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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1708 Introduced in House (IH)]

104th CONGRESS
  1st Session
                                H. R. 1708

  To establish the Federal Mortgage Insurance Corporation as a wholly 
  owned Government corporation to provide full mortgage insurance and 
    provide for the development of credit enhancement products for 
     mortgages for single family homes of low- and moderate-income 
                  homebuyers, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 24, 1995

      Mr. Weller (for himself, Mr. Metcalf, Mr. Barr, Mr. Fox of 
  Pennsylvania, Mr. Stockman, Mr. Ehrlich, Mr. Chrysler, Mr. Ney, Mr. 
 Heineman, Mr. Bono, Mr. Hayworth, Mr. LoBiondo, Mrs. Kelly, Mr. Tate, 
 Mr. Davis, Mr. Graham, Mr. Foley, Mr. Forbes, Mr. Salmon, Mr. English 
   of Pennsylvania, Mr. Frisa, Mr. Burr, Mr. Wamp, and Mr. Bryant of 
  Tennessee) introduced the following bill; which was referred to the 
              Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL

 
  To establish the Federal Mortgage Insurance Corporation as a wholly 
  owned Government corporation to provide full mortgage insurance and 
    provide for the development of credit enhancement products for 
     mortgages for single family homes of low- and moderate-income 
                  homebuyers, and for other purposes.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Mortgage Insurance 
Corporation Charter Act''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.
                  TITLE I--ORGANIZATION OF CORPORATION

Sec. 101. Establishment.
Sec. 102. Purposes.
Sec. 103. General powers.
Sec. 104. Board of Directors.
Sec. 105. Officers and employees.
Sec. 106. Procurement.
Sec. 107. Financial safety and soundness.
Sec. 108. Federal credit reform procedures.
Sec. 109. Additional oversight and reporting requirements.
Sec. 110. Transition.
Sec. 111. Applicability of laws.
Sec. 112. GAO evaluation.
Sec. 113. Rule of construction.
Sec. 114. Authorization of appropriations.
                   TITLE II--BUSINESS OF CORPORATION

Sec. 201. Single family housing requirement.
Sec. 202. Transfer of FHA single family housing business.
Sec. 203. New lines of business.
Sec. 204. Limitations on business activity.
    TITLE III--PROVISIONS RELATING TO GOVERNMENT NATIONAL MORTGAGE 
     ASSOCIATION AND OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT

Sec. 301. GNMA authority.
Sec. 302. Safety and soundness oversight of Corporation by OFHEO.
                       TITLE IV--FHA IMPROVEMENTS

Sec. 401. Calculation of downpayment.
Sec. 402. Delegation of single family mortgage insuring authority to 
                            direct endorsement mortgagees.
SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Corporation.--The term ``Corporation'' means the 
        Federal Mortgage Insurance Corporation established under this 
        Act.
            (2) Native american government.--The term ``Native American 
        government'' means the government of any Indian or Alaska 
        native tribe, band, nation, pueblo, village or community that 
        the Secretary of the Interior acknowledges to exist as an 
        Indian tribe, pursuant to the Federally Recognized Indian Tribe 
        List Act of 1994.
            (3) Single family housing.--The term ``single family 
        housing'' means a property on which there is located a 1- to 4-
        family residence.
            (4) United states.--The term ``United States'' includes the 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Commonwealth of the Northern Mariana Islands, Guam, 
        the Virgin Islands, American Samoa, and Native American 
        governments.

                  TITLE I--ORGANIZATION OF CORPORATION

SEC. 101. ESTABLISHMENT.

    (a) In General.--There is hereby established a body corporate to be 
known as the Federal Mortgage Insurance Corporation, which shall have 
succession until dissolved by Act of Congress.
    (b) Government Corporation.--The Corporation shall be established 
as a wholly owned Government corporation subject to chapter 91 of title 
31, United States Code (commonly referred to as the Government 
Corporation Control Act), except as otherwise provided in this Act.
    (c) Federal Agency.--
            (1) In general.--The Corporation shall be an agency of the 
        United States, except that the Corporation shall not be 
        considered an agency for purposes of holding, managing, and 
        disposing of assets acquired by the Corporation under the 
        provisions of this subtitle or subtitle B.
            (2) Property disposition authority.--For purposes of this 
        subsection, the term ``holding, managing, and disposing of 
        assets'' includes the powers to--
                    (A) deal with, complete, reconstruct, rent, 
                renovate, modernize, insure, make contracts for the 
                management of, establish suitable agencies for the 
                management of, or exercise discretion to sell for cash 
                or credit or lease, any acquired property;
                    (B) pursue collection by way of compromise or 
                otherwise all assigned and transferred claims; and
                    (C) at any time, upon default, foreclose on any 
                property secured by any assigned or transferred 
                mortgage.
    (d) Self-Supporting Entity.--The Corporation shall operate and 
conduct its business as a self-supporting entity.
    (e) Corporate Offices and Residency.--The Corporation shall 
maintain its principal office in the District of Columbia and shall be 
deemed, for purposes of venue in civil actions, to be a resident of the 
District of Columbia. The Corporation may establish other officers in 
such other places as the Corporation considers appropriate in the 
conduct of its business.
    (f) Tax Status.--The Corporation, including its franchise, 
activities, income, and assets, shall be exempt from all taxation now 
or hereafter imposed by any taxing authority in the United States, 
except that any real property of the Corporation (other than real 
property that the Corporation uses as an office) shall be subject to 
taxation to the same extent according to its value as any taxing 
authority taxes other real property.
    (g) Protection of Name.--No person, except the body corporate 
established under this section shall, after the date of the enactment 
of this Act, use the words ``Federal Mortgage Insurance Corporation'' 
or the initials ``FMIC'' as the name or part thereof under which such 
person shall do business. Violations of the preceding sentence may be 
enjoined by any court of general jurisdiction at the suit of the 
Corporation. In any such suit, the Corporation may recover any actual 
damages flowing from such violation, and, in addition, shall be 
entitled to punitive damages (regardless of the existence or 
nonexistence of actual damages) of not more than $100 for each day 
during which such violation is committed or repeated.

 SEC. 102. PURPOSES.

    The Corporation is established for the following purposes:
            (1) To expand the opportunities in the United States for 
        single family homeownership through the provision of full 
        mortgage insurance and credit enhancement products and related 
        activities.
            (2) To address the unmet single family housing credit needs 
        of families and communities in the United States.
            (3) To engage in research, development, and testing of new 
        products designed to make housing credit available to 
        underserved markets.
            (4) To deliver full mortgage insurance and credit 
        enhancement products, and provide other services, for single 
        family housing in a nondiscriminatory manner, and to administer 
        its business in a manner which affirmatively furthers fair 
        housing.
            (5) To promote liquidity and provide stability to the 
        single family housing finance market, by continuing to provide 
        full mortgage insurance and credit enhancement products on a 
        sound basis during times of regional and national economic 
        downturn.
            (6) To expand access to decent and affordable single family 
        housing and to deliver housing credit to families and 
        communities in the United States.

SEC. 103. GENERAL POWERS.

    To further the purposes of this Act, in accordance with chapter 91 
of title 31 of the United States Code (relating to government 
corporations), the Corporation--
            (1) may adopt, amend, and repeal bylaws, and other written 
        administrative guidance;
            (2) may adopt, alter, and use a corporate seal, which shall 
        be judicially noted;
            (3) may enhance and make commitments to enhance credit to 
        the extent authorized under this Act, including commitments to 
        insure, reinsure, advance, and incur liabilities, to the extent 
        provided in title II;
            (4) may acquire, hold, use, improve, deal in, or dispose 
        of, by any means, any interests in any real property or any 
        personal property;
            (5) may execute contracts, make grants, and make other 
        agreements in its own name, with any agency, public or private 
        entity, or person, and carry out any lawful requirement of such 
        contracts, grants, or other agreements;
            (6) may take any actions (including the restructuring of 
        debt) that Corporation determines are necessary to manage the 
        Corporation's portfolio of property, assets, and obligations;
            (7) may, to the extent authorized under this Act--
                    (A) create and supply any product or service 
                consistent with its corporate purposes;
                    (B) collect, generate, and make available any 
                information relevant to the provision of single family 
                housing credit; and
                    (C) assess fees and charges for such products, 
                information, and services in an amount, as determined 
                by the Corporation, that does not exceed their value in 
                the market and that permits the Corporation to recover 
                its fully allocated long-term costs and maintain the 
                level of
                 capital determined by the Corporation to be necessary 
and sufficient to carry out the public purposes of the Corporation;
            (8) may insulate any product, line, or service from any 
        other, by creating distinct insurance funds or other devices to 
        segregate or permit limitations on liability for business 
        activities or accounts;
            (9) may qualify any person or entity to engage in business 
        with the Corporation and enforce and impose penalties for the 
        breach of any duties, obligations, and other commitments made 
        by such persons or entities;
            (10) shall take actions necessary to administer its 
        business in a manner which is nondiscriminatory and which 
        affirmatively furthers fair housing;
            (11) may use the services or obtain the goods of any 
        Federal agency, including the Department of Housing and Urban 
        Development, under working or cooperation agreements or 
        contracts with such agencies and make or receive payment for 
        the cost of such activities;
            (12) shall have the power, in its corporate name, to sue 
        and be sued, and to complain and defend, in any court of 
        competent jurisdiction, State or Federal, but no attachment, 
        garnishment, injunction, or other similar process, mesne or 
        final, shall be issued against the property of the Corporation 
        or against the Corporation with respect to its property, and 
        the Corporation shall not be liable for interest prior to 
        judgment, for punitive or exemplary damages, for penalties, or 
        for claims based upon unjust enrichment, quasi-contract, or 
        contracts implied-in-law, nor shall the Corporation be subject 
        to trial by jury;
            (13) notwithstanding any other provision of law--
                    (A) shall be an agency of the Federal Government, 
                and the officers and employees of the Corporation shall 
                be officers and employees of the Federal Government, 
                for purposes of part IV of title 28, United States 
                Code;
                    (B) shall have all civil actions to which the 
                Corporation is a party deemed to arise under the laws 
                of the United States; and
                    (C) may, at any time before trial and without bond 
                or security, remove any civil or criminal action or 
                proceeding in a State court to which the Corporation is 
                a party to the United States district court for the 
                District of Columbia or to the United States district 
                court with jurisdiction over the place where the civil 
                action or proceeding is pending, by following any 
                procedure for removal of actions in effect at the time 
                of such removal;
            (14) may--
                    (A) accept and use voluntary and uncompensated 
                services and accept, hold, administer, and use gifts 
                and bequests of property, both real and personal, for 
                the purpose of aiding or facilitating the work of the 
                Corporation; and
                    (B) hold gifts and bequests of money and the 
                proceeds from sales of other property received as gifts 
                or bequests in a separate account, and such amounts 
                shall be disbursed as determined by the Corporation:
        except that property accepted pursuant to this paragraph, and 
        the proceeds thereof, shall be used as nearly as possible in 
        accordance with the terms of the gift or bequest and, for the 
        purpose of Federal income, estate, and gift taxes, property 
        accepted under this paragraph shall be considered as a gift or 
        bequest to or for the use of the United States;
            (15) shall have any transaction in which it participates be 
        exempt from the terms of any State or other law or prohibition 
        against payment of usurious interest;
            (16) may act as a fiduciary in connection with any of its 
        undertakings;
            (17) may foreclose any single family housing mortgages held 
        by the Corporation pursuant to the same procedures applicable 
        to the Secretary under the Single Family Mortgage Foreclosure 
        Act of 1994;
            (18) shall have the priority of the United States with 
        respect to the payment of debts out of bankrupt, insolvent, and 
        decedents' estates;
            (19) may invest in systems, technology, or other capital 
        resources, to enhance its ability to carry out the purposes of 
        this Act; and
            (20) shall have and exercise all powers necessary or 
        appropriate to effect any purposes of this Act, including the 
        power to carry out any authority transferred to the Corporation 
        under this Act.

 SEC. 104. BOARD OF DIRECTORS.

    (a) In General.--The powers of the Corporation shall be vested in 
the Board of Directors of the Corporation.
    (b) Appointment.--The Board of Directors shall consist of 9 
individuals appointed by the President by and with the advise and 
consent of the Senate. The President shall designate a chairperson of 
the Board from among members of the Board.
    (c) Qualifications.--Members of the Board of Directors shall be 
citizens of the United States. The Board of Directors shall at all 
times include as members not less than--
            (1) 1 individual from the mortgage finance industry;
            (2) 1 individual from the home building industry;
            (3) 1 individual with knowledge and experience regarding 
        secondary mortgage market activities;
            (4) 1 individual with knowledge and experience regarding 
        home sales;
            (5) 1 individual with knowledge and experience regarding 
        single family housing asset management;
            (6) 1 individual from a State or local housing agency 
        engaged in single family housing activities;
            (7) 1 individual who represents consumer or community 
        interests in single family housing; and
            (8) 1 individual who represents or resides in an urban or 
        rural neighborhood whose population consists predominantly of 
        members of minorities.
    (d) Terms.--
            (1) In general.--Each member of the Board of Directors 
        shall be appointed for a term of 6 years, except as provided in 
        paragraphs (2) and (3).
            (2) Terms of initial appointees.--As designated by the 
        President at the time of appointment, of the members first 
        appointed--
                    (A) 3 shall be appointed for terms of 2 years; and
                    (B) 3 shall be appointed for terms of 4 years.
            (3) Vacancies.--Any member appointed to fill a vacancy 
        occurring before the expiration of the term for which the 
        member's predecessor was appointed shall be appointed only for 
        the remainder of that term. A member may serve after the 
        expiration of that member's term until a successor has taken 
        office. A vacancy in the Board shall be filled in the manner in 
        which the original appointment was made.
    (e) Meetings and Quorum.--The Board of Directors shall meet at any 
time pursuant to the call of the Chairperson or a majority of its 
members and as provided by the bylaws of the Corporation, but not less 
than quarterly. 5 members of the Board shall constitute a quorum.
    (f) Powers.--The Board of Directors shall be responsible for the 
general management of the Corporation and shall have the same 
authority, privileges, and responsibilities as the board of directors 
of a private corporation incorporated under the District of Columbia 
Business Corporation Act.
    (g) Compensation.--Members of the Board of Directors shall serve on 
a part-time basis and shall serve without pay.
    (h) Travel Expenses.--Each member shall receive travel expenses, 
including per diem in lieu of subsistence, in accordance with sections 
5702 and 5703 of title 5, United States Code.

SEC. 105. OFFICERS AND EMPLOYEES.

    (a) Appointment of Officers.--The Board of Directors of the 
Corporation shall appoint a president and vice president of the 
Corporation, and such other officers as are provided for in the bylaws 
of the Corporation.
    (b) Appointment of Employees.--The Board of Directors shall appoint 
such other employees of the Corporation as the Board considers 
necessary for the transaction of its business.
    (c) Compensation, Duties, and Removal.--
            (1) In general.--The Board of Directors shall fix the 
        compensation of all officers and employees of the Corporation, 
        define their duties, and provide a system of management and 
        organization to fix responsibility and promote efficiency.
            (2) Considerations in fixing compensation.--No officer or 
        employee of the Corporation may receive pay in excess of the 
        annual rate of basic pay payable for level III of the Executive 
        Schedule.
    (d) Principles Governing Personnel Management.--The Board shall 
ensure that the system of organization, compensation, and management 
for personnel is consistent with the principles under section 2301(b) 
of title 5, United States Code (regarding merit system principles).
    (e) Applicability of Certain Civil Service Laws.--The officers and 
employees of the Corporation shall be appointed without regard to the 
provisions of title 5, United States Code, governing appointments in 
the competitive service, and may be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 53 of that title 
relating to classification and General Schedule pay rates.
    (f) Use of Federal Agencies.--In carrying out its purposes, the 
Corporation may use information, services, staff, and facilities of any 
executive agency, independent agency, or department (including the 
Department of Housing and Urban Development), with the consent of the 
agency or department, and shall reimburse the agency or department for 
the cost of such information, services, staff, and facilities.
    (g) Indemnification.--The Corporation may provide for the 
indemnification of any officer, employee, contractor, or agent of the 
Corporation on such terms as the Corporation determines proper, except 
that, to the extent that the Corporation self-insures for any 
indemnification--
            (1) the aggregate maximum amount of all indemnifications 
        outstanding at any time shall not exceed 5 percent of the 
        required capital level determined under section 1386 of the 
        Federal Housing Enterprises Financial Safety and Soundness Act 
        of 1992 by the Director of the Office of Federal Housing 
        Enterprise Oversight; and
            (2) no more than $1,000,000 may be paid as an indemnity for 
        any single event.

 SEC. 106. PROCUREMENT.

    (a) In General.--The Board shall establish an economical and 
results-oriented system for procurement, supply, and disposition by the 
Corporation of personal property and nonpersonal services, which shall 
include performance measures and standards for determining the extent 
to which the Corporation's procurement of property and services 
satisfies the objective for which the procurement was undertaken. The 
system shall be consistent with the principles of impartiality and 
competitiveness.
    (b) Consideration of Federal Procurement System.--In establishing 
the system for procurement, supply, and disposition under this 
subsection, the Board shall take into consideration--
            (1) the requirements under the Federal Property and 
        Administrative Services Act of 1949 and the appropriateness or 
        inappropriateness of adopting identical or similar procedures 
        for the Corporation; and
            (2) the experience of the Department of Housing and Urban 
        Development in complying with such Act in procurement, supply, 
        and disposition activities relating to the single family 
        mortgage insurance program under the National Housing Act.
    (c) Exemption From Federal Property and Administrative Service Act 
Provisions.--Section 602(d) of the Federal Property and Administrative 
Services Act of 1949 (40 U.S.C. 474) is amended--
            (1) in paragraph (20), by striking ``and'' at the end;
            (2) in paragraph (21), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(22) The Federal Mortgage Insurance Corporation.''.
    (d) Exemption From Procurement Protest System.--Subchapter V of 
chapter 35 of title 31, United States Code, relating to the procurement 
protest system, shall not apply to the Corporation.

 SEC. 107. FINANCIAL SAFETY AND SOUNDNESS.

    The Director of the Office of Federal Housing Enterprise Oversight 
shall oversee the financial safety and soundness of the Corporation, 
pursuant to subtitle E of the Federal Housing Enterprise Financial 
Safety and Soundness Act of 1992.

 SEC. 108. FEDERAL CREDIT REFORM PROCEDURES.

    (a) Submission of Budget and Business Plan to OFHEO.--In each year, 
the Corporation shall submit its annual budget and business plan to the 
Director of the Office of Federal Housing Enterprise Oversight by a 
date sufficient to enable the Director to produce, pursuant to section 
1385(c) of the Federal Housing Enterprise Financial Safety and 
Soundness Act of 1992, the credit subsidy cost estimates that are 
required for the President's budget.
    (b) Submission of Budget and Credit Cost Estimates to OMB.--For 
purposes of inclusion in the President's budget, the Corporation shall 
submit the annual budget of the Corporation and the annual credit 
subsidy cost estimates produced pursuant to section 1385(c) of the 
Federal Housing Enterprise Financial Safety and Soundness Act of 1992 
to the Director of the Office of Management and Budget.
    (c) Reserves.--
            (1) Establishment.--The Corporation may establish any 
        reserve that the Corporation determines is necessary for the 
        business operations of the Corporation.
            (2) Amounts.--The Corporation may hold as a reserve in any 
        financing account, as defined in section 502 of the 
        Congressional Budget Act of 1974, such amounts as the 
        Corporation considers necessary to comply with the capital 
        requirements established for the Corporation under subtitle E 
        of the Federal Housing Enterprise Financial Safety and 
        Soundness Act of 1992 and to fulfill the purposes of this Act.

 SEC. 109. ADDITIONAL OVERSIGHT AND REPORTING REQUIREMENTS.

    (a) Inspector General.--For purposes of the Inspector General Act 
of 1978 and chapter 91 of title 31, United States Code, the Inspector 
General of the Department of Housing and Urban Development shall 
perform the functions of Inspector General for the Corporation.
    (b) Annual Business Plan.--The Corporation shall establish a 
business plan on an annual basis and shall make such plan available for 
review by the Congress and the President. Such plan shall specify the 
product and operational strategy of the Corporation, including plans to 
address compliance with the safety and soundness requirements 
applicable to the Corporation.

 SEC. 110. TRANSITION.

    (a) Transition Date and Transition Period.--For purposes of this 
Act, the following definitions shall apply:
            (1) Transition date.--The term ``transition date'' means 
        the latter of the following 2 dates:
                    (A) Earliest date.--January 1, 1997.
                    (B) Required actions.--The first date by which all 
                of the following have occurred:
                            (i) The Corporation has submitted an 
                        initial annual budget and business plan to the 
                        Congress and the President that have been 
                        approved by the President.
                            (ii) The Director of the Office of Federal 
                        Housing Enterprise Oversight has certified to 
                        the Congress and the President that the 
                        Director has developed an interim model under 
                        section 1386(a)(2) of the Federal Housing 
                        Enterprises Financial Safety and Soundness Act 
                        of 1992 that is sufficient for the Director's 
                        purposes.
                            (iii) The Director of the Office of 
                        Management and Budget has certified to the 
                        Congress and the President that the application 
                        of such interim model is consistent with the 
                        Federal Credit Reform Act of 1990.
                            (iv) The Director of the Office of 
                        Management and Budget determines that the 
                        staff, systems, and administrative 
                        infrastructure of the Corporation are 
                        sufficient to permit the Corporation to fully 
                        conduct the operation of its business.
            (2) Transition period.--The term ``transition period'' 
        means the period beginning upon the organization of the 
        Corporation under this Act and ending upon the transition date.
    (b) Authority During Transition Period.--During the transition 
period--
            (1) the Secretary of Housing and Urban Development shall, 
        in consultation with the Corporation and the Director of the 
        Office of Management and Budget, transfer to the Corporation 
        such powers and responsibilities of the Secretary to carry out 
        the single family mortgage insurance programs under the 
        National Housing Act, at such times as are appropriate for the 
        Corporation to assume such powers and responsibilities;
            (2) the Corporation may carry out any power or 
        responsibility that the Secretary of Housing and Urban 
        Development transfers to the Corporation consistent with 
        paragraph (1) and section 202, using the staff, systems, and 
        administrative infrastructure that the Corporation engages or 
        acquires during the transition period, or the personnel and 
        other resources of the Secretary;
            (3) the Corporation may incur any obligation consistent 
        with--
                    (A) the carrying out of a delegated power or 
                responsibility; or
                    (B) the acquisition, engagement, or development of 
                staff, systems (including technology to enhance its 
                ability to engage in the business of the Corporation 
                authorized by the Act), and administrative structure; 
                and
            (4) the Corporation may engage in any other activity or 
        undertake any responsibility (not including any authority under 
        section 203) that the Board of Directors determines to be 
        consistent with the start-up of the Corporation and the 
        authority of the Corporation under this Act.

SEC. 111. APPLICABILITY OF LAWS.

    (a) Government Corporation Control Act.--Section 9101(3) of title 
31, United States Code, is amended by adding at the end the following 
new subparagraph:
                    ``(P) the Federal Mortgage Insurance Corporation.''
    (b) Tax Exempt Status of Corporation.--Section 501(l) of the 
Internal Revenue Code of 1986 (26 U.S.C. 501(l)) is amended by adding 
at the end the following new paragraph:
            ``(4) The Federal Mortgage Insurance Corporation 
        established under the Federal Mortgage Insurance Corporation 
        Charter Act.''.
    (c) Notice and Comment Rulemaking.--Any matter relating to mortgage 
insurance, credit enhancement, or other business activities of the 
Corporation authorized under this Act shall be considered a matter 
relating to agency management or personnel or to public property, 
loans, grants, benefits, or contracts, for purposes of section 553(a) 
of title 5, United States Code.
    (d) Conforming Amendment Relating to Usury Exemption for Veterans 
Loans.--Section 3728 of title 38, United States Code, is amended by 
inserting after ``National Housing Act'' the following: ``, or are 
credit-enhanced under the Federal Mortgage Insurance Corporation 
Charter Act,''.

 SEC. 112. GAO EVALUATION.

    (a) In General.--The Comptroller General of the United States shall 
conduct a study and submit a report to the President and the Congress 
on--
            (1) whether this Act provides sufficient authority to 
        permit the Corporation to accomplish its public purposes 
        efficiently and effectively, and in a safe and sound manner;
            (2) the impact of the limitations on business activities as 
        to mortgage amounts and aggregate commitments, and any other 
        statutory limitations, on the current and anticipated business 
        activity of the Corporation; and
            (3) whether the safety and soundness and other requirements 
        under this Act and the Federal Housing Enterprises Financial 
        Safety and Soundness Act of 1992 appropriately provide that the 
        Corporation will be operated in a safe and sound manner and 
        will fulfill the public purposes of its establishment.
    (b) Timing.--The report required by this section shall be submitted 
on the third January 1st occurring after the conclusion of the 
transition period.

 SEC. 113. RULE OF CONSTRUCTION.

    Notwithstanding any other evidence of the intent of Congress, it is 
hereby declared to be the intent of Congress that the provisions of 
this Act shall be construed broadly to achieve the purposes of the Act, 
and the provisions of any other Act that must be construed with any 
provision of this Act shall similarly be construed to achieve the 
purposes of this Act to the extent reasonably possible.

SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

    (a) Annual Availability of Negative Subsidy.--There is authorized 
to be appropriated, in each fiscal year, for conducting operations of 
the Corporation, an amount not exceeding the amount of any net income 
from the operations of the Corporation. Such sums shall remain 
available until expended.
    (b) Funding of Claims.-- Amounts credited to the financing account 
of the Corporation, established pursuant to title V of the 
Congressional Budget Act of 1974, shall be permanently and indefinitely 
available for payment of any claim that the Corporation approves under 
a contract of insurance or other credit enhancement instrument under 
this Act. To the extent that such amounts are insufficient for such 
purpose, the Federal Mortgage Insurance Corporation may borrow from the 
Treasury pursuant to title V of the Congressional Budget Act of 1974.

                   TITLE II--BUSINESS OF CORPORATION

SEC. 201. SINGLE FAMILY HOUSING REQUIREMENT.

    The Corporation may provide mortgage insurance or credit 
enhancement only with respect to credit extended for property that--
            (1) is a 1- to 4-family residence; and
            (2) is located in the United States.

SEC. 202. TRANSFER OF FHA SINGLE FAMILY HOUSING BUSINESS.

    (a) In General.--After the transition date under section 110--
            (1) the Corporation shall carry out a program to insure 
        mortgages on 1- to 4-family dwellings, which shall be subject 
        to the same limitations under the National Housing Act (as 
        amended by title IV of this Act) that are applicable to the 
        mortgage insurance program for 1- to 4-family dwellings carried 
        out by the Secretary of Housing and Urban Development;
            (2) the Corporation may exercise any authority and 
        undertake any responsibility of the Secretary of Housing and 
        Urban Development under the National Housing Act relating to 
        providing mortgage insurance described in paragraph (1) of this 
        subsection, except that any authority that requires an 
        appropriation may be conducted only to the extent that amounts 
        are so appropriated; and
            (3) the Corporation shall manage any assets and obligations 
        transferred under subsection (b) subject to the same 
        limitations applicable to the Secretary of Housing and Urban 
        Development under the National Housing Act (as amended by title 
        IV of this Act).
    (b) Transfer of Assets and Obligations.--The Secretary of Housing 
and Urban Development, in consultation with the Secretary of the 
Treasury, shall, to the extent approved in appropriation Acts, transfer 
to the Corporation, on or before the transition date, all assets and 
obligations of the Secretary of Housing and Urban Development relating 
to the program for mortgage insurance for 1- to 4-family dwellings, 
including all assets and obligations of the Mutual Mortgage Insurance 
Fund under section 202 of the National Housing Act and all assets and 
obligations of the General Insurance Fund and Special Risk Insurance 
Fund under sections 519 and 238(b), respectively, of such Act relating 
to mortgage insurance for such dwellings.
    (c) Continuation of Contracts.--This Act may not be construed to 
affect the validity of any right, duty, or obligation of the United 
States or other person arising under or pursuant to any commitment or 
agreement lawfully entered into under the National Housing Act before 
the enactment of this Act. The provisions of this Act and the National 
Housing Act shall continue to apply to any such obligations to the same 
extent such provisions were applicable before such enactment, except 
only that any obligation of the Secretary of Housing and Urban 
Development transferred to the Corporation pursuant to subsection (b) 
shall be an obligation of the Corporation to the same extent as if the 
Corporation had originally executed such obligation.
    (d) Termination of HUD Mortgage Insurance Authority.--
Notwithstanding any other provision of law, after the transition date 
the Secretary of Housing and Urban Development may not provide any 
insurance, or make any commitment to insure, any mortgage for a 1- to 
4-family dwelling, pursuant to title II of the National Housing Act.

SEC. 203. NEW LINES OF BUSINESS.

    (a) Authority.--After the transition date, the Corporation may, 
subject to the requirements of this section and section 204--
            (1) provide full mortgage insurance for mortgages involving 
        1- to 4-family dwellings that is not subject to the limitations 
        under the National Housing Act; and
            (2) engage in any other method of enhancing credit for 
        mortgages involving 1- to 4-family dwellings.
    (b) Full Insurance.--In insuring or providing credit enhancement 
pursuant to this section for any mortgage, the Corporation--
            (1) may provide such insurance or enhancement only with 
        respect to the full mortgage amount; and
            (2) may not provide such insurance or enhancement in any 
        manner under which the Corporation and any other agency, 
        organization, or person agree to each insure or enhance a 
        portion of the mortgage amount or to bear a particular portion 
        of the loss under such insurance or enhancement.
    (c) Approval.--The Corporation may not engage in any activity under 
subsection (a) unless--
            (1) such activity is within the authority provided under 
        this Act for the Corporation and is specifically approved, as 
        to the nature of the activity and the scope of such activity, 
        by a majority vote of the Board of Directors; and
            (2) the Director of the Office of Federal Housing 
        Enterprise Oversight has specifically determined, and notified 
        the Board of Directors in writing, that engaging in such 
        activity will not cause the Corporation to violate the 
        requirement under section 101(d) and such activity is not 
        likely to result in the Corporation being classified as 
        undercapitalized or significantly undercapitalized, pursuant to 
        section 1386 of the Federal Housing Enterprises Financial 
        Safety and Soundness Act of 1992.

 SEC. 204. LIMITATIONS ON BUSINESS ACTIVITY.

    The Corporation shall be subject to the following limitations on 
business activity:
            (1) Mortgage amount limitation.--
                    (A) In general.--To be eligible for mortgage 
                insurance or other credit enhancement under this Act, a 
                mortgage shall involve a principal obligation in an 
                amount that does not exceed the lesser of--
                            (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 Corporation; 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
                            (ii) in the case of a residence for fewer 
                        than five families, 75 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.
                    (B) Minimum area limitation.--Notwithstanding 
                subparagraph (A), the principal obligation limitation 
                in effect for any area under this paragraph may not be 
                less than the greater of (i) the dollar amount 
                limitation in effect under section 203(b)(2) of the 
                National Housing Act for the area on September 28, 
                1994, or (ii) 38 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.
                    (C) Applicability of exceptions.--Any exceptions to 
                the limit on principal obligations set forth in section 
                203(b)(2)(A) of the National Housing Act, as such 
                section and such exceptions exist as of the date of the 
                enactment of this Act, shall apply to the limitations 
                set forth in subparagraphs (A) and (B) of this 
                paragraph.
            (2) Aggregate mortgage amount of new business.--The 
        aggregate principal amount of mortgages that, during any fiscal 
        year, are insured or provided other credit enhancement by the 
        Corporation pursuant to authority under section 203 may not 
        exceed 15 percent of the aggregate principal amount of all 
        mortgages insured or provided other credit enhancement by the 
        Corporation during such fiscal year.
            (3) Aggregate new mortgage commitment limitation.--The 
        Corporation may not, during the 5-year period beginning upon 
        the transition period, enter into commitments to insure 
        mortgages or provide other credit enhancement for mortgages 
        with an aggregate principal amount that exceeds 
        $520,000,000,000.

    TITLE III--PROVISIONS RELATING TO GOVERNMENT NATIONAL MORTGAGE 
     ASSOCIATION AND OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT

 SEC. 301. GNMA AUTHORITY.

    Title III of the National Housing Act (12 U.S.C. 1716 et seq.) is 
amended--
            (1) in section 301(5), by inserting after ``federally owned 
        mortgage portfolios'' the following: ``(including any owned by 
        the Federal Mortgage Insurance Corporation)'';
            (2) in the first sentence of section 306(g)(1)--
                    (A) by inserting ``the Association, or by'' after 
                ``shall (i) be issued by''; and
                    (B) by striking ``which are insured under the 
                National Housing Act'' and all that follows through the 
                period and inserting ``which are guaranteed or insured 
                under the National Housing Act, the Federal Mortgage 
                Insurance Corporation Charter Act, title V of the 
                Housing Act of 1949, the Servicemen's Readjustment Act 
                of 1944, or chapter 37 of title 38, United States 
                Code.''; and
            (3) in section 306(g)(3)(A)(i), by inserting after 
        ``National Housing Act'' the following: ``or the Federal 
        Mortgage Insurance Corporation Charter Act''.

 SEC. 302. SAFETY AND SOUNDNESS OVERSIGHT OF CORPORATION BY OFHEO.

    (a) In General.--Title XIII of the Housing and Community 
Development Act of 1992 (Public Law 102-550; 106 Stat. 4009) is 
amended--
            (1) by redesignating subtitle E as subtitle F; and
            (2) by inserting after subtitle D the following new 
        subtitle:

``SUBTITLE E--SUPERVISION AND REGULATION OF FEDERAL MORTGAGE INSURANCE 
                              CORPORATION

``SEC. 1384. AUTHORITY OF DIRECTOR.

    ``(a) In General.--The Director of the Office of Federal Housing 
Enterprise Oversight shall supervise and regulate the safety and 
soundness of the Federal Mortgage
 Insurance Corporation (in this subtitle referred to as the 
`Corporation').
    ``(b) Authority Exclusive of Secretary.--The Director is 
authorized, without the review or approval of the Secretary of Housing 
and Urban Development, to make such determinations, take such actions, 
and perform such functions as the Director determines necessary to meet 
the responsibilities of the Director under this subtitle.
    ``(c) Review of New Business of Corporation.--The Director shall 
review any proposed new business activity of the Corporation authorized 
under section 203(c) of the Federal Mortgage Insurance Corporation 
Charter Act by the Board of Directors of the Corporation to determine 
whether such activity will cause the Corporation to violate the 
requirement under section 101(d) of such Act or is likely to result in 
the Corporation being classified as undercapitalized or significantly 
undercapitalized, pursuant to section 1386 of this Act. The Director 
shall submit written notice of the results of any such determination to 
the Board of Directors.

``SEC. 1385. EXAMINATIONS, REPORTS, AND COST ESTIMATES.

    ``(a) Examinations.--The Director shall conduct such examinations 
of the Corporation as the Director determines necessary to evaluate the 
safety and soundness of the Corporation. Such examinations shall be 
subject to and governed by subsections (c) through (f) of section 1317.
    ``(b) Reports.--The Director may require the Corporation to submit, 
within a reasonable period of time, any regular or special report, 
data, or other information whenever, in the judgment of the Director, 
such report, data, or information is necessary to carry out the 
Director's responsibilities under this subtitle and the Federal 
Mortgage Insurance Corporation Charter Act.
    ``(c) Credit Subsidy Cost Estimates.--
            ``(1) In general.--The Director shall produce and submit to 
        the Director of the Office of Management and Budget the annual 
        credit subsidy cost estimates for the Corporation required for 
        the President's budget. Such estimates shall be consistent with 
        the estimates of performance generated by the risk-based 
        capital model or the interim model, as appropriate, developed 
        in accordance with section 1386(a), and with the President's 
        economic forecast.
            ``(2) Unified estimates.--The annual credit subsidy cost 
        estimates produced under this subsection by the Director shall 
        be reported on a unified basis, which shall be based upon the 
        Corporation's business as a whole.
    ``(d) Annual Report on Safety and Soundness.--The Director shall 
submit an annual report to Congress and the Director of the Office of 
Management and Budget on the Corporation's financial safety and 
soundness, as measured pursuant to this subtitle.

``SEC. 1386. CAPITAL REQUIREMENTS.

    ``(a) Required Capital Level.--
            ``(1) Stress test.--
                    ``(A) In general.--The Director shall develop a 
                risk-based capital model to determine the amount of 
                capital that is sufficient for the Corporation to 
                maintain positive capital during a stressful period. 
                The model shall incorporate the assumptions under 
                subparagraphs (B) and (C). The required capital level 
                for the Corporation shall be equal to twice the amount 
                of capital so determined.
                    ``(B) Credit risk.--For purposes of subparagraph 
                (A), the Director shall assume that, during the 
                stressful period referred to in subparagraph (A), 
                credit losses occur at a rate consistent with a 
                nationwide economic recession of average severity based 
                on nationwide economic recessions since 1950.
                    ``(C) Other risks.--For purposes of subparagraph 
                (A), the Director shall make assumptions about such 
                other aspects of the stressful period as the Director 
                determines are appropriate and consistent.
            ``(2) Interim requirements.--Until the Director has 
        established a risk-based capital test as described in paragraph 
        (1), the Director may establish a required capital level for 
        the Corporation based on consideration of such factors as the 
        Director considers appropriate.
            ``(3) Capital classification.--
                    ``(A) Adequately capitalized.--The Corporation 
                shall be classified as adequately capitalized if the 
                capital of the Corporation equals or exceeds the 
                required capital level.
                    ``(B) Undercapitalized.--The Corporation shall be 
                classified as undercapitalized if the capital of the 
                Corporation does not equal or exceed the required 
                capital level, but does equal or exceed 50 percent of 
                the required capital level.
                    ``(C) Significantly undercapital- ized.--The 
                Corporation shall be classified as significantly 
                undercapitalized if the capital of the Corporation does 
                not equal or exceed 50 percent of the required capital 
                level.
            ``(4) Quarterly determination.--The Director shall 
        determine the capital classification of the Corporation not 
        less frequently than once every calendar quarter.
    ``(b) Capital Restoration Plans.--
            ``(1) Requirement.--If the Corporation is classified as 
        undercapitalized or significantly undercapitalized, the 
        Corporation shall submit to the Director a capital restoration 
        plan that complies with this subsection and carry out the plan 
        unless it is disapproved. The plan shall be submitted to the 
        Director within 45 days from the date of notification, or if 
        the Director determines that an extension is necessary, within 
        such additional time as the Director so determines.
            ``(2) Contents.--Each capital restoration plan submitted 
        under this section shall set forth a feasible plan for raising 
        or restoring the capital of the Corporation to an amount not 
        less than the required capital level for the Corporation. Each 
        capital restoration plan shall--
                    ``(A) specify the level of capital the Corporation 
                shall achieve and maintain;
                    ``(B) describe the actions that the Corporation 
                shall take to become classified as adequately 
                capitalized;
                    ``(C) establish a schedule for completing the 
                actions set forth in the plan; and
                    ``(D) specify the types and levels of activities 
                (including existing and new business activities) in 
                which the Corporation shall engage during the term of 
                the plan.

``SEC. 1387. ENFORCEMENT.

    ``(a) Grounds.--The Director may take actions under subsection (b) 
only if--
            ``(1) the Corporation is significantly undercapitalized;
            ``(2) the Corporation is undercapitalized and--
                    ``(A) does not submit a capital restoration plan 
                that is substantially in compliance with section 
                1386(b) within the applicable period, or the Director 
                disapproves the capital restoration plan submitted by 
                the Corporation; or
                    ``(B) has failed to make, in good faith, reasonable 
                efforts necessary to comply with the capital 
                restoration plan; or
            ``(3) the Corporation is engaging or has engaged, or the 
        Director has reasonable cause to believe that the Corporation 
        is about to engage in--
                    ``(A) any conduct that is likely to threaten the 
                adequacy of the capital of the Corporation;
                    ``(B) any failure to comply with any written 
                agreement entered into by the Corporation with the 
                Director; or
                    ``(C) any failure to comply with any request by the 
                Director for a report, data, or information under 
                section 1385(b).
    ``(b) Actions.--The Director may, under this subsection require the 
Corporation--
            ``(1) to cease and desist from any conduct or activity that 
        is described in subsection (a)(2) and (3), or that contributes 
        to the condition described in subsection (a)(1); and
            ``(2) to take corrective or remedial action, including--
                    ``(A) restricting the growth of, or contracting, 
                any category of assets or liabilities;
                    ``(B) reducing, modifying, or terminating any 
                activity that the Director determines creates excessive 
                risk to the Corporation;
                    ``(C) terminating agreements or contracts;
                    ``(D) engaging or employ qualified employees (who 
                may be subject to approval by the Director at the 
                direction of the Director); or
                    ``(E) submitting to the Director for review and 
                approval a detailed and complete operating plan.
    ``(c) Reports.--If the Director is authorized under subsection (a) 
to take action under subsection (b) and determines not to take any such 
action, the Director shall prepare a report detailing the basis of the 
Director's decision not to take such action and shall, within 30 days 
of the decision, submit the report to the President, the Director of 
the Office of Management and Budget, the Comptroller General of the 
United States, the Committee on Banking and Financial Services of the 
House of Representatives, and the Committee on Banking, Housing, and 
Urban Affairs of the Senate.

``SEC. 1388. REIMBURSEMENT OF COSTS.

    ``(a) Assessment and Collection.--The Director shall assess and 
collect from the Corporation such amounts determined by the Director as 
necessary to reimburse the Office of Federal Housing Enterprise 
Oversight for the reasonable costs and expenses of the activities 
undertaken by such Office to carry out the duties of the Director under 
this subtitle, including the costs of examination, enforcement, and 
oversight expenses.
    ``(b) Requirements.--Annual assessments imposed by the Director 
shall be--
            ``(1) imposed prior to October 1 of each year;
            ``(2) collected at such time or times during each 
        assessment year as determined necessary or appropriate by the 
        Director;
            ``(3) deposited into the Federal Housing Enterprise Fund 
        established by section 1316(f); and
            ``(4) available, to the extent provided in appropriation 
        Acts, for carrying out the responsibilities of the Director 
        under this subtitle.''.
    (b) Clerical Amendment.--The table of contents in section 1(b) of 
the Housing and Community Development Act of 1992 (Public Law 102-550; 
106 Stat. 3679) is amended--
            (1) by redesignating the item relating to subtitle E of 
        title XIII as relating to subtitle F of such title; and
            (2) by inserting after the item relating to section 1383 
        the following new items:
``SUBTITLE E--SUPERVISION AND REGULATION OF FEDERAL MORTGAGE INSURANCE 
                              CORPORATION

        ``Sec. 1384. Authority of Director.
        ``Sec. 1385. Examinations, reports, and cost estimates.
        ``Sec. 1386. Capital requirements.
        ``Sec. 1387. Enforcement.
        ``Sec. 1388. Reimbursement of costs.''.
                       TITLE IV--FHA IMPROVEMENTS

SEC. 401. CALCULATION OF DOWNPAYMENT.

    Section 203(b)(2) of the National Housing Act (12 U.S.C. 
1709(b)(2)) is amended--
            (1) by striking subparagraph (B) and inserting the 
        following new subparagraph:
                    ``(B) except as otherwise provided in this 
                paragraph (2), not in excess of--
                            ``(i) in the case of 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,
                            ``(ii) in the case of 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,
                            ``(iii) in the case of 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
                            ``(iv) notwithstanding clauses (ii) and 
                        (iii), in the case of a mortgage for a property 
                        with an appraised value in excess of $50,000 
                        and which is located in a State for which the 
                        average closing cost exceeds 3.25 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,
                plus the amount of the mortgage insurance premium paid 
                at the time the mortgage is insured.'';
            (2) in the 1st sentence of the matter following 
        subparagraph (B), by inserting before the period at the end the 
        following: ``, and 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'';
            (3) by striking the 2d sentence of the matter following 
        subparagraph (B); and
            (4) in penultimate undesignated paragraph--
                    (A) in the 2d sentence, by striking ``the preceding 
                sentence'' and inserting ``this subsection''; and
                    (B) by striking the 1st sentence.

SEC. 402. DELEGATION OF SINGLE FAMILY MORTGAGE INSURING AUTHORITY TO 
              DIRECT ENDORSEMENT MORTGAGEES.

    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:
  ``delegation of insuring authority to direct endorsement mortgagees

    ``Sec. 256. (a) Authority.--The Secretary may delegate, to one or 
more mortgagees approved by the Secretary under the direct endorsement 
program, the authority of the Secretary under this Act to insure 
mortgages involving property upon which there is located a dwelling 
designed principally for occupancy by 1 to 4 families.
    ``(b) Considerations.--In determining whether to delegate authority 
to a mortgagee under this section, the Secretary shall consider the 
experience and performance of the mortgagee under the direct 
endorsement program, the default rate of insured mortgages originated 
by the mortgagee compared to the default rate of all insured mortgages 
in comparable markets, and such other factors as the Secretary 
determines appropriate to minimize risk of loss to the insurance funds 
under this Act.
    ``(c) Enforcement of Insurance Requirements.--
            ``(1) In general.--If the Secretary determines that a 
        mortgage insured by a mortgagee pursuant to delegation of 
        authority under this section was not originated in accordance 
        with the requirements established by the Secretary, and the 
        Secretary pays an insurance claim with respect to the mortgage 
        within a reasonable period specified by the Secretary, the 
        Secretary may require the mortgagee approved under this section 
        to indemnify the Secretary for the loss.
            ``(2) Fraud or misrepresentation.--If fraud or 
        misrepresentation was involved in connection with the 
        origination, the Secretary may require the mortgagee approved 
        under this section to indemnify the Secretary for the loss 
        regardless of when an insurance claim is paid.
    ``(d) Termination of Mortgagee's Authority.--If a mortgagee to 
which the Secretary has made a delegation under this section violates 
the requirements and procedures established by the Secretary or the 
Secretary determines that other good cause exists, the Secretary may 
cancel a delegation of authority under this section to the mortgagee by 
giving notice to the mortgagee. Such a cancellation shall be effective 
upon receipt of the notice by the mortgagee or at a later date 
specified by the Secretary. A decision by the Secretary to cancel a 
delegation shall be final and conclusive and shall not be subject to 
judicial review.
    ``(e) Requirements and Procedures.--Before approving a delegation 
under this section, the Secretary shall issue regulations establishing 
appropriate requirements and procedures, including requirements and 
procedures governing the indemnification of the Secretary by the 
mortgagee.''.
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