59–008 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–330 

PROVIDING FOR CONSIDERATION OF 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 

SEPTEMBER 17, 2007.—Referred to the House Calendar and ordered to be printed 

Ms. MATSUI, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 650] 

The Committee on Rules, having had under consideration House 

Resolution 650, by a nonrecord vote, report the same to the House 

with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for consideration of H.R. 1852, the Expanding American Homeownership Act of 2007, under a structured 

rule. The rule provides one hour of general debate equally divided 

and controlled by the chairman and ranking minority member of 

the Committee on Financial Services. The rule waives all points of 

order against consideration of the bill except clauses 9 and 10 of 

rule XXI. The rule provides that the amendment in the nature of 

a substitute recommended by the Committee on Financial Services 

now printed in the bill, modified by the amendment printed in Part 

A of this report, shall be considered as adopted. The bill as amended shall be considered as an original bill for the purpose of amendment and shall be considered as read. The rule waives all points 

of order against provisions in the bill as amended. 

The rule makes in order only those further amendments printed 

in Part B of this report. The further amendments made in order 

may be offered only in the order printed in this report, may be offered only by a Member designated in this report, shall be considered as read, shall be debatable for the time specified in this report 

equally divided and controlled by the proponent and an opponent, 

shall not be subject to amendment, and shall not be subject to a 

demand for a division of the question in the House or in the Committee of the Whole. All points of order against the amendments 

except for clauses 9 and 10 of rule XXI are waived. The rule proVerDate Aug 31 2005 06:52 Sep 18, 2007 Jkt 059008 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR330.XXX HR330

bajohnson on PROD1PC69 with HEARING
2 

vides one motion to recommit with or without instructions. The 

rule provides that the Chair may postpone further consideration of 

the bill to a time designated by the Speaker. 

EXPLANATION OF WAIVERS

The waiver of all points of order against consideration of the bill 

(except for clauses 9 and 10 of rule XXI) includes a waiver of clause 

4(a) of rule XIII, requiring a three-day layover of the committee report. The committee is not aware of any points of order against 

provisions in the bill, as amended. The waiver of all points of order 

against provisions in the bill, as amended, is prophylactic in nature. 

COMMITTEE VOTES

The results of each record vote on an amendment or motion to 

report, together with the names of those voting for and against, are 

printed below: 

Rules Committee record vote No. 300 

Date: September 17, 2007. 

Measure: H.R. 1852. 

Motion by: Mr. Dreier. 

Summary of motion: To grant an open rule. 

Results: Defeated 3–7. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Welch—Nay; Castor—Nay; Arcuri—Nay; Sutton—Nay; 

Dreier—Yea; Hastings (WA)—Yea; Sessions—Yea. 

Rules Committee record vote No. 301 

Date: September 17, 2007. 

Measure: H.R. 1852. 

Motion by: Mr. Hastings (WA). 

Summary of motion: To make in order and provide appropriate 

waivers for an amendment by Rep. Biggert (IL), #9 to strike the 

funding language for the affordable housing fund and insert language requiring HUD to conduct an annual study on the FHA single family housing mortgage insurance programs to determine the 

appropriate reserve and premium levels. If HUD determines that 

premiums can be reduced, it is directed to reduce them. The 

amendment maintains the current provision in the bill that directs 

any excess reserves to be used to maintain the solvency of the FHA 

insurance fund, encourage counseling and modernize FHA technology. 

Results: Defeated 3–7. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Welch—Nay; Castor—Nay; Arcuri—Nay; Sutton—Nay; 

Dreier—Yea; Hastings (WA)—Yea; Sessions—Yea. 

Rules Committee record vote No. 302 

Date: September 17, 2007. 

Measure: H.R. 1852. 

Motion by: Mr. Sessions. 

Summary of motion: To make in order and provide appropriate 

waivers for an amendment by Rep. Price, Tom (GA), #4 to require 

that any individual or household receiving money from the affordVerDate Aug 31 2005 07:18 Sep 18, 2007 Jkt 026386 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR330.XXX HR330

bajohnson on PROD1PC69 with HEARING
3 

able housing fund must present verification of legal residency by a 

secure identification document. 

Results: Defeated 3–7. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Welch—Nay; Castor—Nay; Arcuri—Nay; Sutton—Nay; 

Dreier—Yea; Hastings (WA)—Yea; Sessions—Yea. 

SUMMARY OF AMENDMENT CONSIDERED AS ADOPTED

The amendment includes provisions to facilitate FHA refinancing 

loans to respond to recent mortgage market developments, perfecting modifications to the bill’s provision establishing a surety 

bond requirement for mortgage broker and loan correspondent participation in FHA, modification of the loan originator fee cap for 

FHA reverse mortgages, a provision authorizing civil money penalties for actions which improperly influence FHA appraisals, and 

modifications to ensure compliance with PAYGO. 

SUMMARY OF AMENDMENTS MADE ORDER UNDER THE RULE

1. Tierney (MA): The amendment directs the Secretary of the Department of Housing and Urban Development to provide mortgage 

insurance premium refunds to eligible borrowers of FHA insured 

loans, which were closed prior to December 8, 2004, but which were 

not endorsed until December 8, 2004 or after that date, and authorizes such sums as may be necessary for such refunds. (10 minutes) 

2. Frank (MA)/Miller, Gary (CA)/Cardoza (CA): The amendment 

raises the FHA single family loan limit, by establishing such limit 

in each area as the lower of (a) 125% of the local median area home 

price or (b) 175% of the national GSE conforming loan limit. Retains the FHA loan floor provision in the reported bill of 65% of the 

GSE conforming loan limit. Also gives HUD authority to raise 

these resulting loan limit amounts by up to $100,000 by area and/ 

or by unit size ‘‘if market conditions warrant.’’ (10 minutes) 

3. Miller, Gary (CA): The amendment will allow qualified down 

payment assistance providers to participate in the FHA Program if 

certain conditions are satisfied (i.e. no obligation for mortgagor to 

repay and net worth requirement). The Secretary shall consider as 

cash or its equivalent any amounts gifted by a family member, the 

mortgagor’s employer or labor union, or a qualified homeownership 

assistance entity, but only if there is no obligation on the part of 

the mortgagor to repay the gift. (10 minutes) 

4. Bishop, Tim (NY): The amendment would clarify requirements 

on reverse mortgages for seniors who own permanent foundation 

homes on leased land. (10 minutes) 

5. Hensarling (TX): The amendment strikes the allowable use of 

FHA savings for an affordable housing fund. (10 minutes) 

6. Tiberi (OH): The amendment requires the Secretary to ensure 

the mortgagor receives counseling at the time of application. Under 

current language the Secretary may, but is not required to, provide 

counseling. (10 minutes) 

7. Biggert (IL): Amendment in the Nature of a Substitute. The 

substitute amendment would reform for the Federal Housing Administration’s (FHA) single-family mortgage insurance activities 

and would allow FHA to base each borrower’s mortgage insurance 

premiums on the risk that the borrower poses to the FHA Mortgage Insurance Fund, with slight variations. Under this proposal, 


bajohnson on PROD1PC69 with HEARING
4 

mortgage insurance premiums will be based on the borrower’s credit history, loan-to-value ratio, debt-to-income ratio, and on FHA’s 

historical experience with similar borrowers. This amendment 

maintains FHA reserves within the insurance fund to preserve the 

future solvency of the FHA program. (20 minutes) 

PART A—TEXT OF AMENDMENT TO BE CONSIDERED AS 

ADOPTED 

Page 8, line 5, before the semicolon insert the following: ‘‘that 

will be occupied by the mortgagor as his or her principal residence’’. 

Page 8, strike lines 12 and 13, and insert the following: 

‘‘(iii)(I) is executed by a mortgagor who has not had 

any present ownership interest in a principal residence, and whose spouse has not had any such interest, during 12-month period ending upon purchase of 

the residence with the mortgage to which this paragraph applies, except that this subclause shall be considered a program to assist first-time homebuyers for 

purposes of section 956 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12713); or 

‘‘(II)(aa) is made to pay or prepay, and fully extinguish, the outstanding obligations under an existing 

mortgage or mortgages on the same property; and 

‘‘(bb) involves a principal obligation not exceeding 

the amount necessary to fully pay or prepay such outstanding obligations under the existing mortgage or 

mortgages, plus any charges and fees involved in such 

transaction and any charges and fees in connection 

with the payment or prepayment of such outstanding 

obligations.’’

Page 24, after line 18, insert the following: 

SEC. 11. REFINANCING MORTGAGES. 

Section 203 of the National Housing Act (12 U.S.C. 1709) is 

amended by inserting after subsection (k) the following new subsection: 

‘‘(l) REFINANCING MORTGAGES.—

‘‘(1) ESTABLISHMENT OF UNDERWRITING STANDARDS.—The 

Secretary shall establish underwriting standards that provide 

for insurance under this title of mortgage loans, and take actions to facilitate the availability of mortgage loans insured 

under this title, for qualified borrowers that are made for the 

purpose of paying or prepaying outstanding obligations under 

existing mortgages for borrowers that—

‘‘(A) have existing mortgages with adverse terms or 

rates, or 

‘‘(B) do not have access to mortgages at reasonable rates 

and terms for such refinancings due to adverse market 

conditions. 


bajohnson on PROD1PC69 with HEARING
5 

‘‘(2) INSURANCE OF MORTGAGES TO BORROWERS IN DEFAULT OR

AT RISK OF DEFAULT.—In facilitating insurance for such mortgages, the Secretary may insure mortgages to borrowers who 

are, currently in default or at imminent risk of being in default, but only if such loans meet reasonable underwriting 

standards established by the Secretary’’. 

Page 38, strike lines 3 and 4, and insert the following: 

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

the mortgage, except that the Secretary may adjust the limitation under this paragraph on the basis of an analysis of (A) 

costs to mortgagors, and (B) the impact on the reverse mortgage market;’’. 

Page 38, line 7, strike ‘‘and’’. 

Page 38, line 10, strike the first period and all that follows and 

insert ‘‘; and’’. 

Page 38, after line 10, insert the following: 

‘‘(5) apply beginning upon the date that the maximum dollar 

amount limitation on the benefits of insurance under this section is first increased pursuant to the amendments made by 

section 19(a)(2) of the Expanding American Homeownership 

Act of 2007.’’. 

Page 39, lines 21 and 22, strike ‘‘, or mortgage broker, or correspondent lender,’’. 

Page 39, strike lines 23 and 24, and insert the following: 

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

the mortgage, services the mortgage, or both underwrites and services the mortgage;’’. 

Page 40, strike line 7, and insert the following: 

‘‘(iv) is licensed, under the laws of the State in 

which the property that is subject to the mortgage is 

located, to act as a lender in such State; and’’. 

Page 40, line 8, strike ‘‘(iv)’’ and insert ‘‘(v)’’. 

Page 40, line 14, insert a comma after ‘‘name’’. 

Page 40, line 15, strike ‘‘or’’ and insert ‘‘and does not’’. 

Page 40, after line 15, insert the following: 

‘‘(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 correspondent lender in such State;’’. 


bajohnson on PROD1PC69 with HEARING
6 

Page 40, line 16, strike ‘‘(ii)’’ and insert ‘‘(iii)’’. 

Page 40, line 19, strike ‘‘in’’ and insert ‘‘that’’. 

Page 40, line 20, insert ‘‘is in’’ before ‘‘a form’’. 

Page 40, line 21, strike ‘‘and’’

Page 40, line 22, strike ‘‘an amount of $75,000’’ and insert ‘‘is in 

an aggregate amount, to be determined by the Secretary based on 

the aggregate principal amount of single-family mortgages insured 

under this title that are placed in a calendar year, which shall not 

be less than $50,000 or more than $100,000’’. 

Page 40, lines 24 and 25, strike ‘‘under regulations of’’ and insert ‘‘by’’. 

Page 41, line 5, strike ‘‘and’’. 

Page 41, after line 5, insert the following: 

‘‘(III) guarantees payment of any liability of the 

correspondent lender arising from its participation 

in the program, up to the penal sum of the surety 

bond; without regard to the number of years the 

bond remains in effect, the number of claims or 

claimants, and the number of premiums paid, in 

no event shall the aggregate liability of the surety 

exceed the penal sum of the bond; and ‘‘(IV) may be cancelled by the surety as to future 

liability by giving 30 days notice in writing to the 

Secretary, except that any such cancellation shall 

not alter the liability of the surety for actions of 

the correspondent lender prior to the effective 

date of the cancellation; and’’. 

Page 41, line 6, strike ‘‘(iii)’’ and insert ‘‘(iv)’’. 

Page 41, line 7, before the period insert ‘‘, except that the Secretary shall not require any minimum net worth or certified financial statements’’. 

Page 41, strike lines 11 through 13, and insert the following: 

‘‘(i) closes the mortgage in the name of the lender, 

and does not underwrite and does not service the 

mortgage;’’. 

Page 41, line 22, before the period insert ‘‘, except that the Secretary shall not require any minimum net worth or certified financial statements’’. 

Page 57, lines 10 and 11, strike ‘‘two-year period beginning on 

the date of the enactment of this Act’’ and insert ‘‘four-year period 

beginning on the date that the Secretary of Housing and Urban DeVerDate Aug 31 2005 06:52 Sep 18, 2007 Jkt 059008 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR330.XXX HR330

bajohnson on PROD1PC69 with HEARING
7 

velopment first insures any mortgage pursuant to the automated 

process established under pilot program under section 258 of the 

National Housing Act (as added by the amendment made by subsection (a) of this section)’’. 

Page 57, strike ‘‘the’’ in line 13 and all that follows through ‘‘section)’’ in line 16 and insert ‘‘such automated process’’. 

Page 61, strike lines 3 through 21, and insert the following: 

SEC. 28. DISCOUNT SALES OF MULTIFAMILY PROPERTIES. 

There is authorized to be appropriated, for discount sales of multifamily real properties under section 207(l) or 246 of the National 

Housing Act (12 U.S.C. 1713(l), 1715z–11), section 203 of the Housing and Community Development Amendments of 1978 (12 U.S.C. 

1701z–11), or section 204 of the Departments of Veterans Affairs 

and Housing and Urban Development, and Independent Agencies 

Appropriations Act, 1997 (12 U.S.C. 1715z–11a), and for discount 

loan sales under section 207(k) of the National Housing Act (12 

U.S.C. 1713(k)), section 203 of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z–11(k)), or section 

204(a) of the Departments of Veterans Affairs and Housing and 

Urban Development, and Independent Agencies Appropriations 

Act, 1997 (12 U.S.C. 1715z–11a(a)), $5,000,000, for fiscal year 2008. 

Page 62, after line 13, insert the following new section: 

SEC. 30. 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. NONCOMPETITIVE SALES IN FISCAL YEAR 2011. 

‘‘Notwithstanding any other provision of law, the Secretary may 

not sell any multifamily real property through any discount sale 

during fiscal year 2011 under the provisions of law referred to in 

section 2002(a) or any multifamily loan through any discount loan 

sale during such fiscal year under the provisions referred to in section 2002(b), unless the property or loan is sold for an amount that 

is equal to or greater than 60 percent of the property market value 

or loan market value, respectively.’’. 

Page 66, after line 25, insert the following new section: 

SEC. 33. CIVIL MONEY PENALTIES FOR IMPROPERLY INFLUENCING 

APPRAISALS. 

Paragraph (2) of section 536(b) of the National Housing Act (12 

U.S.C. 1735f-14(b)(2)) is amended—

(1) in subparagraph (B), by striking ‘‘or’’ at the end; 

(2) in subparagraph (C), by striking the period at the end 

and inserting ‘‘; or’’; and 

(3) by adding at the end the following new subparagraph: 

‘‘(D) in the case of an insured mortgage under title II for 

a 1- to 4-family residence, compensating, instructing, inVerDate Aug 31 2005 06:52 Sep 18, 2007 Jkt 059008 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR330.XXX HR330

bajohnson on PROD1PC69 with HEARING
8 

ducing, coercing, or intimidating any person who conducts 

an appraisal of the property in connection with such mortgage, or attempting to compensate, instruct, induce, coerce, 

or intimidate such a person, for the purpose of causing the 

appraised value assigned to the property under the appraisal to be based on any other factor other than the 

independent judgment of such person exercised in accordance with applicable professional standards.’’. 

PART B—TEXT OF AMENDMENTS MADE IN ORDER UNDER 

THE RULE 

1. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE TIERNEY

OF MASSACHUSETTS, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Page 66, after line 25, insert the following new section: 

SEC. 31. MORTGAGE INSURANCE PREMIUM REFUNDS. 

(a) AUTHORITY.—The Secretary of Housing and Urban Development shall, to the extent that amounts are made available pursuant to subsection (c), provide refunds of unearned premium charges 

paid, at the time of insurance, for mortgage insurance under title 

II of the National Housing Act (12 U.S.C. 1707 et seq.) to or on behalf of mortgagors under mortgages described in subsection (b). 

(b) ELIGIBLE MORTGAGES.—A mortgage described in this section 

is a mortgage on a one- to four-family dwelling that—

(1) was insured under title II of the National Housing Act 

(12 U.S.C. 1707 et seq.); 

(2) is otherwise eligible, under the last sentence of subparagraph (A) of section 203(c)(2) of such Act (12 U.S.C. 

1709(c)(2)(A)), for a refund of all unearned premium charges 

paid on the mortgage pursuant to such subparagraph, except 

that the mortgage— (A) was closed before December 8, 2004; and 

(B) was endorsed on or after such date. 

(c) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to 

be appropriated for each fiscal year such sums as may be necessary 

to provide refunds of unearned mortgage insurance premiums pursuant to this section. 

2. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE FRANK OF

MASSACHUSETTS, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Strike line 19 on page 4 and all that follows through page 5, line 

22, and insert the following: 

SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. 

Section 203(b)(2) of the National Housing Act (12 U.S.C. 

1709(b)(2)(A)) 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, 125 percent 

of the median 1-family house price in the area, as determined by the Secretary; and in the case of a 2-, 3- 


bajohnson on PROD1PC69 with HEARING
9 

, 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 for 2007 

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 for 2007 under such 

section for a 1-family residence; or ‘‘(ii) 175 percent of the dollar amount limitation in 

effect for 2007 under such section 305(a)(2) for a residence of the applicable size (without regard to any authority to increase such limitations with respect to 

properties located in Alaska, Guam, Hawaii, or the 

Virgin Islands), except that each such maximum dollar 

amount shall be adjusted effective January 1 of each 

year beginning with 2008, by adding to or subtracting 

from each such amount (as it may have been previously adjusted) a percentage thereof equal to the 

percentage increase or decrease, during the most recently completed 12-month or 4-quarter period ending 

before the time of determining such annual adjustment, in an housing price index developed or selected 

by the Secretary for purposes of adjustments under 

this clause; 

except that the dollar amount limitation in effect under 

this subparagraph for any size residence for any area 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 amount limitation in 

effect for 2007 under such section 305(a)(2) for a residence 

of the applicable size, as such limitation is adjusted by any 

subsequent percentage adjustments determined under 

clause (ii) of this subparagraph; and except that, if the 

Secretary determines that market conditions warrant such 

an increase, the Secretary may, for such period as the Secretary considers appropriate, increase the maximum dollar 

amount limitation determined pursuant to the preceding 

provisions of this subparagraph with respect to any particular size or sizes of residences, or with respect to residences located in any particular area or areas, to an 

amount that does not exceed the maximum dollar amount 

then otherwise in effect pursuant to the preceding provisions of this subparagraph for such size residence, or for 

such area (if applicable), by not more than $100,000; and’’. 

3. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE GARY MIL- LER OF CALIFORNIA, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Page 7, strike line 10 and insert the following: 

(2) in paragraph (9)— (A) by striking the paragraph 

Page 7, line 19, strike the last period and insert ‘‘; and’’. 


bajohnson on PROD1PC69 with HEARING
10 

Page 7, after line 19, insert the following: 

(B) by inserting after the period at the end the following: 

‘‘For purposes of this paragraph, the Secretary shall consider as cash or its equivalent any amounts gifted by a 

family member (as such term is defined in section 201), 

the mortgagor’s employer or labor union, or a qualified 

homeownership assistance entity, but only if there is no 

obligation on the part of the mortgagor to repay the gift: 

For purposes of the preceding sentence, the term ‘qualified 

homeownership assistance entity’ means any governmental 

agency or charity that has a program to provide homeownership assistance to low- and moderate-income families 

or first-time home buyers, or any private nonprofit organization that has such a program and evidences sufficient 

fiscal soundness to protect the fiscal integrity of the Mutual Mortgage Insurance Fund by maintaining a minimum 

net worth of $4,000,000 of acceptable assets.’’. 

4. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE BISHOP OF

NEW YORK, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Page 35, after line 24, insert the following: 

(2) in subsection (b)(4), by striking subparagraph (B) and inserting the following new subparagraph: 

‘‘(B) under a lease that has a term that ends no earlier 

than the minimum number of years, as specified by the 

Secretary, beyond the actuarial life expectancy of the mortgagor or comortgagor, whichever is the later date.’’. 

Page 35, line 25, strike ‘‘(2)’’ and insert ‘‘(3)’’. 

Page 36, line 7, strike ‘‘(3)’’ and insert ‘‘(4)’’. 

Page 36, line 9, strike ‘‘(4)’’ and insert ‘‘(5)’’. 

5. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE

HENSARLING OF TEXAS, OR HIS DESIGNEE, DEBATABLE FOR 10 

MINUTES

Page 64, strike lines 6 through 13. 

6. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE TIBERI OF

OHIO, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Page 17, strike lines 3 through 16 and insert the following: 

‘‘(I) AT APPLICATION.—At the time of application 

for the loan involved in the mortgage, a list of 

counseling agencies, approved by the Secretary, in 

the area of the applicant.’’. 


bajohnson on PROD1PC69 with HEARING
11 

Page 18, strike lines 20 through 22 and insert the following: 

‘‘(i) REQUIREMENT.—The Secretary shall require that 

the mortgagor shall’’. 

Page 19, strike lines 4 through 5 and insert the following: 

‘‘(I) prior to closing for the loan involved in the 

mortgage;’’. 

7. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE BIGGERT

OF ILLINOIS, OR HER DESIGNEE, DEBATABLE FOR 20 MINUTES

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. Cash investment requirement. 

Sec. 6. Temporary reinstatement of downpayment requirement in event of increased defaults. 

Sec. 7. Mortgage insurance premiums. 

Sec. 8. Rehabilitation loans. 

Sec. 9. Discretionary action. 

Sec. 10. Insurance of condominiums. 

Sec. 11. Mutual Mortgage Insurance Fund. 

Sec. 12. Hawaiian home lands and Indian reservations. 

Sec. 13. Conforming and technical amendments. 

Sec. 14. Home equity conversion mortgages. 

Sec. 15. Conforming loan limit in disaster areas. 

Sec. 16. Participation of mortgage brokers and correspondent lenders. 

Sec. 17. Sense of Congress regarding technology for financial systems. 

Sec. 18. Savings provision. 

Sec. 19. 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 


bajohnson on PROD1PC69 with HEARING
12 

safe-to-seniors reverse mortgage product, both of which were 

once thought too risky to private lenders; 

(3) the FHA single family mortgage insurance program traditionally has been a major provider of mortgage insurance for 

home purchases; 

(4) the FHA mortgage insurance premium structure, as well 

as FHA’s product offerings, should be revised to reflect FHA’s 

enhanced ability to determine risk at the loan level and to 

allow FHA to better respond to changes in the mortgage market; 

(5) during past recessions, including the oil-patch downturns 

in the mid-1980s, FHA remained a viable credit enhancer and 

was therefore instrumental in preventing a more catastrophic 

collapse in housing markets and a greater loss of homeowner 

equity; and 

(6) as housing price appreciation slows and interest rates 

rise, many homeowners and prospective homebuyers will need 

the less-expensive, safer financing alternative that FHA mortgage insurance provides. 

(b) PURPOSES.—The purposes of this Act are— (1) to provide flexibility to FHA to allow for the insurance of 

housing loans for low- and moderate-income homebuyers during all economic cycles in the mortgage market; 

(2) to modernize the FHA single family mortgage insurance 

program by making it more reflective of enhancements to loanlevel risk assessments and changes to the mortgage market; 

and 

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

insurance program to reflect rising house prices and the increased costs associated with new construction. 

SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. 

Paragraph (2) of section 203(b) of the National Housing Act (12 

U.S.C. 1709(b)(2)) is amended— (1) by striking subparagraphs (A) and (B) and inserting the 

following new subparagraphs: ‘‘(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 


bajohnson on PROD1PC69 with HEARING
13 

‘‘(B) not to exceed 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.’’; 

(2) 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 

(3) by striking the last undesignated paragraph (relating to 

counseling with respect to the responsibilities and financial 

management involved in homeownership). 

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. CASH INVESTMENT REQUIREMENT. 

Paragraph (9) of section 203(b) of the National Housing Act (12 

U.S.C. 1709(b)(9)) is amended by striking the paragraph designation and all that follows through ‘‘Provided further, That for’’ and 

inserting the following: 

‘‘(9) Be executed by a mortgagor who shall have paid on account of the property, in cash or its equivalent, an amount, if 

any, as the Secretary may determine based on factors determined by the Secretary and commensurate with the likelihood 

of default. For’’. 

SEC. 6. TEMPORARY REINSTATEMENT OF DOWNPAYMENT REQUIREMENT IN EVENT OF INCREASED DEFAULTS. 

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) EFFECT OF INCREASED DEFAULTS.—

‘‘(A) ANNUAL DETERMINATION.—If, for any calendar year 

described in subparagraph (B)(i), the Secretary determines, pursuant such subparagraph, that—

‘‘(i) the ratio of the number of mortgage insurance 

claims made during such calendar year on mortgages 

insured under this section to the total number of mortgages having such insurance in force during such calendar year exceeds, by 25 percent or more, such ratio 

for the 12-month period ending on the effective date of 

this Act, or 

‘‘(ii) the ratio of the aggregate remaining principal 

obligation under mortgages insured under this section 

for which an insurance claim is made during such calendar year to the average, for such calendar year, of 

the aggregate outstanding principal obligation under 

mortgages so insured exceeds, by 25 percent or more, 

such ratio for the 12-month period ending on such effective date, 

during the 90-day period beginning upon the submission of 

the report for such calendar year under subparagraph 

(B)(ii) containing such determination, the Secretary may 


bajohnson on PROD1PC69 with HEARING
14 

insure a mortgage under this section only pursuant to the 

requirement under subparagraph (C), and the Secretary 

shall, not later than 60 days after submission of the report 

containing such determination, submit a report to the Congress under subparagraph (D) regarding mortgage insurance claims during such calendar year. ‘‘(B) 5 YEARS OF ANNUAL DETERMINATIONS.— ‘‘(i) IN GENERAL.—The Secretary shall, for each of 

the 5 calendar years commencing after the date of the 

enactment of this Act, compare the ratios referred to 

in subparagraph (A) and make a determination under 

such subparagraph. ‘‘(ii) ANNUAL REPORT ON DEFAULTS.—Not later than 

90 days after the conclusion of each of the calendar 

years described in clause (i), the Secretary shall submit a report to the Congress containing the determination of the Secretary under such clause with respect to 

such calendar year and setting forth the ratios referred to in such clause for such calendar year. 

‘‘(C) REINSTATEMENT OF DOWNPAYMENT REQUIREMENT.—

The requirement under this subparagraph is that paragraph (9) of this subsection shall apply as such paragraph 

was in effect on the day before the effective date of the Expanding American Homeownership Act of 2007. 

‘‘(D) REPORTS REGARDING INCREASED DEFAULT RATE.—A 

report under this subparagraph, as required under subparagraph (A), shall contain— ‘‘(i) an analysis of mortgage insurance claims, made 

during the calendar year for which the report is submitted, on mortgages insured under this section; ‘‘(ii) an analysis of the reasons for the increase during such calendar year in the applicable ratio or ratios 

under subparagraph (A), including an analysis of the 

extent to which such increase is attributable to the 

amendments made by the Expanding American Homeownership Act of 2007; 

‘‘(iii) the effect of such increase on the Mutual Mortgage Insurance Fund; 

‘‘(iv) recommendations regarding—

‘‘(I) whether the Congress should, to respond to 

such increase, take legislative action (aa) to apply 

paragraph (9) of this subsection as such paragraph was in effect on the day before the effective 

date of Expanding American Homeownership Act 

of 2007, (bb) to apply paragraph (2)(A)(ii) by substituting ‘87 percent of the dollar amount limitation’ for ‘the dollar amount limitation’, or (cc) 

both; and 

‘‘(II) whether such provisions should be temporary or permanent, and, if temporary, the period during which such provisions should apply; 

and 

‘‘(v) recommendations regarding any other administrative, regulatory, legislative, or other actions that 

should be taken to respond to such increase. 


bajohnson on PROD1PC69 with HEARING
15 

‘‘(E) DEFAULTS IN DISASTER AREAS NOT COUNTED FOR 24

MONTHS.—In determining the number of mortgage insurance claims made and the aggregate remaining principal 

obligation under mortgages for which an insurance claim 

is made for purposes of subparagraph (A) for any calendar 

year, the Secretary shall not take into consideration any 

claim made during such period on a mortgage on any property that is located in an area for which a major disaster 

was declared pursuant to the Robert T. Stafford Disaster 

Relief and Emergency Assistance Act if such claim was 

made during the 24-month period beginning upon such 

declaration.’’. 

SEC. 7. MORTGAGE INSURANCE PREMIUMS. 

Section 203(c) of the National Housing Act (12 U.S.C. 1709(c)) is 

amended—

(1) in paragraph (2), in the matter preceding subparagraph 

(A), by striking ‘‘Notwithstanding’’ and inserting ‘‘Except as 

provided in paragraph (3) and notwithstanding’’; and 

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

‘‘(3) FLEXIBLE RISK-BASED PREMIUMS.—

‘‘(A) IN GENERAL.—For any mortgage insured by the Secretary under this title that is secured by a 1- to 4-family dwelling and for which the loan application is received by the mortgagee on or after October 1, 2007, 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 limitations in subparagraphs (B) 

and (C). The rate of 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 subparagraph but only to the extent that 

such change is not applied to any mortgage already executed. 

‘‘(B) MAXIMUM UP-FRONT PREMIUM AMOUNTS.—For any mortgage insured under a premium structure established pursuant 

to this paragraph, the amount of any single premium payment 

authorized by subparagraph (A), if established and collected 

prior to the insurance of the mortgage, may not exceed the following amount: 

‘‘(i) Except as provided in clauses (ii) and (iii), 3.0 percent of the amount of the original insured principal obligation of the mortgage. 

‘‘(ii) If the mortgagor has a credit score equivalent to a 

FICO score of 560 or more and 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), 2.25 percent of the original insured 

principal obligation of the mortgage. 

‘‘(iii) If the annual premium payment is equal to the 

maximum amount allowable under clause (i) of subparagraph (C), 1.5 percent of the amount of the original insured principal obligation of the mortgage. 


bajohnson on PROD1PC69 with HEARING
16 

‘‘(C) MAXIMUM ANNUAL PREMIUM AMOUNTS.—For any mortgage insured under a premium structure established pursuant 

to this paragraph, the amount of any annual premium payment collected may not exceed the following amount: 

‘‘(i) Except as provided in clauses (ii) and (iii), 2.0 percent of the remaining insured principal obligation of the 

mortgage. 

‘‘(ii) If the mortgagor is a mortgagor described in clause 

(ii) of subparagraph (B), 0.55 percent of the remaining insured principal obligation of the mortgage. 

‘‘(iii) If the single premium payment collected at the time 

of insurance is equal to maximum amount allowable under 

clause (i) of subparagraph (B), 1.0 percent of the remaining 

insured principal obligation of the mortgage. 

‘‘(D) PAYMENT INCENTIVE.—Notwithstanding subparagraph 

(C), for any mortgage insured under a premium structure established pursuant to this paragraph and for which the annual 

premium payment exceeds the amount set forth in subparagraph (C)(ii), if during the 5-year period beginning upon the 

time of insurance all mortgage insurance premiums for such 

mortgage have been paid on a timely basis, upon the expiration of such period the Secretary shall reduce the amount of 

the annual premium payments due thereafter under such 

mortgage to an amount equal to the amount set forth in subparagraph (C)(ii). 

‘‘(E) 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. 

‘‘(F) CONSIDERATIONS FOR PREMIUM STRUCTURE.—When establishing a premium structure under subparagraph (A) or 

when changing such a premium structure, the Secretary shall 

consider the following: 

‘‘(i) The effect of the proposed premium structure on the 

Secretary’s ability to meet the operational goals of the Mutual Mortgage Insurance Fund as provided in section 

202(a). 

‘‘(ii) Underwriting variables. 

‘‘(iii) The extent to which new pricing under the proposed premium structure has potential for acceptance in 

the private market. 

‘‘(iv) The administrative capability of the Secretary to 

administer the proposed premium structure. 

‘‘(v) The effect of the proposed premium structure on the 

Secretary’s ability to maintain the availability of mortgage 

credit and provide stability to mortgage markets.’’. 

SEC. 8. 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)—


bajohnson on PROD1PC69 with HEARING
17 

(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. 9. 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. 10. INSURANCE OF CONDOMINIUMS. 

(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) in clause (1), by striking ‘‘or’’ and inserting a comma; and 

(2) 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, a one-family unit in a multifamily project, including a project in which 

the dwelling units are attached, semi-detached, or detached, 

and an undivided interest in the common areas and facilities 

which serve the project’’. 

SEC. 11. 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 


bajohnson on PROD1PC69 with HEARING
18 

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; 


bajohnson on PROD1PC69 with HEARING
19 

‘‘(C) to curtail the impact of adverse selection on the 

Fund; and 

‘‘(D) to meet the housing needs of the borrowers that the 

single family mortgage insurance program under this title 

is designed to serve.’’. 

(b) OBLIGATIONS OF FUND.—The National Housing Act is amended as follows: 

(1) HOMEOWNERSHIP VOUCHER PROGRAM MORTGAGES.—In 

section 203(v) (12 U.S.C. 1709(v))—

(A) by striking ‘‘Notwithstanding section 202 of this title, 

the’’ and inserting ‘‘The’’; and 

(B) by striking ‘‘General Insurance Fund’’ the first place 

such term appears and all that follows and inserting ‘‘Mutual Mortgage Insurance Fund.’’. 

(2) HOME EQUITY CONVERSION MORTGAGES.—Section 

255(i)(2)(A) of the National Housing Act (12 U.S.C. 1715z–

20(i)(2)(A)) is amended by striking ‘‘General Insurance Fund’’

and inserting ‘‘Mutual Mortgage Insurance Fund’’. 

(c) CONFORMING AMENDMENTS.—The National Housing Act is 

amended—

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

(g) and (h); and 

(2) in section 519(e) (12 U.S.C. 1735c(e)), by striking ‘‘203(b)’’

and all that follows through ‘‘203(i)’’ and inserting ‘‘203, except 

as determined by the Secretary’’. 

SEC. 12. 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 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. 13. 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 


bajohnson on PROD1PC69 with HEARING
20 

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. 14. 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 (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’’; 

(2) in subsection (i)(1)(C), by striking ‘‘limitations’’ and inserting ‘‘limitation’’; and 

(3) by adding at the end the following new subsection: ‘‘(n) AUTHORITY TO INSURE HOME PURCHASE MORTGAGE.— ‘‘(1) IN GENERAL.—Notwithstanding any other provision in 

this section, the Secretary may insure, upon application by a 

mortgagee, a home equity conversion mortgage upon such 

terms and conditions as the Secretary may prescribe, when the 

primary purpose of the home equity conversion mortgage is to 

enable an elderly mortgagor to purchase a 1- to 4-family dwelling in which the mortgagor will occupy or occupies one of the 

units. ‘‘(2) LIMITATION ON PRINCIPAL OBLIGATION.—A home equity 

conversion mortgage insured pursuant to paragraph (1) shall 

involve a principal obligation that does not exceed the dollar 

amount limitation determined under section 305(a)(2) of the 

Federal Home Loan Mortgage Corporation Act for a residence 

of the applicable size.’’. (b) MORTGAGES FOR COOPERATIVES.—Subsection (b) of section 

255 of the National Housing Act (12 U.S.C. 1715z–20(b)) is amended— (1) in paragraph (4)— (A) by inserting ‘‘a first or subordinate mortgage or lien’’ before ‘‘on all stock’’; 

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

(C) by inserting ‘‘a first mortgage or first lien’’ before ‘‘on 

a leasehold’’; and 

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

on’’ before ‘‘all stock’’. 

(c) 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—

(1) the effects of reducing the amounts of such premiums 

from the amounts charged as of the date of the enactment of 

this Act on—

(A) costs to mortgagors; and 

(B) the financial soundness of the program; and 


bajohnson on PROD1PC69 with HEARING
21 

(2) the feasibility and effectiveness of exempting, from all the 

requirements under the program regarding payment of mortgage insurance premiums (including both up-front or annual 

mortgage insurance premiums under section 203(c)(2) of such 

Act), any mortgage insured under the program under which 

part or all of the amount of future payments made to the 

homeowner are used for costs of a long-term care insurance 

contract covering the mortgagor or members of the household 

residing in the mortgaged property. 

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. 15. 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. 16. PARTICIPATION OF MORTGAGE BROKERS AND CORRESPONDENT LENDERS. 

(a) DEFINITIONS.—

(1) IN GENERAL.—Section 201 of the National Housing Act 

(12 U.S.C. 1707) is amended—

(A) 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:’’; 

(B) 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) A lender 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 finanVerDate Aug 31 2005 06:52 Sep 18, 2007 Jkt 059008 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\HR330.XXX HR330

bajohnson on PROD1PC69 with HEARING
22 

cial audits of the Government Auditing Standards 

issued by the Comptroller 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) 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) A mortgage broker who—

‘‘(i) closes the mortgage in the name of the lender 

and does not make, underwrite, or service the mortgage; 

‘‘(ii) is licensed, under the laws of the State in which 

the property that is subject to the mortgage is located, 

to act as a mortgage broker in such State; 

‘‘(iii) posts a surety bond in accordance with the requirements of subparagraph (B)(ii); and 

‘‘(iv) complies with such other requirements as the 

Secretary may establish. 

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

under a mortgage and the successors and assigns of the original borrower.’’; 

(C) in subsection (a), by redesignating clauses (1) and (2) 

as clauses (A) and (B) respectively; and 

(D) by redesignating subsections (a), (c), (d), (e), and (f) 

as paragraphs (1), (4), (5), (6), and (7), respectively, and realigning such paragraphs two ems from the left margin. 

(2) MORTGAGEE REVIEW.—Section 202(c)(7) of the National 

Housing Act (12 U.S.C. 1708(c)(7)) is amended—

(A) in subparagraph (A), by inserting ‘‘, as defined in 

section 201,’’ after ‘‘mortgagee’’; 

(B) by striking subparagraph (B); and 

(C) by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively. 

(3) 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’’. 


bajohnson on PROD1PC69 with HEARING
23 

(4) WAR HOUSING INSURANCE.—Section 601(b) of the National 

Housing Act (12 U.S.C. 1736(b)) is amended by striking ‘‘includes the original lender under a mortgage, and his successors 

and assigns approved by the Secretary’’ and inserting ‘‘has the 

meaning given such term in section 201’’. (5) 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’’. (6) 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’’. 

(b) ELIGIBILITY FOR INSURANCE.— (1) TITLE I.—Paragraph (1) of section 8(b) of the National 

Housing Act (12 U.S.C. 1706c(b)(1)) is amended—

(A) by striking ‘‘, and be held by,’’; and 

(B) by striking ‘‘as responsible and able to service the 

mortgage properly’’. 

(2) 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— (A) by striking ‘‘, and be held by,’’; and 

(B) by striking ‘‘as responsible and able to service the 

mortgage properly’’. (3) SECTION 221 MORTGAGE INSURANCE.—Paragraph (1) of section 221(d) of the National Housing Act (12 U.S.C. 1715l(d)(1)) 

is amended—

(A) by striking ‘‘ and be held by’’; and 

(B) by striking ‘‘as responsible and able to service the 

mortgage properly’’. (4) 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’’. (5) WAR HOUSING MORTGAGE INSURANCE.—Paragraph (1) of 

section 603(b) of the National Housing Act (12 U.S.C. 

1738(b)(1)) is amended—

(A) by striking ‘‘, and be held by,’’; and 

(B) by striking ‘‘as responsible and able to service the 

mortgage properly’’. 

(6) 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—

(A) by striking ‘‘ and be held by’’; and 

(B) by striking ‘‘as responsible and able to service the 

mortgage properly’’. (7) GROUP PRACTICE FACILITY MORTGAGE INSURANCE.—Section 1101(b)(2) of the National Housing Act (12 U.S.C. 

1749aaa(b)(2)) is amended— (A) by striking ‘‘ and held by’’; and 


bajohnson on PROD1PC69 with HEARING
24 

(B) by striking ‘‘as responsible and able to service the 

mortgage properly’’. 

(8) NATIONAL DEFENSE HOUSING INSURANCE.—Paragraph (1) 

of section 903(b) of the National Housing Act (12 U.S.C. 

1750b(b)(1)) is amended—

(A) by striking ‘‘, and be held by,’’; and 

(B) by striking ‘‘as responsible and able to service the 

mortgage properly’’. 

SEC. 17. 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 ‘‘highrisk’’ 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. 


bajohnson on PROD1PC69 with HEARING
25 

SEC. 18. SAVINGS PROVISION. 

Any mortgage insured under title II of the National Housing Act 

before the date of enactment of this Act 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. 19. IMPLEMENTATION. 

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. 

Æ 


bajohnson on PROD1PC69 with HEARING