I

104TH CONGRESS

2D SESSION H. R. 3742

To increase the flexibility of and to streamline certain single family programs

administered by the Federal Housing Administration, to reform the single

family claims and property disposition procedures, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 27, 1996

Mr. LAZIO of New York (by request) introduced the following bill; which was

referred to the Committee on Banking and Financial Services

A BILL

To increase the flexibility of and to streamline certain single

family programs administered by the Federal Housing

Administration, to reform the single family claims and

property disposition procedures, 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 AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘FHA Single Family Housing Reform Act of 1996’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

Sec. 2. Implementation.

TITLE I—PRODUCT FLEXIBILITY AND INSURANCE
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Sec. 10. Alternative mortgage insurance premium structures.

Sec. 11. Insurance of pioneering single family products.

Sec. 12. Limitation on FHA insuring authority.

TITLE II—CLAIMS AND PROPERTY DISPOSITION REFORM

INITIATIVES

Sec. 20. Single family claims reform.

Sec. 21. Sale of acquired property.

TITLE III—STREAMLINING PROPOSALS

Sec. 30. Authority to establish loan to value ratios and related changes to warranty requirement.

Sec. 31. Delegation of insuring authority to DE mortgagees.

Sec. 32. Authority to use amounts borrowed from family members for

downpayments.

Sec. 33. HECM program.

Sec. 34. 100% condominium mortgage insurance for disasters.

Sec. 35. Repeal of provision for fund payments to correct substantial defects.

1 SEC. 2. IMPLEMENTATION.

2 (a) ISSUANCE OF NECESSARY REGULATIONS.—Not3 withstanding 42 U.S.C. 3535(o) or 24 CFR part 10, the

4 Secretary shall issue such regulations as may be necessary

5 to implement any provision of this Act, and any amend6 ment made by this Act, in accordance with section 552

7 or 553 of title 5, United States Code, as determined by

8 the Secretary.

9 (b) USE OF EXISTING RULES.—In implementing any

10 provision of this Act, the Secretary may, in the Secretary’s

11 discretion, provide for the use of existing rules to the ex12 tent appropriate, without the need for further rulemaking.
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1 TITLE I—PRODUCT FLEXIBILITY AND

2 INSURANCE

3 SEC. 10. ALTERNATIVE MORTGAGE INSURANCE PREMIUM

4 STRUCTURES.

5 Section 203(c) of the National Housing Act is

6 amended by adding at the end the following:

7 ‘‘(3)(A) For any class or group of mortgages identi8 fied by the Secretary that are insured under this title, se9 cured by 1- to 4-family dwellings and executed on or after

10 the effective date of the American Community Partner11 ships Act of 1996, the Secretary may establish a mortgage

12 insurance premium structure involving a single premium

13 collected prior to the insurance of the mortgage or periodic

14 premium payments, or both, without regard to any maxi15 mum or minimum premium amounts set forth in this sub16 section. The rate of premium for a mortgage may vary

17 during the mortgage term as long as the basis for deter18 mining the variable rate is determined prior to execution

19 of the mortgage. The Secretary may change a premium

20 structure established under this subparagraph if the

21 change is not applied to any mortgage already executed.

22 ‘‘(B) A premium structure shall be established or

23 changed under subparagraph (A) by publishing notice in

24 the Federal Register and by providing notice to Congress
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1 at least 30 days before the premium structure is estab2 lished or changed.

3 ‘‘(C) The Secretary shall consider the following when

4 establishing a premium structure under subparagraph (A)

5 or when changing such a premium structure—

6 ‘‘(i) the effect on the Secretary’s ability to meet

7 the operational goals of the Mutual Mortgage Insur8 ance Fund as provided in section 205(h), or the ef9 fect on the Secretary’s ability to insure mortgages

10 for low- and moderate-income homeowners under the

11 General Insurance Fund on a sound actuarial basis;

12 ‘‘(ii) the needs of first-time homebuyers and

13 homebuyers with limited ability to make

14 downpayments;

15 ‘‘(iii) the extent to which new pricing has poten16 tial for acceptance on the private market; and

17 ‘‘(iv) the administrative capability of the Sec18 retary to administer the proposed premium struc19 ture.

20 ‘‘(D) After a mortgage is insured, the mortgagor and

21 mortgagee shall have no right to a refund of any premium

22 amount established under subparagraph (A). If a mort23 gage is prepaid in full, the Secretary may refund to the

24 mortgagor all or part of any unearned premium charges

25 collected prior to the insurance of the mortgage.
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1 ‘‘(E) The Secretary may defer the collection date for

2 all or any part of a premium due under a premium struc3 ture established under this paragraph, with or without col4 lecting interest on the deferred payment, until payment

5 of the mortgage in full or such other event as the Sec6 retary may prescribe.’’.

7 SEC. 11. INSURANCE OF PIONEERING SINGLE FAMILY

8 PRODUCTS.

9 (a) IN GENERAL.—Title II of the National Housing

10 Act is amended by adding at the end the following new

11 section:

12 ‘‘INSURANCE OF PIONEERING SINGLE FAMILY PRODUCTS

13 ‘‘SEC. 256. (a) IN GENERAL.—The Secretary may

14 carry out demonstrations which have the potential to in15 crease homeownership opportunities through innovative

16 underwriting, premium structures, and insured mortgage

17 products. Demonstrations shall be consistent with the

18 goals of this Act.

19 ‘‘(b) PURPOSES.—The purposes of this section are

20 to—

21 ‘‘(1) expand opportunities for homeownership

22 through credit enhancement demonstrations;

23 ‘‘(2) address the unmet housing needs of Amer24 ican families and communities by supplementing pri25 vate sector activity;
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1 ‘‘(3) better serve underserved markets through

2 research, developing, and testing new insurance

3 products and methods of delivering mortgage serv4 ices;

5 ‘‘(4) expand access to affordable housing on a

6 nondiscriminatory basis; and

7 ‘‘(5) improve the capacity of localities, States,

8 and for profit and non-profit entities to deliver hous9 ing credit to American families and communities.

10 ‘‘(c) DEMONSTRATION REQUIREMENTS.—In approv11 ing a demonstration under this section, the Secretary may

12 establish such requirements as the Secretary considers ap13 propriate to further the purposes of this section. The Sec14 retary shall determine the terms and conditions of insur15 ance, notwithstanding any provision of this Act.

16 ‘‘(d) TERM OF DEMONSTRATION.—Each demonstra17 tion may be approved for a term of up to 5 years. The

18 term of an insured mortgage or an activity carried out

19 under a demonstration may extend for a longer term, as

20 determined by the Secretary. The Secretary may termi21 nate any demonstration before the end of the approved

22 term if the Secretary deems such action necessary.

23 ‘‘(e) USE OF GENERAL INSURANCE FUND.—The in24 surance or reinsurance of a mortgage or pool of mortgages

25 by the Secretary under this section shall be an obligation
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1 of the General Insurance Fund created pursuant to sec2 tion 519 of this Act.

3 ‘‘(f) PROGRAM LEVEL.—

4 ‘‘(1) ALL DEMONSTRATIONS.—The aggregate

5 number of mortgages insured under this section in

6 any fiscal year may not exceed 10 percent of the

7 number of single family mortgages insured by the

8 Secretary under this title in the current fiscal year.

9 ‘‘(2) EACH DEMONSTRATION.—The total num10 ber of mortgages insured under this section pursu11 ant to any one demonstration in any fiscal year may

12 not exceed 5 percent of the number of single family

13 mortgages insured under this title in the current fis14 cal year.

15 ‘‘(g) REPORTS.—

16 ‘‘(1) ANNUAL PROGRESS REPORT.—For each

17 demonstration carried out under this section, the

18 Secretary shall prepare an annual progress report.

19 ‘‘(2) REPORT FOLLOWING COMPLETION OF

20 EACH DEMONSTRATION.—The Secretary shall sub21 mit a report to Congress within 1 year after the

22 completion of each demonstration, describing the re23 sults of the demonstration and making any rec24 ommendations for legislation.’’.
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1 (b) EVALUATIONS.—The Secretary shall conduct

2 such evaluations of the demonstrations under section 257

3 of the National Housing Act as the Secretary deems ap4 propriate.

5 SEC. 12. LIMITATION ON FHA INSURING AUTHORITY.

6 Section 531(b) of the National Housing Act is

7 amended to read as follows:

8 ‘‘(b) Notwithstanding any other provision of law and

9 subject only to the absence of qualified requests for insur10 ance, to the authority provided in this Act, and to the limi11 tation in subsection (a), the Secretary shall enter into

12 commitments to insure mortgages under this Act with an

13 aggregate principal amount of $127,400,000,000 during

14 fiscal year 1997 and such sums as may be necessary dur15 ing fiscal years 1998, 1999, and 2000.’’.

16 TITLE II—CLAIMS AND PROPERTY

17 DISPOSITION REFORM INITIATIVES

18 SEC. 20. SINGLE FAMILY CLAIMS REFORM.

19 (a) REVISION OF CLAIMS PROCEDURES.—Section

20 204(a) of the National Housing Act (12 U.S.C. 1710(a))

21 is amended to read as follows:

22 ‘‘(a)(1) AUTHORIZED CLAIMS PROCEDURES.—The

23 Secretary is authorized, in accordance with this subsection

24 and terms and conditions prescribed by the Secretary, to

25 pay insurance benefits to the mortgagee as provided in
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1 this paragraph through any of the methods described in

2 subsections (a)(1)(A)–(D) in connection with any mort3 gage insured under section 203 of this Act.

4 ‘‘(A) ASSIGNMENT OF MORTGAGE.—The Sec5 retary may pay insurance benefits whenever a mort6 gage has been in a monetary default for at least

7 three full monthly installments or whenever the

8 mortgagee is entitled to foreclose a mortgage for a

9 non-monetary default. Insurance benefits shall be

10 paid only upon the assignment, transfer and delivery

11 to the Secretary of—

12 ‘‘(i) all rights and interests arising under

13 the mortgage;

14 ‘‘(ii) all claims of the mortgagee against

15 the mortgagor or others arising out of the

16 mortgage transaction;

17 ‘‘(iii) title evidence satisfactory to the Sec18 retary; and

19 ‘‘(iv) such records relating to the mortgage

20 transaction as the Secretary may require.

21 ‘‘(B) CONVEYANCE OF TITLE TO PROPERTY.—

22 The Secretary may pay insurance benefits if the

23 mortgagee has acquired title to the mortgaged prop24 erty through foreclosure or has otherwise acquired
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1 such property from the mortgagor after a default

2 upon—

3 ‘‘(i) the prompt conveyance to the Sec4 retary of title to the property which meets the

5 standards of the Secretary in force at the time

6 the mortgage was insured, and which is evi7 denced in the manner provided by such stand8 ards; and

9 ‘‘(ii) the assignment to the Secretary of all

10 claims of the mortgagee against the mortgagor

11 or others, arising out of the mortgage trans12 action or foreclosure proceedings, except such

13 claims as may have been released with the con14 sent of the Secretary.

15 The Secretary is authorized to permit the mortgagee

16 to tender to the Secretary a satisfactory conveyance

17 of title and transfer of possession direct from the

18 mortgagor or other appropriate grantor, and to pay

19 the insurance benefits to the mortgagee which it

20 would otherwise be entitled to if such conveyance

21 had been made to the mortgagee and from the mort22 gagee to the Secretary.

23 ‘‘(C) CLAIM WITHOUT CONVEYANCE OF

24 TITLE.—The Secretary may pay insurance benefits

25 upon sale of the mortgaged property at foreclosure
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1 where such sale is for at least the fair market value

2 of the property (with appropriate adjustments), as

3 determined by the Secretary and upon assignment to

4 the Secretary of all claims referred to in clause (ii)

5 of subsection (a)(1)(B).

6 ‘‘(D) PRE-FORECLOSURE SALE.—The Secretary

7 may pay insurance benefits upon the sale of the

8 mortgaged property by the mortgagor after default

9 and the assignment to the Secretary of all claims re10 ferred to in clause (ii) of subsection (a)(1)(B), if—

11 ‘‘(i) the sale of the mortgaged property has

12 been approved by the Secretary;

13 ‘‘(ii) the mortgagee receives an amount at

14 least equal to the fair market value of the prop15 erty (with appropriate adjustments), as deter16 mined by the Secretary; and

17 ‘‘(iii) the mortgagor has received an appro18 priate disclosure, as determined by the Sec19 retary.

20 ‘‘(2) PAYMENT FOR LOSS MITIGATION.—The Sec21 retary may pay insurance benefits to the mortgagee to rec22 ompense the mortgagee for its actions to provide an alter23 native to foreclosure of a mortgage that is in default,

24 which actions may include such actions as special forbear25 ance, loan modification, and deeds in lieu of foreclosure,
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1 all upon such terms and conditions as the mortgagee shall

2 determine in the mortgagee’s sole discretion within guide3 lines provided by the Secretary, but which may not include

4 assignment of a mortgage to the Secretary. For purposes

5 of the preceding sentence, no action authorized by the Sec6 retary and no action taken, nor any failure to act, by the

7 Secretary or the mortgagee shall be subject to judicial re8 view.

9 ‘‘(3) DETERMINING CLAIMS PROCEDURE.—The Sec10 retary shall publish guidelines for determining which of

11 the procedures for payment of insurance specified in sub12 sections (a)(1)(A)–(D) are available to a mortgagee when

13 it claims insurance benefits. At least one of the procedures

14 for payment of insurance benefits specified in subsection

15 (a)(1)(A) or (a)(1)(B) shall be available to a mortgagee

16 with respect to a mortgage, but the same procedure is not

17 required to be available for all of the mortgages held by

18 a mortgagee.

19 ‘‘(4) SERVICING ASSIGNED MORTGAGE.—If a mort20 gage is assigned to the Secretary under paragraph (1)(A),

21 the Secretary may permit the assigning mortgagee or its

22 servicer to continue to service the mortgage for reasonable

23 compensation and on terms and conditions determined by

24 the Secretary. Neither the Secretary nor any servicer of

25 the mortgage shall be required to forbear from collection
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1 of amounts due under the mortgage or otherwise pursue

2 loss mitigation measures.

3 ‘‘(5) CALCULATING INSURANCE BENEFITS.—Insur4 ance benefits shall be paid as provided in section 520 of

5 this Act, and shall be equal to the original principal obliga6 tion of the mortgage which was unpaid on the date the

7 mortgage was assigned to the Secretary, or on the date

8 of the institution of foreclosure proceedings, or on the date

9 of the acquisition of the property after default other than

10 by foreclosure, or on the date of sale of the mortgaged

11 property by the mortgagor, with such additions and deduc12 tions as the Secretary deems appropriate.

13 ‘‘(6) FORBEARANCE AND RECASTING AFTER DE14 FAULT.—The mortgagee may, upon such terms and condi15 tions as the Secretary may prescribe—

16 ‘‘(A) extend the time for the curing of the de17 fault, and of the time for commencing foreclosure

18 proceedings or for otherwise acquiring title to the

19 mortgaged property to such time as the mortgagee

20 determines is necessary and desirable to enable the

21 mortgagor to complete the mortgage payments, in22 cluding an extension of time beyond the stated ma23 turity of the mortgage, and in the event of a subse24 quent foreclosure or acquisition of the property by

25 other means the Secretary is authorized to include
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1 in the amount of insurance benefits an amount equal

2 to any unpaid mortgage interest; or

3 ‘‘(B) provide for a modification of the terms of

4 the mortgage for the purpose of recasting, over the

5 remaining term of the mortgage or over such longer

6 period pursuant to guidelines as may be prescribed

7 by the Secretary, the total unpaid amount then due,

8 with the modification to become effective currently

9 or to become effective upon the termination of an

10 agreed-upon extension of the period for curing the

11 default; and the principal amount of the mortgage,

12 as modified, shall be considered the ‘original prin13 cipal amount of the mortgage’ as that term is used

14 in this section for the purpose of computing the total

15 amount of insurance benefits.

16 ‘‘(7) TERMINATION OF PREMIUM OBLIGATION.—The

17 obligation of the mortgagee to pay the premium charges

18 for insurance shall cease upon fulfillment of the appro19 priate requirements under which the Secretary may pay

20 insurance benefits, as described in paragraph (1). The

21 Secretary may also terminate the mortgagee’s obligation

22 to pay mortgage insurance premiums upon receipt of an

23 application filed by the mortgagee for insurance benefits

24 under paragraph (1), or in the event the contract of insur25 ance is terminated pursuant to section 229 of this Act.
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1 ‘‘(8) RELATIONSHIP TO SECTION 230.—Nothing in

2 this section shall limit the authority of the Secretary to

3 pay insurance benefits under section 230 of this Act.’’.

4 (b) EFFECTIVE DATE.—The Secretary shall publish

5 a notice in the Federal Register stating the effective date

6 of the terms and conditions prescribed by the Secretary

7 under section 204(a)(1) of the National Housing Act, as

8 amended by this section. Sections 204(a) and (k) of the

9 National Housing Act as they existed immediately prior

10 to the effective date of the terms and conditions imple11 menting the amendment to subsection (a) made by this

12 Act shall continue to apply to any mortgage insured under

13 section 203 of the National Housing Act insured prior to

14 such date, except that the Secretary is authorized, at the

15 request of the mortgagee, to pay insurance benefits as pro16 vided in sections 204(a)(1)(A) and (D) of such Act and

17 to calculate insurance benefits in accordance with section

18 204(a)(6) of such Act.

19 (c) REDUNDANT PROVISION REPEALED.—Section

20 204(k) of the National Housing Act (12 U.S.C. 1710(k))

21 is hereby repealed.

22 SEC. 21. SALE OF ACQUIRED PROPERTY.

23 (a) AUTHORITY TO SELL.—Section 204(g) of the

24 National Housing Act is amended by adding at the end

25 the following: ‘‘Notwithstanding any other provision of
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1 law, the Secretary may sell such property as referenced

2 in the preceding sentence on such terms and conditions

3 as the Secretary may prescribe.’’.

4 (b) AUTHORITY TO INSURE MORTGAGE.—Section

5 223(c) of the National Housing Act is amended by insert6 ing after ‘‘sale by him’’ the following: ‘‘, including a sale

7 through another entity under authority of the fourth sen8 tence of section 204(g),’’.

9 TITLE III—STREAMLINING PROPOSALS

10 SEC. 30. AUTHORITY TO ESTABLISH LOAN TO VALUE RA11 TIOS AND RELATED CHANGES TO WARRANTY

12 REQUIREMENT.

13 (a) CHANGES TO ELIGIBILITY FOR MORTGAGE IN14 SURANCE.—Section 203(b) of the National Housing Act

15 (12 U.S.C. 1709(b)) is amended—

16 (1) in paragraph (2), by striking subparagraph

17 (B), including all of the matter following subpara18 graph (B), and inserting in lieu thereof the follow19 ing:

20 ‘‘(B) not to exceed an amount prescribed

21 by the Secretary on the basis of the appraised

22 value of the property.

23 For purposes of this subsection, the term ‘appraised

24 value’ means the amount set forth in the written

25 statement required under section 226, or a similar
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1 amount determined by the Secretary if section 226

2 does not apply.’’; and

3 (2) by revising paragraph (8) to read as follows:

4 ‘‘(8) Be limited to a residence for which the

5 purchaser or owner has received a construction war6 ranty from the seller or builder that is satisfactory

7 to the Secretary, whenever such a warranty is re8 quired by the Secretary, unless the residence was

9 completed more than one year prior to the applica10 tion for insurance.’’.

11 (b) REPEAL OF SECTION 801 WARRANTY REQUIRE12 MENT.—Section 801 of the Housing Act of 1954 (12

13 U.S.C. 1701j–1) is hereby repealed.

14 SEC. 31. DELEGATION OF INSURING AUTHORITY TO DIRECT

15 ENDORSEMENT MORTGAGEES.

16 The National Housing Act, as amended by section 11

17 of this Act, is further amended by adding the following

18 new section at the end of title II:

19 ‘‘DELEGATION OF INSURING AUTHORITY TO DIRECT

20 ENDORSEMENT MORTGAGEES

21 ‘‘SEC. 257. The Secretary may delegate, to one or

22 more mortgagees approved by the Secretary under the di23 rect endorsement program, the authority of the Secretary

24 under this Act to insure mortgages involving property

25 upon which there is located a dwelling designed principally

26 for occupancy by one to four families. In determining
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1 whether to delegate such authority to a mortgagee, the

2 Secretary shall take into account the experience and per3 formance of the mortgagee under the direct endorsement

4 program, the default rate of insured mortgages it has

5 originated compared to the default rate of all insured

6 mortgages in comparable markets, and such other factors

7 as the Secretary determines appropriate to minimize risk

8 of loss to the insurance funds under this Act.

9 ‘‘(b) If the Secretary determines that a mortgage in10 sured by a mortgagee pursuant to a delegation of author11 ity under this section was not originated in accordance

12 with the requirements of the Secretary, and the Secretary

13 pays an insurance claim with respect to the mortgage

14 within a reasonable period specified by the Secretary, the

15 Secretary may require the mortgagee approved under this

16 section to indemnify the Secretary for the loss. However,

17 if fraud or misrepresentation was involved in connection

18 with the origination, the Secretary may require the mort19 gagee approved under this section to indemnify the Sec20 retary for the loss regardless of when an insurance claim

21 is paid.

22 ‘‘(c) For a violation of requirements and procedures

23 established by the Secretary or for other good cause, the

24 Secretary may cancel a delegation of authority under this

25 section by giving notice to the mortgagee. The cancellation
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1 shall be effective upon receipt of the notice by the mortga2 gee or at a later date specified by the Secretary. A decision

3 by the Secretary to cancel a delegation shall be final and

4 conclusive and shall not be subject to judicial review.

5 ‘‘(d) Before approving a delegation under this sec6 tion, the Secretary shall establish appropriate require7 ments and procedures, including requirements and proce8 dures governing the indemnification of the Secretary by

9 the mortgagee.’’.

10 SEC. 32. AUTHORITY TO USE AMOUNTS BORROWED FROM

11 FAMILY MEMBERS FOR DOWNPAYMENTS.

12 (a) IN GENERAL.—Section 203(b)(9) of the National

13 Housing Act is amended by inserting before the period at

14 the end the following: ‘‘: Provided further, That for the

15 purposes of this paragraph, the Secretary shall consider

16 as cash or its equivalent any amounts borrowed from a

17 family member (as such term is defined in section 201)’’.

18 (b) DEFINITION OF FAMILY MEMBER.—Section 201

19 of the National Housing Act is amended by adding at the

20 end the following new subsections:

21 ‘‘(e) The term ‘family member’ means, with respect

22 to a mortgagor under such section, a child, parent, or

23 grandparent of the mortgagor (or the mortgagor’s

24 spouse). In determining whether any of the relationships

25 referred to in the preceding sentence exist, a legally adopt-
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1 ed son or daughter of an individual (and a child who is

2 a member of an individual’s household, if placed with such

3 individual by an authorized placement agency for legal

4 adoption by such individual), and a foster child of an indi5 vidual, shall be treated as a child of such individual by

6 blood.

7 ‘‘(f) The term ‘child’ means, with respect to a mort8 gagor under such section, a son, stepson, daughter, or

9 stepdaughter of such mortgagor.’’.

10 SEC. 33. HECM PROGRAM.

11 (a) REMOVAL OF CERTAIN LIMITATIONS ON THE IN12 SURANCE OF HOME EQUITY CONVERSION MORTGAGES.—

13 Section 255(g) of the National Housing Act is amended

14 by striking the first and second sentences.

15 (b) PERMIT MORTGAGEE TO ARRANGE FOR

16 CONSUMER EDUCATION.—Section 255 of such Act, as

17 amended by this section, is further amended—

18 (1) by revising subsection (d)(2)(B) to read as

19 follows:

20 ‘‘(B) has received adequate consumer edu21 cation by a third party as provided in sub22 section (f); and’’;

23 (2) by revising subsection (e)(1) to read as fol24 lows:
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1 ‘‘(1) no later than the time of the loan applica2 tion, a disclosure form developed by the Secretary

3 and information regarding sources of the consumer

4 education required in subsection (d)(2)(B);’’.

5 (3) in subsection (f)—

6 (A) by revising the first sentence to read

7 as follows: ‘‘The Secretary shall provide or

8 cause to be provided the consumer education re9 quired in subsection (d)(2)(B) and shall set

10 standards for providers of consumer education

11 to the extent considered necessary by the Sec12 retary.’’; and

13 (B) by inserting after paragraph (5) the

14 following new sentence:

15 ‘‘Nothing in this section shall prevent the mortgagee from

16 requiring the mortgagor to provide reasonable compensa17 tion to the party that provided the consumer education

18 required in subsection (d)(2)(B), including reimbursement

19 from proceeds of the mortgage, as long as no payment

20 or other thing of value is given in violation of section 8

21 of the Real Estate Settlement Procedures Act.’’

22 (c) OTHER APPROACHES TO CONSUMER EDU23 CATION.—The Secretary shall consult with consumer

24 groups, industry representatives, representatives of coun25 seling organizations, and other interested parties to iden-
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1 tify approaches to consumer education other than the re2 quirements of section 255 of the National Housing Act

3 that may be feasible and desirable for home equity conver4 sion mortgages insured under section 255 and other types

5 of reverse mortgages. The Secretary may adopt, in lieu

6 of the consumer education required by section 255(f) of

7 the National Housing Act as amended by this section, al8 ternative approaches to consumer education that may be

9 developed as a result of such consultations.

10 (d) TECHNICAL AMENDMENTS.—Section 255 of such

11 Act, as amended by this section, is further amended—

12 (1) by striking ‘‘DEMONSTRATION’’ from the

13 title;

14 (2) in subsection (a), by striking ‘‘demonstra15 tion’’; and

16 (3) in subsection (k)(4), by striking ‘‘dem17 onstration’’ and inserting in lieu thereof ‘‘program’’.

18 SEC. 34. 100 PERCENT CONDOMINIUM MORTGAGE INSUR19 ANCE FOR DISASTERS.

20 The third sentence of section 234(c) of the National

21 Housing Act is amended by inserting after ‘‘203(b)(2)’’

22 the following: ‘‘or pursuant to section 203(h) under the

23 conditions described in section 203(h)’’.
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1 SEC. 35. REPEAL OF PROVISION FOR FUND PAYMENTS TO

2 CORRECT SUBSTANTIAL DEFECTS.

3 Section 518 of the National Housing Act (12 U.S.C.

4 1735b) is hereby repealed.

Æ