HR 1852
9-18-07, Bill Passed House 348-72
Referred to Senate Committee
on Banking, Housing & Urban Affairs
110th CONGRESS
1st Session
H. R. 1852
IN THE SENATE OF THE UNITED STATES
September 19, 2007
Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
AN ACT
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.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
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. Refinancing mortgages.
Sec. 12. Annual reports on new programs and loss mitigation.
Sec. 13. Insurance for single family homes with licensed child care facilities.
Sec. 14. Rehabilitation loans.
Sec. 15. Discretionary action.
Sec. 16. Insurance of condominiums and manufactured housing.
Sec. 17. Mutual Mortgage Insurance Fund.
Sec. 18. Hawaiian home lands and Indian reservations.
Sec. 19. Conforming and technical amendments.
Sec. 20. Home equity conversion mortgages.
Sec. 21. Participation of mortgage brokers and correspondent lenders.
Sec. 22. Conforming loan limit in disaster areas.
Sec. 23. Failure to pay amounts from escrow accounts for single family mortgages.
Sec. 24. Acceptable identification for FHA mortgagors.
Sec. 25. Pilot program for automated process for borrowers without sufficient
credit history.
Sec. 26. Sense of Congress regarding technology for financial systems.
Sec. 27. Multifamily housing mortgage limits in high cost areas.
Sec. 28. Discount sales of multifamily properties.
Sec. 29. Clarification of disposition of certain properties.
Sec. 30. Noncompetitive sales by HUD to states and localities.
Sec. 31. 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. 32. Limitation on mortgage insurance premium increases.
Sec. 33. Civil money penalties for improperly influencing appraisals.
Sec. 34. Mortgage insurance premium refunds.
Sec. 35. Savings provision.
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)(A)) 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, 125 percent of 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 for 2007 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 for 2007 under such section for a 1-family residence;
or
`(ii) 175 percent of the dollar amount limitation in effect for 2007
under such section 305(a)(2) for a residence of the applicable size
(without regard to any authority to increase such limitations with respect
to properties located in Alaska, Guam, Hawaii, or the Virgin Islands),
except that each such maximum dollar amount shall be adjusted effective
January 1 of each year beginning with 2008, by adding to or subtracting
from each such amount (as it may have been previously adjusted) a percentage
thereof equal to the percentage increase or decrease, during the most
recently completed 12-month or 4-quarter period ending before the time
of determining such annual adjustment, in an housing price index developed
or selected by the Secretary for purposes of adjustments under this
clause;
except that the dollar amount limitation in effect under this subparagraph
for any size residence for any area 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 amount limitation
in effect for 2007 under such section 305(a)(2) for a residence of the
applicable size, as such limitation is adjusted by any subsequent percentage
adjustments determined under clause (ii) of this subparagraph; and except
that, if the Secretary determines that market conditions warrant such
an increase, the Secretary may, for such period as the Secretary considers
appropriate, increase the maximum dollar amount limitation determined
pursuant to the preceding provisions of this subparagraph with respect
to any particular size or sizes of residences, or with respect to residences
located in any particular area or areas, to an amount that does not exceed
the maximum dollar amount then otherwise in effect pursuant to the preceding
provisions of this subparagraph for such size residence, or for such area
(if applicable), by not more than $100,000; 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--
(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
(A) 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'; and
(B) by inserting after the period at the end the following: `For purposes
of this paragraph, the Secretary shall consider as cash or its equivalent
any amounts gifted by a family member (as such term is defined in section
201), the mortgagor's employer or labor union, or a qualified homeownership
assistance entity, but only if there is no obligation on the part of the
mortgagor to repay the gift: For purposes of the preceding sentence, the
term `qualified homeownership assistance entity' means any governmental
agency or charity that has a program to provide homeownership assistance
to low- and moderate-income families or first-time home buyers, or any
private nonprofit organization that has such a program and evidences sufficient
fiscal soundness to protect the fiscal integrity of the Mutual Mortgage
Insurance Fund by maintaining a minimum net worth of $4,000,000 of acceptable
assets.'.
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 that will be occupied by
the mortgagor as his or her principal residence;
`(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)(I) is executed by a mortgagor who has not had any present ownership
interest in a principal residence, and whose spouse has not had any such
interest, during 12-month period ending upon purchase of the residence
with the mortgage to which this paragraph applies, except that this subclause
shall be considered a program to assist first-time homebuyers for purposes
of section 956 of the Cranston-Gonzalez National Affordable Housing Act
(42 U.S.C. 12713); or
`(II)(aa) is made to pay or prepay, and fully extinguish, the outstanding
obligations under an existing mortgage or mortgages on the same property;
and
`(bb) involves a principal obligation not exceeding the amount necessary
to fully pay or prepay such outstanding obligations under the existing
mortgage or mortgages, plus any charges and fees involved in such transaction
and any charges and fees in connection with the payment or prepayment
of such outstanding obligations.
`(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:
`(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:
`(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, a list of counseling agencies, approved by the Secretary,
in the area of the applicant.
`(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.
`(i) REQUIREMENT- The Secretary shall 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 closing 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. REFINANCING MORTGAGES.
Section 203 of the National Housing Act (12 U.S.C. 1709) is amended by inserting
after subsection (k) the following new subsection:
`(l) Refinancing Mortgages-
`(1) ESTABLISHMENT OF UNDERWRITING STANDARDS- The Secretary shall establish
underwriting standards that provide for insurance under this title of mortgage
loans, and take actions to facilitate the availability of mortgage loans
insured under this title, for qualified borrowers that are made for the
purpose of paying or prepaying outstanding obligations under existing mortgages
for borrowers that--
`(A) have existing mortgages with adverse terms or rates, or
`(B) do not have access to mortgages at reasonable rates and terms for
such refinancings due to adverse market conditions.
`(2) INSURANCE OF MORTGAGES TO BORROWERS IN DEFAULT OR AT RISK OF DEFAULT-
In facilitating insurance for such mortgages, the Secretary may insure mortgages
to borrowers who are, currently in default or at imminent risk of being
in default, but only if such loans meet reasonable underwriting standards
established by the Secretary.'.
SEC. 12. 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. 13. 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. 14. 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
(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. 15. 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. 16. INSURANCE OF CONDOMINIUMS AND MANUFACTURED HOUSING.
(a) In General- Section 234 of the National Housing Act (12 U.S.C. 1715y)
is amended--
(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. 17. 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. 18. 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. 19. 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. 20. 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 (b)(4), by striking subparagraph (B) and inserting the
following new subparagraph:
`(B) under a lease that has a term that ends no earlier than the minimum
number of years, as specified by the Secretary, beyond the actuarial life
expectancy of the mortgagor or comortgagor, whichever is the later date.'.
(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';
(4) in subsection (i)(1)(C), by striking `limitations' and inserting `limitation';
and
(5) 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--
(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 to 1.5 percent of the maximum claim amount of the mortgage, except
that the Secretary may adjust the limitation under this paragraph on the
basis of an analysis of: (A) costs to mortgagors; and (B) the impact on
the reverse mortgage market;
`(2) be subject to a minimum allowable amount;
`(3) provide that the origination fee may be fully financed with the mortgage;
`(4) include any fees paid to correspondent mortgagees approved by the Secretary
or to mortgage brokers; and
`(5) apply beginning upon the date that the maximum dollar amount limitation
on the benefits of insurance under this section is first increased pursuant
to the amendments made by section 19(a)(2) of the Expanding American Homeownership
Act of 2007.'.
(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. 21. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS.
(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 who--
`(i) closes a mortgage in its name and underwrites the mortgage, services
the mortgage, or both underwrites and services the mortgage;
`(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;
`(iv) is licensed, under the laws of the State in which the property
that is subject to the mortgage is located, to act as a lender in such
State; and
`(v) 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 and does
not 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 correspondent
lender in such State;
`(iii) posts a surety bond, in lieu of any requirement to provide audited
financial statements or meet a minimum net worth requirement, that--
`(I) is in a form satisfactory to the Secretary;
`(II) is in an aggregate amount, to be determined by the Secretary
based on the aggregate principal amount of single-family mortgages
insured under this title that are placed in a calendar year, which
shall not be less than $50,000 or more than $100,000, as such amount
is adjusted annually by the Secretary (as determined by 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;
`(III) guarantees payment of any liability of the correspondent lender
arising from its participation in the program, up to the penal sum
of the surety bond; without regard to the number of years the bond
remains in effect, the number of claims or claimants, and the number
of premiums paid, in no event shall the aggregate liability of the
surety exceed the penal sum of the bond; and
`(IV) may be cancelled by the surety as to future liability by giving
30 days notice in writing to the Secretary, except that any such cancellation
shall not alter the liability of the surety for actions of the correspondent
lender prior to the effective date of the cancellation; and
`(iv) complies with such other requirements as the Secretary may establish,
except that the Secretary shall not require any minimum net worth or
certified financial statements.
`(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 underwrite
and does not 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,
except that the Secretary shall not require any minimum net worth or
certified financial statements.
`(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. 22. 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. 23. 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. 24. 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 6 months
after the date of the enactment of this Act.
SEC. 25. 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 4-year period beginning
on the date that the Secretary of Housing and Urban Development first insures
any mortgage pursuant to the automated process established under pilot program
under section 258 of the National Housing Act (as added by the amendment made
by subsection (a) of this section), the Comptroller General of the United
States shall submit to the Congress a report identifying the number of additional
mortgagors served using such automated process 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. 26. 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. 27. 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. 28. DISCOUNT SALES OF MULTIFAMILY PROPERTIES.
There is authorized to be appropriated, for discount sales of multifamily
real properties under section 207(l) or 246 of the National Housing Act (12
U.S.C. 1713(l), 1715z-11), section 203 of the Housing and Community Development
Amendments of 1978 (12 U.S.C. 1701z-11), or section 204 of the Departments
of Veterans Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1997 (12 U.S.C. 1715z-11a), and for discount loan sales
under section 207(k) of the National Housing Act (12 U.S.C. 1713(k)), section
203 of the Housing and Community Development Amendments of 1978 (12 U.S.C.
1701z-11(k)), or section 204(a) of the Departments of Veterans Affairs and
Housing and Urban Development, and Independent Agencies Appropriations Act,
1997 (12 U.S.C. 1715z-11a(a)), $5,000,000, for fiscal year 2008.
SEC. 29. 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. 30. 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. NONCOMPETITIVE SALES IN FISCAL YEAR 2011.
`Notwithstanding any other provision of law, the Secretary may not sell any
multifamily real property through any discount sale during fiscal year 2011
under the provisions of law referred to in section 2002(a) or any multifamily
loan through any discount loan sale during such fiscal year under the provisions
referred to in section 2002(b), unless the property or loan is sold for an
amount that is equal to or greater than 60 percent of the property market
value or loan market value, respectively.'.
SEC. 31. 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. 32. 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. 33. CIVIL MONEY PENALTIES FOR IMPROPERLY INFLUENCING APPRAISALS.
Paragraph (2) of section 536(b) of the National Housing Act (12 U.S.C. 1735f-14(b)(2))
is amended--
(1) in subparagraph (B), by striking `or' at the end;
(2) in subparagraph (C), by striking the period at the end and inserting
`; or'; and
(3) by adding at the end the following new subparagraph:
`(D) in the case of an insured mortgage under title II for a 1- to 4-family
residence, compensating, instructing, inducing, coercing, or intimidating
any person who conducts an appraisal of the property in connection with
such mortgage, or attempting to compensate, instruct, induce, coerce,
or intimidate such a person, for the purpose of causing the appraised
value assigned to the property under the appraisal to be based on any
other factor other than the independent judgment of such person exercised
in accordance with applicable professional standards.'.
SEC. 34. MORTGAGE INSURANCE PREMIUM REFUNDS.
(a) Authority- The Secretary of Housing and Urban Development shall, to the
extent that amounts are made available pursuant to subsection (c), provide
refunds of unearned premium charges paid, at the time of insurance, for mortgage
insurance under title II of the National Housing Act (12 U.S.C. 1707 et seq.)
to or on behalf of mortgagors under mortgages described in subsection (b).
(b) Eligible Mortgages- A mortgage described in this section is a mortgage
on a one- to four-family dwelling that--
(1) was insured under title II of the National Housing Act (12 U.S.C. 1707
et seq.);
(2) is otherwise eligible, under the last sentence of subparagraph (A) of
section 203(c)(2) of such Act (12 U.S.C. 1709(c)(2)(A)), for a refund of
all unearned premium charges paid on the mortgage pursuant to such subparagraph,
except that the mortgage--
(A) was closed before December 8, 2004; and
(B) was endorsed on or after such date.
(c) Authorization of Appropriations- There is authorized to be appropriated
for each fiscal year such sums as may be necessary to provide refunds of unearned
mortgage insurance premiums pursuant to this section.
SEC. 35. 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. 36. 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.
Passed the House of Representatives September 18, 2007.
Attest:
LORRAINE C. MILLER,
Clerk.
END
