138
or obligation of the United States or other person arising
under or pursuant to any commitment or agreement en-
tered into before the effective date under section 451
under any provision repealed by subsection (a) of this sec-
tion.
(c) TREATMENT OF PREVIOUSLY OBLIGATED AS-
SISTANCE.—Notwithstanding subsection (a), any amounts
appropriated to carry out the provisions repealed by sub-
section (a) that are obligated before the effective date
under section 451 shall be used in the manner provided,
and subject to any requirements and agreements entered
into, under such provisions (as such provisions were in ef-
fect immediately before the repeal under subsection (a)).
Subtitle D—Housing and
Community Opportunities Agency
SEC. 441. ESTABLISHMENT.
There is hereby established as an independent estab-
lishment in the executive branch of the Government to be
known as the Housing and Community Opportunities
Agency (in this subtitle referred to as the ‘‘Agency’’).
SEC. 442. DIRECTOR.
(a) APPOINTMENT.—There shall be at the head of the
Housing and Community Opportunities Agency a Direc-
tor, who shall be appointed by the President, by and with
the advice and consent of the Senate. The Agency shall
139
be administered under the supervision and direction of the
Director.
(b) COMPENSATION AT LEVEL IV OF EXECUTIVE
SCHEDULE.—Section 5315 of title 5, United States Code,
is amended by inserting at the end the following new item:
‘‘Director, Federal Housing and Community
Opportunities Agency.’’.
SEC. 443. DUTIES.
The Director shall be responsible for administration
of the block grant programs under subtitles A, B, and C.
SEC. 444. PERSONNEL.
(a) APPOINTMENT.—The Director may select, ap-
point, employ, and fix the compensation of any officers
and employees necessary to carry out the functions of the
Director, subject to the provisions of title 5, United States
Code governing appointments in the competitive service,
and shall be paid in accordance with the provisions of
chapter 51 and subchapter II of chapter 53 of such title
relating to classification and General Schedule pay rates.
(b) TRANSFER.—
(1) IN GENERAL.—The Director may, in coordi-
nation with the Administrator of the Housing and
Urban Development Programs Resolution Agency,
transfer personnel employed by the Department of
Housing and Urban Development in connection with
140
programs repealed under section 437 to fill positions
established by the Director, except that, the provi-
sions of section 3324 of title 5, United States Code,
shall apply with respect to transfers to positions in
grade levels above GS–15.
(2) EFFECT.—Any full-time or part-time per-
sonnel employed in permanent positions shall not be
separated or reduced in grade or compensation be-
cause of a transfer under this subsection during the
1-year period beginning upon the date of the enact-
ment of this Act.
SEC. 445. ADMINISTRATIVE PROVISIONS.
The Director may—
(1) issue any regulations the Director considers
necessary to carry out the functions of the Director;
(2) organize the Agency as the Director deter-
mines necessary or appropriate, subject to the provi-
sions of this subtitle;
(3) except as otherwise provided by law, dele-
gate any function of the Director to the officers and
employees of the Agency as the Director may des-
ignate, and may authorize successive redelegations
of such functions as the Director considers necessary
or appropriate; except that the delegation of func-
tions under this paragraph shall not relieve the Di-
141
rector of responsibility for the administration of
such functions;
(4) procure temporary and intermittent services
in accordance with section 3109 of title 5, United
States Code;
(5) accept and use gifts, bequests, and dona-
tions of property;
(6) use the United States mails in the same
manner and under the same conditions as other de-
partments and agencies of the United States;
(7) subject to the provisions of the Federal
Property and Administrative Services Act of 1949,
make, enter into, and perform such contracts,
grants, leases, cooperative agreements, or other simi-
lar transactions and make such payments as the Di-
rector determines necessary or appropriate to carry
out the functions of the Agency; except that the au-
thority to enter into contracts and to make pay-
ments shall be effective only to such extent or in
such amounts as are provided in appropriation Acts;
and
(8) cause a seal of office to be made for the
Agency of such design as the Director shall approve,
and judicial notice shall be taken of the seal.
142
SEC. 446. REPORT.
After the conclusion of each fiscal year, the Director
shall submit to the Congress a report regarding the activi-
ties of the Agency during the fiscal year. The report shall
include descriptions of the amounts allocated for each
State, for Indian tribes, and for Indian housing authorities
under the block grant programs under subtitles A, B, and
C, any actions taken by the Director under section 432,
and the operations and personnel needs of the Agency.
Subtitle E—Effective Date
SEC. 451. EFFECTIVE DATE.
(a) IN GENERAL.—Except provided in subsection (b),
this title shall take effect, and the amendments under this
title shall be made and shall apply, on the effective date
under section 108(a).
(b) PROVISIONS EFFECTIVE ON DATE OF ENACT-
MENT.—Section 442 shall take effect on the date of the
enactment of this Act.
TITLE V—SINGLE FAMILY HOUS-
ING MORTGAGE INSURANCE
Subtitle A—Federal Home
Mortgage Insurance Program
SEC. 501. FEDERAL HOME MORTGAGE INSURANCE FUND.
(a) IN GENERAL.—There is hereby established in the
Treasury of the United States a fund to be known as the
Federal Home Mortgage Insurance Fund, which shall con-
143
sist of such amounts as may be appropriated or credited
to such Fund, as provided in this section. The Fund shall
be under the sole administration of the Administrator of
the Federal Home Mortgage Insurance Fund, appointed
under section 532.
(b) USE.—Amounts in the Fund shall be available
only for the purposes of—
(1) the payment to qualified mortgage insurers
of claims for losses under risk-sharing agreements
entered into under this subtitle;
(2) the payment of claim notes issued under
subsection (f)(2) of this section;
(3) investment as provided under subsection
(d); and
(4) annual assessments under section 1394 of
the Housing and Community Development Act of
1992 for costs of the Office of Federal Housing En-
terprise Oversight of the Department of the Treas-
ury for carrying out subtitle F of title XIII of such
Act.
(c) CREDITS.—There are hereby appropriated to the
Fund amounts equivalent to—
(1) any premium payments for mortgage insur-
ance that are paid to the Fund Administrator by
qualified mortgage insurers under section 505(f)(2);
144
(2) the first $500,000,000 of proceeds from any
sales of FHA single family mortgage insurance in-
terests conducted under section 553; and
(3) any interest on, and proceeds from, the sale
or redemption of any obligation purchased pursuant
to subsection (d).
(d) INVESTMENT.—Amounts in the Fund not nec-
essary, in the determination of the Fund Administrator,
for the current operations of the Fund shall be invested
in interest-bearing obligations of, or interest-bearing obli-
gations guaranteed as to principal and interest by, the
United States or any agency of the United States.
(e) 
LIMITATION
ON
LIABILITY
OF
UNITED
STATES.—
(1) GENERAL
RULE.—Any claim against the
Fund Administrator or the Federal Government re-
sulting from a risk-sharing agreement or insurance
coverage provided pursuant to this subtitle may be
paid only out of the Fund.
(2) RULE OF CONSTRUCTION.—Nothing in this
title may be construed to authorize the payment by
the United States Government of any amount with
respect to any such claim out of any source other
than the Fund.
(f) INSUFFICIENT AMOUNTS.—
145
(1) PRIORITY OF CLAIMS.—If at any time the
amounts in the Fund are insufficient to pay all of
the claims on the Fund out of the Fund at such
time, such claims shall, to the extent permitted
under subsection (e)(1) be paid in full in the order
in which such claims are finally determined.
(2) CLAIM NOTE.—In the case of any claim
against the Fund for which amounts in the Fund
are insufficient to pay the claim, the Fund Adminis-
trator shall issue to the qualified mortgage insurer
making the claim a note in the amount of the defi-
ciency, as determined by the Fund Administrator. A
claim note issued under this section shall be an obli-
gation only of the Fund, shall not constitute a debt
or obligation backed by the full faith or credit of the
United States, and shall clearly indicate on the note
such extent and limitation of the obligation.
(g) ACTUARIAL STUDY.—The Fund Administrator
shall provide for an independent actuarial study of the
Fund to be conducted annually and shall report annually
to the Congress regarding the financial status of the
Fund.
(h) OVERSIGHT.—The Director of the Office of Fed-
eral Housing Enterprise Oversight (as reestablished under
section 122 of this Act) shall monitor the safety and
146
soundness of the Fund, as provided in subtitle F of title
XIII of the Housing and Community Development Act of
1992.
SEC. 502. AUTHORITY TO ENTER INTO RISK-SHARING
AGREEMENTS FOR MORTGAGE INSURANCE
COVERAGE.
(a) IN GENERAL.—On and after the date under sub-
section (b), the Fund Administrator may enter into risk-
sharing agreements under this subtitle with qualified
mortgage insurers providing for the insurance of qualified
mortgages, in accordance with this subtitle.
(b) COMMENCEMENT OF BUSINESS.—The date under
this subsection is the first date by which both of the fol-
lowing actions have occurred:
(1) MINIMUM
AMOUNT.—The Fund Adminis-
trator has determined that amounts in the Fund ex-
ceed $100,000,000.
(2) NOTICE.—The Fund Administrator certifies
in writing to the Congress and the President that
amounts in the Fund exceed $100,000,000.
SEC. 503. QUALIFIED MORTGAGES.
(a) IN GENERAL.—For purposes of this subtitle, the
term ‘‘qualified mortgage’’ means a mortgage on a single
family home to be used as the principal residence of the
mortgagor that meets the following requirements:
147
(1) QUALIFIED MORTGAGEE.—The mortgage is
made to, and held by, a qualified mortgagee.
(2) UNDERWRITING.—The mortgage meets any
underwriting criteria established under section
505(c).
(3) 
ELIGIBLE
MORTGAGORS
AND
PROP-
ERTIES.—The mortgage is executed—
(A) in connection with the acquisition of
the single family home by a mortgagor who—
(i) is a first-time homebuyer; and
(ii) has an income, at the time of in-
surance, not exceeding 125 percent of the
median income for the area in which the
property subject to the mortgage is lo-
cated;
(B) has an income, at the time of insur-
ance, not exceeding 80 percent of the median
income for the area in which the property sub-
ject to the mortgage is located;
(C) in connection with the acquisition of
the single family home—
(i) that is located in an area that, at
the time of insurance, is an economically
distressed area (as determined under sub-
section (c)); and
148
(ii) by a mortgage who has an income,
at the time of insurance, not exceeding 125
percent of the median income for the area
in which the property subject to the mort-
gage is located; or
(D) for the refinancing of a mortgage pre-
viously insured under a risk-sharing agreement
that has an original principal obligation not ex-
ceeding 150 percent of the amount of the out-
standing principal obligation of the mortgage
refinanced.
(4) LOAN-TO-VALUE RATIO.—The mortgage in-
volves an original principal obligation in an amount
that does not exceed 97 percent of the appraised
value of the property, as of the date the mortgage
is accepted for insurance.
(b) QUALIFIED MORTGAGEES.—The Fund Adminis-
trator, in consultation with qualified mortgage insurers
and representatives of interested institutional mortgage
investors shall establish standards for mortgagees eligible
to make and hold mortgages insured a risk-sharing agree-
ment under this subtitle. In establishing such standards,
the Fund Administrator and such other entities shall take
into consideration mortgagee eligibility standards estab-
lished by the Secretary of Housing and Urban Develop-
149
ment for participation in the single family housing mort-
gage insurance program under title II of the National
Housing Act.
(c) ECONOMICALLY DISTRESSED AREAS.—For pur-
poses of this subtitle, the term ‘‘economically distressed
area’’ means a geographical area—
(1) for which the decline, over the most recent
12 months, in the number of residents of the area
who are employed exceeds 2.5 percent of the total
number of residents of the area; and
(2) that—
(A) is located within a metropolitan statis-
tical area, as defined by the Office of Manage-
ment and Budget, and has a population of not
less than 40,000 or such other population as
the Fund Administrator considers appropriate
for purposes of this subtitle; or
(B) is located outside of a metropolitan
statistical area and has a population, as deter-
mined by the most recent census data available,
of not less than 30,000.
(d) INCOME AND MEDIAN AREA INCOME.—For pur-
poses of this section, incomes shall be determined in the
manner in which incomes are determined under title II
and the Fund Administrator shall utilize the same areas
150
for which median area income is determined under such
title and the median area incomes so determined.
SEC. 504. INSURANCE COVERAGE.
(a) AUTHORITY.—To the extent provided in a risk-
sharing agreement under this subtitle, the qualified mort-
gage insurer under the agreement may make commitments
to insure, and provide mortgage insurance coverage under
this section for, qualified mortgages. Mortgage insurance
under this subtitle may be provided only for qualified
mortgages.
(b) EXTENT OF COVERAGE.—
(1) LIMITATION.—The portion of a mortgage
insured under a risk-sharing agreement under this
subtitle may not exceed 35 percent of the amount of
the outstanding principal obligation of the qualified
mortgage (and such fees, interest, and other ex-
penses determined by the Secretary to be appro-
priate).
(2) DETERMINATION.—Subject to paragraph
(1), the Fund Administrator may establish maxi-
mum percentage limitations of the outstanding prin-
cipal obligation of a qualified mortgage that mort-
gage insurance provided pursuant to a risk-sharing
agreement may cover. In establishing such limita-
tions, the Fund Administrator shall consult with
151
mortgage insurers and other interested parties and
take into consideration any audits of the Comptroller
General under section 536(a), and the report of the
Comptroller General under section 536(b).
(3) SEPARATE
LIMITATIONS.—The Fund Ad-
ministrator may determine separate maximum per-
centage limitations under paragraph (2) for various
categories of mortgages, based on loan-to-value ra-
tios.
(4) EFFECTIVE DATE.—A maximum percentage
limitation established under this subsection by the
Fund Administrator shall take effect upon the expi-
ration of the 30-day period beginning upon the
Fund Administrator providing written notice to the
Congress of the establishment of such limitation.
(c) MORTGAGE INSURANCE PREMIUMS.—For each
qualified mortgage covered by mortgage insurance pro-
vided pursuant to a risk-sharing agreement, the qualified
mortgage insurer shall charge and collect annual pre-
miums for the insurance during the term of the mortgage.
The Fund Administrator and the qualified mortgage in-
surer shall establish the amount of the premiums to be
paid for mortgages insured under this subtitle under a
risk-sharing agreement, except that the amount of such
premiums may not exceed, on a net present value basis,
152
the amount of premiums charges in effect on June 1,
1995, for mortgage insurance under section 203 of the
National Housing Act.
(d) PAYMENT OF INSURANCE.—A claim under mort-
gage insurance provided under this section shall be paid
by the Fund Administrator and the qualified mortgage in-
surer to the claimant in the manner and under the condi-
tions provided for under the risk-sharing agreement.
(e) OBLIGATION
OF FUND.—The insurance of a
qualified mortgage pursuant to a risk-sharing agreement
shall be an obligation only of the qualified mortgage in-
surer writing the insurance and the Fund and shall not
be a debt or obligation backed by the full faith and credit
of the United States.
SEC. 505. RISK-SHARING AGREEMENTS.
(a) ELIGIBLE MORTGAGE INSURERS.—The Fund Ad-
ministrator may enter into a risk-sharing agreement under
this subtitle only with a qualified mortgage insurer.
(b) SHARED-RISK MORTGAGE INSURANCE.—
(1) IN
GENERAL.—A risk-sharing agreement
under this subtitle shall be a written agreement en-
tered into by the Fund Administrator and a quali-
fied mortgage insurer pursuant to which mortgage
insurance meeting the requirements of section 504
may be provided for qualified mortgages in a man-
153
ner such that each such party to the agreement in-
sures a portion of the insurance risk under each
mortgage so insured (in the amounts established
pursuant to subsection (d)) and is severally liable for
the portion so insured.
(2) LIMITATION ON AMOUNT.—Each risk-shar-
ing agreement shall establish limitations on the ag-
gregate principal amount of the mortgages that may
be insured under the agreement, taking into account
the limitation under section 508(b).
(c) UNDERWRITING STANDARDS.—
(1) REQUIREMENT.—Each risk-sharing agree-
ment shall ensure that each mortgage insured pursu-
ant to the agreement shall meet such underwriting
standards as may be established under this sub-
section. Such standards shall include standards for
quality, type, and class of mortgages, debt-to-income
ratio, downpayment amount, and other loan terms
and conditions.
(2) ESTABLISHMENT.—Standards under this
subsection may be established—
(A) by regulation by the Fund Adminis-
trator, for all mortgages insured under all risk-
sharing agreements, after consultation with
qualified mortgage insurers and representatives
154
of interested institutional mortgage investors;
and
(B) by terms and conditions of a risk-shar-
ing agreement (but only to the extent consistent
with regulations issued under subparagraph
(A)), for the mortgages insured under the par-
ticular risk-sharing agreement.
(3) AFFORDABLE HOUSING TARGETING.—Any
standards established under this subsection shall be
based primarily on any mortgage underwriting
standards established by the Federal National Mort-
gage Association and the Federal Home Loan Mort-
gage Corporation with respect to mortgages pur-
chased by such enterprises in furtherance of the
housing goals established under subpart B of part 2
of subtitle A of the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992.
(4) REFINANCING REQUIREMENTS.—At a mini-
mum, the Fund Administrator shall establish stand-
ards by regulation under paragraph (2)(A) that re-
quire that, in the case of a qualified mortgage under
section 503(a)(3)(D), an appraisal shall be con-
ducted in connection with the execution of such refi-
nancing mortgage to determine the value of the resi-
dence for purposes of any loan-to-value limitation or
155
other limitation established under such standards
that takes into consideration the value of the resi-
dence.
(d) TREATMENT OF LOSSES.—
(1) IN GENERAL.—Each risk-sharing agreement
shall provide that losses resulting from the defaults
on qualified mortgages insured pursuant to the
agreement shall be apportioned in accordance with
the standards established under this subsection.
(2) DETERMINATION.—The Fund Adminis-
trator shall establish standards for the apportion-
ment of losses under risk-sharing agreements to the
qualified mortgage insurer under the agreement and
the Fund. In establishing such standards, the Fund
Administrator shall consult with mortgage insurers
and other interested parties and take into consider-
ation any audits of the Comptroller General under
section 536(a), and the report of the Comptroller
General under section 536(b).
(3) SEPARATE
LIMITATIONS.—The Fund Ad-
ministrator may establish separate standards under
this subsection for the apportionment of losses for
various categories of mortgages, based on—
(A) the categories under subparagraphs
(A), (B), (C), and (D) of section 503(a)(3); and
156
(B) the extent of the loss.
(4) EFFECTIVE DATE.—A standard for the ap-
portionment of losses established under this sub-
section by the Fund Administrator shall take effect
upon the expiration of the 30-day period beginning
upon the Fund Administrator providing written no-
tice to the Congress of the establishment of such
standard.
(e) DEFINITION OF LOSSES.—For purposes of this
section, the term ‘‘losses’’ means the sum of any amounts
paid under claims for insurance coverage pursuant to risk-
sharing agreements (less any amounts recovered by the
mortgage insurer from disposition of insured properties
conveyed pursuant to payment of insurance and collection
on claims against mortgagors) and any costs incurred for
administration, maintenance, repair, taxes, and other
holding costs relating to insured properties.
(f) MORTGAGE INSURANCE PREMIUMS.—Each risk-
sharing agreement shall provide that the mortgage insurer
shall—
(1) collect, for each mortgage insured pursuant
to the agreement, annual premium payments in ac-
cordance with section 504(c); and
(2) pay to the Fund Administrator an amount
of the premium payments collected that is commen-
157
surate with the apportionment of losses provided for
under the agreement pursuant to subsection (d), as
determined by the insurer and the Fund Adminis-
trator.
(g) 
ADMINISTRATIVE
FEE.—Each 
risk-sharing
agreement shall provide that the qualified mortgage in-
surer may retain an amount of any premium payments
collected under subsection (f) to cover administrative ex-
penses involved in underwriting and administrating mort-
gage insurance coverage under this subtitle, as agreed to
by the Fund Administrator and the mortgage insurer. The
Fund Administrator may establish standards for such pro-
visions regarding retention of amounts for administrative
expenses.
(h) ALLOWANCE
FOR LOSSES.—Each risk-sharing
agreement shall provide that any amounts owed to the
qualified mortgage insurer because the insurer has paid
claims on insurance that include losses attributable to the
Fund (in accordance with subsection (e)) may be recov-
ered by the insurer from premiums subsequently collected
by the insurer or from the Fund Administrator.
(i) DISPOSITION OF PROPERTIES AND COLLECTION
AGAINST CLAIMS.—Each risk-sharing agreement shall
provide that the qualified mortgage insurer shall—
158
(1) provide for the sale, rent, or other disposi-
tion of properties conveyed to the insurer in ex-
change for payment of the benefit of insurance cov-
erage; and
(2) pursue to final collection all claims against
mortgagors assigned to the mortgage insurer by
mortgagees pursuant to the payment of the benefit
of insurance coverage.
(j) 
ADMINISTRATION
OF
BOOK-OF-BUSINESS
BASIS.—Each risk-sharing agreement shall provide that
any calculations regarding premiums collected, losses in-
curred, amounts to be transferred between the Fund Ad-
ministrator or the qualified mortgage insurer, and any
payments relating to such calculations shall be made on
a book-of-business basis and according to such schedules
as are agreed to by the Fund Administrator and the quali-
fied mortgage insurer.
(k) RESPONSIBILITIES OF MORTGAGE INSURER.—
Each risk-sharing agreement shall provide that the quali-
fied mortgage insurer providing mortgage insurance cov-
erage under the agreement shall carry out all functions
relating to—
(1) determining whether a mortgagee is a quali-
fied mortgagee;
159
(2) determining whether a mortgage is a quali-
fied mortgage;
(3) making commitments for and providing
mortgage insurance;
(4) all other underwriting functions for mort-
gage insurance;
(5) collection of insurance premiums;
(6) payment to mortgagees of the benefits of in-
surance; and
(7) settlement of claims under mortgage insur-
ance coverage.
(l) ANNUAL AUDIT AND REPORT.—Each risk-sharing
agreement shall provide for the qualified mortgage in-
surer—
(1) to conduct, on an annual basis, an audit of
the operations of the insurer with respect to insur-
ance written pursuant to the agreement and the
compliance of the insurer with the requirements of
this subtitle and the agreement; and
(2) to submit to the Fund Administrator a re-
port regarding such audit.
SEC. 506. REQUIREMENTS FOR QUALIFIED MORTGAGE IN-
SURERS.
(a) IN GENERAL.—The Fund Administrator shall, by
regulation, establish standards to ensure that any mort-
160
gage insurer with whom the Fund Administrator enters
into risk-sharing agreements under this subtitle has re-
ceived, from a nationally recognized statistical rating
agency, a rating on its obligations of ‘‘AA’’ or better, or
any equivalent designation sufficient to indicate that the
insurer operates financially in a safe and sound manner.
(b) INCLUSION AND PARTICIPATION OF STATE AND
LOCAL HOUSING AGENCIES.—For purposes of this sub-
title, a qualified mortgage insurer may include a State or
local housing finance agency or other housing agency of
a State or local government or a private insurer coordinat-
ing with such an agency to enter into a risk-sharing agree-
ment under this subtitle.
(c) RECORDS.—The Fund Administrator may re-
quire, under such standards, that a mortgage insurer
make available to the Fund Administrator at the Fund
Administrator’s request, such financial and other records
as the Fund Administrator considers necessary for pur-
poses of this title. The Fund Administrator may not make
available to the public or otherwise disclose any informa-
tion or records obtained under this subsection that is not
otherwise publicly available.
SEC. 507. DEFINITIONS.
For purposes of this subtitle, the following definitions
shall apply:
161
(1) FIRST MORTGAGE.—The term ‘‘first mort-
gage’’ means such classes of first liens as are com-
monly given to secure advances on, or the unpaid
purchase price of, real estate under the laws of the
State in which the real estate is located, together
with the credit instrument, if any, secured thereby.
(2) FIRST-TIME HOMEBUYER.—The term ‘‘first-
time homebuyer’’ means any individual who (and
whose spouse) has not had any present ownership in
a principal residence during the 3-year period ending
on the date of the purchase by the individual of any
principal residence with a mortgage insured pursu-
ant to a risk-sharing agreement.
(3) FUND.—The term ‘‘Fund’’ means the Fed-
eral Home Mortgage Insurance Fund established
under section 501.
(4) MORTGAGE.—The term ‘‘mortgage’’ means
a first mortgage on real estate, in fee simple, or on
a leasehold under a lease for not less than 99 years
which is renewable or under a lease having a period
of not less than 10 years to run beyond the maturity
date of the mortgage. The term includes—
(A) a first lien given (in accordance with
the laws of the State where the property is lo-
cated) to secure a loan made to finance the pur-
162
chase of stock or membership in a cooperative
ownership housing corporation the permanent
occupancy of dwelling units of which is re-
stricted to members of such corporation, where
the purchase of such stock or membership will
entitle the purchaser to the permanent occu-
pancy of one of such units;
(B) a first lien given (in accordance with
the laws of the State where the property is lo-
cated) to secure a loan made to finance the pur-
chase of a fee interest in, or long-term leasehold
interest in, a 1-family unit in a multifamily
project, including a project in which the units
are detached, semi-detached, or attached, and
an undivided interest in the common areas and
facilities which serve the project; and
(C) loans and advances of credit for the
purchase of financing the purchase of a manu-
factured home or the lot on which to place such
home and paying expenses reasonably necessary
for the appropriate preparation of such lot for
the placement of such home.
The term includes graduated-payment, growing-eq-
uity, adjustable rate, and shared-appreciation mort-
163
gages, as such terms are defined by the Fund Ad-
ministrator.
(5) MORTGAGE INSURER.—The term ‘‘mortgage
insurer’’ means any person or legal entity that is au-
thorized to transact, in any State, the business of in-
surance against the nonpayment of, or default on, a
mortgage or loan for residential property.
(6) MORTGAGEE.—The term ‘‘mortgagee’’ in-
cludes the original lender under a mortgage and the
successors and assigns of the original lender, and in-
cludes the holders of credit instruments issued under
a trust mortgage or deed of trust pursuant to which
such holders act by and through a trustee therein
named.
(7) QUALIFIED
MORTGAGE
INSURER.—The
term ‘‘qualified mortgage insurer’’ means a mort-
gage insurer that the Fund Administrator has deter-
mined complies with the standards established under
section 506.
(8) QUALIFIED MORTGAGEE.—The term ‘‘quali-
fied mortgagee’’ means a mortgagee that complies
with the standards established pursuant to section
503(b).
(9) RISK-SHARING
AGREEMENT.—The term
‘‘risk-sharing agreement’’ means an agreement
164
under section 505 between the Fund Administrator
and a qualified mortgage insurer.
(10) SINGLE FAMILY HOME.—The term ‘‘single
family home’’ means a 1- to 4-family residence.
(11) STATE.—The term ‘‘State’’ means the
States of the United States, the District of Colum-
bia, the Commonwealth of Puerto Rico, the Com-
monwealth of the Northern Mariana Islands, Guam,
the Virgin Islands, American Samoa, and any other
territory or possession of the United States.
SEC. 508. LIMITATION ON COMMITMENTS TO INSURE
MORTGAGES.
(a) BUDGET ACT COMPLIANCE.—The authority of
the Fund Administrator to enter into risk-sharing agree-
ments to insure mortgages under this subtitle shall be ef-
fective for any fiscal year only to such extent or in such
amounts as are or have been provided in appropriation
Acts for such fiscal year.
(b) MAXIMUM PRINCIPAL AMOUNT LIMITATION.—
Notwithstanding any other provision of law and subject
only to the authority provided in this title and the limita-
tion under subsection (a), the Fund Administrator may,
during the period consisting of fiscal year 1996 through
2000, enter into commitments under risk-sharing agree-
ments to provide mortgage insurance for mortgages hav-
165
ing 
an 
aggregate 
insured 
principal 
amount 
of
$500,000,000,000.
Subtitle B—Federal Home Mort-
gage Insurance Fund Adminis-
tration
SEC. 531. ESTABLISHMENT.
(a) IN GENERAL.—There is hereby established an of-
fice within the Department of the Treasury, which shall
be known as the Federal Home Mortgage Insurance Fund
Administration.
(b) CONTINUANCE.—Notwithstanding any other pro-
vision of law or any authority of the Secretary of the
Treasury, the Secretary may not merge or consolidate the
Administration, or any functions or responsibilities of the
Administration, with any other function or program ad-
ministered by the Secretary.
SEC. 532. FUND ADMINISTRATOR.
(a) APPOINTMENT.—The Administration shall be
under the management of the Administrator of the Fed-
eral Home Mortgage Insurance Fund, who shall be ap-
pointed by the President, by and with the advice and con-
sent of the Senate, from among individuals who are citi-
zens of the United States, have a demonstrated under-
standing of the private mortgage insurance industry, the
secondary mortgage markets, and housing finance (includ-
166
ing finance activities of State and local housing finance
agencies).
(b) TERM.—The Fund Administrator shall be ap-
pointed for a term of 8 years.
(c) VACANCY.—A vacancy in the position of Fund
Administrator shall be filled in the manner in which the
original appointment was made under subsection (a).
(d) SERVICE AFTER END OF TERM.—A Fund Ad-
ministrator may serve after the expiration of the term for
which the Fund Administrator was appointed until a suc-
cessor Fund Administrator has been appointed.
SEC. 533. DUTY AND AUTHORITY OF FUND ADMINIS-
TRATOR.
(a) DUTY.—The duties of the Fund Administrator
shall be—
(1) to administer the Federal Home Mortgage
Insurance Fund under section 501;
(2) to carry out the responsibilities under sub-
title A with respect to risk-sharing agreements;
(3) to exercise, pursuant to section 554, the au-
thority and functions of the Secretary of Housing
and Urban Development under the Single Family
Mortgage Foreclosure Act of 1994 and the Multi-
family Mortgage Foreclosure Act of 1981; and
167
(4) to exercise any other authority and func-
tions of the Secretary of Housing and Urban Devel-
opment transferred under subtitle C.
(b) DELEGATION OF AUTHORITY.—The Fund Ad-
ministrator may delegate to officers and employees of the
Administration any of the functions, powers, and duties
of the Fund Administrator, as the Fund Administrator
considers appropriate.
SEC. 534. PERSONNEL.
(a) HIRING AUTHORITY.—The Fund Administrator
may appoint and fix the compensation of such officers and
employees of the Administration as the Fund Adminis-
trator considers necessary to carry out the functions of
the Fund Administrator and the Administration, subject
to the provisions of title 5, United States Code governing
appointments in the competitive service, and in accordance
with the provisions of chapter 51 and subchapter II of
chapter 53 of such title relating to classification and Gen-
eral Schedule pay rates.
(b) PERSONNEL OF OTHER FEDERAL AGENCIES.—
In carrying out the duties of the Administration, the Fund
Administrator may use information, services, staff, and fa-
cilities of any executive agency, independent agency, or de-
partment on a reimbursable basis, with the consent of
such agency or department.
168
(c) REIMBURSEMENT OF TREASURY.—The Fund Ad-
ministrator shall reimburse the Department of the Treas-
ury for reasonable costs incurred by the Department that
are directly related to the operations of the Administra-
tion.
(d) OUTSIDE EXPERTS AND CONSULTANTS.—Not-
withstanding any provision of law limiting pay or com-
pensation, the Fund Administrator may appoint and com-
pensate such outside experts and consultants as the Fund
Administrator determines necessary to assist the work of
the Administration.
SEC. 535. REPORTS.
The Fund Administrator shall submit a report to the
Congress annually describing—
(1) the provisions and extent of risk-sharing
agreements entered into under subtitle A by the
Fund Administrator during the year for which the
report is made;
(2) the number, types, amounts, and character-
istics of borrowers under mortgages insured during
such year pursuant to such risk-sharing agreements;
and
(3) the financial condition of the Federal Home
Mortgage Insurance Fund at such time.
169
SEC. 536. GAO AUDITS AND REPORTS.
(a) AUDITS.—The Comptroller General of the United
States shall audit the operations of the Administration
and the Federal Home Mortgage Insurance Fund in ac-
cordance with generally accepted Government auditing
standards. All books, records, accounts, reports, files, and
property belonging to, or used by, the Administration or
relating to the Fund shall be made available to the Comp-
troller General. Audits under this section shall be con-
ducted annually and shall specifically consider whether the
limitations and standards in effect governing the extent
of mortgage insurance coverage under risk-sharing agree-
ments under subtitle A and the apportionment of losses
under such risk-sharing agreements are appropriate to en-
sure that the business of the Administration is conducted
in a financially safe and sound manner.
(b) REPORT ON STANDARDS FOR INSURANCE COV-
ERAGE.—The Comptroller General shall submit a report
to the Fund Administrator and the Congress on appro-
priate standards and limitations for the extent of mort-
gage insurance coverage under risk-sharing agreements
under subtitle A and for apportionment of losses under
such risk-sharing agreements. The report shall be submit-
ted not later than the expiration of the 1-year period be-
ginning upon the date of the enactment of this Act.
170
(c) REPORT ON PRIVATIZATION.—Upon the expira-
tion of the 7-year period beginning upon the date of the
enactment of this Act, the Comptroller General shall sub-
mit a report to the Congress regarding the effects that
prohibiting new business by the Federal Home Mortgage
Insurance Fund would have on the availability and cost
of mortgage credit and the prospects for privatization of
the functions of the Fund.
SEC. 537. REGULATIONS.
The Fund Administrator may issue any regulations
necessary to carry out the responsibilities of the Fund Ad-
ministrator under this title.
SEC. 538. AUTHORIZATION OF APPROPRIATIONS FOR AD-
MINISTRATIVE EXPENSES.
There is authorized to be appropriated, for expenses
of the Administration in carrying out this title,
$8,000,000 for each of fiscal years 1996, 1997, 1998,
1999, and 2000.
Subtitle C—Transition Provisions
SEC. 551. PROHIBITION OF NEW FHA BUSINESS.
(a) IN GENERAL.—Notwithstanding any provision of
title I, the Administrator of the Housing and Urban De-
velopment Programs Resolution Agency may not enter
into any commitment to insure or guarantee any mortgage
or loan, and may not newly insure or guarantee any mort-
171
gage or loans, under any provision of the National Hous-
ing Act, the Indian housing loan guarantee program under
section 184 of the Housing and Community Development
Act of 1992, the multifamily housing mortgage credit
demonstration programs under subtitle C of title V of such
Act, the energy efficient mortgages pilot program under
section 513 of such Act (and section 106 of the Energy
Policy Act of 1992), except—
(1) as provided in subsection (b); and
(2) the Resolution Administrator may newly
guarantee or insure any mortgage under such au-
thority for which a commitment for such guarantee
or insurance was made before the effective date of
this title.
(b) LIMITED CONTINUANCE OF SINGLE FAMILY PRO-
GRAM.—On and before the date under section 502(b), the
Resolution Administrator may make commitments to in-
sure, and may newly insure, mortgages on 1- to 4-family
residences under the authority provided under title II of
the National Housing Act (and related provisions of law),
but only if the mortgage is executed for the acquisition
of such a residence by a mortgagor who is a first-time
homebuyer (as such term is defined in section 507) and
has an income, at the time of insurance, not exceeding
the median income for the area in which the property sub-
172
ject to the mortgage is located, as determined by the Reso-
lution Administrator. The Resolution Administrator may
not newly insure any mortgage under this subsection after
the date under section 502(b), notwithstanding any com-
mitment to insure made on or before such date.
(c) AUTHORITY FOR MULTIFAMILY MARK-TO-MAR-
KET.—During the period beginning on the date of the en-
actment of this Act and ending on the date under section
554(b), the Resolution Administrator may take such ac-
tions as may be necessary, with respect to a multifamily
housing project covered in whole or in part by an expiring
or terminating contract for project-based rental assistance
under any program under section 8 or 23 (as in effect
before January 1, 1975) of the United States Housing Act
of 1937 or the rent supplement program under section
101 of the Housing and Urban Development Act of 1965,
to ensure that the project is financially viable without the
provision of project-based rental assistance. Notwithstand-
ing any other provision of law, or any provision of any
contract or agreement to which the Secretary of Housing
and Urban Development is a party, such actions may in-
clude making full or partial nondefault payment of claims
for mortgage insurance (which may include requiring a
recasting of the mortgage), selling defaulted mortgages,
removing (or agreeing to remove) mortgage, regulatory,
173
use agreement, and other restrictions with respect to the
project, purchasing reinsurance, transferring economic in-
terests in insurance contracts or premiums, and other ac-
tions to ensure the ability of the project to operate in the
market without project-based rental assistance.
SEC. 552. REPEAL OF FHA INSURANCE AUTHORITY.
(a) REPEALS.—Effective on the date under section
502(b), the following provisions of law are repealed:
(1) NATIONAL HOUSING ACT.—Titles I, II, V,
VI, VII, VIII, IX, and XI of the National Housing
Act (12 U.S.C. 1701 et seq.).
(2) INDIAN HOUSING LOAN GUARANTEE PRO-
GRAM.—Section 184 of the Housing and Community
Development Act of 1992 (12 U.S.C. 1515z–13a).
(3) MULTIFAMILY HOUSING MORTGAGE CREDIT
DEMONSTRATION PROGRAMS.—Subtitle C of title V
of the Housing and Community Development Act of
1992 (12 U.S.C. 1707 note).
(4) ENERGY
EFFICIENT
MORTGAGES
PILOT
PROGRAM.—Section 513 of the Housing and Com-
munity Development Act of 1992 and section 106 of
the Energy Policy Act of 1992 (42 U.S.C. 12712
note).
(b) SAVINGS PROVISION.—Any mortgage insurance
or guarantee provided under any provision of law repealed
174
by subsection (a), or under section 551(b) of this Act, and
in effect on the date under section 502(b), shall continue
to be governed by the provisions of law applicable to the
mortgage insurance or guarantee as in effect immediately
before such date, subject to the provisions of sections 553
and 554 of this Act.
SEC. 553. SALE OF FHA ASSETS.
(a) IN GENERAL.—As soon as practicable, but not
before certification required under subsection (e)(2), the
Resolution Administrator shall market and sell the FHA
mortgage insurance interests according to the plan under
subsection (c).
(b) PURPOSES.—The Resolution Administrator shall
carry out the responsibilities under subsection (a) in a
manner that—
(1) maximizes the net present value return
from the sale of the interests and results in no net
cost to the Federal Government (taking into consid-
eration the cost of not selling such assets);
(2) minimizes the impact of such transactions
on the real estate and financial markets;
(3) protects investors in and lenders for mort-
gages insured under the FHA mortgage insurance
programs;
175
(4) minimizes the risk of loss to the Federal
Government (including the Government National
Mortgage Association) resulting from non-payment
of insurance on defaulted mortgages insured under
the FHA mortgage insurance programs;
(5) disposes of enough such interests before
September 30, 1998, to result in proceeds of an
amount not less than the amount specified in section
502(b), which may include targeting the most valu-
able or marketable interests (on a book-of-business
basis or otherwise) for sale during such period;
(6) disposes of remaining interests as rapidly as
is practicable, taking into consideration the goals
under paragraphs (1) through (4); and
(7) disposes, to the greatest extent practicable,
of all disposable FHA mortgage insurance interests.
(c) PLAN FOR MARKETING AND SALE.—
(1) ESTABLISHMENT AND SUBMISSION TO CON-
GRESS.—Not later than the expiration of the 6-
month period beginning on the date of the enact-
ment of this Act, the Resolution Administrator shall
establish and submit to the Director of the Office of
Management and Budget and to the Congress a plan
for the immediate marketing and sale of FHA mort-
gage insurance interests.
176
(2) PURPOSE.—The plan may provide for the
packaging, marketing, discounting, and sale of such
interests in any manner and to any interested pur-
chasers that the Resolution Administrator considers
appropriate to dispose of FHA mortgage insurance
interests, except that the sale shall comply with the
requirements of subsection (b).
(d) CONSULTATION.—In establishing the plan under
subsection (c) and carrying out this section, the Resolution
Administrator shall consult with the Fund Administrator
and appropriate persons having expertise regarding asset
sales conducted by the Resolution Trust Corporation, the
Federal Deposit Insurance Corporation, and other Federal
agencies, and shall utilize officers and employees of the
Housing and Urban Development Programs Resolution
Agency experienced with respect to disposition of real
property assets of the Department of Housing and Urban
Development.
(e) CERTIFICATION OF NO NET COST TO FEDERAL
GOVERNMENT.—
(1) DETERMINATION OF COST.—Upon receiving
the plan under subsection (c), the Director of the
Office of Management and Budget shall make a de-
termination of the cost of the plan, and of the por-
tion of the plan providing for sale of interests in ac-
177
cordance with subsection (b)(5), to the Federal Gov-
ernment and shall certify the results of such deter-
mination to the Resolution Administrator.
(2) REQUIREMENT
OF
NO
NET
COST.—The
Resolution Administrator may not market or sell any
FHA mortgage insurance interests pursuant to the
plan unless the Director of the Office of Manage-
ment and Budget certifies to the Resolution Admin-
istrator and the Congress that such plan, or the por-
tion of the plan providing for sale of interests in ac-
cordance with subsection (b)(5), will not result in
any net cost to the Federal Government.
(3) REPORT.—If the Director certifies that the
plan or a portion of the plan will result in a net cost
to the Federal Government, the Resolution Adminis-
trator shall submit a report to the Congress describ-
ing the reasons for such cost and any appropriate
revisions to the plan or portion or to the require-
ments under this section.
(f) TREATMENT OF PROCEEDS.—Proceeds from the
sale of FHA mortgage insurance interests shall be used
as follows:
(1) START-UP AMOUNTS FOR FEDERAL HOME
MORTGAGE
INSURANCE
FUND.—The 
first
$500,000,000 of such proceeds shall be credited to
178
the Federal Home Mortgage Insurance Fund in ac-
cordance with section 501(c).
(2) DEFICIT REDUCTION.—Any such proceeds
exceeding the amount under paragraph (1) shall be
covered into the General Fund of the Treasury of
the United States.
(g) REPEAL OF LIMITATIONS ON DISPOSITION OF
HUD-OWNED MULTIFAMILY PROJECTS.—Section 203 of
the Housing and Community Development Amendments
of 1978 (12 U.S.C. 1701z–11) is hereby repealed.
SEC. 554. TRANSFER OF REMAINING FHA AUTHORITY TO
ADMINISTRATOR OF FEDERAL HOME MORT-
GAGE INSURANCE FUND.
(a) IN GENERAL.—Effective on the date under sub-
section (b), there shall be transferred to the Fund Admin-
istrator—
(1) to the extent that any such functions or
amounts exist on such date, all functions of the Res-
olution Administrator regarding administration of
any insurance or guarantees provided, and funds es-
tablished, under the provisions of law repealed by
section 552(a) or under section 551(b);
(2) all functions of the Resolution Adminis-
trator under section 553 of this Act; and