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# Legislative Bulletin..........................................\..........September 18, 2007

**Contents:**

> H.R. 1852---Amendments to the Expanding American Homeownership Act

H.R. 1852, the Expanding American Homeownership Act (sponsored by Rep.
Maxine Waters, D-CA), is scheduled to be considered on the House floor
on Tuesday, September 18, 2007, subject to a structured rule ([**H.Res.
650**](http://thomas.loc.gov/cgi-bin/query/z?c110:H.Res.650:)),
self-executing (i.e. automatically passing) one amendment and making in
order the following seven amendments, each debatable for 10 minutes,
except where noted.

The rule waives all points of order against consideration of the bill,
except those regarding PAYGO and earmarks, waives all points of order
against the bill itself, and allows the Chair to postpone consideration
of the legislation at any time during its consideration. The rule allows
one motion to recommit with or without instructions.

[Note]{.underline}: The summaries below are based on RSC staff's review
of *actual amendment text*. For a summary of the underlying bill, see a
separate RSC document released yesterday.

**RSC Staff Contact**: Paul Teller; <paul.teller@mail.house.gov>;
202-226-9718

**SELF-EXECUTING AMENDMENT**

The self-executing amendment (i.e. the amendment that automatically
passes when the rule itself passes):

-   Directs the HUD Secretary to create underwriting standards for
    refinancing mortgages, with particular emphasis on insuring
    mortgages for borrowers who are in default or are at risk of
    default;

-   Reduces from 2% to 1.5% the maximum origination fee that can be
    charged for insuring reverse mortgages, but allows this maximum rate
    to be increased based on certain determinations;

-   Replaces the fixed \$75,000 amount of the surety bond for the
    alternative method of lender participation with a range of \$50,000
    to \$100,000, to be determined by the HUD Secretary;

-   Provides for cancellation of surety bonds;

-   Explicitly prohibits the Secretary from requiring that any lender or
    broker participating in the surety bond program have any minimum net
    worth or certified financial statements;

-   Increases from two years to four years the timeframe in which GAO
    must report on the pilot program for an automated process for
    providing alternative credit rating information for borrowers;

-   Authorizes \$5 million for FY2008 for discount sales of multifamily
    properties;

-   Sets a 60%-of-market-value floor for discount sales of multifamily
    properties in FY2011;

-   Establishes civil penalties for improperly influencing FHA
    appraisals; and

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-   Makes several clarifying and technical changes.

[Reportedly]{.underline}, this amendment eliminates the PAYGO violation
(and point of order against the bill's consideration) that would have
otherwise existed. A CBO cost estimate was not available at press time.

**AMENDMENTS MADE IN ORDER**

***1. Tierney (D-MA):*** Directs the HUD Secretary to provide mortgage
insurance prepaid premium refunds to eligible borrowers of FHA insured
loans that were closed prior to December 8, 2004 yet not endorsed until
December 8, 2004 or after that date. Authorizes such sums as may be
necessary for such refunds. The amendment sponsor's office notes that,
"the Consolidated Appropriations Act of 2005 (P.L. 108-447) included a
provision that altered the upfront mortgage insurance premium refund
policy for Federal Housing Administration (FHA) insured loans.
Specifically, the Act prevented eligible borrowers from receiving
refunds of prepaid insurance if their mortgage was endorsed by the
Department of Housing and Urban Development (HUD) on or after the date
of the bill's enactment, which was December 8, 2004."

***2. Frank (D-MA)/* Miller, Gary (R-CA)/ *Cardoza (D-CA):***
**[Further]{.underline}** increases the FHA single family loan limit by
establishing such limit in each area as the lower of: 125% of the local
median area home price or 175% of the national GSE conforming loan
limit.  Retains the FHA loan floor provision in the reported bill of 65%
of the GSE conforming loan limit.  Also gives HUD authority to raise
these resulting loan limit amounts by up to \$100,000 by area and/or by
unit size "if the Secretary determines that market conditions warrant."
(no definition provided)

**[NOTE]{.underline}:** Those Members concerned about the expansion of
FHA lending authority in the underlying bill should be even more
concerned about the further increases in the Frank-Miller-Cardoza
amendment.

 

**3. Miller, Gary (R-CA):** Allows qualified down payment assistance
providers to participate in the FHA program if certain conditions are
satisfied (i.e. no obligation for mortgagor to repay and net worth
requirement).  The Secretary, for the purpose of determining eligibility
for downpayment assistance, would have to consider as cash or its
equivalent any amounts gifted by a family member, the mortgagor's
employer or labor union, or a qualified homeownership assistance entity,
but only if there is no obligation on the part of the mortgagor to repay
the gift.

 

***4. Bishop, Tim (D-NY):*** Clarifies requirements on reverse mortgages
for seniors who own permanent foundation homes on leased land so that
the HUD Secretary could set the minimum number of years an applicable
lease could be effective beyond the life expectancy of the mortgagor.

 

**5. Hensarling (R-TX):** Strikes the allowable use of FHA savings for
an affordable housing fund.  The underlying bill authorizes
appropriations, in the amount equal to the net increase in negative
credit subsidy (i.e. excess FHA funds from premiums and fees charged
under the mortgage insurance programs) created by this bill's
provisions, for diversion to an affordable housing fund (created by the
GSE reform bill---H.R. 1427), for grants (via non-profits) to provide
affordable rental housing and homeownership opportunities for low income
families. [NOTE]{.underline}: In current law, excess FHA funds---i.e.
savings---are deposited in the U.S. Treasury as a benefit to taxpayers.

**[NOTE]{.underline}:** Conservatives have opposed an affordable housing
fund in the past because, since money is fungible, it would allow
liberal activist groups, like ACORN and La Raza, that perform some
housing-related activities, to use taxpayer dollars to indirectly
subsidize their big-government, anti-conservative advocacy nationwide.

 

**6. Tiberi (R-OH):** Requires the HUD Secretary to ensure that the
mortgagor receives financial counseling at the time of application for a
mortgage.  In the underlying bill, the Secretary may, but is not
required to, provide for such counseling at the time of application.

 

**7. Biggert (R-IL): Amendment in the Nature of a Substitute. ** The
substitute amendment would still allow FHA to base each borrower's
mortgage insurance premiums on the risk that the borrower poses to the
FHA Mortgage Insurance Fund.  In the Biggert amendment, however,
mortgage insurance premiums would be based on the borrower's credit
history, loan-to-value ratio, debt-to-income ratio, and on FHA's
historical experience with similar borrowers.  Reserves would be
required to be maintained within the mortgage insurance fund to preserve
the future solvency of FHA.

The amendment does **[not]{.underline}** include many of the underlying
bill's controversial aspects for conservatives, including the affordable
housing fund language, the loan limit increases in high-cost areas, the
mandatory refunds for on-time payers, and the allowance of
zero-downpayment loans to be insured. Yet the amendment
**[does]{.underline}** contain other provisions similar to the
underlying bill that conservatives may find objectionable, including
increases in FHA loan limits, and a five-year extension on mortgage
terms. *(20 minutes)*