109th CONGRESS
2d Session
H. R. 4804
IN THE SENATE OF THE UNITED STATES
July 26, 2006
Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
AN ACT
To modernize the manufactured housing loan insurance program under
title I of the National Housing Act.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This title may be cited as the `FHA Manufactured Housing Loan Modernization
Act of 2006'.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings- The Congress finds that--
(1) manufactured housing plays a vital role in providing housing for low-
and moderate-income families in the United States;
(2) the FHA title I insurance program for manufactured home loans traditionally
has been a major provider of mortgage insurance for home-only transactions;
(3) the manufactured housing market is in the midst of a prolonged downturn
which has resulted in a severe contraction of traditional sources of private
lending for manufactured home purchases;
(4) during past downturns the FHA title I insurance program for manufactured
homes has filled the lending void by providing stability until the private
markets could recover;
(5) in 1992, during the manufactured housing industry's last major recession,
over 30,000 manufactured home loans were insured under title I;
(6) in 2004, fewer than 2,000 manufactured housing loans were insured
under title I;
(7) the loan limits for title I manufactured housing loans have not been
adjusted for inflation since 1992; and
(8) these problems with the title I program have resulted in an atrophied
market for manufactured housing loans, leaving American families who have
the most difficulty achieving homeownership without adequate financing
options for home-only manufactured home purchases.
(b) Purposes- The purposes of this Act are--
(1) to provide adequate funding for FHA-insured manufactured housing loans
for low- and moderate-income homebuyers during all economic cycles in
the manufactured housing industry;
(2) to modernize the FHA title I insurance program for manufactured housing
loans to enhance participation by Ginnie Mae and the private lending markets;
and
(3) to adjust the low loan limits for title I manufactured home loan insurance
to reflect the increase in costs since such limits were last increased
in 1992 and to index the limits to inflation.
SEC. 3. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION PORTFOLIO.
The second sentence of section 2(a) of the National Housing Act (12 U.S.C.
1703(a)) is amended--
(1) by striking `In no case' and inserting `Other than in connection with
a manufactured home or a lot on which to place such a home (or both),
in no case'; and
(2) by striking `: Provided, That with' and inserting `. With'.
SEC. 4. INSURANCE BENEFITS.
(a) In General- Subsection (b) of section 2 of the National Housing Act
(12 U.S.C. 1703(b)), is amended by adding at the end the following new paragraph:
`(8) INSURANCE BENEFITS FOR MANUFACTURED HOUSING LOANS- Any contract of
insurance with respect to loans, advances of credit, or purchases in connection
with a manufactured home or a lot on which to place a manufactured home
(or both) for a financial institution that is executed under this title
after the date of the enactment of the FHA Manufactured Housing Loan Modernization
Act of 2006 by the Secretary shall be conclusive evidence of the eligibility
of such financial institution for insurance, and the validity of any contract
of insurance so executed shall be incontestable in the hands of the bearer
from the date of the execution of such contract, except for fraud or misrepresentation
on the part of such institution.'.
(b) Applicability- The amendment made by subsection (a) shall only apply
to loans that are registered or endorsed for insurance after the date of
the enactment of this Act.
SEC. 5. MAXIMUM LOAN LIMITS.
(a) Dollar Amounts- Paragraph (1) of section 2(b) of the National Housing
Act (12 U.S.C. 1703(b)(1)) is amended--
(1) in clause (ii) of subparagraph (A), by striking `$17,500' and inserting
`$24,500';
(2) in subparagraph (C) by striking `$48,600' and inserting `$68,040';
(3) in subparagraph (D) by striking `$64,800' and inserting `$90,720';
(4) in subparagraph (E) by striking `$16,200' and inserting `$22,680';
and
(5) by realigning subparagraphs (C), (D), and (E) 2 ems to the left so
that the left margins of such subparagraphs are aligned with the margins
of subparagraphs (A) and (B).
(b) Annual Indexing- Subsection (b) of section 2 of the National Housing
Act (12 U.S.C. 1703(b)), as amended by the preceding provisions of this
Act, is further amended by adding at the end the following new paragraph:
`(9) ANNUAL INDEXING OF MANUFACTURED HOUSING LOANS- The Secretary shall
develop a method of indexing in order to annually adjust the loan limits
established in subparagraphs (A)(ii), (C), (D), and (E) of this subsection.
Such index shall be based on the manufactured housing price data collected
by the United States Census Bureau. The Secretary shall establish such
index no later than one year after the date of the enactment of the FHA
Manufactured Housing Loan Modernization Act of 2006.'
(c) Technical and Conforming Changes- Paragraph (1) of section 2(b) of the
National Housing Act (12 U.S.C. 1703(b)(1)) is amended--
(1) by striking `No' and inserting `Except as provided in the last sentence
of this paragraph, no'; and
(2) by adding after and below subparagraph (G) the following:
`The Secretary shall, by regulation, annually increase the dollar amount
limitations in subparagraphs (A)(ii), (C), (D), and (E) (as such limitations
may have been previously adjusted under this sentence) in accordance with
the index established pursuant to paragraph (9).'.
SEC. 6. INSURANCE PREMIUMS.
Subsection (f) of section 2 of the National Housing Act (12 U.S.C. 1703(f))
is amended--
(1) by inserting `(1) Premium Charges- ' after `(f)'; and
(2) by adding at the end the following new paragraph:
`(2) Manufactured Home Loans- Notwithstanding paragraph (1), in the case
of a loan, advance of credit, or purchase in connection with a manufactured
home or a lot on which to place such a home (or both), the premium charge
for the insurance granted under this section shall be paid by the borrower
under the loan or advance of credit, as follows:
`(A) At the time of the making of the loan, advance of credit, or purchase,
a single premium payment in an amount not to exceed 2.25 percent of the
amount of the original insured principal obligation.
`(B) In addition to the premium under subparagraph (A), annual premium
payments during the term of the loan, advance, or obligation purchased
in an amount not exceeding 1.0 percent of the remaining insured principal
balance (excluding the portion of the remaining balance attributable to
the premium collected under subparagraph (A) and without taking into account
delinquent payments or prepayments).
`(C) Premium charges under this paragraph shall be established in amounts
that are sufficient, but do not exceed the minimum amounts necessary,
to maintain a negative credit subsidy for the program under this section
for insurance of loans, advances of credit, or purchases in connection
with a manufactured home or a lot on which to place such a home (or both),
as determined based upon risk to the Federal Government under existing
underwriting requirements.
`(D) The Secretary may increase the limitations on premium payments to
percentages above those set forth in subparagraphs (A) and (B), but only
if necessary, and not in excess of the minimum increase necessary, to
maintain a negative credit subsidy as described in subparagraph (C).'.
SEC. 7. TECHNICAL CORRECTIONS.
(a) Dates- Subsection (a) of section 2 of the National Housing Act (12 U.S.C.
1703(a)) is amended--
(1) by striking `on and after July 1, 1939,' each place such term appears;
and
(2) by striking `made after the effective date of the Housing Act of 1954'.
(b) Authority of Secretary- Subsection (c) of section 2 of the National
Housing Act (12 U.S.C. 1703(c)) is amended to read as follows:
`(c) Handling and Disposal of Property-
`(1) AUTHORITY OF SECRETARY- Notwithstanding any other provision of law,
the Secretary may--
`(A) deal with, complete, rent, renovate, modernize, insure, or assign
or sell at public or private sale, or otherwise dispose of, for cash
or credit in the Secretary's discretion, and upon such terms and conditions
and for such consideration as the Secretary shall determine to be reasonable,
any real or personal property conveyed to or otherwise acquired by the
Secretary, in connection with the payment of insurance heretofore or
hereafter granted under this title, including any evidence of debt,
contract, claim, personal property, or security assigned to or held
by him in connection with the payment of insurance heretofore or hereafter
granted under this section; and
`(B) pursue to final collection, by way of compromise or otherwise,
all claims assigned to or held by the Secretary and all legal or equitable
rights accruing to the Secretary in connection with the payment of such
insurance, including unpaid insurance premiums owed in connection with
insurance made available by this title.
`(2) ADVERTISEMENTS FOR PROPOSALS- Section 3709 of the Revised Statutes
shall not be construed to apply to any contract of hazard insurance or
to any purchase or contract for services or supplies on account of such
property if the amount thereof does not exceed $25,000.
`(3) DELEGATION OF AUTHORITY- The power to convey and to execute in the
name of the Secretary, deeds of conveyance, deeds of release, assignments
and satisfactions of mortgages, and any other written instrument relating
to real or personal property or any interest therein heretofore or hereafter
acquired by the Secretary pursuant to the provisions of this title may
be exercised by an officer appointed by the Secretary without the execution
of any express delegation of power or power of attorney. Nothing in this
subsection shall be construed to prevent the Secretary from delegating
such power by order or by power of attorney, in the Secretary's discretion,
to any officer or agent the Secretary may appoint.'.
SEC. 8. REVISION OF UNDERWRITING CRITERIA.
(a) In General- Subsection (b) of section 2 of the National Housing Act
(12 U.S.C. 1703(b)), as amended by the preceding provisions of this Act,
is further amended by adding at the end the following new paragraph:
`(10) FINANCIAL SOUNDNESS OF MANUFACTURED HOUSING PROGRAM- The Secretary
shall establish such underwriting criteria for loans and advances of credit
in connection with a manufactured home or a lot on which to place a manufactured
home (or both), including such loans and advances represented by obligations
purchased by financial institutions, as may be necessary to ensure that
the program under this title for insurance for financial institutions
against losses from such loans, advances of credit, and purchases is financially
sound.'.
(b) Timing- Not later than the expiration of the 6-month period beginning
on the date of the enactment of this Act, the Secretary of Housing and Urban
Development shall revise the existing underwriting criteria for the program
referred to in paragraph (10) of section 2(b) of the National Housing Act
(as added by subsection (a) of this section) in accordance with the requirements
of such paragraph.
Passed the House of Representatives July 25, 2006.
Attest:
KAREN L. HAAS,
Clerk.
END
