II 

109TH CONGRESS 

2D SESSION S. 3535 

To modernize and update the National Housing Act and to 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 

JUNE 19, 2006 

Mr. TALENT (for himself, Mr. MARTINEZ, Mr. ISAKSON, and Mr. CHAMBLISS) 

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 

to enable the Federal Housing Administration to use 

risk based pricing to more effectively reach underserved 

borrowers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Expanding American Homeownership Act of 2006’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 


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TITLE I—SINGLE FAMILY MORTGAGE INSURANCE REFORM 

Sec. 101. Short title. 

Sec. 102. Findings and purposes. 

Sec. 103. Conforming loan limits and maximum principal loan obligation. 

Sec. 104. Extension of mortgage term. 

Sec. 105. Cash investment requirement. 

Sec. 106. Mortgage insurance premiums. 

Sec. 107. Rehabilitation loans. 

Sec. 108. Discretionary action. 

Sec. 109. Insurance of condominiums. 

Sec. 110. Mutual Mortgage Insurance Fund. 

Sec. 111. Hawaiian home lands and Indian reservations. 

Sec. 112. Conforming and technical amendments. 

Sec. 113. Home equity conversion mortgages. 

Sec. 114. Conforming loan limit in disaster areas. 

Sec. 115. Savings provision. 

Sec. 116. Implementation. 

TITLE II—MANUFACTURED HOUSING MORTGAGE INSURANCE 

Sec. 201. Short title. 

Sec. 202. Findings and purposes. 

Sec. 203. Exception to limitation on financial institution portfolio. 

Sec. 204. Insurance benefits. 

Sec. 205. Maximum loan limits. 

Sec. 206. Insurance premiums. 

Sec. 207. Technical corrections. 

1 TITLE I—SINGLE FAMILY MORT2 GAGE INSURANCE REFORM 

3 SEC. 101. SHORT TITLE. 

4 This title may be cited as the ‘‘FHA Modernization 

5 Act of 2006’’. 

6 SEC. 102. FINDINGS AND PURPOSES. 

7 (a) FINDINGS.—Congress finds that— 

8 (1) one of the primary missions of the Federal 

9 Housing Administration is to reach borrowers under10 served or not served by the existing conventional 

11 marketplace; 

12 (2) the Federal Housing Administration has a 

13 long history of innovation and has pioneered the 30- 


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1 year self-amortizing mortgage and a safe-to-seniors 

2 reverse mortgage product, both of which were once 

3 thought too risky by private lenders; 

4 (3) the Federal Housing Administration single 

5 family mortgage insurance program has traditionally 

6 been a major provider of mortgage insurance for 

7 home purchases; 

8 (4) the Federal Housing Administration mort9 gage insurance premium structure, as well as the 

10 Federal Housing Administration’s product offerings, 

11 should be revised to reflect the enhanced ability of 

12 the Federal Housing Administration to determine 

13 risk at the loan level and to allow Federal Housing 

14 Administration to better respond to changes in the 

15 mortgage market; 

16 (5) during past recessions, including the oil17 patch downturns in the mid-1980s, the Federal 

18 Housing Administration remained a viable credit 

19 enhancer and was therefore instrumental in pre20 venting a more catastrophic collapse in housing mar21 kets and a greater loss of homeowner equity; and 

22 (6) as housing price appreciation slows and in23 terest rates rise, many homeowners and prospective 

24 homebuyers will need the less-expensive, safer fiVerDate Aug 31 2005 00:47 Jun 22, 2006 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3535.IS S3535

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1 nancing alternative that the Federal Housing Ad2 ministration mortgage insurance provides. 

3 (b) PURPOSES.—The purposes of this title are— 

4 (1) to provide flexibility to the Federal Housing 

5 Administration to allow for the insurance of housing 

6 loans for low- and moderate-income homebuyers dur7 ing all economic cycles in the mortgage market; 

8 (2) to modernize the Federal Housing Adminis9 tration single family mortgage insurance program by 

10 making such program more reflective of enhance11 ments to loan-level risk assessments and changes to 

12 the mortgage market; and 

13 (3) to adjust the loan limits for the single fam14 ily mortgage insurance program to reflect rising 

15 house prices and the increased costs associated with 

16 new construction. 

17 SEC. 103. CONFORMING LOAN LIMITS AND MAXIMUM PRIN18 CIPAL LOAN OBLIGATION. 

19 Section 203(b)(2) of the National Housing Act (12 

20 U.S.C. 1709(b)(2)) is amended— 

21 (1) by inserting ‘‘not to exceed the lesser of’’ 

22 after ‘‘in an amount’’; 

23 (2) by striking subparagraphs (A) and (B) and 

24 inserting the following— 


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1 ‘‘(A)(i) in the case of a 1-family residence, 

2 the median 1-family house price in the area, as 

3 determined by the Secretary; and 

4 ‘‘(ii) in the case of a 2-, 3-, or 4-family 

5 residence, the percentage of such median price 

6 that bears the same ratio to such median price 

7 as the dollar amount limitation in effect under 

8 section 305(a)(2) of the Federal Home Loan 

9 Mortgage Corporation Act (12 U.S.C. 

10 1454(a)(2)) for a 2-, 3-, or 4-family residence, 

11 respectively, bears to the dollar amount limita12 tion in effect under such section for a 1-family 

13 residence; or 

14 ‘‘(B) the dollar amount limitation deter15 mined under such section 305(a)(2) for a resi16 dence of the applicable size, except that the dol17 lar amount limitation in effect for any area 

18 under this subparagraph may not be less than 

19 the greater of— 

20 ‘‘(i) the dollar amount limitation in ef21 fect under this section for the area on Oc22 tober 21, 1998; or 

23 ‘‘(ii) 65 percent of the dollar limita24 tion determined under such section 


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1 305(a)(2) for a residence of the applicable 

2 size.’’; 

3 (3) in the first undesignated paragraph, by 

4 striking the second sentence (relating to average 

5 cost); and 

6 (4) by striking the last undesignated paragraph. 

7 SEC. 104. EXTENSION OF MORTGAGE TERM. 

8 Section 203(b)(3) of the National Housing Act (12 

9 U.S.C. 1709(b)(3)) is amended by striking ‘‘thirty-five 

10 years (or thirty years if such mortgage is not approved 

11 for insurance prior to construction’’ and inserting ‘‘40 

12 years’’. 

13 SEC. 105. CASH INVESTMENT REQUIREMENT. 

14 Section 203(b)(9) of the National Housing Act (12 

15 U.S.C. 1709(b)(9)) is amended— 

16 (1) by striking ‘‘(except with respect to’’ and all 

17 that follows through ‘‘larger amount’’ and inserting 

18 ‘‘an amount, if any,’’; 

19 (2) by striking the comma after ‘‘determine’’ 

20 and inserting ‘‘based on factors determined by the 

21 Secretary and commensurate with the likelihood of 

22 default’’; 

23 (3) by striking ‘‘of the Secretary’s’’ and all that 

24 follows through ‘‘insured)’’; 


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1 (4) by striking the first colon and inserting a 

2 period; 

3 (5) by striking the first proviso; and 

4 (6) by striking ‘‘Provided further, That for’’ and 

5 inserting ‘‘For’’. 

6 SEC. 106. MORTGAGE INSURANCE PREMIUMS. 

7 Section 203(c) of the National Housing Act (12 

8 U.S.C. 1709(c)(2)) is amended by adding at the end the 

9 following: 

10 ‘‘(3)(A) For mortgages insured by the Sec11 retary under this title that are secured by 1 to 4 

12 family dwellings and for which the loan application 

13 is received by the mortgagee on or after October 1, 

14 2006, the Secretary may establish a mortgage insur15 ance premium structure involving a single premium 

16 collected prior to the insurance of the mortgage or 

17 periodic payments, or both, without regard to any 

18 maximum or minimum premium amounts set forth 

19 in this subsection. The rate of premium for a mort20 gage may vary during the mortgage term as long as 

21 the basis for determining the variable rate is deter22 mined prior to the execution of the mortgage. The 

23 Secretary may change a premium structure estab24 lished under this subparagraph if the change is not 

25 applied to any mortgage already executed. 


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1 ‘‘(B) A premium structure shall be established 

2 or changed under subparagraph (A) by providing no3 tice to mortgagees and by providing notice to Con4 gress at least 30 days prior to the date that the pre5 mium structure is to be established or changed. 

6 ‘‘(C) In establishing a premium structure under 

7 subparagraph (A) or when changing such a premium 

8 structure the Secretary shall consider the following: 

9 ‘‘(i) The effect on the ability of the Sec10 retary to meet the operational goals of the Mu11 tual Mortgage Insurance Fund as provided in 

12 section 202(a). 

13 ‘‘(ii) Underwriting variables. 

14 ‘‘(iii) The extent to which new pricing has 

15 potential for acceptance on the private market. 

16 ‘‘(iv) The administrative capability of the 

17 Secretary to administer the proposed premium 

18 structure. 

19 ‘‘(v) The effect on the ability of the Sec20 retary to maintain the availability of mortgage 

21 credit and provide stability to mortgage mar22 kets.’’. 

23 SEC. 107. REHABILITATION LOANS. 

24 Section 203(k) of the National Housing Act (12 

25 U.S.C. 1709(k)) is amended— 


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1 (1) in paragraph (1), by striking ‘‘on’’ and all 

2 that follows through ‘‘1978’’; and 

3 (2) in paragraph (5)— 

4 (A) by striking ‘‘General Insurance Fund’’ 

5 the first place it appears and inserting ‘‘Mutual 

6 Mortgage Insurance Fund’’; and 

7 (B) in the second sentence, by striking the 

8 comma and all that follows through the period 

9 at the end, and inserting a period. 

10 SEC. 108. DISCRETIONARY ACTION. 

11 (a) TRANSFER OF NOTICE REQUIREMENTS.—Section 

12 203 of the National Housing Act (12 U.S.C. 1709) is 

13 amended by striking subsection (s); 

14 (b) NOTICE PROVISIONS.—Section 202 of the Na15 tional Housing Act (12 U.S.C. 1708) is amended— 

16 (1) by redesignating subsection (e) as sub17 section (f); and 

18 (2) by inserting after subsection (d) the fol19 lowing new subsection (e): 

20 ‘‘(e) NOTICE OF DISCRETIONARY ACTION.—When21 ever the Secretary has taken any discretionary action to 

22 suspend or revoke the approval of any mortgagee to par23 ticipate in any mortgage insurance program under this 

24 subchapter, the Secretary shall provide prompt notice of 


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1 the action and a statement of the reasons for the action 

2 to— 

3 ‘‘(1) the Secretary of Veterans Affairs; 

4 ‘‘(2) the chief executive officer of the Federal 

5 National Mortgage Association; 

6 ‘‘(3) the chief executive officer of the Federal 

7 Home Loan Mortgage Corporation; 

8 ‘‘(4) the Administrator of the Rural Housing 

9 Service; 

10 ‘‘(5) if the mortgagee is a national bank, or a 

11 subsidiary or affiliate of such a bank, the Comp12 troller of the Currency; 

13 ‘‘(6) if the mortgagee is a State bank that is a 

14 member of the Federal Reserve System or a sub15 sidiary or affiliate of such a bank, or a bank holding 

16 company or a subsidiary or affiliate of such a com17 pany, the Board of Governors of the Federal Re18 serve System; 

19 ‘‘(7) if the mortgagee is a State bank that is 

20 not a member of the Federal Reserve System or is 

21 a subsidiary or affiliate of such a bank, the Board 

22 of Directors of the Federal Deposit Insurance Cor23 poration; and 

24 ‘‘(8) if the mortgagee is a Federal or State sav25 ings association or a subsidiary or affiliate of a savVerDate Aug 31 2005 00:47 Jun 22, 2006 Jkt 049200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3535.IS S3535

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1 ings association, the Director of the Office of Thrift 

2 Supervision.’’. 

3 SEC. 109. INSURANCE OF CONDOMINIUMS. 

4 (a) IN GENERAL.—Section 234 of the National 

5 Housing Act (12 U.S.C. 1715y) is amended— 

6 (1) in subsection (c)— 

7 (A) in the first sentence, by striking the 

8 period and inserting the following ‘‘, and (3) 

9 the project has a blanket mortgage insured by 

10 the Secretary under subsection (d).’’; and 

11 (B) by striking ‘‘thirty-five’’ and inserting 

12 ‘‘40’’; and 

13 (2) in subsection (g), by striking ‘‘, except’’ and 

14 all that follows through the period at the end and 

15 inserting a period. 

16 (b) FIRST MORTGAGES.—Section 201(a) of the Na17 tional Housing Act (12 U.S.C. 1707(a)) is amended by 

18 striking the semicolon and inserting ‘‘or (3) a first mort19 gage given to secure the unpaid purchase price of a fee 

20 interest in, or long-term leasehold interest in, a 1 family 

21 unit in a multifamily project, including a project in which 

22 the dwelling units are attached, semi-detached, or de23 tached, and an undivided interest in the common areas 

24 and facilities which serve the project;’’. 


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1 SEC. 110. MUTUAL MORTGAGE INSURANCE FUND. 

2 (a) ESTABLISHMENT OF FUND.—Section 202(a) of 

3 the National Housing Act (12 U.S.C. 1708) is amended 

4 to read as follows: 

5 ‘‘(a) MUTUAL MORTGAGE INSURANCE FUND.— 

6 ‘‘(1) ESTABLISHMENT.—Subject to the provi7 sions of the Federal Credit Reform Act of 1990, 

8 there is hereby created a Mutual Mortgage Insur9 ance Fund (referred to in this section as the 

10 ‘Fund’), which shall be used by the Secretary to 

11 carry out the provisions of this title with respect to 

12 mortgages insured under section 203. The Secretary 

13 is authorized to use amounts in the Fund to guar14 antee any mortgage insured under section 203. 

15 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

16 There are authorized to be appropriated such sums 

17 as are necessary for the cost of— 

18 ‘‘(A) loan guarantees authorized under this 

19 subsection; and 

20 ‘‘(B) administering such loan guarantees. 

21 ‘‘(3) LIMIT ON LOAN GUARANTEES.—Commit22 ments to guarantee loans under the subsection may 

23 be made by the Secretary only to the extent that 

24 total loan principal, any part of which is guaranteed, 

25 does not exceed the amount specified in annual ap26 propriations acts each year. 


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1 ‘‘(4) ANNUAL INDEPENDENT ACTUARIAL

2 STUDY.— 

3 ‘‘(A) STUDY AND REPORT.—The Secretary 

4 shall— 

5 ‘‘(i) provide for an independent actu6 arial study of the Fund to be conducted 

7 annually; and 

8 ‘‘(ii) report annually to the Congress 

9 regarding the financial status of the Fund. 

10 ‘‘(B) CONTENT OF STUDY.—Each study 

11 required under subparagraph (A) shall analyze 

12 the financial position of the Fund and rec13 ommend adjustments to underwriting stand14 ards, program participation, or premiums, if 

15 necessary, to ensure that the Fund remains fi16 nancially sound. 

17 ‘‘(C) TIMING OF REPORT.—The Secretary 

18 shall submit a report required under subpara19 graph (A) to Congress each quarter, with the 

20 first report submitted on the later of— 

21 ‘‘(i) the last day of the first quarter of 

22 fiscal year 2007; or 

23 ‘‘(ii) 90 days after the date of enact24 ment of this subsection. 


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1 ‘‘(D) ADDITIONAL REQUIREMENTS OF THE

2 REPORT.—Each report required under subpara3 graph (A) shall detail— 

4 ‘‘(i) the cumulative volume of loan 

5 guarantee commitments made for the fiscal 

6 year; 

7 ‘‘(ii) the types of loans insured, cat8 egorized by risk; 

9 ‘‘(iii) significant changes between ac10 tual and projected claim and prepayment 

11 activity; 

12 ‘‘(iv) projected versus actual loss 

13 rates; and 

14 ‘‘(v) updated projections of the annual 

15 subsidy rates to ensure that increases in 

16 risk to the Fund are identified and miti17 gated by adjustments to underwriting 

18 standards, program participation, or pre19 miums, and the Fund’s financial soundness 

20 is maintained. 

21 ‘‘(5) ADDITIONAL RESPONSIBILITY.—The Sec22 retary shall ensure that the Fund remains finan23 cially sound. 

24 ‘‘(6) ADJUSTMENT OF PREMIUMS.— 


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1 ‘‘(A) AUTHORITY OF THE SECRETARY.—If, 

2 pursuant to the independent actuarial study of 

3 the Fund required under paragraph (4), the 

4 Secretary determines that the Fund is not 

5 meeting the operational goals established under 

6 subparagraph (B) or there is a substantial 

7 probability that the Fund will not maintain its 

8 established target subsidy rate, the Secretary 

9 may either make— 

10 ‘‘(i) programmatic adjustments under 

11 section 203 as necessary to reduce the risk 

12 to the Fund; or 

13 ‘‘(ii) appropriate premium adjust14 ments. 

15 ‘‘(B) OPERATIONAL GOALS.—The oper16 ational goals of the Fund are— 

17 ‘‘(i) charging borrowers an appro18 priate premium for the risk that such bor19 rower poses to the Fund; 

20 ‘‘(ii) minimizing the default risk to 

21 the Fund and to homeowners; 

22 ‘‘(iii) curtailing the impact of adverse 

23 selection on the Fund; and 

24 ‘‘(iv) meeting the housing needs of the 

25 target mortgagors of the Fund.’’. 


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1 (b) AMENDMENT TO SECTION 205.—Section 205 of 

2 the National Housing Act (12 U.S.C. 1711) is amended 

3 by striking subsections (g) and (h). 

4 (c) AMENDMENT TO SECTION 203.—Section 203(v) 

5 of the National Housing Act (12 U.S.C. 1709(v)) is 

6 amended by— 

7 (1) striking ‘‘Notwithstanding section 202 of 

8 this title, the’’ and inserting ‘‘The’’; and 

9 (2) striking ‘‘General Insurance Fund’’ and all 

10 that follows through the period at the end and in11 serting ‘‘Mutual Mortgage Insurance Fund.’’. 

12 (d) AMENDMENTS TO GENERAL INSURANCE

13 FUND.—Section 519(e) of the National Housing Act (12 

14 U.S.C. 1735c(e)) is amended by— 

15 (1) striking ‘‘203(b)’’ and inserting ‘‘203’’; and 

16 (2) striking ‘‘(except’’ and all that follows 

17 through ‘‘203(i)’’ and inserting ‘‘except as deter18 mined by the Secretary’’. 

19 (e) HOME EQUITY CONVERSION MORTGAGES.—Sec20 tion 255(i)(2)(A) of the National Housing Act (12 U.S.C. 

21 1715z–20(i)(2)A)) is amended by striking ‘‘General Insur22 ance Fund’’ and inserting ‘‘Mutual Mortgage Insurance 

23 Fund’’. 


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1 SEC. 111. HAWAIIAN HOME LANDS AND INDIAN RESERVA2 TIONS. 

3 (a) SINGLE FAMILY MORTGAGE INSURANCE.—Sec4 tion 247(c) of the National Housing Act (12 U.S.C. 

5 1715z–12) is amended— 

6 (1) in the heading, by striking ‘‘GENERAL IN7 SURANCE FUND’’ and inserting ‘‘MUTUAL MORT8 GAGE INSURANCE FUND’’; 

9 (2) in the first sentence, by striking ‘‘General 

10 Insurance Fund established in section 519’’ and in11 serting ‘‘Mutual Mortgage Insurance Fund’’; and 

12 (3) in the second sentence, by striking the 

13 comma and all that follows through the period at the 

14 end and inserting ‘‘, except that all references in sec15 tion 204 to section 203 shall be construed to refer 

16 to the section under which the mortgage is in17 sured.’’. 

18 (b) MORTGAGE INSURANCE ON INDIAN RESERVA19 TIONS.—Section 248(f) of the National Housing Act (12 

20 U.S.C. 1715z–13) is amended— 

21 (1) in the heading, by striking ‘‘GENERAL IN22 SURANCE FUND’’ and inserting ‘‘MUTUAL MORT23 GAGE INSURANCE FUND’’; 

24 (2) in the first sentence, by striking ‘‘General 

25 Insurance Fund established in section 519’’ and in26 serting ‘‘Mutual Mortgage Insurance Fund’’; and 


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1 (3) in the second sentence, by striking the 

2 comma and all that follows through the period at the 

3 end and inserting ‘‘, except that all references in sec4 tion 204 to section 203 shall be construed to refer 

5 to the section under which the mortgage is in6 sured.’’. 

7 SEC. 112. CONFORMING AND TECHNICAL AMENDMENTS. 

8 (a) REPEAL OF SECTIONS.—The following sections of 

9 the National Housing Act are repealed: 

10 (1) Section 203(i) (12 U.S.C. 1709(i)). 

11 (2) Section 203(o) (12 U.S.C. 1709(o)). 

12 (3) Section 203(p) (12 U.S.C. 1709(p)). 

13 (4) Section 203(q) (12 U.S.C. 1709(q)). 

14 (5) Section 222 (12 U.S.C. 1715m). 

15 (6) Section 237 (12 U.S.C. 1715z–2). 

16 (7) Section 245 (12 U.S.C. 1715z–10). 

17 (b) DEFINITION OF AREA.—Section 203(u)(2)(A) of 

18 the National Housing Act (12 U.S.C. 1709(u)(2)(A)) is 

19 amended by striking ‘‘shall’’ and all that follows through 

20 the semicolon at the end and inserting ‘‘means a metro21 politan statistical area, as established by the Office of 

22 Management and Budget;’’. 

23 (c) DEFINITION OF STATE.—Section 201(d) of the 

24 National Housing Act (12 U.S.C. 1707(d)) is amended by 


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1 striking ‘‘the Trust Territory of the Pacific Islands’’ and 

2 inserting ‘‘the Northern Marianas Islands’’. 

3 SEC. 113. HOME EQUITY CONVERSION MORTGAGES. 

4 Section 255 of the National Housing Act (12 U.S.C. 

5 1715z–20) is amended— 

6 (1) in subsection (g)— 

7 (A) by striking the first sentence; and 

8 (B) by striking ‘‘section 203(b)(2)’’ and in9 serting ‘‘section 305(a)(2) of the Federal Home 

10 Loan Mortgage Corporation Act’’; 

11 (2) in subsection (i)(1)(C), by striking ‘‘limita12 tions’’ and inserting ‘‘limitation’’; and 

13 (3) by adding a new subsection as follows: 

14 ‘‘(n) AUTHORITY FOR HOME PURCHASE.— 

15 ‘‘(1) IN GENERAL.—Notwithstanding any other 

16 provision in this section, the Secretary may insure, 

17 upon application by a mortgagee, a home equity con18 version mortgage upon such terms and conditions as 

19 the Secretary may prescribe, when the primary pur20 pose of the home equity conversion mortgage is to 

21 enable an elderly mortgagor to purchase a 1 to 4 

22 family dwelling in which the mortgagor will occupy 

23 or occupies one of the units. 

24 ‘‘(2) LIMITATION ON PRINCIPAL OBLIGATION.— 

25 A home equity conversion mortgage insured under 


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1 paragraph (1) shall involve a principal obligation 

2 that does not exceed the dollar amount limitation de3 termined under section 305(a)(2) of the Federal 

4 Home Loan Mortgage Corporation Act for a resi5 dence of the applicable size.’’. 

6 SEC. 114. CONFORMING LOAN LIMIT IN DISASTER AREAS. 

7 Section 203(h) of the National Housing Act (12 

8 U.S.C. 1709) is amended— 

9 (1) by striking ‘‘Notwithstanding’’ and insert10 ing the following: 

11 ‘‘(1) IN GENERAL.—Notwithstanding’’; 

12 (2) by inserting after ‘‘value of property’’ the 

13 following: ‘‘plus any initial service charges, ap14 praisal, inspection, and other fees in connection with 

15 the mortgage, as approved by the Secretary’’; and 

16 (3) by adding at the end the following: 

17 ‘‘(2) TEMPORARY AGREEMENTS TO INSURE

18 MORTGAGES.—In any case in which the single family 

19 residence to be insured under this subsection is with20 in a jurisdiction in which the President has declared 

21 a major disaster as described in paragraph (1), the 

22 Secretary is authorized for a temporary period not 

23 to exceed 36 months from the date of such Presi24 dential declaration, to enter into agreements to in25 sure a mortgage which involves a principal obligation 


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1 of up to 100 percent of the dollar limitation deter2 mined under section 305(a)(2) of the Federal Home 

3 Loan Mortgage Corporation Act for a single family 

4 residence, and not in excess of 100 percent of the 

5 appraised value of the property plus any initial serv6 ice charges, appraisal, inspection and other fees in 

7 connection with the mortgage as approved by the 

8 Secretary.’’. 

9 SEC. 115. SAVINGS PROVISION. 

10 Any mortgage insured under title II of the National 

11 Housing Act before the date of enactment of this title shall 

12 continue to be governed by the laws, regulations, orders, 

13 terms, and conditions to which it was subject to on the 

14 day prior to the date of enactment of this title. 

15 SEC. 116. IMPLEMENTATION. 

16 (a) IN GENERAL.—The Secretary shall by notice es17 tablish any additional requirements that may be necessary 

18 to immediately carry out the provisions of this title. 

19 (b) EFFECT OF NOTICE.—Any notice required under 

20 subsection (a) shall take effect upon the date of issuance 

21 of such notice. 


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1 TITLE II—MANUFACTURED 

2 HOUSING MORTGAGE INSUR3 ANCE 

4 SEC. 201. SHORT TITLE. 

5 This title may be cited as the ‘‘Federal Housing Ad6 ministration Manufactured Housing Loan Act of 2006’’. 

7 SEC. 202. FINDINGS AND PURPOSES. 

8 (a) FINDINGS.—Congress finds that— 

9 (1) manufactured housing plays a vital role in 

10 providing housing for low- and moderate-income 

11 families in the United States; 

12 (2) the Federal Housing Administration title I 

13 insurance program for manufactured home loans 

14 traditionally has been a major provider of mortgage 

15 insurance for home-only transactions; 

16 (3) the manufactured housing market is in the 

17 midst of a prolonged downturn which has resulted in 

18 a severe contraction of traditional sources of private 

19 lending for manufactured home purchases; 

20 (4) during past downturns the Federal Housing 

21 Administration title I insurance program for manu22 factured homes has filled the lending void by pro23 viding stability until the private markets could re24 cover; 


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1 (5) in 1992, during the manufactured housing 

2 industry’s last major recession, over 30,000 manu3 factured home loans were insured under title I; 

4 (6) in 2004, fewer than 2,000 manufactured 

5 housing loans were insured under title I; 

6 (7) the loan limits for title I manufactured 

7 housing loans have not been adjusted for inflation 

8 since 1992; and 

9 (8) such problems with the title I program have 

10 resulted in an atrophied market for manufactured 

11 housing loans, leaving American families who have 

12 the most difficulty achieving homeownership without 

13 adequate financing options for home-only manufac14 tured home purchases. 

15 (b) PURPOSES.—The purposes of this title are— 

16 (1) to provide adequate funding for the Federal 

17 Housing Administration-insured manufactured hous18 ing loans for low- and moderate-income homebuyers 

19 during all economic cycles in the manufactured 

20 housing industry; 

21 (2) to modernize the Federal Housing Adminis22 tration title I insurance program for manufactured 

23 housing loans to enhance participation by Ginnie 

24 Mae and the private lending markets; and 


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1 (3) to adjust the low loan limits for title I man2 ufactured home loan insurance to reflect the increase 

3 in costs since such limits were last increased in 1992 

4 and to index such limits to inflation. 

5 SEC. 203. EXCEPTION TO LIMITATION ON FINANCIAL INSTI6 TUTION PORTFOLIO. 

7 (a) INSURANCE OF FINANCIAL INSTITUTIONS.—The 

8 second sentence of section 2(a) of the National Housing 

9 Act (12 U.S.C. 1703(a)) is amended— 

10 (1) by striking ‘‘In no case’’ and inserting 

11 ‘‘Other than in connection with a manufactured 

12 home or a lot on which to place such a home (or 

13 both), in no case’’; and 

14 (2) by striking the colon and inserting a period. 

15 (b) CLARIFICATION.—The proviso in section 2(a) of 

16 the National Housing Act (12 U.S.C. 1703(a)) is amended 

17 by striking ‘‘Provided, that with’’ and inserting ‘‘With’’. 

18 SEC. 204. INSURANCE BENEFITS. 

19 (a) MANUFACTURED HOUSING LOANS.—Section 2(b) 

20 of the National Housing Act (12 U.S.C. 1703(b)), is 

21 amended by adding at the end the following: 

22 ‘‘(8) INSURANCE BENEFITS FOR MANUFAC23 TURED HOUSING LOANS.—Any contract of insurance 

24 with respect to loans, advances of credit, or pur25 chases in connection with a manufactured home or 


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1 a lot on which to place a manufactured home (or 

2 both) for a financial institution that is executed 

3 under this title after the date of the enactment of 

4 this provision by the Secretary shall be conclusive 

5 evidence of the eligibility of such financial institution 

6 for insurance, and the validity of any contract of in7 surance so executed shall be incontestable in the 

8 hands of the bearer from the date of the execution 

9 of such contract, except for fraud or misrepresenta10 tion on the part of such institution.’’. 

11 (b) APPLICABILITY.—The provisions of this section 

12 shall only apply to loans that are registered or endorsed 

13 for insurance after the date of enactment of this section. 

14 SEC. 205. MAXIMUM LOAN LIMITS. 

15 (a) DOLLAR AMOUNTS.—Section 2(b)(1) of the Na16 tional Housing Act (12 U.S.C. 1703(b)(1)) is amended— 

17 (1) in clause (ii) of subparagraph (A), by strik18 ing ‘‘$17,500’’ and inserting ‘‘$24,500’’; 

19 (2) in subparagraph (C), by striking ‘‘$48,600’’ 

20 and inserting ‘‘$68,040’’; 

21 (3) in subparagraph (D), by striking ‘‘$64,800’’ 

22 and inserting ‘‘$90,720’’; 

23 (4) in subparagraph (E), by striking ‘‘$16,200’’ 

24 and inserting ‘‘$22,680’’; and 


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1 (5) by realigning subparagraphs (C), (D), and 

2 (E) 2 ems to the left so that the left margins of 

3 such subparagraphs are aligned with the margins of 

4 subparagraphs (A) and (B). 

5 (b) ANNUAL INDEXING.—Section 2(b) of the Na6 tional Housing Act (12 U.S.C. 1703(b)), as amended by 

7 section 204, is amended by adding at the end the fol8 lowing: 

9 ‘‘(9) INDEXING.— 

10 ‘‘(A) IN GENERAL.—The Secretary shall 

11 develop a method of indexing in order to annu12 ally adjust the loan limits established in sub13 paragraphs (A)(ii), (C), (D), and (E) of this 

14 subsection. 

15 ‘‘(B) BASIS OF INDEX.—The index method 

16 developed under subparagraph (A) shall be 

17 based on the manufactured housing price data 

18 collected by the United States Census Bureau. 

19 ‘‘(C) TIMING.—The Secretary shall develop 

20 the index method required under subparagraph 

21 (A) not later than 1 year after the date of en22 actment of this paragraph.’’. 

23 (c) TECHNICAL AND CONFORMING CHANGES.—Sec24 tion 2(b)(1) of the National Housing Act (12 U.S.C. 

25 1703(b)(1)) is amended— 


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1 (1) by striking ‘‘No’’ and inserting ‘‘Except as 

2 provided in the last sentence of this paragraph, no’’; 

3 and 

4 (2) by adding the following flush text after sub5 paragraph (G): 

6 ‘‘The Secretary shall, by regulation, increase the dollar 

7 amount limitations in subparagraphs (A)(ii), (C), (D), and 

8 (E) according to the index method developed in paragraph 

9 (9).’’. 

10 SEC. 206. INSURANCE PREMIUMS. 

11 Section 2(f) of the National Housing Act (12 U.S.C. 

12 1703(f)) is amended— 

13 (1) by striking ‘‘(f) The Secretary’’ and by in14 serting the following: 

15 ‘‘(f) INSURANCE PREMIUMS.— 

16 ‘‘(1) IN GENERAL.—The Secretary’’; and 

17 (2) by adding at the end the following: 

18 ‘‘(2) MANUFACTURED HOME LOANS.— 

19 ‘‘(A) PREMIUM STRUCTURE.—Notwith20 standing paragraph (1), in the case of a loan, 

21 advance of credit, or purchase in connection 

22 with a manufactured home or a lot on which to 

23 place such a home (or both), the Secretary may 

24 establish a mortgage insurance premium struc25 ture involving a single premium collected prior 


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1 to the insurance of the mortgage or periodic 

2 payments, or both. 

3 ‘‘(B) RATE.—The rate of premium for a 

4 mortgage under subparagraph (A) may vary 

5 during the mortgage term as long as the basis 

6 for determining the variable rate is determined 

7 prior to the execution of the mortgage. 

8 ‘‘(C) CHANGE IN PREMIUMS.—The Sec9 retary may change a premium structure estab10 lished under this paragraph if the change is not 

11 applied to any mortgage already executed. 

12 ‘‘(D) NOTICE.—A premium structure shall 

13 be established or changed under this paragraph 

14 by providing notice to lenders and by providing 

15 notice to Congress at least 30 days prior to the 

16 date that the premium structure is to be estab17 lished or changed.’’. 

18 SEC. 207. TECHNICAL CORRECTIONS. 

19 (a) DATES.—Section 2(a) of the National Housing 

20 Act (12 U.S.C. 1703(a)) is amended— 

21 (1) by striking ‘‘on and after July 1, 1939,’’; 

22 and 

23 (2) by striking ‘‘made after August 2, 1954’’. 


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1 (b) AUTHORITY OF THE SECRETARY.—Section 2(c) 

2 of the National Housing Act (12 U.S.C. 1703(c)) is 

3 amended to read as follows: 

4 ‘‘(c) AUTHORITY OF THE SECRETARY.— 

5 ‘‘(1) IN GENERAL.—Notwithstanding any other 

6 provision of law, the Secretary is authorized— 

7 ‘‘(A) to deal with, complete, rent, renovate, 

8 modernize, insure, or assign or sell at public or 

9 private sale, or otherwise dispose of, for cash or 

10 credit in the discretion of the Secretary, and 

11 upon such terms and conditions and for such 

12 consideration as the Secretary shall determine 

13 to be reasonable, any real or personal property 

14 conveyed to or otherwise acquired by the Sec15 retary, in connection with the payment of insur16 ance heretofore or hereafter granted under this 

17 title, including any evidence of debt, contract, 

18 claim, personal property, or security assigned to 

19 or held by the Secretary in connection with the 

20 payment of insurance heretofore or hereafter 

21 granted under this section; and 

22 ‘‘(B) to pursue to final collection, by way 

23 of compromise or otherwise, all claims assigned 

24 to or held by the Secretary and all legal or eq25 uitable rights accruing to the Secretary in conVerDate Aug 31 2005 00:47 Jun 22, 2006 Jkt 049200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S3535.IS S3535

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1 nection with the payment of such insurance, in2 cluding unpaid insurance premiums owed in 

3 connection with insurance made available by 

4 this title. 

5 ‘‘(2) RULE OF CONSTRUCTION.—Section 3709 

6 of the Revised Statutes shall not be construed to 

7 apply to any contract of hazard insurance or to any 

8 purchase or contract for services or supplies on ac9 count of such property if the amount thereof does 

10 not exceed $25,000. 

11 ‘‘(3) DELEGATION OF POWER.— 

12 ‘‘(A) IN GENERAL.—The power to convey 

13 and to execute in the name of the Secretary, 

14 deeds of conveyance, deeds of release, assign15 ments and satisfactions of mortgages, and any 

16 other written instrument relating to real or per17 sonal property or any interest therein heretofore 

18 or hereafter acquired by the Secretary pursuant 

19 to the provisions of this title may be exercised 

20 by an officer appointed by the Secretary with21 out the execution of any express delegation of 

22 power or power of attorney. 

23 ‘‘(B) RULE OF CONSTRUCTION.—Nothing 

24 in this paragraph shall be construed to prevent 

25 the Secretary from delegating such power by 


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1 order or by power of attorney, in the discretion 

2 of the Secretary, to any officer or agent the 

3 Secretary may appoint.’’. 

Æ 


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