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(B) by striking ‘‘established under section 
203(b)(2)’’ and all that follows through ‘‘lo-
cated’’ and inserting ‘‘limitation established 
under section 305(a)(2) of the Federal Home 
Loan Mortgage Corporation Act for a 1-family 
residence’’; 
(2) in subsection (i)(1)(C), by striking ‘‘limita-
tions’’ and inserting ‘‘limitation’’; and 
(3) by adding at the end the following new sub-
section: 
‘‘(n) AUTHORITY
TO
INSURE
HOME
PURCHASE 
MORTGAGE.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision in this section, the Secretary may insure, 
upon application by a mortgagee, a home equity con-
version mortgage upon such terms and conditions as 
the Secretary may prescribe, when the primary pur-
pose of the home equity conversion mortgage is to 
enable an elderly mortgagor to purchase a 1-to 4 
family dwelling in which the mortgagor will occupy 
or occupies one of the units. 
‘‘(2) LIMITATION ON PRINCIPAL OBLIGATION.— 
A home equity conversion mortgage insured pursu-
ant to paragraph (1) shall involve a principal obliga-
tion that does not exceed the dollar amount limita-
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tion determined under section 305(a)(2) of the Fed-
eral Home Loan Mortgage Corporation Act for a 
residence of the applicable size.’’. 
(b) MORTGAGES
FOR COOPERATIVES.—Subsection 
(b) of section 255 of the National Housing Act (12 U.S.C. 
1715z-20(b)) is amended— 
(1) in paragraph (4)— 
(A) by inserting ‘‘a first or subordinate 
mortgage or lien’’ before ‘‘on all stock’’; 
(B) by inserting ‘‘unit’’ after ‘‘dwelling’’; 
and 
(C) by inserting ‘‘a first mortgage or first 
lien’’ before ‘‘on a leasehold’’; and 
(2) in paragraph (5), by inserting ‘‘a first or 
subordinate lien on’’ before ‘‘all stock’’. 
(c) STUDY REGARDING MORTGAGE INSURANCE PRE-
MIUMS.—The Secretary of Housing and Urban Develop-
ment shall conduct a study regarding mortgage insurance 
premiums charged under the program under section 255 
of the National Housing Act (12 U.S.C. 1715z-20) for in-
surance of home equity conversion mortgages to analyze 
and determine— 
(1) the effects of reducing the amounts of such 
premiums from the amounts charged as of the date 
of the enactment of this Act on— 
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(A) costs to mortgagors; and 
(B) the financial soundness of the pro-
gram; and 
(2) the feasibility and effectiveness of exempt-
ing, from all the requirements under the program re-
garding payment of mortgage insurance premiums 
(including both up-front or annual mortgage insur-
ance premiums under section 203(c)(2) of such Act), 
any mortgage insured under the program under 
which part or all of the amount of future payments 
made to the homeowner are used for costs of a long- 
term care insurance contract covering the mortgagor 
or members of the household residing in the mort-
gaged property. 
Not later than the expiration of the 12-month period be-
ginning on the date of the enactment of this Act, the Sec-
retary shall submit a report to the Congress setting forth 
the results and conclusions of the study. 
SEC. 15. CONFORMING LOAN LIMIT IN DISASTER AREAS. 
Section 203(h) of the National Housing Act (12 
U.S.C. 1709) is amended— 
(1) by inserting after ‘‘property’’ the following: 
‘‘plus any initial service charges, appraisal, inspec-
tion and other fees in connection with the mortgage 
as approved by the Secretary,’’; 
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(2) by striking the second sentence (as added 
by chapter 7 of the Emergency Supplemental Appro-
priations Act of 1994 (Public Law 103–211; 108 
Stat. 12)); and 
(3) by adding at the end the following new sen-
tence: ‘‘In any case in which the single family resi-
dence to be insured under this subsection is within 
a jurisdiction in which the President has declared a 
major disaster to have occurred, the Secretary is au-
thorized, for a temporary period not to exceed 36 
months from the date of such Presidential declara-
tion, to enter into agreements to insure a mortgage 
which involves a principal obligation of up to 100 
percent of the dollar limitation determined under 
section 305(a)(2) of the Federal Home Loan Mort-
gage Corporation Act for a single family residence, 
and not in excess of 100 percent of the appraised 
value of the property plus any initial service charges, 
appraisal, inspection and other fees in connection 
with the mortgage as approved by the Secretary.’’. 
SEC. 16. PARTICIPATION OF MORTGAGE BROKERS AND 
CORRESPONDENT LENDERS. 
(a) DEFINITIONS.— 
(1) IN GENERAL.—Section 201 of the National 
Housing Act (12 U.S.C. 1707) is amended— 
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(A) 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, except as specifically 
provided otherwise, the following definitions 
shall apply:’’; 
(B) by striking subsection (b) and insert-
ing the following: 
‘‘(2) The term ‘mortgagee’ means any of the 
following entities, and its successors and assigns, to 
the extent such entity is approved by the Secretary: 
‘‘(A) A lender or correspondent lender, 
who— 
‘‘(i) makes, underwrites, and services 
mortgages; 
‘‘(ii) submits to the Secretary such fi-
nancial audits performed in accordance 
with the standards for financial audits of 
the Government Auditing Standards issued 
by the Comptroller of the United States; 
‘‘(iii) meet the minimum net worth re-
quirement that the Secretary shall estab-
lish; and 
‘‘(iv) complies with such other re-
quirements as the Secretary may establish. 
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‘‘(B) A correspondent lender who— 
‘‘(i) closes a mortgage in its name but 
does not underwrite or service the mort-
gage; 
‘‘(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 
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 re-
quirements as the Secretary may establish. 
‘‘(C) A mortgage broker who— 
‘‘(i) closes the mortgage in the name 
of the lender and does not make, under-
write, or service the mortgage; 
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‘‘(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 
mortgage broker in such State; 
‘‘(iii) posts a surety bond in accord-
ance with the requirements of subpara-
graph (B)(ii); and 
‘‘(iv) complies with such other re-
quirements as the Secretary may establish. 
‘‘(3) The term ‘mortgagor’ includes the original 
borrower under a mortgage and the successors and 
assigns of the original borrower.’’; 
(C) in subsection (a), by redesignating 
clauses (1) and (2) as clauses (A) and (B) re-
spectively; and 
(D) by redesignating subsections (a), (c), 
(d), (e), and (f) as paragraphs (1), (4), (5), (6), 
and (7), respectively, and realigning such para-
graphs two ems from the left margin. 
(2) MORTGAGEE REVIEW.—Section 202(c)(7) of 
the National Housing Act (12 U.S.C. 1708(c)(7)) is 
amended— 
(A) in subparagraph (A), by inserting ‘‘, as 
defined in section 201,’’ after ‘‘mortgagee’’; 
(B) by striking subparagraph (B); and 
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(C) by redesignating subparagraphs (C) 
and (D) as subparagraphs (B) and (C), respec-
tively. 
(3) MULTIFAMILY
RENTAL
HOUSING
INSUR-
ANCE.—Section 207(a)(2) of the National Housing 
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’’. 
(4) 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 successors and assigns 
approved by the Secretary’’ and inserting ‘‘has the 
meaning given such term in section 201’’. 
(5) ARMED SERVICES HOUSING MORTGAGE IN-
SURANCE.—Section 801(b) of the National Housing 
Act (12 U.S.C. 1748(b)) is amended by striking ‘‘in-
cludes the original lender under a mortgage, and his 
successors and assigns approved by the Secretary’’ 
and inserting ‘‘has the meaning given such term in 
section 201’’. 
(6) GROUP
PRACTICE
FACILITIES
MORTGAGE 
INSURANCE.—Section 1106(8) of the National 
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Housing Act (12 U.S.C. 1749aaa-5(8)) is amended 
by striking ‘‘means the original lender under a mort-
gage, and his or its successors and assigns, and’’ 
and inserting ‘‘has the meaning given such term in 
section 201, except that such term also’’. 
(b) ELIGIBILITY FOR INSURANCE.— 
(1) TITLE I.—Paragraph (1) of section 8(b) of 
the National Housing Act (12 U.S.C. 1706c(b)(1)) 
is amended— 
(A) by striking ‘‘, and be held by,’’; and 
(B) by striking ‘‘as responsible and able to 
service the mortgage properly’’. 
(2) SINGLE
FAMILY
HOUSING
MORTGAGE
IN-
SURANCE.—Paragraph (1) of section 203(b) of the 
National Housing Act (12 U.S.C. 1709(b)(1)) is 
amended— 
(A) by striking ‘‘, and be held by,’’; and 
(B) by striking ‘‘as responsible and able to 
service the mortgage properly’’. 
(3) SECTION
221
MORTGAGE
INSURANCE.— 
Paragraph (1) of section 221(d) of the National 
Housing Act (12 U.S.C. 1715l(d)(1)) is amended— 
(A) by striking ‘‘ and be held by’’; and 
(B) by striking ‘‘as responsible and able to 
service the mortgage properly’’. 
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(4) HOME EQUITY CONVERSION MORTGAGE IN-
SURANCE.—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’’. 
(5) WAR
HOUSING
MORTGAGE
INSURANCE.— 
Paragraph (1) of section 603(b) of the National 
Housing Act (12 U.S.C. 1738(b)(1)) is amended— 
(A) by striking ‘‘, and be held by,’’; and 
(B) by striking ‘‘as responsible and able to 
service the mortgage properly’’. 
(6) WAR HOUSING MORTGAGE INSURANCE FOR 
LARGE-SCALE HOUSING PROJECTS.—Paragraph (1) 
of section 611(b) of the National Housing Act (12 
U.S.C. 1746(b)(1)) is amended— 
(A) by striking ‘‘ and be held by’’; and 
(B) by striking ‘‘as responsible and able to 
service the mortgage properly’’. 
(7) GROUP PRACTICE FACILITY MORTGAGE IN-
SURANCE.—Section 1101(b)(2) of the National 
Housing Act (12 U.S.C. 1749aaa(b)(2)) is amend-
ed— 
(A) by striking ‘‘ and held by’’; and 
(B) by striking ‘‘as responsible and able to 
service the mortgage properly’’. 
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(8) NATIONAL
DEFENSE
HOUSING
INSUR-
ANCE.—Paragraph (1) of section 903(b) of the Na-
tional Housing Act (12 U.S.C. 1750b(b)(1)) is 
amended— 
(A) by striking ‘‘, and be held by,’’; and 
(B) by striking ‘‘as responsible and able to 
service the mortgage properly’’. 
SEC. 17. SENSE OF CONGRESS REGARDING TECHNOLOGY 
FOR FINANCIAL SYSTEMS. 
(a) CONGRESSIONAL FINDINGS.—The Congress finds 
the following: 
(1) The Government Accountability Office has 
cited the FHA single family housing mortgage insur-
ance program as a ‘‘high-risk’’ program, with a pri-
mary reason being non-integrated and out-dated fi-
nancial management systems. 
(2) The ‘‘Audit of the Federal Housing Admin-
istration’s Financial Statements for Fiscal Years 
2004 and 2003’’, conducted by the Inspector Gen-
eral of the Department of Housing and Urban De-
velopment reported as a material weakness that 
‘‘HUD/FHA’s automated data processing [ADP] 
system environment must be enhanced to more effec-
tively support FHA’s business and budget proc-
esses’’. 
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(3) Existing technology systems for the FHA 
program have not been updated to meet the latest 
standards of the Mortgage Industry Standards 
Maintenance Organization and have numerous defi-
ciencies that lenders have outlined. 
(4) Improvements to technology used in the 
FHA program will— 
(A) allow the FHA program to improve the 
management of the FHA portfolio, garner 
greater efficiencies in its operations, and lower 
costs across the program; 
(B) result in efficiencies and lower costs 
for lenders participating in the program, allow-
ing them to better use the FHA products in ex-
tending homeownership opportunities to higher 
credit risk or lower-income families, in a sound 
manner. 
(5) The Mutual Mortgage Insurance Fund op-
erates without cost to the taxpayers and generates 
revenues for the Federal Government. 
(b) SENSE OF CONGRESS.—It is the sense of the 
Congress that— 
(1) the Secretary of Housing and Urban Devel-
opment should use a portion of the funds received 
from premiums paid for FHA single family housing 
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