II

106TH CONGRESS

2D SESSION S. 2914

To amend the National Housing Act to require partial rebates of FHA

mortgage insurance premiums to certain mortgagors upon payment of

their FHA-insured mortgages.

IN THE SENATE OF THE UNITED STATES

JULY 25, 2000

Mr. ALLARD (for himself and Mr. GRAMM) introduced the following bill; which

was read twice and referred to the Committee on Banking, Housing, and

Urban Affairs

A BILL

To amend the National Housing Act to require partial rebates of FHA mortgage insurance premiums to certain

mortgagors upon payment of their FHA-insured mortgages.

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 ‘‘Homeowners Rebate

5 Act of 2000’’.
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1 SEC. 2. PAYMENT OF DISTRIBUTIVE SHARES FROM MU2 TUAL MORTGAGE INSURANCE FUND RE3 SERVES.

4 (a) IN GENERAL.—Section 205(c) of the National

5 Housing Act (12 U.S.C. 1711(c)) is amended to read as

6 follows:

7 ‘‘(c) DISTRIBUTION OF RESERVES.—Upon termi8 nation of an insurance obligation of the Mutual Mortgage

9 Insurance Fund by payment of the mortgage insured

10 thereunder, if the Secretary determines (in accordance

11 with subsection (e)) that there is a surplus for distribution

12 under this section to mortgagors, the Participating Re13 serve Account shall be subject to distribution as follows:

14 ‘‘(1) REQUIRED DISTRIBUTION.—In the case of

15 a mortgage paid after November 5, 1990, and in16 sured for 7 years or more before such termination,

17 the Secretary shall distribute to the mortgagor a

18 share of such Account in such manner and amount

19 as the Secretary shall determine to be equitable and

20 in accordance with sound actuarial and accounting

21 practice, subject to paragraphs (3) and (4).

22 ‘‘(2) DISCRETIONARY DISTRIBUTION.—In the

23 case of a mortgage not described in paragraph (1),

24 the Secretary is authorized to distribute to the mort25 gagor a share of such Account in such manner and

26 amount as the Secretary shall determine to be equi-
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1 table and in accordance with sound actuarial and ac2 counting practice, subject to paragraphs (3) and (4).

3 ‘‘(3) LIMITATION ON AMOUNT.—In no event

4 shall the amount any such distributable share exceed

5 the aggregate scheduled annual premiums of the

6 mortgagor to the year of termination of the insur7 ance.

8 ‘‘(4) APPLICATION REQUIREMENT.—The Sec9 retary shall not distribute any share to an eligible

10 mortgagor under this subsection beginning on the

11 date which is 6 years after the date that the Sec12 retary first transmitted written notification of eligi13 bility to the last known address of the mortgagor,

14 unless the mortgagor has applied in accordance with

15 procedures prescribed by the Secretary for payment

16 of the share within the 6-year period. The Secretary

17 shall transfer from the Participating Reserve Ac18 count to the General Surplus Account any amounts

19 that, pursuant to the preceding sentence, are no

20 longer eligible for distribution.’’.

21 (b) DETERMINATION OF SURPLUS.—

22 (1) IN GENERAL.—Section 205(e) of the Na23 tional Housing Act (12 U.S.C. 1711(e)) is amended

24 by adding at the end the following: ‘‘Notwith25 standing any other provision of this section, if, at
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1 the time of such a determination, the capital ratio

2 (as defined in subsection (f)) for the Fund is 3.0

3 percent or greater, the Secretary shall determine

4 that there is a surplus for distribution under this

5 section to mortgagors.’’.

6 (2) GAO REPORT.—Not later than 1 year after

7 the date of enactment of this Act, the Comptroller

8 General shall submit a report to the Congress that

9 evaluates the adequacy of the capital ratio require10 ment under section 205(f)(2) of the National Hous11 ing Act (12 U.S.C. 1711(f)(2)) for ensuring the

12 safety and soundness of the Mutual Mortgage Insur13 ance Fund. Such report shall also evaluate the ade14 quacy of the capital ratio level established under sec15 tion 205(e)(1) of the National Housing Act, as

16 amended by paragraph (1) of this section and shall

17 include a recommendation of a capital ratio level

18 that, if made effective under such section upon the

19 expiration of the 2-year period beginning on the date

20 of enactment of this Act, would provide for distribu21 tions of shares under section 205(c) of such Act in

22 a manner adequate to ensure the safety and sound23 ness of such Fund.

24 (c) RETROACTIVE PAYMENTS.—
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1 (1) TIMING.—Not later than 3 months after the

2 date of enactment of this Act, the Secretary of

3 Housing and Urban Development shall determine

4 the amount of each distributable share for each

5 mortgage described in paragraph (2) to be paid and

6 shall make payment of such share.

7 (2) MORTGAGES COVERED.—A mortgage de8 scribed in this paragraph is a mortgage for which—

9 (A) the insurance obligation of the Mutual

10 Mortgage Insurance Fund was terminated by

11 payment of the mortgage before the date of en12 actment of this Act;

13 (B) a distributable share is required to be

14 paid to the mortgagor under section 205(c)(1)

15 of the National Housing Act (12 U.S.C.

16 1711(c)(1)), as amended by subsection (a) of

17 this section; and

18 (C) no distributable share was paid pursu19 ant to section 205(c) of the National Housing

20 Act upon termination of the insurance obliga21 tion of such Fund.

Æ