Topic: Domestic Commerce — Consumer Finance
Subject: Housing and community development
Date: 2010-04-20 00:00:00

FHA Reform Act of 2010 - (Sec. 2) Amends the National Housing Act to authorize the Secretary of Housing and Urban Development (HUD) to increase the maximum annual premium payments for mortgage insurance, and make the charging of them discretionary instead of mandatory. (Sec. 3) Authorizes the Secretary to require specified mortgagees to indemnify HUD for payment of a mortgage insurance claim if the mortgage was not originated or underwritten in accordance with HUD requirements. Authorizes the Secretary to require a mortgagee to indemnify HUD for loss regardless of when an insurance claim is paid if fraud or misrepresentation was involved in connection with the mortgage origination or underwriting. (Sec. 4) Authorizes the Secretary to terminate approval of a mortgagee to originate or underwrite single family mortgages if the mortgagee's rate of early defaults and claims is excessive. (Sec. 6) Establishes within the Federal Housing Administration (FHA) a Deputy Assistant Secretary for Risk Management and Regulatory Affairs responsible for all matters relating to managing and mitigating the risk to HUD mortgage insurance funds and for ensuring the performance of HUD-insured mortgages. Abolishes the position of the FHA chief risk officer. (Sec. 7) Authorizes the Secretary to use outside sources to: (1) analyze credit risk models and practices employed by HUD in connection with mortgages; (2) evaluate underwriting standards; and (3) analyze lender compliance with, and HUD enforcement of, underwriting standards. (Sec. 8) Directs the Secretary to: (1) review and identify mortgagees with a significant or rapid increase in early defaults and claims with respect to all mortgages they have originated on housing located in any particular geographic area or areas; and (2) report on such reviews to certain congressional committees. Authorizes appropriations for FY2010-FY2014 to provide additional full-time equivalent positions for HUD, or for entering into necessary contracts, to conduct such reviews, as well as to carry out other responsibilities relating to ensuring the safety and soundness of the Mutual Mortgage Insurance Fund. (Sec. 9) Authorizes the Secretary to require a mortgagee to: (1) use the Nationwide Mortgage Licensing System and Registry; (2) obtain unique company identifiers for all the mortgagee's officers or owners. Authorizes the Secretary to require each insured mortgage to include any such unique company identifier. Directs the Secretary to: (1) pursue joint protocols for information sharing with state regulatory agencies; and (2) require mortgagees of HUD-insured single-family or multifamily housing to notify HUD if they terminate or discontinue mortgage purchases from another mortgagee based upon any determination, evidence, or report of fraud or material misrepresentation in connection with the origination of such mortgages. (Sec. 11) Requires the annual independent actuarial study of the Mutual Mortgage Insurance Fund to review and evaluate any: (1) changes to the current or projected safety and soundness of the Fund since the most recent report; and (2) risks to the Fund. Requires the Secretary in quarterly reports to Congress to specify for mortgages that are obligations of the Fund any factors likely to have an impact on the Fund's financial status or cause any material changes to its safety and soundness. (Sec. 12) Prescribes conditions compelling the Secretary to review and reduce certain cash investment requirements (down payment requirements) binding upon mortgages or mortgagors. (Sec. 13) Revises eligibility requirements for mortgage insurance. Requires a mortgage to have been made to a mortgagee approved by the Secretary (as under current law) or to a person or entity authorized by the Secretary to participate in the origination of the mortgage. Applies the same new eligibility requirement to insurance of a home equity conversion mortgage (reverse mortgage) for elderly homeowners. (Sec. 14) Revises requirements for early mortgage default and foreclosure information collected by the Secretary for mortgage lender analysis. Requires such information to include, for each servicer of insured mortgages, data on the performance of mortgages originated during each calendar quarter of the collection period, disaggregated by the direct endorsement mortgagee from whom the servicer acquired such servicing rights. (Sec. 15) Authorizes the Secretary to reimburse servicers of certain HUD-insured residential mortgages for the costs of obtaining the services of specified independent third parties, including a HUD-approved housing counseling agency, to make in-person contact, at no charge, with mortgagors whose payments are 60 or more days past due, solely to provide information regarding: (1) HUD-approved housing counseling agencies; and (2) mortgage loan modification, refinance, and assistance programs. Applies confidentiality requirements to such independent third parties. Directs the Secretary, in providing reimbursements, to give priority to independent third parties serving mortgagors under covered mortgages in areas experiencing a mortgage foreclosure rate and unemployment rate higher than the national average for the most recent 12-month period for which satisfactory data are available. (Sec. 16) Directs the Comptroller General to report to Congress on single family mortgage insurance programs of HUD and the Mutual Mortgage Insurance Fund. (Sec. 17) Revises the cash investment requirement for mortgage insurance eligibility to authorize the Secretary to establish a higher minimum cash investment requirement for all mortgagors, or a certain class or classes of mortgagors, which may be based on criteria related to borrowers' credit scores or other industry standards related to borrowers' financial soundness. Requires the Secretary to report annually to certain congressional committees on the implementation of minimum cash investment requirements, including discussion and analysis of options for proposed changes to such requirements. (Sec. 18) Directs the Secretary to provide refunds of unearned premium charges paid at the time of insurance for mortgage insurance to or on behalf of mortgagors under certain mortgages on one- to four-family dwellings. Authorizes appropriations for such refunds. (Sec. 19) Revises maximum mortgage amount limits for multifamily housing that includes elevator-type structures with sound standards of construction and design. Replaces specific dollar amounts for any increase in such limits the Secretary may make with an allowed increase of 50% of the amounts specified for each unit size. Applies to projects consisting of more than four dwelling units located in an extremely high-cost area certain mortgage insurance requirements currently applying to property in Alaska, Guam, Hawaii, and the Virgin Islands. (Sec. 20) Applies through FY2011 HUD Mortgagee Letter 2002-17 (regarding "Special Forbearance: Program Changes and Updates"), relating to Type I Special Forbearance, with respect to mortgagees of certain insured mortgages secured by one- to four-family dwellings that have problem or damaging drywall products. (Sec. 21) Authorizes the Secretary to increase the maximum dollar amount limitations on the principal obligation of certain insurable mortgages for certain micropolitan counties experiencing significant population growth and meeting other specified requirements. (Sec. 22) Requires mortgagors on a one- to four-family dwelling to provide a valid Social Security Number and be: (1) a U.S. citizen; (2) a lawful permanent resident alien; or (3) a non-permanent resident alien who legally resides in and is authorized to work in the United States. (Sec. 23) Prohibits the Secretary from insuring any mortgage secured by a one- to four-family dwelling unless the mortgagor certifies, under penalty of perjury, that he or she has not been convicted of a sex offense against a minor. (Sec. 24) Prohibits the use of funds to pay the salary of any federal employee engaged in certain mortgage insurance activities who has been officially disciplined for violations of Standards of Ethical Conduct for Employees of the Executive Branch for viewing, downloading, or exchanging pornography, including child pornography, on a federal government computer or while performing official federal government duties. (Sec. 25) Prohibits the Secretary from newly insuring a mortgage secured by a one- to four-family dwelling unless the mortgagee has determined that the mortgagor has not previously engaged in any strategic default with respect to a residential mortgage loan. (Sec. 26) Directs the Secretary to use all available actions and authorized methods to protect U.S. taxpayers from financial responsibility for any obligations of the Mutual Mortgage Insurance Fund, including authority to: (1) increase insurance premiums for mortgages that are obligations of the Fund; (2) establish more stringent underwriting standards for such mortgages; and (3) increase the amount of cash or its equivalent required to be paid on account of the property subject to such a mortgage.