II 

Calendar No. 275 

113TH CONGRESS 

1ST SESSION S. 1376 

[Report No. 113–129] 

To improve the Federal Housing Administration and to ensure the solvency 

of the Mutual Mortgage Insurance Fund, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2013 

Mr. JOHNSON of South Dakota (for himself and Mr. CRAPO) introduced the 

following bill; which was read twice and referred to the Committee on 

Banking, Housing, and Urban Affairs 

DECEMBER 19, 2013 

Reported by Mr. JOHNSON of South Dakota, with amendments 

[Omit the part struck through and insert the part printed in italic] 

A BILL 

To improve the Federal Housing Administration and to ensure the solvency of the Mutual Mortgage Insurance 

Fund, and for other purposes. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘FHA Solvency Act of 2013’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Mortgage insurance premiums. 

Sec. 3. Prohibition on insuring mortgagors with 2 prior foreclosures. 

Sec. 34. Indemnification by FHA mortgagees. 

Sec. 45. Review of mortgagee performance. 

Sec. 6. Transfer of mortgage servicing duties. 

Sec. 57. Easing regulatory burdens; resource guide. 

Sec. 68. Improving underwriting standards. 

Sec. 79. Ensuring adequate capital levels in the Mutual Mortgage Insurance 

Fund. 

Sec. 10. Stress testing of the Mutual Mortgage Insurance Fund. 

Sec. 11. Congressional notification of use of certain authorities with respect to the 

FHA. 

Sec. 812. Establishment of Deputy Assistant Secretary and Chief Risk Officer 

of FHA. 

Sec. 913. Disclosure of events. 

Sec. 1014. GAO study on disclosures. 

Sec. 1115. Stabilizing the HECM program. 

Sec. 16. Principal limit factor for HECM program. 

Sec. 1217. Publication of final rules relating to limiting seller contributions towards purchase related expenses. 

Sec. 18. GAO study on FHA loan limits. 

3 SEC. 2. MORTGAGE INSURANCE PREMIUMS. 

4 (a) IN GENERAL.—Section 203(c) of the National 

5 Housing Act (12 U.S.C. 1709(c)) is amended— 

6 (1) in paragraph (2)(B)— 

7 (A) in the matter preceding clause (i)— 

8 (i) by striking ‘‘may’’ and inserting 

9 ‘‘shall’’; 

10 (ii) by striking ‘‘not exceeding 1.5 

11 percent’’ and inserting ‘‘not less than 0.55 

12 percent’’; and 

13 (iii) by inserting ‘‘and not exceeding 

14 2.0 percent of such remaining insured 


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1 principal balance’’ before ‘‘for the following 

2 periods:’’; and 

3 (B) in clause (ii), by striking ‘‘1.55 per4 cent’’ and inserting ‘‘2.05 percent’’; and 

5 (2) by adding at the end the following: 

6 ‘‘(3) EVALUATION OF UP-FRONT AND ANNUAL

7 PREMIUMS.— 

8 ‘‘(A) ANNUAL REVIEW.—The Secretary 

9 shall, at least annually, review— 

10 ‘‘(i) the amount of the annual and up11 front premiums collected under this sub12 section; and 

13 ‘‘(ii) the expected losses to the Mutual 

14 Mortgage Insurance Fund, as such losses 

15 are calculated in the annual independent 

16 actuarial study required under section 

17 202(a)(4). 

18 ‘‘(B) REQUIRED ADJUSTMENTS.—Upon 

19 completion of the review required under sub20 paragraph (A), the Secretary shall, for all mort21 gages that are to become an obligation of the 

22 Mutual Mortgage Insurance Fund after the 

23 date that such review is complete, adjust the 

24 annual and up-front premiums applied to such 

25 mortgages so that the premiums collected over 


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1 the life of such mortgages will exceed the ex2 pected losses of such mortgages to the Fund 

3 plus amounts sufficient to ensure the capital re4 serve ratio remains at the level required under 

5 section 205(f). 

6 ‘‘(C) RULE OF CONSTRUCTION.—Nothing 

7 in this paragraph shall permit or be construed 

8 to permit the Secretary to apply different pre9 mium rates to the same mortgage product dur10 ing the same time period based solely on the 

11 characteristics of the mortgagor.’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 subsection (a) take effect upon the expiration of the 6- 

14 month period beginning on the date of enactment of this 

15 Act. 

16 SEC. 3. PROHIBITION ON INSURING MORTGAGORS WITH 2 

17 PRIOR FORECLOSURES. 

18 Section 203 of the National Housing Act (12 U.S.C. 

19 1709) is amended by adding at the end the following: 

20 ‘‘(y) PROHIBITION ON INSURING MORTGAGORS WITH

21 2 PRIOR FORECLOSURES.—The Secretary may not insure, 

22 or enter into a commitment to insure, a mortgage under 

23 this section that is executed by a mortgagor who is the mort24 gagor under any two mortgages on 1- to 4-family residen25 tial properties that have been previously foreclosed upon.’’. 


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1 SEC. 34. INDEMNIFICATION BY FHA MORTGAGEES. 

2 (a) IN GENERAL.—Section 202 of the National 

3 Housing Act (12 U.S.C. 1708) is amended by adding at 

4 the end the following new subsection: 

5 ‘‘(i) INDEMNIFICATION BY MORTGAGEES.— 

6 ‘‘(1) IN GENERAL.—If the Secretary determines 

7 that a mortgage executed by a mortgagee approved 

8 by the Secretary under the direct endorsement pro9 gram or insured by a mortgagee pursuant to the del10 egation of authority under section 256 contains a 

11 material defect such that the mortgage should not 

12 have been approved or endorsed for insurance, and 

13 a loan becomes delinquent within 36 months of such 

14 approval or endorsement leading to a default or the 

15 Secretary pays a claim within 36 months after such 

16 approval or endorsement, the Secretary may require 

17 the mortgagee approved by the Secretary under the 

18 direct endorsement program or the mortgagee dele19 gated authority under section 256 to indemnify the 

20 Secretary for the loss, irrespective of whether the 

21 violation caused the mortgage default. 

22 ‘‘(2) FRAUD OR MISREPRESENTATION.—If 

23 fraud or misrepresentation was involved in connec24 tion with the origination, the Secretary shall require 

25 the mortgagee approved by the Secretary under the 

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1 gated authority under section 256 to indemnify the 

2 Secretary for the loss regardless of when an insur3 ance claim is paid., except if the Secretary determines 

4 that the fraud or misrepresentation was the result of 

5 fraud or misrepresentation committed not by the 

6 mortgagee but by a third party and that the mort7 gagee had implemented adequate quality control and 

8 review procedures to deter, detect, and identify such 

9 fraud or misrepresentation. 

10 ‘‘(3) REQUIREMENTS AND PROCEDURES.—The 

11 Secretary shall issue regulations establishing— 

12 ‘‘(A) appropriate requirements and proce13 dures governing the indemnification of the Sec14 retary by the mortgagee, including public re15 porting on— 

16 ‘‘(i) the number of loans that— 

17 ‘‘(I) were not originated in ac18 cordance with the requirements estab19 lished by the Secretary; and 

20 ‘‘(II) involved fraud or misrepre21 sentation in connection with the origi22 nation; and 

23 ‘‘(ii) the financial impact on the Mu24 tual Mortgage Insurance Fund when in25 demnification is required; and 


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1 ‘‘(B) an appeals process, or making any 

2 necessary modifications or revisions to an exist3 ing appeals process of the Secretary, to appeal 

4 any determination of indemnification made by 

5 the Secretary pursuant to paragraph (1) or (2). 

6 ‘‘(4) APPLICABILITY.—This subsection shall 

7 only apply to mortgages insured under this title that 

8 were originated on or after the date of enactment of 

9 the FHA Solvency Act of 2013. 

10 ‘‘(5) DEPOSIT IN THE MUTUAL MORTGAGE IN11 SURANCE FUND.—The Secretary shall deposit any 

12 amounts collected pursuant to this subsection in, 

13 and for the use of, the Mutual Mortgage Insurance 

14 Fund.’’. 

15 (b) RULE OF CONSTRUCTION.—Nothing in sub16 section (a), or the amendment made by subsection (a), 

17 shall be construed to supersede, alter, or in any way affect 

18 the authorities granted to the Secretary of Housing and 

19 Urban Development under section 256 of the National 

20 Housing Act (12 U.S.C. 1715z–21). 

21 SEC. 45. REVIEW OF MORTGAGEE PERFORMANCE. 

22 Section 533 of the National Housing Act (12 U.S.C. 

23 1735f–11) is amended— 

24 (1) by amending subsection (a) to read as fol25 lows: 


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1 ‘‘(a) PERIODIC REVIEW OF MORTGAGEE PERFORM2 ANCE.—To reduce losses in connection with single family 

3 mortgage insurance programs under this Act, at least once 

4 a year the Secretary shall review the mortgagees origi5 nating or underwriting insured single family mortgages.’’; 

6 (2) by amending subsection (b) to read as fol7 lows: 

8 ‘‘(b) COMPARISON WITH OTHER MORTGAGEES.— 

9 ‘‘(1) IN GENERAL.—In conducting the review 

10 required under subsection (a), for each mortgagee 

11 the Secretary shall compare that mortgagee with 

12 other mortgagees originating or underwriting in13 sured single family mortgages based on the rates of 

14 defaults and claims for insured single family mort15 gage loans originated or underwritten by that mort16 gagee. The Secretary may also compare that mort17 gagee with such other mortgagees based on— 

18 ‘‘(A) underwriting quality; 

19 ‘‘(B) geographic area served; or 

20 ‘‘(C) any commonly used factors the Sec21 retary deems necessary for comparing mortgage 

22 default risk, provided that such comparison is 

23 of factors that the Secretary would expect to re24 duce the default risk of mortgages insured by 

25 the Secretary. 


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1 ‘‘(2) IMPLEMENTATION.—In carrying out the 

2 comparisons required under paragraph (1), the Sec3 retary shall implement such comparisons by regula4 tion, notice, or mortgagee letter.’’; and 

5 (3) in subsection (c)— 

6 (A) by striking paragraph (1) and insert7 ing the following: 

8 ‘‘(1) TERMINATION AUTHORITY.— 

9 ‘‘(A) IN GENERAL.—Notwithstanding sec10 tion 202(c), the Secretary may terminate the 

11 approval of a mortgagee to originate or under12 write single family mortgages if the Secretary 

13 determines that the mortgage loans originated 

14 or underwritten by the mortgagee present an 

15 unacceptable risk to the insurance funds. 

16 ‘‘(B) BASIS FOR DETERMINING UNACCEPT17 ABLE RISK.—For purposes of subparagraph 

18 (A), a mortgagee may present an unacceptable 

19 risk to the insurance funds based on— 

20 ‘‘(i) a comparison of any of the fac21 tors set forth in subsection (b); or 

22 ‘‘(ii) a determination that the mort23 gagee engaged in fraud or misrepresenta24 tion.’’; 


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1 (B) by redesignating paragraph (2) as 

2 paragraph (3); 

3 (C) by inserting after paragraph (1) the 

4 following: 

5 ‘‘(2) APPLICABILITY AND ENFORCEMENT.—The 

6 authority granted to the Secretary under paragraph 

7 (1) shall— 

8 ‘‘(A) apply for any specified area or areas, 

9 or on a nationwide basis; and 

10 ‘‘(B) be made in accordance with any regu11 lation, notice, or mortgagee letter issued by the 

12 Secretary.’’; and 

13 (D) in paragraph (3) (as so redesig14 nated)— 

15 (i) by striking ‘‘(3 ) The Secretary 

16 shall give’’ and inserting ‘‘(3) NOTICE AND

17 RIGHT TO INFORMAL CONFERENCE.—The 

18 Secretary shall give’’; and 

19 (ii) in the fourth sentence, by striking 

20 ‘‘excessive default and claim rate’’ and in21 serting ‘‘finding of an unacceptable risk to 

22 the insurance funds’’. 


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1 SEC. 6. TRANSFER OF MORTGAGE SERVICING DUTIES. 

2 (a) IN GENERAL.—Title II of the National Housing 

3 Act (12 U.S.C. 1707 et seq.) is amended by adding at the 

4 end the following new section: 

5 ‘‘SEC. 259. TRANSFER OF MORTGAGE SERVICING DUTIES. 

6 ‘‘(a) TRANSFER OF MORTGAGE SERVICING DUTIES.— 

7 ‘‘(1) IN GENERAL.—For any mortgage or pool of 

8 mortgages insured under this title and in accordance 

9 with rules promulgated by the Secretary, the Sec10 retary may require the servicer of any such mortgage 

11 or pool of mortgages to enter into a subservicing ar12 rangement with any independent specialty servicer 

13 approved by the Secretary. 

14 ‘‘(2) RULES.—The rules required under para15 graph (1) shall— 

16 ‘‘(A) set forth with clarity the performance 

17 conditions of a servicer that would warrant or 

18 necessitate the use of the authority granted to the 

19 Secretary under this section; 

20 ‘‘(B) require that the performance condition 

21 warranting or necessitating the use of such au22 thority be of such type or character so as to ma23 terially and adversely affect the Secretary’s abil24 ity to recover any amounts owed to the Sec25 retary; 


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1 ‘‘(C) for purposes of subparagraph (B), de2 fine the term ‘materially and adversely affect’; 

3 ‘‘(D) require that any servicer whose serv4 icing duties are subject to this section be pro5 vided a reasonable amount of time, provided that 

6 such time does not present a risk to the Mutual 

7 Mortgage Insurance Fund, to rebut, address, or 

8 correct any determination of the Secretary re9 garding a performance condition described under 

10 subparagraph (A); 

11 ‘‘(E) only permit the Secretary to carry out 

12 the authority granted under this section upon ex13 piration of the time-period allowed under sub14 paragraph (D); 

15 ‘‘(F) limit the scope of any such authority 

16 to mortgages that share similar underwriting, 

17 borrower, and performance characteristics; 

18 ‘‘(G) ensure that the scope of any such au19 thority is not applied broadly and without fur20 ther limitation; and 

21 ‘‘(H) notwithstanding subparagraphs (B) 

22 through (G), provide that a servicer may be sub23 ject to more extensive programmatic discipline or 

24 correction measures, as determined by the Sec25 retary, if, during any 5-year period— 


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1 ‘‘(i) the servicing duties that are the 

2 subject of the current use of the Secretary’s 

3 authority under this section marks the third 

4 instance of the use of such authority with 

5 respect to the same servicer; and 

6 ‘‘(ii) with respect to the prior two sep7 arate and individual instances of the use of 

8 such authority, the same servicer failed to 

9 cure any identified performance conditions 

10 or implement corrective measures as deter11 mined by the Secretary pursuant to sub12 paragraph (D).’’. 

13 (b) APPLICABILITY.—The amendment made by this 

14 section shall only apply to mortgages insured under title 

15 II of the National Housing Act (12 U.S.C. 1707 et seq.) 

16 that were originated on or after the date of enactment of 

17 this Act. 

18 SEC. 57. EASING REGULATORY BURDENS; RESOURCE 

19 GUIDE. 

20 (a) IN GENERAL.—Not later than 360 days after the 

21 date of enactment of this Act, the Secretary of Housing 

22 and Urban Development (in this section referred to as the 

23 ‘‘Secretary’’) shall issue a single, uniform resource guide 

24 to inform lenders and servicers of the policies, processes, 

25 and procedures applicable to mortgages insured under title 


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1 II of the National Housing Act (12 U.S.C. 1707 et seq.), 

2 including, but not limited to, the policies, processes, and 

3 procedures of the Secretary relating to any indemnifica4 tion authority of the Secretary, including any criteria the 

5 Secretary considers to be a material defect for purposes 

6 of executing such authority. 

7 (b) CONTENT.—The resource guide required under 

8 subsection (a) shall aggregate all forms, policies, and other 

9 related information set forth in any handbooks, mortgagee 

10 letters, guidebooks, notices, or bulletins issued by the Sec11 retary. 

12 (c) UPDATING.—Beginning on the expiration of the 

13 date set forth under subsection (a), whenever the Sec14 retary issues any new policy, process, or procedure, or re15 vises or otherwise amends any existing policy, process, or 

16 procedure contained in the resource guide required under 

17 subsection (a), such addition, revision, or amendment shall 

18 be issued as an amendment to the resource guide. 

19 (d) PUBLIC AVAILABILITY; WEBSITE ACCESS.—The 

20 resource guide required under subsection (a) shall be made 

21 available to the public and posted on the website of the 

22 Department of the Housing and Urban Development. 

23 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

24 are authorized to be appropriated such sums as are nec25 essary to carry out this section. 


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1 SEC. 68. IMPROVING UNDERWRITING STANDARDS. 

2 (a) IN GENERAL.—Not later than 180 days after the 

3 date of enactment of this Act, the Secretary of Housing 

4 and Urban Development shall, by mortgagee letter or rule, 

5 evaluate and revise as necessary the underwriting stand6 ards for mortgages eligible to be insured under title II of 

7 the National Housing Act (12 U.S.C. 1707 et seq.), which 

8 shall— 

9 (1) be based on empirically derived, demon10 strably and statistically sound models; and 

11 (2) include criteria, the evaluation of which has 

12 historically resulted in comparatively low rates of de13 linquency and default during adverse economic con14 ditions. 

15 (b) CRITERIA.—The underwriting standards under 

16 subsection (a) shall include an evaluation of— 

17 (1) the current or reasonably expected income 

18 and financial resources of a borrower; 

19 (2) the employment status of a borrower, if in20 come used under paragraph (1) is employment in21 come; 

22 (3) the monthly payment of a borrower under 

23 the terms of a mortgage; 

24 (4) the monthly payment for any other loan 

25 held by the borrower; 


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1 (5) the monthly payment for any obligations re2 lated to the mortgage; 

3 (6) any other debt obligations of a borrower, in4 cluding alimony and child support; 

5 (7) the monthly debt-to-income ratio or residual 

6 income of a borrower; 

7 (8) the credit history of a borrower; and 

8 (9) any other risk factor or criteria, as deter9 mined appropriate by the Secretary. 

10 SEC. 79. ENSURING ADEQUATE CAPITAL LEVELS IN THE 

11 MUTUAL MORTGAGE INSURANCE FUND. 

12 Section 205 of the National Housing Act (12 U.S.C. 

13 1711(f)) is amended— 

14 (1) in subsection (f)— 

15 (A) in paragraph (2), by striking ‘‘shall en16 sure that the Fund maintains at least such cap17 ital ratio at all times thereafter’’ and inserting 

18 ‘‘maintains such ratio thereafter, subject to 

19 paragraph (3)’’; and 

20 (B) by amending paragraph (3) to read as 

21 follows: 

22 ‘‘(3) The Secretary shall ensure that the Mu23 tual Mortgage Insurance Fund attains a capital 

24 ratio of not less than 3.0 percent within 10 years 

25 after the date of enactment of the FHA Solvency 


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1 Act of 2013, and shall ensure that the Fund main2 tains at least such capital ratio at all times there3 after.’’; and 

4 (2) by adding at the end the following: 

5 ‘‘(g) ENSURING ADEQUATE CAPITAL LEVELS IN THE

6 MUTUAL MORTGAGE INSURANCE FUND.— 

7 ‘‘(1) EFFECTIVE DATE.— 

8 ‘‘(A) IN GENERAL.—Except as provided in 

9 subparagraph (B), this subsection shall take ef10 fect on the date of enactment of the FHA Sol11 vency Act of 2013. 

12 ‘‘(B) EXCEPTION FOR IMPOSITION OF SUR13 CHARGES.— 

14 ‘‘(i) IN GENERAL.—Paragraphs 

15 (4)(D), (5)(D), and (6)(D) of this sub16 section— 

17 ‘‘(I) shall not have any force or 

18 effect during the 2-year period begin19 ning on the date of enactment of the 

20 FHA Solvency Act of 2013; and 

21 ‘‘(II) shall take effect upon the 

22 earlier of— 

23 ‘‘(aa) the expiration of the 

24 2-year period set forth under 

25 subclause (I), if in any annual 


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1 independent actuarial study re2 quired under section 202(a)(4) 

3 the Mutual Mortgage Insurance 

4 Fund is designated as critically 

5 undercapitalized pursuant to 

6 paragraph (6); 

7 ‘‘(bb) the date the inde8 pendent actuary commissioned to 

9 carry out the annual independent 

10 actuarial study required under 

11 section 202(a)(4) submits the re12 sults of the fiscal year 2016 

13 study to the Secretary, if such 

14 study finds that the Mutual 

15 Mortgage Insurance Fund has 

16 not achieved the capital ratio re17 quired to be maintained under 

18 subsection (f)(1); 

19 ‘‘(cc) any date occurring 

20 after the date set forth under 

21 item (bb), but prior to any date 

22 set forth under items (dd) or 

23 (ee), if in any annual inde24 pendent actuarial study required 

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1 pendent actuary commissioned to 

2 carry out the study finds— 

3 ‘‘(AA) that in compari4 son to the independent actu5 arial study submitted in the 

6 most recent prior fiscal year, 

7 the capital ratio of the Fund 

8 has decreased; and 

9 ‘‘(BB) the market 

10 share for mortgages insured 

11 under this title has not been 

12 concurrently reduced thus 

13 contributing to the decrease 

14 in the capital ratio described 

15 under subitem (AA); 

16 ‘‘(dd) the date on which the 

17 Mutual Mortgage Insurance 

18 Fund attains a capital ratio of 

19 3.0 percent; or 

20 ‘‘(ee) the date that is 10 

21 years after the date of enactment 

22 of the FHA Solvency Act of 

23 2013. 

24 ‘‘(ii) RULE OF CONSTRUCTION.—For 

25 purposes of this subsection, any finding 


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1 made under item (cc) of clause (i)(II) shall 

2 be deemed to mean that the Mutual Mort3 gage Insurance Fund is undercapitalized 

4 pursuant to paragraph (4) and that not5 withstanding the provisions of paragraph 

6 (4)(D)(iv), the Secretary shall begin or 

7 continue to collect any surcharge set forth 

8 under paragraph (4)(D), until the earlier 

9 of the date on which— 

10 ‘‘(I) the next report of the Sec11 retary on the annual independent ac12 tuarial study required under section 

13 202(a)(4) finds that in comparison to 

14 the independent actuarial study sub15 mitted in the most recent prior fiscal 

16 year, the capital ratio of the Fund has 

17 increased; 

18 ‘‘(II) the report of the Secretary 

19 required under paragraph (3)(A) finds 

20 that in comparison to the independent 

21 actuarial study submitted in the most 

22 recent prior fiscal year, the capital 

23 ratio of the Fund has increased; or 

24 ‘‘(III) the Mutual Mortgage In25 surance Fund has been designated as 


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1 significantly undercapitalized pursu2 ant to paragraph (5) or critically 

3 undercapitalized pursuant to para4 graph (6) and the premium surcharge 

5 applicable to any such designation has 

6 taken effect. 

7 ‘‘(2) DUTY OF CHIEF RISK OFFICER.—Fol8 lowing the receipt by the Deputy Assistant Secretary 

9 and Chief Risk Officer of the final completed report 

10 for the fiscal year of the independent actuary com11 missioned to carry out the annual independent actu12 arial study required under section 202(a)(4) ana13 lyzing the capital ratio of the Mutual Mortgage In14 surance Fund, the Deputy Assistant Secretary and 

15 Chief Risk Officer shall, as part of that individual’s 

16 regularly assigned duties and responsibilities, have a 

17 duty to notify, within 24 hours, the Secretary of any 

18 failure to maintain the capital ratio of the Mutual 

19 Mortgage Insurance Fund as required under sub20 section (f). 

21 ‘‘(3) STUDIES AND REPORTS.— 

22 ‘‘(A) FOR WHEN FUND IS UNDERCAPITAL23 IZED OR SIGNIFICANTLY UNDERCAPITALIZED.— 

24 If the Mutual Mortgage Insurance Fund is des25 ignated as undercapitalized or significantly 


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1 undercapitalized pursuant to paragraphs (4) or 

2 (5), respectively, then not later than 180 days 

3 after date on which the Secretary submits the 

4 report on the annual independent actuarial 

5 study required under section 202(a)(4), and an6 nually thereafter until such time as the Mutual 

7 Mortgage Insurance Fund achieves the capital 

8 ratio required to be maintained under sub9 section (f), the Secretary shall provide a report 

10 to the Committee on Banking, Housing, and 

11 Urban Affairs of the Senate and the Committee 

12 on Financial Services of the House of Rep13 resentatives updating the results of the inde14 pendent actuarial study required under section 

15 202(a)(4) to reflect the most recently available 

16 information and analyzing the financial position 

17 of the Fund. 

18 ‘‘(B) FOR WHEN FUND IS CRITICALLY

19 UNDERCAPITALIZED.—If the Mutual Mortgage 

20 Insurance Fund is designated as critically 

21 undercapitalized pursuant to paragraph (6), 

22 then not later than the last day of the current 

23 fiscal quarter in which the Congress is informed 

24 of such events pursuant to paragraph (6)(A), 

25 and every fiscal quarter thereafter until such 


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1 time as the Mutual Mortgage Insurance Fund 

2 achieves the capital ratio required to be main3 tained under subsection (f) or is designated as 

4 undercapitalized or significantly undercapital5 ized pursuant to paragraphs (4) or (5), respec6 tively, the Secretary shall provide a report to 

7 the Committee on Banking, Housing, and 

8 Urban Affairs of the Senate and the Committee 

9 on Financial Services of the House of Rep10 resentatives updating the results of the inde11 pendent actuarial study required under section 

12 202(a)(4) to reflect the most recently available 

13 information and analyzing the financial position 

14 of the Fund. 

15 ‘‘(C) FAILURE TO COMPLY WITH RE16 QUIRED TIMELINES.—If the Secretary fails to 

17 comply with any timeline required under sub18 paragraphs (A) or (B), the Secretary shall ap19 pear before the Committee on Banking, Hous20 ing, and Urban Affairs of the Senate and the 

21 Committee on Financial Services of the House 

22 of Representatives within 7 days of the last day 

23 of that deadline to provide testimony explaining 

24 the failure to comply. 


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1 ‘‘(4) CORRECTIVE ACTIONS WHEN FUND IS

2 UNDERCAPITALIZED.— 

3 ‘‘(A) NOTICE TO CONGRESS.—Not later 

4 than 7 days after the date on which the Sec5 retary is informed that the Mutual Mortgage 

6 Insurance Fund has a capital ratio of not less 

7 than 50 percent but less than 100 percent of 

8 the capital ratio required to be maintained 

9 under subsection (f), the Secretary shall notify 

10 the Chair and Ranking Member of the Com11 mittee on Banking, Housing, and Urban Affairs 

12 of the Senate and the Chair and Ranking Mem13 ber of the Committee on Financial Services of 

14 the House of Representatives of such shortfall, 

15 and the exact date on which the Secretary was 

16 informed of such shortfall. 

17 ‘‘(B) SUBMISSION OF CAPITAL RESTORA18 TION PLAN.—Not later than 30 days after the 

19 date on which notice is provided under subpara20 graph (A), the Secretary shall submit to the 

21 Chair and Ranking Member of the Committee 

22 on Banking, Housing, and Urban Affairs of the 

23 Senate and the Chair and Ranking Member of 

24 the Committee on Financial Services of the 

25 House of Representatives a capital restoration 


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1 plan, including a timeline for implementation of 

2 such plan, to achieve the capital ratio required 

3 to be maintained under subsection (f). The plan 

4 required under this subparagraph shall be re5 vised annually until such time as the Mutual 

6 Mortgage Insurance Fund achieves the capital 

7 ratio required to be maintained under sub8 section (f). 

9 ‘‘(C) CONGRESSIONAL TESTIMONY.—Not 

10 later than 45 days after the date on which no11 tice is provided under subparagraph (A), and 

12 annually thereafter until such time as the Mu13 tual Mortgage Insurance Fund achieves the 

14 capital ratio required to be maintained under 

15 subsection (f), the Secretary shall provide testi16 mony to the Committee on Banking, Housing, 

17 and Urban Affairs of the Senate and the Com18 mittee on Financial Services of the House of 

19 Representatives on the capital status of the 

20 Fund and the performance or projected per21 formance of the plan submitted under subpara22 graph (B). 

23 ‘‘(D) IMPOSITION OF PREMIUM SUR24 CHARGE.— 


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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 any limitation on the amount of any pre3 mium payment set forth under section 

4 203(c), in addition to the premiums col5 lected under subparagraphs (A), (B), and 

6 (C) of paragraph (2) of section 203(c), if 

7 the Mutual Mortgage Insurance Fund is 

8 designated as undercapitalized pursuant to 

9 this paragraph, the Secretary shall estab10 lish and collect annual premium payments 

11 for any newly insured mortgage for which 

12 the Secretary collects an annual premium 

13 payment under section 203(c), except for 

14 those mortgages insured pursuant to sec15 tion 255, in an amount described in clause 

16 (ii). 

17 ‘‘(ii) AMOUNT OF SURCHARGE.—With 

18 respect to a mortgage, the amount de19 scribed in this clause is 10 basis points of 

20 the remaining insured principal balance 

21 (excluding the portion of the remaining 

22 balance attributable to the premium col23 lected under paragraph (2)(A) of section 

24 203(c) and without taking into account de25 linquent payments or prepayments). 


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1 ‘‘(iii) EFFECTIVE DATE.— 

2 ‘‘(I) IN GENERAL.—Subject to 

3 subclause (II), the requirement to col4 lect the annual premium payment set 

5 forth under this subparagraph shall 

6 take effect on the date that is 180 

7 days after the date on which notice is 

8 provided to Congress under subpara9 graph (A). 

10 ‘‘(II) DELAY.—The effective date 

11 of the requirement to collect the an12 nual premium payment set forth 

13 under this subparagraph may be ex14 tended for an additional 180 days, if 

15 prior to the expiration of the initial 

16 180-day time period described under 

17 subclause (I), the report of the Sec18 retary required under paragraph 

19 (3)(A)— 

20 ‘‘(aa) is submitted to Con21 gress; and 

22 ‘‘(bb) finds that the Mutual 

23 Mortgage Insurance Fund has 

24 achieved the capital ratio reVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.RS S1376

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1 quired to be maintained under 

2 subsection (f). 

3 ‘‘(III) REINSTITUTION OF SUR4 CHARGE.—Notwithstanding sub5 clauses (I) and (II), if the next report 

6 of the Secretary on the annual inde7 pendent actuarial study required 

8 under section 202(a)(4) that is sub9 mitted after the report of the Sec10 retary described in subclause (II) 

11 finds that the Mutual Mortgage In12 surance Fund has not achieved the 

13 capital ratio required to be main14 tained under subsection (f), then the 

15 effective date of the requirement to 

16 collect the annual premium payment 

17 set forth under this subparagraph 

18 shall be the date that is 30 days after 

19 the date on which such report is sub20 mitted to Congress. 

21 ‘‘(iv) CESSATION OF APPLICATION.— 

22 The Secretary shall not be required to col23 lect the annual premium payment set forth 

24 under this subparagraph, if, at any time 


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1 after the date on which such requirement 

2 has gone into effect, either— 

3 ‘‘(I) the report of the Secretary 

4 on the annual independent actuarial 

5 study required under section 

6 202(a)(4) finds that the Mutual Mort7 gage Insurance Fund has achieved the 

8 capital ratio required to be main9 tained under subsection (f); 

10 ‘‘(II) the report of the Secretary 

11 required under paragraph (3) (A) 

12 finds that the Mutual Mortgage In13 surance Fund has achieved the capital 

14 ratio required to be maintained under 

15 subsection (f); or 

16 ‘‘(III) the Mutual Mortgage In17 surance Fund has been designated 

18 significantly undercapitalized pursu19 ant to paragraph (5) or critically 

20 undercapitalized pursuant to para21 graph (6) and the premium surcharge 

22 applicable to any such designation has 

23 taken effect. 

24 ‘‘(5) CORRECTIVE ACTIONS WHEN FUND IS SIG25 NIFICANTLY UNDERCAPITALIZED.— 


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1 ‘‘(A) NOTICE TO CONGRESS.—Not later 

2 than 7 days after the date on which the Sec3 retary is informed that the Mutual Mortgage 

4 Insurance Fund has a capital ratio of not less 

5 than 0 percent but less than 50 percent of the 

6 capital ratio required to be maintained under 

7 subsection (f), the Secretary shall notify the 

8 Chair and Ranking Member of the Committee 

9 on Banking, Housing, and Urban Affairs of the 

10 Senate and the Chair and Ranking Member of 

11 the Committee on Financial Services of the 

12 House of Representatives of such shortfall, and 

13 the date on which the Secretary was informed 

14 of such shortfall. 

15 ‘‘(B) SUBMISSION OF REVISED CAPITAL

16 RESTORATION PLAN.—Not later than 30 days 

17 after the date on which notice is provided under 

18 subparagraph (A), the Secretary shall submit to 

19 the Chair and Ranking Member of the Com20 mittee on Banking, Housing, and Urban Affairs 

21 of the Senate and the Chair and Ranking Mem22 ber of the Committee on Financial Services of 

23 the House of Representatives a capital restora24 tion plan, or a revised capital restoration plan, 

25 including a timeline for implementation of such 


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1 plan or revised plan, to achieve the capital ratio 

2 required to be maintained under subsection (f). 

3 The plan required under this subparagraph 

4 shall be revised annually until such time as the 

5 Mutual Mortgage Insurance Fund achieves the 

6 capital ratio required to be maintained under 

7 subsection (f). 

8 ‘‘(C) CONGRESSIONAL TESTIMONY.—Not 

9 later than 45 days after the date on which no10 tice is provided under subparagraph (A), and 

11 every 180 days thereafter until such time as the 

12 Mutual Mortgage Insurance Fund achieves the 

13 capital ratio required to be maintained under 

14 subsection (f), the Secretary shall provide testi15 mony to the Committee on Banking, Housing, 

16 and Urban Affairs of the Senate and the Com17 mittee on Financial Services of the House of 

18 Representatives on the capital status of the 

19 Fund and the performance or projected per20 formance of the revised capital restoration plan 

21 submitted under subparagraph (B). 

22 ‘‘(D) IMPOSITION OF PREMIUM SUR23 CHARGE.— 

24 ‘‘(i) IN GENERAL.—Notwithstanding 

25 any limitation on the amount of any preVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.RS S1376

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1 mium payment set forth under section 

2 203(c), in addition to the premiums col3 lected under subparagraphs (A), (B), and 

4 (C) of paragraph (2) of section 203(c), if 

5 the Mutual Mortgage Insurance Fund is 

6 designated as significantly undercapitalized 

7 pursuant to this paragraph, the Secretary 

8 shall establish and collect annual premium 

9 payments for any newly insured mortgage 

10 for which the Secretary collects an annual 

11 premium payment under section 203(c), 

12 except for those mortgages insured pursu13 ant to section 255, in an amount described 

14 in clause (ii). 

15 ‘‘(ii) AMOUNT OF SURCHARGE.—With 

16 respect to a mortgage, the amount de17 scribed in this clause is 20 basis points of 

18 the remaining insured principal balance 

19 (excluding the portion of the remaining 

20 balance attributable to the premium col21 lected under paragraph (2)(A) of section 

22 203(c) and without taking into account de23 linquent payments or prepayments). 

24 ‘‘(iii) EFFECTIVE DATE.— 


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1 ‘‘(I) IN GENERAL.—Subject to 

2 subclause (II), the requirement to col3 lect the annual premium payment set 

4 forth under this subparagraph shall 

5 take effect on the date that is 180 

6 days after the date on which notice is 

7 provided to Congress under subpara8 graph (A). 

9 ‘‘(II) DELAY.—The effective date 

10 of the requirement to collect the an11 nual premium payment set forth 

12 under this subparagraph shall be ex13 tended for an additional 180 days, if 

14 prior to the expiration of the initial 

15 180-day time period described under 

16 subclause (I), the report of the Sec17 retary required under paragraph 

18 (3)(A)— 

19 ‘‘(aa) is submitted to Con20 gress; and 

21 ‘‘(bb) finds that the Mutual 

22 Mortgage Insurance Fund— 

23 ‘‘(AA) has achieved the 

24 capital ratio required to be 


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1 maintained under subsection 

2 (f); or 

3 ‘‘(BB) has a capital 

4 ratio of not less than 50 

5 percent but less than 100 

6 percent of the capital ratio 

7 required to be maintained 

8 under subsection (f), at 

9 which point the provisions of 

10 paragraph (4)(D) shall be 

11 applicable, except that the 

12 provisions of clause (iii) of 

13 such paragraph (4)(D) shall 

14 not be applicable and that 

15 the premium surcharge ap16 plicable to such paragraph 

17 shall take effect within 30 

18 days of the issuance of such 

19 report. 

20 ‘‘(III) REINSTITUTION OF SUR21 CHARGE.—Notwithstanding sub22 clauses (I) and (II), if the next report 

23 of the Secretary on the annual inde24 pendent actuarial study required 

25 under section 202(a)(4) that is subVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.RS S1376

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1 mitted after the report of the Sec2 retary described in subclause (II) 

3 finds that the Mutual Mortgage In4 surance Fund has a capital ratio of 

5 not less than 0 percent but less than 

6 50 percent of the capital ratio re7 quired to be maintained under sub8 section (f), then the effective date of 

9 the requirement to collect the annual 

10 premium payment set forth under this 

11 subparagraph shall be the date that is 

12 30 days after the date on which such 

13 report is submitted to Congress. 

14 ‘‘(iv) CESSATION OF APPLICATION.— 

15 The Secretary shall not be required to col16 lect the annual premium payment set forth 

17 under this subparagraph, if, at any time 

18 after the date on which such requirement 

19 has gone into effect, either— 

20 ‘‘(I) the report of the Secretary 

21 on the annual independent actuarial 

22 study required under section 

23 202(a)(4) finds that the Mutual Mort24 gage Insurance Fund— 


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1 ‘‘(aa) has achieved the cap2 ital ratio required to be main3 tained under subsection (f); or 

4 ‘‘(bb) has a capital ratio of 

5 not less than 50 percent but less 

6 than 100 percent of the capital 

7 ratio required to be maintained 

8 under subsection (f), at which 

9 point the provisions of paragraph 

10 (4)(D) shall be applicable, except 

11 that the provisions of clause (iii) 

12 of such paragraph (4)(D) shall 

13 not be applicable and that the 

14 premium surcharge applicable to 

15 such paragraph shall take effect 

16 within 30 days of the issuance of 

17 such report; 

18 ‘‘(II) the report of the Secretary 

19 required under paragraph (3)(A) finds 

20 that the Mutual Mortgage Insurance 

21 Fund— 

22 ‘‘(aa) has achieved the cap23 ital ratio required to be main24 tained under subsection (f); or 


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•S 1376 RS

1 ‘‘(bb) has a capital ratio of 

2 not less than 50 percent but less 

3 than 100 percent of the capital 

4 ratio required to be maintained 

5 under subsection (f), at which 

6 point the provisions of paragraph 

7 (4)(D) shall be applicable, except 

8 that the provisions of clause (iii) 

9 of such paragraph (4)(D) shall 

10 not be applicable and that the 

11 premium surcharge applicable to 

12 such paragraph shall take effect 

13 within 30 days of the issuance of 

14 such report; or 

15 ‘‘(III) the Mutual Mortgage In16 surance Fund has been designated as 

17 critically undercapitalized pursuant to 

18 paragraph (6) and the premium sur19 charge applicable to any such designa20 tion has taken effect. 

21 ‘‘(E) REQUIRED EXAMINATION OF UNDER22 WRITING REQUIREMENTS.—If the Mutual Mort23 gage Insurance Fund is designated as signifi24 cantly undercapitalized pursuant to this para25 graph, the Secretary shall— 


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1 ‘‘(i) not later than 30 days after the 

2 date on which notice is provided under 

3 subparagraph (A), examine all of its prod4 uct lines, product or insurance features, 

5 and underwriting criteria for ways to 

6 strengthen and enhance such products, 

7 features, or criteria to limit losses to the 

8 Mutual Mortgage Insurance Fund; 

9 ‘‘(ii) in carrying out the requirement 

10 under clause (i), undertake such examina11 tion actions as are necessary to reduce the 

12 financial vulnerability of the Mutual Mort13 gage Insurance Fund from those risk char14 acteristics or product lines that most con15 tribute to the default of mortgages insured 

16 under section 202, including by reviewing 

17 the underwriting and servicing standards 

18 for mortgages to be insured by the Sec19 retary, including, but not limited to, a re20 view of— 

21 ‘‘(I) the amount of cash or its 

22 equivalent required to be paid on ac23 count of the property subject to a 

24 mortgage that is an obligation of the 

25 Fund; 


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1 ‘‘(II) servicer compliance with 

2 any loan servicing or loss mitigation 

3 guidelines of the Secretary; and 

4 ‘‘(III) economic conditions 

5 present in the housing market, pro6 vided there is a demonstrated likeli7 hood that the policies of the Secretary 

8 would impact those economic condi9 tions; and 

10 ‘‘(iii) submit to the Committee on 

11 Banking, Housing, and Urban Affairs of 

12 the Senate and the Committee on Finan13 cial Services of the House of Representa14 tives any analysis, findings, or rec15 ommendations used or made by the Sec16 retary to carry out the requirements of this 

17 subparagraph. 

18 ‘‘(6) CORRECTIVE ACTIONS WHEN FUND IS

19 CRITICALLY UNDERCAPITALIZED.— 

20 ‘‘(A) NOTICE TO CONGRESS.—Not later 

21 than 7 days after the date on which the Sec22 retary is informed that the Mutual Mortgage 

23 Insurance Fund has a capital ratio of less than 

24 0 percent of the capital ratio required to be 

25 maintained under subsection (f), the Secretary 


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•S 1376 RS

1 shall notify the Chair and Ranking Member of 

2 the Committee on Banking, Housing, and 

3 Urban Affairs of the Senate and the Chair and 

4 Ranking Member of the Committee on Finan5 cial Services of the House of Representatives of 

6 such shortfall, and the date on which the Sec7 retary was informed of such shortfall. 

8 ‘‘(B) SUBMISSION OF FURTHER REVISED

9 CAPITAL RESTORATION PLAN.—Not later than 

10 30 days after the date on which notice is pro11 vided under subparagraph (A), the Secretary 

12 shall jointly submit with the Secretary of the 

13 Treasury to the Chair and Ranking Member of 

14 the Committee on Banking, Housing, and 

15 Urban Affairs of the Senate and the Chair and 

16 Ranking Member of the Committee on Finan17 cial Services of the House of Representatives a 

18 capital restoration plan, or a revised capital res19 toration plan, including a timeline for imple20 mentation of such plan, to achieve the capital 

21 ratio required to be maintained under sub22 section (f). The plan required under this sub23 paragraph shall be revised and submitted annu24 ally with the Secretary of the Treasury, until 

25 such time as the Mutual Mortgage Insurance 


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•S 1376 RS

1 Fund achieves the capital ratio required to be 

2 maintained under subsection (f). 

3 ‘‘(C) CONGRESSIONAL TESTIMONY.—Not 

4 later than 45 days after the date on which no5 tice is provided under subparagraph (A), and 

6 every 180 days thereafter until such time as the 

7 Mutual Mortgage Insurance Fund achieves the 

8 capital ratio required to be maintained under 

9 subsection (f), the Secretary and the Secretary 

10 of the Treasury shall each provide testimony to 

11 the Committee on Banking, Housing, and 

12 Urban Affairs of the Senate and the Committee 

13 on Financial Services of the House of Rep14 resentatives on the capital status of the Fund 

15 and the success or failure of the further revised 

16 capital restoration plan submitted under sub17 paragraph (B). 

18 ‘‘(D) IMPOSITION OF PREMIUM SUR19 CHARGE.— 

20 ‘‘(i) IN GENERAL.—Notwithstanding 

21 any limitation on the amount of any pre22 mium payment set forth under section 

23 203(c), in addition to the premiums col24 lected under subparagraphs (A), (B), and 

25 (C) of paragraph (2) of section 203(c), if 


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•S 1376 RS

1 the Mutual Mortgage Insurance Fund is 

2 designated as critically undercapitalized 

3 pursuant to this paragraph, the Secretary 

4 shall establish and collect annual premium 

5 payments for any newly insured mortgage 

6 for which the Secretary collects an annual 

7 premium payment under section 203(c), 

8 except for those mortgages insured pursu9 ant to section 255, in an amount described 

10 in clause (ii). 

11 ‘‘(ii) AMOUNT OF SURCHARGE.—With 

12 respect to a mortgage, the amount de13 scribed in this clause is 30 basis points of 

14 the remaining insured principal balance 

15 (excluding the portion of the remaining 

16 balance attributable to the premium col17 lected under paragraph (2)(A) of section 

18 203(c) and without taking into account de19 linquent payments or prepayments). 

20 ‘‘(iii) EFFECTIVE DATE.— 

21 ‘‘(I) IN GENERAL.—Subject to 

22 subclause (II), the requirement to col23 lect the annual premium payment set 

24 forth under this subparagraph shall 

25 take effect on the date that is 180 


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•S 1376 RS

1 days after the date on which notice is 

2 provided to Congress under subpara3 graph (A). 

4 ‘‘(II) DELAY.—The effective date 

5 of the requirement to collect the an6 nual premium payment set forth 

7 under this subparagraph shall be ex8 tended for an additional 180 days, if 

9 prior to the expiration of the initial 

10 180-day time period described under 

11 subclause (I), the report of the Sec12 retary required under paragraph 

13 (3)(B)— 

14 ‘‘(aa) is submitted to Con15 gress; and 

16 ‘‘(bb) finds that the Mutual 

17 Mortgage Insurance Fund— 

18 ‘‘(AA) has achieved the 

19 capital ratio required to be 

20 maintained under subsection 

21 (f); 

22 ‘‘(BB) has a capital 

23 ratio of not less than 50 

24 percent but less than 100 

25 percent of the capital ratio 


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•S 1376 RS

1 required to be maintained 

2 under subsection (f), at 

3 which point the provisions of 

4 paragraph (4)(D) shall be 

5 applicable, except that the 

6 provisions of clause (iii) of 

7 such paragraph (4)(D) shall 

8 not be applicable and that 

9 the premium surcharge ap10 plicable to such paragraph 

11 shall take effect within 30 

12 days of the issuance of such 

13 report; or 

14 ‘‘(CC) has a capital 

15 ratio of not less than 0 per16 cent but less than 50 per17 cent of the capital ratio re18 quired to be maintained 

19 under subsection (f), at 

20 which point the provisions of 

21 paragraph (5)(D) shall be 

22 applicable, except that the 

23 provisions of clause (iii) of 

24 such paragraph (5)(D) shall 

25 not be applicable and that 


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•S 1376 RS

1 the premium surcharge ap2 plicable to such paragraph 

3 shall take effect within 30 

4 days of the issuance of such 

5 report. 

6 ‘‘(III) REINSTITUTION OF SUR7 CHARGE.—Notwithstanding sub8 clauses (I) and (II), if within 1 cal9 endar year any report of the Secretary 

10 required under paragraph (3)(B) 

11 finds that the Mutual Mortgage In12 surance Fund has a capital ratio of 

13 less than 0 percent of the capital ratio 

14 required to be maintained under sub15 section (f), then the effective date of 

16 the requirement to collect the annual 

17 premium payment set forth under this 

18 subparagraph shall be the date that is 

19 30 days after the date on which such 

20 report is submitted to Congress. 

21 ‘‘(iv) CESSATION OF APPLICATION.— 

22 The Secretary shall not be required to col23 lect the annual premium payment set forth 

24 under this subparagraph, if, at any time 


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46 

•S 1376 RS

1 after the date on which such requirement 

2 has gone into effect, either— 

3 ‘‘(I) the report of the Secretary 

4 on the annual independent actuarial 

5 study required under section 

6 202(a)(4) finds that the Mutual Mort7 gage Insurance Fund— 

8 ‘‘(aa) has achieved the cap9 ital ratio required to be main10 tained under subsection (f); 

11 ‘‘(bb) has a capital ratio of 

12 not less than 50 percent but less 

13 than 100 percent of the capital 

14 ratio required to be maintained 

15 under subsection (f), at which 

16 point the provisions of paragraph 

17 (4)(D) shall be applicable, except 

18 that the provisions of clause (iii) 

19 of such paragraph (4)(D) shall 

20 not be applicable and that the 

21 premium surcharge applicable to 

22 such paragraph shall take effect 

23 within 30 days of the issuance of 

24 such report; or 


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1 ‘‘(cc) has a capital ratio of 

2 not less than 0 percent but less 

3 than 50 percent of the capital 

4 ratio required to be maintained 

5 under subsection (f), at which 

6 point the provisions of paragraph 

7 (5)(D) shall be applicable, except 

8 that the provisions of clause (iii) 

9 of such paragraph (5)(D) shall 

10 not be applicable and that the 

11 premium surcharge applicable to 

12 such paragraph shall take effect 

13 within 30 days of the issuance of 

14 such report; or 

15 ‘‘(II) the report of the Secretary 

16 required under paragraph (3)(B) 

17 finds that the Mutual Mortgage In18 surance Fund— 

19 ‘‘(aa) has achieved the cap20 ital ratio required to be main21 tained under subsection (f); 

22 ‘‘(bb) has a capital ratio of 

23 not less than 50 percent but less 

24 than 100 percent of the capital 

25 ratio required to be maintained 


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•S 1376 RS

1 under subsection (f), at which 

2 point the provisions of paragraph 

3 (4)(D) shall be applicable, except 

4 that the provisions of clause (iii) 

5 of such paragraph (4)(D) shall 

6 not be applicable and that the 

7 premium surcharge applicable to 

8 such paragraph shall take effect 

9 within 30 days of the issuance of 

10 such report; or 

11 ‘‘(cc) has a capital ratio of 

12 not less than 0 percent but less 

13 than 50 percent of the capital 

14 ratio required to be maintained 

15 under subsection (f), at which 

16 point the provisions of paragraph 

17 (5)(D) shall be applicable, except 

18 that the provisions of clause (iii) 

19 of such paragraph (5)(D) shall 

20 not be applicable and that the 

21 premium surcharge applicable to 

22 such paragraph shall take effect 

23 within 30 days of the issuance of 

24 such report. 


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1 ‘‘(E) REQUIRED ENHANCEMENTS TO UN2 DERWRITING REQUIREMENTS.—If the Mutual 

3 Mortgage Insurance Fund is designated as 

4 critically undercapitalized pursuant to this 

5 paragraph, the Secretary shall— 

6 ‘‘(i) not later than 30 days after the 

7 date on which notice is provided under 

8 subparagraph (A), take such actions as 

9 necessary to revise its product lines, prod10 uct or insurances features, or underwriting 

11 criteria in order to strengthen and enhance 

12 such products, features, or criteria to limit 

13 losses to the Mutual Mortgage Insurance 

14 Fund; 

15 ‘‘(ii) in carrying out the requirement 

16 under clause (i), undertake such actions as 

17 are necessary to reduce the financial vul18 nerability of the Mutual Mortgage Insur19 ance Fund from those risk characteristics 

20 or product lines that most contribute to 

21 the default of mortgages insured under 

22 section 202, such actions— 

23 ‘‘(I) may include, but are not 

24 limited to, a revision of the— 


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•S 1376 RS

1 ‘‘(aa) amount of cash or its 

2 equivalent required to be paid on 

3 account of the property subject 

4 to a mortgage that is an obliga5 tion of the Fund; 

6 ‘‘(bb) servicer standards for 

7 compliance with any loan serv8 icing or loss mitigation guidelines 

9 of the Secretary; and 

10 ‘‘(cc) treatment of loan 

11 modification requests made by 

12 borrowers having insurance pro13 vided under this title seeking as14 sistance under a modification 

15 program of the Secretary; and 

16 ‘‘(II) shall take into consideration 

17 economic conditions present in the 

18 housing market, provided there is a 

19 demonstrated likelihood that the poli20 cies of the Secretary would impact 

21 those economic conditions; and 

22 ‘‘(iii) submit to the Committee on 

23 Banking, Housing, and Urban Affairs of 

24 the Senate and the Committee on Finan25 cial Services of the House of RepresentaVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.RS S1376

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1 tives any relevant final analysis used by 

2 the Secretary to carry out the require3 ments of this subparagraph. 

4 ‘‘(7) MANDATORY REEVALUATION.—Upon the 

5 Mutual Mortgage Insurance Fund achieving the cap6 ital ratio required to be maintained under subsection 

7 (f), the Secretary— 

8 ‘‘(A) shall review any actions taken pursu9 ant to this subsection; 

10 ‘‘(B) shall examine and determine wheth11 er— 

12 ‘‘(i) the need to maintain such action 

13 is necessary; and 

14 ‘‘(ii) the repeal, revision, or amend15 ment of any such action can be carried out 

16 without having any adverse effect on the 

17 ability of the Fund to maintain the capital 

18 ratio required under subsection (f); and 

19 ‘‘(C) may, pursuant to any determination 

20 under subparagraph (B) that no such adverse 

21 effects exist, repeal, revise, or amend any such 

22 action as the Secretary determines appro23 priate.’’. 


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1 SEC. 10. STRESS TESTING OF THE MUTUAL MORTGAGE IN2 SURANCE FUND. 

3 Section 202(a)(4) of the National Housing Act (12 

4 U.S.C. 1708(a)(4)) is amended by inserting after the last 

5 sentence the following: ‘‘The report shall also include an al6 ternative stress test scenario of the Fund based on relevant 

7 assumptions used in the annual Comprehensive Capital 

8 Analysis and Review stress tests performed by the Board 

9 of Governors of the Federal Reserve System. The alternative 

10 stress test scenario of the Fund shall be developed by the 

11 Secretary, in consultation with the Board of Governors of 

12 the Federal Reserve System, and appropriately tailored for 

13 purposes of assessing the financial status of the Fund. A 

14 summary of the results of the alternative stress test scenario 

15 of the Fund, as well as any other stress test scenario of the 

16 Fund that may be utilized, shall be included in the report.’’. 

17 SEC. 11. CONGRESSIONAL NOTIFICATION OF USE OF CER18 TAIN AUTHORITIES WITH RESPECT TO THE 

19 FHA. 

20 (a) NOTICE BY TREASURY.—The Secretary of the 

21 Treasury shall provide written notice to the Committee on 

22 Banking, Housing, and Urban Affairs of the Senate and 

23 the Committee on Financial Services of the House of Rep24 resentatives within 48 hours of the exercise of any authority 

25 granted under section 504(f) of the Federal Credit Reform 

26 Act of 1990 (2 U.S.C. 661c(f)) to carry out any transaction 


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1 to fund any account established for the benefit of the De2 partment of Housing and Development, the Federal Hous3 ing Administration, or the Mutual Mortgage Insurance 

4 Fund established under section 202 of the National Housing 

5 Act (12 U.S.C. 1708). 

6 (b) NOTICE BY HUD.—The Secretary of Housing and 

7 Urban Development shall provide written notice to the 

8 Committee on Banking, Housing, and Urban Affairs of the 

9 Senate and the Committee on Financial Services of the 

10 House of Representatives within 48 hours of the receipt of 

11 any amounts described under subsection (a). 

12 (c) INCLUSION IN REQUIRED REPORTS.—The Sec13 retary of Housing and Urban Development shall include, 

14 in any report required by law to be submitted to Congress, 

15 including any annual, quarterly, actuarial, or other report 

16 required to be submitted to the Committee on Banking, 

17 Housing, and Urban Affairs of the Senate and the Com18 mittee on Financial Services of the House of Representative, 

19 the dollar amount of any amounts owed by the Secretary 

20 of Housing and Urban Development to the Treasury as a 

21 result of the exercise of any authority granted under section 

22 504(f) of the Federal Credit Reform Act of 1990 (2 U.S.C. 

23 661c(f)). 

24 (d) PUBLIC AVAILABILITY.— 


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1 (1) TREASURY.—As soon as is practicable, the 

2 notice required by subsection (a) shall be made avail3 able to the public and posted on the website of the De4 partment of the Treasury. 

5 (2) HUD.—As soon as is practicable, the notice 

6 required by subsection (b) shall be made available to 

7 the public and posted on the website of the Depart8 ment of Housing and Urban Development. 

9 SEC. 812. ESTABLISHMENT OF DEPUTY ASSISTANT SEC10 RETARY AND CHIEF RISK OFFICER OF FHA. 

11 (a) IN GENERAL.—Subsection (b) of section 4 of the 

12 Department of Housing and Urban Development Act (42 

13 U.S.C. 3533(b)) is amended— 

14 (1) by striking ‘‘There shall be’’ and inserting 

15 the following: 

16 ‘‘(1) ESTABLISHMENT OF COMMISSIONER.— 

17 There shall be’’; and 

18 (2) by adding at the end the following: 

19 ‘‘(2) ESTABLISHMENT OF DEPUTY ASSISTANT

20 SECRETARY AND CHIEF RISK OFFICER.— 

21 ‘‘(A) APPOINTMENT.—There shall be in 

22 the Department, within the Federal Housing 

23 Administration, a Deputy Assistant Secretary 

24 and Chief Risk Officer, who shall be appointed 

25 by the Secretary and shall be responsible to the 


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1 Federal Housing Commissioner for all matters 

2 relating to managing and mitigating risk to the 

3 mortgage insurance funds of the Department 

4 and ensuring the performance of mortgages in5 sured by the Department to protect borrowers 

6 and taxpayers. 

7 ‘‘(B) RESPONSIBILITIES.—The Deputy As8 sistant Secretary and Chief Risk Officer estab9 lished under subparagraph (A) shall have— 

10 ‘‘(i) comprehensive risk management 

11 and regulatory knowledge in key risks, in12 cluding credit, interest rate, and oper13 ational risk; 

14 ‘‘(ii) a sound understanding of the 

15 tools and methodologies used to measure 

16 and quantify risk, including the use of sta17 tistical models; and 

18 ‘‘(iii) a broad understanding and 

19 knowledge of mortgage industry best prac20 tices for risk management. 

21 ‘‘(C) UNDERWRITING REPORT.— 

22 ‘‘(i) IN GENERAL.—Not later than 1 

23 year after the date of enactment of the 

24 FHA Solvency Act of 2013, and annually 

25 thereafter, the Deputy Assistant Secretary 


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1 and Chief Risk Officer (or, if not yet ap2 pointed, the Commissioner of the Federal 

3 Housing Administration) shall prepare a 

4 report on the underwriting standards for 

5 mortgages insured under title II of the Na6 tional Housing Act (12 U.S.C. 1707 et 

7 seq.), which shall be submitted by the Sec8 retary to— 

9 ‘‘(I) the Committee on Banking, 

10 Housing, and Urban Affairs of the 

11 Senate; and 

12 ‘‘(II) the Committee on Financial 

13 Services of the House of Representa14 tives. 

15 ‘‘(ii) CONTENTS.—The report required 

16 under clause (i) shall include— 

17 ‘‘(I) for all mortgages insured 

18 under title II of the National Housing 

19 Act that were made not less than 6 

20 months and not more than 36 months 

21 before the date of the report, an iden22 tification of the default risk character23 istics as such characteristics existed at 

24 the time of origination of the mort25 gage based on risk factors that are 


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1 commonly used in evaluating mort2 gage default risk, including— 

3 ‘‘(aa) the current or reason4 ably expected income and finan5 cial resources of a borrower; 

6 ‘‘(bb) the employment status 

7 of a borrower, if income used 

8 under item (aa) is employment 

9 income; 

10 ‘‘(cc) the monthly mortgage 

11 payment of a borrower under the 

12 terms of a mortgage; 

13 ‘‘(dd) the monthly payment 

14 for any other loan held by the 

15 borrower; 

16 ‘‘(ee) the monthly payment 

17 for any obligations related to the 

18 mortgage; 

19 ‘‘(ff) any other debt obliga20 tions of a borrower, including ali21 mony and child support; 

22 ‘‘(gg) the monthly debt-to23 income ratio or residual income 

24 of a borrower; 


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1 ‘‘(hh) the credit history of a 

2 borrower; and 

3 ‘‘(ii) any other risk factor, 

4 as determined appropriate by the 

5 Secretary; 

6 ‘‘(II) in tabular format, the num7 ber of mortgages insured under title 

8 II of the National Housing Act that 

9 are in default and the rate of default 

10 for— 

11 ‘‘(aa) each for the character12 istics described in subclause (I); 

13 ‘‘(bb) any multi-way com14 bination of the characteristics in 

15 subclause (I) as determined ap16 propriate by the Secretary; and 

17 ‘‘(cc) any additional multi18 way combination of the charac19 teristics in subclause (I) as may 

20 be requested by the Chair or 

21 Ranking Member of the Com22 mittee on Banking, Housing, and 

23 Urban Affairs of the Senate or 

24 the Chair or Ranking Member of 

25 the Committee on Financial 


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1 Services of the House of Rep2 resentatives, provided that the 

3 Deputy Assistant Secretary and 

4 Chief Risk Officer (or, if not yet 

5 appointed, the Commissioner of 

6 the Federal Housing Administra7 tion) shall be provided an addi8 tional 30 days from the date of 

9 receipt of such request to satisfy 

10 such request; 

11 ‘‘(III) an analysis of mortgages 

12 insured under title II of the National 

13 Housing Act that were made not less 

14 than 6 months and not more than 36 

15 months before the date of the report 

16 and are in the lowest quartile and 

17 decile of loan performance, which 

18 shall include— 

19 ‘‘(aa) a description of the 

20 characteristics described in sub21 clause (I) for mortgages in the 

22 lowest quartile and decile of loan 

23 performance; and 

24 ‘‘(bb) a comparison of the 

25 characteristics described in subVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00059 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.RS S1376

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1 clause (I) between mortgages in 

2 the lowest quartile and decile of 

3 loan performance and all other 

4 mortgages insured under title II 

5 of the National Housing Act; 

6 ‘‘(IV) recommendations by the 

7 Deputy Assistant Secretary and Chief 

8 Risk Officer for revisions to the un9 derwriting standards of the Secretary 

10 for mortgages eligible to be insured 

11 under title II of the National Housing 

12 Act based on the findings of the re13 port, and a response to those rec14 ommendations from the Secretary; 

15 and 

16 ‘‘(V) a quantitative analysis of 

17 the effects of any revisions to the un18 derwriting standards made by the 

19 Secretary in response to the findings 

20 of a prior report, and any rec21 ommendations of the Deputy Assist22 ant Secretary and Chief Risk Officer 

23 in response to those revisions.’’. 

24 (b) CONFORMING AMENDMENT.—Section 202(a)(4) 

25 of the National Housing Act (12 U.S.C. 1708(a)(4)) is 


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1 amended by inserting after the first sentence the fol2 lowing: ‘‘The independent actuary commissioned to carry 

3 out the annual independent actuarial study required under 

4 this paragraph shall submit such study to the Deputy As5 sistant Secretary and Chief Risk Officer.’’. 

6 SEC. 913. DISCLOSURE OF EVENTS. 

7 Section 202(a)(4) of the National Housing Act (12 

8 U.S.C. 1708(a)(4)) is amended— 

9 (1) by striking ‘‘The Secretary shall’’ and in10 serting the following: 

11 ‘‘(1) IN GENERAL.—The Secretary shall’’; and 

12 (2) by adding at the end the following: 

13 ‘‘(2) DISCLOSURE OF UNFORESEEN EVENTS.— 

14 ‘‘(A) IN GENERAL.—Prior to the submis15 sion of any report of the Secretary under para16 graph (1), the Secretary shall require that the 

17 independent actuary commissioned to perform 

18 the study required under paragraph (1) disclose 

19 to the Secretary any events or circumstances 

20 that occur after the study is completed but be21 fore the report is submitted to Congress and 

22 that would have resulted in changes to the in23 puts or assumptions the actuary used to make 

24 forecasts about the financial position of the 

25 Fund, if such changes are sufficiently signifiVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00061 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.RS S1376

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1 cant that a reasonable person would expect 

2 them to substantially alter the actuary’s fore3 casts of the economic value of the Fund or the 

4 actuary’s projections relating to the capital re5 serve ratio of the Fund. 

6 ‘‘(B) INFORMING CONGRESS.—The Sec7 retary shall inform Congress of any disclosures 

8 required under subparagraph (A) either by— 

9 ‘‘(i) the submission of an addendum 

10 to the report of the Secretary required 

11 under paragraph (1); or 

12 ‘‘(ii) a letter from the Secretary ad13 dressed to the Committee on Banking, 

14 Housing, and Urban Affairs of the Senate 

15 and the Committee on Financial Services 

16 of the House of Representatives.’’. 

17 SEC. 1014. GAO STUDY ON DISCLOSURES. 

18 (a) IN GENERAL.—Not later than 180 days after the 

19 date of enactment of this Act, the Comptroller General 

20 of the United States shall conduct a one-time study of the 

21 relevant information disclosed by the Secretary of Housing 

22 and Urban Development in conjunction with the release 

23 of the annual actuarial report of the Secretary required 

24 under section 202(a)(4) of the National Housing Act (12 

25 U.S.C. 1708(a)(4)). 


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1 (b) REQUIRED CONSULTATION.—In conducting the 

2 study required under subsection (a), the Comptroller Gen3 eral shall consult, as appropriate, with prominent United 

4 States academics with national recognition and significant 

5 depth of experience in the housing market and the per6 formance of high loan-to-value lending. 

7 (c) REQUIRED REVIEW.—In carrying out the study 

8 required under subsection (a), the Comptroller General 

9 shall review and make recommendations regarding— 

10 (1) if a reasonable amount of relevant data and 

11 analyses are being disclosed by the Secretary of 

12 Housing and Urban Development to the public, for 

13 research, in conjunction with the release of the an14 nual actuarial report of the Secretary required under 

15 section 202(a)(4) of the National Housing Act (12 

16 U.S.C. 1708(a)(4)); and 

17 (2) the disclosure by the Secretary of additional 

18 relevant data and analyses to the public, for re19 search purposes. 

20 (d) FOLLOW UP.—Not later than 12 months after the 

21 release of the study required under subsection (a), the 

22 Comptroller General shall conduct an additional report re23 garding the actions of the Secretary of Housing and 

24 Urban Development in carrying out any recommendations 


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1 of the Comptroller General made pursuant to subsection 

2 (c)(2). 

3 SEC. 1115. STABILIZING THE HECM PROGRAM. 

4 (a) IN GENERAL.—Section 255 of the National 

5 Housing Act (12 U.S.C. 1715z–20) is amended— 

6 (1) in subsection (d)(8)— 

7 (A) by inserting ‘‘property maintenance,’’ 

8 before ‘‘insurance’’; and 

9 (B) by inserting ‘‘, including matters that 

10 set forth terms and provisions for establishing 

11 escrow accounts, performing financial assess12 ments, or limiting the amount of any payment 

13 made available under the mortgage’’ before the 

14 semicolon; and 

15 (B) by inserting ‘‘the establishment of es16 crow accounts or set-asides, the limiting of 

17 amounts of any payment made available under 

18 the mortgage,’’ after ‘‘payment of taxes’’; 

19 (C) by striking ‘‘may’’ and inserting 

20 ‘‘shall’’; and 

21 (D) by inserting ‘‘, including matters that 

22 set forth the terms and provisions for performing 

23 financial assessments’’ before the semicolon; 

24 (2) in subsection (h)— 


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1 (A) in paragraph (1), by striking ‘‘; and’’ 

2 and inserting a semicolon; 

3 (B) in paragraph (2), by striking the pe4 riod and inserting ‘‘; and’’; and 

5 (C) by adding at the end the following new 

6 paragraph: 

7 ‘‘(3) by notice or mortgagee letter, establish any 

8 additional or alternative requirements that the Sec9 retary, in his or her discretion, determines necessary 

10 to more effectively carry out the purposes of the pro11 gram authorized under this section, and any such 

12 notice or mortgagee letter shall take effect upon 

13 issuance and expire not later than 24 months after 

14 the date of issuance of the notice or mortgagee let15 ter.’’. 

16 (2) in subsection (h)(3), as added by the Reverse 

17 Mortgage Stabilization Act of 2013 (Public Law 113– 

18 29), by striking ‘‘any additional or alternative re19 quirements’’ and inserting ‘‘requirements pertaining 

20 to escrow accounts or set-asides, financial assessments, 

21 or limiting the amount of any payment made avail22 able under the mortgage, as authorized under sub23 section (d)(8),’’; and 

24 (3) by adding at the end the following: 


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1 ‘‘(s) ESCROW ACCOUNTS OR SET-ASIDES.—In car2 rying out the program authorized under this section, the 

3 Secretary shall require the establishment of an escrow ac4 count or set-aside in any instance where the Secretary de5 termines, after a financial assessment of the mortgagor has 

6 been completed, that such an account or set-aside would 

7 mitigate the risk of loss to the mortgagee, the mortgagor, 

8 the program, or the Mutual Mortgage Insurance Fund.’’. 

9 (b) LIMITATION ON AUTHORITY.—The authority of the 

10 Secretary of Housing and Urban Development to issue any 

11 notice or mortgagee letter pursuant to section 255(h)(3) of 

12 the National Housing Act, as added by the Reverse Mort13 gage Stabilization Act of 2013 (Public Law 113–29) shall 

14 expire not later than 24 months after the date of enactment 

15 of this Act. 

16 (bc) RULEMAKING.— 

17 (1) IN GENERAL.—In carrying out the author18 ity provided to the Secretary of Housing and Urban 

19 Development under section 255(h)(3) of the Na20 tional Housing Act, as added by subsection (a) as 

21 added by the Reverse Mortgage Stabilization Act of 

22 2013 (Public Law 113–29), the Secretary shall— 

23 (A) not later than 90 days after the 

24 issuance of the notice or mortgagee letter pur25 suant to such section, issue a notice of proposed 


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1 rulemaking addressing the same additional or 

2 alternative requirements that are the subject of 

3 the notice or mortgagee letter; and 

4 (B) not later than 24 months after the 

5 issuance of the notice of proposed rulemaking 

6 required under subparagraph (A)— 

7 (i) issue a final rule addressing the 

8 same additional or alternative require9 ments that are the subject of the notice or 

10 mortgagee letter; or 

11 (ii) withdraw the notice or mortgagee 

12 letter. 

13 (2) FAILURE TO COMPLY.—If the Secretary of 

14 Housing and Urban Development fails to issue a 

15 final rule by the end of the period described under 

16 paragraph (1)(B)— 

17 (A) the provisions of the notice or mort18 gagee letter at issue shall become null and void; 

19 (B) the Secretary— 

20 (i) shall not have authority to reissue 

21 such notice or mortgagee letter; and 

22 (ii) may only address the require23 ments that are the subject of the notice or 

24 mortgagee letter at issue through the pro25 mulgation of a regulation pursuant to the 


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1 rulemaking requirements of title 5, United 

2 States Code; and 

3 (C) the Secretary and the Director of the 

4 Office of Management and Budget shall appear 

5 before the Committee on Banking, Housing, 

6 and Urban Affairs of the Senate and the Com7 mittee on Financial Services of the House of 

8 Representatives to provide testimony explaining 

9 the failure to comply with the requirements of 

10 this subsection. 

11 (d) ADDITIONAL RULEMAKING RELATING TO FIXED12 RATE FULL DRAW PRODUCTS.—Not later than 1 year after 

13 the date of enactment of this Act, the Secretary of Housing 

14 and Urban Development shall issue a notice of proposed 

15 rulemaking that— 

16 (1) eliminates the use, issuance, or establishment 

17 of any standard fixed-rate full draw product offered 

18 under the home equity conversion mortgage program 

19 authorized by section 255 of the National Housing 

20 Act (12 U.S.C. 1715z-20); and 

21 (2) requires any other fixed-rate full draw prod22 uct offered under the home equity conversion mortgage 

23 program authorized by section 255 of the National 

24 Housing Act not subject to elimination under paraVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00068 Fmt 6652 Sfmt 6203 E:\BILLS\S1376.RS S1376

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1 graph (1) to be based on a financial assessment of the 

2 mortgagor. 

3 (e) REPORT.— 

4 (1) IN GENERAL.—The Secretary of Housing and 

5 Urban Development, on a quarterly basis, shall report 

6 to the Committee on Banking, Housing, and Urban 

7 Affairs of the Senate and the Committee on Financial 

8 Services of the House of Representatives on the status 

9 and financial condition of each distinct product of10 fered under the home equity conversion mortgage pro11 gram authorized by section 255 of the National Hous12 ing Act, including the HECM Standard Adjustable, 

13 HECM Saver Fixed, and HECM Saver Adjustable 

14 products. 

15 (2) CONTENTS OF REPORT.—The report required 

16 under paragraph (1) shall set forth, for each product 

17 the— 

18 (A) default rates under the product; 

19 (B) rate of foreclosure on loans insured pur20 suant to each product; and 

21 (C) severity and extent of losses incurred on 

22 loans insured pursuant to each product. 

23 (3) FURTHER STUDY.—Upon review of the infor24 mation collected pursuant to this subsection, if the 

25 Secretary of Housing and Urban Development deterVerDate Mar 15 2010 03:56 Dec 20, 2013 Jkt 039200 PO 00000 Frm 00069 Fmt 6652 Sfmt 6203 E:\BILLS\S1376.RS S1376

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1 mines that any individual product has a default rate 

2 measurably higher than the default rates occurring in 

3 any other product or is experiencing losses measur4 ably higher than losses incurred in any other product, 

5 the Secretary shall further study the product and in6 clude in the next quarterly report due under para7 graph (1)— 

8 (A) information identifying and enumer9 ating the causes of such higher default rates and 

10 severity of losses; and 

11 (B) a detailed description of the actions to 

12 be taken by the Secretary to correct such ineffi13 ciencies. 

14 SEC. 16. PRINCIPAL LIMIT FACTOR FOR HECM PROGRAM. 

15 Section 255(m)(2) of the National Housing Act (12 

16 U.S.C. 1715z–20(m)(2)) is amended— 

17 (1) by striking ‘‘paragraph (1) shall’’ and insert18 ing ‘‘paragraph (1)—’’ 

19 ‘‘(A) shall’’; 

20 (2) in subparagraph (A), as so designated, by 

21 striking the period at the end and inserting ‘‘; and’’; 

22 and 

23 (3) by adding at the end the following: 

24 ‘‘(B) in the case of a fixed rate mortgage, 

25 may not involve a principal limit (as defined in 


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1 section 206.3 of title 24, Code of Federal Regula2 tions) with a principal limit factor in excess of 

3 .61.’’. 

4 SEC. 1217. PUBLICATION OF FINAL RULES RELATING TO 

5 LIMITING SELLER CONTRIBUTIONS TOWARDS 

6 PURCHASE RELATED EXPENSES. 

7 (a) REQUIRED COMPLETION OF RULE.—Not later 

8 than 90 days after the date of enactment of this Act, the 

9 Secretary of Housing and Urban Development shall— 

10 (1) issue and publish its final rule to implement 

11 the proposed rule entitled ‘‘Federal Housing Admin12 istration (FHA) Risk Management Initiatives: Re13 vised Seller Concessions’’ (77 Fed. Reg. 10695 

14 (February 23, 2012)); and 

15 (2) ensure that the final rule required under 

16 paragraph (1)— 

17 (A) limits the amount a seller or interested 

18 third party, or both, may contribute towards 

19 the purchase-related expenses of a borrower 

20 without reducing the maximum insured amount 

21 of a mortgage insured under title II of the Na22 tional Housing Act (12 U.S.C. 1707 et seq.); 

23 and 

24 (B) defines the acceptable types of ex25 penses that a seller or interested third party, or 


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1 both, may contribute under subparagraph (A), 

2 such as closing costs, prepaid expenses, dis3 count points, up-front mortgage insurance pre4 miums, and interest rate buydowns. 

5 (b) FAILURE TO COMPLY.—If the Secretary of Hous6 ing and Urban Development fails to issue a final rule by 

7 the end of the period described under subsection (a), the 

8 Secretary and the Director of Office of Management and 

9 Budget shall appear before the Committee on Banking, 

10 Housing, and Urban Affairs of the Senate and the Com11 mittee on Financial Services of the House of Representa12 tives to provide testimony explaining the failure to comply 

13 with the requirements of this section. 

14 SEC. 18. GAO STUDY ON FHA LOAN LIMITS. 

15 (a) IN GENERAL.—The Comptroller General of the 

16 United States shall conduct a one-time study to determine 

17 the appropriate dollar amount limitation on the maximum 

18 original principal obligation of a mortgage that may be in19 sured under title II of the National Housing Act (12 U.S.C. 

20 1701 et seq.). 

21 (b) REQUIRED REVIEW.—In carrying out the study re22 quired under subsection (a), the Comptroller General shall 

23 review and make recommendations regarding the appro24 priate methodology for further adjustments to the dollar 

25 amount limitation, including adjustments for inflation, 


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1 varying home prices across different regions of the United 

2 States, and the effects of economic downturns. 

3 (c) REPORT.—Not later than 1 year after the date of 

4 enactment of this Act, the Comptroller General shall submit 

5 a report to the Committee on Banking, Housing, and Urban 

6 Affairs of the Senate and the Committee on Financial Serv7 ices of the House of Representatives on the results of the 

8 study conducted pursuant to subsection (a), including its 

9 reasons justifying its determination. 


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Calendar No. 275 

113TH CONGRESS 

1ST SESSION S. 1376 

[Report No. 113–129] 

A BILL 

To improve the Federal Housing Administration 

gage Insurance Fund, and for other purposes. and to ensure the solvency of the Mutual MortDECEMBER 19, 2013 

Reported with amendments 


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