IB 
Union Calendar No. 386 
110TH CONGRESS 
2D SESSION 
H. R. 5830 
[Report No. 110–619] 
To create a voluntary FHA program that provides mortgage refinancing 
assistance to allow families to stay in their homes, protect neighborhoods, 
and help stabilize the housing market. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 17, 2008 
Mr. FRANK of Massachusetts (for himself, Ms. WATERS, Mrs. MALONEY of 
New York, Mr. WATT, Mr. ACKERMAN, Mr. MEEKS of New York, Mr. 
CLAY, Mr. LYNCH, Mr. AL GREEN of Texas, Ms. MOORE of Wisconsin, 
Mr. LINCOLN DAVIS of Tennessee, Mr. HODES, Mr. WILSON of Ohio, Mr. 
PERLMUTTER, Mr. MURPHY
of Connecticut, Mr. DONNELLY, Mr. 
WEXLER, Mr. SHAYS, Ms. GINNY BROWN-WAITE of Florida, Mr. DIN-
GELL, Ms. SCHAKOWSKY, Mr. LEVIN, Mr. HINCHEY, Mr. FATTAH, Mr. 
JACKSON of Illinois, Mrs. CHRISTENSEN, Ms. LEE, Mr. WU, Ms. MCCOL-
LUM
of Minnesota, Mr. VAN
HOLLEN, Mr. BUTTERFIELD, Mr. 
COURTNEY, Mr. SESTAK, Mr. SIRES, and Ms. TSONGAS) introduced the 
following bill; which was referred to the Committee on Financial Services 
MAY 5, 2008 
Additional sponsors: Mr. MAHONEY of Florida, Mr. CARSON, Mr. CROWLEY, 
Mr. HINOJOSA, Mr. LANGEVIN, Mr. CAPUANO, Mr. CUMMINGS, Mr. 
BACA, and Mr. SHERMAN 
MAY 5, 2008 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
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[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on April 17, 2008] 
A BILL 
To create a voluntary FHA program that provides mortgage 
refinancing assistance to allow families to stay in their 
homes, protect neighborhoods, and help stabilize the 
housing market. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘FHA Housing Stabilization and Homeownership Reten-
tion Act of 2008’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
TITLE I—HOMEOWNERSHIP RETENTION 
Sec. 101. Purposes. 
Sec. 102. Insurance of homeownership retention mortgages. 
Sec. 103. Study of Auction or Bulk Refinance Program. 
Sec. 104. Temporary increase in maximum loan guaranty amount for certain 
housing loans guaranteed by Secretary of Veterans Affairs. 
Sec. 105. Study of possible accounting revisions relating to property at risk of 
foreclosure and the availability of credit for refinancing home 
mortgages at risk of foreclosure. 
Sec. 106. GAO study of the effect of tightening credit markets in communities af-
fected by the subprime mortgage foreclosure crises and predatory 
lending on prospective first-time homebuyers seeking mortgages. 
TITLE II—OFFICE OF HOUSING COUNSELING 
Sec. 201. Short title. 
Sec. 202. Establishment of Office of Housing Counseling. 
Sec. 203. Counseling procedures. 
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Sec. 204. Grants for housing counseling assistance. 
Sec. 205. Requirements to use HUD-certified counselors under HUD programs. 
Sec. 206. Study of defaults and foreclosures. 
Sec. 207. Definitions for counseling-related programs. 
Sec. 208. Updating and simplification of mortgage information booklet. 
TITLE III—COMBATING MORTGAGE FRAUD 
Sec. 301. Authorization of appropriations to combat mortgage fraud. 
TITLE I—HOMEOWNERSHIP 
RETENTION 
SEC. 101. PURPOSES. 
The purposes of this title are— 
(1) to create an FHA program, which is vol-
untary on the part of borrowers and existing mort-
gage loan holders, to insure refinance loans for sub-
stantial numbers of borrowers at risk of foreclosure, at 
levels which are reasonably likely to be sustainable 
through enhanced affordability of debt service; 
(2) to provide flexible underwriting for FHA-in-
sured loans under such a program to provide refi-
nancing opportunities under fiscally responsible 
terms, including higher fees commensurate with high-
er risk levels, a seasoning requirement for higher debt 
to income loans, and additional program controls to 
limit and control risk; 
(3) to bar speculators and second home owners 
from participation in such program; 
(4) to require existing mortgage loan holders to 
take substantial loan writedowns in exchange for hav-
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ing the Federal Government and the borrower assume 
the ongoing risk of the refinanced loan; 
(5) to set a loan-to-value limit on such loans 
that provides the FHA with an equity buffer against 
potential loan losses, provides protections against the 
risk of future home price declines, and creates incen-
tives for borrowers to maintain payments on the loan; 
(6) to protect the FHA against losses which may 
exceed normal FHA loss levels by establishing higher 
fee levels, including an exit fee and profit sharing 
during the first five years of the loan, with such high-
er fee levels effectively being funded through the re-
quired lender writedown; 
(7) to provide a fair level of incentives for junior 
lien holders to provide the necessary releases of their 
lien interests, in order to meet program requirements 
that all outstanding liens must be extinguished, and 
thereby permit the refinancing to be completed; 
(8) to enhance the administrative capacity of the 
FHA to carry out its expanded role under the pro-
gram through establishment of an Oversight Board 
which adds expertise from the Federal Reserve and the 
Department of the Treasury, through additional fund-
ing to contract out for the provision of any needed ex-
pertise in designing program requirements and over-
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sight, and through additional funding to increase 
FHA personnel resources as needed to handle the in-
creased loan volume resulting from the program; 
(9) to sunset the program when it is no longer 
needed; and 
(10) to study the need for and efficacy of an auc-
tion or bulk refinancing mechanism to facilitate more 
expeditious refinancing of larger volumes of existing 
mortgages that are at risk for foreclosure into FHA- 
insured mortgages. 
SEC. 102. INSURANCE OF HOMEOWNERSHIP RETENTION 
MORTGAGES. 
(a) MORTGAGE INSURANCE PROGRAM.—Title II of the 
National Housing Act (12 U.S.C. 1707 et seq.) is amended 
by adding at the end the following new section: 
‘‘SEC. 257. INSURANCE OF HOMEOWNERSHIP RETENTION 
MORTGAGES. 
‘‘(a) OVERSIGHT BOARD.— 
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished the Refinance Program Oversight Board (in 
this section referred to as the ‘Oversight Board’). 
‘‘(2) MEMBERSHIP.—The Oversight Board shall 
consist of the following members or their designees: 
‘‘(A) The Secretary of the Treasury. 
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‘‘(B) The Secretary of Housing and Urban 
Development. 
‘‘(C) The Chairman of the Board of Gov-
ernors of the Federal Reserve System. 
‘‘(3) NO ADDITIONAL COMPENSATION.—Members 
of the Oversight Board shall receive no additional pay 
by reason of service on the Oversight Board. 
‘‘(4) RESPONSIBILITIES.—The Oversight Board 
shall be responsible for establishing program and 
oversight requirements for the program under this sec-
tion, which shall include— 
‘‘(A) detailed program requirements under 
subsection (c); 
‘‘(B) flexible underwriting criteria under 
subsection (d); 
‘‘(C) a mortgage premium structure under 
subsection (e); 
‘‘(D) a reasonable fee and rate limitation 
under subsection (f); 
‘‘(E) enhancement of FHA capacity under 
subsection (i), including oversight of such activi-
ties and personnel as may be contracted for as 
provided therein; 
‘‘(F) monitoring of underwriting risk under 
subsection (j); and 
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‘‘(G) such additional requirements as may 
be necessary and appropriate to oversee and im-
plement the program. 
‘‘(5) USE OF RESOURCES.—In carrying out its 
functions under this section, the Oversight Board may 
utilize, with their consent and to the extent practical, 
the personnel, services, and facilities of the Depart-
ment of the Treasury, the Department of Housing and 
Urban Development, the Board of Governors of the 
Federal Reserve System, the Federal Reserve Banks, 
and other Federal agencies, with or without reim-
bursement therefore. 
‘‘(b) AUTHORITY.— 
‘‘(1) IN GENERAL.—The Secretary shall, subject 
only to the absence of qualified requests for insurance 
under this section and to the limitations under sub-
section (h) of this section and section 531(a), make 
commitments to insure and insure any mortgage cov-
ering a 1- to 4-family residence that is made for the 
purpose of paying or prepaying outstanding obliga-
tions under an existing mortgage or mortgages on the 
residence if the mortgage being insured under this sec-
tion meets the requirements of this section, as estab-
lished by the Oversight Board, and of section 203, ex-
cept as modified by this section. 
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‘‘(2) ESTABLISHMENT AND IMPLEMENTATION OF 
PROGRAM
REQUIREMENTS.—The Oversight Board 
shall establish program requirements and standards 
under this section and the Secretary shall implement 
such requirements and standards. The Oversight 
Board and the Secretary may establish and imple-
ment any requirements or standards through interim 
guidance and mortgagee letters. 
‘‘(c) REQUIREMENTS.—To be eligible for insurance 
under this section, a mortgage shall comply with all of the 
following requirements: 
‘‘(1) OWNER-OCCUPIED
PRINCIPAL
RESIDENCE 
REQUIREMENT.—The residence to be covered by the 
mortgage insured under this section shall be occupied 
by the mortgagor as the principal residence of the 
mortgagor and the mortgagor shall provide a certifi-
cation to the originator of the mortgage that such res-
idence to be covered by the mortgage insured under 
this section is the only residence in which the mort-
gagor has any present ownership interest. 
‘‘(2) LACK OF CAPACITY TO PAY EXISTING MORT-
GAGE OR MORTGAGES.— 
‘‘(A) BORROWER CERTIFICATION.— 
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‘‘(i) The mortgagor shall provide a cer-
tification to the originator of the mortgage 
that the mortgagor— 
‘‘(I) has not intentionally de-
faulted on the existing mortgage or 
mortgages; and 
‘‘(II) has not knowingly, or will-
fully and with actual knowledge fur-
nished material information known to 
be false for the purpose of obtaining the 
existing mortgage or mortgages. 
‘‘(ii) The mortgagor shall agree in 
writing that the mortgagor shall be liable to 
repay the FHA any direct financial benefit 
achieved from the reduction of indebtedness 
on the existing mortgage or mortgages on 
the residence refinanced under this section 
derived from misrepresentations made in 
the certifications and documentation re-
quired under this subparagraph, subject to 
the discretion of the Oversight Board. 
‘‘(B) CURRENT BORROWER DEBT-TO-INCOME 
RATIO.—As of March 1, 2008, the mortgagor 
shall have had a ratio of mortgage debt to in-
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come, taking into consideration all existing 
mortgages at such time, greater than 35 percent. 
‘‘(C) 
LOSS
MITIGATION
RESPONSIBIL-
ITIES.—This section may not be construed to 
alter or in any way affect the responsibilities of 
any party (including the mortgage servicer) to 
engage in any or all loan modification or other 
loss mitigation strategies to maximize value to 
investors as established by any applicable con-
tract. 
‘‘(3) ELIGIBILITY OF MORTGAGES BY DATE OF 
ORIGINATION.—The existing senior mortgage shall 
have been originated on or before December 31, 2007. 
‘‘(4) MAXIMUM LOAN-TO-VALUE RATIO FOR NEW 
LOANS.—The mortgage being insured under this sec-
tion shall involve a principal obligation (including 
such initial service charges, appraisal, inspection, 
and other fees as the Secretary shall approve and in-
cluding the mortgage insurance premium paid pursu-
ant to subsection (e)(1)) in an amount not to exceed 
90 percent of the current appraised value of the prop-
erty. Section 203(d) shall not apply to mortgages in-
sured under this section. 
‘‘(5) REQUIRED WAIVER OF PREPAYMENT PEN-
ALTIES AND FEES.—All penalties for prepayment of 
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the existing mortgage or mortgages, and all fees and 
penalties related to default or delinquency on all ex-
isting mortgages or mortgages, shall be waived or for-
given. 
‘‘(6) REQUIRED LOAN REDUCTION.— 
‘‘(A) REDUCTION OF INDEBTEDNESS UNDER 
EXISTING
SENIOR
MORTGAGE.—The amount of 
indebtedness on the existing mortgage or mort-
gages on the residence shall have been substan-
tially reduced by such percentage as the Over-
sight Board or Secretary may require, and such 
reduction shall be at least sufficient to— 
‘‘(i) provide for the refinancing of such 
existing mortgage or mortgages in an 
amount not greater than 90 percent of the 
current appraised value of the property in-
volved; 
‘‘(ii) pay the full amount of the single 
premium to be collected pursuant to sub-
section (e)(1) (which shall be an amount 
equal to 3.0 percent of the amount of the 
original insured principal obligation of the 
mortgage insured under this section and 
which shall serve as an additional reserve to 
cover possible loan losses); and 
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‘‘(iii) pay the full amount of the loan 
origination fee and any other closing costs, 
not to exceed 2.0 percent of the amount of 
the original insured principal obligation of 
the mortgage insured under this section. 
‘‘(B) EXTINGUISHMENT OF DEBT BY REFI-
NANCING.— 
‘‘(i) REQUIRED AGREEMENT.—All ex-
isting holders of mortgage liens on the prop-
erty involved shall agree to accept the pro-
ceeds of the insured loan as payment in full 
of all indebtedness under all existing mort-
gages, and all encumbrances related to such 
mortgages shall be removed. The Oversight 
Board may take such actions as the Over-
sight Board considers necessary or appro-
priate to facilitate coordination and agree-
ment between the holders of the existing sen-
ior mortgage and any existing subordinate 
mortgages, taking into consideration the 
subordinate lien status of such subordinate 
mortgages, to comply with the requirement 
under this subparagraph. 
‘‘(ii) TREATMENT OF MULTIPLE MORT-
GAGE LIENS.—In addition to clause (i), the 
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Oversight Board shall adopt one of the fol-
lowing approaches for all mortgages or such 
classes of mortgages as the Oversight Board 
may determine and may, from time to time, 
reconsider: 
‘‘(I) FIXED PRICE.—As a require-
ment for participating in this pro-
gram, all existing lien holders will 
agree to not provide any payment to 
subordinate lien holders other than 
such payment in accordance with a 
formula established by the Oversight 
Board as set forth in clause (iii); ex-
cept that the Oversight Board may es-
tablish a short period within which 
first and subordinate lien holders may 
negotiate to extinguish all subordinate 
liens for compensation that may be dif-
ferent from the amount determined 
under such formula set forth in clause 
(iii). 
‘‘(II) 
SHARED
EQUITY.—The 
Oversight Board may require the mort-
gagor under a mortgage insured under 
this section to agree to share a portion 
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of any future equity in the mortgaged 
property with holders of existing subor-
dinate mortgages, in accordance with a 
formula for such shared equity estab-
lished by the Oversight Board as set 
forth in clause (iii), except that pay-
ments of such shared equity may be 
made only after the Secretary recovers 
all amounts owed to the Secretary with 
respect to such mortgage pursuant to 
the program under this section (includ-
ing amounts owed pursuant to para-
graph (8)). 
‘‘(iii) FORMULA.—In determining a 
formula for determining any payments to 
subordinate lien holders pursuant to sub-
clauses (I) and (II) of clause (ii), and in 
any reconsideration of such formula as the 
Oversight Board may from time to time un-
dertake, the Oversight Board shall take into 
consideration the current market value of 
such liens. In no case may a formula pro-
vide for the payment of more than 1 percent 
of the current appraised value of the mort-
gaged property to a subordinate lien holder 
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if the outstanding balance owed to more 
senior lien holders is equal to or exceeds 
such current appraised value. 
‘‘(iv) 
VOLUNTARY
PROGRAM.—This 
subparagraph may not be construed to re-
quire any holder of any existing mortgage 
to participate in the program under this 
section generally, or with respect to any 
particular loan. 
‘‘(v) SOURCE OF PAYMENTS FOR SUB-
ORDINATE LOANS.—Any amounts paid to 
holders of any existing subordinate mort-
gages in connection with the origination 
and insurance of a mortgage under this sec-
tion shall derive only from— 
‘‘(I) the holder of the existing sen-
ior mortgage; or 
‘‘(II) in the case only of the 
shared equity approach under clause 
(ii)(II), the mortgagor under the mort-
gage insured under this section 
‘‘(7) REQUIRED
REDUCTION
OF
DEBT
SERV-
ICE.—The debt service payments due under the mort-
gage insured under this section shall be in an amount 
that is substantially reduced from the debt service 
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payments due under the existing mortgage or mort-
gages, which reduction may be achieved through a re-
duction of indebtedness, a reduction in the interest 
rate being paid, or an extension of the term of the 
mortgage, or any combination thereof. 
‘‘(8) FINANCIAL RECOVERY TO FEDERAL GOVERN-
MENT THROUGH EXIT PREMIUM.— 
‘‘(A) SUBORDINATE
LIEN.—The mortgage 
shall provide that the Secretary shall retain a 
lien on the residence involved, which shall be 
subordinate to the mortgage insured under this 
section but senior to all other mortgages on the 
residence that may exist at any time, and which 
shall secure the repayment of the amount due 
under subparagraph (D). 
‘‘(B) NO
INTEREST
OR
PAYMENT
DURING 
MORTGAGE.—The amount secured by the lien re-
tained by the Secretary pursuant to subpara-
graph (A) shall not bear interest and shall not 
be repayable to the Secretary except as provided 
in subparagraph (D) of this paragraph. 
‘‘(C) NET PROCEEDS AVAILABLE FOR EXIT 
PREMIUM.—Upon the sale, refinancing, or other 
disposition of the residence covered by a mort-
gage insured under this section, any proceeds re-
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sulting from such disposition that remain after 
deducting the remaining insured principal bal-
ance of the mortgage insured under this section 
shall be available to meet the obligation under 
subparagraph (D). 
‘‘(D) EXIT
PREMIUM.—Upon any refi-
nancing of the mortgage insured under this sec-
tion or any sale or disposition of the residence 
covered by the mortgage, the Secretary shall, sub-
ject to the availability of sufficient net proceeds 
described in subparagraph (C), receive the great-
er of— 
‘‘(i) 3 percent of the amount of the 
original insured principal obligation of the 
mortgage; or 
‘‘(ii) a percentage of the portion of the 
net proceeds described in subparagraph (C), 
which shall be— 
‘‘(I) in the case of any refi-
nancing, sale, or disposition occurring 
during the first year of the term of the 
mortgage, 100 percent of such net pro-
ceeds; 
‘‘(II) in the case of any refi-
nancing, sale, or disposition occurring 
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during the second year of the term of 
the mortgage, 80 percent; 
‘‘(III) in the case of any refi-
nancing, sale, or disposition occurring 
during the third year of the term of the 
mortgage, 60 percent; and 
‘‘(IV) in the case of any refi-
nancing, sale, or disposition occurring 
during the fourth year of the term of 
the mortgage or at any time thereafter, 
50 percent; 
except that such percentage of proceeds shall be 
reduced by all fees the Secretary has collected for 
the mortgage prior to such refinancing, sale, or 
disposition. 
‘‘(E) AUTHORITY TO PROHIBIT NEW SECOND 
LIENS.—The Oversight Board shall prohibit bor-
rowers from granting a new second lien on the 
mortgaged property during the first five years of 
the term of the mortgage insured under this sec-
tion, except as the Oversight Board determines to 
be necessary to ensure the appropriate mainte-
nance of the mortgaged property. 
‘‘(9) DOCUMENTATION AND VERIFICATION OF IN-
COME.—In complying with the FHA underwriting re-
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quirements under the program under this section, the 
mortgagee under the mortgage shall document and 
verify the income of the mortgagor by procuring an 
Internal Revenue Service transcript of the income tax 
returns of the mortgagor for the two most recent years 
for which the filing deadline for such years has passed 
and by any other method, in accordance with proce-
dures and standards that the Oversight Board or the 
Secretary shall establish. 
‘‘(10) FIXED
RATE
MORTGAGE.—The mortgage 
insured under this section shall bear interest at a sin-
gle rate that is fixed for the entire term of the mort-
gage. 
‘‘(11) 
MAXIMUM
LOAN
AMOUNT.—Notwith-
standing section 203(b)(2), the mortgage being in-
sured under this section shall involve a principal obli-
gation in an amount that does not exceed the limita-
tion (for a property of the applicable size) on the 
amount of the principal obligation that would be al-
lowable under the terms of section 202(a) of the Eco-
nomic Stimulus Act of 2008 if the mortgage were in-
sured pursuant to such section. The limitation on the 
amount of the principal obligation allowable under 
such Act shall apply for the purposes of this Act until 
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the termination under subsection (n) of the program 
under this subsection. 
‘‘(12) INELIGIBILITY FOR FRAUD CONVICTION.— 
The mortgagor shall not have been convicted under 
Federal or State law for mortgage fraud during the 
7-year period ending upon the insurance of the mort-
gage under this section. 
‘‘(13) LENDER REVIEW.—The mortgagee under 
the mortgage shall conduct an electronic database 
search of the mortgagor’s criminal history to deter-
mine if the mortgagor has had a conviction described 
in paragraph (12). The mortgagee may charge the 
mortgagor a reasonable fee for the actual cost of the 
search not to exceed a maximum rate established by 
the Oversight Board. The Oversight Board may pro-
vide clarification, if needed, to help mortgagees iden-
tify any differences among the States in how they re-
port mortgage fraud convictions. The Oversight Board 
shall establish procedures sufficient to allow the mort-
gagor to challenge a mortgagee’s determination with 
respect to paragraph (12) (including to correct inac-
curacies resulting from theft of the mortgagor’s iden-
tity or personally identifiable information). 
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‘‘(14) APPRAISALS.—Any appraisal conducted in 
connection with a mortgage insured under this section 
shall— 
‘‘(A) be based on the current value of the 
property; 
‘‘(B) be conducted in accordance with title 
XI of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989 (12 U.S.C. 
3331 et seq.); 
‘‘(C) be completed by an appraiser who 
meets the competency requirements of the Uni-
form Standards of Professional Appraisal Prac-
tice; 
‘‘(D) be wholly consistent with the ap-
praisal standards, practices, and procedures 
under section 202(e) of this Act that apply to all 
loans insured under this Act; and 
‘‘(E) comply with the requirements of sub-
section (g) of this section (relating to appraisal 
independence). 
‘‘(15) STATEMENT OF LOAN TERMS.— 
‘‘(A) REQUIREMENT.—The mortgagor shall 
have been provided by the mortgagee, not later 
than three days after application for the mort-
gage, a form described in subparagraph (B) ap-
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E:\BILLS\H5830.RH
H5830
jbell on PROD1PC69 with BILLS