tion 305(a)(2) for a residence of the applicable 
size; and 
‘‘(B) not to exceed the appraised value of 
the property, plus any initial service charges, 
appraisal, inspection and other fees in connec-
tion with the mortgage as approved by the Sec-
retary.’’; 
(2) in the matter after and below subparagraph 
(B), by striking the second sentence (relating to a def-
inition of ‘‘average closing cost’’) and all that follows 
through ‘‘title 38, United States Code’’; and 
(3) by striking the last undesignated paragraph 
(relating to counseling with respect to the responsibil-
ities and financial management involved in home-
ownership). 
SEC. 4. EXTENSION OF MORTGAGE TERM. 
Paragraph (3) of section 203(b) of the National Hous-
ing 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 mortgage 
is not approved for insurance prior to construction)’’. 
SEC. 5. CASH INVESTMENT REQUIREMENT. 
Paragraph (9) of section 203(b) of the National Hous-
ing Act (12 U.S.C. 1709(b)(9) is amended by striking the 
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paragraph designation and all that follows through ‘‘Pro-
vided 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 equiv-
alent, an amount, if any, as the Secretary may deter-
mine based on factors determined by the Secretary 
and commensurate with the likelihood of default. 
For’’. 
SEC. 6. MORTGAGE INSURANCE PREMIUMS. 
Section 203(c) of the National Housing Act (12 U.S.C. 
1709(c)) is amended— 
(1) in paragraph (2), in the matter preceding 
subparagraph (A), by striking ‘‘Notwithstanding’’ 
and inserting ‘‘Except as provided in paragraph (3) 
and notwithstanding’’; and 
(2) by adding at the end the following new para-
graph: 
‘‘(3) FLEXIBLE RISK-BASED PREMIUMS.— 
‘‘(A) IN GENERAL.—For any mortgage insured 
by the Secretary under this title that is secured by a 
1- to 4-family dwelling and for which the loan appli-
cation is received by the mortgagee on or after Octo-
ber 1, 2006, the Secretary may establish a mortgage 
insurance premium structure involving a single pre-
mium payment collected prior to the insurance of the 
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mortgage or periodic payments, or both, without re-
gard to any maximum or minimum premium 
amounts set forth in this subsection. The rate of pre-
mium for such a mortgage may vary during the 
mortgage term as long as the basis for determining 
the variable rate is established before the execution of 
the mortgage. The Secretary may change a premium 
structure established under this subparagraph but 
only to the extent that such change is not applied to 
any mortgage already executed. 
‘‘(B) ESTABLISHMENT AND ALTERATION OF PRE-
MIUM STRUCTURE.—A premium structure shall be es-
tablished or changed under subparagraph (A) only by 
providing notice to mortgagees and to the Congress, at 
least 30 days before the premium structure is estab-
lished or changed. 
‘‘(C) CONSIDERATIONS
FOR
PREMIUM
STRUC-
TURE.—When establishing a premium structure 
under subparagraph (A) or when changing such a 
premium structure, the Secretary shall consider the 
following: 
‘‘(i) The effect of the proposed premium 
structure on the Secretary’s ability to meet the 
operational goals of the Mutual Mortgage Insur-
ance Fund as provided in section 202(a). 
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‘‘(ii) Underwriting variables. 
‘‘(iii) The extent to which new pricing 
under the proposed premium structure has po-
tential for acceptance in the private market. 
‘‘(iv) The administrative capability of the 
Secretary to administer the proposed premium 
structure. 
‘‘(v) The effect of the proposed premium 
structure on the Secretary’s ability to maintain 
the availability of mortgage credit and provide 
stability to mortgage markets.’’. 
SEC. 7. REHABILITATION LOANS. 
Subsection (k) of section 203 of the National Housing 
Act (12 U.S.C. 1709(k)) is amended— 
(1) in paragraph (1), by striking ‘‘on’’ and all 
that follows through ‘‘1978’’; and 
(2) in paragraph (5)— 
(A) by striking ‘‘General Insurance Fund’’ 
the first place it appears and inserting ‘‘Mutual 
Mortgage Insurance Fund’’; and 
(B) in the second sentence, by striking the 
comma and all that follows through ‘‘General In-
surance Fund’’. 
SEC. 8. DISCRETIONARY ACTION. 
The National Housing Act is amended— 
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(1) in subsection (e) of section 202 (12 U.S.C. 
1708(e))— 
(A) in paragraph (3)(B), by striking ‘‘sec-
tion 202(e) of the National Housing Act’’ and 
inserting ‘‘this subsection’’; and 
(B) by redesignating such subsection as sub-
section (f); 
(2) by striking paragraph (4) of section 203(s) 
(12 U.S.C. 1709(s)(4)) and inserting the following 
new paragraph: 
‘‘(4) the Secretary of Agriculture;’’; and 
(3) by transferring subsection (s) of section 203 
(as amended by paragraph (2) of this section) to sec-
tion 202, inserting such subsection after subsection 
(d) of section 202, and redesignating such subsection 
as subsection (e). 
SEC. 9. INSURANCE OF CONDOMINIUMS. 
(a) IN GENERAL.—Section 234 of the National Hous-
ing Act (12 U.S.C. 1715y) is amended— 
(1) in subsection (c)— 
(A) in the first sentence— 
(i) by striking ‘‘and’’ before ‘‘(2)’’; and 
(ii) by inserting before the period at 
the end the following: ‘‘, and (3) the project 
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has a blanket mortgage insured by the Sec-
retary under subsection (d)’’; and 
(B) in clause (B) of the third sentence, by 
striking ‘‘thirty-five years’’ and inserting ‘‘forty 
years’’; and 
(2) in subsection (g), by striking ‘‘, except that’’ 
and all that follows and inserting a period. 
(b) DEFINITION OF MORTGAGE.—Section 201(a) of the 
National Housing Act (12 U.S.C. 1707(a)) is amended— 
(1) in clause (1), by striking ‘‘or’’ and inserting 
a comma; and 
(2) by inserting before the semicolon the fol-
lowing: ‘‘, or (c) a first mortgage given to secure the 
unpaid purchase price of a fee interest in, or long- 
term leasehold interest in, a one-family unit in a 
multifamily project, including a project in which the 
dwelling units are attached, semi-detached, or de-
tached, and an undivided interest in the common 
areas and facilities which serve the project’’. 
SEC. 10. MUTUAL MORTGAGE INSURANCE FUND. 
(a) IN GENERAL.—Subsection (a) of section 202 of the 
National Housing Act (12 U.S.C. 1708(a)) is amended to 
read as follows: 
‘‘(a) MUTUAL MORTGAGE INSURANCE FUND.— 
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‘‘(1) ESTABLISHMENT.—Subject to the provisions 
of the Federal Credit Reform Act of 1990, there is 
hereby created a Mutual Mortgage Insurance Fund 
(in this title referred to as the ‘Fund’), which shall be 
used by the Secretary to carry out the provisions of 
this title with respect to mortgages insured under sec-
tion 203. The Secretary may enter into commitments 
to guarantee, and may guarantee, such insured mort-
gages. 
‘‘(2) LIMIT ON LOAN GUARANTEES.—The author-
ity of the Secretary to enter into commitments to 
guarantee such insured mortgages shall be effective for 
any fiscal year only to the extent that the aggregate 
original principal loan amount under such mort-
gages, any part of which is guaranteed, does not ex-
ceed the amount specified in appropriations Acts for 
such fiscal year. 
‘‘(3) FIDUCIARY
RESPONSIBILITY.—The Sec-
retary has a responsibility to ensure that the Mutual 
Mortgage Insurance Fund remains financially sound. 
‘‘(4) 
ANNUAL
INDEPENDENT
ACTUARIAL 
STUDY.—The Secretary shall provide for an inde-
pendent actuarial study of the Fund to be conducted 
annually, which shall analyze the financial position 
of the Fund. The Secretary shall submit a report an-
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nually to the Congress describing the results of such 
study and assessing the financial status of the Fund. 
The report shall recommend adjustments to under-
writing standards, program participation, or pre-
miums, if necessary, to ensure that the Fund remains 
financially sound. 
‘‘(5) QUARTERLY REPORTS.—During each fiscal 
year, the Secretary shall submit a report to the Con-
gress for each quarter, which shall specify for mort-
gages that are obligations of the Fund— 
‘‘(A) the cumulative volume of loan guar-
antee commitments that have been made during 
such fiscal year through the end of the quarter 
for which the report is submitted; 
‘‘(B) the types of loans insured, categorized 
by risk; 
‘‘(C) any significant changes between actual 
and projected claim and prepayment activity; 
‘‘(D) projected versus actual loss rates; and 
‘‘(E) updated projections of the annual sub-
sidy rates to ensure that increases in risk to the 
Fund are identified and mitigated by adjust-
ments to underwriting standards, program par-
ticipation, or premiums, and the financial 
soundness of the Fund is maintained. 
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The first quarterly report under this paragraph shall 
be submitted on the last day of the first quarter of fis-
cal year 2007, or upon the expiration of the 90-day 
period beginning on the date of the enactment of the 
Expanding American Homeownership Act of 2006, 
whichever is later. 
‘‘(6) ADJUSTMENT OF PREMIUMS.—If, pursuant 
to the independent actuarial study of the Fund re-
quired under paragraph (5), the Secretary determines 
that the Fund is not meeting the operational goals es-
tablished under paragraph (8) or there is a substan-
tial probability that the Fund will not maintain its 
established target subsidy rate, the Secretary may ei-
ther make programmatic adjustments under section 
203 as necessary to reduce the risk to the Fund, or 
make appropriate premium adjustments. 
‘‘(7) OPERATIONAL
GOALS.—The operational 
goals for the Fund are— 
‘‘(A) to charge borrowers under loans that 
are obligations of the Fund an appropriate pre-
mium for the risk that such loans pose to the 
Fund; 
‘‘(B) to minimize the default risk to the 
Fund and to homeowners; 
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‘‘(C) to curtail the impact of adverse selec-
tion on the Fund; and 
‘‘(D) to meet the housing needs of the bor-
rowers that the single family mortgage insurance 
program under this title is designed to serve.’’. 
(b) OBLIGATIONS OF FUND.—The National Housing 
Act is amended as follows: 
(1) HOMEOWNERSHIP VOUCHER PROGRAM MORT-
GAGES.—In section 203(v) (12 U.S.C. 1709(v))— 
(A) by striking ‘‘Notwithstanding section 
202 of this title, the’’ and inserting ‘‘The’’; and 
(B) by striking ‘‘General Insurance Fund’’ 
the first place such term appears and all that 
follows and inserting ‘‘Mutual Mortgage Insur-
ance Fund.’’. 
(2) HOME EQUITY CONVERSION MORTGAGES.— 
Section 255(i)(2)(A) of the National Housing Act (12 
U.S.C. 1715z–20(i)(2)(A)) is amended by striking 
‘‘General Insurance Fund’’ and inserting ‘‘Mutual 
Mortgage Insurance Fund’’. 
(c) CONFORMING AMENDMENTS.—The National Hous-
ing Act is amended— 
(1) in section 205 (12 U.S.C. 1711), by striking 
subsections (g) and (h); and 
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(2) in section 519(e) (12 U.S.C. 1735c(e)), by 
striking ‘‘203(b)’’ and all that follows through 
‘‘203(i)’’ and inserting ‘‘203, except as determined by 
the Secretary’’. 
SEC. 11. HAWAIIAN HOME LANDS AND INDIAN RESERVA-
TIONS. 
(a) HAWAIIAN HOME LANDS.—Section 247(c) of the 
National Housing Act (12 U.S.C. 1715z–12) is amended— 
(1) by striking ‘‘General Insurance Fund estab-
lished in section 519’’ and inserting ‘‘Mutual Mort-
gage Insurance Fund’’; and 
(2) in the second sentence, by striking ‘‘(1) all 
references’’ and all that follows through ‘‘and (2)’’. 
(b) INDIAN RESERVATIONS.—Section 248(f) of the Na-
tional Housing Act (12 U.S.C. 1715z–13) is amended— 
(1) by striking ‘‘General Insurance Fund’’ the 
first place it appears through ‘‘519’’ and inserting 
‘‘Mutual Mortgage Insurance Fund’’; and 
(2) in the second sentence, by striking ‘‘(1) all 
references’’ and all that follows through ‘‘and (2)’’. 
SEC. 12. CONFORMING AND TECHNICAL AMENDMENTS. 
(a) REPEALS.—The following provisions of the Na-
tional Housing Act are repealed: 
(1) Subsection (i) of section 203 (12 U.S.C. 
1709(i)). 
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(2) Subsection (o) of section 203 (12 U.S.C. 
1709(o)). 
(3) Subsection (p) of section 203 (12 U.S.C. 
1709(p)). 
(4) Subsection (q) of section 203 (12 U.S.C. 
1709(q)). 
(5) Section 222 (12 U.S.C. 1715m). 
(6) Section 237 (12 U.S.C. 1715z–2). 
(7) Section 245 (12 U.S.C. 1715z–10). 
(b) DEFINITION OF AREA.—Section 203(u)(2)(A) of 
the National Housing Act (12 U.S.C. 1709(u)(2)(A)) is 
amended by striking ‘‘shall’’ and all that follows and insert-
ing ‘‘means a metropolitan statistical area as established 
by the Office of Management and Budget;’’. 
(c) DEFINITION OF STATE.—Section 201(d) of the Na-
tional Housing Act (12 U.S.C. 1707(d)) is amended by 
striking ‘‘the Trust Territory of the Pacific Islands’’ and 
inserting ‘‘the Commonwealth of the Northern Mariana Is-
lands’’. 
SEC. 13. HOME EQUITY CONVERSION MORTGAGES. 
(a) IN GENERAL.—Section 255 of the National Hous-
ing Act (12 U.S.C. 1715z–20) is amended— 
(1) in subsection (g)— 
(A) by striking the first sentence; and 
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