I
103D CONGRESS
2D SESSION
H. R. 4484
To improve the single family housing mortgage insurance program of the
Department of Housing and Urban Development.
IN THE HOUSE OF REPRESENTATIVES
MAY 24, 1994
Mr. ORTON introduced the following bill; which was referred to the Committee
on Banking, Finance and Urban Affairs
A BILL
To improve the single family housing mortgage insurance
program of the Department of Housing and Urban De-
velopment.
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 Improvement Act
of 1994’’.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that—
(1) the single family housing mortgage insur-
ance program of the Department of Housing and
Urban Development is a significant factor in pro-
moting first-time and affordable homeownership in
the United States;
(2) use of mortgage financing under the pro-
gram has decreased in recent years, due in part to
increasing complexity of mortgage origination and
servicing under the program;
(3) simplifying and streamlining the loan cri-
teria and loan approval process under the program
would have a positive effect on use of the program
without increasing risk to the Mutual Mortgage In-
surance Fund; and
(4) flexible lending products can be developed
without increasing risk to the Mutual Mortgage In-
surance Fund.
SEC. 3. LOAN FLOOR.
Subparagraph (A) of the first sentence of section
203(b)(2) of the National Housing Act (12 U.S.C.
1709(b)(2)(A)) is amended by striking the matter follow-
ing clause (ii) and inserting the following:
‘‘except that the applicable dollar amount limi-
tation in effect under this subparagraph (A) for
any area may not be less than the greater of—
‘‘(I) the dollar amount limitation in
effect under this section for the area on
the date of enactment of the FHA Im-
provement Act of 1994; or
‘‘(II) the applicable average area pur-
chase price determined under section
143(e)(2) of the Internal Revenue Code of
1986, as adjusted by the Secretary to re-
flect a single amount using purchase prices
for residences that have been previously oc-
cupied, and for residences that have not
been so occupied, which amount shall be
adjusted by the Secretary annually on the
basis of the Constant Quality Housing
Price Index;’’.
SEC. 4. CALCULATION OF DOWNPAYMENT.
Section 203(b)(2) of the National Housing Act (12
U.S.C. 1709(b)(2)) is amended—
(1) by striking subparagraph (B) and inserting
the following new subparagraph:
‘‘(B) except as otherwise provided in this
paragraph (2), not in excess of—
‘‘(i) 98.75 percent of the appraised
value of the property, in the case of a
mortgage with an appraised value equal to
or less than $50,000, or
‘‘(ii) 97.5 percent of the appraised
value of the property, in the case of a
mortgage with an appraised value in excess
of $50,000,
plus the amount of the mortgage insurance pre-
mium paid at the time the mortgage is in-
sured.’’;
(2) by striking the 2d sentence of the matter
following subparagraph (B); and
(3) in penultimate undesignated paragraph—
(A) in the 2d sentence, by striking ‘‘the
preceding sentence’’ and inserting ‘‘this sub-
section’’; and
(B) by striking the first sentence.
SEC. 5. ISSUANCE OF INSURANCE BY MORTGAGEES.
Section 215 of the National Housing Act (12 U.S.C.
1715f) is amended—
(1) by inserting ‘‘(a) MORTGAGES WITHOUT IN-
SURED PERMANENT FINANCING.—’’ after ‘‘SEC.
215’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) ISSUANCE
OF INSURANCE CERTIFICATES
BY
MORTGAGEE.—Not later than the expiration of the 180-
day period beginning on the date of the enactment of this
Act, the Secretary shall implement a system for insuring
mortgages under this title involving properties upon which
are located 1- to 4-family dwelling units that provides that
any mortgagee that is authorized by the Secretary to proc-
ess mortgages as direct endorsement mortgages may en-
dorse a mortgage for insurance, execute a firm commit-
ment for insurance binding upon the Secretary, and issue
a certificate of mortgage insurance under this title, with-
out review and approval by the Secretary of the specific
mortgage.’’.
SEC. 6. ELIMINATION OF RESTRICTIONS REGARDING NEW
CONSTRUCTION.
(a) IN GENERAL.—Section 203(b)(2) of the National
Housing Act (12 U.S.C. 1709(b)(2)) is amended, in the
matter following subparagraph (B) (as amended by sec-
tion 3 of this Act)—
(1) in the 1st undesignated paragraph, by strik-
ing ‘‘Notwithstanding any other provision of this
section,’’ and all that follows through ‘‘beginning of
construction.’’; and
(2) by striking the 2d undesignated paragraph
(relating to mortgage insurance amounts for resi-
dences having solar energy systems)
(b) REPEAL OF AUTHORITY TO EXPEND AMOUNTS
FROM INSURANCE FUND TO CORRECT SUBSTANTIAL DE-