SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rural Housing Opportunity and 
Enhancement Act of 2005''.

SEC. 2. GUARANTEES FOR RURAL HOUSING LOANS.

    (a) Income Limitation.--
            (1) In general.--Section 502(h) of the Housing Act of 1949 
        (42 U.S.C. 1472(h)) is amended--
                    (A) by striking paragraph (3); and
                    (B) in paragraph (11), by striking `` for low and 
                moderate income families''.
            (2) Repeal.--Section 751 of the Agriculture, Rural 
        Development, Food and Drug Administration, and Related Agencies 
        Appropriations Act, 2001 (42 U.S.C. 1472 note) is hereby 
        repealed:
    (b) Guarantee Fee.--
            (1) In general.--Section 502(h)(8) of the Housing Act of 
        1949 is amended by striking ``not more than 1 percent'' and 
        inserting ``0.9 percent''.
            (2) Repeals.--The following provisions are hereby repealed:
                    (A) Section 739 of the Agriculture, Rural 
                Development, Food and Drug Administration, and Related 
                Agencies Appropriations Act, 2001 (42 U.S.C. 1472 
                note).
                    (B) Section 726 of the Agriculture, Rural 
                Development, Food and Drug Administration, and Related 
                Agencies Appropriations Act, 2005 (118 Stat. 2842).
    (c) Repayment Ability.--Section 502(h) of the Housing Act of 1949 
is amended by inserting after paragraph (2) the following new 
paragraph:
            ``(3) Eligibility of borrowers.--Any regulations of the 
        Secretary limiting eligibility of borrowers for loans 
        guaranteed pursuant to this subsection based upon the ratio 
        between the debt and income of the borrower shall provide for a 
        higher income-to-debt ratio with respect to loans for newly 
        constructed properties''.

SEC. 3. GUARANTEES FOR REFINANCING LOANS.

    Section 502(h)(14) of the Housing Act of 1949 (42 U.S.C. 
1472(h)(13)) is amended as follows:
            (1) Guarantee fee.--
                    (A) In subparagraph (A), by striking ``(F)'' and 
                inserting ``(I)''
                    (B) In subparagraph (E), by striking ``(8),''.
                    (C) By redesignating subparagraphs (E) and (F) as 
                subparagraphs (H) and (I), respectively.
                    (D) By inserting after subparagraph (D) the 
                following new subparagraph:
                    ``(E) Guarantee fee.--With respect to a refinancing 
                loan under this paragraph, the Secretary may collect 
                from the lender at the time of issuance of the 
                guarantee a fee equal to 0.5 percent of the principal 
                obligation of the loan.''.
            (2) Refinancing other types of mortgages.--In subparagraph 
        (A)--
                    (A) by inserting ``(i)'' before ``under this 
                section''; and
                    (B) by inserting before the last comma the 
                following: ``, or (ii) to acquire or construct a 
                single-family residence that meets the requirements of 
                paragraph (4)''.
            (3) Loan amount.--In subparagraph (D), by striking ``and 
        such closing costs'' and all that follows through ``prescribe'' 
        and inserting the following: ``and closing costs, which shall 
        include amounts paid as an origination fee, but not in excess 
        of 1 percent of the principal obligation of the loan, amounts 
        paid as a discount fee, but not in excess of 200 basis points, 
        any amounts required to be paid into escrow upon loan 
        origination, and such other closing costs as the Secretary may 
        prescribe''.
            (4) Elimination of income restriction.--In subparagraph 
        (H), as so redesignated by paragraph (1)(B) of this section, by 
        striking ``(3),''.
            (5) Loan requirements.--By inserting before subparagraph 
        (H), as so redesignated by paragraph (1)(B) of this section, 
        the following new subparagraphs:
                    ``(F) Prohibited loan terms.--The Secretary may not 
                require, for a refinancing loan to be eligible for a 
                guarantee under this paragraph--
                            ``(i) that an appraisal credit report or 
                        underwriting be conducted in connection with 
                        the loan; or
                            ``(ii) in the case of a loan described in 
                        clause (i) of subparagraph (A), that the 
                        residence in connection with which the loan is 
                        made be located in a rural area.
                    ``(G) Required loan terms.--The Secretary shall 
                require, for a refinancing loan to be eligible for a 
                guarantee under this paragraph, that--
                            ``(i) the borrower is not delinquent with 
                        respect to payment of the existing loan being 
                        refinanced; and
                            ``(ii) the monthly payments required by the 
                        borrower under the refinancing loan be at least 
                        $50 less than the monthly payments so required 
                        under the existing loan being refinanced.''.

SEC. 4. RECORDING OF LOANS.

    Section 501 of the Housing Act of 1949 (42 U.S.C. 1471) is amended 
by adding at the end the following new subsection:
    ``(k) Recording Requirements.--The Secretary shall provide that 
each loan made, insured, or guaranteed under this title shall be 
recorded, in accordance with any applicable State and local laws 
requiring recordation of loans, as a loan made, insured, or guaranteed 
(as appropriate) by the Department of Agriculture, and not as a 
conventional loan.''.

SEC. 5. RURAL AREA DEFINITION.

    Clause (3) of the first sentence of section 520 of the Housing Act 
of 1949 (42 U.S.C. 1490) is amended by striking ``and (A)'' and all 
that follows through ``moderate-income families,''.

SEC. 6. INCOME LIMITATION FOR DIRECT LOANS.

    The first sentence of paragraph (4) of section 501(b) of the 
Housing Act of 1949 (42 U.S.C. 1471(b)(4)) is amended by inserting 
before the period at the end the following: ``, except that in 
determining such respective levels for purposes of direct loans made 
under section 502, section 3(b)(2) of such Act (42 U.S.C. 1437a(b)(2)) 
shall be applied by substituting `150 percent' for `80 per centum' each 
place such term appears and by substituting `93.75 percent' for `50 per 
centum' each place such term appears''.
Rural Housing Opportunity and Enhancement Act of 2005 - Amends the Doug Bereuter Section 502 Single Family Housing Loan Guarantee Act of the Housing Act of 1949 with respect to the single family rural housing loan guarantee program to: (1) eliminate low and moderate income eligibility requirements; (2) reduce maximum guarantee fees paid by lenders; and (3) require any regulation limiting borrower eligibility based upon the borrower's debt-income ratio to provide for a higher income-to-debt ratio for newly-constructed property loans.

Revises refinancing loan guarantee provisions to: (1) authorize a specified lender guarantee fee; (2) permit a guarantee to acquire or construct an eligible single-family residence; (3) amend closing cost provisions; (4) eliminate income requirements; (5) prohibit that an appraisal credit report be required in connection with the loan, or that the residence be in a rural area for an existing loan; and (6) require that the borrower is not delinquent with respect to existing loan payments, and that monthly refinance payments be at least $50 less than existing monthly payments.

Requires agricultural housing loans to be recorded as Department of Agriculture, rather than conventional, loans.

Revises the definition of "rural area."

Increases direct loan income limitations.
To amend section 502(h) of the Housing Act of 1949 to improve the rural housing loan guarantee program, and for other purposes.