Expanding American Homeownership Act of 2007 - Amends the National Housing Act to: (1) modify guidelines governing the maximum principal loan obligation; (2) extend the mortgage term; and (3) revise requirements for cash payment by the mortgagor in the eligibility criteria for mortgage insurance.
Directs the Secretary of Housing and Urban Development (HUD) to reinstate the current downpayment requirement in the event of increased defaults.
Authorizes the Secretary to establish a mortgage insurance premium structure involving a single premium payment collected prior to the insurance of the mortgage that may vary during the mortgage term as long as the basis for determining the variable rate is established before the execution of the mortgage. Sets forth maximum upfront premium amounts.
Permits the Secretary to insure any mortgage covering a one-family unit in a condominium project if the project has a certain HUD-insured blanket mortgage.
Revises requirements for the Mutual Mortgage Insurance (MMI) Fund. Limits the authority of the Secretary to enter into commitments for loan guarantees.
Makes insurance of a Native Hawaiian or Indian reservation mortgage the obligation of the MMI Fund (instead of the General Insurance Fund).
Eliminates the limitation placed upon the aggregate number of home equity conversion mortgages insured under the Act.
Authorizes the Secretary to insure a home equity conversion mortgage when its primary purpose is to enable an elderly mortgagor to purchase a one- to four-family dwelling in which the mortgagor will occupy one of the units.
Authorizes the Secretary to enter into agreements to insure temporarily certain mortgages for a single family residence located within a presidentially declared major disaster area.
Redefines mortgagee to allow participation in the federal mortgage insurance program by state-licensed mortgage brokers and correspondent lenders who make, underwrite, or service mortgage loans.
[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2325 Introduced in Senate (IS)]
110th CONGRESS
1st Session
S. 2325
To modernize and update the National Housing Act and enable the Federal
Housing Administration to use risk-based pricing to more effectively
reach underserved borrowers, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 8, 2007
Mr. Voinovich introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To modernize and update the National Housing Act and enable the Federal
Housing Administration to use risk-based pricing to more effectively
reach underserved borrowers, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Expanding American
Homeownership Act of 2007''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Maximum principal loan obligation.
Sec. 4. Extension of mortgage term.
Sec. 5. Cash investment requirement.
Sec. 6. Temporary reinstatement of downpayment requirement in event of
increased defaults.
Sec. 7. Mortgage insurance premiums.
Sec. 8. Rehabilitation loans.
Sec. 9. Discretionary action.
Sec. 10. Insurance of condominiums.
Sec. 11. Mutual Mortgage Insurance Fund.
Sec. 12. Hawaiian home lands and Indian reservations.
Sec. 13. Conforming and technical amendments.
Sec. 14. Home equity conversion mortgages.
Sec. 15. Conforming loan limit in disaster areas.
Sec. 16. Participation of mortgage brokers and correspondent lenders.
Sec. 17. Sense of Congress regarding technology for financial systems.
Sec. 18. Savings provision.
Sec. 19. Implementation.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds that--
(1) one of the primary missions of the Federal Housing
Administration (FHA) single family mortgage insurance program
is to reach borrowers who are underserved, or not served, by
the existing conventional mortgage marketplace;
(2) the FHA program has a long history of innovation, which
includes pioneering the 30-year self-amortizing mortgage and a
safe-to-seniors reverse mortgage product, both of which were
once thought too risky to private lenders;
(3) the FHA single family mortgage insurance program
traditionally has been a major provider of mortgage insurance
for home purchases;
(4) the FHA mortgage insurance premium structure, as well
as FHA's product offerings, should be revised to reflect FHA's
enhanced ability to determine risk at the loan level and to
allow FHA to better respond to changes in the mortgage market;
(5) during past recessions, including the oil-patch
downturns in the mid-1980s, FHA remained a viable credit
enhancer and was therefore instrumental in preventing a more
catastrophic collapse in housing markets and a greater loss of
homeowner equity; and
(6) as housing price appreciation slows and interest rates
rise, many homeowners and prospective homebuyers will need the
less-expensive, safer financing alternative that FHA mortgage
insurance provides.
(b) Purposes.--The purposes of this Act are--
(1) to provide flexibility to FHA to allow for the
insurance of housing loans for low- and moderate-income
homebuyers during all economic cycles in the mortgage market;
(2) to modernize the FHA single family mortgage insurance
program by making it more reflective of enhancements to loan-
level risk assessments and changes to the mortgage market; and
(3) to adjust the loan limits for the single family
mortgage insurance program to reflect rising house prices and
the increased costs associated with new construction.
SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION.
Paragraph (2) of section 203(b) of the National Housing Act (12
U.S.C. 1709(b)(2)) is amended--
(1) by striking subparagraphs (A) and (B) and inserting the
following new subparagraphs:
``(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 the appraised value of the
property, plus any initial service charges, appraisal,
inspection and other fees in connection with the
mortgage as approved by the Secretary.'';
(2) in the matter after and below subparagraph (B), by
striking the second sentence (relating to a definition of
``average closing cost'') and all that follows through ``title
38, United States Code''; and
(3) by striking the last undesignated paragraph (relating
to counseling with respect to the responsibilities and
financial management involved in homeownership).
SEC. 4. EXTENSION OF MORTGAGE TERM.
Paragraph (3) of section 203(b) of the National Housing Act (12
U.S.C. 1709(b)(3)) is amended--
(1) by striking ``thirty-five years'' and inserting ``forty
years''; and
(2) by striking ``(or thirty years if such mortgage is not
approved for insurance prior to construction)''.
SEC. 5. CASH INVESTMENT REQUIREMENT.
Paragraph (9) of section 203(b) of the National Housing Act (12
U.S.C. 1709(b)(9)) is amended by striking the paragraph designation and
all that follows through ``Provided further, That for'' and inserting
the following:
``(9) Be executed by a mortgagor who shall have paid on
account of the property, in cash or its equivalent, an amount,
if any, as the Secretary may determine based on factors
determined by the Secretary and commensurate with the
likelihood of default. For''.
SEC. 6. TEMPORARY REINSTATEMENT OF DOWNPAYMENT REQUIREMENT IN EVENT OF
INCREASED DEFAULTS.
Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is
amended by adding at the end the following new paragraph:
``(10) Effect of increased defaults.--
``(A) Annual determination.--If, for any calendar
year described in subparagraph (B)(i), the Secretary
determines, pursuant such subparagraph, that--
``(i) the ratio of the number of mortgage
insurance claims made during such calendar year
on mortgages insured under this section to the
total number of mortgages having such insurance
in force during such calendar year exceeds, by
25 percent or more, such ratio for the 12-month
period ending on the effective date of this
Act, or
``(ii) the ratio of the aggregate remaining
principal obligation under mortgages insured
under this section for which an insurance claim
is made during such calendar year to the
average, for such calendar year, of the
aggregate outstanding principal obligation
under mortgages so insured exceeds, by 25
percent or more, such ratio for the 12-month
period ending on such effective date,
during the 90-day period beginning upon the submission
of the report for such calendar year under subparagraph
(B)(ii) containing such determination, the Secretary
may insure a mortgage under this section only pursuant
to the requirement under subparagraph (C), and the
Secretary shall, not later than 60 days after
submission of the report containing such determination,
submit a report to the Congress under subparagraph (D)
regarding mortgage insurance claims during such
calendar year.
``(B) 5 years of annual determinations.--
``(i) In general.--The Secretary shall, for
each of the 5 calendar years commencing after
the date of the enactment of this Act, compare
the ratios referred to in subparagraph (A) and
make a determination under such subparagraph.
``(ii) Annual report on defaults.--Not
later than 90 days after the conclusion of each
of the calendar years described in clause (i),
the Secretary shall submit a report to the
Congress containing the determination of the
Secretary under such clause with respect to
such calendar year and setting forth the ratios
referred to in such clause for such calendar
year.
``(C) Reinstatement of downpayment requirement.--
The requirement under this subparagraph is that
paragraph (9) of this subsection shall apply as such
paragraph was in effect on the day before the effective
date of the Expanding American Homeownership Act of
2007.
``(D) Reports regarding increased default rate.--A
report under this subparagraph, as required under
subparagraph (A), shall contain--
``(i) an analysis of mortgage insurance
claims, made during the calendar year for which
the report is submitted, on mortgages insured
under this section;
``(ii) an analysis of the reasons for the
increase during such calendar year in the
applicable ratio or ratios under subparagraph
(A), including an analysis of the extent to
which such increase is attributable to the
amendments made by the Expanding American
Homeownership Act of 2007;
``(iii) the effect of such increase on the
Mutual Mortgage Insurance Fund;
``(iv) recommendations regarding--
``(I) whether the Congress should,
to respond to such increase, take
legislative action (aa) to apply
paragraph (9) of this subsection as
such paragraph was in effect on the day
before the effective date of Expanding
American Homeownership Act of 2007,
(bb) to apply paragraph (2)(A)(ii) by
substituting `87 percent of the dollar
amount limitation' for `the dollar
amount limitation', or (cc) both; and
``(II) whether such provisions
should be temporary or permanent, and,
if temporary, the period during which
such provisions should apply; and
``(v) recommendations regarding any other
administrative, regulatory, legislative, or
other actions that should be taken to respond
to such increase.
``(E) Defaults in disaster areas not counted for 24
months.--In determining the number of mortgage
insurance claims made and the aggregate remaining
principal obligation under mortgages for which an
insurance claim is made for purposes of subparagraph
(A) for any calendar year, the Secretary shall not take
into consideration any claim made during such period on
a mortgage on any property that is located in an area
for which a major disaster was declared pursuant to the
Robert T. Stafford Disaster Relief and Emergency
Assistance Act if such claim was made during the 24-
month period beginning upon such declaration.''.
SEC. 7. MORTGAGE INSURANCE PREMIUMS.
Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)) is
amended--
(1) in paragraph (2), in the matter preceding subparagraph
(A), by striking ``Notwithstanding'' and inserting ``Except as
provided in paragraph (3) and notwithstanding''; and
(2) by adding at the end the following new paragraph:
``(3) Flexible Risk-Based Premiums.--
``(A) In general.--For any mortgage insured by the
Secretary under this title that is secured by a 1- to 4-family
dwelling and for which the loan application is received by the
mortgagee on or after the date of enactment of the Expanding
American Homeownership Act of 2007, the Secretary may establish
a mortgage insurance premium structure involving a single
premium payment collected prior to the insurance of the
mortgage or annual payments (which may be collected on a
periodic basis), or both, subject to the limitations in
subparagraphs (B) and (C). The rate of premium for such a
mortgage may vary during the mortgage term as long as the basis
for determining the variable rate is established before the
execution of the mortgage. The Secretary may change a premium
structure established under this subparagraph but only to the
extent that such change is not applied to any mortgage already
executed.
``(B) Maximum up-front premium amounts.--For any mortgage
insured under a premium structure established pursuant to this
paragraph, the amount of any single premium payment authorized
by subparagraph (A), if established and collected prior to the
insurance of the mortgage, may not exceed the following amount:
``(i) Except as provided in clauses (ii) and (iii),
3.0 percent of the amount of the original insured
principal obligation of the mortgage.
``(ii) If the mortgagor has a credit score
equivalent to a FICO score of 560 or more and has paid
on account of the property, in cash or its equivalent,
at least 3 percent of the Secretary's estimate of the
cost of acquisition (excluding the mortgage insurance
premium paid at the time the mortgage is insured), 2.25
percent of the original insured principal obligation of
the mortgage.
``(iii) If the annual premium payment is equal to
the maximum amount allowable under clause (i) of
subparagraph (C), 1.5 percent of the amount of the
original insured principal obligation of the mortgage.
``(C) Maximum annual premium amounts.--For any mortgage
insured under a premium structure established pursuant to this
paragraph, the amount of any annual premium payment collected
may not exceed the following amount:
``(i) Except as provided in clauses (ii) and (iii),
2.0 percent of the remaining insured principal
obligation of the mortgage.
``(ii) If the mortgagor is a mortgagor described in
clause (ii) of subparagraph (B), 0.55 percent of the
remaining insured principal obligation of the mortgage.
``(iii) If the single premium payment collected at
the time of insurance is equal to maximum amount
allowable under clause (i) of subparagraph (B), 1.0
percent of the remaining insured principal obligation
of the mortgage.
``(D) Payment incentive.--Notwithstanding subparagraph (C),
for any mortgage insured under a premium structure established
pursuant to this paragraph and for which the annual premium
payment exceeds the amount set forth in subparagraph (C)(ii),
if during the 5-year period beginning upon the time of
insurance all mortgage insurance premiums for such mortgage
have been paid on a timely basis, upon the expiration of such
period the Secretary shall reduce the amount of the annual
premium payments due thereafter under such mortgage to an
amount equal to the amount set forth in subparagraph (C)(ii).
``(E) Establishment and alteration of premium structure.--A
premium structure shall be established or changed under
subparagraph (A) only by providing notice to mortgagees and to
the Congress, at least 30 days before the premium structure is
established or changed.
``(F) Considerations for premium structure.--When
establishing a premium structure under subparagraph (A) or when
changing such a premium structure, the Secretary shall consider
the following:
``(i) The effect of the proposed premium structure
on the Secretary's ability to meet the operational
goals of the Mutual Mortgage Insurance Fund as provided
in section 202(a).
``(ii) Underwriting variables.
``(iii) The extent to which new pricing under the
proposed premium structure has potential for acceptance
in the private market.
``(iv) The administrative capability of the
Secretary to administer the proposed premium structure.
``(v) The effect of the proposed premium structure
on the Secretary's ability to maintain the availability
of mortgage credit and provide stability to mortgage
markets.''.
SEC. 8. 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
(2) in paragraph (5)--
(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. 9. 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. 10. INSURANCE OF CONDOMINIUMS.
(a) In General.--Section 234 of the National Housing Act (12 U.S.C.
1715y) is amended--
(1) in subsection (c)--
(A) in the first sentence--
(i) by striking ``and'' before ``(2)''; and
(ii) by inserting before the period at the
end the following: ``, and (3) the project has
a blanket mortgage insured by the Secretary
under subsection (d)''; and
(B) in clause (B) of the third sentence, by
striking ``thirty-five years'' and inserting ``forty
years''; and
(2) in subsection (g), by striking ``, except that'' and
all that follows and inserting a period.
(b) Definition of Mortgage.--Section 201(a) of the National Housing
Act (12 U.S.C. 1707(a)) is amended--
(1) in clause (1), by striking ``or'' and inserting a
comma; and
(2) 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, a
one-family unit in a multifamily project, including a project
in which the dwelling units are attached, semi-detached, or
detached, and an undivided interest in the common areas and
facilities which serve the project''.
SEC. 11. MUTUAL MORTGAGE INSURANCE FUND.
(a) In General.--Subsection (a) of section 202 of the National
Housing Act (12 U.S.C. 1708(a)) is amended to read as follows:
``(a) Mutual Mortgage Insurance Fund.--
``(1) Establishment.--Subject to the provisions of the
Federal Credit Reform Act of 1990, there is hereby created a
Mutual Mortgage Insurance Fund (in this title referred to as
the `Fund'), which shall be used by the Secretary to carry out
the provisions of this title with respect to mortgages insured
under section 203. The Secretary may enter into commitments to
guarantee, and may guarantee, such insured mortgages.
``(2) Limit on loan guarantees.--The authority of the
Secretary to enter into commitments to guarantee such insured
mortgages shall be effective for any fiscal year only to the
extent that the aggregate original principal loan amount under
such mortgages, any part of which is guaranteed, does not
exceed the amount specified in appropriations Acts for such
fiscal year.
``(3) Fiduciary responsibility.--The Secretary has a
responsibility to ensure that the Mutual Mortgage Insurance
Fund remains financially sound.
``(4) Annual independent actuarial study.--The Secretary
shall provide for an independent actuarial study of the Fund to
be conducted annually, which shall analyze the financial
position of the Fund. The Secretary shall submit a report
annually to the Congress describing the results of such study
and assessing the financial status of the Fund. The report
shall recommend adjustments to underwriting standards, program
participation, or premiums, if necessary, to ensure that the
Fund remains financially sound.
``(5) Quarterly reports.--During each fiscal year, the
Secretary shall submit a report to the Congress for each
quarter, which shall specify for mortgages that are obligations
of the Fund--
``(A) the cumulative volume of loan guarantee
commitments that have been made during such fiscal year
through the end of the quarter for which the report is
submitted;
``(B) the types of loans insured, categorized by
risk;
``(C) any significant changes between actual and
projected claim and prepayment activity;
``(D) projected versus actual loss rates; and
``(E) updated projections of the annual subsidy
rates to ensure that increases in risk to the Fund are
identified and mitigated by adjustments to underwriting
standards, program participation, or premiums, and the
financial soundness of the Fund is maintained.
The first quarterly report under this paragraph shall be
submitted on the last day of the first quarter of fiscal year
2008, or upon the expiration of the 90-day period beginning on
the date of the enactment of the Expanding American
Homeownership Act of 2007, whichever is later.
``(6) Adjustment of premiums.--If, pursuant to the
independent actuarial study of the Fund required under
paragraph (5), the Secretary determines that the Fund is not
meeting the operational goals established under paragraph (8)
or there is a substantial probability that the Fund will not
maintain its established target subsidy rate, the Secretary may
either make programmatic adjustments under section 203 as
necessary to reduce the risk to the Fund, or make appropriate
premium adjustments.
``(7) Operational goals.--The operational goals for the
Fund are--
``(A) to charge borrowers under loans that are
obligations of the Fund an appropriate premium for the
risk that such loans pose to the Fund;
``(B) to minimize the default risk to the Fund and
to homeowners;
``(C) to curtail the impact of adverse selection on
the Fund; and
``(D) to meet the housing needs of the borrowers
that the single family mortgage insurance program under
this title is designed to serve.''.
(b) Obligations of Fund.--The National Housing Act is amended as
follows:
(1) Homeownership voucher program mortgages.--In section
203(v) (12 U.S.C. 1709(v))--
(A) by striking ``Notwithstanding section 202 of
this title, the'' and inserting ``The''; and
(B) by striking ``General Insurance Fund'' the
first place such term appears and all that follows and
inserting ``Mutual Mortgage Insurance Fund.''.
(2) Home equity conversion mortgages.--Section 255(i)(2)(A)
of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is
amended by striking ``General Insurance Fund'' and inserting
``Mutual Mortgage Insurance Fund''.
(c) Conforming Amendments.--The National Housing Act is amended--
(1) in section 205 (12 U.S.C. 1711), by striking
subsections (g) and (h); and
(2) in section 519(e) (12 U.S.C. 1735c(e)), by striking
``203(b)'' and all that follows through ``203(i)'' and
inserting ``203, except as determined by the Secretary''.
SEC. 12. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.
(a) Hawaiian Home Lands.--Section 247(c) of the National Housing
Act (12 U.S.C. 1715z-12) is amended--
(1) by striking ``General Insurance Fund established in
section 519'' and inserting ``Mutual Mortgage Insurance Fund'';
and
(2) in the second sentence, by striking ``(1) all
references'' and all that follows through ``and (2)''.
(b) Indian Reservations.--Section 248(f) of the National Housing
Act (12 U.S.C. 1715z-13) is amended--
(1) by striking ``General Insurance Fund'' the first place
it appears 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. 13. 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. 14. 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 (g)--
(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'';
(2) in subsection (i)(1)(C), by striking ``limitations''
and inserting ``limitation''; and
(3) by adding at the end the following new subsection:
``(n) Authority To Insure Home Purchase Mortgage.--
``(1) In general.--Notwithstanding any other provision in
this section, the Secretary may insure, upon application by a
mortgagee, a home equity conversion mortgage upon such terms
and conditions as the Secretary may prescribe, when the primary
purpose of the home equity conversion mortgage is to enable an
elderly mortgagor to purchase a 1- to 4-family dwelling in
which the mortgagor will occupy or occupies one of the units.
``(2) Limitation on principal obligation.--A home equity
conversion mortgage insured pursuant to paragraph (1) shall
involve a principal obligation that does not exceed the dollar
amount limitation determined under section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act for a residence of
the applicable size.''.
(b) Mortgages for Cooperatives.--Subsection (b) of section 255 of
the National Housing Act (12 U.S.C. 1715z-20(b)) is amended--
(1) in paragraph (4)--
(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) Study Regarding Mortgage Insurance Premiums.--The Secretary of
Housing and Urban Development shall conduct a study regarding mortgage
insurance premiums charged under the program under section 255 of the
National Housing Act (12 U.S.C. 1715z-20) for insurance of home equity
conversion mortgages to analyze and determine--
(1) the effects of reducing the amounts of such premiums
from the amounts charged as of the date of the enactment of
this Act on--
(A) costs to mortgagors; and
(B) the financial soundness of the program; and
(2) the feasibility and effectiveness of exempting, from
all the requirements under the program regarding payment of
mortgage insurance premiums (including both up-front or annual
mortgage insurance premiums under section 203(c)(2) of such
Act), any mortgage insured under the program under which part
or all of the amount of future payments made to the homeowner
are used for costs of a long-term care insurance contract
covering the mortgagor or members of the household residing in
the mortgaged property.
Not later than the expiration of the 12-month period beginning on the
date of the enactment of this Act, the Secretary shall submit a report
to the Congress setting forth the results and conclusions of the study.
SEC. 15. CONFORMING LOAN LIMIT IN DISASTER AREAS.
Section 203(h) of the National Housing Act (12 U.S.C. 1709) is
amended--
(1) by inserting after ``property'' the following: ``plus
any initial service charges, appraisal, inspection and other
fees in connection with the mortgage as approved by the
Secretary,'';
(2) by striking the second sentence (as added by chapter 7
of the Emergency Supplemental Appropriations Act of 1994
(Public Law 103-211; 108 Stat. 12)); and
(3) by adding at the end the following new sentence: ``In
any case in which the single family residence to be insured
under this subsection is within a jurisdiction in which the
President has declared a major disaster to have occurred, the
Secretary is authorized, for a temporary period not to exceed
36 months from the date of such Presidential declaration, to
enter into agreements to insure a mortgage which involves a
principal obligation of up to 100 percent of the dollar
limitation determined under section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act for a single family
residence, and not in excess of 100 percent of the appraised
value of the property plus any initial service charges,
appraisal, inspection and other fees in connection with the
mortgage as approved by the Secretary.''.
SEC. 16. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS.
(a) Definitions.--
(1) In general.--Section 201 of the National Housing Act
(12 U.S.C. 1707) is amended--
(A) by striking ``As used in section 203 of this
title--'' and inserting ``As used in this title and for
purposes of participation in insurance programs under
this title, except as specifically provided otherwise,
the following definitions shall apply:'';
(B) by striking subsection (b) and inserting the
following:
``(2) The term `mortgagee' means any of the following
entities, and its successors and assigns, to the extent such
entity is approved by the Secretary:
``(A) A lender or correspondent lender, who--
``(i) makes, underwrites, and services
mortgages;
``(ii) submits to the Secretary such
financial audits performed in accordance with
the standards for financial audits of the
Government Auditing Standards issued by the
Comptroller of the United States;
``(iii) meet the minimum net worth
requirement that the Secretary shall establish;
and
``(iv) complies with such other
requirements as the Secretary may establish.
``(B) A correspondent lender who--
``(i) closes a mortgage in its name but
does not underwrite or service the mortgage;
``(ii) posts a surety bond, in lieu of any
requirement to provide audited financial
statements or meet a minimum net worth
requirement, in--
``(I) a form satisfactory to the
Secretary; and
``(II) an amount of $75,000, as
such amount is adjusted annually by the
Secretary (as determined under
regulations of the Secretary) by the
change for such year in the Consumer
Price Index for All Urban Consumers
published monthly by the Bureau of
Labor Statistics of the Department of
Labor; and
``(iii) complies with such other
requirements as the Secretary may establish.
``(C) A mortgage broker who--
``(i) closes the mortgage in the name of
the lender and does not make, underwrite, or
service the mortgage;
``(ii) is licensed, under the laws of the
State in which the property that is subject to
the mortgage is located, to act as a mortgage
broker in such State;
``(iii) posts a surety bond in accordance
with the requirements of subparagraph (B)(ii);
and
``(iv) complies with such other
requirements as the Secretary may establish.
``(3) The term `mortgagor' includes the original borrower
under a mortgage and the successors and assigns of the original
borrower.'';
(C) in subsection (a), by redesignating clauses (1)
and (2) as clauses (A) and (B) respectively; and
(D) by redesignating subsections (a), (c), (d),
(e), and (f) as paragraphs (1), (4), (5), (6), and (7),
respectively, and realigning such paragraphs two ems
from the left margin.
(2) Mortgagee review.--Section 202(c)(7) of the National
Housing Act (12 U.S.C. 1708(c)(7)) is amended--
(A) in subparagraph (A), by inserting ``, as
defined in section 201,'' after ``mortgagee'';
(B) by striking subparagraph (B); and
(C) by redesignating subparagraphs (C) and (D) as
subparagraphs (B) and (C), respectively.
(3) Multifamily rental housing insurance.--Section
207(a)(2) of the National Housing Act (12 U.S.C. 1713(a)(2)) is
amended by striking ``means the original lender under a
mortgage, and its successors and assigns, and'' and inserting
``has the meaning given such term in section 201, except that
such term also''.
(4) War housing insurance.--Section 601(b) of the National
Housing Act (12 U.S.C. 1736(b)) is amended by striking
``includes the original lender under a mortgage, and his
successors and assigns approved by the Secretary'' and
inserting ``has the meaning given such term in section 201''.
(5) Armed services housing mortgage insurance.--Section
801(b) of the National Housing Act (12 U.S.C. 1748(b)) is
amended by striking ``includes the original lender under a
mortgage, and his successors and assigns approved by the
Secretary'' and inserting ``has the meaning given such term in
section 201''.
(6) Group practice facilities mortgage insurance.--Section
1106(8) of the National Housing Act (12 U.S.C. 1749aaa-5(8)) is
amended by striking ``means the original lender under a
mortgage, and his or its successors and assigns, and'' and
inserting ``has the meaning given such term in section 201,
except that such term also''.
(b) Eligibility for Insurance.--
(1) Title i.--Paragraph (1) of section 8(b) of the National
Housing Act (12 U.S.C. 1706c(b)(1)) is amended--
(A) by striking ``, and be held by,''; and
(B) by striking ``as responsible and able to
service the mortgage properly''.
(2) Single family housing mortgage insurance.--Paragraph
(1) of section 203(b) of the National Housing Act (12 U.S.C.
1709(b)(1)) is amended--
(A) by striking ``, and be held by,''; and
(B) by striking ``as responsible and able to
service the mortgage properly''.
(3) Section 221 mortgage insurance.--Paragraph (1) of
section 221(d) of the National Housing Act (12 U.S.C.
1715l(d)(1)) is amended--
(A) by striking ``and be held by''; and
(B) by striking ``as responsible and able to
service the mortgage properly''.
(4) Home equity conversion mortgage insurance.--Paragraph
(1) of section 255(d) of the National Housing Act (12 U.S.C.
1715z-20(d)(1)) is amended by striking ``as responsible and
able to service the mortgage properly''.
(5) War housing mortgage insurance.--Paragraph (1) of
section 603(b) of the National Housing Act (12 U.S.C.
1738(b)(1)) is amended--
(A) by striking ``, and be held by,''; and
(B) by striking ``as responsible and able to
service the mortgage properly''.
(6) War housing mortgage insurance for large-scale housing
projects.--Paragraph (1) of section 611(b) of the National
Housing Act (12 U.S.C. 1746(b)(1)) is amended--
(A) by striking ``and be held by''; and
(B) by striking ``as responsible and able to
service the mortgage properly''.
(7) Group practice facility mortgage insurance.--Section
1101(b)(2) of the National Housing Act (12 U.S.C.
1749aaa(b)(2)) is amended--
(A) by striking ``and held by''; and
(B) by striking ``as responsible and able to
service the mortgage properly''.
(8) National defense housing insurance.--Paragraph (1) of
section 903(b) of the National Housing Act (12 U.S.C.
1750b(b)(1)) is amended--
(A) by striking ``, and be held by,''; and
(B) by striking ``as responsible and able to
service the mortgage properly''.
SEC. 17. SENSE OF CONGRESS REGARDING TECHNOLOGY FOR FINANCIAL SYSTEMS.
(a) Congressional Findings.--The Congress finds the following:
(1) The Government Accountability Office has cited the FHA
single family housing mortgage insurance program as a ``high-
risk'' program, with a primary reason being non-integrated and
out-dated financial management systems.
(2) The ``Audit of the Federal Housing Administration's
Financial Statements for Fiscal Years 2004 and 2003'',
conducted by the Inspector General of the Department of Housing
and Urban Development reported as a material weakness that
``HUD/FHA's automated data processing [ADP] system environment
must be enhanced to more effectively support FHA's business and
budget processes''.
(3) Existing technology systems for the FHA program have
not been updated to meet the latest standards of the Mortgage
Industry Standards Maintenance Organization and have numerous
deficiencies that lenders have outlined.
(4) Improvements to technology used in the FHA program
will--
(A) allow the FHA program to improve the management
of the FHA portfolio, garner greater efficiencies in
its operations, and lower costs across the program; and
(B) result in efficiencies and lower costs for
lenders participating in the program, allowing them to
better use the FHA products in extending homeownership
opportunities to higher credit risk or lower-income
families, in a sound manner.
(5) The Mutual Mortgage Insurance Fund operates without
cost to the taxpayers and generates revenues for the Federal
Government.
(b) Sense of Congress.--It is the sense of the Congress that--
(1) the Secretary of Housing and Urban Development should
use a portion of the funds received from premiums paid for FHA
single family housing mortgage insurance that are in excess of
the amounts paid out in claims to substantially increase the
funding for technology used in such FHA program;
(2) the goal of this investment should be to bring the
technology used in such FHA program to the level and
sophistication of the technology used in the conventional
mortgage lending market, or to exceed such level; and
(3) the Secretary of Housing and Urban Development should
report to the Congress not later than 180 days after the date
of the enactment of this Act regarding the progress the
Department is making toward such goal and if progress is not
sufficient, the resources needed to make greater progress.
SEC. 18. SAVINGS PROVISION.
Any mortgage insured under title II of the National Housing Act
before the date of enactment of this Act shall continue to be governed
by the laws, regulations, orders, and terms and conditions to which it
was subject on the day before the date of the enactment of this Act.
SEC. 19. 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 Act. The notice shall take
effect upon issuance.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line