S 2338
Calendar No. 481
110th CONGRESS
1st Session
S. 2338
[Report No. 110-227]
To modernize and update the National Housing Act and enable
the Federal Housing Administration to more effectively reach underserved
borrowers, and for other purposes.
IN THE SENATE OF THE UNITED STATES
November 13, 2007
Mr. REID (for Mr. DODD) from the Committee on Banking, Housing, and
Urban Affairs reported the following original bill; which was read twice
and placed on the calendar
A BILL
To modernize and update the National Housing Act and enable
the Federal Housing Administration 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 `FHA Modernization 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.
TITLE I--BUILDING AMERICAN HOMEOWNERSHIP
Sec. 102. Maximum principal loan obligation.
Sec. 103. Cash investment requirement and prohibition of seller-funded
downpayment assistance.
Sec. 104. Mortgage insurance premiums.
Sec. 105. Rehabilitation loans.
Sec. 106. Discretionary action.
Sec. 107. Insurance of condominiums.
Sec. 108. Mutual Mortgage Insurance Fund.
Sec. 109. Hawaiian home lands and Indian reservations.
Sec. 110. Conforming and technical amendments.
Sec. 111. Insurance of mortgages.
Sec. 112. Home equity conversion mortgages.
Sec. 113. Energy efficient mortgages program.
Sec. 114. Pilot program for automated process for borrowers without
sufficient credit history.
Sec. 115. Homeownership preservation.
Sec. 116. Use of FHA savings for improvements in FHA technologies,
procedures, processes, program performance, staffing, and salaries.
Sec. 117. Post-purchase housing counseling eligibility improvements.
Sec. 118. Pre-purchase homeownership counseling demonstration.
Sec. 119. Fraud prevention.
Sec. 120. Limitation on mortgage insurance premium increases.
Sec. 121. Savings provision.
Sec. 122. Implementation.
TITLE II--MANUFACTURED HOUSING LOAN MODERNIZATION
Sec. 203. Exception to limitation on financial institution portfolio.
Sec. 204. Insurance benefits.
Sec. 205. Maximum loan limits.
Sec. 206. Insurance premiums.
Sec. 207. Technical corrections.
Sec. 208. Revision of underwriting criteria.
Sec. 209. Prohibition against kickbacks and unearned fees.
Sec. 210. Leasehold requirements.
TITLE I--BUILDING AMERICAN HOMEOWNERSHIP
SEC. 101. SHORT TITLE.
This title may be cited as the `Building American Homeownership Act
of 2007'.
SEC. 102. MAXIMUM PRINCIPAL LOAN OBLIGATION.
Paragraph (2) of section 203(b)(2) of the National Housing Act (12 U.S.C.
1709(b)(2)) is amended--
(1) by amending subparagraphs (A) and (B) to read as follows:
`(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 100 percent of the appraised value of the property.';
and
(2) in the matter following subparagraph (B), by striking the second
sentence (relating to a definition of `average closing cost') and
all that follows through `section 3103A(d) of title 38, United States
Code.'.
SEC. 103. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF SELLER-FUNDED
DOWNPAYMENT ASSISTANCE.
Paragraph 9 of section 203(b) of the National Housing Act (12 U.S.C.
1709(b)(9)) is amended to read as follows:
`(9) CASH INVESTMENT REQUIREMENT-
`(A) IN GENERAL- A mortgage insured under this section shall be
executed by a mortgagor who shall have paid, in cash, on account
of the property an amount equal to not less than 1.5 percent of
the appraised value of the property or such larger amount as the
Secretary may determine.
`(B) FAMILY MEMBERS- 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,
that--
`(i) such lien shall be subordinate to the mortgage; and
`(ii) 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.
`(C) PROHIBITED SOURCES- In no case shall the funds required by
subparagraph (A) consist, in whole or in part, of funds provided
by any of the following parties before, during, or after closing
of the property sale:
`(i) The seller or any other person or entity that financially
benefits from the transaction.
`(ii) Any third party or entity that is reimbursed, directly or
indirectly, by any of the parties described in clause (i).'.
SEC. 104. MORTGAGE INSURANCE PREMIUMS.
Section 203(c)(2) of the National Housing Act (12 U.S.C. 1709(c)(2))
is amended--
(1) in the matter preceding subparagraph (A), by striking `or of the
General Insurance Fund' and all that follows through `section 234(c),,';
and
(2) in subparagraph (A)--
(A) by striking `2.25 percent' and inserting `3 percent'; and
(B) by striking `2.0 percent' and inserting `2.75 percent'.
SEC. 105. 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. 106. 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. 107. INSURANCE OF CONDOMINIUMS.
(a) In General- Section 234 of the National Housing Act (12 U.S.C. 1715y)
is amended--
(1) in subsection (c), in the first sentence--
(A) by striking `and' before `(2)'; and
(B) 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
(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) is amended by adding at the end the following new subsection:
`(g) 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. 108. 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 calendar 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 on the
last day of the first full calendar quarter following the enactment
of the Building 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 (4), the Secretary determines
that the Fund is not meeting the operational goals established under
paragraph (7) 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 this title 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 minimize the default risk to the Fund and to homeowners
by among other actions instituting fraud prevention quality control
screening not later than 18 months after the date of enactment of
the Building American Homeownership Act of 2007; and
`(B) 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 through the end of the subsection 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. 109. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.
(a) Hawaiian Home Lands- Section 247(c) of the National Housing Act
(12 U.S.C. 1715z-12(c)) 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(f)) is amended--
(1) by striking `General Insurance Fund' the first place it appears
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. 110. 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. 111. INSURANCE OF MORTGAGES.
Subsection (n)(2) of section 203 of the National Housing Act (12 U.S.C.
1709(n)(2)) is amended--
(1) in subparagraph (A), by inserting `or subordinate mortgage or'
before `lien given'; and
(2) in subparagraph (C), by inserting `or subordinate mortgage or'
before `lien'.
SEC. 112. 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',';
(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 of 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 home equity conversion mortgage will be used
to purchase a 1- to 4-family dwelling unit, one unit of which that
the mortgagor will occupy as a primary residence, and to provide for
any future payments to the mortgagor, based on available equity, as
authorized under subsection (d)(9).
`(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 1-family residence.'.
(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 1.5 percent of the maximum claim amount of the mortgage
unless adjusted thereafter on the basis of--
`(A) the costs to the mortgagor; and
`(B) the impact of such fees 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; and
`(5) have the same effective date as subsection (o)(2) regarding the
limitation on principal obligation.'.
(d) Study Regarding Program Costs and Credit Availability-
(1) IN GENERAL- The Comptroller General of the United States shall
conduct a study regarding the costs and availability of credit under
the home equity conversion mortgages for elderly homeowners program
under section 255 of the National Housing Act (12 U.S.C. 1715z-20)
(in this subsection referred to as the `program').
(2) PURPOSE- The purpose of the study required under paragraph (1)
is to help Congress analyze and determine the effects of limiting
the amounts of the costs or fees under the program from the amounts
charged under the program as of the date of the enactment of this
Act.
(3) CONTENT OF REPORT- The study required under paragraph (1) should
focus on--
(A) the cost to mortgagors of participating in the program;
(B) the financial soundness of the program;
(C) the availability of credit under the program; and
(D) the costs to elderly homeowners participating in the program,
including--
(i) mortgage insurance premiums charged under the program;
(ii) up-front fees charged under the program; and
(iii) margin rates charged under the program.
(4) TIMING OF REPORT- Not later than 12 months after the date of the
enactment of this Act, the Comptroller General shall submit a report
to the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives
setting forth the results and conclusions of the study required under
paragraph (1).
SEC. 113. ENERGY EFFICIENT MORTGAGES PROGRAM.
Section 106(a)(2) of the Energy Policy Act of 1992 (42 U.S.C. 12712
note) is amended--
(1) by amending subparagraph (C) to read as follows:
`(C) COSTS OF IMPROVEMENTS- The cost of cost-effective energy efficiency
improvements shall not exceed the greater of--
`(i) 5 percent of the property value (not to exceed 5 percent
of the limit established under section 203(b)(2)(A)) of the National
Housing Act (12 U.S.C. 1709(b)(2)(A); or
`(ii) 2 percent of the limit established under section 203(b)(2)(B)
of such Act.'; and
(2) by adding at the end the following:
`(D) LIMITATION- In any fiscal year, the aggregate number of mortgages
insured pursuant to this section may not exceed 5 percent of the
aggregate number of mortgages for 1- to 4-family residences insured
by the Secretary of Housing and Urban Development under title II
of the National Housing Act (12 U.S.C. 1707 et seq.) during the
preceding fiscal year.'.
SEC. 114. 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.) is amended by adding at the end the following new section:
`SEC. 257. 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
to first-time homebuyers.
`(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 Building 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 title, 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 257 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. 115. HOMEOWNERSHIP PRESERVATION.
The Secretary of Housing and Urban Development and the Commissioner
of the Federal Housing Administration, in consultation with industry,
the Neighborhood Reinvestment Corporation, and other entities involved
in foreclosure prevention activities, shall--
(1) develop and implement a plan to improve the Federal Housing Administration's
loss mitigation process; and
(2) report such plan to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the
House of Representatives.
SEC. 116. USE OF FHA SAVINGS FOR IMPROVEMENTS IN FHA TECHNOLOGIES,
PROCEDURES, PROCESSES, PROGRAM PERFORMANCE, STAFFING, AND SALARIES.
(a) Authorization of Appropriations- There is authorized to be appropriated
for each of fiscal years 2008 through 2012, $25,000,000, from negative
credit subsidy for the mortgage insurance programs under title II of
the National Housing Act, to the Secretary of Housing and Urban Development
for increasing funding for the purpose of improving technology, processes,
program performance, eliminating fraud, and for providing appropriate
staffing in connection with the mortgage insurance programs under title
II of the National Housing Act.
(b) Certification- The authorization under subsection (a) shall not
be effective for a fiscal year unless the Secretary of Housing and Urban
Development has, by rulemaking 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--
(1) 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--
(A) comply with the requirements of section 205(f) of such Act (relating
to required capital ratio for the Mutual Mortgage Insurance Fund);
and
(B) ensure the safety and soundness of the other mortgage insurance
funds under such Act; and
(2) any negative credit subsidy for such fiscal year resulting from
such mortgage insurance programs adequately ensures the efficient
delivery and availability of such programs.
(c) Study and Report- The Secretary of Housing and Urban Development
shall conduct a study to obtain recommendations from participants in
the private residential (both single family and multifamily) mortgage
lending business and the secondary market for such mortgages on how
best to update and upgrade processes and technologies for the mortgage
insurance programs under title II of the National Housing Act so that
the 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 processes and technology,
and providing appropriate staffing for such mortgage insurance programs.
SEC. 117. POST-PURCHASE HOUSING COUNSELING ELIGIBILITY IMPROVEMENTS.
Section 106(c)(4) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(c)(4)) is amended:
(1) in subparagraph (C)--
(A) in clause (i), by striking `; or' and inserting a semicolon;
(B) in clause (ii), by striking the period at the end and inserting
a semicolon; and
(C) by adding at the end the following:
`(iii) a significant reduction in the income of the household
due to divorce or death; or
`(iv) a significant increase in basic expenses of the homeowner
or an immediate family member of the homeowner (including the
spouse, child, or parent for whom the homeowner provides substantial
care or financial assistance) due to--
`(I) an unexpected or significant increase in medical expenses;
`(III) unexpected and significant damage to the property, the
repair of which will not be covered by private or public insurance;
or
`(IV) a large property-tax increase; or';
(2) by striking the matter that follows subparagraph (C); and
(3) by adding at the end the following:
`(D) the Secretary of Housing and Urban Development determines that
the annual income of the homeowner is no greater than the annual
income established by the Secretary as being of low- or moderate-income.'.
SEC. 118. PRE-PURCHASE HOMEOWNERSHIP COUNSELING DEMONSTRATION.
(a) Establishment of Program- For the period beginning on the date of
enactment of this Act and ending on the date that is 3 years after such
date of enactment, the Secretary of Housing and Urban Development shall
establish and conduct a demonstration program to test the effectiveness
of alternative forms of pre-purchase homeownership counseling for eligible
homebuyers.
(b) Forms of Counseling- The Secretary of Housing and Urban Development
shall provide to eligible homebuyers pre-purchase homeownership counseling
under this section in the form of --
(1) telephone counseling;
(2) individualized in-person counseling;
(3) web-based counseling;
(4) counseling classes; or
(5) any other form or type of counseling that the Secretary may, in
his discretion, determine appropriate.
(c) Size of Program- The Secretary shall make available the pre-purchase
homeownership counseling described in subsection (b) to not more than
3,000 eligible homebuyers in any given year.
(d) Incentive to Participate- The Secretary of Housing and Urban Development
may provide incentives to eligible homebuyers to participate in the
demonstration program established under subsection (a). Such incentives
may include the reduction of any insurance premium charges owed by the
eligible homebuyer to the Secretary.
(e) Eligible Homebuyer Defined- For purposes of this section an `eligible
homebuyer' means a first-time homebuyer who has been approved for a
home loan with a loan-to-value ratio between 97 percent and 98.5 percent.
(f) Report to Congress- The Secretary of Housing and Urban Development
shall report to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of
Representative--
(1) on an annual basis, on the progress and results of the demonstration
program established under subsection (a); and
(2) for the period beginning on the date of enactment of this Act
and ending on the date that is 5 years after such date of enactment,
on the payment history and delinquency rates of eligible homebuyers
who participated in the demonstration program.
SEC. 119. FRAUD PREVENTION.
Section 1014 of title 18, United States Code, is amended in the first
sentence--
(1) by inserting `the Federal Housing Administration' before `the
Farm Credit Administration'; and
(2) by striking `commitment, or loan' and inserting `commitment, loan,
or insurance agreement or application for insurance or a guarantee'.
SEC. 120. LIMITATION ON MORTGAGE INSURANCE PREMIUM INCREASES.
(a) In General- Notwithstanding any other provision of law, including
any provision of this Act and any amendment made by this Act--
(1) for the period beginning on the date of the enactment of this
Act and ending on October 1, 2009, the premiums charged for mortgage
insurance under multifamily housing programs 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
if not less than 30 days prior to such increase taking effect, the
Secretary of Housing and Urban Development--
(A) notifies the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House
of Representatives of such increase; and
(B) publishes notice of such increase in the Federal Register.
(b) Waiver- The Secretary of Housing and Urban Development may waive
the 30-day notice requirement under subsection (a)(2), if the Secretary
determines that waiting 30-days before increasing premiums would cause
substantial damage to the solvency of multifamily housing programs under
the National Housing Act.
SEC. 121. 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 title.
SEC. 122. IMPLEMENTATION.
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 title. The notice shall take effect upon
issuance.
TITLE II--MANUFACTURED HOUSING LOAN MODERNIZATION
SEC. 201. SHORT TITLE.
This title may be cited as the `FHA Manufactured Housing Loan Modernization
Act of 2007'.
SEC. 202. PURPOSES.
The purposes of this title 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. 203. 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. 204. 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 2007 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. 205. 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 `$25,090';
(2) in subparagraph (C) by striking `$48,600' and inserting `$69,678';
(3) in subparagraph (D) by striking `$64,800' and inserting `$92,904';
(4) in subparagraph (E) by striking `$16,200' and inserting `$23,226';
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 1 year after the
date of the enactment of the FHA Manufactured Housing Loan Modernization
Act of 2007.'
(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. 206. 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. 207. 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. 208. 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.
SEC. 209. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.
Title I of the National Housing Act is amended by adding at the end
of section 9 the following new section:
`SEC. 10. PROHIBITION AGAINST KICKBACKS AND UNEARNED FEES.
`(a) In General- Except as provided in subsection (b), the provisions
of sections 3, 8, 16, 17, 18, and 19 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2601 et seq.) shall apply to each sale of a manufactured
home financed with an FHA-insured loan or extension of credit, as well
as to services rendered in connection with such transactions.
`(b) Authority of the Secretary- The Secretary is authorized to determine
the manner and extent to which the provisions of sections 3, 8, 16,
17, 18, and 19 of the Real Estate Settlement Procedures Act of 1974
(12 U.S.C. 2601 et seq.) may reasonably be applied to the transactions
described in subsection (a), and to grant such exemptions as may be
necessary to achieve the purposes of this section.
`(c) Definitions- For purposes of this section--
`(1) the term `federally related mortgage loan' as used in sections
3, 8, 16, 17, 18, and 19 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2601 et seq.) shall include an FHA-insured
loan or extension of credit made to a borrower for the purpose of
purchasing a manufactured home that the borrower intends to occupy
as a personal residence; and
`(2) the term `real estate settlement service' as used in sections
3, 8, 16, 17, 18, and 19 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2601 et seq.) shall include any service rendered
in connection with a loan or extension of credit insured by the Federal
Housing Administration for the purchase of a manufactured home.
`(d) Unfair and Deceptive Practices- In connection with the purchase
of a manufactured home financed with a loan or extension of credit insured
by the Federal Housing Administration under this title, the Secretary
shall prohibit acts or practices in connection with loans or extensions
of credit that the Secretary finds to be unfair, deceptive, or otherwise
not in the interests of the borrower.'.
SEC. 210. LEASEHOLD REQUIREMENTS.
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:
`(11) LEASEHOLD REQUIREMENTS- No insurance shall be granted under
this section to any such financial institution with respect to any
obligation representing any such loan, advance of credit, or purchase
by it, made for the purposes of financing a manufactured home which
is intended to be situated in a manufactured home community pursuant
to a lease, unless such lease--
`(A) expires not less than 3 years after the origination date of
the obligation;
`(B) is renewable upon the expiration of the original 3 year term
by successive 1 year terms; and
`(C) requires the lessor to provide the lessee written notice of
termination of the lease not less than 180 days prior to the expiration
of the current lease term in the event the lessee is required to
move due to the closing of the manufactured home community, and
further provides that failure to provide such notice to the mortgagor
in a timely manner will cause the lease term, at its expiration,
to automatically renew for an additional 1 year term.'.
Calendar No. 481
110th CONGRESS
1st Session
S. 2338
[Report No. 110-227]
A BILL
To modernize and update the National Housing Act and enable the Federal
Housing Administration to more effectively reach underserved borrowers,
and for other purposes.
November 13, 2007
Read twice and placed on the calendar
END
