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(3) by striking the last undesignated paragraph 
(relating to counseling with respect to the respon-
sibilities and financial management involved in 
homeownership). 
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. CASH INVESTMENT REQUIREMENT. 
Paragraph (9) of section 203(b) of the National 
Housing Act (12 U.S.C. 1709(b)(9) is amended by strik-
ing the paragraph designation and all that follows through 
‘‘Provided further, That for’’ and inserting the following: 
‘‘(9) Be executed by a mortgagor who shall 
have paid on account of the property, in cash or its 
equivalent, an amount, if any, as the Secretary may 
determine based on factors determined by the Sec-
retary and commensurate with the likelihood of de-
fault. For’’. 
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SEC. 6. TEMPORARY REINSTATEMENT OF DOWNPAYMENT 
REQUIREMENT IN EVENT OF INCREASED DE-
FAULTS. 
Section 203(b) of the National Housing Act (12 
U.S.C. 1709(b)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(10) EFFECT OF INCREASED DEFAULTS.— 
‘‘(A) ANNUAL
DETERMINATION.—If, for 
any calendar year described in subparagraph 
(B)(i), the Secretary determines, pursuant such 
subparagraph, that— 
‘‘(i) the ratio of the number of mort-
gage insurance claims made during such 
calendar year on mortgages insured under 
this section to the total number of mort-
gages having such insurance in force dur-
ing such calendar year exceeds, by 25 per-
cent or more, such ratio for the 12-month 
period ending on the effective date of this 
Act, or 
‘‘(ii) the ratio of the aggregate re-
maining principal obligation under mort-
gages insured under this section for which 
an insurance claim is made during such 
calendar year to the average, for such cal-
endar year, of the aggregate outstanding 
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principal obligation under mortgages so in-
sured exceeds, by 25 percent or more, such 
ratio for the 12-month period ending on 
such effective date, 
during the 90-day period beginning upon the 
submission of the report for such calendar year 
under subparagraph (B)(ii) containing such de-
termination, the Secretary may insure a mort-
gage under this section only pursuant to the re-
quirement under subparagraph (C), and the 
Secretary shall, not later than 60 days after 
submission of the report containing such deter-
mination, submit a report to the Congress 
under subparagraph (D) regarding mortgage 
insurance claims during such calendar year. 
‘‘(B) 5 YEARS
OF
ANNUAL
DETERMINA-
TIONS.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall, for each of the 5 calendar years com-
mencing after the date of the enactment of 
this Act, compare the ratios referred to in 
subparagraph (A) and make a determina-
tion under such subparagraph. 
‘‘(ii) 
ANNUAL
REPORT
ON
DE-
FAULTS.—Not later than 90 days after the 
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conclusion of each of the calendar years 
described in clause (i), the Secretary shall 
submit a report to the Congress containing 
the determination of the Secretary under 
such clause with respect to such calendar 
year and setting forth the ratios referred 
to in such clause for such calendar year. 
‘‘(C) REINSTATEMENT OF DOWNPAYMENT 
REQUIREMENT.—The requirement under this 
subparagraph is that paragraph (9) of this sub-
section shall apply as such paragraph was in ef-
fect on the day before the effective date of the 
Expanding American Homeownership Act of 
2006. 
‘‘(D) REPORTS
REGARDING
INCREASED 
DEFAULT RATE.—A report under this subpara-
graph, as required under subparagraph (A), 
shall contain— 
‘‘(i) an analysis of mortgage insurance 
claims, made during the calendar year for 
which the report is submitted, on mort-
gages insured under this section; 
‘‘(ii) an analysis of the reasons for the 
increase during such calendar year in the 
applicable ratio or ratios under subpara-
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graph (A), including an analysis of the ex-
tent to which such increase is attributable 
to the amendments made by the Expand-
ing American Homeownership Act of 2006; 
‘‘(iii) the effect of such increase on 
the Mutual Mortgage Insurance Fund; 
‘‘(iv) recommendations regarding— 
‘‘(I) 
whether 
the 
Congress 
should, to respond to such increase, 
take legislative action (aa) to apply 
paragraph (9) of this subsection as 
such paragraph was in effect on the 
day before the effective date of Ex-
panding 
American 
Homeownership 
Act of 2006, (bb) to apply paragraph 
(2)(A)(ii) by substituting ‘87 percent 
of the dollar amount limitation’ for 
‘the dollar amount limitation’, or (cc) 
both; and 
‘‘(II) whether such provisions 
should be temporary or permanent, 
and, if temporary, the period during 
which such provisions should apply; 
and 
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‘‘(v) recommendations regarding any 
other administrative, regulatory, legislative, 
or other actions that should be taken to re-
spond to such increase. 
‘‘(E) DEFAULTS IN DISASTER AREAS NOT 
COUNTED FOR 24 MONTHS.—In determining the 
number of mortgage insurance claims made and 
the aggregate remaining principal obligation 
under mortgages for which an insurance claim 
is made for purposes of subparagraph (A) for 
any calendar year, the Secretary shall not take 
into consideration any claim made during such 
period on a mortgage on any property that is 
located in an area for which a major disaster 
was declared pursuant to the Robert T. Staf-
ford Disaster Relief and Emergency Assistance 
Act if such claim was made during the 24- 
month period beginning upon such declara-
tion.’’. 
SEC. 7. MORTGAGE INSURANCE PREMIUMS. 
Section 203(c) of the National Housing Act (12 
U.S.C. 1709(c)) is amended— 
(1) in paragraph (2), in the matter preceding 
subparagraph (A), by striking ‘‘Notwithstanding’’ 
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and inserting ‘‘Except as provided in paragraph (3) 
and notwithstanding’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(3) FLEXIBLE RISK-BASED PREMIUMS.— 
‘‘(A) IN GENERAL.—For any mortgage insured 
by the Secretary under this title that is secured by 
a 1- to 4-family dwelling and for which the loan ap-
plication is received by the mortgagee on or after 
October 1, 2006, 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, sub-
ject to the limitations in subparagraphs (B) and (C). 
The rate of 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 
subparagraph but only to the extent that such 
change is not applied to any mortgage already exe-
cuted. 
‘‘(B) 
MAXIMUM
UP-FRONT
PREMIUM 
AMOUNTS.—For any mortgage insured under a pre-
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mium structure established pursuant to this para-
graph, the amount of any single premium payment 
authorized by subparagraph (A), if established and 
collected prior to the insurance of the mortgage, 
may not exceed the following amount: 
‘‘(i) Except as provided in clauses (ii) and 
(iii), 3.0 percent of the amount of the original 
insured principal obligation of the mortgage. 
‘‘(ii) If the mortgagor has a credit score 
equivalent to a FICO score of 560 or more and 
has 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), 2.25 per-
cent of the original insured principal obligation 
of the mortgage. 
‘‘(iii) If the annual premium payment is 
equal to the maximum amount allowable under 
clause (i) of subparagraph (C), 1.5 percent of 
the amount of the original insured principal ob-
ligation of the mortgage. 
‘‘(C) MAXIMUM ANNUAL PREMIUM AMOUNTS.— 
For any mortgage insured under a premium struc-
ture established pursuant to this paragraph, the 
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amount of any annual premium payment collected 
may not exceed the following amount: 
‘‘(i) Except as provided in clauses (ii) and 
(iii), 2.0 percent of the remaining insured prin-
cipal obligation of the mortgage. 
‘‘(ii) If the mortgagor is a mortgagor de-
scribed in clause (ii) of subparagraph (B), 0.55 
percent of the remaining insured principal obli-
gation of the mortgage. 
‘‘(iii) If the single premium payment col-
lected at the time of insurance is equal to max-
imum amount allowable under clause (i) of sub-
paragraph (B), 1.0 percent of the remaining in-
sured principal obligation of the mortgage. 
‘‘(D) PAYMENT
INCENTIVE.—Notwithstanding 
subparagraph (C), for any mortgage insured under 
a premium structure established pursuant to this 
paragraph and for which the annual premium pay-
ment exceeds the amount set forth in subparagraph 
(C)(ii), if during the 5-year period beginning upon 
the time of insurance all mortgage insurance pre-
miums for such mortgage have been paid on a timely 
basis, upon the expiration of such period the Sec-
retary shall reduce the amount of the annual pre-
mium payments due thereafter under such mortgage 
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to an amount equal to the amount set forth in sub-
paragraph (C)(ii). 
‘‘(E) 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. 
‘‘(F) CONSIDERATIONS FOR PREMIUM STRUC-
TURE.—When establishing a premium structure 
under subparagraph (A) or when changing such a 
premium structure, the Secretary shall consider the 
following: 
‘‘(i) The effect of the proposed premium 
structure on the Secretary’s ability to meet the 
operational goals of the Mutual Mortgage In-
surance Fund as provided in section 202(a). 
‘‘(ii) Underwriting variables. 
‘‘(iii) The extent to which new pricing 
under the proposed premium structure has po-
tential for acceptance in the private market. 
‘‘(iv) The administrative capability of the 
Secretary to administer the proposed premium 
structure. 
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‘‘(v) The effect of the proposed premium 
structure on the Secretary’s ability to maintain 
the availability of mortgage credit and provide 
stability to mortgage markets.’’. 
SEC. 8. 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. 9. 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 
subsection (f); 
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(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. 10. 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 
(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. 
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(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. 11. 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, 
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 
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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 
Fund. The report shall recommend adjustments to 
underwriting standards, program participation, or 
premiums, if necessary, to ensure that the Fund re-
mains financially sound. 
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‘‘(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. 
The first quarterly report under this paragraph shall 
be submitted on the last day of the first quarter of 
fiscal year 2007, or upon the expiration of the 90- 
day period beginning on the date of the enactment 
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of the Expanding American Homeownership Act of 
2006, 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; 
‘‘(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-
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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— 
(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. 12. 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)’’. 
SEC. 13. 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 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’’. 
SEC. 14. 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 
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