‘‘(B) UNDERCAPITALIZED.—The Corpora-
tion shall be classified as undercapitalized if the
capital of the Corporation does not equal or ex-
ceed the required capital level, but does equal
or exceed 50 percent of the required capital
level.
‘‘(C) 
SIGNIFICANTLY
UNDERCAPITAL-
IZED.—The Corporation shall be classified as
significantly undercapitalized if the capital of
the Corporation does not equal or exceed 50
percent of the required capital level.
‘‘(4) QUARTERLY
DETERMINATION.—The Di-
rector shall determine the capital classification of
the Corporation not less frequently than once every
calendar quarter.
‘‘(b) CAPITAL RESTORATION PLANS.—
‘‘(1) REQUIREMENT.—If the Corporation is
classified 
as 
undercapitalized 
or 
significantly
undercapitalized, the Corporation shall submit to the
Director a capital restoration plan that complies
with this subsection and carry out the plan unless it
is disapproved. The plan shall be submitted to the
Director within 45 days from the date of notifica-
tion, or if the Director determines that an extension
is necessary, within such additional time as the Di-
rector so determines.
‘‘(2) CONTENTS.—Each capital restoration plan
submitted under this section shall set forth a fea-
sible plan for raising or restoring the capital of the
Corporation to an amount not less than the required
capital level for the Corporation. Each capital res-
toration plan shall—
‘‘(A) specify the level of capital the Cor-
poration shall achieve and maintain;
‘‘(B) describe the actions that the Corpora-
tion shall take to become classified as ade-
quately capitalized;
‘‘(C) establish a schedule for completing
the actions set forth in the plan; and
‘‘(D) specify the types and levels of activi-
ties (including existing and new business activi-
ties) in which the Corporation shall engage dur-
ing the term of the plan.
‘‘SEC. 1387. ENFORCEMENT.
‘‘(a) GROUNDS.—The Director may take actions
under subsection (b) only if—
‘‘(1) 
the 
Corporation 
is 
significantly
undercapitalized;
‘‘(2) the Corporation is undercapitalized and—
‘‘(A) does not submit a capital restoration
plan that is substantially in compliance with
section 1386(b) within the applicable period, or
the Director disapproves the capital restoration
plan submitted by the Corporation; or
‘‘(B) has failed to make, in good faith, rea-
sonable efforts necessary to comply with the
capital restoration plan; or
‘‘(3) the Corporation is engaging or has en-
gaged, or the Director has reasonable cause to be-
lieve that the Corporation is about to engage in—
‘‘(A) any conduct that is likely to threaten
the adequacy of the capital of the Corporation;
‘‘(B) any failure to comply with any writ-
ten agreement entered into by the Corporation
with the Director; or
‘‘(C) any failure to comply with any re-
quest by the Director for a report, data, or in-
formation under section 1385(b).
‘‘(b) ACTIONS.—The Director may, under this sub-
section require the Corporation—
‘‘(1) to cease and desist from any conduct or
activity that is described in subsection (a)(2) and
(3), or that contributes to the condition described in
subsection (a)(1); and
‘‘(2) to take corrective or remedial action, in-
cluding—
‘‘(A) restricting the growth of, or contract-
ing, any category of assets or liabilities;
‘‘(B) reducing, modifying, or terminating
any activity that the Director determines cre-
ates excessive risk to the Corporation;
‘‘(C) terminating agreements or contracts;
‘‘(D) engaging or employ qualified employ-
ees (who may be subject to approval by the Di-
rector 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) to take action under subsection (b) and de-
termines not to take any such action, the Director shall
prepare a report detailing the basis of the Director’s deci-
sion not to take such action and shall, within 30 days of
the decision, submit the report to the President, the Direc-
tor of the Office of Management and Budget, the Comp-
troller General of the United States, the Committee on
Banking and Financial Services of the House of Rep-
resentatives, and the Committee on Banking, Housing,
and Urban Affairs of the Senate.
‘‘SEC. 1388. REIMBURSEMENT OF COSTS.
‘‘(a) ASSESSMENT AND COLLECTION.—The Director
shall assess and collect from the Corporation such
amounts determined by the Director as necessary to reim-
burse the Office of Federal Housing Enterprise Oversight
for the reasonable costs and expenses of the activities un-
dertaken by such Office to carry out the duties of the Di-
rector under this subtitle, including the costs of examina-
tion, enforcement, and oversight expenses.
‘‘(b) REQUIREMENTS.—Annual assessments imposed
by the Director shall be—
‘‘(1) imposed prior to October 1 of each year;
‘‘(2) collected at such time or times during each
assessment year as determined necessary or appro-
priate by the Director;
‘‘(3) deposited into the Federal Housing Enter-
prise Fund established by section 1316(f); and
‘‘(4) available, to the extent provided in appro-
priation Acts, for carrying out the responsibilities of
the Director under this subtitle.’’.
(b) CLERICAL AMENDMENT.—The table of contents
in section 1(b) of the Housing and Community Develop-
ment Act of 1992 (Public Law 102–550; 106 Stat. 3679)
is amended—
(1) by redesignating the item relating to sub-
title E of title XIII as relating to subtitle F of such
title; and
(2) by inserting after the item relating to sec-
tion 1383 the following new items:
‘‘SUBTITLE E—SUPERVISION AND REGULATION OF FEDERAL
MORTGAGE INSURANCE CORPORATION
‘‘Sec. 1384. Authority of Director.
‘‘Sec. 1385. Examinations, reports, and cost estimates.
‘‘Sec. 1386. Capital requirements.
‘‘Sec. 1387. Enforcement.
‘‘Sec. 1388. Reimbursement of costs.’’.
TITLE IV—FHA IMPROVEMENTS
SEC. 401. CALCULATION OF DOWNPAYMENT.
Section 203(b)(2) of the National Housing Act (12
U.S.C. 1709(b)(2)) is amended—
(1) by striking subparagraph (B) and inserting
the following new subparagraph:
‘‘(B) except as otherwise provided in this
paragraph (2), not in excess of—
‘‘(i) in the case of a mortgage for a
property with an appraised value equal to
or less than $50,000, 98.75 percent of the
appraised value of the property,
‘‘(ii) in the case of a mortgage for a
property with an appraised value in excess
of $50,000 but not in excess of $125,000,
97.65 percent of the appraised value of the
property,
retary shall approve) that are paid in connection
with such mortgages’’;
(3) by striking the 2d sentence of the matter
following subparagraph (B); and
(4) in penultimate undesignated paragraph—
(A) in the 2d sentence, by striking ‘‘the
preceding sentence’’ and inserting ‘‘this sub-
section’’; and
(B) by striking the 1st sentence.
SEC. 402. DELEGATION OF SINGLE FAMILY MORTGAGE IN-
SURING AUTHORITY TO DIRECT ENDORSE-
MENT MORTGAGEES.
Title II of the National Housing Act (12 U.S.C. 1707
et seq.) is amended by adding at the end the following
new section:
‘‘DELEGATION OF INSURING AUTHORITY TO DIRECT
ENDORSEMENT MORTGAGEES
‘‘SEC. 256. (a) AUTHORITY.—The Secretary may del-
egate, to one or more mortgagees approved by the Sec-
retary under the direct endorsement program, the author-
ity of the Secretary under this Act to insure mortgages
involving property upon which there is located a dwelling
designed principally for occupancy by 1 to 4 families.
‘‘(b) CONSIDERATIONS.—In determining whether to
delegate authority to a mortgagee under this section, the
Secretary shall consider the experience and performance
of the mortgagee under the direct endorsement program,
the default rate of insured mortgages originated by the
mortgagee compared to the default rate of all insured
mortgages in comparable markets, and such other factors
as the Secretary determines appropriate to minimize risk
of loss to the insurance funds under this Act.
‘‘(c) ENFORCEMENT
OF
INSURANCE
REQUIRE-
MENTS.—
‘‘(1) IN GENERAL.—If the Secretary determines
that a mortgage insured by a mortgagee pursuant to
delegation of authority under this section was not
originated in accordance with the requirements es-
tablished by the Secretary, and the Secretary pays
an insurance claim with respect to the mortgage
within a reasonable period specified by the Sec-
retary, the Secretary may require the mortgagee ap-
proved under this section to indemnify the Secretary
for the loss.
‘‘(2) 
FRAUD
OR
MISREPRESENTATION.—If
fraud or misrepresentation was involved in connec-
tion with the origination, the Secretary may require
the mortgagee approved under this section to indem-
nify the Secretary for the loss regardless of when an
insurance claim is paid.
‘‘(d) TERMINATION OF MORTGAGEE’S AUTHORITY.—
If a mortgagee to which the Secretary has made a delega-
tion under this section violates the requirements and pro-
cedures established by the Secretary or the Secretary de-
termines that other good cause exists, the Secretary may
cancel a delegation of authority under this section to the
mortgagee by giving notice to the mortgagee. Such a can-
cellation shall be effective upon receipt of the notice by
the mortgagee or at a later date specified by the Secretary.
A decision by the Secretary to cancel a delegation shall
be final and conclusive and shall not be subject to judicial
review.
‘‘(e) REQUIREMENTS AND PROCEDURES.—Before ap-
proving a delegation under this section, the Secretary shall
issue regulations establishing appropriate requirements
and procedures, including requirements and procedures
governing the indemnification of the Secretary by the
mortgagee.’’.
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