IB 

Union Calendar No. 133 

110TH CONGRESS 

1ST SESSION H. R. 1852 

[Report No. 110–217] 

To modernize and update the National Housing Act and enable the Federal 

Housing Administration to use risk-based pricing to more effectively 

reach underserved borrowers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 29, 2007 

Ms. WATERS (for herself and Mr. FRANK of Massachusetts) introduced the 

following bill; which was referred to the Committee on Financial Services 

JUNE 28, 2007 

Additional sponsors: Mr. SIRES, Mr. SCHIFF, Mr. JEFFERSON, Mr. RUSH, 

Mrs. CHRISTENSEN, Mr. CUMMINGS, Mr. WELCH of Vermont, Ms. 

ESHOO, Mr. MARKEY, Mr. MORAN of Virginia, Mr. ETHERIDGE, and Mr. 

WYNN

JUNE 28, 2007 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on March 29, 2007] 

A BILL 

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. 


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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 AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the ‘‘Ex5 panding American Homeownership Act of 2007’’. 

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

7 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. Annual reports on new programs and loss mitigation. 

Sec. 12. Insurance for single family homes with licensed child care facilities. 

Sec. 13. Rehabilitation loans. 

Sec. 14. Discretionary action. 

Sec. 15. Insurance of condominiums and manufactured housing. 

Sec. 16. Mutual Mortgage Insurance Fund. 

Sec. 17. Hawaiian home lands and Indian reservations. 

Sec. 18. Conforming and technical amendments. 

Sec. 19. Home equity conversion mortgages. 

Sec. 20. Participation of mortgage brokers and correspondent lenders. 

Sec. 21. Conforming loan limit in disaster areas. 

Sec. 22. Failure to pay amounts from escrow accounts for single family mortgages. 

Sec. 23. Acceptable identification for FHA mortgagors. 

Sec. 24. Pilot program for automated process for borrowers without sufficient 

credit history. 

Sec. 25. Sense of Congress regarding technology for financial systems. 

Sec. 26. Multifamily housing mortgage limits in high cost areas. 

Sec. 27. Valuation of multifamily properties in noncompetitive sales by HUD to 

States and localities. 

Sec. 28. Clarification of disposition of certain properties. 

Sec. 29. 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. 30. Limitation on mortgage insurance premium increases. 

Sec. 31. Savings provision. 

Sec. 32. 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 are 

6 underserved, or not served, by the existing conven7 tional mortgage marketplace; 

8 (2) the FHA program has a long history of inno9 vation, which includes pioneering the 30-year self-am10 ortizing mortgage and a safe-to-seniors reverse mort11 gage product, both of which were once thought too 

12 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 struc17 ture, as well as FHA’s product offerings, should be re18 vised to reflect FHA’s enhanced ability to determine 

19 risk at the loan level and to allow FHA to better re20 spond to changes in the mortgage market; 

21 (5) during past recessions, including the oil22 patch downturns in the mid-1980s, FHA remained a 

23 viable credit enhancer and was therefore instrumental 

24 in preventing a more catastrophic collapse in housing 

25 markets and a greater loss of homeowner equity; and 


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1 (6) as housing price appreciation slows and in2 terest rates rise, many homeowners and prospective 

3 homebuyers will need the less-expensive, safer financ4 ing alternative that FHA mortgage insurance pro5 vides. 

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

7 (1) to provide flexibility to FHA to allow for the 

8 insurance of housing loans for low- and moderate-in9 come homebuyers during all economic cycles in the 

10 mortgage market; 

11 (2) to modernize the FHA single family mort12 gage insurance program by making it more reflective 

13 of enhancements to loan-level risk assessments and 

14 changes to the mortgage market; and 

15 (3) to adjust the loan limits for the single family 

16 mortgage insurance program to reflect rising house 

17 prices and the increased costs associated with new 

18 construction. 

19 SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. 

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

21 U.S.C. 1709(b)(2)) is amended by striking subparagraph 

22 (A) and inserting the following new subparagraph: 

23 ‘‘(A) not to exceed the lesser of— 

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

25 the median 1-family house price in the 


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1 area, as determined by the Secretary; and 

2 in the case of a 2-, 3-, or 4-family residence, 

3 the percentage of such median price that 

4 bears the same ratio to such median price 

5 as the dollar amount limitation in effect 

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

7 Home Loan Mortgage Corporation Act (12 

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

9 residence, respectively, bears to the dollar 

10 amount limitation in effect under such sec11 tion for a 1-family residence; or 

12 ‘‘(ii) the dollar amount limitation de13 termined under such section 305(a)(2) for a 

14 residence of the applicable size; 

15 except that the dollar amount limitation in effect 

16 for any area under this subparagraph may not 

17 be less than the greater of (I) the dollar amount 

18 limitation in effect under this section for the 

19 area on October 21, 1998, or (II) 65 percent of 

20 the dollar limitation determined under such sec21 tion 305(a)(2) for a residence of the applicable 

22 size; and’’. 

23 SEC. 4. EXTENSION OF MORTGAGE TERM. 

24 Paragraph (3) of section 203(b) of the National Hous25 ing Act (12 U.S.C. 1709(b)(3)) is amended— 


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

2 ‘‘forty years’’; and 

3 (2) by striking ‘‘(or thirty years if such mortgage 

4 is not approved for insurance prior to construction)’’. 

5 SEC. 5. DOWNPAYMENT SIMPLIFICATION. 

6 Section 203(b) of the National Housing Act (12 U.S.C. 

7 1709(b)) is amended— 

8 (1) in paragraph (2)— 

9 (A) by striking subparagraph (B) and in10 serting the following new subparagraph: 

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

12 sum of— 

13 ‘‘(i) the amount of the mortgage pre14 mium paid at the time the mortgage is in15 sured; and 

16 ‘‘(ii)(I) except as provided in subclause 

17 (II), 97.75 percent of the appraised value of 

18 the property; or 

19 ‘‘(II) in the case only of a mortgage de20 scribed in subsection (c)(3), the appraised 

21 value of the property, plus any initial serv22 ice charges, appraisal, inspection, and other 

23 fees in connection with the mortgage as ap24 proved by the Secretary.’’; 


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1 (B) in the matter after and below subpara2 graph (B), by striking the second sentence (relat3 ing to a definition of ‘‘average closing cost’’) and 

4 all that follows through ‘‘title 38, United States 

5 Code.’’; and 

6 (C) by striking the last undesignated para7 graph (relating to counseling with respect to the 

8 responsibilities and financial management in9 volved in homeownership); and 

10 (2) in paragraph (9), by striking the paragraph 

11 designation and all that follows through ‘‘Provided 

12 further, That for’’ and inserting the following: 

13 ‘‘(9) Except in the case of a mortgage described 

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

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

16 or its equivalent, at least 3 percent of the Secretary’s 

17 estimate of the cost of acquisition (excluding the mort18 gage insurance premium paid at the time the mort19 gage is insured). For’’. 

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

21 LOWER-DOWNPAYMENT BORROWERS. 

22 Section 203(c) of the National Housing Act (12 U.S.C. 

23 1709(c) is amended by adding at the end the following new 

24 paragraph: 


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1 ‘‘(3) ZERO- AND LOWER-DOWNPAYMENT BOR2 ROWERS.— 

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

4 apply to any mortgage that— 

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

6 ‘‘(ii)(I) is an obligation of the Mutual Mort7 gage Insurance Fund or of the General Insurance 

8 Fund pursuant to subsection (v) of this section; 

9 or 

10 ‘‘(II) is insured under subsection (k) of this 

11 section or section 234(c); 

12 ‘‘(iii) is executed by a mortgagor who is a 

13 first-time homebuyer; and 

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

15 does not comply with subclause (I) of subsection 

16 (b)(2)(B)(ii) (relating to loan-to-value ratio); or 

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

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

19 its equivalent, at least 3 percent of the Sec20 retary’s estimate of the cost of acquisition (ex21 cluding the mortgage insurance premium paid 

22 at the time the mortgage is insured). 

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

24 single premium payment collected at the time of in25 surance may not exceed 3.0 percent of the amount of 


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1 the original insured principal obligation of the mort2 gage. 

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

4 in subparagraph (D), the amount of any annual pre5 mium payment collected may not exceed 0.75 percent 

6 of the remaining insured principal obligation of the 

7 mortgage. 

8 ‘‘(D) ANNUAL REDETERMINATION OF PREMIUM

9 RATE.—The Secretary shall redetermine the rates of 

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

11 SEC. 7. MORTGAGE INSURANCE PREMIUMS FOR STANDARD 

12 AND HIGHER-RISK BORROWERS. 

13 Paragraph (2) of section 203(c) of the National Hous14 ing Act (12 U.S.C. 1709(c)(2)) is amended— 

15 (1) by striking the matter that precedes subpara16 graph (A) and inserting the following: 

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

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

19 is an obligation of the Mutual Mortgage Insurance Fund 

20 or of the General Insurance Fund pursuant to subsection 

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

22 section or section 234(c), for which the mortgagor has paid 

23 on account of the property, in cash or its equivalent, at 

24 least 3 percent of the Secretary’s estimate of the cost of ac25 quisition (excluding the mortgage insurance premium paid 


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1 at the time the mortgage is insured), and that involves a 

2 principal obligation that complies with subclause (I) of sub3 section (b)(2)(B)(ii), the following requirements shall 

4 apply:’’; and 

5 (2) by adding at the end the following new sub6 paragraph: 

7 ‘‘(C) HIGHER-RISK BORROWERS.—The Secretary 

8 shall establish underwriting standards that provide 

9 for insurance under this section of mortgages de10 scribed in the matter in this paragraph preceding 

11 subparagraph (A) for which the mortgagor has a cred12 it score equivalent to a FICO score of less than 560, 

13 and may insure, and make commitments to insure, 

14 such mortgages. Such underwriting standards shall 

15 include establishing and collecting premium pay16 ments that comply with the requirements of this para17 graph, except that notwithstanding subparagraph (A), 

18 the single premium payment collected at the time of 

19 insurance may be established in an amount that does 

20 not exceed 3.0 percent of the amount of the original 

21 insured principal obligation of the mortgage.’’. 

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

23 Section 203(c) of the National Housing Act (12 U.S.C. 

24 1709(c)), as amended by the preceding provisions of this 


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1 Act, is further amended by adding at the end the following 

2 new paragraphs: 

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

4 of a mortgage referred to in paragraph (2)(C) or (3)(A) 

5 for which the loan application is received by the mortgagee 

6 on or after October 1, 2007: 

7 ‘‘(A) IN GENERAL.—The Secretary may establish 

8 a mortgage insurance premium structure involving a 

9 single premium payment collected prior to the insur10 ance of the mortgage or annual payments (which may 

11 be collected on a periodic basis), or both, subject to the 

12 requirements of subparagraph (B) and paragraph (5). 

13 Under such structure, the rate of premiums for such 

14 a mortgage may vary according to the credit risk as15 sociated with the mortgage and the rate of any an16 nual premium for such a mortgage may vary during 

17 the mortgage term as long as the basis for deter18 mining the variable rate is established before the exe19 cution of the mortgage. The Secretary may change a 

20 premium structure established under this subclause 

21 but only to the extent that such change is not applied 

22 to any mortgage already executed. 

23 ‘‘(B) ESTABLISHMENT AND ALTERATION OF PRE24 MIUM STRUCTURE.—A premium structure shall be es25 tablished or changed under subparagraph (A) only by 


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1 providing notice to mortgagees and to the Congress, at 

2 least 30 days before the premium structure is estab3 lished or changed. 

4 ‘‘(C) ANNUAL REPORT REGARDING PREMIUMS.— 

5 The Secretary shall submit a report to the Congress 

6 annually setting forth the rate structures and rates es7 tablished and altered pursuant to this paragraph dur8 ing the preceding 12-month period and describing 

9 how such rates were determined. 

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

11 When establishing premiums for mortgages referred to in 

12 paragraph (2)(C), establishing premiums pursuant to para13 graph (3), establishing a premium structure under para14 graph (4), and when changing such a premium structure, 

15 the Secretary shall consider the following: 

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

17 structure on the Secretary’s ability to meet the oper18 ational goals of the Mutual Mortgage Insurance Fund 

19 as provided in section 202(a). 

20 ‘‘(B) Underwriting variables. 

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

22 proposed premiums or structure has potential for ac23 ceptance in the private market. 


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1 ‘‘(D) The administrative capability of the Sec2 retary to administer the proposed premiums or struc3 ture. 

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

5 structure on the Secretary’s ability to maintain the 

6 availability of mortgage credit and provide stability 

7 to mortgage markets. 

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

9 PRODUCT RISK.— 

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

11 rates under paragraphs (2), (3), and (4), the Sec12 retary may provide for variations in such rates ac13 cording to the credit risk associated with the type of 

14 mortgage product that is being insured under this 

15 title, which may include providing that premium 

16 rates differ between fixed-rate mortgages and adjust17 able-rate mortgages insured pursuant to section 251, 

18 between mortgages insured pursuant to section 203(b) 

19 and mortgages for condominiums insured pursuant to 

20 section 234, and between such other products as the 

21 Secretary considers appropriate. 

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

23 be construed to authorize the Secretary to establish, 

24 for any mortgage product, any mortgage insurance 

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1 ments and limitations under paragraphs (2) through 

2 (5).’’. 

3 SEC. 9. PAYMENT INCENTIVES. 

4 Section 203(c) of the National Housing Act (12 U.S.C. 

5 1709(c)), as amended by the preceding provisions of this 

6 Act, is further amended by adding at the end the following 

7 new paragraph: 

8 ‘‘(7) PAYMENT INCENTIVES.— 

9 ‘‘(A) AUTHORITY.—With respect to mortgages re10 ferred to in paragraph (2)(C) or (3): 

11 ‘‘(i) DISCRETIONARY 3-YEAR PAYMENT IN12 CENTIVE.—The Secretary may provide, in the 

13 discretion of the Secretary, that the payment in14 centive under subparagraph (B) shall apply 

15 upon the expiration of the 3-year period begin16 ning upon the time of insurance of such a mort17 gage. 

18 ‘‘(ii) MANDATORY 5-YEAR PAYMENT INCEN19 TIVE.—The Secretary shall provide that the pay20 ment incentive under subparagraph (B) applies 

21 upon the expiration of the 5-year period begin22 ning upon the time of insurance of such a mort23 gage. 

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

25 mortgage to which the payment incentive under this 


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1 subparagraph applies, if, during the period referred 

2 to in clause (i) or (ii) of subparagraph (A), as appli3 cable, all mortgage insurance premiums for such 

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

5 expiration of such period the Secretary shall— 

6 ‘‘(i) reduce the amount of the annual pre7 mium payments otherwise due thereafter under 

8 such mortgage— 

9 ‘‘(I) in the case of a mortgage referred 

10 to in paragraph (3), to an amount that does 

11 not exceed the amount of the maximum an12 nual premium allowable under paragraph 

13 (2)(B); and 

14 ‘‘(II) in the case of a mortgage referred 

15 to in paragraph (2)(C), to an amount that 

16 does not exceed the amount of the annual 

17 premium payable at the time of insurance 

18 of the mortgage on a mortgage of the same 

19 product type having the same terms, but for 

20 which the mortgagor has a credit score 

21 equivalent to a FICO score of 560 or more; 

22 and 

23 ‘‘(ii) in the case only of a mortgage referred 

24 to in paragraph (2)(C), refund to the mortgagor, 

25 upon payment in full of the obligation of the 


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1 mortgage, any amount by which the single pre2 mium payment for such mortgage collected at the 

3 time of insurance exceeded the amount of the sin4 gle premium payment chargeable under para5 graph (2)(A) at the time of insurance for a mort6 gage of the same product type having the same 

7 terms, but for which the mortgagor has a credit 

8 score equivalent to a FICO score of 560 or 

9 more.’’. 

10 SEC. 10. BORROWER PROTECTIONS FOR HIGHER RISK 

11 MORTGAGES. 

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

13 1709(b)) is amended by adding at the end the following new 

14 paragraph: 

15 ‘‘(10) BORROWER PROTECTIONS FOR CERTAIN

16 MORTGAGES.—Except as otherwise specifically pro17 vided in this paragraph, in the case of any mortgage 

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

19 (c), the following requirements shall apply: 

20 ‘‘(A) DISCLOSURES.— 

21 ‘‘(i) REQUIRED DISCLOSURES.—In ad22 dition to any disclosures that are otherwise 

23 required by law or by the Secretary for sin24 gle family mortgages, the mortgagee shall 


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1 disclose to the mortgagor the following in2 formation: 

3 ‘‘(I) AT APPLICATION.—At the 

4 time of application for the loan in5 volved in the mortgage— 

6 ‘‘(aa) a list of counseling 

7 agencies approved by the Sec8 retary in the area of the appli9 cant; and 

10 ‘‘(bb) if the mortgagor is not 

11 provided counseling in accordance 

12 with subparagraph (B), the infor13 mation required under subclauses 

14 (I), (II), and (III) of subpara15 graph (B)(iii) to be provided to 

16 the mortgagor. 

17 ‘‘(II) AT EXECUTION.—At the 

18 time of entering into the mortgage— 

19 ‘‘(aa) the terms of the man20 datory 5-year payment incentive 

21 required under subsection 

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

23 ‘‘(bb) a statement that the 

24 mortgagor has a right under con25 tract to loss mitigation. 


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1 ‘‘(III) OTHER INFORMATION.— 

2 Any other additional information that 

3 the Secretary determines is appro4 priate to ensure that the mortgagor has 

5 received timely and accurate informa6 tion about the program under para7 graph (2)(C) or (3) of subsection (c), as 

8 applicable. 

9 ‘‘(ii) PENALTIES FOR FAILURE TO PRO10 VIDE REQUIRED DISCLOSURES.—The Sec11 retary may establish and impose appro12 priate penalties for failure of a mortgagee to 

13 provide any disclosure required under 

14 clause (i). 

15 ‘‘(iii) NO PRIVATE RIGHT OF AC16 TION.—This subparagraph shall not create 

17 any private right of action on behalf of the 

18 mortgagor. 

19 ‘‘(B) COUNSELING.— 

20 ‘‘(i) ALLOWABLE REQUIREMENT.—The 

21 Secretary may, in the discretion of the Sec22 retary, require that the mortgagor shall 

23 have received counseling that complies with 

24 the requirements of this subparagraph. 


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1 ‘‘(ii) TERMS OF COUNSELING.—Coun2 seling under this subparagraph shall be pro3 vided— 

4 ‘‘(I) prior to application for the 

5 loan involved in the mortgage; 

6 ‘‘(II) by a third party (other than 

7 the mortgagee) who is approved by the 

8 Secretary, with respect to the respon9 sibilities and financial management 

10 involved in homeownership; 

11 ‘‘(III) on an individual basis to 

12 the mortgagor by a representative of 

13 the approved third-party counseling 

14 entity; and 

15 ‘‘(IV) in person, to the maximum 

16 extent possible. 

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

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

19 counseling under this subparagraph shall 

20 include providing to, and discussing with, 

21 the mortgagor— 

22 ‘‘(I) information regarding home23 ownership options other than a mort24 gage that is subject to this paragraph, 

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1 gage options that are or may become 

2 available to the mortgagor, the finan3 cial implications of entering into a 

4 mortgage (including a mortgage subject 

5 to this paragraph), and any other in6 formation that the Secretary may re7 quire; 

8 ‘‘(II) a written disclosure that sets 

9 forth the amount and the percentage by 

10 which a property with a mortgage that 

11 is subject to this paragraph must ap12 preciate for the mortgagor to recover 

13 the principal amount of the mortgage, 

14 the costs financed under the mortgage, 

15 and the estimated costs involved in 

16 selling the property, if the mortgagor 

17 were to sell the property on each of the 

18 second, fifth, and tenth anniversaries of 

19 the mortgage; and 

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

21 Secretary shall require, that specifies 

22 the effective cost to a mortgagor of bor23 rowing the amount by which the max24 imum amount that could be borrowed 

25 under a mortgage that is referred to in 


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1 subsection (c)(3) exceeds the maximum 

2 amount that could be borrowed under a 

3 mortgage insured under this subsection 

4 that is not a mortgage referred to in 

5 such subsection, based on average clos6 ing costs with respect to such amount, 

7 as determined by the Secretary; such 

8 cost shall be expressed as an annual 

9 interest rate over the first 5 years of a 

10 mortgage; the disclosure required under 

11 this subclause may be provided in con12 junction with the notice required under 

13 subsection (f). 

14 ‘‘(iv) 2- AND 3-FAMILY RESIDENCES.— 

15 In the case of a mortgage involving a 2- or 

16 3-family residence, counseling under this 

17 subparagraph shall include (in addition to 

18 the information required under clause (iii)) 

19 information regarding real estate property 

20 management. 

21 ‘‘(C) NOTICE OF FORECLOSURE PREVENTION

22 COUNSELING AVAILABILITY.— 

23 ‘‘(i) WRITTEN AGREEMENT.—To be eli24 gible for insurance under this subsection, 

25 the mortgagee shall provide the mortgagor, 


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1 at the time of the execution of the mortgage, 

2 a written agreement which shall be signed 

3 by the mortgagor and under which the 

4 mortgagee shall provide notice described in 

5 clause (ii) to a housing counseling entity 

6 that has agreed to provide the notice and 

7 counseling required under clause (iii) and 

8 is approved by the Secretary. 

9 ‘‘(ii) NOTICE TO COUNSELING AGEN10 CY.—The notice described in this clause, 

11 with respect to a mortgage, is notice, pro12 vided at the earliest time practicable after 

13 the mortgagor becomes 60 days delinquent 

14 with respect to any payment due under the 

15 mortgage, that the mortgagor is so delin16 quent and of how to contact the mortgagor. 

17 Such notice may only be provided once with 

18 respect to each delinquency period for a 

19 mortgage. 

20 ‘‘(iii) NOTICE TO MORTGAGOR.—Upon 

21 notice from a mortgagee that a mortgagor is 

22 60 days delinquent with respect to pay23 ments due under the mortgage, the housing 

24 counseling entity shall at the earliest time 

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1 linquency, that the entity makes available 

2 foreclosure prevention counseling that may 

3 assist the mortgagor in resolving the delin4 quency, and of how to contact the entity to 

5 arrange for such counseling. 

6 ‘‘(iv) ABILITY TO CURE.—Failure to 

7 provide the written agreement required 

8 under clause (i) may be corrected by send9 ing such agreement to the mortgagor not 

10 later than the earliest time practicable after 

11 the mortgagor first becomes 60 days delin12 quent with respect to payments due under 

13 the mortgage. Insurance provided under this 

14 subsection may not be terminated and pen15 alties for such failure may not be prospec16 tively or retroactively imposed if such fail17 ure is corrected in accordance with this 

18 clause. 

19 ‘‘(v) PENALTIES FOR FAILURE TO PRO20 VIDE AGREEMENT.—The Secretary may es21 tablish and impose appropriate penalties 

22 for failure of a mortgagee to provide the 

23 written agreement required under clause (i). 

24 ‘‘(vi) LIMITATION ON LIABILITY OF

25 MORTGAGEE.—A mortgagee shall not incur 


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1 any liability or penalties for any failure of 

2 a housing counseling entity to provide no3 tice under clause (iii). 

4 ‘‘(vii) NO PRIVATE RIGHT OF AC5 TION.—This subparagraph shall not create 

6 any private right of action on behalf of the 

7 mortgagor. 

8 ‘‘(viii) DELINQUENCY PERIOD.—For 

9 purposes of this subparagraph, the term ‘de10 linquency period’ means, with respect to a 

11 mortgage, a period that begins upon the 

12 mortgagor becoming delinquent with respect 

13 to payments due under the mortgage and 

14 ends upon the first subsequent occurrence of 

15 such payments under the mortgage becom16 ing current or the property subject to the 

17 mortgage being foreclosed or otherwise dis18 posed of.’’. 

19 SEC. 11. 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 for 

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1 sured pursuant to the programs for mortgage in2 surance under paragraphs (2)(C) and (3) of sec3 tion 203(c). 

4 ‘‘(D) Actions taken by the Secretary during 

5 the applicable collection period with respect to 

6 loss mitigation on mortgages insured pursuant 

7 to section 203.’’. 

8 SEC. 12. 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 subsection: 

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

14 that— 

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

16 are less than 12 years of age; and 

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

18 which it is located (or, if there is no State law pro19 viding for such licensing and regulation by the State, 

20 by the municipality or other political subdivision in 

21 which the facility is located). 

22 Such term does not include facilities for school-age children 

23 primarily for use during normal school hours.’’. 

24 (b) INCREASE IN MAXIMUM MORTGAGE AMOUNT LIMI25 TATION.—Paragraph (2) of section 203(b) of the National 


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1 Housing Act (12 U.S.C. 1709(b)(2)), as amended by the 

2 preceding provisions of this Act, is further amended by add3 ing at end the following new undesignated paragraph: 

4 ‘‘Notwithstanding any other provision of this 

5 paragraph, the amount that may be insured under 

6 this section may be increased by up to 25 percent if 

7 such increase is necessary to account for the increased 

8 cost of the residence due to an increased need of space 

9 in the residence for locating and operating a child 

10 care facility (as such term is defined in section 201) 

11 within the residence, but only if a valid license or cer12 tificate of compliance with regulations described in 

13 section 201(g)(2) has been issued for such facility as 

14 of the date of the execution of the mortgage, and only 

15 if such increase in the amount insured is propor16 tional to the amount of space of such residence that 

17 will be used for such facility.’’. 

18 SEC. 13. REHABILITATION LOANS. 

19 Subsection (k) of section 203 of the National Housing 

20 Act (12 U.S.C. 1709(k)) is amended— 

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

22 that follows through ‘‘1978’’; and 

23 (2) in paragraph (5)— 


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

2 the first place it appears and inserting ‘‘Mutual 

3 Mortgage Insurance Fund’’; and 

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

5 comma and all that follows through ‘‘General In6 surance Fund’’. 

7 SEC. 14. DISCRETIONARY ACTION. 

8 The National Housing Act is amended— 

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

10 1708(e))— 

11 (A) in paragraph (3)(B), by striking ‘‘sec12 tion 202(e) of the National Housing Act’’ and 

13 inserting ‘‘this subsection’’; and 

14 (B) by redesignating such subsection as sub15 section (f); 

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

17 (12 U.S.C. 1709(s)(4)) and inserting the following 

18 new paragraph: 

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

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

21 (as amended by paragraph (2) of this section) to sec22 tion 202, inserting such subsection after subsection 

23 (d) of section 202, and redesignating such subsection 

24 as subsection (e). 


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1 SEC. 15. INSURANCE OF CONDOMINIUMS AND MANUFAC2 TURED HOUSING. 

3 (a) IN GENERAL.—Section 234 of the National Hous4 ing Act (12 U.S.C. 1715y) is amended— 

5 (1) in subsection (c)— 

6 (A) in the first sentence— 

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

8 (ii) by inserting before the period at 

9 the end the following: ‘‘, and (3) the project 

10 has a blanket mortgage insured by the Sec11 retary under subsection (d)’’; and 

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

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

14 years’’; and 

15 (2) in subsection (g), by striking ‘‘, except that’’ 

16 and all that follows and inserting a period. 

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

18 National Housing Act (12 U.S.C. 1707(a)) is amended— 

19 (1) before ‘‘ a first mortgage’’ insert ‘‘(A)’’; 

20 (2) by striking ‘‘or on a leasehold (1)’’ and in21 serting ‘‘(B) a first mortgage on a leasehold on real 

22 estate (i)’’; 

23 (3) by striking ‘‘or (2)’’ and inserting ‘‘, or (ii)’’; 

24 and 

25 (4) by inserting before the semicolon the fol26 lowing: ‘‘, or (C) a first mortgage given to secure the 


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1 unpaid purchase price of a fee interest in, or long2 term leasehold interest in, real estate consisting of a 

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

4 project in which the dwelling units are attached, or 

5 are manufactured housing units, semi-detached, or de6 tached, and an undivided interest in the common 

7 areas and facilities which serve the project’’. 

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

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

10 preceding provisions of this Act, is further amended by add11 ing at the end the following new subsection: 

12 ‘‘(h) The term ‘real estate’ means land and all natural 

13 resources and structures permanently affixed to the land, 

14 including residential buildings and stationary manufac15 tured housing. The Secretary may not require, for treatment 

16 of any land or other property as real estate for purposes 

17 of this title, that such land or property be treated as real 

18 estate for purposes of State taxation.’’. 

19 SEC. 16. MUTUAL MORTGAGE INSURANCE FUND. 

20 (a) IN GENERAL.—Subsection (a) of section 202 of the 

21 National Housing Act (12 U.S.C. 1708(a)) is amended to 

22 read as follows: 

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

24 ‘‘(1) ESTABLISHMENT.—Subject to the provisions 

25 of the Federal Credit Reform Act of 1990, there is 


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1 hereby created a Mutual Mortgage Insurance Fund 

2 (in this title referred to as the ‘Fund’), which shall be 

3 used by the Secretary to carry out the provisions of 

4 this title with respect to mortgages insured under sec5 tion 203. The Secretary may enter into commitments 

6 to guarantee, and may guarantee, such insured mort7 gages. 

8 ‘‘(2) LIMIT ON LOAN GUARANTEES.—The author9 ity of the Secretary to enter into commitments to 

10 guarantee such insured mortgages shall be effective for 

11 any fiscal year only to the extent that the aggregate 

12 original principal loan amount under such mort13 gages, any part of which is guaranteed, does not ex14 ceed the amount specified in appropriations Acts for 

15 such fiscal year. 

16 ‘‘(3) FIDUCIARY RESPONSIBILITY.—The Sec17 retary has a responsibility to ensure that the Mutual 

18 Mortgage Insurance Fund remains financially sound. 

19 ‘‘(4) ANNUAL INDEPENDENT ACTUARIAL

20 STUDY.—The Secretary shall provide for an inde21 pendent actuarial study of the Fund to be conducted 

22 annually, which shall analyze the financial position 

23 of the Fund. The Secretary shall submit a report an24 nually to the Congress describing the results of such 

25 study and assessing the financial status of the Fund. 


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1 The report shall recommend adjustments to under2 writing standards, program participation, or pre3 miums, if necessary, to ensure that the Fund remains 

4 financially sound. 

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

6 year, the Secretary shall submit a report to the Con7 gress for each quarter, which shall specify for mort8 gages that are obligations of the Fund— 

9 ‘‘(A) the cumulative volume of loan guar10 antee commitments that have been made during 

11 such fiscal year through the end of the quarter 

12 for which the report is submitted; 

13 ‘‘(B) the types of loans insured, categorized 

14 by risk; 

15 ‘‘(C) any significant changes between actual 

16 and projected claim and prepayment activity; 

17 ‘‘(D) projected versus actual loss rates; and 

18 ‘‘(E) updated projections of the annual sub19 sidy rates to ensure that increases in risk to the 

20 Fund are identified and mitigated by adjust21 ments to underwriting standards, program par22 ticipation, or premiums, and the financial 

23 soundness of the Fund is maintained. 

24 The first quarterly report under this paragraph shall 

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1 cal year 2008, or upon the expiration of the 90-day 

2 period beginning on the date of the enactment of the 

3 Expanding American Homeownership Act of 2007, 

4 whichever is later. 

5 ‘‘(6) ADJUSTMENT OF PREMIUMS.—If, pursuant 

6 to the independent actuarial study of the Fund re7 quired under paragraph (5), the Secretary determines 

8 that the Fund is not meeting the operational goals es9 tablished under paragraph (8) or there is a substan10 tial probability that the Fund will not maintain its 

11 established target subsidy rate, the Secretary may ei12 ther make programmatic adjustments under section 

13 203 as necessary to reduce the risk to the Fund, or 

14 make appropriate premium adjustments. 

15 ‘‘(7) OPERATIONAL GOALS.—The operational 

16 goals for the Fund are— 

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

18 are obligations of the Fund an appropriate pre19 mium for the risk that such loans pose to the 

20 Fund; 

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

22 Fund and to homeowners; 

23 ‘‘(C) to curtail the impact of adverse selec24 tion on the Fund; and 


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1 ‘‘(D) to meet the housing needs of the bor2 rowers that the single family mortgage insurance 

3 program under this title is designed to serve.’’. 

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

5 Act is amended as follows: 

6 (1) HOMEOWNERSHIP VOUCHER PROGRAM MORT7 GAGES.—In section 203(v) (12 U.S.C. 1709(v))— 

8 (A) by striking ‘‘Notwithstanding section 

9 202 of this title, the’’ and inserting ‘‘The’’; and 

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

11 the first place such term appears and all that 

12 follows and inserting ‘‘Mutual Mortgage Insur13 ance Fund.’’. 

14 (2) HOME EQUITY CONVERSION MORTGAGES.— 

15 Section 255(i)(2)(A) of the National Housing Act (12 

16 U.S.C. 1715z–20(i)(2)(A)) is amended by striking 

17 ‘‘General Insurance Fund’’ and inserting ‘‘Mutual 

18 Mortgage Insurance Fund’’. 

19 (c) CONFORMING AMENDMENTS.—The National Hous20 ing Act is amended— 

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

22 subsections (g) and (h); and 

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

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


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1 ‘‘203(i)’’ and inserting ‘‘203, except as determined by 

2 the Secretary’’. 

3 SEC. 17. HAWAIIAN HOME LANDS AND INDIAN RESERVA4 TIONS. 

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

6 National Housing Act (12 U.S.C. 1715z–12) is amended— 

7 (1) by striking ‘‘General Insurance Fund estab8 lished in section 519’’ and inserting ‘‘Mutual Mort9 gage Insurance Fund’’; and 

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

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

12 (b) INDIAN RESERVATIONS.—Section 248(f) of the Na13 tional Housing Act (12 U.S.C. 1715z–13) is amended— 

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

15 first place it appears and all that follows through 

16 ‘‘519’’ and inserting ‘‘Mutual Mortgage Insurance 

17 Fund’’; and 

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

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

20 SEC. 18. CONFORMING AND TECHNICAL AMENDMENTS. 

21 (a) REPEALS.—The following provisions of the Na22 tional Housing Act are repealed: 

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

24 1709(i)). 


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

2 1709(o)). 

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

4 1709(p)). 

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

6 1709(q)). 

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

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

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

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

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

12 amended by striking ‘‘shall’’ and all that follows and insert13 ing ‘‘means a metropolitan statistical area as established 

14 by the Office of Management and Budget;’’. 

15 (c) DEFINITION OF STATE.—Section 201(d) of the Na16 tional Housing Act (12 U.S.C. 1707(d)) is amended by 

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

18 inserting ‘‘the Commonwealth of the Northern Mariana Is19 lands’’. 

20 SEC. 19. HOME EQUITY CONVERSION MORTGAGES. 

21 (a) IN GENERAL.—Section 255 of the National Hous22 ing Act (12 U.S.C. 1715z–20) is amended— 

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

24 after ‘‘ ‘mortgagor’,’’; 

25 (2) in subsection (g)— 


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1 (A) by striking the first sentence; and 

2 (B) by striking ‘‘established under section 

3 203(b)(2)’’ and all that follows through ‘‘located’’ 

4 and inserting ‘‘limitation established under sec5 tion 305(a)(2) of the Federal Home Loan Mort6 gage Corporation Act for a 1-family residence’’; 

7 (3) in subsection (i)(1)(C), by striking ‘‘limita8 tions’’ and inserting ‘‘limitation’’; and 

9 (4) by adding at the end the following new sub10 section: 

11 ‘‘(o) AUTHORITY TO INSURE HOME PURCHASE MORT12 GAGE.— 

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

14 provision in this section, the Secretary may insure, 

15 upon application by a mortgagee, a home equity con16 version mortgage upon such terms and conditions as 

17 the Secretary may prescribe, when the primary pur18 pose of the home equity conversion mortgage is to en19 able an elderly mortgagor to purchase a 1- to 4-fam20 ily dwelling in which the mortgagor will occupy or 

21 occupies one of the units. 

22 ‘‘(2) LIMITATION ON PRINCIPAL OBLIGATION.—A 

23 home equity conversion mortgage insured pursuant to 

24 paragraph (1) shall involve a principal obligation 

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

2 Loan Mortgage Corporation Act for a residence of the 

3 applicable size.’’. 

4 (b) MORTGAGES FOR COOPERATIVES.—Subsection (b) 

5 of section 255 of the National Housing Act (12 U.S.C. 

6 1715z–20(b)) is amended— 

7 (1) in paragraph (4)— 

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

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

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

11 and 

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

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

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

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

16 (c) LIMITATION ON ORIGINATION FEES.—Section 255 

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

18 amended by the preceding provisions of this section, is fur19 ther amended— 

20 (1) by redesignating subsections (k), (l), and (m) 

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

22 (2) by inserting after subsection (j) the following 

23 new subsection: 

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


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1 be charged to a mortgagor under a mortgage insured under 

2 this section, which limitations shall— 

3 ‘‘(1) equal two percent of the original principal 

4 limit of the mortgage; 

5 ‘‘(2) be subject to a minimum allowable amount; 

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

7 fully financed with the mortgage; and 

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

9 mortgagees approved by the Secretary or to mortgage 

10 brokers.’’. 

11 (d) STUDY REGARDING MORTGAGE INSURANCE PRE12 MIUMS.—The Secretary of Housing and Urban Develop13 ment shall conduct a study regarding mortgage insurance 

14 premiums charged under the program under section 255 of 

15 the National Housing Act (12 U.S.C. 1715z–20) for insur16 ance of home equity conversion mortgages to analyze and 

17 determine the effects of reducing the amounts of such pre18 miums from the amounts charged as of the date of the enact19 ment of this Act on (1) costs to mortgagors, and (2) the 

20 financial soundness of the program. Not later than the expi21 ration of the 12-month period beginning on the date of the 

22 enactment of this Act, the Secretary shall submit a report 

23 to the Congress setting forth the results and conclusions of 

24 the study. 


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1 SEC. 20. PARTICIPATION OF MORTGAGE BROKERS AND 

2 CORRESPONDENT LENDERS. 

3 (a) IN GENERAL.— 

4 (1) DEFINITIONS.— 

5 (A) IN GENERAL.—Section 201 of the Na6 tional Housing Act (12 U.S.C. 1707), as amend7 ed by the preceding provisions of this Act, is fur8 ther amended— 

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

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

11 this title and for purposes of participation 

12 in insurance programs under this title, ex13 cept as specifically provided otherwise, the 

14 following definitions shall apply:’’; 

15 (ii) by striking subsection (b) and in16 serting the following: 

17 ‘‘(2) The term ‘mortgagee’ means any of the fol18 lowing entities, and its successors and assigns, to the 

19 extent such entity is approved by the Secretary: 

20 ‘‘(A) QUALIFICATION BY AUDIT AND NET

21 WORTH.—A lender, or mortgage broker, or cor22 respondent lender, who— 

23 ‘‘(i) makes, underwrites, and services 

24 mortgages; 

25 ‘‘(ii) submits to the Secretary such fi26 nancial audits performed in accordance 


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1 with the standards for financial audits of 

2 the Government Auditing Standards issued 

3 by the Comptroller General of the United 

4 States; 

5 ‘‘(iii) meet the minimum net worth re6 quirement that the Secretary shall establish; 

7 and 

8 ‘‘(iv) complies with such other require9 ments as the Secretary may establish. 

10 ‘‘(B) QUALIFICATION OF CORRESPONDENT

11 LENDERS BY SURETY BOND.—Except as provided 

12 in subparagraph (D), a correspondent lender 

13 who— 

14 ‘‘(i) closes a mortgage in its name but 

15 does not underwrite or service the mortgage; 

16 ‘‘(ii) posts a surety bond, in lieu of 

17 any requirement to provide audited finan18 cial statements or meet a minimum net 

19 worth requirement, in— 

20 ‘‘(I) a form satisfactory to the 

21 Secretary; and 

22 ‘‘(II) an amount of $75,000, as 

23 such amount is adjusted annually by 

24 the Secretary (as determined under 

25 regulations of the Secretary) by the 


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1 change for such year in the Consumer 

2 Price Index for All Urban Consumers 

3 published monthly by the Bureau of 

4 Labor Statistics of the Department of 

5 Labor; and 

6 ‘‘(iii) complies with such other require7 ments as the Secretary may establish. 

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 of 

12 the lender and does not make, underwrite, 

13 or 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 mort17 gage broker in such State; 

18 ‘‘(iii) posts a surety bond in accord19 ance with the requirements of subparagraph 

20 (B)(ii); and 

21 ‘‘(iv) complies with such other require22 ments as the Secretary may establish. 

23 ‘‘(D) CONDITIONS FOR CONTINUED APPLICA24 BILITY.—(i) Subparagraphs (B) and (C) shall 

25 continue to apply after the expiration of the 5- 


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1 year period beginning on the date of the enact2 ment of the Expanding American Homeowner3 ship Act of 2007 only if, after the expiration of 

4 the 4-year period beginning upon such date of 

5 enactment and taking into consideration the re6 port submitted in accordance with section 19(b) 

7 of such Act, the Secretary— 

8 ‘‘(I) makes a determination that such 

9 subparagraphs provide protection to mort10 gage insurance funds for mortgages insured 

11 under this title that are comparable to the 

12 protection provided by the requirements for 

13 mortgagees under this title as in effect im14 mediately before the enactment of such Act; 

15 and 

16 ‘‘(II) publishes in the Federal Register 

17 a notice of such determination and an order 

18 extending the applicability of such subpara19 graphs. 

20 ‘‘(ii) If, taking into consideration such re21 port, the Secretary makes a determination after 

22 the expiration of such 4-year period that sub23 paragraphs (B) and (C) do not provide protec24 tion as referred to in clause (i) of this subpara25 graph, the Secretary may, by order published in 


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1 the Federal Register, provide for the participa2 tion, after the expiration of the 5-year period re3 ferred to in clause (i), of correspondent lenders 

4 and mortgage brokers as mortgagees in the insur5 ance programs under this title in accordance 

6 with subparagraphs (B) and (C) as modified by 

7 the Secretary as the Secretary considers appro8 priate to provide such protection. 

9 ‘‘(E) ADDITIONAL MORTGAGE BROKER RE10 QUIREMENTS.— 

11 ‘‘(i) In addition to the requirements 

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

13 duties imposed under other statutes or com14 mon law, to be eligible as a mortgagee 

15 under this section, a broker shall— 

16 ‘‘(I) safeguard and account for 

17 any money handled for the borrower; 

18 ‘‘(II) follow reasonable and lawful 

19 instructions from the borrower; and 

20 ‘‘(III) act with reasonable skill, 

21 care, and diligence. 

22 ‘‘(ii) For purposes of this subpara23 graph, a loan correspondent shall be consid24 ered to be a mortgage broker. 


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1 ‘‘(iii) The duties and standards of care 

2 created in this subparagraph shall not be 

3 waived or modified. 

4 ‘‘(iv) Any broker found by the Sec5 retary to have violated the requirements of 

6 this subparagraph may not originate mort7 gage loans insured under this title. 

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

9 borrower under a mortgage and the successors and as10 signs of the original borrower.’’; and 

11 (iii) by redesignating subsections (a), 

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

13 (1), (4), (5), (6), (7), (8), and (9), respec14 tively, and indenting such paragraphs two 

15 ems so as to align the left margins of such 

16 paragraphs with the left margins of para17 graphs (2) and (3) (as added by clause (ii) 

18 of this subparagraph). 

19 (B) MORTGAGEE REVIEW.—Section 

20 202(c)(7) of the National Housing Act (12 

21 U.S.C. 1708(c)(7)) is amended— 

22 (i) in subparagraph (A), by inserting 

23 ‘‘, as defined in section 201,’’ after ‘‘mort24 gagee’’; 

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


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1 (iii) by redesignating subparagraphs 

2 (C) and (D) as subparagraphs (B) and (C), 

3 respectively. 

4 (C) MULTIFAMILY RENTAL HOUSING INSUR5 ANCE.—Section 207(a)(2) of the National Hous6 ing Act (12 U.S.C. 1713(a)(2)) is amended by 

7 striking ‘‘means the original lender under a 

8 mortgage, and its successors and assigns, and’’ 

9 and inserting ‘‘has the meaning given such term 

10 in section 201, except that such term also’’. 

11 (D) WAR HOUSING INSURANCE.—Section 

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

13 1736(b)) is amended by striking ‘‘includes the 

14 original lender under a mortgage, and his suc15 cessors and assigns approved by the Secretary’’ 

16 and inserting ‘‘has the meaning given such term 

17 in section 201’’. 

18 (E) ARMED SERVICES HOUSING MORTGAGE

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

20 Housing Act (12 U.S.C. 1748(b)) is amended by 

21 striking ‘‘includes the original lender under a 

22 mortgage, and his successors and assigns ap23 proved by the Secretary’’ and inserting ‘‘has the 

24 meaning given such term in section 201’’. 


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1 (F) GROUP PRACTICE FACILITIES MORT2 GAGE INSURANCE.—Section 1106(8) of the Na3 tional Housing Act (12 U.S.C. 1749aaa–5(8)) is 

4 amended by striking ‘‘means the original lender 

5 under a mortgage, and his or its successors and 

6 assigns, and’’ and inserting ‘‘has the meaning 

7 given such term in section 201, except that such 

8 term also’’. 

9 (2) ELIGIBILITY FOR INSURANCE.— 

10 (A) TITLE i.—Paragraph (1) of section 8(b) 

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

12 1706c(b)(1)) is amended— 

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

14 (ii) by striking ‘‘as responsible and 

15 able to service the mortgage properly’’. 

16 (B) SINGLE FAMILY HOUSING MORTGAGE

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

18 the National Housing Act (12 U.S.C. 1709(b)(1)) 

19 is amended— 

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

21 (ii) by striking ‘‘as responsible and 

22 able to service the mortgage properly’’. 

23 (C) SECTION 221 MORTGAGE INSURANCE.— 

24 Paragraph (1) of section 221(d) of the National 


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•HR 1852 RH

1 Housing Act (12 U.S.C. 1715l(d)(1)) is amend2 ed— 

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

4 (ii) by striking ‘‘as responsible and 

5 able to service the mortgage properly’’. 

6 (D) HOME EQUITY CONVERSION MORTGAGE

7 INSURANCE.—Paragraph (1) of section 255(d) of 

8 the National Housing Act (12 U.S.C. 1715z– 

9 20(d)(1)) is amended by striking ‘‘as responsible 

10 and able to service the mortgage properly’’. 

11 (E) WAR HOUSING MORTGAGE INSUR12 ANCE.—Paragraph (1) of section 603(b) of the 

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

14 amended— 

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

16 (ii) by striking ‘‘as responsible and 

17 able to service the mortgage properly’’. 

18 (F) WAR HOUSING MORTGAGE INSURANCE

19 FOR LARGE-SCALE HOUSING PROJECTS.—Para20 graph (1) of section 611(b) of the National Hous21 ing Act (12 U.S.C. 1746(b)(1)) is amended— 

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

23 (ii) by striking ‘‘as responsible and 

24 able to service the mortgage properly’’. 


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1 (G) GROUP PRACTICE FACILITY MORTGAGE

2 INSURANCE.—Section 1101(b)(2) of the National 

3 Housing Act (12 U.S.C. 1749aaa(b)(2)) is 

4 amended— 

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

6 (ii) by striking ‘‘as responsible and 

7 able to service the mortgage properly’’. 

8 (H) NATIONAL DEFENSE HOUSING INSUR9 ANCE.—Paragraph (1) of section 903(b) of the 

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

11 amended— 

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

13 (ii) by striking ‘‘as responsible and 

14 able to service the mortgage properly’’. 

15 (I) CONTINGENT REPEAL.—Unless there is 

16 published in the Federal Register, before the ex17 piration of the 5-year period beginning on the 

18 date of the enactment of this Act, an order under 

19 clause (i) or (ii) of section 201(2)(D) of the Na20 tional Housing Act (12 U.S.C. 1707(2)(D)), as 

21 added by paragraph (1)(A)(2) of this subsection, 

22 upon the expiration of such period the provisions 

23 of such Act amended by this paragraph are 

24 amended to read as such provisions would be in 

25 effect upon such expiration if this Act had not 


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1 been enacted (taking into consideration any 

2 amendments, after such date of enactment, to 

3 such provisions other than under this Act). 

4 (b) GAO STUDY AND REPORT.— 

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

6 United States shall conduct a study, upon the expira7 tion of the 42-month period beginning on the date of 

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

9 amendments made by subsection (a), which shall ana10 lyze and determine— 

11 (A) the extent to which such amendments 

12 have resulted in increased participation, by 

13 mortgage brokers and correspondent lenders, in 

14 the mortgage insurance programs under the Na15 tional Housing Act, as measured by the number 

16 and amounts of such insured mortgages, 

17 disaggregated by the States in which the prop18 erties subject to such mortgages are located; 

19 (B) with respect to mortgages insured under 

20 such Act, a comparison in the numbers and rate 

21 of defaults, foreclosures, and mortgage insurance 

22 claims on such mortgages originated by mortgage 

23 brokers and correspondent lenders authorized to 

24 participate in the programs under such Act pur25 suant to the amendments made by subsection (a) 


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1 to such numbers and rates on such mortgages 

2 originated by lenders who would be authorized to 

3 participate in such programs notwithstanding 

4 such amendments; 

5 (C) any impact of such amendments on the 

6 costs to the Secretary of Housing and Urban De7 velopment of administering the mortgage insur8 ance programs under such title; and 

9 (D) the extent and effectiveness of the super10 vision and enforcement, by the Secretary, of the 

11 additional authority provided under the amend12 ments made by subsection (a). 

13 (2) REPORT.—Not later than the expiration of 4- 

14 year period beginning on the date of the enactment of 

15 this Act, the Comptroller General shall submit a re16 port to the Congress and the Secretary of Housing 

17 and Urban Development setting forth the results and 

18 conclusions of the study conducted pursuant to para19 graph (1). 

20 SEC. 21. CONFORMING LOAN LIMIT IN DISASTER AREAS. 

21 Section 203(h) of the National Housing Act (12 U.S.C. 

22 1709) is amended— 

23 (1) by inserting after ‘‘property’’ the following: 

24 ‘‘plus any initial service charges, appraisal, inspecVerDate Aug 31 2005 02:04 Jun 29, 2007 Jkt 059200 PO 00000 Frm 00050 Fmt 6652 Sfmt 6203 E:\BILLS\H1852.RH H1852

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1 tion and other fees in connection with the mortgage 

2 as approved by the Secretary,’’; 

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

4 chapter 7 of the Emergency Supplemental Appropria5 tions Act of 1994 (Public Law 103–211; 108 Stat. 

6 12)); and 

7 (3) by adding at the end the following new sen8 tence: ‘‘In any case in which the single family resi9 dence to be insured under this subsection is within a 

10 jurisdiction in which the President has declared a 

11 major disaster to have occurred, the Secretary is au12 thorized, for a temporary period not to exceed 36 

13 months from the date of such Presidential declaration, 

14 to enter into agreements to insure a mortgage which 

15 involves a principal obligation of up to 100 percent 

16 of the dollar limitation determined under section 

17 305(a)(2) of the Federal Home Loan Mortgage Cor18 poration Act for a single family residence, and not in 

19 excess of 100 percent of the appraised value of the 

20 property plus any initial service charges, appraisal, 

21 inspection and other fees in connection with the mort22 gage as approved by the Secretary.’’. 


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1 SEC. 22. FAILURE TO PAY AMOUNTS FROM ESCROW AC2 COUNTS FOR SINGLE FAMILY MORTGAGES. 

3 (a) PENALTIES.—Section 536 of the National Housing 

4 Act (12 U.S.C. 1735f–14) is amended— 

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

6 (including escrow account servicers),’’ after ‘‘apprais7 ers,’’; 

8 (2) in subsection (b)(1)— 

9 (A) in the matter preceding subparagraph 

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

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

12 (B) by inserting at the end the following 

13 new subparagraphs: 

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

15 4-family residence insured under title II that re16 quires the mortgagor to make payments to the 

17 mortgagee or other servicer of the mortgage for 

18 deposit into an escrow account for the purpose of 

19 assuring payment of taxes, insurance premiums, 

20 and other charges with respect to the property, 

21 failure on the part of the servicer to make any 

22 such payment from the escrow account by the 

23 deadline to avoid a penalty with respect to such 

24 payment provided for in the mortgage, unless the 

25 servicer was not provided notice of such deadline. 


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

2 payment as described in subparagraph (K), sub3 mitting any information to a consumer report4 ing agency (as such term is defined in section 

5 603(f) of the Fair Credit Reporting Act (15 

6 U.S.C. 1681a(f))) regarding such failure that is 

7 adverse to the credit rating or interest of the 

8 mortgagor.’’; and 

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

10 following: ‘‘In the case of any failure to make a pay11 ment described in subsection (b)(1)(K) for which the 

12 servicer fails to reimburse the mortgagor (A) before 

13 the expiration of the 60-day period beginning on the 

14 deadline to avoid a penalty with respect to such pay15 ment, in the sum of the amount not paid from the es16 crow account by such deadline and the amount of any 

17 penalties accruing to the mortgagor that are attrib18 utable to such failure, or (B) in the amount of any 

19 attorneys fees incurred by the mortgagor and attrib20 utable to such failure, the Secretary shall increase the 

21 amount of the penalty under subsection (a) for any 

22 such failure to reimburse, unless the Secretary deter23 mines there are mitigating circumstances.’’. 

24 (b) PROHIBITION ON SUBMISSION OF INFORMATION BY

25 HUD.—Title II of the National Housing Act (12 U.S.C. 


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1 1707 et seq.) is amended by adding at the end the following 

2 new section: 

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

4 SERVICER TO MAKE ESCROW PAYMENTS. 

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

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

7 submit any information to a consumer reporting agency (as 

8 such term is defined in section 603(f) of the Fair Credit 

9 Reporting Act (15 U.S.C. 1681a(f))) regarding such failure 

10 that is adverse to the credit rating or interest of the mort11 gagor.’’. 

12 SEC. 23. ACCEPTABLE IDENTIFICATION FOR FHA MORTGA13 GORS. 

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

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

16 1715) the following new section: 

17 ‘‘SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION. 

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

19 provision of this title unless the mortgagor under the mort20 gage provides personal identification in one of the following 

21 forms: 

22 ‘‘(1) SOCIAL SECURITY CARD WITH PHOTO IDEN23 TIFICATION CARD OR REAL ID ACT IDENTIFICATION.— 


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

2 a photo identification card issued by the Federal 

3 Government or a State Government; or 

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

5 card issued by a State in the case of a State that 

6 is in compliance with title II of the REAL ID 

7 Act of 2005 (title II of division B of Public Law 

8 109-13; 49 U.S.C. 30301 note). 

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

10 United States or a foreign government. 

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

12 photo identification card issued by the Secretary of 

13 Homeland Security (acting through the Director of 

14 the United States Citizenship and Immigration Serv15 ices).’’. 

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

17 210 of the National Housing Act (as added by subsection 

18 (a) of this section) shall take effect six months after the date 

19 of the enactment of this Act. 

20 SEC. 24. PILOT PROGRAM FOR AUTOMATED PROCESS FOR 

21 BORROWERS WITHOUT SUFFICIENT CREDIT 

22 HISTORY. 

23 (a) ESTABLISHMENT.—Title II of the National Hous24 ing Act (12 U.S.C. 1707 et seq.), as amended by the preVerDate Aug 31 2005 02:04 Jun 29, 2007 Jkt 059200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6203 E:\BILLS\H1852.RH H1852

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1 ceding provisions of this Act, is further amended by adding 

2 at the end the following new section: 

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

4 BORROWERS WITHOUT SUFFICIENT CREDIT 

5 HISTORY. 

6 ‘‘(a) ESTABLISHMENT.—The Secretary shall carry out 

7 a pilot program to establish, and make available to mortga8 gees, an automated process for providing alternative credit 

9 rating information for mortgagors and prospective mortga10 gors under mortgages on 1- to 4-family residences to be in11 sured under this title who have insufficient credit histories 

12 for determining their creditworthiness. Such alternative 

13 credit rating information may include rent, utilities, and 

14 insurance payment histories, and such other information 

15 as the Secretary considers appropriate. 

16 ‘‘(b) SCOPE.—The Secretary may carry out the pilot 

17 program under this section on a limited basis or scope, and 

18 may consider limiting the program— 

19 ‘‘(1) to first-time homebuyers; or 

20 ‘‘(2) metropolitan statistical areas significantly 

21 impacted by subprime lending. 

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

23 number of mortgages insured pursuant to the automated 

24 process established under this section may not exceed 5 per25 cent of the aggregate number of mortgages for 1- to 4-family 


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1 residences insured by the Secretary under this title during 

2 the preceding fiscal year. 

3 ‘‘(d) SUNSET.—After the expiration of the 5-year pe4 riod beginning on the date of the enactment of the Expand5 ing American Homeownership Act of 2007, the Secretary 

6 may not enter into any new commitment to insure any 

7 mortgage, or newly insure any mortgage, pursuant to the 

8 automated process established under this section.’’. 

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

10 the two-year period beginning on the date of the enactment 

11 of this Act, the Comptroller General of the United States 

12 shall submit to the Congress a report identifying the num13 ber of additional mortgagors served using the automated 

14 process established pursuant to section 258 of the National 

15 Housing Act (as added by the amendment made by sub16 section (a) of this section) and the impact of such process 

17 and the insurance of mortgages pursuant to such process 

18 on the safety and soundness of the insurance funds under 

19 the National Housing Act of which such mortgages are obli20 gations. 

21 SEC. 25. SENSE OF CONGRESS REGARDING TECHNOLOGY 

22 FOR FINANCIAL SYSTEMS. 

23 (a) CONGRESSIONAL FINDINGS.—The Congress finds 

24 the following: 


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1 (1) The Government Accountability Office has 

2 cited the FHA single family housing mortgage insur3 ance program as a ‘‘high-risk’’ program, with a pri4 mary reason being non-integrated and out-dated fi5 nancial management systems. 

6 (2) The ‘‘Audit of the Federal Housing Adminis7 tration’s Financial Statements for Fiscal Years 2004 

8 and 2003’’, conducted by the Inspector General of the 

9 Department of Housing and Urban Development re10 ported as a material weakness that ‘‘HUD/FHA’s 

11 automated data processing [ADP] system environ12 ment must be enhanced to more effectively support 

13 FHA’s business and budget processes’’. 

14 (3) Existing technology systems for the FHA 

15 program have not been updated to meet the latest 

16 standards of the Mortgage Industry Standards Main17 tenance Organization and have numerous deficiencies 

18 that lenders have outlined. 

19 (4) Improvements to technology used in the FHA 

20 program will— 

21 (A) allow the FHA program to improve the 

22 management of the FHA portfolio, garner great23 er efficiencies in its operations, and lower costs 

24 across the program; 


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1 (B) result in efficiencies and lower costs for 

2 lenders participating in the program, allowing 

3 them to better use the FHA products in extend4 ing homeownership opportunities to higher credit 

5 risk or lower-income families, in a sound man6 ner. 

7 (5) The Mutual Mortgage Insurance Fund oper8 ates without cost to the taxpayers and generates reve9 nues for the Federal Government. 

10 (b) SENSE OF CONGRESS.—It is the sense of the Con11 gress that— 

12 (1) the Secretary of Housing and Urban Devel13 opment should use a portion of the funds received 

14 from premiums paid for FHA single family housing 

15 mortgage insurance that are in excess of the amounts 

16 paid out in claims to substantially increase the fund17 ing for technology used in such FHA program; 

18 (2) the goal of this investment should be to bring 

19 the technology used in such FHA program to the level 

20 and sophistication of the technology used in the con21 ventional mortgage lending market, or to exceed such 

22 level; and 

23 (3) the Secretary of Housing and Urban Devel24 opment should report to the Congress not later than 

25 180 days after the date of the enactment of this Act 


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1 regarding the progress the Department is making to2 ward such goal and if progress is not sufficient, the 

3 resources needed to make greater progress. 

4 SEC. 26. MULTIFAMILY HOUSING MORTGAGE LIMITS IN 

5 HIGH COST AREAS. 

6 The National Housing Act is amended— 

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

8 221(d)(3)(ii)(II), 221(d)(4)(ii)(II), 231(c)(2)(B), and 

9 234(e)(3)(B) (12 U.S.C. 1713(c)(3), 1715e(b)(2)(B)(i), 

10 1715l(d)(3)(ii)(II), 1715l(d)(4)(ii)(II), 

11 1715v(c)(2)(B), and 1715y(e)(3)(B))— 

12 (A) by striking ‘‘140 percent’’ each place 

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

14 and 

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

16 areas’’ each place such term appears and insert17 ing ‘‘215 percent in high cost areas’’; and 

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

19 1715k(d)(3)(B)(iii)(III)) by striking ‘‘206A’’ and all 

20 that follows through ‘‘project-by-project basis’’ and in21 serting the following: ‘‘206A of this Act) by not to ex22 ceed 170 percent in any geographical area where the 

23 Secretary finds that cost levels so require and by not 

24 to exceed 170 percent, or 215 percent in high cost 


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1 areas, where the Secretary determines it necessary on 

2 a project-by-project basis’’. 

3 SEC. 27. VALUATION OF MULTIFAMILY PROPERTIES IN 

4 NONCOMPETITIVE SALES BY HUD TO STATES 

5 AND LOCALITIES. 

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

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

8 adding at the end the following new section: 

9 ‘‘SEC. 2004. VALUATION OF MULTIFAMILY PROPERTIES IN 

10 NONCOMPETITIVE SALES BY HUD TO STATES 

11 AND LOCALITIES. 

12 ‘‘Notwithstanding any other provision of law and with 

13 respect to any fiscal year, in determining the market value 

14 of any multifamily real property or multifamily loan for 

15 any noncompetitive sale to a State or local government enti16 ty, the Secretary shall consider, but not be limited to, indus17 try standard appraisal practices, including the cost of re18 pairs needed to bring the property at least to minimum 

19 State and local code standards and of maintaining the ex20 isting affordability restrictions imposed by the Secretary on 

21 the multifamily real property or multifamily loan.’’. 

22 SEC. 28. CLARIFICATION OF DISPOSITION OF CERTAIN 

23 PROPERTIES. 

24 Notwithstanding any other provision of law, subtitle 

25 A of title II of the Deficit Reduction Act of 2005 (12 U.S.C. 


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1 1701z–11 note) and the amendments made by such title 

2 shall not apply to any transaction regarding a multifamily 

3 real property for which— 

4 (1) the Secretary of Housing and Urban Devel5 opment has received, before the date of the enactment 

6 of such Act, written expressions of interest in pur7 chasing the property from both a city government and 

8 the housing commission of such city; 

9 (2) after such receipt, the Secretary acquires title 

10 to the property at a foreclosure sale; and 

11 (3) such city government and housing commis12 sion have resolved a previous disagreement with re13 spect to the disposition of the property. 

14 SEC. 29. USE OF FHA SAVINGS FOR COSTS OF MORTGAGE 

15 INSURANCE, HOUSING COUNSELING, FHA 

16 TECHNOLOGIES, PROCEDURES, AND PROC17 ESSES, AND FOR AFFORDABLE HOUSING 

18 GRANT FUND, AND STUDY. 

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

20 authorized to be appropriated for each fiscal year an 

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

22 except as provided in subsection (b), the negative credit sub23 sidy for the mortgage insurance programs under title II of 

24 the National Housing Act resulting from this Act and the 


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1 amendments made by this Act, for the following purposes 

2 in the following amounts: 

3 (1) SINGLE FAMILY HOUSING MORTGAGE INSUR4 ANCE.—For each fiscal year, for costs (as such term 

5 is defined in section 502 of the Federal Credit Reform 

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

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

8 Housing Act (12 U.S.C. 1709(b)), the additional 

9 amount (not including any costs of such mortgage in10 surance resulting from this Act or the amendments 

11 made by this Act), if any, necessary to ensure that the 

12 credit subsidy cost of such mortgage insurance for 

13 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 Develop18 ment Act of 1968 (12 U.S.C. 1701x), in connection 

19 with homebuyers and homeowners with mortgages in20 sured under title II of the National Housing Act, 

21 from the amount appropriated for the preceding fiscal 

22 year to $100,000,000. 

23 (3) MORTGAGE INSURANCE TECHNOLOGY, PROCE24 DURES, PROCESSES, PROGRAM PERFORMANCE, AND

25 SALARIES.—For each of fiscal years 2008 through 


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1 2012, $25,000,000 for increasing funding for the pur2 pose of improving technology, procedures, processes, 

3 and program performance, and salaries in connection 

4 with the mortgage insurance programs under title II 

5 of the National Housing Act. 

6 (4) AFFORDABLE HOUSING FUND.—For each fis7 cal year, for an affordable housing fund available for 

8 use only for grants to provide affordable rental hous9 ing and affordable homeownership opportunities for 

10 low-income families, the amount remaining under 

11 this section after amounts are made available for such 

12 fiscal year in accordance with paragraphs (1), (2), 

13 and (3). 

14 (b) EXCLUSION OF EARNINGS FROM THE SINGLE FAM15 ILY MORTGAGE INSURANCE PROGRAM.—With respect to a 

16 fiscal year, the negative credit subsidy determined under 

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

18 cost for such fiscal year, if any, for mortgage insurance pro19 vided pursuant to section 203(b) of the National Housing 

20 Act. 

21 (c) CERTIFICATION.—Subsection (a) shall not be effec22 tive for a fiscal year unless the Secretary of Housing and 

23 Urban Development has, by rule making in accordance with 

24 section 553 of title 5, United States Code (notwithstanding 

25 subsections (a)(2), (b)(B), and (d)(3) of such section), made 


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1 a determination that premiums being, or to be, charged 

2 during such fiscal year for mortgage insurance under title 

3 II of the National Housing Act are established at the min4 imum amount sufficient to comply with the requirements 

5 of section 205(f) of such Act (relating to required capital 

6 ratio for the Mutual Mortgage Insurance Fund) and ensure 

7 the safety and soundness of the other mortgage insurance 

8 funds under such Act, and any negative credit subsidy for 

9 such fiscal year resulting from such mortgage insurance 

10 programs adequately ensures the efficient delivery and 

11 availability of such programs. 

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

13 and Urban Development shall conduct a study to obtain 

14 recommendations from participants in the private residen15 tial mortgage lending business and the secondary market 

16 for such mortgages on how best to update and upgrade pro17 cedures, processes, and technologies for the mortgage insur18 ance programs under title II of the National Housing Act 

19 so that the policies and procedures for originating, insur20 ing, and servicing of such mortgages conform with those 

21 customarily used by secondary market purchasers of resi22 dential mortgage loans. Not later than the expiration of the 

23 12-month period beginning on the date of the enactment of 

24 this Act, the Secretary shall submit a report to the Congress 

25 describing the progress made and to be made toward updatVerDate Aug 31 2005 02:04 Jun 29, 2007 Jkt 059200 PO 00000 Frm 00065 Fmt 6652 Sfmt 6203 E:\BILLS\H1852.RH H1852

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1 ing and upgrading such procedures, processes, and tech2 nology, and providing appropriate staffing for such mort3 gage insurance programs. 

4 SEC. 30. LIMITATION ON MORTGAGE INSURANCE PREMIUM 

5 INCREASES. 

6 Notwithstanding any other provision of law, including 

7 any provision of this Act and any amendment made by 

8 this Act— 

9 (1) the premiums charged for mortgage insur10 ance under any program under the National Housing 

11 Act may not be increased above the premium amounts 

12 in effect under such program on October 1, 2006, un13 less the Secretary of Housing and Urban Development 

14 determines that, absent such increase, insurance of 

15 additional mortgages under such program would, 

16 under the Federal Credit Reform Act of 1990, require 

17 the appropriation of new budget authority to cover 

18 the costs (as such term is defined in section 502 of the 

19 Federal Credit Reform Act of 1990 (2 U.S.C. 661a) 

20 of such insurance; and 

21 (2) a premium increase pursuant to paragraph 

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

23 with the procedures under section 553 of title 5, 

24 United States Code (notwithstanding subsections 

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


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1 SEC. 31. 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, and 

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

6 before the date of the enactment of this Act. 

7 SEC. 32. 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. 


hmoore on PRODPC68 with HMBILLS
Union Calendar No. 133 

110TH CONGRESS 

1ST SESSION H. R. 1852 

[Report No. 110

–217] 

A BILL 

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 

JUNE 28, 2007 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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