SEC. 2. SECOND CHANCE AT HOMEOWNERSHIP MORTGAGE 
INSURANCE PROGRAM. 
Title II of the National Housing Act (12 U.S.C. 17) 
is amended by adding at the end the following new section: 
‘‘SEC. 259. SECOND CHANCE AT HOMEOWNERSHIP PRO-
GRAM. 
‘‘(a) ESTABLISHMENT.—There is established in the 
Federal Housing Administration a Second Chance at 
Homeownership Program (in this section referred to as 
the ‘Program’). 
‘‘(b) PURPOSES.—The purposes of the Program 
are— 
‘‘(1) to create an FHA program, participation 
in which is voluntary on the part of homeowners and 
eligible lenders, to provide loans for qualified second- 
chance borrowers and support long-term, sustainable 
homeownership; 
‘‘(2) to target mortgage assistance under this 
section to enable families to become homeowners of 
their principal residence; and 
‘‘(3) to ensure the Program remains in effect 
only for as long as is necessary to provide stability 
to the housing market. 
‘‘(c) ESTABLISHMENT
AND IMPLEMENTATION
OF 
PROGRAM REQUIREMENTS.— 
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‘‘(1) DUTIES OF SECRETARY.—To carry out the 
purposes of the Program, the Secretary shall— 
‘‘(A) establish requirements and standards 
for the program consistent with section 203(b) 
to the maximum extent possible; and 
‘‘(B) prescribe such regulations and pro-
vide such guidance as may be necessary or ap-
propriate to implement such requirements and 
standards. 
‘‘(2) INTERIM GUIDANCE AND MORTGAGEE LET-
TERS.—In carrying out any of the program require-
ments or standards established under paragraph (1), 
the Secretary may issue such interim guidance and 
mortgagee letters as the Secretary determines nec-
essary or appropriate. 
‘‘(d) INSURANCE
OF MORTGAGES.—The Secretary 
may, upon application of a mortgagee, make commitments 
to insure or may insure any mortgage that meets the re-
quirements under subsection (e). 
‘‘(e) REQUIREMENTS OF INSURED MORTGAGES.—To 
be eligible for insurance under this section, a mortgage 
shall comply with all of the following requirements: 
‘‘(1) MORTGAGOR.—The mortgagor under the 
mortgage may not have— 
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‘‘(A) been the mortgagor under any other 
mortgage or had any present ownership interest 
in any residence after January 1, 2011, except 
that the Secretary may provide exceptions to 
such requirement for any mortgagor who has 
inherited a property; 
‘‘(B) been delinquent with respect to any 
of the most recent 12 monthly rental payments 
due for the rental of the mortgagor’s principal 
residence; 
‘‘(C) been convicted under Federal or 
State law for fraud during the 10-year period 
ending upon the insurance of the mortgage 
under this section; and 
‘‘(D) a net worth, as of the date the mort-
gagor first applies for a mortgage to be insured 
under the Program under this section, that ex-
ceeds $1,000,000. 
‘‘(2) ACQUISITION OF PRINCIPAL RESIDENCE.— 
The mortgagor shall be made for the purpose of ac-
quiring a 1- to 4-family residence that— 
‘‘(A) is located in the same State as the 
principal residence of the mortgagor at the time 
the mortgage is executed; and 
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‘‘(B) shall be occupied by the mortgagor as 
the principal residence of the mortgagor. 
‘‘(3) DOWNPAYMENT.—The mortgagor shall 
have paid on account of the mortgage, in cash or its 
equivalent, on account of the property an amount 
equal to not less than 5 percent of the appraised 
value of the property. 
‘‘(4) MAXIMUM LOAN AMOUNT.—The mortgage 
shall— 
‘‘(A) have principal obligation that does 
not exceed the dollar amount limitation for a 
property of the applicable size that is in effect, 
for the year in which the mortgage is executed, 
under the sixth sentence of section 305(a)(2) of 
the Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1454(a)(2)); and 
‘‘(B) be payable on a monthly basis in an 
amount that— 
‘‘(i) is fixed over the entire term of 
the mortgage; and 
‘‘(ii) does not exceed the average 
amount paid by the mortgagor for the 
most recent 12 monthly rental payments 
paid by the mortgagor for the rental of the 
mortgagor’s previous principal residence. 
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‘‘(5) TERM OF MORTGAGE.—The mortgage to 
be insured shall— 
‘‘(A) bear interest at a single rate that is 
fixed for the entire term of the mortgage; and 
‘‘(B) have a maturity of not less than 30 
years from the date of the beginning of amorti-
zation of such mortgage. 
‘‘(6) APPRAISALS.—Any appraisal conducted in 
connection with the mortgage 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(g) of this Act that apply to 
all loans insured under this Act; and 
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‘‘(E) comply with the requirements of sub-
section (f) of this section (relating to appraisal 
independence). 
‘‘(7) PROHIBITION
ON
SECOND
LIENS.—The 
mortgagor under the mortgage may not grant a new 
second lien on the mortgaged property during the 
first 5 years of the term of the mortgage insured 
under this section, except as the Secretary deter-
mines to be necessary to ensure the maintenance of 
property standards and provided that such new out-
standing liens (A) do not reduce the value of the 
Government’s equity in the borrower’s home; and 
(B) when combined with the mortgagor’s existing 
mortgage indebtedness, do not exceed 95 percent of 
the home’s appraised value at the time of the new 
second lien. 
‘‘(8) CERTIFICATIONS AND DOCUMENTATION.— 
‘‘(A) PRINCIPAL RESIDENCE; NO PRESENT 
OWNERSHIP
INTEREST.—The mortgagor shall 
provide documentation satisfactory in the deter-
mination of the Secretary to prove compliance 
with the requirements under paragraphs (1)(A) 
and (2)(B). 
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