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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2475 Introduced in House (IH)]

110th CONGRESS
  1st Session
                                H. R. 2475

 To amend title 38, United States Code, to authorize the Secretary of 
  Veterans Affairs to guarantee home equity conversion mortgages for 
                      elderly veteran homeowners.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 24, 2007

    Mr. Michaud (for himself and Ms. Ginny Brown-Waite of Florida) 
 introduced the following bill; which was referred to the Committee on 
   Veterans' Affairs, and in addition to the Committee on Financial 
Services, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
 To amend title 38, United States Code, to authorize the Secretary of 
  Veterans Affairs to guarantee home equity conversion mortgages for 
                      elderly veteran homeowners.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veteran Home Equity Conversion 
Mortgage Act of 2007''.

SEC. 2. DEPARTMENT OF VETERANS AFFAIRS GUARANTEE OF HOME EQUITY 
              CONVERSION MORTGAGES FOR ELDERLY VETERAN HOMEOWNERS.

    (a) Loan Guarantee Authorized.--Subchapter II of chapter 37 of 
title 38, United States Code, is amended by adding at the end the 
following new section:
``Sec. 3715. Guarantee of home equity conversion mortgages for elderly 
              veteran homeowners
    ``(a) Loan Guarantee.--Upon receiving an application by a covered 
mortgagee and under such terms and conditions as the Secretary may 
prescribe, the Secretary may guarantee any home equity conversion 
mortgage that is made to an elderly veteran homeowner pursuant to the 
provisions of this section and conforms with all applicable provisions 
of this title.
    ``(b) Standards for Commitment.--The Secretary shall establish 
standards under which the Secretary will commit to guarantee such home 
equity conversion mortgage made to an elderly veteran homeowner before 
the date on which the mortgage is executed, if the Secretary determines 
that the mortgage--
            ``(1) is likely to improve the financial situation or 
        otherwise meet the special needs of the elderly veteran 
        homeowner;
            ``(2) will include appropriate safeguards for the elderly 
        veteran homeowner to offset the special risks associated with 
        the mortgage; and
            ``(3) has such terms as the Secretary may establish to 
        ensure that it is accepted in the secondary mortgage market.
    ``(c) Mortgage Eligibility.--A home equity conversion mortgage may 
be guaranteed under this section if it--
            ``(1) is secured by a dwelling, farm residence, one-family 
        residential unit in a condominium housing development or 
        project, or manufactured home permanently affixed to a lot, 
        that is owned and occupied by the eligible elderly veteran 
        homeowner;
            ``(2) has been executed by an elderly veteran homeowner 
        who--
                    ``(A) has discussed with a loan counselor approved 
                by the Secretary--
                            ``(i) options other than a home equity 
                        conversion mortgage that are available to the 
                        homeowner, including other housing, social 
                        service, health, and financial options;
                            ``(ii) other home equity conversion options 
                        that are or may become available to the 
                        homeowner, such as sale-leaseback financing, 
                        deferred payment loans, and property tax 
                        deferral; and
                            ``(iii) the financial implications of 
                        entering into a home equity conversion 
                        mortgage; and
                            ``(iv) any other information that the 
                        Secretary may require;
                    ``(B) has received a disclosure that a home equity 
                conversion mortgage may have tax consequences, affect 
                eligibility for assistance under Federal and State 
                programs, and have an impact on the heirs and estate of 
                the homeowner;
                    ``(C) has received the full disclosure described in 
                subsection (e)(1); and
                    ``(D) meets any additional requirements prescribed 
                by the Secretary;
            ``(3) provides that prepayment, in whole or in part, may be 
        made at any time during the period of the mortgage, without 
        penalty;
            ``(4) provides for a fixed or variable interest rate or 
        future sharing between the veteran and the covered mortgagee of 
        the appreciation in the value of the property, as agreed upon 
        by the veteran and the mortgagee;
            ``(5) provides for the satisfaction of the obligation in a 
        manner satisfactory to the Secretary;
            ``(6) provides that the eligible elderly veteran homeowner 
        is not liable for any difference between the net amount of 
        remaining indebtedness under the mortgage and the amount 
        recovered by the covered mortgagee from the net sales proceeds 
        from the dwelling that is subject to the mortgage (based upon 
        the amount of the accumulated equity selected by the veteran to 
        be subject to the mortgage, as agreed upon by the veteran and 
        the mortgagee);
            ``(7) contains such terms and provisions with respect to 
        insurance, repairs, alterations, payment of taxes, default 
        reserve, delinquency charges, foreclosure proceedings, 
        anticipation of maturity, additional and secondary liens, and 
        other matters as the Secretary may prescribe;
            ``(8) provides for future payments to the veteran, based on 
        accumulated equity (minus any applicable fees and charges), 
        that are calculated according one of the following methods 
        chosen by the homeowner:
                    ``(A) payment based upon a line of credit;
                    ``(B) payment on a monthly basis over a term 
                specified by the homeowner;
                    ``(C) payment on a monthly basis over a term 
                specified by the homeowner and based upon a line of 
                credit;
                    ``(D) payment on a monthly basis over the tenure of 
                the homeowner;
                    ``(E) payment on a monthly basis over the tenure of 
                the homeowner and based upon a line of credit; or
                    ``(F) payment on any other basis that the Secretary 
                considers appropriate;
            ``(9) provides that the homeowner may convert the method of 
        payment chosen under paragraph (8) to any other method under 
        such paragraph during the term of the loan, except that in the 
        case of a fixed-rate home equity conversion mortgage, the 
        Secretary may, by regulation, limit such convertibility;
            ``(10) contains such restrictions as the Secretary may 
        determine are appropriate to ensure that the homeowner does not 
        fund any unnecessary or excessive costs for obtaining the 
        mortgage, including any costs of estate planning, financial 
        advice, or other related services; and
            ``(11) satisfies any other requirements prescribed by the 
        Secretary.
    ``(d) Conditions of Guarantee.--(1) The Secretary shall require the 
covered mortgagee of a home equity conversion mortgage guaranteed under 
this section to make available to the elderly veteran homeowner--
            ``(A) at the time of the application for the loan in 
        connection with the mortgage, a written list of the names and 
        addresses of third-party information sources who are approved 
        by the Secretary as responsible and able to provide the 
        information required by subsection (e);
            ``(B) by not later than 10 days before closing on the loan, 
        a statement informing the elderly veteran homeowner of such 
        homeowner's limited liability under the mortgage, as well as 
        the homeowner's rights, obligations, and remedies with respect 
        to temporary absences from the home, late payments, and payment 
        default by the lender, along with any conditions requiring 
        satisfaction of the loan obligation and any other information 
        that the Secretary may require;
            ``(C) by not later than January 31 of each year, an annual 
        statement summarizing for the preceding calendar year the total 
        principal amount paid to the homeowner under the loan secured 
        by the home equity conversion mortgage, the total amount of 
        deferred interest added to the principal, and the outstanding 
        loan balance at the end of that year; and
            ``(D) before closing on the loan, a statement of the 
        projected total cost of the mortgage to the veteran homeowner 
        based upon the projected total future loan balance (such cost 
        expressed as a single average annual interest rate for at least 
        two different appreciation rates for the term of the mortgage) 
        for not less than two projected loan terms, as determined by 
        the Secretary, which shall include--
                    ``(i) the cost for a short-term home equity 
                conversion mortgage; and
                    ``(ii) the cost for a loan term equaling the 
                actuarial life expectancy of the veteran.
    ``(2) The Secretary may not guarantee a home equity conversion 
mortgage under this section unless such mortgage provides that the 
elderly veteran homeowner's responsibility to satisfy the loan 
obligation is deferred until the homeowners death, the sale of the 
home, or the occurrence of certain other events specified in 
regulations by the Secretary.
    ``(e) Information Provided to Homeowner.--(1) The Secretary shall 
provide or arrange, before executing on a home equity conversion 
mortgage under this section, for a third-party to provide to the 
elderly veteran homeowner under the mortgage a full disclosure that 
clearly states--
            ``(A) all of the costs charged to the homeowner, including 
        the costs of estate planning, financial advice, and other 
        services that are related to the mortgage but are not required 
        to obtain the mortgage; and
            ``(B) which of the costs under subparagraph (A) are 
        required to obtain the mortgage and which are not required to 
        obtain the mortgage; and
    ``(2) The Secretary may, in lieu of carrying out paragraph (1), 
adopt an alternative approach to educating an elderly veteran 
homeowner, but only if such alternative approach provides to the 
homeowner all of the information specified such paragraphs. For the 
purpose of carrying out the preceding sentence, the Secretary shall 
consult with industry representatives, consumer groups, representatives 
of counseling organizations, and other interested parties to identify 
alternative approaches to providing to the elderly veteran homeowner 
the information required under this subsection that may be feasible and 
desirable for home equity conversion mortgages guaranteed under this 
section.
    ``(f) Limitation on Amount of Benefits.--In no case may the benefit 
from a guarantee of a mortgage under this section exceed the maximum 
guarantee amount under section 3703 of this title.
    ``(g) Additional Authority.--(1) To further the purposes of this 
section, the Secretary shall take any action necessary--
            ``(A) to provide any elderly veteran homeowner with funds 
        to which the homeowner is entitled under a mortgage guaranteed 
        under this section, but that the homeowner has not received 
        because of the default of the party responsible for payment;
            ``(B) to obtain repayment from any source of any amount 
        provided to a homeowner under subparagraph (A); and
            ``(C) to provide a covered mortgagee with funds to which 
        the mortgagee is entitled under the terms of a mortgage 
        guaranteed under this section.
    ``(2) Actions under paragraph (1) may include--
            ``(A) disbursing funds to the elderly veteran homeowner or 
        covered mortgagee from the Veterans Housing Benefit Program 
        Fund;
            ``(B) accepting an assignment of the guaranteed mortgage, 
        notwithstanding that the homeowner is not in default under the 
        terms of the mortgage, and calculating the amount and making 
        the payment of a claim on such assigned mortgage;
            ``(C) requiring a subordinate mortgage from the homeowner 
        at any time in order to secure repayments of any funds 
        previously advanced or to be advanced to the homeowner;
            ``(D) requiring a subrogation to the Secretary of the 
        rights of any parties to the transaction against any defaulting 
        parties; and
            ``(E) imposing premium charges.
    ``(h) Exemption From Certain Provisions of Law.--Section 137(b) of 
the Truth in Lending Act (15 U.S.C. 1647(b)) and any implementing 
regulations issued by the Board of Governors of the Federal Reserve 
System shall not apply to a mortgage guaranteed under this section.
    ``(i) Authority To Guarantee Mortgages for Refinancing.--(1) The 
Secretary may, upon application by a covered mortgagee, guarantee any 
mortgage given to refinance an existing home equity conversion mortgage 
guaranteed under this section.
    ``(2) As a condition of guaranteeing a mortgage under this 
subsection, the Secretary shall require that the covered mortgagee of a 
home equity conversion mortgage guaranteed under this subsection 
provide to the elderly veteran homeowner, within an appropriate period 
of time and in a manner, a good faith estimate of--
            ``(A) the total cost of the refinancing; and
            ``(B) the increase in the homeowner's principal limit as 
        measured by the estimated initial principal limit on the 
        mortgage to be guaranteed under this subsection, less the 
        current principal limit on the home equity conversion mortgage 
        that is being refinanced and guaranteed under this subsection.
    ``(3) The amount of the loan fee for a mortgage refinanced under 
this subsection shall be determined by the Secretary under section 3729 
of this title.
    ``(4) In the case of an elderly veteran homeowner who applies for 
refinancing under this subsection, the Secretary may waive the 
requirement that the homeowner receive information under subsection 
(e), but only if--
            ``(A) the increase in the principal limit exceeds the 
        amount of the total cost of refinancing by an amount to be 
        determined by the Secretary; and
            ``(B) the time between the closing of the original home 
        equity conversion mortgage being refinanced through the 
        mortgage guaranteed under this subsection and the application 
        for a refinancing mortgage guaranteed under this subsection 
        does not exceed five years.
    ``(j) Origination Fee.--The Secretary may establish a limit on the 
origination fee that may be charged to an elderly veteran homeowner for 
a mortgage guaranteed under this section, except that such limitation 
shall provide that the origination fee may be fully financed with the 
mortgage and shall include any fees paid to correspondent mortgagees 
approved by the Secretary.
    ``(k) Fee Waiver.--(1) Notwithstanding section 3729 of this title, 
in the case of a mortgage guaranteed under this section for which the 
total amount (except as provided under paragraph (2)) of all future 
payments described in subsection (l)(4)(B) are to be used only to fund 
the cost of a qualified long-term care insurance contract that covers 
the elderly veteran homeowner or a member of the homeowner's household 
residing in the property subject to the mortgage, the Secretary may not 
charge or collect the loan fee otherwise required under subparagraph 
(a) of such section.
    ``(2) A mortgage described in paragraph (1) may provide for 
financing of any amount used to satisfy outstanding mortgage 
obligations (in accordance with such limitations as the Secretary shall 
prescribe) and any amount used for initial service charges, appraisal, 
inspection, and other fees (as approved by the Secretary) in connection 
with such mortgage, and the amount of future payments shall be reduced 
accordingly.
    ``(3) For purposes of this subsection, the term `qualified long-
term care insurance contract' has the meaning given such term in 
section 7702B of the Internal Revenue Code of 1986 (26 U.S.C. 7702B), 
except that such contract shall also meet the requirements of--
            ``(A) sections 9 (relating to disclosure), 24 (relating to 
        suitability), and 26 (relating to contingent nonforfeiture) of 
        the long-term care insurance model regulation promulgated by 
        the National Association of Insurance Commissioners (as adopted 
        as of September 2000); and
            ``(B) section 8 (relating to contingent nonforfeiture) of 
        the long-term care insurance model Act promulgated by the 
        National Association of Insurance Commissioners (as adopted as 
        of September 2000).
    ``(l) Definitions.--For the purposes this section:
            ``(1) The term `elderly veteran homeowner' means any 
        homeowner who is, or whose spouse is, a veteran who is eligible 
        for housing loan benefits under this title and who is at least 
        62 years of age or such higher age as the Secretary may 
        prescribe.
            ``(2) The term `mortgage' means a first mortgage or first 
        lien--
                    ``(A) on real estate, in fee simple;
                    ``(B) on all stock allocated to a dwelling in a 
                residential cooperative housing corporation; or
                    ``(C) on a leasehold that is--
                            ``(i) under a lease for not less than 99 
                        years that is renewable; or
                            ``(ii) under a lease having a period of not 
                        less than 10 years to run beyond the maturity 
                        date of the mortgage.
            ``(3) The term `first mortgage' means a first lien that is 
        given to secure an advance on, or the unpaid purchase price of, 
        real estate or all stock allocated to a dwelling unit in a 
        residential cooperative housing corporation, under the laws of 
        the State in which the real estate or dwelling unit is located, 
        together with any credit instruments secured for such purpose.
            ``(4) The term `home equity conversion mortgage' means a 
        housing loan, as defined in section 3701 of this chapter that--
                    ``(A) is secured by a first mortgage;
                    ``(B) provides for future payments to the homeowner 
                based on accumulated equity; and
                    ``(C) is made by--
                            ``(i) a Federal land bank, National bank, 
                        State bank, private bank, building and loan 
                        association, insurance company, credit union, 
                        or mortgage and loan company, that is subject 
                        to examination and supervision by an agency of 
                        the United States or of any State; or
                            ``(ii) a State; or
                            ``(iii) a lender or mortgage broker 
                        approved by the Secretary pursuant to standards 
                        established by the Secretary.''.
    (b) Conforming Amendment.--Section 3701(a) of such title is amended 
by striking ``sections 3710(a) and 3712(a)(1)'' and inserting 
``sections 3710(a), 3712(a)(1), and 3715''.
    (c) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the items relating to 
subchapter II the following new item:

``3715. Guarantee of home equity conversion mortgages for elderly 
                            veteran homeowners.''.
                                 <all>
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