I 
111TH CONGRESS 
1ST SESSION 
H. R. 600 
To revise the requirements for seller-financed downpayments for mortgages 
for single-family housing insured by the Secretary of Housing and Urban 
Development under title II of the National Housing Act. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 16, 2009 
Mr. AL GREEN of Texas (for himself, Ms. WATERS, and Mr. GARY G. MILLER 
of California) introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To revise the requirements for seller-financed downpayments 
for mortgages for single-family housing insured by the 
Secretary of Housing and Urban Development under title 
II of the National Housing Act. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘FHA Seller-Financed 
Downpayment Reform Act of 2009’’. 
SEC. 2. FHA SELLER-FINANCED DOWNPAYMENT PROGRAM. 
Paragraph (9) of section 203(b) of the National 
Housing Act (12 U.S.C. 1709(b)(9)) is amended— 
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(1) in subparagraph (C), by striking ‘‘In no 
case shall the funds required by subparagraph (A)’’ 
and inserting the following: ‘‘Except in the case of 
a mortgage described in subparagraph (D), the 
funds required by subparagraph (A) shall not’’; and 
(2) by adding at the end the following new sub-
paragraphs: 
‘‘(D) 
EXCEPTIONS
TO
PROHIBITED 
SOURCES.—A mortgage described in this sub-
paragraph is any of the following mortgages: 
‘‘(i) A mortgage under which the 
mortgagor has a credit score equivalent to 
a FICO score of 680 or greater. 
‘‘(ii) A mortgage under which— 
‘‘(I) the mortgagor has a credit 
score equivalent to a FICO score of at 
least 620 but less than 680; and 
‘‘(II) mortgage insurance pre-
miums charged are established— 
‘‘(aa) at levels necessary, 
but no higher than needed, to 
allow such class of loans to be in-
sured without resulting in a need 
for an appropriation for a credit 
subsidy, which may exceed the 
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maximum 
amount 
permitted 
under section 203(c)(2)(B); 
‘‘(bb) in the case of the sin-
gle premium collected at the time 
of insurance, in an amount not 
exceeding 3.0 percent of the 
amount of the original principal 
obligation of the mortgage; and 
‘‘(cc) in the case of the an-
nual premium for a mortgage 
under which the mortgagor has a 
credit score equivalent to a FICO 
score of at least 640 but less 
than 680, in an amount not ex-
ceeding 1.25 percent of the re-
maining insured principal balance 
(excluding the portion of the re-
maining balance attributable to 
the premium collected at the time 
of insurance and without taking 
into account delinquent payments 
or prepayments). 
‘‘(iii) For mortgages insured in fiscal 
year 2010 or thereafter, a mortgage under 
which the mortgagor has a credit score 
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equivalent to a FICO score of 619 or less, 
but only if the Secretary certifies that such 
loans can be insured without resulting in a 
need for an appropriation for a credit sub-
sidy. For such mortgages, the Secretary 
may charge premiums at levels authorized 
under items (bb) and (cc) of clause (ii)(II) 
and may establish a credit or FICO score 
limitation or impose such other require-
ments as are necessary to meet the condi-
tions for certification under this clause. 
‘‘(E) REQUIREMENTS FOR DOWNPAYMENT 
ASSISTANCE
ENTITIES.—Any entity partici-
pating in a program that provides downpay-
ment assistance for a mortgage described in 
subparagraph (D) pursuant to the exception 
under subparagraph (C), which programs shall 
include programs of governmental agencies and 
private nonprofit organizations, shall, before the 
closing for the loan involved in the mortgage in 
connection with which such assistance is pro-
vided— 
‘‘(i) offer to make available, to the 
mortgagor, counseling regarding the re-
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sponsibilities and financial management in-
volved in homeownership; 
‘‘(ii) if such offer is accepted by the 
mortgagor, make such counseling available 
for the mortgagor; and 
‘‘(iii) in the case of any such entity 
that is a private nonprofit organization, 
implement a conflict of interest policy that 
prohibits directors, officers, employees, and 
immediate family members from receiving 
financial benefits from any entity that is 
providing the program with goods or serv-
ices other than the homeownership assist-
ance program entity itself or its wholly 
owned affiliate. 
‘‘(F) CIVIL
MONEY
PENALTIES
FOR
IM-
PROPERLY
INFLUENCING
APPRAISALS.—The 
Secretary may impose a civil money penalty, in 
the same manner and to the same extent as for 
a violation under section 536, for compensating, 
instructing, inducing, coercing, or intimidating 
any person who conducts an appraisal of the 
property to be subject to a mortgage described 
in subparagraph (D) and under which any part 
of the funds required by subparagraph (A) are 
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provided to a party described in subparagraph 
(C), or attempting to compensate, instruct, in-
duce, coerce, or intimidate such a person, for 
the purpose of causing the appraised value as-
signed to the property under the appraisal to be 
based on any other factor other than the inde-
pendent judgment of such person exercised in 
accordance with applicable professional stand-
ards.’’. 
Æ 
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