To revise the requirements for seller-financed downpayments for mortgages for single-family housing insured by the Secretary of Housing and Urban Development under title II of the National Housing Act.

Summary: FHA Seller-Financed Downpayment Reform Act of 2009 - Amends the National Housing Act to make exceptions to the prohibition against mortgage insurance for mortgages involving a downpayment using funds furnished by: (1) the seller or any party that benefits financially from the transaction (seller-financed downpayment); or (2) any third party that is reimbursed by the seller or any such party.

Makes eligible for mortgage insurance, in spite of a seller-financed downpayment, any mortagors with credit scores equivalent to a FICO score of: (1) 680 or more; (2) at least 620 but less than 680; or (3) 619 or less. Prescribes conditions for mortgage insurance in the latter two situations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``FHA Seller-Financed Downpayment 
Reform Act of 2009''.

SEC. 2. FHA SELLER-FINANCED DOWNPAYMENT PROGRAM.

    Paragraph (9) of section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)(9)) is amended--
            (1) in subparagraph (C), by striking ``In no case shall the 
        funds required by subparagraph (A)'' and inserting the 
        following: ``Except in the case of a mortgage described in 
        subparagraph (D), the funds required by subparagraph (A) shall 
        not''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(D) Exceptions to prohibited sources.--A mortgage 
                described in this subparagraph is any of the following 
                mortgages:
                            ``(i) A mortgage under which the mortgagor 
                        has a credit score equivalent to a FICO score 
                        of 680 or greater.
                            ``(ii) A mortgage under which--
                                    ``(I) the mortgagor has a credit 
                                score equivalent to a FICO score of at 
                                least 620 but less than 680; and
                                    ``(II) mortgage insurance premiums 
                                charged are established--
                                            ``(aa) at levels necessary, 
                                        but no higher than needed, to 
                                        allow such class of loans to be 
                                        insured without resulting in a 
                                        need for an appropriation for a 
                                        credit subsidy, which may 
                                        exceed the maximum amount 
                                        permitted under section 
                                        203(c)(2)(B);
                                            ``(bb) in the case of the 
                                        single premium collected at the 
                                        time of insurance, in an amount 
                                        not exceeding 3.0 percent of 
                                        the amount of the original 
                                        principal obligation of the 
                                        mortgage; and
                                            ``(cc) in the case of the 
                                        annual premium for a mortgage 
                                        under which the mortgagor has a 
                                        credit score equivalent to a 
                                        FICO score of at least 640 but 
                                        less than 680, in an amount not 
                                        exceeding 1.25 percent of the 
                                        remaining insured principal 
                                        balance (excluding the portion 
                                        of the remaining balance 
                                        attributable to the premium 
                                        collected at the time of 
                                        insurance and without taking 
                                        into account delinquent 
                                        payments or prepayments).
                            ``(iii) For mortgages insured in fiscal 
                        year 2010 or thereafter, a mortgage under which 
                        the mortgagor has a credit score equivalent to 
                        a FICO score of 619 or less, but only if the 
                        Secretary certifies that such loans can be 
                        insured without resulting in a need for an 
                        appropriation for a credit subsidy. For such 
                        mortgages, the Secretary may charge premiums at 
                        levels authorized under items (bb) and (cc) of 
                        clause (ii)(II) and may establish a credit or 
                        FICO score limitation or impose such other 
                        requirements as are necessary to meet the 
                        conditions for certification under this clause.
                    ``(E) Requirements for downpayment assistance 
                entities.--Any entity participating in a program that 
                provides downpayment assistance for a mortgage 
                described in subparagraph (D) pursuant to the exception 
                under subparagraph (C), which programs shall include 
                programs of governmental agencies and private nonprofit 
                organizations, shall, before the closing for the loan 
                involved in the mortgage in connection with which such 
                assistance is provided--
                            ``(i) offer to make available, to the 
                        mortgagor, counseling regarding the 
                        responsibilities and financial management 
                        involved in homeownership;
                            ``(ii) if such offer is accepted by the 
                        mortgagor, make such counseling available for 
                        the mortgagor; and
                            ``(iii) in the case of any such entity that 
                        is a private nonprofit organization, implement 
                        a conflict of interest policy that prohibits 
                        directors, officers, employees, and immediate 
                        family members from receiving financial 
                        benefits from any entity that is providing the 
                        program with goods or services other than the 
                        homeownership assistance program entity itself 
                        or its wholly owned affiliate.
                    ``(F) Civil money penalties for improperly 
                influencing appraisals.--The Secretary may impose a 
                civil money penalty, in the same manner and to the same 
                extent as for a violation under section 536, for 
                compensating, instructing, inducing, coercing, or 
                intimidating any person who conducts an appraisal of 
                the property to be subject to a mortgage described in 
                subparagraph (D) and under which any part of the funds 
                required by subparagraph (A) are provided to a party 
                described in subparagraph (C), or attempting to 
                compensate, instruct, induce, coerce, or intimidate 
                such a person, for the purpose of causing the appraised 
                value assigned to the property under the appraisal to 
                be based on any other factor other than the independent 
                judgment of such person exercised in accordance with 
                applicable professional standards.''.