II 

113TH CONGRESS 

1ST SESSION S. 1376 

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 

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’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Mortgage insurance premiums. 

Sec. 3. Indemnification by FHA mortgagees. 

Sec. 4. Review of mortgagee performance. 


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Sec. 5. Easing regulatory burdens; resource guide. 

Sec. 6. Improving underwriting standards. 

Sec. 7. Ensuring adequate capital levels in the Mutual Mortgage Insurance 

Fund. 

Sec. 8. Establishment of Deputy Assistant Secretary and Chief Risk Officer of 

FHA. 

Sec. 9. Disclosure of events. 

Sec. 10. GAO study on disclosures. 

Sec. 11. Stabilizing the HECM program. 

Sec. 12. Publication of final rules relating to limiting seller contributions towards purchase related expenses. 

1 SEC. 2. MORTGAGE INSURANCE PREMIUMS. 

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

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

4 (1) in paragraph (2)(B)— 

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

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

7 ‘‘shall’’; 

8 (ii) by striking ‘‘not exceeding 1.5 

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

10 percent’’; and 

11 (iii) by inserting ‘‘and not exceeding 

12 2.0 percent of such remaining insured 

13 principal balance’’ before ‘‘for the following 

14 periods:’’; and 

15 (B) in clause (ii), by striking ‘‘1.55 per16 cent’’ and inserting ‘‘2.05 percent’’; and 

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

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

19 PREMIUMS.— 


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1 ‘‘(A) ANNUAL REVIEW.—The Secretary 

2 shall, at least annually, review— 

3 ‘‘(i) the amount of the annual and up4 front premiums collected under this sub5 section; and 

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

7 Mortgage Insurance Fund, as such losses 

8 are calculated in the annual independent 

9 actuarial study required under section 

10 202(a)(4). 

11 ‘‘(B) REQUIRED ADJUSTMENTS.—Upon 

12 completion of the review required under sub13 paragraph (A), the Secretary shall, for all mort14 gages that are to become an obligation of the 

15 Mutual Mortgage Insurance Fund after the 

16 date that such review is complete, adjust the 

17 annual and up-front premiums applied to such 

18 mortgages so that the premiums collected over 

19 the life of such mortgages will exceed the ex20 pected losses of such mortgages to the Fund 

21 plus amounts sufficient to ensure the capital re22 serve ratio remains at the level required under 

23 section 205(f). 

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

25 in this paragraph shall permit or be construed 


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1 to permit the Secretary to apply different pre2 mium rates to the same mortgage product dur3 ing the same time period based solely on the 

4 characteristics of the mortgagor.’’. 

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

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

7 month period beginning on the date of enactment of this 

8 Act. 

9 SEC. 3. INDEMNIFICATION BY FHA MORTGAGEES. 

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

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

12 the end the following new subsection: 

13 ‘‘(i) INDEMNIFICATION BY MORTGAGEES.— 

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

15 that a mortgage executed by a mortgagee approved 

16 by the Secretary under the direct endorsement pro17 gram or insured by a mortgagee pursuant to the del18 egation of authority under section 256 contains a 

19 material defect such that the mortgage should not 

20 have been approved or endorsed for insurance, and 

21 a loan becomes delinquent within 36 months of such 

22 approval or endorsement leading to a default or the 

23 Secretary pays a claim within 36 months after such 

24 approval or endorsement, the Secretary may require 

25 the mortgagee approved by the Secretary under the 


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1 direct endorsement program or the mortgagee dele2 gated authority under section 256 to indemnify the 

3 Secretary for the loss, irrespective of whether the 

4 violation caused the mortgage default. 

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

6 fraud or misrepresentation was involved in connec7 tion with the origination, the Secretary shall require 

8 the mortgagee approved by the Secretary under the 

9 direct endorsement program or the mortgagee dele10 gated authority under section 256 to indemnify the 

11 Secretary for the loss regardless of when an insur12 ance claim is paid. 

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

14 Secretary shall issue regulations establishing— 

15 ‘‘(A) appropriate requirements and proce16 dures governing the indemnification of the Sec17 retary by the mortgagee, including public re18 porting on— 

19 ‘‘(i) the number of loans that— 

20 ‘‘(I) were not originated in ac21 cordance with the requirements estab22 lished by the Secretary; and 

23 ‘‘(II) involved fraud or misrepre24 sentation in connection with the origi25 nation; and 


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1 ‘‘(ii) the financial impact on the Mu2 tual Mortgage Insurance Fund when in3 demnification is required; and 

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

5 necessary modifications or revisions to an exist6 ing appeals process of the Secretary, to appeal 

7 any determination of indemnification made by 

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

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

10 only apply to mortgages insured under this title that 

11 were originated on or after the date of enactment of 

12 the FHA Solvency Act of 2013. 

13 ‘‘(5) DEPOSIT IN THE MUTUAL MORTGAGE IN14 SURANCE FUND.—The Secretary shall deposit any 

15 amounts collected pursuant to this subsection in, 

16 and for the use of, the Mutual Mortgage Insurance 

17 Fund.’’. 

18 (b) RULE OF CONSTRUCTION.—Nothing in sub19 section (a), or the amendment made by subsection (a), 

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

21 the authorities granted to the Secretary of Housing and 

22 Urban Development under section 256 of the National 

23 Housing Act. 


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1 SEC. 4. REVIEW OF MORTGAGEE PERFORMANCE. 

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

3 1735f–11) is amended— 

4 (1) by amending subsection (a) to read as fol5 lows: 

6 ‘‘(a) PERIODIC REVIEW OF MORTGAGEE PERFORM7 ANCE.—To reduce losses in connection with single family 

8 mortgage insurance programs under this Act, at least once 

9 a year the Secretary shall review the mortgagees origi10 nating or underwriting insured single family mortgages.’’; 

11 (2) by amending subsection (b) to read as fol12 lows: 

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

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

15 required under subsection (a), for each mortgagee 

16 the Secretary shall compare that mortgagee with 

17 other mortgagees originating or underwriting in18 sured single family mortgages based on the rates of 

19 defaults and claims for insured single family mort20 gage loans originated or underwritten by that mort21 gagee. The Secretary may also compare that mort22 gagee with such other mortgagees based on— 

23 ‘‘(A) underwriting quality; 

24 ‘‘(B) geographic area served; or 

25 ‘‘(C) any commonly used factors the Sec26 retary deems necessary for comparing mortgage 


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1 default risk, provided that such comparison is 

2 of factors that the Secretary would expect to re3 duce the default risk of mortgages insured by 

4 the Secretary. 

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

6 comparisons required under paragraph (1), the Sec7 retary shall implement such comparisons by regula8 tion, notice, or mortgagee letter.’’; and 

9 (3) in subsection (c)— 

10 (A) by striking paragraph (1) and insert11 ing the following: 

12 ‘‘(1) TERMINATION AUTHORITY.— 

13 ‘‘(A) IN GENERAL.—Notwithstanding sec14 tion 202(c), the Secretary may terminate the 

15 approval of a mortgagee to originate or under16 write single family mortgages if the Secretary 

17 determines that the mortgage loans originated 

18 or underwritten by the mortgagee present an 

19 unacceptable risk to the insurance funds. 

20 ‘‘(B) BASIS FOR DETERMINING UNACCEPT21 ABLE RISK.—For purposes of subparagraph 

22 (A), a mortgagee may present an unacceptable 

23 risk to the insurance funds based on— 

24 ‘‘(i) a comparison of any of the fac25 tors set forth in subsection (b); or 


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1 ‘‘(ii) a determination that the mort2 gagee engaged in fraud or misrepresenta3 tion.’’; 

4 (B) by redesignating paragraph (2) as 

5 paragraph (3); 

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

7 following: 

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

9 authority granted to the Secretary under paragraph 

10 (1) shall— 

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

12 or on a nationwide basis; and 

13 ‘‘(B) be made in accordance with any regu14 lation, notice, or mortgagee letter issued by the 

15 Secretary.’’; and 

16 (D) in paragraph (3) (as so redesig17 nated)— 

18 (i) by striking ‘‘The Secretary shall 

19 give’’ and inserting ‘‘(3) NOTICE AND

20 RIGHT TO INFORMAL CONFERENCE.—The 

21 Secretary shall give’’; and 

22 (ii) in the fourth sentence, by striking 

23 ‘‘excessive default and claim rate’’ and in24 serting ‘‘finding of an unacceptable risk to 

25 the insurance funds’’. 


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1 SEC. 5. EASING REGULATORY BURDENS; RESOURCE GUIDE. 

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

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

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

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

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

7 and procedures applicable to mortgages insured under title 

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

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

10 procedures of the Secretary relating to any indemnifica11 tion authority of the Secretary, including any criteria the 

12 Secretary considers to be a material defect for purposes 

13 of executing such authority. 

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

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

16 related information set forth in any handbooks, mortgagee 

17 letters, guidebooks, notices, or bulletins issued by the Sec18 retary. 

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

20 date set forth under subsection (a), whenever the Sec21 retary issues any new policy, process, or procedure, or re22 vises or otherwise amends any existing policy, process, or 

23 procedure contained in the resource guide required under 

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

25 be issued as an amendment to the resource guide. 


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

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

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

4 Department of the Housing and Urban Development. 

5 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

6 are authorized to be appropriated such sums as are nec7 essary to carry out this section. 

8 SEC. 6. IMPROVING UNDERWRITING STANDARDS. 

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

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

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

12 evaluate and revise as necessary the underwriting stand13 ards for mortgages eligible to be insured under title II of 

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

15 shall— 

16 (1) be based on empirically derived, demon17 strably and statistically sound models; and 

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

19 historically resulted in comparatively low rates of de20 linquency and default during adverse economic con21 ditions. 

22 (b) CRITERIA.—The underwriting standards under 

23 subsection (a) shall include an evaluation of— 

24 (1) the current or reasonably expected income 

25 and financial resources of a borrower; 


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1 (2) the employment status of a borrower, if in2 come used under paragraph (1) is employment in3 come; 

4 (3) the monthly payment of a borrower under 

5 the terms of a mortgage; 

6 (4) the monthly payment for any other loan 

7 held by the borrower; 

8 (5) the monthly payment for any obligations re9 lated to the mortgage; 

10 (6) any other debt obligations of a borrower, in11 cluding alimony and child support; 

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

13 income of a borrower; 

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

15 (9) any other risk factor or criteria, as deter16 mined appropriate by the Secretary. 

17 SEC. 7. ENSURING ADEQUATE CAPITAL LEVELS IN THE MU18 TUAL MORTGAGE INSURANCE FUND. 

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

20 1711(f)) is amended— 

21 (1) in subsection (f)— 

22 (A) in paragraph (2), by striking ‘‘shall en23 sure that the Fund maintains at least such cap24 ital ratio at all times thereafter’’ and inserting 


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1 ‘‘maintains such ratio thereafter, subject to 

2 paragraph (3)’’; and 

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

4 follows: 

5 ‘‘(3) The Secretary shall ensure that the Mu6 tual Mortgage Insurance Fund attains a capital 

7 ratio of not less than 3.0 percent within 10 years 

8 after the date of enactment of the FHA Solvency 

9 Act of 2013, and shall ensure that the Fund main10 tains at least such capital ratio at all times there11 after.’’; and 

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

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

14 MUTUAL MORTGAGE INSURANCE FUND.— 

15 ‘‘(1) EFFECTIVE DATE.— 

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

17 subparagraph (B), this subsection shall take ef18 fect on the date of enactment of the FHA Sol19 vency Act of 2013. 

20 ‘‘(B) EXCEPTION FOR IMPOSITION OF SUR21 CHARGES.— 

22 ‘‘(i) IN GENERAL.—Paragraphs 

23 (4)(D), (5)(D), and (6)(D) of this sub24 section— 


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1 ‘‘(I) shall not have any force or 

2 effect during the 2-year period begin3 ning on the date of enactment of the 

4 FHA Solvency Act of 2013; and 

5 ‘‘(II) shall take effect upon the 

6 earlier of— 

7 ‘‘(aa) the expiration of the 

8 2-year period set forth under 

9 subclause (I), if in any annual 

10 independent actuarial study re11 quired under section 202(a)(4) 

12 the Mutual Mortgage Insurance 

13 Fund is designated as critically 

14 undercapitalized pursuant to 

15 paragraph (6); 

16 ‘‘(bb) the date the inde17 pendent actuary commissioned to 

18 carry out the annual independent 

19 actuarial study required under 

20 section 202(a)(4) submits the re21 sults of the fiscal year 2016 

22 study to the Secretary, if such 

23 study finds that the Mutual 

24 Mortgage Insurance Fund has 

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1 quired to be maintained under 

2 subsection (f)(1); 

3 ‘‘(cc) any date occurring 

4 after the date set forth under 

5 item (bb), but prior to any date 

6 set forth under items (dd) or 

7 (ee), if in any annual inde8 pendent actuarial study required 

9 under section 202(a)(4) the inde10 pendent actuary commissioned to 

11 carry out the study finds— 

12 ‘‘(AA) that in compari13 son to the independent actu14 arial study submitted in the 

15 most recent prior fiscal year, 

16 the capital ratio of the Fund 

17 has decreased; and 

18 ‘‘(BB) the market 

19 share for mortgages insured 

20 under this title has not been 

21 concurrently reduced thus 

22 contributing to the decrease 

23 in the capital ratio described 

24 under subitem (AA); 


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1 ‘‘(dd) the date on which the 

2 Mutual Mortgage Insurance 

3 Fund attains a capital ratio of 

4 3.0 percent; or 

5 ‘‘(ee) the date that is 10 

6 years after the date of enactment 

7 of the FHA Solvency Act of 

8 2013. 

9 ‘‘(ii) RULE OF CONSTRUCTION.—For 

10 purposes of this subsection, any finding 

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

12 be deemed to mean that the Mutual Mort13 gage Insurance Fund is undercapitalized 

14 pursuant to paragraph (4) and that not15 withstanding the provisions of paragraph 

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

17 continue to collect any surcharge set forth 

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

19 of the date on which— 

20 ‘‘(I) the next report of the Sec21 retary on the annual independent ac22 tuarial study required under section 

23 202(a)(4) finds that in comparison to 

24 the independent actuarial study sub25 mitted in the most recent prior fiscal 


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1 year, the capital ratio of the Fund has 

2 increased; 

3 ‘‘(II) the report of the Secretary 

4 required under paragraph (3)(A) finds 

5 that in comparison to the independent 

6 actuarial study submitted in the most 

7 recent prior fiscal year, the capital 

8 ratio of the Fund has increased; or 

9 ‘‘(III) the Mutual Mortgage In10 surance Fund has been designated 

11 significantly undercapitalized pursu12 ant to paragraph (5) or critically 

13 undercapitalized pursuant to para14 graph (6) and the premium surcharge 

15 applicable to any such designation has 

16 taken effect. 

17 ‘‘(2) DUTY OF CHIEF RISK OFFICER.—Fol18 lowing the receipt by the Deputy Assistant Secretary 

19 and Chief Risk Officer of the final completed report 

20 for the fiscal year of the independent actuary com21 missioned to carry out the annual independent actu22 arial study required under section 202(a)(4) ana23 lyzing the capital ratio of the Mutual Mortgage In24 surance Fund, the Deputy Assistant Secretary and 

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


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1 regularly assigned duties and responsibilities, have a 

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

3 failure to maintain the capital ratio of the Mutual 

4 Mortgage Insurance Fund as required under sub5 section (f). 

6 ‘‘(3) STUDIES AND REPORTS.— 

7 ‘‘(A) FOR WHEN FUND IS UNDERCAPITAL8 IZED OR SIGNIFICANTLY UNDERCAPITALIZED.— 

9 If the Mutual Mortgage Insurance Fund is des10 ignated as undercapitalized or significantly 

11 undercapitalized pursuant to paragraphs (4) or 

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

13 after date on which the Secretary submits the 

14 report on the annual independent actuarial 

15 study required under section 202(a)(4), and an16 nually thereafter until such time as the Mutual 

17 Mortgage Insurance Fund achieves the capital 

18 ratio required to be maintained under sub19 section (f), the Secretary shall provide a report 

20 to the Committee on Banking, Housing, and 

21 Urban Affairs of the Senate and the Committee 

22 on Financial Services of the House of Rep23 resentatives updating the results of the inde24 pendent actuarial study required under section 

25 202(a)(4) to reflect the most recently available 


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1 information and analyzing the financial position 

2 of the Fund. 

3 ‘‘(B) FOR WHEN FUND IS CRITICALLY

4 UNDERCAPITALIZED.—If the Mutual Mortgage 

5 Insurance Fund is designated as critically 

6 undercapitalized pursuant to paragraph (6), 

7 then not later than the last day of the current 

8 fiscal quarter in which the Congress is informed 

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

10 and every fiscal quarter thereafter until such 

11 time as the Mutual Mortgage Insurance Fund 

12 achieves the capital ratio required to be main13 tained under subsection (f) or is designated as 

14 undercapitalized or significantly undercapital15 ized pursuant to paragraphs (4) or (5), respec16 tively, the Secretary shall provide a report to 

17 the Committee on Banking, Housing, and 

18 Urban Affairs of the Senate and the Committee 

19 on Financial Services of the House of Rep20 resentatives updating the results of the inde21 pendent actuarial study required under section 

22 202(a)(4) to reflect the most recently available 

23 information and analyzing the financial position 

24 of the Fund. 


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1 ‘‘(C) FAILURE TO COMPLY WITH RE2 QUIRED TIMELINES.—If the Secretary fails to 

3 comply with any timeline required under sub4 paragraphs (A) or (B), the Secretary shall ap5 pear before the Committee on Banking, Hous6 ing, and Urban Affairs of the Senate and the 

7 Committee on Financial Services of the House 

8 of Representatives within 7 days of the last day 

9 of that deadline to provide testimony explaining 

10 the failure to comply. 

11 ‘‘(4) CORRECTIVE ACTIONS WHEN FUND IS

12 UNDERCAPITALIZED.— 

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

14 than 7 days after the date on which the Sec15 retary is informed that the Mutual Mortgage 

16 Insurance Fund has a capital ratio of not less 

17 than 50 percent but less than 100 percent of 

18 the capital ratio required to be maintained 

19 under subsection (f), the Secretary shall notify 

20 the Chair and Ranking Member of the Com21 mittee on Banking, Housing, and Urban Affairs 

22 of the Senate and the Chair and Ranking Mem23 ber of the Committee on Financial Services of 

24 the House of Representatives of such shortfall, 


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1 and the exact date on which the Secretary was 

2 informed of such shortfall. 

3 ‘‘(B) SUBMISSION OF CAPITAL RESTORA4 TION PLAN.—Not later than 30 days after the 

5 date on which notice is provided under subpara6 graph (A), the Secretary shall submit to the 

7 Chair and Ranking Member of the Committee 

8 on Banking, Housing, and Urban Affairs of the 

9 Senate and the Chair and Ranking Member of 

10 the Committee on Financial Services of the 

11 House of Representatives a capital restoration 

12 plan, including a timeline for implementation of 

13 such plan, to achieve the capital ratio required 

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

15 required under this subparagraph shall be re16 vised annually until such time as the Mutual 

17 Mortgage Insurance Fund achieves the capital 

18 ratio required to be maintained under sub19 section (f). 

20 ‘‘(C) CONGRESSIONAL TESTIMONY.—Not 

21 later than 45 days after the date on which no22 tice is provided under subparagraph (A), and 

23 annually thereafter until such time as the Mu24 tual Mortgage Insurance Fund achieves the 

25 capital ratio required to be maintained under 


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1 subsection (f), the Secretary shall provide testi2 mony to the Committee on Banking, Housing, 

3 and Urban Affairs of the Senate and the Com4 mittee on Financial Services of the House of 

5 Representatives on the capital status of the 

6 Fund and the performance or projected per7 formance of the plan submitted under subpara8 graph (B). 

9 ‘‘(D) IMPOSITION OF PREMIUM SUR10 CHARGE.— 

11 ‘‘(i) IN GENERAL.—Notwithstanding 

12 any limitation on the amount of any pre13 mium payment set forth under section 

14 203(c), in addition to the premiums col15 lected under subparagraphs (A), (B), and 

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

17 the Mutual Mortgage Insurance Fund is 

18 designated as undercapitalized pursuant to 

19 this paragraph, the Secretary shall estab20 lish and collect annual premium payments 

21 for any newly insured mortgage for which 

22 the Secretary collects an annual premium 

23 payment under section 203(c), except for 

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1 tion 255, in an amount described in clause 

2 (ii). 

3 ‘‘(ii) AMOUNT OF SURCHARGE.—With 

4 respect to a mortgage, the amount de5 scribed in this clause is 10 basis points of 

6 the remaining insured principal balance 

7 (excluding the portion of the remaining 

8 balance attributable to the premium col9 lected under paragraph (2)(A) of section 

10 203(c) and without taking into account de11 linquent payments or prepayments). 

12 ‘‘(iii) EFFECTIVE DATE.— 

13 ‘‘(I) IN GENERAL.—Subject to 

14 subclause (II), the requirement to col15 lect the annual premium payment set 

16 forth under this subparagraph shall 

17 take effect on the date that is 180 

18 days after the date on which notice is 

19 provided to Congress under subpara20 graph (A). 

21 ‘‘(II) DELAY.—The effective date 

22 of the requirement to collect the an23 nual premium payment set forth 

24 under this subparagraph may be ex25 tended for an additional 180 days, if 


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1 prior to the expiration of the initial 

2 180-day time period described under 

3 subclause (I), the report of the Sec4 retary required under paragraph 

5 (3)(A)— 

6 ‘‘(aa) is submitted to Con7 gress; and 

8 ‘‘(bb) finds that the Mutual 

9 Mortgage Insurance Fund has 

10 achieved the capital ratio re11 quired to be maintained under 

12 subsection (f). 

13 ‘‘(III) REINSTITUTION OF SUR14 CHARGE.—Notwithstanding sub15 clauses (I) and (II), if the next report 

16 of the Secretary on the annual inde17 pendent actuarial study required 

18 under section 202(a)(4) that is sub19 mitted after the report of the Sec20 retary described in subclause (II) 

21 finds that the Mutual Mortgage In22 surance Fund has not achieved the 

23 capital ratio required to be main24 tained under subsection (f), then the 

25 effective date of the requirement to 


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1 collect the annual premium payment 

2 set forth under this subparagraph 

3 shall be the date that is 30 days after 

4 the date on which such report is sub5 mitted to Congress. 

6 ‘‘(iv) CESSATION OF APPLICATION.— 

7 The Secretary shall not be required to col8 lect the annual premium payment set forth 

9 under this subparagraph, if, at any time 

10 after the date on which such requirement 

11 has gone into effect, either— 

12 ‘‘(I) the report of the Secretary 

13 on the annual independent actuarial 

14 study required under section 

15 202(a)(4) finds that the Mutual Mort16 gage Insurance Fund has achieved the 

17 capital ratio required to be main18 tained under subsection (f); 

19 ‘‘(II) the report of the Secretary 

20 required under paragraph (3) finds 

21 that the Mutual Mortgage Insurance 

22 Fund has achieved the capital ratio 

23 required to be maintained under sub24 section (f); or 


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1 ‘‘(III) the Mutual Mortgage In2 surance Fund has been designated 

3 significantly undercapitalized pursu4 ant to paragraph (5) or critically 

5 undercapitalized pursuant to para6 graph (6) and the premium surcharge 

7 applicable to any such designation has 

8 taken effect. 

9 ‘‘(5) CORRECTIVE ACTIONS WHEN FUND IS SIG10 NIFICANTLY UNDERCAPITALIZED.— 

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

12 than 7 days after the date on which the Sec13 retary is informed that the Mutual Mortgage 

14 Insurance Fund has a capital ratio of not less 

15 than 0 percent but less than 50 percent of the 

16 capital ratio required to be maintained under 

17 subsection (f), the Secretary shall notify the 

18 Chair and Ranking Member of the Committee 

19 on Banking, Housing, and Urban Affairs of the 

20 Senate and the Chair and Ranking Member of 

21 the Committee on Financial Services of the 

22 House of Representatives of such shortfall, and 

23 the date on which the Secretary was informed 

24 of such shortfall. 


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•S 1376 IS

1 ‘‘(B) SUBMISSION OF REVISED CAPITAL

2 RESTORATION PLAN.—Not later than 30 days 

3 after the date on which notice is provided under 

4 subparagraph (A), the Secretary shall submit to 

5 the Chair and Ranking Member of the Com6 mittee on Banking, Housing, and Urban Affairs 

7 of the Senate and the Chair and Ranking Mem8 ber of the Committee on Financial Services of 

9 the House of Representatives a capital restora10 tion plan, or a revised capital restoration plan, 

11 including a timeline for implementation of such 

12 plan or revised plan, to achieve the capital ratio 

13 required to be maintained under subsection (f). 

14 The plan required under this subparagraph 

15 shall be revised annually until such time as the 

16 Mutual Mortgage Insurance Fund achieves the 

17 capital ratio required to be maintained under 

18 subsection (f). 

19 ‘‘(C) CONGRESSIONAL TESTIMONY.—Not 

20 later than 45 days after the date on which no21 tice is provided under subparagraph (A), and 

22 every 180 days thereafter until such time as the 

23 Mutual Mortgage Insurance Fund achieves the 

24 capital ratio required to be maintained under 

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•S 1376 IS

1 mony to the Committee on Banking, Housing, 

2 and Urban Affairs of the Senate and the Com3 mittee on Financial Services of the House of 

4 Representatives on the capital status of the 

5 Fund and the performance or projected per6 formance of the revised capital restoration plan 

7 submitted under subparagraph (B). 

8 ‘‘(D) IMPOSITION OF PREMIUM SUR9 CHARGE.— 

10 ‘‘(i) IN GENERAL.—Notwithstanding 

11 any limitation on the amount of any pre12 mium payment set forth under section 

13 203(c), in addition to the premiums col14 lected under subparagraphs (A), (B), and 

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

16 the Mutual Mortgage Insurance Fund is 

17 designated as significantly undercapitalized 

18 pursuant to this paragraph, the Secretary 

19 shall establish and collect annual premium 

20 payments for any newly insured mortgage 

21 for which the Secretary collects an annual 

22 premium payment under section 203(c), 

23 except for those mortgages insured pursu24 ant to section 255, in an amount described 

25 in clause (ii). 


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•S 1376 IS

1 ‘‘(ii) AMOUNT OF SURCHARGE.—With 

2 respect to a mortgage, the amount de3 scribed in this clause is 20 basis points of 

4 the remaining insured principal balance 

5 (excluding the portion of the remaining 

6 balance attributable to the premium col7 lected under paragraph (2)(A) of section 

8 203(c) and without taking into account de9 linquent payments or prepayments). 

10 ‘‘(iii) EFFECTIVE DATE.— 

11 ‘‘(I) IN GENERAL.—Subject to 

12 subclause (II), the requirement to col13 lect the annual premium payment set 

14 forth under this subparagraph shall 

15 take effect on the date that is 180 

16 days after the date on which notice is 

17 provided to Congress under subpara18 graph (A). 

19 ‘‘(II) DELAY.—The effective date 

20 of the requirement to collect the an21 nual premium payment set forth 

22 under this subparagraph shall be ex23 tended for an additional 180 days, if 

24 prior to the expiration of the initial 

25 180-day time period described under 


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•S 1376 IS

1 subclause (I), the report of the Sec2 retary required under paragraph 

3 (3)(A)— 

4 ‘‘(aa) is submitted to Con5 gress; and 

6 ‘‘(bb) finds that the Mutual 

7 Mortgage Insurance Fund— 

8 ‘‘(AA) has achieved the 

9 capital ratio required to be 

10 maintained under subsection 

11 (f); or 

12 ‘‘(BB) has a capital 

13 ratio of not less than 50 

14 percent but less than 100 

15 percent of the capital ratio 

16 required to be maintained 

17 under subsection (f), at 

18 which point the provisions of 

19 paragraph (4)(D) shall be 

20 applicable, except that the 

21 provisions of clause (iii) of 

22 such paragraph (4)(D) shall 

23 not be applicable and that 

24 the premium surcharge ap25 plicable to such paragraph 


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•S 1376 IS

1 shall take effect within 30 

2 days of the issuance of such 

3 report. 

4 ‘‘(III) REINSTITUTION OF SUR5 CHARGE.—Notwithstanding sub6 clauses (I) and (II), if the next report 

7 of the Secretary on the annual inde8 pendent actuarial study required 

9 under section 202(a)(4) that is sub10 mitted after the report of the Sec11 retary described in subclause (II) 

12 finds that the Mutual Mortgage In13 surance Fund has a capital ratio of 

14 not less than 0 percent but less than 

15 50 percent of the capital ratio re16 quired to be maintained under sub17 section (f), then the effective date of 

18 the requirement to collect the annual 

19 premium payment set forth under this 

20 subparagraph shall be the date that is 

21 30 days after the date on which such 

22 report is submitted to Congress. 

23 ‘‘(iv) CESSATION OF APPLICATION.— 

24 The Secretary shall not be required to col25 lect the annual premium payment set forth 


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•S 1376 IS

1 under this subparagraph, if, at any time 

2 after the date on which such requirement 

3 has gone into effect, either— 

4 ‘‘(I) the report of the Secretary 

5 on the annual independent actuarial 

6 study required under section 

7 202(a)(4) finds that the Mutual Mort8 gage Insurance Fund— 

9 ‘‘(aa) has achieved the cap10 ital ratio required to be main11 tained under subsection (f); or 

12 ‘‘(bb) has a capital ratio of 

13 not less than 50 percent but less 

14 than 100 percent of the capital 

15 ratio required to be maintained 

16 under subsection (f), at which 

17 point the provisions of paragraph 

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

19 that the provisions of clause (iii) 

20 of such paragraph (4)(D) shall 

21 not be applicable and that the 

22 premium surcharge applicable to 

23 such paragraph shall take effect 

24 within 30 days of the issuance of 

25 such report; 


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•S 1376 IS

1 ‘‘(II) the report of the Secretary 

2 required under paragraph (3)(A) finds 

3 that the Mutual Mortgage Insurance 

4 Fund— 

5 ‘‘(aa) has achieved the cap6 ital ratio required to be main7 tained under subsection (f); or 

8 ‘‘(bb) has a capital ratio of 

9 not less than 50 percent but less 

10 than 100 percent of the capital 

11 ratio required to be maintained 

12 under subsection (f), at which 

13 point the provisions of paragraph 

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

15 that the provisions of clause (iii) 

16 of such paragraph (4)(D) shall 

17 not be applicable and that the 

18 premium surcharge applicable to 

19 such paragraph shall take effect 

20 within 30 days of the issuance of 

21 such report; or 

22 ‘‘(III) the Mutual Mortgage In23 surance Fund has been designated 

24 critically undercapitalized pursuant to 

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•S 1376 IS

1 charge applicable to any such designa2 tion has taken effect. 

3 ‘‘(E) REQUIRED EXAMINATION OF UNDER4 WRITING REQUIREMENTS.—If the Mutual Mort5 gage Insurance Fund is designated as signifi6 cantly undercapitalized pursuant to this para7 graph, the Secretary shall— 

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

9 date on which notice is provided under 

10 subparagraph (A), examine all of its prod11 uct lines, product or insurance features, 

12 and underwriting criteria for ways to 

13 strengthen and enhance such products, 

14 features, or criteria to limit losses to the 

15 Mutual Mortgage Insurance Fund; 

16 ‘‘(ii) in carrying out the requirement 

17 under clause (i), undertake such examina18 tion actions as are necessary to reduce the 

19 financial vulnerability of the Mutual Mort20 gage Insurance Fund from those risk char21 acteristics or product lines that most con22 tribute to the default of mortgages insured 

23 under section 202, including by reviewing 

24 the underwriting and servicing standards 

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•S 1376 IS

1 retary, including, but not limited to, a re2 view of— 

3 ‘‘(I) the amount of cash or its 

4 equivalent required to be paid on ac5 count of the property subject to a 

6 mortgage that is an obligation of the 

7 Fund; 

8 ‘‘(II) servicer compliance with 

9 any loan servicing or loss mitigation 

10 guidelines of the Secretary; and 

11 ‘‘(III) economic conditions 

12 present in the housing market, pro13 vided there is a demonstrated likeli14 hood that the policies of the Secretary 

15 would impact those economic condi16 tions; and 

17 ‘‘(iii) submit to the Committee on 

18 Banking, Housing, and Urban Affairs of 

19 the Senate and the Committee on Finan20 cial Services of the House of Representa21 tives any analysis, findings, or rec22 ommendations used or made by the Sec23 retary to carry out the requirements of this 

24 subparagraph. 


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•S 1376 IS

1 ‘‘(6) CORRECTIVE ACTIONS WHEN FUND IS

2 CRITICALLY 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 less than 

7 0 percent of the capital ratio required to be 

8 maintained under subsection (f), the Secretary 

9 shall notify the Chair and Ranking Member of 

10 the Committee on Banking, Housing, and 

11 Urban Affairs of the Senate and the Chair and 

12 Ranking Member of the Committee on Finan13 cial Services of the House of Representatives of 

14 such shortfall, and the date on which the Sec15 retary was informed of such shortfall. 

16 ‘‘(B) SUBMISSION OF FURTHER REVISED

17 CAPITAL RESTORATION PLAN.—Not later than 

18 30 days after the date on which notice is pro19 vided under subparagraph (A), the Secretary 

20 shall jointly submit with the Secretary of the 

21 Treasury to the Chair and Ranking Member of 

22 the Committee on Banking, Housing, and 

23 Urban Affairs of the Senate and the Chair and 

24 Ranking Member of the Committee on Finan25 cial Services of the House of Representatives a 


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•S 1376 IS

1 capital restoration plan, or a revised capital res2 toration plan, including a timeline for imple3 mentation of such plan, to achieve the capital 

4 ratio required to be maintained under sub5 section (f). The plan required under this sub6 paragraph shall be revised and submitted annu7 ally with the Secretary of the Treasury, until 

8 such time as the Mutual Mortgage Insurance 

9 Fund achieves the capital ratio required to be 

10 maintained under subsection (f). 

11 ‘‘(C) CONGRESSIONAL TESTIMONY.—Not 

12 later than 45 days after the date on which no13 tice is provided under subparagraph (A), and 

14 every 180 days thereafter until such time as the 

15 Mutual Mortgage Insurance Fund achieves the 

16 capital ratio required to be maintained under 

17 subsection (f), the Secretary and the Secretary 

18 of the Treasury shall each provide testimony to 

19 the Committee on Banking, Housing, and 

20 Urban Affairs of the Senate and the Committee 

21 on Financial Services of the House of Rep22 resentatives on the capital status of the Fund 

23 and the success or failure of the further revised 

24 capital restoration plan submitted under sub25 paragraph (B). 


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•S 1376 IS

1 ‘‘(D) IMPOSITION OF PREMIUM SUR2 CHARGE.— 

3 ‘‘(i) IN GENERAL.—Notwithstanding 

4 any limitation on the amount of any pre5 mium payment set forth under section 

6 203(c), in addition to the premiums col7 lected under subparagraphs (A), (B), and 

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

9 the Mutual Mortgage Insurance Fund is 

10 designated as critically undercapitalized 

11 pursuant to this paragraph, the Secretary 

12 shall establish and collect annual premium 

13 payments for any newly insured mortgage 

14 for which the Secretary collects an annual 

15 premium payment under section 203(c), 

16 except for those mortgages insured pursu17 ant to section 255, in an amount described 

18 in clause (ii). 

19 ‘‘(ii) AMOUNT OF SURCHARGE.—With 

20 respect to a mortgage, the amount de21 scribed in this clause is 30 basis points of 

22 the remaining insured principal balance 

23 (excluding the portion of the remaining 

24 balance attributable to the premium col25 lected under paragraph (2)(A) of section 


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•S 1376 IS

1 203(c) and without taking into account de2 linquent payments or prepayments). 

3 ‘‘(iii) EFFECTIVE DATE.— 

4 ‘‘(I) IN GENERAL.—Subject to 

5 subclause (II), the requirement to col6 lect the annual premium payment set 

7 forth under this subparagraph shall 

8 take effect on the date that is 180 

9 days after the date on which notice is 

10 provided to Congress under subpara11 graph (A). 

12 ‘‘(II) DELAY.—The effective date 

13 of the requirement to collect the an14 nual premium payment set forth 

15 under this subparagraph shall be ex16 tended for an additional 180 days, if 

17 prior to the expiration of the initial 

18 180-day time period described under 

19 subclause (I), the report of the Sec20 retary required under paragraph 

21 (3)(B)— 

22 ‘‘(aa) is submitted to Con23 gress; and 

24 ‘‘(bb) finds that the Mutual 

25 Mortgage Insurance Fund— 


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•S 1376 IS

1 ‘‘(AA) has achieved the 

2 capital ratio required to be 

3 maintained under subsection 

4 (f); 

5 ‘‘(BB) has a capital 

6 ratio of not less than 50 

7 percent but less than 100 

8 percent of the capital ratio 

9 required to be maintained 

10 under subsection (f), at 

11 which point the provisions of 

12 paragraph (4)(D) shall be 

13 applicable, except that the 

14 provisions of clause (iii) of 

15 such paragraph (4)(D) shall 

16 not be applicable and that 

17 the premium surcharge ap18 plicable to such paragraph 

19 shall take effect within 30 

20 days of the issuance of such 

21 report; or 

22 ‘‘(CC) has a capital 

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•S 1376 IS

1 quired to be maintained 

2 under subsection (f), at 

3 which point the provisions of 

4 paragraph (5)(D) shall be 

5 applicable, except that the 

6 provisions of clause (iii) of 

7 such paragraph (5)(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. 

14 ‘‘(III) REINSTITUTION OF SUR15 CHARGE.—Notwithstanding sub16 clauses (I) and (II), if within 1 cal17 endar year any report of the Secretary 

18 required under paragraph (3)(B) 

19 finds that the Mutual Mortgage In20 surance Fund has a capital ratio of 

21 less than 0 percent of the capital ratio 

22 required to be maintained under sub23 section (f), then the effective date of 

24 the requirement to collect the annual 

25 premium payment set forth under this 


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•S 1376 IS

1 subparagraph shall be the date that is 

2 30 days after the date on which such 

3 report is submitted to Congress. 

4 ‘‘(iv) CESSATION OF APPLICATION.— 

5 The Secretary shall not be required to col6 lect the annual premium payment set forth 

7 under this subparagraph, if, at any time 

8 after the date on which such requirement 

9 has gone into effect, either— 

10 ‘‘(I) the report of the Secretary 

11 on the annual independent actuarial 

12 study required under section 

13 202(a)(4) finds that the Mutual Mort14 gage Insurance Fund— 

15 ‘‘(aa) has achieved the cap16 ital ratio required to be main17 tained under subsection (f); 

18 ‘‘(bb) has a capital ratio of 

19 not less than 50 percent but less 

20 than 100 percent of the capital 

21 ratio required to be maintained 

22 under subsection (f), at which 

23 point the provisions of paragraph 

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

25 that the provisions of clause (iii) 


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•S 1376 IS

1 of such paragraph (4)(D) shall 

2 not be applicable and that the 

3 premium surcharge applicable to 

4 such paragraph shall take effect 

5 within 30 days of the issuance of 

6 such report; or 

7 ‘‘(cc) has a capital ratio of 

8 not less than 0 percent but less 

9 than 50 percent of the capital 

10 ratio required to be maintained 

11 under subsection (f), at which 

12 point the provisions of paragraph 

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

14 that the provisions of clause (iii) 

15 of such paragraph (5)(D) shall 

16 not be applicable and that the 

17 premium surcharge applicable to 

18 such paragraph shall take effect 

19 within 30 days of the issuance of 

20 such report; or 

21 ‘‘(II) the report of the Secretary 

22 required under paragraph (3)(B) 

23 finds that the Mutual Mortgage In24 surance Fund— 


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•S 1376 IS

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

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; or 

18 ‘‘(cc) has a capital ratio of 

19 not less than 0 percent but less 

20 than 50 percent of the capital 

21 ratio required to be maintained 

22 under subsection (f), at which 

23 point the provisions of paragraph 

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

25 that the provisions of clause (iii) 


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•S 1376 IS

1 of such paragraph (5)(D) shall 

2 not be applicable and that the 

3 premium surcharge applicable to 

4 such paragraph shall take effect 

5 within 30 days of the issuance of 

6 such report. 

7 ‘‘(E) REQUIRED ENHANCEMENTS TO UN8 DERWRITING REQUIREMENTS.—If the Mutual 

9 Mortgage Insurance Fund is designated as 

10 critically undercapitalized pursuant to this 

11 paragraph, the Secretary shall— 

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

13 date on which notice is provided under 

14 subparagraph (A), take such actions as 

15 necessary to revise its product lines, prod16 uct or insurances features, or underwriting 

17 criteria in order to strengthen and enhance 

18 such products, features, or criteria to limit 

19 losses to the Mutual Mortgage Insurance 

20 Fund; 

21 ‘‘(ii) in carrying out the requirement 

22 under clause (i), undertake such actions as 

23 are necessary to reduce the financial vul24 nerability of the Mutual Mortgage Insur25 ance Fund from those risk characteristics 


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•S 1376 IS

1 or product lines that most contribute to 

2 the default of mortgages insured under 

3 section 202, such actions— 

4 ‘‘(I) may include, but are not 

5 limited to, a revision of the— 

6 ‘‘(aa) amount of cash or its 

7 equivalent required to be paid on 

8 account of the property subject 

9 to a mortgage that is an obliga10 tion of the Fund; 

11 ‘‘(bb) servicer standards for 

12 compliance with any loan serv13 icing or loss mitigation guidelines 

14 of the Secretary; and 

15 ‘‘(cc) treatment of loan 

16 modification requests made by 

17 borrowers having insurance pro18 vided under this title seeking as19 sistance under a modification 

20 program of the Secretary; and 

21 ‘‘(II) shall take into consideration 

22 economic conditions present in the 

23 housing market, provided there is a 

24 demonstrated likelihood that the poliVerDate Mar 15 2010 01:44 Jul 30, 2013 Jkt 029200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.IS S1376

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•S 1376 IS

1 cies of the Secretary would impact 

2 those economic conditions; and 

3 ‘‘(iii) submit to the Committee on 

4 Banking, Housing, and Urban Affairs of 

5 the Senate and the Committee on Finan6 cial Services of the House of Representa7 tives any relevant final analysis used by 

8 the Secretary to carry out the require9 ments of this subparagraph. 

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

11 Mutual Mortgage Insurance Fund achieving the cap12 ital ratio required to be maintained under subsection 

13 (f), the Secretary— 

14 ‘‘(A) shall review any actions taken pursu15 ant to this subsection; 

16 ‘‘(B) shall examine and determine wheth17 er— 

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

19 is necessary; and 

20 ‘‘(ii) the repeal, revision, or amend21 ment of any such action can be carried out 

22 without having any adverse effect on the 

23 ability of the Fund to maintain the capital 

24 ratio required under subsection (f); and 


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•S 1376 IS

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

2 under subparagraph (B) that no such adverse 

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

4 action as the Secretary determines appro5 priate.’’. 

6 SEC. 8. ESTABLISHMENT OF DEPUTY ASSISTANT SEC7 RETARY AND CHIEF RISK OFFICER OF FHA. 

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

9 Department of Housing and Urban Development Act (42 

10 U.S.C. 3533(b)) is amended— 

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

12 the following: 

13 ‘‘(1) ESTABLISHMENT OF COMMISSIONER.— 

14 There shall be’’; and 

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

16 ‘‘(2) ESTABLISHMENT OF DEPUTY ASSISTANT

17 SECRETARY AND CHIEF RISK OFFICER.— 

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

19 the Department, within the Federal Housing 

20 Administration, a Deputy Assistant Secretary 

21 and Chief Risk Officer, who shall be appointed 

22 by the Secretary and shall be responsible to the 

23 Federal Housing Commissioner for all matters 

24 relating to managing and mitigating risk to the 

25 mortgage insurance funds of the Department 


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•S 1376 IS

1 and ensuring the performance of mortgages in2 sured by the Department to protect borrowers 

3 and taxpayers. 

4 ‘‘(B) RESPONSIBILITIES.—The Deputy As5 sistant Secretary and Chief Risk Officer estab6 lished under subparagraph (A) shall have— 

7 ‘‘(i) comprehensive risk management 

8 and regulatory knowledge in key risks, in9 cluding credit, interest rate, and oper10 ational risk; 

11 ‘‘(ii) a sound understanding of the 

12 tools and methodologies used to measure 

13 and quantify risk, including the use of sta14 tistical models; and 

15 ‘‘(iii) a broad understanding and 

16 knowledge of mortgage industry best prac17 tices for risk management. 

18 ‘‘(C) UNDERWRITING REPORT.— 

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

20 year after the date of enactment of the 

21 FHA Solvency Act of 2013, and annually 

22 thereafter, the Deputy Assistant Secretary 

23 and Chief Risk Officer (or, if not yet ap24 pointed, the Commissioner of the Federal 

25 Housing Administration) shall prepare a 


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•S 1376 IS

1 report on the underwriting standards for 

2 mortgages insured under title II of the Na3 tional Housing Act (12 U.S.C. 1707 et 

4 seq.), which shall be submitted by the Sec5 retary to— 

6 ‘‘(I) the Committee on Banking, 

7 Housing, and Urban Affairs of the 

8 Senate; and 

9 ‘‘(II) the Committee on Financial 

10 Services of the House of Representa11 tives. 

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

13 under clause (i) shall include— 

14 ‘‘(I) for all mortgages insured 

15 under title II of the National Housing 

16 Act that were made not less than 6 

17 months and not more than 36 months 

18 before the date of the report, an iden19 tification of the default risk character20 istics as such characteristics existed at 

21 the time of origination of the mort22 gage based on risk factors that are 

23 commonly used in evaluating mort24 gage default risk, including— 


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•S 1376 IS

1 ‘‘(aa) the current or reason2 ably expected income and finan3 cial resources of a borrower; 

4 ‘‘(bb) the employment status 

5 of a borrower, if income used 

6 under item (aa) is employment 

7 income; 

8 ‘‘(cc) the monthly mortgage 

9 payment of a borrower under the 

10 terms of a mortgage; 

11 ‘‘(dd) the monthly payment 

12 for any other loan held by the 

13 borrower; 

14 ‘‘(ee) the monthly payment 

15 for any obligations related to the 

16 mortgage; 

17 ‘‘(ff) any other debt obliga18 tions of a borrower, including ali19 mony and child support; 

20 ‘‘(gg) the monthly debt-to21 income ratio or residual income 

22 of a borrower; 

23 ‘‘(hh) the credit history of a 

24 borrower; and 


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•S 1376 IS

1 ‘‘(ii) any other risk factor, 

2 as determined appropriate by the 

3 Secretary; 

4 ‘‘(II) in tabular format, the num5 ber of mortgages insured under title 

6 II of the National Housing Act that 

7 are in default and the rate of default 

8 for— 

9 ‘‘(aa) each for the character10 istics described in subclause (I); 

11 ‘‘(bb) any multi-way com12 bination of the characteristics in 

13 subclause (I) as determined ap14 propriate by the Secretary; and 

15 ‘‘(cc) any additional multi16 way combination of the charac17 teristics in subclause (I) as may 

18 be requested by the Chair or 

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

21 Urban Affairs of the Senate or 

22 the Chair or Ranking Member of 

23 the Committee on Financial 

24 Services of the House of Rep25 resentatives, provided that the 


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•S 1376 IS

1 Deputy Assistant Secretary and 

2 Chief Risk Officer (or, if not yet 

3 appointed, the Commissioner of 

4 the Federal Housing Administra5 tion) shall be provided an addi6 tional 30 days from the date of 

7 receipt of such request to satisfy 

8 such request; 

9 ‘‘(III) an analysis of mortgages 

10 insured under title II of the National 

11 Housing Act that were made not less 

12 than 6 months and not more than 36 

13 months before the date of the report 

14 and are in the lowest quartile and 

15 decile of loan performance, which 

16 shall include— 

17 ‘‘(aa) a description of the 

18 characteristics described in sub19 clause (I) for mortgages in the 

20 lowest quartile and decile of loan 

21 performance; and 

22 ‘‘(bb) a comparison of the 

23 characteristics described in sub24 clause (I) between mortgages in 

25 the lowest quartile and decile of 


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•S 1376 IS

1 loan performance and all other 

2 mortgages insured under title II 

3 of the National Housing Act; 

4 ‘‘(IV) recommendations by the 

5 Deputy Assistant Secretary and Chief 

6 Risk Officer for revisions to the un7 derwriting standards of the Secretary 

8 for mortgages eligible to be insured 

9 under title II of the National Housing 

10 Act based on the findings of the re11 port, and a response to those rec12 ommendations from the Secretary; 

13 and 

14 ‘‘(V) a quantitative analysis of 

15 the effects of any revisions to the un16 derwriting standards made by the 

17 Secretary in response to the findings 

18 of a prior report, and any rec19 ommendations of the Deputy Assist20 ant Secretary and Chief Risk Officer 

21 in response to those revisions.’’. 

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

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

24 amended by inserting after the first sentence the fol25 lowing: ‘‘The independent actuary commissioned to carry 


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1 out the annual independent actuarial study required under 

2 this paragraph shall submit such study to the Deputy As3 sistant Secretary and Chief Risk Officer.’’. 

4 SEC. 9. DISCLOSURE OF EVENTS. 

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

6 U.S.C. 1708(a)(4)) is amended— 

7 (1) by striking ‘‘The Secretary shall’’ and in8 serting the following: 

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

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

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

12 ‘‘(A) IN GENERAL.—Prior to the submis13 sion of any report of the Secretary under para14 graph (1), the Secretary shall require that the 

15 independent actuary commissioned to perform 

16 the study required under paragraph (1) disclose 

17 to the Secretary any events or circumstances 

18 that occur after the study is completed but be19 fore the report is submitted to Congress and 

20 that would have resulted in changes to the in21 puts or assumptions the actuary used to make 

22 forecasts about the financial position of the 

23 Fund, if such changes are sufficiently signifi24 cant that a reasonable person would expect 

25 them to substantially alter the actuary’s foreVerDate Mar 15 2010 01:44 Jul 30, 2013 Jkt 029200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.IS S1376

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1 casts of the economic value of the Fund or the 

2 actuary’s projections relating to the capital re3 serve ratio of the Fund. 

4 ‘‘(B) INFORMING CONGRESS.—The Sec5 retary shall inform Congress of any disclosures 

6 required under subparagraph (A) either by— 

7 ‘‘(i) the submission of an addendum 

8 to the report of the Secretary required 

9 under paragraph (1); or 

10 ‘‘(ii) a letter from the Secretary ad11 dressed to the Committee on Banking, 

12 Housing, and Urban Affairs of the Senate 

13 and the Committee on Financial Services 

14 of the House of Representatives.’’. 

15 SEC. 10. GAO STUDY ON DISCLOSURES. 

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

17 date of enactment of this Act, the Comptroller General 

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

19 relevant information disclosed by the Secretary of Housing 

20 and Urban Development in conjunction with the release 

21 of the annual actuarial report of the Secretary required 

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

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

24 (b) REQUIRED CONSULTATION.—In conducting the 

25 study required under subsection (a), the Comptroller GenVerDate Mar 15 2010 01:44 Jul 30, 2013 Jkt 029200 PO 00000 Frm 00056 Fmt 6652 Sfmt 6201 E:\BILLS\S1376.IS S1376

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1 eral shall consult, as appropriate, with prominent United 

2 States academics with national recognition and significant 

3 depth of experience in the housing market and the per4 formance of high loan-to-value lending. 

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

6 required under subsection (a), the Comptroller General 

7 shall review and make recommendations regarding— 

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

9 analyses are being disclosed by the Secretary of 

10 Housing and Urban Development to the public, for 

11 research, in conjunction with the release of the an12 nual actuarial report of the Secretary required under 

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

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

15 (2) the disclosure by the Secretary of additional 

16 relevant data and analyses to the public, for re17 search purposes. 

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

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

20 Comptroller General shall conduct an additional report re21 garding the actions of the Secretary of Housing and 

22 Urban Development in carrying out any recommendations 

23 of the Comptroller General made pursuant to subsection 

24 (c)(2). 


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1 SEC. 11. STABILIZING THE HECM PROGRAM. 

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

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

4 (1) in subsection (d)(8)— 

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

6 before ‘‘insurance’’; and 

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

8 set forth terms and provisions for establishing 

9 escrow accounts, performing financial assess10 ments, or limiting the amount of any payment 

11 made available under the mortgage’’ before the 

12 semicolon; and 

13 (2) in subsection (h)— 

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

15 and inserting a semicolon; 

16 (B) in paragraph (2), by striking the pe17 riod and inserting ‘‘; and’’; and 

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

19 paragraph: 

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

21 additional or alternative requirements that the Sec22 retary, in his or her discretion, determines necessary 

23 to more effectively carry out the purposes of the pro24 gram authorized under this section, and any such 

25 notice or mortgagee letter shall take effect upon 

26 issuance and expire not later than 24 months after 


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1 the date of issuance of the notice or mortgagee let2 ter.’’. 

3 (b) RULEMAKING.— 

4 (1) IN GENERAL.—In carrying out the author5 ity provided to the Secretary of Housing and Urban 

6 Development under section 255(h)(3) of the Na7 tional Housing Act, as added by subsection (a), the 

8 Secretary shall— 

9 (A) not later than 90 days after the 

10 issuance of the notice or mortgagee letter pur11 suant to such section, issue a notice of proposed 

12 rulemaking addressing the same additional or 

13 alternative requirements that are the subject of 

14 the notice or mortgagee letter; and 

15 (B) not later than 24 months after the 

16 issuance of the notice of proposed rulemaking 

17 required under subparagraph (A)— 

18 (i) issue a final rule addressing the 

19 same additional or alternative require20 ments that are the subject of the notice or 

21 mortgagee letter; or 

22 (ii) withdraw the notice or mortgagee 

23 letter. 

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

25 Housing and Urban Development fails to issue a 


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1 final rule by the end of the period described under 

2 paragraph (1)(B)— 

3 (A) the provisions of the notice or mort4 gagee letter at issue shall become null and void; 

5 (B) the Secretary— 

6 (i) shall not have authority to reissue 

7 such notice or mortgagee letter; and 

8 (ii) may only address the require9 ments that are the subject of the notice or 

10 mortgagee letter at issue through the pro11 mulgation of a regulation pursuant to the 

12 rulemaking requirements of title 5, United 

13 States Code; and 

14 (C) the Secretary and the Director of Of15 fice of Management and Budget shall appear 

16 before 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 to provide testimony explaining 

20 the failure to comply with the requirements of 

21 this subsection. 


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1 SEC. 12. PUBLICATION OF FINAL RULES RELATING TO LIM2 ITING SELLER CONTRIBUTIONS TOWARDS 

3 PURCHASE RELATED EXPENSES. 

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

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

6 Secretary of Housing and Urban Development shall— 

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

8 the proposed rule entitled ‘‘Federal Housing Admin9 istration (FHA) Risk Management Initiatives: Re10 vised Seller Concessions’’ (77 Fed. Reg. 10695 

11 (February 23, 2012)); and 

12 (2) ensure that the final rule required under 

13 paragraph (1)— 

14 (A) limits the amount a seller or interested 

15 third party, or both, may contribute towards 

16 the purchase-related expenses of a borrower 

17 without reducing the maximum insured amount 

18 of a mortgage insured under title II of the Na19 tional Housing Act (12 U.S.C. 1707 et seq.); 

20 and 

21 (B) defines the acceptable types of ex22 penses that a seller or interested third party, or 

23 both, may contribute under subparagraph (A), 

24 such as closing costs, prepaid expenses, dis25 count points, up-front mortgage insurance pre26 miums, and interest rate buydowns. 


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1 (b) FAILURE TO COMPLY.—If the Secretary of Hous2 ing and Urban Development fails to issue a final rule by 

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

4 Secretary and the Director of Office of Management and 

5 Budget shall appear before the Committee on Banking, 

6 Housing, and Urban Affairs of the Senate and the Com7 mittee on Financial Services of the House of Representa8 tives to provide testimony explaining the failure to comply 

9 with the requirements of this section. 

Æ 


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