IB 
Union Calendar No. 340 
109TH CONGRESS 
2D SESSION 
H. R. 5121 
[Report No. 109–589] 
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 
APRIL 6, 2006 
Mr. NEY (for himself, Ms. WATERS, Mr. GARY G. MILLER of California, and 
Mr. TIBERI) introduced the following bill; which was referred to the Com-
mittee on Financial Services 
JULY 20, 2006 
Additional sponsors: Mr. SHAYS, Mr. WYNN, Ms. HARRIS, Mr. HINOJOSA, 
Mrs. MALONEY, Mr. PAYNE, Mr. MARCHANT, Mr. CLAY, Mrs. DRAKE, 
Mr. MILLER of North Carolina, Mr. LINCOLN DIAZ-BALART of Florida, 
Mr. ENGLISH of Pennsylvania, Mr. MARIO DIAZ-BALART of Florida, Mr. 
MCKEON, Mr. DREIER, Mr. CALVERT, Mr. RADANOVICH, Mr. CAMPBELL 
of California, Mr. ROHRABACHER, Mr. FORTUN˜O, Mrs. CAPITO, Ms. 
GINNY BROWN-WAITE of Florida, Mr. ISRAEL, Mr. PEARCE, Mr. 
LATOURETTE, Mr. ROSS, Mr. DAVIS of Kentucky, Mr. FOLEY, Mr. POR-
TER, Mr. RENZI, Mr. NEUGEBAUER, Mrs. JO ANN DAVIS of Virginia, Mr. 
ANDREWS, Mr. SANDERS, Ms. PRYCE of Ohio, Mr. FEENEY, Mr. SES-
SIONS, Mr. GOODE, Mr. MCHUGH, Mr. RAMSTAD, Mr. MCGOVERN, Mr. 
AL GREEN of Texas, Mr. WELDON of Pennsylvania, Mrs. BIGGERT, Ms. 
CARSON, Mr. MICA, Ms. MATSUI, Mr. PLATTS, Mr. CLEAVER, Mr. SIM-
MONS, Mr. CASE, Mr. BACHUS, Ms. MCKINNEY, Mr. BACA, Mr. 
GILLMOR, Mr. POMBO, Mr. BURGESS, Mr. LUCAS, Mr. BRADY of Penn-
sylvania, Mr. SCOTT of Georgia, Mr. CAPUANO, Ms. HART, Ms. BERK-
LEY, Mr. DAVIS of Alabama, Mr. OTTER, Mr. CLYBURN, Mr. FOSSELLA, 
Mr. ROTHMAN, Mr. DAVIS of Tennessee, Mr. LARSEN of Washington, 
Mrs. BLACKBURN, Mr. BOEHLERT, Mr. KLINE, Mr. CUMMINGS, Ms. 
JACKSON-LEE of Texas, Mr. FITZPATRICK of Pennsylvania, Mr. OWENS, 
Mrs. CHRISTENSEN, Ms. MILLENDER-MCDONALD, Mr. DOOLITTLE, Mr. 
TOWNS, Mr. JEFFERSON, Mr. MEEKS of New York, Mr. FATTAH, Mr. 
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HASTINGS of Florida, Mr. RUSH, Mr. MEEK of Florida, Mr. CONYERS, 
Mr. REYNOLDS, Mr. RANGEL, Ms. NORTON, Mr. DAVIS of Illinois, Mr. 
PICKERING, Mr. BROWN of Ohio, Mr. HIGGINS, Mr. PASCRELL, Mr. 
THOMPSON of Mississippi, Mr. BISHOP of Georgia, Mr. SAXTON, Mr. 
ENGEL, Mr. SWEENEY, Mr. FORD, and Mrs. NAPOLITANO 
JULY 20, 2006 
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 April 6, 2006] 
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 ‘‘Ex-
panding American Homeownership Act of 2006’’. 
(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. Cash investment requirement. 
Sec. 6. Mortgage insurance premiums. 
Sec. 7. Rehabilitation loans. 
Sec. 8. Discretionary action. 
Sec. 9. Insurance of condominiums. 
Sec. 10. Mutual Mortgage Insurance Fund. 
Sec. 11. Hawaiian home lands and Indian reservations. 
Sec. 12. Conforming and technical amendments. 
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Sec. 13. Home equity conversion mortgages. 
Sec. 14. Conforming loan limit in disaster areas. 
Sec. 15. Participation of mortgage brokers and correspondent lenders. 
Sec. 16. Sense of Congress regarding technology for financial systems. 
Sec. 17. Savings provision. 
Sec. 18. 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 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 
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viable credit enhancer and was therefore instrumental 
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 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. 
Paragraph (2) of section 203(b) of the National Hous-
ing Act (12 U.S.C. 1709(b)(2)) is amended— 
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(1) by striking subparagraphs (A) and (B) and 
inserting the following new subparagraphs: 
‘‘(A) not to exceed the lesser of— 
‘‘(i) in the case of a 1-family residence, 
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 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-
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