TABLE OF CONTENTS:
Title I: Organization of Corporation
Title II: Business of Corporation
Title III: Provisions Relating to Government National
Mortgage Association and Office of Federal Housing
Enterprise Oversight
Title IV: FHA Improvements
Federal Mortgage Insurance Corporation Charter Act - Title I: Organization of Corporation - Establishes the Federal Mortgage Insurance Corporation (the Corporation) as a tax-exempt, self-supporting, wholly owned Government corporation to promote the single family housing market through expanded opportunities for full mortgage insurance and housing credit.
(Sec. 104) Charges the Director of the Office of Federal Housing Enterprise Oversight (OFHEO) with regulatory supervision over the financial safety and soundness of the Corporation. Requires the Corporation to submit an annual budget and business plan to OFHEO.
(Sec. 109) Places the Corporation within the purview of the Inspector General of the Department of Housing and Urban Development.
Requires the Corporation to establish an annual business plan for review by the Congress and the President.
(Sec. 112) Directs the Comptroller General to report to the President and the Congress on the impact upon the Corporation of statutory limitations and safety and soundness requirements.
(Sec. 113) Authorizes appropriations in an amount each fiscal year equal to the amount of net income from Corporation operations.
Title II: Business of Corporation - Limits Corporation authority to provide mortgage insurance or credit enhancement to property that is a one- to four-family dwelling located in the United States.
(Sec. 202) Prescribes guidelines for the Corporation to implement a mortgage insurance program under the same statutory limitations applicable to family dwellings carried out by the Secretary of Housing and Urban Development.
Prescribes guidelines under which the Secretary shall transfer to the Corporation all assets and obligations relating to the mortgage insurance program for family dwellings. Sets a termination date for the Secretary's mortgage insurance authority.
(Sec. 203) Authorizes the Corporation to: (1) provide full mortgage insurance for family dwellings that is not subject to the National Housing Act strictures; and (2) engage in any other method of enhancing credit for mortgages involving family dwellings.
(Sec. 204) Subjects the Corporation to certain limitations on business activity.
Title III: Provisions Relating to Government National Mortgage Association and Office of Federal Housing Enterprise Oversight - Amends the National Housing Act to make technical changes reflecting the provisions of this Act.
(Sec. 302) Amends the Housing and Community Development Act of 1992 to provide for the supervision and regulation of the Corporation. Vests the OFHEO Director with exclusive supervisory and regulatory authority over the safety and soundness of the Corporation, including a mandate to review any proposed new business activity to determine any potential for undercapitalization. Sets forth the Director's supervisory and enforcement parameters.
Title IV: FHA Improvements - Amends the National Housing Act to: (1) modify the mortgage insurance eligibility formula for family dwellings; and (2) prescribe guidelines under which the Secretary may delegate the authority to insure mortgages for family dwellings to a mortgagee.
[Congressional Bills 104th Congress]
[From the U.S. Government Printing Office]
[H.R. 1708 Introduced in House (IH)]
104th CONGRESS
1st Session
H. R. 1708
To establish the Federal Mortgage Insurance Corporation as a wholly
owned Government corporation to provide full mortgage insurance and
provide for the development of credit enhancement products for
mortgages for single family homes of low- and moderate-income
homebuyers, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 24, 1995
Mr. Weller (for himself, Mr. Metcalf, Mr. Barr, Mr. Fox of
Pennsylvania, Mr. Stockman, Mr. Ehrlich, Mr. Chrysler, Mr. Ney, Mr.
Heineman, Mr. Bono, Mr. Hayworth, Mr. LoBiondo, Mrs. Kelly, Mr. Tate,
Mr. Davis, Mr. Graham, Mr. Foley, Mr. Forbes, Mr. Salmon, Mr. English
of Pennsylvania, Mr. Frisa, Mr. Burr, Mr. Wamp, and Mr. Bryant of
Tennessee) introduced the following bill; which was referred to the
Committee on Banking and Financial Services
_______________________________________________________________________
A BILL
To establish the Federal Mortgage Insurance Corporation as a wholly
owned Government corporation to provide full mortgage insurance and
provide for the development of credit enhancement products for
mortgages for single family homes of low- and moderate-income
homebuyers, 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.
This Act may be cited as the ``Federal Mortgage Insurance
Corporation Charter Act''.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.
TITLE I--ORGANIZATION OF CORPORATION
Sec. 101. Establishment.
Sec. 102. Purposes.
Sec. 103. General powers.
Sec. 104. Board of Directors.
Sec. 105. Officers and employees.
Sec. 106. Procurement.
Sec. 107. Financial safety and soundness.
Sec. 108. Federal credit reform procedures.
Sec. 109. Additional oversight and reporting requirements.
Sec. 110. Transition.
Sec. 111. Applicability of laws.
Sec. 112. GAO evaluation.
Sec. 113. Rule of construction.
Sec. 114. Authorization of appropriations.
TITLE II--BUSINESS OF CORPORATION
Sec. 201. Single family housing requirement.
Sec. 202. Transfer of FHA single family housing business.
Sec. 203. New lines of business.
Sec. 204. Limitations on business activity.
TITLE III--PROVISIONS RELATING TO GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION AND OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT
Sec. 301. GNMA authority.
Sec. 302. Safety and soundness oversight of Corporation by OFHEO.
TITLE IV--FHA IMPROVEMENTS
Sec. 401. Calculation of downpayment.
Sec. 402. Delegation of single family mortgage insuring authority to
direct endorsement mortgagees.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Corporation.--The term ``Corporation'' means the
Federal Mortgage Insurance Corporation established under this
Act.
(2) Native american government.--The term ``Native American
government'' means the government of any Indian or Alaska
native tribe, band, nation, pueblo, village or community that
the Secretary of the Interior acknowledges to exist as an
Indian tribe, pursuant to the Federally Recognized Indian Tribe
List Act of 1994.
(3) Single family housing.--The term ``single family
housing'' means a property on which there is located a 1- to 4-
family residence.
(4) United states.--The term ``United States'' includes the
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of the Northern Mariana Islands, Guam,
the Virgin Islands, American Samoa, and Native American
governments.
TITLE I--ORGANIZATION OF CORPORATION
SEC. 101. ESTABLISHMENT.
(a) In General.--There is hereby established a body corporate to be
known as the Federal Mortgage Insurance Corporation, which shall have
succession until dissolved by Act of Congress.
(b) Government Corporation.--The Corporation shall be established
as a wholly owned Government corporation subject to chapter 91 of title
31, United States Code (commonly referred to as the Government
Corporation Control Act), except as otherwise provided in this Act.
(c) Federal Agency.--
(1) In general.--The Corporation shall be an agency of the
United States, except that the Corporation shall not be
considered an agency for purposes of holding, managing, and
disposing of assets acquired by the Corporation under the
provisions of this subtitle or subtitle B.
(2) Property disposition authority.--For purposes of this
subsection, the term ``holding, managing, and disposing of
assets'' includes the powers to--
(A) deal with, complete, reconstruct, rent,
renovate, modernize, insure, make contracts for the
management of, establish suitable agencies for the
management of, or exercise discretion to sell for cash
or credit or lease, any acquired property;
(B) pursue collection by way of compromise or
otherwise all assigned and transferred claims; and
(C) at any time, upon default, foreclose on any
property secured by any assigned or transferred
mortgage.
(d) Self-Supporting Entity.--The Corporation shall operate and
conduct its business as a self-supporting entity.
(e) Corporate Offices and Residency.--The Corporation shall
maintain its principal office in the District of Columbia and shall be
deemed, for purposes of venue in civil actions, to be a resident of the
District of Columbia. The Corporation may establish other officers in
such other places as the Corporation considers appropriate in the
conduct of its business.
(f) Tax Status.--The Corporation, including its franchise,
activities, income, and assets, shall be exempt from all taxation now
or hereafter imposed by any taxing authority in the United States,
except that any real property of the Corporation (other than real
property that the Corporation uses as an office) shall be subject to
taxation to the same extent according to its value as any taxing
authority taxes other real property.
(g) Protection of Name.--No person, except the body corporate
established under this section shall, after the date of the enactment
of this Act, use the words ``Federal Mortgage Insurance Corporation''
or the initials ``FMIC'' as the name or part thereof under which such
person shall do business. Violations of the preceding sentence may be
enjoined by any court of general jurisdiction at the suit of the
Corporation. In any such suit, the Corporation may recover any actual
damages flowing from such violation, and, in addition, shall be
entitled to punitive damages (regardless of the existence or
nonexistence of actual damages) of not more than $100 for each day
during which such violation is committed or repeated.
SEC. 102. PURPOSES.
The Corporation is established for the following purposes:
(1) To expand the opportunities in the United States for
single family homeownership through the provision of full
mortgage insurance and credit enhancement products and related
activities.
(2) To address the unmet single family housing credit needs
of families and communities in the United States.
(3) To engage in research, development, and testing of new
products designed to make housing credit available to
underserved markets.
(4) To deliver full mortgage insurance and credit
enhancement products, and provide other services, for single
family housing in a nondiscriminatory manner, and to administer
its business in a manner which affirmatively furthers fair
housing.
(5) To promote liquidity and provide stability to the
single family housing finance market, by continuing to provide
full mortgage insurance and credit enhancement products on a
sound basis during times of regional and national economic
downturn.
(6) To expand access to decent and affordable single family
housing and to deliver housing credit to families and
communities in the United States.
SEC. 103. GENERAL POWERS.
To further the purposes of this Act, in accordance with chapter 91
of title 31 of the United States Code (relating to government
corporations), the Corporation--
(1) may adopt, amend, and repeal bylaws, and other written
administrative guidance;
(2) may adopt, alter, and use a corporate seal, which shall
be judicially noted;
(3) may enhance and make commitments to enhance credit to
the extent authorized under this Act, including commitments to
insure, reinsure, advance, and incur liabilities, to the extent
provided in title II;
(4) may acquire, hold, use, improve, deal in, or dispose
of, by any means, any interests in any real property or any
personal property;
(5) may execute contracts, make grants, and make other
agreements in its own name, with any agency, public or private
entity, or person, and carry out any lawful requirement of such
contracts, grants, or other agreements;
(6) may take any actions (including the restructuring of
debt) that Corporation determines are necessary to manage the
Corporation's portfolio of property, assets, and obligations;
(7) may, to the extent authorized under this Act--
(A) create and supply any product or service
consistent with its corporate purposes;
(B) collect, generate, and make available any
information relevant to the provision of single family
housing credit; and
(C) assess fees and charges for such products,
information, and services in an amount, as determined
by the Corporation, that does not exceed their value in
the market and that permits the Corporation to recover
its fully allocated long-term costs and maintain the
level of
capital determined by the Corporation to be necessary
and sufficient to carry out the public purposes of the Corporation;
(8) may insulate any product, line, or service from any
other, by creating distinct insurance funds or other devices to
segregate or permit limitations on liability for business
activities or accounts;
(9) may qualify any person or entity to engage in business
with the Corporation and enforce and impose penalties for the
breach of any duties, obligations, and other commitments made
by such persons or entities;
(10) shall take actions necessary to administer its
business in a manner which is nondiscriminatory and which
affirmatively furthers fair housing;
(11) may use the services or obtain the goods of any
Federal agency, including the Department of Housing and Urban
Development, under working or cooperation agreements or
contracts with such agencies and make or receive payment for
the cost of such activities;
(12) shall have the power, in its corporate name, to sue
and be sued, and to complain and defend, in any court of
competent jurisdiction, State or Federal, but no attachment,
garnishment, injunction, or other similar process, mesne or
final, shall be issued against the property of the Corporation
or against the Corporation with respect to its property, and
the Corporation shall not be liable for interest prior to
judgment, for punitive or exemplary damages, for penalties, or
for claims based upon unjust enrichment, quasi-contract, or
contracts implied-in-law, nor shall the Corporation be subject
to trial by jury;
(13) notwithstanding any other provision of law--
(A) shall be an agency of the Federal Government,
and the officers and employees of the Corporation shall
be officers and employees of the Federal Government,
for purposes of part IV of title 28, United States
Code;
(B) shall have all civil actions to which the
Corporation is a party deemed to arise under the laws
of the United States; and
(C) may, at any time before trial and without bond
or security, remove any civil or criminal action or
proceeding in a State court to which the Corporation is
a party to the United States district court for the
District of Columbia or to the United States district
court with jurisdiction over the place where the civil
action or proceeding is pending, by following any
procedure for removal of actions in effect at the time
of such removal;
(14) may--
(A) accept and use voluntary and uncompensated
services and accept, hold, administer, and use gifts
and bequests of property, both real and personal, for
the purpose of aiding or facilitating the work of the
Corporation; and
(B) hold gifts and bequests of money and the
proceeds from sales of other property received as gifts
or bequests in a separate account, and such amounts
shall be disbursed as determined by the Corporation:
except that property accepted pursuant to this paragraph, and
the proceeds thereof, shall be used as nearly as possible in
accordance with the terms of the gift or bequest and, for the
purpose of Federal income, estate, and gift taxes, property
accepted under this paragraph shall be considered as a gift or
bequest to or for the use of the United States;
(15) shall have any transaction in which it participates be
exempt from the terms of any State or other law or prohibition
against payment of usurious interest;
(16) may act as a fiduciary in connection with any of its
undertakings;
(17) may foreclose any single family housing mortgages held
by the Corporation pursuant to the same procedures applicable
to the Secretary under the Single Family Mortgage Foreclosure
Act of 1994;
(18) shall have the priority of the United States with
respect to the payment of debts out of bankrupt, insolvent, and
decedents' estates;
(19) may invest in systems, technology, or other capital
resources, to enhance its ability to carry out the purposes of
this Act; and
(20) shall have and exercise all powers necessary or
appropriate to effect any purposes of this Act, including the
power to carry out any authority transferred to the Corporation
under this Act.
SEC. 104. BOARD OF DIRECTORS.
(a) In General.--The powers of the Corporation shall be vested in
the Board of Directors of the Corporation.
(b) Appointment.--The Board of Directors shall consist of 9
individuals appointed by the President by and with the advise and
consent of the Senate. The President shall designate a chairperson of
the Board from among members of the Board.
(c) Qualifications.--Members of the Board of Directors shall be
citizens of the United States. The Board of Directors shall at all
times include as members not less than--
(1) 1 individual from the mortgage finance industry;
(2) 1 individual from the home building industry;
(3) 1 individual with knowledge and experience regarding
secondary mortgage market activities;
(4) 1 individual with knowledge and experience regarding
home sales;
(5) 1 individual with knowledge and experience regarding
single family housing asset management;
(6) 1 individual from a State or local housing agency
engaged in single family housing activities;
(7) 1 individual who represents consumer or community
interests in single family housing; and
(8) 1 individual who represents or resides in an urban or
rural neighborhood whose population consists predominantly of
members of minorities.
(d) Terms.--
(1) In general.--Each member of the Board of Directors
shall be appointed for a term of 6 years, except as provided in
paragraphs (2) and (3).
(2) Terms of initial appointees.--As designated by the
President at the time of appointment, of the members first
appointed--
(A) 3 shall be appointed for terms of 2 years; and
(B) 3 shall be appointed for terms of 4 years.
(3) Vacancies.--Any member appointed to fill a vacancy
occurring before the expiration of the term for which the
member's predecessor was appointed shall be appointed only for
the remainder of that term. A member may serve after the
expiration of that member's term until a successor has taken
office. A vacancy in the Board shall be filled in the manner in
which the original appointment was made.
(e) Meetings and Quorum.--The Board of Directors shall meet at any
time pursuant to the call of the Chairperson or a majority of its
members and as provided by the bylaws of the Corporation, but not less
than quarterly. 5 members of the Board shall constitute a quorum.
(f) Powers.--The Board of Directors shall be responsible for the
general management of the Corporation and shall have the same
authority, privileges, and responsibilities as the board of directors
of a private corporation incorporated under the District of Columbia
Business Corporation Act.
(g) Compensation.--Members of the Board of Directors shall serve on
a part-time basis and shall serve without pay.
(h) Travel Expenses.--Each member shall receive travel expenses,
including per diem in lieu of subsistence, in accordance with sections
5702 and 5703 of title 5, United States Code.
SEC. 105. OFFICERS AND EMPLOYEES.
(a) Appointment of Officers.--The Board of Directors of the
Corporation shall appoint a president and vice president of the
Corporation, and such other officers as are provided for in the bylaws
of the Corporation.
(b) Appointment of Employees.--The Board of Directors shall appoint
such other employees of the Corporation as the Board considers
necessary for the transaction of its business.
(c) Compensation, Duties, and Removal.--
(1) In general.--The Board of Directors shall fix the
compensation of all officers and employees of the Corporation,
define their duties, and provide a system of management and
organization to fix responsibility and promote efficiency.
(2) Considerations in fixing compensation.--No officer or
employee of the Corporation may receive pay in excess of the
annual rate of basic pay payable for level III of the Executive
Schedule.
(d) Principles Governing Personnel Management.--The Board shall
ensure that the system of organization, compensation, and management
for personnel is consistent with the principles under section 2301(b)
of title 5, United States Code (regarding merit system principles).
(e) Applicability of Certain Civil Service Laws.--The officers and
employees of the Corporation shall be appointed without regard to the
provisions of title 5, United States Code, governing appointments in
the competitive service, and may be paid without regard to the
provisions of chapter 51 and subchapter III of chapter 53 of that title
relating to classification and General Schedule pay rates.
(f) Use of Federal Agencies.--In carrying out its purposes, the
Corporation may use information, services, staff, and facilities of any
executive agency, independent agency, or department (including the
Department of Housing and Urban Development), with the consent of the
agency or department, and shall reimburse the agency or department for
the cost of such information, services, staff, and facilities.
(g) Indemnification.--The Corporation may provide for the
indemnification of any officer, employee, contractor, or agent of the
Corporation on such terms as the Corporation determines proper, except
that, to the extent that the Corporation self-insures for any
indemnification--
(1) the aggregate maximum amount of all indemnifications
outstanding at any time shall not exceed 5 percent of the
required capital level determined under section 1386 of the
Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 by the Director of the Office of Federal Housing
Enterprise Oversight; and
(2) no more than $1,000,000 may be paid as an indemnity for
any single event.
SEC. 106. PROCUREMENT.
(a) In General.--The Board shall establish an economical and
results-oriented system for procurement, supply, and disposition by the
Corporation of personal property and nonpersonal services, which shall
include performance measures and standards for determining the extent
to which the Corporation's procurement of property and services
satisfies the objective for which the procurement was undertaken. The
system shall be consistent with the principles of impartiality and
competitiveness.
(b) Consideration of Federal Procurement System.--In establishing
the system for procurement, supply, and disposition under this
subsection, the Board shall take into consideration--
(1) the requirements under the Federal Property and
Administrative Services Act of 1949 and the appropriateness or
inappropriateness of adopting identical or similar procedures
for the Corporation; and
(2) the experience of the Department of Housing and Urban
Development in complying with such Act in procurement, supply,
and disposition activities relating to the single family
mortgage insurance program under the National Housing Act.
(c) Exemption From Federal Property and Administrative Service Act
Provisions.--Section 602(d) of the Federal Property and Administrative
Services Act of 1949 (40 U.S.C. 474) is amended--
(1) in paragraph (20), by striking ``and'' at the end;
(2) in paragraph (21), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(22) The Federal Mortgage Insurance Corporation.''.
(d) Exemption From Procurement Protest System.--Subchapter V of
chapter 35 of title 31, United States Code, relating to the procurement
protest system, shall not apply to the Corporation.
SEC. 107. FINANCIAL SAFETY AND SOUNDNESS.
The Director of the Office of Federal Housing Enterprise Oversight
shall oversee the financial safety and soundness of the Corporation,
pursuant to subtitle E of the Federal Housing Enterprise Financial
Safety and Soundness Act of 1992.
SEC. 108. FEDERAL CREDIT REFORM PROCEDURES.
(a) Submission of Budget and Business Plan to OFHEO.--In each year,
the Corporation shall submit its annual budget and business plan to the
Director of the Office of Federal Housing Enterprise Oversight by a
date sufficient to enable the Director to produce, pursuant to section
1385(c) of the Federal Housing Enterprise Financial Safety and
Soundness Act of 1992, the credit subsidy cost estimates that are
required for the President's budget.
(b) Submission of Budget and Credit Cost Estimates to OMB.--For
purposes of inclusion in the President's budget, the Corporation shall
submit the annual budget of the Corporation and the annual credit
subsidy cost estimates produced pursuant to section 1385(c) of the
Federal Housing Enterprise Financial Safety and Soundness Act of 1992
to the Director of the Office of Management and Budget.
(c) Reserves.--
(1) Establishment.--The Corporation may establish any
reserve that the Corporation determines is necessary for the
business operations of the Corporation.
(2) Amounts.--The Corporation may hold as a reserve in any
financing account, as defined in section 502 of the
Congressional Budget Act of 1974, such amounts as the
Corporation considers necessary to comply with the capital
requirements established for the Corporation under subtitle E
of the Federal Housing Enterprise Financial Safety and
Soundness Act of 1992 and to fulfill the purposes of this Act.
SEC. 109. ADDITIONAL OVERSIGHT AND REPORTING REQUIREMENTS.
(a) Inspector General.--For purposes of the Inspector General Act
of 1978 and chapter 91 of title 31, United States Code, the Inspector
General of the Department of Housing and Urban Development shall
perform the functions of Inspector General for the Corporation.
(b) Annual Business Plan.--The Corporation shall establish a
business plan on an annual basis and shall make such plan available for
review by the Congress and the President. Such plan shall specify the
product and operational strategy of the Corporation, including plans to
address compliance with the safety and soundness requirements
applicable to the Corporation.
SEC. 110. TRANSITION.
(a) Transition Date and Transition Period.--For purposes of this
Act, the following definitions shall apply:
(1) Transition date.--The term ``transition date'' means
the latter of the following 2 dates:
(A) Earliest date.--January 1, 1997.
(B) Required actions.--The first date by which all
of the following have occurred:
(i) The Corporation has submitted an
initial annual budget and business plan to the
Congress and the President that have been
approved by the President.
(ii) The Director of the Office of Federal
Housing Enterprise Oversight has certified to
the Congress and the President that the
Director has developed an interim model under
section 1386(a)(2) of the Federal Housing
Enterprises Financial Safety and Soundness Act
of 1992 that is sufficient for the Director's
purposes.
(iii) The Director of the Office of
Management and Budget has certified to the
Congress and the President that the application
of such interim model is consistent with the
Federal Credit Reform Act of 1990.
(iv) The Director of the Office of
Management and Budget determines that the
staff, systems, and administrative
infrastructure of the Corporation are
sufficient to permit the Corporation to fully
conduct the operation of its business.
(2) Transition period.--The term ``transition period''
means the period beginning upon the organization of the
Corporation under this Act and ending upon the transition date.
(b) Authority During Transition Period.--During the transition
period--
(1) the Secretary of Housing and Urban Development shall,
in consultation with the Corporation and the Director of the
Office of Management and Budget, transfer to the Corporation
such powers and responsibilities of the Secretary to carry out
the single family mortgage insurance programs under the
National Housing Act, at such times as are appropriate for the
Corporation to assume such powers and responsibilities;
(2) the Corporation may carry out any power or
responsibility that the Secretary of Housing and Urban
Development transfers to the Corporation consistent with
paragraph (1) and section 202, using the staff, systems, and
administrative infrastructure that the Corporation engages or
acquires during the transition period, or the personnel and
other resources of the Secretary;
(3) the Corporation may incur any obligation consistent
with--
(A) the carrying out of a delegated power or
responsibility; or
(B) the acquisition, engagement, or development of
staff, systems (including technology to enhance its
ability to engage in the business of the Corporation
authorized by the Act), and administrative structure;
and
(4) the Corporation may engage in any other activity or
undertake any responsibility (not including any authority under
section 203) that the Board of Directors determines to be
consistent with the start-up of the Corporation and the
authority of the Corporation under this Act.
SEC. 111. APPLICABILITY OF LAWS.
(a) Government Corporation Control Act.--Section 9101(3) of title
31, United States Code, is amended by adding at the end the following
new subparagraph:
``(P) the Federal Mortgage Insurance Corporation.''
(b) Tax Exempt Status of Corporation.--Section 501(l) of the
Internal Revenue Code of 1986 (26 U.S.C. 501(l)) is amended by adding
at the end the following new paragraph:
``(4) The Federal Mortgage Insurance Corporation
established under the Federal Mortgage Insurance Corporation
Charter Act.''.
(c) Notice and Comment Rulemaking.--Any matter relating to mortgage
insurance, credit enhancement, or other business activities of the
Corporation authorized under this Act shall be considered a matter
relating to agency management or personnel or to public property,
loans, grants, benefits, or contracts, for purposes of section 553(a)
of title 5, United States Code.
(d) Conforming Amendment Relating to Usury Exemption for Veterans
Loans.--Section 3728 of title 38, United States Code, is amended by
inserting after ``National Housing Act'' the following: ``, or are
credit-enhanced under the Federal Mortgage Insurance Corporation
Charter Act,''.
SEC. 112. GAO EVALUATION.
(a) In General.--The Comptroller General of the United States shall
conduct a study and submit a report to the President and the Congress
on--
(1) whether this Act provides sufficient authority to
permit the Corporation to accomplish its public purposes
efficiently and effectively, and in a safe and sound manner;
(2) the impact of the limitations on business activities as
to mortgage amounts and aggregate commitments, and any other
statutory limitations, on the current and anticipated business
activity of the Corporation; and
(3) whether the safety and soundness and other requirements
under this Act and the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 appropriately provide that the
Corporation will be operated in a safe and sound manner and
will fulfill the public purposes of its establishment.
(b) Timing.--The report required by this section shall be submitted
on the third January 1st occurring after the conclusion of the
transition period.
SEC. 113. RULE OF CONSTRUCTION.
Notwithstanding any other evidence of the intent of Congress, it is
hereby declared to be the intent of Congress that the provisions of
this Act shall be construed broadly to achieve the purposes of the Act,
and the provisions of any other Act that must be construed with any
provision of this Act shall similarly be construed to achieve the
purposes of this Act to the extent reasonably possible.
SEC. 114. AUTHORIZATION OF APPROPRIATIONS.
(a) Annual Availability of Negative Subsidy.--There is authorized
to be appropriated, in each fiscal year, for conducting operations of
the Corporation, an amount not exceeding the amount of any net income
from the operations of the Corporation. Such sums shall remain
available until expended.
(b) Funding of Claims.-- Amounts credited to the financing account
of the Corporation, established pursuant to title V of the
Congressional Budget Act of 1974, shall be permanently and indefinitely
available for payment of any claim that the Corporation approves under
a contract of insurance or other credit enhancement instrument under
this Act. To the extent that such amounts are insufficient for such
purpose, the Federal Mortgage Insurance Corporation may borrow from the
Treasury pursuant to title V of the Congressional Budget Act of 1974.
TITLE II--BUSINESS OF CORPORATION
SEC. 201. SINGLE FAMILY HOUSING REQUIREMENT.
The Corporation may provide mortgage insurance or credit
enhancement only with respect to credit extended for property that--
(1) is a 1- to 4-family residence; and
(2) is located in the United States.
SEC. 202. TRANSFER OF FHA SINGLE FAMILY HOUSING BUSINESS.
(a) In General.--After the transition date under section 110--
(1) the Corporation shall carry out a program to insure
mortgages on 1- to 4-family dwellings, which shall be subject
to the same limitations under the National Housing Act (as
amended by title IV of this Act) that are applicable to the
mortgage insurance program for 1- to 4-family dwellings carried
out by the Secretary of Housing and Urban Development;
(2) the Corporation may exercise any authority and
undertake any responsibility of the Secretary of Housing and
Urban Development under the National Housing Act relating to
providing mortgage insurance described in paragraph (1) of this
subsection, except that any authority that requires an
appropriation may be conducted only to the extent that amounts
are so appropriated; and
(3) the Corporation shall manage any assets and obligations
transferred under subsection (b) subject to the same
limitations applicable to the Secretary of Housing and Urban
Development under the National Housing Act (as amended by title
IV of this Act).
(b) Transfer of Assets and Obligations.--The Secretary of Housing
and Urban Development, in consultation with the Secretary of the
Treasury, shall, to the extent approved in appropriation Acts, transfer
to the Corporation, on or before the transition date, all assets and
obligations of the Secretary of Housing and Urban Development relating
to the program for mortgage insurance for 1- to 4-family dwellings,
including all assets and obligations of the Mutual Mortgage Insurance
Fund under section 202 of the National Housing Act and all assets and
obligations of the General Insurance Fund and Special Risk Insurance
Fund under sections 519 and 238(b), respectively, of such Act relating
to mortgage insurance for such dwellings.
(c) Continuation of Contracts.--This Act may not be construed to
affect the validity of any right, duty, or obligation of the United
States or other person arising under or pursuant to any commitment or
agreement lawfully entered into under the National Housing Act before
the enactment of this Act. The provisions of this Act and the National
Housing Act shall continue to apply to any such obligations to the same
extent such provisions were applicable before such enactment, except
only that any obligation of the Secretary of Housing and Urban
Development transferred to the Corporation pursuant to subsection (b)
shall be an obligation of the Corporation to the same extent as if the
Corporation had originally executed such obligation.
(d) Termination of HUD Mortgage Insurance Authority.--
Notwithstanding any other provision of law, after the transition date
the Secretary of Housing and Urban Development may not provide any
insurance, or make any commitment to insure, any mortgage for a 1- to
4-family dwelling, pursuant to title II of the National Housing Act.
SEC. 203. NEW LINES OF BUSINESS.
(a) Authority.--After the transition date, the Corporation may,
subject to the requirements of this section and section 204--
(1) provide full mortgage insurance for mortgages involving
1- to 4-family dwellings that is not subject to the limitations
under the National Housing Act; and
(2) engage in any other method of enhancing credit for
mortgages involving 1- to 4-family dwellings.
(b) Full Insurance.--In insuring or providing credit enhancement
pursuant to this section for any mortgage, the Corporation--
(1) may provide such insurance or enhancement only with
respect to the full mortgage amount; and
(2) may not provide such insurance or enhancement in any
manner under which the Corporation and any other agency,
organization, or person agree to each insure or enhance a
portion of the mortgage amount or to bear a particular portion
of the loss under such insurance or enhancement.
(c) Approval.--The Corporation may not engage in any activity under
subsection (a) unless--
(1) such activity is within the authority provided under
this Act for the Corporation and is specifically approved, as
to the nature of the activity and the scope of such activity,
by a majority vote of the Board of Directors; and
(2) the Director of the Office of Federal Housing
Enterprise Oversight has specifically determined, and notified
the Board of Directors in writing, that engaging in such
activity will not cause the Corporation to violate the
requirement under section 101(d) and such activity is not
likely to result in the Corporation being classified as
undercapitalized or significantly undercapitalized, pursuant to
section 1386 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992.
SEC. 204. LIMITATIONS ON BUSINESS ACTIVITY.
The Corporation shall be subject to the following limitations on
business activity:
(1) Mortgage amount limitation.--
(A) In general.--To be eligible for mortgage
insurance or other credit enhancement under this Act, a
mortgage shall involve a principal obligation in an
amount that does not exceed the lesser of--
(i) in the case of a 1-family residence, 95
percent of the median 1-family house price in
the area, as determined by the Corporation; in
the case of a 2-family residence, 107 percent
of such median price; in the case of a 3-family
residence, 130 percent of such median price; or
in the case of a 4-family residence, 150
percent of such median price; or
(ii) in the case of a residence for fewer
than five families, 75 percent of the dollar
amount limitation determined under section
305(a)(2) of the Federal Home Loan Mortgage
Corporation Act for a residence of the
applicable size.
(B) Minimum area limitation.--Notwithstanding
subparagraph (A), the principal obligation limitation
in effect for any area under this paragraph may not be
less than the greater of (i) the dollar amount
limitation in effect under section 203(b)(2) of the
National Housing Act for the area on September 28,
1994, or (ii) 38 percent of the dollar amount
limitation determined under section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act for a
residence of the applicable size.
(C) Applicability of exceptions.--Any exceptions to
the limit on principal obligations set forth in section
203(b)(2)(A) of the National Housing Act, as such
section and such exceptions exist as of the date of the
enactment of this Act, shall apply to the limitations
set forth in subparagraphs (A) and (B) of this
paragraph.
(2) Aggregate mortgage amount of new business.--The
aggregate principal amount of mortgages that, during any fiscal
year, are insured or provided other credit enhancement by the
Corporation pursuant to authority under section 203 may not
exceed 15 percent of the aggregate principal amount of all
mortgages insured or provided other credit enhancement by the
Corporation during such fiscal year.
(3) Aggregate new mortgage commitment limitation.--The
Corporation may not, during the 5-year period beginning upon
the transition period, enter into commitments to insure
mortgages or provide other credit enhancement for mortgages
with an aggregate principal amount that exceeds
$520,000,000,000.
TITLE III--PROVISIONS RELATING TO GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION AND OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT
SEC. 301. GNMA AUTHORITY.
Title III of the National Housing Act (12 U.S.C. 1716 et seq.) is
amended--
(1) in section 301(5), by inserting after ``federally owned
mortgage portfolios'' the following: ``(including any owned by
the Federal Mortgage Insurance Corporation)'';
(2) in the first sentence of section 306(g)(1)--
(A) by inserting ``the Association, or by'' after
``shall (i) be issued by''; and
(B) by striking ``which are insured under the
National Housing Act'' and all that follows through the
period and inserting ``which are guaranteed or insured
under the National Housing Act, the Federal Mortgage
Insurance Corporation Charter Act, title V of the
Housing Act of 1949, the Servicemen's Readjustment Act
of 1944, or chapter 37 of title 38, United States
Code.''; and
(3) in section 306(g)(3)(A)(i), by inserting after
``National Housing Act'' the following: ``or the Federal
Mortgage Insurance Corporation Charter Act''.
SEC. 302. SAFETY AND SOUNDNESS OVERSIGHT OF CORPORATION BY OFHEO.
(a) In General.--Title XIII of the Housing and Community
Development Act of 1992 (Public Law 102-550; 106 Stat. 4009) is
amended--
(1) by redesignating subtitle E as subtitle F; and
(2) by inserting after subtitle D the following new
subtitle:
``SUBTITLE E--SUPERVISION AND REGULATION OF FEDERAL MORTGAGE INSURANCE
CORPORATION
``SEC. 1384. AUTHORITY OF DIRECTOR.
``(a) In General.--The Director of the Office of Federal Housing
Enterprise Oversight shall supervise and regulate the safety and
soundness of the Federal Mortgage
Insurance Corporation (in this subtitle referred to as the
`Corporation').
``(b) Authority Exclusive of Secretary.--The Director is
authorized, without the review or approval of the Secretary of Housing
and Urban Development, to make such determinations, take such actions,
and perform such functions as the Director determines necessary to meet
the responsibilities of the Director under this subtitle.
``(c) Review of New Business of Corporation.--The Director shall
review any proposed new business activity of the Corporation authorized
under section 203(c) of the Federal Mortgage Insurance Corporation
Charter Act by the Board of Directors of the Corporation to determine
whether such activity will cause the Corporation to violate the
requirement under section 101(d) of such Act or is likely to result in
the Corporation being classified as undercapitalized or significantly
undercapitalized, pursuant to section 1386 of this Act. The Director
shall submit written notice of the results of any such determination to
the Board of Directors.
``SEC. 1385. EXAMINATIONS, REPORTS, AND COST ESTIMATES.
``(a) Examinations.--The Director shall conduct such examinations
of the Corporation as the Director determines necessary to evaluate the
safety and soundness of the Corporation. Such examinations shall be
subject to and governed by subsections (c) through (f) of section 1317.
``(b) Reports.--The Director may require the Corporation to submit,
within a reasonable period of time, any regular or special report,
data, or other information whenever, in the judgment of the Director,
such report, data, or information is necessary to carry out the
Director's responsibilities under this subtitle and the Federal
Mortgage Insurance Corporation Charter Act.
``(c) Credit Subsidy Cost Estimates.--
``(1) In general.--The Director shall produce and submit to
the Director of the Office of Management and Budget the annual
credit subsidy cost estimates for the Corporation required for
the President's budget. Such estimates shall be consistent with
the estimates of performance generated by the risk-based
capital model or the interim model, as appropriate, developed
in accordance with section 1386(a), and with the President's
economic forecast.
``(2) Unified estimates.--The annual credit subsidy cost
estimates produced under this subsection by the Director shall
be reported on a unified basis, which shall be based upon the
Corporation's business as a whole.
``(d) Annual Report on Safety and Soundness.--The Director shall
submit an annual report to Congress and the Director of the Office of
Management and Budget on the Corporation's financial safety and
soundness, as measured pursuant to this subtitle.
``SEC. 1386. CAPITAL REQUIREMENTS.
``(a) Required Capital Level.--
``(1) Stress test.--
``(A) In general.--The Director shall develop a
risk-based capital model to determine the amount of
capital that is sufficient for the Corporation to
maintain positive capital during a stressful period.
The model shall incorporate the assumptions under
subparagraphs (B) and (C). The required capital level
for the Corporation shall be equal to twice the amount
of capital so determined.
``(B) Credit risk.--For purposes of subparagraph
(A), the Director shall assume that, during the
stressful period referred to in subparagraph (A),
credit losses occur at a rate consistent with a
nationwide economic recession of average severity based
on nationwide economic recessions since 1950.
``(C) Other risks.--For purposes of subparagraph
(A), the Director shall make assumptions about such
other aspects of the stressful period as the Director
determines are appropriate and consistent.
``(2) Interim requirements.--Until the Director has
established a risk-based capital test as described in paragraph
(1), the Director may establish a required capital level for
the Corporation based on consideration of such factors as the
Director considers appropriate.
``(3) Capital classification.--
``(A) Adequately capitalized.--The Corporation
shall be classified as adequately capitalized if the
capital of the Corporation equals or exceeds the
required capital level.
``(B) Undercapitalized.--The Corporation shall be
classified as undercapitalized if the capital of the
Corporation does not equal or exceed the required
capital level, but does equal or exceed 50 percent of
the required capital level.
``(C) Significantly undercapital- ized.--The
Corporation shall be classified as significantly
undercapitalized if the capital of the Corporation does
not equal or exceed 50 percent of the required capital
level.
``(4) Quarterly determination.--The Director shall
determine the capital classification of the Corporation not
less frequently than once every calendar quarter.
``(b) Capital Restoration Plans.--
``(1) Requirement.--If the Corporation is classified as
undercapitalized or significantly undercapitalized, the
Corporation shall submit to the Director a capital restoration
plan that complies with this subsection and carry out the plan
unless it is disapproved. The plan shall be submitted to the
Director within 45 days from the date of notification, or if
the Director determines that an extension is necessary, within
such additional time as the Director so determines.
``(2) Contents.--Each capital restoration plan submitted
under this section shall set forth a feasible plan for raising
or restoring the capital of the Corporation to an amount not
less than the required capital level for the Corporation. Each
capital restoration plan shall--
``(A) specify the level of capital the Corporation
shall achieve and maintain;
``(B) describe the actions that the Corporation
shall take to become classified as adequately
capitalized;
``(C) establish a schedule for completing the
actions set forth in the plan; and
``(D) specify the types and levels of activities
(including existing and new business activities) in
which the Corporation shall engage during the term of
the plan.
``SEC. 1387. ENFORCEMENT.
``(a) Grounds.--The Director may take actions under subsection (b)
only if--
``(1) the Corporation is significantly undercapitalized;
``(2) the Corporation is undercapitalized and--
``(A) does not submit a capital restoration plan
that is substantially in compliance with section
1386(b) within the applicable period, or the Director
disapproves the capital restoration plan submitted by
the Corporation; or
``(B) has failed to make, in good faith, reasonable
efforts necessary to comply with the capital
restoration plan; or
``(3) the Corporation is engaging or has engaged, or the
Director has reasonable cause to believe that the Corporation
is about to engage in--
``(A) any conduct that is likely to threaten the
adequacy of the capital of the Corporation;
``(B) any failure to comply with any written
agreement entered into by the Corporation with the
Director; or
``(C) any failure to comply with any request by the
Director for a report, data, or information under
section 1385(b).
``(b) Actions.--The Director may, under this subsection require the
Corporation--
``(1) to cease and desist from any conduct or activity that
is described in subsection (a)(2) and (3), or that contributes
to the condition described in subsection (a)(1); and
``(2) to take corrective or remedial action, including--
``(A) restricting the growth of, or contracting,
any category of assets or liabilities;
``(B) reducing, modifying, or terminating any
activity that the Director determines creates excessive
risk to the Corporation;
``(C) terminating agreements or contracts;
``(D) engaging or employ qualified employees (who
may be subject to approval by the Director at the
direction of the Director); or
``(E) submitting to the Director for review and
approval a detailed and complete operating plan.
``(c) Reports.--If the Director is authorized under subsection (a)
to take action under subsection (b) and determines not to take any such
action, the Director shall prepare a report detailing the basis of the
Director's decision not to take such action and shall, within 30 days
of the decision, submit the report to the President, the Director of
the Office of Management and Budget, the Comptroller General of the
United States, the Committee on Banking and Financial Services of the
House of Representatives, and the Committee on Banking, Housing, and
Urban Affairs of the Senate.
``SEC. 1388. REIMBURSEMENT OF COSTS.
``(a) Assessment and Collection.--The Director shall assess and
collect from the Corporation such amounts determined by the Director as
necessary to reimburse the Office of Federal Housing Enterprise
Oversight for the reasonable costs and expenses of the activities
undertaken by such Office to carry out the duties of the Director under
this subtitle, including the costs of examination, enforcement, and
oversight expenses.
``(b) Requirements.--Annual assessments imposed by the Director
shall be--
``(1) imposed prior to October 1 of each year;
``(2) collected at such time or times during each
assessment year as determined necessary or appropriate by the
Director;
``(3) deposited into the Federal Housing Enterprise Fund
established by section 1316(f); and
``(4) available, to the extent provided in appropriation
Acts, for carrying out the responsibilities of the Director
under this subtitle.''.
(b) Clerical Amendment.--The table of contents in section 1(b) of
the Housing and Community Development Act of 1992 (Public Law 102-550;
106 Stat. 3679) is amended--
(1) by redesignating the item relating to subtitle E of
title XIII as relating to subtitle F of such title; and
(2) by inserting after the item relating to section 1383
the following new items:
``SUBTITLE E--SUPERVISION AND REGULATION OF FEDERAL MORTGAGE INSURANCE
CORPORATION
``Sec. 1384. Authority of Director.
``Sec. 1385. Examinations, reports, and cost estimates.
``Sec. 1386. Capital requirements.
``Sec. 1387. Enforcement.
``Sec. 1388. Reimbursement of costs.''.
TITLE IV--FHA IMPROVEMENTS
SEC. 401. CALCULATION OF DOWNPAYMENT.
Section 203(b)(2) of the National Housing Act (12 U.S.C.
1709(b)(2)) is amended--
(1) by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) except as otherwise provided in this
paragraph (2), not in excess of--
``(i) in the case of a mortgage for a
property with an appraised value equal to or
less than $50,000, 98.75 percent of the
appraised value of the property,
``(ii) in the case of a mortgage for a
property with an appraised value in excess of
$50,000 but not in excess of $125,000, 97.65
percent of the appraised value of the property,
``(iii) in the case of a mortgage for a
property with an appraised value in excess of
$125,000, 97.15 percent of the appraised value
of the property, or
``(iv) notwithstanding clauses (ii) and
(iii), in the case of a mortgage for a property
with an appraised value in excess of $50,000
and which is located in a State for which the
average closing cost exceeds 3.25 percent of
the average, for the State, of the sale price
of properties located in the State for which
mortgages have been executed, 97.75 percent of
the appraised value of the property,
plus the amount of the mortgage insurance premium paid
at the time the mortgage is insured.'';
(2) in the 1st sentence of the matter following
subparagraph (B), by inserting before the period at the end the
following: ``, and the term `average closing cost' means, with
respect to a State, the average, for mortgages executed for
properties that are located within the State, of the total
amounts (as determined by the Secretary) of initial service
charges, appraisal, inspection, and other fees (as the
Secretary shall approve) that are paid in connection with such
mortgages'';
(3) by striking the 2d sentence of the matter following
subparagraph (B); and
(4) in penultimate undesignated paragraph--
(A) in the 2d sentence, by striking ``the preceding
sentence'' and inserting ``this subsection''; and
(B) by striking the 1st sentence.
SEC. 402. DELEGATION OF SINGLE FAMILY MORTGAGE INSURING AUTHORITY TO
DIRECT ENDORSEMENT MORTGAGEES.
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:
``delegation of insuring authority to direct endorsement mortgagees
``Sec. 256. (a) Authority.--The Secretary may delegate, to one or
more mortgagees approved by the Secretary under the direct endorsement
program, the authority of the Secretary under this Act to insure
mortgages involving property upon which there is located a dwelling
designed principally for occupancy by 1 to 4 families.
``(b) Considerations.--In determining whether to delegate authority
to a mortgagee under this section, the Secretary shall consider the
experience and performance of the mortgagee under the direct
endorsement program, the default rate of insured mortgages originated
by the mortgagee compared to the default rate of all insured mortgages
in comparable markets, and such other factors as the Secretary
determines appropriate to minimize risk of loss to the insurance funds
under this Act.
``(c) Enforcement of Insurance Requirements.--
``(1) In general.--If the Secretary determines that a
mortgage insured by a mortgagee pursuant to delegation of
authority under this section was not originated in accordance
with the requirements established by the Secretary, and the
Secretary pays an insurance claim with respect to the mortgage
within a reasonable period specified by the Secretary, the
Secretary may require the mortgagee approved under this section
to indemnify the Secretary for the loss.
``(2) Fraud or misrepresentation.--If fraud or
misrepresentation was involved in connection with the
origination, the Secretary may require the mortgagee approved
under this section to indemnify the Secretary for the loss
regardless of when an insurance claim is paid.
``(d) Termination of Mortgagee's Authority.--If a mortgagee to
which the Secretary has made a delegation under this section violates
the requirements and procedures established by the Secretary or the
Secretary determines that other good cause exists, the Secretary may
cancel a delegation of authority under this section to the mortgagee by
giving notice to the mortgagee. Such a cancellation shall be effective
upon receipt of the notice by the mortgagee or at a later date
specified by the Secretary. A decision by the Secretary to cancel a
delegation shall be final and conclusive and shall not be subject to
judicial review.
``(e) Requirements and Procedures.--Before approving a delegation
under this section, the Secretary shall issue regulations establishing
appropriate requirements and procedures, including requirements and
procedures governing the indemnification of the Secretary by the
mortgagee.''.
<all>
HR 1708 IH----2
HR 1708 IH----3
HR 1708 IH----4
HR 1708 IH----5
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E1116)
Referred to the House Committee on Banking and Financial Services.
Referred to the Subcommittee on Housing and Community Opportunity.
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