IB 
Union Calendar No. 133 
110TH CONGRESS 
1ST SESSION H. R. 1852 
[Report No. 110–217] 
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 
JUNE 28, 2007 
Additional sponsors: Mr. SIRES, Mr. SCHIFF, Mr. JEFFERSON, Mr. RUSH, 
Mrs. CHRISTENSEN, Mr. CUMMINGS, Mr. WELCH of Vermont, Ms. 
ESHOO, Mr. MARKEY, Mr. MORAN of Virginia, Mr. ETHERIDGE, and Mr. 
WYNN 
JUNE 28, 2007 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on March 29, 2007] 
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. 
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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 ‘‘Ex-
panding 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. 
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. Insurance for single family homes with licensed child care facilities. 
Sec. 13. Rehabilitation loans. 
Sec. 14. Discretionary action. 
Sec. 15. Insurance of condominiums and manufactured housing. 
Sec. 16. Mutual Mortgage Insurance Fund. 
Sec. 17. Hawaiian home lands and Indian reservations. 
Sec. 18. Conforming and technical amendments. 
Sec. 19. Home equity conversion mortgages. 
Sec. 20. Participation of mortgage brokers and correspondent lenders. 
Sec. 21. Conforming loan limit in disaster areas. 
Sec. 22. Failure to pay amounts from escrow accounts for single family mort-
gages. 
Sec. 23. Acceptable identification for FHA mortgagors. 
Sec. 24. Pilot program for automated process for borrowers without sufficient 
credit history. 
Sec. 25. Sense of Congress regarding technology for financial systems. 
Sec. 26. Multifamily housing mortgage limits in high cost areas. 
Sec. 27. Valuation of multifamily properties in noncompetitive sales by HUD to 
States and localities. 
Sec. 28. Clarification of disposition of certain properties. 
Sec. 29. Use of FHA savings for costs of mortgage insurance, housing counseling, 
FHA technologies, procedures, and processes, and for affordable 
housing grant fund, and study. 
Sec. 30. Limitation on mortgage insurance premium increases. 
Sec. 31. Savings provision. 
Sec. 32. Implementation. 
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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 conven-
tional mortgage marketplace; 
(2) the FHA program has a long history of inno-
vation, which includes pioneering the 30-year self-am-
ortizing mortgage and a safe-to-seniors reverse mort-
gage product, both of which were once thought too 
risky to private lenders; 
(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 struc-
ture, as well as FHA’s product offerings, should be re-
vised to reflect FHA’s enhanced ability to determine 
risk at the loan level and to allow FHA to better re-
spond to changes in the mortgage market; 
(5) during past recessions, including the oil- 
patch downturns in the mid-1980s, FHA remained a 
viable credit enhancer and was therefore instrumental 
in preventing a more catastrophic collapse in housing 
markets and a greater loss of homeowner equity; and 
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(6) as housing price appreciation slows and in-
terest rates rise, many homeowners and prospective 
homebuyers will need the less-expensive, safer financ-
ing alternative that FHA mortgage insurance pro-
vides. 
(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 moderate-in-
come homebuyers during all economic cycles in the 
mortgage market; 
(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 family 
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 residence, 
the median 1-family house price in the 
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area, as determined by the Secretary; and 
in the case of a 2-, 3-, or 4-family residence, 
the percentage of such median price that 
bears the same ratio to such median 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 under such sec-
tion for a 1-family residence; 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 effect 
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 sec-
tion 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 Hous-
ing Act (12 U.S.C. 1709(b)(3)) is amended— 
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(1) by striking ‘‘thirty-five years’’ and inserting 
‘‘forty years’’; and 
(2) by striking ‘‘(or thirty years if such mortgage 
is not approved for insurance prior to construction)’’. 
SEC. 5. DOWNPAYMENT SIMPLIFICATION. 
Section 203(b) of the National Housing Act (12 U.S.C. 
1709(b)) is amended— 
(1) in paragraph (2)— 
(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 subclause 
(II), 97.75 percent of the appraised value of 
the property; or 
‘‘(II) in the case only of a mortgage de-
scribed in subsection (c)(3), the appraised 
value of the property, plus any initial serv-
ice charges, appraisal, inspection, and other 
fees in connection with the mortgage as ap-
proved by the Secretary.’’; 
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(B) in the matter after and below subpara-
graph (B), by striking the second sentence (relat-
ing 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 in-
volved in homeownership); and 
(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 Secretary’s 
estimate of the cost of acquisition (excluding the mort-
gage insurance premium paid at the time the mort-
gage 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 following new 
paragraph: 
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‘‘(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 Mort-
gage Insurance Fund or of the General Insurance 
Fund pursuant to subsection (v) of this section; 
or 
‘‘(II) is insured under subsection (k) of this 
section or section 234(c); 
‘‘(iii) is executed by a mortgagor who is a 
first-time homebuyer; and 
‘‘(iv)(I) involves a principal obligation that 
does not comply with subclause (I) of subsection 
(b)(2)(B)(ii) (relating to loan-to-value ratio); or 
‘‘(II) 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.—The amount of any 
single premium payment collected at the time of in-
surance may not exceed 3.0 percent of the amount of 
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the original insured principal obligation of the mort-
gage. 
‘‘(C) ANNUAL PREMIUMS.—Except as provided 
in subparagraph (D), the amount of any annual pre-
mium payment collected may not exceed 0.75 percent 
of the remaining insured principal obligation of the 
mortgage. 
‘‘(D) ANNUAL REDETERMINATION OF PREMIUM 
RATE.—The Secretary shall redetermine the rates of 
premiums not less than once every 12 months.’’. 
SEC. 7. MORTGAGE INSURANCE PREMIUMS FOR STANDARD 
AND HIGHER-RISK BORROWERS. 
Paragraph (2) of section 203(c) of the National Hous-
ing Act (12 U.S.C. 1709(c)(2)) is amended— 
(1) by striking the matter that precedes subpara-
graph (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 ac-
quisition (excluding the mortgage insurance premium paid 
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at the time the mortgage is insured), and that involves a 
principal obligation that complies with subclause (I) of sub-
section (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 Secretary 
shall establish underwriting standards that provide 
for insurance under this section of mortgages de-
scribed in the matter in this paragraph preceding 
subparagraph (A) for which the mortgagor has a cred-
it score equivalent to a FICO score of less than 560, 
and may insure, and make commitments to insure, 
such mortgages. Such underwriting standards shall 
include establishing and collecting premium pay-
ments that comply with the requirements of this para-
graph, except that notwithstanding subparagraph (A), 
the single premium payment collected at the time of 
insurance may be established in an amount that does 
not exceed 3.0 percent of the amount of the original 
insured principal obligation of the mortgage.’’. 
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 
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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: 
‘‘(A) IN GENERAL.—The Secretary may establish 
a mortgage insurance premium structure involving a 
single premium payment collected prior to the insur-
ance 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 as-
sociated with the mortgage and the rate of any an-
nual premium for such a mortgage may vary during 
the mortgage term as long as the basis for deter-
mining the variable rate is established before the exe-
cution 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 executed. 
‘‘(B) ESTABLISHMENT AND ALTERATION OF PRE-
MIUM STRUCTURE.—A premium structure shall be es-
tablished or changed under subparagraph (A) only by 
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providing notice to mortgagees and to the Congress, at 
least 30 days before the premium structure is estab-
lished or changed. 
‘‘(C) ANNUAL REPORT REGARDING PREMIUMS.— 
The Secretary shall submit a report to the Congress 
annually setting forth the rate structures and rates es-
tablished and altered pursuant to this paragraph dur-
ing 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 para-
graph (3), establishing a premium structure under para-
graph (4), and when changing such a premium structure, 
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. 
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‘‘(D) The administrative capability of the Sec-
retary to administer the proposed premiums or struc-
ture. 
‘‘(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. 
‘‘(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 adjust-
able-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-
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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: 
‘‘(7) PAYMENT INCENTIVES.— 
‘‘(A) AUTHORITY.—With respect to mortgages re-
ferred 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 in-
centive 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 pay-
ment incentive under subparagraph (B) applies 
upon the expiration of the 5-year period begin-
ning upon the time of insurance of such a mort-
gage. 
‘‘(B) PAYMENT INCENTIVE.—In the case of any 
mortgage to which the payment incentive under this 
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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— 
‘‘(i) reduce the amount of the annual pre-
mium payments otherwise due thereafter under 
such mortgage— 
‘‘(I) in the case of a mortgage referred 
to in paragraph (3), to an amount that does 
not exceed the amount of the maximum an-
nual premium allowable under paragraph 
(2)(B); and 
‘‘(II) in the case of a mortgage referred 
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 referred 
to in paragraph (2)(C), refund to the mortgagor, 
upon payment in full of the obligation of the 
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mortgage, any amount by which the single pre-
mium payment for such mortgage collected at the 
time of insurance exceeded the amount of the sin-
gle premium payment chargeable under para-
graph (2)(A) at the time of insurance for a mort-
gage 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. 
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 sin-
gle family mortgages, the mortgagee shall 
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disclose to the mortgagor the following in-
formation: 
‘‘(I) AT
APPLICATION.—At the 
time of application for the loan in-
volved in the mortgage— 
‘‘(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 accordance 
with subparagraph (B), the infor-
mation required under subclauses 
(I), (II), and (III) of subpara-
graph (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. 
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‘‘(III) OTHER
INFORMATION.— 
Any other additional information that 
the Secretary determines is appro-
priate to ensure that the mortgagor has 
received timely and accurate informa-
tion about the program under para-
graph (2)(C) or (3) of subsection (c), as 
applicable. 
‘‘(ii) PENALTIES FOR FAILURE TO PRO-
VIDE
REQUIRED
DISCLOSURES.—The Sec-
retary 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 Sec-
retary, require that the mortgagor shall 
have received counseling that complies with 
the requirements of this subparagraph. 
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‘‘(ii) TERMS OF COUNSELING.—Coun-
seling under this subparagraph shall be pro-
vided— 
‘‘(I) prior to application for the 
loan involved in the mortgage; 
‘‘(II) by a third party (other than 
the mortgagee) who is approved by the 
Secretary, with respect to the respon-
sibilities and financial management 
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-
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gage options that are or may become 
available to the mortgagor, the finan-
cial implications of entering into a 
mortgage (including a mortgage subject 
to this paragraph), and any other in-
formation that the Secretary may re-
quire; 
‘‘(II) a written disclosure that sets 
forth the amount and the percentage by 
which a property with a mortgage that 
is subject to this paragraph must ap-
preciate for the mortgagor to recover 
the principal amount of the mortgage, 
the costs financed under the mortgage, 
and the estimated 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 bor-
rowing the amount by which the max-
imum amount that could be borrowed 
under a mortgage that is referred to in 
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subsection (c)(3) exceeds the maximum 
amount that could be borrowed under a 
mortgage insured under this subsection 
that is not a mortgage referred to in 
such subsection, based on average clos-
ing costs with respect to such amount, 
as determined by the Secretary; such 
cost shall be expressed as an annual 
interest rate over the first 5 years of a 
mortgage; the disclosure required under 
this subclause may be provided in con-
junction with the notice required under 
subsection (f). 
‘‘(iv) 2- AND 3-FAMILY RESIDENCES.— 
In the case of a mortgage involving a 2- or 
3-family residence, counseling under this 
subparagraph shall include (in addition to 
the information required under clause (iii)) 
information regarding real estate property 
management. 
‘‘(C) NOTICE OF FORECLOSURE PREVENTION 
COUNSELING AVAILABILITY.— 
‘‘(i) WRITTEN AGREEMENT.—To be eli-
gible for insurance under this subsection, 
the mortgagee shall provide the mortgagor, 
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at the time of the execution of the mortgage, 
a written agreement which shall be signed 
by the mortgagor and under which the 
mortgagee shall provide notice described in 
clause (ii) to a housing counseling entity 
that has agreed to provide the notice and 
counseling required under clause (iii) and 
is approved by the Secretary. 
‘‘(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 mortgagor. 
Such notice may only be provided once with 
respect to each delinquency period 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 housing 
counseling entity shall at the earliest time 
practicable notify the mortgagor of such de-
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linquency, that the entity makes available 
foreclosure prevention counseling that may 
assist the mortgagor in resolving the delin-
quency, and of how to contact the entity to 
arrange for such counseling. 
‘‘(iv) ABILITY
TO
CURE.—Failure to 
provide the written agreement required 
under clause (i) may be corrected by send-
ing such agreement to the mortgagor not 
later than the earliest time practicable after 
the mortgagor first becomes 60 days delin-
quent with respect to payments due under 
the mortgage. Insurance provided under this 
subsection may not be terminated and pen-
alties for such failure may not be prospec-
tively or retroactively imposed if such fail-
ure is corrected in accordance with this 
clause. 
‘‘(v) PENALTIES FOR FAILURE TO PRO-
VIDE AGREEMENT.—The Secretary may es-
tablish and impose appropriate penalties 
for failure of a mortgagee to provide the 
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 ‘de-
linquency period’ means, with respect to a 
mortgage, a period that begins upon the 
mortgagor becoming delinquent with respect 
to payments due under the mortgage and 
ends upon the first subsequent occurrence of 
such payments under the mortgage becom-
ing current or the property subject to the 
mortgage being foreclosed or otherwise dis-
posed 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 mortgages in-
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sured pursuant to the programs for mortgage in-
surance under paragraphs (2)(C) and (3) of sec-
tion 203(c). 
‘‘(D) Actions taken by the Secretary during 
the applicable collection period with respect to 
loss mitigation on mortgages insured pursuant 
to section 203.’’. 
SEC. 12. INSURANCE FOR SINGLE FAMILY HOMES WITH LI-
CENSED CHILD CARE FACILITIES. 
(a) DEFINITION OF CHILD CARE FACILITY.—Section 
201 of the National Housing Act (12 U.S.C. 1707) is 
amended by adding at the end the following new subsection: 
‘‘(g) The term ‘child care facility’ means a facility 
that— 
‘‘(A) has as its purpose the care of children who 
are less than 12 years of age; and 
‘‘(B) is licensed or regulated by the State in 
which it is located (or, if there is no State law pro-
viding for such licensing and regulation by the State, 
by the municipality or other political subdivision in 
which the facility is located). 
Such term does not include facilities for school-age children 
primarily for use during normal school hours.’’. 
(b) INCREASE IN MAXIMUM MORTGAGE AMOUNT LIMI-
TATION.—Paragraph (2) of section 203(b) of the National 
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Housing Act (12 U.S.C. 1709(b)(2)), as amended by the 
preceding provisions of this Act, is further amended by add-
ing at end the following new undesignated paragraph: 
‘‘Notwithstanding any other provision of this 
paragraph, the amount that may be insured under 
this section may be increased by up to 25 percent if 
such increase is necessary to account for the increased 
cost of the residence due to an increased need of space 
in the residence for locating and operating a child 
care facility (as such term is defined in section 201) 
within the residence, but only if a valid license or cer-
tificate of compliance with regulations described in 
section 201(g)(2) has been issued for such facility as 
of the date of the execution of the mortgage, and only 
if such increase in the amount insured is propor-
tional to the amount of space of such residence that 
will be used for such facility.’’. 
SEC. 13. REHABILITATION LOANS. 
Subsection (k) of section 203 of the National Housing 
Act (12 U.S.C. 1709(k)) is amended— 
(1) in paragraph (1), by striking ‘‘on’’ and all 
that follows through ‘‘1978’’; and 
(2) in paragraph (5)— 
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(A) by striking ‘‘General Insurance Fund’’ 
the first place it appears and inserting ‘‘Mutual 
Mortgage Insurance Fund’’; and 
(B) in the second sentence, by striking the 
comma and all that follows through ‘‘General In-
surance Fund’’. 
SEC. 14. DISCRETIONARY ACTION. 
The National Housing Act is amended— 
(1) in subsection (e) of section 202 (12 U.S.C. 
1708(e))— 
(A) in paragraph (3)(B), by striking ‘‘sec-
tion 202(e) of the National Housing Act’’ and 
inserting ‘‘this subsection’’; and 
(B) by redesignating such subsection as sub-
section (f); 
(2) by striking paragraph (4) of section 203(s) 
(12 U.S.C. 1709(s)(4)) and inserting the following 
new paragraph: 
‘‘(4) the Secretary of Agriculture;’’; and 
(3) by transferring subsection (s) of section 203 
(as amended by paragraph (2) of this section) to sec-
tion 202, inserting such subsection after subsection 
(d) of section 202, and redesignating such subsection 
as subsection (e). 
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SEC. 15. INSURANCE OF CONDOMINIUMS AND MANUFAC-
TURED HOUSING. 
(a) IN GENERAL.—Section 234 of the National Hous-
ing Act (12 U.S.C. 1715y) is amended— 
(1) in subsection (c)— 
(A) in the first sentence— 
(i) by striking ‘‘and’’ before ‘‘(2)’’; and 
(ii) by inserting before the period at 
the end the following: ‘‘, and (3) the project 
has a blanket mortgage insured by the Sec-
retary under subsection (d)’’; and 
(B) in clause (B) of the third sentence, by 
striking ‘‘thirty-five years’’ and inserting ‘‘forty 
years’’; and 
(2) in subsection (g), by striking ‘‘, except that’’ 
and all that follows and inserting a period. 
(b) DEFINITION OF MORTGAGE.—Section 201(a) of the 
National Housing Act (12 U.S.C. 1707(a)) is amended— 
(1) before ‘‘ a first mortgage’’ insert ‘‘(A)’’; 
(2) by striking ‘‘or on a leasehold (1)’’ and in-
serting ‘‘(B) a first mortgage on a leasehold on real 
estate (i)’’; 
(3) by striking ‘‘or (2)’’ and inserting ‘‘, or (ii)’’; 
and 
(4) by inserting before the semicolon the fol-
lowing: ‘‘, or (C) a first mortgage given to secure the 
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unpaid purchase price of a fee interest in, or long- 
term leasehold interest in, real estate consisting of a 
one-family unit in a multifamily project, including a 
project in which the dwelling units are attached, or 
are manufactured housing units, semi-detached, or de-
tached, and an undivided interest in the common 
areas and facilities which serve the project’’. 
(c) DEFINITION OF REAL ESTATE.—Section 201 of the 
National Housing Act (12 U.S.C. 1707), as amended by the 
preceding provisions of this Act, is further amended by add-
ing at the end the following new subsection: 
‘‘(h) The term ‘real estate’ means land and all natural 
resources and structures permanently affixed to the land, 
including residential buildings and stationary manufac-
tured housing. The Secretary may not require, for treatment 
of any land or other property as real estate for purposes 
of this title, that such land or property be treated as real 
estate for purposes of State taxation.’’. 
SEC. 16. 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 provisions 
of the Federal Credit Reform Act of 1990, there is 
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hereby created a Mutual Mortgage Insurance Fund 
(in this title referred to as the ‘Fund’), which shall be 
used by the Secretary to carry out the provisions of 
this title with respect to mortgages insured under sec-
tion 203. The Secretary may enter into commitments 
to guarantee, and may guarantee, such insured mort-
gages. 
‘‘(2) LIMIT ON LOAN GUARANTEES.—The author-
ity of the Secretary to enter into commitments to 
guarantee such insured mortgages shall be effective for 
any fiscal year only to the extent that the aggregate 
original principal loan amount under such mort-
gages, any part of which is guaranteed, does not ex-
ceed the amount specified in appropriations Acts for 
such fiscal year. 
‘‘(3) FIDUCIARY
RESPONSIBILITY.—The Sec-
retary has a responsibility to ensure that the Mutual 
Mortgage Insurance Fund remains financially sound. 
‘‘(4) 
ANNUAL
INDEPENDENT
ACTUARIAL 
STUDY.—The Secretary shall provide for an inde-
pendent actuarial study of the Fund to be conducted 
annually, which shall analyze the financial position 
of the Fund. The Secretary shall submit a report an-
nually to the Congress describing the results of such 
study and assessing the financial status of the Fund. 
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The report shall recommend adjustments to under-
writing standards, program participation, or pre-
miums, if necessary, to ensure that the Fund remains 
financially sound. 
‘‘(5) QUARTERLY REPORTS.—During each fiscal 
year, the Secretary shall submit a report to the Con-
gress for each quarter, which shall specify for mort-
gages that are obligations of the Fund— 
‘‘(A) the cumulative volume of loan guar-
antee commitments that have been made during 
such fiscal year through the end of the quarter 
for which the report is submitted; 
‘‘(B) the types of loans insured, categorized 
by risk; 
‘‘(C) any significant changes between actual 
and projected claim and prepayment activity; 
‘‘(D) projected versus actual loss rates; and 
‘‘(E) updated projections of the annual sub-
sidy rates to ensure that increases in risk to the 
Fund are identified and mitigated by adjust-
ments to underwriting standards, program par-
ticipation, or premiums, and the financial 
soundness of the Fund is maintained. 
The first quarterly report under this paragraph shall 
be submitted on the last day of the first quarter of fis-
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cal 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, pursuant 
to the independent actuarial study of the Fund re-
quired under paragraph (5), the Secretary determines 
that the Fund is not meeting the operational goals es-
tablished under paragraph (8) or there is a substan-
tial probability that the Fund will not maintain its 
established target subsidy rate, the Secretary may ei-
ther make programmatic adjustments under section 
203 as necessary to reduce the risk to the Fund, or 
make appropriate premium adjustments. 
‘‘(7) OPERATIONAL
GOALS.—The operational 
goals for the Fund are— 
‘‘(A) to charge borrowers under loans that 
are obligations of the Fund an appropriate pre-
mium for the risk that such loans pose to the 
Fund; 
‘‘(B) to minimize the default risk to the 
Fund and to homeowners; 
‘‘(C) to curtail the impact of adverse selec-
tion on the Fund; and 
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‘‘(D) to meet the housing needs of the bor-
rowers that the single family mortgage insurance 
program under this title is designed to serve.’’. 
(b) OBLIGATIONS OF FUND.—The National Housing 
Act is amended as follows: 
(1) HOMEOWNERSHIP VOUCHER PROGRAM MORT-
GAGES.—In section 203(v) (12 U.S.C. 1709(v))— 
(A) by striking ‘‘Notwithstanding section 
202 of this title, the’’ and inserting ‘‘The’’; and 
(B) by striking ‘‘General Insurance Fund’’ 
the first place such term appears and all that 
follows and inserting ‘‘Mutual Mortgage Insur-
ance Fund.’’. 
(2) HOME EQUITY CONVERSION MORTGAGES.— 
Section 255(i)(2)(A) of the National Housing Act (12 
U.S.C. 1715z–20(i)(2)(A)) is amended by striking 
‘‘General Insurance Fund’’ and inserting ‘‘Mutual 
Mortgage Insurance Fund’’. 
(c) CONFORMING AMENDMENTS.—The National Hous-
ing Act is amended— 
(1) in section 205 (12 U.S.C. 1711), by striking 
subsections (g) and (h); and 
(2) in section 519(e) (12 U.S.C. 1735c(e)), by 
striking ‘‘203(b)’’ and all that follows through 
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‘‘203(i)’’ and inserting ‘‘203, except as determined by 
the Secretary’’. 
SEC. 17. HAWAIIAN HOME LANDS AND INDIAN RESERVA-
TIONS. 
(a) HAWAIIAN HOME LANDS.—Section 247(c) of the 
National Housing Act (12 U.S.C. 1715z–12) is amended— 
(1) by striking ‘‘General Insurance Fund estab-
lished in section 519’’ and inserting ‘‘Mutual Mort-
gage Insurance Fund’’; and 
(2) in the second sentence, by striking ‘‘(1) all 
references’’ and all that follows through ‘‘and (2)’’. 
(b) INDIAN RESERVATIONS.—Section 248(f) of the Na-
tional Housing Act (12 U.S.C. 1715z–13) is amended— 
(1) by striking ‘‘General Insurance Fund’’ the 
first place it appears and all that follows through 
‘‘519’’ and inserting ‘‘Mutual Mortgage Insurance 
Fund’’; and 
(2) in the second sentence, by striking ‘‘(1) all 
references’’ and all that follows through ‘‘and (2)’’. 
SEC. 18. CONFORMING AND TECHNICAL AMENDMENTS. 
(a) REPEALS.—The following provisions of the Na-
tional Housing Act are repealed: 
(1) Subsection (i) of section 203 (12 U.S.C. 
1709(i)). 
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(2) Subsection (o) of section 203 (12 U.S.C. 
1709(o)). 
(3) Subsection (p) of section 203 (12 U.S.C. 
1709(p)). 
(4) Subsection (q) of section 203 (12 U.S.C. 
1709(q)). 
(5) Section 222 (12 U.S.C. 1715m). 
(6) Section 237 (12 U.S.C. 1715z–2). 
(7) Section 245 (12 U.S.C. 1715z–10). 
(b) DEFINITION OF AREA.—Section 203(u)(2)(A) of 
the National Housing Act (12 U.S.C. 1709(u)(2)(A)) is 
amended by striking ‘‘shall’’ and all that follows and insert-
ing ‘‘means a metropolitan statistical area as established 
by the Office of Management and Budget;’’. 
(c) DEFINITION OF STATE.—Section 201(d) of the Na-
tional Housing Act (12 U.S.C. 1707(d)) is amended by 
striking ‘‘the Trust Territory of the Pacific Islands’’ and 
inserting ‘‘the Commonwealth of the Northern Mariana Is-
lands’’. 
SEC. 19. HOME EQUITY CONVERSION MORTGAGES. 
(a) IN GENERAL.—Section 255 of the National Hous-
ing Act (12 U.S.C. 1715z–20) is amended— 
(1) in subsection (b)(2), insert ‘‘ ‘real estate,’ ’’ 
after ‘‘ ‘mortgagor’,’’; 
(2) in subsection (g)— 
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(A) by striking the first sentence; and 
(B) by striking ‘‘established under section 
203(b)(2)’’ and all that follows through ‘‘located’’ 
and inserting ‘‘limitation established under sec-
tion 305(a)(2) of the Federal Home Loan Mort-
gage Corporation Act for a 1-family residence’’; 
(3) in subsection (i)(1)(C), by striking ‘‘limita-
tions’’ and inserting ‘‘limitation’’; and 
(4) by adding at the end the following new sub-
section: 
‘‘(o) AUTHORITY TO INSURE HOME PURCHASE MORT-
GAGE.— 
‘‘(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 en-
able an elderly mortgagor to purchase a 1- to 4-fam-
ily dwelling in which the mortgagor will occupy or 
occupies one of the units. 
‘‘(2) LIMITATION ON PRINCIPAL OBLIGATION.—A 
home equity conversion mortgage insured pursuant to 
paragraph (1) shall involve a principal obligation 
that does not exceed the dollar amount limitation de-
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termined under section 305(a)(2) of the Federal 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) LIMITATION ON ORIGINATION FEES.—Section 255 
of the National Housing Act (12 U.S.C. 1715z–20), as 
amended by the preceding provisions of this section, is fur-
ther amended— 
(1) by redesignating subsections (k), (l), and (m) 
as subsections (l), (m), and (n), respectively; and 
(2) by inserting after subsection (j) the following 
new subsection: 
‘‘(k) LIMITATION ON ORIGINATION FEES.—The Sec-
retary shall establish limits on the origination fee that may 
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be charged to a mortgagor under a mortgage insured under 
this section, which limitations shall— 
‘‘(1) equal two percent of the original principal 
limit of the mortgage; 
‘‘(2) be subject to a minimum allowable amount; 
‘‘(3) provide that the origination fee may be 
fully financed with the mortgage; and 
‘‘(4) include any fees paid to correspondent 
mortgagees approved by the Secretary or to mortgage 
brokers.’’. 
(d) 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 insur-
ance of home equity conversion mortgages to analyze and 
determine the effects of reducing the amounts of such pre-
miums from the amounts charged as of the date of the enact-
ment of this Act on (1) costs to mortgagors, and (2) the 
financial soundness of the program. Not later than the expi-
ration of the 12-month period beginning on the date of the 
enactment of this Act, the Secretary shall submit a report 
to the Congress setting forth the results and conclusions of 
the study. 
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SEC. 20. PARTICIPATION OF MORTGAGE BROKERS AND 
CORRESPONDENT LENDERS. 
(a) IN GENERAL.— 
(1) DEFINITIONS.— 
(A) IN GENERAL.—Section 201 of the Na-
tional Housing Act (12 U.S.C. 1707), as amend-
ed by the preceding provisions of this Act, is fur-
ther amended— 
(i) by striking ‘‘As used in section 203 
of this title—’’ and inserting ‘‘As used in 
this title and for purposes of participation 
in insurance programs under this title, ex-
cept as specifically provided otherwise, the 
following definitions shall apply:’’; 
(ii) by striking subsection (b) and in-
serting the following: 
‘‘(2) The term ‘mortgagee’ means any of the fol-
lowing entities, and its successors and assigns, to the 
extent such entity is approved by the Secretary: 
‘‘(A) QUALIFICATION
BY
AUDIT
AND
NET 
WORTH.—A lender, or mortgage broker, or cor-
respondent lender, who— 
‘‘(i) makes, underwrites, and services 
mortgages; 
‘‘(ii) submits to the Secretary such fi-
nancial audits performed in accordance 
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with the standards for financial audits of 
the Government Auditing Standards issued 
by the Comptroller General of the United 
States; 
‘‘(iii) meet the minimum net worth re-
quirement that the Secretary shall establish; 
and 
‘‘(iv) complies with such other require-
ments as the Secretary may establish. 
‘‘(B) QUALIFICATION
OF
CORRESPONDENT 
LENDERS BY SURETY BOND.—Except as provided 
in subparagraph (D), a correspondent lender 
who— 
‘‘(i) closes a mortgage in its name but 
does not underwrite or service the mortgage; 
‘‘(ii) posts a surety bond, in lieu of 
any requirement to provide audited finan-
cial statements or meet a minimum net 
worth requirement, in— 
‘‘(I) a form satisfactory to the 
Secretary; and 
‘‘(II) an amount of $75,000, as 
such amount is adjusted annually by 
the Secretary (as determined under 
regulations of the Secretary) by the 
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change for such year in the Consumer 
Price Index for All Urban Consumers 
published monthly by the Bureau of 
Labor Statistics of the Department of 
Labor; and 
‘‘(iii) complies with such other require-
ments as the Secretary may establish. 
‘‘(C) QUALIFICATION OF BROKERS BY SUR-
ETY
BOND.—Except as provided in subpara-
graph (D), a mortgage broker who— 
‘‘(i) closes the mortgage in the name of 
the lender and does not make, underwrite, 
or service the mortgage; 
‘‘(ii) is licensed, under the laws of the 
State in which the property that is subject 
to the mortgage is located, to act as a mort-
gage broker in such State; 
‘‘(iii) posts a surety bond in accord-
ance with the requirements of subparagraph 
(B)(ii); and 
‘‘(iv) complies with such other require-
ments as the Secretary may establish. 
‘‘(D) CONDITIONS FOR CONTINUED APPLICA-
BILITY.—(i) Subparagraphs (B) and (C) shall 
continue to apply after the expiration of the 5- 
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year period beginning on the date of the enact-
ment of the Expanding American Homeowner-
ship Act of 2007 only if, after the expiration of 
the 4-year period beginning upon such date of 
enactment and taking into consideration the re-
port submitted in accordance with section 19(b) 
of such Act, the Secretary— 
‘‘(I) makes a determination that such 
subparagraphs provide protection to mort-
gage insurance funds for mortgages insured 
under this title that are comparable to the 
protection provided by the requirements for 
mortgagees under this title as in effect im-
mediately before the enactment of such Act; 
and 
‘‘(II) publishes in the Federal Register 
a notice of such determination and an order 
extending the applicability of such subpara-
graphs. 
‘‘(ii) If, taking into consideration such re-
port, the Secretary makes a determination after 
the expiration of such 4-year period that sub-
paragraphs (B) and (C) do not provide protec-
tion as referred to in clause (i) of this subpara-
graph, the Secretary may, by order published in 
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the Federal Register, provide for the participa-
tion, after the expiration of the 5-year period re-
ferred to in clause (i), of correspondent lenders 
and mortgage brokers as mortgagees in the insur-
ance programs under this title in accordance 
with subparagraphs (B) and (C) as modified by 
the Secretary as the Secretary considers appro-
priate to provide such protection. 
‘‘(E) ADDITIONAL MORTGAGE BROKER RE-
QUIREMENTS.— 
‘‘(i) In addition to the requirements 
under subparagraphs (A) and (C) and to 
duties imposed under other statutes or com-
mon law, to be eligible as a mortgagee 
under this section, a broker shall— 
‘‘(I) safeguard and account for 
any money handled for the borrower; 
‘‘(II) follow reasonable and lawful 
instructions from the borrower; and 
‘‘(III) act with reasonable skill, 
care, and diligence. 
‘‘(ii) For purposes of this subpara-
graph, a loan correspondent shall be consid-
ered to be a mortgage broker. 
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‘‘(iii) The duties and standards of care 
created in this subparagraph shall not be 
waived or modified. 
‘‘(iv) Any broker found by the Sec-
retary to have violated the requirements of 
this subparagraph may not originate mort-
gage loans insured under this title. 
‘‘(3) The term ‘mortgagor’ includes the original 
borrower under a mortgage and the successors and as-
signs of the original borrower.’’; and 
(iii) by redesignating subsections (a), 
(c), (d), (e), (f), (g), and (h) as paragraphs 
(1), (4), (5), (6), (7), (8), and (9), respec-
tively, and indenting such paragraphs two 
ems so as to align the left margins of such 
paragraphs with the left margins of para-
graphs (2) and (3) (as added by clause (ii) 
of this subparagraph). 
(B) 
MORTGAGEE
REVIEW.—Section 
202(c)(7) of the National Housing Act (12 
U.S.C. 1708(c)(7)) is amended— 
(i) in subparagraph (A), by inserting 
‘‘, as defined in section 201,’’ after ‘‘mort-
gagee’’; 
(ii) by striking subparagraph (B); and 
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(iii) by redesignating subparagraphs 
(C) and (D) as subparagraphs (B) and (C), 
respectively. 
(C) MULTIFAMILY RENTAL HOUSING INSUR-
ANCE.—Section 207(a)(2) of the National Hous-
ing Act (12 U.S.C. 1713(a)(2)) is amended by 
striking ‘‘means the original lender under a 
mortgage, and its successors and assigns, and’’ 
and inserting ‘‘has the meaning given such term 
in section 201, except that such term also’’. 
(D) WAR
HOUSING
INSURANCE.—Section 
601(b) of the National Housing Act (12 U.S.C. 
1736(b)) is amended by striking ‘‘includes the 
original lender under a mortgage, and his suc-
cessors and assigns approved by the Secretary’’ 
and inserting ‘‘has the meaning given such term 
in section 201’’. 
(E) ARMED SERVICES HOUSING MORTGAGE 
INSURANCE.—Section 801(b) of the National 
Housing Act (12 U.S.C. 1748(b)) is amended by 
striking ‘‘includes the original lender under a 
mortgage, and his successors and assigns ap-
proved by the Secretary’’ and inserting ‘‘has the 
meaning given such term in section 201’’. 
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(F) GROUP
PRACTICE
FACILITIES
MORT-
GAGE INSURANCE.—Section 1106(8) of the Na-
tional Housing Act (12 U.S.C. 1749aaa–5(8)) is 
amended by striking ‘‘means the original lender 
under a mortgage, and his or its successors and 
assigns, and’’ and inserting ‘‘has the meaning 
given such term in section 201, except that such 
term also’’. 
(2) ELIGIBILITY FOR INSURANCE.— 
(A) TITLE i.—Paragraph (1) of section 8(b) 
of the National Housing Act (12 U.S.C. 
1706c(b)(1)) is amended— 
(i) by striking ‘‘, and be held by,’’; and 
(ii) by striking ‘‘as responsible and 
able to service the mortgage properly’’. 
(B) SINGLE
FAMILY
HOUSING
MORTGAGE 
INSURANCE.—Paragraph (1) of section 203(b) of 
the National Housing Act (12 U.S.C. 1709(b)(1)) 
is amended— 
(i) by striking ‘‘, and be held by,’’; and 
(ii) by striking ‘‘as responsible and 
able to service the mortgage properly’’. 
(C) SECTION 221 MORTGAGE INSURANCE.— 
Paragraph (1) of section 221(d) of the National 
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Housing Act (12 U.S.C. 1715l(d)(1)) is amend-
ed— 
(i) by striking ‘‘and be held by’’; and 
(ii) by striking ‘‘as responsible and 
able to service the mortgage properly’’. 
(D) HOME EQUITY CONVERSION MORTGAGE 
INSURANCE.—Paragraph (1) of section 255(d) of 
the National Housing Act (12 U.S.C. 1715z– 
20(d)(1)) is amended by striking ‘‘as responsible 
and able to service the mortgage properly’’. 
(E) WAR
HOUSING
MORTGAGE
INSUR-
ANCE.—Paragraph (1) of section 603(b) of the 
National Housing Act (12 U.S.C. 1738(b)(1)) is 
amended— 
(i) by striking ‘‘, and be held by,’’; and 
(ii) by striking ‘‘as responsible and 
able to service the mortgage properly’’. 
(F) WAR HOUSING MORTGAGE INSURANCE 
FOR LARGE-SCALE HOUSING PROJECTS.—Para-
graph (1) of section 611(b) of the National Hous-
ing Act (12 U.S.C. 1746(b)(1)) is amended— 
(i) by striking ‘‘and be held by’’; and 
(ii) by striking ‘‘as responsible and 
able to service the mortgage properly’’. 
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(G) GROUP PRACTICE FACILITY MORTGAGE 
INSURANCE.—Section 1101(b)(2) of the National 
Housing Act (12 U.S.C. 1749aaa(b)(2)) is 
amended— 
(i) by striking ‘‘and held by’’; and 
(ii) by striking ‘‘as responsible and 
able to service the mortgage properly’’. 
(H) NATIONAL DEFENSE HOUSING INSUR-
ANCE.—Paragraph (1) of section 903(b) of the 
National Housing Act (12 U.S.C. 1750b(b)(1)) is 
amended— 
(i) by striking ‘‘, and be held by,’’; and 
(ii) by striking ‘‘as responsible and 
able to service the mortgage properly’’. 
(I) CONTINGENT REPEAL.—Unless there is 
published in the Federal Register, before the ex-
piration of the 5-year period beginning on the 
date of the enactment of this Act, an order under 
clause (i) or (ii) of section 201(2)(D) of the Na-
tional Housing Act (12 U.S.C. 1707(2)(D)), as 
added by paragraph (1)(A)(2) of this subsection, 
upon the expiration of such period the provisions 
of such Act amended by this paragraph are 
amended to read as such provisions would be in 
effect upon such expiration if this Act had not 
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been enacted (taking into consideration any 
amendments, after such date of enactment, to 
such provisions other than under this Act). 
(b) GAO STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study, upon the expira-
tion of the 42-month period beginning on the date of 
the enactment of this Act, regarding the effect of the 
amendments made by subsection (a), which shall ana-
lyze and determine— 
(A) the extent to which such amendments 
have resulted in increased participation, by 
mortgage brokers and correspondent lenders, in 
the mortgage insurance programs under the Na-
tional Housing Act, as measured by the number 
and 
amounts 
of 
such 
insured 
mortgages, 
disaggregated by the States in which the prop-
erties subject to such mortgages are located; 
(B) with respect to mortgages insured under 
such Act, a comparison in the numbers and rate 
of defaults, foreclosures, and mortgage insurance 
claims on such mortgages originated by mortgage 
brokers and correspondent lenders authorized to 
participate in the programs under such Act pur-
suant to the amendments made by subsection (a) 
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to such numbers and rates on such mortgages 
originated by lenders who would be authorized to 
participate in such programs notwithstanding 
such amendments; 
(C) any impact of such amendments on the 
costs to the Secretary of Housing and Urban De-
velopment of administering the mortgage insur-
ance programs under such title; and 
(D) the extent and effectiveness of the super-
vision and enforcement, by the Secretary, of the 
additional authority provided under the amend-
ments made by subsection (a). 
(2) REPORT.—Not later than the expiration of 4- 
year period beginning on the date of the enactment of 
this Act, the Comptroller General shall submit a re-
port to the Congress and the Secretary of Housing 
and Urban Development setting forth the results and 
conclusions of the study conducted pursuant to para-
graph (1). 
SEC. 21. 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-
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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 Appropria-
tions 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 declaration, 
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 Mortgage Cor-
poration 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, appraisal, 
inspection and other fees in connection with the mort-
gage as approved by the Secretary.’’. 
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SEC. 22. FAILURE TO PAY AMOUNTS FROM ESCROW AC-
COUNTS FOR SINGLE FAMILY MORTGAGES. 
(a) PENALTIES.—Section 536 of the National Housing 
Act (12 U.S.C. 1735f–14) is amended— 
(1) in subsection (a)(1), by inserting ‘‘servicers 
(including escrow account servicers),’’ after ‘‘apprais-
ers,’’; 
(2) in subsection (b)(1)— 
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘or other participant referred 
to in subsection (a),’’ after ‘‘lender,’’ ; and 
(B) by inserting at the end the following 
new subparagraphs: 
‘‘(K) In the case of a mortgage for a 1- to 
4-family residence insured under title II that re-
quires the mortgagor to make payments to the 
mortgagee or other servicer of the mortgage for 
deposit into an escrow account for the purpose of 
assuring payment of taxes, insurance premiums, 
and other charges with respect to the property, 
failure on the part of the servicer to make any 
such payment from the escrow account by the 
deadline to avoid a penalty with respect to such 
payment provided for in the mortgage, unless the 
servicer was not provided notice of such deadline. 
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‘‘(L) In the case of any failure to make any 
payment as described in subparagraph (K), sub-
mitting any information to a consumer report-
ing agency (as such term is defined in section 
603(f) of the Fair Credit Reporting Act (15 
U.S.C. 1681a(f))) regarding such failure that is 
adverse to the credit rating or interest of the 
mortgagor.’’; and 
(3) in subsection (c)(3), by adding at the end the 
following: ‘‘In the case of any failure to make a pay-
ment described in subsection (b)(1)(K) for which the 
servicer fails to reimburse the mortgagor (A) before 
the expiration of the 60-day period beginning on the 
deadline to avoid a penalty with respect to such pay-
ment, in the sum of the amount not paid from the es-
crow account by such deadline and the amount of any 
penalties accruing to the mortgagor that are attrib-
utable to such failure, or (B) in the amount of any 
attorneys fees incurred by the mortgagor and attrib-
utable to such failure, the Secretary shall increase the 
amount of the penalty under subsection (a) for any 
such failure to reimburse, unless the Secretary deter-
mines there are mitigating circumstances.’’. 
(b) PROHIBITION ON SUBMISSION OF INFORMATION BY 
HUD.—Title II of the National Housing Act (12 U.S.C. 
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1707 et seq.) is amended by adding at the end the following 
new section: 
‘‘SEC. 257. PROHIBITION REGARDING FAILURE ON PART OF 
SERVICER TO MAKE ESCROW PAYMENTS. 
‘‘In the case of any failure to make any payment as 
described in section 536(b)(1)(K), the Secretary may not 
submit any information to a consumer reporting agency (as 
such term is defined in section 603(f) of the Fair Credit 
Reporting Act (15 U.S.C. 1681a(f))) regarding such failure 
that is adverse to the credit rating or interest of the mort-
gagor.’’. 
SEC. 23. ACCEPTABLE IDENTIFICATION FOR FHA MORTGA-
GORS. 
(a) IN GENERAL.—Title II of the National Housing 
Act is amended by inserting after section 209 (12 U.S.C. 
1715) the following new section: 
‘‘SEC. 210. FORMS OF ACCEPTABLE IDENTIFICATION. 
‘‘The Secretary may not insure a mortgage under any 
provision of this title unless the mortgagor under the mort-
gage provides personal identification in one of the following 
forms: 
‘‘(1) SOCIAL SECURITY CARD WITH PHOTO IDEN-
TIFICATION CARD OR REAL ID ACT IDENTIFICATION.— 
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‘‘(A) A social security card accompanied by 
a photo identification card issued by the Federal 
Government or a State Government; or 
‘‘(B) A driver’s license or identification 
card issued by a State in the case of a State that 
is in compliance with title II of the REAL ID 
Act of 2005 (title II of division B of Public Law 
109-13; 49 U.S.C. 30301 note). 
‘‘(2) PASSPORT.—A passport issued by the 
United States or a foreign government. 
‘‘(3) USCIS PHOTO IDENTIFICATION CARD.—A 
photo identification card issued by the Secretary of 
Homeland Security (acting through the Director of 
the United States Citizenship and Immigration Serv-
ices).’’. 
(b) EFFECTIVE DATE.—The requirements of section 
210 of the National Housing Act (as added by subsection 
(a) of this section) shall take effect six months after the date 
of the enactment of this Act. 
SEC. 24. PILOT PROGRAM FOR AUTOMATED PROCESS FOR 
BORROWERS WITHOUT SUFFICIENT CREDIT 
HISTORY. 
(a) ESTABLISHMENT.—Title II of the National Hous-
ing Act (12 U.S.C. 1707 et seq.), as amended by the pre-
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ceding provisions of this Act, is further amended by adding 
at the end the following new section: 
‘‘SEC. 258. PILOT PROGRAM FOR AUTOMATED PROCESS FOR 
BORROWERS WITHOUT SUFFICIENT CREDIT 
HISTORY. 
‘‘(a) ESTABLISHMENT.—The Secretary shall carry out 
a pilot program to establish, and make available to mortga-
gees, an automated process for providing alternative credit 
rating information for mortgagors and prospective mortga-
gors under mortgages on 1- to 4-family residences to be in-
sured under this title who have insufficient credit histories 
for determining their creditworthiness. Such alternative 
credit rating information may include rent, utilities, and 
insurance payment histories, and such other information 
as the Secretary considers appropriate. 
‘‘(b) SCOPE.—The Secretary may carry out the pilot 
program under this section on a limited basis or scope, and 
may consider limiting the program— 
‘‘(1) to first-time homebuyers; or 
‘‘(2) metropolitan statistical areas significantly 
impacted by subprime lending. 
‘‘(c) LIMITATION.—In any fiscal year, the aggregate 
number of mortgages insured pursuant to the automated 
process established under this section may not exceed 5 per-
cent of the aggregate number of mortgages for 1- to 4-family 
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residences insured by the Secretary under this title during 
the preceding fiscal year. 
‘‘(d) SUNSET.—After the expiration of the 5-year pe-
riod beginning on the date of the enactment of the Expand-
ing American Homeownership Act of 2007, the Secretary 
may not enter into any new commitment to insure any 
mortgage, or newly insure any mortgage, pursuant to the 
automated process established under this section.’’. 
(b) GAO REPORT.—Not later than the expiration of 
the two-year period beginning on the date of the enactment 
of this Act, the Comptroller General of the United States 
shall submit to the Congress a report identifying the num-
ber of additional mortgagors served using the automated 
process established pursuant to section 258 of the National 
Housing Act (as added by the amendment made by sub-
section (a) of this section) and the impact of such process 
and the insurance of mortgages pursuant to such process 
on the safety and soundness of the insurance funds under 
the National Housing Act of which such mortgages are obli-
gations. 
SEC. 25. SENSE OF CONGRESS REGARDING TECHNOLOGY 
FOR FINANCIAL SYSTEMS. 
(a) CONGRESSIONAL FINDINGS.—The Congress finds 
the following: 
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(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 Adminis-
tration’s Financial Statements for Fiscal Years 2004 
and 2003’’, conducted by the Inspector General of the 
Department of Housing and Urban Development re-
ported as a material weakness that ‘‘HUD/FHA’s 
automated data processing [ADP] system environ-
ment must be enhanced to more effectively support 
FHA’s business and budget processes’’. 
(3) Existing technology systems for the FHA 
program have not been updated to meet the latest 
standards of the Mortgage Industry Standards Main-
tenance Organization and have numerous deficiencies 
that lenders have outlined. 
(4) Improvements to technology used in the FHA 
program will— 
(A) allow the FHA program to improve the 
management of the FHA portfolio, garner great-
er efficiencies in its operations, and lower costs 
across the program; 
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