‘‘(B) NO
INTENTIONAL
DEFAULT
OR 
FALSE
INFORMATION.—The mortgagor shall 
certify to the Secretary that the mortgagor— 
‘‘(i) has not, during the 10-year pe-
riod ending upon the insurance of the 
mortgage under this section— 
‘‘(I) intentionally defaulted on 
any mortgage or any other debt; or 
‘‘(II) knowingly or willfully fur-
nished material information known to 
be false for the purpose of obtaining 
any mortgage; and 
‘‘(ii) is in compliance with the require-
ment under paragraph (1)(C) (relating to 
convictions for fraud). 
‘‘(C) LIABILITY
FOR
REPAYMENT.—The 
mortgagor shall agree in writing that the mort-
gagor shall be liable to repay to the Secretary 
any direct financial benefit achieved from a 
mortgage insured under this section that is de-
rived from misrepresentations made by the 
mortgagor in the certifications and documenta-
tion required under this paragraph, subject to 
the discretion of the Secretary. 
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‘‘(D) DOCUMENTATION AND VERIFICATION 
OF INCOME.—In complying with the FHA un-
derwriting requirements under the Program 
under this section, the mortgagee shall docu-
ment and verify the income of the mortgagor or 
non-filing status in accordance with procedures 
and standards that the Secretary shall establish 
(provided that such procedures and standards 
are consistent with section 203(b) to the max-
imum extent possible) which may include re-
quiring the mortgagee to procure a copy of the 
income tax returns from the Internal Revenue 
Service, for the two most recent years for which 
the filing deadline for such years has passed 
and by any other method, in accordance with 
procedures and standards that the Secretary 
shall establish. 
‘‘(E) MORTGAGE FRAUD.—The duty of the 
mortgagee to ensure that the mortgagor is in 
compliance with paragraph (1)(C) shall be sat-
isfied if the mortgagee makes a good faith ef-
fort to determine that the mortgagor has not 
been convicted under Federal or State law for 
fraud during the period described in such para-
graph. 
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‘‘(f) APPRAISAL INDEPENDENCE.— 
‘‘(1) PROHIBITIONS ON INTERESTED PARTIES 
IN
A
REAL
ESTATE
TRANSACTION.—No mortgage 
lender, mortgage broker, mortgage banker, real es-
tate broker, appraisal management company, em-
ployee of an appraisal management company, nor 
any other person with an interest in a real estate 
transaction involving an appraisal in connection with 
a mortgage insured under this section shall improp-
erly influence, or attempt to improperly influence, 
through coercion, extortion, collusion, compensation, 
instruction, inducement, intimidation, nonpayment 
for services rendered, or bribery, the development, 
reporting, result, or review of a real estate appraisal 
sought in connection with the mortgage. 
‘‘(2) CIVIL MONETARY PENALTIES.—The Sec-
retary may impose a civil money penalty for any 
knowing and material violation of paragraph (1) 
under the same terms and conditions as are author-
ized in section 536(a) of this Act. 
‘‘(g) STANDARDS TO PROTECT AGAINST ADVERSE 
SELECTION.— 
‘‘(1) IN
GENERAL.—The Secretary shall, by 
rule or order, establish standards and policies to re-
quire the underwriter of a mortgage insured under 
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this section to provide such representations and war-
ranties as the Secretary considers necessary or ap-
propriate to enforce compliance with all underwriting 
and appraisal standards of the Program. 
‘‘(2) EXCLUSION FOR VIOLATIONS.—The Sec-
retary shall not pay insurance benefits to a mort-
gagee who violates the representations and warran-
ties, as established under paragraph (1), or in any 
case in which a mortgagor fails to make the first 
payment on a mortgage insured under this section. 
‘‘(3) OTHER AUTHORITY.—The Secretary may 
establish such other standards or policies as nec-
essary to protect against adverse selection, including 
requiring loans identified by the Secretary as higher 
risk loans to demonstrate payment performance for 
a reasonable period of time before being insured 
under the program under this section. 
‘‘(h) PREMIUMS.— 
‘‘(1) ESTABLISHMENT AND COLLECTION.—For 
each mortgage insured under this section, the Sec-
retary shall establish and collect— 
‘‘(A) at the time of insurance, a single pre-
mium payment in an amount that is at least 
100 basis points greater than the single pre-
mium payment that would otherwise be charged 
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pursuant to section 203(c)(2)(A) with respect 
to the mortgage; and 
‘‘(B) in addition to the premium required 
under paragraph (1), an annual premium in an 
amount that is at least 100 basis points greater 
than the annual premium payment that would 
otherwise be charged pursuant to section 
203(c)(2)(B) with respect to the mortgage. 
‘‘(2) CONSIDERATIONS.—In setting the pre-
mium under this subsection, the Secretary shall con-
sider— 
‘‘(A) the financial integrity of the Pro-
gram; and 
‘‘(B) the purposes of the Program set 
forth in subsection (b). 
‘‘(i) ORIGINATION FEES AND INTEREST RATE.—The 
Secretary shall establish— 
‘‘(1) a reasonable limitation on origination fees 
for mortgages insured under this section; and 
‘‘(2) procedures to ensure that interest rates on 
such mortgages shall be commensurate with market 
rate interest rates on such types of loans. 
‘‘(j) DEFAULT.—Any mortgagor who defaults in re-
payment of a mortgage insured under this section shall 
not be eligible for any mortgage insurance provided by the 
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Secretary for the 10-year period beginning upon such de-
fault. 
‘‘(k) 5-YEAR PHASE-IN FOR EQUITY AS A RESULT 
OF SALE OR REFINANCING.—For each mortgage insured 
under this section, the Secretary and the mortgagor of 
such mortgage shall, upon any sale or disposition of the 
property to which the mortgage relates, or upon the subse-
quent refinancing of such mortgage, be entitled to the fol-
lowing with respect to any equity created as a direct result 
of the mortgage being insured under this section: 
‘‘(1) If such sale or refinancing occurs during 
the period that begins on the date that such mort-
gage is insured and ends 1 year after such date of 
insurance, the Secretary shall be entitled to 100 per-
cent of such equity. 
‘‘(2) If such sale or refinancing occurs during 
the period that begins 1 year after such date of in-
surance and ends 2 years after such date of insur-
ance, the Secretary shall be entitled to 90 percent of 
such equity and the mortgagor shall be entitled to 
10 percent of such equity. 
‘‘(3) If such sale or refinancing occurs during 
the period that begins 2 years after such date of in-
surance and ends 3 years after such date of insur-
ance, the Secretary shall be entitled to 80 percent of 
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progress of the Program, which shall contain the following 
information for each month: 
‘‘(1) The number of new mortgages insured 
under this section, including the location of the 
properties subject to such mortgages by census 
tract. 
‘‘(2) The aggregate principal obligation of new 
mortgages insured under this section. 
‘‘(3) The amount of premiums collected for in-
surance of mortgages under this section. 
‘‘(4) The claim and loss rates for mortgages in-
sured under this section. 
‘‘(5) Any other information that the Secretary 
considers appropriate. 
Upon submitting each monthly report required under this 
subsection, the Secretary shall make such report publicly 
available on the World Wide Web site of the Department 
of Housing and Urban Development. 
‘‘(n) REQUIRED OUTREACH EFFORTS.—The Sec-
retary shall carry out outreach efforts to ensure that 
homeowners, lenders, and the general public are aware of 
the opportunities for assistance available under this sec-
tion. 
‘‘(o) ENHANCEMENT OF FHA CAPACITY.—The Sec-
retary shall take such actions as may be necessary to— 
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‘‘(1) contract for the establishment of under-
writing criteria, automated underwriting systems, 
pricing standards, and other factors relating to eligi-
bility for mortgages insured under this section; 
‘‘(2) contract for independent quality reviews of 
underwriting, including appraisal reviews and fraud 
detection, of mortgages insured under this section or 
pools of such mortgages; and 
‘‘(3) increase personnel of the Department as 
necessary to process or monitor the processing of 
mortgages insured under this section. 
‘‘(p) GNMA COMMITMENT AUTHORITY.— 
‘‘(1) GUARANTEES.—The Secretary shall take 
such actions as may be necessary to ensure that se-
curities based on and backed by a trust or pool com-
posed of mortgages insured under this section are 
available to be guaranteed by the Government Na-
tional Mortgage Association as to the timely pay-
ment of principal and interest. 
‘‘(2) GUARANTEE
AUTHORITY.—To carry out 
the purposes of section 306 of the National Housing 
Act (12 U.S.C. 1721), the Government National 
Mortgage Association may enter into new commit-
ments to issue guarantees of securities based on or 
backed by mortgages insured under this section, not 
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exceeding $200,000,000,000. The amount of author-
ity provided under the preceding sentence to enter 
into new commitments to issue guarantees is in ad-
dition to any amount of authority to make new com-
mitments to issue guarantees that is provided to the 
Association under any other provision of law. 
‘‘(q) SUNSET.—The Secretary may not enter into any 
new commitment to insure any mortgage pursuant to this 
section before October 1, 2012 or after September 30, 
2015. 
‘‘(r) RULE OF CONSTRUCTION RELATING TO VOL-
UNTARY NATURE OF PROGRAM.—This section shall not 
be construed to require that any financial institution or 
mortgagee approved by the Secretary under section 203 
as responsible and able to service mortgages responsibly 
participate in any activity authorized under this section. 
‘‘(s) RULE OF CONSTRUCTION RELATING TO INSUR-
ANCE OF MORTGAGES.—Except as otherwise provided for 
in this section or by action of the Secretary, the provisions 
and requirements of section 203(b) shall apply with re-
spect to the insurance of any mortgage under this section. 
The Secretary shall conform documents, forms, and proce-
dures for mortgages insured under this section to those 
in place for mortgages insured under section 203(b) to the 
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maximum extent possible consistent with the requirements 
of this section.’’. 
Æ 
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