I

104TH CONGRESS

2D SESSION H. R. 3897

To provide permanent authority for the insurance of home equity conversion

mortgages and promote consumer education in connection with such

mortgages, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 25, 1996

Mr. LAZIO of New York (for himself, Mr. LEACH, Mr. BEREUTER, Mr. BAKER

of Louisiana, Mr. CASTLE, Mr. WELLER, Mr. HAYWORTH, Mr. BONO,

Mr. NEY, Mr. EHRLICH, Mr. CREMEANS, Mr. FOX of Pennsylvania, Mr.

HEINEMAN, Mr. WATTS of Oklahoma, Mr. ENGLIGH of Pennsylvania, Mr.

ENSIGN, and Mr. FLANAGAN) introduced the following bill; which was referred to the Committee on Banking and Financial Services

A BILL

To provide permanent authority for the insurance of home

equity conversion mortgages and promote consumer education in connection with such mortgages, 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.

4 This Act may be cited as the ‘‘Senior Citizens Home5 ownership Protection Act of 1996’’.
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1 SEC. 2. PERMANENT HOME EQUITY CONVERSION MORT2 GAGE INSURANCE AUTHORITY.

3 Section 255(g) of the National Housing Act (12

4 U.S.C. 1715z–20(g)) is amended by striking the first 2

5 sentences.

6 SEC. 3. PERMISSION FOR MORTGAGEE TO ARRANGE FOR

7 CONSUMER EDUCATION.

8 Section 255 of the National Housing Act is amend9 ed—

10 (1) in subsection (d)(2), by striking subpara11 graph (B) and inserting the following new subpara12 graph:

13 ‘‘(B) has received adequate consumer edu14 cation by a third party as provided in sub15 section (f); and’’;

16 (2) in subsection (e), by striking paragraph (1)

17 and inserting the following new paragraph:

18 ‘‘(1) no later than the time of the loan applica19 tion, a disclosure form developed by the Secretary

20 and information regarding sources of the consumer

21 education required in subsection (d)(2)(B);’’;

22 (3) in subsection (f)—

23 (A) by striking the first sentence and in24 serting the following new sentence: ‘‘The Sec25 retary shall provide or cause to be provided the

26 consumer education required in subsection
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1 (d)(2)(B) and shall set standards for providers

2 of consumer education to the extent considered

3 necessary by the Secretary.’’; and

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

5 following new sentence:

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

7 requiring the mortgagor to provide reasonable compensa8 tion to the party that provided the consumer education

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

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

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

12 of the Real Estate Settlement Procedures Act of 1974.’’.

13 SEC. 4. OTHER APPROACHES TO CONSUMER EDUCATION.

14 The Secretary of Housing and Urban Development

15 shall consult with consumer groups, industry representa16 tives, representatives of counseling organizations, and

17 other interested parties to identify approaches to

18 consumer education other than the requirements of section

19 255 of the National Housing Act that may be feasible and

20 desirable for home equity conversion mortgages insured

21 under section 255 and other types of reverse mortgages.

22 The Secretary may adopt, in lieu of the consumer edu23 cation required by section 255(f) of the National Housing

24 Act, alternative approaches to consumer education that

25 may be developed as a result of such consultations.
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1 SEC. 5. FUNDING FOR COUNSELING AND CONSUMER EDU2 CATION AND OUTREACH.

3 (a) AUTHORITY TO USE ASSISTED HOUSING

4 AMOUNTS.—To the extent and for the purposes specified

5 in subsection (b), and in addition to any other amounts

6 available for such purposes, the Secretary of Housing and

7 Urban Development may use recaptured amounts initially

8 appropriated for the account of the Department of Hous9 ing and Urban Development known as the Annual Con10 tributions for Assisted Housing account.

11 (b) FISCAL YEAR 1997.—Of the amounts described

12 in subsection (a), up to a total of $1,000,000 shall be

13 available to the Secretary for fiscal year 1997, in such

14 amounts as the Secretary determines appropriate, for the

15 following purposes in connection with home equity conver16 sion mortgages insured under section 255 of the National

17 Housing Act:

18 (1) For housing counseling authorized by sec19 tion 106 of the Housing and Urban Development

20 Act of 1968.

21 (2) For transfer to the departmental salaries

22 and expenses account for consumer education and

23 outreach activities.

24 SEC. 6. CONFORMING AMENDMENTS.

25 Section 255 of the National Housing Act is amend26 ed—
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1 (1) in the section heading, by striking ‘‘DEM2 ONSTRATION’’;

3 (2) in subsections (a) and (i)(1) by striking

4 ‘‘demonstration’’ each place it appears;

5 (3) in subsection (a)—

6 (A) in paragraph (1), by inserting ‘‘and’’

7 after the semicolon at the end;

8 (B) in paragraph (2), by striking ‘‘; and’’

9 at the end and inserting a period; and

10 (C) by striking paragraph (3); and

11 (4) by striking subsection (k).

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