IIB 

111TH CONGRESS 

2D SESSION H. R. 5072 

IN THE SENATE OF THE UNITED STATES 

JUNE 10, 2010 

Received; read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

AN ACT 

To improve the financial safety and soundness of the FHA 

mortgage insurance program. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘FHA Reform Act of 

3 2010’’. 

4 SEC. 2. MORTGAGE INSURANCE PREMIUMS. 

5 Subparagraph (B) of section 203(c)(2) of the Na6 tional Housing Act (12 U.S.C. 1709(c)(2)(B)) is amend7 ed— 

8 (1) in the matter preceding clause (i)— 

9 (A) by striking ‘‘shall’’ and inserting 

10 ‘‘may’’; and 

11 (B) by striking ‘‘0.50 percent’’ and insert12 ing ‘‘1.5 percent’’; and 

13 (2) in clause (ii), by striking ‘‘shall be in an 

14 amount not exceeding 0.55 percent’’ and inserting 

15 ‘‘may be in an amount not exceeding 1.55 percent’’. 

16 SEC. 3. INDEMNIFICATION BY MORTGAGEES. 

17 Section 202 of the National Housing Act (12 U.S.C. 

18 1708) is amended by adding at the end the following new 

19 subsection: 

20 ‘‘(i) INDEMNIFICATION BY MORTGAGEES.— 

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

22 that a mortgage executed by a mortgagee approved 

23 by the Secretary under the direct endorsement pro24 gram or insured by a mortgagee pursuant to the del25 egation of authority under section 256 was not origi26 nated or underwritten in accordance with the reVerDate Mar 15 2010 21:13 Jun 11, 2010 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.RFS H5072

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1 quirements established by the Secretary, and the 

2 Secretary pays an insurance claim with respect to 

3 the mortgage within a reasonable period specified by 

4 the Secretary, the Secretary may require the mort5 gagee approved by the Secretary under the direct en6 dorsement program or the mortgagee delegated au7 thority under section 256 to indemnify the Secretary 

8 for the loss. 

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

10 fraud or misrepresentation was involved in connec11 tion with the origination or underwriting, the Sec12 retary may require the mortgagee approved by the 

13 Secretary under the direct endorsement program or 

14 the mortgagee delegated authority under section 256 

15 to indemnify the Secretary for the loss regardless of 

16 when an insurance claim is paid. 

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

18 Secretary shall issue regulations establishing appro19 priate requirements and procedures governing the 

20 indemnification of the Secretary by the mortgagee.’’. 

21 SEC. 4. DELEGATION OF INSURING AUTHORITY. 

22 Section 256 of the National Housing Act (12 U.S.C. 

23 1715z–21) is amended— 

24 (1) by striking subsection (c); 


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1 (2) in subsection (e), by striking ‘‘, including’’ 

2 and all that follows through ‘‘by the mortgagee’’; 

3 and 

4 (3) by redesignating subsections (d) and (e) as 

5 subsections (c) and (d), respectively. 

6 SEC. 5. AUTHORITY TO TERMINATE MORTGAGEE ORIGINA7 TION AND UNDERWRITING APPROVAL. 

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

9 1735f–11) is amended— 

10 (1) in the first sentence of subsection (b), by in11 serting ‘‘or areas or on a nationwide basis’’ after 

12 ‘‘area’’ each place such term appears; and 

13 (2) in subsection (c), by striking ‘‘(c)’’ and all 

14 that follows through ‘‘The Secretary’’ in the first 

15 sentence of paragraph (2) and inserting the fol16 lowing: 

17 ‘‘(c) TERMINATION OF MORTGAGEE ORIGINATION

18 AND UNDERWRITING APPROVAL.— 

19 ‘‘(1) TERMINATION AUTHORITY.—If the Sec20 retary determines, under the comparison provided in 

21 subsection (b), that a mortgagee has a rate of early 

22 defaults and claims that is excessive, the Secretary 

23 may terminate the approval of the mortgagee to 

24 originate or underwrite single family mortgages for 


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1 any area, or areas, or on a nationwide basis, not2 withstanding section 202(c) of this Act. 

3 ‘‘(2) PROCEDURE.—The Secretary’’. 

4 SEC. 6. DEPUTY ASSISTANT SECRETARY OF FHA FOR RISK 

5 MANAGEMENT AND REGULATORY AFFAIRS. 

6 (a) ESTABLISHMENT OF POSITION.—Subsection (b) 

7 of section 4 of the Department of Housing and Urban De8 velopment Act (42 U.S.C. 3533(b)) is amended— 

9 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and 

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

11 paragraph: 

12 ‘‘(2) There shall be in the Department, within the 

13 Federal Housing Administration, a Deputy Assistant Sec14 retary for Risk Management and Regulatory Affairs, who 

15 shall be appointed by the Secretary and shall be respon16 sible to the Federal Housing Commissioner for all matters 

17 relating to managing and mitigating risk to the mortgage 

18 insurance funds of the Department and ensuring the per19 formance of mortgages insured by the Department.’’. 

20 (b) TERMINATION.—Upon the appointment and con21 firmation of the initial Deputy Assistant Secretary for 

22 Risk Management and Regulatory Affairs pursuant to sec23 tion 4(b)(2) of the Department of Housing and Urban De24 velopment Act, as amended by subsection (a) of this sec25 tion, the position of chief risk officer within the Federal 


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1 Housing Administration, filled by appointment by the 

2 Federal Housing Commissioner, is abolished. 

3 SEC. 7. USE OF OUTSIDE CREDIT RISK ANALYSIS SOURCES. 

4 Section 202 of the National Housing Act (12 U.S.C. 

5 1708), as amended by the preceding provisions of this Act, 

6 is further amended by adding at the end the following new 

7 subsection: 

8 ‘‘(j) USE OF OUTSIDE CREDIT RISK ANALYSIS

9 SOURCES.—The Secretary may obtain the services of, and 

10 enter into contracts with, private and other entities out11 side of the Department in— 

12 ‘‘(1) analyzing credit risk models and practices 

13 employed by the Department in connection with 

14 such mortgages; 

15 ‘‘(2) evaluating underwriting standards applica16 ble to such mortgages insured by the Department; 

17 and 

18 ‘‘(3) analyzing the performance of lenders in 

19 complying with, and the Department in enforcing, 

20 such underwriting standards.’’. 

21 SEC. 8. REVIEW OF MORTGAGEE PERFORMANCE. 

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

23 1735f–11) is amended— 

24 (1) in subsection (a), by inserting after the pe25 riod at the end the following: ‘‘For purposes of this 


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1 subsection, the term ‘early default’ means a default 

2 that occurs within 24 months after a mortgage is 

3 originated or such alternative appropriate period as 

4 the Secretary shall establish.’’; 

5 (2) in subsection (b), by inserting after the pe6 riod at the end of the first sentence the following: 

7 ‘‘The Secretary shall also identify which mortgagees 

8 have had a significant or rapid increase, as deter9 mined by the Secretary, in the number or percentage 

10 of early defaults and claims on such mortgages, with 

11 respect to all mortgages originated by the mortgagee 

12 or mortgages on housing located in any particular 

13 geographic area or areas.’’; and 

14 (3) by adding at the end the following new sub15 sections: 

16 ‘‘(d) SUFFICIENT RESOURCES.—There is authorized 

17 to be appropriated to the Secretary for each of fiscal years 

18 2010 through 2014 the amount necessary to provide addi19 tional full-time equivalent positions for the Department, 

20 or for entering into such contracts as are necessary, to 

21 conduct reviews in accordance with the requirements of 

22 this section and to carry out other responsibilities relating 

23 to ensuring the safety and soundness of the Mutual Mort24 gage Insurance Fund. 


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1 ‘‘(e) REPORTING TO CONGRESS.—Not later than 90 

2 days after the date of enactment of the FHA Reform Act 

3 of 2010 and not less often than annually thereafter, the 

4 Secretary shall make available to the Committee on Finan5 cial Services of the House of Representatives and the 

6 Committee on Banking, Housing, and Urban Affairs of 

7 the Senate any information and conclusions pursuant to 

8 the reviews required under subsection (a). Such report 

9 shall not include detailed information on the performance 

10 of individual mortgages.’’. 

11 SEC. 9. USE OF NATIONWIDE MORTGAGE LICENSING SYS12 TEM AND REGISTRY. 

13 (a) USE BY MORTGAGEES, OFFICERS, AND OWNERS; 

14 USE FOR INSURED MORTGAGES.— 

15 (1) MORTGAGEES, OFFICERS, AND OWNERS.— 

16 Section 202 of the National Housing Act (12 U.S.C. 

17 1708), as amended by the preceding provisions of 

18 this Act, is further amended by adding at the end 

19 the following new subsections: 

20 ‘‘(k) USE OF NATIONWIDE MORTGAGE LICENSING

21 SYSTEM AND REGISTRY FOR MORTGAGEES, OFFICERS, 

22 AND OWNERS.—The Secretary may require, as a condition 

23 for approval of a mortgagee by the Secretary to originate 

24 or underwrite mortgages on single family residences that 

25 are insured by the Secretary, that the mortgagee— 


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1 ‘‘(1) obtain and maintain a unique company 

2 identifier assigned by the Nationwide Mortgage Li3 censing System and Registry, as established by the 

4 Conference of State Bank Supervisors and the 

5 American Association of Residential Mortgage Regu6 lators; and 

7 ‘‘(2) obtain and maintain, as relates to any and 

8 all officers or owners of the mortgagee who are sub9 ject to the requirements of the S.A.F.E. Mortgage 

10 Licensing Act of 2008, or are otherwise required to 

11 register with the Nationwide Mortgage Licensing 

12 System and Registry, the unique identifier assigned 

13 by the Nationwide Mortgage Licensing System and 

14 Registry, as established by the Conference of State 

15 Bank Supervisors and the American Association of 

16 Residential Mortgage Regulators.’’. 

17 (2) INSURED MORTGAGES.—Section 203 of the 

18 National Housing Act (12 U.S.C. 1709) is amended 

19 by adding at the end the following new subsection: 

20 ‘‘(y) USE OF NATIONWIDE MORTGAGE LICENSING

21 SYSTEM AND REGISTRY FOR INSURED LOANS.—The Sec22 retary may require each mortgage insured under this sec23 tion to include the unique identifier (as such term is de24 fined in section 1503 of the S.A.F.E. Mortgage Licensing 

25 act of 2008 (12 U.S.C. 5102)) and any unique company 


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1 identifier assigned by the Nationwide Mortgage Licensing 

2 System and Registry, as established by the Conference of 

3 State Bank Supervisors and the American Association of 

4 Residential Mortgage Regulators.’’. 

5 (b) COORDINATION WITH STATE REGULATORY

6 AGENCIES.—Section 202 of the National Housing Act (12 

7 U.S.C. 1708), as amended by the preceding provisions of 

8 this Act, is further amended by adding at the end the fol9 lowing new subsection: 

10 ‘‘(l) INFORMATION SHARING WITH STATE REGU11 LATORY AGENCIES.— 

12 ‘‘(1) JOINT PROTOCOL ON INFORMATION SHAR13 ING.—The Secretary shall, through consultation with 

14 State regulatory agencies, pursue protocols for infor15 mation sharing, including the appropriate treatment 

16 of confidential or otherwise restricted information, 

17 regarding either actions described in subsection 

18 (c)(3) of this section or disciplinary or enforcement 

19 actions by a State regulatory agency or agencies 

20 against a mortgagee (as such term is defined in sub21 section (c)(7)). 

22 ‘‘(2) COORDINATION.—To the greatest extent 

23 possible, the Secretary and appropriate State regu24 latory agencies shall coordinate disciplinary and enVerDate Mar 15 2010 21:13 Jun 11, 2010 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.RFS H5072

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1 forcement actions involving mortgagees (as such 

2 term is defined in subsection (c)(7)).’’. 

3 SEC. 10. REPORTING OF MORTGAGEE ACTIONS TAKEN 

4 AGAINST OTHER MORTGAGEES. 

5 Section 202 of the National Housing Act (12 U.S.C. 

6 1708(e)), as amended by the preceding provisions of this 

7 Act, is further amended by adding at the end the following 

8 new subsection: 

9 ‘‘(m) NOTIFICATION OF MORTGAGEE ACTIONS.—The 

10 Secretary shall require each mortgagee, as a condition for 

11 approval by the Secretary to originate or underwrite mort12 gages on single family or multifamily housing that are in13 sured by the Secretary, if such mortgagee engages in the 

14 purchase of mortgages insured by the Secretary and origi15 nated by other mortgagees or in the purchase of the serv16 icing rights to such mortgages, and such mortgagee at any 

17 time takes action to terminate or discontinue such pur18 chases from another mortgagee based on any determina19 tion, evidence, or report of fraud or material misrepresen20 tation in connection with the origination of such mort21 gages, the mortgagee shall, not later than 15 days after 

22 taking such action, shall notify the Secretary of the action 

23 taken and the reasons for such action.’’. 


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1 SEC. 11. ANNUAL ACTUARIAL STUDY AND QUARTERLY RE2 PORTS ON MUTUAL MORTGAGE INSURANCE 

3 FUND. 

4 Subsection (a) of section 202 of the National Hous5 ing Act (12 U.S.C. 1708(a)) is amended— 

6 (1) in the second sentence of paragraph (4), by 

7 inserting before the period at the end the following: 

8 ‘‘, any changes to the current or projected safety 

9 and soundness of the Fund since the most recent re10 port under this paragraph or paragraph (5), and 

11 any risks to the Fund’’; and 

12 (2) in paragraph (5)— 

13 (A) in subparagraph (D), by striking 

14 ‘‘and’’ at the end; 

15 (B) in subparagraph (E), by striking the 

16 period at the end and inserting ‘‘; and’’; 

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

18 ‘‘(F) any other factors that are likely to 

19 have an impact on the financial status of the 

20 Fund or cause any material changes to the cur21 rent or projected safety and soundness of the 

22 Fund since the most recent report under para23 graph (4). 

24 The Secretary may include in the report under this 

25 paragraph any recommendations not made in the 

26 most recent report under paragraph (4) that may be 


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1 needed to ensure that the Fund remains financially 

2 sound.’’. 

3 SEC. 12. REVIEW OF DOWNPAYMENT REQUIREMENTS. 

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

5 1711) is amended by adding at the end the following new 

6 subsection: 

7 ‘‘(g) REVIEW OF DOWNPAYMENT REQUIREMENTS.— 

8 If, at any time when the capital ratio (as such term is 

9 defined in subsection (f)) of the Mutual Mortgage Insur10 ance Fund does not comply with the requirement under 

11 subsection (f)(1), the Secretary establishes a cash invest12 ment requirement, for all mortgages or mortgagors or with 

13 respect to any group of mortgages or mortgagors, that ex14 ceeds the minimum percentage or amount required under 

15 section 203(b)(9), thereafter upon the capital ratio first 

16 complying with the requirement under subsection (f)(1) 

17 the Secretary shall review such cash investment require18 ment and, if the Secretary determines that such percent19 age or amount may be reduced while maintaining such 

20 compliance, the Secretary shall subsequently reduce such 

21 requirement by such percentage or amount as the Sec22 retary considers appropriate.’’. 


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1 SEC. 13. AUTHORIZATION TO PARTICIPATE IN THE ORIGI2 NATION OF FHA-INSURED LOANS. 

3 (a) SINGLE FAMILY MORTGAGES.—Section 203(b) of 

4 the National Housing Act (12 U.S.C. 1709(b)) is amended 

5 by striking paragraph (1) and inserting the following new 

6 paragraph: 

7 ‘‘(1) Have been made to a mortgagee approved 

8 by the Secretary or to a person or entity authorized 

9 by the Secretary under section 202(d)(1) to partici10 pate in the origination of the mortgage, and be held 

11 by a mortgagee approved by the Secretary as re12 sponsible and able to service the mortgage prop13 erly.’’. 

14 (b) HOME EQUITY CONVERSION MORTGAGES.—Sec15 tion 255(d) of the National Housing Act (12 U.S.C. 

16 1715z–20(d)) is amended by striking paragraph (1) and 

17 inserting the following new paragraph: 

18 ‘‘(1) have been originated by a mortgagee ap19 proved by, or by a person or entity authorized under 

20 section 202(d)(1) to participate in the origination 

21 by, the Secretary;’’. 

22 SEC. 14. DEFAULT AND ORIGINATION INFORMATION BY 

23 LOAN SERVICER AND ORIGINATING DIRECT 

24 ENDORSEMENT LENDER. 

25 (a) COLLECTION OF INFORMATION.—Paragraph (2) 

26 of section 540(b) of the National Housing Act (12 U.S.C. 


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1 1712 U.S.C. 1735f–18(b)(2)) is amended by adding at the 

2 end the following new subparagraph: 

3 ‘‘(C) For each entity that services insured 

4 mortgages, data on the performance of mort5 gages originated during each calendar quarter 

6 occurring during the applicable collection pe7 riod, disaggregated by the direct endorsement 

8 mortgagee from whom such entity acquired 

9 such servicing.’’. 

10 (b) APPLICABILITY.—Information described in sub11 paragraph (C) of section 540(b)(2) of the National Hous12 ing Act, as added by subsection (a) of this section, shall 

13 first be made available under such section 540 for the ap14 plicable collection period (as such term is defined in such 

15 section) relating to the first calendar quarter ending after 

16 the expiration of the 12-month period that begins on the 

17 date of the enactment of this Act. 

18 SEC. 15. THIRD PARTY SERVICER OUTREACH. 

19 (a) AUTHORITY.—The Secretary of Housing and 

20 Urban Development may, to the extent any amounts for 

21 fiscal year 2010 or 2011 are made available in advance 

22 in appropriation Acts for reimbursements under this sec23 tion, provide reimbursement to servicers of covered mort24 gages (as such term is defined in subsection (f)) for costs 

25 of obtaining the services of independent third parties 


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1 meeting the requirements under subsection (b) of this sec2 tion to make in-person contact with mortgagors under cov3 ered mortgages whose payments under such mortgages are 

4 60 or more days past due, solely for the purposes of pro5 viding information to such mortgagors regarding— 

6 (1) available counseling by housing counseling 

7 agencies approved by the Secretary; 

8 (2) available mortgage loan modification, refi9 nance, and assistance programs; and 

10 (3) available counseling regarding financial 

11 management and credit risk. 

12 (b) QUALIFIED INDEPENDENT THIRD PARTIES.—An 

13 independent third party meets the requirements of this 

14 subsection if the third party— 

15 (1) is an entity, including a housing counseling 

16 agency approved by the Secretary, that meets stand17 ards, qualifications, and requirements (including re18 garding foreclosure prevention training, quality mon19 itoring, safeguarding of non-public information) es20 tablished by the Secretary for purposes of this sec21 tion for in-person contact about available mortgage 

22 loan modification, refinance, and assistance pro23 grams; and 

24 (2) does not charge any fees or require other 

25 payments, directly or indirectly, from any mortgagor 


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1 for making in-person contact and providing informa2 tion and documents under this section. 

3 (c) TREATMENT OF PERSONAL, NON-PUBLIC, AND

4 CONFIDENTIAL INFORMATION.—An independent third 

5 party whose services are obtained using amounts made 

6 available for use under this section and the mortgage 

7 servicer obtaining such services shall not use, disclose, or 

8 distribute any personal, non-public, or confidential infor9 mation about a mortgagor obtained during an in-person 

10 contact with the mortgagor, except for purposes of engag11 ing in the process of modification or refinance of the cov12 ered mortgage. 

13 (d) DATE OF CONTACT AND DISCLOSURES.—Each 

14 independent third party whose services are obtained by a 

15 mortgage servicer using amounts made available for use 

16 under this section shall— 

17 (1) initiate in-person contact with a mortgagor 

18 not later than 10 days after the date upon which 

19 payments under the covered mortgage of the mort20 gagor become 60 days past due; and 

21 (2) upon making in-person contact with a mort22 gagor, provide the mortgagor with a written docu23 ment that discloses— 


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1 (A) the name of, and contact information 

2 for, the independent third party and the mort3 gage servicer; 

4 (B) that the independent third party has 

5 contracted with the mortgage servicer to pro6 vide the in-person contact at no charge to the 

7 mortgagor; 

8 (C) that the independent third party is an 

9 agent of the mortgage servicer; 

10 (D) that the in-person contact with the 

11 mortgagor consists of providing information 

12 about available counseling by a housing coun13 seling agency approved by the Secretary and 

14 available mortgage loan modification, refinance, 

15 and assistance programs; 

16 (E) that the independent third party and 

17 the mortgage servicer are prohibited from the 

18 use, disclosure, or distribution of personal, non19 public, and confidential information about the 

20 mortgagor, obtained during the in-person con21 tact, except for purposes of engaging in the 

22 process of modification or refinance of the cov23 ered mortgage; 

24 (F) any other information that the Sec25 retary determines should be disclosed. 


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1 (e) PRIORITY.—In providing reimbursements under 

2 this section, the Secretary of Housing and Urban Develop3 ment shall provide priority to independent third parties 

4 serving mortgagors under covered mortgages in areas ex5 periencing a mortgage foreclosure rate and unemployment 

6 rate higher than the national average for the most recent 

7 12-month period for which satisfactory data are available. 

8 (f) DEFINITION OF COVERED MORTGAGE.—For pur9 poses of this section, the term ‘‘covered mortgage’’ means 

10 a mortgage on a 1- to 4-family residence insured under 

11 the provisions of subsection (b) or (k) of section 203, sec12 tion 234(c), or 251 of the National Housing Act (12 

13 U.S.C. 1709, 1715y, 1715z–16). 

14 SEC. 16. GAO REPORT ON FHA. 

15 Not later than the expiration of the 12-month period 

16 beginning on the date of the enactment of this Act, the 

17 Comptroller General of the United States shall submit to 

18 the Congress a report on the single family mortgage insur19 ance programs of the Secretary of Housing and Urban De20 velopment and the Mutual Mortgage Insurance Fund es21 tablished under section 202(a) of the National Housing 

22 Act (12 U.S.C. 1708(a)) that— 

23 (1) analyzes such Fund, the economic net 

24 worth, capital ratio, and unamortized insurance-in25 force (as such terms are defined in section 205(f)(4) 


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1 of such Act (12 U.S.C. 1711(f)(4))) of such Fund, 

2 the risks to the Fund, how the capital ratio of the 

3 Fund affects the mortgage insurance programs 

4 under the Fund and the broader housing market, 

5 the extent to which the housing markets are more 

6 dependent on mortgage insurance provided through 

7 the Fund since the financial crisis began in 2008, 

8 and the exposure of the taxpayers for obligations of 

9 the Fund; 

10 (2) analyzes the methodology for determining 

11 the Fund’s capital ratio under section 205(f) of such 

12 Act and examines alternative methods for assessing 

13 the Fund’s financial condition and their potential 

14 impacts on the Fund’s ability to meet the oper15 ational goals under section 202(a)(7) of such Act; 

16 (3) analyzes the potential effects of the in17 creases in the limits on the maximum principal obli18 gation of mortgages made by the FHA Moderniza19 tion Act of 2008 (title I of division B of Public Law 

20 110–289), section 202 of the Economic Stimulus 

21 Act of 2008 (Public Law 110–185; 122 Stat. 620), 

22 section 1202 of division A of the American Recovery 

23 and Reinvestment Act of 2009 (Public Law 111–5; 

24 123 Stat. 225), and section 166 of the Continuing 

25 Appropriations Resolution, 2010 (as added by secVerDate Mar 15 2010 21:13 Jun 11, 2010 Jkt 089200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.RFS H5072

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1 tion 104 of division B of Public Law 111–88; 123 

2 Stat. 29723) on— 

3 (A) the risks to and safety and soundness 

4 of the Fund; 

5 (B) the impact on the affordability and 

6 availability of mortgage credit for borrowers for 

7 loans authorized under such higher loan limits; 

8 (C) the private market for residential 

9 mortgage loans that are not insured by the Sec10 retary of Housing and Urban Development; and 

11 (D) the Federal National Mortgage Asso12 ciation and the Federal Home Loan Mortgage 

13 Corporation; and 

14 (4) analyzes the impact on affordability to FHA 

15 borrowers, and the impact to the Fund, of seller 

16 concessions or contributions to a borrower pur17 chasing a residence using a mortgage that is insured 

18 by the Secretary. 

19 SEC. 17. AUTHORITY TO ESTABLISH HIGHER MINIMUM 

20 CASH INVESTMENT REQUIREMENT. 

21 (a) AUTHORITY.—Paragraph (9) of section 203(b) of 

22 the National Housing Act (12 U.S.C. 1709(b)(9)) is 

23 amended by adding at the end the following new subpara24 graph: 


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1 ‘‘(D) AUTHORITY TO ESTABLISH HIGHER

2 MINIMUM REQUIREMENT.—The Secretary may 

3 establish a higher minimum cash investment re4 quirement than the minimum requirement 

5 under subsection (a), for all mortgagors or a 

6 certain class or classes of mortgagors, which 

7 may be based on criteria related to borrowers’ 

8 credit scores or other industry standards re9 lated to borrowers’ financial soundness. In es10 tablishing such a higher minimum cash invest11 ment requirement, the Secretary shall take into 

12 consideration the findings of the most recent 

13 annual report to the Congress on minimum 

14 cash investments pursuant to section 16(b) of 

15 the FHA Reform Act of 2010.’’. 

16 (b) REPORT.—Not later than the expiration of the 

17 12-month period beginning on the date of the enactment 

18 of this Act and annually thereafter, the Secretary of Hous19 ing and Urban Development shall submit to the Com20 mittee on Financial Services of the House of Representa21 tives and the Committee on Banking, Housing, and Urban 

22 Affairs of the Senate a report detailing the implementa23 tion of the minimum cash investment requirements under 

24 section 203(b)(9) of the National Housing Act (12 U.S.C. 

25 1709(b)(9)) and discussing and analyzing options for proVerDate Mar 15 2010 21:13 Jun 11, 2010 Jkt 089200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\H5072.RFS H5072

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1 posed changes to such requirements, including changes 

2 that would take into account borrowers’ credit scores or 

3 other industry standards related to borrowers’ financial 

4 soundness. Such report shall— 

5 (1) analyze the impacts that any actual or pro6 posed such changes are projected to have on— 

7 (A) the financial soundness of the Mutual 

8 Mortgage Insurance Fund; 

9 (B) the housing finance market of the 

10 United States; and 

11 (C) the number of borrowers served by the 

12 Federal Housing Administration; 

13 (2) explain the reasons for any actual or pro14 posed such changes in the such requirements made 

15 since the last report under this subsection; 

16 (3) evaluate the impact of any actual or pro17 posed such changes in such requirements on the Mu18 tual Mortgage Insurance Fund; 

19 (4) evaluate the impacts of any actual or pro20 posed such changes on potential mortgagors under 

21 mortgages on one- to four-family dwellings insured 

22 by the Secretary under the National Housing Act; 

23 and 


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1 (5) evaluate the impact of any actual or pro2 posed such changes on the soundness of the housing 

3 market in the United States. 

4 SEC. 18. MORTGAGE INSURANCE PREMIUM REFUNDS. 

5 (a) AUTHORITY.—The Secretary of Housing and 

6 Urban Development shall, to the extent that amounts are 

7 made available pursuant to subsection (c), provide refunds 

8 of unearned premium charges paid at the time of insur9 ance for mortgage insurance under title II of the National 

10 Housing Act (12 U.S.C. 1707 et seq.) to or on behalf of 

11 mortgagors under mortgages described in subsection (b). 

12 (b) ELIGIBLE MORTGAGES.—A mortgage described 

13 in this section is a mortgage on a one- to four-family 

14 dwelling that— 

15 (1) was insured under title II of the National 

16 Housing Act (12 U.S.C. 1707 et seq.); 

17 (2) is otherwise eligible, under the last sentence 

18 of subparagraph (A) of section 203(c)(2) of such Act 

19 (12 U.S.C. 1709(c)(2)(A)), for a refund of all un20 earned premium charges paid on the mortgage pur21 suant to such subparagraph, except that the mort22 gage— 

23 (A) was closed before December 8, 2004; 

24 and 

25 (B) was endorsed on or after such date. 


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1 (c) AUTHORIZATION OF APPROPRIATIONS.—There is 

2 authorized to be appropriated for each fiscal year such 

3 sums as may be necessary to provide refunds of unearned 

4 mortgage insurance premiums pursuant to this section. 

5 SEC. 19. MAXIMUM MORTGAGE AMOUNT LIMITS FOR MUL6 TIFAMILY HOUSING. 

7 (a) ELEVATOR-TYPE STRUCTURES.— 

8 (1) AMENDMENTS.—The National Housing Act 

9 is amended in each of the provisions specified in 

10 paragraph (2)— 

11 (A) by inserting ‘‘with sound standards of 

12 construction and design’’ after ‘‘elevator-type 

13 structures’’ the first place such term appears; 

14 and 

15 (B) by striking ‘‘to not to exceed’’ and all 

16 that follows through ‘‘sound standards of con17 struction and design’’ each place such terms ap18 pear and inserting ‘‘by not more than 50 per19 cent of the amounts specified for each unit 

20 size’’. 

21 (2) PROVISIONS AMENDED.—The provisions of 

22 the National Housing Act specified in this para23 graph are as follows: 

24 (A) Subparagraph (A) of section 207(c)(3) 

25 (12 U.S.C. 1713(c)(3)(A)). 


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1 (B) Subparagraph (A) of section 213(b)(2) 

2 (12 U.S.C. 1715e(b)(2)(A)). 

3 (C) Subclause (I) of section 

4 220(d)(3)(B)(iii) (12 U.S.C. 

5 1715k(d)(3)(B)(iii)(I)). 

6 (D) In section 221(d) (12 U.S.C. 

7 1715l(d))— 

8 (i) subclause (I) of paragraph (3)(ii); 

9 and 

10 (ii) subclause (I) of paragraph (4)(ii). 

11 (E) Subparagraph (A) of section 231(c)(2) 

12 (12 U.S.C. 1715v(c)(2)(A)). 

13 (F) Subparagraph (A) of section 234(e)(3) 

14 (12 U.S.C. 1715y(e)(3)(A)). 

15 (b) EXTREMELY HIGH-COST AREAS.—Section 214 of 

16 the National Housing Act (12 U.S.C. 1715d) is amend17 ed— 

18 (1) in the first sentence— 

19 (A) by inserting ‘‘, or with respect to 

20 projects consisting of more than four dwelling 

21 units located in an extremely high-cost area as 

22 determined by the Secretary’’ after ‘‘or the Vir23 gin Islands’’ the first place such term appears; 

24 (B) by inserting ‘‘, or to construct projects 

25 consisting of more than four dwelling units on 


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1 property located in an extremely high-cost area 

2 as determined by the Secretary’’ after ‘‘or the 

3 Virgin Islands’’ the second place such term ap4 pears; and 

5 (C) by inserting ‘‘, or with respect to 

6 projects consisting of more than four dwelling 

7 units located in an extremely high-cost area as 

8 determined by the Secretary’’ after ‘‘or the Vir9 gin Islands’’ the third place such term appears; 

10 (2) in the second sentence— 

11 (A) by inserting ‘‘, or with respect to a 

12 project consisting of more than four dwelling 

13 units located in an extremely high-cost area as 

14 determined by the Secretary,’’ after ‘‘or the Vir15 gin Islands’’ the first place such term appears; 

16 and 

17 (B) by inserting ‘‘, or in the case of a 

18 project consisting of more than four dwelling 

19 units in an extremely high-cost area as deter20 mined by the Secretary, in such extremely high21 cost area,’’ after ‘‘or the Virgin Islands’’ the 

22 second place such term appears; and 

23 (3) in the section heading, by striking ‘‘AND

24 THE VIRGIN ISLANDS’’ and inserting ‘‘THE VIRGIN

25 ISLANDS, AND EXTREMELY HIGH-COST AREAS’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to mortgages insured under title 

3 II of the National Housing Act after September 30, 2010. 

4 SEC. 20. SPECIAL FORBEARANCE FOR MORTGAGORS WITH 

5 CHINESE DRYWALL. 

6 The provisions of Mortgagee Letter 2002–17 of the 

7 Secretary of Housing and Urban Development (regarding 

8 ‘‘Special Forbearance: Program Changes and Updates’’) 

9 relating to Type I Special Forbearance shall apply, until 

10 the conclusion of fiscal year 2011 and may not be revoked, 

11 annulled, repealed, or rescinded during such period, with 

12 respect to mortgagees of mortgages insured under title II 

13 of the National Housing Act that are secured by one- to 

14 four-family dwellings that have problem or damaging 

15 drywall products. 

16 SEC. 21. INCREASED LOAN LIMITS FOR DESIGNATED COUN17 TIES. 

18 (a) AUTHORITY.—Notwithstanding any other provi19 sion of law, the Secretary of Housing and Urban Develop20 ment (in this section referred to as the ‘‘Secretary’’) may 

21 increase the dollar amount limitations on the principal ob22 ligation of mortgages otherwise determined under section 

23 203(b)(2) of the National Housing Act for any county that 

24 is designated under this section. 

25 (b) PROCEDURE.— 


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1 (1) FEDERAL REGISTER NOTICE.—Any designa2 tion of a county under this section shall be made 

3 only pursuant to application by the county for such 

4 designation, in accordance with procedures that the 

5 Secretary may establish. The Secretary may estab6 lish such procedures only by publication in the Fed7 eral Register not later than 60 days after the date 

8 of the enactment of this Act. 

9 (2) FINAL DETERMINATION.—If the Secretary 

10 establishes procedures for applications under para11 graph (1) and receives a completed application for 

12 designation under this section of a county in accord13 ance with such procedures, the Secretary shall issue 

14 a final determination regarding such application for 

15 designation, based on the criteria under subsection 

16 (c), not later than 60 days after such receipt. 

17 (c) DETERMINATION CRITERIA.—The Secretary may 

18 designate an applicant county under this section only if 

19 the county is located within a micropolitan area (as such 

20 term is defined by the Director of the Office of Manage21 ment and Budget) and meets the following criteria: 

22 (1) More than 70 percent of the border of the 

23 applicant county abuts two or more metropolitan 

24 statistical areas (as such term is defined by the Di25 rector of the Office of Management and Budget) for 


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1 which each dollar amount limitation on the principal 

2 obligation of a mortgage that may be insured under 

3 section 203 of the National Housing Act, in effect 

4 at the time of such determination, is at least 40 per5 cent greater than the dollar amount limitation for 

6 the same size residence for the applicant county. For 

7 purposes of such calculation, the dollar amount limi8 tations of such abutting counties shall not include 

9 any increase attributable to the authority under this 

10 section. 

11 (2) The applicant county has experienced sig12 nificant population growth, as evidenced by an in13 crease of 15 percent or more during the 10 years 

14 preceding the application, according to statistics of 

15 the United States Census Bureau or such other ap16 propriate criteria as the Secretary shall establish. 

17 (3) The dollar amount limitation on the prin18 cipal obligation of a mortgage on housing in the ap19 plicant county that may be insured under section 

20 203 of the National Housing Act, in effect at the 

21 time of such application, is the minimum such dollar 

22 amount limitation allowable under the matter that 

23 follows clause (ii) in section 203(b)(2)(A) of the Na24 tional Housing Act. 


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1 (d) ESTABLISHMENT OF LOAN LIMITS.—For a coun2 ty designated under this section, the Secretary may in3 crease the maximum dollar amount limitations on the 

4 principal obligation of mortgages otherwise determined 

5 under section 203(b)(2) of the National Housing Act to 

6 such levels as are appropriate, taking into consideration 

7 the criteria established for such designation, but not to 

8 exceed the dollar amount limitations for the abutting met9 ropolitan statistical area meeting the requirements of sub10 section (c)(1) that has the lowest such dollar amount limi11 tations. 

12 (e) EFFECTIVE DATE AND TERM OF DESIGNATION

13 OF NEW COUNTYWIDE LOAN LIMITS.—A designation of 

14 a county under this section, and the maximum dollar 

15 amount limitations for such county pursuant to subsection 

16 (d), shall— 

17 (1) take effect upon the expiration of the 60- 

18 day period that begins upon the final determination 

19 for the county referred to in subsection (b)(2); and 

20 (2) remain in effect until the end of the cal21 endar year in which such designation takes effect. 

22 (f) LOAN LIMITS FOR SUCCEEDING YEARS.—With 

23 respect to each calendar year immediately following the 

24 calendar year in which a county is designated under this 

25 subsection, the Secretary may, notwithstanding any other 


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1 provision of law, continue or adjust the dollar amount limi2 tations in effect pursuant to this section for such des3 ignated county for such preceding year, as appropriate, 

4 consistent with the criteria under this section. 

5 SEC. 22. IDENTIFICATION REQUIREMENTS FOR BOR6 ROWERS. 

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

8 1709), as amended by the preceding provisions of this Act, 

9 is further amended by adding at the end the following new 

10 subsection: 

11 ‘‘(z) IDENTIFICATION REQUIREMENTS FOR BOR12 ROWERS.—No mortgage on a 1- to 4-family dwelling may 

13 be insured under this title unless the mortgagor under 

14 such mortgage— 

15 ‘‘(1) provides a valid Social Security Number; 

16 and 

17 ‘‘(2) is (A) a United States citizen, (B) a lawful 

18 permanent resident alien, or (C) a non-permanent 

19 resident alien who legally resides in and is author20 ized to work in the United States. 

21 The Secretary shall establish policies under which mortga22 gees verify compliance with the requirements under this 

23 subsection.’’. 


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1 SEC. 23. REQUIRED CERTIFICATIONS. 

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

3 1709), as amended by the preceding provisions of this Act, 

4 is further amended by adding at the end the following new 

5 subsection: 

6 ‘‘(z) REQUIRED CERTIFICATIONS.—Notwithstanding 

7 any other provision of law, the Secretary may not insure 

8 any mortgage secured by a one- to four-family dwelling 

9 unless the mortgagor under such mortgage certifies, under 

10 penalty of perjury, that the mortgagor has not been con11 victed of a sex offense against a minor (as such terms are 

12 defined in section 111 of the Sex Offender Registration 

13 and Notification Act (42 U.S.C. 16911)).’’. 

14 SEC. 24. PROHIBITION ON USE OF FUNDS FOR CERTAIN 

15 FEDERAL EMPLOYEES. 

16 None of the funds authorized under this Act or any 

17 amendment made by this Act may be used to pay the sal18 ary of any individual engaged in activities related to title 

19 II of the National Housing Act who has been officially 

20 disciplined for violations of subpart G of the Standards 

21 of Ethical Conduct for Employees of the Executive Branch 

22 for viewing, downloading, or exchanging pornography, in23 cluding child pornography, on a Federal Government com24 puter or while performing official Federal Government du25 ties. 


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1 SEC. 25. PROHIBITION OF MORTGAGE INSURANCE FOR 

2 BORROWERS WITH STRATEGIC DEFAULTS. 

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

4 1709), as amended by the preceding provisions of this Act, 

5 is further amended by adding at the end the following new 

6 subsection: 

7 ‘‘(z) PROHIBITION OF MORTGAGE INSURANCE FOR

8 BORROWERS WITH STRATEGIC DEFAULTS.— 

9 ‘‘(1) PROHIBITION.—The Secretary may not 

10 newly insure any mortgage under this title that is 

11 secured by a 1- to 4-family dwelling unless the mort12 gagee has determined, in accordance with such 

13 standards and requirements established by the Sec14 retary, that the mortgagor under such mortgage has 

15 not previously engaged in any strategic default with 

16 respect to any residential mortgage loan. 

17 ‘‘(2) STRATEGIC DEFAULT.—For purposes of 

18 this subsection, the term ‘strategic default’ means, 

19 with respect to a residential mortgage loan, an in20 tentional default having such characteristics or 

21 under such circumstances as the Secretary shall, by 

22 regulation, provide.’’. 

23 SEC. 26. PROHIBITION ON TAXPAYER BAILOUT OF FHA 

24 PROGRAM. 

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

26 1711), as amended by the preceding provisions of this Act, 


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1 is further amended by adding at the end the following new 

2 subsection: 

3 ‘‘(h) TAXPAYER PROTECTION.—The Secretary shall 

4 use all available actions and methods authorized under law 

5 to ensure compliance with subsection (f)(2) and to protect 

6 the taxpayers of the United States from financial responsi7 bility for any obligations of the Fund, including authority 

8 to increase insurance premiums charged under this title 

9 for mortgages that are obligations of the Fund, authority 

10 to establish more stringent underwriting standards for 

11 such mortgages, and authority to increase the amount of 

12 cash or its equivalent required to be paid on account of 

13 the property subject to such a mortgage.’’. 

Passed the House of Representatives June 10, 2010. 

Attest: LORRAINE C. MILLER, 

Clerk. 


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