FHA Manufactured Housing Loan Modernization Act of 2005 - Amends the National Housing Act with respect to Federal Housing Administration (FHA) housing loan insurance for manufactured homes (or lots for such homes) to: (1) exempt such loans from certain financial institution portfolio limits; (2) establish loan-to-value ratio and downpayment requirements; (3) provide that any such contract shall be conclusive evidence of an institution's insurance eligibility; (4) increase loan limits; (5) set forth borrower premium charges; and (6) direct the Secretary of Housing and Urban Development to establish underwriting criteria that will ensure the manufactured housing program's financial soundness.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2803 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 2803
To modernize the manufactured housing loan insurance program under
title I of the National Housing Act.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 8, 2005
Mr. Feeney (for himself and Mr. Frank of Massachusetts) introduced the
following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To modernize the manufactured housing loan insurance program under
title I of the National Housing Act.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``FHA Manufactured Housing Loan
Modernization Act of 2005''.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds that--
(1) manufactured housing plays a vital role in providing
housing for low- and moderate-income families in the United
States;
(2) the FHA title I insurance program for manufactured home
loans traditionally has been a major provider of mortgage
insurance for home-only transactions;
(3) the manufactured housing market is in the midst of a
prolonged downturn which has resulted in a severe contraction
of traditional sources of private lending for manufactured home
purchases;
(4) during past downturns the FHA title I insurance program
for manufactured homes has filled the lending void by providing
stability until the private markets could recover;
(5) in 1992, during the manufactured housing industry's
last major recession, over 30,000 manufactured home loans were
insured under title I;
(6) in 2004, fewer than 2,000 manufactured housing loans
were insured under Title I;
(7) the dramatic reduction in the use of the title I
program is due primarily to certain structural problems of the
program, which have resulted in refusal by the Government
National Mortgage Association (Ginnie Mae) to accept new
participants into the program since 1989, contributing to
higher loan costs and fewer loan originators;
(8) the loan limits for title I manufactured housing loans
have not been adjusted for inflation since 1992; and
(9) these problems with the title I program have resulted
in an atrophied market for manufactured housing loans, leaving
American families who have the most difficulty achieving
homeownership without adequate financing options for home-only
manufactured home purchases.
(b) Purposes.--The purposes of this Act are--
(1) to provide adequate funding for FHA-insured
manufactured housing loans for low- and moderate-income
homebuyers during all economic cycles in the manufactured
housing industry;
(2) to modernize the FHA Title I insurance program for
manufactured housing loans to enhance participation by Ginnie
Mae and the private lending markets;
(3) to adjust the artificially 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; and
(4) to ensure that the title I manufactured housing loan
insurance program requires no credit subsidy from the Federal
Government.
SEC. 3. EXCEPTION TO LIMITATION ON FINANCIAL INSTITUTION PORTFOLIO.
The second sentence of section 2(a) of the National Housing Act (12
U.S.C. 1703(a)) is amended by striking ``In no case'' and inserting the
following: ``Other than in connection with a manufactured home or a lot
on which to place such a home (or both), in no case''.
SEC. 4. LOAN-TO-VALUE RATIO AND DOWNPAYMENT REQUIREMENT.
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) Loan-to-Value and Downpayment Limitations on Manufactured
Housing Loans.--No insurance may 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 in connection with
a manufactured home or a lot on which to place a manufactured home (or
both) unless such loan or advance of credit, or any loan or advance of
credit represented by such an obligation--
``(A) involves a principal obligation not exceeding the sum
of--
``(i) the amount of the mortgage insurance premium
paid by the borrower at the time that the loan, advance
of credit, or purchase is made; and
``(ii) 95 percent of the appraised value of the
manufactured home or lot on which to place a
manufactured home (or both) for which the loan or
advance of credit is made; and
``(B) such loan or advance of credit is made to a borrower
who has paid in cash or its equivalent, on account of the
manufactured home or lot on which to place a manufactured home
(or both) for which the loan or advance of credit is made, at
least 3 percent of the Secretary's estimate of the costs of
acquisition, alteration, improvements, lot preparation, or
other eligible activity for which the loan or advance of credit
was made (excluding the amount of the mortgage insurance
premium paid by the borrower at the time that the loan or
advance of credit is made).''.
SEC. 5. INSURANCE BENEFITS.
Subsection (b) of section 2 of the National Housing Act (12 U.S.C.
1703(b)), as amended by section 4 of this Act, is further amended by
adding at the end the following new paragraph:
``(9) 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 before or after the date of the enactment of
this Act 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. With respect only to 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 Secretary shall otherwise provide for
the payment of insurance benefits under the provisions of this section
for losses on such loans, advances, or purchases according to the same
terms, conditions, procedures, and requirements applicable under
section 204 to a mortgage insured under section 203 covering a
manufactured home (and the site on which it is located).''.
SEC. 6. MAXIMUM LOAN LIMITS.
(a) Dollar Amounts.--Paragraph (1) of section 2(b) of the National
Housing Act (12 U.S.C. 1703(b)(1)) is amended--
(1) in clause (ii) of subparagraph (A), by striking
``$17,500'' and inserting ``$24,500'';
(2) in subparagraph (C) by striking ``$48,600'' and
inserting ``$68,040'';
(3) in subparagraph (D) by striking ``$64,800'' and
inserting ``$90,720'';
(4) in subparagraph (E) by striking ``$16,200'' and
inserting ``$22,680''; and
(5) by realigning subparagraphs (C), (D), and (E) 2 ems to
the left so that the left margins of such subparagraphs are
aligned with the margins of subparagraphs (A) and (B).
(b) Annual Indexing.--
(1) Method of indexing.--Section 206A of the National
Housing Act (12 U.S.C. 1712a) is amended--
(A) in subsection (a)--
(i) by redesignating paragraphs (1) through
(7) as paragraphs (2) through (8),
respectively; and
(ii) by inserting before paragraph (2) (as
so redesignated) the following new paragraph:
``(1) subparagraphs (A)(ii), (C), (D), and (E) of section
2(b)(1) (12 U.S.C. 1703(b)(1));''.
(2) 2004 and 2005 adjustments.--Not later than 30 days
after the date of the enactment of this Act, the Federal
Reserve Board shall calculate the adjustments for 2004 and 2005
pursuant to paragraph (1) of section 206A(a) of the National
Housing Act (12 U.S.C. 1712a(a)(1)), as added by the amendment
made by paragraph (1) of this subsection, and shall notify the
Secretary of Housing and Urban Development pursuant to
subsection (b) of such section 206A. Such adjustments shall
take effect upon the date of such notification.
(3) Technical and conforming changes.--Paragraph (1) of
section 2(b) of the National Housing Act (12 U.S.C. 1703(b)(1))
is amended--
(A) by striking ``No'' and inserting ``Except as
provided in the last sentence of this paragraph and in
paragraph (8), no''; and
(B) by adding after and below subparagraph (G) the
following:
``The Secretary shall, by regulation, increase the dollar
amount limitations in subparagraphs (A)(ii), (C), (D), and (E)
(as such limitations may have been adjusted in accordance with
section 206A of this Act).''.
SEC. 7. INSURANCE PREMIUMS.
Subsection (f) of section 2 of the National Housing Act (12 U.S.C.
1703(f)) is amended--
(1) by inserting ``(1)'' after ``(f)'';
(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.''.
SEC. 8. REVISION OF UNDERWRITING CRITERIA.
(a) In General.--Subsection (b) of section 2 of the National
Housing Act (12 U.S.C. 1703(b)), as amended by the preceding provisions
of this Act, is further amended by adding at the end the following new
paragraph:
``(10) Financial Soundness of Manufactured Housing Program.--The
Secretary shall establish such underwriting criteria for loans and
advances of credit in connection with a manufactured home or a lot on
which to place a manufactured home (or both), including such loans and
advances represented by obligations purchased by financial
institutions, as may be necessary to ensure that the program under this
title for insurance for financial institutions against losses from such
loans, advances of credit, and purchases is financially sound.''.
(b) Timing.--Not later than the expiration of the 6-month period
beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall revise the existing underwriting
criteria for the program referred to in paragraph (10) of section 2(b)
of the National Housing Act (as added by subsection (a) of this
section) in accordance with the requirements of such paragraph.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Housing and Community Opportunity.
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