I 

111TH CONGRESS 

2D SESSION H. R. 6256 

To establish a shared equity homeownership pilot program for FHA mortgage 

insurance. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 29, 2010 

Mr. GARY G. MILLER of California introduced the following bill; which was 

referred to the Committee on Financial Services 

A BILL 

To establish a shared equity homeownership pilot program 

for FHA mortgage insurance. 

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 ‘‘Strengthening FHA 

5 Through Shared Equity Homeownership Act of 2010’’. 

6 SEC. 2. SHARED EQUITY PILOT PROGRAM. 

7 (a) PURPOSE.—The purpose of this section is to es8 tablish a shared equity homeownership pilot program for 

9 FHA mortgage insurance to complement FHA mortgage 

10 lending activity to analyze the effectiveness of shared eqVerDate Mar 15 2010 04:16 Oct 08, 2010 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6256.IH H6256

tjames on DSKG8SOYB1PROD with BILLS
2 

•HR 6256 IH

1 uity finance methods that stimulate the flow of private eq2 uity capital into the housing sector, while mitigating risk 

3 to borrowers and to the Mutual Mortgage Insurance 

4 Fund. 

5 (b) ESTABLISHMENT.—The Secretary of Housing 

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

7 ‘‘Secretary’’) shall carry out a pilot program under this 

8 section (in this section referred to as the ‘‘pilot program)’’ 

9 to analyze the effectiveness of providing mortgage insur10 ance under the FHA mortgage insurance program for 

11 mortgages for the acquisition or refinancing of 1- to 4- 

12 family residences that are financed in part through a 

13 shared equity arrangement under which independent, pri14 vate sector investors invest, together with the mortgagors, 

15 equity funds for such residences and thereby share in the 

16 ownership of such residences. 

17 (c) APPLICATION AND SELECTION.— 

18 (1) ELIGIBILITY AND APPLICATION.—The Sec19 retary shall establish eligibility requirements for fi20 nancial institutions, nonprofit organizations, housing 

21 associations, investment pools, and other appropriate 

22 individuals and entities to participate in the pilot 

23 program and shall provide for eligible entities to 

24 apply to the Secretary for such participation. Such 

25 applications shall include such information as the 


tjames on DSKG8SOYB1PROD with BILLS
3 

•HR 6256 IH

1 Secretary considers appropriate regarding the mat2 ters referred to in subparagraphs (A) through (D) of 

3 paragraph (2). 

4 (2) SELECTION.—Not later than 270 days after 

5 the date of the enactment of this Act, the Secretary 

6 shall select not more than 8 individuals and entities 

7 to participate in the pilot program, from among eli8 gible individuals and entities applying for such par9 ticipation, using criteria established by the Sec10 retary, which shall include criteria based on— 

11 (A) the methodology to be used for deploy12 ing equity sharing capital, which shall ensure 

13 that equity sharing capital shall be deployed 

14 from private sector sources; 

15 (B) a definition of markets to be targeted; 

16 (C) legal agreements and disclosures nec17 essary to protect mortgagors and all other in18 volved parties and to provide for periodic pro19 gram monitoring; and 

20 (D) the source and level of revenue ex21 pected to be derived from participating in the 

22 pilot program. 

23 (d) PRINCIPAL RESIDENCE.—A residence acquired 

24 with a mortgage that is insured by the Secretary under 


tjames on DSKG8SOYB1PROD with BILLS
4 

•HR 6256 IH

1 the pilot program shall be occupied by the mortgagor as 

2 the primary residence of the mortgagor. 

3 (e) DOWNPAYMENT.—The mortgagor under a mort4 gage insured by the Secretary under the pilot program 

5 shall comply with the requirement under section 203(b)(9) 

6 of the National Housing Act (12 U.S.C. 1709(b)(9)) that 

7 the mortgagor invest the amount required by the Sec8 retary, which shall be not less than 3.5 percent of the ap9 praised value of the residence. 

10 (f) MINIMUM HOMEBUYER EQUITY.—The mortgagor 

11 under the mortgage insured by the Secretary under the 

12 pilot program shall retain a percentage of ownership in 

13 the residence under the shared equity arrangement that 

14 is not less than 60 percent. 

15 (g) INSURANCE PREMIUMS.—Notwithstanding sec16 tion 203(c)(2)(B) of the National Housing Act (12 U.S.C. 

17 1709(c)(2)(B)), the Secretary shall establish and collect 

18 annual premium payments on mortgages insured by the 

19 Secretary under the pilot program in an amount based on 

20 the annual premium charged under such section 

21 203(c)(2)(B), as adjusted by the Secretary to account for 

22 any reduced risk in insuring such mortgages attributable 

23 to the shared equity arrangement. 

24 (h) RIGHTS OF MORTGAGOR.—The Secretary shall 

25 establish requirements to ensure the mortgagor maintains 


tjames on DSKG8SOYB1PROD with BILLS
5 

•HR 6256 IH

1 occupancy rights in the property subject to the mortgage 

2 insured under the pilot program. A mortgagor and shared 

3 equity investor shall receive transactional documentation 

4 that addresses the rights, privileges and responsibilities of 

5 both the mortgagor and shared equity investor. 

6 (i) SCOPE.— 

7 (1) GEOGRAPHIC DIVERSITY.—The Secretary 

8 shall carry out the pilot program in multiple regional 

9 mortgage markets in the United States. 

10 (2) EQUITY SHARING CAPITAL INVESTMENTS.— 

11 The Secretary shall, for each eligible entity partici12 pating in the pilot program, limit the amount of eq13 uity sharing capital invested under the pilot program 

14 to $25,000,000. 

15 (3) TIMING.—The Secretary may not insure 

16 any mortgage in connection with the pilot program 

17 after the expiration of the two-year period beginning 

18 on the date of the implementation of the pilot pro19 gram under this Act. 

20 (j) WAIVER.—The Secretary may waive, or specify al21 ternative requirements for, any provision of any statute, 

22 regulation, or guideline that the Secretary administers (ex23 cept for requirements related to fair housing, non24 discrimination, labor standards, and the environment) 

25 upon a determination by the Secretary that such waiver 


tjames on DSKG8SOYB1PROD with BILLS
6 

•HR 6256 IH

1 is appropriate to carry out the pilot program under this 

2 section. 

3 (k) MONITORING AND REPORTING.— 

4 (1) MONITORING.—The Secretary shall provide 

5 for such monitoring of the pilot program, investors 

6 participating in the pilot program, and shared equity 

7 arrangements entered into under the pilot program 

8 as may be necessary to determine the effectiveness 

9 of the pilot program and of the structure of, and re10 quirements under, the pilot program. 

11 (2) REPORTS TO CONGRESS.—Not later than 

12 the expiration of the 18-month period beginning on 

13 the date of the enactment of this Act, the Comp14 troller General of the United States shall submit a 

15 report to the Congress analyzing effectiveness of the 

16 pilot program and making recommendations regard17 ing expansion of the pilot program and improve18 ments for the pilot program. 

Æ 


tjames on DSKG8SOYB1PROD with BILLS