loans, grants, benefits, or contracts, for purposes of sec-
tion 553(a) of title 5, United States Code. 
(b) SUBSIDY LAYERING.—For purposes of section 
102(d) of the Department of Housing and Urban Develop-
ment Reform Act of 1989, mortgage insurance and other 
credit enhancement provided under this title shall not be 
considered assistance within the jurisdiction of the De-
partment. 
(c) GOVERNMENT CORPORATION CONTROL ACT.— 
Section 9101(3) of title 31, United States Code, is amend-
ed by adding at the end the following new subparagraph: 
‘‘(S) the Federal Housing Administra-
tion.’’. 
(d) TAX EXEMPT STATUS OF FHA.—Section 501(l) 
of the Internal Revenue Code of 1986 (26 U.S.C. 501(l)) 
is amended by adding at the end the following new para-
graph: 
‘‘(5) The Federal Housing Administration es-
tablished under the FHA Reform and Modernization 
Act of 2013.’’. 
SEC. 219. EVALUATION. 
(a) IN GENERAL.—The Director shall conduct a 
study and submit a report to the President and the Con-
gress on— 
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(1) whether this title provides sufficient author-
ity to permit the FHA to accomplish its public pur-
poses efficiently and effectively, and in a safe and 
sound manner; 
(2) the impact of the limitations on business ac-
tivities as to mortgage amounts and aggregate com-
mitments, and any other statutory limitations, on 
the current and anticipated business activity of the 
FHA; and 
(3) whether the provisions of subtitle C appro-
priately provide that the FHA will be operated in a 
safe and sound manner and will fulfill the public 
purposes of its establishment. 
(b) TIMING.—The report required by this section 
shall be submitted on the third January 1st occurring 
after the conclusion of the transition period under section 
281. 
SEC. 220. FUNDING. 
(a) FUNDING OF SALARIES AND EXPENSES.—There 
is authorized to be appropriated for each fiscal year to 
the FHA, for salaries, expenses, and technology for the 
management and operations of the FHA an amount not 
exceeding the amount of the negative subsidy credited to 
the negative subsidy receipt account not needed for re-
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serves of the funds of the FHA pursuant to sections 256 
and 259. 
(b) FUNDING OF CLAIMS.— 
(1) AVAILABILITY OF FUNDS.—Amounts cred-
ited to the financing account of the FHA, estab-
lished pursuant to title V of the Congressional 
Budget Act of 1974, shall be permanently and in-
definitely available for payment of any claim that 
the FHA approves under a contract of insurance or 
other credit enhancement instrument pursuant to 
this title. 
(2) BORROWING AUTHORITY.— 
(A) IN GENERAL.—To the extent that such 
amounts are insufficient for such purpose, the 
FHA may borrow from the Treasury pursuant 
to title V of the Congressional Budget Act of 
1974. 
(B) NOTICE
TO
CONGRESS.—Upon exer-
cising the authority referred to in subparagraph 
(A), the FHA shall submit to the Congress— 
(i) notice of such exercise of authority 
and the extent of the borrowing under-
taken; 
(ii) a plan for repayment to the 
Treasury of the amounts borrowed, speci-
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fying the time and amounts of such pay-
ments; and 
(iii) if such borrowing is for the Mu-
tual Mortgage Insurance Fund, how the 
FHA will comply with the capital restora-
tion plan required under section 257(c). 
SEC. 221. EFFECTIVE DATE. 
This subtitle shall take effect on the date of the en-
actment of this Act. 
Subtitle B—Business Authority and 
Requirements 
SEC. 231. AUTHORITY TO CARRY OUT FHA AND OTHER 
BUSINESS. 
(a) IN GENERAL.—After the expiration of the transi-
tion period under section 281— 
(1) the FHA may exercise (in addition to pow-
ers set forth in section 282) any authority and un-
dertake any responsibilities of the Secretary of 
Housing and Urban Development under the Na-
tional Housing Act (as amended by this title) relat-
ing to mortgage insurance, except as otherwise pro-
vided in this title and except that any authority that 
requires an appropriation may be conducted only to 
the extent that amounts are so appropriated; 
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(2) any amounts in the Mutual Mortgage Insur-
ance Fund under section 202(a) of the National 
Housing Act (12 U.S.C. 1708(a)), any amounts in 
the General Insurance Fund and Special Risk Insur-
ance Fund under sections 519 and 238(b), respec-
tively, of such Act (12 U.S.C. 1735c, 1715z–3(b)), 
and any amounts in the Cooperative Management 
Housing Insurance Fund under section 213(k) of 
such Act (12 U.S.C. 1715e(k)), shall be used by the 
FHA only— 
(A) for meeting any obligations of such 
Funds entered into before such transition date; 
and 
(B) for carrying out the mortgage insur-
ance obligations of the FHA pursuant to sec-
tion 282(1) of this title and paragraph (1) of 
this section; and 
(3) the FHA may exercise any authority of the 
FHA under this title. 
(b) TERMINATION OF SECRETARY’S FHA AUTHOR-
ITY.—After the expiration of the transition period under 
section 281, the Secretary may not exercise any authority 
under the National Housing Act relating to mortgage in-
surance. This subsection may not be construed to limit 
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or otherwise affect the Secretary’s authority under title 
I of the National Housing Act (12 U.S.C. 1702 et seq.). 
(c) CONTINUATION OF OBLIGATIONS.—This section 
and section 282(1) may not be construed to affect the va-
lidity of any right, duty, or obligation of the United States 
or other person arising under or pursuant to any commit-
ment or agreement lawfully entered into with the Sec-
retary of Housing and Urban Development under the Na-
tional Housing Act. 
SEC. 232. ELIGIBLE SINGLE-FAMILY MORTGAGES. 
(a) IN GENERAL.—Notwithstanding section 203 of 
the National Housing Act (12 U.S.C. 1709) or any other 
provision of law, the FHA may insure, and make commit-
ments to insure, a mortgage on a 1- to 4-family residential 
property only if the mortgage complies with the following 
requirements: 
(1) MORTGAGE AMOUNT.—The mortgage shall 
involve a principal obligation (including such initial 
service charges, appraisal, inspection, and other fees 
as the FHA shall approve) in an amount not to ex-
ceed the following amounts: 
(A) APPRAISED
VALUE.—100 percent of 
the appraised value of the property. 
(B) AREA LIMITATION.— 
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the sixth sentence of such section 
305(a)(2) for a residence of the appli-
cable size. 
For purposes of the preceding sentence, 
the term ‘‘area’’ means a metropolitan sta-
tistical area as established by the Office of 
Management and Budget; and the median 
1-family house price for an area shall be 
equal to the median 1-family house price of 
the county within the area that has the 
highest such median price. 
(ii) 
MINIMUM
LIMIT.—Notwith-
standing clause (i), the principal obligation 
limitation in effect for any area under this 
subparagraph may not be less than the 
greater of— 
(I) 375 percent of the median in-
come for the area, as determined by 
the FHA; or 
(II) $200,000. 
(2) DOWNPAYMENT.—The mortgage shall be 
executed by a mortgagor who shall have paid on ac-
count of the property subject to the mortgage an 
amount, in cash or its equivalent, equal to or exceed-
ing— 
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(A) 5 percent of the cost of acquisition of 
the property, as determined by the FHA; or 
(B) in the case of a mortgage under which 
the mortgagor is a first-time homebuyer and for 
which such credit enhancement as the FHA 
shall determine has been provided, 3.5 percent 
of the cost of acquisition of the property, as de-
termined by the FHA. 
(3) PUBLIC
PURPOSE
REQUIREMENT.—The 
mortgage shall meet the requirements of any one of 
the following subparagraphs: 
(A) FIRST-TIME HOMEBUYER.—The mort-
gagor under the mortgage is a first-time home-
buyer (as such term is defined in section 202) 
of the property subject to the mortgage and the 
property is used as the principal residence of 
the mortgagor. 
(B) LOW- OR
MODERATE-INCOME
MORT-
GAGOR.—The mortgagor under the mortgage is 
a member of a family as follows: 
(i) IN GENERAL.—A family having an 
income that is less than 115 percent of the 
median income, as determined by the 
FHA, for the area in which the property 
subject to the mortgage is located, except 
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that the FHA may establish income ceil-
ings higher or lower than 115 percent of 
the median for the area to take into con-
sideration various sizes of families. 
(ii) HIGH-COST
AREAS.—A family 
that— 
(I) resides in any area for which 
the median 1-family house price ex-
ceeds the maximum dollar amount 
limitation in effect for that year on 
the original principal obligation of a 
mortgage on a 1-family residence that 
may be purchased by the Federal 
Home Loan Mortgage Corporation, as 
determined under section 305(a)(2) of 
the Federal Home Loan Mortgage 
Corporation 
Act 
(12 
U.S.C. 
1454(a)(2)); and 
(II) has an income that is less 
than 150 percent of the median in-
come, as determined by the FHA, for 
the area in which the property subject 
to the mortgage is located, except that 
the FHA may establish income ceil-
ings higher or lower than 150 percent 
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of the median for the area to take 
into consideration various sizes of 
families. 
For purposes of this subparagraph, the term 
‘‘area’’ has the meaning given such term in the 
last sentence of paragraph (1)(B)(i). 
(C) COUNTER-CYCLICAL MARKET ADJUST-
MENT.—The property subject to the mortgage 
is located in a county or counties for which a 
determination under this subparagraph has 
been made, as follows: 
(i) 
DETERMINATION.—A 
mortgage 
may be insured pursuant to this subpara-
graph only upon a joint determination by 
the Director and the Chief Risk Officer 
that— 
(I) available credit for the pur-
chase of 1- to 4-family homes located 
in such county or counties has con-
tracted significantly, as measured by 
the credit availability measure of the 
Office of the Comptroller of the Cur-
rency; 
(II) housing prices in such coun-
ty or counties have declined signifi-
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cantly, as measured by the applicable 
housing price index of the Federal 
Housing Finance Agency; or 
(III) available credit for the pur-
chase of housing or such other eco-
nomic conditions exist sufficient to 
evidence a significant contraction of 
capital in such county or counties, as 
measured by a metric identified by the 
Director and the Chief Risk Officer in 
a written notice made publicly avail-
able, and provided to the Congress, in 
advance of such determination. 
(ii) CONDITIONS OF TERMINATION.— 
Upon making a determination under clause 
(i), the Director and the Chief Risk Officer 
shall also identify measurable criteria for 
determining that the conditions determined 
under clause (i) for such county or coun-
ties have ceased to exist. 
(iii) NOTICE
TO
CONGRESS.—Upon 
making a determination under clause (i), 
the Director and the Chief Risk Officer 
shall provide written notice to the Congress 
of such determination and the specific 
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measurable criteria identified pursuant to 
clause (ii). 
(iv) TERMINATION.—The authority to 
insure mortgages pursuant to this subpara-
graph on properties located in a county or 
counties shall terminate upon the earlier 
of— 
(I) the expiration of the 18- 
month period beginning upon the date 
that notification under clause (iii) is 
provided to the Congress of the deter-
mination under clause (i) with respect 
to such county or counties; or 
(II) the occurrence of the condi-
tions identified pursuant to clause (ii) 
with respect to such county or coun-
ties. 
(v) MULTIPLE
DETERMINATIONS.— 
Nothing in this subparagraph may be con-
strued to prevent multiple or consecutive 
periods for a county or counties during 
which mortgages on properties located in 
such county or counties may be insured 
pursuant to this subparagraph. 
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(D) DISASTER AREA.—The Board of Di-
rectors exercises the authority to insure mort-
gages under this subparagraph, subject to the 
following requirements: 
(i) IMPLEMENTATION.—The Board of 
Directors may implement authority to in-
sure mortgages under this subparagraph 
only if the Board— 
(I) by a vote of the majority of 
its members, approves such implemen-
tation for a specific disaster area 
under clause (iii) and a specific dis-
aster period under clause (iv); and 
(II) notifies the Congress and the 
President in writing of such approval, 
such disaster period, and such dis-
aster area not less than 30 days be-
fore the commencement of the dis-
aster period. 
(ii) 
ELIGIBLE
MORTGAGES.—The 
FHA may insure, or make a commitment 
to insure, a mortgage under authority 
under this subparagraph only if— 
(I) the mortgage is made for the 
purchase of a principal residence by a 
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mortgagor whose home (that the 
mortgagor occupied as an owner or 
tenant) was located in a disaster area 
described under clause (iii) and was 
destroyed or damaged to such an ex-
tent that reconstruction is required, 
as a result of a major disaster de-
clared by the President under the 
Robert T. Stafford Disaster Relief 
and Emergency Assistance Act; and 
(II) the commitment for mort-
gage insurance is made during the 
disaster 
period 
established 
under 
clause (iv) for such disaster area. 
(iii) DISASTER
AREA.—A disaster 
area may be established for purposes of 
this subparagraph only for the area af-
fected by a major disaster, as declared by 
the President under the Robert T. Stafford 
Disaster Relief and Emergency Assistance 
Act, or a portion of such area, as deter-
mined by the FHA. 
(iv) DISASTER
PERIOD.—A disaster 
period established for purposes of this sub-
paragraph shall— 
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(I) commence upon or after the 
declaration of the major disaster re-
ferred to in clause (iii); and 
(II) terminate on the date certain 
approved by the Board of Directors 
under clause (i)(I) and contained in 
the notice under clause (i)(II), which 
shall not be later than 18 months 
after the commencement of the period. 
(b) CONFORMING AMENDMENTS.—Section 203(b) of 
the National Housing Act (12 U.S.C. 1709(b)) is amend-
ed— 
(1) by striking paragraph (2); and 
(2) in paragraph (9)— 
(A) by striking subparagraph (A); and 
(B) in subparagraph (B), by striking ‘‘this 
paragraph’’ and inserting ‘‘section 202(a)(2) of 
the FHA Reform and Modernization Act of 
2013’’. 
SEC. 233. RISK-SHARING. 
(a) DEVELOPMENT OF DEMONSTRATION MODEL.— 
Not later than the expiration of the 2-year period begin-
ning on the date of the enactment of this Act, the FHA 
shall develop and implement a model and standards for 
entering into risk-sharing agreements with respect to 
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mortgages insured by the FHA, under which the FHA 
shall insure a portion of the amount of the mortgage and 
persons or entities determined under the guidelines estab-
lished pursuant to subsection (b) to be qualified to partici-
pate in such an agreement shall insure the remainder (or 
another) portion of the amount of the eligible mortgage. 
(b) QUALIFICATIONS
OF
RISK-SHARING
PART-
NERS.— 
(1) ESTABLISHMENT.—The model and stand-
ards established under this section shall include 
guidelines for the qualification of persons or entities 
to participate in risk-sharing and other credit en-
hancement activities with the FHA. 
(2) PROCEDURES.—In establishing such guide-
lines, the FHA shall review the guidelines estab-
lished by the Director for qualification of persons or 
entities to participate in risk-sharing and other cred-
it enhancement activities with the Federal National 
Mortgage Association or the Federal Home Loan 
Mortgage Corporation. The FHA shall determine 
whether such guidelines for such enterprises are suf-
ficient for purposes of the FHA, including whether 
such guidelines meet the requirements under para-
graph (3), and— 
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(A) if the FHA determines that such 
guidelines are so sufficient, the FHA shall 
adopt such guidelines for purposes of this sec-
tion, to the extent appropriate, with any 
changes necessary to account for differences be-
tween the mortgages insured under this title 
and the National Housing Act and the business 
under such provisions and the business of such 
enterprises; or 
(B) if the FHA determines that such 
guidelines are not so sufficient, the FHA shall 
adopt such guidelines for purposes of this sec-
tion, to the extent appropriate and with changes 
referred to in subparagraph (A), together with 
additional criteria sufficient to address any 
such insufficiency. 
(3) CONTENT.—Such guidelines shall ensure 
that— 
(A) persons or entities participating in 
risk-sharing and other credit enhancement ac-
tivities pursuant to this section have sufficient 
capital, credit worthiness, and liquidity, and are 
otherwise capable of fulfilling their obligations 
to the FHA; 
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(B) such persons or entities and their prin-
cipals or officers are not engaged in a business 
the goals of which would conflict with the pur-
poses of the FHA or the National Housing Act; 
and 
(C) product or service delivery will be con-
ducted in a manner that is efficient and effec-
tive, and that will comply with the requirement 
under section 211(d). 
(c) RISK-SHARING REQUIREMENT.— 
(1) REQUIREMENT.—After the expiration of the 
2-year period referred to in subsection (a), the FHA 
shall ensure that, in each fiscal year, not less than 
10 percent of any new business in mortgages on 1- 
to 4-family residential property is insured pursuant 
to a risk-sharing agreement with respect to such 
mortgage that complies with the standards estab-
lished pursuant to subsection (a). 
(2) LIMITATION.—In any fiscal year, the FHA 
may not comply with paragraph (1) by entering into 
risk-sharing agreements with respect only to one or 
a limited number of types or categories of mort-
gages, or mortgages having only particular, or a par-
ticular range of, original principal obligation 
amounts, but shall enter into risk-sharing agree-
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ments for all types and amounts of mortgages in-
sured by the FHA, to the extent required under 
paragraph (1). 
(3) NEW BUSINESS.—For purposes of this sub-
section, with respect to a fiscal year, the term ‘‘new 
business’’ means the aggregate dollar amount of the 
principal obligations of mortgages for which a com-
mitment to insure is made pursuant to the National 
Housing Act or this title, as applicable, during such 
fiscal year. 
(d) REPORTS TO CONGRESS.—Upon the expiration of 
each of the 3- and 5-year periods beginning on the date 
of the enactment of this Act, the FHA shall submit a re-
port to the Congress on the findings and results of risk- 
sharing activities under this section. Such reports shall de-
scribe the model and standards for entering into risk-shar-
ing agreements, analyze appropriate dollar amount limits 
for the original principal obligations of mortgages that 
should be subject to a risk-sharing requirement, identify 
the effects of such risk-sharing activities on the Mutual 
Mortgage Insurance Fund, and make recommendations 
regarding expanding the risk-sharing requirement under 
subsection (c). 
(e) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. During the tran-
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this title, and shall provide for sharing of premiums with 
entities entering into risk-sharing agreements with the 
FHA pursuant to section 233 based on the relative portion 
of the mortgage insured and the risk of loss borne. 
(b) MINIMUM PREMIUMS.—In the case of mortgages 
on 1- to 4-family residential properties insured by the 
FHA, the premiums established and collected by the FHA 
shall include an annual premium payment in an amount 
not less than 0.55 percent of the remaining insured prin-
cipal balance (excluding the portion of the remaining bal-
ance attributable to any premium collected at the time of 
insurance and without taking into account delinquent pay-
ments or prepayments) for the entire term of the mort-
gage. 
(c) 
SELF-SUFFICIENT
OPERATIONS.—Notwith-
standing section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)) or any other provision of law, premium 
rates established under this section shall be established in 
amounts sufficient to cover— 
(1) costs of providing mortgage insurance cov-
erage under this title; 
(2) costs for administration, operations, man-
agement, and technology systems for the FHA for 
carrying out this title; 
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(3) the capital ratio required for the Mutual 
Mortgage Insurance Fund under section 256(b) and 
under section 259 with respect to mortgage insur-
ance for mortgages on multifamily properties; and 
(4) salaries and expenses for officers and per-
sonnel of the FHA. 
(d) RISK-BASED PREMIUMS.—The FHA may, with 
respect to mortgages on 1- to 4-family residential prop-
erties insured by the FHA, establish a mortgage insurance 
premium structure involving a single premium payment 
collected prior to the insurance of the mortgage or annual 
payments (which may be collected on a periodic basis), or 
both. Under such structure, the rate of premiums for such 
a mortgage may vary according to the credit risk associ-
ated with the mortgage and the rate of any annual pre-
mium for such a mortgage may vary during the mortgage 
term, except that the basis for determining the variable 
rate shall be established before the execution of the mort-
gage. The FHA may change a premium structure estab-
lished under this subsection, but only to the extent that 
such change is not applied to any mortgage already exe-
cuted. 
(e) SAVINGS PROVISION.—Nothing in this section 
may be construed to affect premiums charged for mort-
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gage insurance provided for mortgages insured before the 
date of the enactment of this Act. 
SEC. 236. DEFAULT AND FORECLOSURE STATEMENT. 
(a) WRITTEN STATEMENT.—The FHA shall ensure 
that each mortgagor under a mortgage on a 1- to 4-family 
residential property insured by the FHA is provided, by 
the mortgagee at the time that such mortgage is origi-
nated, with a written statement containing the informa-
tion required under subsection (b). 
(b) DEFAULT AND FORECLOSURE INFORMATION.— 
The information required under this subsection with re-
spect to a mortgage is information identifying the percent-
age (as determined according to historical rates of default 
and foreclosure) of mortgages on 1- to 4-family residential 
properties that were insured pursuant to this title and the 
National Housing Act and that had mortgagors who have 
the same risk profile and mortgage product as the mort-
gagor receiving the written statement pursuant to this sec-
tion (as determined in accordance with guidelines estab-
lished by the FHA) that— 
(1) during the terms of such mortgages, experi-
enced a default on payments due under such mort-
gages; and 
(2) were foreclosed upon during the terms of 
such mortgages. 
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SEC. 237. OCCUPANCY AND RENT LIMITATIONS FOR MULTI-
FAMILY MORTGAGE INSURANCE. 
(a) IN GENERAL.—Notwithstanding any provision of 
the National Housing Act or any other provision of law, 
the FHA may not insure any mortgage on a residential 
property having 5 or more dwelling units unless the prop-
erty is subject to such binding terms and conditions, in-
cluding such occupancy and rent restrictions, as are satis-
factory to the FHA to ensure that the property includes 
dwelling units, to the extent determined by the FHA to 
be appropriate, for which occupancy is restricted during 
the entire term of the mortgage to only the following fami-
lies: 
(1) IN GENERAL.—A family having an income 
that is less than 115 percent of the median income, 
as determined by the FHA, for the area in which the 
property subject to the mortgage is located, except 
that the FHA may establish income ceilings higher 
or lower than 115 percent of the median for the area 
to take into consideration various sizes of families. 
(2) HIGH-COST AREAS.—A family that— 
(A) resides in any area in which the me-
dian 1-family house price exceeds the maximum 
dollar amount limitation in effect for that year 
on the original principal obligation of a mort-
gage on a 1-family residence that may be pur-
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chased by the Federal Home Loan Mortgage 
Corporation, as determined under section 
305(a)(2) of the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1454(a)(2)); and 
(B) has an income that is less than 150 
percent of the median income, as determined by 
the FHA, for the area in which the property 
subject to the mortgage is located, except that 
the FHA may establish income ceilings higher 
or lower than 150 percent of the median for the 
area to take into consideration various sizes of 
families. 
(b) LOWER INCOMES.—Subsection (a) may not be 
construed to prevent the FHA from establishing occu-
pancy, income, and rent restrictions that establish limits 
on incomes for families occupying income-restricted units 
in a property that are lower than the incomes specified 
in subsection (a). 
(c) AREA.—For purposes of this section, the term 
‘‘area’’ has the meaning given such term in the last sen-
tence of section 232(a)(1)(b)(i). 
SEC. 238. EFFECTIVE DATE. 
This subtitle and the amendments made by this sub-
title, except for sections 233 and 234, shall take effect 
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upon the expiration of the transition period under section 
281. 
Subtitle C—Financial Safety and 
Soundness 
SEC. 251. AUTHORITY OF DIRECTOR. 
(a) DUTY.—The Director of the Federal Housing Fi-
nance Agency shall supervise and regulate the safety and 
soundness of the FHA and the programs of the Rural 
Housing Service of the Department of Agriculture for 
housing loans made, insured, or guaranteed under title V 
of the Housing Act of 1949, and it shall be the duty of 
the Director to ensure that the FHA and such Rural 
Housing Service programs are adequately capitalized and 
operating safely. 
(b) AUTHORITY.—The Director may make such de-
terminations, take such actions, and perform such func-
tions as the Director determines necessary to meet the re-
sponsibilities of the Director under this subtitle. 
SEC. 252. BUDGETS AND BUSINESS PLANS. 
(a) SUBMISSION OF BUSINESS-TYPE BUDGET.—In 
each year, the FHA shall prepare and submit an annual 
budget as required under section 9103 of title 31, United 
States Code, and shall submit such budget to the Director 
by a date sufficient to enable the Director to produce, pur-
suant to section 255(c) of this title, the credit subsidy cost 
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estimates that are required for the budget of the United 
States Government under section 1105(a) of title 31, 
United States Code. 
(b) SUBMISSION OF BUDGET AND CREDIT COST ES-
TIMATES TO OMB.—For purposes of inclusion in the 
budget of the United States Government, the FHA shall 
submit the annual budget of the FHA and the annual 
credit subsidy cost estimates produced pursuant to section 
255(c) of this title to the Director of the Office of Manage-
ment and Budget. 
(c) RESERVES.— 
(1) ESTABLISHMENT.—Subject to sections 256 
and 259, the FHA may establish any reserve that 
the FHA determines is necessary for the business 
operations of the FHA. 
(2) AMOUNTS.—The FHA may hold as a re-
serve in any financing account, as defined in section 
502 of the Congressional Budget Act of 1974 (2 
U.S.C. 661a), such amounts as the FHA considers 
necessary to comply with the capital requirements 
established for the FHA under sections 256 and 259 
of this title and to fulfill the purposes of this title. 
SEC. 253. ANNUAL BUSINESS PLAN; USE OF GAAP. 
(a) ANNUAL BUSINESS PLAN.—The FHA shall es-
tablish a business plan on an annual basis and shall make 
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such plan available for review by the Director. Such plan 
shall specify the products and operational strategy of the 
FHA, including plans to address compliance with the safe-
ty and soundness requirements applicable to the FHA. 
(b) USE OF GAAP.—Any financial reporting of the 
FHA, including the preparation of the annual business 
plan required by subsection (a), the annual budget re-
quired in accordance with section 252(a), and any finan-
cial statements of the FHA, shall be conducted in accord-
ance with generally accepted accounting principles applica-
ble to the private sector. 
SEC. 254. EXAMINATIONS, REPORTS, AND COST ESTIMATES. 
(a) EXAMINATIONS.—The Director shall conduct 
such examinations of the FHA and the Rural Housing 
Service programs referred to in section 251(a) as the Di-
rector determines necessary to evaluate the safety and 
soundness of the FHA and such programs. Such examina-
tions shall be subject to and governed by subsections (c) 
through (h) of section 1317 of the Federal Housing Enter-
prises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4517), except that the last sentence of subsection 
(c) shall not apply and any reimbursements referred to 
in such sentence shall be made from amounts collected 
under section 255 of this title. 
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(b) REPORTS.—The Director may require the FHA 
and the Rural Housing Service to submit, within a reason-
able period of time, any regular or special report, data, 
or other information whenever, in the judgment of the Di-
rector, such report, data, or information is necessary to 
carry out the Director’s responsibilities under this title. 
(c) CREDIT SUBSIDY COST ESTIMATES.— 
(1) IN GENERAL.—The Director shall produce 
and submit to the Director of the Office of Manage-
ment and Budget the annual credit subsidy cost esti-
mates for the FHA and the Rural Housing Service 
programs referred to in section 251(a) required for 
the President’s budget. Such estimates shall be con-
sistent with the estimates of performance generated 
by the risk-based capital model developed in accord-
ance with section 257(b), and with the President’s 
economic forecast. 
(2) UNIFIED
ESTIMATES.—The annual credit 
subsidy cost estimates produced under this sub-
section by the Director shall be reported on a unified 
basis, which shall be based upon the business of the 
FHA, and the Rural Housing Service programs re-
ferred to in section 251(a), as a whole. 
(d) ANNUAL REPORT
ON SAFETY
AND SOUND-
NESS.—The Director shall submit an annual report to 
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Congress and the Director of the Office of Management 
and Budget on the financial safety and soundness of the 
FHA and the Rural Housing Service programs referred 
to in section 251(a), as measured pursuant to this subtitle. 
SEC. 255. REIMBURSEMENT OF COSTS. 
(a) ASSESSMENT AND COLLECTION.—The Director 
shall assess and collect from the FHA and the Secretary 
of Agriculture annual assessments in such amounts deter-
mined by the Director as necessary to reimburse the Fed-
eral Housing Finance Agency for the reasonable costs and 
expenses of the activities undertaken by such Agency to 
carry out the duties of the Director under this subtitle, 
including the costs of examination, enforcement, and over-
sight expenses. 
(b) REQUIREMENTS.—Annual assessments imposed 
by the Director shall be— 
(1) imposed prior to October 1 of each year; 
(2) allocated among the FHA and the Secretary 
of Agriculture proportionally based on the costs and 
expenses of the Agency of carrying out the duties 
under this subtitle with respect to FHA and the 
Rural Housing Service program referred to in sec-
tion 251(a), respectively; 
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(3) collected at such time or times during each 
assessment year as determined necessary or appro-
priate by the Director; and 
(4) treated in the same manner as provided 
under section 1316(f) of the Federal Housing Enter-
prises Financial Safety and Soundness Act of 1992 
(12 U.S.C. 4516(f)) with respect to amounts re-
ceived by the Director from assessments under sec-
tion 1316 of such Act, except that amounts from as-
sessments under this section may be used only for 
expenses of the Director and the Agency relating to 
the functions and responsibilities under this subtitle. 
SEC. 256. MUTUAL MORTGAGE INSURANCE FUND CAPITAL 
RESERVE. 
(a) SEGREGATION OF BOOKS.—To ensure accurate 
determinations of the capital ratio under subsection (b) 
of this section and such ratio under section 205(f) of the 
National Housing Act, as amended by subsection (d) of 
this section, the FHA shall establish separate accounts in 
the Mutual Mortgage Insurance Fund and take such other 
actions as may be necessary to segregate the following 
amounts: 
(1) Capital attributable to new business. 
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(2) Capital attributable to mortgages that be-
come insured before the expiration of the transition 
period under section 281. 
(b) CAPITAL RATIO FOR NEW BUSINESS.—The FHA 
shall ensure that the account for the Mutual Mortgage In-
surance Fund that is established pursuant to subsection 
(a)(1) of this section at all times maintains a capital ratio 
of not less than 4.0 percent. 
(c) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) CAPITAL.—The term ‘‘capital’’ means the 
economic net worth of the account of the Fund that 
is established pursuant to subsection (a)(1) of this 
section, as determined by the FHA under the annual 
audit required under section 538 of the National 
Housing Act (12 U.S.C. 1735f–16). 
(2) CAPITAL RATIO.—The term ‘‘capital ratio’’ 
means the ratio of capital to unamortized insurance- 
in-force. 
(3) ECONOMIC NET WORTH.—The term ‘‘eco-
nomic net worth’’ means the current cash available 
to the account of the Fund that is established pursu-
ant to subsection (a)(1) of this section, plus the net 
present value of all future cash inflows and outflows 
expected to result from outstanding new business. 
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(4) FUND.—The term ‘‘Fund’’ means the Mu-
tual Mortgage Insurance Fund established under 
section 205 of the National Housing Act (12 U.S.C. 
1711). 
(5) NEW BUSINESS.—The term ‘‘new business’’ 
means mortgages that are obligations of the Mutual 
Mortgage Insurance Fund that become insured by 
the FHA after the expiration of the transition period 
under section 281. 
(6) UNAMORTIZED INSURANCE IN FORCE.—The 
term ‘‘unamortized insurance-in-force’’ means the 
remaining obligation on outstanding new business, 
as estimated by the FHA. 
(d) TREATMENT OF EXISTING CAPITAL RATIO.— 
Paragraph (4) of section 205(f) of the National Housing 
Act (12 U.S.C. 1711(f)(4)) is amended— 
(1) in subparagraph (A), by striking ‘‘Mutual 
Mortgage Insurance Fund’’ and inserting ‘‘account 
of the Mutual Mortgage Insurance Fund that is es-
tablished pursuant to subsection (a)(2) of the FHA 
Reform and Modernization Act of 2013’’; 
(2) in subparagraph (C)— 
(A) by striking ‘‘Fund’’ the first place such 
term appears and inserting ‘‘account of the Mu-
tual Mortgage Insurance Fund that is estab-
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lished pursuant to subsection (a)(2) of the 
FHA Reform and Modernization Act of 2013’’; 
and 
(B) by striking ‘‘the Fund.’’ and inserting 
the following: ‘‘such account that become in-
sured by the Secretary of Housing and Urban 
Development (or the FHA, pursuant to subtitle 
D of the FHA Reform and Modernization Act 
of 2013) before the expiration of the transition 
period under section 281 of such Act.’’; and 
(3) in subparagraph (D), by inserting before 
the comma the following: ‘‘and become insured be-
fore the expiration of the transition period under 
section 281 of the FHA Reform and Modernization 
Act of 2013’’. 
SEC. 257. CAPITAL CLASSIFICATIONS AND PERFORMANCE 
MEASURES FOR MUTUAL MORTGAGE INSUR-
ANCE FUND. 
(a) CAPITAL CLASSIFICATION; EFFECT ON INSUR-
ANCE AUTHORITY.— 
(1) ADEQUATELY CAPITALIZED.—At any time 
that the capital ratio (as such term is defined in sec-
tion 256(c)(2) of this title) is greater than 4.0 per-
cent, the account for the Mutual Mortgage Insur-
ance Fund established pursuant to section 256(a)(1) 
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shall be classified as adequately capitalized for pur-
poses of this subtitle. 
(2) UNDERCAPITALIZED.—At any time that the 
capital ratio is less than 4.0 percent— 
(A) the account for the Mutual Mortgage 
Insurance Fund established pursuant to section 
256(a)(1) shall be classified as undercapitalized 
for purposes of this subtitle; and 
(B) if such capital ratio is— 
(i) equal to or greater than 2.0 per-
cent, the FHA may not enter into any new 
commitment to insure any mortgage on a 
1- to 4-family residential property that in-
volves a principal obligation (including 
such initial service charges, appraisal, in-
spection, and other fees as the FHA shall 
approve) in an amount exceeding 90 per-
cent of the appraised value of the property; 
and 
(ii) less than 2.0 percent but equal to 
or greater than 0.0 percent, the FHA may 
not enter into any new commitment to in-
sure any mortgage on a 1- to 4-family resi-
dential property that involves a principal 
obligation (including such initial service 
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charges, appraisal, inspection, and other 
fees as the FHA shall approve) in an 
amount exceeding 80 percent of the ap-
praised value of the property. 
(3) SIGNIFICANTLY
UNDERCAPITALIZED.—At 
any time that the capital ratio is less than 0.0 per-
cent— 
(A) the account for the Mutual Mortgage 
Insurance Fund established pursuant to section 
256(a)(1) shall be classified as significantly 
undercapitalized for purposes of this subtitle; 
and 
(B) the Director may, pursuant to section 
258(a)(1), take actions under section 258(b). 
(4) QUARTERLY DETERMINATION OF CAPITAL 
RATIO.—The Director shall determine the capital 
ratio and the capital classification of the account for 
the Mutual Mortgage Insurance Fund established 
pursuant to section 256(a)(1) for purposes of this 
subtitle not less frequently than each calendar quar-
ter. 
(b) STRESS TEST.— 
(1) IN GENERAL.—The Director shall develop a 
risk-based capital model to determine the amount of 
capital that is sufficient for the FHA to maintain 
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positive capital during a period of economic stress. 
The model shall incorporate the assumptions under 
paragraphs (2) and (3). 
(2) CREDIT RISK.—For purposes of paragraph 
(1), the Director shall assume that, during the pe-
riod of economic stress referred to in paragraph (1), 
credit losses occur at a rate consistent with a nation-
wide economic recession of average severity based on 
nationwide economic recessions since 1950. 
(3) OTHER RISKS.—For purposes of paragraph 
(1), the Director shall make assumptions about such 
other aspects of the period of economic stress as the 
Director determines are appropriate and consistent. 
(c) CAPITAL RESTORATION PLAN REQUIREMENT.— 
If the account for the Mutual Mortgage Insurance Fund 
established pursuant to section 256(a)(1) is classified as 
undercapitalized or significantly undercapitalized, the 
FHA shall— 
(1) submit to the Director a capital restoration 
plan meeting the requirements of section 258(d) for 
raising or restoring the capital of such account to an 
amount not less than the amount required for such 
account to be classified as adequately capitalized; 
and 
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(2) upon approval by the Director, carry out 
such plan. 
If the Director disapproves a capital restoration plan sub-
mitted under this subsection, the Director shall convey in 
writing reasons for such disapproval and shall provide for 
the FHA to resubmit a revised plan for approval by the 
Director. 
SEC. 258. ENFORCEMENT. 
(a) GROUNDS.—The Director may take actions under 
subsection (b) only if— 
(1) the account for the Mutual Mortgage Insur-
ance Fund established pursuant to section 256(a)(1) 
is classified under section 257(a) as significantly 
undercapitalized; 
(2) the account for the Mutual Mortgage Insur-
ance Fund established pursuant to section 256(a)(1) 
is classified under section 257(a) as undercapitalized 
and— 
(A) the FHA does not submit a capital 
restoration plan that is substantially in compli-
ance with section 257(c) within the applicable 
period, or the Director disapproves the capital 
restoration plan submitted by the FHA; or 
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(B) the FHA has failed to make, in good 
faith, reasonable efforts necessary to comply 
with the capital restoration plan; or 
(3) the FHA is engaging or has engaged, or the 
Director has reasonable cause to believe that the 
FHA is about to engage in— 
(A) any conduct that is likely to threaten 
the adequacy of the capital of the account for 
the Mutual Mortgage Insurance Fund estab-
lished pursuant to section 256(a)(1); 
(B) any failure to comply with any written 
agreement entered into by the FHA with the 
Director; or 
(C) any failure to comply with any request 
by the Director for a report, data, or informa-
tion under section 254(b). 
(b) ACTIONS.—The Director may, under this sub-
section, require the FHA— 
(1) to cease and desist from any conduct or ac-
tivity that— 
(A) with respect to the account for the 
Mutual Mortgage Insurance Fund established 
pursuant to section 256(a)(1), is described in 
paragraph (2) or (3) of subsection (a), or that 
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contributes to the condition described in sub-
section (a)(1); and 
(B) with respect to any other Fund, con-
tributes to a failure to meet a capital reserve 
requirement established pursuant to section 
259(a) or is likely to threaten the adequacy of 
the capital of such Fund; and 
(2) to take corrective or remedial action, includ-
ing— 
(A) restricting the growth of, or con-
tracting, any category of assets or liabilities; 
(B) reducing, modifying, or terminating 
any activity that the Director determines cre-
ates excessive risk to the FHA; 
(C) terminating agreements or contracts; 
(D) engaging or employing qualified em-
ployees (who may be subject to approval by the 
Director at the direction of the Director); or 
(E) submitting to the Director for review 
and approval a detailed and complete operating 
plan. 
(c) REPORTS.—If the Director is authorized under 
subsection (a) of this section or section 259(b) to take ac-
tion under subsection (b) of this section and determines 
not to take any such action, the Director shall prepare 
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a report detailing the basis of the Director’s decision not 
to take such action and shall, within 30 days of the deci-
sion, submit the report to the President, the Director of 
the Office of Management and Budget, the Comptroller 
General of the United States, the Committee on Banking 
and Financial Services of the House of Representatives, 
and the Committee on Banking, Housing, and Urban Af-
fairs of the Senate. 
(d) CAPITAL RESTORATION PLANS.—A capital res-
toration plan submitted pursuant to section 257(c), 
259(b), or 260(d)(3) shall— 
(1) set forth a feasible plan for raising or re-
storing the capital of the Fund for which it is pre-
pared; 
(2) specify the level of capital to be achieved 
and maintained; 
(3) be submitted to the Director within 45 days 
from the date of notification, or if the Director de-
termines that an extension is necessary, within such 
additional time as the Director so determines; 
(4) describe the actions that the FHA shall 
take for such Fund to become classified as ade-
quately capitalized; 
(5) establish a schedule for completing the ac-
tions set forth in the plan; and 
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(6) specify the types and levels of activities (in-
cluding existing and new business activities) in 
which the FHA shall engage during the term of the 
plan. 
SEC. 259. CAPITAL RESERVE REQUIREMENTS FOR OTHER 
FUNDS. 
(a) REQUIREMENTS.—The Director shall establish 
capital reserve requirements for— 
(1) the General Insurance Fund established 
under section 519 of the National Housing Act (12 
U.S.C. 1735c); 
(2) the Special Risk Insurance Fund estab-
lished under section 238(b) of such Act (12 U.S.C. 
1715z–3(b)); 
(3) the Cooperative Management Housing In-
surance Fund established under section 213(k) of 
such Act (12 U.S.C. 1715e(k)); and 
(4) the Rural Housing Insurance Fund estab-
lished under title V of the Housing Act of 1949 (42 
U.S.C. 1471), or the various accounts of such Fund. 
(b) ENFORCEMENT.—The Director may enforce com-
pliance with the requirements under subsection (a) of this 
section with respect to a Fund by taking action under sec-
tion 258(b) or by requiring submission of a capital res-
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100 
toration plan for such Fund meeting the requirements of 
section 258(d). 
SEC. 260. AUTHORITY TO ESTABLISH TEMPORARY CAPITAL 
RATIOS IN CASES OF NATIONWIDE COUNTER-
CYCLICAL MARKET ADJUSTMENT. 
(a) AUTHORITY; DETERMINATION.—The Director 
may suspend the applicability of the capital ratio under 
section 256(b) for the Mutual Mortgage Insurance Fund 
or any capital reserve requirement established pursuant 
to section 259 for any Fund specified under such section 
and establish a temporary alternative capital ratio with 
respect to such Fund for a specified period of time, but 
only upon a joint determination by the Director and the 
Chief Risk Officer that— 
(1) available credit throughout the United 
States or a significant portion of the United States 
for the purchase of the types of residences for which 
mortgages that obligations of such Fund are made 
has contracted significantly, as measured by the 
credit availability measure of the Office of the 
Comptroller of the Currency; 
(2) housing prices throughout the United States 
or a significant portion of the United States have 
declined significantly, as measured by the applicable 
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101 
housing price index of the Federal Housing Finance 
Agency; or 
(3) available credit for the purchase of housing 
or such other economic conditions exist sufficient to 
evidence a significant contraction of capital through-
out the United States or a significant portion of the 
United States, as measured by a metric identified by 
the Director and the Chief Risk Officer in a written 
notice made publicly available, and provided to the 
Congress, in advance of such determination. 
(b) CONDITIONS OF TERMINATION.—Upon making a 
determination under subsection (a), the Director and the 
Chief Risk Officer shall also identify measurable criteria 
for determining that the conditions determined under sub-
section (a) have ceased to exist. 
(c) NOTICE TO CONGRESS.—Upon making a deter-
mination under subsection (a), the Director and the Chief 
Risk Officer shall provide written notice to the Congress 
of such determination and the specific measurable criteria 
identified pursuant to subsection (b). 
(d) EFFECT OF TEMPORARY ALTERNATIVE CAPITAL 
RATIO.—During any period that a temporary alternative 
capital ratio is in effect pursuant to subsection (a) with 
respect to any Fund— 
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102 
(1) in the case of a temporary capital ratio for 
the Mutual Mortgage Insurance Fund, subsections 
(a) and (c) of section 257 and section 258 shall not 
apply; 
(2) such temporary and alternative capital clas-
sifications as the Director shall establish shall be in 
effect with respect to such Fund; and 
(3) the Director shall require the FHA or the 
Secretary of Agriculture (as appropriate) to submit 
and carry out a capital restoration plan for such 
Fund meeting the requirements under section 
258(d) and may take actions under section 258(b) 
with respect to such Fund only in accordance with 
such standards relating to such temporary and alter-
native capital classifications for such Fund as the 
Director shall establish. 
(e) TERMINATION.—Any temporary alternative cap-
ital ratio established pursuant to subsection (a) shall ter-
minate upon the earlier of— 
(1) the expiration of the 18-month period begin-
ning upon the date that notification under sub-
section (c) is provided to the Congress of the deter-
mination under subsection (a); or 
(2) the occurrence of the conditions identified 
pursuant to subsection (b). 
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(f) MULTIPLE DETERMINATIONS.—Nothing in this 
section may be construed to prevent multiple or consecu-
tive periods during which temporary alternative capital ra-
tios are in effect pursuant to this section. 
SEC. 261. 7-YEAR BORROWER SUSPENSION FOR FORE-
CLOSURE. 
(a) FHA.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), with respect to any mortgage on a 1- to 
4-family residential property that is foreclosed upon, 
during the 7-year period beginning upon the date of 
such foreclosure, the FHA may not newly insure, 
under any provision of this title, the National Hous-
ing Act, or any FHA program, any other mortgage 
under which the mortgagor is the individual who was 
the mortgagor under the mortgage that was fore-
closed upon. 
(2) WAIVER.—The FHA shall provide, by regu-
lation, for the FHA to waive the applicability of 
paragraph (1) with respect to a mortgagor in cases 
in which hardship circumstances materially contrib-
uted to the default and foreclosure of the mortgage. 
For purposes of this subsection, such hardship cir-
cumstances may include divorce, job or other income 
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loss, health problems, death in the family, and such 
other situations as the FHA may prescribe. 
(b) RURAL HOUSING.—Section 505 of the Housing 
Act of 1949 (42 U.S.C. 1475) is amended by adding at 
the end the following new subsection: 
‘‘(c) 7-YEAR BORROWER SUSPENSION FOR FORE-
CLOSURE.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), with respect to any mortgage on a 1- to 
4-family residential property that is foreclosed upon, 
during the 7-year period beginning upon the date of 
such foreclosure, the Secretary may not newly make, 
insure, or guarantee, under any provision of this 
title, any other loan under which the borrower is in-
dividual who was the mortgagor under the mortgage 
that was foreclosed upon. 
‘‘(2) WAIVER.—The Secretary shall provide, by 
regulation, for waiver of the applicability of para-
graph (1) with respect to a borrower in cases in 
which hardship circumstances materially contributed 
to the default and foreclosure of the mortgage. For 
purposes of this subsection, such hardship cir-
cumstances may include divorce, job or other income 
loss, health problems, death in the family, and such 
other situations as the Secretary may prescribe.’’. 
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(c) REGULATIONS.—The FHA and the Secretary of 
Agriculture shall jointly issue regulations required under 
subsection (a) of this section and section 505(c) of the 
Housing Act of 1949, as added by subsection (b) of this 
section. 
SEC. 262. BORROWER INELIGIBILITY UPON SECOND FORE-
CLOSURE. 
(a) FHA.—If any individual is the mortgagor under 
any two mortgages on 1- to 4-family residential properties 
that have been foreclosed upon, the FHA may not newly 
insure, under any provision of this title, the National 
Housing Act, or any FHA program, any other mortgage 
under which such individual is the mortgagor. 
(b) RURAL HOUSING.—Section 505 of the Housing 
Act of 1949 (42 U.S.C. 1475), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(d) BORROWER
INELIGIBILITY
UPON
SECOND 
FORECLOSURE.—If any individual is the mortgagor under 
any two mortgages for 1- to 4-family residential properties 
that have been foreclosed upon, the Secretary may not 
newly make, insure, or guarantee, under any provision of 
this title, any other loan under which such individual is 
the borrower.’’. 
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SEC. 263. LIMITATION ON SELLER CONCESSIONS. 
(a) FHA.—The FHA may not newly insure, under 
any provision of this title, the National Housing Act, or 
any FHA program, any mortgage on a 1- to 4-family resi-
dential property with respect to which the seller of the 
property subject to such mortgage (or any third party or 
entity that is reimbursed directly or indirectly by the sell-
er) contributes toward the acquisition of the property by 
the mortgagor any amount in excess of 3 percent of the 
total closing costs (as determined by the FHA) in connec-
tion with such acquisition. 
(b) RURAL HOUSING.—Section 501 of the Housing 
Act of 1949 (42 U.S.C. 1471), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(n) LIMITATION ON SELLER CONCESSIONS.—The 
Secretary may not newly make, insure, or guarantee, 
under any provision of this title, any loan for a 1- to 4- 
family residential property with respect to which the seller 
of the property for which the loan is made (or any third 
party or entity that is reimbursed directly or indirectly by 
the seller) contributes toward the acquisition of the prop-
erty by the borrower any amount in excess of 3 percent 
of the total closing costs (as determined by the Secretary) 
in connection with such acquisition.’’. 
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SEC. 264. LENDER REPURCHASE REQUIREMENT. 
(a) REQUIREMENT.—The FHA may not newly in-
sure, under any provision of this title, the National Hous-
ing Act, or any FHA program, any mortgage on a 1- to 
4-family residential property unless the mortgagee under 
such mortgage enters into such binding agreements as the 
FHA considers necessary to ensure that, if the mortgagor 
is in default with respect to the mortgagor’s obligation to 
make payments under the mortgage for 60 or more con-
secutive days during the 24-month period beginning upon 
origination of the mortgage, the mortgagee will, upon no-
tice by the FHA, repurchase such mortgage in an amount 
equal to the remaining principal obligation under the 
mortgage, as determined in accordance with guidelines 
issued by the FHA. 
(b) EFFECTIVE DATE.—This section shall take effect 
upon the date of the enactment of this Act. 
SEC. 265. INDEMNIFICATION BY MORTGAGEES. 
(a) IN GENERAL.—If the FHA determines that at or 
before the time of loan closing the mortgagee knew, or 
should have known based on the information then reason-
ably available to the mortgagee, of a serious and material 
violation of the requirements established by the FHA with 
respect to a mortgage executed after the date of the enact-
ment of this Act by such mortgagee approved by the FHA 
under the direct endorsement program or insured by a 
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mortgagee pursuant to the delegation of authority under 
section 256 of the National Housing Act (12 U.S.C. 
1715z–21) such that the mortgage loan should not have 
been approved and endorsed for insurance, and the FHA 
pays an insurance claim with respect to the mortgage 
within a reasonable period specified by the FHA, the FHA 
may require the mortgagee approved by the FHA under 
the direct endorsement program or the mortgagee dele-
gated authority under such section 256 to indemnify the 
FHA for the loss, or any portion thereof, if the violation 
was a materially contributing factor to the cause of the 
mortgage default. 
(b) FRAUD OR MATERIAL MISREPRESENTATION.—If 
fraud or material misrepresentation was involved in con-
nection with the origination or underwriting of a mortgage 
executed after enactment by the mortgagee and the FHA 
determines that at or before the time of loan closing such 
mortgagee knew or should have known, based on the infor-
mation then reasonably available to such mortgagee, of the 
fraud or material misrepresentation such that the mort-
gage loan should not have been approved and endorsed 
for insurance, the FHA shall require the mortgagee ap-
proved by the FHA under the direct endorsement program 
or the mortgagee delegated authority under such section 
256 to indemnify the FHA for the loss, or any portion 
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109 
thereof, if the fraud or material misrepresentation was a 
materially contributing factor to the cause of the mortgage 
default. 
(c) APPEALS PROCESS.—The FHA shall, by regula-
tion, establish an appeals process for mortgagees to appeal 
indemnification determinations made pursuant to sub-
section (a) or (b). 
(d) REQUIREMENTS AND PROCEDURES.—The FHA 
shall issue regulations establishing appropriate require-
ments and procedures governing the indemnification of the 
FHA by the mortgagee, including public reporting on— 
(1) the number of loans that— 
(A) were not originated or underwritten in 
accordance with the requirements established by 
the FHA; 
(B) involved fraud or material misrepre-
sentation in connection with the origination or 
underwriting that was a material contributing 
factor to the cause of the mortgage default; and 
(C) the financial impact on the Mutual 
Mortgage Insurance Fund when indemnification 
is required. 
(e) QUALITY CONTROL AND ASSURANCE.— 
(1) MANUAL.—The FHA shall, pursuant to its 
existing regulatory authority, issue and update an-
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110 
nually a manual, handbook, or guide that collects all 
of the origination and underwriting requirements 
that a mortgagee must follow to make residential 
mortgage loans eligible for insurance by the FHA 
which shall— 
(A) provide clear and concise directions so 
that a mortgagee can reasonably know what is 
expected of it; 
(B) identify examples of specific serious 
and material violations that could be the basis 
for an indemnification demand under this sec-
tion; 
(C) apply nationally and be interpreted by 
the FHA uniformly with respect to all mort-
gages endorsed for insurance; and 
(D) permit prospective changes with rea-
sonable advance notice to mortgagees, which 
such changes must be incorporated into the fol-
lowing year’s revised version of the manual, 
handbook, or guide and may not provide for 
retroactive changes to mortgages previously en-
dorsed for insurance. 
(2) REQUIREMENTS.—The FHA shall— 
(A) make prompt initial determinations of 
a mortgagee’s potential liability for either in-
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111 
demnification under this section or other ad-
ministrative remedies or sanctions that may be 
available under the National Housing Act or 
other applicable laws, based on either self-re-
ports by the mortgagee or other findings by the 
FHA through its examination processes of po-
tential serious and material violations of such 
origination and underwriting requirements es-
tablished under paragraph (1) or other fraud 
and material misrepresentations; 
(B) promptly notify the mortgagee of such 
initial determination and afford the lender the 
opportunity to provide additional information 
and analysis before a final determination is 
made; and 
(C) not pursue indemnification under sub-
sections (a) and (b) with respect to those mort-
gages reviewed under this subsection unless an 
initial determination of mortgagee liability is 
made and communicated to the mortgagee with-
in six months of the FHA’s receipt of informa-
tion that is reasonably sufficient to enable the 
FHA to determine initially that a serious and 
material violation or fraud or material mis-
representation may have occurred. 
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112 
(f) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. During the tran-
sition period under section 281, any reference in this sec-
tion to the FHA shall be construed to refer to the Sec-
retary to the extent the Secretary has not delegated au-
thority under this section to the FHA pursuant to section 
282(1). 
SEC. 266. PROHIBITIONS RELATING TO USE OF POWER OF 
EMINENT DOMAIN. 
(a) FHA.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, neither the Secretary nor the FHA 
may newly insure, under any provision of this title, 
the National Housing Act, or any FHA program, 
any mortgage that is secured by a structure or 
dwelling unit that is located within a county that 
contains any structure or dwelling unit that secures 
or secured a residential mortgage loan which mort-
gage loan was obtained by the State during the pre-
ceding 120 months by exercise of the power of emi-
nent domain. 
(2) DEFINITIONS.—For purposes of this para-
graph, the following definitions shall apply: 
(A) RESIDENTIAL MORTGAGE LOAN.—The 
term ‘‘residential mortgage loan’’ means a 
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mortgage loan that is evidenced by a promis-
sory note and secured by a mortgage, deed of 
trust, or other security instrument on a residen-
tial structure or a dwelling unit in a residential 
structure. Such term includes a first mortgage 
or any subordinate mortgage. 
(B) STATE.—The term ‘‘State’’ includes 
the District of Columbia, the Commonwealth of 
Puerto Rico, and any territory or possession of 
the United States, and includes any agency or 
political subdivision of a State. 
(b) RURAL HOUSING.—Section 501 of the Housing 
Act of 1949 (42 U.S.C. 1471), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(o) PROHIBITION RELATING TO USE OF POWER OF 
EMINENT DOMAIN.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Secretary may not newly guar-
antee, make, or insure under this title any mortgage 
that is secured by a structure or dwelling unit that 
is located within a county that contains any struc-
ture or dwelling unit that secures or secured a resi-
dential mortgage loan which mortgage loan was ob-
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tained by the State during the preceding 120 
months by exercise of the power of eminent domain. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) RESIDENTIAL
MORTGAGE
LOAN.— 
The term ‘residential mortgage loan’ means a 
mortgage loan that is evidenced by a promis-
sory note and secured by a mortgage, deed of 
trust, or other security instrument on a residen-
tial structure or a dwelling unit in a residential 
structure. Such term includes a first mortgage 
or any subordinate mortgage. 
‘‘(B) STATE.—The term ‘State’ has the 
meaning given such term in section 502(h)(12), 
and includes any agency or political subdivision 
of a State.’’. 
(c) EFFECTIVE DATE.—This section and the amend-
ment made by this section shall take effect upon the date 
of the enactment of this Act. 
SEC. 267. RESIDUAL INCOME REQUIREMENT. 
(a) IN GENERAL.—The FHA may not newly insure, 
under any provision of this title, the National Housing 
Act, or any FHA program, any mortgage on a 1- to 4- 
family residential property unless the mortgagor under 
such mortgage meets such requirements as the FHA shall, 
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by regulation, establish to ensure that the mortgagor has 
sufficient residual income. 
(b) RESIDUAL INCOME.—For purposes of this sec-
tion, the term ‘‘residual income’’ means, with respect to 
a mortgagor, the net monthly income of the mortgagor, 
as provided by regulation by the FHA, after taking into 
consideration— 
(1) any assets of the mortgagor other than the 
property subject to such mortgage; and 
(2) any monthly obligations of the mortgagor 
with respect to mortgage payments, insurance pay-
ment, and taxes for the property subject to the 
mortgage, income and other taxes, maintenance, and 
utility expenses for the property, child care expenses, 
auto, consumer, and any other debt obligations, ali-
mony and child support expenses, and such other ex-
penses as the FHA may provide. 
(c) EFFECTIVE DATE.—This section and the amend-
ment made by this section shall take effect upon the date 
of the enactment of this Act. 
SEC. 268. EFFECTIVE DATE. 
This subtitle and the amendments made by this sub-
title (except for sections 264, 265, 266, and 267, and any 
amendments made by such sections) shall take effect upon 
the expiration of the transition period under section 281. 
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Subtitle D—Transition 
SEC. 281. TRANSITION PERIOD. 
(a) IN GENERAL.—For purposes of this subtitle, the 
term ‘‘transition period’’ means the period that— 
(1) begins on the date of the enactment of this 
Act; and 
(2) ends upon the earlier of— 
(A) the date that the Director publishes 
notice in the Federal Register that the Director 
has determined that all of the requirements 
under subsection (b) have been completed; or 
(B) the expiration of the 5-year period be-
ginning on the date of the enactment of this 
Act. 
(b) REQUIREMENTS FOR ENDING TRANSITION PE-
RIOD.—The requirements under this subsection are the 
following: 
(1) APPROVAL
OF
INITIAL
ANNUAL
BUDGET 
AND BUSINESS PLAN.—The FHA has submitted to 
the Director of the Federal Housing Finance Agency 
an initial annual budget and business plan and the 
Director has approved the budget and plan. 
(2) DETERMINATION
OF
CORPORATE
CAPAC-
ITY.—The Director of the Office of Management 
and Budget has determined, and notified the Direc-
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tor, that the staff, systems, and administrative infra-
structure of the FHA are sufficient to permit the 
FHA to fully conduct the operation of its business. 
SEC. 282. AUTHORITY DURING TRANSITION PERIOD. 
During the transition period the FHA may— 
(1) carry out any power or responsibility of the 
Secretary relating to mortgage insurance programs 
under the National Housing Act that the Secretary 
delegates to the FHA, using the staff, systems, and 
administrative infrastructure that the FHA engages 
or acquires during the transition period, or the per-
sonnel and other resources of the Secretary; 
(2) incur any obligation consistent with— 
(A) the carrying out of a power or respon-
sibility delegated under paragraph (1); or 
(B) the acquisition, engagement, or devel-
opment of staff, systems (including technology 
to enhance the ability of the FHA to engage in 
the business authorized by the title), and ad-
ministrative structure; and 
(3) engage in any activity or undertake any re-
sponsibility (not including entering into, or making 
any commitment to enter into, any contract of insur-
ance under this title) that the FHA determines to 
be consistent with the establishment of the FHA. 
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118 
SEC. 283. ADVISORY BOARD. 
(a) ESTABLISHMENT.—The Secretary of Housing 
and Urban Development shall establish an advisory board 
to provide advice to the Board of Directors of the FHA 
regarding establishing and organizing the FHA and cre-
ating the business plan, premium structure, and product 
lines of the FHA. 
(b) FUNCTIONS.—In carrying out its responsibilities 
under subsection (a) the advisory board may— 
(1) obtain guidance from participants in the 
mortgage markets to be served by the FHA; 
(2) assess the housing and mortgage credit 
needs; 
(3) obtain information concerning single family 
housing finance markets to assess how the FHA can 
complement the roles of public and private partici-
pants in such markets; and 
(4) consult with the relevant Federal agencies 
generally regarding how the FHA can improve the 
delivery of single family housing credit enhancement 
to families, communities, and hard-to-serve markets. 
(c) MEMBERSHIP.—The advisory board shall consist 
of— 
(1) the Assistant Secretary of Housing and 
Urban Development who is the Federal Housing 
Commissioner; 
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(2) the Administrator of the Rural Housing 
Service of the Department of Agriculture; 
(3) not less than 5 individuals appointed by the 
Secretary who are representatives of the mortgage 
finance industry; and 
(4) not less than 2 individuals who have exper-
tise in affordable housing serving low- and mod-
erate-income populations. 
Members of the advisory board shall serve at the pleasure 
of the Secretary. 
(d) TERMINATION.—The advisory board shall termi-
nate upon the expiration of the transition period under 
section 281. 
SEC. 284. TRANSFER OF HUD AUTHORITY. 
(a) TRANSFER.—Except as provided in subsections 
(c) and (d), effective upon the expiration of the transition 
period, the functions of, authority provided to, and the re-
sponsibilities of the Secretary of Housing and Urban De-
velopment and the Department of Housing and Urban De-
velopment under the following provisions of law are trans-
ferred to the FHA: 
(1) Titles II and V of the National Housing Act 
(12 U.S.C. 1707 et seq., 1735a et seq.). 
(2) Section 3 of Public Law 99–289 (12 U.S.C. 
1721 note; relating to estimates of use of insuring 
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authority), except that this paragraph shall not ter-
minate or transfer any authority of the Secretary 
under such section relating to section 306(g) of the 
National Housing Act (12 U.S.C. 1721(g)). 
(3) Section 801 of the Housing Act of 1954 (12 
U.S.C. 1701j–1; relating to builders warranties). 
(4) Section 424 of the Housing and Community 
Development Act of 1987 (12 U.S.C. 1715z–1c; re-
lating to residential water treatment). 
(5) Section 328 of the Cranston-Gonzalez Na-
tional Affordable Housing Act (12 U.S.C. 1713 
note; relating to delegation of processing). 
(6) Section 106 of the Energy Policy Act of 
1992 (12 U.S.C. 1701z–16; relating to energy effi-
cient mortgages pilot program). 
(7) Section 542 of the Housing and Community 
Development Act of 1992 (12 U.S.C. 1715z–22; re-
lating to multifamily mortgage credit programs). 
(8) Section 103(h) of the Multifamily Housing 
Property Disposition Reform Act of 1994 (12 U.S.C. 
1715z–1a note; relating to alternative uses of multi-
family projects to prevent default). 
(b) REPEAL OF ASSIGNMENT PROVISIONS.—Effec-
tive upon the date of the enactment of this Act, section 
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204(a)(1)(B) of the National Housing Act (12 U.S.C. 
1710(a)) is amended by striking the last sentence. 
(c) APPLICABILITY.—The repeals under subsections 
(a) and (b) shall not affect any legally binding obligations 
entered into pursuant to the provisions repealed before the 
applicable effective date under such subsections. Any 
mortgage insurance, funds, or activities subject, before re-
peal, to a provision of law repealed by such subsections 
shall continue to be governed by the provision as it existed 
immediately before repeal, except that the FHA may exer-
cise any authority under such provision otherwise trans-
ferred to the FHA by this title. 
(d) REFERENCES.—After the expiration of the tran-
sition period, any reference in Federal law to the Secretary 
of Housing and Urban Development, in connection with 
any function of the Secretary transferred under subsection 
(a) or any other provision of this subtitle, shall be deemed 
to be a reference to the FHA. 
SEC. 285. WIND-UP OF HUD AFFAIRS. 
(a) ABOLISHMENT OF POSITIONS.—Effective upon 
the expiration of the transition period, any offices of the 
Department of Housing and Urban Development respon-
sible for functions transferred pursuant to section 284(a), 
to the extent of such functions, and the position of the 
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Federal Housing Commissioner in the Department of 
Housing and Urban Development, are abolished. 
(b) DISPOSITION OF AFFAIRS.—During the transi-
tion period, the Secretary, solely for the purpose of wind-
ing up the affairs of the Department relating to the func-
tions transferred under section 284— 
(1) shall manage the employees of the Depart-
ment responsible for such functions and provide for 
the payment of the compensation and benefits of any 
such employee which accrue before the effective date 
of the transfer of such employee under section 287; 
and 
(2) may take any other action necessary for the 
purpose of winding up the affairs of the Department 
relating to such functions. 
(c) STATUS OF EMPLOYEES BEFORE TRANSFER.— 
The provisions of and amendments made by this title and 
the abolishments under subsection (a) of this section may 
not be construed to affect the status of any employee of 
the Department as an employee of an agency of the United 
States for purposes of any other provision of law before 
the effective date of the transfer of any such employee 
under section 287. 
(d) USE OF PROPERTY AND SERVICES.— 
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123 
(1) PROPERTY.—The FHA may use the prop-
erty of the Department of Housing and Urban De-
velopment to perform functions which have been 
transferred to the FHA for such time as is reason-
able to facilitate the orderly transfer of functions 
transferred under any other provision of this title or 
any amendment made by this title to any other pro-
vision of law. 
(2) AGENCY
SERVICES.—Any agency, depart-
ment, or other instrumentality of the United States, 
and any successor to any such agency, department, 
or instrumentality, which was providing supporting 
services to the Department of Housing and Urban 
Development before the expiration of the transition 
period under subsection (a) in connection with func-
tions that are transferred under section 284 to the 
FHA shall— 
(A) continue to provide such services, on a 
reimbursable basis, until the transfer of such 
functions is complete; and 
(B) consult with the FHA to coordinate 
and facilitate a prompt and reasonable transi-
tion. 
(e) CONTINUATION OF SERVICES.—The FHA may 
use the services of employees and other personnel of the 
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Department of Housing and Urban Development relating 
to the functions transferred under section 284, on a reim-
bursable basis, to perform functions which have been 
transferred to the FHA for such time as is reasonable to 
facilitate the orderly transfer of functions pursuant to any 
other provision of this title or any amendment made by 
this title to any other provision of law. 
(f) SAVINGS PROVISIONS.— 
(1) EXISTING RIGHTS, DUTIES, AND OBLIGA-
TIONS NOT AFFECTED.—Subsection (a) shall not af-
fect the validity of any right, duty, or obligation of 
the United States, the Secretary of Housing and 
Urban Development, or any other person, which— 
(A) arises under— 
(i) the National Housing Act; or 
(ii) any other provision of law applica-
ble with respect to the functions of the De-
partment of Housing and Urban Develop-
ment transferred under section 284; and 
(B) existed on the day before the date of 
abolishment under subsection (a). 
(2) CONTINUATION
OF
SUITS.—No action or 
other proceeding commenced by or against the Sec-
retary of Housing and Urban Development in con-
nection with functions transferred to the FHA under 
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section 284 shall abate by reason of the enactment 
of this title, except that the FHA shall be sub-
stituted for the Secretary as a party to any such ac-
tion or proceeding. 
SEC. 286. CONTINUATION AND COORDINATION OF CERTAIN 
ACTIONS. 
(a) IN GENERAL.—All regulations, orders, and deter-
minations described in subsection (b) shall remain in ef-
fect according to the terms of such regulations, orders, 
and determinations, and shall be enforceable by or against 
the FHA, until modified, terminated, set aside, or super-
seded in accordance with applicable law by the FHA, as 
the case may be, any court of competent jurisdiction, or 
operation of law. 
(b) APPLICABILITY.—A regulation, order, or deter-
mination is described in this subsection if it— 
(1) was issued, made, prescribed, or allowed to 
become effective by— 
(A) the Secretary of Housing and Urban 
Development and relates to a function of the 
Secretary transferred under section 284; or 
(B) a court of competent jurisdiction, and 
relates to functions transferred under section 
284; and 
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(2) is in effect upon the expiration of the tran-
sition period. 
SEC. 287. TRANSFER AND RIGHTS OF HUD EMPLOYEES. 
(a) TRANSFER.—Each employee of the Department 
of Housing and Urban Development who performs func-
tions transferred under section 284 shall be transferred 
to the FHA for employment, not later than the date of 
the expiration of the transition period, and such transfer 
shall be deemed a transfer of function for purposes of sec-
tion 3503 of title 5, United States Code. 
(b) GUARANTEED POSITIONS.— 
(1) IN GENERAL.—Each employee transferred 
under subsection (a) shall be guaranteed a position 
with the same status, tenure, grade, and pay as the 
position held by such employee on the day imme-
diately preceding the transfer. 
(2) NO INVOLUNTARY SEPARATION OR REDUC-
TION.—An employee transferred under subsection 
(a) holding a permanent position on the day imme-
diately preceding the transfer may not be involun-
tarily separated or reduced in grade or compensation 
during the 12-month period beginning on the date of 
transfer, except for cause, or, in the case of a tem-
porary employee, separated in accordance with the 
terms of the appointment of the employee. 
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127 
(c) APPOINTMENT AUTHORITY FOR EXCEPTED AND 
SENIOR EXECUTIVE SERVICE EMPLOYEES.— 
(1) IN GENERAL.—In the case of an employee 
occupying a position in the excepted service or the 
Senior Executive Service, any appointment authority 
established under law or by regulations of the Office 
of Personnel Management for filling such position 
shall be transferred, subject to paragraph (2). 
(2) DECLINE OF TRANSFER.—The FHA may 
decline a transfer of authority under paragraph (1) 
to the extent that such authority relates to— 
(A) a position excepted from the competi-
tive service because of its confidential, policy-
making, policy-determining, or policy-advocating 
character; or 
(B) a noncareer position in the Senior Ex-
ecutive Service (within the meaning of section 
3132(a)(7) of title 5, United States Code). 
(d) REORGANIZATION.—If the FHA determines, after 
the end of the 1-year period beginning on the expiration 
of the transition period, that a reorganization of the com-
bined workforce is required, that reorganization shall be 
deemed a major reorganization for purposes of affording 
affected employee retirement under section 8336(d)(2) or 
8414(b)(1)(B) of title 5, United States Code. 
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128 
(e) EMPLOYEE BENEFIT PROGRAMS.— 
(1) IN GENERAL.—Any employee of the Depart-
ment of Housing and Urban Development accepting 
employment with the FHA as a result of a transfer 
under subsection (a) may retain, for 12 months after 
the date on which such transfer occurs, membership 
in any employee benefit program of the FHA or the 
Department of Housing and Urban Development, as 
applicable, including insurance, to which such em-
ployee belongs on the date of the expiration of the 
transition period, if— 
(A) the employee does not elect to give up 
the benefit or membership in the program; and 
(B) the benefit or program is continued by 
the FHA. 
(2) COST DIFFERENTIAL.— 
(A) IN GENERAL.—The difference in the 
costs between the benefits which would have 
been provided by the Department of Housing 
and Urban Development and those provided by 
this section shall be paid by the FHA. 
(B) HEALTH
INSURANCE.—-If any em-
ployee elects to give up membership in a health 
insurance program or the health insurance pro-
gram is not continued by the FHA, the em-
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ployee shall be permitted to select an alternate 
Federal health insurance program not later 
than 30 days after the date of such election or 
notice, without regard to any other regularly 
scheduled open season. 
SEC. 288. TRANSFER OF PROPERTY AND FACILITIES. 
Upon the expiration of the transition period, all prop-
erty of the Department of Housing and Urban Develop-
ment relating to the functions transferred under section 
284 shall transfer to the FHA. 
SEC. 289. EFFECTIVE DATE. 
This subtitle shall take effect on the date of the en-
actment of this Act. 
Subtitle E—Related Amendments 
and Provisions 
SEC. 291. GNMA AUTHORITY. 
Title III of the National Housing Act is amended— 
(1) in section 301(5) (12 U.S.C. 1716(5)), by 
inserting after ‘‘federally owned mortgage portfolios’’ 
the following: ‘‘(including any owned by the Federal 
Housing Administration)’’; 
(2) in section 302 (12 U.S.C. 1717)— 
(A) in subsection (b)(1), by inserting ‘‘, 
the FHA Reform and Modernization Act of 
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130 
2013,’’ after ‘‘National Housing Act’’ each 
place such term appears; and 
(B) in subsection (c)(2), by inserting after 
subparagraph (F) the following new subpara-
graph: 
‘‘(G) The Federal Housing Administration.’’; 
and 
(3) in section 306(g) (12 U.S.C. 1721(g))— 
(A) in the clause (ii) of the first sentence 
of paragraph (1), by inserting ‘‘or the FHA Re-
form and Modernization Act of 2013’’ before ‘‘, 
or which are insured’’; and 
(B) in paragraph (3)(A), by inserting 
‘‘under the FHA Reform and Modernization 
Act of 2013 or are insured’’ after ‘‘Federal 
Housing Administration’’. 
SEC. 292. REPEAL OF CERTAIN FHA PROGRAMS. 
(a) REPEALS.—Effective upon the expiration of the 
2-year period that begins upon the date of the enactment 
of this Act, the following sections are repealed: 
(1) HOME
EQUITY
CONVERSION
MORTGAGE 
PROGRAM.—Section 255 of the National Housing 
Act (12 U.S.C. 1715z–20). 
(2) MORTGAGE INSURANCE FOR HOSPITALS.— 
Section 242 (12 U.S.C. 1715z–7). 
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(b) CONFORMING AMENDMENTS.— 
(1) The penultimate sentence of section 212(a) 
(12 U.S.C. 1715c(a)) is amended by inserting after 
‘‘section 242’’ each place such term appears the fol-
lowing: ‘‘(as such section was in effect immediately 
before the effective date under section 292(a) of the 
FHA Reform and Modernization Act of 2013)’’. 
(2) Section 223 (12 U.S.C. 1715n) is amend-
ed— 
(A) in subsection (a)(7), in the matter pre-
ceding subparagraph (A), by inserting before 
the first comma the following: ‘‘but not includ-
ing a mortgage insured under section 242 ‘(as 
such section was in effect immediately before 
the effective date under section 292(a) of the 
FHA Reform and Modernization Act of 
2013)’ ’’; 
(B) in subsection (d)(2)(A)— 
(i) in clause (i) by striking ‘‘and’’ at 
the end; and 
(ii) by inserting before the semicolon 
at the end the following: ‘‘and (iii) shall 
not be insured under section 242 (as such 
section was in effect immediately before 
the effective date under section 292(a) of 
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deemed to be, a department, agency, or instrumen-
tality of the United States Government and shall not 
be subject to title 5 or 31 of the United States Code. 
(2) SUPERVISION.—Notwithstanding any other 
provision of law, the Utility shall be subject to the 
exclusive supervision and regulation by the Agency, 
and shall not be subject to supervision or regulation 
by any other Federal department or agency or by 
any State. The Utility is authorized to conduct its 
business without regard to any qualification or simi-
lar statute in any State. 
(3) EXEMPTION FROM TAXATION.—The Utility 
shall be exempt from all taxation imposed by the 
United States, any territory, dependency, or posses-
sion of the United States or any State, county, mu-
nicipality, or local taxing authority, except that any 
real property of the Repository shall be subject to 
State, territorial, county, municipal, or local taxation 
to the same extent according to its value as other 
real property. 
(f) DIRECTORS.—The Utility shall be governed by a 
board of directors, which shall consist of a number of di-
rectors determined by the Director to meet the needs of 
the Utility, of which— 
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for qualification, the Utility shall revoke 
the issuer’s qualified status. 
(ii) CONSTRUCTION.—The revocation 
of an issuer’s qualified status under this 
subparagraph shall— 
(I) have no effect on the qualified 
status of any security issued before 
such revocation; and 
(II) not relieve the issuer of any 
obligation associated with any rep-
resentation or warranty or any repur-
chase obligations related to any quali-
fied security issued before such rev-
ocation. 
(C) GRACE PERIOD.—The Utility shall es-
tablish standards by which a qualified issuer 
who no longer meets the standards for quali-
fication may remediate and return to meeting 
the standards, without losing the issuer’s quali-
fied status. 
(D) PUBLICATION.—The Agency shall pub-
lish a list of issuers who are no longer qualified 
in the Federal Register and the Utility shall 
maintain an updated list of such issuers on the 
Utility’s Web site. 
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