59–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–217 

EXPANDING AMERICAN HOMEOWNERSHIP ACT OF 2007 

JUNE 28, 2007.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. FRANK of Massachusetts, from the Committee on Financial 

Services, submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 1852] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 1852) 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, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended 

do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 18 

Background and Need for Legislation .................................................................... 18 

Hearings ................................................................................................................... 24 

Committee Consideration ........................................................................................ 25 

Committee Votes ...................................................................................................... 25 

Committee Oversight Findings ............................................................................... 32 

Performance Goals and Objectives ......................................................................... 33 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 33 

Committee Cost Estimate ....................................................................................... 33 

Congressional Budget Office Estimate ................................................................... 33 

Federal Mandates Statement ................................................................................. 43 

Advisory Committee Statement .............................................................................. 43 

Constitutional Authority Statement ...................................................................... 43 

Applicability to Legislative Branch ........................................................................ 43 

Earmark Identification ............................................................................................ 43 

Section-by-Section Analysis of the Legislation ...................................................... 44 


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Changes in Existing Law Made by the Bill, as Reported ..................................... 50 

Additional Views ...................................................................................................... 92 

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

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 mid1980s, 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. 


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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 


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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). 


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‘‘(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.—


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‘‘(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 lowdownpayment 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 


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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.’’. 


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(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.’’. 


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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 


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(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 


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(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—


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‘‘(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 


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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 


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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 deadVerDate Aug 31 2005 20:36 Jul 05, 2007 Jkt 059006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6621 E:\HR\OC\HR217.XXX HR217

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line 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 


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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 


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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 


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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. 

PURPOSE AND SUMMARY

H.R. 1852, the ‘‘Expanding American Homeownership Act of 

2007,’’ contains a number of provisions designed to expand the use 

and improve the efficiency of Federal Housing Administration 

(FHA) insured loan programs. A major focus of the bill is to modernize the FHA Title II single family loan program, through provisions to raise loan limits in high cost areas, to authorize zero downpayment loans, to permit risk-based pricing, and to direct HUD to 

modify underwriting guidelines in order to serve higher credit risk 

borrowers. These changes are augmented by disclosure requirements to ensure that borrowers make informed mortgage choices 

and consumer protections for higher risk borrowers and borrowers 

with reduced down payments. 

The bill also makes changes to other FHA loan programs, including FHA reverse mortgage loans, multifamily housing loans, and 

Section 234 condominium loans. Finally, the bill authorizes use of 

increased taxpayer profits (negative credit subsidies) resulting from 

the bill for housing counseling, for FHA information technology, 

and for affordable housing grant purposes. 

BACKGROUND AND NEED FOR LEGISLATION

MODERNIZING THE FHA SINGLE FAMILY LOAN PROGRAM

The FHA was established in the 1930s to provide a reliable 

source of affordable long-term amortizing mortgage loans to enable 

families to become first time homebuyers. Since then, FHA has provided home financing for millions of Americans. It has done so by 


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offering mortgage loans at affordable rates and fees to homebuyers 

who did not qualify for the most competitive mortgage rates and 

terms offered by private sector lenders. FHA has also been at the 

forefront of standardizing financial products, especially for low and 

moderate income and underserved borrowers. FHA has historically 

maintained its presence in turbulent mortgage markets and in geographic areas experiencing housing downturns, serving as a source 

of stability at precisely the time when private sector lenders have 

pulled back or exited such difficult markets. 

The hearing on H.R. 1852 raised a number of mortgage issues, 

including predatory lending practices, risky loan products such as 

teaser rate loans, and the high rates and costs associated with 

subprime loans. The hearing cited these types of factors not just as 

a problem, but also as an opportunity for FHA to reassert its traditional role of meeting unmet mortgage market needs. 

The distinction was drawn between predatory loan practices and 

subprime lending. Subprime lending can perform the important 

task of providing affordable mortgage credit to borrowers with less 

than perfect credit histories, but who are still creditworthy. Predatory lending occurs when lenders take advantage of the lack of loan 

opportunities for subprime borrowers to impose excessive rates and 

fees, prepayment penalties, and reset terms that can result in exorbitant interest rate increases. Witnesses testified that FHA could 

serve subprime borrowers at more attractive rates and terms than 

might otherwise be available in the market, while maintaining underwriting standards and fees sufficient to maintain FHA’s financial health. 

As recently as the year 2000, the FHA single family loan program was insuring loans for almost a million families a year and 

generating profits [‘‘negative credit subsidy’’] of over $2 billion a 

year. Unfortunately, over the last several years, FHA loan volume 

has fallen significantly. The FHA Commissioner, in his testimony 

on this bill, identified a number of statutory impediments that 

have contributed to FHA’s declining role in the single family mortgage market. H.R. 1852 makes a number of changes designed to 

address these impediments, with the goal of increasing FHA participation by private sector loan originators and of increasing loan 

opportunities for underserved but creditworthy borrowers that 

would otherwise be shut out of mortgage markets, pay higher rates 

or be the victims of predatory loan practices. 

Loan Limits. The bill raises FHA loan limits to expand the availability of FHA loans. By statute, an FHA single family loan cannot 

exceed the lower of 95 percent of the local area median home price 

or 87 percent of the national GSE conforming loan limit. In 2007, 

this means that no FHA loan may exceed $362,790. As a result, 

FHA is of little or no practical value in higher cost areas where median home prices exceed this limit. The bill would address this limitation by raising the maximum FHA loan limit up to the GSE conforming loan limit (currently $417,000). The bill also makes 

changes designed to make the program more useful in more moderately priced areas. It raises the local component of the two-part 

maximum loan limit calculation from 95 percent of the local median home price up to 100 percent of such price, and it raises the 

current FHA loan floor of 48 percent of the GSE conforming loan 

limit up to 65 percent of such limit. 


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The bill provides for a more rational process for setting loan limits on FHA single family loans for 2-, 3-, and 4-unit properties. 

Currently such limits are set by statute at 107, 130, and 150 percent, respectively, of the 1-unit limit in each local area. The bill revises this method to instead calculate such limits by applying the 

same ratio that 2-, 3-, and 4-unit GSE conforming loan limits bear 

to the conforming 1-unit limit. The bill additionally permits an increase in FHA single family loan limits of up to 25 percent higher 

than the customary loan limit for any home which includes space 

used for a licensed child care facility, subject to the requirement 

that such increase must be proportional to the amount of space 

that will be used for the facility. The bill also gives HUD authority 

to increase FHA single family loan limits up to 100 percent of the 

appraised value plus closing costs and up to the nationwide GSE 

conforming loan limit for a period of up to 36 months in Presidentially-declared disaster areas. 

Down Payment Requirements. The bill simplifies and reduces 

down payment requirements. By statute, the maximum FHA loanto-value (LTV) calculation is a complicated one, varying based on 

factors that include the size of the loan and whether the loan is located in a state with high closing costs. The bill would greatly simplify this basic calculation, while maintaining comparable overall 

levels, by establishing a maximum loan to value of 97.75 percent 

of the home price, plus the upfront FHA premium. The bill also retains the current statutory requirement that each borrower must 

make at least a 3 percent down payment in cash. 

To better reflect private sector loan practices, the bill also authorizes FHA to reduce down payment requirements, including the 

authority to offer zero down payment loans. It does so by identifying a separate class of loans for borrowers that do not comply 

with either the basic LTV or the cash down payment requirement. 

To cover the increased risk of such lower down payment loans, the 

maximum upfront FHA premium HUD can charge for such loans 

is increased from 2.25 percent to 3 percent, and the maximum annual premium that can be charged for such borrowers is raised 

from .55 to .75 percent. To avoid unfairly imposing fee burdens on 

borrowers that ultimately meet their loan obligations, the bill includes a ‘‘Payment Incentives’’ provision. This provision requires 

HUD to reduce annual premiums for borrowers that make 5 years 

of on-time payments down to the existing statutory maximum of 

.55 percent in subsequent years. HUD is also authorized to reduce 

such premiums for borrowers that make three years of on-time 

payments. 

Maximum Loan Term. The bill increases the maximum amortization term for FHA single family loans from 35 years to 40 years. 

This would permit a slight reduction in a borrower’s monthly payment. 

Higher Risk Borrowers. The bill directs HUD to underwrite loans 

for Higher Risk borrowers than it currently serves, defining this 

category as borrowers with a FICO-equivalent score of 560 or 

below. To cover the increased risk of such loans, FHA may charge 

upfront premiums of up to 3 percent. The bill also includes Payment Incentive annual loan fee reductions for Higher Risk borrowers that make on-time payments, as well as a refund at the 

time of loan repayment of the higher upfront premium that was 


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charged because the borrower was classified as a Higher Risk borrower. 

To further expand FHA loan opportunities, the bill requires HUD 

to carry out a pilot program to establish an automated process to 

provide alternative credit rating information for borrowers with insufficient credit histories to determine their creditworthiness. The 

number of such loans is capped at 5 percent of the number of FHA 

loans insured in the preceding year, and this pilot sunsets after 

five years. 

Risk-based Pricing. To provide for more accurate pricing of FHA 

loans in conjunction with these higher levels of authorized FHA 

premiums, the bill authorizes ‘‘risk-based pricing.’’ Historically, 

FHA has charged the same level of premiums for all its borrowers, 

resulting in cross-subsidization between higher and lower credit 

risk borrowers. Authority for risk-based pricing is designed to more 

accurately align fees paid with the loan risk borne by the FHA. It 

is also designed to retain potential lower risk borrowers who might 

otherwise forgo FHA loans because the fees are not competitive. 

However, the bill retains some degree of cross-subsidization, 

through reasonable fee caps and Payment Incentive provisions. Finally, the bill authorizes risk-based pricing based on the type of 

loan product. This would permit, for example, higher premiums on 

riskier Adjustable Rate Mortgages [ARMs] than on fixed rate mortgages. 

Consumer Protections. To address the increased risks associated 

with these program changes, the bill includes a number of protections for Higher Risk borrowers and borrowers with zero and lower 

down payment loans. HUD is given authority to require pre-purchase counseling for such borrowers. If HUD establishes such a requirement, it is intended that it would be established only for 

riskier classes of borrowers, based on a determination that such a 

requirement is essential either to mitigate against the risk of such 

loans, or to ensure that such class of borrower is fully prepared for 

the risks of buying a home. In addition, FHA mortgage loan originators are required to provide to zero and lower down payment and 

Higher Risk borrowers a list of local HUD-approved counseling 

agencies at the time of loan application. And, such borrowers who 

become 60 days delinquent on their FHA loan must be given notice 

by a housing counseling entity of the availability of foreclosure prevention counseling. 

The bill also requires a number of written disclosures, provided 

either through counseling or at the time of loan application. Such 

disclosures must include identification of other mortgage loan options, the additional costs associated with lower down payment 

loans, and the appreciation needed to pay off zero and lower down 

payment loans, taking into account real estate sales costs. Borrowers must also be given disclosures at loan closing of their Payment Incentive and loss mitigation rights. 

To track the impact of the bill on the financial soundness of the 

FHA program, H.R. 1852 requires HUD to report annually on the 

rates of default and foreclosure of zero and lower down payment 

and Higher Risk borrowers. HUD is also required to report on loss 

mitigation actions it has taken. 


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FHA MULTI-FAMILY LOANS

Four years ago, Congress raised the maximum loan limit for 

FHA-insured multi-family loans in high cost areas, but did not provide the increase needed to fully cover construction costs in the nation’s highest cost housing markets. The bill would complete this 

effort, by raising the maximum loan limit in high cost areas from 

140 percent of the basic loan limit to 170 percent of such limit, and 

by raising the maximum loan limit on a case-by-case basis from 

170 percent of the basic loan limit to 215 percent of such limit. 

In addition, the bill would clarify implementation of the 2005 

Reconciliation Act provision that prohibits discount loan sales and 

upfront grants to localities of foreclosed FHA-insured multifamily 

properties. The bill states that HUD must take into account, consistent with normal appraisal practices, the cost of rehabilitation 

and maintaining affordability restrictions in establishing the market price to be offered to localities under their statutory first right 

of refusal to purchase such properties. The bill would also clarify 

the provision in the 2005 Act grandfathering existing purchase proposals from the prohibition against discount sales. The bill states 

that this grandfather status would apply to transactions in which 

HUD received an expression of interest from both a local city and 

housing authority prior to enactment of the 2005 Act, provided that 

a disagreement between such two entities was subsequently resolved. 

FHA REVERSE MORTGAGE LOANS

The bill would permanently eliminate the statutory volume cap 

on the total number of FHA Home Equity Conversion Mortgage 

loans [HECMs, also known as reverse mortgage loans] which HUD 

can insure. Without a removal of this cap, the program could otherwise be forced to be shut down. 

The bill also decouples FHA reverse mortgage loan limits from 

the general FHA loan limit calculation which caps limits at the 

local median home price. Instead, the bill establishes a unified 

maximum reverse mortgage loan limit equal to the GSE conforming loan limit. This change is made to reflect the fact that reverse mortgage loans are not used to buy a home or refinance a 

loan, but rather to pay other costs which are not generally tied to 

home prices (e.g., health care costs). The bill would also set a cap 

on the maximum loan fee that an FHA reverse mortgage loan originator can charge, setting such cap at 2 percent of the ‘‘original 

principal limit’’ of the mortgage. Finally, the bill requires HUD to 

conduct a study to analyze the effects of reducing FHA reverse 

mortgage premiums on both the cost to borrowers and the financial 

soundness of the program. 

USE OF FHA SAVINGS FOR COUNSELING, TECHNOLOGY IMPROVEMENTS, 

AND AFFORDABLE HOUSING GRANT FUND PURPOSES

Over the last five years, FHA has produced over $10 billion in 

profits to federal taxpayers, as calculated by CBO’s determination 

of negative credit subsidies for all the FHA loan programs. The 

practice has been to simply return these funds to the Federal treasury. 


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The bill would instead authorize a reinvestment of such profits 

into both the FHA specifically, and into housing more generally. 

The bill would calculate the net negative credit subsidies over each 

of the next five years that are created by the bill’s provisions, and 

would authorize appropriations of such amounts for certain specified purposes. First, funds would be authorized for any credit subsidy appropriation that might be needed to keep the basic FHA single family 203(b) loan program in the black that year (i.e., avoid 

any credit subsidy appropriation that might be needed). Secondly, 

$58 million a year would be authorized to bring funding for housing counseling up from the current level of $42 million to $100 million a year. Third, $25 million would be authorized each year for 

FHA information technology, procedures, and processes. 

Finally, an authorization is provided for all net negative credit 

subsidies that remain after such deductions for use as an affordable housing fund, for grants to provide affordable rental housing 

and homeownership opportunities for low income families. As a further condition no funds may be used in any year for such purpose 

unless HUD, by rule, makes a determination that FHA premiums 

being charged that year are sufficient to comply with the Section 

205(f) MMIF capital ratio requirement and are also sufficient to ensure the safety and soundness of the other FHA mortgage insurance funds. Moreover, no negative credit subsidies from the Section 

203(b) single family loan program may be used for affordable housing fund purposes. 

HUD is required to conduct a study on how best to update and 

upgrade FHA procedures, processes, and technologies. The bill also 

includes a Sense of Congress stating that HUD should use a portion of the funds FHA receives from premiums in excess of what 

it pays out in claims to upgrade FHA’s current technology. FHA is 

also encouraged to submit a report to Congress detailing the 

progress it is making towards this goal and any resources it may 

need to make greater progress. 

OTHER PROVISIONS

The bill includes a number of provisions designed to enhance program flexibility, increase mortgage originator participation in FHA 

loans, limit unnecessary FHA premiums, and protect the financial 

soundness of FHA. 

The bill revises the definition of condominium mortgages which 

may be insured, to provide that condominiums may be in the form 

of manufactured housing units. The bill also modifies the definition 

of real estate to permit manufactured homes sited on land under 

a long term lease to be financed under Title II, even if they are not 

taxed as real property. The purpose is to permit such FHA loans 

in states that do not tax such homes as real estate, and therefore 

do not meet the current HUD definition of real estate for the purpose of insuring FHA Title II loans. 

The bill also includes a provision to encourage increased participation of mortgage brokers and correspondent lenders in FHA. The 

current FHA net worth and annual audit requirement is commonly 

cited as a barrier to increased participation in FHA by mortgage 

brokers and loan correspondents. The bill gives such entities the 

option of posting a $75,000 surety bond in lieu of the existing net 

worth and annual audit requirements. Such authority would expire 


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after five years, unless HUD extends the provision pursuant to a 

determination that it provides comparable protections or modifies 

it to provide for comparable protection. The bill also requires GAO 

to conduct a study and report to Congress within 4 years on the 

effect of provision. 

The bill also imposes additional requirements for mortgage brokers participating in FHA loans. Among other things, mortgage 

brokers are required to safeguard and account for any money handled for the borrower, to follow reasonable and lawful instructions 

from the borrower, and to act with reasonable skill, care, and diligence. Any mortgage broker found by HUD to have violated these 

provisions may not originate any FHA-insured loans. 

The bill includes a provision to bar unnecessary fee hikes in FHA 

programs. Specifically, it prohibits HUD from increasing any FHA 

premiums above the level in effect at the beginning of FY 2007 unless HUD determines that such an increase is necessary to avoid 

a credit subsidy appropriation. This provision is designed to ensure 

that FHA fees are used solely to cover the risk associated with the 

loan, and not to supplement general fund revenues. 

The bill requires FHA mortgage servicers that establish escrow 

accounts to make required payments by any deadline required to 

avoid a penalty, unless such servicer was not provided notice of 

such deadline. HUD is authorized to increase the amount of penalty for servicers that fail to reimburse borrowers per this requirement. The bill also prohibits submission of information by HUD or 

servicers that is adverse to the credit rating or interest of the borrower, if such information is based on the servicer’s failure to make 

a payment by any deadline. 

The bill makes a number of changes to provisions of the Credit 

Reform Act of 1990 which are designed to insure that the Mutual 

Mortgage Insurance Fund (MMIF) remains financially sound. 

These include transferring a number of FHA programs into the 

MMIF, including Section 234 condominium loans, Section 203(k) 

purchase-rehabilitation loans, reverse mortgage loans, Section 247 

loans insured on Hawaiian Home Lands, and Section 248 loans in 

Indian Reservations. 

The bill also prohibits HUD from insuring any FHA loan unless 

the borrower provides personal identification, which may include a 

Social Security card along with a photo ID issued by the Federal 

or a state government, a drivers license or ID card issued by a 

state in accordance with the REAL ID Act of 2005, a passport, and 

a USCIS photo identification card. 

HEARINGS

The Subcommittee on Housing and Community Opportunity held 

a hearing on April 19, 2007 entitled ‘‘The Expanding American 

Homeownership Act of 2007: H.R. 1852 and Related FHA Modernization Issues.’’ The following witnesses testified: 

Panel One: 

The Honorable Brian D. Montgomery, Assistant Secretary 

for Housing–Federal Housing Commissioner, U.S. Department 

of Housing and Urban Development 

Panel Two: 

• Ms. Iona Harrison, GRI, National Association of Realtors 


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• Mr. Lautaro ‘‘Lot’’ Diaz, Vice President, Community Development, National Council of La Raza • Mr. John M. Robbins, CMB, Chairman, Mortgage Bankers 

Association • Mr. Ed Smith, Jr., Chairman, CAMB Government Affairs 

Committee, Chief Executive Officer, Plaza Financial Group, 

California Association of Mortgage Brokers • Mr. William P. Killmer, National Association of Home 

Builders, Group Executive Vice President for Advocacy 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

May 2, 2007, and on May 3, 2007, ordered H.R. 1852, the Expanding American Homeownership Act of 2007, as amended, favorably 

reported to the House by a record vote of 45 yeas and 19 nays. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Frank to report the bill, as amended, to the House with a favorable 

recommendation was agreed to by a record vote of 45 yeas and 19 

nays (Record vote FC–46). The names of Members voting for and 

against follow: 

RECORD VOTE NO. FC–46 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. X ........... ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... X ........... ............. Mr. Baker ............................. ........... X .............

Ms. Waters ............................ X ........... ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... X ........... ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... X ........... ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... X ........... ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ X ........... ............. Mr. Lucas ............................. ........... X .............

Mr. Ackerman ........................ ........... ........... ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ X ........... ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... X ........... ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. X ........... ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... X ........... ............. Mr. Jones .............................. ........... ........... .............

Mr. Capuano ......................... X ........... ............. Mrs. Biggert ......................... ........... X .............

Mr. Hinojosa .......................... X ........... ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ X ........... ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... X ........... ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... X ........... ............. Mr. Feeney ............................ ........... X .............

Mr. Lynch .............................. X ........... ............. Mr. Hensarling ..................... ........... X .............

Mr. Miller (NC) ...................... X ........... ............. Mr. Garrett (NJ) .................... ........... X .............

Mr. Scott ............................... X ........... ............. Ms. Brown-Waite (FL) .......... ........... X .............

Mr. Green .............................. X ........... ............. Mr. Barrett (SC) ................... ........... X .............

Mr. Cleaver ........................... X ........... ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... X ........... ............. Mr. Pearce ............................ ........... ........... .............

Ms. Moore (WI) ...................... X ........... ............. Mr. Neugebauer .................... ........... X .............

Mr. Davis (TN) ...................... X ........... ............. Mr. Price (GA) ...................... ........... X .............

Mr. Sires ............................... X ........... ............. Mr. Davis (KY) ...................... ........... X .............

Mr. Hodes .............................. X ........... ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. X ........... ............. Mr. Campbell ....................... ........... X .............

Mr. Klein ............................... X ........... ............. Mr. Putnam .......................... ........... X .............

Mr. Mahoney (FL) .................. X ........... ............. Mrs. Bachmann .................... ........... X .............

Mr. Wilson ............................. X ........... ............. Mr. Roskam .......................... ........... X .............

Mr. Perlmutter ....................... X ........... ............. Mr. Marchant ....................... ........... X .............

Mr. Murphy ............................ X ........... .............


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26 

RECORD VOTE NO. FC–46—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Donnelly .......................... X ........... .............

Mr. Wexler ............................. X ........... .............

Mr. Marshall ......................... X ........... .............

Mr. Boren .............................. X ........... .............

The following amendments were disposed of by record votes. The 

names of Members voting for and against follow: 

An amendment by Mr. Garrett, No. 9, regarding temporary reinstatement of downpayment and premium requirements in event of 

increased defaults, was not agreed to by a record vote of 29 yeas 

and 34 nays (Record vote FC–38): 

RECORD VOTE NO. FC–38 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... ........... ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ ........... ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite (FL) .......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... ........... ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Pearce ............................ X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... ........... ........... .............

Mr. Klein ............................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Murphy ............................ ........... X .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Frank, No. 15, regarding use of FHA savings for costs of mortgage insurance, housing counseling, and affordable housing grant fund, was agreed to by a record vote of 37 

yeas and 15 nays (Record vote FC–39): 


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27 

RECORD VOTE NO. FC–39 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. X ........... ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... X ........... ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... ........... ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... X ........... ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... ........... ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... X ........... ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ X ........... ............. Mr. Lucas ............................. ........... X .............

Mr. Ackerman ........................ ........... ........... ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ X ........... ............. Mr. Gillmor ........................... ........... ........... .............

Mr. Sherman ......................... X ........... ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. X ........... ............. Mr. Manzullo ........................ ........... ........... .............

Mr. Moore (KS) ...................... X ........... ............. Mr. Jones .............................. ........... ........... .............

Mr. Capuano ......................... X ........... ............. Mrs. Biggert ......................... ........... X .............

Mr. Hinojosa .......................... ........... ........... ............. Mr. Shays ............................. ........... ........... .............

Mr. Clay ................................ X ........... ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... X ........... ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ ........... X .............

Mr. Lynch .............................. X ........... ............. Mr. Hensarling ..................... ........... X .............

Mr. Miller (NC) ...................... X ........... ............. Mr. Garrett (NJ) .................... ........... X .............

Mr. Scott ............................... X ........... ............. Ms. Brown-Waite (FL) .......... ........... X .............

Mr. Green .............................. X ........... ............. Mr. Barrett (SC) ................... ........... X .............

Mr. Cleaver ........................... X ........... ............. Mr. Gerlach .......................... ........... X .............

Ms. Bean ............................... X ........... ............. Mr. Pearce ............................ ........... ........... .............

Ms. Moore (WI) ...................... X ........... ............. Mr. Neugebauer .................... ........... ........... .............

Mr. Davis (TN) ...................... X ........... ............. Mr. Price (GA) ...................... ........... X .............

Mr. Sires ............................... X ........... ............. Mr. Davis (KY) ...................... ........... X .............

Mr. Hodes .............................. X ........... ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. ........... ........... ............. Mr. Campbell ....................... ........... X .............

Mr. Klein ............................... X ........... ............. Mr. Putnam .......................... ........... ........... .............

Mr. Mahoney (FL) .................. X ........... ............. Mrs. Bachmann .................... ........... X .............

Mr. Wilson ............................. X ........... ............. Mr. Roskam .......................... ........... X .............

Mr. Perlmutter ....................... X ........... ............. Mr. Marchant ....................... ........... ........... .............

Mr. Murphy ............................ ........... ........... .............

Mr. Donnelly .......................... X ........... .............

Mr. Wexler ............................. X ........... .............

Mr. Marshall ......................... X ........... .............

Mr. Boren .............................. X ........... .............

An amendment by Mrs. Biggert, No. 16, regarding use of FHA 

savings for Title II single family mortgage insurance programs, was 

not agreed to by a record vote of 22 yeas and 38 nays (Record vote 

FC–40): 

RECORD VOTE NO. FC–40 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... X ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... ........... ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. ........... X .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ ........... ........... .............


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28 

RECORD VOTE NO. FC–40—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite (FL) .......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Gerlach .......................... ........... X .............

Ms. Bean ............................... ........... X ............. Mr. Pearce ............................ ........... ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Putnam .......................... ........... ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... ........... ........... .............

Mr. Murphy ............................ ........... ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Bachus, No. 17, limiting housing fund increases, was not agreed to by a record vote of 26 yeas and 36 nays 

(Record vote FC–41): 

RECORD VOTE NO. FC–41 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... X ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... ........... ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. ........... ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite (FL) .......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Pearce ............................ ........... ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Murphy ............................ ........... X .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............


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29 

RECORD VOTE NO. FC–41—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Price (GA), No. 21, requiring offsets, was 

not agreed to by a record vote of 27 yeas and 37 nays (Record vote 

FC–42): 

RECORD VOTE NO. FC–42 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... X ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... ........... ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... X .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite (FL) .......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Pearce ............................ ........... ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Murphy ............................ ........... X .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Price (GA), No. 22, regarding protection 

of senior citizen homeowners, was not agreed to by a record vote 

of 28 yeas and 36 nays (Record note FC–43): 

RECORD VOTE NO. FC–43 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .......................... ............. X ............. Mr. Bachus ....................... X ............. .............

Mr. Kanjorski .................... ............. X ............. Mr. Baker .......................... X ............. .............

Ms. Waters ........................ ............. X ............. Ms. Pryce (OH) ................. X ............. .............

Mrs. Maloney .................... ............. X ............. Mr. Castle ......................... X ............. .............

Mr. Gutierrez ..................... ............. X ............. Mr. King (NY) ................... X ............. .............

Ms. Vela ́zquez ................... ............. X ............. Mr. Royce .......................... X ............. .............

Mr. Watt ............................ ............. X ............. Mr. Lucas ......................... X ............. .............


rwilkins on PROD1PC63 with HEARING
30 

RECORD VOTE NO. FC–43—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Ackerman ................... ............. ............. ............. Mr. Paul ............................ ............. ............. .............

Ms. Carson ....................... ............. X ............. Mr. Gillmor ....................... X ............. .............

Mr. Sherman ..................... ............. X ............. Mr. LaTourette .................. X ............. .............

Mr. Meeks ......................... ............. X ............. Mr. Manzullo ..................... X ............. .............

Mr. Moore (KS) .................. ............. X ............. Mr. Jones .......................... ............. ............. .............

Mr. Capuano ..................... ............. X ............. Mrs. Biggert ..................... X ............. .............

Mr. Hinojosa ..................... ............. X ............. Mr. Shays ......................... X ............. .............

Mr. Clay ............................ ............. X ............. Mr. Miller (CA) .................. X ............. .............

Mrs. McCarthy .................. ............. X ............. Mrs. Capito ....................... X ............. .............

Mr. Baca ........................... ............. X ............. Mr. Feeney ........................ X ............. .............

Mr. Lynch .......................... ............. X ............. Mr. Hensarling .................. X ............. .............

Mr. Miller (NC) .................. ............. X ............. Mr. Garrett (NJ) ................ X ............. .............

Mr. Scott ........................... ............. X ............. Ms. Brown-Waite (FL) ....... X ............. .............

Mr. Green .......................... ............. X ............. Mr. Barrett (SC) ............... X ............. .............

Mr. Cleaver ....................... ............. X ............. Mr. Gerlach ....................... X ............. .............

Ms. Bean .......................... ............. X ............. Mr. Pearce ........................ ............. ............. .............

Ms. Moore (WI) ................. ............. X ............. Mr. Neugebauer ................ X ............. .............

Mr. Davis (TN) .................. ............. X ............. Mr. Price (GA) ................... X ............. .............

Mr. Sires ........................... ............. X ............. Mr. Davis (KY) .................. X ............. .............

Mr. Hodes ......................... ............. X ............. Mr. McHenry ..................... ............. ............. .............

Mr. Ellison ........................ ............. X ............. Mr. Campbell .................... X ............. .............

Mr. Klein ........................... ............. X ............. Mr. Putnam ...................... X ............. .............

Mr. Mahoney (FL) .............. ............. X ............. Mrs. Bachmann ................ X ............. .............

Mr. Wilson ......................... ............. X ............. Mr. Roskam ...................... X ............. .............

Mr. Perlmutter .................. ............. X ............. Mr. Marchant .................... X ............. .............

Mr. Murphy ....................... ............. X .............

Mr. Donnelly ...................... ............. X .............

Mr. Wexler ......................... ............. X .............

Mr. Marshall ..................... ............. X .............

Mr. Boren .......................... ............. X .............

An amendment by Mr. Garrett, No. 23, regarding suspension of 

contributions, was not agreed to by a record vote of 28 yeas and 

36 nays (Record vote FC–44): 

RECORD VOTE NO. FC–44 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... X ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... ........... ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite (FL) .......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Pearce ............................ ........... ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Price (GA) ...................... X ........... .............


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RECORD VOTE NO. FC–44—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Murphy ............................ ........... X .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Biggert, No. 24, an amendment in the nature of a substitute, was not agreed to by a record vote of 28 yeas 

and 36 nays (Record vote FC–45): 

RECORD VOTE NO. FC–45 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... X ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... ........... ............. Mr. Paul ............................... ........... ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite (FL) .......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Pearce ............................ ........... ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Murphy ............................ ........... X .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

The following other amendments were also considered by the 

Committee: 


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An amendment by Mr. Hodes, No. 1, regarding failure to pay 

amounts from escrow accounts for single family mortgages, was 

agreed to by a voice vote. 

An amendment by Mr. Donnelly, No. 2, adding manufactured 

housing, was agreed to by a voice vote. 

An amendment by Mr. Donnelly, No. 3, adding the definition of 

real estate, was agreed to by a voice vote. 

An amendment by Mrs. McCarthy, No. 4, requiring a mandatory 

notice, was agreed to by a voice vote. 

An amendment by Mr. Frank, No. 5, adding participation of 

mortgage brokers and correspondent lenders, was agreed to, as 

amended, by a voice vote. 

An amendment by Mr. Green to the amendment offered by Mr. 

Frank, No. 5a, adding additional mortgage brokers and correspondent lenders, was agreed to, as modified by unanimous consent, by a voice vote. 

An amendment by Ms. Waters to the amendment offered by Mr. 

Frank, No. 5b, inserting mortgage bankers, was agreed to by a 

voice vote. 

An amendment by Mrs. Maloney, No. 6, providing insurance for 

single family homes with licensed day care facilities, was agreed to 

by a voice vote. 

An amendment by Mr. Moore of Kansas, No. 7, limiting mortgage 

insurance premiums was agreed to by a voice vote. 

An amendment by Mr. Frank, No. 8, clarifying disposition of certain properties, was agreed to by a voice vote. 

An amendment by Mr. Marshall, No. 10, putting a limitation on 

origination fees, was agreed to by a voice vote. 

An amendment by Mrs. Capito, No. 11, requiring acceptable 

forms of identification for FHA mortgagors, was agreed to by a 

voice vote. 

An amendment by Mr. Green, No. 12, establishing a pilot program for automated process for borrowers without sufficient credit 

history, was agreed to by a voice vote. 

An amendment by Mrs. Biggert, No. 13, requiring notification 

and availability to mortgagor, was not agreed to by a voice vote. 

An amendment by Mr. McHenry, No. 14, requiring mortgage disclosures, was offered and withdrawn. 

An amendment by Ms. Waters, No. 18, expanding underwriting 

standards, was agreed to by a voice vote. 

An amendment by Mr. Miller of California, No. 19, regarding certification requirements, was agreed to by a voice vote. 

An amendment by Mr. Neugebauer, No. 20, the question was divided: The first part, dealing with authorization of appropriations, 

was not agreed to by a voice vote. The second part, authorizing a 

HUD study and report, was agreed to by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 


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PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

H.R. 1852 contains a number of provisions designed to expand 

the use and improve the efficiency of Federal Housing Administration (FHA) insured loan programs. A major focus of the bill is to 

modernize the FHA Title II single family loan program, through 

provisions to raise loan limits in high cost areas, to authorize zero 

down payment loans, to permit risk-based pricing, and to direct 

HUD to modify underwriting guidelines in order to serve higher 

credit risk borrowers. These changes are augmented by disclosure 

requirements to ensure that borrowers make informed mortgage 

choices and consumer protections for higher risk borrowers and 

borrowers with reduced down payments. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

JUNE 11, 2007. 

Hon. BARNEY FRANK, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1852, the Expanding 

American Homeownership Act of 2007. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susanne S. Mehlman. 

Sincerely, 

PETER R. ORSZAG. 

Enclosure. 

H.R. 1852—Expanding American Homeownership Act of 2007 

Summary: H.R. 1852 would amend the National Housing Act to 

authorize the Federal Housing Administration (FHA) to implement 

a new pricing structure for the mortgage guarantees it offers. This 


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legislation also would remove the statutory limitation on the number of reverse mortgages that FHA can insure and would make 

other changes to the Home Equity Conversion Mortgage (HECM) 

program. In addition, this legislation would authorize the appropriation of funds to provide certain borrowers with financial counseling and to establish a new affordable housing fund. 

Enacting H.R. 1852 would increase direct spending by allowing 

the Department of Housing and Urban Development (HUD) to sell 

certain properties at below-market prices without an appropriation 

of funds to offset any forgone sales proceeds. That provision would 

modify the cost of some previous and outstanding loan guarantees. 

As a result, CBO estimates that enacting H.R. 1852 would increase 

direct spending by $16 million in 2007. 

CBO also estimates that implementing H.R. 1852 would result in 

a net increase in offsetting collections (a credit against discretionary spending) of $313 million in 2008 and $628 million over the 

2008–2012 period, assuming that appropriation laws necessary to 

implement the FHA programs and the Mortgage-Backed Securities 

(MBS) program of the Government National Mortgage Association 

(GNMA) are enacted. 

H.R. 1852 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would impose no costs on state, local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 1852 is shown in the following table. The cost 

of this legislation falls within budget functions 370 (mortgage and 

housing credit) and 600 (income security). 

TABLE 1. ESTIMATED BUDGETARY IMPACT OF H.R. 1852 

By fiscal year, in millions of dollars—

2007 2008 2009 2010 2011 2012 

CHANGES IN DIRECT SPENDING 

Discounted Multifamily Sale 

Estimated Budget Authority ................................................ 2 0 0 0 0 0 

Estimated Outlays ............................................................... 2 0 0 0 0 0 

Noncompetitive Multifamily Sales 

Estimated Budget Authority ................................................ 14 0 0 0 0 0 

Estimated Outlays ............................................................... 14 0 0 0 0 0 

Total Changes 

Estimated Budget Authority ................................................ 16 0 0 0 0 0 

Estimated Outlays ............................................................... 16 0 0 0 0 0 

SPENDING SUBJECT TO APPROPRIATION 

Net FHA and GNMA Spending, and Spending for Housing Counseling Under Current Law 1

Estimated Authorization Level ............................................. ¥900 ¥402 ¥425 ¥425 ¥425 ¥425 

Estimated Outlays ............................................................... ¥900 ¥365 ¥419 ¥425 ¥425 ¥425 

Total Changes 

Estimated Authorization Level .................................... 0 ¥12 ¥16 ¥17 ¥22 ¥28 

Estimated Outlays ...................................................... 0 ¥313 ¥139 ¥36 ¥65 ¥75 

Net Spending Under H.R. 1852 

Estimated Authorization Level ............................................. ¥900 ¥414 ¥441 ¥442 ¥447 ¥453 

Estimated Outlays ............................................................... ¥900 ¥678 ¥558 ¥461 ¥490 ¥500 

1 The figures for 2007 are CBO’s current estimates of budget authority and outlays for FHA’s multifamily and single-family programs, the 

HECM program, HUD’s housing counseling program, and for GNMA’s MBS program under the enacted appropriation levels for this year. The 

2008–2012 levels are CBO’s baseline estimates of the net offsetting collections that would be generated by those programs, assuming that 

appropriation laws necessary to implement FHA and GNMA programs are enacted. 

Note: GNMA = Government National Mortgage Association; HECM = Home Equity Conversion Mortgage; MBS = Mortgage-Backed Securities; 

HUD = Department of Housing and Urban Development; FHA = Federal Housing Administration. 


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35 

Basis of Estimate: For this estimate, CBO assumes that H.R. 

1852 will be enacted before the end of fiscal year 2007, that the 

amounts necessary to implement the bill will be appropriated for 

each year, and that appropriation laws necessary to implement the 

FHA and GNMA programs will be enacted each year. 

Changes in direct spending 

Prior to the enactment of the Deficit Reduction Act (DRA) of 

2005, HUD often sold foreclosed multifamily properties to state and 

local governments as part of its right of first refusal program (that 

is, a noncompetitive program in which HUD negotiated directly 

with the buyer). Frequently, state and local governments purchased those properties for nominal amounts, such as $1. The DRA 

bars HUD from taking into account the cost of rehabilitating the 

foreclosed property and the expense of maintaining existing affordability restrictions on the property (for example, limiting the 

amount of rent paid by tenants) when setting the price for a noncompetitive property sale. As a result, noncompetitive sales no 

longer occur. Potential buyers (including state and local governments) have concluded that the price HUD sets for a noncompetitive sale exceeds the amount that bidders would offer in a competitive auction. DRA authorizes HUD to sell foreclosed properties at 

lower prices only if funds have been appropriated to offset the forgone sales proceeds through 2010. Since the enactment of DRA in 

2006, no such appropriations have been provided. 

Both sections 27 and 28 would result in below-market sales in 

certain circumstances without further appropriation action. Enacting those sections would increase direct spending because the cash 

flows associated with some previous and existing loan guarantees 

would be modified. The cost of a loan modification is estimated on 

a net-present-value basis and recorded in the year in which the legislation is enacted. CBO estimates that enacting the two sections 

would result in a cost of $16 million in 2007, as discussed below. 

Valuation of Multifamily Properties in Noncompetitive Sales by 

HUD to States and Localities. Section 27 would require HUD to adjust for the cost of rehabilitating and maintaining existing affordability restrictions when appraising foreclosed properties for the 

purpose of calculating the price for sales to states and localities. 

CBO expects that this legislation would allow noncompetitive sales 

to become an attractive alternative to competitive auctions for some 

state and local governments. Consequently, we estimate that the 

volume of noncompetitive sales of foreclosed properties would return to levels that existed prior to the enactment of the DRA—

about 10 property sales each year. 

Based on information from HUD, CBO estimates that the price 

paid in noncompetitive sales prior to enactment of DRA averaged 

$1.3 million less than the price paid in competitive sales for similar 

properties. Based on information from HUD, we do not expect that 

HUD would return to its pre-DRA practice of negotiating sales 

prices for nominal amounts. However, CBO estimates that it is 

likely that the sales price in half of the negotiated sales that would 

occur under H.R. 1852 would be less than the price that would be 

received in an auction. Consequently, we estimate that, on average, 

the government would forgo receipts of about $5 million per year—


rwilkins on PROD1PC63 with HEARING
36 

$l million each for about five properties per year that would be sold 

in noncompetitive sales over the 2008–2010 period. 

Because enacting this provision would change the expected cash 

flows associated with the multifamily insurance program, this loss 

of sales proceeds (which are recoveries on defaulted loans) would 

be considered a modification of existing federal loan guarantees. 

Under credit reform procedures, the costs of such modifications are 

estimated on a net-present-value basis and recorded in the year in 

which the legislation is enacted. Assuming the bill is enacted late 

in fiscal year 2007, CBO estimates that enacting this provision 

would result in an increase in direct spending of $14 million in 

2007. (Such estimated costs would be recorded in 2008 if the bill 

is enacted after September 30, 2007.) 

Clarification of Disposition of Certain Properties. Section 28 

would, under certain circumstances, exempt properties from the 

sale requirements specified in the DRA. Based on information from 

HUD, CBO estimates that this provision would affect the sale of 

one property located in Michigan by allowing its sale to the city 

government at a price below market value. CBO estimates that the 

market value of the property is about $2 million, and that, under 

current law, it will be sold at a competitive auction; under this provision, the property could instead be sold to the city government for 

a nominal amount. Because this section would result in a change 

to the cash flows associated with the original loan guarantee, this 

loss of receipts would be considered a loan modification. As a result, CBO estimates that enacting this section would increase direct spending by about $2 million in 2007. 

Spending subject to appropriation 

CBO estimates that implementing H.R. 1852 would result in an increase in offsetting collections of $313 million in 2008 and $628 

million over the 2008–2012 period, assuming enactment of appropriation laws necessary to implement the FHA and GNMA programs. The estimated additional offsetting collections would stem 

from the authority in H.R. 1852 to expand FHA’s HECM loan program and to raise the loan limits for FHA’s multifamily program. 

The latter change also would result in more offsetting collections 

for GNMA. Additional discretionary costs associated with limiting 

a planned increase in mortgage insurance fees, providing payment 

incentives to certain FHA borrowers, and authorizing the appropriation of funds for housing counseling and for a new affordable 

housing fund would be netted against those new offsetting collections. 

CBO expects that other provisions of the bill would have no significant budgetary impact over the next 5 years. The major provisions of the bill are discussed below. Table 2 details the components of estimated spending subject to appropriation under H.R. 

1852. 

Amendments to the HECM Loan Insurance Program. HECM 

loans are considered to be ‘‘reverse mortgages’’ because they enable 

homeowners who are at least 62 years of age to withdraw some of 

the equity in their homes in the form of monthly payments, in a 

lump sum, or through a line of credit. Under current law, FHA is 

permitted to guarantee up to a cumulative total of 275,000 such 

loans, although this limitation has been waived through fiscal year 


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37 

2007. This cap has already been reached this year; consequently, 

the program will be inactive beginning in 2008 unless the cap is 

amended. 

Loan size is tied to loan limits that vary by geographic region, 

and such loans cannot be used to purchase another home. In addition, the origination fee charged by lenders is calculated as a percentage of the home’s value. 

Enacting this legislation would remove the statutory limitation 

on the number of loans that could be guaranteed, set a single nationwide limit on the dollar amount of a HECM loan that would 

be tied to the conforming loan amount, limit the origination fee to 

2 percent of the loan amount (subject to a minimum allowable 

amount), and allow borrowers to use HECM loans to purchase a 

new home. (Conforming loans have terms and conditions that follow the guidelines set forth by the Government Sponsored Enterprises (GSEs); the conforming loan amount is $417,000.) 

Implementation of the HECM program, like all of FHA’s insurance programs, is contingent on the enactment of appropriation 

laws that provide annual loan commitment authority. Thus, the estimated budgetary impact of this proposal is considered to be discretionary, and it is tied to the demand for HECM loans and the 

estimated subsidy cost of the loan guarantees. 

Because, under credit reform procedures, guarantees of HECM 

loans are estimated to have negative subsidies (that is, they earn 

money for the government), CBO estimates that implementing 

those amendments would increase offsetting collections by about 

$2.1 billion over the 2008–2012 period. 

TABLE 2. ESTIMATED EFFECTS OF H.R. 1852 ON SPENDING SUBJECT TO APPROPRIATION 

By fiscal year, in millions of dollars—

2007 2008 2009 2010 2011 2012 

SPENDING SUBJECT TO APPROPRIATION 

Net FHA and GNMA Spending, and Spending for Housing Counseling Under Current Law 1

Estimated Authorization Level ............................................. ¥900 ¥402 ¥425 ¥425 ¥425 ¥425 

Estimated Outlays ............................................................... ¥900 ¥365 ¥419 ¥425 ¥425 ¥425 

Proposed Changes 

Amendments to HECM Loan Program 

Estimated Authorization Level .................................... 0 ¥370 ¥385 ¥410 ¥445 ¥480 

Estimated Outlays ...................................................... 0 ¥370 ¥385 ¥410 ¥445 ¥480 

Higher Loan Limits for Multifamily Program 

Estimated Authorization Level .................................... 0 ¥19 ¥19 ¥19 ¥19 ¥19 

Estimated Outlays ...................................................... 0 ¥19 ¥19 ¥19 ¥19 ¥19 

Additional GNMA Offsetting Collections 

Estimated Authorization Level .................................... 0 ¥12 ¥17 ¥19 ¥26 ¥34 

Estimated Outlays ...................................................... 0 ¥12 ¥17 ¥19 ¥26 ¥34 

Limit on Premium Increases for Mortgage Insurance 

Estimated Authorization Level .................................... 0 20 43 43 43 43 

Estimated Outlays ...................................................... 0 20 43 43 43 43 

Cost of Payment Incentives 

Estimated Authorization Level .................................... 0 16 16 16 16 16 

Estimated Outlays ...................................................... 0 16 16 16 16 16 

Housing Counseling Program 

Estimated Authorization Level .................................... 0 58 58 58 58 58 

Estimated Outlays ...................................................... 0 6 49 58 58 58 

FHA Technology Support Costs 

Authorization Level ..................................................... 0 25 25 25 25 25 

Estimated Outlays ...................................................... 0 19 25 25 25 25 

Affordable Housing Fund 

Estimated Authorization Level .................................... 0 270 262 287 322 357 


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TABLE 2. ESTIMATED EFFECTS OF H.R. 1852 ON SPENDING SUBJECT TO APPROPRIATION—

Continued 

By fiscal year, in millions of dollars—

2007 2008 2009 2010 2011 2012 

Estimated Outlays ...................................................... 0 27 148 268 279 310 

Total Changes 

Estimated Authorization Level ........................... 0 ¥12 ¥16 ¥17 ¥22 ¥28 

Estimated Outlays ............................................. 0 ¥313 ¥139 ¥36 ¥65 ¥75 

Net Spending Under H.R. 1852 

Estimated Authorization Level .................................... ¥900 ¥414 ¥441 ¥442 -447 ¥453 

Estimated Outlays ...................................................... ¥900 ¥678 ¥558 ¥461 ¥490 ¥500 

1 The figures for 2007 are CBO’s current estimates of budget authority and outlays for FHA’s multifamily and single-family programs, the 

HECM program, HUD’s housing counseling program, and for GNMA’s MBS program under the enacted appropriation levels for this year. The 2008–2012 levels are CBO’s baseline estimates of the net offsetting collections that would be generated by those programs, assuming that 

appropriation laws necessary to implement FHA and GNMA programs are enacted. 

Note: GNMA = Government National Mortgage Association; HECM = Home Equity Conversion Mortgage; MBS = Mortgage-Backed Securities; 

HUD = Department of Housing and Urban Development; FHA = Federal Housing Administration. 

Demand for HECM Loans. According to the National Reverse 

Mortgage Lenders Association (NRMLA) and other industry experts, the HECM program has risen in popularity in recent years. 

As more consumers are becoming aware ofthe product, more households are becoming eligible for the program (currently over 17 million households have owners who are age 65 or older, according to 

census data), and more seniors view the product as an alternative 

approach to financing home-improvement projects, medical costs, 

and other needs. In addition, sources in the mortgage industry 

have observed an increasing demand among seniors for new housing within senior communities. The number of HECM loans insured by FHA more than doubled from 2003 to 2006 (18,000 loans 

were insured in 2003, compared with 76,000 loans in 2006). Furthermore, based on the number of HECM loans insured as of April 

2006, that volume could reach over 100,000 loans by the end of fiscal year 2007. 

Based on information from FHA, NRMLA, and other industry experts, CBO estimates that setting a single nationwide loan limit 

and permitting borrowers to use HECM loans to purchase a new 

home would result in a product that would be more attractive to 

borrowers and more easily marketed by lenders, resulting in increased demand for HECM loans. On the other hand, the limit on 

the origination fee could result in a program that is less profitable 

for certain lenders, causing some to end or limit their participation 

in the program. A lower origination fee, however, could increase 

the program’s attractiveness to some borrowers, assuming lenders 

do not increase interest rates significantly to compensate for lower 

origination fees. 

Currently, the market for FHA’s HECM loans appears to be very 

robust, and under this bill, FHA would probably insure more than 

100,000 loans annually over the next several years. Also, GNMA’s 

recent decision to begin securitizing HECM loans could result in increased activity by lenders, as investors in the secondary mortgage 

market begin to invest in mortgage-backed securities that include 

this product. Whether the number of guarantees could exceed 

100,000 loans on a continued basis each year would depend on 

FHA’s ability to administer and manage the program in an efficient 

manner and on the market’s response to this bill, especially the 

change in the origination fee. Based on information from FHA, 

CBO estimates that the agency could insure about 110,000 loans 


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(with a face value of about $27 billion) in 2008. In subsequent 

years, we estimate that demand would increase at the estimated 

rates for appreciation in housing prices—about 2 percent to 4 percent a year. 

Subsidy Cost. Under current law, FHA guarantees of HECM 

loans are estimated to result in net offsetting collections to the federal government because guarantee fees for those mortgages are 

currently estimated to more than offset the costs of expected defaults. For 2008, the Administration’s subsidy estimate for HECM 

guarantees is ¥1.9 percent. Under the expanded program authorized by H.R. 1852, CBO estimates that the subsidy rate for the 

HECM loans would be ¥1.35 percent. This reduction from the estimated rate for 2008 is due to the increased risk FHA would experience under the proposed nationwide loan limitation. With larger 

loan sizes, the ‘‘equity cushion’’ (that is the difference between the 

home’s value and the potential cost of a claim payment) would decrease, leading to potentially more costly claims for FHA. 

This estimated subsidy rate of ¥1.35 percent assumes that the 

HECM loan program would not be subject to the risk-based pricing 

structure authorized by the bill and described below. CBO assumes 

that FHA would continue to charge fixed, up-front, and annual fees 

for all HECM borrowers, regardless of any specific evaluation of 

their individual risk of default. CBO estimates that implementing 

this legislation would result in additional offsetting collections of 

$370 million in 2008 and $2.1 billion over the 2008–2012 period, 

contingent on enactment of appropriation bills that would establish 

the authority to make HECM loan guarantees by specifying annual 

loan commitment levels. 

Estimated Impact on Demand for Multifamily Loan Guarantees. 

GNMA is responsible for guaranteeing securities backed by pools of 

mortgages that are insured by the federal government. In exchange 

for a fee charged to lenders or issuers of the securities, GNMA 

guarantees the timely payments of scheduled principal and interest 

due on the pooled mortgages that back those securities. Because, 

under credit reform procedures, the value of the fees collected by 

GNMA is estimated to exceed the cost of loan defaults in each year, 

the Administration estimates that the GNMA MBS program will 

have a subsidy rate of ¥0.21 percent in 2008, resulting in the net 

collection of receipts to the federal government. 

Currently GNMA does not securitize HECM loans; according to 

GNMA, however, securitization of those loans will begin in 2008 if 

the program has authority to operate beyond 2007. Under the bill, 

CBO estimates that in 2008 about 5 percent of the HECM loans 

would be included in GNMA’s MBS program. We estimate that in 

subsequent years, 10 percent to 20 percent of the HECM loans 

would be securitized by GNMA. Thus, CBO estimates that those 

proposed changes to the HECM program would result in additional 

offsetting collections to GNMA, totaling about $40 million over the 

2008–2012 period, assuming appropriation action to establish a dollar limitation for the GNMA securities program. 

Higher Loan Limits for the Multifamily Program. Under the National Housing Act, FHA is authorized to insure private loans used 

to finance certain multifamily homes, subject to loan limitations 

specified in appropriation acts. Section 26 would increase the current limit on the value of individual loans that FHA can guarantee 


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in certain high-cost areas of the country under 12 of its 20 multifamily loan guarantee programs. (High-cost housing markets are 

designated by FHA and include such cities as Boston, San Francisco, and Los Angeles.) 

The maximum amount of a loan that FHA can guarantee for 

multifamily housing depends on the base loan levels established by 

FHA, which vary by type and size of housing within a project. For 

example, the base loan limit for each unit of a building with twobedroom apartments without elevators is roughly $54,000. Currently, in regions designated by FHA as high-cost areas, the base 

loan limit can be increased by up to 170 percent. Thus, in a highcost region, the loan limit for each unit in a building with two-bedroom apartments without elevators can be as high as $146,000 

(that is, 270 percent of the base limit). Under H.R. 1852, FHA 

could increase the base loan limit by up to 215 percent in high-cost 

areas. (In this example, the loan limit for that two-bedroom apartment could be as high as $170,000.) 

Estimated Impact on Demand for Multifamily Loan Guarantees. 

The Federal Credit Reform Act of 1990 requires an appropriation 

of the subsidy costs and administrative costs associated with loan 

guarantees and direct loans. The subsidy cost is the estimated 

long-term cost to the government of a loan guarantee or a direct 

loan, calculated on a net-present-value basis, excluding administrative costs. Under current law, FHA’s guarantees of multifamily 

loans are estimated to result in net offsetting collections (that is, 

negative outlays) because the Administration estimates that guarantee fees collected on those mortgages will more than offset the 

costs of expected defaults, calculated on a present-value basis. For 

2008, CBO estimates that the weighted average subsidy cost for 

the multifamily programs subject to the loan limit increases under 

this legislation is ¥1.9 percent. This estimate takes into account 

the prohibition on increases in certain premium fees in section 30 

of this legislation. In addition, CBO estimates that, under current 

law, FHA will insure $4 billion to $5 billion in multifamily loans 

in 2008. 

If FHA made more loan guarantees as a result of the higher cap 

on the value of loans in high-cost areas, the agency would record 

additional offsetting collections (which would be a reduction in discretionary spending). According to industry experts, the current 

loan limits constrain new construction and rehabilitation of multifamily housing. Based on information from FHA field offices and 

realtors in certain high-cost areas, CBO expects that, under H.R. 

1852, FHA would insure an additional 35 to 45 loans a year for 

multifamily projects with a total face value of about $1 billion. We 

expect that the subsidy rate for those loans over the 2008–2012 period would be similar to the program’s estimated rate of ¥1.9 percent for 2008 under H.R. 1852. Thus, CBO estimates that those additional loan guarantees would increase offsetting collections to 

FHA (and thus reduce outlays) by about $19 million annually over 

the 2008–2012 period. 

Effects on GNMA’s Subsidy Costs. Because most FHA multifamily loan guarantees are included in GNMA’s MBS program, 

CBO estimates that raising the loan limit would result in additional GNMA collections of about $2 million a year over the 2008–

2012 period. Those savings would affect discretionary spending beVerDate Aug 31 2005 20:36 Jul 05, 2007 Jkt 059006 PO 00000 Frm 00040 Fmt 6659 Sfmt 6602 E:\HR\OC\HR217.XXX HR217

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cause, like FHA, GNMA requires appropriation action to establish 

the total amount of its guarantees. 

Raising Loan Limits for the Single-Family Program. Section 3 

would raise FHA’s loan limit—the dollar amount of a mortgage 

that FHA can insure—for its single-family program from 87 percent of the conforming loan amount to 100 percent of the conforming loan limit in certain geographic regions where the cost of 

housing is very high. Effectively, this would be a change from insuring loans of $362,790 today to insuring loans of up to $417,000 

in certain parts of the country. In less expensive markets, the limit 

would be raised from 48 percent to 65 percent of the conforming 

loan limit, or a change from loan guarantees of up to $200,160 to 

loan guarantees of up to $271,050 under the bill. 

CBO estimates that implementing this provision would increase 

loan volume by about 8 percent a year—about $4 billion annually 

in additional loan guarantees—over the next five years. This increase would stem mostly from increasing the limit in the less expensive housing markets. Despite this estimated increase in loan 

volume, CBO estimates that no additional offsetting collections 

would be realized because we expect the subsidy rate for the singlefamily program to be zero over the next five years. However, because most FHA single-family loan guarantees are included in 

GNMA’s MBS program, CBO estimates that raising the loan limit 

would result in additional offsetting collections to GNMA of about 

$45 million over the 2008–2012 period. As mentioned earlier, 

GNMA requires appropriation action to establish its dollar limitation for the securities program, so those savings would be offsets 

to discretionary spending. 

Limit on Increases in Fees for Mortgage Insurance. Currently, 

FHA has the authority to adjust fees for its mortgage insurance 

programs through administrative action. Section 30 would prohibit 

FHA from increasing fees unless the increase is required to maintain the estimated credit subsidy for the program at zero, but not 

less than zero. According to the Administration, annual fees for 

new loan guarantees for the apartment development and refinance 

programs will increase by about 16 basis points beginning in 2008. 

CBO estimates that those fee increases would affect about $2.6 billion in loan guarantees in 2008 and over $3 billion in loan guarantees annually in subsequent years. Furthermore, we estimate that 

those fee increases would increase offsetting collections for this program by $192 million over the 2008–2012 period. Thus, prohibiting 

those fee increases would result in a loss of $192 million in discretionary offsetting collections over the next five years. 

Cost of Payment Incentives. Section 9 would authorize HUD to 

provide certain payment incentives to borrowers after three years 

of timely premium payments; after five years of timely premium 

payments, FHA would be required to provide payment incentives. 

Borrowers who have taken out zero down payment loans or who 

are considered to be a higher risk of default would be eligible for 

some of those incentives, which include reductions in annual premiums and refunds of up-front premiums upon payment of the full 

mortgage. CBO estimates that the borrowers of about $7 billion in 

FHA-guaranteed mortgages made annually would eventually be eligible for certain payment incentives. Furthermore, we estimate 

that those payment incentives would increase the subsidy rate for 


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the affected loan guarantees by an average of 0.23 percent. Under 

the Federal Credit Reform Act of 1990, such costs require the appropriation of funds. CBO estimates that appropriations of about 

$16 million would be required annually over the 2008–2012 period. 

Section 29, which is discussed below, would authorize appropriations for any credit subsidy required for the single-family loan 

guarantee program. 

Additional Authorizations of Appropriations. Section 29 of this 

legislation would authorize the appropriation of funds for various 

purposes in amounts that equal the net increase in negative credit 

subsidy for the FHA programs resulting from this legislation. Such 

appropriations would be used to provide credit subsidies for the 

single-family loan guarantee program (to the extent needed), funding for the housing counseling program, funding to support the improvement of FHA’s technologies and processes, and funding for an 

affordable housing fund, which would provide grants to support affordable rental housing and affordable homeownership opportunities for low-income families. Those funds are not authorized to be 

appropriated each year unless HUD, by rule, determines that FHA 

premiums being charged that year are sufficient to comply with the 

Mutual Mortgage Insurance Fund’s (MMIFs) capital ratio requirement and are also sufficient to ensure the safety and soundness of 

other FHA mortgage insurance funds. 

Based on the amounts CBO estimates for the provisions affecting the HECM and multifamily programs, we estimate that about $2 

billion would be authorized to be appropriated over the 2008–2012 

period. We further estimate that, over the next five years, implementing these provisions would cost about $80 million for the credit subsidies associated with the payment incentives, $229 million 

for the housing counseling program, $119 million for FHA program 

support, and $1 billion for the affordable housing fund. 

Risk-based Pricing and Flexible Downpayment Requirements. 

Currently, FHA’s single-family loan guarantee program has a flat 

premium structure under which all borrowers pay the same upfront and annual fees, regardless of the borrower’s individual risk 

of default. According to the FHA, the up-front fee in 2008 is expected to increase from 1.5 percent to 1.66 percent and the annual 

fee will rise from 0.5 percent to 0.55 percent. Furthermore, the Administration estimates that those fee increases will result in a subsidy rate of zero for the single-family program for 2008. 

Under this legislation, FHA would have the authority to match 

the fees it charges with the borrowers’ risk of default or the risk 

associated with a particular loan product, and to offer guarantees 

for loans with little or no down payment. For certain borrowers and 

types of loan products, the up-front fee could be as high as 3 percent and the annual fee could be as high as 0.75 percent. CBO estimates that implementing this risk-based pricing proposal would result in a weighted subsidy rate that is about zero. Because the subsidy rate for 2008 is estimated to be zero under current law, CBO 

expects that FHA would charge rates under H.R. 1852 that would 

produce a similar result. 

Intergovernmental and private-sector impact: H.R. 1852 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would impose no costs on state, local, or tribal governments. 


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Estimate prepared by: Federal costs: Susanne S. Mehlman; impact on state, local, and tribal governments: Teri Gullo; impact on 

the private sector: Paige Piper/Bach. 

Estimate spproved by: Robert A. Sunshine, Assistant Director for 

Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

In compliance with clause 9 of rule XXI, the Committee is in receipt of the following correspondence: Regarding section 28, the 

City of Ypsilanti, Michigan, submitted by Mr. Dingell: 

CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, 

Washington, DC, June 15, 2007. 

Hon. BARNEY FRANK, Chairman, House Committee on Financial Services, 

Washington, DC. 

Hon. SPENCER BACHUS, Ranking Member, House Committee on Financial Services, 

Washington, DC. 

DEAR GENTLEMEN: I am requesting the legislative language 

found in Section 28 of H.R. 1852 for the City of Ypsilanti, Michigan 

in fiscal year 2008. The entity that would benefit from this provision is the City of Ypsilanti, located at City Hall, One South Huron 

Street, Ypsilanti, MI 48197. The provision would allow HUD to sell 

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lanti, Michigan 48197, at a below market rate. I certified that neither I nor my spouse has any financial interested in this project. 

Sincerely, 

JOHN D. DINGELL, Member of Congress. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title and table of contents 

Includes a table of contents and the short title of the bill, which 

is the ‘‘Expanding American Homeownership Act of 2007.’’

Section 2. Findings and purposes 

Includes the findings and purposes of the Act. 

Section 3. Maximum principal loan obligation 

Increases FHA Section 203(b)(2) single family mortgage loan limits. Under current law, the maximum insurable mortgage loan 

amount for a Single Family residence is the lesser of (a) 95 percent 

of the local median home price, or (b) 87 percent of the nationwide 

GSE conforming loan limit—except that notwithstanding the local 

median home price determination, there is a national loan floor 

equal to 48 percent of the nationwide GSE conforming loan limit. 

This section raises the loan limit to the lesser of: (a) 100 percent 

of the local median home price, or (b) the nationwide GSE conforming loan limit. It also raises the nationwide loan floor from 48 

percent to 65 percent of the GSE conforming limit. In 2007, the nationwide GSE conforming loan limit is $417,000. 

Under current law, FHA loan limits for 2-, 3- and 4-unit mortgages are statutorily set as 107 percent, 130 percent, and 150 percent of the FHA single family 1-unit median home price, respectively. This section changes this calculation, so that the ratio of 

loan limits for 2-, 3-, and 4-unit mortgages to the FHA 1-unit mortgage limit is conformed to the same ratios that the GSE conforming 

loan limits for 2-, 3-, and 4-unit mortgages bear to the GSE conforming 1-unit loan limit. 

Section 4. Extension of mortgage term 

Extends the maximum loan term on FHA single family loans 

from 35 to 40 years. 

Section 5. Down payment simplification 

The current loan-to-value (LTV) limit for an FHA single family 

loan is generally 97.75 percent of a home’s appraised value, plus 

the upfront FHA premium—except that there are separate LTV 

limits for loans of lower amounts and for loans in states that do 

not have high closing costs. This section simplifies the FHA single 

family statutory LTV limits to permit loans up to 97.75 percent of 

appraised value, plus the upfront FHA mortgage premium. It also 

creates new statutory authority to waive this limit for ‘‘zero- and 

lower-down payment borrowers,’’ as are defined in Section 6. 

Also retains the current statutory 3 percent cash down payment 

requirement—except for ‘‘zero- and lower-down payment borrowers,’’ as are identified in Section 6. 


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Section 6. Mortgage insurance premiums for zero and lower down 

payment borrowers 

Defines ‘‘zero- and lower down payment borrowers’’ as first-time 

homebuyers who do not comply with either the 97.75 percent LTV 

limit or the 3 percent cash down requirement, referenced in Section 

5. 

FHA is authorized to charge upfront premiums for such borrowers in an amount up to 3 percent, and annual premiums for 

such borrowers up to .75 percent of the loan balance. 

Section 7. Higher risk borrowers 

Creates a definition of a ‘‘Standard Risk’’ borrower as a borrower 

with a 560 or higher equivalent FICO score that complies with 

LTV and 3 percent down payment requirements. Also defines a 

‘‘Higher Risk’’ borrower as one with a FICO equivalent score below 

560. Directs HUD to underwrite loans for Higher Risk borrowers. 

Raises the existing statutory upfront cap for Higher Risk borrowers 

from 2.25 percent to 3 percent, but retains the .55 percent annual 

premium cap for such borrowers. 

Section 8. Risk-based premiums 

Authorizes risk-based premiums for Zero and Lower Down borrowers’’ and ‘‘Higher Risk’’ borrowers (as defined in Sections 6 and 

7). Establishes procedures for HUD to establish and change premiums, including a list of factors to be considered in establishing 

such premiums. Also authorizes risk-based pricing based on product type—such as fixed rate vs. ARM, and Section 203(b) vs. Section 234 condominium loans. 

Section 9. Payment incentives 

Requires HUD to provide ‘‘Payment Incentives’’ for borrowers 

that make on-time payments for at least the first 5 years of the 

loan. For zero down borrowers, such Payment Incentives would result in a reduction of annual premiums after such period down to 

statutory maximum of .55 percent. For higher risk borrowers, Payment Incentives would result in a reduction of annual payments 

after such period down to the level that would have been charged 

had they not been higher risk, plus a refund equal to the difference 

between the higher upfront premium such borrowers paid and the 

premium paid by Standard Risk Borrowers. HUD is also authorized to offer these Payment Incentives to borrowers after a period 

of 3 years of on-time payments. 

Section 10. Borrower protections for higher risk mortgages 

Authorizes HUD to require pre-purchase counseling for zero and 

lower down payment borrowers and higher risk borrowers. Requires the mortgagee to provide the borrower at loan application a 

list of HUD-approved housing counseling agencies in the area. In 

addition, borrowers who become 60-days delinquent on their loan 

must be given notice by a housing counseling entity of the availability of foreclosure prevention counseling. 

Requires borrowers applying for zero down and lower down payment loans to be provided written disclosures, either through counseling or at loan application, regarding other mortgage loan options, the additional costs associated with lower down payment 


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loans and the appreciation needed to pay off the loan, including 

selling costs. Also at closing, borrowers are to be given disclosures 

of their payment incentive rights and rights to loss mitigation. 

Section 11. Annual reports on new programs and loss mitigation 

Requires HUD to report annually on the rates of default and 

foreclosure of zero and lower down payment and higher risk borrowers, as well as actions HUD has taken with respect to loss mitigation. 

Section 12. Insurance for single family homes with licensed child 

care facilities 

Permits an increase in FHA single family loan limits of up to 25 

percent higher than the customary loan limit for any home which 

includes space used for a licensed child care facility. Such increase 

must be proportional to the amount of space that will be used for 

the child care facility. 

Section 13. Rehabilitation loans 

Deletes obsolete language in existing section 203(k)(1) FHA rehabilitation loans. Also makes the Section 203(k) program an obligation of the Mutual Mortgage Insurance Fund (MMIF), instead of its 

current status as an obligation of the General Insurance Fund. 

Section 14. Discretionary action 

Moves existing language contained in section 203(s) of the National Housing Act, dealing with notification requirements about 

actions taken by the Secretary to suspend or revoke the approval 

of a mortgagee to participate in FHA programs, to section 202 of 

the National Housing Act, which contains the basic authority of the 

Mortgagee Review Board. 

Section 15. Insurance of condominiums and manufactured housing 

Establishes a new limitation on the existing Section 234(c) condominium program, to limit such loans in the future to take out financing for multifamily blanket mortgages on FHA insured section 

234(d) condominium projects. Contains a conforming amendment to 

Section 234(c) of the National Housing Act to permit 40 year mortgages. Amends section 201(a) of the National Housing Act to add 

a definition of condominium mortgage to the definition section, consistent with the intent to insure condominium mortgages under 

section 203 of the National Housing Act, and to provide that condominiums may be in the form of manufactured housing units. 

Modifies the definition of real estate to permit manufactured homes 

to be financed, even though they are not taxed as real property. 

Section 16. Mutual mortgage insurance fund 

Clarifies that the MMIF is subject to the provisions of the Credit 

Reform Act of 1990, and the use of ‘guarantee’ and ‘commitment to 

guarantee’ reflects that purpose. Directs HUD to ensure that the 

MMIF remains financially sound. Also requires HUD to provide an 

independent actuarial report to Congress annually on the financial 

status of the Fund, and requires HUD to submit a quarterly report 

on the financial status and soundness of the Fund. Grants HUD 


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the authority to change premiums or underwriting standards if the 

Fund is at risk in accordance with other sections of this bill. 

Establishes operational goals for the Fund, which include charging appropriate premiums commensurate with the borrower’s risk, 

minimizing the default risk to the Fund and to homeowners, curtailing the impact of adverse selection on the Fund, and meeting 

the housing needs of the borrowers that this bill is designed to 

serve. 

Makes insured mortgages that are used in conjunction with the 

Homeownership Voucher program obligations of the MMIF and 

makes reverse mortgages insured under section 255 of the National 

Housing Act obligations of the MMIF. 

Section 17. Hawaiian home land and Indian reservations 

Makes single family mortgages insured on Hawaiian Home 

Lands under section 247 of the National Housing Act and single 

family mortgages insured on Indian Reservations under section 248 

of the National Housing Act obligations of the MMIF. 

Section 18. Conforming and technical amendments 

Repeals certain obsolete or little used programs and makes two 

other technical and conforming amendments. The programs repealed include: 

* Section 203(i) mortgage insurance for outlying areas. 

* Sections 203(o), (p) and (q) relating to certain mortgage insurance on Indian lands. 

* Section 222 mortgage insurance for servicemen. The program is not operational and the benefits of mortgage insurance 

are otherwise available under section 203. 

* Section 237 special mortgage insurance for low income 

families. 

* Section 245 graduated payment mortgage program. 

Section 19. Home equity conversion mortgages 

Eliminates the current mortgage volume cap on FHA reverse 

mortgages [also know as Home Equity Conversion (HECM) mortgages]. Also provides for a uniform nationwide mortgage loan cap 

on FHA reverse mortgage loans, equal to the GSE conforming loan 

limit [thus eliminating the local median home price determination 

otherwise used for Section 203(b) loans]. Requires HUD to establish limits on the origination fee that may be charged for a reverse 

mortgage loan, which shall equal 2 percent of the original principal 

limit of the mortgage, be subject to a minimum allowable amount, 

and provide that the origination fee may be financed by the mortgage. Permits FHA reverse mortgage loans to be used in cooperative units. Requires HUD to conduct a study, to analyze the effects 

of reducing premiums on both the cost to the borrowers and the financial soundness of the program. 

Section 20. Participation of mortgage brokers and correspondent 

lenders 

Gives mortgage brokers and correspondent lenders the option of 

posting a $75,000 surety bond in lieu of the existing net worth and 

annual audit requirements for participation in the FHA single family loan program. Requires GAO to conduct a study and report to 


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Congress within 4 years of the date of enactment on the effect of 

this change, with respect to extent of increased participation, comparison of defaults, foreclosures, and insurance claims, and HUD 

supervision of the provision. This option is repealed after five years 

unless HUD either extends it based on a determination that such 

alternative treatment provides comparable protection to the existing audit and net worth requirements or modifies it pursuant to a 

determination published in the Federal Register as HUD considers 

appropriate to provide for such comparable protection. 

Imposes additional requirements for mortgage brokers and correspondent lenders participating in FHA loans, including requiring 

them to safeguard and account for any money handled for the borrower, to follow reasonable and lawful instructions from the borrower, and to act with reasonable skill, care, and diligence. 

Section 21. Conforming loan limit in disaster areas 

Gives HUD the authority to increase FHA single family loan limits up to 100 percent of the appraised value plus closing costs and 

up to the nationwide GSE conforming loan limit for a period of up 

to 36 months in Presidentially-declared disaster areas. 

Section 22. Failure to pay amounts from escrow accounts for single 

family mortgages 

Requires FHA mortgage servicers that establish escrow accounts 

to make required payments by any deadline required to avoid a 

penalty, unless such servicer was not provided notice of such deadline. Authorizes HUD to increase the amount of penalty for 

servicers that fail to reimburse borrowers, including for attorneys 

fees incurred by the borrower, within 60 days of the failure to 

make a payment by a deadline. Also prohibits submission of information by HUD or servicers that is adverse to the credit rating or 

interest of the borrower, which is based on the servicer’s failure to 

make a payment by any deadline. 

Section 23. Acceptable identification for FHA mortgagors 

Prohibits HUD from insuring any FHA loan unless the borrower 

provides personal identification. Permissible forms of identification 

include a Social Security card along with a photo ID issued by the 

Federal or a state government, a drivers license or ID care issued 

by a state in accordance with the REAL ID Act of 2005, a passport, 

and a USCIS photo identification card. 

Section 24. Pilot program for automated process for borrowers without a sufficient credit history 

Requires HUD to carry out a pilot program to establish an automated process for providing alternative credit rating information 

for borrowers who have insufficient credit histories for determining 

their creditworthiness. HUD may not insure a number of mortgages under this pilot which exceeds 5 percent of the aggregate 

number of FHA insured mortgages in the preceding year. Within 

2 years of the bill’s enactment, GAO is required to send Congress 

a report identifying the number of additional borrowers under this 

pilot and the impact of the pilot on safety and soundness. This pilot 

sunsets after 5 years of the bill’s enactment. 


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Section 25. Sense of Congress regarding technology for financial 

systems 

Sense of Congress stating that HUD should use a portion of the 

funds FHA receives from premiums in excess of what it pays out 

in claims to upgrade FHA’s current technology. FHA is also encouraged to submit a report to Congress detailing the progress it is 

making towards this goal and any resources it may need to make 

greater progress. 

Section 26. Multifamily housing mortgage limits in high cost areas 

Increases maximum FHA multifamily loan limits in high cost 

areas from 140 percent of the basic loan limit to 170 percent and 

raises such maximum loan limits on a case by case basis from 170 

percent of the basic limit to 215 percent of such limit. 

Section 27. Valuation of multifamily properties in noncompetitive 

sales by HUD to State and localities 

Requires HUD to take into account the cost of rehabilitation and 

maintaining existing affordability restrictions when appraising 

FHA foreclosed multifamily loan properties for the purposes of calculating the sale price under states’ and localities’ first right of refusal to purchase such properties. 

Section 28. Clarification of disposition of certain properties 

Clarifies grandfather provisions relating to continued eligibility 

for discounted sales under the first right of refusal of foreclosed 

FHA multifamily properties with respect to the 2005 Deficit Reduction Act which eliminated such discounted sales—by permitting 

transitions for which HUD received an expression of interest in 

purchasing a property from both a city government and housing 

commission of the city, and for which such city government and 

housing commission have resolved a previous disagreement with 

respect to disposition of the property. 

Section 29. Use of FHA savings for costs of mortgage insurance, 

housing counseling, and affordable housing grant fund 

Authorizes appropriations, in the amount equal to the net increase in negative credit subsidy created by the bill’s provisions, for 

use as an affordable housing fund, for grants to provide affordable 

rental housing and homeownership opportunities for low income 

families—after first deducting all of the following: (1) the amount, 

if any, needed to avoid a credit subsidy appropriation for the FHA 

203(b) single family loan program in that year, (2) the amount 

needed to increase nationwide funding for housing counseling 

grants from the current level of $42 million to $100 million a year 

for each of the next five years, and (3) $25 million each of the next 

five years to increase funding for improving FHA technology, procedures, processes, and program performance, and salaries. No funds 

may be expended under this section in any year unless HUD, by 

rule, makes a determination that FHA premiums being charged 

that year are sufficient to comply with the Section 205(f) MMIF 

capital ratio requirement and are also sufficient to ensure the safety and soundness of the other FHA mortgage insurance funds. No 

negative credit subsidies from the Section 203(b) single family loan 

program may be used to fund expenditures under this section. 


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HUD shall conduct a study on how best to update and upgrade 

FHA procedures, processes, and technologies. 

Section 30. Limitation on mortgage insurance premium increases 

Prohibits HUD from increasing any FHA premiums above the 

level in effect at the beginning of FY 2007 unless the HUD Secretary determines that, absent such increase, a program would require a credit subsidy appropriation. 

Section 31. Savings provision 

Provides that any mortgage insured before the bill’s date of enactment shall continue to be governed by laws, regulations, orders, 

and terms and conditions that existed prior to the bill’s enactment. 

Section 32. Implementation 

Requires HUD to establish by notice any additional requirements 

necessary to carry out the provisions of this bill, which notice shall 

take immediate effect. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

NATIONAL HOUSING ACT 

* * * * * * * 

TITLE I—HOUSING RENOVATION AND MODERNIZATION 

* * * * * * * 

INSURANCE OF MORTGAGES

SEC. 8. (a) * * * 

(b) To be eligible for insurance under this section, a mortgage 

shall—

(1) have been made toø, and be held by,¿ a mortgagee approved by the Secretary øas responsible and able to service the 

mortgage properly¿; 

* * * * * * * 

TITLE II—MORTGAGE INSURANCE 

DEFINITIONS

SEC. 201. øAs used in section 203 of this title—¿ 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: 

ø(a)¿ (1) The term ‘‘mortgage’’ means (A) a first mortgage on 

real estate, in fee simple, øor on a leasehold (1)¿ (B) a first 

mortgage on a leasehold on real estate (i) under a lease for not 

less than ninety-nine years which is renewable øor (2)¿, or (ii) 


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under a lease having a period of not less than ten years to run 

beyond the maturity date of the mortgage, 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; and the term ‘‘first mortgage’’ means such classes of 

first liens as are commonly given to secure advances on, or the 

unpaid purchase price of, real estate, under the laws of the 

State in which the real estate is located, together with the 

credit instrument, if any, secured thereby. 

ø(b) The term ‘‘mortgagee’’ includes the original lender under 

a mortgage, and his successors and assigns approved by the Secretary; and the term ‘‘mortgagor’’ includes the original borrower 

under a mortgage and his successors and assigns.¿ 

(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; 


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(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 

suchdetermination 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. 


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

under a mortgage and the successors and assigns of the original borrower. 

ø(c)¿ (4) The term ‘‘maturity date’’ means the date on which 

the mortgage indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage. 

ø(d)¿ (5) The term ‘‘State’’ includes the several States and 

Puerto Rico, the District of Columbia, Guam, øthe Trust Territory of the Pacific Islands¿ the Commonwealth of the Northern 

Mariana Islands, American Samoa, and the Virgin Islands. 

ø(e)¿ (6) The term ‘‘family member’’ means, with respect to 

a mortgagor under such section, a child, parent, or grandparent of the mortgagor (or the mortgagor’s spouse). In determining whether any of the relationships referred to in the preceding sentence exist, a legally adopted son or daughter of an 

individual (and a child who is a member of an individual’s 

household, if placed with such individual by an authorized 

placement agency for legal adoption by such individual), and a 

foster child of an individual, shall be treated as a child of such 

individual by blood. 

ø(f)¿ (7) The term ‘‘child’’ means, with respect to a mortgagor 

under such section, a son, stepson, daughter, or stepdaughter 

of such mortgagor. 

(8) 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. 

(9) 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. 

FEDERAL HOUSING ADMINISTRATION OPERATIONS

SEC. 202. ø(a) MUTUAL MORTGAGE INSURANCE FUND.—There is 

hereby created a Mutual Mortgage Insurance Fund (hereinafter referred to as the ‘‘Fund’’), which shall be used by the Secretary as 

a revolving fund for carrying out the provisions of this title with 

respect to mortgages insured under section 203 as hereinafter provided, and there shall be allocated immediately to such Fund the 

sum of $10,000,000 out of funds made available to the Secretary for 

the purposes of this title.¿ 

(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 


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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; 


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(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. 

* * * * * * * 

(c) MORTGAGEE REVIEW BOARD.—

(1) * * * 

* * * * * * * 

(7) DEFINITION OF ‘‘MORTGAGEE’’.—For purposes of this subsection, the term ‘‘mortgagee’’ means—

(A) a mortgagee, as defined in section 201, approved 

under this Act; 

ø(B) a lender or a loan correspondent approved under 

title I of this Act;¿ 

ø(C)¿ (B) a branch office or subsidiary of the mortgagee, 

lender, or loan correspondent; or 

ø(D)¿ (C) a director, officer, employee, agent, or other 

person participating in the conduct of the affairs of the 

mortgagee, lender, or loan correspondent. 

* * * * * * * 

ø(s)¿ (e) Whenever the Secretary has taken any discretionary 

action to suspend or revoke the approval of any mortgagee to participate in any mortgage insurance program under this title, the 

Secretary shall provide prompt notice of the action and a statement 

of the reasons for the action to—

(1) * * * 

* * * * * * * 

ø(4) the Administrator of the Farmers Home Administration;¿ 

(4) the Secretary of Agriculture; 

* * * * * * * 

ø(e)¿ (f) APPRAISAL STANDARDS.—(1) * * * 

* * * * * * * 

(3) DIRECT ENDORSEMENT PROGRAM.— (A) * * * 

(B) Any appraisal conducted pursuant to subparagraph (A) 

shall be conducted by an individual who complies with the 

qualifications or standards for appraisers established by the 

Secretary pursuant to øsection 202(e) of the National Housing 

Act¿ this subsection. 

* * * * * * * 

INSURANCE OF MORTGAGES

SEC. 203. (a) * * * 

(b) To be eligible for insurance under this section a mortgage 

shall comply with the following: 


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(1) Have been made toø, and be held by,¿ a mortgagee approved by the Secretary øas responsible and able to service the 

mortgage properly¿. (2) Involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount— ø(A) not to exceed the lesser of— ø(i) in the case of a 1-family residence, 95 percent of 

the median 1-family house price in the area, as determined by the Secretary; in the case of a 2-family residence, 107 percent of such median price; in the case 

of a 3-family residence, 130 percent of such median 

price; or in the case of a 4-family residence, 150 percent of such median price; or 

ø(ii) 87 percent of 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; except that the dollar amount limitation in effect for any area under this subparagraph 

may not be less than the greater of the dollar amount 

limitation in effect under this section for the area on 

the date of the enactment of the Departments of Veterans Affairs and Housing and Urban Development, 

and Independent Agencies Appropriations Act for Fiscal Year 1999 or 48 percent of the dollar limitation determined under section 305(a)(2) of the Federal Home 

Loan Mortgage Corporation Act for a residence of the 

applicable size; and 

ø(B) not to exceed an amount equal to the sum of— ø(i) the amount of the mortgage insurance premium 

paid at the time the mortgage is insured; and 

ø(ii) in the case of— ø(I) a mortgage for a property with an appraised value equal to or less than $50,000, 98.75 percent 

of the appraised value of the property; 

ø(II) a mortgage for a property with an appraised value in excess of $50,000 but not in excess of $125,000, 97.65 percent of the appraised 

value of the property; 

ø(III) a mortgage for a property with an appraised value in excess of $125,000, 97.15 percent 

of the appraised value of the property; or 

ø(IV) notwithstanding subclauses (II) and (III), 

a mortgage for a property with an appraised value 

in excess of $50,000 that is located in an area of 

the State for which the average closing cost exceeds 2.10 percent of the average, for the State, of 

the sale price of properties located in the State for 

which mortgages have been executed, 97.75 percent of the appraised value of the property.¿ 

(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 


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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 

(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. 

For purposes of the preceding sentence, the term ‘‘area’’ means 

a metropolitan statistical area as established by the Office of 

Management and Budget; and the median 1-family house price 

for an area shall be equal to the median 1-family house price 

of the county within the area that has the highest such median 

price. øFor purposes of this paragraph, the term ‘‘average closing cost’’ means, with respect to a State, the average, for mortgages executed for properties that are located within the State, 

of the total amounts (as determined by the Secretary) of initial 

service charges, appraisal, inspection, and other fees (as the 

Secretary shall approve) that are paid in connection with such 

mortgages. Notwithstanding any other provision of this section, 

in any case where the dwelling is not approved for mortgage 

insurance prior to the beginning of construction, such mortgage 

shall not exceed 90 per centum of the entire appraised value 

of the property as of the date the mortgage is accepted for insurance, unless (i) the dwelling was completed more than one 

year prior to the application for mortgage insurance, or (ii) the 

dwelling was approved for guaranty, insurance, or a direct loan 

under chapter 37 of title 38, United States Code, prior to the 

beginning of construction, or (iii) the dwelling is covered by a 

consumer protection or warranty plan acceptable to the Secretary and satisfies all requirements which would have been 

applicable if such dwelling had been approved for mortgage insurance prior to the beginning of construction. As used herein, 

the term ‘‘veteran’’ means any person who served on active 

duty in the armed forces of the United States for a period of 

not less than 90 days (or as certified by the Secretary of Defense as having performed extra-hazardous service), and who 

was discharged or released therefrom under conditions other 


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than dishonorable, except that persons enlisting in the armed 

forces after September 7, 1980, or entering active duty after 

October 16, 1981, shall have their eligibility determined in accordance with section 3103A(d) of title 38, United States 

Code.¿ 

* * * * * * * 

øNotwithstanding any other provision of this paragraph, the 

Secretary may not insure, or enter into a commitment to insure, a mortgage under this section that is executed by a firsttime homebuyer and that involves a principal obligation (including such initial service charges, appraisal, inspection, and 

other fees as the Secretary shall approve) in excess of 97 percent of the appraised value of the property unless the mortgagor has completed a program of counseling with respect to 

the responsibilities and financial management involved in 

homeownership that is approved by the Secretary; except that 

the Secretary may, in the discretion of the Secretary, waive the 

applicability of this requirement.¿ 

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. 

(3) Have a maturity satisfactory to the Secretary, but not to 

exceed, in any event, øthirty-five years (or thirty years if such 

mortgage is not approved for insurance prior to construction)¿ 

forty years from the date of the beginning of amortization of 

the mortgage. 

* * * * * * * 

ø(9) Be executed by a mortgagor who shall have paid on account of the property (except with respect to a mortgage executed by a mortgagor who is a veteran) at least 3 per centum, 

or such larger amount as the Secretary may determine, of the 

Secretary’s estimate of the cost of acquisition (excluding the 

mortgage insurance premium paid at the time the mortgage is 

insured) in cash or its equivalent: Provided, That with respect 

to a mortgage executed by a mortgagor who is sixty years of 

age or older as of the date the mortgage is endorsed for insurance or with respect to a mortgage meeting the requirements 

of subsection (i) of this section, or with respect to a mortgage 

covering a single-family home being purchased under the lowincome housing demonstration project assisted pursuant to section 207 of the Housing Act of 1961, or with respect to a mortgage covering a housing unit in connection with a homeownership program under the Homeownership and Opportunity 

Through HOPE Act, the mortgagor’s payment required by this 

subsection may be paid by a corporation or person other than 


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the mortgagor under such terms and conditions as the Secretary may prescribe: Provided further, That for¿ 

(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 purposes of this paragraph, the Secretary 

shall consider as cash or its equivalent any amounts borrowed 

from a family member (as such term is defined in section 201), 

subject only to the requirements that, in any case in which the 

repayment of such borrowed amounts is secured by a lien 

against the property, such lien shall be subordinate to the 

mortgage and the sum of the principal obligation of the mortgage and the obligation secured by such lien may not exceed 

100 percent of the appraised value of the property plus any initial service charges, appraisal, inspection, and other fees in 

connection with the mortgage. 

(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). 


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(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 


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61 

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). 


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(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. 

(c)(1) * * * 

ø(2) Notwithstanding any other provision of this section, each 

mortgage secured by a 1- to 4-family dwelling that is an obligation 

of the Mutual Mortgage Insurance Fund or of the General Insurance Fund pursuant to subsection (v) and each mortgage that is insured under subsection (k) or section 234(c),, shall be subject to the 

following requirements:¿ 

(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: 

(A) * * * 

* * * * * * * 

(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. 

(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 


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(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. 

(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 STRUC- TURE.—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. 


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(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). 

(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 


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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. 

* * * * * * * 

(h) Notwithstanding any other provision of this section, the Secretary is authorized to insure any mortgage which involves a principal obligation not in excess of the applicable maximum dollar 

limit under subsection (b) and not in excess of 100 per centum of 

the appraised value of a property plus any initial service charges, 

appraisal, inspection and other fees in connection with the mortgage 

as approved by the Secretary, upon which there is located a dwelling designed principally for a single-family residence, where the 

mortgagor establishes (to the satisfaction of the Secretary) that his 

home which he occupied as an owner or as a tenant was destroyed 

or damaged to such an extent that reconstruction is required as a 

result of a flood, fire, hurricane, earthquake, storm, or other catastrophe, which the President, pursuant to Robert T. Stafford Disaster Relief and Emergency Assistance Act, has determined to be 

a major disaster. øIn 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 18 

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 single family residence, and not in excess of 100 percent of 

the appraised value.¿ 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. 

ø(i) The Secretary is authorized to insure under this section, any 

mortgage meeting the requirements of subsection (b) of this section, 

except as modified by this subsection, which involves a principal 

obligation not in excess of 75 per centum of the limit on the principal obligation applicable to a one-family residence under subsection (b) of this section and not in excess of 97 per centum (or, 

in any case where the dwelling is not approved for mortgage insurance prior to the beginning of construction, unless the construction 


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of the dwelling was completed more than one year prior to the application for mortgage insurance or the dwelling was approved for 

guaranty, insurance, or direct loan under chapter 37 of title 38, 

United States Code, prior to the beginning of construction, 90 per 

centum) of the appraised value of a property located in an area 

where the Secretary finds it is not practicable to obtain conformity 

with many of the requirements essential to the insurance of mortgages on housing in built-up urban areas, upon which there is located a dwelling designed principally for a single-family residence: 

Provided, That the Secretary finds that the property with respect 

to which the mortgage is executed is an acceptable risk, giving consideration to the need for providing adequate housing for families 

of low and moderate income particularly in suburban and outlying 

areas or small communities: Provided further, That under the foregoing provisions of this subsection the Secretary is authorized to 

insure any mortgage issued with respect to a farm home on a plot 

of land two and one-half or more acres in size adjacent to an allweather public road.¿ 

* * * * * * * 

(k)(1) The Secretary may, in order to assist in the rehabilitation 

of one- to four-family structures used primarily for residential purposes, insure and make commitments to insure rehabilitation loans 

(including advances made during rehabilitation) made by financial 

institutions øon and after 180 days following the date of enactment 

of the Housing and Community Development Amendments of 

1978¿. Such commitments to insure and such insurance shall be 

made upon such terms and conditions which the Secretary may 

prescribe and which are consistent with the provisions of subsections (b), (c), (e), (i) and (j) of this section, except as modified by 

the provisions of this subsection. 

* * * * * * * 

(5) All funds received and all disbursements made pursuant to 

the authority established by this subsection shall be credited or 

charged as appropriate, to the øGeneral Insurance Fund¿ Mutual 

Mortgage Insurance Fund, and insurance benefits shall be paid in 

cash out of such Fund or in debentures executed in the name of 

such Fund. Insurance benefits paid with respect to loans secured 

by a first mortgage and insured under this subsection shall be paid 

in accordance with section 204ø, except that all references in section 204 to the Mutual Mortgage Insurance Fund shall be construed as referring to the General Insurance Fund¿. Insurance benefits paid with respect to loans secured by a mortgage other than 

a first mortgage and insured under this subsection shall be paid in 

accordance with paragraphs (6) and (7) of section 220(h), except 

that reference to ‘‘this subsection’’ in such paragraphs shall be construed as referring to this subsection. 

* * * * * * * 

ø(o)(1) Notwithstanding any other provision of this section or any 

other section of this title, the Secretary is authorized to insure, and 

to commit to insure, under subsection (b) of this section as modified 

by this subsection a mortgage which meets both the requirements 

of this subsection and such criteria as the Secretary by regulation 


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may prescribe to further the purpose of this subsection, in any community where the Secretary determines that— ø(A) temporary adverse economic conditions exist throughout 

the community as a direct and primary result of outstanding 

claims to ownership of land in the community by an American 

Indian tribe, band, or Nation; 

ø(B) such ownership claims are reasonably likely to be settled, by court action or otherwise; 

ø(C) as a direct result of the community’s temporarily impaired economic condition, owner occupants of homes in the 

community have been involuntarily unemployed or underemployed and have thus incurred substantial reductions in income which significantly impair their ability to continue timely 

payment of their mortgages; 

ø(D) as a result, widespread mortgage foreclosures and distress sales of homes are likely in the community; and 

ø(E) fifty or more individual homeowners were joined as parties defendant or were members of a defendant class prior to 

December 31, 1976, in litigation involving claims to ownership 

of land in the community by an American Indian tribe, band, 

or Nation. 

ø(2) A mortgage shall be eligible for insurance under subsection 

(b) of this section as modified by this subsection without regard to 

limitations in this title relating to a mortgagor’s reasonable ability 

to pay, economic soundness, marketability of title, or any other 

statutory restriction which the Secretary determines is contrary to 

the purpose of this subsection, but only if the mortgagor is an 

owner of a home in a community specified in paragraph (1) who, 

as a direct result of the community’s temporarily impaired economic condition, has been involuntarily unemployed or underemployed and has thus incurred a substantial reduction in income 

which significantly impairs the owner’s ability to continue timely 

payment of the mortgage. The Secretary is authorized to encourage 

or afford directly to or on behalf of mortgagors whose mortgages 

are insured under subsection (b) as modified by this subsection 

forebearance, assignment of mortgages to the Secretary, or such 

other relief as the Secretary deems appropriate and consistent with 

the purpose of this subsection. The Secretary, in connection with 

any mortgage insured under subsection (b) as modified by this subsection, shall have all statutory powers, authority, and responsibilities which the Secretary has with respect to other mortgages insured under subsection (b), except that the Secretary may modify 

such powers, authority, or responsibilities where the Secretary 

deems such action to be necessary because of the special nature of 

the mortgage involved. Notwithstanding section 202 of this title, 

the insurance of a mortgage under subsection (b) of this section as 

modified by this subsection shall be the obligation of the Special 

Risk Insurance Fund created pursuant to section 238 of this title. 

ø(p)(1) Notwithstanding any other provision of this section or any 

other section of this title, the Secretary is authorized to insure, and 

to commit to insure, under subsection (b) of this section as modified 

by this subsection a mortgage which meets both the requirements 

of this subsection and such criteria as the Secretary by regulation 

shall prescribe to further the purpose of this subsection, in any 

community where the Secretary determines that—


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ø(A) temporary adverse economic conditions exist throughout 

the community as a direct and primary result of outstanding 

claims to ownership of land in the community by an American 

Indian tribe, band, or nation; 

ø(B) such ownership claims are reasonably likely to be settled, by court action or otherwise; and 

ø(C) fifty or more individual homeowners were joined as parties defendant or were members of a defendant class prior to 

April 1, 1980, in ligitation involving claims to ownership of 

land in the community by an American Indian tribe, band, 

group, or nation pursuant to a dispute involving the Articles 

of Confederation, Trade and Intercourse Act of 1790, or any 

similar State or Federal law. 

ø(2) A mortgage shall be eligible for insurance under subsection 

(b) of this section as modified by this subsection without regard to 

limitations in this title relating to marketability of title, or any 

other statutory restriction which the Secretary determines is contrary to the purpose of this subsection, but only if the mortgagor 

is an owner of a home in a community specified in paragraph (1). 

The Secretary, in connection with any mortgage insured under subsection (b) as modified by this subsection, shall have all statutory 

powers, authority, and responsibilities which the Secretary has 

with respect to other mortgages insured under subsection (b), except that the Secretary may modify such powers, authority, or responsibilities where the Secretary deems such action to be necessary because of the special nature of the mortgage involved. Notwithstanding section 202 of this title, the insurance of a mortgage 

under subsection (b) of this section as modified by this subsection 

shall be the obligation of the Special Risk Insurance Fund created 

pursuant to section 238 of this title. 

ø(q)(1) Notwithstanding any other provision of this section or any 

other section of this title, the Secretary shall insure and commit to 

insure, under subsection (b) as modified by this subsection, any 

mortgage secured by property located on land that—

ø(A) is within the Allegany Reservation of the Seneca Nation 

of New York Indians; and 

ø(B) is subject to a lease entered into for a term of 99 years 

pursuant to the Act of February 19, 1875 (Chapter 90; 18 Stat. 

330) and the Act of September 30, 1890 (Chapter 1132; 26 

Stat. 558). 

ø(2) A mortgage shall be eligible for insurance under subsection 

(b) as modified by this subsection without regard to limitations in 

this title relating to marketability of title or any other statutory restriction that the Secretary determines is contrary to the purpose 

of this subsection. 

ø(3) The Secretary, in connection with any mortgage insured 

under subsection (b) as modified by this subsection, shall have all 

statutory powers, authority, and responsibilities that the Secretary 

has with respect to other mortgages insured under subsection (b), 

except that the Secretary may modify such powers, authority, or responsibilities if the Secretary determines such action to be necessary because of the special nature of the mortgage involved. 


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ø(4) Notwithstanding section 202, the insurance of a mortgage 

under subsection (b) as modified by this subsection shall be the obligation of the Special Risk Insurance Fund created in section 238.¿ 

* * * * * * * 

(u)(1) * * * 

(2) For purposes of this subsection—

(A) the term ‘‘area’’ øshall have the meaning given the term 

under subsection (b)(2);¿ means a metropolitan statistical area 

as established by the Office of Management and Budget; 

* * * * * * * 

(v) øNotwithstanding section 202 of this title, the¿ The insurance 

of a mortgage under this section in connection with the assistance 

provided under section 8(y) of the United States Housing Act of 

1937 shall be the obligation of the øGeneral Insurance Fund created pursuant to section 519 of this title. The provisions of subsections (a) through (h), (j), and (k) of section 204 shall apply to 

such mortgages, except that (1) all references in section 204 to the 

Mutual Mortgage Insurance Fund or the Fund shall be construed 

to refer to the General Insurance Fund, and (2) any excess 

amounts described in section 204(f)(1) shall be retained by the Secretary and credited to the General Insurance Fund. The report required under this subsection shall include the report required 

under section 540(c) and the report required under section 205(g).¿ 

Mutual Mortgage Insurance Fund 

* * * * * * * 

CLASSIFICATION OF MORTGAGES AND INSURANCE FUND

SEC. 205. (a) * * * 

* * * * * * * 

ø(g) The Secretary shall provide for an independent actuarial 

study of the Mutual Mortage Insurance Fund to be conducted annually and shall report annually to the Congress regarding the financial status of the Fund. 

ø(h)(1) If, pursuant to the independent annual actuarial study of 

the Mutual Mortgage Insurance Fund required under subsection 

(g), the Secretary determines that the Mutual Mortgage Insurance 

Fund is not meeting the operational goals under paragraph (2), the 

Secretary may not issue distributions, and may, by regulation, propose and implement any adjustments to the insurance premiums 

under section 203(c) or section 2103(b) of the Omnibus Budget Reconciliation Act of 1990. Upon determining that a premium change 

is appropriate under the preceding sentence, the Secretary shall 

immediately notify Congress of the proposed change and the reasons for the change. Any such premium change shall not take effect 

before the expiration of the 90-day period beginning upon such notification. 

ø(2) The operational goals referred to in paragraph (1) shall be—

ø(A) maintaining an adequate capital ratio; 

ø(B) meeting the needs of homebuyers with low 

downpayments and first-time homebuyers by providing access 

to mortgage credit; 


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ø(C) minimizing the risk to the Fund and to homeowners 

from homeowner default; and 

ø(D) avoiding adverse selection.¿ 

* * * * * * * 

RENTAL HOUSING INSURANCE

SEC. 207. (a) As used in this section—

(1) * * * 

(2) The term ‘‘mortgagee’’ ømeans the original lender under a 

mortgage, and its successors and assigns, and¿ has the meaning 

given such term in section 201, except that such term also includes 

the holders of credit instruments issued under a trust mortgage or 

deed of trust pursuant to which such holders act by and through 

a trustee therein named. 

* * * * * * * 

(c) To be eligible for insurance under this section a mortgage on 

any property or project shall involve a principal obligation in an 

amount—

(2) * * * 

(3)(A) not to exceed, for such part of the property or projects 

as may be attributable to dwelling use (excluding exterior and 

land improvements as defined by the Secretary), $38,025 per 

family unit without bedroom, $42,120 per family unit with one 

bedroom, $50,310 per family unit with two bedrooms, $62,010 

per family unit with three bedrooms, and $70,200 per family 

unit with four or more bedrooms, or not to exceed $17,460 per 

space; except that as to projects to consist of elevator-type 

structures the Secretary may, in his discretion, increase the 

dollar amount limitations per family unit to not to exceed 

$43,875 per family unit without a bedroom, $49,140 per family 

unit with one bedroom, $60,255 per family unit with two bedrooms, $75,465 per family unit with three bedrooms, and 

$85,328 per family unit with four or more bedrooms, as the 

case may be, to compensate for the higher costs incident to the 

construction of elevator type structures of sound standards of 

construction and design; and except that the Secretary may, by 

regulation, increase any of the foregoing dollar amount limitations contained in this paragraph by not to exceed ø140 percent¿ 170 percent in any geographical area where the Secretary 

finds that cost levels so require and by not to exceed ø140 percent¿ 170 percent, or ø170 percent in high cost areas¿ 215 percent in high cost areas, where the Secretary determines it necessary on a project-by-project basis, but in no case may any 

such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the 

Government National Mortgage Association in implementing 

its special assistance functions under section 305 of this Act 

(as such section existed immediately before November 30, 

1983) is involved. 

* * * * * * * 


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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). 

* * * * * * * 

COOPERATIVE HOUSING INSURANCE

SEC. 213. (a) * * * 

(b) To be eligible for insurance under this section a mortgage on 

any property or project of a corporation or trust of the character 

described in paragraph numbered (1) of subsection (a) of this section shall involve a principal obligation in an amount— (2)(A) not to exceed, for such part of the property or project 

as may be attributable to dwelling use (excluding exterior land 

improvements as defined by the Secretary), $41,207 per family 

unit without a bedroom, $47,511 per family unit with one bedroom, $57,300 per family unit with two bedrooms, $73,343 per 

family unit with three bedrooms, and $81,708 per family unit 

with four or more bedrooms, and not to exceed 98 per centum 

of the amount which the Secretary estimates will be the replacement cost of the property or project when the proposed 

physical improvements are completed: Provided, That as to 

projects to consist of elevator-type structures the Secretary 

may, in his discretion, increase the dollar amount limitations 

per family unit to not to exceed $43,875 per family unit without a bedroom, $49,710 per family unit with one bedroom, 

$60,446 per family unit with two bedrooms, $78,197 per family 

unit with three bedrooms, and $85,836 per family unit with 

four or more bedrooms, as the case may be, to compensate for 

the higher cost incident to the construction of elevator-type 

structures of sound standards of construction and design; (B)(i) 

the Secretary may, by regulation, increase any of the dollar 

amount limitations in subparagraph (A) (as such limitations 

may have been adjusted in accordance with section 206A of 

this Act) by not to exceed ø140 percent¿ 170 percent in any 

geographical area where the Secretary finds that cost levels so 

require and by not to exceed ø140 percent¿ 170 percent, or 

ø170 percent in high cost areas¿ 215 percent in high cost areas, 

where the Secretary determines it necessary on a project-byVerDate Aug 31 2005 20:36 Jul 05, 2007 Jkt 059006 PO 00000 Frm 00071 Fmt 6659 Sfmt 6601 E:\HR\OC\HR217.XXX HR217

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project basis, but in no case may any such increase exceed 90 

percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions under section 305 of this Act (as such section existed immediately before November 30, 1983) is involved; and (ii) in the 

case of a mortgagor of the character described in paragraph (3) 

of subsection (a) the mortgage shall involve a principal obligation in an amount not to exceed 90 per centum of the amount 

which the Secretary estimates will be the replacement cost of 

the property or project when the proposed physical improvements are completed; and (iii) upon the sale of a property or 

project by a mortgagor of the character described in paragraph 

(3) of subsection (a) to a nonprofit cooperative ownership housing corporation or trust within two years after the completion 

of such property or project the mortgage given to finance such 

sale shall involve a principal obligation in an amount not to exceed the maximum amount computed in accordance with this 

subparagraph (B)(i).. 

* * * * * * * 

REHABILITATION AND NEIGHBORHOOD CONSERVATION HOUSING

INSURANCE

SEC. 220. (a) * * * 

* * * * * * * 

(d) To be eligible for insurance under this section a mortgage 

shall meet the following conditions: 

(1) * * * 

* * * * * * * 

(3) The mortgage shall— (A) * * * 

(B)(ii) * * * 

(iii)(I) not to exceed, for such part of the property or project 

as may be attributable to dwelling use (excluding exterior land 

improvements as defined by the Secretary), $38,025 per family 

unit without a bedroom, $42,120 per family unit with one bedroom, $50,310 per family unit with two bedrooms, $62,010 per 

family unit with three bedrooms, and $70,200 per family unit 

with four or more bedrooms, except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit 

not to exceed $43,875 per family unit without a bedroom, 

$49,140 per family unit with one bedroom, $60,255 per family 

unit with two bedrooms, $75,465 per family unit with three 

bedrooms, and $85,328 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs 

incident to the construction of elevator-type structures of sound 

standards of construction and design; and (II) with respect to 

rehabilitation projects involving not more than five family 

units, the Secretary may by regulation increase by 25 per centum any of the dollar amount limitations in subparagraph 

(B)(iii)(I) (as such limitations may have been adjusted in accordance with section 206A of this Act) which are applicable to 


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units with two, three, or four or more bedrooms; (III) the Secretary may, by regulation, increase the dollar amount limitations contained in subparagraph (B)(iii)(I) (as such limitations 

may have been adjusted in accordance with section ø206A of 

this Act)) by not to exceed 110 percent in any geographical 

area where the Secretary finds that cost levels so require and 

by not to exceed 140 percent where the Secretary determines 

it necessary on a project-by-project basis¿ 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, but 

in no case may any such increase exceed 90 percent where the 

Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in 

implementing its special assistance functions under section 305 

of this Act (as such section existed immediately before November 30, 1983) is involved); (IV) That nothing contained in this 

subparagraph (B)(iii)(I) shall preclude the insurance of mortgages covering existing multifamily dwellings to be rehabilitated or reconstructed for the purposes set forth in subsection 

(a) of this section; (V) the Secretary may further increase any 

of the dollar limitations which would otherwise apply to such 

projects by not to exceed 20 per centum if such increase is necessary to account for the increased cost of the project due to 

the installation therein of a solar energy system (as defined in 

subparagraph (3) of the last paragraph of section 2(a) of this 

Act) or residential energy conservation measures (as defined in 

section 210(11)(A) through (G) and (I) of Public Law 95–619) 

in cases where the Secretary determines that such measures 

are in addition to those required under the minimum property 

standards and will be cost-effective over the life of the measure; and 

HOUSING FOR MODERATE INCOME AND DISPLACED FAMILIES

SEC. 221. (a) * * * 

* * * * * * * 

(d) To be eligible for insurance under this section, a mortgage 

shall—

(1) have been made to øand be held by¿ a mortgagee approved by the Secretary øas responsible and able to service the 

mortgage properly¿; 

* * * * * * * 

(3) if executed by a mortgagor which is a public body or 

agency (and, except with respect to a project assisted or to be 

assisted pursuant to section 8 of the United States Housing 

Act of 1937, which certifies that it is not receiving financial assistance from the United States exclusively pursuant to such 

Act), a cooperative (including an investor-sponsor who meets 

such requirements as the Secretary may impose to assure that 

the consumer interest is protected), or a limited dividend corporation (as defined by the Secretary), or a private nonprofit 

corporation or association, or other mortgagor approved by the 

Secretary, and regulated or supervised under Federal or State 


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laws or by political subdivisions of States, or agencies thereof, 

or by the Secretary under a regulatory agreement or otherwise, 

as to rents, charges, and methods of operation, in such form 

and in such manner as in the opinion of the Secretary will effectuate the purposes of this section— (ii)(I) not exceed, for such part of the property or project 

as may be attributable to dwelling use (excluding exterior 

land improvements as defined by the Secretary), $42,048 

per family unit without a bedroom, $48,481 per family unit 

with one bedroom, 58,469 per family unit with two bedrooms, $74,840 per family unit with three bedrooms, and 

$83,375 per family unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit to not to exceed 

$44,250 per family unit without a bedroom, $50,724 per 

family unit with one bedroom, $61,680 per family unit 

with two bedrooms, $79,793 per family unit with three 

bedrooms, and $87,588 per family unit with four or more 

bedrooms, as the case may be, to compensate for the higher costs incident to the construction of elevator-type structures of sound standards of construction and design; (II) 

the Secretary may, by regulation, increase any of the dollar amount limitations in subclause (I) (as such limitations 

may have been adjusted in accordance with section 206A 

of this Act) by not to exceed ø140 percent¿ 170 percent in 

any geographical area where the Secretary finds that cost 

levels so require and by not to exceed ø140 percent¿ 170 

percent, or ø170 percent in high cost areas¿ 215 percent in 

high cost areas, where the Secretary determines it necessary on a project-by-project basis, but in no case may 

any such increase exceed 90 percent where the Secretary 

determines that a mortgage purchased or to be purchased 

by the Government National Mortgage Association in implementing its special assistance functions under section 

305 of this Act (as such section existed immediately before 

November 30, 1983) is involved; and 

* * * * * * * 

(4) if executed by a mortgagor and which is approved by the 

Secretary— (ii)(I) not exceed, or such part of the property or project 

as may be attributable to dwelling use (excluding exterior 

land improvements as defined by the Secretary), $37,843 

per family unit without a bedroom, $42,954 per family unit 

with one bedroom, $51,920 per family unit with two bedrooms, $65,169 per family unit with three bedrooms, and 

$73,846 per family unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit to not to exceed 

$40,876 per family unit without a bedroom, $46,859 per 

family unit with one bedroom, $56,979 per family unit 

with two bedrooms, $73,710 per family unit with three 

bedrooms, and $80,913 per family unit with four or more 

bedrooms, as the case may be, to compensate for the highVerDate Aug 31 2005 20:36 Jul 05, 2007 Jkt 059006 PO 00000 Frm 00074 Fmt 6659 Sfmt 6601 E:\HR\OC\HR217.XXX HR217

rwilkins on PROD1PC63 with HEARING
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er costs incident to the construction of elevator-type structures of sound standards of construction and design; (II) 

the Secretary may, by regulation, increase any of the dollar limitations in subclause (I) (as such limitations may 

have been adjusted in accordance with section 206A of this 

Act) by not to exceed ø140 percent¿ 170 percent in any geographical area where the Secretary finds that cost levels 

so require and by not to exceed ø140 percent¿ 170 percent, 

or ø170 percent in high cost areas¿ 215 percent in high 

cost areas, where the Secretary determines it necessary on 

a project-by-project basis, but in no case may any such increase exceed 90 percent where the Secretary determines 

that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing 

its special assistance functions under section 305 of this 

Act (as such section existed immediately before November 

30, 1983) is involved; 

* * * * * * * 

øMORTGAGOR INSURANCE FOR SERVICEMEN

øSEC. 222. (a) The purpose of this section is to aid in the provision of housing accommodations for servicemen in the Armed 

Forces of the United States, servicemen in the United States Coast 

Guard and their families, and servicemen in the United States National Oceanic and Atmospheric Administration and their families 

by supplementing the insurance of mortgages under section 203 of 

this title with a system of mortgage insurance specially designed 

to assist the financing required for the construction or purchase of 

dwellings by those persons. As used in this section, a ‘‘servicemen’’

means a person to whom the Secretary of Defense (or any officer 

or employee designated by him), the Secretary of Homeland Security (or any officer or employee designated by him), or the Secretary of Commerce (or any officer or employee designated by him), 

as the case may be, has issued a certificate hereunder indicating 

that such person requires housing, is serving on active duty in the 

Armed Forces of the United States, in the United States Coast 

Guard, or in the United States National Oceanic and Atmospheric 

Administration and has served on active duty for more than two 

years, but a certificate shall not be issued hereunder to any person 

ordered to active duty for training purposes only. The Secretary of 

Defense, the Secretary of Homeland Security, and the Secretary of 

Commerce, respectively, are authorized to prescribe rules and regulations governing the issuance of such certificates and may withhold issuance of more than one such certificate to a serviceman 

whenever in his discretion issuance is not justified due to circumstances resulting from military assignment, or, in the case of 

the United States Coast Guard or the United States National Oceanic and Atmospheric Administration, other assignment. 

ø(b) To be eligible for insurance under this section a mortgage 

shall—

ø(1) meet the requirements of section 203(b) or 203(i), or 

221(d)(2), or 234(c), except as such requirements are modified 

by this section; 


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ø(2) involve a dwelling designed principally for a one-family 

residence or a one-family unit in a condominium project; 

ø(3) have a principal obligation not in excess of the sum of (i) 97 per centum of $25,000 of the appraised value of the property as of the date the mortgage is accepted for insurance, and 

(ii) 95 per centum of such value in excess of $25,000; and 

ø(4) be executed by a mortgagor who at the time of application for insurance is certified as a ‘‘serviceman’’ and who at the 

time of insurance is the owner of the property and either occupies the property as a principal residence or certifies that his 

failure to do so is the result of his military assignment, or in 

the case of the United States Coast Guard or the United States 

National Oceanic and Atmospheric Administration, other assignment. 

ø(c) The Secretary may prescribe the manner in which a mortgage may be accepted for insurance under this section. Premiums 

fixed by the Secretary under section 203 with resepct to, or payable 

during, the period of ownership by a serviceman of the property involved shall not be payable by the mortgagee but shall be paid not 

less frequently than once each year, upon request of the Secretary 

to the Secretary of Defense, the Secretary of Homeland Security, or 

the Secretary of Commerce, as the case may be, from the respective 

appropriations available for pay and allowances of persons eligible 

for mortgage insurance under this section. As used herein, ‘‘the period of ownership by a serviceman’’ means the period, for which 

premiums are fixed, prior to the date that the Secretary of Defense 

(or any officer or employee or other persons designated by him), the 

Secretary of Transporation (or any officer or employee or other person designated by him), or the Secretary of Commerce (or any officer or employee or other person designated by him), as the case 

may be, furnishes the Secretary with a certification that such ownership (as defined by the Secretary), has terminated. 

ø(d) Any mortgagee under a mortgage insured under this section 

is entitled to the benefits of the insurance as provided in section 

204(a) with respect to mortgages insured under section 203. 

ø(e) The provisions of subsections (b), (c), (d), (e), (f), (g), (h), (j), 

and (k) of section 204 shall apply to mortgages insured under this 

section, except that as applied to those mortgages (1) all references 

to the ‘‘Fund,’’ or ‘‘Mutual Mortgage Insurance Fund,’’ shall refer 

to the General Insurance Fund, and (2) all references to ‘‘section 

203’’ shall refer to this section. 

ø(f) The Secretary is authorized to transfer to this section the insurance on any mortgage covering a single-family dwelling or a 

one-family unit in a condominium project insured under this Act, 

if the mortgage indebtedness thereof has been assumed by a serviceman who at the time of assumption is the owner of the property 

and either occupies the property as a principal residence or certifies that his failure to do so is the result of his military assignment, or, in the case of the United States Coast Guard or the 

United States National Oceanic and Atmospheric Administration, 

other assignment. 

ø(g) Where a serviceman dies while on active duty in the Armed 

Forces of the United States or in the United States Coast Guard 

or in the United States National Oceanic and Atmospheric Administration, leaving a surviving widow as owner of the property, the 


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period of ownership by the serviceman (within the meaning of subsection (c) of this section) shall extend for two years beyond the 

date of the serviceman’s death or until the date the widow disposes 

of the property, whichever date occurs first. The Secretary of Defense or the Secretary of Homeland Security, or the Secretary of 

Commerce, as the case may be, shall notify such widow promptly 

following the serviceman’s death of the additional costs to be borne 

by the mortgagor following termination of the two year period.¿ 

* * * * * * * 

HOUSING FOR ELDERLY PERSONS

SEC. 231. (a) * * * 

* * * * * * * 

(c) To be eligible for insurance under this section, a mortgage to 

provide housing for elderly persons shall— (2)(A) not to exceed, for such part of the property or project 

as may be attributable to dwelling use (excluding exterior land 

improvement as defined by the Secretary), $35,978 per family 

unit without a bedroom, $40,220 per family unit with one bedroom, $48,029 per family unit with two bedrooms, $57,798 per 

family unit with three bedrooms, and $67,950 per family unit 

with four or more bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit 

to not to exceed $40,876 per family unit without a bedroom, 

$46,859 per family unit with one bedroom, $56,979 per family 

unit with two bedrooms, $73,710 per family unit with three 

bedrooms, and $80,913 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs 

incident to the construction of elevator-type structures of sound 

standards of construction and design; (B) the Secretary may, 

by regulation, increase any of the dollar limitations in subparagraph (A) (as such limitations may have been adjusted in accordance with section 206A of this Act) by not to exceed ø140 

percent¿ 170 percent in any geographical area where the Secretary finds that cost levels so require and by not to exceed 

ø140 percent¿ 170 percent, or ø170 percent in high cost areas¿ 

215 percent in high cost areas, where the Secretary determines 

it necessary on a project-by-project basis, but in no case may 

any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the 

Government National Mortgage Association in implementing 

its special assistance functions under section 305 of this Act 

(as such section existed immediately before November 30, 

1983) is involved; (C) the Secretary may, by regulation, increase any of the dollar limitations in subparagraph (A) (as 

such limitations may have been adjusted in accordance with 

section 206A of this Act) by not to exceed 20 per centum if such 

increase is necessary to account for the increased cost of the 

project due to the installation therein of a solar energy system 

(as defined in subparagraph (3) of the last paragraph of section 

2(a) of this Act) or residential energy conservation measures 

(as defined in section 210(11) (A) through (G) and (I) of Public 

Law 95–619) in cases where the Secretary determines that 


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such measures are in addition to those required under the minimum property standards and will be cost-effective over the life 

of the measure; 

* * * * * * * 

MORTGAGE INSURANCE FOR CONDOMINIUMS

SEC. 234. (a) * * * 

* * * * * * * 

(c) The Secretary is authorized, in his discretion and under such 

terms and conditions as he may prescribe (including the minimum 

number of family units in the project which shall be offered for sale 

and provisions for the protection of the consumer and the public interest), to insure any mortgage covering a one-family unit in a multifamily project and an undivided interest in the common areas and 

facilities which serve the project if (1) the mortgage meets the requirements of this subsection and of section 203(b), except as that 

section is modified by this subsection, øand¿ (2) at least 80 percent 

of the units in the project covered by mortgages insured under this 

title are occupied by the mortgagors or comortgagors, and (3) the 

project has a blanket mortgage insured by the Secretary under subsection (d). Any project proposed to be constructed or rehabilitated 

after the date of enactment of the Housing Act of 1961 with the 

assistance of mortgage insurance under this Act, where the sale of 

family units is to be assisted with mortgage insurance under this 

subsection, shall be subject to such requirements as the Secretary 

may prescribe. To be eligible for insurance pursuant to this subsection, a mortgage shall (A) involve a principal obligation in an 

amount not to exceed the maximum principal obligation of a mortgage which may be insured in the area pursuant to section 

203(b)(2) or pursuant to section 203(h) under the conditions described in section 203(h) or pursuant to section 203(h) under the 

conditions described in section 203(h), and (B) have a maturity satisfactory to the Secretary, but not to exceed, in any event, øthirtyfive years¿ forty years from the date of the beginning of amortization of the mortgages. The mortgage shall contain such provisions 

as the Secretary determines to be necessary for the maintenance 

of common areas and facilities and the multifamily project. The 

mortgagor shall have exclusive right to the use of the one-family 

unit covered by the mortgage and, together with the owners of 

other units in the multifamily project, shall have the right to the 

use of the common areas and facilities serving the project and the 

obligation of maintaining all such common areas and facilities. The 

Secretary may require that the rights and obligations of the mortgagor and the owners of other dwelling units in the project shall 

be subject to such controls as he determines to be necessary and 

feasible to promote and protect individual owners, the multifamily 

project and its occupants. For the purposes of this subsection, the 

Secretary is authorized in his discretion and under such terms and 

conditions as he may prescribe to permit one-family units and interests in common areas and facilities in multifamily projects covered by mortgages insured under any section of this Act other than 


rwilkins on PROD1PC63 with HEARING
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section 213(a) (1) and (2) to be released from the liens of those 

mortgages. 

* * * * * * * 

(e) To be eligible for insurance, a blanket mortgage on any multifamily project of a mortgagor of the character described in subsection (d) shall involve a principal obligation in an amount—

(2) * * * 

(3)(A) not to exceed, for such part of the project as may be 

attributable to dwelling use (excluding exterior land improvements as defined by the Secretary), $42,048 per family unit 

without a bedroom, $48,481 per family unit with one bedroom, 

$58,469 per family unit with two bedrooms, $74,840 per family 

unit with three bedrooms, and $83,375 per family unit with 

four or more bedrooms; except that as to projects to consist of 

elevator-type structures the Secretary may, in his discretion, 

increase the dollar amount limitations per family unit to not 

to exceed $44,250 per family unit without a bedroom, $50,724 

per family unit with one bedroom, $61,680 per family unit with 

two bedrooms, $79,793 per family unit with three bedrooms, 

and $87,588 per family unit with four or more bedrooms, as 

the case may be, to compensate for higher costs incident to the 

construction of elevator-type structures of sound standards of 

construction and design; (B) the Secretary may, by regulation, 

increase any of the dollar limitations in subparagraph (A) (as 

such limitations may have been adjusted in accordance with 

section 206A of this Act) by not to exceed ø140 percent¿ 170 

percent in any geographical area where the Secretary finds 

that cost levels so require and by not to exceed ø140 percent¿ 

170 percent, or ø170 percent in high cost areas¿ 215 percent in 

high cost areas, where the Secretary determines it necessary 

on a project-by-project basis, but in no case may any such increase exceed 90 percent where the Secretary determines that 

a mortgage purchased or to be purchased by the Government 

National Mortgage Association in implementing its special assistance functions under section 305 of this Act (as such section existed immediately before November 30, 1983) is involved; and 

* * * * * * * 

(g) Any mortgagee under a mortgage insured under subsection (c) 

of this section is entitled to receive the benefits of the insurance 

as provided in section 204(a) of this Act with respect to mortgages 

insured under section 203, and the provisions of subsections (b), (c), 

(d), (e), (f), (g), (h), (j), and (k) of section 204 shall be applicable to 

the mortgages insured under subsection (c) of this sectionø, except 

that (1) all references in section 204 of the Mutual Mortgage Insurance Fund or the Fund shall be construed to refer to the General 

Insurance Fund, (2) all references therein to section 203 shall be 

construed to refer to subsection (c) of this section, and (3) the excess remaining, referred to in section 204(f)(1), shall be retained by 

the Secretary and credited to the General Insurance Fund¿. 

* * * * * * * 


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øSPECIAL MORTGAGE INSURANCE ASSISTANCE

øSEC. 237. (a) The purpose of this section is to help provide adequate housing for families of low and moderate income, including 

those who, for reasons of credit history, irregular income patterns 

caused by seasonal employment, or other factors, are unable to 

meet the credit requirements of the Secretary for the purchase of 

a single-family home financed by a mortgage insured under section 

203, 220, 221, 234, or 235(j)(4), but who, through the incentive of 

homeownership and counseling assistance, appear to be able to 

achieve homeownership. 

ø(b) The Secretary is authorized upon application by the mortgagee to insure under this section not more than 26 percent of the 

total principal obligation (including such initial service charges, 

and such appraisal, inspection, and other fees as the Secretary 

shall approve) of any mortgage meeting the requirements of this 

section. 

ø(c) To be eligible for insurance under this section, a mortgage 

shall—

ø(1) meet the requirements of section 203 (except subsection 

(m)), 220(d)(3)(A), 221(d)(2), 221(h)(5), 221(i), 234(c), or 

235(j)(4), except as such requirements are modified by this section; 

ø(2) involve a principal obligation (including such initial 

service charges, and such appraisal, inspection, and other fees, 

as the Secretary shall approve) in an amount not to exceed 

$70,000; 

ø(3) be executed by a mortgagor who the Secretary has determined, after a full and complete study of the case, would not 

be an acceptable credit risk for mortgage insurance purposes 

under sections 203, 220, 221, 234, or 235(j)(4), because of his 

credit standing, debt obligations, total annual income, or income characteristics but who the Secretary is satisfied would 

be a reasonably satisfactory credit risk, consistent with the objectives stated in subsection (a), if he were to receive budget, 

debt management, and related counseling, prior to and during 

the 12 months immediately following the purchase of the property, from a community development financial institution 

under section 103(5) of the Community Development Banking 

and Financial Institutions Act of 1994: Provided, That, in determining whether the mortgagor is a reasonably satisfactory 

credit risk, the Secretary shall review the credit history of the 

applicant giving special consideration to those delinquent accounts which were ultimately paid by the applicant and to extenuating factors which may have caused credit accounts of the 

applicant to become delinquent; and the Secretary shall also 

give special consideration to income characteristics of applicants whose total income over the two years prior to their applications has remained at levels of eligibility (as required 

under paragraph (4) of this subsection), but who, because of 

the character of their seasonal employment or for other reasons, have not maintained continuous employment under one 

employer during that time; 

ø(4) require monthly payments which, in combination with 

local real estate taxes on the property involved, do not exceed 


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36 per centum of the applicant’s income, based on his average 

monthly income during the year prior to his application or the 

average monthly income during the three years prior to his application, whichever is higher; and 

ø(5) require the mortgagor to be subject, if necessary, to a 

default mitigation effort undertaken by an intermediary community development financial institution under section 103(5) 

of the Community Development Banking and Financial Institutions Act of 1994, that is acting as a sponsor and pass-through 

of insurance under section 203 and is approved by the Secretary; 

ø(6) involve a total principal obligation (including such initial 

service charges, and such appraisal, inspection, and other fees 

as the Secretary shall approve) that is not more than 90 percent of the value of the property for which the mortgage is provided; and 

ø(7) involve a total principal obligation (including such initial 

service charges, and such appraisal, inspection, and other fees 

as the Secretary shall approve) in which the mortgagor has equity (as defined by the Secretary) of not less than 10 percent 

and such equity shall be subordinate to the interest of the Secretary in the mortgaged property. 

ø(d) The Secretary shall give preference in approving mortgage 

insurance applications and in providing counseling services under 

this section (1) to families which are eligible for assistance payments under section 235, (2) to families living in empowerment 

zones and enterprise communities (as those terms are defined in 

section 1393(b) of the Internal Revenue Code of 1986 (26 U.S.C. 

1393(b)) who are eligible for homeownership assistance, and (3) to 

families living in public housing units, especially those families required to leave public housing because their incomes have risen beyond the maximum prescribed income limits, and families eligible 

for residence in public housing who have been displaced from federally assisted urban renewal areas. 

ø(e) The Secretary is authorized to provide, or contract with community development financial institutions under section 103(5) of 

the Community Development Banking and Financial Institutions 

Act of 1994 to provide, such budget, debt management, and related 

counseling services to mortgagors whose mortgages are insured 

under this section as he determines to be necessary to meet the objectives of this section. The Secretary may also provide such counseling to otherwise eligible families who lack sufficient funds to 

supply a down payment to help them to save an amount necessary 

for that purpose. 

ø(f) The aggregate principal balance of the portions of mortgages 

insured under this section and outstanding at one time shall not 

exceed $200,000,000. 

ø(g) Mortgages insured under this section shall be subject to an 

insurance premium fee of not more than 1.25 percent of the total 

mortgage principal obligation (including such initial service 

charges, and such appraisal, inspection, and other fees as the Secretary shall approve). 

ø(h) Before insuring a mortgage under this section, the Secretary 

shall enter into such contracts or other agreements as may be necessary to ensure that the mortgagee or other holder of the mortVerDate Aug 31 2005 20:36 Jul 05, 2007 Jkt 059006 PO 00000 Frm 00081 Fmt 6659 Sfmt 6601 E:\HR\OC\HR217.XXX HR217

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gage shall assume not less than 10 percent and not more than 50 

percent of any loss on the insured mortgage, subject to any reasonable limit on the liability of the mortgagee or holder of the mortgage that may be specified in the event of unusual or catastrophic 

losses that may be incurred by any one mortgagee or mortgage 

holder. 

ø(i) No guarantees may be issued under section 306(g) for the 

timely payment of interest or principal on securities backed, in 

whole or in part, by mortgages insured under this section. 

ø(j) There are authorized to be appropriated such sums as may 

be necessary to carry out the provisions of subsection (e) of this 

section.¿ 

* * * * * * * 

øGRADUATED PAYMENT AND INDEXED MORTGAGES

øSEC. 245. (a) The Secretary may insure under any provision of 

this title mortgages and loans with provisions of varying rates of 

amortization corresponding to anticipated variations in family income or with monthly payments and outstanding balances adjusted 

by a percentage change in a selected price index to the extent he 

determines such mortgages or loans (1) have promise for expanding 

housing opportunities or meet special needs, (2) can be developed 

to include any safeguards for mortgagors or purchasers that may 

be necessary to offset special risks of such mortgages, and (3) have 

a potential for acceptance in the private market. Notwithstanding 

any other provision of this title, except as provided in subsections 

(b) and (c) of this section, the principal obligation (including all interest to be deferred and added to principal) of a mortgage insured 

pursuant to this section may not exceed 97 per centum of the appraised value of the property covered by the mortgage as of the 

date the mortgage is accepted for insurance. 

ø(b) Notwithstanding the provisions of subsection (a), the Secretary may insure under any provision of this title a mortgage or 

loan which meets the requirements of the first sentence of subsection (a) and which has provisions for varying rates of amortization if the Secretary determines— ø(1) the mortgagor could not reasonably afford to purchase 

the dwelling unit by means of a mortgage insured under subsection (a) or any other mortgage insurance program under 

this title; 

ø(2) the principal obligation of the mortgage or loan initially 

does not exceed the percentage of the initial appraised value 

of the property specified in section 203(b) of this title as of the 

date the mortgage or loan is accepted for insurance; 

ø(3) the principal obligation of the mortgage or loan thereafter (including all interest to be deferred and added to principal) will not at any time be scheduled to exceed 97 per centum of the projected value of the property; and 

ø(4) the principal obligation of the mortgage thereafter will 

not exceed 113 per centum of the initial appraised value of the 

property. 

Mortgage insurance under this subsection shall be limited to mortgages executed by mortgagors who, as determined by the Secretary, 

have not owned dwelling units within the preceding three years. 


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For the purpose of this subsection, the projected value of the property shall be calculated by the Secretary by increasing the initial 

appraised value of the property at a rate not in excess of 21⁄2 per 

centum per annum. The number of mortgages which are insured in 

accordance with this subsection in any fiscal year may not exceed 

(A) that number of mortgages the aggregate initial principal obligation of which equals 10 per centum of the aggregate amount of the 

initial principal obligation of all mortgages secured by properties 

improved by one- to four-family residences which are insured under 

this title during the preceding fiscal year, or (B) 50,000 mortgages, 

whichever is greater. No loan or mortgage may be insured under 

this subsection after the date of the enactment of the Housing and 

Community Development Act of 1987, except pursuant to a commitment to insure entered into on or before such date. 

ø(c) Notwithstanding the provisions of subsection (a), the Secretary may insure under any provision of this title a mortgage or 

loan that meets the requirements of the first sentence of subsection 

(a) and that has provisions permitting adjustment of monthly payments and outstanding principal according to changes or percentages of changes in a selected price index if the Secretary determines— 

ø(1) the principal obligation of the mortgage or loan initially 

does not exceed the percentage of the initial appraised value 

of the property specified in section 203(b) as of the date the 

mortgage or loan is accepted for insurance; and 

ø(2) the monthly payments and principal obligation of the 

mortgage or loan thereafter will not at any time be increased 

at a rate greater than the percentage change in the price index 

stipulated in the initial mortgage or loan contract. 

In carrying out this subsection, the Secretary shall give a priority 

to mortgages executed by mortgagors who, as determined by the 

Secretary, have not owned dwelling units within the preceding 3 

years. The Secretary shall, not later than March 31, 1984, prescribe regulations establishing guidelines governing mortgages and 

loans described in this subsection and shall, to the extent practicable, conduct a demonstration program to insure mortgages and 

loans in accordance with this subsection during fiscal years 1984 

and 1985. The aggregate number of mortgages and loans insured 

under this subsection and section 252 in any fiscal year may not 

exceed 10 percent of the aggregate number of mortgages and loans 

insured by the Secretary under this title during the preceding fiscal 

year. 

ø(d)(1) The Secretary may insure, under any provision of this 

title relating to multifamily housing projects, mortgages and loans 

with provisions of varying rates of amortization corresponding to 

anticipated variations in project income, to the extent the Secretary 

determines such mortgages or loans (A) have promise for expanding housing opportunities or meet special needs; (B) can be developed to include any safeguards for mortgagors, tenants, or purchasers that may be necessary to offset special risks of such mortgages; and (C) have a potential for acceptances in the private market. 

ø(2) Notwithstanding any other provision of this title, the principal obligation of a mortgage or loan insured pursuant to this subsection— 


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ø(A) may not exceed initially the percentage of the initial appraised value or replacement cost of the property involved that 

is required by the provision of this title under which such property is insured; and 

ø(B) thereafter (including all interest to be deferred and 

added to principal) may not at any time be scheduled to exceed 

100 percent of the projected value of such property. 

ø(3) For purposes of this subsection, the projected value of a 

property shall be calculated by the Secretary by increasing the initial appraised value of such property at a rate not in excess of 2.5 

percent per annum. 

ø(e) Any mortgage or loan insured pursuant to this section which 

contains or sets forth any graduated mortgage provisions (including 

but not limited to provisions for adding deferred interest to principal) which are authorized under this section and applicable regulations, or which have been insured on the basis of their being so 

authorized, shall not be subject to any State constitution, statute, 

court decree, common law, or rule of public policy (1) limiting the 

amount of interest which may be charged, taken, received, or reserved, or the manner of calculating such interest (including but 

not limited to prohibitions against the charging of interest on interest), if such constitution, statute, court decree, common law, or rule 

would not apply to the mortgage or loan in the absence of such 

graduated payment mortgage provisions, or (2) requiring a minimum amortization of principal under the mortgage or loan.¿ 

* * * * * * * 

SINGLE-FAMILY MORTGAGE INSURANCE ON HAWAIIAN HOME LANDS

SEC. 247. (a) * * * 

* * * * * * * 

(c) Notwithstanding any other provision of this Act, the insurance of a mortgage using the authority contained in this section 

shall be the obligation of the øGeneral Insurance Fund established 

in section 519¿ Mutual Mortgage Insurance Fund. The mortgagee 

shall be eligible to receive the benefits of insurance as provided in 

section 204 with respect to mortgages insured pursuant to this section, except that ø(1) all references in section 204 to the Mutual 

Mortgage Insurance Fund or the Fund shall be construed to refer 

to the General Insurance Fund; and (2)¿ all references in section 

204 to section 203 shall be construed to refer to the section under 

which the mortgage is insured. 

* * * * * * * 

SINGLE FAMILY MORTGAGE INSURANCE ON INDIAN RESERVATIONS

SEC. 248. (a) * * * 

* * * * * * * 

(f) Notwithstanding any other provision of this Act, the insurance 

of a mortgage using the authority contained in this section shall be 

the obligation of the øGeneral Insurance Fund established in section 519¿ Mutual Mortgage Insurance Fund. The mortgagee shall 

be eligible to receive the benefits of insurance as provided in section 204 with respect to mortgages insured pursuant to this secVerDate Aug 31 2005 20:36 Jul 05, 2007 Jkt 059006 PO 00000 Frm 00084 Fmt 6659 Sfmt 6601 E:\HR\OC\HR217.XXX HR217

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tion, except that ø(1) all references in section 204 to the Mutual 

Mortgage Insurance Fund or the Fund shall be construed to refer 

to the General Insurance Fund; and (2)¿ all references in section 

204 to section 203 shall be construed to refer to the section under 

which the mortgage is insured. 

* * * * * * * 

INSURANCE OF HOME EQUITY CONVERSION MORTGAGES FOR ELDERLY

HOMEOWNERS

SEC. 255. (a) * * * 

(b) DEFINITIONS.—For purposes of this section: 

(1) * * * 

(2) The terms ‘‘mortgagee’’, ‘‘mortgagor’’, ‘‘real estate,’’ and 

‘‘State’’ have the meanings given such terms in section 201. 

* * * * * * * 

(4) MORTGAGE.—The term ‘‘mortgage’’ means a first mortgage or first lien on real estate, in fee simple, a first or subordinate mortgage or lien on all stock allocated to a dwelling unit 

in a residential cooperative housing corporation, or a first 

mortgage or first lien on a leasehold— (A) * * * 

* * * * * * * 

(5) FIRST MORTGAGE.—The term ‘‘first mortgage’’ means such 

classes of first liens as are commonly given to secure advances 

on, or the unpaid purchase price of, real estate or a first or 

subordinate lien on 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 the credit instruments, if any, secured thereby. 

* * * * * * * 

(d) ELIGIBILITY REQUIREMENTS.—To be eligible for insurance 

under this section, a mortgage shall—

(1) have been made to a mortgagee approved by the Secretary øas responsible and able to service the mortgage properly¿; 

* * * * * * * 

(g) LIMITATION ON INSURANCE AUTHORITY.—øThe aggregate number of mortgages insured under this section may not exceed 

275,000.¿ In no case may the benefits of insurance under this section exceed the maximum dollar amount øestablished under section 

203(b)(2) for 1-family residences in the area in which the dwelling 

subject to the mortgage under this section is located¿ limitation established under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a 1-family residence. 

* * * * * * * 

(i) PROTECTION OF HOMEOWNER AND LENDER.— (1) Notwithstanding any other provision of law, and in order 

to further the purposes of the program authorized in this section, the Secretary shall take any action necessary— (A) * * * 

* * * * * * * 


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(C) to provide any mortgagee under this section with 

funds not to exceed the ølimitations¿ limitation in subsection (g) to which the mortgagee is entitled under the 

terms of the insured mortgage or ancillary contracts authorized in this section. 

(2) Actions under paragraph (1) may include—

(A) disbursing funds to the mortgagor or mortgagee from 

the øGeneral Insurance Fund¿ Mutual Mortgage Insurance 

Fund; 

* * * * * * * 

(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. 

ø(k)¿ (l) INSURANCE AUTHORITY FOR REFINANCINGS.—

(1) * * * 

* * * * * * * 

ø(l)¿ (m) WAIVER OF UP-FRONT PREMIUMS FOR MORTGAGES TO

FUND LONG-TERM CARE INSURANCE.—

(1) * * * 

* * * * * * * 

ø(m)¿ (n) FUNDING FOR COUNSELING AND CONSUMER EDUCATION

AND OUTREACH.—Of any amounts made available for any of fiscal 

years 2000 through 2003 for housing counseling under section 106 

of the Housing and Urban Development Act of 1968, up to a total 

of $1,000,000 shall be available to the Secretary in each such fiscal 

year, in such amounts as the Secretary determines appropriate, for 

the following purposes in connection with home equity conversion 

mortgages insured under this section: 

(1) * * * 

* * * * * * * 

(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 


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Federal Home Loan Mortgage Corporation Act for a residence 

of the applicable size. 

* * * * * * * 

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. 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. 

* * * * * * * 

TITLE V—MISCELLANEOUS 

* * * * * * * 

ESTABLISHMENT OF GENERAL INSURANCE FUND

SEC. 519. (a) * * * 

* * * * * * * 

(e) The General Insurance Fund shall not be used for carrying 

out the provisions of sections ø203(b) (except as provided in section 

203(v)), 203(h) and 203(i)¿ 203, except as determined by the Secretary, or the provisions of section 213 to the extent that they involve mortgages the insurance for which is the obligation of the Cooperative Management Housing Insurance Fund created by section 


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213(k), or the provisions of sections 223(e), 233(a)(2), 235, 236 and 

237; and nothing in this section shall apply to or affect mortgages, 

loans, commitments, or insurance under such provisions. 

* * * * * * * 

SEC. 536. CIVIL MONEY PENALTIES AGAINST MORTGAGEES, LENDERS, 

AND OTHER PARTICIPANTS IN FHA PROGRAMS. 

(a) IN GENERAL.— (1) AUTHORITY.—If a mortgagee approved under the Act, a 

lender holding a contract of insurance under title I, or a principal, officer, or employee of such mortgagee or lender, or other 

person or entity participating in either an insured mortgage or 

title I loan transaction under this Act or providing assistance 

to the borrower in connection with any such loan, including 

sellers of the real e 

(state involved, borrowers, closing agents, title companies, 

real estate agents, mortgage brokers, appraisers, servicers (including escrow account servicers), loan correspondents and 

dealers, knowingly and materially violates any applicable provision of subsection (b), the Secretary may impose a civil 

money penalty on the mortgagee or lender, or such other person or entity, in accordance with this section. The penalty 

under this paragraph shall be in addition to any other available civil remedy or any available criminal penalty, and may 

be imposed whether or not the Secretary imposes other administrative sanctions. The penalty shall be in addition to any 

other available civil remedy or any available criminal penalty, 

and may be imposed whether or not the Secretary imposes 

other administrative sanctions. 

* * * * * * * 

(b) VIOLATIONS FOR WHICH A PENALTY MAY BE IMPOSED.— (1) VIOLATIONS.—The Secretary may impose a civil money 

penalty under subsection (a) for any knowing and material violation by a mortgagee or lender, or other participant referred 

to in subsection (a), as follows: 

(A) * * * 

* * * * * * * 

(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. 

* * * * * * * 


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(c) AGENCY PROCEDURES.— (1) * * * 

* * * * * * * 

(3) FACTORS IN DETERMINING AMOUNT OF PENALTY.—In determining the amount of a penalty under subsection (a), consideration shall be given to such factors as the gravity of the offense, any history of prior offenses (including those before enactment of this section), ability to pay the penalty, injury to 

the public, benefits received, deterrence of future violations, 

and such other factors as the Secretary may determine in regulations to be appropriate. 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. 

* * * * * * * 

INFORMATION REGARDING EARLY DEFAULTS AND FORECLOSURES ON

INSURED MORTGAGES

SEC. 540. (a) * * * 

(b) CONTENTS.—

(1) * * * 

(2) OTHER INFORMATION.—Information collected under this 

section shall also include the following: 

(A) * * * 

* * * * * * * 

(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. 

* * * * * * * 

TITLE VI—DEFENSE HOUSING INSURANCE 

SEC. 601. As used in this title—

(a) * * * 

(b) The term ‘‘mortgagee’’ øincludes the original lender under a 

mortgage, and his successors and assigns approved by the Secretary¿ has the meaning given such term in section 201; and the 

term ‘‘mortgagor’’ includes the original borrower under a mortgage 

and his successors and assigns. 

* * * * * * * 

SEC. 603. (a) * * * 


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(b) To be eligible for insurance under this section a mortgage 

shall—

(1) have been made toø, and be held by,¿ a mortgagee approved by the Secretary øas responsible and able to service the 

mortgage properly¿; 

* * * * * * * 

SEC. 611. (a) * * * 

(b) To be eligible for insurance under this section, a morgage 

shall—

(1) have been made to øand be held by¿ a mortgagee approved by the Secretary øas responsible and able to service the 

mortgage properly¿; 

* * * * * * * 

TITLE VIII—ARMED SERVICES HOUSING MORTGAGE 

INSURANCE 

SEC. 801. As used in this title—

(a) * * * 

(b) The term ‘‘mortgagee’’ øincludes the original lender under a 

mortgage, and his successors and assigns approved by the Secretary¿ has the meaning given such term in section 201; and the 

term ‘‘mortgagor’’ includes the original borrower under a mortgage, 

his successors and assigns. 

* * * * * * * 

TITLE VI—NATIONAL DEFENSE HOUSING INSURANCE 

* * * * * * * 

SEC. 903. (a) * * * 

(b) To be eligible for insurance under this section a mortgage 

shall—

(1) have been made toø, and be held by,¿ a mortgagee approved by the Secretary øas responsible and able to service the 

mortgage properly¿; 

* * * * * * * 

TITLE XI—MORTGAGE INSURANCE FOR GROUP PRACTICE 

FACILITIES 

INSURANCE OF MORTGAGES

SEC. 1101. (a) * * * 

(b) To be eligible for insurance under this title, the mortgage 

shall (1) be executed by a mortgagor that is a group practice unit 

or organization or other mortgagor, approved by the Secretary, (2) 

be made to øand held by¿ a mortgagee approved by the Secretary 

øas responsible and able to service the mortgage properly¿, and (3) 

cover a property or project which is approved for mortgage insurance prior to the beginning of construction or rehabilitation and is 

designed for use as a group practice facility or medical practice facility which the Secretary finds will be constructed in an economical manner, will not be of elaborate or extravagant design or materials, and will be adequate and suitable for carrying out the purposes of this title. No mortgage shall be insured under this title unVerDate Aug 31 2005 20:36 Jul 05, 2007 Jkt 059006 PO 00000 Frm 00090 Fmt 6659 Sfmt 6601 E:\HR\OC\HR217.XXX HR217

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less it is shown to the satisfaction of the Secretary that the applicant would be unable to obtain the mortgage loan without such insurance on terms comparable to those specified in subsection (c). 

* * * * * * * 

DEFINITIONS

SEC. 1106. For the purposes of this title— (1) * * * 

* * * * * * * 

(8) The term ‘‘mortgagee’’ ømeans the original lender under a 

mortgage, and his or its successors and assigns, and¿ has the 

meaning given such term in section 201, except that such term also 

includes the holders of credit instruments issued under a trust 

mortgage or deed of trust pursuant to which such holders act by 

and through a trustee named therein. 

* * * * * * * 

DEFICIT REDUCTION ACT OF 2005 

* * * * * * * 

TITLE II—HOUSING AND DEPOSIT 

INSURANCE PROVISIONS 

Subtitle A—FHA Asset Disposition 

* * * * * * * 

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. 

* * * * * * * 


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ADDITIONAL VIEWS 

H.R. 1852, THE ‘‘EXPANDING AMERICAN HOMEOWNERSHIP ACT OF 2007’’

The Federal Housing Administration (FHA) was established by 

the National Housing Act of 1934 to broaden homeownership, protect lending institutions, and stimulate the building industry. Prior 

to the creation of FHA, home mortgages typically did not exceed 50 

percent of the home value or extend beyond five years. At the end 

of the five years, mortgages had to be repaid or renegotiated. During the Great Depression, lenders were unable or unwilling to renegotiate many loans as they came due. Consequently, many borrowers lost their homes and lenders lost money because property 

values declined significantly. The FHA program, which is administered by the Department of Housing and Urban Development 

(HUD), was established to provide stability and liquidity in the 

market. Its creation fostered the development of the 30-year mortgage product and led to standardized mortgage instruments. 

Since 1934, FHA has insured more than 33 million loans and is 

the largest insurer of mortgages in the world. During the 1940s, 

FHA helped finance military housing and homes for returning veterans. In the 1980s, FHA helped to steady falling home prices and 

made it possible for potential homebuyers to obtain financing at a 

time when the private sector was withdrawing from targeted geographical regions, such as the oil-producing states. 

While there is a lack of familiarity with FHA, and a mistaken 

belief that FHA directly provides mortgage loans, the agency actually only provides mortgage insurance for those loans that meet 

FHA-established underwriting standards. Moreover, these FHA-insured loans are available to owner-occupants who can demonstrate 

the ability to repay the loans. In contrast to loans in the conventional market, primarily purchased and meeting guidelines established by Government Sponsored Enterprises (GSEs) or the Jumbo 

Market, FHA underwriting standards allow for more flexibility in 

calculating household income and debt/payment ratios. The cost of 

mortgage insurance is passed along to the homeowner in the form 

of an up front premium paid at the time of the closing and a second 

premium charged on an annual basis and typically paid monthly. 

FHA is one of the few government agencies to operate entirely 

based on the fee income derived from its programs, which means 

the taxpayer does not pay for or subsidize the agency. There are 

two funds operated by FHA: (1) Mutual Mortgage Insurance Fund 

(MMIF), and the General Insurance/Special Risk Fund (GI/SRI). 

Despite FHA’s ability to pay for itself, there has been considerable 

debate on the proper role of a government agency in promoting 

homeownership, which includes the question of whether the agency 

should be involved in mortgage insurance activities where a private 

sector industry exists to meet the need. Arguably, FHA is primarily 


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used for first-time, inner-city, and rural homebuyers, a market 

where private sector activity has been thought to lag behind. However, the private sector has argued that it is using new technologies to market its products more aggressively in these typically 

underserved areas and markets. 

Many FHA proponents believe that the program must be reformed in order for it to maintain its relevance in the marketplace. 

While FHA was previously considered an innovator, its products 

currently lag behind private-market offerings, often leaving consumers with the sole option of obtaining costly, more risky loans 

available in the subprime market. The FHA program is also cumbersome and antiquated technologically, leading many lenders to 

forgo FHA product origination. 

On the same day that Housing Subcommittee Chairwoman Maxine Waters and Financial Services Chairman Barney Frank introduced H.R. 1852, the ‘‘Expanding American Homeownership Act of 

2007,’’ Housing Subcommittee Ranking Member Judy Biggert and 

Full Committee Ranking Member Spencer Bachus introduced H.R. 

1752, also entitled ‘‘The Expanding American Homeownership Act 

of 2007.’’ H.R. 1752 is identical to H.R. 5121, bipartisan legislation 

that passed the House last Congress by a margin of 415–7. 

H.R. 1752 proposes comprehensive reform of FHA’s single-family 

mortgage insurance activities. The legislation would allow FHA to 

base each borrower’s mortgage insurance premiums upon the risk 

that the borrower poses to the FHA Mortgage Insurance Fund, 

with slight variations. Under this proposal, mortgage insurance 

premiums would be based on the borrower’s credit history, loan-tovalue ratio, debt-to-income ratio, and on FHA’s historical experience with similar borrowers. The Administration has stated it believes that this change would decrease premiums for many of 

FHA’s traditional borrowers, thereby increasing access to homeownership. 

H.R. 1752 would also amend the National Housing Act to change 

the factors used to determine the maximum single family mortgage 

amounts insurable by FHA. Generally, under current law, the maximum insurable mortgage is the lesser of a maximum allowable 

dollar amount and an amount based on a maximum percentage of 

appraised value plus the mortgage insurance premium. 

Currently, FHA maximum mortgage dollar amounts are established with reference to the median home price for the area in 

which the property is located. For a single-family residence, the 

maximum dollar amount that can be insured is 95% of the median 

home price for the area. For two-, three- and four-family residences 

the maximum dollar amounts that can be insured are 107%, 130% 

and 150% of such median price, respectively. These amounts are 

capped and cannot exceed 87% of the Federal Home Loan Mortgage 

Corporation Association conforming loan limit, which now stands at 

$362,790 for a one-unit property. There is also a statutory ‘‘floor’’

amount below which the maximum mortgage dollar amount cannot 

be set. The current ‘‘floor’’ is set at 48% of the FHLMC conforming 

loan limit, now $200,160 for a one-unit property. 

In addition, under H.R. 1752, FHA would be allowed to insure 

up to the full median house price in the area, as opposed to 95% 

of the median house price. Moreover, for consistency, the references 


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to the percentages for two-, three- and four-family residences would 

be removed from the statute. This proposal strikes the 87% cap, 

and allows FHA to insure up to 100% of the FHLMC loan limit. 

Also, the bill increases the ‘‘floor’’ to 65% of the FHLMC conforming 

loan limit. 

Although H.R. 1852 contains many of the reforms included in 

H.R. 1752, it also features several significant departures from last 

Congress’s House-passed bill. These important differences include: 

• H.R. 1852 limits eligibility for low- and no-downpayment 

FHA loans to first time homebuyers, while H.R. 1752 allows 

participation by any FHA-qualified borrower, including those 

seeking to refinance an existing loan; 

• H.R. 1852 includes a directive for FHA to serve high-risk 

borrowers (those with FICO scores of 560 or lower), while H.R. 

1752 includes no such mandate; 

• H.R. 1852 caps annual premiums for borrowers making at 

least a 3% down payment (including borrowers deemed highrisk) at current levels, while H.R. 1752 gives HUD greater 

flexibility to devise a truly risk-based pricing structure for the 

FHA program that more closely matches the premiums paid by 

an individual borrower to that borrower’s credit history; and 

• H.R. 1852 authorizes the use of surpluses generated by the 

FHA program to support the creation of a grant program to 

fund affordable rental housing and affordable homeownership 

opportunities for low-income families, while H.R. 1752 contains 

no such provision. 

H.R. 1852’s provisions to divert a portion of FHA surpluses to 

fund a new, unrelated, and as yet undefined government housing 

program caused the greatest concern among Republicans during 

the Committee’s consideration of the legislation. These concerns 

are shared by the Administration. On May 1, 2007, HUD transmitted a letter to Chairman Frank outlining its views on H.R. 

1852. Regarding the affordable housing fund, the letter stated: 

H.R. 1852 also includes provisions that would have an 

adverse budgetary effect. The act would create an Affordable Housing Grant Fund with savings from increased 

FHA receipts. This is potentially disruptive to the existing 

appropriations process. All FHA receipts are currently netted against HUD’s spending totals and taken into consideration during appropriations for the Department. The 

proposal’s details are also undefined and unclear; therefore, the specifics may raise additional policy concerns. In 

addition, the act revises certain recently enacted asset disposition reforms for FHA multifamily programs. 

The bulk of the surplus generated by FHA under H.R. 1852 

would result from the negative credit subsidy created by HUD’s collection of premiums under the Home Equity Conversion Mortgage 

(HECM) program. HECM loans are reverse mortgages that allow 

homeowners over the age of 62 to tap the equity in their homes in 

the form of monthly payments, lump sum distributions, or lines of 

credit. Republicans believe that excess premiums under the HECM 

program should remain in FHA for the benefit of senior citizens 


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and other FHA beneficiaries, rather than being redirected to an 

amorphous affordable housing fund. 

To address concerns about the affordable housing fund and the 

other key differences between the Republican and Democratic approaches to FHA modernization identified above, Republicans offered a series of amendments at the markup of H.R. 1852. Most notably, Mrs. Biggert offered an amendment to substitute the text of 

H.R. 1752 for H.R. 1852, and Ranking Member Bachus offered an 

amendment to postpone the new spending authorized by H.R. 1852 

to finance the affordable housing fund until such time as Congress 

stops raiding the Social Security surplus to pay for unrelated government initiatives. Both amendments were defeated, prompting a 

majority of Committee Republicans to vote against favorably reporting the legislation to the full House. 

While we support legislation that modernizes the FHA program 

and reestablishes it as a viable alternative for low- and middle-income homebuyers, we will continue to oppose legislation that siphons funds away from the FHA program as seed money for an affordable housing agenda that has not been adequately delineated 

or explained by its proponents. 

SPENCER BACHUS. K. MARCHANT. ADAM H. PUTNAM. TOM FEENEY. DONALD A. MANZULLO. FRANK D. LUCAS. JUDY BIGGERT. GEOFF DAVIS. PAUL GILLMOR. 

RANDY NEUGEBAUER. 

GINNY BROWN-WAITE. STEVAN PEARCE. 

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