I 
109TH CONGRESS 
2D SESSION 
H. R. 5121 
To modernize and update the National Housing Act and enable the Federal 
Housing Administration to use risk-based pricing to more effectively 
reach underserved borrowers, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 6, 2006 
Mr. NEY (for himself, Ms. WATERS, Mr. GARY G. MILLER of California, and 
Mr. TIBERI) introduced the following bill; which was referred to the Com-
mittee on Financial Services 
A BILL 
To modernize and update the National Housing Act and 
enable the Federal Housing Administration to use risk- 
based pricing to more effectively reach underserved bor-
rowers, and for other purposes. 
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 
‘‘Expanding American Homeownership Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
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Sec. 2. Findings and purposes. 
Sec. 3. Maximum principal loan obligation. 
Sec. 4. Extension of mortgage term. 
Sec. 5. Cash investment requirement. 
Sec. 6. Mortgage insurance premiums. 
Sec. 7. Rehabilitation loans. 
Sec. 8. Discretionary action. 
Sec. 9. Insurance of condominiums. 
Sec. 10. Mutual Mortgage Insurance Fund. 
Sec. 11. Hawaiian home lands and Indian reservations. 
Sec. 12. Conforming and technical amendments. 
Sec. 13. Home equity conversion mortgages. 
Sec. 14. Conforming loan limit in disaster areas. 
Sec. 15. Savings provision. 
Sec. 16. Implementation. 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds that— 
(1) one of the primary missions of the Federal 
Housing Administration (FHA) single family mort-
gage insurance program is to reach borrowers who 
are underserved, or not served, by the existing con-
ventional mortgage marketplace; 
(2) the FHA program has a long history of in-
novation, which includes pioneering the 30-year self- 
amortizing mortgage and a safe-to-seniors reverse 
mortgage product, both of which were once thought 
too risky to private lenders; 
(3) the FHA single family mortgage insurance 
program traditionally has been a major provider of 
mortgage insurance for home purchases; 
(4) the FHA mortgage insurance premium 
structure, as well as FHA’s product offerings, 
should be revised to reflect FHA’s enhanced ability 
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to determine risk at the loan level and to allow FHA 
to better respond to changes in the mortgage mar-
ket; 
(5) during past recessions, including the oil- 
patch downturns in the mid-1980s, FHA remained 
a viable credit enhancer and was therefore instru-
mental in preventing a more catastrophic collapse in 
housing markets and a greater loss of homeowner 
equity; and 
(6) as housing price appreciation slows and in-
terest rates rise, many homeowners and prospective 
homebuyers will need the less-expensive, safer fi-
nancing alternative that FHA mortgage insurance 
provides. 
(b) PURPOSES.—The purposes of this Act are— 
(1) to provide flexibility to FHA to allow for 
the insurance of housing loans for low- and mod-
erate-income homebuyers during all economic cycles 
in the mortgage market; 
(2) to modernize the FHA single family mort-
gage insurance program by making it more reflective 
of enhancements to loan-level risk assessments and 
changes to the mortgage market; and 
(3) to adjust the loan limits for the single fam-
ily mortgage insurance program to reflect rising 
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house prices and the increased costs associated with 
new construction. 
SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. 
Paragraph (2) of section 203(b) of the National 
Housing Act (12 U.S.C. 1709(b)(2)) is amended— 
(1) in subparagraph (A)— 
(A) by striking the subparagraph designa-
tion and all that follows through the end of 
clause (i) and inserting the following: 
‘‘(A) not to exceed the lesser of— 
‘‘(i) the median house price in the 
area, as determined by the Secretary; or’’; 
and 
(B) in clause (ii)— 
(i) by striking ‘‘87 percent of’’; 
(ii) by striking ‘‘for Fiscal Year’’ and 
inserting a comma; and 
(iii) by striking ‘‘48 percent’’ and in-
serting ‘‘65 percent’’; 
(2) by striking subparagraph (B) and inserting 
the following: 
‘‘(B) not to exceed the appraised value of 
the property, plus any initial service charges, 
appraisal, inspection and other fees in connec-
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tion with the mortgage as approved by the Sec-
retary.’’; 
(3) in the matter after and below subparagraph 
(B), by striking the semi-colon in the first sentence 
and all that follows through ‘‘title 38, United States 
Code’’ and inserting a period; and 
(4) by striking the last undesignated paragraph 
(relating to counseling with respect to the respon-
sibilities and financial management involved in 
homeownership). 
SEC. 4. EXTENSION OF MORTGAGE TERM. 
Paragraph (3) of section 203(b) of the National 
Housing Act (12 U.S.C. 1709(b)(3)) is amended— 
(1) by striking ‘‘thirty-five years’’ and inserting 
‘‘forty years’’; and 
(2) by striking ‘‘(or thirty years if such mort-
gage is not approved for insurance prior to construc-
tion)’’. 
SEC. 5. CASH INVESTMENT REQUIREMENT. 
Paragraph (9) of section 203(b) of the National 
Housing Act (12 U.S.C. 1709(b)(9) is amended by strik-
ing the paragraph designation and all that follows through 
‘‘Provided further, That for’’ and inserting the following: 
‘‘(9) Be executed by a mortgagor who shall 
have paid on account of the property, in cash or its 
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