount and
the percentage by which a
property with a mortgage that
is subject to this paragraph
must appreciate for the
mortgagor to recover the
principal amount of the
mortgage, the costs financed
under the mortgage, and the
estimated costs involved in
selling the property, if the
mortgagor were to sell the
property on each of the second,
fifth, and tenth anniversaries
of the mortgage; and
(III) a written disclosure,
as the Secretary shall require,
that specifies the effective
cost to a mortgagor of
borrowing the amount by which
the maximum amount that could
be borrowed under a mortgage
that is referred to in
subsection (c)(3) exceeds the
maximum amount that could be
borrowed under a mortgage
insured under this subsection
that is not a mortgage referred
to in such subsection, based on
average closing costs with
respect to such amount, as
determined by the Secretary;
such cost shall be expressed as
an annual interest rate over
the first 5 years of a
mortgage; the disclosure
required under this subclause
may be provided in conjunction
with the notice required under
subsection (f).
(iv) 2- and 3-family residences.--In
the case of a mortgage involving a 2-
or 3-family residence, counseling under
this subparagraph shall include (in
addition to the information required
under clause (iii)) information
regarding real estate property
management.
(C) Notice of foreclosure prevention
counseling availability.--
(i) Written agreement.--To be
eligible for insurance under this
subsection, the mortgagee shall provide
the mortgagor, at the time of the
execution of the mortgage, a written
agreement which shall be signed by the
mortgagor and under which the mortgagee
shall provide notice described in
clause (ii) to a housing counseling
entity that has agreed to provide the
notice and counseling required under
clause (iii) and is approved by the
Secretary.
(ii) Notice to counseling agency.--
The notice described in this clause,
with respect to a mortgage, is notice,
provided at the earliest time
practicable after the mortgagor becomes
60 days delinquent with respect to any
payment due under the mortgage, that
the mortgagor is so delinquent and of
how to contact the mortgagor. Such
notice may only be provided once with
respect to each delinquency period for
a mortgage.
(iii) Notice to mortgagor.--Upon
notice from a mortgagee that a
mortgagor is 60 days delinquent with
respect to payments due under the
mortgage, the housing counseling entity
shall at the earliest time practicable
notify the mortgagor of such
delinquency, that the entity makes
available foreclosure prevention
counseling that may assist the
mortgagor in resolving the delinquency,
and of how to contact the entity to
arrange for such counseling.
(iv) Ability to cure.--Failure to
provide the written agreement required
under clause (i) may be corrected by
sending such agreement to the mortgagor
not later than the earliest time
practicable after the mortgagor first
becomes 60 days delinquent with respect
to payments due under the mortgage.
Insurance provided under this
subsection may not be terminated and
penalties for such failure may not be
prospectively or retroactively imposed
if such failure is corrected in
accordance with this clause.
(v) Penalties for failure to provide
agreement.--The Secretary may establish
and impose appropriate penalties for
failure of a mortgagee to provide the
written agreement required under clause
(i).
(vi) Limitation on liability of
mortgagee.--A mortgagee shall not incur
any liability or penalties for any
failure of a housing counseling entity
to provide notice under clause (iii).
(vii) No private right of action.--
This subparagraph shall not create any
private right of action on behalf of
the mortgagor.
(viii) Delinquency period.--For
purposes of this subparagraph, the term
``delinquency period'' means, with
respect to a mortgage, a period that
begins upon the mortgagor becoming
delinquent with respect to payments due
under the mortgage and ends upon the
first subsequent occurrence of such
payments under the mortgage becoming
current or the property subject to the
mortgage being foreclosed or otherwise
disposed of.
(c)(1) * * *
[(2) Notwithstanding any other provision of this section,
each mortgage secured by a 1- to 4-family dwelling that is an
obligation of the Mutual Mortgage Insurance Fund or of the
General Insurance Fund pursuant to subsection (v) and each
mortgage that is insured under subsection (k) or section
234(c),, shall be subject to the following requirements:]
(2) Standard-Risk Mortgages.--In the case of any mortgage
that is secured by a 1- to 4-family dwelling, is an obligation
of the Mutual Mortgage Insurance Fund or of the General
Insurance Fund pursuant to subsection (v) of this section or is
insured under subsection (k) of this section or section 234(c),
for which the mortgagor has paid on account of the property, in
cash or its equivalent, at least 3 percent of the Secretary's
estimate of the cost of acquisition (excluding the mortgage
insurance premium paid at the time the mortgage is insured),
and that involves a principal obligation that complies with
subclause (I) of subsection (b)(2)(B)(ii), the following
requirements shall apply:
(A) * * *
* * * * * * *
(C) Higher-risk borrowers.--The Secretary shall
establish underwriting standards that provide for
insurance under this section of mortgages described in
the matter in this paragraph preceding subparagraph (A)
for which the mortgagor has a credit score equivalent
to a FICO score of less than 560, and may insure, and
make commitments to insure, such mortgages. Such
underwriting standards shall include establishing and
collecting premium payments that comply with the
requirements of this paragraph, except that
notwithstanding subparagraph (A), the single premium
payment collected at the time of insurance may be
established in an amount that does not exceed 3.0
percent of the amount of the original insured principal
obligation of the mortgage.
(3) Zero- and Lower-Downpayment Borrowers.--
(A) Applicability.--This paragraph shall apply to any
mortgage that--
(i) is secured by a 1- to 4-family dwelling;
(ii)(I) is an obligation of the Mutual
Mortgage Insurance Fund or of the General
Insurance Fund pursuant to subsection (v) of
this section; or
(II) is insured under subsection (k) of this
section or section 234(c);
(iii) is executed by a mortgagor who is a
first-time homebuyer; and
(iv)(I) involves a principal obligation that
does not comply with subclause (I) of
subsection (b)(2)(B)(ii) (relating to loan-to-
value ratio); or
(II) is executed by a mortgagor who has not
paid on account of the property, in cash or its
equivalent, at least 3 percent of the
Secretary's estimate of the cost of acquisition
(excluding the mortgage insurance premium paid
at the time the mortgage is insured).
(B) Up-front premiums.--The amount of any single
premium payment collected at the time of insurance may
not exceed 3.0 percent of the amount of the original
insured principal obligation of the mortgage.
(C) Annual premiums.--Except as provided in
subparagraph (D), the amount of any annual premium
payment collected may not exceed 0.75 percent of the
remaining insured principal obligation of the mortgage.
(D) Annual redetermination of premium rate.--The
Secretary shall redetermine the rates of premiums not
less than once every 12 months.
(4) Flexible Risk-Based Premiums.--In the case of a mortgage
referred to in paragraph (2)(C) or (3)(A) for which the loan
application is received by the mortgagee on or after October 1,
2007:
(A) In general.--The Secretary may establish a
mortgage insurance premium structure involving a single
premium payment collected prior to the insurance of the
mortgage or annual payments (which may be collected on
a periodic basis), or both, subject to the requirements
of subparagraph (B) and paragraph (5). Under such
structure, the rate of premiums for such a mortgage may
vary according to the credit risk associated with the
mortgage and the rate of any annual premium for such a
mortgage may vary during the mortgage term as long as
the basis for determining the variable rate is
established before the execution of the mortgage. The
Secretary may change a premium structure established
under this subclause but only to the extent that such
change is not applied to any mortgage already executed.
(B) Establishment and alteration of premium
structure.--A premium structure shall be established or
changed under subparagraph (A) only by providing notice
to mortgagees and to the Congress, at least 30 days
before the premium structure is established or changed.
(C) Annual report regarding premiums.--The Secretary
shall submit a report to the Congress annually setting
forth the rate structures and rates established and
altered pursuant to this paragraph during the preceding
12-month period and describing how such rates were
determined.
(5) Considerations for Premium Structure.--When establishing
premiums for mortgages referred to in paragraph (2)(C),
establishing premiums pursuant to paragraph (3), establishing a
premium structure under paragraph (4), and when changing such a
premium structure, the Secretary shall consider the following:
(A) The effect of the proposed premiums or structure
on the Secretary's ability to meet the operational
goals of the Mutual Mortgage Insurance Fund as provided
in section 202(a).
(B) Underwriting variables.
(C) The extent to which new pricing under the
proposed premiums or structure has potential for
acceptance in the private market.
(D) The administrative capability of the Secretary to
administer the proposed premiums or structure.
(E) The effect of the proposed premiums or structure
on the Secretary's ability to maintain the availability
of mortgage credit and provide stability to mortgage
markets.
(6) Authority to Base Premium Prices on Product Risk.--
(A) Authority.--In establishing premium rates under
paragraphs (2), (3), and (4), the Secretary may provide
for variations in such rates according to the credit
risk associated with the type of mortgage product that
is being insured under this title, which may include
providing that premium rates differ between fixed-rate
mortgages and adjustable-rate mortgages insured
pursuant to section 251, between mortgages insured
pursuant to section 203(b) and mortgages for
condominiums insured pursuant to section 234, and
between such other products as the Secretary considers
appropriate.
(B) Limitation.--Subparagraph (A) may not be
construed to authorize the Secretary to establish, for
any mortgage product, any mortgage insurance premium
rate that does not comply with the requirements and
limitations under paragraphs (2) through (5).
(7) Payment Incentives.--
(A) Authority.--With respect to mortgages referred to
in paragraph (2)(C) or (3):
(i) Discretionary 3-year payment incentive.--
The Secretary may provide, in the discretion of
the Secretary, that the payment incentive under
subparagraph (B) shall apply upon the
expiration of the 3-year period beginning upon
the time of insurance of such a mortgage.
(ii) Mandatory 5-year payment incentive.--The
Secretary shall provide that the payment
incentive under subparagraph (B) applies upon
the expiration of the 5-year period beginning
upon the time of insurance of such a mortgage.
(B) Payment incentive.--In the case of any mortgage
to which the payment incentive under this subparagraph
applies, if, during the period referred to in clause
(i) or (ii) of subparagraph (A), as applicable, all
mortgage insurance premiums for such mortgage have been
paid on a timely basis, upon the expiration of such
period the Secretary shall--
(i) reduce the amount of the annual premium
payments otherwise due thereafter under such
mortgage--
(I) in the case of a mortgage
referred to in paragraph (3), to an
amount that does not exceed the amount
of the maximum annual premium allowable
under paragraph (2)(B); and
(II) in the case of a mortgage
referred to in paragraph (2)(C), to an
amount that does not exceed the amount
of the annual premium payable at the
time of insurance of the mortgage on a
mortgage of the same product type
having the same terms, but for which
the mortgagor has a credit score
equivalent to a FICO score of 560 or
more; and
(ii) in the case only of a mortgage referred
to in paragraph (2)(C), refund to the
mortgagor, upon payment in full of the
obligation of the mortgage, any amount by which
the single premium payment for such mortgage
collected at the time of insurance exceeded the
amount of the single premium payment chargeable
under paragraph (2)(A) at the time of insurance
for a mortgage of the same product type having
the same terms, but for which the mortgagor has
a credit score equivalent to a FICO score of
560 or more.
* * * * * * *
(h) Notwithstanding any other provision of this section,
the Secretary is authorized to insure any mortgage which
involves a principal obligation not in excess of the applicable
maximum dollar limit under subsection (b) and not in excess of
100 per centum of the appraised value of a property plus any
initial service charges, appraisal, inspection and other fees
in connection with the mortgage as approved by the Secretary,
upon which there is located a dwelling designed principally for
a single-family residence, where the mortgagor establishes (to
the satisfaction of the Secretary) that his home which he
occupied as an owner or as a tenant was destroyed or damaged to
such an extent that reconstruction is required as a result of a
flood, fire, hurricane, earthquake, storm, or other
catastrophe, which the President, pursuant to Robert T.
Stafford Disaster Relief and Emergency Assistance Act, has
determined to be a major disaster. [In any case in which the
single family residence to be insured under this subsection is
within a jurisdiction in which the President has declared a
major disaster to have occurred, the Secretary is authorized,
for a temporary period not to exceed 18 months from the date of
such Presidential declaration, to enter into agreements to
insure a mortgage which involves a principal obligation of up
to 100 percent of the dollar limitation determined under
section 305(a)(2) of the Federal Home Loan Mortgage Corporation
Act for single family residence, and not in excess of 100
percent of the appraised value.] In any case in which the
single family residence to be insured under this subsection is
within a jurisdiction in which the President has declared a
major disaster to have occurred, the Secretary is authorized,
for a temporary period not to exceed 36 months from the date of
such Presidential declaration, to enter into agreements to
insure a mortgage which involves a principal obligation of up
to 100 percent of the dollar limitation determined under
section 305(a)(2) of the Federal Home Loan Mortgage Corporation
Act for a single family residence, and not in excess of 100
percent of the appraised value of the property plus any initial
service charges, appraisal, inspection and other fees in
connection with the mortgage as approved by the Secretary.
[(i) The Secretary is authorized to insure under this
section, any mortgage meeting the requirements of subsection
(b) of this section, except as modified by this subsection,
which involves a principal obligation not in excess of 75 per
centum of the limit on the principal obligation applicable to a
one-family residence under subsection (b) of this section and
not in excess of 97 per centum (or, in any case where the
dwelling is not approved for mortgage insurance prior to the
beginning of construction, unless the construction of the
dwelling was completed more than one year prior to the
application for mortgage insurance or the dwelling was approved
for guaranty, insurance, or direct loan under chapter 37 of
title 38, United States Code, prior to the beginning of
construction, 90 per centum) of the appraised value of a
property located in an area where the Secretary finds it is not
practicable to obtain conformity with many of the requirements
essential to the insurance of mortgages on housing in built-up
urban areas, upon which there is located a dwelling designed
principally for a single-family residence: Provided, That the
Secretary finds that the property with respect to which the
mortgage is executed is an acceptable risk, giving
consideration to the need for providing adequate housing for
families of low and moderate income particularly in suburban
and outlying areas or small communities: Provided further, That
under the foregoing provisions of this subsection the Secretary
is authorized to insure any mortgage issued with respect to a
farm home on a plot of land two and one-half or more acres in
size adjacent to an all-weather public road.]
* * * * * * *
(k)(1) The Secretary may, in order to assist in the
rehabilitation of one- to four-family structures used primarily
for residential purposes, insure and make commitments to insure
rehabilitation loans (including advances made during
rehabilitation) made by financial institutions [on and after
180 days following the date of enactment of the Housing and
Community Development Amendments of 1978]. Such commitments to
insure and such insurance shall be made upon such terms and
conditions which the Secretary may prescribe and which are
consistent with the provisions of subsections (b), (c), (e),
(i) and (j) of this section, except as modified by the
provisions of this subsection.
* * * * * * *
(5) All funds received and all disbursements made pursuant
to the authority established by this subsection shall be
credited or charged as appropriate, to the [General Insurance
Fund] Mutual Mortgage Insurance Fund, and insurance benefits
shall be paid in cash out of such Fund or in debentures
executed in the name of such Fund. Insurance benefits paid with
respect to loans secured by a first mortgage and insured under
this subsection shall be paid in accordance with section 204[,
except that all references in section 204 to the Mutual
Mortgage Insurance Fund shall be construed as referring to the
General Insurance Fund]. Insurance benefits paid with respect
to loans secured by a mortgage other than a first mortgage and
insured under this subsection shall be paid in accordance with
paragraphs (6) and (7) of section 220(h), except that reference
to ``this subsection'' in such paragraphs shall be construed as
referring to this subsection.
* * * * * * *
[(o)(1) Notwithstanding any other provision of this section
or any other section of this title, the Secretary is authorized
to insure, and to commit to insure, under subsection (b) of
this section as modified by this subsection a mortgage which
meets both the requirements of this subsection and such
criteria as the Secretary by regulation may prescribe to
further the purpose of this subsection, in any community where
the Secretary determines that--
[(A) temporary adverse economic conditions exist
throughout the community as a direct and primary result
of outstanding claims to ownership of land in the
community by an American Indian tribe, band, or Nation;
[(B) such ownership claims are reasonably likely to
be settled, by court action or otherwise;
[(C) as a direct result of the community's
temporarily impaired economic condition, owner
occupants of homes in the community have been
involuntarily unemployed or underemployed and have thus
incurred substantial reductions in income which
significantly impair their ability to continue timely
payment of their mortgages;
[(D) as a result, widespread mortgage foreclosures
and distress sales of homes are likely in the
community; and
[(E) fifty or more individual homeowners were joined
as parties defendant or were members of a defendant
class prior to December 31, 1976, in litigation
involving claims to ownership of land in the community
by an American Indian tribe, band, or Nation.
[(2) A mortgage shall be eligible for insurance under
subsection (b) of this section as modified by this subsection
without regard to limitations in this title relating to a
mortgagor's reasonable ability to pay, economic soundness,
marketability of title, or any other statutory restriction
which the Secretary determines is contrary to the purpose of
this subsection, but only if the mortgagor is an owner of a
home in a community specified in paragraph (1) who, as a direct
result of the community's temporarily impaired economic
condition, has been involuntarily unemployed or underemployed
and has thus incurred a substantial reduction in income which
significantly impairs the owner's ability to continue timely
payment of the mortgage. The Secretary is authorized to
encourage or afford directly to or on behalf of mortgagors
whose mortgages are insured under subsection (b) as modified by
this subsection forebearance, assignment of mortgages to the
Secretary, or such other relief as the Secretary deems
appropriate and consistent with the purpose of this subsection.
The Secretary, in connection with any mortgage insured under
subsection (b) as modified by this subsection, shall have all
statutory powers, authority, and responsibilities which the
Secretary has with respect to other mortgages insured under
subsection (b), except that the Secretary may modify such
powers, authority, or responsibilities where the Secretary
deems such action to be necessary because of the special nature
of the mortgage involved. Notwithstanding section 202 of this
title, the insurance of a mortgage under subsection (b) of this
section as modified by this subsection shall be the obligation
of the Special Risk Insurance Fund created pursuant to section
238 of this title.
[(p)(1) Notwithstanding any other provision of this section
or any other section of this title, the Secretary is authorized
to insure, and to commit to insure, under subsection (b) of
this section as modified by this subsection a mortgage which
meets both the requirements of this subsection and such
criteria as the Secretary by regulation shall prescribe to
further the purpose of this subsection, in any community where
the Secretary determines that--
[(A) temporary adverse economic conditions exist
throughout the community as a direct and primary result
of outstanding claims to ownership of land in the
community by an American Indian tribe, band, or nation;
[(B) such ownership claims are reasonably likely to
be settled, by court action or otherwise; and
[(C) fifty or more individual homeowners were joined
as parties defendant or were members of a defendant
class prior to April 1, 1980, in ligitation involving
claims to ownership of land in the community by an
American Indian tribe, band, group, or nation pursuant
to a dispute involving the Articles of Confederation,
Trade and Intercourse Act of 1790, or any similar State
or Federal law.
[(2) A mortgage shall be eligible for insurance under
subsection (b) of this section as modified by this subsection
without regard to limitations in this title relating to
marketability of title, or any other statutory restriction
which the Secretary determines is contrary to the purpose of
this subsection, but only if the mortgagor is an owner of a
home in a community specified in paragraph (1). The Secretary,
in connection with any mortgage insured under subsection (b) as
modified by this subsection, shall have all statutory powers,
authority, and responsibilities which the Secretary has with
respect to other mortgages insured under subsection (b), except
that the Secretary may modify such powers, authority, or
responsibilities where the Secretary deems such action to be
necessary because of the special nature of the mortgage
involved. Notwithstanding section 202 of this title, the
insurance of a mortgage under subsection (b) of this section as
modified by this subsection shall be the obligation of the
Special Risk Insurance Fund created pursuant to section 238 of
this title.
[(q)(1) Notwithstanding any other provision of this section
or any other section of this title, the Secretary shall insure
and commit to insure, under subsection (b) as modified by this
subsection, any mortgage secured by property located on land
that--
[(A) is within the Allegany Reservation of the Seneca
Nation of New York Indians; and
[(B) is subject to a lease entered into for a term of
99 years pursuant to the Act of February 19, 1875
(Chapter 90; 18 Stat. 330) and the Act of September 30,
1890 (Chapter 1132; 26 Stat. 558).
[(2) A mortgage shall be eligible for insurance under
subsection (b) as modified by this subsection without regard to
limitations in this title relating to marketability of title or
any other statutory restriction that the Secretary determines
is contrary to the purpose of this subsection.
[(3) The Secretary, in connection with any mortgage insured
under subsection (b) as modified by this subsection, shall have
all statutory powers, authority, and responsibilities that the
Secretary has with respect to other mortgages insured under
subsection (b), except that the Secretary may modify such
powers, authority, or responsibilities if the Secretary
determines such action to be necessary because of the special
nature of the mortgage involved.
[(4) Notwithstanding section 202, the insurance of a
mortgage under subsection (b) as modified by this subsection
shall be the obligation of the Special Risk Insurance Fund
created in section 238.]
* * * * * * *
(u)(1) * * *
(2) For purposes of this subsection--
(A) the term ``area'' [shall have the meaning given
the term under subsection (b)(2);] means a metropolitan
statistical area as established by the Office of
Management and Budget;
* * * * * * *
(v) [Notwithstanding section 202 of this title, the] The
insurance of a mortgage under this section in connection with
the assistance provided under section 8(y) of the United States
Housing Act of 1937 shall be the obligation of the [General
Insurance Fund created pursuant to section 519 of this title.
The provisions of subsections (a) through (h), (j), and (k) of
section 204 shall apply to such mortgages, except that (1) all
references in section 204 to the Mutual Mortgage Insurance Fund
or the Fund shall be construed to refer to the General
Insurance Fund, and (2) any excess amounts described in section
204(f)(1) shall be retained by the Secretary and credited to
the General Insurance Fund. The report required under this
subsection shall include the report required under section
540(c) and the report required under section 205(g).] Mutual
Mortgage Insurance Fund
* * * * * * *
classification of mortgages and insurance fund
Sec. 205. (a) * * *
* * * * * * *
[(g) The Secretary shall provide for an independent
actuarial study of the Mutual Mortage Insurance Fund to be
conducted annually and shall report annually to the Congress
regarding the financial status of the Fund.
[(h)(1) If, pursuant to the independent annual actuarial
study of the Mutual Mortgage Insurance Fund required under
subsection (g), the Secretary determines that the Mutual
Mortgage Insurance Fund is not meeting the operational goals
under paragraph (2), the Secretary may not issue distributions,
and may, by regulation, propose and implement any adjustments
to the insurance premiums under section 203(c) or section
2103(b) of the Omnibus Budget Reconciliation Act of 1990. Upon
determining that a premium change is appropriate under the
preceding sentence, the Secretary shall immediately notify
Congress of the proposed change and the reasons for the change.
Any such premium change shall not take effect before the
expiration of the 90-day period beginning upon such
notification.
[(2) The operational goals referred to in paragraph (1)
shall be--
[(A) maintaining an adequate capital ratio;
[(B) meeting the needs of homebuyers with low
downpayments and first-time homebuyers by providing
access to mortgage credit;
[(C) minimizing the risk to the Fund and to
homeowners from homeowner default; and
[(D) avoiding adverse selection.]
* * * * * * *
rental housing insurance
Sec. 207. (a) As used in this section--
(1) * * *
(2) The term ``mortgagee'' [means the original lender under
a mortgage, and its successors and assigns, and] has the
meaning given such term in section 201, except that such term
also includes the holders of credit instruments issued under a
trust mortgage or deed of trust pursuant to which such holders
act by and through a trustee therein named.
* * * * * * *
(c) To be eligible for insurance under this section a
mortgage on any property or project shall involve a principal
obligation in an amount--
(2) * * *
(3)(A) not to exceed, for such part of the property
or projects as may be attributable to dwelling use
(excluding exterior and land improvements as defined by
the Secretary), $38,025 per family unit without
bedroom, $42,120 per family unit with one bedroom,
$50,310 per family unit with two bedrooms, $62,010 per
family unit with three bedrooms, and $70,200 per family
unit with four or more bedrooms, or not to exceed
$17,460 per space; except that as to projects to
consist of elevator-type structures the Secretary may,
in his discretion, increase the dollar amount
limitations per family unit to not to exceed $43,875
per family unit without a bedroom, $49,140 per family
unit with one bedroom, $60,255 per family unit with two
bedrooms, $75,465 per family unit with three bedrooms,
and $85,328 per family unit with four or more bedrooms,
as the case may be, to compensate for the higher costs
incident to the construction of elevator type
structures of sound standards of construction and
design; and except that the Secretary may, by
regulation, increase any of the foregoing dollar amount
limitations contained in this paragraph by not to
exceed [140 percent] 170 percent in any geographical
area where the Secretary finds that cost levels so
require and by not to exceed [140 percent] 170 percent,
or [170 percent in high cost areas] 215 percent in high
cost areas, where the Secretary determines it necessary
on a project-by-project basis, but in no case may any
such increase exceed 90 percent where the Secretary
determines that a mortgage purchased or to be purchased
by the Government National Mortgage Association in
implementing its special assistance functions under
section 305 of this Act (as such section existed
immediately before November 30, 1983) is involved.
* * * * * * *
SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION.
The Secretary may not insure a mortgage under any provision
of this title unless the mortgagor under the mortgage provides
personal identification in one of the following forms:
(1) Social security card with photo identification
card or real id act identification.--
(A) A social security card accompanied by a
photo identification card issued by the Federal
Government or a State Government; or
(B) A driver's license or identification card
issued by a State in the case of a State that
is in compliance with title II of the REAL ID
Act of 2005 (title II of division B of Public
Law 109-13; 49 U.S.C. 30301 note).
(2) Passport.--A passport issued by the United States
or a foreign government.
(3) USCIS photo identification card.--A photo
identification card issued by the Secretary of Homeland
Security (acting through the Director of the United
States Citizenship and Immigration Services).
* * * * * * *
cooperative housing insurance
Sec. 213. (a) * * *
(b) To be eligible for insurance under this section a
mortgage on any property or project of a corporation or trust
of the character described in paragraph numbered (1) of
subsection (a) of this section shall involve a principal
obligation in an amount--
(2)(A) not to exceed, for such part of the property
or project as may be attributable to dwelling use
(excluding exterior land improvements as defined by the
Secretary), $41,207 per family unit without a bedroom,
$47,511 per family unit with one bedroom, $57,300 per
family unit with two bedrooms, $73,343 per family unit
with three bedrooms, and $81,708 per family unit with
four or more bedrooms, and not to exceed 98 per centum
of the amount which the Secretary estimates will be the
replacement cost of the property or project when the
proposed physical improvements are completed: Provided,
That as to projects to consist of elevator-type
structures the Secretary may, in his discretion,
increase the dollar amount limitations per family unit
to not to exceed $43,875 per family unit without a
bedroom, $49,710 per family unit with one bedroom,
$60,446 per family unit with two bedrooms, $78,197 per
family unit with three bedrooms, and $85,836 per family
unit with four or more bedrooms, as the case may be, to
compensate for the higher cost incident to the
construction of elevator-type structures of sound
standards of construction and design; (B)(i) the
Secretary may, by regulation, increase any of the
dollar amount limitations in subparagraph (A) (as such
limitations may have been adjusted in accordance with
section 206A of this Act) by not to exceed [140
percent] 170 percent in any geographical area where the
Secretary finds that cost levels so require and by not
to exceed [140 percent] 170 percent, or [170 percent in
high cost areas] 215 percent in high cost areas, where
the Secretary determines it necessary on a project-by-
project basis, but in no case may any such increase
exceed 90 percent where the Secretary determines that a
mortgage purchased or to be purchased by the Government
National Mortgage Association in implementing its
special assistance functions under section 305 of this
Act (as such section existed immediately before
November 30, 1983) is involved; and (ii) in the case of
a mortgagor of the character described in paragraph (3)
of subsection (a) the mortgage shall involve a
principal obligation in an amount not to exceed 90 per
centum of the amount which the Secretary estimates will
be the replacement cost of the property or project when
the proposed physical improvements are completed; and
(iii) upon the sale of a property or project by a
mortgagor of the character described in paragraph (3)
of subsection (a) to a nonprofit cooperative ownership
housing corporation or trust within two years after the
completion of such property or project the mortgage
given to finance such sale shall involve a principal
obligation in an amount not to exceed the maximum
amount computed in accordance with this subparagraph
(B)(i)..
* * * * * * *
rehabilitation and neighborhood conservation housing insurance
Sec. 220. (a) * * *
* * * * * * *
(d) To be eligible for insurance under this section a
mortgage shall meet the following conditions:
(1) * * *
* * * * * * *
(3) The mortgage shall--
(A) * * *
(B)(ii) * * *
(iii)(I) not to exceed, for such part of the property
or project as may be attributable to dwelling use
(excluding exterior land improvements as defined by the
Secretary), $38,025 per family unit without a bedroom,
$42,120 per family unit with one bedroom, $50,310 per
family unit with two bedrooms, $62,010 per family unit
with three bedrooms, and $70,200 per family unit with
four or more bedrooms, except that as to projects to
consist of elevator-type structures the Secretary may,
in his discretion, increase the dollar amount
limitations per family unit not to exceed $43,875 per
family unit without a bedroom, $49,140 per family unit
with one bedroom, $60,255 per family unit with two
bedrooms, $75,465 per family unit with three bedrooms,
and $85,328 per family unit with four or more bedrooms,
as the case may be, to compensate for the higher costs
incident to the construction of elevator-type
structures of sound standards of construction and
design; and (II) with respect to rehabilitation
projects involving not more than five family units, the
Secretary may by regulation increase by 25 per centum
any of the dollar amount limitations in subparagraph
(B)(iii)(I) (as such limitations may have been adjusted
in accordance with section 206A of this Act) which are
applicable to units with two, three, or four or more
bedrooms; (III) the Secretary may, by regulation,
increase the dollar amount limitations contained in
subparagraph (B)(iii)(I) (as such limitations may have
been adjusted in accordance with section [206A of this
Act)) by not to exceed 110 percent in any geographical
area where the Secretary finds that cost levels so
require and by not to exceed 140 percent where the
Secretary determines it necessary on a project-by-
project basis] 206A of this Act) by not to exceed 170
percent in any geographical area where the Secretary
finds that cost levels so require and by not to exceed
170 percent, or 215 percent in high cost areas, where
the Secretary determines it necessary on a project-by-
project basis, but in no case may any such increase
exceed 90 percent where the Secretary determines that a
mortgage purchased or to be purchased by the Government
National Mortgage Association in implementing its
special assistance functions under section 305 of this
Act (as such section existed immediately before
November 30, 1983) is involved); (IV) That nothing
contained in this subparagraph (B)(iii)(I) shall
preclude the insurance of mortgages covering existing
multifamily dwellings to be rehabilitated or
reconstructed for the purposes set forth in subsection
(a) of this section; (V) the Secretary may further
increase any of the dollar limitations which would
otherwise apply to such projects by not to exceed 20
per centum if such increase is necessary to account for
the increased cost of the project due to the
installation therein of a solar energy system (as
defined in subparagraph (3) of the last paragraph of
section 2(a) of this Act) or residential energy
conservation measures (as defined in section 210(11)(A)
through (G) and (I) of Public Law 95-619) in cases
where the Secretary determines that such measures are
in addition to those required under the minimum
property standards and will be cost-effective over the
life of the measure; and
housing for moderate income and displaced families
Sec. 221. (a) * * *
* * * * * * *
(d) To be eligible for insurance under this section, a
mortgage shall--
(1) have been made to [and be held by] a mortgagee
approved by the Secretary [as responsible and able to
service the mortgage properly];
* * * * * * *
(3) if executed by a mortgagor which is a public body
or agency (and, except with respect to a project
assisted or to be assisted pursuant to section 8 of the
United States Housing Act of 1937, which certifies that
it is not receiving financial assistance from the
United States exclusively pursuant to such Act), a
cooperative (including an investor-sponsor who meets
such requirements as the Secretary may impose to assure
that the consumer interest is protected), or a limited
dividend corporation (as defined by the Secretary), or
a private nonprofit corporation or association, or
other mortgagor approved by the Secretary, and
regulated or supervised under Federal or State laws or
by political subdivisions of States, or agencies
thereof, or by the Secretary under a regulatory
agreement or otherwise, as to rents, charges, and
methods of operation, in such form and in such manner
as in the opinion of the Secretary will effectuate the
purposes of this section--
(ii)(I) not exceed, for such part of the
property or project as may be attributable to
dwelling use (excluding exterior land
improvements as defined by the Secretary),
$42,048 per family unit without a bedroom,
$48,481 per family unit with one bedroom,
58,469 per family unit with two bedrooms,
$74,840 per family unit with three bedrooms,
and $83,375 per family unit with four or more
bedrooms; except that as to projects to consist
of elevator-type structures the Secretary may,
in his discretion, increase the dollar amount
limitations per family unit to not to exceed
$44,250 per family unit without a bedroom,
$50,724 per family unit with one bedroom,
$61,680 per family unit with two bedrooms,
$79,793 per family unit with three bedrooms,
and $87,588 per family unit with four or more
bedrooms, as the case may be, to compensate for
the higher costs incident to the construction
of elevator-type structures of sound standards
of construction and design; (II) the Secretary
may, by regulation, increase any of the dollar
amount limitations in subclause (I) (as such
limitations may have been adjusted in
accordance with section 206A of this Act) by
not to exceed [140 percent] 170 percent in any
geographical area where the Secretary finds
that cost levels so require and by not to
exceed [140 percent] 170 percent, or [170
percent in high cost areas] 215 percent in high
cost areas, where the Secretary determines it
necessary on a project-by-project basis, but in
no case may any such increase exceed 90 percent
where the Secretary determines that a mortgage
purchased or to be purchased by the Government
National Mortgage Association in implementing
its special assistance functions under section
305 of this Act (as such section existed
immediately before November 30, 1983) is
involved; and
* * * * * * *
(4) if executed by a mortgagor and which is approved
by the Secretary--
(ii)(I) not exceed, or such part of the
property or project as may be attributable to
dwelling use (excluding exterior land
improvements as defined by the Secretary),
$37,843 per family unit without a bedroom,
$42,954 per family unit with one bedroom,
$51,920 per family unit with two bedrooms,
$65,169 per family unit with three bedrooms,
and $73,846 per family unit with four or more
bedrooms; except that as to projects to consist
of elevator-type structures the Secretary may,
in his discretion, increase the dollar amount
limitations per family unit to not to exceed
$40,876 per family unit without a bedroom,
$46,859 per family unit with one bedroom,
$56,979 per family unit with two bedrooms,
$73,710 per family unit with three bedrooms,
and $80,913 per family unit with four or more
bedrooms, as the case may be, to compensate for
the higher costs incident to the construction
of elevator-type structures of sound standards
of construction and design; (II) the Secretary
may, by regulation, increase any of the dollar
limitations in subclause (I) (as such
limitations may have been adjusted in
accordance with section 206A of this Act) by
not to exceed [140 percent] 170 percent in any
geographical area where the Secretary finds
that cost levels so require and by not to
exceed [140 percent] 170 percent, or [170
percent in high cost areas] 215 percent in high
cost areas, where the Secretary determines it
necessary on a project-by-project basis, but in
no case may any such increase exceed 90 percent
where the Secretary determines that a mortgage
purchased or to be purchased by the Government
National Mortgage Association in implementing
its special assistance functions under section
305 of this Act (as such section existed
immediately before November 30, 1983) is
involved;
* * * * * * *
[mortgagor insurance for servicemen
[Sec. 222. (a) The purpose of this section is to aid in the
provision of housing accommodations for servicemen in the Armed
Forces of the United States, servicemen in the United States
Coast Guard and their families, and servicemen in the United
States National Oceanic and Atmospheric Administration and
their families by supplementing the insurance of mortgages
under section 203 of this title with a system of mortgage
insurance specially designed to assist the financing required
for the construction or purchase of dwellings by those persons.
As used in this section, a ``servicemen'' means a person to
whom the Secretary of Defense (or any officer or employee
designated by him), the Secretary of Homeland Security (or any
officer or employee designated by him), or the Secretary of
Commerce (or any officer or employee designated by him), as the
case may be, has issued a certificate hereunder indicating that
such person requires housing, is serving on active duty in the
Armed Forces of the United States, in the United States Coast
Guard, or in the United States National Oceanic and Atmospheric
Administration and has served on active duty for more than two
years, but a certificate shall not be issued hereunder to any
person ordered to active duty for training purposes only. The
Secretary of Defense, the Secretary of Homeland Security, and
the Secretary of Commerce, respectively, are authorized to
prescribe rules and regulations governing the issuance of such
certificates and may withhold issuance of more than one such
certificate to a serviceman whenever in his discretion issuance
is not justified due to circumstances resulting from military
assignment, or, in the case of the United States Coast Guard or
the United States National Oceanic and Atmospheric
Administration, other assignment.
[(b) To be eligible for insurance under this section a
mortgage shall--
[(1) meet the requirements of section 203(b) or
203(i), or 221(d)(2), or 234(c), except as such
requirements are modified by this section;
[(2) involve a dwelling designed principally for a
one-family residence or a one-family unit in a
condominium project;
[(3) have a principal obligation not in excess of the
sum of (i) 97 per centum of $25,000 of the appraised
value of the property as of the date the mortgage is
accepted for insurance, and (ii) 95 per centum of such
value in excess of $25,000; and
[(4) be executed by a mortgagor who at the time of
application for insurance is certified as a
``serviceman'' and who at the time of insurance is the
owner of the property and either occupies the property
as a principal residence or certifies that his failure
to do so is the result of his military assignment, or
in the case of the United States Coast Guard or the
United States National Oceanic and Atmospheric
Administration, other assignment.
[(c) The Secretary may prescribe the manner in which a
mortgage may be accepted for insurance under this section.
Premiums fixed by the Secretary under section 203 with resepct
to, or payable during, the period of ownership by a serviceman
of the property involved shall not be payable by the mortgagee
but shall be paid not less frequently than once each year, upon
request of the Secretary to the Secretary of Defense, the
Secretary of Homeland Security, or the Secretary of Commerce,
as the case may be, from the respective appropriations
available for pay and allowances of persons eligible for
mortgage insurance under this section. As used herein, ``the
period of ownership by a serviceman'' means the period, for
which premiums are fixed, prior to the date that the Secretary
of Defense (or any officer or employee or other persons
designated by him), the Secretary of Transporation (or any
officer or employee or other person designated by him), or the
Secretary of Commerce (or any officer or employee or other
person designated by him), as the case may be, furnishes the
Secretary with a certification that such ownership (as defined
by the Secretary), has terminated.
[(d) Any mortgagee under a mortgage insured under this
section is entitled to the benefits of the insurance as
provided in section 204(a) with respect to mortgages insured
under section 203.
[(e) The provisions of subsections (b), (c), (d), (e), (f),
(g), (h), (j), and (k) of section 204 shall apply to mortgages
insured under this section, except that as applied to those
mortgages (1) all references to the ``Fund,'' or ``Mutual
Mortgage Insurance Fund,'' shall refer to the General Insurance
Fund, and (2) all references to ``section 203'' shall refer to
this section.
[(f) The Secretary is authorized to transfer to this
section the insurance on any mortgage covering a single-family
dwelling or a one-family unit in a condominium project insured
under this Act, if the mortgage indebtedness thereof has been
assumed by a serviceman who at the time of assumption is the
owner of the property and either occupies the property as a
principal residence or certifies that his failure to do so is
the result of his military assignment, or, in the case of the
United States Coast Guard or the United States National Oceanic
and Atmospheric Administration, other assignment.
[(g) Where a serviceman dies while on active duty in the
Armed Forces of the United States or in the United States Coast
Guard or in the United States National Oceanic and Atmospheric
Administration, leaving a surviving widow as owner of the
property, the period of ownership by the serviceman (within the
meaning of subsection (c) of this section) shall extend for two
years beyond the date of the serviceman's death or until the
date the widow disposes of the property, whichever date occurs
first. The Secretary of Defense or the Secretary of Homeland
Security, or the Secretary of Commerce, as the case may be,
shall notify such widow promptly following the serviceman's
death of the additional costs to be borne by the mortgagor
following termination of the two year period.]
* * * * * * *
housing for elderly persons
Sec. 231. (a) * * *
* * * * * * *
(c) To be eligible for insurance under this section, a
mortgage to provide housing for elderly persons shall--
(2)(A) not to exceed, for such part of the property
or project as may be attributable to dwelling use
(excluding exterior land improvement as defined by the
Secretary), $35,978 per family unit without a bedroom,
$40,220 per family unit with one bedroom, $48,029 per
family unit with two bedrooms, $57,798 per family unit
with three bedrooms, and $67,950 per family unit with
four or more bedrooms; except that as to projects to
consist of elevator-type structures the Secretary may,
in his discretion, increase the dollar amount
limitations per family unit to not to exceed $40,876
per family unit without a bedroom, $46,859 per family
unit with one bedroom, $56,979 per family unit with two
bedrooms, $73,710 per family unit with three bedrooms,
and $80,913 per family unit with four or more bedrooms,
as the case may be, to compensate for the higher costs
incident to the construction of elevator-type
structures of sound standards of construction and
design; (B) the Secretary may, by regulation, increase
any of the dollar limitations in subparagraph (A) (as
such limitations may have been adjusted in accordance
with section 206A of this Act) by not to exceed [140
percent] 170 percent in any geographical area where the
Secretary finds that cost levels so require and by not
to exceed [140 percent] 170 percent, or [170 percent in
high cost areas] 215 percent in high cost areas, where
the Secretary determines it necessary on a project-by-
project basis, but in no case may any such increase
exceed 90 percent where the Secretary determines that a
mortgage purchased or to be purchased by the Government
National Mortgage Association in implementing its
special assistance functions under section 305 of this
Act (as such section existed immediately before
November 30, 1983) is involved; (C) the Secretary may,
by regulation, increase any of the dollar limitations
in subparagraph (A) (as such limitations may have been
adjusted in accordance with section 206A of this Act)
by not to exceed 20 per centum if such increase is
necessary to account for the increased cost of the
project due to the installation therein of a solar
energy system (as defined in subparagraph (3) of the
last paragraph of section 2(a) of this Act) or
residential energy conservation measures (as defined in
section 210(11) (A) through (G) and (I) of Public Law
95-619) in cases where the Secretary determines that
such measures are in addition to those required under
the minimum property standards and will be cost-
effective over the life of the measure;
* * * * * * *
mortgage insurance for condominiums
Sec. 234. (a) * * *
* * * * * * *
(c) The Secretary is authorized, in his discretion and
under such terms and conditions as he may prescribe (including
the minimum number of family units in the project which shall
be offered for sale and provisions for the protection of the
consumer and the public interest), to insure any mortgage
covering a one-family unit in a multifamily project and an
undivided interest in the common areas and facilities which
serve the project if (1) the mortgage meets the requirements of
this subsection and of section 203(b), except as that section
is modified by this subsection, [and] (2) at least 80 percent
of the units in the project covered by mortgages insured under
this title are occupied by the mortgagors or comortgagors, and
(3) the project has a blanket mortgage insured by the Secretary
under subsection (d). Any project proposed to be constructed or
rehabilitated after the date of enactment of the Housing Act of
1961 with the assistance of mortgage insurance under this Act,
where the sale of family units is to be assisted with mortgage
insurance under this subsection, shall be subject to such
requirements as the Secretary may prescribe. To be eligible for
insurance pursuant to this subsection, a mortgage shall (A)
involve a principal obligation in an amount not to exceed the
maximum principal obligation of a mortgage which may be insured
in the area pursuant to section 203(b)(2) or pursuant to
section 203(h) under the conditions described in section 203(h)
or pursuant to section 203(h) under the conditions described in
section 203(h), and (B) have a maturity satisfactory to the
Secretary, but not to exceed, in any event, [thirty-five years]
forty years from the date of the beginning of amortization of
the mortgages. The mortgage shall contain such provisions as
the Secretary determines to be necessary for the maintenance of
common areas and facilities and the multifamily project. The
mortgagor shall have exclusive right to the use of the one-
family unit covered by the mortgage and, together with the
owners of other units in the multifamily project, shall have
the right to the use of the common areas and facilities serving
the project and the obligation of maintaining all such common
areas and facilities. The Secretary may require that the rights
and obligations of the mortgagor and the owners of other
dwelling units in the project shall be subject to such controls
as he determines to be necessary and feasible to promote and
protect individual owners, the multifamily project and its
occupants. For the purposes of this subsection, the Secretary
is authorized in his discretion and under such terms and
conditions as he may prescribe to permit one-family units and
interests in common areas and facilities in multifamily
projects covered by mortgages insured under any section of this
Act other than section 213(a) (1) and (2) to be released from
the liens of those mortgages.
* * * * * * *
(e) To be eligible for insurance, a blanket mortgage on any
multi-family project of a mortgagor of the character described
in subsection (d) shall involve a principal obligation in an
amount--
(2) * * *
(3)(A) not to exceed, for such part of the project as
may be attributable to dwelling use (excluding exterior
land improvements as defined by the Secretary), $42,048
per family unit without a bedroom, $48,481 per family
unit with one bedroom, $58,469 per family unit with two
bedrooms, $74,840 per family unit with three bedrooms,
and $83,375 per family unit with four or more bedrooms;
except that as to projects to consist of elevator-type
structures the Secretary may, in his discretion,
increase the dollar amount limitations per family unit
to not to exceed $44,250 per family unit without a
bedroom, $50,724 per family unit with one bedroom,
$61,680 per family unit with two bedrooms, $79,793 per
family unit with three bedrooms, and $87,588 per family
unit with four or more bedrooms, as the case may be, to
compensate for higher costs incident to the
construction of elevator-type structures of sound
standards of construction and design; (B) the Secretary
may, by regulation, increase any of the dollar
limitations in subparagraph (A) (as such limitations
may have been adjusted in accordance with section 206A
of this Act) by not to exceed [140 percent] 170 percent
in any geographical area where the Secretary finds that
cost levels so require and by not to exceed [140
percent] 170 percent, or [170 percent in high cost
areas] 215 percent in high cost areas, where the
Secretary determines it necessary on a project-by-
project basis, but in no case may any such increase
exceed 90 percent where the Secretary determines that a
mortgage purchased or to be purchased by the Government
National Mortgage Association in implementing its
special assistance functions under section 305 of this
Act (as such section existed immediately before
November 30, 1983) is involved; and
* * * * * * *
(g) Any mortgagee under a mortgage insured under subsection
(c) of this section is entitled to receive the benefits of the
insurance as provided in section 204(a) of this Act with
respect to mortgages insured under section 203, and the
provisions of subsections (b), (c), (d), (e), (f), (g), (h),
(j), and (k) of section 204 shall be applicable to the
mortgages insured under subsection (c) of this section[, except
that (1) all references in section 204 of the Mutual Mortgage
Insurance Fund or the Fund shall be construed to refer to the
General Insurance Fund, (2) all references therein to section
203 shall be construed to refer to subsection (c) of this
section, and (3) the excess remaining, referred to in section
204(f)(1), shall be retained by the Secretary and credited to
the General Insurance Fund].
* * * * * * *
[special mortgage insurance assistance
[Sec. 237. (a) The purpose of this section is to help
provide adequate housing for families of low and moderate
income, including those who, for reasons of credit history,
irregular income patterns caused by seasonal employment, or
other factors, are unable to meet the credit requirements of
the Secretary for the purchase of a single-family home financed
by a mortgage insured under section 203, 220, 221, 234, or
235(j)(4), but who, through the incentive of homeownership and
counseling assistance, appear to be able to achieve
homeownership.
[(b) The Secretary is authorized upon application by the
mortgagee to insure under this section not more than 26 percent
of the total principal obligation (including such initial
service charges, and such appraisal, inspection, and other fees
as the Secretary shall approve) of any mortgage meeting the
requirements of this section.
[(c) To be eligible for insurance under this section, a
mortgage shall--
[(1) meet the requirements of section 203 (except
subsection (m)), 220(d)(3)(A), 221(d)(2), 221(h)(5),
221(i), 234(c), or 235(j)(4), except as such
requirements are modified by this section;
[(2) involve a principal obligation (including such
initial service charges, and such appraisal,
inspection, and other fees, as the Secretary shall
approve) in an amount not to exceed $70,000;
[(3) be executed by a mortgagor who the Secretary has
determined, after a full and complete study of the
case, would not be an acceptable credit risk for
mortgage insurance purposes under sections 203, 220,
221, 234, or 235(j)(4), because of his credit standing,
debt obligations, total annual income, or income
characteristics but who the Secretary is satisfied
would be a reasonably satisfactory credit risk,
consistent with the objectives stated in subsection
(a), if he were to receive budget, debt management, and
related counseling, prior to and during the 12 months
immediately following the purchase of the property,
from a community development financial institution
under section 103(5) of the Community Development
Banking and Financial Institutions Act of 1994:
Provided, That, in determining whether the mortgagor is
a reasonably satisfactory credit risk, the Secretary
shall review the credit history of the applicant giving
special consideration to those delinquent accounts
which were ultimately paid by the applicant and to
extenuating factors which may have caused credit
accounts of the applicant to become delinquent; and the
Secretary shall also give special consideration to
income characteristics of applicants whose total income
over the two years prior to their applications has
remained at levels of eligibility (as required under
paragraph (4) of this subsection), but who, because of
the character of their seasonal employment or for other
reasons, have not maintained continuous employment
under one employer during that time;
[(4) require monthly payments which, in combination
with local real estate taxes on the property involved,
do not exceed 36 per centum of the applicant's income,
based on his average monthly income during the year
prior to his application or the average monthly income
during the three years prior to his application,
whichever is higher; and
[(5) require the mortgagor to be subject, if
necessary, to a default mitigation effort undertaken by
an intermediary community development financial
institution under section 103(5) of the Community
Development Banking and Financial Institutions Act of
1994, that is acting as a sponsor and pass-through of
insurance under section 203 and is approved by the
Secretary;
[(6) involve a total principal obligation (including
such initial service charges, and such appraisal,
inspection, and other fees as the Secretary shall
approve) that is not more than 90 percent of the value
of the property for which the mortgage is provided; and
[(7) involve a total principal obligation (including
such initial service charges, and such appraisal,
inspection, and other fees as the Secretary shall
approve) in which the mortgagor has equity (as defined
by the Secretary) of not less than 10 percent and such
equity shall be subordinate to the interest of the
Secretary in the mortgaged property.
[(d) The Secretary shall give preference in approving
mortgage insurance applications and in providing counseling
services under this section (1) to families which are eligible
for assistance payments under section 235, (2) to families
living in empowerment zones and enterprise communities (as
those terms are defined in section 1393(b) of the Internal
Revenue Code of 1986 (26 U.S.C. 1393(b)) who are eligible for
homeownership assistance, and (3) to families living in public
housing units, especially those families required to leave
public housing because their incomes have risen beyond the
maximum prescribed income limits, and families eligible for
residence in public housing who have been displaced from
federally assisted urban renewal areas.
[(e) The Secretary is authorized to provide, or contract
with community development financial institutions under section
103(5) of the Community Development Banking and Financial
Institutions Act of 1994 to provide, such budget, debt
management, and related counseling services to mortgagors whose
mortgages are insured under this section as he determines to be
necessary to meet the objectives of this section. The Secretary
may also provide such counseling to otherwise eligible families
who lack sufficient funds to supply a down payment to help them
to save an amount necessary for that purpose.
[(f) The aggregate principal balance of the portions of
mortgages insured under this section and outstanding at one
time shall not exceed $200,000,000.
[(g) Mortgages insured under this section shall be subject
to an insurance premium fee of not more than 1.25 percent of
the total mortgage principal obligation (including such initial
service charges, and such appraisal, inspection, and other fees
as the Secretary shall approve).
[(h) Before insuring a mortgage under this section, the
Secretary shall enter into such contracts or other agreements
as may be necessary to ensure that the mortgagee or other
holder of the mortgage shall assume not less than 10 percent
and not more than 50 percent of any loss on the insured
mortgage, subject to any reasonable limit on the liability of
the mortgagee or holder of the mortgage that may be specified
in the event of unusual or catastrophic losses that may be
incurred by any one mortgagee or mortgage holder.
[(i) No guarantees may be issued under section 306(g) for
the timely payment of interest or principal on securities
backed, in whole or in part, by mortgages insured under this
section.
[(j) There are authorized to be appropriated such sums as
may be necessary to carry out the provisions of subsection (e)
of this section.]
* * * * * * *
[GRADUATED PAYMENT AND INDEXED MORTGAGES
[Sec. 245. (a) The Secretary may insure under any provision
of this title mortgages and loans with provisions of varying
rates of amortization corresponding to anticipated variations
in family income or with monthly payments and outstanding
balances adjusted by a percentage change in a selected price
index to the extent he determines such mortgages or loans (1)
have promise for expanding housing opportunities or meet
special needs, (2) can be developed to include any safeguards
for mortgagors or purchasers that may be necessary to offset
special risks of such mortgages, and (3) have a potential for
acceptance in the private market. Notwithstanding any other
provision of this title, except as provided in subsections (b)
and (c) of this section, the principal obligation (including
all interest to be deferred and added to principal) of a
mortgage insured pursuant to this section may not exceed 97 per
centum of the appraised value of the property covered by the
mortgage as of the date the mortgage is accepted for insurance.
[(b) Notwithstanding the provisions of subsection (a), the
Secretary may insure under any provision of this title a
mortgage or loan which meets the requirements of the first
sentence of subsection (a) and which has provisions for varying
rates of amortization if the Secretary determines--
[(1) the mortgagor could not reasonably afford to
purchase the dwelling unit by means of a mortgage
insured under subsection (a) or any other mortgage
insurance program under this title;
[(2) the principal obligation of the mortgage or loan
initially does not exceed the percentage of the initial
appraised value of the property specified in section
203(b) of this title as of the date the mortgage or
loan is accepted for insurance;
[(3) the principal obligation of the mortgage or loan
thereafter (including all interest to be deferred and
added to principal) will not at any time be scheduled
to exceed 97 per centum of the projected value of the
property; and
[(4) the principal obligation of the mortgage
thereafter will not exceed 113 per centum of the
initial appraised value of the property.
Mortgage insurance under this subsection shall be limited to
mortgages executed by mortgagors who, as determined by the
Secretary, have not owned dwelling units within the preceding
three years. For the purpose of this subsection, the projected
value of the property shall be calculated by the Secretary by
increasing the initial appraised value of the property at a
rate not in excess of 2\1/2\ per centum per annum. The number
of mortgages which are insured in accordance with this
subsection in any fiscal year may not exceed (A) that number of
mortgages the aggregate initial principal obligation of which
equals 10 per centum of the aggregate amount of the initial
principal obligation of all mortgages secured by properties
improved by one- to four-family residences which are insured
under this title during the preceding fiscal year, or (B)
50,000 mortgages, whichever is greater. No loan or mortgage may
be insured under this subsection after the date of the
enactment of the Housing and Community Development Act of 1987,
except pursuant to a commitment to insure entered into on or
before such date.
[(c) Notwithstanding the provisions of subsection (a), the
Secretary may insure under any provision of this title a
mortgage or loan that meets the requirements of the first
sentence of subsection (a) and that has provisions permitting
adjustment of monthly payments and outstanding principal
according to changes or percentages of changes in a selected
price index if the Secretary determines--
[(1) the principal obligation of the mortgage or loan
initially does not exceed the percentage of the initial
appraised value of the property specified in section
203(b) as of the date the mortgage or loan is accepted
for insurance; and
[(2) the monthly payments and principal obligation of
the mortgage or loan thereafter will not at any time be
increased at a rate greater than the percentage change
in the price index stipulated in the initial mortgage
or loan contract.
In carrying out this subsection, the Secretary shall give a
priority to mortgages executed by mortgagors who, as determined
by the Secretary, have not owned dwelling units within the
preceding 3 years. The Secretary shall, not later than March
31, 1984, prescribe regulations establishing guidelines
governing mortgages and loans described in this subsection and
shall, to the extent practicable, conduct a demonstration
program to insure mortgages and loans in accordance with this
subsection during fiscal years 1984 and 1985. The aggregate
number of mortgages and loans insured under this subsection and
section 252 in any fiscal year may not exceed 10 percent of the
aggregate number of mortgages and loans insured by the
Secretary under this title during the preceding fiscal year.
[(d)(1) The Secretary may insure, under any provision of
this title relating to multifamily housing projects, mortgages
and loans with provisions of varying rates of amortization
corresponding to anticipated variations in project income, to
the extent the Secretary determines such mortgages or loans (A)
have promise for expanding housing opportunities or meet
special needs; (B) can be developed to include any safeguards
for mortgagors, tenants, or purchasers that may be necessary to
offset special risks of such mortgages; and (C) have a
potential for acceptances in the private market.
[(2) Notwithstanding any other provision of this title, the
principal obligation of a mortgage or loan insured pursuant to
this subsection--
[(A) may not exceed initially the percentage of the
initial appraised value or replacement cost of the
property involved that is required by the provision of
this title under which such property is insured; and
[(B) thereafter (including all interest to be
deferred and added to principal) may not at any time be
scheduled to exceed 100 percent of the projected value
of such property.
[(3) For purposes of this subsection, the projected value
of a property shall be calculated by the Secretary by
increasing the initial appraised value of such property at a
rate not in excess of 2.5 percent per annum.
[(e) Any mortgage or loan insured pursuant to this section
which contains or sets forth any graduated mortgage provisions
(including but not limited to provisions for adding deferred
interest to principal) which are authorized under this section
and applicable regulations, or which have been insured on the
basis of their being so authorized, shall not be subject to any
State constitution, statute, court decree, common law, or rule
of public policy (1) limiting the amount of interest which may
be charged, taken, received, or reserved, or the manner of
calculating such interest (including but not limited to
prohibitions against the charging of interest on interest), if
such constitution, statute, court decree, common law, or rule
would not apply to the mortgage or loan in the absence of such
graduated payment mortgage provisions, or (2) requiring a
minimum amortization of principal under the mortgage or loan.]
* * * * * * *
single-family mortgage insurance on hawaiian home lands
Sec. 247. (a) * * *
* * * * * * *
(c) Notwithstanding any other provision of this Act, the
insurance of a mortgage using the authority contained in this
section shall be the obligation of the [General Insurance Fund
established in section 519] Mutual Mortgage Insurance Fund. The
mortgagee shall be eligible to receive the benefits of
insurance as provided in section 204 with respect to mortgages
insured pursuant to this section, except that [(1) all
references in section 204 to the Mutual Mortgage Insurance Fund
or the Fund shall be construed to refer to the General
Insurance Fund; and (2)] all references in section 204 to
section 203 shall be construed to refer to the section under
which the mortgage is insured.
* * * * * * *
single family mortgage insurance on indian reservations
Sec. 248. (a) * * *
* * * * * * *
(f) Notwithstanding any other provision of this Act, the
insurance of a mortgage using the authority contained in this
section shall be the obligation of the [General Insurance Fund
established in section 519] Mutual Mortgage Insurance Fund. The
mortgagee shall be eligible to receive the benefits of
insurance as provided in section 204 with respect to mortgages
insured pursuant to this section, except that [(1) all
references in section 204 to the Mutual Mortgage Insurance Fund
or the Fund shall be construed to refer to the General
Insurance Fund; and (2)] all references in section 204 to
section 203 shall be construed to refer to the section under
which the mortgage is insured.
* * * * * * *
INSURANCE OF HOME EQUITY CONVERSION MORTGAGES FOR ELDERLY HOMEOWNERS
Sec. 255. (a) * * *
(b) Definitions.--For purposes of this section:
(1) * * *
(2) The terms ``mortgagee'', ``mortgagor'', ``real
estate,'' and ``State'' have the meanings given such
terms in section 201.
* * * * * * *
(4) Mortgage.--The term ``mortgage'' means a first
mortgage or first lien on real estate, in fee simple, a
first or subordinate mortgage or lien on all stock
allocated to a dwelling unit in a residential
cooperative housing corporation, or a first mortgage or
first lien on a leasehold--
(A) * * *
* * * * * * *
(5) First mortgage.--The term ``first mortgage''
means such classes of first liens as are commonly given
to secure advances on, or the unpaid purchase price of,
real estate or a first or subordinate lien on all stock
allocated to a dwelling unit in a residential
cooperative housing corporation, under the laws of the
State in which the real estate or dwelling unit is
located, together with the credit instruments, if any,
secured thereby.
* * * * * * *
(d) Eligibility Requirements.--To be eligible for insurance
under this section, a mortgage shall--
(1) have been made to a mortgagee approved by the
Secretary [as responsible and able to service the
mortgage properly];
* * * * * * *
(g) Limitation on Insurance Authority.--[The aggregate number
of mortgages insured under this section may not exceed
275,000.] In no case may the benefits of insurance under this
section exceed the maximum dollar amount [established under
section 203(b)(2) for 1-family residences in the area in which
the dwelling subject to the mortgage under this section is
located] limitation established under section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act for a 1-family
residence.
* * * * * * *
(i) Protection of Homeowner and Lender.--
(1) Notwithstanding any other provision of law, and
in order to further the purposes of the program
authorized in this section, the Secretary shall take
any action necessary--
(A) * * *
* * * * * * *
(C) to provide any mortgagee under this
section with funds not to exceed the
[limitations] limitation in subsection (g) to
which the mortgagee is entitled under the terms
of the insured mortgage or ancillary contracts
authorized in this section.
(2) Actions under paragraph (1) may include--
(A) disbursing funds to the mortgagor or
mortgagee from the [General Insurance Fund]
Mutual Mortgage Insurance Fund;
* * * * * * *
(k) Limitation on Origination Fees.--The Secretary shall
establish limits on the origination fee that may be charged to
a mortgagor under a mortgage insured under this section, which
limitations shall--
(1) equal two percent of the original principal limit
of the mortgage;
(2) be subject to a minimum allowable amount;
(3) provide that the origination fee may be fully
financed with the mortgage; and
(4) include any fees paid to correspondent mortgagees
approved by the Secretary or to mortgage brokers.
[(k)] (l) Insurance Authority for Refinancings.--
(1) * * *
* * * * * * *
[(l)] (m) Waiver of Up-Front Premiums for Mortgages to Fund
Long-Term Care Insurance.--
(1) * * *
* * * * * * *
[(m)] (n) Funding for Counseling and Consumer Education and
Outreach.--Of any amounts made available for any of fiscal
years 2000 through 2003 for housing counseling under section
106 of the Housing and Urban Development Act of 1968, up to a
total of $1,000,000 shall be available to the Secretary in each
such fiscal year, in such amounts as the Secretary determines
appropriate, for the following purposes in connection with home
equity conversion mortgages insured under this section:
(1) * * *
* * * * * * *
(o) Authority To Insure Home Purchase Mortgage.--
(1) In general.--Notwithstanding any other provision
in this section, the Secretary may insure, upon
application by a mortgagee, a home equity conversion
mortgage upon such terms and conditions as the
Secretary may prescribe, when the primary purpose of
the home equity conversion mortgage is to enable an
elderly mortgagor to purchase a 1- to 4-family dwelling
in which the mortgagor will occupy or occupies one of
the units.
(2) Limitation on principal obligation.--A home
equity conversion mortgage insured pursuant to
paragraph (1) shall involve a principal obligation that
does not exceed the dollar amount limitation determined
under section 305(a)(2) of the Federal Home Loan
Mortgage Corporation Act for a residence of the
applicable size.
* * * * * * *
SEC. 257. PROHIBITION REGARDING FAILURE ON PART OF SERVICER TO MAKE
ESCROW PAYMENTS.
In the case of any failure to make any payment as described
in section 536(b)(1)(K), the Secretary may not submit any
information to a consumer reporting agency (as such term is
defined in section 603(f) of the Fair Credit Reporting Act (15
U.S.C. 1681a(f))) regarding such failure that is adverse to the
credit rating or interest of the mortgagor.
SEC. 258. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT
SUFFICIENT CREDIT HISTORY.
(a) Establishment.--The Secretary shall carry out a pilot
program to establish, and make available to mortgagees, an
automated process for providing alternative credit rating
information for mortgagors and prospective mortgagors under
mortgages on 1- to 4-family residences to be insured under this
title who have insufficient credit histories for determining
their creditworthiness. Such alternative credit rating
information may include rent, utilities, and insurance payment
histories, and such other information as the Secretary
considers appropriate.
(b) Scope.--The Secretary may carry out the pilot program
under this section on a limited basis or scope, and may
consider limiting the program--
(1) to first-time homebuyers; or
(2) metropolitan statistical areas significantly
impacted by subprime lending.
(c) Limitation.--In any fiscal year, the aggregate number of
mortgages insured pursuant to the automated process established
under this section may not exceed 5 percent of the aggregate
number of mortgages for 1- to 4-family residences insured by
the Secretary under this title during the preceding fiscal
year.
(d) Sunset.--After the expiration of the 5-year period
beginning on the date of the enactment of the Expanding
American Homeownership Act of 2007, the Secretary may not enter
into any new commitment to insure any mortgage, or newly insure
any mortgage, pursuant to the automated process established
under this section.
* * * * * * *
TITLE V--MISCELLANEOUS
* * * * * * *
establishment of general insurance fund
Sec. 519. (a) * * *
* * * * * * *
(e) The General Insurance Fund shall not be used for
carrying out the provisions of sections [203(b) (except as
provided in section 203(v)), 203(h) and 203(i)] 203, except as
determined by the Secretary, or the provisions of section 213
to the extent that they involve mortgages the insurance for
which is the obligation of the Cooperative Management Housing
Insurance Fund created by section 213(k), or the provisions of
sections 223(e), 233(a)(2), 235, 236 and 237; and nothing in
this section shall apply to or affect mortgages, loans,
commitments, or insurance under such provisions.
* * * * * * *
SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, AND OTHER
PARTICIPANTS IN FHA PROGRAMS.
(a) In General.--
(1) Authority.--If a mortgagee approved under the
Act, a lender holding a contract of insurance under
title I, or a principal, officer, or employee of such
mortgagee or lender, or other person or entity
participating in either an insured mortgage or title I
loan transaction under this Act or providing assistance
to the borrower in connection with any such loan,
including sellers of the real e
(state involved, borrowers, closing agents, title
companies, real estate agents, mortgage brokers,
appraisers, servicers (including escrow account
servicers), loan correspondents and dealers, knowingly
and materially violates any applicable provision of
subsection (b), the Secretary may impose a civil money
penalty on the mortgagee or lender, or such other
person or entity, in accordance with this section. The
penalty under this paragraph shall be in addition to
any other available civil remedy or any available
criminal penalty, and may be imposed whether or not the
Secretary imposes other administrative sanctions. The
penalty shall be in addition to any other available
civil remedy or any available criminal penalty, and may
be imposed whether or not the Secretary imposes other
administrative sanctions.
* * * * * * *
(b) Violations for Which a Penalty May Be Imposed.--
(1) Violations.--The Secretary may impose a civil
money penalty under subsection (a) for any knowing and
material violation by a mortgagee or lender, or other
participant referred to in subsection (a), as follows:
(A) * * *
* * * * * * *
(K) In the case of a mortgage for a 1- to 4-
family residence insured under title II that
requires the mortgagor to make payments to the
mortgagee or other servicer of the mortgage for
deposit into an escrow account for the purpose
of assuring payment of taxes, insurance
premiums, and other charges with respect to the
property, failure on the part of the servicer
to make any such payment from the escrow
account by the deadline to avoid a penalty with
respect to such payment provided for in the
mortgage, unless the servicer was not provided
notice of such deadline.
(L) In the case of any failure to make any
payment as described in subparagraph (K),
submitting any information to a consumer
reporting agency (as such term is defined in
section 603(f) of the Fair Credit Reporting Act
(15 U.S.C. 1681a(f))) regarding such failure
that is adverse to the credit rating or
interest of the mortgagor.
* * * * * * *
(c) Agency Procedures.--
(1) * * *
* * * * * * *
(3) Factors in determining amount of penalty.--In
determining the amount of a penalty under subsection
(a), consideration shall be given to such factors as
the gravity of the offense, any history of prior
offenses (including those before enactment of this
section), ability to pay the penalty, injury to the
public, benefits received, deterrence of future
violations, and such other factors as the Secretary may
determine in regulations to be appropriate. In the case
of any failure to make a payment described in
subsection (b)(1)(K) for which the servicer fails to
reimburse the mortgagor (A) before the expiration of
the 60-day period beginning on the deadline to avoid a
penalty with respect to such payment, in the sum of the
amount not paid from the escrow account by such
deadline and the amount of any penalties accruing to
the mortgagor that are attributable to such failure, or
(B) in the amount of any attorneys fees incurred by the
mortgagor and attributable to such failure, the
Secretary shall increase the amount of the penalty
under subsection (a) for any such failure to reimburse,
unless the Secretary determines there are mitigating
circumstances.
* * * * * * *
INFORMATION REGARDING EARLY DEFAULTS AND FORECLOSURES ON INSURED
MORTGAGES
Sec. 540. (a) * * *
(b) Contents.--
(1) * * *
(2) Other information.--Information collected under
this section shall also include the following:
(A) * * *
* * * * * * *
(C) The rates of default and foreclosure for
the applicable collection period for mortgages
insured pursuant to the programs for mortgage
insurance under paragraphs (2)(C) and (3) of
section 203(c).
(D) Actions taken by the Secretary during the
applicable collection period with respect to
loss mitigation on mortgages insured pursuant
to section 203.
* * * * * * *
TITLE VI--DEFENSE HOUSING INSURANCE
Sec. 601. As used in this title--
(a) * * *
(b) The term ``mortgagee'' [includes the original lender
under a mortgage, and his successors and assigns approved by
the Secretary] has the meaning given such term in section 201;
and the term ``mortgagor'' includes the original borrower under
a mortgage and his successors and assigns.
* * * * * * *
Sec. 603. (a) * * *
(b) To be eligible for insurance under this section a
mortgage shall--
(1) have been made to[, and be held by,] a mortgagee
approved by the Secretary [as responsible and able to
service the mortgage properly];
* * * * * * *
Sec. 611. (a) * * *
(b) To be eligible for insurance under this section, a
morgage shall--
(1) have been made to [and be held by] a mortgagee
approved by the Secretary [as responsible and able to
service the mortgage properly];
* * * * * * *
TITLE VIII--ARMED SERVICES HOUSING MORTGAGE INSURANCE
Sec. 801. As used in this title--
(a) * * *
(b) The term ``mortgagee'' [includes the original lender
under a mortgage, and his successors and assigns approved by
the Secretary] has the meaning given such term in section 201;
and the term ``mortgagor'' includes the original borrower under
a mortgage, his successors and assigns.
* * * * * * *
TITLE VI--NATIONAL DEFENSE HOUSING INSURANCE
* * * * * * *
Sec. 903. (a) * * *
(b) To be eligible for insurance under this section a
mortgage shall--
(1) have been made to[, and be held by,] a mortgagee
approved by the Secretary [as responsible and able to
service the mortgage properly];
* * * * * * *
TITLE XI--MORTGAGE INSURANCE FOR GROUP PRACTICE FACILITIES
insurance of mortgages
Sec. 1101. (a) * * *
(b) To be eligible for insurance under this title, the
mortgage shall (1) be executed by a mortgagor that is a group
practice unit or organization or other mortgagor, approved by
the Secretary, (2) be made to [and held by] a mortgagee
approved by the Secretary [as responsible and able to service
the mortgage properly], and (3) cover a property or project
which is approved for mortgage insurance prior to the beginning
of construction or rehabilitation and is designed for use as a
group practice facility or medical practice facility which the
Secretary finds will be constructed in an economical manner,
will not be of elaborate or extravagant design or materials,
and will be adequate and suitable for carrying out the purposes
of this title. No mortgage shall be insured under this title
unless it is shown to the satisfaction of the Secretary that
the applicant would be unable to obtain the mortgage loan
without such insurance on terms comparable to those specified
in subsection (c).
* * * * * * *
definitions
Sec. 1106. For the purposes of this title--
(1) * * *
* * * * * * *
(8) The term ``mortgagee'' [means the original lender under
a mortgage, and his or its successors and assigns, and] has the
meaning given such term in section 201, except that such term
also includes the holders of credit instruments issued under a
trust mortgage or deed of trust pursuant to which such holders
act by and through a trustee named therein.
* * * * * * *
----------
DEFICIT REDUCTION ACT OF 2005
* * * * * * *
TITLE II--HOUSING AND DEPOSIT INSURANCE PROVISIONS
Subtitle A--FHA Asset Disposition
* * * * * * *
SEC. 2004. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE SALES
BY HUD TO STATES AND LOCALITIES.
Notwithstanding any other provision of law and with respect
to any fiscal year, in determining the market value of any
multifamily real property or multifamily loan for any
noncompetitive sale to a State or local government entity, the
Secretary shall consider, but not be limited to, industry
standard appraisal practices, including the cost of repairs
needed to bring the property at least to minimum State and
local code standards and of maintaining the existing
affordability restrictions imposed by the Secretary on the
multifamily real property or multifamily loan.
* * * * * * *
ADDITIONAL VIEWS
H.R. 1852, THE ``EXPANDING AMERICAN HOMEOWNERSHIP ACT OF 2007''
The Federal Housing Administration (FHA) was established by
the National Housing Act of 1934 to broaden homeownership,
protect lending institutions, and stimulate the building
industry. Prior to the creation of FHA, home mortgages
typically did not exceed 50 percent of the home value or extend
beyond five years. At the end of the five years, mortgages had
to be repaid or renegotiated. During the Great Depression,
lenders were unable or unwilling to renegotiate many loans as
they came due. Consequently, many borrowers lost their homes
and lenders lost money because property values declined
significantly. The FHA program, which is administered by the
Department of Housing and Urban Development (HUD), was
established to provide stability and liquidity in the market.
Its creation fostered the development of the 30-year mortgage
product and led to standardized mortgage instruments.
Since 1934, FHA has insured more than 33 million loans and
is the largest insurer of mortgages in the world. During the
1940s, FHA helped finance military housing and homes for
returning veterans. In the 1980s, FHA helped to steady falling
home prices and made it possible for potential homebuyers to
obtain financing at a time when the private sector was
withdrawing from targeted geographical regions, such as the
oil-producing states.
While there is a lack of familiarity with FHA, and a
mistaken belief that FHA directly provides mortgage loans, the
agency actually only provides mortgage insurance for those
loans that meet FHA-established underwriting standards.
Moreover, these FHA-insured loans are available to owner-
occupants who can demonstrate the ability to repay the loans.
In contrast to loans in the conventional market, primarily
purchased and meeting guidelines established by Government
Sponsored Enterprises (GSEs) or the Jumbo Market, FHA
underwriting standards allow for more flexibility in
calculating household income and debt/payment ratios. The cost
of mortgage insurance is passed along to the homeowner in the
form of an up front premium paid at the time of the closing and
a second premium charged on an annual basis and typically paid
monthly.
FHA is one of the few government agencies to operate
entirely based on the fee income derived from its programs,
which means the taxpayer does not pay for or subsidize the
agency. There are two funds operated by FHA: (1) Mutual
Mortgage Insurance Fund (MMIF), and the General Insurance/
Special Risk Fund (GI/SRI). Despite FHA's ability to pay for
itself, there has been considerable debate on the proper role
of a government agency in promoting homeownership, which
includes the question of whether the agency should be involved
in mortgage insurance activities where a private sector
industry exists to meet the need. Arguably, FHA is primarily
used for first-time, inner-city, and rural homebuyers, a market
where private sector activity has been thought to lag behind.
However, the private sector has argued that it is using new
technologies to market its products more aggressively in these
typically underserved areas and markets.
Many FHA proponents believe that the program must be
reformed in order for it to maintain its relevance in the
marketplace. While FHA was previously considered an innovator,
its products currently lag behind private-market offerings,
often leaving consumers with the sole option of obtaining
costly, more risky loans available in the subprime market. The
FHA program is also cumbersome and antiquated technologically,
leading many lenders to forgo FHA product origination.
On the same day that Housing Subcommittee Chairwoman Maxine
Waters and Financial Services Chairman Barney Frank introduced
H.R. 1852, the ``Expanding American Homeownership Act of
2007,'' Housing Subcommittee Ranking Member Judy Biggert and
Full Committee Ranking Member Spencer Bachus introduced H.R.
1752, also entitled ``The Expanding American Homeownership Act
of 2007.'' H.R. 1752 is identical to H.R. 5121, bipartisan
legislation that passed the House last Congress by a margin of
415-7.
H.R. 1752 proposes comprehensive reform of FHA's single-
family mortgage insurance activities. The legislation would
allow FHA to base each borrower's mortgage insurance premiums
upon the risk that the borrower poses to the FHA Mortgage
Insurance Fund, with slight variations. Under this proposal,
mortgage insurance premiums would be based on the borrower's
credit history, loan-to-value ratio, debt-to-income ratio, and
on FHA's historical experience with similar borrowers. The
Administration has stated it believes that this change would
decrease premiums for many of FHA's traditional borrowers,
thereby increasing access to homeownership.
H.R. 1752 would also amend the National Housing Act to
change the factors used to determine the maximum single family
mortgage amounts insurable by FHA. Generally, under current
law, the maximum insurable mortgage is the lesser of a maximum
allowable dollar amount and an amount based on a maximum
percentage of appraised value plus the mortgage insurance
premium.
Currently, FHA maximum mortgage dollar amounts are
established with reference to the median home price for the
area in which the property is located. For a single-family
residence, the maximum dollar amount that can be insured is 95%
of the median home price for the area. For two-, three- and
four-family residences the maximum dollar amounts that can be
insured are 107%, 130% and 150% of such median price,
respectively. These amounts are capped and cannot exceed 87% of
the Federal Home Loan Mortgage Corporation Association
conforming loan limit, which now stands at $362,790 for a one-
unit property. There is also a statutory ``floor'' amount below
which the maximum mortgage dollar amount cannot be set. The
current ``floor'' is set at 48% of the FHLMC conforming loan
limit, now $200,160 for a one-unit property.
In addition, under H.R. 1752, FHA would be allowed to
insure up to the full median house price in the area, as
opposed to 95% of the median house price. Moreover, for
consistency, the references to the percentages for two-, three-
and four-family residences would be removed from the statute.
This proposal strikes the 87% cap, and allows FHA to insure up
to 100% of the FHLMC loan limit. Also, the bill increases the
``floor'' to 65% of the FHLMC conforming loan limit.
Although H.R. 1852 contains many of the reforms included in
H.R. 1752, it also features several significant departures from
last Congress's House-passed bill. These important differences
include:
<bullet> H.R. 1852 limits eligibility for low- and
no-downpayment FHA loans to first time homebuyers,
while H.R. 1752 allows participation by any FHA-
qualified borrower, including those seeking to
refinance an existing loan;
<bullet> H.R. 1852 includes a directive for FHA to
serve high-risk borrowers (those with FICO scores of
560 or lower), while H.R. 1752 includes no such
mandate;
<bullet> H.R. 1852 caps annual premiums for borrowers
making at least a 3% down payment (including borrowers
deemed high-risk) at current levels, while H.R. 1752
gives HUD greater flexibility to devise a truly risk-
based pricing structure for the FHA program that more
closely matches the premiums paid by an individual
borrower to that borrower's credit history; and
<bullet> H.R. 1852 authorizes the use of surpluses
generated by the FHA program to support the creation of
a grant program to fund affordable rental housing and
affordable homeownership opportunities for low-income
families, while H.R. 1752 contains no such provision.
H.R. 1852's provisions to divert a portion of FHA surpluses
to fund a new, unrelated, and as yet undefined government
housing program caused the greatest concern among Republicans
during the Committee's consideration of the legislation. These
concerns are shared by the Administration. On May 1, 2007, HUD
transmitted a letter to Chairman Frank outlining its views on
H.R. 1852. Regarding the affordable housing fund, the letter
stated:
H.R. 1852 also includes provisions that would have an
adverse budgetary effect. The act would create an Affordable
Housing Grant Fund with savings from increased FHA receipts.
This is potentially disruptive to the existing appropriations
process. All FHA receipts are currently netted against HUD's
spending totals and taken into consideration during
appropriations for the Department. The proposal's details are
also undefined and unclear; therefore, the specifics may raise
additional policy concerns. In addition, the act revises
certain recently enacted asset disposition reforms for FHA
multifamily programs.
The bulk of the surplus generated by FHA under H.R. 1852
would result from the negative credit subsidy created by HUD's
collection of premiums under the Home Equity Conversion
Mortgage (HECM) program. HECM loans are reverse mortgages that
allow homeowners over the age of 62 to tap the equity in their
homes in the form of monthly payments, lump sum distributions,
or lines of credit. Republicans believe that excess premiums
under the HECM program should remain in FHA for the benefit of
senior citizens and other FHA beneficiaries, rather than being
redirected to an amorphous affordable housing fund.
To address concerns about the affordable housing fund and
the other key differences between the Republican and Democratic
approaches to FHA modernization identified above, Republicans
offered a series of amendments at the markup of H.R. 1852. Most
notably, Mrs. Biggert offered an amendment to substitute the
text of H.R. 1752 for H.R. 1852, and Ranking Member Bachus
offered an amendment to postpone the new spending authorized by
H.R. 1852 to finance the affordable housing fund until such
time as Congress stops raiding the Social Security surplus to
pay for unrelated government initiatives. Both amendments were
defeated, prompting a majority of Committee Republicans to vote
against favorably reporting the legislation to the full House.
While we support legislation that modernizes the FHA
program and reestablishes it as a viable alternative for low-
and middle-income homebuyers, we will continue to oppose
legislation that siphons funds away from the FHA program as
seed money for an affordable housing agenda that has not been
adequately delineated or explained by its proponents.
Spencer Bachus.
K. Marchant.
Adam H. Putnam.
Tom Feeney.
Donald A. Manzullo.
Frank D. Lucas.
Judy Biggert.
Geoff Davis.
Paul Gillmor.
Randy Neugebauer.
Ginny Brown-Waite.
Stevan Pearce.
<all>