I 
110TH CONGRESS 
1ST SESSION H. R. 1852 
To modernize and update the National Housing Act and enable the Federal 
Housing Administration to use risk-based pricing to more effectively 
reach underserved borrowers, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 29, 2007 
Ms. WATERS (for herself and Mr. FRANK of Massachusetts) introduced the 
following bill; which was referred to the Committee on Financial Services 
A BILL 
To modernize and update the National Housing Act and 
enable the Federal Housing Administration to use risk- 
based pricing to more effectively reach underserved bor-
rowers, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Expanding American Homeownership Act of 2007’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
Sec. 2. Findings and purposes. 
Sec. 3. Maximum principal loan obligation. 
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Sec. 4. Extension of mortgage term. 
Sec. 5. Downpayment simplification. 
Sec. 6. Mortgage insurance premiums for zero- and lower-downpayment bor-
rowers. 
Sec. 7. Mortgage insurance premiums for standard and higher-risk borrowers. 
Sec. 8. Risk-based mortgage insurance premiums. 
Sec. 9. Payment incentives. 
Sec. 10. Borrower protections for higher risk mortgages. 
Sec. 11. Annual reports on new programs and loss mitigation. 
Sec. 12. Rehabilitation loans. 
Sec. 13. Discretionary action. 
Sec. 14. Insurance of condominiums. 
Sec. 15. Mutual Mortgage Insurance Fund. 
Sec. 16. Hawaiian home lands and Indian reservations. 
Sec. 17. Conforming and technical amendments. 
Sec. 18. Home equity conversion mortgages. 
Sec. 19. Conforming loan limit in disaster areas. 
Sec. 20. Sense of Congress regarding technology for financial systems. 
Sec. 21. Multifamily housing mortgage limits in high cost areas. 
Sec. 22. Valuation of multifamily properties in noncompetitive sales by HUD 
to States and localities. 
Sec. 23. Use of FHA savings for affordable housing grant fund. 
Sec. 24. Savings provision. 
Sec. 25. Implementation. 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds that— 
(1) one of the primary missions of the Federal 
Housing Administration (FHA) single family mort-
gage insurance program is to reach borrowers who 
are underserved, or not served, by the existing con-
ventional mortgage marketplace; 
(2) the FHA program has a long history of in-
novation, which includes pioneering the 30-year self- 
amortizing mortgage and a safe-to-seniors reverse 
mortgage product, both of which were once thought 
too risky to private lenders; 
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(3) the FHA single family mortgage insurance 
program traditionally has been a major provider of 
mortgage insurance for home purchases; 
(4) the FHA mortgage insurance premium 
structure, as well as FHA’s product offerings, 
should be revised to reflect FHA’s enhanced ability 
to determine risk at the loan level and to allow FHA 
to better respond to changes in the mortgage mar-
ket; 
(5) during past recessions, including the oil- 
patch downturns in the mid-1980s, FHA remained 
a viable credit enhancer and was therefore instru-
mental in preventing a more catastrophic collapse in 
housing markets and a greater loss of homeowner 
equity; and 
(6) as housing price appreciation slows and in-
terest rates rise, many homeowners and prospective 
homebuyers will need the less-expensive, safer fi-
nancing alternative that FHA mortgage insurance 
provides. 
(b) PURPOSES.—The purposes of this Act are— 
(1) to provide flexibility to FHA to allow for 
the insurance of housing loans for low- and mod-
erate-income homebuyers during all economic cycles 
in the mortgage market; 
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(2) to modernize the FHA single family mort-
gage insurance program by making it more reflective 
of enhancements to loan-level risk assessments and 
changes to the mortgage market; and 
(3) to adjust the loan limits for the single fam-
ily mortgage insurance program to reflect rising 
house prices and the increased costs associated with 
new construction. 
SEC. 3. MAXIMUM PRINCIPAL LOAN OBLIGATION. 
Section 203(b)(2) of the National Housing Act (12 
U.S.C. 1709(b)(2)) is amended by striking subparagraph 
(A) and inserting the following new subparagraph: 
‘‘(A) not to exceed the lesser of— 
‘‘(i) in the case of a 1-family resi-
dence, the median 1-family house price in 
the area, as determined by the Secretary; 
and in the case of a 2-, 3-, or 4-family res-
idence, the percentage of such median 
price that bears the same ratio to such me-
dian price as the dollar amount limitation 
in effect under section 305(a)(2) of the 
Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 
4-family residence, respectively, bears to 
the dollar amount limitation in effect 
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under such section for a 1-family resi-
dence; or 
‘‘(ii) the dollar amount limitation de-
termined under such section 305(a)(2) for 
a residence of the applicable size; 
except that the dollar amount limitation in ef-
fect for any area under this subparagraph may 
not be less than the greater of (I) the dollar 
amount limitation in effect under this section 
for the area on October 21, 1998, or (II) 65 
percent of the dollar limitation determined 
under such section 305(a)(2) for a residence of 
the applicable size; and’’. 
SEC. 4. EXTENSION OF MORTGAGE TERM. 
Paragraph (3) of section 203(b) of the National 
Housing Act (12 U.S.C. 1709(b)(3)) is amended— 
(1) by striking ‘‘thirty-five years’’ and inserting 
‘‘forty years’’; and 
(2) by striking ‘‘(or thirty years if such mort-
gage is not approved for insurance prior to construc-
tion)’’. 
SEC. 5. DOWNPAYMENT SIMPLIFICATION. 
Section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)) is amended— 
(1) in paragraph (2)— 
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(A) by striking subparagraph (B) and in-
serting the following new subparagraph: 
‘‘(B) not to exceed an amount equal to the 
sum of— 
‘‘(i) the amount of the mortgage pre-
mium paid at the time the mortgage is in-
sured; and 
‘‘(ii)(I) except as provided in sub-
clause (II), 97.75 percent of the appraised 
value of the property; or 
‘‘(II) in the case only of a mortgage 
described in subsection (c)(3), the ap-
praised value of the property, plus any ini-
tial service charges, appraisal, inspection, 
and other fees in connection with the mort-
gage as approved by the Secretary.’’; 
(B) in the matter after and below subpara-
graph (B), by striking the second sentence (re-
lating to a definition of ‘‘average closing cost’’) 
and all that follows through ‘‘title 38, United 
States Code.’’; and 
(C) by striking the last undesignated para-
graph (relating to counseling with respect to 
the responsibilities and financial management 
involved in homeownership); and 
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(2) in paragraph (9), by striking the paragraph 
designation and all that follows through ‘‘Provided 
further, That for’’ and inserting the following: 
‘‘(9) Except in the case of a mortgage described 
in subsection (c)(3), be executed by a mortgagor who 
shall have paid on account of the property, in cash 
or its equivalent, at least 3 percent of the Sec-
retary’s estimate of the cost of acquisition (excluding 
the mortgage insurance premium paid at the time 
the mortgage is insured). For’’. 
SEC. 6. MORTGAGE INSURANCE PREMIUMS FOR ZERO- AND 
LOWER-DOWNPAYMENT BORROWERS. 
Section 203(c) of the National Housing Act (12 
U.S.C. 1709(c) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) ZERO- 
AND
LOWER-DOWNPAYMENT
BOR-
ROWERS.— 
‘‘(A) APPLICABILITY.—This paragraph shall 
apply to any mortgage that— 
‘‘(i) is secured by a 1- to 4-family dwelling; 
‘‘(ii)(I) is an obligation of the Mutual 
Mortgage Insurance Fund or of the General In-
surance Fund pursuant to subsection (v) of this 
section; or 
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‘‘(II) is insured under subsection (k) of 
this section or section 234(c); and 
‘‘(iii)(I) is executed by a mortgagor who is 
a first-time homebuyer; and 
‘‘(II)(aa) involves a principal obligation 
that does not comply with subclause (I) of sub-
section (b)(2)(B)(ii) (relating to loan-to-value 
ratio); or 
‘‘(bb) is executed by a mortgagor who has 
not paid on account of the property, in cash or 
its equivalent, at least 3 percent of the Sec-
retary’s estimate of the cost of acquisition (ex-
cluding the mortgage insurance premium paid 
at the time the mortgage is insured). 
‘‘(B) UP-FRONT
PREMIUMS.—Except as pro-
vided in subparagraph (D), the amount of any single 
premium payment collected at the time of insurance 
may not exceed 3.0 percent of the amount of the 
original insured principal obligation of the mortgage. 
‘‘(C) ANNUAL PREMIUMS.—Except as provided 
in subparagraph (D), the amount of any annual pre-
mium payment collected may not exceed 0.75 per-
cent of the remaining insured principal obligation of 
the mortgage. 
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‘‘(D) ANNUAL REDETERMINATION OF PREMIUM 
RATE.—The Secretary shall redetermine the rates of 
premiums not less than once every 12 months and 
may establish such rates upon any such redeter-
mination at an amount in excess of the amounts 
under subparagraphs (B) and (C), but only to the 
extent that such increased rates are commensurate 
with the additional credit risk associated with such 
a mortgage.’’. 
SEC. 7. MORTGAGE INSURANCE PREMIUMS FOR STANDARD 
AND HIGHER-RISK BORROWERS. 
Paragraph (2) of section 203(c) of the National 
Housing Act (12 U.S.C. 1709(c)(2)) is amended— 
(1) by striking the matter that precedes sub-
paragraph (A) and inserting the following: 
‘‘(2) STANDARD-RISK MORTGAGES.—In the case of 
any mortgage that is secured by a 1- to 4-family dwelling, 
is an obligation of the Mutual Mortgage Insurance Fund 
or of the General Insurance Fund pursuant to subsection 
(v) of this section or is insured under subsection (k) of 
this section or section 234(c), for which the mortgagor has 
paid on account of the property, in cash or its equivalent, 
at least 3 percent of the Secretary’s estimate of the cost 
of acquisition (excluding the mortgage insurance premium 
paid at the time the mortgage is insured), and that in-
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volves a principal obligation that complies with subclause 
(I) of subsection (b)(2)(B)(ii), the following requirements 
shall apply:’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(C) HIGHER-RISK
BORROWERS.—The Sec-
retary shall establish underwriting standards, includ-
ing premium payments that comply with the require-
ments of this paragraph, that provide for insurance 
under this section of mortgages described in the 
matter in this paragraph preceding subparagraph 
(A) for which the mortgagor has a credit score 
equivalent to a FICO score of less than 560, and 
may insure, and make commitments to insure, such 
mortgages.’’. 
SEC. 8. RISK-BASED MORTGAGE INSURANCE PREMIUMS. 
Section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)), as amended by the preceding provisions 
of this Act, is further amended by adding at the end the 
following new paragraphs: 
‘‘(4) FLEXIBLE RISK-BASED PREMIUMS.—In the 
case of a mortgage referred to in paragraph (2)(C) or 
(3)(A) for which the loan application is received by the 
mortgagee on or after October 1, 2007: 
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‘‘(A) IN GENERAL.—The Secretary may estab-
lish a mortgage insurance premium structure involv-
ing 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, 
subject to the requirements of subparagraph (B) and 
paragraph (5). Under such structure, the rate of 
premiums for such a mortgage may vary according 
to the credit risk associated with the mortgage and 
the rate of any annual premium for such a mortgage 
may vary during the mortgage term as long as the 
basis for determining the variable rate is established 
before the execution of the mortgage. The Secretary 
may change a premium structure established under 
this subclause but only to the extent that such 
change is not applied to any mortgage already exe-
cuted. 
‘‘(B) ESTABLISHMENT
AND
ALTERATION
OF 
PREMIUM STRUCTURE.—A premium structure shall 
be established or changed under subparagraph (A) 
only by providing notice to mortgagees and to the 
Congress, at least 30 days before the premium 
structure is established or changed. 
‘‘(C) 
ANNUAL
REPORT
REGARDING
PRE-
MIUMS.—The Secretary shall submit a report to the 
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Congress annually setting forth the rate structures 
and rates established and altered pursuant to this 
paragraph during the preceding 12-month period 
and describing how such rates were determined. 
‘‘(5) CONSIDERATIONS FOR PREMIUM STRUCTURE.— 
When establishing premiums for mortgages referred to in 
paragraph (2)(C), establishing premiums pursuant to 
paragraph (3), establishing a premium structure under 
paragraph (4), and when changing such a premium struc-
ture, the Secretary shall consider the following: 
‘‘(A) The effect of the proposed premiums or 
structure on the Secretary’s ability to meet the oper-
ational goals of the Mutual Mortgage Insurance 
Fund as provided in section 202(a). 
‘‘(B) Underwriting variables. 
‘‘(C) The extent to which new pricing under the 
proposed premiums or structure has potential for ac-
ceptance in the private market. 
‘‘(D) The administrative capability of the Sec-
retary to administer the proposed premiums or 
structure. 
‘‘(E) The effect of the proposed premiums or 
structure on the Secretary’s ability to maintain the 
availability of mortgage credit and provide stability 
to mortgage markets. 
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‘‘(6) AUTHORITY
TO BASE PREMIUM PRICES
ON 
PRODUCT RISK.— 
‘‘(A) AUTHORITY.—In establishing premium 
rates under paragraphs (2), (3), and (4), the Sec-
retary may provide for variations in such rates ac-
cording to the credit risk associated with the type of 
mortgage product that is being insured under this 
title, which may include providing that premium 
rates differ between fixed-rate mortgages and ad-
justable-rate mortgages insured pursuant to section 
251, between mortgages insured pursuant to section 
203(b) and mortgages for condominiums insured 
pursuant to section 234, and between such other 
products as the Secretary considers appropriate. 
‘‘(B) LIMITATION.—Subparagraph (A) may not 
be construed to authorize the Secretary to establish, 
for any mortgage product, any mortgage insurance 
premium rate that does not comply with the require-
ments and limitations under paragraphs (2) through 
(5).’’. 
SEC. 9. PAYMENT INCENTIVES. 
Section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)), as amended by the preceding provisions 
of this Act, is further amended by adding at the end the 
following new paragraph: 
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‘‘(7) PAYMENT INCENTIVES.— 
‘‘(A) AUTHORITY.—With respect to mortgages 
referred to in paragraph (2)(C) or (3): 
‘‘(i) DISCRETIONARY 3-YEAR PAYMENT IN-
CENTIVE.—The Secretary may provide, in the 
discretion of the Secretary, that the payment 
incentive under subparagraph (B) shall apply 
upon the expiration of the 3-year period begin-
ning upon the time of insurance of such a mort-
gage. 
‘‘(ii) MANDATORY 5-YEAR PAYMENT INCEN-
TIVE.—The Secretary shall provide that the 
payment incentive under subparagraph (B) ap-
plies upon the expiration of the 5-year period 
beginning upon the time of insurance of such a 
mortgage. 
‘‘(B) PAYMENT INCENTIVE.—In the case of any 
mortgage to which the payment incentive under this 
subparagraph applies, if, during the period referred 
to in clause (i) or (ii) of subparagraph (A), as appli-
cable, all mortgage insurance premiums for such 
mortgage have been paid on a timely basis, upon the 
expiration of such period the Secretary shall— 
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‘‘(i) reduce the amount of the annual pre-
mium payments otherwise due thereafter under 
such mortgage— 
‘‘(I) in the case of a mortgage re-
ferred to in paragraph (3), to an amount 
that does not exceed the amount of the 
maximum annual premium allowable under 
paragraph (2)(B); and 
‘‘(II) in the case of a mortgage re-
ferred to in paragraph (2)(C), to an 
amount that does not exceed the amount of 
the annual premium payable at the time of 
insurance of the mortgage on a mortgage 
of the same product type having the same 
terms, but for which the mortgagor has a 
credit score equivalent to a FICO score of 
560 or more; and 
‘‘(ii) in the case only of a mortgage re-
ferred to in paragraph (2)(C), refund to the 
mortgagor, upon payment in full of the obliga-
tion of the mortgage, any amount by which the 
single premium payment for such mortgage col-
lected at the time of insurance exceeded the 
amount of the single premium payment charge-
able under paragraph (2)(A) at the time of in-
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surance for a mortgage of the same product 
type having the same terms, but for which the 
mortgagor has a credit score equivalent to a 
FICO score of 560 or more.’’. 
SEC. 10. BORROWER PROTECTIONS FOR HIGHER RISK 
MORTGAGES. 
(a) IN GENERAL.—Section 203(b) of the National 
Housing Act (12 U.S.C. 1709(b)) is amended by adding 
at the end the following new paragraph: 
‘‘(10) BORROWER PROTECTIONS FOR CERTAIN 
MORTGAGES.—Except as otherwise specifically pro-
vided in this paragraph, in the case of any mortgage 
referred to in paragraph (2)(C) or (3) of subsection 
(c), the following requirements shall apply: 
‘‘(A) DISCLOSURES.— 
‘‘(i) REQUIRED DISCLOSURES.—In ad-
dition to any disclosures that are otherwise 
required by law or by the Secretary for 
single family mortgages, the mortgagee 
shall disclose to the mortgagor the fol-
lowing information: 
‘‘(I) AT
APPLICATION.—At the 
time of application for the loan in-
volved in the mortgage— 
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‘‘(aa) a list of counseling 
agencies approved by the Sec-
retary in the area of the appli-
cant; and 
‘‘(bb) if the mortgagor is not 
provided counseling in accord-
ance with subparagraph (B), the 
information required under sub-
clauses (I), (II), and (III) of sub-
paragraph (B)(iii) to be provided 
to the mortgagor. 
‘‘(II) AT
EXECUTION.—At the 
time of entering into the mortgage— 
‘‘(aa) the terms of the man-
datory 5-year payment incentive 
required 
under 
subsection 
(c)(7)(A)(ii); and 
‘‘(bb) a statement that the 
mortgagor has a right under con-
tract to loss mitigation. 
‘‘(III) OTHER
INFORMATION.— 
Any other additional information that 
the Secretary determines is appro-
priate to ensure that the mortgagor 
has received timely and accurate in-
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formation about the program under 
paragraph (2)(C) or (3) of subsection 
(c), as applicable. 
‘‘(ii) PENALTIES
FOR
FAILURE
TO 
PROVIDE
REQUIRED
DISCLOSURES.—The 
Secretary may establish and impose appro-
priate penalties for failure of a mortgagee 
to provide any disclosure required under 
clause (i). 
‘‘(iii) NO
PRIVATE
RIGHT
OF
AC-
TION.—This subparagraph shall not create 
any private right of action on behalf of the 
mortgagor. 
‘‘(B) COUNSELING.— 
‘‘(i) ALLOWABLE
REQUIREMENT.— 
The Secretary may, in the discretion of the 
Secretary, require that the mortgagor shall 
have received counseling that complies with 
the requirements of this subparagraph. 
‘‘(ii) TERMS OF COUNSELING.—Coun-
seling under this subparagraph shall be 
provided— 
‘‘(I) prior to application for the 
loan involved in the mortgage; 
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‘‘(II) by a third party (other than 
the mortgagee) who is approved by 
the Secretary, with respect to the re-
sponsibilities and financial manage-
ment involved in homeownership; 
‘‘(III) on an individual basis to 
the mortgagor by a representative of 
the approved third-party counseling 
entity; and 
‘‘(IV) in person, to the maximum 
extent possible. 
‘‘(iii) TOPICS.—In the case only of a 
mortgage referred to in subsection (c)(3), 
counseling under this subparagraph shall 
include providing to, and discussing with, 
the mortgagor— 
‘‘(I) information regarding home-
ownership options other than a mort-
gage that is subject to this paragraph, 
other zero- or low-downpayment mort-
gage options that are or may become 
available to the mortgagor, the finan-
cial implications of entering into a 
mortgage (including a mortgage sub-
ject to this paragraph), and any other 
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information that the Secretary may 
require; 
‘‘(II) a written disclosure that 
sets forth the amount and the per-
centage by which a property with a 
mortgage that is subject to this para-
graph must appreciate for the mort-
gagor to recover the principal amount 
of the mortgage, the costs financed 
under the mortgage, and the esti-
mated costs involved in selling the 
property, if the mortgagor were to sell 
the property on each of the second, 
fifth, and tenth anniversaries of the 
mortgage; and 
‘‘(III) a written disclosure, as the 
Secretary shall require, that specifies 
the effective cost to a mortgagor of 
borrowing the amount by which the 
maximum amount that could be bor-
rowed under a mortgage that is re-
ferred to in subsection (c)(3) exceeds 
the maximum amount that could be 
borrowed under a mortgage insured 
under this subsection that is not a 
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mortgage referred to in such sub-
section, based on average closing costs 
with respect to such amount, as deter-
mined by the Secretary; such cost 
shall be expressed as an annual inter-
est rate over the first 5 years of a 
mortgage; 
the 
disclosure 
required 
under this subclause may be provided 
in conjunction with the notice re-
quired under subsection (f). 
‘‘(iv) 
2- 
AND
3-FAMILY
RESI-
DENCES.—In the case of a mortgage in-
volving a 2- or 3-family residence, coun-
seling under this subparagraph shall in-
clude (in addition to the information re-
quired under clause (iii)) information re-
garding real estate property management. 
‘‘(C) OPTION
FOR
NOTICE
OF
FORE-
CLOSURE
PREVENTION
COUNSELING
AVAIL-
ABILITY.— 
‘‘(i) OPTION.—To be eligible for in-
surance under this subsection, the mort-
gagee shall provide mortgagor, at the time 
of the execution of the mortgage, an op-
tional written agreement which, if signed 
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by the mortgagor, allows, but does not re-
quire, the mortgagee to provide notice de-
scribed in clause (ii) to a housing coun-
seling entity that has agreed to provide the 
notice and counseling required under 
clause (iii) and is approved by the Sec-
retary. 
‘‘(ii) NOTICE TO COUNSELING AGEN-
CY.—The notice described in this clause, 
with respect to a mortgage, is notice, pro-
vided at the earliest time practicable after 
the mortgagor becomes 60 days delinquent 
with respect to any payment due under the 
mortgage, that the mortgagor is so delin-
quent and of how to contact the mort-
gagor. Such notice may only be provided 
once with respect to each delinquency pe-
riod for a mortgage. 
‘‘(iii) NOTICE TO MORTGAGOR.—Upon 
notice from a mortgagee that a mortgagor 
is 60 days delinquent with respect to pay-
ments due under the mortgage, the hous-
ing counseling entity shall at the earliest 
time practicable notify the mortgagor of 
such delinquency, that the entity makes 
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available foreclosure prevention counseling 
that may assist the mortgagor in resolving 
the delinquency, and of how to contact the 
entity to arrange for such counseling. 
‘‘(iv) ABILITY TO CURE.—Failure to 
provide the optional written agreement re-
quired under clause (i) may be corrected 
by sending such agreement to the mort-
gagor not later than the earliest time prac-
ticable after the mortgagor first becomes 
60 days delinquent with respect to pay-
ments due under the mortgage. Insurance 
provided under this subsection may not be 
terminated and penalties for such failure 
may not be prospectively or retroactively 
imposed if such failure is corrected in ac-
cordance with this clause. 
‘‘(v) PENALTIES
FOR
FAILURE
TO 
PROVIDE
AGREEMENT.—The 
Secretary 
may establish and impose appropriate pen-
alties for failure of a mortgagee to provide 
the optional written agreement required 
under clause (i). 
‘‘(vi) LIMITATION
ON
LIABILITY
OF 
MORTGAGEE.—A mortgagee shall not incur 
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any liability or penalties for any failure of 
a housing counseling entity to provide no-
tice under clause (iii). 
‘‘(vii) NO
PRIVATE
RIGHT
OF
AC-
TION.—This subparagraph shall not create 
any private right of action on behalf of the 
mortgagor. 
‘‘(viii) DELINQUENCY
PERIOD.—For 
purposes of this subparagraph, the term 
‘delinquency period’ means, with respect to 
a mortgage, a period that begins upon the 
mortgagor becoming delinquent with re-
spect to payments due under the mortgage 
and ends upon the first subsequent occur-
rence of such payments under the mort-
gage becoming current or the property 
subject to the mortgage being foreclosed or 
otherwise disposed of.’’. 
SEC. 11. ANNUAL REPORTS ON NEW PROGRAMS AND LOSS 
MITIGATION. 
Section 540(b)(2) of the National Housing Act (12 
U.S.C. 1735f–18(b)(2)) is amended, by adding at the end 
the following new subparagraphs: 
‘‘(C) The rates of default and foreclosure 
for the applicable collection period for mort-
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gages insured pursuant to the programs for 
mortgage insurance under paragraphs (2)(C) 
and (3) of section 203(c). 
‘‘(D) Actions taken by the Secretary dur-
ing the applicable collection period with respect 
to loss mitigation on mortgages insured pursu-
ant to section 203.’’. 
SEC. 12. REHABILITATION LOANS. 
Subsection (k) of section 203 of the National Hous-
ing Act (12 U.S.C. 1709(k)) is amended— 
(1) in paragraph (1), by striking ‘‘on’’ and all 
that follows through ‘‘1978’’; and 
(2) in paragraph (5)— 
(A) by striking ‘‘General Insurance Fund’’ 
the first place it appears and inserting ‘‘Mutual 
Mortgage Insurance Fund’’; and 
(B) in the second sentence, by striking the 
comma and all that follows through ‘‘General 
Insurance Fund’’. 
SEC. 13. DISCRETIONARY ACTION. 
The National Housing Act is amended— 
(1) in subsection (e) of section 202 (12 U.S.C. 
1708(e))— 
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(A) in paragraph (3)(B), by striking ‘‘sec-
tion 202(e) of the National Housing Act’’ and 
inserting ‘‘this subsection’’; and 
(B) by redesignating such subsection as 
subsection (f); 
(2) by striking paragraph (4) of section 203(s) 
(12 U.S.C. 1709(s)(4)) and inserting the following 
new paragraph: 
‘‘(4) the Secretary of Agriculture;’’; and 
(3) by transferring subsection (s) of section 203 
(as amended by paragraph (2) of this section) to 
section 202, inserting such subsection after sub-
section (d) of section 202, and redesignating such 
subsection as subsection (e). 
SEC. 14. INSURANCE OF CONDOMINIUMS. 
(a) IN GENERAL.—Section 234 of the National 
Housing Act (12 U.S.C. 1715y) is amended— 
(1) in subsection (c)— 
(A) in the first sentence— 
(i) by striking ‘‘and’’ before ‘‘(2)’’; 
and 
(ii) by inserting before the period at 
the end the following: ‘‘, and (3) the 
project has a blanket mortgage insured by 
the Secretary under subsection (d)’’; and 
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(B) in clause (B) of the third sentence, by 
striking ‘‘thirty-five years’’ and inserting ‘‘forty 
years’’; and 
(2) in subsection (g), by striking ‘‘, except 
that’’ and all that follows and inserting a period. 
(b) DEFINITION OF MORTGAGE.—Section 201(a) of 
the National Housing Act (12 U.S.C. 1707(a)) is amend-
ed— 
(1) in clause (1), by striking ‘‘or’’ and inserting 
a comma; and 
(2) by inserting before the semicolon the fol-
lowing: ‘‘, or (c) a first mortgage given to secure the 
unpaid purchase price of a fee interest in, or long- 
term leasehold interest in, a one-family unit in a 
multifamily project, including a project in which the 
dwelling units are attached, semi-detached, or de-
tached, and an undivided interest in the common 
areas and facilities which serve the project’’. 
SEC. 15. MUTUAL MORTGAGE INSURANCE FUND. 
(a) IN GENERAL.—Subsection (a) of section 202 of 
the National Housing Act (12 U.S.C. 1708(a)) is amended 
to read as follows: 
‘‘(a) MUTUAL MORTGAGE INSURANCE FUND.— 
‘‘(1) ESTABLISHMENT.—Subject to the provi-
sions of the Federal Credit Reform Act of 1990, 
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there is hereby created a Mutual Mortgage Insur-
ance Fund (in this title referred to as the ‘Fund’), 
which shall be used by the Secretary to carry out the 
provisions of this title with respect to mortgages in-
sured under section 203. The Secretary may enter 
into commitments to guarantee, and may guarantee, 
such insured mortgages. 
‘‘(2) LIMIT ON LOAN GUARANTEES.—The au-
thority of the Secretary to enter into commitments 
to guarantee such insured mortgages shall be effec-
tive for any fiscal year only to the extent that the 
aggregate original principal loan amount under such 
mortgages, any part of which is guaranteed, does 
not exceed the amount specified in appropriations 
Acts for such fiscal year. 
‘‘(3) FIDUCIARY
RESPONSIBILITY.—The Sec-
retary has a responsibility to ensure that the Mutual 
Mortgage Insurance Fund remains financially sound. 
‘‘(4) 
ANNUAL
INDEPENDENT
ACTUARIAL 
STUDY.—The Secretary shall provide for an inde-
pendent actuarial study of the Fund to be conducted 
annually, which shall analyze the financial position 
of the Fund. The Secretary shall submit a report 
annually to the Congress describing the results of 
such study and assessing the financial status of the 
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Fund. The report shall recommend adjustments to 
underwriting standards, program participation, or 
premiums, if necessary, to ensure that the Fund re-
mains financially sound. 
‘‘(5) QUARTERLY REPORTS.—During each fiscal 
year, the Secretary shall submit a report to the Con-
gress for each quarter, which shall specify for mort-
gages that are obligations of the Fund— 
‘‘(A) the cumulative volume of loan guar-
antee commitments that have been made during 
such fiscal year through the end of the quarter 
for which the report is submitted; 
‘‘(B) the types of loans insured, cat-
egorized by risk; 
‘‘(C) any significant changes between ac-
tual and projected claim and prepayment activ-
ity; 
‘‘(D) projected versus actual loss rates; 
and 
‘‘(E) updated projections of the annual 
subsidy rates to ensure that increases in risk to 
the Fund are identified and mitigated by ad-
justments to underwriting standards, program 
participation, or premiums, and the financial 
soundness of the Fund is maintained. 
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The first quarterly report under this paragraph shall 
be submitted on the last day of the first quarter of 
fiscal year 2008, or upon the expiration of the 90- 
day period beginning on the date of the enactment 
of the Expanding American Homeownership Act of 
2007, whichever is later. 
‘‘(6) ADJUSTMENT OF PREMIUMS.—If, pursu-
ant to the independent actuarial study of the Fund 
required under paragraph (5), the Secretary deter-
mines that the Fund is not meeting the operational 
goals established under paragraph (8) or there is a 
substantial probability that the Fund will not main-
tain its established target subsidy rate, the Secretary 
may either make programmatic adjustments under 
section 203 as necessary to reduce the risk to the 
Fund, or make appropriate premium adjustments. 
‘‘(7) OPERATIONAL
GOALS.—The operational 
goals for the Fund are— 
‘‘(A) to charge borrowers under loans that 
are obligations of the Fund an appropriate pre-
mium for the risk that such loans pose to the 
Fund; 
‘‘(B) to minimize the default risk to the 
Fund and to homeowners; 
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‘‘(C) to curtail the impact of adverse selec-
tion on the Fund; and 
‘‘(D) to meet the housing needs of the bor-
rowers that the single family mortgage insur-
ance program under this title is designed to 
serve.’’. 
(b) OBLIGATIONS OF FUND.—The National Housing 
Act is amended as follows: 
(1) 
HOMEOWNERSHIP
VOUCHER
PROGRAM 
MORTGAGES.—In 
section 
203(v) 
(12 
U.S.C. 
1709(v))— 
(A) by striking ‘‘Notwithstanding section 
202 of this title, the’’ and inserting ‘‘The’’; and 
(B) by striking ‘‘General Insurance Fund’’ 
the first place such term appears and all that 
follows and inserting ‘‘Mutual Mortgage Insur-
ance Fund.’’. 
(2) HOME EQUITY CONVERSION MORTGAGES.— 
Section 255(i)(2)(A) of the National Housing Act 
(12 U.S.C. 1715z–20(i)(2)(A)) is amended by strik-
ing ‘‘General Insurance Fund’’ and inserting ‘‘Mu-
tual Mortgage Insurance Fund’’. 
(c) CONFORMING
AMENDMENTS.—The National 
Housing Act is amended— 
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(1) in section 205 (12 U.S.C. 1711), by striking 
subsections (g) and (h); and 
(2) in section 519(e) (12 U.S.C. 1735c(e)), by 
striking ‘‘203(b)’’ and all that follows through 
‘‘203(i)’’ and inserting ‘‘203, except as determined 
by the Secretary’’. 
SEC. 16. HAWAIIAN HOME LANDS AND INDIAN RESERVA-
TIONS. 
(a) HAWAIIAN HOME LANDS.—Section 247(c) of the 
National Housing Act (12 U.S.C. 1715z–12) is amend-
ed— 
(1) by striking ‘‘General Insurance Fund estab-
lished in section 519’’ and inserting ‘‘Mutual Mort-
gage Insurance Fund’’; and 
(2) in the second sentence, by striking ‘‘(1) all 
references’’ and all that follows through ‘‘and (2)’’. 
(b) INDIAN RESERVATIONS.—Section 248(f) of the 
National Housing Act (12 U.S.C. 1715z–13) is amend-
ed— 
(1) by striking ‘‘General Insurance Fund’’ the 
first place it appears through ‘‘519’’ and inserting 
‘‘Mutual Mortgage Insurance Fund’’; and 
(2) in the second sentence, by striking ‘‘(1) all 
references’’ and all that follows through ‘‘and (2)’’. 
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SEC. 17. CONFORMING AND TECHNICAL AMENDMENTS. 
(a) REPEALS.—The following provisions of the Na-
tional Housing Act are repealed: 
(1) Subsection (i) of section 203 (12 U.S.C. 
1709(i)). 
(2) Subsection (o) of section 203 (12 U.S.C. 
1709(o)). 
(3) Subsection (p) of section 203 (12 U.S.C. 
1709(p)). 
(4) Subsection (q) of section 203 (12 U.S.C. 
1709(q)). 
(5) Section 222 (12 U.S.C. 1715m). 
(6) Section 237 (12 U.S.C. 1715z–2). 
(7) Section 245 (12 U.S.C. 1715z–10). 
(b) DEFINITION OF AREA.—Section 203(u)(2)(A) of 
the National Housing Act (12 U.S.C. 1709(u)(2)(A)) is 
amended by striking ‘‘shall’’ and all that follows and in-
serting ‘‘means a metropolitan statistical area as estab-
lished by the Office of Management and Budget;’’. 
(c) DEFINITION OF STATE.—Section 201(d) of the 
National Housing Act (12 U.S.C. 1707(d)) is amended by 
striking ‘‘the Trust Territory of the Pacific Islands’’ and 
inserting ‘‘the Commonwealth of the Northern Mariana 
Islands’’. 
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SEC. 18. HOME EQUITY CONVERSION MORTGAGES. 
(a) IN GENERAL.—Section 255 of the National 
Housing Act (12 U.S.C. 1715z–20) is amended— 
(1) in subsection (g)— 
(A) by striking the first sentence; and 
(B) by striking ‘‘established under section 
203(b)(2)’’ and all that follows through ‘‘lo-
cated’’ and inserting ‘‘limitation established 
under section 305(a)(2) of the Federal Home 
Loan Mortgage Corporation Act for a 1-family 
residence’’; 
(2) in subsection (i)(1)(C), by striking ‘‘limita-
tions’’ and inserting ‘‘limitation’’; and 
(3) by adding at the end the following new sub-
section: 
‘‘(n) AUTHORITY TO INSURE HOME PURCHASE 
MORTGAGE.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision in this section, the Secretary may insure, 
upon application by a mortgagee, a home equity con-
version mortgage upon such terms and conditions as 
the Secretary may prescribe, when the primary pur-
pose of the home equity conversion mortgage is to 
enable an elderly mortgagor to purchase a 1- to 4- 
family dwelling in which the mortgagor will occupy 
or occupies one of the units. 
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‘‘(2) LIMITATION ON PRINCIPAL OBLIGATION.— 
A home equity conversion mortgage insured pursu-
ant to paragraph (1) shall involve a principal obliga-
tion that does not exceed the dollar amount limita-
tion determined under section 305(a)(2) of the Fed-
eral Home Loan Mortgage Corporation Act for a 
residence of the applicable size.’’. 
(b) MORTGAGES
FOR COOPERATIVES.—Subsection 
(b) of section 255 of the National Housing Act (12 U.S.C. 
1715z–20(b)) is amended— 
(1) in paragraph (4)— 
(A) by inserting ‘‘a first or subordinate 
mortgage or lien’’ before ‘‘on all stock’’; 
(B) by inserting ‘‘unit’’ after ‘‘dwelling’’; 
and 
(C) by inserting ‘‘a first mortgage or first 
lien’’ before ‘‘on a leasehold’’; and 
(2) in paragraph (5), by inserting ‘‘a first or 
subordinate lien on’’ before ‘‘all stock’’. 
(c) STUDY REGARDING MORTGAGE INSURANCE PRE-
MIUMS.—The Secretary of Housing and Urban Develop-
ment shall conduct a study regarding mortgage insurance 
premiums charged under the program under section 255 
of the National Housing Act (12 U.S.C. 1715z–20) for 
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insurance of home equity conversion mortgages to analyze 
and determine— 
(1) the effects of reducing the amounts of such 
premiums from the amounts charged as of the date 
of the enactment of this Act on— 
(A) costs to mortgagors; and 
(B) the financial soundness of the pro-
gram; and 
(2) the feasibility and effectiveness of exempt-
ing, from all the requirements under the program re-
garding payment of mortgage insurance premiums 
(including both up-front or annual mortgage insur-
ance premiums under section 203(c)(2) of such Act), 
any mortgage insured under the program under 
which part or all of the amount of future payments 
made to the homeowner are used for costs of a long- 
term care insurance contract covering the mortgagor 
or members of the household residing in the mort-
gaged property. 
Not later than the expiration of the 12-month period be-
ginning on the date of the enactment of this Act, the Sec-
retary shall submit a report to the Congress setting forth 
the results and conclusions of the study. 
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SEC. 19. CONFORMING LOAN LIMIT IN DISASTER AREAS. 
Section 203(h) of the National Housing Act (12 
U.S.C. 1709) is amended— 
(1) by inserting after ‘‘property’’ the following: 
‘‘plus any initial service charges, appraisal, inspec-
tion and other fees in connection with the mortgage 
as approved by the Secretary,’’; 
(2) by striking the second sentence (as added 
by chapter 7 of the Emergency Supplemental Appro-
priations Act of 1994 (Public Law 103–211; 108 
Stat. 12)); and 
(3) by adding at the end the following new sen-
tence: ‘‘In any case in which the single family resi-
dence to be insured under this subsection is within 
a jurisdiction in which the President has declared a 
major disaster to have occurred, the Secretary is au-
thorized, for a temporary period not to exceed 36 
months from the date of such Presidential declara-
tion, to enter into agreements to insure a mortgage 
which involves a principal obligation of up to 100 
percent of the dollar limitation determined under 
section 305(a)(2) of the Federal Home Loan Mort-
gage Corporation Act for a single family residence, 
and not in excess of 100 percent of the appraised 
value of the property plus any initial service charges, 
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appraisal, inspection and other fees in connection 
with the mortgage as approved by the Secretary.’’. 
SEC. 20. SENSE OF CONGRESS REGARDING TECHNOLOGY 
FOR FINANCIAL SYSTEMS. 
(a) CONGRESSIONAL FINDINGS.—The Congress finds 
the following: 
(1) The Government Accountability Office has 
cited the FHA single family housing mortgage insur-
ance program as a ‘‘high-risk’’ program, with a pri-
mary reason being non-integrated and out-dated fi-
nancial management systems. 
(2) The ‘‘Audit of the Federal Housing Admin-
istration’s Financial Statements for Fiscal Years 
2004 and 2003’’, conducted by the Inspector Gen-
eral of the Department of Housing and Urban De-
velopment reported as a material weakness that 
‘‘HUD/FHA’s automated data processing [ADP] 
system environment must be enhanced to more effec-
tively support FHA’s business and budget proc-
esses’’. 
(3) Existing technology systems for the FHA 
program have not been updated to meet the latest 
standards of the Mortgage Industry Standards 
Maintenance Organization and have numerous defi-
ciencies that lenders have outlined. 
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(4) Improvements to technology used in the 
FHA program will— 
(A) allow the FHA program to improve the 
management of the FHA portfolio, garner 
greater efficiencies in its operations, and lower 
costs across the program; 
(B) result in efficiencies and lower costs 
for lenders participating in the program, allow-
ing them to better use the FHA products in ex-
tending homeownership opportunities to higher 
credit risk or lower-income families, in a sound 
manner. 
(5) The Mutual Mortgage Insurance Fund op-
erates without cost to the taxpayers and generates 
revenues for the Federal Government. 
(b) SENSE OF CONGRESS.—It is the sense of the 
Congress that— 
(1) the Secretary of Housing and Urban Devel-
opment should use a portion of the funds received 
from premiums paid for FHA single family housing 
mortgage insurance that are in excess of the 
amounts paid out in claims to substantially increase 
the funding for technology used in such FHA pro-
gram; 
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(2) the goal of this investment should be to 
bring the technology used in such FHA program to 
the level and sophistication of the technology used in 
the conventional mortgage lending market, or to ex-
ceed such level; and 
(3) the Secretary of Housing and Urban Devel-
opment should report to the Congress not later than 
180 days after the date of the enactment of this Act 
regarding the progress the Department is making 
toward such goal and if progress is not sufficient, 
the resources needed to make greater progress. 
SEC. 21. MULTIFAMILY HOUSING MORTGAGE LIMITS IN 
HIGH COST AREAS. 
The National Housing Act is amended— 
(1) in sections 207(c)(3), 213(b)(2)(B)(i), 
221(d)(3)(ii)(II), 
221(d)(4)(ii)(II), 
231(c)(2)(B), 
and 
234(e)(3)(B) 
(12 
U.S.C. 
1713(c)(3), 
1715e(b)(2)(B)(i), 
1715l(d)(3)(ii)(II), 
1715l(d)(4)(ii)(II), 
1715v(c)(2)(B), 
and 
1715y(e)(3)(B))— 
(A) by striking ‘‘140 percent’’ each place 
such term appears and inserting ‘‘170 percent’’; 
and 
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(B) by striking ‘‘170 percent in high cost 
areas’’ each time place such term appears and 
inserting ‘‘215 percent in high cost areas’’; and 
(2) in section 220(d)(3)(B)(iii)(III) (12 U.S.C. 
1715k(d)(3)(B)(iii)(III)) by striking ‘‘206A’’ and all 
that follows through ‘‘project-by-project basis’’ and 
inserting the following: ‘‘206A of this Act) by not to 
exceed 170 percent in any geographical area where 
the Secretary finds that cost levels so require and by 
not to exceed 170 percent, or 215 percent in high 
cost areas, where the Secretary determines it nec-
essary on a project-by-project basis’’. 
SEC. 22. VALUATION OF MULTIFAMILY PROPERTIES IN 
NONCOMPETITIVE SALES BY HUD TO STATES 
AND LOCALITIES. 
Subtitle A of title II of the Deficit Reduction Act of 
2005 (Public Law 109–171; 120 Stat. 7) is amended by 
adding at the end the following new subsection: 
‘‘SEC. 2004. VALUATION OF MULTIFAMILY PROPERTIES IN 
NONCOMPETITIVE SALES BY HUD TO STATES 
AND LOCALITIES. 
‘‘Notwithstanding any other provision of law and with 
respect to any fiscal year, in determining the market value 
of any multifamily real property or multifamily loan for 
any noncompetitive sale to a State or local government 
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