Teacher:In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.
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This Act may be cited as the ''Zero Downpayment Act of 2004''.

SEC. 2. INSURANCE FOR ZERO-DOWNPAYMENT MORTGAGES.

(a) Mortgage Insurance Authority.--Section 203 of the National
Housing Act (12 U.S.C. 1709) is amended by inserting after subsection
(k) the following new subsection:
''(l) Zero-Downpayment Mortgages.--
''(1) Insurance authority.--The Secretary may insure, and
commit to insure, under this subsection any mortgage that meets
the requirements of this subsection and, except as otherwise
specifically provided in this subsection, of subsection (b).
''(2) Eligible single family property.--To be eligible for
insurance under this subsection, a mortgage shall involve a
property upon which there is located a dwelling that is
designed principally for a 1- to 3-family residence and that,
notwithstanding subsection (g), is to be occupied by the
mortgagor as his or her principal residence, which shall
include--
''(A) a 1-family dwelling unit in a multifamily
project and an undivided interest in the common areas
and facilities which serve the project;
''(B) a 1-family dwelling unit of a cooperative
housing corporation the permanent occupancy of the
dwelling units of which is restricted to members of
such corporation and in which the purchase of such
stock or membership entitles the purchaser to the
permanent occupancy of such dwelling unit; and
''(C) a manufactured home that meets such standards
as the Secretary has established for purposes of
subsection (b).
''(3) Maximum principal obligation.--
''(A) Limitation.--To be eligible for insurance
under this subsection, a mortgage shall involve a
principal obligation in an amount 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.
''(B) Inapplicability of other loan-to-value
requirements.--A mortgage insured under this subsection
shall not be subject to subparagraph (B) of paragraph
(2) of subsection (b) or to the matter in such
paragraph that follows such subparagraph.
''(4) Eligible mortgagors.--The mortgagor under a mortgage
insured under this subsection shall meet the following
requirements:
''(A) First-time homebuyer.--The mortgagor shall be
a first-time homebuyer. The program for mortgage
insurance under this subsection shall be considered a
Federal program to assist first-time homebuyers for
purposes of section 956 of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12713).
''(B) Counseling.--
''(i) Requirement.--The mortgagor shall
have received counseling, prior to application
for the loan involved in the mortgage, by a
third party (other than the mortgagee) who is
approved by the Secretary, with respect to the
responsibilities and financial management
involved in homeownership. Such counseling
shall be provided to the mortgagor on an
individual basis by a representative of the
approved third party counseling entity, and
shall be provided in person to the maximum
extent practicable.
''(ii) Topics.--Such counseling shall
include providing to, and discussing with, the
mortgagor--
''(I) information regarding
homeownership options other than a
mortgage insured under this subsection,
other zero- or low-downpayment mortgage
options that are or may become
available to the mortgagor, the
financial implications of entering into
a mortgage (including a mortgage
insured under this subsection), and any
other information that the Secretary
may require; and
''(II) a document that sets forth
the amount and the percentage by which
a property subject to a mortgage
insured under this subsection must
appreciate for the mortgagor to recover
the principal amount of the mortgage,
the costs financed under the mortgage,
and the estimated costs involved in
selling the property, if the mortgagor
were to sell the property on each of
the second, fifth, and tenth
anniversaries of the mortgage.
''(iii) 2- and 3-family residences.--In the
case of a mortgage involving a 2- or 3-family
residence, such counseling shall include (in
addition to the information required under
clause (ii)) information regarding real estate
property management.
''(5) Option for notice of foreclosure prevention
counseling availability.--
''(A) Option.--To be eligible for insurance under
this subsection, the mortgagee shall provide mortgagor,
at the time of the execution of the mortgage, an
optional written agreement which, if signed by the
mortgagor, allows, but does not require, the mortgagee
to provide notice described in subparagraph (B) to a
housing counseling entity that has agreed to provide
the notice and counseling required under subparagraph
(C) and is approved by the Secretary.
''(B) Notice to counseling agency.-- The notice
described in this subparagraph, with respect to a
mortgage, is notice, provided at the earliest time
practicable after the mortgagor becomes 60 days
delinquent with respect to any payment due under the
mortgage, that the mortgagor is so delinquent and of
how to contact the mortgagor. Such notice may only be
provided once with respect to each delinquency period
for a mortgage.
''(C) Notice to mortgagor.--Upon notice from a
mortgagee that a mortgagor is 60 days delinquent with
respect to payments due under the mortgage, the housing
counseling entity shall at the earliest time
practicable notify the mortgagor of such delinquency,
that the entity makes available foreclosure prevention
counseling that may assist the mortgagor in resolving
the delinquency, and of how to contact the entity to
arrange for such counseling.
''(D) Ability to cure.--Failure to provide the
optional written agreement required under subparagraph
(A) may be corrected by sending such agreement to the
mortgagor not later than the earliest time practicable
after the mortgagor first becomes 60 days delinquent
with respect to payments due under the mortgage.
Insurance provided under this subsection may not be
terminated and penalties for such failure may not be
prospectively or retroactively imposed if such failure
is corrected in accordance with this subparagraph.
''(E) Penalties for failure to provide agreement.--
The Secretary may establish and impose appropriate
penalties for failure of a mortgagee to provide the
optional written agreement required under subparagraph
(A).
''(F) Limitation on liability of mortgagee.--A
mortgagee shall not incur any liability or penalties
for any failure of a housing counseling entity to
provide notice under subparagraph (C).
''(G) No private right of action.--This paragraph
shall not create any private right of action on behalf
of the mortgagor.
''(H) Delinquency period.--For purposes of this
paragraph, the term 'delinquency period' means, with
respect to a mortgage, a period that begins upon the
mortgagor becoming delinquent with respect to payments
due under the mortgage and ends upon the first
subsequent occurrence of such payments under the
mortgage becoming current or the property subject to
the mortgage being foreclosed or otherwise disposed of.
''(6) Inapplicability of downpayment requirement.--A
mortgage insured under this subsection shall not be subject to
paragraph (9) of subsection (b) or any other requirement to pay
on account of the property, in cash or its equivalent, any
amount of the cost of acquisition.
''(7) MMIF monitoring.--In conjunction with the credit
subsidy estimation calculated each year pursuant to the Federal
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), the Secretary
shall review the program performance for mortgages insured
under this subsection and make any necessary adjustments, which
may include altering mortgage insurance premiums subject to
subsection (c)(2), adjusting underwriting standards, and
limiting the availability of mortgage insurance under this
subsection, to ensure that the Mutual Mortgage Insurance Fund
shall continue to generate a negative credit subsidy.
''(8) Underwriting.--For a mortgage to be eligible for
insurance under this subsection:
''(A) In general.--The mortgagor's credit and
ability to pay the monthly mortgage payments shall have
been evaluated using the Federal Housing
Administration's Technology Open To Approved Lenders
(TOTAL) Mortgage Scorecard, or a similar standardized
credit scoring system approved by the Secretary, and in
accordance with procedures established by the
Secretary.
''(B) Multi-unit properties.--In the case of a
mortgage involving a property upon which there is
located a dwelling that is designed principally for a
2- or 3-family residence, the mortgagor meets such
additional underwriting standards as the Secretary may
establish.
''(9) Approval of mortgagees.--To be eligible for insurance
under this subsection, a mortgage shall have been made to a
mortgagee that meets such criteria as the Secretary shall
establish to ensure that mortgagees meet appropriate standards
for participation in the program authorized under this
subsection.
''(10) Disclosure of incremental costs.--
''(A) Required disclosure.--For a mortgage to be
eligible for insurance under this subsection, the
mortgagee shall provide to the mortgagor, at the time
of the application for the loan involved in the
mortgage, a written disclosure, as the Secretary shall
require, that specifies the effective cost to a
mortgagor of borrowing the amount by which the maximum
amount that could be borrowed under a mortgage insured
under this subsection exceeds the maximum amount that
could be borrowed under a mortgage insured under
subsection (b), based on average closing costs with
respect to such amount, as determined by the Secretary.
Such cost shall be expressed as an annual interest rate
over the first 5 years of a mortgage.
''(B) Coordination.--The disclosure required under
this paragraph may be provided in conjunction with the
notice required under subsection (f).
''(11) Loss mitigation.--
''(A) In general.--Upon the default of any mortgage
insured under this subsection, the mortgagee shall
engage in loss mitigation actions for the purpose of
providing an alternative to foreclosure to the same
extent as is required of other mortgages insured under
this title pursuant to the regulations issued under
section 230(a).
''(B) Annual reporting.--Not later than 90 days
after the end of each fiscal year, the Secretary shall
submit a report to the Congress that compares the rates
of default and foreclosure during such fiscal year for
mortgages insured under this subsection, for single-
family mortgages insured under this title (other than
under this subsection), and for mortgages for housing
purchased with assistance provided under the
downpayment assistance initiative under section 271 of
the Cranston-Gonzalez National Affordable Housing Act
(42 U.S.C. 12821).
''(12) Additional requirements.--The Secretary may
establish any additional requirements for mortgage insurance
under this subsection as may be necessary or appropriate.
''(13) Limitation.--The aggregate number of mortgages
insured under this subsection in any fiscal year may not exceed
10 percent of the aggregate number of mortgages and loans
insured by the Secretary under this title during the preceding
fiscal year.
''(14) Program suspension.--
''(A) In general.--Subject to subparagraph (C), the
authority under paragraph (1) to insure mortgages shall
be suspended if at any time the claim rate described in
subparagraph (B) exceeds 3.5 percent. A suspension
under this subparagraph shall remain in effect until
such time as such claim rate is 3.5 percent or less.
''(B) FHA total single-family annual claim rate.--
The claim rate described in this subparagraph, for any
particular time, is the ratio of the number of claims
during the 12 months preceding such time on mortgages
on 1- to 4-family residences insured pursuant to this
title to the number of mortgages on such residences
having such insurance in force at that time.
''(C) Applicability.--A suspension under
subparagraph (A) shall not preclude the Secretary from
endorsing or insuring any mortgage that was duly
executed before the date of such suspension.
''(15) Sunset.--No mortgage may be insured under this
subsection after September 30, 2009, except that the Secretary
may endorse or insure any mortgage that was duly executed
before such date.
''(16) GAO reports.--The Comptroller General of the United
States shall submit a report to the Congress not later than 2
years after the date of the enactment of this subsection, and
annually thereafter, regarding the performance of mortgages
insured under this subsection.
''(17) Implementation.--The Secretary may implement this
subsection on an interim basis by issuing an interim rule,
except that the Secretary shall solicit public comments upon
publication of such interim rule and shall issue a final rule
implementing this subsection after consideration of the
comments submitted.''.
(b) Mortgage Insurance Premiums.--The second sentence of
subparagraph (A) of section 203(c)(2) of the National Housing Act (12
U.S.C. 1709(c)(2)(A)) is amended by striking ''In'' and inserting
''Except with respect to a mortgage insured under subsection (l), in''.
(c) General Insurance Fund.--Section 519(e) of the National Housing
Act (12 U.S.C. 1735c(e)) is amended by striking ''and 203(i)'' and
inserting '', 203(i), and 203(l)''.
Student:
Zero Downpayment Act of 2004 - Amends the National Housing Act to authorize the Secretary of Housing and Urban Development to insure first-time homeowner zero-downpayment mortgages for one-family residences, including one- to three-unit dwellings, condominiums, cooperatives, and manufactured housing.

Limits the principal obligation on an insured mortgage to not more than 100 percent of the property's appraised value plus any initial service charges, appraisal, inspection, and other related fees.

Requires: (1) independent mortgagor counseling prior to applying for a loan, including specific counseling regarding real estate property management for mortgagors purchasing dwellings with two to three units; and (2) the mortgagee to provide the mortgagor with an option for notice of foreclosure prevention counseling, which shall become effective 60 days after delinquency.

Requires: (1) the Secretary to monitor and make adjustments (mortgage premiums and availability and underwriting standards) to such program; (2) mortgagor credit evaluation by the Federal Housing Administration's (FHA) TOTAL Mortgage Scorecard or other standardized credit scoring system; (3) additional underwriting standards for borrowers purchasing two- to three-unit dwellings; and (4) written mortgagee disclosure to the mortgagor of incremental costs.

Limits the program to not more than ten percent of the aggregate number of FHA mortgages and loans insured in the preceding fiscal year. Suspends the program if claim rates exceed a certain FHA single-family claim rate.

Requires a Government Accountability Office (GAO) program report within two years of enactment of this Act and annually thereafter.

Sunsets the program after September 30, 2009.