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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1852 Reported in House (RH)]

                                                 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 risk-based pricing to more effectively 
          reach underserved borrowers, and for other purposes.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Expanding American 
Homeownership Act of 2007''.
    (b) Table of Contents.--The table of contents for 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.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) one of the primary missions of the Federal Housing 
        Administration (FHA) single family mortgage insurance program 
        is to reach borrowers who are underserved, or not served, by 
        the existing conventional mortgage marketplace;
            (2) the FHA program has a long history of innovation, which 
        includes pioneering the 30-year self-amortizing mortgage and a 
        safe-to-seniors reverse mortgage product, both of which were 
        once thought too risky to private lenders;
            (3) the FHA single family mortgage insurance program 
        traditionally has been a major provider of mortgage insurance 
        for home purchases;
            (4) the FHA mortgage insurance premium structure, as well 
        as FHA's product offerings, should be revised to reflect FHA's 
        enhanced ability to determine risk at the loan level and to 
        allow FHA to better respond to changes in the mortgage market;
            (5) during past recessions, including the oil-patch 
        downturns in the mid-1980s, FHA remained a viable credit 
        enhancer and was therefore instrumental in preventing a more 
        catastrophic collapse in housing markets and a greater loss of 
        homeowner equity; and
            (6) as housing price appreciation slows and interest rates 
        rise, many homeowners and prospective homebuyers will need the 
        less-expensive, safer financing alternative that FHA mortgage 
        insurance provides.
    (b) Purposes.--The purposes of this Act are--
            (1) to provide flexibility to FHA to allow for the 
        insurance of housing loans for low- and moderate-income 
        homebuyers during all economic cycles in the mortgage market;
            (2) to modernize the FHA single family mortgage insurance 
        program by making it more reflective of enhancements to loan-
        level risk assessments and changes to the mortgage market; and
            (3) to adjust the loan limits for the single family 
        mortgage insurance program to reflect rising house prices and 
        the increased costs associated with new construction.

SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION.

    Section 203(b)(2) of the National Housing Act (12 U.S.C. 
1709(b)(2)) is amended by striking subparagraph (A) and inserting the 
following new subparagraph:
                    ``(A) not to exceed the lesser of--
                            ``(i) in the case of a 1-family residence, 
                        the median 1-family house price in the area, as 
                        determined by the Secretary; and in the case of 
                        a 2-, 3-, or 4-family residence, the percentage 
                        of such median price that bears the same ratio 
                        to such median price as the dollar amount 
                        limitation in effect under section 305(a)(2) of 
                        the Federal Home Loan Mortgage Corporation Act 
                        (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-
                        family residence, respectively, bears to the 
                        dollar amount limitation in effect under such 
                        section for a 1-family residence; or
                            ``(ii) the dollar amount limitation 
                        determined under such section 305(a)(2) for a 
                        residence of the applicable size;
                except that the dollar amount limitation in effect for 
                any area under this subparagraph may not be less than 
                the greater of (I) the dollar amount limitation in 
                effect under this section for the area on October 21, 
                1998, or (II) 65 percent of the dollar limitation 
                determined under such section 305(a)(2) for a residence 
                of the applicable size; and''.

SEC. 4. EXTENSION OF MORTGAGE TERM.

    Paragraph (3) of section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)(3)) is amended--
            (1) by striking ``thirty-five years'' and inserting ``forty 
        years''; and
            (2) by striking ``(or thirty years if such mortgage is not 
        approved for insurance prior to construction)''.

SEC. 5. DOWNPAYMENT SIMPLIFICATION.

    Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is 
amended--
            (1) in paragraph (2)--
                    (A) by striking subparagraph (B) and inserting the 
                following new subparagraph:
                    ``(B) not to exceed an amount equal to the sum of--
                            ``(i) the amount of the mortgage premium 
                        paid at the time the mortgage is insured; and
                            ``(ii)(I) except as provided in subclause 
                        (II), 97.75 percent of the appraised value of 
                        the property; or
                            ``(II) in the case only of a mortgage 
                        described in subsection (c)(3), the appraised 
                        value of the property, plus any initial service 
                        charges, appraisal, inspection, and other fees 
                        in connection with the mortgage as approved by 
                        the Secretary.'';
                    (B) in the matter after and below subparagraph (B), 
                by striking the second sentence (relating to a 
                definition of ``average closing cost'') and all that 
                follows through ``title 38, United States Code.''; and
                    (C) by striking the last undesignated paragraph 
                (relating to counseling with respect to the 
                responsibilities and financial management involved in 
                homeownership); and
            (2) in paragraph (9), by striking the paragraph designation 
        and all that follows through ``Provided further, That for'' and 
        inserting the following:
            ``(9) Except in the case of a mortgage described in 
        subsection (c)(3), be executed by a mortgagor who shall have 
        paid on account of the property, in cash or its equivalent, at 
        least 3 percent of the Secretary's estimate of the cost of 
        acquisition (excluding the mortgage insurance premium paid at 
        the time the mortgage is insured). For''.

SEC. 6. MORTGAGE INSURANCE PREMIUMS FOR ZERO- AND LOWER-DOWNPAYMENT 
              BORROWERS.

    Section 203(c) of the National Housing Act (12 U.S.C. 1709(c) is 
amended by adding at the end the following new paragraph:
    ``(3) Zero- and Lower-Downpayment Borrowers.--
            ``(A) Applicability.--This paragraph shall apply to any 
        mortgage that--
                    ``(i) is secured by a 1- to 4-family dwelling;
                    ``(ii)(I) is an obligation of the Mutual Mortgage 
                Insurance Fund or of the General Insurance Fund 
                pursuant to subsection (v) of this section; or
                    ``(II) is insured under subsection (k) of this 
                section or section 234(c);
                    ``(iii) is executed by a mortgagor who is a first-
                time homebuyer; and
                    ``(iv)(I) involves a principal obligation that does 
                not comply with subclause (I) of subsection 
                (b)(2)(B)(ii) (relating to loan-to-value ratio); or
                    ``(II) is executed by a mortgagor who has not paid 
                on account of the property, in cash or its equivalent, 
                at least 3 percent of the Secretary's estimate of the 
                cost of acquisition (excluding the mortgage insurance 
                premium paid at the time the mortgage is insured).
            ``(B) Up-front premiums.--The amount of any single premium 
        payment collected at the time of insurance may not exceed 3.0 
        percent of the amount of the original insured principal 
        obligation of the mortgage.
            ``(C) Annual premiums.--Except as provided in subparagraph 
        (D), the amount of any annual premium payment collected may not 
        exceed 0.75 percent of the remaining insured principal 
        obligation of the mortgage.
            ``(D) Annual redetermination of premium rate.--The 
        Secretary shall redetermine the rates of premiums not less than 
        once every 12 months.''.

SEC. 7. MORTGAGE INSURANCE PREMIUMS FOR STANDARD AND HIGHER-RISK 
              BORROWERS.

    Paragraph (2) of section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)(2)) is amended--
            (1) by striking the matter that precedes subparagraph (A) 
        and inserting the following:
    ``(2) Standard-Risk Mortgages.--In the case of any mortgage that is 
secured by a 1- to 4-family dwelling, is an obligation of the Mutual 
Mortgage Insurance Fund or of the General Insurance Fund pursuant to 
subsection (v) of this section or is insured under subsection (k) of 
this section or section 234(c), for which the mortgagor has paid on 
account of the property, in cash or its equivalent, at least 3 percent 
of the Secretary's estimate of the cost of acquisition (excluding the 
mortgage insurance premium paid at the time the mortgage is insured), 
and that involves a principal obligation that complies with subclause 
(I) of subsection (b)(2)(B)(ii), the following requirements shall 
apply:''; and
            (2) by adding at the end the following new subparagraph:
            ``(C) Higher-risk borrowers.--The Secretary shall establish 
        underwriting standards that provide for insurance under this 
        section of mortgages described in the matter in this paragraph 
        preceding subparagraph (A) for which the mortgagor has a credit 
        score equivalent to a FICO score of less than 560, and may 
        insure, and make commitments to insure, such mortgages. Such 
        underwriting standards shall include establishing and 
        collecting premium payments that comply with the requirements 
        of this paragraph, except that notwithstanding subparagraph 
        (A), the single premium payment collected at the time of 
        insurance may be established in an amount that does not exceed 
        3.0 percent of the amount of the original insured principal 
        obligation of the mortgage.''.

SEC. 8. RISK-BASED MORTGAGE INSURANCE PREMIUMS.

    Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)), as 
amended by the preceding provisions of this Act, is further amended by 
adding at the end the following new paragraphs:
    ``(4) Flexible Risk-Based Premiums.--In the case of a mortgage 
referred to in paragraph (2)(C) or (3)(A) for which the loan 
application is received by the mortgagee on or after October 1, 2007:
            ``(A) In general.--The Secretary may establish a mortgage 
        insurance premium structure involving a single premium payment 
        collected prior to the insurance of the mortgage or annual 
        payments (which may be collected on a periodic basis), or both, 
        subject to the requirements of subparagraph (B) and paragraph 
        (5). Under such structure, the rate of premiums for such a 
        mortgage may vary according to the credit risk associated with 
        the mortgage and the rate of any annual premium for such a 
        mortgage may vary during the mortgage term as long as the basis 
        for determining the variable rate is established before the 
        execution of the mortgage. The Secretary may change a premium 
        structure established under this subclause but only to the 
        extent that such change is not applied to any mortgage already 
        executed.
            ``(B) Establishment and alteration of premium structure.--A 
        premium structure shall be established or changed under 
        subparagraph (A) only by providing notice to mortgagees and to 
        the Congress, at least 30 days before the premium structure is 
        established or changed.
            ``(C) Annual report regarding premiums.--The Secretary 
        shall submit a report to the Congress annually setting forth 
        the rate structures and rates established and altered pursuant 
        to this paragraph during the preceding 12-month period and 
        describing how such rates were determined.
    ``(5) Considerations for Premium Structure.--When establishing 
premiums for mortgages referred to in paragraph (2)(C), establishing 
premiums pursuant to paragraph (3), establishing a premium structure 
under paragraph (4), and when changing such a premium structure, the 
Secretary shall consider the following:
            ``(A) The effect of the proposed premiums or structure on 
        the Secretary's ability to meet the operational goals of the 
        Mutual Mortgage Insurance Fund as provided in section 202(a).
            ``(B) Underwriting variables.
            ``(C) The extent to which new pricing under the proposed 
        premiums or structure has potential for acceptance in the 
        private market.
            ``(D) The administrative capability of the Secretary to 
        administer the proposed premiums or structure.
            ``(E) The effect of the proposed premiums or structure on 
        the Secretary's ability to maintain the availability of 
        mortgage credit and provide stability to mortgage markets.
    ``(6) Authority To Base Premium Prices on Product Risk.--
            ``(A) Authority.--In establishing premium rates under 
        paragraphs (2), (3), and (4), the Secretary may provide for 
        variations in such rates according to the credit risk 
        associated with the type of mortgage product that is being 
        insured under this title, which may include providing that 
        premium rates differ between fixed-rate mortgages and 
        adjustable-rate mortgages insured pursuant to section 251, 
        between mortgages insured pursuant to section 203(b) and 
        mortgages for condominiums insured pursuant to section 234, and 
        between such other products as the Secretary considers 
        appropriate.
            ``(B) Limitation.--Subparagraph (A) may not be construed to 
        authorize the Secretary to establish, for any mortgage product, 
        any mortgage insurance premium rate that does not comply with 
        the requirements and limitations under paragraphs (2) through 
        (5).''.

SEC. 9. PAYMENT INCENTIVES.

    Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)), as 
amended by the preceding provisions of this Act, is further amended by 
adding at the end the following new paragraph:
    ``(7) Payment Incentives.--
            ``(A) Authority.--With respect to mortgages referred to in 
        paragraph (2)(C) or (3):
                    ``(i) Discretionary 3-year payment incentive.--The 
                Secretary may provide, in the discretion of the 
                Secretary, that the payment incentive under 
                subparagraph (B) shall apply upon the expiration of the 
                3-year period beginning upon the time of insurance of 
                such a mortgage.
                    ``(ii) Mandatory 5-year payment incentive.--The 
                Secretary shall provide that the payment incentive 
                under subparagraph (B) applies upon the expiration of 
                the 5-year period beginning upon the time of insurance 
                of such a mortgage.
            ``(B) Payment incentive.--In the case of any mortgage to 
        which the payment incentive under this subparagraph applies, 
        if, during the period referred to in clause (i) or (ii) of 
        subparagraph (A), as applicable, all mortgage insurance 
        premiums for such mortgage have been paid on a timely basis, 
        upon the expiration of such period the Secretary shall--
                    ``(i) reduce the amount of the annual premium 
                payments otherwise due thereafter under such mortgage--
                            ``(I) in the case of a mortgage referred to 
                        in paragraph (3), to an amount that does not 
                        exceed the amount of the maximum annual premium 
                        allowable under paragraph (2)(B); and
                            ``(II) in the case of a mortgage referred 
                        to in paragraph (2)(C), to an amount that does 
                        not exceed the amount of the annual premium 
                        payable at the time of insurance of the 
                        mortgage on a mortgage of the same product type 
                        having the same terms, but for which the 
                        mortgagor has a credit score equivalent to a 
                        FICO score of 560 or more; and
                    ``(ii) in the case only of a mortgage referred to 
                in paragraph (2)(C), refund to the mortgagor, upon 
                payment in full of the obligation of the mortgage, any 
                amount by which the single premium payment for such 
                mortgage collected at the time of insurance exceeded 
                the amount of the single premium payment chargeable 
                under paragraph (2)(A) at the time of insurance for a 
                mortgage of the same product type having the same 
                terms, but for which the mortgagor has a credit score 
                equivalent to a FICO score of 560 or more.''.

SEC. 10. BORROWER PROTECTIONS FOR HIGHER RISK MORTGAGES.

    Section 203(b) of the National Housing Act (12 U.S.C. 1709(b)) is 
amended by adding at the end the following new paragraph:
            ``(10) Borrower protections for certain mortgages.--Except 
        as otherwise specifically provided in this paragraph, in the 
        case of any mortgage referred to in paragraph (2)(C) or (3) of 
        subsection (c), the following requirements shall apply:
                    ``(A) Disclosures.--
                            ``(i) Required disclosures.--In addition to 
                        any disclosures that are otherwise required by 
                        law or by the Secretary for single family 
                        mortgages, the mortgagee shall disclose to the 
                        mortgagor the following information:
                                    ``(I) At application.--At the time 
                                of application for the loan involved in 
                                the mortgage--
                                            ``(aa) a list of counseling 
                                        agencies approved by the 
                                        Secretary in the area of the 
                                        applicant; and
                                            ``(bb) if the mortgagor is 
                                        not provided counseling in 
                                        accordance with subparagraph 
                                        (B), the information required 
                                        under subclauses (I), (II), and 
                                        (III) of subparagraph (B)(iii) 
                                        to be provided to the 
                                        mortgagor.
                                    ``(II) At execution.--At the time 
                                of entering into the mortgage--
                                            ``(aa) the terms of the 
                                        mandatory 5-year payment 
                                        incentive required under 
                                        subsection (c)(7)(A)(ii); and
                                            ``(bb) a statement that the 
                                        mortgagor has a right under 
                                        contract to loss mitigation.
                                    ``(III) Other information.--Any 
                                other additional information that the 
                                Secretary determines is appropriate to 
                                ensure that the mortgagor has received 
                                timely and accurate information about 
                                the program under paragraph (2)(C) or 
                                (3) of subsection (c), as applicable.
                            ``(ii) Penalties for failure to provide 
                        required disclosures.--The Secretary may 
                        establish and impose appropriate penalties for 
                        failure of a mortgagee to provide any 
                        disclosure required under clause (i).
                            ``(iii) No private right of action.--This 
                        subparagraph shall not create any private right 
                        of action on behalf of the mortgagor.
                    ``(B) Counseling.--
                            ``(i) Allowable requirement.--The Secretary 
                        may, in the discretion of the Secretary, 
                        require that the mortgagor shall have received 
                        counseling that complies with the requirements 
                        of this subparagraph.
                            ``(ii) Terms of counseling.--Counseling 
                        under this subparagraph shall be provided--
                                    ``(I) prior to application for the 
                                loan involved in the mortgage;
                                    ``(II) by a third party (other than 
                                the mortgagee) who is approved by the 
                                Secretary, with respect to the 
                                responsibilities and financial 
                                management involved in homeownership;
                                    ``(III) on an individual basis to 
                                the mortgagor by a representative of 
                                the approved third-party counseling 
                                entity; and
                                    ``(IV) in person, to the maximum 
                                extent possible.
                            ``(iii) Topics.--In the case only of a 
                        mortgage referred to in subsection (c)(3), 
                        counseling under this subparagraph shall 
                        include providing to, and discussing with, the 
                        mortgagor--
                                    ``(I) information regarding 
                                homeownership options other than a 
                                mortgage that is subject to this 
                                paragraph, other zero- or low-
                                downpayment mortgage options that are 
                                or may become available to the 
                                mortgagor, the financial implications 
                                of entering into a mortgage (including 
                                a mortgage subject to this paragraph), 
                                and any other information that the 
                                Secretary may require;
                                    ``(II) a written disclosure that 
                                sets forth the amount and the 
                                percentage by which a property with a 
                                mortgage that is subject to this 
                                paragraph must appreciate for the 
                                mortgagor to recover the principal 
                                amount of the mortgage, the costs 
                                financed under the mortgage, and the 
                                estimated costs involved in selling the 
                                property, if the mortgagor were to sell 
                                the property on each of the second, 
                                fifth, and tenth anniversaries of the 
                                mortgage; and
                                    ``(III) a written disclosure, as 
                                the Secretary shall require, that 
                                specifies the effective cost to a 
                                mortgagor of borrowing the amount by 
                                which the maximum amount that could be 
                                borrowed under a mortgage that is 
                                referred to in subsection (c)(3) 
                                exceeds the maximum amount that could 
                                be borrowed under a mortgage insured 
                                under this subsection that is not a 
                                mortgage referred to in such 
                                subsection, based on average closing 
                                costs with respect to such amount, as 
                                determined by the Secretary; such cost 
                                shall be expressed as an annual 
                                interest rate over the first 5 years of 
                                a mortgage; the disclosure required 
                                under this subclause may be provided in 
                                conjunction with the notice required 
                                under subsection (f).
                            ``(iv) 2- and 3-family residences.--In the 
                        case of a mortgage involving a 2- or 3-family 
                        residence, counseling under this subparagraph 
                        shall include (in addition to the information 
                        required under clause (iii)) information 
                        regarding real estate property management.
                    ``(C) Notice of foreclosure prevention counseling 
                availability.--
                            ``(i) Written agreement.--To be eligible 
                        for insurance under this subsection, the 
                        mortgagee shall provide the mortgagor, at the 
                        time of the execution of the mortgage, a 
                        written agreement which shall be signed by the 
                        mortgagor and under which the mortgagee shall 
                        provide notice described in clause (ii) to a 
                        housing counseling entity that has agreed to 
                        provide the notice and counseling required 
                        under clause (iii) and is approved by the 
                        Secretary.
                            ``(ii) Notice to counseling agency.--The 
                        notice described in this clause, with respect 
                        to a mortgage, is notice, provided at the 
                        earliest time practicable after the mortgagor 
                        becomes 60 days delinquent with respect to any 
                        payment due under the mortgage, that the 
                        mortgagor is so delinquent and of how to 
                        contact the mortgagor. Such notice may only be 
                        provided once with respect to each delinquency 
                        period for a mortgage.
                            ``(iii) Notice to mortgagor.--Upon notice 
                        from a mortgagee that a mortgagor is 60 days 
                        delinquent with respect to payments due under 
                        the mortgage, the housing counseling entity 
                        shall at the earliest time practicable notify 
                        the mortgagor of such delinquency, that the 
                        entity makes available foreclosure prevention 
                        counseling that may assist the mortgagor in 
                        resolving the delinquency, and of how to 
                        contact the entity to arrange for such 
                        counseling.
                            ``(iv) Ability to cure.--Failure to provide 
                        the written agreement required under clause (i) 
                        may be corrected by sending such agreement to 
                        the mortgagor not later than the earliest time 
                        practicable after the mortgagor first becomes 
                        60 days delinquent with respect to payments due 
                        under the mortgage. Insurance provided under 
                        this subsection may not be terminated and 
                        penalties for such failure may not be 
                        prospectively or retroactively imposed if such 
                        failure is corrected in accordance with this 
                        clause.
                            ``(v) Penalties for failure to provide 
                        agreement.--The Secretary may establish and 
                        impose appropriate penalties for failure of a 
                        mortgagee to provide the written agreement 
                        required under clause (i).
                            ``(vi) Limitation on liability of 
                        mortgagee.--A mortgagee shall not incur any 
                        liability or penalties for any failure of a 
                        housing counseling entity to provide notice 
                        under clause (iii).
                            ``(vii) No private right of action.--This 
                        subparagraph shall not create any private right 
                        of action on behalf of the mortgagor.
                            ``(viii) Delinquency period.--For purposes 
                        of this subparagraph, the term `delinquency 
                        period' means, with respect to a mortgage, a 
                        period that begins upon the mortgagor becoming 
                        delinquent with respect to payments due under 
                        the mortgage and ends upon the first subsequent 
                        occurrence of such payments under the mortgage 
                        becoming current or the property subject to the 
                        mortgage being foreclosed or otherwise disposed 
                        of.''.

SEC. 11. ANNUAL REPORTS ON NEW PROGRAMS AND LOSS MITIGATION.

    Section 540(b)(2) of the National Housing Act (12 U.S.C. 1735f-
18(b)(2)) is amended, by adding at the end the following new 
subparagraphs:
                    ``(C) The rates of default and foreclosure for the 
                applicable collection period for mortgages insured 
                pursuant to the programs for mortgage insurance under 
                paragraphs (2)(C) and (3) of section 203(c).
                    ``(D) Actions taken by the Secretary during the 
                applicable collection period with respect to loss 
                mitigation on mortgages insured pursuant to section 
                203.''.

SEC. 12. INSURANCE FOR SINGLE FAMILY HOMES WITH LICENSED CHILD CARE 
              FACILITIES.

    (a) Definition of Child Care Facility.--Section 201 of the National 
Housing Act (12 U.S.C. 1707) is amended by adding at the end the 
following new subsection:
    ``(g) The term `child care facility' means a facility that--
            ``(A) has as its purpose the care of children who are less 
        than 12 years of age; and
            ``(B) is licensed or regulated by the State in which it is 
        located (or, if there is no State law providing for such 
        licensing and regulation by the State, by the municipality or 
        other political subdivision in which the facility is located).
Such term does not include facilities for school-age children primarily 
for use during normal school hours.''.
    (b) Increase in Maximum Mortgage Amount Limitation.--Paragraph (2) 
of section 203(b) of the National Housing Act (12 U.S.C. 1709(b)(2)), 
as amended by the preceding provisions of this Act, is further amended 
by adding at end the following new undesignated paragraph:
            ``Notwithstanding any other provision of this paragraph, 
        the amount that may be insured under this section may be 
        increased by up to 25 percent if such increase is necessary to 
        account for the increased cost of the residence due to an 
        increased need of space in the residence for locating and 
        operating a child care facility (as such term is defined in 
        section 201) within the residence, but only if a valid license 
        or certificate of compliance with regulations described in 
        section 201(g)(2) has been issued for such facility as of the 
        date of the execution of the mortgage, and only if such 
        increase in the amount insured is proportional to the amount of 
        space of such residence that will be used for such facility.''.

SEC. 13. REHABILITATION LOANS.

    Subsection (k) of section 203 of the National Housing Act (12 
U.S.C. 1709(k)) is amended--
            (1) in paragraph (1), by striking ``on'' and all that 
        follows through ``1978''; and
            (2) in paragraph (5)--
                    (A) by striking ``General Insurance Fund'' the 
                first place it appears and inserting ``Mutual Mortgage 
                Insurance Fund''; and
                    (B) in the second sentence, by striking the comma 
                and all that follows through ``General Insurance 
                Fund''.

SEC. 14. DISCRETIONARY ACTION.

    The National Housing Act is amended--
            (1) in subsection (e) of section 202 (12 U.S.C. 1708(e))--
                    (A) in paragraph (3)(B), by striking ``section 
                202(e) of the National Housing Act'' and inserting 
                ``this subsection''; and
                    (B) by redesignating such subsection as subsection 
                (f);
            (2) by striking paragraph (4) of section 203(s) (12 U.S.C. 
        1709(s)(4)) and inserting the following new paragraph:
            ``(4) the Secretary of Agriculture;''; and
            (3) by transferring subsection (s) of section 203 (as 
        amended by paragraph (2) of this section) to section 202, 
        inserting such subsection after subsection (d) of section 202, 
        and redesignating such subsection as subsection (e).

SEC. 15. INSURANCE OF CONDOMINIUMS AND MANUFACTURED HOUSING.

    (a) In General.--Section 234 of the National Housing Act (12 U.S.C. 
1715y) is amended--
            (1) in subsection (c)--
                    (A) in the first sentence--
                            (i) by striking ``and'' before ``(2)''; and
                            (ii) by inserting before the period at the 
                        end the following: ``, and (3) the project has 
                        a blanket mortgage insured by the Secretary 
                        under subsection (d)''; and
                    (B) in clause (B) of the third sentence, by 
                striking ``thirty-five years'' and inserting ``forty 
                years''; and
            (2) in subsection (g), by striking ``, except that'' and 
        all that follows and inserting a period.
    (b) Definition of Mortgage.--Section 201(a) of the National Housing 
Act (12 U.S.C. 1707(a)) is amended--
            (1) before `` a first mortgage'' insert ``(A)'';
            (2) by striking ``or on a leasehold (1)'' and inserting 
        ``(B) a first mortgage on a leasehold on real estate (i)'';
            (3) by striking ``or (2)'' and inserting ``, or (ii)''; and
            (4) by inserting before the semicolon the following: ``, or 
        (C) a first mortgage given to secure the unpaid purchase price 
        of a fee interest in, or long-term leasehold interest in, real 
        estate consisting of a one-family unit in a multifamily 
        project, including a project in which the dwelling units are 
        attached, or are manufactured housing units, semi-detached, or 
        detached, and an undivided interest in the common areas and 
        facilities which serve the project''.
    (c) Definition of Real Estate.--Section 201 of the National Housing 
Act (12 U.S.C. 1707), as amended by the preceding provisions of this 
Act, is further amended by adding at the end the following new 
subsection:
    ``(h) The term `real estate' means land and all natural resources 
and structures permanently affixed to the land, including residential 
buildings and stationary manufactured housing. The Secretary may not 
require, for treatment of any land or other property as real estate for 
purposes of this title, that such land or property be treated as real 
estate for purposes of State taxation.''.

SEC. 16. MUTUAL MORTGAGE INSURANCE FUND.

    (a) In General.--Subsection (a) of section 202 of the National 
Housing Act (12 U.S.C. 1708(a)) is amended to read as follows:
    ``(a) Mutual Mortgage Insurance Fund.--
            ``(1) Establishment.--Subject to the provisions of the 
        Federal Credit Reform Act of 1990, there is hereby created a 
        Mutual Mortgage Insurance Fund (in this title referred to as 
        the `Fund'), which shall be used by the Secretary to carry out 
        the provisions of this title with respect to mortgages insured 
        under section 203. The Secretary may enter into commitments to 
        guarantee, and may guarantee, such insured mortgages.
            ``(2) Limit on loan guarantees.--The authority of the 
        Secretary to enter into commitments to guarantee such insured 
        mortgages shall be effective for any fiscal year only to the 
        extent that the aggregate original principal loan amount under 
        such mortgages, any part of which is guaranteed, does not 
        exceed the amount specified in appropriations Acts for such 
        fiscal year.
            ``(3) Fiduciary responsibility.--The Secretary has a 
        responsibility to ensure that the Mutual Mortgage Insurance 
        Fund remains financially sound.
            ``(4) Annual independent actuarial study.--The Secretary 
        shall provide for an independent actuarial study of the Fund to 
        be conducted annually, which shall analyze the financial 
        position of the Fund. The Secretary shall submit a report 
        annually to the Congress describing the results of such study 
        and assessing the financial status of the Fund. The report 
        shall recommend adjustments to underwriting standards, program 
        participation, or premiums, if necessary, to ensure that the 
        Fund remains financially sound.
            ``(5) Quarterly reports.--During each fiscal year, the 
        Secretary shall submit a report to the Congress for each 
        quarter, which shall specify for mortgages that are obligations 
        of the Fund--
                    ``(A) the cumulative volume of loan guarantee 
                commitments that have been made during such fiscal year 
                through the end of the quarter for which the report is 
                submitted;
                    ``(B) the types of loans insured, categorized by 
                risk;
                    ``(C) any significant changes between actual and 
                projected claim and prepayment activity;
                    ``(D) projected versus actual loss rates; and
                    ``(E) updated projections of the annual subsidy 
                rates to ensure that increases in risk to the Fund are 
                identified and mitigated by adjustments to underwriting 
                standards, program participation, or premiums, and the 
                financial soundness of the Fund is maintained.
        The first quarterly report under this paragraph shall be 
        submitted on the last day of the first quarter of fiscal year 
        2008, or upon the expiration of the 90-day period beginning on 
        the date of the enactment of the Expanding American 
        Homeownership Act of 2007, whichever is later.
            ``(6) Adjustment of premiums.--If, pursuant to the 
        independent actuarial study of the Fund required under 
        paragraph (5), the Secretary determines that the Fund is not 
        meeting the operational goals established under paragraph (8) 
        or there is a substantial probability that the Fund will not 
        maintain its established target subsidy rate, the Secretary may 
        either make programmatic adjustments under section 203 as 
        necessary to reduce the risk to the Fund, or make appropriate 
        premium adjustments.
            ``(7) Operational goals.--The operational goals for the 
        Fund are--
                    ``(A) to charge borrowers under loans that are 
                obligations of the Fund an appropriate premium for the 
                risk that such loans pose to the Fund;
                    ``(B) to minimize the default risk to the Fund and 
                to homeowners;
                    ``(C) to curtail the impact of adverse selection on 
                the Fund; and
                    ``(D) to meet the housing needs of the borrowers 
                that the single family mortgage insurance program under 
                this title is designed to serve.''.
    (b) Obligations of Fund.--The National Housing Act is amended as 
follows:
            (1) Homeownership voucher program mortgages.--In section 
        203(v) (12 U.S.C. 1709(v))--
                    (A) by striking ``Notwithstanding section 202 of 
                this title, the'' and inserting ``The''; and
                    (B) by striking ``General Insurance Fund'' the 
                first place such term appears and all that follows and 
                inserting ``Mutual Mortgage Insurance Fund.''.
            (2) Home equity conversion mortgages.--Section 255(i)(2)(A) 
        of the National Housing Act (12 U.S.C. 1715z-20(i)(2)(A)) is 
        amended by striking ``General Insurance Fund'' and inserting 
        ``Mutual Mortgage Insurance Fund''.
    (c) Conforming Amendments.--The National Housing Act is amended--
            (1) in section 205 (12 U.S.C. 1711), by striking 
        subsections (g) and (h); and
            (2) in section 519(e) (12 U.S.C. 1735c(e)), by striking 
        ``203(b)'' and all that follows through ``203(i)'' and 
        inserting ``203, except as determined by the Secretary''.

SEC. 17. HAWAIIAN HOME LANDS AND INDIAN RESERVATIONS.

    (a) Hawaiian Home Lands.--Section 247(c) of the National Housing 
Act (12 U.S.C. 1715z-12) is amended--
            (1) by striking ``General Insurance Fund established in 
        section 519'' and inserting ``Mutual Mortgage Insurance Fund''; 
        and
            (2) in the second sentence, by striking ``(1) all 
        references'' and all that follows through ``and (2)''.
    (b) Indian Reservations.--Section 248(f) of the National Housing 
Act (12 U.S.C. 1715z-13) is amended--
            (1) by striking ``General Insurance Fund'' the first place 
        it appears and all that follows through ``519'' and inserting 
        ``Mutual Mortgage Insurance Fund''; and
            (2) in the second sentence, by striking ``(1) all 
        references'' and all that follows through ``and (2)''.

SEC. 18. CONFORMING AND TECHNICAL AMENDMENTS.

    (a) Repeals.--The following provisions of the National Housing Act 
are repealed:
            (1) Subsection (i) of section 203 (12 U.S.C. 1709(i)).
            (2) Subsection (o) of section 203 (12 U.S.C. 1709(o)).
            (3) Subsection (p) of section 203 (12 U.S.C. 1709(p)).
            (4) Subsection (q) of section 203 (12 U.S.C. 1709(q)).
            (5) Section 222 (12 U.S.C. 1715m).
            (6) Section 237 (12 U.S.C. 1715z-2).
            (7) Section 245 (12 U.S.C. 1715z-10).
    (b) Definition of Area.--Section 203(u)(2)(A) of the National 
Housing Act (12 U.S.C. 1709(u)(2)(A)) is amended by striking ``shall'' 
and all that follows and inserting ``means a metropolitan statistical 
area as established by the Office of Management and Budget;''.
    (c) Definition of State.--Section 201(d) of the National Housing 
Act (12 U.S.C. 1707(d)) is amended by striking ``the Trust Territory of 
the Pacific Islands'' and inserting ``the Commonwealth of the Northern 
Mariana Islands''.

SEC. 19. HOME EQUITY CONVERSION MORTGAGES.

    (a) In General.--Section 255 of the National Housing Act (12 U.S.C. 
1715z-20) is amended--
            (1) in subsection (b)(2), insert ```real estate,''' after 
        ```mortgagor','';
            (2) in subsection (g)--
                    (A) by striking the first sentence; and
                    (B) by striking ``established under section 
                203(b)(2)'' and all that follows through ``located'' 
                and inserting ``limitation established under section 
                305(a)(2) of the Federal Home Loan Mortgage Corporation 
                Act for a 1-family residence'';
            (3) in subsection (i)(1)(C), by striking ``limitations'' 
        and inserting ``limitation''; and
            (4) by adding at the end the following new subsection:
    ``(o) Authority To Insure Home Purchase Mortgage.--
            ``(1) In general.--Notwithstanding any other provision in 
        this section, the Secretary may insure, upon application by a 
        mortgagee, a home equity conversion mortgage upon such terms 
        and conditions as the Secretary may prescribe, when the primary 
        purpose of the home equity conversion mortgage is to enable an 
        elderly mortgagor to purchase a 1- to 4-family dwelling in 
        which the mortgagor will occupy or occupies one of the units.
            ``(2) Limitation on principal obligation.--A home equity 
        conversion mortgage insured pursuant to paragraph (1) shall 
        involve a principal obligation that does not exceed the dollar 
        amount limitation determined under section 305(a)(2) of the 
        Federal Home Loan Mortgage Corporation Act for a residence of 
        the applicable size.''.
    (b) Mortgages for Cooperatives.--Subsection (b) of section 255 of 
the National Housing Act (12 U.S.C. 1715z-20(b)) is amended--
            (1) in paragraph (4)--
                    (A) by inserting ``a first or subordinate mortgage 
                or lien'' before ``on all stock'';
                    (B) by inserting ``unit'' after ``dwelling''; and
                    (C) by inserting ``a first mortgage or first lien'' 
                before ``on a leasehold''; and
            (2) in paragraph (5), by inserting ``a first or subordinate 
        lien on'' before ``all stock''.
    (c) Limitation on Origination Fees.--Section 255 of the National 
Housing Act (12 U.S.C. 1715z-20), as amended by the preceding 
provisions of this section, is further amended--
            (1) by redesignating subsections (k), (l), and (m) as 
        subsections (l), (m), and (n), respectively; and
            (2) by inserting after subsection (j) the following new 
        subsection:
    ``(k) Limitation on Origination Fees.--The Secretary shall 
establish limits on the origination fee that may be charged to a 
mortgagor under a mortgage insured under this section, which 
limitations shall--
            ``(1) equal two percent of the original principal limit of 
        the mortgage;
            ``(2) be subject to a minimum allowable amount;
            ``(3) provide that the origination fee may be fully 
        financed with the mortgage; and
            ``(4) include any fees paid to correspondent mortgagees 
        approved by the Secretary or to mortgage brokers.''.
    (d) Study Regarding Mortgage Insurance Premiums.--The Secretary of 
Housing and Urban Development shall conduct a study regarding mortgage 
insurance premiums charged under the program under section 255 of the 
National Housing Act (12 U.S.C. 1715z-20) for insurance of home equity 
conversion mortgages to analyze and determine the effects of reducing 
the amounts of such premiums from the amounts charged as of the date of 
the enactment of this Act on (1) costs to mortgagors, and (2) the 
financial soundness of the program. Not later than the expiration of 
the 12-month period beginning on the date of the enactment of this Act, 
the Secretary shall submit a report to the Congress setting forth the 
results and conclusions of the study.

SEC. 20. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS.

    (a) In General.--
            (1) Definitions.--
                    (A) In general.--Section 201 of the National 
                Housing Act (12 U.S.C. 1707), as amended by the 
                preceding provisions of this Act, is further amended--
                            (i) by striking ``As used in section 203 of 
                        this title--'' and inserting ``As used in this 
                        title and for purposes of participation in 
                        insurance programs under this title, except as 
                        specifically provided otherwise, the following 
                        definitions shall apply:'';
                            (ii) by striking subsection (b) and 
                        inserting the following:
            ``(2) The term `mortgagee' means any of the following 
        entities, and its successors and assigns, to the extent such 
        entity is approved by the Secretary:
                    ``(A) Qualification by audit and net worth.--A 
                lender, or mortgage broker, or correspondent lender, 
                who--
                            ``(i) makes, underwrites, and services 
                        mortgages;
                            ``(ii) submits to the Secretary such 
                        financial audits performed in accordance with 
                        the standards for financial audits of the 
                        Government Auditing Standards issued by the 
                        Comptroller General of the United States;
                            ``(iii) meet the minimum net worth 
                        requirement that the Secretary shall establish; 
                        and
                            ``(iv) complies with such other 
                        requirements as the Secretary may establish.
                    ``(B) Qualification of correspondent lenders by 
                surety bond.--Except as provided in subparagraph (D), a 
                correspondent lender who--
                            ``(i) closes a mortgage in its name but 
                        does not underwrite or service the mortgage;
                            ``(ii) posts a surety bond, in lieu of any 
                        requirement to provide audited financial 
                        statements or meet a minimum net worth 
                        requirement, in--
                                    ``(I) a form satisfactory to the 
                                Secretary; and
                                    ``(II) an amount of $75,000, as 
                                such amount is adjusted annually by the 
                                Secretary (as determined under 
                                regulations of the Secretary) by the 
                                change for such year in the Consumer 
                                Price Index for All Urban Consumers 
                                published monthly by the Bureau of 
                                Labor Statistics of the Department of 
                                Labor; and
                            ``(iii) complies with such other 
                        requirements as the Secretary may establish.
                    ``(C) Qualification of brokers by surety bond.--
                Except as provided in subparagraph (D), a mortgage 
                broker who--
                            ``(i) closes the mortgage in the name of 
                        the lender and does not make, underwrite, or 
                        service the mortgage;
                            ``(ii) is licensed, under the laws of the 
                        State in which the property that is subject to 
                        the mortgage is located, to act as a mortgage 
                        broker in such State;
                            ``(iii) posts a surety bond in accordance 
                        with the requirements of subparagraph (B)(ii); 
                        and
                            ``(iv) complies with such other 
                        requirements as the Secretary may establish.
                    ``(D) Conditions for continued applicability.--(i) 
                Subparagraphs (B) and (C) shall continue to apply after 
                the expiration of the 5-year period beginning on the 
                date of the enactment of the Expanding American 
                Homeownership Act of 2007 only if, after the expiration 
                of the 4-year period beginning upon such date of 
                enactment and taking into consideration the report 
                submitted in accordance with section 19(b) of such Act, 
                the Secretary--
                            ``(I) makes a determination that such 
                        subparagraphs provide protection to mortgage 
                        insurance funds for mortgages insured under 
                        this title that are comparable to the 
                        protection provided by the requirements for 
                        mortgagees under this title as in effect 
                        immediately before the enactment of such Act; 
                        and
                            ``(II) publishes in the Federal Register a 
                        notice of such determination and an order 
                        extending the applicability of such 
                        subparagraphs.
                    ``(ii) If, taking into consideration such report, 
                the Secretary makes a determination after the 
                expiration of such 4-year period that subparagraphs (B) 
                and (C) do not provide protection as referred to in 
                clause (i) of this subparagraph, the Secretary may, by 
                order published in the Federal Register, provide for 
                the participation, after the expiration of the 5-year 
                period referred to in clause (i), of correspondent 
                lenders and mortgage brokers as mortgagees in the 
                insurance programs under this title in accordance with 
                subparagraphs (B) and (C) as modified by the Secretary 
                as the Secretary considers appropriate to provide such 
                protection.
                    ``(E) Additional mortgage broker requirements.--
                            ``(i) In addition to the requirements under 
                        subparagraphs (A) and (C) and to duties imposed 
                        under other statutes or common law, to be 
                        eligible as a mortgagee under this section, a 
                        broker shall--
                                    ``(I) safeguard and account for any 
                                money handled for the borrower;
                                    ``(II) follow reasonable and lawful 
                                instructions from the borrower; and
                                    ``(III) act with reasonable skill, 
                                care, and diligence.
                            ``(ii) For purposes of this subparagraph, a 
                        loan correspondent shall be considered to be a 
                        mortgage broker.
                            ``(iii) The duties and standards of care 
                        created in this subparagraph shall not be 
                        waived or modified.
                            ``(iv) Any broker found by the Secretary to 
                        have violated the requirements of this 
                        subparagraph may not originate mortgage loans 
                        insured under this title.
            ``(3) The term `mortgagor' includes the original borrower 
        under a mortgage and the successors and assigns of the original 
        borrower.''; and
                            (iii) by redesignating subsections (a), 
                        (c), (d), (e), (f), (g), and (h) as paragraphs 
                        (1), (4), (5), (6), (7), (8), and (9), 
                        respectively, and indenting such paragraphs two 
                        ems so as to align the left margins of such 
                        paragraphs with the left margins of paragraphs 
                        (2) and (3) (as added by clause (ii) of this 
                        subparagraph).
                    (B) Mortgagee review.--Section 202(c)(7) of the 
                National Housing Act (12 U.S.C. 1708(c)(7)) is 
                amended--
                            (i) in subparagraph (A), by inserting ``, 
                        as defined in section 201,'' after 
                        ``mortgagee'';
                            (ii) by striking subparagraph (B); and
                            (iii) by redesignating subparagraphs (C) 
                        and (D) as subparagraphs (B) and (C), 
                        respectively.
                    (C) Multifamily rental housing insurance.--Section 
                207(a)(2) of the National Housing Act (12 U.S.C. 
                1713(a)(2)) is amended by striking ``means the original 
                lender under a mortgage, and its successors and 
                assigns, and'' and inserting ``has the meaning given 
                such term in section 201, except that such term also''.
                    (D) War housing insurance.--Section 601(b) of the 
                National Housing Act (12 U.S.C. 1736(b)) is amended by 
                striking ``includes the original lender under a 
                mortgage, and his successors and assigns approved by 
                the Secretary'' and inserting ``has the meaning given 
                such term in section 201''.
                    (E) Armed services housing mortgage insurance.--
                Section 801(b) of the National Housing Act (12 U.S.C. 
                1748(b)) is amended by striking ``includes the original 
                lender under a mortgage, and his successors and assigns 
                approved by the Secretary'' and inserting ``has the 
                meaning given such term in section 201''.
                    (F) Group practice facilities mortgage insurance.--
                Section 1106(8) of the National Housing Act (12 U.S.C. 
                1749aaa-5(8)) is amended by striking ``means the 
                original lender under a mortgage, and his or its 
                successors and assigns, and'' and inserting ``has the 
                meaning given such term in section 201, except that 
                such term also''.
            (2) Eligibility for insurance.--
                    (A) Title i.--Paragraph (1) of section 8(b) of the 
                National Housing Act (12 U.S.C. 1706c(b)(1)) is 
                amended--
                            (i) by striking ``, and be held by,''; and
                            (ii) by striking ``as responsible and able 
                        to service the mortgage properly''.
                    (B) Single family housing mortgage insurance.--
                Paragraph (1) of section 203(b) of the National Housing 
                Act (12 U.S.C. 1709(b)(1)) is amended--
                            (i) by striking ``, and be held by,''; and
                            (ii) by striking ``as responsible and able 
                        to service the mortgage properly''.
                    (C) Section 221 mortgage insurance.--Paragraph (1) 
                of section 221(d) of the National Housing Act (12 
                U.S.C. 1715l(d)(1)) is amended--
                            (i) by striking ``and be held by''; and
                            (ii) by striking ``as responsible and able 
                        to service the mortgage properly''.
                    (D) Home equity conversion mortgage insurance.--
                Paragraph (1) of section 255(d) of the National Housing 
                Act (12 U.S.C. 1715z-20(d)(1)) is amended by striking 
                ``as responsible and able to service the mortgage 
                properly''.
                    (E) War housing mortgage insurance.--Paragraph (1) 
                of section 603(b) of the National Housing Act (12 
                U.S.C. 1738(b)(1)) is amended--
                            (i) by striking ``, and be held by,''; and
                            (ii) by striking ``as responsible and able 
                        to service the mortgage properly''.
                    (F) War housing mortgage insurance for large-scale 
                housing projects.--Paragraph (1) of section 611(b) of 
                the National Housing Act (12 U.S.C. 1746(b)(1)) is 
                amended--
                            (i) by striking ``and be held by''; and
                            (ii) by striking ``as responsible and able 
                        to service the mortgage properly''.
                    (G) Group practice facility mortgage insurance.--
                Section 1101(b)(2) of the National Housing Act (12 
                U.S.C. 1749aaa(b)(2)) is amended--
                            (i) by striking ``and held by''; and
                            (ii) by striking ``as responsible and able 
                        to service the mortgage properly''.
                    (H) National defense housing insurance.--Paragraph 
                (1) of section 903(b) of the National Housing Act (12 
                U.S.C. 1750b(b)(1)) is amended--
                            (i) by striking ``, and be held by,''; and
                            (ii) by striking ``as responsible and able 
                        to service the mortgage properly''.
                    (I) Contingent repeal.--Unless there is published 
                in the Federal Register, before the expiration of the 
                5-year period beginning on the date of the enactment of 
                this Act, an order under clause (i) or (ii) of section 
                201(2)(D) of the National Housing Act (12 U.S.C. 
                1707(2)(D)), as added by paragraph (1)(A)(2) of this 
                subsection, upon the expiration of such period the 
                provisions of such Act amended by this paragraph are 
                amended to read as such provisions would be in effect 
                upon such expiration if this Act had not been enacted 
                (taking into consideration any amendments, after such 
                date of enactment, to such provisions other than under 
                this Act).
    (b) GAO Study and Report.--
            (1) Study.--The Comptroller General of the United States 
        shall conduct a study, upon the expiration of the 42-month 
        period beginning on the date of the enactment of this Act, 
        regarding the effect of the amendments made by subsection (a), 
        which shall analyze and determine--
                    (A) the extent to which such amendments have 
                resulted in increased participation, by mortgage 
                brokers and correspondent lenders, in the mortgage 
                insurance programs under the National Housing Act, as 
                measured by the number and amounts of such insured 
                mortgages, disaggregated by the States in which the 
                properties subject to such mortgages are located;
                    (B) with respect to mortgages insured under such 
                Act, a comparison in the numbers and rate of defaults, 
                foreclosures, and mortgage insurance claims on such 
                mortgages originated by mortgage brokers and 
                correspondent lenders authorized to participate in the 
                programs under such Act pursuant to the amendments made 
                by subsection (a) to such numbers and rates on such 
                mortgages originated by lenders who would be authorized 
                to participate in such programs notwithstanding such 
                amendments;
                    (C) any impact of such amendments on the costs to 
                the Secretary of Housing and Urban Development of 
                administering the mortgage insurance programs under 
                such title; and
                    (D) the extent and effectiveness of the supervision 
                and enforcement, by the Secretary, of the additional 
                authority provided under the amendments made by 
                subsection (a).
            (2) Report.--Not later than the expiration of 4-year period 
        beginning on the date of the enactment of this Act, the 
        Comptroller General shall submit a report to the Congress and 
        the Secretary of Housing and Urban Development setting forth 
        the results and conclusions of the study conducted pursuant to 
        paragraph (1).

SEC. 21. CONFORMING LOAN LIMIT IN DISASTER AREAS.

    Section 203(h) of the National Housing Act (12 U.S.C. 1709) is 
amended--
            (1) by inserting after ``property'' the following: ``plus 
        any initial service charges, appraisal, inspection and other 
        fees in connection with the mortgage as approved by the 
        Secretary,'';
            (2) by striking the second sentence (as added by chapter 7 
        of the Emergency Supplemental Appropriations Act of 1994 
        (Public Law 103-211; 108 Stat. 12)); and
            (3) by adding at the end the following new sentence: ``In 
        any case in which the single family residence to be insured 
        under this subsection is within a jurisdiction in which the 
        President has declared a major disaster to have occurred, the 
        Secretary is authorized, for a temporary period not to exceed 
        36 months from the date of such Presidential declaration, to 
        enter into agreements to insure a mortgage which involves a 
        principal obligation of up to 100 percent of the dollar 
        limitation determined under section 305(a)(2) of the Federal 
        Home Loan Mortgage Corporation Act for a single family 
        residence, and not in excess of 100 percent of the appraised 
        value of the property plus any initial service charges, 
        appraisal, inspection and other fees in connection with the 
        mortgage as approved by the Secretary.''.

SEC. 22. FAILURE TO PAY AMOUNTS FROM ESCROW ACCOUNTS FOR SINGLE FAMILY 
              MORTGAGES.

    (a) Penalties.--Section 536 of the National Housing Act (12 U.S.C. 
1735f-14) is amended--
            (1) in subsection (a)(1), by inserting ``servicers 
        (including escrow account servicers),'' after ``appraisers,'';
            (2) in subsection (b)(1)--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``or other participant referred to in 
                subsection (a),'' after ``lender,'' ; and
                    (B) by inserting at the end the following new 
                subparagraphs:
                    ``(K) In the case of a mortgage for a 1- to 4-
                family residence insured under title II that requires 
                the mortgagor to make payments to the mortgagee or 
                other servicer of the mortgage for deposit into an 
                escrow account for the purpose of assuring payment of 
                taxes, insurance premiums, and other charges with 
                respect to the property, failure on the part of the 
                servicer to make any such payment from the escrow 
                account by the deadline to avoid a penalty with respect 
                to such payment provided for in the mortgage, unless 
                the servicer was not provided notice of such deadline.
                    ``(L) In the case of any failure to make any 
                payment as described in subparagraph (K), submitting 
                any information to a consumer reporting agency (as such 
                term is defined in section 603(f) of the Fair Credit 
                Reporting Act (15 U.S.C. 1681a(f))) regarding such 
                failure that is adverse to the credit rating or 
                interest of the mortgagor.''; and
            (3) in subsection (c)(3), by adding at the end the 
        following: ``In the case of any failure to make a payment 
        described in subsection (b)(1)(K) for which the servicer fails 
        to reimburse the mortgagor (A) before the expiration of the 60-
        day period beginning on the deadline to avoid a penalty with 
        respect to such payment, in the sum of the amount not paid from 
        the escrow account by such deadline and the amount of any 
        penalties accruing to the mortgagor that are attributable to 
        such failure, or (B) in the amount of any attorneys fees 
        incurred by the mortgagor and attributable to such failure, the 
        Secretary shall increase the amount of the penalty under 
        subsection (a) for any such failure to reimburse, unless the 
        Secretary determines there are mitigating circumstances.''.
    (b) Prohibition on Submission of Information by HUD.--Title II of 
the National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding 
at the end the following new section:

``SEC. 257. PROHIBITION REGARDING FAILURE ON PART OF SERVICER TO MAKE 
              ESCROW PAYMENTS.

    ``In the case of any failure to make any payment as described in 
section 536(b)(1)(K), the Secretary may not submit any information to a 
consumer reporting agency (as such term is defined in section 603(f) of 
the Fair Credit Reporting Act (15 U.S.C. 1681a(f))) regarding such 
failure that is adverse to the credit rating or interest of the 
mortgagor.''.

SEC. 23. ACCEPTABLE IDENTIFICATION FOR FHA MORTGAGORS.

    (a) In General.--Title II of the National Housing Act is amended by 
inserting after section 209 (12 U.S.C. 1715) the following new section:

``SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION.

    ``The Secretary may not insure a mortgage under any provision of 
this title unless the mortgagor under the mortgage provides personal 
identification in one of the following forms:
            ``(1) Social security card with photo identification card 
        or real id act identification.--
                    ``(A) A social security card accompanied by a photo 
                identification card issued by the Federal Government or 
                a State Government; or
                    ``(B) A driver's license or identification card 
                issued by a State in the case of a State that is in 
                compliance with title II of the REAL ID Act of 2005 
                (title II of division B of Public Law 109-13; 49 U.S.C. 
                30301 note).
            ``(2) Passport.--A passport issued by the United States or 
        a foreign government.
            ``(3) USCIS photo identification card.--A photo 
        identification card issued by the Secretary of Homeland 
        Security (acting through the Director of the United States 
        Citizenship and Immigration Services).''.
    (b) Effective Date.--The requirements of section 210 of the 
National Housing Act (as added by subsection (a) of this section) shall 
take effect six months after the date of the enactment of this Act.

SEC. 24. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT 
              SUFFICIENT CREDIT HISTORY.

    (a) Establishment.--Title II of the National Housing Act (12 U.S.C. 
1707 et seq.), as amended by the preceding provisions of this Act, is 
further amended by adding at the end the following new section:

``SEC. 258. PILOT PROGRAM FOR AUTOMATED PROCESS FOR BORROWERS WITHOUT 
              SUFFICIENT CREDIT HISTORY.

    ``(a) Establishment.--The Secretary shall carry out a pilot program 
to establish, and make available to mortgagees, an automated process 
for providing alternative credit rating information for mortgagors and 
prospective mortgagors under mortgages on 1- to 4-family residences to 
be insured under this title who have insufficient credit histories for 
determining their creditworthiness. Such alternative credit rating 
information may include rent, utilities, and insurance payment 
histories, and such other information as the Secretary considers 
appropriate.
    ``(b) Scope.--The Secretary may carry out the pilot program under 
this section on a limited basis or scope, and may consider limiting the 
program--
            ``(1) to first-time homebuyers; or
            ``(2) metropolitan statistical areas significantly impacted 
        by subprime lending.
    ``(c) Limitation.--In any fiscal year, the aggregate number of 
mortgages insured pursuant to the automated process established under 
this section may not exceed 5 percent of the aggregate number of 
mortgages for 1- to 4-family residences insured by the Secretary under 
this title during the preceding fiscal year.
    ``(d) Sunset.--After the expiration of the 5-year period beginning 
on the date of the enactment of the Expanding American Homeownership 
Act of 2007, the Secretary may not enter into any new commitment to 
insure any mortgage, or newly insure any mortgage, pursuant to the 
automated process established under this section.''.
    (b) GAO Report.--Not later than the expiration of the two-year 
period beginning on the date of the enactment of this Act, the 
Comptroller General of the United States shall submit to the Congress a 
report identifying the number of additional mortgagors served using the 
automated process established pursuant to section 258 of the National 
Housing Act (as added by the amendment made by subsection (a) of this 
section) and the impact of such process and the insurance of mortgages 
pursuant to such process on the safety and soundness of the insurance 
funds under the National Housing Act of which such mortgages are 
obligations.

SEC. 25. SENSE OF CONGRESS REGARDING TECHNOLOGY FOR FINANCIAL SYSTEMS.

    (a) Congressional Findings.--The Congress finds the following:
            (1) The Government Accountability Office has cited the FHA 
        single family housing mortgage insurance program as a ``high-
        risk'' program, with a primary reason being non-integrated and 
        out-dated financial management systems.
            (2) The ``Audit of the Federal Housing Administration's 
        Financial Statements for Fiscal Years 2004 and 2003'', 
        conducted by the Inspector General of the Department of Housing 
        and Urban Development reported as a material weakness that 
        ``HUD/FHA's automated data processing [ADP] system environment 
        must be enhanced to more effectively support FHA's business and 
        budget processes''.
            (3) Existing technology systems for the FHA program have 
        not been updated to meet the latest standards of the Mortgage 
        Industry Standards Maintenance Organization and have numerous 
        deficiencies that lenders have outlined.
            (4) Improvements to technology used in the FHA program 
        will--
                    (A) allow the FHA program to improve the management 
                of the FHA portfolio, garner greater efficiencies in 
                its operations, and lower costs across the program;
                    (B) result in efficiencies and lower costs for 
                lenders participating in the program, allowing them to 
                better use the FHA products in extending homeownership 
                opportunities to higher credit risk or lower-income 
                families, in a sound manner.
            (5) The Mutual Mortgage Insurance Fund operates without 
        cost to the taxpayers and generates revenues for the Federal 
        Government.
    (b) Sense of Congress.--It is the sense of the Congress that--
            (1) the Secretary of Housing and Urban Development should 
        use a portion of the funds received from premiums paid for FHA 
        single family housing mortgage insurance that are in excess of 
        the amounts paid out in claims to substantially increase the 
        funding for technology used in such FHA program;
            (2) the goal of this investment should be to bring the 
        technology used in such FHA program to the level and 
        sophistication of the technology used in the conventional 
        mortgage lending market, or to exceed such level; and
            (3) the Secretary of Housing and Urban Development should 
        report to the Congress not later than 180 days after the date 
        of the enactment of this Act regarding the progress the 
        Department is making toward such goal and if progress is not 
        sufficient, the resources needed to make greater progress.

SEC. 26. MULTIFAMILY HOUSING MORTGAGE LIMITS IN HIGH COST AREAS.

    The National Housing Act is amended--
            (1) in sections 207(c)(3), 213(b)(2)(B)(i), 
        221(d)(3)(ii)(II), 221(d)(4)(ii)(II), 231(c)(2)(B), and 
        234(e)(3)(B) (12 U.S.C. 1713(c)(3), 1715e(b)(2)(B)(i), 
        1715l(d)(3)(ii)(II), 1715l(d)(4)(ii)(II), 1715v(c)(2)(B), and 
        1715y(e)(3)(B))--
                    (A) by striking ``140 percent'' each place such 
                term appears and inserting ``170 percent''; and
                    (B) by striking ``170 percent in high cost areas'' 
                each place such term appears and inserting ``215 
                percent in high cost areas''; and
            (2) in section 220(d)(3)(B)(iii)(III) (12 U.S.C. 
        1715k(d)(3)(B)(iii)(III)) by striking ``206A'' and all that 
        follows through ``project-by-project basis'' and inserting the 
        following: ``206A of this Act) by not to exceed 170 percent in 
        any geographical area where the Secretary finds that cost 
        levels so require and by not to exceed 170 percent, or 215 
        percent in high cost areas, where the Secretary determines it 
        necessary on a project-by-project basis''.

SEC. 27. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE SALES BY 
              HUD TO STATES AND LOCALITIES.

    Subtitle A of title II of the Deficit Reduction Act of 2005 (Public 
Law 109-171; 120 Stat. 7) is amended by adding at the end the following 
new section:

``SEC. 2004. VALUATION OF MULTIFAMILY PROPERTIES IN NONCOMPETITIVE 
              SALES BY HUD TO STATES AND LOCALITIES.

    ``Notwithstanding any other provision of law and with respect to 
any fiscal year, in determining the market value of any multifamily 
real property or multifamily loan for any noncompetitive sale to a 
State or local government entity, the Secretary shall consider, but not 
be limited to, industry standard appraisal practices, including the 
cost of repairs needed to bring the property at least to minimum State 
and local code standards and of maintaining the existing affordability 
restrictions imposed by the Secretary on the multifamily real property 
or multifamily loan.''.

SEC. 28. CLARIFICATION OF DISPOSITION OF CERTAIN PROPERTIES.

    Notwithstanding any other provision of law, subtitle A of title II 
of the Deficit Reduction Act of 2005 (12 U.S.C. 1701z-11 note) and the 
amendments made by such title shall not apply to any transaction 
regarding a multifamily real property for which--
            (1) the Secretary of Housing and Urban Development has 
        received, before the date of the enactment of such Act, written 
        expressions of interest in purchasing the property from both a 
        city government and the housing commission of such city;
            (2) after such receipt, the Secretary acquires title to the 
        property at a foreclosure sale; and
            (3) such city government and housing commission have 
        resolved a previous disagreement with respect to the 
        disposition of the property.

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.

    (a) In General.--Subject to subsection (c), there is authorized to 
be appropriated for each fiscal year an amount equal to the net 
increase for such fiscal year in, except as provided in subsection (b), 
the negative credit subsidy for the mortgage insurance programs under 
title II of the National Housing Act resulting from this Act and the 
amendments made by this Act, for the following purposes in the 
following amounts:
            (1) Single family housing mortgage insurance.--For each 
        fiscal year, for costs (as such term is defined in section 502 
        of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of 
        mortgage insurance provided pursuant to section 203(b) of the 
        National Housing Act (12 U.S.C. 1709(b)), the additional amount 
        (not including any costs of such mortgage insurance resulting 
        from this Act or the amendments made by this Act), if any, 
        necessary to ensure that the credit subsidy cost of such 
        mortgage insurance for such fiscal year is $0.
            (2) Housing counseling.--For each of fiscal years 2008 
        through 2012, the amount needed to increase funding, for the 
        housing counseling program under section 106 of the Housing and 
        Urban Development Act of 1968 (12 U.S.C. 1701x), in connection 
        with homebuyers and homeowners with mortgages insured under 
        title II of the National Housing Act, from the amount 
        appropriated for the preceding fiscal year to $100,000,000.
            (3) Mortgage insurance technology, procedures, processes, 
        program performance, and salaries.--For each of fiscal years 
        2008 through 2012, $25,000,000 for increasing funding for the 
        purpose of improving technology, procedures, processes, and 
        program performance, and salaries in connection with the 
        mortgage insurance programs under title II of the National 
        Housing Act.
            (4) Affordable housing fund.--For each fiscal year, for an 
        affordable housing fund available for use only for grants to 
        provide affordable rental housing and affordable homeownership 
        opportunities for low-income families, the amount remaining 
        under this section after amounts are made available for such 
        fiscal year in accordance with paragraphs (1), (2), and (3).
    (b) Exclusion of Earnings From the Single Family Mortgage Insurance 
Program.--With respect to a fiscal year, the negative credit subsidy 
determined under subsection (a) shall not include the negative credit 
subsidy cost for such fiscal year, if any, for mortgage insurance 
provided pursuant to section 203(b) of the National Housing Act.
    (c) Certification.--Subsection (a) shall not be effective for a 
fiscal year unless the Secretary of Housing and Urban Development has, 
by rule making in accordance with section 553 of title 5, United States 
Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such 
section), made a determination that premiums being, or to be, charged 
during such fiscal year for mortgage insurance under title II of the 
National Housing Act are established at the minimum amount sufficient 
to comply with the requirements of section 205(f) of such Act (relating 
to required capital ratio for the Mutual Mortgage Insurance Fund) and 
ensure the safety and soundness of the other mortgage insurance funds 
under such Act, and any negative credit subsidy for such fiscal year 
resulting from such mortgage insurance programs adequately ensures the 
efficient delivery and availability of such programs.
    (d) Study and Report.--The Secretary of Housing and Urban 
Development shall conduct a study to obtain recommendations from 
participants in the private residential mortgage lending business and 
the secondary market for such mortgages on how best to update and 
upgrade procedures, processes, and technologies for the mortgage 
insurance programs under title II of the National Housing Act so that 
the policies and procedures for originating, insuring, and servicing of 
such mortgages conform with those customarily used by secondary market 
purchasers of residential mortgage loans. Not later than the expiration 
of the 12-month period beginning on the date of the enactment of this 
Act, the Secretary shall submit a report to the Congress describing the 
progress made and to be made toward updating and upgrading such 
procedures, processes, and technology, and providing appropriate 
staffing for such mortgage insurance programs.

SEC. 30. LIMITATION ON MORTGAGE INSURANCE PREMIUM INCREASES.

    Notwithstanding any other provision of law, including any provision 
of this Act and any amendment made by this Act--
            (1) the premiums charged for mortgage insurance under any 
        program under the National Housing Act may not be increased 
        above the premium amounts in effect under such program on 
        October 1, 2006, unless the Secretary of Housing and Urban 
        Development determines that, absent such increase, insurance of 
        additional mortgages under such program would, under the 
        Federal Credit Reform Act of 1990, require the appropriation of 
        new budget authority to cover the costs (as such term is 
        defined in section 502 of the Federal Credit Reform Act of 1990 
        (2 U.S.C. 661a) of such insurance; and
            (2) a premium increase pursuant to paragraph (1) may be 
        made only by rule making in accordance with the procedures 
        under section 553 of title 5, United States Code 
        (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such 
        section).

SEC. 31. SAVINGS PROVISION.

    Any mortgage insured under title II of the National Housing Act 
before the date of enactment of this title shall continue to be 
governed by the laws, regulations, orders, and terms and conditions to 
which it was subject on the day before the date of the enactment of 
this Act.

SEC. 32. IMPLEMENTATION.

    Except as provided in section 23(b), the Secretary of Housing and 
Urban Development shall by notice establish any additional requirements 
that may be necessary to immediately carry out the provisions of this 
Act. The notice shall take effect upon issuance.
                                                 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 and enable the Federal 
 Housing Administration to use risk-based pricing to more effectively 
          reach underserved borrowers, and for other purposes.

_______________________________________________________________________

                             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
```