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104TH CONGRESS

1ST SESSION H. R. 2309

To define the circumstances under which earthquake insurance requirements

may be imposed by the Federal Home Loan Mortgage Corporation on

a specifically targeted State or area.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 12, 1995

Mr. ROYCE introduced the following bill; which was referred to the Committee

on Banking and Financial Services

A BILL

To define the circumstances under which earthquake insurance requirements may be imposed by the Federal Home

Loan Mortgage Corporation on a specifically targeted

State or area.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Earthquake Insurance

5 Availability Act of 1995’’.
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1 SEC. 2. RESTRICTIONS ON EARTHQUAKE INSURANCE RE2 QUIREMENTS.

3 Section 307 of the Federal Home Loan Mortgage

4 Corporation Act (12 U.S.C. 1456) is amended by adding

5 at the end the following new subsection:

6 ‘‘(h) EARTHQUAKE INSURANCE REQUIREMENTS.—

7 ‘‘(1) DEFINITIONS.—For purposes of this sub8 section—

9 ‘‘(A) the term ‘affected State’ means any

10 State that is subject to an earthquake insur11 ance requirement that is targeted to a specific

12 State or area;

13 ‘‘(B) the term ‘earthquake insurance re14 quirement’ means any requirement that—

15 ‘‘(i) is imposed by the Corporation as

16 a condition for mortgage purchase eligi17 bility under this title; and

18 ‘‘(ii) includes specific insurance cov19 erage requirements for property damage

20 caused by earthquakes;

21 ‘‘(C) the term ‘insurance commissioner’

22 means the insurance commissioner or other

23 State official primarily responsible for the over24 sight of insurance; and

25 ‘‘(D) the term ‘State’ means any State,

26 territory, or possession of the United States,
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1 the District of Columbia, or the Commonwealth

2 of Puerto Rico; and

3 ‘‘(E) the term ‘targeted to a specific State

4 or area’, with respect to an earthquake insur5 ance requirement, means any requirement that

6 is not applicable to mortgages secured by dwell7 ings located in all States.

8 ‘‘(2) IMPOSITION OF CERTAIN EARTHQUAKE IN9 SURANCE REQUIREMENTS.—

10 ‘‘(A) IN GENERAL.—The Corporation may

11 impose an earthquake insurance requirement

12 that is targeted to a specific State or area only

13 if the insurance commissioner of the State cer14 tifies in writing the existence of reasonable in15 surance capacity in the State.

16 ‘‘(B) DETERMINATION OF REASONABLE

17 INSURANCE CAPACITY.—In determining whether

18 to make a certification under subparagraph (A),

19 the insurance commissioner of each affected

20 State shall consider whether—

21 ‘‘(i) the insurance product necessary

22 for compliance with the earthquake insur23 ance requirement at issue is—

24 ‘‘(I) available in the State or

25 area, as applicable;
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1 ‘‘(II) underwritten by an ade2 quate number of companies to meet

3 projected demand in the State or

4 area, as applicable; and

5 ‘‘(III) affordably priced for the

6 consumers to which the insurance is

7 targeted; and

8 ‘‘(ii) compliance with the earthquake

9 insurance requirement at issue would cause

10 undue hardship for citizens of the State.’’.

11 SEC. 3. EFFECTIVE DATE.

12 The amendment made by this Act shall be considered

13 to have taken effect on January 1, 1995.

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