Home Improvement Loan Modernization Act of 2014

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Home Improvement Loan Modernization 
Act of 2014''.

SEC. 2. MODIFICATION TO PREMIUM CHARGES ON FINANCING CERTAIN 
              ALTERATIONS, REPAIRS, AND IMPROVEMENTS TO, OR CONVERSIONS 
              OF, EXISTING STRUCTURES.

    Subsection (f) of section 2 of the National Housing Act (12 U.S.C. 
1703(f)) is amended--
            (1) in paragraph (2), by striking ``paragraph (1)'' and 
        inserting ``paragraphs (1) and (3)''; and
            (2) by inserting at the end the following new paragraph:
            ``(3) Financing alterations, repairs, improvements, or 
        conversions.--Notwithstanding paragraphs (1) and (2), in the 
        case of a loan, advance of credit, or purchase in connection 
        with insurance granted under subparagraph (A)(i) or 
        subparagraph (B) of paragraph (1), the premium charge for such 
        insurance shall be paid by the financial institution providing 
        the loan or advance of credit, as follows:
                    ``(A) At the time of the making of the loan, 
                advance of credit, or purchase, a single premium 
                payment in an amount not to exceed 2.75 percent of the 
                amount of the original insured principal obligation.
                    ``(B) In addition to the premium under subparagraph 
                (A), annual premium payments during the term of the 
                loan, advance, or obligation purchased in an amount not 
                exceeding 1.5 percent of the remaining insured 
                principal balance (excluding the portion of the 
                remaining balance attributable to the premium collected 
                under subparagraph (A) and without taking into account 
                delinquent payments or prepayments).
                    ``(C) Premium charges under this paragraph shall be 
                established in amounts that are sufficient, but do not 
                exceed the minimum amounts necessary (as determined 
                based upon risk to the Federal Government under 
                existing underwriting requirements) to maintain a 
                negative credit subsidy for the program under this 
                section for insurance of loans, advances of credit, or 
                purchases in connection with--
                            ``(i) financing alterations, repairs, and 
                        improvements for single-family structures; and
                            ``(ii) financing alterations, repairs, 
                        improvements, or conversions of an existing 
                        structure used or to be used as an apartment 
                        house or a dwelling for two or more families.
                    ``(D) The Secretary may increase the limitations on 
                premium payments to percentages above those set forth 
                in subparagraphs (A) and (B), but only if necessary, 
                and not in excess of the minimum increase necessary, to 
                maintain a negative credit subsidy as described in 
                subparagraph (C).''.

SEC. 3. MODIFICATION TO LOAN LIMITATION FOR FINANCING CERTAIN 
              ALTERATIONS, REPAIRS, AND IMPROVEMENTS TO, OR CONVERSIONS 
              OF, EXISTING STRUCTURES.

    Subsection (b) of section 2 of the National Housing Act (12 U.S.C. 
1703(b)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)(i), by striking ``$25,000'' 
                and inserting ``$42,000'';
                    (B) in subparagraph (B)--
                            (i) by striking ``$60,000'' and inserting 
                        ``$101,888''; and
                            (ii) by striking ``$12,000'' and inserting 
                        ``$20,378''; and
                    (C) in the matter after and below subparagraph (G), 
                by adding at the end the following: ``The Secretary 
                shall, by notice, annually increase the dollar amount 
                limitation in subparagraph (A)(i) and subparagraph (B) 
                (as such limitations may have been previously adjusted 
                under this sentence) in accordance with the index 
                established pursuant to paragraph (12).''; and
            (2) by adding at the end the following new paragraph:
            ``(12) Annual indexing of loans for financing alterations, 
        repairs, and improvements to, or conversions of, existing 
        structures.--Not later than 1 year after the date of enactment 
        of the Home Improvement Loan Modernization Act of 2014, the 
        Secretary shall develop a method of indexing to annually 
        increase the dollar amount limitations established in 
        subparagraph (A)(i) and subparagraph (B) of paragraph (1). Such 
        index shall be based on the Consumer Price Index for all urban 
        consumers (CPI-U) computed by the Bureau of Labor 
        Statistics.''.

SEC. 4. MODIFICATION TO LOAN LIMITATION FOR ENERGY EFFICIENCY HOME 
              IMPROVEMENTS.

    Subsection (b) of section 2 of the National Housing Act (12 U.S.C. 
1703(b)), as amended by section 2 of this Act, is further amended by 
adding at the end the following new paragraph:
            ``(13) The dollar amount limitations otherwise applicable 
        under subparagraph (A)(i) and subparagraph (B) of paragraph (1) 
        (as adjusted by paragraph (12)) may be increased up to 150 
        percent of such limitation if at least half of the amount will 
        be used for energy conserving improvements or the installation 
        of solar energy systems (as defined in the last paragraph of 
        section 2(a) of this Act).''.

Summary: Home Improvement Loan Modernization Act of 2014 - Amends the National Housing Act to specify the premium charge paid by a financial institution to insure any loan, advance of credit, or purchase of obligations representing loans and advances of credit it makes to finance certain home improvements for both existing single-family and multifamily structures. Sets the initial premium at 2.75% of the original insured principal obligation, with annual premium payments not to exceed 1.5% of the remaining balance. Limits any premium charges to the minimum amounts necessary to maintain a negative credit subsidy for the insurance program. Increases the maximum obligation that may be insured for improvements to: (1) an existing single-family dwelling from $25,000 to $42,000; and (2) an existing multi-family structure from $60,000 to $101,888, with an average amount of $20,378 (currently $12,000) per family unit. Directs the Secretary of Housing and Urban Development (HUD) to develop a method of indexing to increase these dollar amount limitations annually, based on the Consumer Price Index for all urban consumers (CPI-U) computed by the Bureau of Labor Statistics (BLS). Allows an increase in these dollar amount limitations also by up to 150% if at least half of the amount will be used for energy conserving improvements or the installation of solar energy systems.