110TH CONGRESS 

1ST SESSION H. R. 1852 

AN ACT 

To modernize and update the National Housing Act and 

enable the Federal Housing Administration to use riskbased 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, 
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1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

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

3 ‘‘Expanding American Homeownership Act of 2007’’. 

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

5 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. Downpayment simplification. 

Sec. 6. Mortgage insurance premiums for zero- and lower-downpayment borrowers. 

Sec. 7. Mortgage insurance premiums for standard and higher-risk borrowers. 

Sec. 8. Risk-based mortgage insurance premiums. 

Sec. 9. Payment incentives. 

Sec. 10. Borrower protections for higher risk mortgages. 

Sec. 11. Refinancing mortgages. 

Sec. 12. Annual reports on new programs and loss mitigation. 

Sec. 13. Insurance for single family homes with licensed child care facilities. 

Sec. 14. Rehabilitation loans. 

Sec. 15. Discretionary action. 

Sec. 16. Insurance of condominiums and manufactured housing. 

Sec. 17. Mutual Mortgage Insurance Fund. 

Sec. 18. Hawaiian home lands and Indian reservations. 

Sec. 19. Conforming and technical amendments. 

Sec. 20. Home equity conversion mortgages. 

Sec. 21. Participation of mortgage brokers and correspondent lenders. 

Sec. 22. Conforming loan limit in disaster areas. 

Sec. 23. Failure to pay amounts from escrow accounts for single family mortgages. 

Sec. 24. Acceptable identification for FHA mortgagors. 

Sec. 25. Pilot program for automated process for borrowers without sufficient 

credit history. 

Sec. 26. Sense of Congress regarding technology for financial systems. 

Sec. 27. Multifamily housing mortgage limits in high cost areas. 

Sec. 28. Discount sales of multifamily properties. 

Sec. 29. Clarification of disposition of certain properties. 

Sec. 30. Noncompetitive sales by HUD to states and localities. 

Sec. 31. Use of FHA savings for costs of mortgage insurance, housing counseling, FHA technologies, procedures, and processes, and for 

affordable housing grant fund, and study. 

Sec. 32. Limitation on mortgage insurance premium increases. 

Sec. 33. Civil money penalties for improperly influencing appraisals. 

Sec. 34. Mortgage insurance premium refunds. 

Sec. 35. Savings provision. 

Sec. 36. Implementation. 
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1 SEC. 2. FINDINGS AND PURPOSES. 

2 (a) FINDINGS.—The Congress finds that— 

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

4 Housing Administration (FHA) single family mort5 gage insurance program is to reach borrowers who 

6 are underserved, or not served, by the existing con7 ventional mortgage marketplace; 

8 (2) the FHA program has a long history of in9 novation, which includes pioneering the 30-year self10 amortizing mortgage and a safe-to-seniors reverse 

11 mortgage product, both of which were once thought 

12 too risky to private lenders; 

13 (3) the FHA single family mortgage insurance 

14 program traditionally has been a major provider of 

15 mortgage insurance for home purchases; 

16 (4) the FHA mortgage insurance premium 

17 structure, as well as FHA’s product offerings, 

18 should be revised to reflect FHA’s enhanced ability 

19 to determine risk at the loan level and to allow FHA 

20 to better respond to changes in the mortgage mar21 ket; 

22 (5) during past recessions, including the oil23 patch downturns in the mid-1980s, FHA remained 

24 a viable credit enhancer and was therefore instru25 mental in preventing a more catastrophic collapse in 
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1 housing markets and a greater loss of homeowner 

2 equity; and 

3 (6) as housing price appreciation slows and in4 terest rates rise, many homeowners and prospective 

5 homebuyers will need the less-expensive, safer fi6 nancing alternative that FHA mortgage insurance 

7 provides. 

8 (b) PURPOSES.—The purposes of this Act are— 

9 (1) to provide flexibility to FHA to allow for 

10 the insurance of housing loans for low- and mod11 erate-income homebuyers during all economic cycles 

12 in the mortgage market; 

13 (2) to modernize the FHA single family mort14 gage insurance program by making it more reflective 

15 of enhancements to loan-level risk assessments and 

16 changes to the mortgage market; and 

17 (3) to adjust the loan limits for the single fam18 ily mortgage insurance program to reflect rising 

19 house prices and the increased costs associated with 

20 new construction. 

21 SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. 

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

23 U.S.C. 1709(b)(2)(A)) is amended by striking subpara24 graph (A) and inserting the following new subparagraph: 

25 ‘‘(A) not to exceed the lesser of— 
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1 ‘‘(i) in the case of a 1-family resi2 dence, 125 percent of the median 1-family 

3 house price in the area, as determined by 

4 the Secretary; and in the case of a 2-, 3- 

5 , or 4-family residence, the percentage of 

6 such median price that bears the same 

7 ratio to such median price as the dollar 

8 amount limitation in effect for 2007 under 

9 section 305(a)(2) of the Federal Home 

10 Loan Mortgage Corporation Act (12 

11 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-family 

12 residence, respectively, bears to the dollar 

13 amount limitation in effect for 2007 under 

14 such section for a 1-family residence; or 

15 ‘‘(ii) 175 percent of the dollar amount 

16 limitation in effect for 2007 under such 

17 section 305(a)(2) for a residence of the ap18 plicable size (without regard to any author19 ity to increase such limitations with re20 spect to properties located in Alaska, 

21 Guam, Hawaii, or the Virgin Islands), ex22 cept that each such maximum dollar 

23 amount shall be adjusted effective January 

24 1 of each year beginning with 2008, by 

25 adding to or subtracting from each such 
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1 amount (as it may have been previously 

2 adjusted) a percentage thereof equal to the 

3 percentage increase or decrease, during the 

4 most recently completed 12-month or 4- 

5 quarter period ending before the time of 

6 determining such annual adjustment, in an 

7 housing price index developed or selected 

8 by the Secretary for purposes of adjust9 ments under this clause; 

10 except that the dollar amount limitation in ef11 fect under this subparagraph for any size resi12 dence for any area may not be less than the 

13 greater of: (I) the dollar amount limitation in 

14 effect under this section for the area on October 

15 21, 1998; or (II) 65 percent of the dollar 

16 amount limitation in effect for 2007 under such 

17 section 305(a)(2) for a residence of the applica18 ble size, as such limitation is adjusted by any 

19 subsequent percentage adjustments determined 

20 under clause (ii) of this subparagraph; and ex21 cept that, if the Secretary determines that mar22 ket conditions warrant such an increase, the 

23 Secretary may, for such period as the Secretary 

24 considers appropriate, increase the maximum 

25 dollar amount limitation determined pursuant 
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1 to the preceding provisions of this subpara2 graph with respect to any particular size or 

3 sizes of residences, or with respect to residences 

4 located in any particular area or areas, to an 

5 amount that does not exceed the maximum dol6 lar amount then otherwise in effect pursuant to 

7 the preceding provisions of this subparagraph 

8 for such size residence, or for such area (if ap9 plicable), by not more than $100,000; and’’. 

10 SEC. 4. EXTENSION OF MORTGAGE TERM. 

11 Paragraph (3) of section 203(b) of the National 

12 Housing Act (12 U.S.C. 1709(b)(3)) is amended— 

13 (1) by striking ‘‘thirty-five years’’ and inserting 

14 ‘‘forty years’’; and 

15 (2) by striking ‘‘(or thirty years if such mort16 gage is not approved for insurance prior to construc17 tion)’’. 

18 SEC. 5. DOWNPAYMENT SIMPLIFICATION. 

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

20 U.S.C. 1709(b)) is amended— 

21 (1) in paragraph (2)— 

22 (A) by striking subparagraph (B) and in23 serting the following new subparagraph: 

24 ‘‘(B) not to exceed an amount equal to the 

25 sum of— 
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1 ‘‘(i) the amount of the mortgage pre2 mium paid at the time the mortgage is in3 sured; and 

4 ‘‘(ii)(I) except as provided in sub5 clause (II), 97.75 percent of the appraised 

6 value of the property; or 

7 ‘‘(II) in the case only of a mortgage 

8 described in subsection (c)(3), the ap9 praised value of the property, plus any ini10 tial service charges, appraisal, inspection, 

11 and other fees in connection with the mort12 gage as approved by the Secretary.’’; 

13 (B) in the matter after and below subpara14 graph (B), by striking the second sentence (re15 lating to a definition of ‘‘average closing cost’’) 

16 and all that follows through ‘‘title 38, United 

17 States Code.’’; and 

18 (C) by striking the last undesignated para19 graph (relating to counseling with respect to 

20 the responsibilities and financial management 

21 involved in homeownership); and 

22 (2) in paragraph (9)— 

23 (A) by striking the paragraph designation 

24 and all that follows through ‘‘Provided further, 

25 That for’’ and inserting the following: 
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1 ‘‘(9) Except in the case of a mortgage described 

2 in subsection (c)(3), be executed by a mortgagor who 

3 shall have paid on account of the property, in cash 

4 or its equivalent, at least 3 percent of the Sec5 retary’s estimate of the cost of acquisition (excluding 

6 the mortgage insurance premium paid at the time 

7 the mortgage is insured). For’’; and 

8 (B) by inserting after the period at the end 

9 the following: ‘‘For purposes of this paragraph, 

10 the Secretary shall consider as cash or its 

11 equivalent any amounts gifted by a family 

12 member (as such term is defined in section 

13 201), the mortgagor’s employer or labor union, 

14 or a qualified homeownership assistance entity, 

15 but only if there is no obligation on the part of 

16 the mortgagor to repay the gift: For purposes 

17 of the preceding sentence, the term ‘qualified 

18 homeownership assistance entity’ means any 

19 governmental agency or charity that has a pro20 gram to provide homeownership assistance to 

21 low- and moderate-income families or first-time 

22 home buyers, or any private nonprofit organiza23 tion that has such a program and evidences suf24 ficient fiscal soundness to protect the fiscal in25 tegrity of the Mutual Mortgage Insurance Fund 
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1 by maintaining a minimum net worth of 

2 $4,000,000 of acceptable assets.’’. 

3 SEC. 6. MORTGAGE INSURANCE PREMIUMS FOR ZERO- AND 

4 LOWER-DOWNPAYMENT BORROWERS. 

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

6 U.S.C. 1709(c) is amended by adding at the end the fol7 lowing new paragraph: 

8 ‘‘(3) ZERO- AND LOWER-DOWNPAYMENT BOR9 ROWERS.— 

10 ‘‘(A) APPLICABILITY.—This paragraph shall 

11 apply to any mortgage that— 

12 ‘‘(i) is secured by a 1- to 4-family dwelling 

13 that will be occupied by the mortgagor as his or 

14 her principal residence; 

15 ‘‘(ii)(I) is an obligation of the Mutual 

16 Mortgage Insurance Fund or of the General In17 surance Fund pursuant to subsection (v) of this 

18 section; or 

19 ‘‘(II) is insured under subsection (k) of 

20 this section or section 234(c); 

21 ‘‘(iii)(I) is executed by a mortgagor who 

22 has not had any present ownership interest in 

23 a principal residence, and whose spouse has not 

24 had any such interest, during 12-month period 

25 ending upon purchase of the residence with the 
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1 mortgage to which this paragraph applies, ex2 cept that this subclause shall be considered a 

3 program to assist first-time homebuyers for 

4 purposes of section 956 of the Cranston-Gon5 zalez National Affordable Housing Act (42 

6 U.S.C. 12713); or 

7 ‘‘(II)(aa) is made to pay or prepay, and 

8 fully extinguish, the outstanding obligations 

9 under an existing mortgage or mortgages on 

10 the same property; and 

11 ‘‘(bb) involves a principal obligation not ex12 ceeding the amount necessary to fully pay or 

13 prepay such outstanding obligations under the 

14 existing mortgage or mortgages, plus any 

15 charges and fees involved in such transaction 

16 and any charges and fees in connection with the 

17 payment or prepayment of such outstanding ob18 ligations. 

19 ‘‘(iv)(I) involves a principal obligation that 

20 does not comply with subclause (I) of sub21 section (b)(2)(B)(ii) (relating to loan-to-value 

22 ratio); or 

23 ‘‘(II) is executed by a mortgagor who has 

24 not paid on account of the property, in cash or 

25 its equivalent, at least 3 percent of the Sec-
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1 retary’s estimate of the cost of acquisition (ex2 cluding the mortgage insurance premium paid 

3 at the time the mortgage is insured). 

4 ‘‘(B) UP-FRONT PREMIUMS.—The amount of 

5 any single premium payment collected at the time of 

6 insurance may not exceed 3.0 percent of the amount 

7 of the original insured principal obligation of the 

8 mortgage. 

9 ‘‘(C) ANNUAL PREMIUMS.—Except as provided 

10 in subparagraph (D), the amount of any annual pre11 mium payment collected may not exceed 0.75 per12 cent of the remaining insured principal obligation of 

13 the mortgage. 

14 ‘‘(D) ANNUAL REDETERMINATION OF PREMIUM

15 RATE.—The Secretary shall redetermine the rates of 

16 premiums not less than once every 12 months.’’. 

17 SEC. 7. MORTGAGE INSURANCE PREMIUMS FOR STANDARD 

18 AND HIGHER-RISK BORROWERS. 

19 Paragraph (2) of section 203(c) of the National 

20 Housing Act (12 U.S.C. 1709(c)(2)) is amended— 

21 (1) by striking the matter that precedes sub22 paragraph (A) and inserting the following: 

23 ‘‘(2) STANDARD-RISK MORTGAGES.—In the case of 

24 any mortgage that is secured by a 1- to 4-family dwelling, 

25 is an obligation of the Mutual Mortgage Insurance Fund 
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1 or of the General Insurance Fund pursuant to subsection 

2 (v) of this section or is insured under subsection (k) of 

3 this section or section 234(c), for which the mortgagor has 

4 paid on account of the property, in cash or its equivalent, 

5 at least 3 percent of the Secretary’s estimate of the cost 

6 of acquisition (excluding the mortgage insurance premium 

7 paid at the time the mortgage is insured), and that in8 volves a principal obligation that complies with subclause 

9 (I) of subsection (b)(2)(B)(ii), the following requirements 

10 shall apply:’’; and 

11 (2) by adding at the end the following new sub12 paragraph: 

13 ‘‘(C) HIGHER-RISK BORROWERS.—The Sec14 retary shall establish underwriting standards that 

15 provide for insurance under this section of mort16 gages described in the matter in this paragraph pre17 ceding subparagraph (A) for which the mortgagor 

18 has a credit score equivalent to a FICO score of less 

19 than 560, and may insure, and make commitments 

20 to insure, such mortgages. Such underwriting stand21 ards shall include establishing and collecting pre22 mium payments that comply with the requirements 

23 of this paragraph, except that notwithstanding sub24 paragraph (A), the single premium payment col25 lected at the time of insurance may be established 
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1 in an amount that does not exceed 3.0 percent of the 

2 amount of the original insured principal obligation of 

3 the mortgage.’’. 

4 SEC. 8. RISK-BASED MORTGAGE INSURANCE PREMIUMS. 

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

6 U.S.C. 1709(c)), as amended by the preceding provisions 

7 of this Act, is further amended by adding at the end the 

8 following new paragraphs: 

9 ‘‘(4) FLEXIBLE RISK-BASED PREMIUMS.—In the 

10 case of a mortgage referred to in paragraph (2)(C) or 

11 (3)(A) for which the loan application is received by the 

12 mortgagee on or after October 1, 2007: 

13 ‘‘(A) IN GENERAL.—The Secretary may estab14 lish a mortgage insurance premium structure involv15 ing a single premium payment collected prior to the 

16 insurance of the mortgage or annual payments 

17 (which may be collected on a periodic basis), or both, 

18 subject to the requirements of subparagraph (B) and 

19 paragraph (5). Under such structure, the rate of 

20 premiums for such a mortgage may vary according 

21 to the credit risk associated with the mortgage and 

22 the rate of any annual premium for such a mortgage 

23 may vary during the mortgage term as long as the 

24 basis for determining the variable rate is established 

25 before the execution of the mortgage. The Secretary 
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1 may change a premium structure established under 

2 this subclause but only to the extent that such 

3 change is not applied to any mortgage already exe4 cuted. 

5 ‘‘(B) ESTABLISHMENT AND ALTERATION OF

6 PREMIUM STRUCTURE.—A premium structure shall 

7 be established or changed under subparagraph (A) 

8 only by providing notice to mortgagees and to the 

9 Congress, at least 30 days before the premium 

10 structure is established or changed. 

11 ‘‘(C) ANNUAL REPORT REGARDING PRE12 MIUMS.—The Secretary shall submit a report to the 

13 Congress annually setting forth the rate structures 

14 and rates established and altered pursuant to this 

15 paragraph during the preceding 12-month period 

16 and describing how such rates were determined. 

17 ‘‘(5) CONSIDERATIONS FOR PREMIUM STRUCTURE.— 

18 When establishing premiums for mortgages referred to in 

19 paragraph (2)(C), establishing premiums pursuant to 

20 paragraph (3), establishing a premium structure under 

21 paragraph (4), and when changing such a premium struc22 ture, the Secretary shall consider the following: 

23 ‘‘(A) The effect of the proposed premiums or 

24 structure on the Secretary’s ability to meet the oper-
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1 ational goals of the Mutual Mortgage Insurance 

2 Fund as provided in section 202(a). 

3 ‘‘(B) Underwriting variables. 

4 ‘‘(C) The extent to which new pricing under the 

5 proposed premiums or structure has potential for ac6 ceptance in the private market. 

7 ‘‘(D) The administrative capability of the Sec8 retary to administer the proposed premiums or 

9 structure. 

10 ‘‘(E) The effect of the proposed premiums or 

11 structure on the Secretary’s ability to maintain the 

12 availability of mortgage credit and provide stability 

13 to mortgage markets. 

14 ‘‘(6) AUTHORITY TO BASE PREMIUM PRICES ON

15 PRODUCT RISK.— 

16 ‘‘(A) AUTHORITY.—In establishing premium 

17 rates under paragraphs (2), (3), and (4), the Sec18 retary may provide for variations in such rates ac19 cording to the credit risk associated with the type of 

20 mortgage product that is being insured under this 

21 title, which may include providing that premium 

22 rates differ between fixed-rate mortgages and ad23 justable-rate mortgages insured pursuant to section 

24 251, between mortgages insured pursuant to section 

25 203(b) and mortgages for condominiums insured 
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1 pursuant to section 234, and between such other 

2 products as the Secretary considers appropriate. 

3 ‘‘(B) LIMITATION.—Subparagraph (A) may not 

4 be construed to authorize the Secretary to establish, 

5 for any mortgage product, any mortgage insurance 

6 premium rate that does not comply with the require7 ments and limitations under paragraphs (2) through 

8 (5).’’. 

9 SEC. 9. PAYMENT INCENTIVES. 

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

11 U.S.C. 1709(c)), as amended by the preceding provisions 

12 of this Act, is further amended by adding at the end the 

13 following new paragraph: 

14 ‘‘(7) PAYMENT INCENTIVES.— 

15 ‘‘(A) AUTHORITY.—With respect to mortgages 

16 referred to in paragraph (2)(C) or (3): 

17 ‘‘(i) DISCRETIONARY 3-YEAR PAYMENT IN18 CENTIVE.—The Secretary may provide, in the 

19 discretion of the Secretary, that the payment 

20 incentive under subparagraph (B) shall apply 

21 upon the expiration of the 3-year period begin22 ning upon the time of insurance of such a mort23 gage. 

24 ‘‘(ii) MANDATORY 5-YEAR PAYMENT INCEN25 TIVE.—The Secretary shall provide that the 
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1 payment incentive under subparagraph (B) ap2 plies upon the expiration of the 5-year period 

3 beginning upon the time of insurance of such a 

4 mortgage. 

5 ‘‘(B) PAYMENT INCENTIVE.—In the case of any 

6 mortgage to which the payment incentive under this 

7 subparagraph applies, if, during the period referred 

8 to in clause (i) or (ii) of subparagraph (A), as appli9 cable, all mortgage insurance premiums for such 

10 mortgage have been paid on a timely basis, upon the 

11 expiration of such period the Secretary shall— 

12 ‘‘(i) reduce the amount of the annual pre13 mium payments otherwise due thereafter under 

14 such mortgage— 

15 ‘‘(I) in the case of a mortgage re16 ferred to in paragraph (3), to an amount 

17 that does not exceed the amount of the 

18 maximum annual premium allowable under 

19 paragraph (2)(B); and 

20 ‘‘(II) in the case of a mortgage re21 ferred to in paragraph (2)(C), to an 

22 amount that does not exceed the amount of 

23 the annual premium payable at the time of 

24 insurance of the mortgage on a mortgage 

25 of the same product type having the same 
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1 terms, but for which the mortgagor has a 

2 credit score equivalent to a FICO score of 

3 560 or more; and 

4 ‘‘(ii) in the case only of a mortgage re5 ferred to in paragraph (2)(C), refund to the 

6 mortgagor, upon payment in full of the obliga7 tion of the mortgage, any amount by which the 

8 single premium payment for such mortgage col9 lected at the time of insurance exceeded the 

10 amount of the single premium payment charge11 able under paragraph (2)(A) at the time of in12 surance for a mortgage of the same product 

13 type having the same terms, but for which the 

14 mortgagor has a credit score equivalent to a 

15 FICO score of 560 or more.’’. 

16 SEC. 10. BORROWER PROTECTIONS FOR HIGHER RISK 

17 MORTGAGES. 

18 Section 203(b) of the National Housing Act (12 

19 U.S.C. 1709(b)) is amended by adding at the end the fol20 lowing new paragraph: 

21 ‘‘(10) BORROWER PROTECTIONS FOR CERTAIN

22 MORTGAGES.—Except as otherwise specifically pro23 vided in this paragraph, in the case of any mortgage 

24 referred to in paragraph (2)(C) or (3) of subsection 

25 (c), the following requirements shall apply: 
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1 ‘‘(A) DISCLOSURES.— 

2 ‘‘(i) REQUIRED DISCLOSURES.—In ad3 dition to any disclosures that are otherwise 

4 required by law or by the Secretary for 

5 single family mortgages, the mortgagee 

6 shall disclose to the mortgagor the fol7 lowing information: 

8 ‘‘(I) AT APPLICATION.—At the 

9 time of application for the loan in10 volved in the mortgage, a list of coun11 seling agencies, approved by the Sec12 retary, in the area of the applicant. 

13 ‘‘(II) AT EXECUTION.—At the 

14 time of entering into the mortgage— 

15 ‘‘(aa) the terms of the man16 datory 5-year payment incentive 

17 required under subsection 

18 (c)(7)(A)(ii); and 

19 ‘‘(bb) a statement that the 

20 mortgagor has a right under con21 tract to loss mitigation. 

22 ‘‘(III) OTHER INFORMATION.— 

23 Any other additional information that 

24 the Secretary determines is appro25 priate to ensure that the mortgagor 
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1 has received timely and accurate in2 formation about the program under 

3 paragraph (2)(C) or (3) of subsection 

4 (c), as applicable. 

5 ‘‘(ii) PENALTIES FOR FAILURE TO

6 PROVIDE REQUIRED DISCLOSURES.—The 

7 Secretary may establish and impose appro8 priate penalties for failure of a mortgagee 

9 to provide any disclosure required under 

10 clause (i). 

11 ‘‘(iii) NO PRIVATE RIGHT OF AC12 TION.—This subparagraph shall not create 

13 any private right of action on behalf of the 

14 mortgagor. 

15 ‘‘(B) COUNSELING.— 

16 ‘‘(i) REQUIREMENT.—The Secretary 

17 shall require that the mortgagor shall have 

18 received counseling that complies with the 

19 requirements of this subparagraph. 

20 ‘‘(ii) TERMS OF COUNSELING.—Coun21 seling under this subparagraph shall be 

22 provided— 

23 ‘‘(I) prior to closing for the loan 

24 involved in the mortgage; 
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1 ‘‘(II) by a third party (other than 

2 the mortgagee) who is approved by 

3 the Secretary, with respect to the re4 sponsibilities and financial manage5 ment involved in homeownership; 

6 ‘‘(III) on an individual basis to 

7 the mortgagor by a representative of 

8 the approved third-party counseling 

9 entity; and 

10 ‘‘(IV) in person, to the maximum 

11 extent possible. 

12 ‘‘(iii) TOPICS.—In the case only of a 

13 mortgage referred to in subsection (c)(3), 

14 counseling under this subparagraph shall 

15 include providing to, and discussing with, 

16 the mortgagor— 

17 ‘‘(I) information regarding home18 ownership options other than a mort19 gage that is subject to this paragraph, 

20 other zero- or low-downpayment mort21 gage options that are or may become 

22 available to the mortgagor, the finan23 cial implications of entering into a 

24 mortgage (including a mortgage sub25 ject to this paragraph), and any other 
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1 information that the Secretary may 

2 require; 

3 ‘‘(II) a written disclosure that 

4 sets forth the amount and the per5 centage by which a property with a 

6 mortgage that is subject to this para7 graph must appreciate for the mort8 gagor to recover the principal amount 

9 of the mortgage, the costs financed 

10 under the mortgage, and the esti11 mated costs involved in selling the 

12 property, if the mortgagor were to sell 

13 the property on each of the second, 

14 fifth, and tenth anniversaries of the 

15 mortgage; and 

16 ‘‘(III) a written disclosure, as the 

17 Secretary shall require, that specifies 

18 the effective cost to a mortgagor of 

19 borrowing the amount by which the 

20 maximum amount that could be bor21 rowed under a mortgage that is re22 ferred to in subsection (c)(3) exceeds 

23 the maximum amount that could be 

24 borrowed under a mortgage insured 

25 under this subsection that is not a 
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1 mortgage referred to in such sub2 section, based on average closing costs 

3 with respect to such amount, as deter4 mined by the Secretary; such cost 

5 shall be expressed as an annual inter6 est rate over the first 5 years of a 

7 mortgage; the disclosure required 

8 under this subclause may be provided 

9 in conjunction with the notice re10 quired under subsection (f). 

11 ‘‘(iv) 2- AND 3-FAMILY RESI12 DENCES.—In the case of a mortgage in13 volving a 2- or 3-family residence, coun14 seling under this subparagraph shall in15 clude (in addition to the information re16 quired under clause (iii)) information re17 garding real estate property management. 

18 ‘‘(C) NOTICE OF FORECLOSURE PREVEN19 TION COUNSELING AVAILABILITY.— 

20 ‘‘(i) WRITTEN AGREEMENT.—To be 

21 eligible for insurance under this subsection, 

22 the mortgagee shall provide the mortgagor, 

23 at the time of the execution of the mort24 gage, a written agreement which shall be 

25 signed by the mortgagor and under which 
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1 the mortgagee shall provide notice de2 scribed in clause (ii) to a housing coun3 seling entity that has agreed to provide the 

4 notice and counseling required under 

5 clause (iii) and is approved by the Sec6 retary. 

7 ‘‘(ii) NOTICE TO COUNSELING AGEN8 CY.—The notice described in this clause, 

9 with respect to a mortgage, is notice, pro10 vided at the earliest time practicable after 

11 the mortgagor becomes 60 days delinquent 

12 with respect to any payment due under the 

13 mortgage, that the mortgagor is so delin14 quent and of how to contact the mort15 gagor. Such notice may only be provided 

16 once with respect to each delinquency pe17 riod for a mortgage. 

18 ‘‘(iii) NOTICE TO MORTGAGOR.—Upon 

19 notice from a mortgagee that a mortgagor 

20 is 60 days delinquent with respect to pay21 ments due under the mortgage, the hous22 ing counseling entity shall at the earliest 

23 time practicable notify the mortgagor of 

24 such delinquency, that the entity makes 

25 available foreclosure prevention counseling 
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1 that may assist the mortgagor in resolving 

2 the delinquency, and of how to contact the 

3 entity to arrange for such counseling. 

4 ‘‘(iv) ABILITY TO CURE.—Failure to 

5 provide the written agreement required 

6 under clause (i) may be corrected by send7 ing such agreement to the mortgagor not 

8 later than the earliest time practicable 

9 after the mortgagor first becomes 60 days 

10 delinquent with respect to payments due 

11 under the mortgage. Insurance provided 

12 under this subsection may not be termi13 nated and penalties for such failure may 

14 not be prospectively or retroactively im15 posed if such failure is corrected in accord16 ance with this clause. 

17 ‘‘(v) PENALTIES FOR FAILURE TO

18 PROVIDE AGREEMENT.—The Secretary 

19 may establish and impose appropriate pen20 alties for failure of a mortgagee to provide 

21 the written agreement required under 

22 clause (i). 

23 ‘‘(vi) LIMITATION ON LIABILITY OF

24 MORTGAGEE.—A mortgagee shall not incur 

25 any liability or penalties for any failure of 
27 

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1 a housing counseling entity to provide no2 tice under clause (iii). 

3 ‘‘(vii) NO PRIVATE RIGHT OF AC4 TION.—This subparagraph shall not create 

5 any private right of action on behalf of the 

6 mortgagor. 

7 ‘‘(viii) DELINQUENCY PERIOD.—For 

8 purposes of this subparagraph, the term 

9 ‘delinquency period’ means, with respect to 

10 a mortgage, a period that begins upon the 

11 mortgagor becoming delinquent with re12 spect to payments due under the mortgage 

13 and ends upon the first subsequent occur14 rence of such payments under the mort15 gage becoming current or the property 

16 subject to the mortgage being foreclosed or 

17 otherwise disposed of.’’. 

18 SEC. 11. REFINANCING MORTGAGES. 

19 Section 203 of the National Housing Act (12 U.S.C. 

20 1709) is amended by inserting after subsection (k) the fol21 lowing new subsection: 

22 ‘‘(l) REFINANCING MORTGAGES.— 

23 ‘‘(1) ESTABLISHMENT OF UNDERWRITING

24 STANDARDS.—The Secretary shall establish under25 writing standards that provide for insurance under 
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1 this title of mortgage loans, and take actions to fa2 cilitate the availability of mortgage loans insured 

3 under this title, for qualified borrowers that are 

4 made for the purpose of paying or prepaying out5 standing obligations under existing mortgages for 

6 borrowers that— 

7 ‘‘(A) have existing mortgages with adverse 

8 terms or rates, or 

9 ‘‘(B) do not have access to mortgages at 

10 reasonable rates and terms for such 

11 refinancings due to adverse market conditions. 

12 ‘‘(2) INSURANCE OF MORTGAGES TO BOR13 ROWERS IN DEFAULT OR AT RISK OF DEFAULT.—In 

14 facilitating insurance for such mortgages, the Sec15 retary may insure mortgages to borrowers who are, 

16 currently in default or at imminent risk of being in 

17 default, but only if such loans meet reasonable un18 derwriting standards established by the Secretary.’’. 

19 SEC. 12. ANNUAL REPORTS ON NEW PROGRAMS AND LOSS 

20 MITIGATION. 

21 Section 540(b)(2) of the National Housing Act (12 

22 U.S.C. 1735f–18(b)(2)) is amended, by adding at the end 

23 the following new subparagraphs: 

24 ‘‘(C) The rates of default and foreclosure 

25 for the applicable collection period for mort-
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1 gages insured pursuant to the programs for 

2 mortgage insurance under paragraphs (2)(C) 

3 and (3) of section 203(c). 

4 ‘‘(D) Actions taken by the Secretary dur5 ing the applicable collection period with respect 

6 to loss mitigation on mortgages insured pursu7 ant to section 203.’’. 

8 SEC. 13. INSURANCE FOR SINGLE FAMILY HOMES WITH LI9 CENSED CHILD CARE FACILITIES. 

10 (a) DEFINITION OF CHILD CARE FACILITY.—Section 

11 201 of the National Housing Act (12 U.S.C. 1707) is 

12 amended by adding at the end the following new sub13 section: 

14 ‘‘(g) The term ‘child care facility’ means a facility 

15 that— 

16 ‘‘(A) has as its purpose the care of children who 

17 are less than 12 years of age; and 

18 ‘‘(B) is licensed or regulated by the State in 

19 which it is located (or, if there is no State law pro20 viding for such licensing and regulation by the State, 

21 by the municipality or other political subdivision in 

22 which the facility is located). 

23 Such term does not include facilities for school-age chil24 dren primarily for use during normal school hours.’’. 
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1 (b) INCREASE IN MAXIMUM MORTGAGE AMOUNT

2 LIMITATION.—Paragraph (2) of section 203(b) of the Na3 tional Housing Act (12 U.S.C. 1709(b)(2)), as amended 

4 by the preceding provisions of this Act, is further amended 

5 by adding at end the following new undesignated para6 graph: 

7 ‘‘Notwithstanding any other provision of this 

8 paragraph, the amount that may be insured under 

9 this section may be increased by up to 25 percent 

10 if such increase is necessary to account for the in11 creased cost of the residence due to an increased 

12 need of space in the residence for locating and oper13 ating a child care facility (as such term is defined 

14 in section 201) within the residence, but only if a 

15 valid license or certificate of compliance with regula16 tions described in section 201(g)(2) has been issued 

17 for such facility as of the date of the execution of 

18 the mortgage, and only if such increase in the 

19 amount insured is proportional to the amount of 

20 space of such residence that will be used for such fa21 cility.’’. 

22 SEC. 14. REHABILITATION LOANS. 

23 Subsection (k) of section 203 of the National Hous24 ing Act (12 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 ‘‘General 

9 Insurance Fund’’. 

10 SEC. 15. DISCRETIONARY ACTION. 

11 The National Housing Act is amended— 

12 (1) in subsection (e) of section 202 (12 U.S.C. 

13 1708(e))— 

14 (A) in paragraph (3)(B), by striking ‘‘sec15 tion 202(e) of the National Housing Act’’ and 

16 inserting ‘‘this subsection’’; and 

17 (B) by redesignating such subsection as 

18 subsection (f); 

19 (2) by striking paragraph (4) of section 203(s) 

20 (12 U.S.C. 1709(s)(4)) and inserting the following 

21 new paragraph: 

22 ‘‘(4) the Secretary of Agriculture;’’; and 

23 (3) by transferring subsection (s) of section 203 

24 (as amended by paragraph (2) of this section) to 

25 section 202, inserting such subsection after sub-
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1 section (d) of section 202, and redesignating such 

2 subsection as subsection (e). 

3 SEC. 16. INSURANCE OF CONDOMINIUMS AND MANUFAC4 TURED HOUSING. 

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

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

7 (1) in subsection (c)— 

8 (A) in the first sentence— 

9 (i) by striking ‘‘and’’ before ‘‘(2)’’; 

10 and 

11 (ii) by inserting before the period at 

12 the end the following: ‘‘, and (3) the 

13 project has a blanket mortgage insured by 

14 the Secretary under subsection (d)’’; and 

15 (B) in clause (B) of the third sentence, by 

16 striking ‘‘thirty-five years’’ and inserting ‘‘forty 

17 years’’; and 

18 (2) in subsection (g), by striking ‘‘, except 

19 that’’ and all that follows and inserting a period. 

20 (b) DEFINITION OF MORTGAGE.—Section 201(a) of 

21 the National Housing Act (12 U.S.C. 1707(a)) is amend22 ed— 

23 (1) before ‘‘ a first mortgage’’ insert ‘‘(A)’’; 
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1 (2) by striking ‘‘or on a leasehold (1)’’ and in2 serting ‘‘(B) a first mortgage on a leasehold on real 

3 estate (i)’’; 

4 (3) by striking ‘‘or (2)’’ and inserting ‘‘, or 

5 (ii)’’; and 

6 (4) by inserting before the semicolon the fol7 lowing: ‘‘, or (C) a first mortgage given to secure the 

8 unpaid purchase price of a fee interest in, or long9 term leasehold interest in, real estate consisting of 

10 a one-family unit in a multifamily project, including 

11 a project in which the dwelling units are attached, 

12 or are manufactured housing units, semi-detached, 

13 or detached, and an undivided interest in the com14 mon areas and facilities which serve the project’’. 

15 (c) DEFINITION OF REAL ESTATE.—Section 201 of 

16 the National Housing Act (12 U.S.C. 1707), as amended 

17 by the preceding provisions of this Act, is further amended 

18 by adding at the end the following new subsection: 

19 ‘‘(h) The term ‘real estate’ means land and all nat20 ural resources and structures permanently affixed to the 

21 land, including residential buildings and stationary manu22 factured housing. The Secretary may not require, for 

23 treatment of any land or other property as real estate for 

24 purposes of this title, that such land or property be treated 

25 as real estate for purposes of State taxation.’’. 
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1 SEC. 17. MUTUAL MORTGAGE INSURANCE FUND. 

2 (a) IN GENERAL.—Subsection (a) of section 202 of 

3 the National Housing Act (12 U.S.C. 1708(a)) 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 (in this title referred to as the ‘Fund’), 

10 which shall be used by the Secretary to carry out the 

11 provisions of this title with respect to mortgages in12 sured under section 203. The Secretary may enter 

13 into commitments to guarantee, and may guarantee, 

14 such insured mortgages. 

15 ‘‘(2) LIMIT ON LOAN GUARANTEES.—The au16 thority of the Secretary to enter into commitments 

17 to guarantee such insured mortgages shall be effec18 tive for any fiscal year only to the extent that the 

19 aggregate original principal loan amount under such 

20 mortgages, any part of which is guaranteed, does 

21 not exceed the amount specified in appropriations 

22 Acts for such fiscal year. 

23 ‘‘(3) FIDUCIARY RESPONSIBILITY.—The Sec24 retary has a responsibility to ensure that the Mutual 

25 Mortgage Insurance Fund remains financially sound. 
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1 ‘‘(4) ANNUAL INDEPENDENT ACTUARIAL

2 STUDY.—The Secretary shall provide for an inde3 pendent actuarial study of the Fund to be conducted 

4 annually, which shall analyze the financial position 

5 of the Fund. The Secretary shall submit a report 

6 annually to the Congress describing the results of 

7 such study and assessing the financial status of the 

8 Fund. The report shall recommend adjustments to 

9 underwriting standards, program participation, or 

10 premiums, if necessary, to ensure that the Fund re11 mains financially sound. 

12 ‘‘(5) QUARTERLY REPORTS.—During each fiscal 

13 year, the Secretary shall submit a report to the Con14 gress for each quarter, which shall specify for mort15 gages that are obligations of the Fund— 

16 ‘‘(A) the cumulative volume of loan guar17 antee commitments that have been made during 

18 such fiscal year through the end of the quarter 

19 for which the report is submitted; 

20 ‘‘(B) the types of loans insured, cat21 egorized by risk; 

22 ‘‘(C) any significant changes between ac23 tual and projected claim and prepayment activ24 ity; 
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1 ‘‘(D) projected versus actual loss rates; 

2 and 

3 ‘‘(E) updated projections of the annual 

4 subsidy rates to ensure that increases in risk to 

5 the Fund are identified and mitigated by ad6 justments to underwriting standards, program 

7 participation, or premiums, and the financial 

8 soundness of the Fund is maintained. 

9 The first quarterly report under this paragraph shall 

10 be submitted on the last day of the first quarter of 

11 fiscal year 2008, or upon the expiration of the 90- 

12 day period beginning on the date of the enactment 

13 of the Expanding American Homeownership Act of 

14 2007, whichever is later. 

15 ‘‘(6) ADJUSTMENT OF PREMIUMS.—If, pursu16 ant to the independent actuarial study of the Fund 

17 required under paragraph (5), the Secretary deter18 mines that the Fund is not meeting the operational 

19 goals established under paragraph (8) or there is a 

20 substantial probability that the Fund will not main21 tain its established target subsidy rate, the Secretary 

22 may either make programmatic adjustments under 

23 section 203 as necessary to reduce the risk to the 

24 Fund, or make appropriate premium adjustments. 
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1 ‘‘(7) OPERATIONAL GOALS.—The operational 

2 goals for the Fund are— 

3 ‘‘(A) to charge borrowers under loans that 

4 are obligations of the Fund an appropriate pre5 mium for the risk that such loans pose to the 

6 Fund; 

7 ‘‘(B) to minimize the default risk to the 

8 Fund and to homeowners; 

9 ‘‘(C) to curtail the impact of adverse selec10 tion on the Fund; and 

11 ‘‘(D) to meet the housing needs of the bor12 rowers that the single family mortgage insur13 ance program under this title is designed to 

14 serve.’’. 

15 (b) OBLIGATIONS OF FUND.—The National Housing 

16 Act is amended as follows: 

17 (1) HOMEOWNERSHIP VOUCHER PROGRAM

18 MORTGAGES.—In section 203(v) (12 U.S.C. 

19 1709(v))— 

20 (A) by striking ‘‘Notwithstanding section 

21 202 of this title, the’’ and inserting ‘‘The’’; and 

22 (B) by striking ‘‘General Insurance Fund’’ 

23 the first place such term appears and all that 

24 follows and inserting ‘‘Mutual Mortgage Insur25 ance Fund.’’. 
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1 (2) HOME EQUITY CONVERSION MORTGAGES.— 

2 Section 255(i)(2)(A) of the National Housing Act 

3 (12 U.S.C. 1715z–20(i)(2)(A)) is amended by strik4 ing ‘‘General Insurance Fund’’ and inserting ‘‘Mu5 tual Mortgage Insurance Fund’’. 

6 (c) CONFORMING AMENDMENTS.—The National 

7 Housing Act is amended— 

8 (1) in section 205 (12 U.S.C. 1711), by striking 

9 subsections (g) and (h); and 

10 (2) in section 519(e) (12 U.S.C. 1735c(e)), by 

11 striking ‘‘203(b)’’ and all that follows through 

12 ‘‘203(i)’’ and inserting ‘‘203, except as determined 

13 by the Secretary’’. 

14 SEC. 18. HAWAIIAN HOME LANDS AND INDIAN RESERVA15 TIONS. 

16 (a) HAWAIIAN HOME LANDS.—Section 247(c) of the 

17 National Housing Act (12 U.S.C. 1715z–12) is amend18 ed— 

19 (1) by striking ‘‘General Insurance Fund estab20 lished in section 519’’ and inserting ‘‘Mutual Mort21 gage Insurance Fund’’; and 

22 (2) in the second sentence, by striking ‘‘(1) all 

23 references’’ and all that follows through ‘‘and (2)’’. 
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1 (b) INDIAN RESERVATIONS.—Section 248(f) of the 

2 National Housing Act (12 U.S.C. 1715z–13) is amend3 ed— 

4 (1) by striking ‘‘General Insurance Fund’’ the 

5 first place it appears and all that follows through 

6 ‘‘519’’ and inserting ‘‘Mutual Mortgage Insurance 

7 Fund’’; and 

8 (2) in the second sentence, by striking ‘‘(1) all 

9 references’’ and all that follows through ‘‘and (2)’’. 

10 SEC. 19. CONFORMING AND TECHNICAL AMENDMENTS. 

11 (a) REPEALS.—The following provisions of the Na12 tional Housing Act are repealed: 

13 (1) Subsection (i) of section 203 (12 U.S.C. 

14 1709(i)). 

15 (2) Subsection (o) of section 203 (12 U.S.C. 

16 1709(o)). 

17 (3) Subsection (p) of section 203 (12 U.S.C. 

18 1709(p)). 

19 (4) Subsection (q) of section 203 (12 U.S.C. 

20 1709(q)). 

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

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

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

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

25 the National Housing Act (12 U.S.C. 1709(u)(2)(A)) is 
40 

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1 amended by striking ‘‘shall’’ and all that follows and in2 serting ‘‘means a metropolitan statistical area as estab3 lished by the Office of Management and Budget;’’. 

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

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

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

7 inserting ‘‘the Commonwealth of the Northern Mariana 

8 Islands’’. 

9 SEC. 20. HOME EQUITY CONVERSION MORTGAGES. 

10 (a) IN GENERAL.—Section 255 of the National 

11 Housing Act (12 U.S.C. 1715z–20) is amended— 

12 (1) in subsection (b)(2), insert ‘‘ ‘real estate,’ ’’ 

13 after ‘‘ ‘mortgagor’,’’; 

14 (2) in subsection (b)(4), by striking subpara15 graph (B) and inserting the following new subpara16 graph: 

17 ‘‘(B) under a lease that has a term that 

18 ends no earlier than the minimum number of 

19 years, as specified by the Secretary, beyond the 

20 actuarial life expectancy of the mortgagor or co21 mortgagor, whichever is the later date.’’. 

22 (3) in subsection (g)— 

23 (A) by striking the first sentence; and 

24 (B) by striking ‘‘established under section 

25 203(b)(2)’’ and all that follows through ‘‘lo-
41 

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1 cated’’ and inserting ‘‘limitation established 

2 under section 305(a)(2) of the Federal Home 

3 Loan Mortgage Corporation Act for a 1-family 

4 residence’’; 

5 (4) in subsection (i)(1)(C), by striking ‘‘limita6 tions’’ and inserting ‘‘limitation’’; and 

7 (5) by adding at the end the following new sub8 section: 

9 ‘‘(o) AUTHORITY TO INSURE HOME PURCHASE

10 MORTGAGE.— 

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

12 provision in this section, the Secretary may insure, 

13 upon application by a mortgagee, a home equity con14 version mortgage upon such terms and conditions as 

15 the Secretary may prescribe, when the primary pur16 pose of the home equity conversion mortgage is to 

17 enable an elderly mortgagor to purchase a 1- to 4- 

18 family dwelling in which the mortgagor will occupy 

19 or occupies one of the units. 

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

21 A home equity conversion mortgage insured pursu22 ant to paragraph (1) shall involve a principal obliga23 tion that does not exceed the dollar amount limita24 tion determined under section 305(a)(2) of the Fed-
42 

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1 eral Home Loan Mortgage Corporation Act for a 

2 residence of the applicable size.’’. 

3 (b) MORTGAGES FOR COOPERATIVES.—Subsection 

4 (b) of section 255 of the National Housing Act (12 U.S.C. 

5 1715z–20(b)) is amended— 

6 (1) in paragraph (4)— 

7 (A) by inserting ‘‘a first or subordinate 

8 mortgage or lien’’ before ‘‘on all stock’’; 

9 (B) by inserting ‘‘unit’’ after ‘‘dwelling’’; 

10 and 

11 (C) by inserting ‘‘a first mortgage or first 

12 lien’’ before ‘‘on a leasehold’’; and 

13 (2) in paragraph (5), by inserting ‘‘a first or 

14 subordinate lien on’’ before ‘‘all stock’’. 

15 (c) LIMITATION ON ORIGINATION FEES.—Section 

16 255 of the National Housing Act (12 U.S.C. 1715z–20), 

17 as amended by the preceding provisions of this section, 

18 is further amended— 

19 (1) by redesignating subsections (k), (l), and 

20 (m) as subsections (l), (m), and (n), respectively; 

21 and 

22 (2) by inserting after subsection (j) the fol23 lowing new subsection: 

24 ‘‘(k) LIMITATION ON ORIGINATION FEES.—The Sec25 retary shall establish limits on the origination fee that may 
43 

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1 be charged to a mortgagor under a mortgage insured 

2 under this section, which limitations shall— 

3 ‘‘(1) equal to 1.5 percent of the maximum claim 

4 amount of the mortgage, except that the Secretary 

5 may adjust the limitation under this paragraph on 

6 the basis of an analysis of: (A) costs to mortgagors; 

7 and (B) the impact on the reverse mortgage market; 

8 ‘‘(2) be subject to a minimum allowable 

9 amount; 

10 ‘‘(3) provide that the origination fee may be 

11 fully financed with the mortgage; 

12 ‘‘(4) include any fees paid to correspondent 

13 mortgagees approved by the Secretary or to mort14 gage brokers; and 

15 ‘‘(5) apply beginning upon the date that the 

16 maximum dollar amount limitation on the benefits of 

17 insurance under this section is first increased pursu18 ant to the amendments made by section 19(a)(2) of 

19 the Expanding American Homeownership Act of 

20 2007.’’. 

21 (d) STUDY REGARDING MORTGAGE INSURANCE PRE22 MIUMS.—The Secretary of Housing and Urban Develop23 ment shall conduct a study regarding mortgage insurance 

24 premiums charged under the program under section 255 

25 of the National Housing Act (12 U.S.C. 1715z–20) for 
44 

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1 insurance of home equity conversion mortgages to analyze 

2 and determine the effects of reducing the amounts of such 

3 premiums from the amounts charged as of the date of the 

4 enactment of this Act on: (1) costs to mortgagors; and 

5 (2) the financial soundness of the program. Not later than 

6 the expiration of the 12-month period beginning on the 

7 date of the enactment of this Act, the Secretary shall sub8 mit a report to the Congress setting forth the results and 

9 conclusions of the study. 

10 SEC. 21. PARTICIPATION OF MORTGAGE BROKERS AND 

11 CORRESPONDENT LENDERS. 

12 (a) IN GENERAL.— 

13 (1) DEFINITIONS.— 

14 (A) IN GENERAL.—Section 201 of the Na15 tional Housing Act (12 U.S.C. 1707), as 

16 amended by the preceding provisions of this 

17 Act, is further amended— 

18 (i) by striking ‘‘As used in section 203 

19 of this title—’’ and inserting ‘‘As used in 

20 this title and for purposes of participation 

21 in insurance programs under this title, ex22 cept as specifically provided otherwise, the 

23 following definitions shall apply:’’; 

24 (ii) by striking subsection (b) and in25 serting the following: 
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1 ‘‘(2) The term ‘mortgagee’ means any of the 

2 following entities, and its successors and assigns, to 

3 the extent such entity is approved by the Secretary: 

4 ‘‘(A) QUALIFICATION BY AUDIT AND NET

5 WORTH.—A lender who— 

6 ‘‘(i) closes a mortgage in its name and 

7 underwrites the mortgage, services the 

8 mortgage, or both underwrites and services 

9 the mortgage; 

10 ‘‘(ii) submits to the Secretary such fi11 nancial audits performed in accordance 

12 with the standards for financial audits of 

13 the Government Auditing Standards issued 

14 by the Comptroller General of the United 

15 States; 

16 ‘‘(iii) meet the minimum net worth re17 quirement that the Secretary shall estab18 lish; 

19 ‘‘(iv) is licensed, under the laws of the 

20 State in which the property that is subject 

21 to the mortgage is located, to act as a 

22 lender in such State; and 

23 ‘‘(v) complies with such other require24 ments as the Secretary may establish. 
46 

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1 ‘‘(B) QUALIFICATION OF CORRESPONDENT

2 LENDERS BY SURETY BOND.—Except as pro3 vided in subparagraph (D), a correspondent 

4 lender who— 

5 ‘‘(i) closes a mortgage in its name, 

6 but does not underwrite and does not serv7 ice the mortgage; 

8 ‘‘(ii) is licensed, under the laws of the 

9 State in which the property that is subject 

10 to the mortgage is located, to act as a cor11 respondent lender in such State; 

12 ‘‘(iii) posts a surety bond, in lieu of 

13 any requirement to provide audited finan14 cial statements or meet a minimum net 

15 worth requirement, that— 

16 ‘‘(I) is in a form satisfactory to 

17 the Secretary; 

18 ‘‘(II) is in an aggregate amount, 

19 to be determined by the Secretary 

20 based on the aggregate principal 

21 amount of single-family mortgages in22 sured under this title that are placed 

23 in a calendar year, which shall not be 

24 less than $50,000 or more than 

25 $100,000, as such amount is adjusted 
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1 annually by the Secretary (as deter2 mined by the Secretary) by the 

3 change for such year in the Consumer 

4 Price Index for All Urban Consumers 

5 published monthly by the Bureau of 

6 Labor Statistics of the Department of 

7 Labor; 

8 ‘‘(III) guarantees payment of any 

9 liability of the correspondent lender 

10 arising from its participation in the 

11 program, up to the penal sum of the 

12 surety bond; without regard to the 

13 number of years the bond remains in 

14 effect, the number of claims or claim15 ants, and the number of premiums 

16 paid, in no event shall the aggregate 

17 liability of the surety exceed the penal 

18 sum of the bond; and 

19 ‘‘(IV) may be cancelled by the 

20 surety as to future liability by giving 

21 30 days notice in writing to the Sec22 retary, except that any such cancella23 tion shall not alter the liability of the 

24 surety for actions of the cor-
48 

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1 respondent lender prior to the effec2 tive date of the cancellation; and 

3 ‘‘(iv) complies with such other re4 quirements as the Secretary may establish, 

5 except that the Secretary shall not require 

6 any minimum net worth or certified finan7 cial statements. 

8 ‘‘(C) QUALIFICATION OF BROKERS BY SUR9 ETY BOND.—Except as provided in subpara10 graph (D), a mortgage broker who— 

11 ‘‘(i) closes the mortgage in the name 

12 of the lender, and does not underwrite and 

13 does not service the mortgage; 

14 ‘‘(ii) is licensed, under the laws of the 

15 State in which the property that is subject 

16 to the mortgage is located, to act as a 

17 mortgage broker in such State; 

18 ‘‘(iii) posts a surety bond in accord19 ance with the requirements of subpara20 graph (B)(ii); and 

21 ‘‘(iv) complies with such other re22 quirements as the Secretary may establish, 

23 except that the Secretary shall not require 

24 any minimum net worth or certified finan25 cial statements. 
49 

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1 ‘‘(D) CONDITIONS FOR CONTINUED APPLI2 CABILITY.—(i) Subparagraphs (B) and (C) 

3 shall continue to apply after the expiration of 

4 the 5-year period beginning on the date of the 

5 enactment of the Expanding American Home6 ownership Act of 2007 only if, after the expira7 tion of the 4-year period beginning upon such 

8 date of enactment and taking into consideration 

9 the report submitted in accordance with section 

10 19(b) of such Act, the Secretary— 

11 ‘‘(I) makes a determination that such 

12 subparagraphs provide protection to mort13 gage insurance funds for mortgages in14 sured under this title that are comparable 

15 to the protection provided by the require16 ments for mortgagees under this title as in 

17 effect immediately before the enactment of 

18 such Act; and 

19 ‘‘(II) publishes in the Federal Reg20 ister a notice of such determination and an 

21 order extending the applicability of such 

22 subparagraphs. 

23 ‘‘(ii) If, taking into consideration such re24 port, the Secretary makes a determination after 

25 the expiration of such 4-year period that sub-
50 

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1 paragraphs (B) and (C) do not provide protec2 tion as referred to in clause (i) of this subpara3 graph, the Secretary may, by order published in 

4 the Federal Register, provide for the participa5 tion, after the expiration of the 5-year period 

6 referred to in clause (i), of correspondent lend7 ers and mortgage brokers as mortgagees in the 

8 insurance programs under this title in accord9 ance with subparagraphs (B) and (C) as modi10 fied by the Secretary as the Secretary considers 

11 appropriate to provide such protection. 

12 ‘‘(E) ADDITIONAL MORTGAGE BROKER RE13 QUIREMENTS.— 

14 ‘‘(i) In addition to the requirements 

15 under subparagraphs (A) and (C) and to 

16 duties imposed under other statutes or 

17 common law, to be eligible as a mortgagee 

18 under this section, a broker shall— 

19 ‘‘(I) safeguard and account for 

20 any money handled for the borrower; 

21 ‘‘(II) follow reasonable and lawful 

22 instructions from the borrower; and 

23 ‘‘(III) act with reasonable skill, 

24 care, and diligence. 
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1 ‘‘(ii) For purposes of this subpara2 graph, a loan correspondent shall be con3 sidered to be a mortgage broker. 

4 ‘‘(iii) The duties and standards of 

5 care created in this subparagraph shall not 

6 be waived or modified. 

7 ‘‘(iv) Any broker found by the Sec8 retary to have violated the requirements of 

9 this subparagraph may not originate mort10 gage loans insured under this title. 

11 ‘‘(3) The term ‘mortgagor’ includes the original 

12 borrower under a mortgage and the successors and 

13 assigns of the original borrower.’’; and 

14 (iii) by redesignating subsections (a), 

15 (c), (d), (e), (f), (g), and (h) as paragraphs 

16 (1), (4), (5), (6), (7), (8), and (9), respec17 tively, and indenting such paragraphs two 

18 ems so as to align the left margins of such 

19 paragraphs with the left margins of para20 graphs (2) and (3) (as added by clause (ii) 

21 of this subparagraph). 

22 (B) MORTGAGEE REVIEW.—Section 

23 202(c)(7) of the National Housing Act (12 

24 U.S.C. 1708(c)(7)) is amended— 
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1 (i) in subparagraph (A), by inserting 

2 ‘‘, as defined in section 201,’’ after ‘‘mort3 gagee’’; 

4 (ii) by striking subparagraph (B); and 

5 (iii) by redesignating subparagraphs 

6 (C) and (D) as subparagraphs (B) and 

7 (C), respectively. 

8 (C) MULTIFAMILY RENTAL HOUSING IN9 SURANCE.—Section 207(a)(2) of the National 

10 Housing Act (12 U.S.C. 1713(a)(2)) is amend11 ed by striking ‘‘means the original lender under 

12 a mortgage, and its successors and assigns, 

13 and’’ and inserting ‘‘has the meaning given 

14 such term in section 201, except that such term 

15 also’’. 

16 (D) WAR HOUSING INSURANCE.—Section 

17 601(b) of the National Housing Act (12 U.S.C. 

18 1736(b)) is amended by striking ‘‘includes the 

19 original lender under a mortgage, and his suc20 cessors and assigns approved by the Secretary’’ 

21 and inserting ‘‘has the meaning given such 

22 term in section 201’’. 

23 (E) ARMED SERVICES HOUSING MORTGAGE

24 INSURANCE.—Section 801(b) of the National 

25 Housing Act (12 U.S.C. 1748(b)) is amended 
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1 by striking ‘‘includes the original lender under 

2 a mortgage, and his successors and assigns ap3 proved by the Secretary’’ and inserting ‘‘has the 

4 meaning given such term in section 201’’. 

5 (F) GROUP PRACTICE FACILITIES MORT6 GAGE INSURANCE.—Section 1106(8) of the Na7 tional Housing Act (12 U.S.C. 1749aaa–5(8)) 

8 is amended by striking ‘‘means the original 

9 lender under a mortgage, and his or its succes10 sors and assigns, and’’ and inserting ‘‘has the 

11 meaning given such term in section 201, except 

12 that such term also’’. 

13 (2) ELIGIBILITY FOR INSURANCE.— 

14 (A) TITLE I.—Paragraph (1) of section 

15 8(b) of the National Housing Act (12 U.S.C. 

16 1706c(b)(1)) is amended— 

17 (i) by striking ‘‘, and be held by,’’; 

18 and 

19 (ii) by striking ‘‘as responsible and 

20 able to service the mortgage properly’’. 

21 (B) SINGLE FAMILY HOUSING MORTGAGE

22 INSURANCE.—Paragraph (1) of section 203(b) 

23 of the National Housing Act (12 U.S.C. 

24 1709(b)(1)) is amended— 
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1 (i) by striking ‘‘, and be held by,’’; 

2 and 

3 (ii) by striking ‘‘as responsible and 

4 able to service the mortgage properly’’. 

5 (C) SECTION 221 MORTGAGE INSUR6 ANCE.—Paragraph (1) of section 221(d) of the 

7 National Housing Act (12 U.S.C. 1715l(d)(1)) 

8 is amended— 

9 (i) by striking ‘‘and be held by’’; and 

10 (ii) by striking ‘‘as responsible and 

11 able to service the mortgage properly’’. 

12 (D) HOME EQUITY CONVERSION MORT13 GAGE INSURANCE.—Paragraph (1) of section 

14 255(d) of the National Housing Act (12 U.S.C. 

15 1715z–20(d)(1)) is amended by striking ‘‘as re16 sponsible and able to service the mortgage prop17 erly’’. 

18 (E) WAR HOUSING MORTGAGE INSUR19 ANCE.—Paragraph (1) of section 603(b) of the 

20 National Housing Act (12 U.S.C. 1738(b)(1)) 

21 is amended— 

22 (i) by striking ‘‘, and be held by,’’; 

23 and 

24 (ii) by striking ‘‘as responsible and 

25 able to service the mortgage properly’’. 
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1 (F) WAR HOUSING MORTGAGE INSURANCE

2 FOR LARGE-SCALE HOUSING PROJECTS.—Para3 graph (1) of section 611(b) of the National 

4 Housing Act (12 U.S.C. 1746(b)(1)) is amend5 ed— 

6 (i) by striking ‘‘and be held by’’; and 

7 (ii) by striking ‘‘as responsible and 

8 able to service the mortgage properly’’. 

9 (G) GROUP PRACTICE FACILITY MORTGAGE

10 INSURANCE.—Section 1101(b)(2) of the Na11 tional Housing Act (12 U.S.C. 1749aaa(b)(2)) 

12 is amended— 

13 (i) by striking ‘‘and held by’’; and 

14 (ii) by striking ‘‘as responsible and 

15 able to service the mortgage properly’’. 

16 (H) NATIONAL DEFENSE HOUSING INSUR17 ANCE.—Paragraph (1) of section 903(b) of the 

18 National Housing Act (12 U.S.C. 1750b(b)(1)) 

19 is amended— 

20 (i) by striking ‘‘, and be held by,’’; 

21 and 

22 (ii) by striking ‘‘as responsible and 

23 able to service the mortgage properly’’. 

24 (I) CONTINGENT REPEAL.—Unless there is 

25 published in the Federal Register, before the 
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1 expiration of the 5-year period beginning on the 

2 date of the enactment of this Act, an order 

3 under clause (i) or (ii) of section 201(2)(D) of 

4 the National Housing Act (12 U.S.C. 

5 1707(2)(D)), as added by paragraph (1)(A)(2) 

6 of this subsection, upon the expiration of such 

7 period the provisions of such Act amended by 

8 this paragraph are amended to read as such 

9 provisions would be in effect upon such expira10 tion if this Act had not been enacted (taking 

11 into consideration any amendments, after such 

12 date of enactment, to such provisions other 

13 than under this Act). 

14 (b) GAO STUDY AND REPORT.— 

15 (1) STUDY.—The Comptroller General of the 

16 United States shall conduct a study, upon the expi17 ration of the 42-month period beginning on the date 

18 of the enactment of this Act, regarding the effect of 

19 the amendments made by subsection (a), which shall 

20 analyze and determine— 

21 (A) the extent to which such amendments 

22 have resulted in increased participation, by 

23 mortgage brokers and correspondent lenders, in 

24 the mortgage insurance programs under the 

25 National Housing Act, as measured by the 
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1 number and amounts of such insured mort2 gages, disaggregated by the States in which the 

3 properties subject to such mortgages are lo4 cated; 

5 (B) with respect to mortgages insured 

6 under such Act, a comparison in the numbers 

7 and rate of defaults, foreclosures, and mortgage 

8 insurance claims on such mortgages originated 

9 by mortgage brokers and correspondent lenders 

10 authorized to participate in the programs under 

11 such Act pursuant to the amendments made by 

12 subsection (a) to such numbers and rates on 

13 such mortgages originated by lenders who 

14 would be authorized to participate in such pro15 grams notwithstanding such amendments; 

16 (C) any impact of such amendments on the 

17 costs to the Secretary of Housing and Urban 

18 Development of administering the mortgage in19 surance programs under such title; and 

20 (D) the extent and effectiveness of the su21 pervision and enforcement, by the Secretary, of 

22 the additional authority provided under the 

23 amendments made by subsection (a). 

24 (2) REPORT.—Not later than the expiration of 

25 4-year period beginning on the date of the enact-
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1 ment of this Act, the Comptroller General shall sub2 mit a report to the Congress and the Secretary of 

3 Housing and Urban Development setting forth the 

4 results and conclusions of the study conducted pur5 suant to paragraph (1). 

6 SEC. 22. 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 inserting after ‘‘property’’ the following: 

10 ‘‘plus any initial service charges, appraisal, inspec11 tion and other fees in connection with the mortgage 

12 as approved by the Secretary,’’; 

13 (2) by striking the second sentence (as added 

14 by chapter 7 of the Emergency Supplemental Appro15 priations Act of 1994 (Public Law 103–211; 108 

16 Stat. 12)); and 

17 (3) by adding at the end the following new sen18 tence: ‘‘In any case in which the single family resi19 dence to be insured under this subsection is within 

20 a jurisdiction in which the President has declared a 

21 major disaster to have occurred, the Secretary is au22 thorized, for a temporary period not to exceed 36 

23 months from the date of such Presidential declara24 tion, to enter into agreements to insure a mortgage 

25 which involves a principal obligation of up to 100 
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1 percent of the dollar limitation determined under 

2 section 305(a)(2) of the Federal Home Loan Mort3 gage Corporation Act for a single family residence, 

4 and not in excess of 100 percent of the appraised 

5 value of the property plus any initial service charges, 

6 appraisal, inspection and other fees in connection 

7 with the mortgage as approved by the Secretary.’’. 

8 SEC. 23. FAILURE TO PAY AMOUNTS FROM ESCROW AC9 COUNTS FOR SINGLE FAMILY MORTGAGES. 

10 (a) PENALTIES.—Section 536 of the National Hous11 ing Act (12 U.S.C. 1735f–14) is amended— 

12 (1) in subsection (a)(1), by inserting ‘‘servicers 

13 (including escrow account servicers),’’ after ‘‘ap14 praisers,’’; 

15 (2) in subsection (b)(1)— 

16 (A) in the matter preceding subparagraph 

17 (A), by inserting ‘‘or other participant referred 

18 to in subsection (a),’’ after ‘‘lender,’’; and 

19 (B) by inserting at the end the following 

20 new subparagraphs: 

21 ‘‘(K) In the case of a mortgage for a 1- to 

22 4-family residence insured under title II that 

23 requires the mortgagor to make payments to 

24 the mortgagee or other servicer of the mortgage 

25 for deposit into an escrow account for the pur-
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1 pose of assuring payment of taxes, insurance 

2 premiums, and other charges with respect to 

3 the property, failure on the part of the servicer 

4 to make any such payment from the escrow ac5 count by the deadline to avoid a penalty with 

6 respect to such payment provided for in the 

7 mortgage, unless the servicer was not provided 

8 notice of such deadline. 

9 ‘‘(L) In the case of any failure to make 

10 any payment as described in subparagraph (K), 

11 submitting any information to a consumer re12 porting agency (as such term is defined in sec13 tion 603(f) of the Fair Credit Reporting Act 

14 (15 U.S.C. 1681a(f))) regarding such failure 

15 that is adverse to the credit rating or interest 

16 of the mortgagor.’’; and 

17 (3) in subsection (c)(3), by adding at the end 

18 the following: ‘‘In the case of any failure to make a 

19 payment described in subsection (b)(1)(K) for which 

20 the servicer fails to reimburse the mortgagor (A) be21 fore the expiration of the 60-day period beginning on 

22 the deadline to avoid a penalty with respect to such 

23 payment, in the sum of the amount not paid from 

24 the escrow account by such deadline and the amount 

25 of any penalties accruing to the mortgagor that are 
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1 attributable to such failure, or (B) in the amount of 

2 any attorneys fees incurred by the mortgagor and 

3 attributable to such failure, the Secretary shall in4 crease the amount of the penalty under subsection 

5 (a) for any such failure to reimburse, unless the Sec6 retary determines there are mitigating cir7 cumstances.’’. 

8 (b) PROHIBITION ON SUBMISSION OF INFORMATION

9 BY HUD.—Title II of the National Housing Act (12 

10 U.S.C. 1707 et seq.) is amended by adding at the end 

11 the following new section: 

12 ‘‘SEC. 257. PROHIBITION REGARDING FAILURE ON PART OF 

13 SERVICER TO MAKE ESCROW PAYMENTS. 

14 ‘‘In the case of any failure to make any payment as 

15 described in section 536(b)(1)(K), the Secretary may not 

16 submit any information to a consumer reporting agency 

17 (as such term is defined in section 603(f) of the Fair Cred18 it Reporting Act (15 U.S.C. 1681a(f))) regarding such 

19 failure that is adverse to the credit rating or interest of 

20 the mortgagor.’’. 

21 SEC. 24. ACCEPTABLE IDENTIFICATION FOR FHA MORTGA22 GORS. 

23 (a) IN GENERAL.—Title II of the National Housing 

24 Act is amended by inserting after section 209 (12 U.S.C. 

25 1715) the following new section: 
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1 ‘‘SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION. 

2 ‘‘The Secretary may not insure a mortgage under any 

3 provision of this title unless the mortgagor under the 

4 mortgage provides personal identification in one of the fol5 lowing forms: 

6 ‘‘(1) SOCIAL SECURITY CARD WITH PHOTO

7 IDENTIFICATION CARD OR REAL ID ACT IDENTIFICA8 TION.— 

9 ‘‘(A) A social security card accompanied by 

10 a photo identification card issued by the Fed11 eral Government or a State Government; or 

12 ‘‘(B) A driver’s license or identification 

13 card issued by a State in the case of a State 

14 that is in compliance with title II of the REAL 

15 ID Act of 2005 (title II of division B of Public 

16 Law 109–13; 49 U.S.C. 30301 note). 

17 ‘‘(2) PASSPORT.—A passport issued by the 

18 United States or a foreign government. 

19 ‘‘(3) USCIS PHOTO IDENTIFICATION CARD.—A 

20 photo identification card issued by the Secretary of 

21 Homeland Security (acting through the Director of 

22 the United States Citizenship and Immigration Serv23 ices).’’. 

24 (b) EFFECTIVE DATE.—The requirements of section 

25 210 of the National Housing Act (as added by subsection 
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1 (a) of this section) shall take effect 6 months after the 

2 date of the enactment of this Act. 

3 SEC. 25. PILOT PROGRAM FOR AUTOMATED PROCESS FOR 

4 BORROWERS WITHOUT SUFFICIENT CREDIT 

5 HISTORY. 

6 (a) ESTABLISHMENT.—Title II of the National Hous7 ing Act (12 U.S.C. 1707 et seq.), as amended by the pre8 ceding provisions of this Act, is further amended by add9 ing at the end the following new section: 

10 ‘‘SEC. 258. PILOT PROGRAM FOR AUTOMATED PROCESS 

11 FOR BORROWERS WITHOUT SUFFICIENT 

12 CREDIT HISTORY. 

13 ‘‘(a) ESTABLISHMENT.—The Secretary shall carry 

14 out a pilot program to establish, and make available to 

15 mortgagees, an automated process for providing alter16 native credit rating information for mortgagors and pro17 spective mortgagors under mortgages on 1- to 4-family 

18 residences to be insured under this title who have insuffi19 cient credit histories for determining their creditworthi20 ness. Such alternative credit rating information may in21 clude rent, utilities, and insurance payment histories, and 

22 such other information as the Secretary considers appro23 priate. 
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1 ‘‘(b) SCOPE.—The Secretary may carry out the pilot 

2 program under this section on a limited basis or scope, 

3 and may consider limiting the program— 

4 ‘‘(1) to first-time homebuyers; or 

5 ‘‘(2) metropolitan statistical areas significantly 

6 impacted by subprime lending. 

7 ‘‘(c) LIMITATION.—In any fiscal year, the aggregate 

8 number of mortgages insured pursuant to the automated 

9 process established under this section may not exceed 5 

10 percent of the aggregate number of mortgages for 1- to 

11 4-family residences insured by the Secretary under this 

12 title during the preceding fiscal year. 

13 ‘‘(d) SUNSET.—After the expiration of the 5-year pe14 riod beginning on the date of the enactment of the Ex15 panding American Homeownership Act of 2007, the Sec16 retary may not enter into any new commitment to insure 

17 any mortgage, or newly insure any mortgage, pursuant to 

18 the automated process established under this section.’’. 

19 (b) GAO REPORT.—Not later than the expiration of 

20 the 4-year period beginning on the date that the Secretary 

21 of Housing and Urban Development first insures any 

22 mortgage pursuant to the automated process established 

23 under pilot program under section 258 of the National 

24 Housing Act (as added by the amendment made by sub25 section (a) of this section), the Comptroller General of the 
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1 United States shall submit to the Congress a report identi2 fying the number of additional mortgagors served using 

3 such automated process and the impact of such process 

4 and the insurance of mortgages pursuant to such process 

5 on the safety and soundness of the insurance funds under 

6 the National Housing Act of which such mortgages are 

7 obligations. 

8 SEC. 26. SENSE OF CONGRESS REGARDING TECHNOLOGY 

9 FOR FINANCIAL SYSTEMS. 

10 (a) CONGRESSIONAL FINDINGS.—The Congress finds 

11 the following: 

12 (1) The Government Accountability Office has 

13 cited the FHA single family housing mortgage insur14 ance program as a ‘‘high-risk’’ program, with a pri15 mary reason being non-integrated and out-dated fi16 nancial management systems. 

17 (2) The ‘‘Audit of the Federal Housing Admin18 istration’s Financial Statements for Fiscal Years 

19 2004 and 2003’’, conducted by the Inspector Gen20 eral of the Department of Housing and Urban De21 velopment reported as a material weakness that 

22 ‘‘HUD/FHA’s automated data processing [ADP] 

23 system environment must be enhanced to more effec24 tively support FHA’s business and budget proc25 esses’’. 
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1 (3) Existing technology systems for the FHA 

2 program have not been updated to meet the latest 

3 standards of the Mortgage Industry Standards 

4 Maintenance Organization and have numerous defi5 ciencies that lenders have outlined. 

6 (4) Improvements to technology used in the 

7 FHA program will— 

8 (A) allow the FHA program to improve the 

9 management of the FHA portfolio, garner 

10 greater efficiencies in its operations, and lower 

11 costs across the program; 

12 (B) result in efficiencies and lower costs 

13 for lenders participating in the program, allow14 ing them to better use the FHA products in ex15 tending homeownership opportunities to higher 

16 credit risk or lower-income families, in a sound 

17 manner. 

18 (5) The Mutual Mortgage Insurance Fund op19 erates without cost to the taxpayers and generates 

20 revenues for the Federal Government. 

21 (b) SENSE OF CONGRESS.—It is the sense of the 

22 Congress that— 

23 (1) the Secretary of Housing and Urban Devel24 opment should use a portion of the funds received 

25 from premiums paid for FHA single family housing 
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1 mortgage insurance that are in excess of the 

2 amounts paid out in claims to substantially increase 

3 the funding for technology used in such FHA pro4 gram; 

5 (2) the goal of this investment should be to 

6 bring the technology used in such FHA program to 

7 the level and sophistication of the technology used in 

8 the conventional mortgage lending market, or to ex9 ceed such level; and 

10 (3) the Secretary of Housing and Urban Devel11 opment should report to the Congress not later than 

12 180 days after the date of the enactment of this Act 

13 regarding the progress the Department is making 

14 toward such goal and if progress is not sufficient, 

15 the resources needed to make greater progress. 

16 SEC. 27. MULTIFAMILY HOUSING MORTGAGE LIMITS IN 

17 HIGH COST AREAS. 

18 The National Housing Act is amended— 

19 (1) in sections 207(c)(3), 213(b)(2)(B)(i), 

20 221(d)(3)(ii)(II), 221(d)(4)(ii)(II), 231(c)(2)(B), 

21 and 234(e)(3)(B) (12 U.S.C. 1713(c)(3), 

22 1715e(b)(2)(B)(i), 1715l(d)(3)(ii)(II), 

23 1715l(d)(4)(ii)(II), 1715v(c)(2)(B), and 

24 1715y(e)(3)(B))— 
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1 (A) by striking ‘‘140 percent’’ each place 

2 such term appears and inserting ‘‘170 percent’’; 

3 and 

4 (B) by striking ‘‘170 percent in high cost 

5 areas’’ each place such term appears and in6 serting ‘‘215 percent in high cost areas’’; and 

7 (2) in section 220(d)(3)(B)(iii)(III) (12 U.S.C. 

8 1715k(d)(3)(B)(iii)(III)) by striking ‘‘206A’’ and all 

9 that follows through ‘‘project-by-project basis’’ and 

10 inserting the following: ‘‘206A of this Act) by not to 

11 exceed 170 percent in any geographical area where 

12 the Secretary finds that cost levels so require and by 

13 not to exceed 170 percent, or 215 percent in high 

14 cost areas, where the Secretary determines it nec15 essary on a project-by-project basis’’. 

16 SEC. 28. DISCOUNT SALES OF MULTIFAMILY PROPERTIES. 

17 There is authorized to be appropriated, for discount 

18 sales of multifamily real properties under section 207(l) 

19 or 246 of the National Housing Act (12 U.S.C. 1713(l), 

20 1715z–11), section 203 of the Housing and Community 

21 Development Amendments of 1978 (12 U.S.C. 1701z–11), 

22 or section 204 of the Departments of Veterans Affairs and 

23 Housing and Urban Development, and Independent Agen24 cies Appropriations Act, 1997 (12 U.S.C. 1715z–11a), 

25 and for discount loan sales under section 207(k) of the 
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1 National Housing Act (12 U.S.C. 1713(k)), section 203 

2 of the Housing and Community Development Amend3 ments of 1978 (12 U.S.C. 1701z–11(k)), or section 204(a) 

4 of the Departments of Veterans Affairs and Housing and 

5 Urban Development, and Independent Agencies Appro6 priations Act, 1997 (12 U.S.C. 1715z–11a(a)), 

7 $5,000,000, for fiscal year 2008. 

8 SEC. 29. CLARIFICATION OF DISPOSITION OF CERTAIN 

9 PROPERTIES. 

10 Notwithstanding any other provision of law, subtitle 

11 A of title II of the Deficit Reduction Act of 2005 (12 

12 U.S.C. 1701z–11 note) and the amendments made by such 

13 title shall not apply to any transaction regarding a multi14 family real property for which— 

15 (1) the Secretary of Housing and Urban Devel16 opment has received, before the date of the enact17 ment of such Act, written expressions of interest in 

18 purchasing the property from both a city govern19 ment and the housing commission of such city; 

20 (2) after such receipt, the Secretary acquires 

21 title to the property at a foreclosure sale; and 

22 (3) such city government and housing commis23 sion have resolved a previous disagreement with re24 spect to the disposition of the property. 
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1 SEC. 30. NONCOMPETITIVE SALES BY HUD TO STATES AND 

2 LOCALITIES. 

3 Subtitle A of title II of the Deficit Reduction Act of 

4 2005 (Public Law 109–171; 120 Stat. 7) is amended by 

5 adding at the end the following new section: 

6 ‘‘SEC. 2004. NONCOMPETITIVE SALES IN FISCAL YEAR 2011. 

7 ‘‘Notwithstanding any other provision of law, the Sec8 retary may not sell any multifamily real property through 

9 any discount sale during fiscal year 2011 under the provi10 sions of law referred to in section 2002(a) or any multi11 family loan through any discount loan sale during such 

12 fiscal year under the provisions referred to in section 

13 2002(b), unless the property or loan is sold for an amount 

14 that is equal to or greater than 60 percent of the property 

15 market value or loan market value, respectively.’’. 

16 SEC. 31. USE OF FHA SAVINGS FOR COSTS OF MORTGAGE 

17 INSURANCE, HOUSING COUNSELING, FHA 

18 TECHNOLOGIES, PROCEDURES, AND PROC19 ESSES, AND FOR AFFORDABLE HOUSING 

20 GRANT FUND, AND STUDY. 

21 (a) IN GENERAL.—Subject to subsection (c), there is 

22 authorized to be appropriated for each fiscal year an 

23 amount equal to the net increase for such fiscal year in, 

24 except as provided in subsection (b), the negative credit 

25 subsidy for the mortgage insurance programs under title 

26 II of the National Housing Act resulting from this Act 
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1 and the amendments made by this Act, for the following 

2 purposes in the following amounts: 

3 (1) SINGLE FAMILY HOUSING MORTGAGE IN4 SURANCE.—For each fiscal year, for costs (as such 

5 term is defined in section 502 of the Federal Credit 

6 Reform Act of 1990 (2 U.S.C. 661a)) of mortgage 

7 insurance provided pursuant to section 203(b) of the 

8 National Housing Act (12 U.S.C. 1709(b)), the ad9 ditional amount (not including any costs of such 

10 mortgage insurance resulting from this Act or the 

11 amendments made by this Act), if any, necessary to 

12 ensure that the credit subsidy cost of such mortgage 

13 insurance for such fiscal year is $0. 

14 (2) HOUSING COUNSELING.—For each of fiscal 

15 years 2008 through 2012, the amount needed to in16 crease funding, for the housing counseling program 

17 under section 106 of the Housing and Urban Devel18 opment Act of 1968 (12 U.S.C. 1701x), in connec19 tion with homebuyers and homeowners with mort20 gages insured under title II of the National Housing 

21 Act, from the amount appropriated for the preceding 

22 fiscal year to $100,000,000. 

23 (3) MORTGAGE INSURANCE TECHNOLOGY, PRO24 CEDURES, PROCESSES, PROGRAM PERFORMANCE, 

25 AND SALARIES.—For each of fiscal years 2008 
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1 through 2012, $25,000,000 for increasing funding 

2 for the purpose of improving technology, procedures, 

3 processes, and program performance, and salaries in 

4 connection with the mortgage insurance programs 

5 under title II of the National Housing Act. 

6 (4) AFFORDABLE HOUSING FUND.—For each 

7 fiscal year, for an affordable housing fund available 

8 for use only for grants to provide affordable rental 

9 housing and affordable homeownership opportunities 

10 for low-income families, the amount remaining under 

11 this section after amounts are made available for 

12 such fiscal year in accordance with paragraphs (1), 

13 (2), and (3). 

14 (b) EXCLUSION OF EARNINGS FROM THE SINGLE

15 FAMILY MORTGAGE INSURANCE PROGRAM.—With respect 

16 to a fiscal year, the negative credit subsidy determined 

17 under subsection (a) shall not include the negative credit 

18 subsidy cost for such fiscal year, if any, for mortgage in19 surance provided pursuant to section 203(b) of the Na20 tional Housing Act. 

21 (c) CERTIFICATION.—Subsection (a) shall not be ef22 fective for a fiscal year unless the Secretary of Housing 

23 and Urban Development has, by rule making in accord24 ance with section 553 of title 5, United States Code (not25 withstanding subsections (a)(2), (b)(B), and (d)(3) of 
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1 such section), made a determination that premiums being, 

2 or to be, charged during such fiscal year for mortgage in3 surance under title II of the National Housing Act are 

4 established at the minimum amount sufficient to comply 

5 with the requirements of section 205(f) of such Act (relat6 ing to required capital ratio for the Mutual Mortgage In7 surance Fund) and ensure the safety and soundness of 

8 the other mortgage insurance funds under such Act, and 

9 any negative credit subsidy for such fiscal year resulting 

10 from such mortgage insurance programs adequately en11 sures the efficient delivery and availability of such pro12 grams. 

13 (d) STUDY AND REPORT.—The Secretary of Housing 

14 and Urban Development shall conduct a study to obtain 

15 recommendations from participants in the private residen16 tial mortgage lending business and the secondary market 

17 for such mortgages on how best to update and upgrade 

18 procedures, processes, and technologies for the mortgage 

19 insurance programs under title II of the National Housing 

20 Act so that the policies and procedures for originating, in21 suring, and servicing of such mortgages conform with 

22 those customarily used by secondary market purchasers 

23 of residential mortgage loans. Not later than the expira24 tion of the 12-month period beginning on the date of the 

25 enactment of this Act, the Secretary shall submit a report 
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1 to the Congress describing the progress made and to be 

2 made toward updating and upgrading such procedures, 

3 processes, and technology, and providing appropriate 

4 staffing for such mortgage insurance programs. 

5 SEC. 32. LIMITATION ON MORTGAGE INSURANCE PREMIUM 

6 INCREASES. 

7 Notwithstanding any other provision of law, including 

8 any provision of this Act and any amendment made by 

9 this Act— 

10 (1) the premiums charged for mortgage insur11 ance under any program under the National Hous12 ing Act may not be increased above the premium 

13 amounts in effect under such program on October 1, 

14 2006, unless the Secretary of Housing and Urban 

15 Development determines that, absent such increase, 

16 insurance of additional mortgages under such pro17 gram would, under the Federal Credit Reform Act 

18 of 1990, require the appropriation of new budget au19 thority to cover the costs (as such term is defined 

20 in section 502 of the Federal Credit Reform Act of 

21 1990 (2 U.S.C. 661a) of such insurance; and 

22 (2) a premium increase pursuant to paragraph 

23 (1) may be made only by rule making in accordance 

24 with the procedures under section 553 of title 5, 
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1 United States Code (notwithstanding subsections 

2 (a)(2), (b)(B), and (d)(3) of such section). 

3 SEC. 33. CIVIL MONEY PENALTIES FOR IMPROPERLY IN4 FLUENCING APPRAISALS. 

5 Paragraph (2) of section 536(b) of the National 

6 Housing Act (12 U.S.C. 1735f–14(b)(2)) is amended— 

7 (1) in subparagraph (B), by striking ‘‘or’’ at 

8 the end; 

9 (2) in subparagraph (C), by striking the period 

10 at the end and inserting ‘‘; or’’; and 

11 (3) by adding at the end the following new sub12 paragraph: 

13 ‘‘(D) in the case of an insured mortgage 

14 under title II for a 1- to 4-family residence, 

15 compensating, instructing, inducing, coercing, 

16 or intimidating any person who conducts an ap17 praisal of the property in connection with such 

18 mortgage, or attempting to compensate, in19 struct, induce, coerce, or intimidate such a per20 son, for the purpose of causing the appraised 

21 value assigned to the property under the ap22 praisal to be based on any other factor other 

23 than the independent judgment of such person 

24 exercised in accordance with applicable profes25 sional standards.’’. 
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•HR 1852 EH

1 SEC. 34. MORTGAGE INSURANCE PREMIUM REFUNDS. 

2 (a) AUTHORITY.—The Secretary of Housing and 

3 Urban Development shall, to the extent that amounts are 

4 made available pursuant to subsection (c), provide refunds 

5 of unearned premium charges paid, at the time of insur6 ance, for mortgage insurance under title II of the National 

7 Housing Act (12 U.S.C. 1707 et seq.) to or on behalf of 

8 mortgagors under mortgages described in subsection (b). 

9 (b) ELIGIBLE MORTGAGES.—A mortgage described 

10 in this section is a mortgage on a one- to four-family 

11 dwelling that— 

12 (1) was insured under title II of the National 

13 Housing Act (12 U.S.C. 1707 et seq.); 

14 (2) is otherwise eligible, under the last sentence 

15 of subparagraph (A) of section 203(c)(2) of such Act 

16 (12 U.S.C. 1709(c)(2)(A)), for a refund of all un17 earned premium charges paid on the mortgage pur18 suant to such subparagraph, except that the mort19 gage— 

20 (A) was closed before December 8, 2004; 

21 and 

22 (B) was endorsed on or after such date. 

23 (c) AUTHORIZATION OF APPROPRIATIONS.—There is 

24 authorized to be appropriated for each fiscal year such 

25 sums as may be necessary to provide refunds of unearned 

26 mortgage insurance premiums pursuant to this section. 
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•HR 1852 EH

1 SEC. 35. SAVINGS PROVISION. 

2 Any mortgage insured under title II of the National 

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

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

5 and terms and conditions to which it was subject on the 

6 day before the date of the enactment of this Act. 

7 SEC. 36. IMPLEMENTATION. 

8 Except as provided in section 23(b), the Secretary of 

9 Housing and Urban Development shall by notice establish 

10 any additional requirements that may be necessary to im11 mediately carry out the provisions of this Act. The notice 

12 shall take effect upon issuance. 

Passed the House of Representatives September 18, 

2007. 

Attest: 

Clerk. 
110TH CONGRESS 

1ST SESSION H. R. 1852 

AN ACT 

To modernize and update the National Housing Act 

underserved borrowers, and for other purposes. to use risk-based pricing to more effectively reach and enable the Federal Housing Administration