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103D CONGRESS

1ST SESSION H. R. 1123

To reduce losses under the single family and multifamily mortgage insurance

programs under title II of the National Housing Act through modernization.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 24, 1993

Mr. SANTORUM (for himself, Mr. INGLIS of South Carolina, Mr. DOOLITTLE,

and Mr. ZIMMER) introduced the following bill; which was referred to the

Committee on Banking, Finance and Urban Affairs

A BILL

To reduce losses under the single family and multifamily

mortgage insurance programs under title II of the National Housing Act through modernization.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘FHA Modernization

5 Act’’.

6 SEC. 2. FHA COMPUTER SYSTEM.

7 (a) SELECTION.—

8 (1) IN GENERAL.—The Secretary of Housing

9 and Urban Development (in this Act referred to as
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1 the ‘‘Secretary’’) shall select a computer system

2 under this section (including appropriate mechanical,

3 electronic, and programming elements) for use in

4 administrating the single family and multifamily

5 housing mortgage insurance programs under title II

6 of the National Housing Act and shall use such sys7 tem to carry out the activities under subsection (b)

8 of this section.

9 (2) USE OF EXISTING SYSTEMS AND PRO10 GRAMS.—In selecting the computer system, the Sec11 retary shall survey and review various computer sys12 tems and programs that are commercially available

13 and used for processing housing and residential

14 mortgage applications. The Secretary shall identify

15 the programs, methods, and procedures that are

16 most effective and applicable for use under this sec17 tion.

18 (3) CONTRACT.—Pursuant to the survey and

19 review under paragraph (2), the Secretary shall, to

20 the extent or in such amounts as are provided in ap21 propriation Acts, enter into a contract with an ap22 propriate private entity for the use and adaptation

23 (if necessary) of the computer system that best

24 meets the specifications established under subsection

25 (b).
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1 (b) REQUIREMENTS.—The computer system selected

2 under this section shall meet the specifications established

3 by the Secretary to carry out activities with respect to the

4 single family and multifamily housing mortgage insurance

5 programs under title II of the National Housing Act, as

6 follows:

7 (1) To administer the processing of applications

8 for mortgage insurance.

9 (2) To maintain and update any records and in10 formation maintained by the Secretary.

11 (3) To facilitate, coordinate, and simplify inter12 action between the Department of Housing and

13 Urban Development and mortgagees, including de14 termination of eligibility, review and certification of

15 underwriting, making insurance commitments and

16 endorsements, closing, and other mortgage insurance

17 activities.

18 (4) To monitor the performance of the Depart19 ment with respect to each function identified in the

20 performance standards established under section 4.

21 (5) To monitor the performance of mortgagees,

22 servicers, and other entities involved in the mortgage

23 insurance programs, entities to whom processing

24 functions have been delegated by the Secretary

25 under section 328 of the Cranston-Gonzalez Na-
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1 tional Affordable Housing Act, and mortgagees ap2 proved for direct endorsement.

3 SEC. 3. STUDY OF PRIVATE MANAGEMENT OF INSURANCE

4 PROGRAMS USING COMPUTER SYSTEM.

5 (a) STUDY.—The Secretary shall conduct a study to

6 determine the effectiveness and feasibility of utilizing pri7 vate contractors to administer the single family and multi8 family housing mortgage insurance programs under the

9 National Housing Act using the computer system selected

10 under section 2. The study shall analyze whether the pur11 poses of the mortgage insurance programs would be car12 ried out more efficiently and economically by using con13 tractors with demonstrated capabilities to carry out the

14 mortgage insurance functions currently performed by the

15 staff of the Department of Housing and Urban Develop16 ment.

17 (b) REPORT.—The Secretary shall submit a report

18 regarding the study to the Congress not later than the

19 expiration of the 4-month period beginning on the date

20 of the enactment of this Act, which shall contain findings

21 and recommendations regarding the use and cost of pri22 vate contractors.

23 SEC. 4. PERFORMANCE STANDARDS.

24 The Secretary shall establish standards by which to

25 evaluate the performance of the Department of Housing
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1 and Urban Development with respect to functions per2 formed by the Department in carrying out the single fam3 ily and multifamily housing mortgage insurance programs

4 under title II of the National Housing Act, including

5 standards for prompt servicing of applications, accuracy

6 of records, accounting for funds, prompt handling of delin7 quencies, and any other separately identifiable functions

8 performed by the Department in carrying out such pro9 grams.

10 SEC. 5. PERIODIC REPORTS REGARDING CONTRACTOR

11 PERFORMANCE.

12 Using information compiled and available through

13 the computer system selected under section 2, the Sec14 retary shall submit to the Congress a report for each cal15 endar year regarding the performance of mortgagees,

16 servicers, and contractors involved in the single family and

17 multifamily housing mortgage insurance programs under

18 title II of the National Housing Act, entities to whom

19 processing functions have been delegated by the Secretary

20 under section 328 of the Cranston-Gonzalez National Af21 fordable Housing Act, and mortgagees approved for direct

22 endorsement. Each report under this section shall be sub23 mitted not later than the March 31 of the year following

24 the year for which the report is made.
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1 SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

2 There is authorized to be appropriated to carry out

3 this Act $10,000,000 for fiscal year 1994.

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