FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008

Bill: 110-hr-6694
Sponsor: Rep. Green, Al [D-TX-9]
Introduced: 2008-07-31 in the House
Policy area: Housing and Community Development
Subjects: Civil actions and liability
Congressional oversight
Government lending and loan guarantees
Housing finance and home ownership
Real estate business

Summary:
action_date: 2008-07-31
text: 
FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 - Amends the National Housing Act to make exceptions to the prohibition against mortgage insurance for mortgages involving a downpayment using funds furnished by: (1) the seller or any party that benefits financially from the transaction (seller-financed downpayment); or (2) any third party that is reimbursed by the seller or any such party.
 
Makes eligible for mortgage insurance, in spite of a seller-financed downpayment, any mortagors with credit scores equivalent to a FICO score of: (1) 680 or more; (2) at least 620 but less than 680; or (3) 619 or less. Prescribes conditions for mortgage insurance in the latter two situations.
 

 
Amends the FHA Modernization Act of 2008 to authorize the Secretary of Housing and Urban Development to implement a risk-based premium product for borrowers with lower credit or FICO scores through the establishment and collection of adequate mortgage insurance premiums to cover the risks of such loans.
 
Requires the Secretary to provide for a refund of a portion or all of the higher risk-based premiums paid at the time of insurance by such borrowers as a result of risk-based pricing, but only those borrowers with a history of on-time mortgage payments. Requires payment of such refund upon payment in full of the underlying mortgage obligation.

action_date: 2008-10-02
text: 
FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 - (Sec. 2) Amends the National Housing Act to make exceptions to the prohibition against mortgage insurance for mortgages involving a downpayment using funds furnished by: (1) the seller or any party that benefits financially from the transaction (seller-financed downpayment); or (2) any third party that is reimbursed by the seller or any such party.
 
Makes eligible for mortgage insurance, in spite of a seller-financed downpayment, any mortagors with credit scores equivalent to a FICO score of: (1) 680 or more; (2) at least 620 but less than 680; or (3) 619 or less. Prescribes conditions for mortgage insurance in the latter two situations.
 

 
Requires entities participating in a governmental or private nonprofit program that provides downpayment assistance for such a mortgage to offer and make available, before loan closing, counseling about the responsibilities and financial management involved in homeownership.
 
Authorizes the Secretary of Housing and Urban Development to impose civil money penalties for improperly influencing appraisals.
 
(Sec. 3) Prohibits the Secretary from implementing: (1) risk-based premiums designed for mortgage lenders to offer a Federal Housing Administration (FHA)-insured product that provides a range of mortgage insurance premium pricing based upon a specified risk that the insurance contract represents; or (2) any other risk-based premium product for mortgage insurance on a single family residence where the premium price for such new product is based upon the borrower's Decision Credit Score.
 
Makes an exception from such prohibition for flexible risk-based premiums. Authorizes the Secretary to establish, for a mortgagor whose FICO credit score is under 600, a mortgage insurance premium structure with a variable rate that reflects the mortgagor's credit risk, if the basis for determining such rate is established before the mortgage is executed.
 
Requires notice to mortgagees and to Congress before such a premium structure is established or changed.
 

 
Requires the Secretary to consider specified factors when premiums are established and collected under a flexible risk-based premium structure.
 
Authorizes the Secretary to provide for variations in such rates according to the credit risk associated with the type of mortgage product that is being insured.
 
Requires the Secretary to make payment incentives to a mortgagor, in the form of certain refunds, upon payment in full of timely mortgage payments.
 
Authorizes the Secretary, for mortgages with a flexible risk-based premium, to establish a higher annual premium in lieu of a higher up-front premium.


Legislative actions:
action_date: 2008-10-02
text: Placed on the Union Calendar, Calendar No. 582.
action_date: 2008-10-02
text: Reported (Amended) by the Committee on Financial Services. H. Rept. 110-905.
action_date: 2008-10-02
text: Reported (Amended) by the Committee on Financial Services. H. Rept. 110-905.
action_date: 2008-09-16
text: Ordered to be Reported (Amended) by Voice Vote.
action_date: 2008-09-16
text: Committee Consideration and Mark-up Session Held.
action_date: 2008-07-31
text: Referred to the House Committee on Financial Services.
action_date: 2008-07-31
text: Introduced in House
action_date: 2008-07-31
text: Introduced in House